Our Electric Utility

Electric Utility Rates ⚡ as explained by the City

This week we are taking a closer look at the rise in electric rates that customers are facing in Lake Worth Beach. To help customers better understand the situation each day we will be breaking down a part of what has caused this to happen and what residents can do to limit the amount of financial pain caused by this rise.

Today we will start with a look at the external factors. To understand how these affect us we must first understand that our electric rate is made up of two costs, a static cost referred to as the “base energy charge” and a variable cost referred to as the “purchased power cost” (listed in your bill as “Power Cost Adjustment”). Our base energy rates are reviewed annually but aren’t likely to change by a large amount as this category is made up of things like maintaining the poles, wires, transformers, and equipment you see in your community. The “base energy charge” includes the cost of the personnel that ensure your home is powered, our costs for nuclear power which are relatively stable, and our debt service associated with our investments in infrastructure. These costs, for the most part, are known ahead of time and remain relatively stable throughout the year and have predictable escalation.

In Lake Worth Beach we often like to think of ourselves as being in control of our destiny due to us having the benefit of owning our own utilities rather than having a profit driven commercial entity running our utility service. Even though we own our own power plant it is antiquated and expensive to operate, but has served us well for since the 1960s. To save you money we purchase energy at much lower costs than we could make it ourselves and it is this cost that varies based on external factors.

Fifty to sixty percent of our electricity is produced by natural gas in highly efficient power plants located across the state. This means that natural gas is burned in order to turn very large turbines and make electricity. This natural gas is piped in from sources along the US southeast gulf coast and has a cost just like the gasoline you use to power your car. Changes in global natural gas prices, increasing demand as our economy rebounds from the effects of the Covid pandemic, increased demand for natural gas as older coal power plants are retired, and lack of sufficient pipeline capacity to get natural gas to markets have caused the cost of this natural gas to increase. These forces combine to increase the cost to produce the electricity you use in your home. These fuel costs are passed on to your electric utility which passes them on to you.

Right now utilities across the US are facing rapidly rising costs for natural gas which have more than tripled in the past year. In Europe natural gas prices are up to ten times higher than here in the US, small consolation as increasing amounts of US natural gas is being liquefied and shipped to international markets, which further increases pressures on natural gas prices. This is not a situation that is unique to us and even profit driven utilities such as FPL have had to raise their rates due to these costs, with additional rate increases likely in the coming months. Unlike many utilities however we have been able to minimize these rate hikes due to a couple of positive factors in our favor:

• 1. We have reduced our reliance on natural gas by being a part owner of the FMPA St Lucie Project, a Nuclear Power Plant investment from which we’ve received energy since the 1980s. This produces 36% of our electricity and because of how nuclear works it does so with a much more static cost across its lifetime. This power plant will remain a low-cost and carbon-free feature of our portfolio at least through 2043.

• 2. Coal plays a small part in our portfolio by being a part owner of the FMPA Stanton I Project, a coal plant investment from which we’ve received energy since the 1980s. This produces up to 10% of our electricity over the course of a year and is scheduled for retirement by year-end 2025 when it will be replaced by solar energy.

• 3. We invested in our own 1.7MW solar field. In 2017 we opened our own solar field on top of an old landfill and this is able to produce a portion of our electricity. This produces up to 0.75% of our electricity over the course of a year. While it’s the most expensive cost of power in our portfolio it is constant in price and has zero air emissions.

• 4. We’ve committed to significant increases in renewable energy purchases such as solar. We have signed contracts for solar energy from three massive solar fields totaling 36.55MW covering hundreds of acres. These projects are currently in the process of being designed, permitted, and constructed. As these start producing power for us in late 2023, 2024, and 2025 we will see our reliance on natural gas lessen which will allow our fuel cost to not just decrease but to become much more stable over the long term.

In addition to these steps we have taken, and continue to take, to reduce our reliance on natural gas we are also updating our electric transmission & distribution system to both improve efficiency and improve reliability, making what fuel we use go further for you.