Case Background
On June 2, 2016,
Duke Energy Florida, LLC (Duke or Company) filed a petition for approval of
modifications to its Interconnection Agreement (Agreement) contained in the
approved tariff. The Agreement was created in 2014 by Order No.
PSC-14-0589-PAA-EI, which separated the Company’s as-available tariff from the
Agreement for Qualifying Facilities (QFs). The agreement was last modified in 2015 by
Order No. PSC-15-305-PAA-EQ along with Duke’s Standard Offer Contract.
On July 21, 2016,
the Commission suspended the agreement to allow sufficient time for Commission
staff to review the application and gather pertinent information.
The Commission has jurisdiction over this matter pursuant
to Sections 366.03, 366.04, 366.05, and 366.06, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission approve Duke’s proposed
modifications to the Interconnection Agreement contained in its approved
tariffs?
Recommendation:
Yes. Staff recommends the Commission approve Duke’s
modifications to its Interconnection Agreement as shown in Attachment A. The
new requirements clarify that the Agreement is intended for interconnections
with Duke only and improves security to ratepayers by requiring insurance similar
to other contracts. The proposed tariff modifications should not place an undue
burden on QFs that seek to interconnect with Duke’s system and deliver power to
the Company. (Wooten)
Staff Analysis:
In its petition Duke proposes to make certain
changes to the approved tariff sheets 9.700 through 9.715 which contains the
terms and conditions of Duke’s Interconnection Agreement for QFs. The Company
submitted a total of 15 revised sheets of the Interconnection Agreement. The type-and-strike
format versions of the revised tariff sheets are included as Attachment A to
this recommendation.
Interconnection Agreement Modifications
In its petition and in response to staff data requests,
Duke notes that some of the proposed tariff changes are meant to reflect that
the Agreement is to address non-Federal Energy Regulatory Commission (FERC)
jurisdictional interconnections only. For example, proposed tariff sheet 9.700,
paragraph 1.0 is modified to reflect that all net output will be sold to Duke. As
a result, any QF wishing to sell power to another party would instead, use the
Company’s FERC interconnection tariff, instead of the proposed Agreement.
The proposed Agreement includes a new component to the
preliminary cost study, a Feasibility Study, which is meant to provide a list
of options available to the QF for its interconnection to narrow the analysis in
determining costs. The estimated interconnection costs for all feasibility studies
for a 50 MW QF is less than $70,000, or approximately $0.0014/watt. Section
4.2.2 on proposed Tariff Sheet 9.705 also adds a requirement that the QF
provides cash or a letter of credit to Duke prior to interconnection field work
being conducted. These new requirements seem reasonable, in that the Feasibility
Study allows a QF to determine its desired interconnection option, while the credit
requirement protects the Company’s ratepayers in the event a QF would not
reimburse Duke for interconnection costs.
Section 12 of the proposed Agreement adds liability
insurance requirements, including consequences that clarify the results of
failing to acquire or maintain insurance coverage. The minimum liability
insurance requirement is $1,000,000 per occurrence for bodily injury or
property damage. While this increases costs to QFs, the requirement represents
a reasonable practice and the language is similar to the insurance requirements
included in the Company’s Standard Offer Contract.
Additional legal terms are added to the agreement,
including events of default, termination, assignment, references to controlling
statutes, and representations that the parties are capable of legally
conducting the agreement. These terms are reasonable and provide clarity in the
event of a dispute regarding the contract terms. Other revisions to the
Agreement include modifications to terminology and definitions with minor
substantive changes.
Conclusion
Staff recommends the Commission approve Duke’s
modifications to its Interconnection Agreement as shown in Attachment A. The
new requirements clarify that the Agreement is intended for interconnections
with Duke only and improves security to ratepayers by requiring insurance
similar to other contracts. The proposed tariff modifications should not place
an undue burden on QFs that seek to interconnect with Duke’s system and deliver
power to the Company.
Issue 2:
Should this docket be closed?
Recommendation: Yes.
If a protest is filed within 21 days of the issuance
of the order, this tariff should remain in effect, with any revenues held
subject to refund, pending resolution of the protest. If no timely protest is
filed, this docket should be closed upon the issuance of a consummating order. (Trierweiler)
Staff Analysis:
If a protest is filed within 21 days of the issuance
of the order, this tariff should remain in effect, with any revenues held
subject to refund, pending resolution of the protest. If no timely protest is
filed, this docket should be closed upon the issuance of a consummating order.
