Florida Power & Light Outstanding Performance

Continuing to expand | Superior operating performance | Outstanding reliability, customer service | Focus on costs provides benefits | Regulatory update | An environmental leader

FPL's customer base grew 2.3 percent as the company added almost 87,000 new customer accounts to total nearly 4 million. Electricity usage per retail customer grew 0.4 percent. Growth in both usage and new customer accounts is expected to continue in 2002.

Continuing to expand

To meet the demands of more customers and greater use of electricity, FPL in 1998 began an on-going capacity expansion program. As part of that program, 1,200 megawatts of new generation were added at existing facilities in 2001. Included were 900 megawatts at the Fort Myers power plant and 300 megawatts of peaking units at the Martin Plant. Over the next four years, the utility expects to add more than 4,000 megawatts of capacity.

The additions in 2001 increased FPL's total system capability, including purchased power, to nearly 19,000 megawatts. This increased capability, combined with demand management programs and additional short-term purchases, will allow us to maintain a strong 20 percent reserve margin.

More new generation will come on line this year with the completion of "repowering" projects at Fort Myers and Sanford. This will increase from 250,000 to 600,000 the number of homes and businesses supplied power by the two plants. The process of repowering - converting existing oil-burning plants to state-of-the-art natural gas operations - not only increases plant output, but reduces emissions as well. As a leading "clean energy" utility, FPL's overall emissions are among the lowest of any U.S. electric utility based on the amount of electricity that it produces.

Early this year FPL proposed a plan to expand capacity at its Martin and Manatee plant sites. The proposal would add 1,900 megawatts of clean-burning, natural gas combined-cycle generation by mid-2005 and allow FPL to serve more than 400,000 new customers while maintaining its reserve margin requirements.

FPL is an industry leader in helping to hold down the need for additional new generation by utilizing energy management and conservation programs to reduce demand for electricity during peak periods. Over the past two decades, through conservation and other programs, FPL has helped customers reduce their overall energy use and avoided having to build nine additional power plants. By meeting its current conservation goals, FPL will avoid building two additional 400-megawatt power plants that otherwise would have been part of its expansion program.

Superior operating performance

If approved, St. Lucie units 1 and 2 could operate until 2036 and 2043. Turkey Point units 3 and 4 could run until 2032 and 2033.

Outstanding reliability, customer service

The J.D. Power & Associates annual study of mid-size business customers ranked FPL third nationally among the top 39 utilities. FPL vaulted from 14th to 6th nationally in overall customer satisfaction.

To further improve customer service and satisfaction, FPL is focusing on a project called Tech 21, which leverages technology to provide FPL customers with better service. For example, one new computer system gives customers who call to report a power outage the estimated time service will be restored. If the estimated time should change by more than one hour from the original estimate, customers are automatically called back with an update. Another system eliminates the manual paper process of dispatching routine work orders and allows field employees to relay information electronically using hand-held data transmitting devices.

Focus on costs provides benefits

Cost efficiency has played a major role in FPL's success for more than a decade. Since 1990, the company's operations and maintenance costs per kilowatt-hour have fallen from 1.82 cents to 1.09 cents, a decline of 40 percent. This is the largest percentage of reduction in costs of any company within a utility peer group. Taking inflation into consideration, the decline in costs is much greater.

The ability of FPL to successfully control costs has enabled it to maintain base rates substantially lower than the industry average. The utility's base rates for residential customers are currently about 12 percent lower than the national average.

Regulatory update

In March, the Florida Public Service Commission (FPSC) approved a four-year agreement with Florida's Public Counsel and others to reduce base rates for FPL customers by 7 percent, or approximately $1 billion through 2005.

The agreement, which becomes effective April 15, 2002, builds upon the current incentive-based agreement in place since 1999 that has saved FPL customers nearly $1.3 billion. Although the new agreement reduces FPL revenues, it also provides important incentives that would allow FPL to grow earnings through continued operational productivity enhancements and other actions.

The new agreement does not establish a range for a return on equity, but instead is incentive-based with a revenue-sharing provision that is the exclusive mechanism to address earnings levels.

The Commission also is studying a proposal by FPL, Florida Power Corporation and Tampa Electric Company to create a regional transmission organization, or RTO, to be called GridFlorida. Late last year the Commission agreed that FPL's participation in GridFlorida was prudent to date, but requested a variation of the original proposal that would include keeping the transmission assets with the investor owned utilities. The Federal Energy Regulatory Commission (FERC) mandated that all investor-owned utilities form RTOs, but the Florida process was halted while the FPSC examined the proposal along with its costs and benefits.

In late 2001, the 2020 Energy Study Commission, established by Florida Governor Jeb Bush to study possible changes in the state's electric system, made its final report to the governor and legislative leaders.

• The Florida Ocean Alliance, a nonpartisan organization dedicated to protecting and enhancing Florida's coastal and ocean resources, recognized FPL's Fort Myers and Sanford repowering projects for significant reductions in air emissions and barge traffic and for the wise use of existing land. In addition to the projects' environmental accomplishments, both were presented with the Star Award, the highest safety honor the U.S. Department of Labor bestows.
• The Florida Department of Environmental Protection's Partnership for Ecosystem Protection recognized the Fort Myers repowering site for its exemplary environmental performance as a partner in the Air Division's environmental protection program.
• The Edison Electric Institute presented FPL with its Land Management Award for integrating environmental stewardship with power plant operations, including its management of wetlands and crocodile habitat at the Turkey Point nuclear power plant in Miami-Dade County.
• FPL also won for the third time the U.S. Environmental Protection Agency's WasteWise "Program Champion Award." WasteWise is a voluntary program that involves businesses, government agencies and others in reducing waste through recycling, waste prevention, and buying recycled material.
• In addition, in February 2002, FPL Group announced its participation as a charter partner in the Environmental Protection Agency's new voluntary Climate Leaders program aimed at reducing greenhouse gas emissions.