OUC's Stanton solar energy farm is seen with the cooling towers of the Curtis H. Stanton Energy Center behind it. OUC says solar power will help offset increases in customers' power bills. Photo taken Tuesday, December 14, 2021. (Joe Burbank/Orlando Sentinel) (Joe Burbank/Orlando Sentinel)

OUC expects to hike bills a third and potentially fourth time this year because of surging prices for natural gas that fuels generators, but the Orlando utility expects to soon cross into the anticipated era in which solar is a less costly source of electricity that prevents bigger rate increases.

Orlando Utilities Commission is preparing to indefinitely close its long-standing program of locking in a rate for customers subscribing to electricity from the utility’s solar panels. With final approval of a rate hike in October, OUC’s solar energy will then be less expensive than conventional energy coming from coal and natural gas generators.

The utility intends to blend its unsubscribed solar energy into the main pool of electricity as a way to help hold down further rate increases. OUC’s production of solar energy is modest, not as much as any of the utility’s half-dozen coal and natural gas generator systems, but is growing rapidly toward supplanting nearly all reliance on fossil fuel in fewer than 30 years.

“We are not alone,” said OUC’s chief financial officer, Mindy Brenay, citing a spike in electricity rates among Florida utilities. Orlando’s utility serves Orlando, parts of Orange County and St. Cloud. “They are running in the same situation.”

OUC raised its electricity charge by $2.50 to $121.50 in January for a bill of 1,000 kilowatt-hours, which is nearly the average monthly residential usage and a benchmark figure that utilities commonly rely on for comparisons.

A hike of $12 to $124 came in June and another for $13 to $137 is proposed for approval by utility commission members in next month. In all, 2022 is set for what is thought to be the largest annual increase in rates in the utility’s history.

Utilities typically do accounting for power bills by breaking them into two main components: the personnel, capital and other costs for generating electricity and the raw fuel needed to run generators.

Utilities such as Florida Power & Light Co. and Duke Energy are regulated by the state and must follow schedules for rate increases due to fuel costs. As a city–owned power provider, OUC is exempt from many regulations and has more flexibility for the timing of rate adjustments.

The pandemic flattened production of natural gas but demand and prices have since shot up.

A view of the new Floating Solar Array at Orlando International Airport, Thursday, December 10, 2020, as seen from Terminal C parking. The array is among the few in the U.S. to have a floating installation and creates a 19,350-square-foot island comprised of 360 individual solar panels. The project is a joint operation between Orlando Utilities Commission (OUC) and OIA. (Joe Burbank/Orlando Sentinel) (Joe Burbank/Orlando Sentinel)

OUC already has depleted a reserve fund specifically managed to buffer any wide swings in the price of natural gas and coal.

Going forward, the utility will be dipping into a general reserve fund designed to absorb unexpected costs for the utility overall. Drawing from the general reserve fund is an unusual move, but not doing so would have meant a $16.50 hike proposed for October, rather than $13.

Also a factor is OUC’s difficulty in obtaining coal because of rail transportation issues. The utility plans to stop using coal by 2027 but in the meantime relies on the fuel for financial advantages. A year ago, coal provided 44 percent of OUC’s electricity but only 24 percent currently.

A financial presentation reviewed by an OUC committee last week shows that another, undetermined rate hike will come in January to stop the draining of the general reserve fund and to begin a long period of replenishing both reserve funds.

But, said Brenay, a rate hike could come later this year if the onset of winter is more severe than expected and brings a jump in demand and price for natural gas.

Next steps, according to the OUC committee presentation, include bolstering funding for OUC’s Project CARE.

Administered by the Heart of Florida United Way, the program provides eligible households with assistance of as much as $500 annually. Details are at OUC.com/Assistance

Another step is to “evaluate fuel markets to determine potential future fuel price increases.”

But a bright spot for fuel price stability, which utilities yearn for, is OUC’s cost of solar energy.

OUC’s current selling price for solar energy is 12.5 cents per kilowatt-hour, which is enough energy to turn on 10, 100-watt bulbs for an hour. The price for conventional energy is 12.4 cents.

With the October rate increase, the price for conventional energy will rise to 13.7 cents per kilowatt hours, while solar energy remains unchanged.

There are many ways to financially compare solar versus fossil fuel, with the costs of battery and other storage of solar electricity for use at night still a moving target.

But assertions that solar energy competes now with natural gas and coal has moved far beyond environmental groups to being a matter of fact among utility leaders.

“If ever there was a time to lean in, it’s now,” said Susannah Randolph, a Senior Campaign Representative for Sierra Club’s Beyond Coal Campaign in Florida, who has long called on OUC to transition more rapidly away from fossil fuels.

“OUC is just out of excuses as to why they can’t fully transition to clean, renewable energy that doesn’t involve volatile and expensive fuel like gas,” Randolph said.