Having been around the electrical energy generation industry for the past three decades, I can tell you that the state of Florida is in desperate need ofa real energy policy.
Unfortunately, the industry in Florida is shackled by outdated legislation and a regulatory structure that protects established interests and prevents independent power entrepreneurs from competing fairly in the marketplace.
Current rules allow the supply of electricity in Florida to be dominated by the state's investor-owned utilities, which control nearly 90 percent of the market for generation. We need a policy that injects free-market principles into a completely state government-controlled electricity market, so Florida can diversify our energy portfolio, create energy security, encourage entrepreneurs and produce high-paying jobs.
In the last 10 years, Florida hasseen a massive surge of natural gas from outside of the state. Currently, natural gas generates more than 50 percent of Florida's electricity and the state has approved its increase to 75 percent over the next decade. The risk with this strategy is a lack of diversity and an overreliance on natural gas that could lead to skyrocketing costs. Just this week in "Forbes" magazine, a financial analyst predicted a quadrupling of natural gas costs -- costs that are then passed directly onto the consumer by the utilities.
The state government, through the Public Service Commission, allows the investor-owned utilities to put all the risk for project overruns, maintenance issues and fuel fluctuations on the ratepayers of Florida. No wise investor would assume all the risk while at the same time investing in one stock, but that is exactly what is happening in Florida's government-controlled electricity market. On the other hand, independent power producers like energy-from-waste facilities and other renewable energy projects could help reduce the volatile cost risk inherent with natural gas, and can provide price stability for homeowners and businesses. But these projects need to be put on a level playing field with large, utility-built projects for that to happen.
Ratepayers are on the hook because the state allows investor-owned utilities to earn a guaranteed profit from newly constructed facilities but does not allow them to make any profit from purchasing independently produced electrical power. By doing this, the state has created a system that encourages utilities to build their own facilities while disincentivizing the purchase of power from independent producers. By simply providing the utilities with the same incentive to purchase power as they are given to build their own power, the state would inject some free-market principles into the monopolized Florida energy market.
Florida needs economic development, jobs and a more reliable energy system. The construction of just one 1,500-ton per day, 50 megawatt energy-from-waste facility can create nearly $1 billion worth of economic activity and create between 300 and 500 direct construction jobs during the three-year construction period. There are approximately 50 direct, permanent high-paying jobs and 65 indirect jobs necessary to operate a facility. With Florida still landfilling over 13 million tons of municipal solid waste annually, there is plenty of economic growth and energy opportunity available if we convert that waste into energy instead.
There is so much potential in Florida to diversify and stabilize our energy system, create energy security, encourage entrepreneurs and produce high-paying jobs, but we need government and its outdated policies to get out of the way and stop protecting the established investor-owned utilities. We need a real energy policy for the state that relies on free-market principles that will ultimately provide the most competitive rates to consumers.
Joseph R. Treshler has worked in the electricity industry for over 30 years. He is currently vice president, business management and development at Covanta Energy, the world's leading energy-from-waste company. Covanta operates five facilities in Florida, producing over 228 megawatts of baseload energy and employs 400 people with a payroll of $40 million.
