23 Companies Earn Fpl Rate Cuts
Written by Scott Blake on May 16, 2013
By Scott Blake
It’s been about a year and a half since Florida Power & Light Co. decided to try its hand at economic development. So far, there have been victories large and small, but FPL hasn’t been swamped by companies taking up its offers.
Lynn Pitts, director of FPL’s Office of Economic Development, says the program faces challenges such as awareness in the business community and a sluggish economy.
"We’re trying to change people’s attitudes," Mr. Pitts said this week. "It’s taking a while for people to get to put it in front of their minds."
A thrust of FPL’s effort has been a program offering companies electric rate discounts in exchange for expanding or relocating in Florida and creating jobs.
So far, the program has attracted 23 takers, including two major projects in South Florida — a new Univision/ABC television network studio in Doral that’s supposed to create 346 jobs, announced in October, and most recently, last week’s announcement that rental car giant Hertz Corp. is moving its headquarters from New Jersey to the Fort Myers area, creating about 700 jobs.
Mr. Pitts acknowledges that FPL’s discounted rate program wasn’t primarily responsible for drawing those and other companies, but the program "sweetened the pot" of local and state incentives that played a major role in those decisions.
FPL’s program got off to a slow start.
"There just wasn’t much activity for the first six to eight months," Mr. Pitts recalled. "But it’s been picking up and we’re seeing more project activity."
In January, FPL followed up its rate discount program by unveiling a new website, www.PoweringFLorida.com, which is a compilation of data that businesses, site selectors and designated economic development agencies across the state might use when a business is considering whether to expand or relocate in certain cities.
Of the 23 projects that so far have used FPL’s discount program, eight or nine have already qualified for rate discounts while the rest are ongoing projects that are expected to receive discounts in the future.
Several of those projects have been in Miami-Dade and Broward counties — including new Publix supermarkets in Hialeah and Pinecrest, each slated to create 50 jobs.
Overall, the 23 projects are supposed to create about 2,900 jobs, according to FPL. The company’s largest customer base is in Southeast Florida, but its entire territory runs along Florida’s East Coast from Jacksonville down through Miami and up the West Coast to the Tampa area.
But there is a limit to how much revenue FPL, the state’s largest utility company, is willing to sacrifice for the rate discounts. That number is capped at $3 million a year, Mr. Pitts said.
Large projects get large savings in their electric bills. For example, the Univision project is expected to receive $150,000 to $200,000 worth of electric rate discounts over four to five years, the life of the program. And Hertz is expected to get about $125,000 worth of rate discounts over the same period, according to Mr. Pitts.
However, not to let down its shareholders, FPL does make up some or all of the revenue lost through the discounts by raising its rates across its entire customer base, both commercial/ industrial and residential, which Mr. Pitts said only amounts to "pennies" in increases in individual electric bills because it is spread out so vastly.
These are the details of how the discounts work: A new or expanding business that adds a minimum of 350 kilowatts a month of new electric load and creates at least 10 new jobs per 350 kilowatts of added load can apply for the reduced rates.
However, beginning June 1, the benchmark for qualifying for the reduced rates will go up. After that date, businesses will have to create 25 new jobs per 350 kilowatts of added electric load.
The discounts apply to a company’s standard base energy and demand charges over four years, providing a 20% discount in the first year; 15% in the second year; 10% in the third and 5% in the fourth.
As an extra incentive to stimulate the use of existing vacant property, businesses adding the required new electric load and new jobs in commercial or industrial space that has been vacant for more than six months will receive five years of discounts instead of four, beginning with a 25% discount in the first year, declining by 5% each year thereafter.
Mr. Pitts said companies entering the program was must sign an agreement, which includes a pledge that they will create the number of jobs specified. He said FPL generally doesn’t intend to check up on the companies, but the Florida Public Service Commission, which regulates utilities, has the authority to audit the companies to determine if they have fulfilled their promises.
Regarding the Hertz project, state officials said it wouldn’t have been possible without a strong partnership at the state and local levels that included economic development agencies in the Fort Myers area and FPL. The project is expected to be a nearly $69 million investment.
"We did not make the decision to relocate lightly," Hertz Chairman and CEO Mark Frissora said in a statement last week. "We wanted to know that Florida was not only attractive to us as a company, but also for our employees… Florida is a great place to run a business and raise a family and we are proud to be able to call this our new home."
In addition to the FPL discounts and use of its data website, the Hertz package of incentives included tax credits, tax refunds and workforce training reimbursement grants.
While FPL also contributed to the Univision deal, Gov. Rick Scott’s office, Enterprise Florida (the state’s economic development agency), and the Beacon Council (Miami-Dade’s economic development partnership), took the lead in the project, which was expected to be a $274 million capital investment.
The new English-language TV news network is to target the growing Hispanic market and be based at the Univision studios in Doral.
"The new ABC-Univision network will be headquartered in a state-of-the-art facility and will retain and attract the very best talent in the industry, creating a thriving and dynamic production hub," Univision Networks President Cesar Conde said at the time.
Meanwhile, FPL’s Powering-Florida website offers two sets of services:
nOne-stop shop for site selectors: The website provides thousands of site-selection experts across the globe with direct access to information about Florida’s workforce, available real estate, utility rate options, and potential discounts and incentives — all information important to selecting a location for a new or expanding business.
nMarket resource center for local economic development organizations: The website also provides local agencies in Florida with tailored data about their communities that can help them better market their strengths and target businesses best-suited for their specific economic and workforce profiles.
Said Mr. Pitts: "Never before has all this information existed in one place."To read the entire issue of Miami Today online, subscribe to e-MIAMI TODAY, an exact digital replica of the printed edition.