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Florida Power & Light
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FPL is among America's largest and fastest growing electric utilities. During the year the utility added 94,000 new accounts, a 2.4% increase, including our four millionth customer. Electricity usage per retail customer grew by 3.5%, due primarily to warmer than normal weather and the elasticity of demand in the aftermath of a reduction in base electricity rates. Energy sales reached an all-time high of 98.6 billion kilowatt-hours. For 2003, we expect customer growth of about 1.9% and weather normalized usage growth of about 2.1%. |
2002 Customer Mix |
To meet future growth - and as part of an on-going expansion plan - FPL increased its generating capability by 1,022 net-megawatts during 2002 with the successful completion of the Fort Myers plant repowering project and the first half of the Sanford plant repowering project. The utility's total generating capability at year-end 2002 was nearly 21,000 mega-watts, including purchased power. The completion in 2003 of the Sanford project and additional peaking units being built at Fort Myers will add nearly 1,300 more megawatts to the FPL system.
Following an analysis of 134 other proposals in two competitive capacity solicitations, the Florida Public Service Commission unanimously approved FPL's proposed expansion projects at the Manatee and Martin plant sites. Subject to additional regulatory approvals, the expansion at Manatee and Martin will provide an additional 1,900 megawatts of power in 2005, enough to meet the needs of approximately 400,000 new customers and maintain a reserve margin of 20%.
FPL is expanding its system facilities and infrastructure to support the increased generating capacity and demand. During 2002 the company added 11 new substations, 36 miles of transmission lines, and more than 400 miles of distribution lines. In 2003, the company expects to add 14 new substations, nearly 90 miles of transmission, and approximately 415 miles of distribution.
While building plants and facilities to meet the growing demand on its system, FPL works with customers to help them conserve or reduce their use of electricity. Its conservation and demand side management programs are among the most effective in the nation and to date have reduced the need for new generation by approximately 3,200 megawatts - the equivalent of not building six large power plants.
Superior reliability
FPL's power plants operate at world-class levels. The percentage of time they are available to generate power is among the highest in the industry. During 2002 the "availability" of FPL's nuclear facilities rose to a record 97%, well above the most recent industry average of 89%. In addition, the company's nuclear operations received a rating of 99.3 from the World Association of Nuclear Operators, placing us among the top quarter of the nation's 103 nuclear units.
The availability of the company's fossil-fueled plants was 94%, just off last year's record and also well above the industry average of 87%.
FPL's reliability and customer service continue to improve. Over the past five years the average annual amount of time that customers were without power has been cut nearly in half, from more than 137 minutes to 69 minutes. In addition, the duration and frequency of interruptions have been reduced by 35% and 23%, respectively.
An Industry Leader in Plant Performance
Improving customer service
FPL continually strives to be a customer-friendly company. For example, as the result of an initiative begun in 2000, customers are being kept better informed about the status of planned power outages and the restoration of power. Improvements in Web-based options allow customers to access their accounts and other important energy information, as well as pay their bills more conveniently. These and other quality initiatives have enabled the company to receive continued high marks in its annual customer surveys of both residential and business customers.
After more than a decade of steady reductions, FPL's operating and maintenance costs per kilowatt-hour rose in 2002, driven by higher expenses for nuclear maintenance, property insurance and employee medical costs, and a one-time voluntary accrual of $35 million - in addition to the normal $20 million - in the storm fund to be better prepared should a major storm strike within its service area. Nonetheless, the company's O&M expenses as measured in dollars per customer remained at 42% below the industry average. With a goal of further improving both service levels and cost effectiveness, FPL is intensifying its efforts to improve its quality, productivity and operational efficiency.
Milestones for nuclear operations
FPL's nuclear facilities at Turkey Point, located south of Miami, and at St. Lucie, on Hutchinson Island, combined to produce more than 26 billion kilowatt-hours of electricity during 2002. This is more than a 5% increase over the previous year and an all-time high.
