Lakeland Electric spent millions to buy electric from Orlando utility in 2022

Lakeland Electric spent more than $8.1 million last year purchasing electricity from Orlando to keep the lights on in homes and businesses across the city.

The utility entered into a three-year power purchase agreement with Orlando Utilities Commission in April 2021 to ensure available power after decommissioning coal-powered McIntosh Unit 3.

Lakeland Electric relied on OUC to provide power in November 2021 where it purchased 50,594 megawatt hours. That's enough electricity to power more than 40,000 residential customers based on average monthly use of 1,200 kilowatt hours. Lakeland Electric paid more than $2.2 million to OUC that month, according to data provided by LE spokeswoman Cathryn Lacy.

The issue was Lakeland Electric took its largest generator McIntosh Unit 5, a natural gas-powered combined cycle unit capable of producing up to 360 megawatts, offline for scheduled maintenance starting Nov. 6, according to Lacy. The plant was offline for over a month through Dec. 9.

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The utility heavily relied on OUC in March 2022, purchasing 16,332 megawatts of generation for similar reasons. Lacy said Unit 5 has a planned outage for scheduled maintenance from March 1 to March 11. This plant outage along with customer demands cost roughly $840,000.

The most expensive power purchases occurred this past summer, as Lakeland Electric bought less electricity from OUC but paid a significantly higher rate. Records provided show power purchased from OUC at about $41.03 per megawatt hour in February rose to roughly $143.60 per megawatt hour in July.

"That is basically due to the higher natural gas pricing became higher in the summer," Paul Shipps, LE's manager of power resources, said. "The cost per megawatt started increasing in May, into June, July and August."

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Lakeland Electric also purchased 6,720 megawatt hours from OUC in July 2022 to meet the city's demand when the pricing was at its highest.

The utility company experienced its own issues with the rising cost of natural gas collided with record-high temperatures across the nation this summer. Lakeland Electric raised its fuel rates from $40 to $60 per 1,000 kilowatt hours as of July 1, then increased them from $60 to $75 starting Sept. 1.

To date, Lakeland Electric spent about $23.4 million in secure the OUC purchase agreement and more than $8.7 million for electricity purchased.

Lacy said Lakeland Electric staff believes the power purchase agreement represents a cost savings of $13 million versus the alternative of having kept Unit 3 running until the next generation RICE Engines could be fully constructed and brought online.

Sara-Megan Walsh can be reached at swalsh@theledger.com or 863-802-7545. Follow on Twitter @SaraWalshFl.

This article originally appeared on The Ledger: OUC sold $8 million in power to Lakeland Electric in 2022