Florida Power & Light Co. (FPL) has received approval from the Florida Public Service Commission (PSC) to acquire and phase out the Cedar Bay Generating Plant, a coal-fired facility located in Jacksonville, Fla.

FPL has been buying power from the 250-MW plant under a long-term contract since 1988. The deal was not set to expire until 2024, but FPL said that upon taking ownership of the plant, it intends to immediately terminate the contract. By doing so, it expects to save customers more than $70 million annually because the company can generate electricity at a much lower cost today than what was agreed to in the contract.

“As we continue to look for ways to improve the efficiency of our system and keep costs down for our customers, this plan is another smart step forward to serve our customers with affordable clean energy now and in the future,” said Eric Silagy, CEO of FPL.

In March, FPL petitioned the PSC with an initial proposal and then the company worked with the Office of Public Counsel to refine it. In July, FPL and the Office of Public Counsel jointly filed a revised proposal in the form of a settlement agreement, which the PSC approved today.

Several environmental groups support the plan.

“We applaud the PSC for approving this proposal that will reduce carbon emissions,” said Eric Draper, executive director of Audubon Florida. “Utilizing cleaner fuel sources like natural gas and solar result in lower emissions and groundwater use compared to coal-fired power plants.”

The Sierra Club, Natural Resources Defense Council, and The Nature Conservancy were also said to be in favor of the proposal.

FPL said it would reduce Cedar Bay plant operations by 90% upon taking ownership. The plant is not expected to operate more than about 5% of the time based on its true economics. According to the company’s current analysis of operational needs, it expects to permanently decommission the plant in a couple of years. That will likely be after a new interstate natural gas pipeline enters commercial operation, which is expected in 2017.

FPL has been strategically phasing out older, less-efficient fossil fuel plants and replacing them with new, high-efficiency natural gas energy centers that it says use approximately one-third less fuel per megawatt-hour. But the company is not just interested in using natural gas. In June, FPL announced that it wants to invest directly in natural gas exploration and production as a means of securing future gas supplies and guarding against price volatility.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)