Subject: FW: Panel okays energy plan; St. Petersburg Times - November 16, 2001
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Date: Mon, 19 Nov 2001 12:08:32 -0800 (PST)

F.Y.I.
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From: Wilson, Rob 
Sent: Monday, November 19, 2001 2:06 PM
To: Boatman, Jack; Tu, Denis
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Subject: FW: Panel okays energy plan; St. Petersburg Times - November 16, 2001

FYI- Note Sen. Lee's comments re: merchant plants. Only merchant plant players are suggesting the issue will be discussed by the legislature in 2002. Incumbents will probably enjoy the status quo for a couple more years.
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From: Stiles, Billy [mailto:[email-masked]]
Sent: Friday, November 16, 2001 1:34 PM
To: Carole Joy Barice (E-mail); David B. Struhs (E-mail); E. Leon Jacobs (E-mail); Helen A. Ferre' (E-mail); J. Dudley Goodlette (E-mail); Jack Shreve (E-mail); John J. Anderson (E-mail); Joseph K. Tannehill (E-mail); Joshua High (E-mail); Kaaren Johnson-Street (E-mail); Kenneth W. Littlefield (E-mail); Lou Frey Jr. (E-mail); Miguel De Grandy (E-mail); Sandra B. Mortham (E-mail); Sandy J. Woods (E-mail); Sanford (Sandy) V. Berg Ph. D. (E-mail); Stephen J. Mitchell (E-mail); Tom Lee (E-mail); Walter Revell (E-mail)
Subject: Panel okays energy plan; St. Petersburg Times - November 16, 2001

Panel okays energy plan

The governor's panel on energy endorses opening the state's power market to competition, but few expect it to be tackled next year. 

By STEVE HUETTEL
? St. Petersburg Times,
published November 16, 2001 
  _____  

TALLAHASSEE -- The governor's energy study commission Thursday endorsed a plan backed by the state's big utilities to open Florida's wholesale electricity market to competition. 

The 113-page report will frame the debate on deregulating the state's power business. But commission members acknowledged it's unlikely legislators will tackle the complex plan next year when they are struggling with a budget shortfall and redrawing their electoral districts. 

Some members of the panel wanted to recommend that the Legislature act first on the part of deregulation that the entrenched state utilities have long fought: giving their out-of-state competitors free rein to build power plants in the Florida. 

"This (plan) was designed to be so weighty . . . it will never get anywhere in the Legislature," said state Sen. Tom Lee, R-Brandon. "If that happens, the status quo wins." 

Lee's proposal to let in the outsiders first was narrowly defeated. Opponents argued it wasn't fair to permit such "merchant plants" unless Florida utilities also were allowed to sell their existing plants to unregulated affiliates. 

Commission chairman Walter Revell defended the report's complexity and said no one expects legislators to turn it into law quickly. 

"Energy is big, technical, complex, controversial and capital-intensive," said Revell, who oversaw the panel's 14 months of work. "There are no short, simple solutions for a strategic plan for energy for Florida." 

Gov. Jeb Bush appointed the Florida Energy 2020 Study Commission after out-of-state companies were blocked from building merchant power plants by the Legislature and the state Supreme Court. Florida is the only state that bans merchants from building the most efficient natural gas-fired plants. 

Bush argued that the state needed to attract more power plants to meet Florida's growing appetite for electricity and avoid California-style power shortages. 

The panel sent legislators a plan earlier this year that would have let merchants in and allowed state utilities to sell their plants to unregulated affiliates at depreciated values. 

Critics charged the proposal would let utilities spin off the plants -- paid for by their Florida customers -- at bargain-basement prices. That initial plan died in the Legislature. 

Commission members tried to fix the problem in the new deregulation plan. 

Ratepayers should get half of any profits utilities reaped from selling their plants, the report recommends, while company shareholders should eat any loss from a sale. 

But Department of Environmental Protection secretary David Struhs said the provision wouldn't benefit ratepayers because there won't be any profits to share when utilities sell their plants at the depreciated value. 

The energy commission had originally proposed taking away the authority of the state Public Service Commission, the governor and Cabinet to reject unpopular power plant projects. But environmentalists strongly opposed the plan. The final report proposed eliminating the PSC's review of new plants but left it up the Legislature to decide the role of the governor and Cabinet. 

Wednesday, most panel members insisted the report was full of intertwined compromises that wouldn't work on their own. 

"It would be a tragic mistake to unsettle the balance by taking segments out," said Stephen Mitchell, a Tampa attorney. 

But Lee suggested state utilities helped make the plan overly complicated by design. If it failed, he said, established players such as Florida Power and Tampa Electric would get to keep their monopoly over the electricity business. 

A top Florida Power executive said afterward that the way it turned out was "a win-win." 

"The current system functions well," said Vincent Dolan, vice president for regulatory and public affairs. "Now, we've got a report that could make the system better." 

-- Steve Huettel can be reached at [email-masked] <mailto:[email-masked]> or (813) 226-3384.