STATEMENT OF

JAY HAKES

ADMINISTRATOR

ENERGY INFORMATION ADMINISTRATION

U.S. DEPARTMENT OF ENERGY

BEFORE THE

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

COMMITTEE ON RESOURCES

UNITED STATES HOUSE OF REPRESENTATIVES

AUGUST 5, 1999

 

Testimony of Jay Hakes

Administrator, Energy Information Administration

U.S. Department of Energy

before the

House Committee on Resources

Subcommittee on Energy and Mineral Resources

on

Electric Power and Other Energy Needs for the State of Florida

AUGUST 5, 1999

 

Thank you for the opportunity to appear before you today to provide you with information on the "forecasting demand for electric power and other energy needs for the State of Florida."

EIA maintains profiles with historical data for all states. These profiles are available to the public on the Internet. EIA generally does its projections into the future on a national or regional basis, not by state. Because of the size of Florida, however, we are able to provide the committee some state projections for electricity growth.

Overview

Florida produces a very limited amount of crude oil and natural gas. Energy consumption is primarily petroleum. Florida ranks 3rd in the country in consumption of petroleum and electricity and 8th nationally in total energy consumption. Florida is among the top 4 States in consumption in the residential, commercial, and transportation sectors, but only 20th in the industrial sector. Coal is the most important fuel for Florida. s electric utilities. Florida. s overall energy prices rank 9th in the Nation. Chart 1 depicts the primary energy sources consumed by the State.

Chart 1. Primary Energy Consumed in Florida by Source, 1996

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Petroleum and Natural Gas

Florida has small onshore reserves of petroleum and natural gas. Although an offshore proved field for natural gas has been established there is no public data available on the amount of offshore reserves. In 1997 petroleum reserves were 91 million barrels of crude oil and 17 million barrels of natural gas liquids. Natural gas reserves were 96 billion cubic feet of dry gas. Production of petroleum and natural gas is done on a very limited scale. Half of the State. s energy need is met by petroleum. Florida consumed 806 thousand barrels per day of petroleum in 1996. Over half of this was in the form of motor gasoline. Natural gas consumption was 485.7 billion cubic feet in 1997. Chart 2 depicts Florida. s consumption of petroleum products in 1996.

Chart 2. Petroleum Consumed in Florida by Product, 1996

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Natural Gas Restructuring

The state has no unbundled service programs for residential customers of natural gas. Natural gas service in the state is provided by 8 regulated utilities and 50 municipalities. All 8 utilities provide transportation services to large customers but not to residential users. The Florida Public Service Commission intends to pass rules for unbundling commercial and industrial customers by the end of 1999 but has no plans for residential unbundling. In 1997, Florida had 532,790 residential and 48,251 commercial customers, with commercial customers consuming nearly three times as much gas as the residential: 37 billion cubic feet versus 13 billion cubic feet. The average prices paid for natural gas purchased from local distribution companies by residential and commercial customers were $11.90 and $6.85 per thousand cubic feet, respectively. The average city gate price in Florida was $3.97 per thousand cubic feet.

Electricity

Florida had the fourth largest population and the third largest utility generating capability in 1996. The largest portion (about 45 percent) of electricity generated in Florida comes from coal-fired plants. Florida is also very reliant on nuclear power (nearly 20 percent) and power from oil-fired (about 16 percent) and gas-fired plants (nearly 20 percent). Chart 3 depicts the fuels used by electric utilities in 1996.

Chart 3. Electric Utility Use of Energy in Florida, 1996

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Nonutility electric power generators used an additional 363 trillion Btu. This is 20 percent of the total fuels used by the electric power industry, as compared to the 1986 share of 9.1 percent. Coal and wood waste together account for about half of the fuel. Natural gas is a large component also.

Two of the three largest plants in the State, Crystal River and Turkey Point, have nuclear generating capability. The largest utility in the State is the Florida Power and Light Company, which operates three of the State's five largest plants. Florida has an insignificant amount of hydropower capability and generation. The average price of electricity, 7.18 cents per kilowatthour, was sixteenth most expensive in the Nation. Florida is a net importer of electricity although it is a long peninsula with significant population centers at the southern end, making importing opportunities limited.

The utilities generated 145 billion kilowatthours of a total of 167 billion kilowatthours that were produced in Florida in 1996. The nonutilities produced the balance of 22 billion kilowatthours. Their share increased from 5.0 percent in 1986 to 13.2 percent in 1996. Chart 4 shows the utilities generation of electricity by primary energy source, 1986-1996.

Chart 4. Utility Generation of Electricity by Primary Energy Source, 1986-1996

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Emissions

The Clean Air Act Amendments of 1990 specified a number of utility plants to begin compliance with stricter emissions standards for sulfur dioxide (SO2) and nitrogen oxides (NOx) in 1995. Charts 5-7 depict these emissions and carbon dioxide from 1986 to 1996.

Chart 5. Estimated Sulfur Dioxide Emissions

1986-1996

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   Chart 6. Estimated Nitrogen Oxide Emissions

1986-1996

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Chart 7. Estimated Carbon Dioxide Emissions

1986-1996

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The utility plants included 2,286 megawatts of nameplate capacity at Gulf Power's Crist plant and Tampa Electric Company's Big Bend plant. Emissions of SO2 from Florida electric generation rose from 1986 to 1991, but declined from 1991 to 1996. Both emissions of NOx and carbon dioxide (CO2), however, increased over both periods. Florida's SO2, NOx, and CO2 emissions were all among the top 7 nationally in 1996. Its concentration rankings were all also high, among the top 12.

Electricity Restructuring

The U.S. electric power industry is undergoing profound change. The industry, once considered a natural monopoly, is opening its wholesale market to competition as a result of the Federal Energy Regulatory Commission. s open access order issued on April 24, 1996. Regulatory orders and legislation for the State of Florida are summarized here.

Regulatory Orders

4/99: The PSC approved a merchant plant to be built in New Smyrna by Duke Energy. The combined cycle gas plant has a photovoltaic unit to offer a "green" pricing option as part of the plant's marketing. The utilities in the State opposed the plant, but the PSC stated that the plant, and other merchant plants proposed to be built could help solve the State's reserve margin problem, lack of photovoltaics, and market share concerns.

2/99: The PSC ruled that investor-owned utilities must disclose the sources of generation and purchased power by fuel type to consumers

8/98: Responding to competitive pressures that can lower electric bills for large consumers, the PSC approved discount rates (up to 20%) for new and expanding businesses. The Florida Alliance for Lower Electric Rates Today opposes the discounts, and proposes state-wide competition for all consumers.

Legislation

4/99: The legislature adjourned April 30 with no major electric industry restructuring effort or even a study considered.

Electricity Outlook

Demand for electricity is expected to increase at an average rate of approximately 2.2 percent per year through the year 2005. For the Southeastern Electric Reliability Council/Florida, defined as the State of Florida but without the western panhandle, the outlook for electricity demand in billion kilowatthours is shown in Table 1.

Table 1. Outlook for Electricity Demand for Florida

By Sector and Year (Billion Kilowatthours)

 

1997

2000

2005

Residential 77.50 84.87

   93.78

Commercial/Other 69.46 74.89 81.77
Industrial 14.15 14.34 15.27
Transportation 0.71 0.76 1.34
Total 161.82 174.85 192.17

The forecasts are taken from the Energy Information Administration's National Energy Modeling System. The electricity use in the transportation sector is mainly for electric rail such as intercity, commuter and transit rail systems.

I will be happy to answer any questions that the committee members may have.