Florida Power & Light Company, a subsidiary of FPL Group (NYSE: FPL), today announced that it will move forward with a $2 billion investment to modernize two power plants while reducing company staffing levels by about 300 positions as a result of the currently difficult economy. The actions will benefit FPL customers by delivering customer benefits for decades to come, including fuel savings and improvements in environmental performance and reliability, while keeping current operating costs in line. “These decisions were not easy, but we believe that the near-term focus on keeping operating costs in line while continuing to invest in our infrastructure to deliver the best value, service and reliability over the long term represents a balanced and responsible approach to meeting the needs of our customers,” said FPL President and CEO Armando J. Olivera. Capital Projects FPL suspended activity on the modernizations in January in order to appropriately evaluate the impact of a rate case decision, including its effect on FPL’s creditworthiness and implications for the cost of capital. Following an in-depth analysis, the company determined it is appropriate to move ahead with the modernizations of its Riviera Beach and Cape Canaveral power plants. FPL estimates that the new units will save customers $850 million to $950 million over the life of the plants as compared to keeping the existing facilities in the fleet. In addition, the new units will improve air quality by reducing particulate emissions by 88 percent at these sites and improve the plants’ carbon dioxide emission rate by more than 50 percent. Furthermore, the new plants don’t require any additional use of water or land. The modernizations of the two plants will create demand for 1,300 direct and 4,000 indirect jobs during the construction period. The units will go into service in 2013 and 2014, as originally planned.
“Since the rate case decision, we have been downgraded by two rating agencies and are on negative watch by another. We strongly believe that the Florida Public Service Commission underestimated the actual cost of FPL’s equity in the recent base rate proceeding. This continues to be a source of concern to us. At the same time, an in-depth analysis has made it clear that the modernizations at Riviera Beach and Cape Canaveral continue to show a substantial benefit for our customers. As a result, we will move forward with the projects. Implicit in this decision, of course, is the recognition that we must demonstrate to the PSC throughout the service lives of these important investments, the need for a fair and appropriate return to the investors who will help to make these and other projects a reality,” Olivera said.FPL had also suspended activity on its proposed natural gas pipeline. The company said today that Florida still needs a third natural gas pipeline to enhance fuel security and give customers access to additional markets. However, given a revised load forecast, new natural gas supplies are not projected to be needed until 2016. As a result, FPL will be evaluating options in 2011 for developing a third pipeline in the future. Staffing Reductions FPL also announced today that it will reduce its staffing levels by a net of about 300 positions, or less than 3 percent, primarily due to the difficult economy and a dramatic reduction in new housing construction that has reduced the need for positions to support that activity. These changes have been developed such that they will have no impact on the service that the company provides existing customers. To mitigate the impact on employees, the company is offering a voluntary enhanced retirement plan in affected parts of the business.
The company expects that about 425 employees in total will be affected, including approximately 85 bargaining unit employees. The company estimates that about 220 employees will accept the voluntary enhanced retirement offer, significantly reducing the number of employees who will be involuntarily affected. In addition, the company expects to do some selective hiring based on specific needed skills. As a result, the company estimates a net reduction of about 300 positions in 2010.“We had hoped to avoid the necessity of staffing reductions because we recognize the hardship this creates. However, the most recent customer and sales projections for 2010 and beyond now have dropped even lower than the levels we had forecast as a part of our rate case filing, notwithstanding a short-term, weather-driven revenue increase in the first quarter. New housing construction, which drives so much of our workload and growth, is at an all-time low – 69 percent below the levels we were seeing in 2007. We do not believe it will return to pre-2008 levels for a long time. Moreover, we are continuing to experience a drop in existing customer use of electricity. To give some context, our weather-normalized kWh sales are down more than 4 percent since their peak in 2007. As a result, it has become very clear that we have to align our staffing levels relative to the most recent sales projections,” Olivera said in an announcement to employees today. “I recognize the hardship this creates for individuals, especially in a difficult economy, and I personally regret the impact of a job loss on any FPL employee,” Olivera said, adding that the company will work hard to place affected employees in open positions and will offer severance and outplacement benefits to eligible employees. Florida Power & Light Company Florida Power & Light Company (FPL) is the largest electric utility in Florida and one of the largest rate-regulated utilities in the United States. FPL serves approximately 4.5 million customer accounts in Florida and is a leading employer in the state with 10,500 employees. The company consistently outperforms national averages for service reliability while customer bills are below the national average. A clean energy leader, FPL has one of the lowest emissions profiles and one of the leading energy efficiency programs among utilities nationwide. FPL is a subsidiary of Juno Beach, Fla.-based FPL Group, Inc. (NYSE: FPL). For more information, visit www.FPL.com. Cautionary Statements And Risk Factors That May Affect Future Results In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL) are hereby providing cautionary statements identifying important factors that could cause FPL Group's or FPL's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of FPL Group and FPL in this news release, on their respective websites, in response to questions or otherwise. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance, climate change strategy or growth strategies (often, but not always, through the use of words or phrases such as will, will likely result, are expected to, will continue, is anticipated, aim, believe, could, should, would, estimated, may, plan, potential, projection, target, outlook, predict and intend or words of similar meaning) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could cause FPL Group's or FPL's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of FPL Group and FPL.
Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.The following are some important factors that could have a significant impact on FPL Group's and FPL's operations and financial results, and could cause FPL Group's and FPL's actual results or outcomes to differ materially from those discussed or implied in the forward-looking statements: FPL Group and FPL are subject to complex laws and regulations and to changes in laws and regulations as well as changing governmental policies and regulatory actions. FPL holds franchise agreements with local municipalities and counties, and must renegotiate expiring agreements. These factors may have a negative impact on the business and results of operations of FPL Group and FPL.