Case Background
Section
366.91(3), Florida Statutes (F.S.) requires that each investor-owned utility
(IOU) continuously offers to purchase capacity and energy from renewable energy
generators. Florida Public Service Commission (Commission) Rules 25-17.200
through 25-17.310, Florida Administrative Code (F.A.C.), implement the statute
and require each IOU to file with the Commission by April 1 of each year, a Standard
Offer Contract based on the next avoidable fossil fueled generating unit of
each technology type identified in the utility’s current Ten-Year Site Plan. On
April 1, 2016, Florida Public Utilities Company (FPUC) filed a petition for
approval of its new Standard Offer Rate Schedule and Standard Offer Contract to
replace its existing Renewable Energy (REN) Tariff and its Cogeneration (COG) Tariff,
in accordance with the rules cited above and Rules 25-9.003, 25-17.0825, and
25-17.0832, F.A.C.
Because FPUC
does not own or operate any electric generating units, it does not have any
avoidable units on which to base its Standard Offer Contract. Rule
25-17.250(1), F.A.C., requires that, under these circumstances, the Standard Offer
Contract be based on avoiding or deferring a planned purchase. FPUC purchases
all of its electric power through purchased power agreements in its Northeast
Division from JEA, and in its Northwest Division from Gulf Power Company (Gulf).
On August 11,
2016, FPUC amended its filing to reflect revisions needed based on its review
after the original filing of April 1, 2016. On September 27, 2016, FPUC amended
its filing with Tariff Sheet Nos. 18 and
24.0 to reflect revisions to the amended filing of August 11, 2016. FPUC also
revised its responses to staff’s data requests based on its amended filings.
The Commission
has jurisdiction over this Standard Offer Contract pursuant to Sections 366.04
through 366.06 and 366.91, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve the new Standard Offer
Rate Schedule and Standard Offer Contract filed by Florida Public Utilities
Company?
Recommendation:
Yes. FPUC’s new Standard Offer Rate Schedule and Standard
Offer Contract conform to all the requirements of Rule 25-17.0825 and Rules
25-17.200 through 25-17.310, F.A.C., and reflect the avoidable costs associated
with FPUC’s power purchase agreements. Staff recommends that the Rate Schedule
and Standard Offer Contract filed by FPUC be approved as filed. (Lee)
Staff Analysis:
Pursuant to Rule 25-17.250, F.A.C., an IOU
must continuously make available a standard offer contract for the purchase of
firm capacity and energy from renewable generating facilities (RF) and small
qualifying facilities (QF) with a design capacity of 100 kilowatt (kW) or less.
FPUC does not own or operate any of its own electric generating facilities and
thus does not file a Ten-Year Site Plan. Instead, FPUC purchases its electric
energy under long-term, full requirements contracts with wholesale providers.
The proposed standard offer rate schedule consists of
three components: (1) the Standard Offer-As Available schedule (SOA); (2) the
Standard Offer- Firm Schedule (SOF); and (3) the Standard Offer Contract. The
SOA and SOF consolidate FPUC's previous REN and COG tariffs. FPUC states that
the new consolidated tariff and Standard Offer Contract have been crafted to
comply with the provisions of Chapter 25-17, including Rule 25-17.0825 and Rule
25-17.0832, as they apply to purchases
of energy and capacity from RF/QF operators. FPUC’s new Standard Offer Contract
and rate schedule, with the amended schedules filed on August 11, 2016, and
September 27, 2016, is provided as Attachment A. Similar to FPUC's previous REN
and COG tariffs, the capacity and energy payments under the proposed rate
schedule depend on the terms of FPUC’s wholesale contracts with its suppliers
for FPUC's Northeast Division and Northwest Division.
Northeast Division
At present, JEA is the full
requirements supplier for FPUC's Northeast Division, which consists of
Fernandina Beach and Amelia Island. FPUC’s revised responses to staff’s data
request provided the estimates of the annual payments to an operator with a 20
MW facility operating at a capacity factor of 80 percent, for a RF/QF operator
located inside the service territory. FPUC estimated that its annual capacity
and energy payments would be approximately $3.5 million and $7.9 million
respectively, based on the full reduction in JEA billing to FPUC that would
include the capacity, energy, environmental, fuel and line loss components.
