Fla. Munis Have Power to Write Their Own Future, Says FMPA
Annual address honors FMPA’s founders and celebrates their gift of self-determination
ORLANDO, Fla., July 21, 2011 – Municipal electric utilities in Florida have the power to write their own future thanks to the courage of their founders, said Florida Municipal Power Agency General Manager and CEO Nicholas P. Guarriello and FMPA Board Chairman Vince R. Ruano in an address to FMPA’s members at the Agency’s annual meeting held today in Palm Beach, Fla.
This year’s address celebrated the silver anniversary of FMPA’s All-Requirements Project (ARP), which began operation in May 1986 and today serves the wholesale electricity needs for 14 cities in Florida.
“ARP’s founding members—Bushnell, Green Cove Springs, Jacksonville Beach, Leesburg and Ocala—proved that it’s not the size of your utility that matters, but the depth of your determination,” said Ruano. “That determination is as strong today as it was when ARP began operation in 1986.”
In recent years, Florida’s municipal electric utilities have weathered a difficult period, as the nation has experienced economic hard times. FMPA responded by developing and executing a strategic plan to regain its competitiveness.
“We have emerged from this difficult era, and FMPA has found its way back to competitiveness. We still have more to do though. We will not rest until we achieve our goal of being the lowest cost wholesale power provider once more,” said Ruano.
“[FMPA has] turned a corner, and we’re ready to go the next mile to achieve our goals. We have the goals, we have a plan, and we have the ability to make it happen. Let’s carry our founders’ gift of self-determination into the future. The power to shape our destiny is truly in our hands. Let’s make the most of it as we write the next chapter of our future,” said Guarriello.
The speech’s full text is included below.
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“The Power Is in Our Hands”
remarks as prepared
Nicholas P. Guarriello, FMPA General Manager and CEO, and Vince Ruano, FMPA Board of Directors Chairman
FMEA-FMPA Annual Conference – Palm Beach, Fla., July 21, 2011
Twenty five years ago, my city, the city of Bushnell, made a decision that would define our future and the future of other cities throughout the state.
Florida Municipal Power Agency was putting together a new power supply project called the All-Requirements Project or ARP. The prospects of savings from this project were conservatively small, but FMPA offered something that no other wholesale supplier could provide, and that’s control of our destiny. This new power supplier wouldn’t just sell us power. We would finally be owners, not just renters, of our power resources.
It wasn’t an easy decision, I can tell you. The Agency was just seven years old with no experience running an all-requirements project. But the people of Bushnell knew that if someone didn’t step up, the new project wouldn’t get off the ground, and there would be no competition in the marketplace. Without ARP, we would remain dependent upon our largest competitors. So, Bushnell signed on to become the first member of the ARP.
Yes, our little system, one of the smallest munis in the state, and the four cities that bravely joined us were enough against great odds to stand up to the market’s largest players. Breaking away to create ARP made wholesale competition a reality in our state and made it possible for systems of all sizes to be owners, not just renters, of our power assets.
ARP’s founding members—Bushnell, Green Cove Springs, Jacksonville Beach, Leesburg and Ocala—proved that it’s not the size of your utility that matters, but the depth of your determination. That determination is as strong today as it was when ARP began operation in 1986.
In recent years, FMPA’s members have weathered one of the most difficult periods in our recent history, just as our nation has been through a historically tough economy. But together, Florida’s municipal electric utilities have survived and, just like 25 years ago, we proved our competitors and naysayers wrong again.
We have emerged from this difficult era, and FMPA has found its way back to competitiveness. We still have more to do though. We will not rest until we achieve our goal of being the lowest cost wholesale power provider once more. The good news is that we have the power to make that happen, thanks to the bold decision 25 years ago to form ARP. We control our destiny, and we will make the most of it.
We are shaping our future by learning from our past. When our fuel mix and above-market fuel costs made ARP rates uncompetitive, we updated our fuel hedging program to more closely follow the market. When the Agency saw the economic hardship our communities faced, the Agency staff tightened their belts, too, holding vacant positions open and trimming spending, like travel and training. Most importantly, FMPA’s members developed a strategic plan that set bold goals for FMPA, and staff developed an action plan to make those goals a reality.
Now, I’d like to welcome to the stage FMPA General Manager and CEO Nick Guarriello to tell you more about that strategic action plan and what it means to our communities.
Thank you, Vince. It has been two years since FMPA’s members approved that action plan, and I am proud to report that we are making progress and regaining our competitiveness. We have completed nearly half of the 45 strategic action items, and another quarter are being executed now.
We’ve made great strides in improving efficiency. In the past five years alone, FMPA has made changes to the ARP generating fleet that will allow us to generate each megawatt of electricity with nearly 9% less fuel. Saving fuel, our largest expense, is good for both consumers and the environment.
More importantly, ARP rates have come down. Many of our above-market hedges have expired, and the natural gas market has stayed low. The average rate for 2011 is projected to be lower than 2010, and 2010 rates were lower than 2009. If you look at the retail electric rate comparison our friends at FMEA produce each month, ARP members are once again competitive on a statewide basis. Recently some have been lower than the IOU average in the state, and in recent months, as many as half have been below the municipal average.
All of this is good news, but we’re not content to rest. The electric utility industry faces major changes ahead. As you’ve heard at the sessions yesterday and today, all of us face important decisions. We must consider how to update our business model to encourage energy conservation. We must find ways to manage fuel price risks. We must plan for the uncertain future facing base-load generation.
FMPA will stay ahead of these changes. In uncertain times, we will work together and decide what’s right for our member communities. Our chief competitors no longer make all the decisions for our utilities. Decisions they made with their interests in mind, not ours. Today, we write our future. As a reminder of this fact, we’ve left at each of your places a small gift, a pen. I hope it will serve as a reminder of the even greater gift our founders have given us. And that’s the power to shape our destiny. The power is in our hands to write our own future.
We honor the gift of independence every time we take a step closer to making our founders’ vision a reality. In recent years, our founders’ hopes and dreams, at times, seemed far away. But FMPA’s members never stopped working to shape a better tomorrow. And today, we can see our progress down that road. We’ve turned a corner, and we’re ready to go the next mile to achieve our goals.
We have the goals, we have a plan, and we have the ability to make it happen. Let’s carry our founders’ gift of self-determination into the future. The power to shape our destiny is truly in our hands. Let’s make the most of it as we write the next chapter of our future.
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Florida Municipal Power Agency (FMPA) is a wholesale power company owned by 30 municipal electric utilities. FMPA provides economies of scale in power generation and related services to support community-owned electric utilities. The members of FMPA serve approximately two million Floridians.