FPL to pass tax savings to customers

With a new federal law providing tax credits for renewable energy, Florida Power & Light on Friday asked state regulators to approve a plan that would pass an estimated $384.1 million in savings to customers over the next three years.

The plan, which will begin refunding $25 million to customers in January, will reduce the price increases that FPL customers will face in 2023.

It stems from a federal law, known as the Inflation Reduction Act, that President Joe Biden signed into law in August. The law extended tax credits for renewable energy, a change that has benefited utilities such as FPL, which have largely moved to solar power.

FPL customers will see higher bills in 2023 due to higher prices for primary electricity and higher costs for natural gas, which feeds power plants.

“We recognize that all Florida residents continue to grapple with the challenges of record high inflation and the increasing costs of everyday goods and services,” FPL Chairman and CEO Eric Silaghi said in a prepared statement Friday. “As we continue to work more efficiently to drive costs out of our business, federal tax savings will begin to provide some relief to customers in the coming year as higher natural gas prices continue to put pressure on bills.”

Due to the merger with the former Gulf Power, FPL has two sets of prices. In 2022, residential customers in areas served by FPL traditionally pay $120.67 per month if they use 1,000 kWh of electricity – a common industry standard. Customers in areas of Northwest Florida previously served by Gulf Power pay $155.61.

Without the federal tax savings, those monthly bills would rise to $130.23 in January for customers in traditional FPL areas and $160.43 in Northwest Florida. With the savings, bills will go to $126.65 in January in traditional FPL areas and $156.85 in Northwest Florida.

Bills will adjust again in February, with 1,000-kilowatt-hour customers paying $129.59 in conventional areas and $159.81 in Northwest Florida, according to a filing with the state’s Public Service Commission. Prices are likely to change further in 2023 due to the costs of natural gas.

Utility bills are made up of a combination of factors, with the two largest costs related to base rates and fuel. Last year, the Public Service Commission approved a multi-year settlement that included increases in the Federal Reserve’s base rate.

That settlement also included a requirement to adjust rates if federal tax laws changed. Friday’s FPL proposal will implement this requirement.

Under the proposal, FPL customers would receive a $25 million refund in January reflecting the effects of federal law for the 2022 tax year, according to the proposal, utilities would also begin to pass $69.7 million annually in tax savings. These savings will be made available in 2023, 2024 and 2025.

In addition, FPL estimated that the law would result in a total savings of $150 million in 2024 and 2025. These savings relate to the costs of solar projects included in last year’s base price adjustment.

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