Florida has higher electric rates than those of neighboring states because of its reliance on natural gas to generate electric power according to a study released in September.
In a September 27, 2011, press release the Florida Public Service Commission (PSC) said it requested the study from the Public Utility Research Center (PURC) located at the University of Florida’s Warrington College of Business “as part of an initiative to find ways to hold down utility rates.”
Two key findings from the study titled “Addressing the Level of Florida’s Electricity Prices”:
- From 1990 through 2002, Florida’s electricity costs were comparable to the other states’ costs. Beginning in 2003, the residential cost of electricity in Florida grew faster than costs in the other states and is now about 10% higher than the next highest state, Alabama.
- Overall, it appears that Florida’s electricity costs appear high relative to those of neighboring states because Florida uses more natural gas to generate electricity than do the other states.
In 1990, Florida got roughly 60 percent of its electricity from uranium and coal, and is down to 40 percent today. The decline is offset by an increased reliance on natural gas, which by 2009 accounted for 50 percent of the state’s electricity. “In contrast, the neighboring states of Alabama and Georgia generated 66 percent and 78 percent, respectively, from coal and nuclear energy.”
PSC Chairman Art Graham responded to the study and Florida’s fuel mix:
‘It comes with a cost—Florida’s residential customers pay 10 to 20 percent more than they would in other Southeast states. Documenting the reason for higher prices is an important first step in restraining rates.’ He cautioned that cost is just one factor to consider in fuel diversity decisions, however.
Coloradans would be wise to keep an eye on Florida because with HB 1365, the fuel switching bill, we are headed in the same direction.