Lakeland Electric News Blog: Emergency Fuel Rate Adjustment, Power Generation Replacement Plan
Emergency Fuel Rate Adjustment
LAKELAND, FL (April 7, 2020) | The Lakeland City Commission voted yesterday to lower the electric fuel charge for Lakeland Electric customers for May and June. After giving a presentation Monday, April 6, at the Utility Committee meeting, staff recommended an emergency fuel rate adjustment to provide emergency relief to customers in the midst of the COVID-19 pandemic. The fuel charge will be lowered by $7.00 from $27.00 per 1000 kWh to $20.00 per 1000 kWh for May and June. This emergency fuel rate is expected to be restored to its normal rate in July.
The fuel charge will change to 2¢ per kilowatt-hour (kWh). Multiplying the fuel charge by 1,000 kWh, the amount an average residential home utilizes in a month, the cost equals $20.00 per 1,000 kWh for fuel.
Lakeland Electric is accelerating the under-recovery of the fuel reserve to provide emergency relief for customers. This 26% emergency fuel rate decrease is in addition to the 17.5% fuel rate decrease that began April 1. Lakeland Electric will return to the Utility Committee in June for its regularly scheduled fuel rate update. The utility expects to propose restoring the fuel rate to approximately the April fuel rate for the next quarter (July/August/September.) The April fuel rate of $27.00 per 1000 kWh was Lakeland Electric’s lowest fuel rate in 19 years.
As with most electric utilities that generate their own power, the cost of fuel is passed directly to customers. This makes the fuel charge an important part of Lakeland Electric’s ongoing effort to keep our customer’s electric costs low.
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Power Generation Replacement Plan
LAKELAND, FL (April 7, 2020) | The City of Lakeland’s Utility Committee unanimously approved an advisory vote today on Lakeland Electric’s plan for replacement power generation. Lakeland Electric’s coal-fired generator will be mothballed by Fall 2024 and will leave 139 megawatts (MW) of generation capacity to be filled. The utility’s plan to replace the power generation capacity includes a combination of internal combustion engines, solar power, battery storage, and power purchase agreements.
The plan calls for the purchase of five natural-gas fired internal combustion engines with approximately 100 MW total capacity. The internal combustion engines have extremely fast start times and ramp rates, making the units uniquely able to meet peak demand requirements and also manage capacity fluctuation typical of solar power. Lakeland Electric plans to add 50 – 75 MW of solar with 10% of battery storage. The new solar farm is likely to be located on land owned by the City of Lakeland. The solar panels will occupy the land for the next 25 years. The remaining capacity needs will be filled by demand management, interruptible load, and power purchase agreements. With this plan, Lakeland Electric is on track to reduce its carbon footprint by 67% since 2001 and will continue to provide affordable, dependable, and sustainable power to its customers.
To complete this plan, the utility will borrow $110 million through a variety of options, including bonds and bridge loans. An estimated 3.5% base rate increase is expected by 2023, less than the rate of inflation. The utility acknowledged during the meeting that changes in credit markets might cause modifications to the plan, and the Utility Committee will be advised throughout the process.
The utility will return to the Utility Committee for approval of purchase contracts, to issue debt, or for other necessary actions. Lakeland Electric believes this plan is the best long-term strategy to modernize the power generation portfolio and prepare the utility for a better operational, environmental, and financial future.