Florida utility says its cheapest power plant is still offline, and the outage has cost $8 million

A prolonged outage at Gainesville Regional Utilities' lowest-cost power plant is now hitting Florida customers in the wallet.

GRU leaders say the shutdown has already added $8 million in costs, another example of infrastructure breakdowns filtering down to households through utility bills.

What happened?

During the July 1 meeting of the GRU Authority, members were told that the Kelly plant is still out of service. Utility officials describe Kelly as GRU's least expensive power source, and the current outage is attributed to a mechanical issue with the rotor.

According to the Alachua Chronicle, CEO Ed Bielarski said the plant's outage is the reason GRU's fuel adjustment charge remains higher.

Because GRU is "not able to partake of some of that cheap power," Bielarski said the fuel adjustment will remain at 50 mills in July. Alachua Chronicle reported that the utility now expects Kelly to stay offline until late July or early August.

While Kelly remains unavailable, GRU has been purchasing replacement electricity from Florida Power & Light — as much as 75 megawatts during the summer — under a contract priced between $23 and $29 per megawatt. Bielarski said that bought power costs more than electricity from Kelly, but the Alachua Chronicle reported it is still cheaper than what GRU can produce on its own right now.

The board also discussed GRU's ongoing litigation with the City of Gainesville over governance of the utility. Chair Eric Lawson said the dispute could continue even if the board wins the current appeal, and Authority Attorney Scott Walker agreed, raising the prospect of additional legal costs.

Why does it matter?

When a utility's cheapest plant goes offline, customers can quickly lose the benefit of lower-cost electricity. In this case, GRU said the outage has already contributed to millions in extra costs and is keeping a higher fuel charge in place, even as natural gas prices have eased.

Bielarski defended relying on retrofitted fossil fuel infrastructure, saying new construction is too expensive right now. But older or heavily modified systems can still suffer major breakdowns that disrupt the economics of service.

The legal fight with the city could add another layer of expense. Chair Eric Lawson warned that if litigation drags on, "those costs will come out of the [general fund] transfer" — money that affects the utility's broader financial picture.

What's being done?

GRU is working to return the Kelly plant to service, with restoration currently targeted for late July or early August. Until then, the utility is depending on purchased power and running Deerhaven 2 on gas at up to 220 megawatts to preserve reliability.

Bielarski said, according to the Alachua Chronicle, that buying outside power means GRU does not have to run Deerhaven 1 as heavily, which could help extend that plant's life. He argued that this is a more affordable option than rushing into costly new construction.

Bielarski explained that he has instructed staff to create daily reports on possible water leaks so customers can be contacted, though automated alerts are still likely nine to 12 months away because two software systems are not yet exchanging data properly.

"Nobody wants to see higher electric bills, and we're doing our best to try to minimize those, but we have to have reliability, at the same time," Bielarski said.

Lawson added: "This is going to be an ongoing issue, potentially, even if the Authority prevails."

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