Utility's Hurricane Cost Estimated at $200 Million
By Jim Saunders
Gulf Power faced an estimated $200 million in costs to restore electricity after Hurricane Sally hammered parts of the Panhandle last month, the utility’s parent company told analysts Wednesday during a quarterly earnings call.
While the estimate remains preliminary, Gulf likely will be able to seek approval in the coming months from the Florida Public Service Commission to recoup the money from customers. Hurricane Sally made landfall Sept. 16 in Gulf Shores, Ala., and caused massive flooding and damage in Pensacola and other areas of Florida’s western Panhandle.
Rebecca Kujawa, executive vice president and chief financial officer of NextEra Energy, the parent company of Gulf Power and Florida Power & Light, said during the earnings call that the hurricane caused outages for about 285,000 Gulf customers. She said about 7,000 workers, including FPL employees and contractors, were used to restore power.
“Gulf Power was able to restore service to essentially all impacted customers within five days,” Kujawa said. “We are pleased with the efficient and safe restoration response to Hurricane Sally, which was made more challenging by the ongoing impacts of the COVID-19 pandemic. Our focus on preparation and execution, including our annual storm drills, helped ensure a timely response to the hurricane despite the pandemic.”
Florida utilities have typically been allowed to recover storm-restoration costs from customers, with the possibility of such recoveries built into base-rate agreements approved by the Public Service Commission. The commission, for example, last month signed off on Gulf’s recovery of about $290 million in costs stemming from Hurricane Michael in 2018. The utility began recouping the money last year on an interim basis and later returned to the commission for approval of the final amount.
NextEra, which has long included FPL, closed a deal in January 2019 to purchase Gulf Power from Southern Company and announced this year that it would merge the two utilities. Kujawa said during Wednesday’s earnings call that the Federal Energy Regulatory Commission this month approved what she described as an “internal reorganization” that will allow Gulf to merge into FPL in January.
Gulf is planned to continue as a separate operating division in 2021 with separate rates, but the merged company will file a combined rate proposal in early 2022 at the Public Service Commission. The two utilities serve about 5.6 million customers.
“As we have previously discussed, we expect that FPL and Gulf Power operating as a single, larger Florida utility company will create both operational and financial benefits for our customers,” Kujawa said.
NextEra’s adjusted third-quarter earnings were $1.311 billion, or $2.66 per share, compared to $1.163 billion, or $2.39 per share, in the third quarter of 2019. FPL and Gulf also had increased net income during the third quarter, compared to last year.
Article reposted with permission from The News Service of Florida.