After an extensive four-year application and review process, the Nuclear Regulatory Commission extended the operating licenses of Turkey Point nuclear units 3 and 4 until 2032 and 2033, respectively. The NRC is currently reviewing FPL's application to renew the operating licenses of its two St. Lucie units, a process expected to be completed in the fall of 2003.
Successful refueling outages were conducted at both Turkey Point and St. Lucie. The outage at Turkey Point's unit 4 was the shortest conducted by any similarly-designed nuclear power plant in the United States. Reflecting its overall success, Turkey Point received the 2002 Utility Achievement Award from the American Nuclear Society for its outstanding performance coupled with production costs that are among the lowest in the nation.
The nuclear division's top priorities continue to be safety and security, and during 2002 a number of security measures were added to the plants' already extensive security program. Also, in response to an NRC directive to nuclear plants nationwide, FPL visually inspected the reactor vessel heads at all four of its nuclear units and no problems were found. Additional volumetric and visual testing performed on the reactor vessel heads at St. Lucie unit 1 and Turkey Point unit 3 during scheduled refueling outages confirmed these results. These tests also will be conducted on FPL's two other nuclear units during their scheduled refueling outages this year. As a cost-effective measure, FPL plans to replace the reactor vessel heads over a three-year period beginning in 2004 rather than undergo expensive supplemental inspections.
Progressive regulators action
Under an agreement, negotiated between FPL and the Office of Public Counsel and approved by the Florida Public Service Commission in March of 2002, FPL reduced its base rates by 7%, or $250 million annually. As a result, at year-end 2002, the utility's residential rates were 13% below the national average and the lowest of all the major investor-owned utilities in Florida. The agreement avoided a full-scale rate hearing and will provide savings to customers of approximately $1 billion through 2005.
In addition, the agreement provided for revenue sharing between FPL and its customers if revenues exceed certain levels. In February of this year, FPL returned approximately $11 million to its customers as a result of the revenue-sharing feature. The agreement is incentive-based in that the company benefits from productivity gains and has no stated return on equity limitation.
With the state's progressive regulatory environment, any actions to restructure the electric industry in Florida are unlikely in the near future.
In other regulatory actions, progress continued on the development of GridFlorida, a non-profit Independent System Operator (ISO) for the state. The ISO was presented to the Florida Public Service Commission as a regional transmission organization, as mandated by the Federal Energy Regulatory Commission. The Commission approved a proposal by FPL and two other major Florida utilities for an ISO in 2002, but the Office of Public Counsel protested this decision to the Florida Supreme Court on jurisdictional grounds. A ruling is expected in 2003. |
Diverse Energy Sources at FPL |
Environmental leadership
As one of the nation's cleanest electric utilities, FPL's rates of emission of sulfur dioxide, carbon dioxide and nitrogen oxides are among the lowest of major investor-owned utilities throughout the nation. Over the past decade, the company has dramatically reduced emissions from its power plants while adding thousands of megawatts of additional power.
For example, FPL's 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. The repowering of its Fort Myers plant reduced nitrogen oxide emissions from 7.23 pounds per megawatt-hour to 0.26; sulfur dioxide from 20.94 lbs/mwh to 0.02; and carbon dioxide from 1,722 to 774 lbs/mwh. In addition, FPL recently received the support of the Florida Department of Environmental Protection to proceed with the installation of pollution control technology to lower nitrogen oxide emissions at its two existing oil-fired units at the Manatee plant located near Bradenton, Florida. Being one of America's cleanest electric utilities benefits all of the citizens of Florida and also allows FPL to avoid many of the costs other companies must incur to bring their operations into compliance with environmental laws and regulations. Early in 2002, FPL Group participated as a charter partner in the Environmental Protection Agency's new voluntary Climate Leaders program aimed at reducing greenhouse gas emissions. Partnering with the EPA is an important next step in assessing and reducing emissions at power plants in Florida and throughout the country. |
Reducing Emission Rates at FPL Group |
FPL Group's environmental achievements resulted in the company being recognized for a second straight time as having the strongest environmental program in the electric power industry. Innovest, an international independent investment research firm, ranked FPL Group number one among more than two dozen U.S. electric companies surveyed.