Northwest Division
At present, Gulf is the full requirements
supplier for FPUC's Northwest Division, which consists of portions of Jackson,
Calhoun, and Liberty counties. FPUC’s revised responses to staff’s data request
provided the estimates of the annual payments to an operator with a 20 MW
facility operating at a capacity factor of 80 percent, for a RF/QF operator
located inside the service territory. FPUC estimated that its annual capacity
and energy payments would be zero and $8.25 million respectively, based on the full reduction in Gulf’s billing
to FPUC that would include the capacity, energy, environmental, fuel and line
loss components. Payments for capacity are projected to remain at zero because
there is no reduction in FPUC’s capacity payment to Gulf due to the “ratchet
provision” included in FPUC’s contract with Gulf. This provision set a minimum
capacity and precludes any decrease in demand payments to Gulf based on a
decrease in the overall demand or the addition of generation resources.
Other Contract Terms
Both the SOA (at Sheet No. 18) and
the SOF (at Sheet No. 24.0) include updated language to better address line
losses and potential issues associated with the location of the RF/QF operators,
consistent with Rule 25-17.0825 for the SOA and Rule 25-17.0832 for the SOF. This
ensures appropriate accounting of the transmission cost impact due to the
location of the RF/QF operators and deliveries are made without creating
transmission line constraints on FPUC’s system. The Standard Offer Contract
also includes additional language at Sheet No. 32, to clarify situations in
which FPUC can disconnect the qualifying facilities for unsafe conditions and
circumstances under which FPUC will reconnect to the qualifying facilities.
These are similar to provisions in standard offer contracts of other IOUs but
were not addressed in FPUC’s previous Standard Offer Contract.
The proposed
schedule relies upon the cost of FPUC’s underlying full requirements suppliers
as the basis for its calculation of energy payments to qualifying facilities.
In previously approved tariffs, FPUC's avoided energy payments to qualifying
facilities were identified as being current estimates provided for informational
purposes only, which were based on data of estimated fuel costs of FPUC’s
wholesale supplier. FPUC asserts that its new approach clarifies and refines
its past practice and eliminates example rates, thus preventing confusion. Upon
request, a utility is required by Rule 25-17.0825(5) to provide the most
updated data within 30 days. Staff notes that a similar revision removing
avoided energy cost projections from the renewable energy tariff of Florida
Power & Light Company was approved by the Commission.
In addition,
the proposed schedule includes language at Sheet No. 28 to address situations
in which FPUC may decline to execute standard offer contract and seek relief from the Commission, in
accordance with Rule 25-17.0832(4)(c). Language is also included at Paragraph
13, Sheet No. 16 to address changes in
federal or state regulatory requirements, consistent with the provision considered in Rule 25-17.270, F.A.C.
Conclusion
FPUC’s new Standard Offer Contracts and related rate
schedule conform to all the requirements of Rule 25-17.0825 and Rules 25-17.200
through 25-17.310, F.A.C., and reflect the avoidable costs associated with
FPUC’s purchased power agreements. Staff recommends that the Rate Schedule and Standard
Offer Contract filed by FPUC be approved as filed.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. This docket should
be closed upon issuance of a consummating order, unless a person whose
substantial interests are affected by the Commission’s decision files a protest
within 21 days of the issuance of the Commission’s Proposed Agency Action
Order. Potential signatories should be aware that, if a timely protest is
filed, FPUC’s Standard Offer Contract may subsequently be revised. (Murphy)
Staff
Analysis: This docket should be closed upon the issuance of a
consummating order, unless a person whose substantial interests are affected by
the Commission’s decision files a protest within 21 days of the issuance of the
Commission’s Proposed Agency Action Order. Potential signatories should be
aware that, if a timely protest is filed, FPUC’s Standard Offer Contract may
subsequently be revised.
