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
generating facilities and small qualifying facilities. The Florida Public
Service Commission (Commission) Rules 25-17.200 through 25-17.310, Florida
Administrative Code (F.A.C.), implement the statute and requires each IOU to
file with the Commission, by April 1 of each year, a revised 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 July 18, 2017,
a final Commission Order was filed approving Florida Power & Light
Company’s (FPL’s) standard offer contract with the Dania Beach Clean Energy
Center denoted as its avoided unit.
Pursuant to Rule
25-17.250(2)(a)2, F.A.C., a standard offer contract should remain open until
the utility files a petition for a need determination for the avoided unit. On
October 20, 2017, FPL filed a petition for a determination of need for the Dania
Beach Clean Energy Center, the 2022 avoidable unit identified in FPL’s current
Ten-Year Site Plan and the basis for the standard offer contract approved in
Docket No. 20170077-EQ, as well as a petition for approval of its revised standard
offer contract and rate schedule. On December 22, 2017, FPL filed an amended
petition correcting the expected in-service date of the specified avoided unit.
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 amended renewable
energy tariff and standard offer contract filed by Florida Power & Light
Company?
Recommendation:
Yes. The provisions of FPL’s revised renewable
energy tariff and standard offer contract conform to the requirements of Rules
25-17.200 through 25-17.310, F.A.C. FPL does not have any avoidable fossil
fueled generating units or avoidable power purchases in the upcoming 10-year
planning period. However, FPL has identified its next avoidable unit rather
than offer only energy payments in its standard offer contract. FPL’s revised standard
offer contract provides flexibility in the arrangement for payments so that a
developer of renewable generation may select the payment stream best suited to
its financial needs. Staff recommends that FPL’s revised renewable energy
tariff and standard offer contract be approved as filed. (Thompson)
Staff Analysis:
Rule 25-17.250, F.A.C., requires that FPL, an IOU,
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 design capacities of 100 kilowatts (kW) or
less. Pursuant to Rules 25-17.250(1) and (3), F.A.C., the standard offer
contract must provide a term of at least 10 years, and the payment terms must
be based on the utility’s next avoidable fossil-fueled generating unit
identified in its most recent Ten-Year Site Plan or, if no avoided unit is
identified, its next avoidable planned purchase.
Due to FPL’s recent need determination filing, its 2017
Ten-Year Site Plan no longer includes any avoidable fossil fueled generating
units. In addition, there are not any long term planned purchases to be avoided
or deferred during the 2017-2026 planning period. As a result, FPL could opt to
offer only a standard contract for energy payments based on its as-available
energy cost. However, in an effort to encourage renewable generation, FPL has
identified its next avoidable unit which is a 1,752 megawatt (MW) natural
gas-fired combined cycle (CC) unit at a greenfield site with an expected
in-service date of June 1, 2028. To reflect the new avoidable unit, cost data
has been revised in FPL’s standard offer contract. The Commission has approved
using a unit outside of the Ten-Year Site Plan planning period previously.
The RF/QF operator may elect to make no commitment as to
the quantity or timing of its deliveries to FPL, and to have a committed
capacity of zero (0) MW. Under such a scenario, the energy is delivered on an
as-available basis and the operator receives only an energy payment.
Alternatively, the RF/QF operator may elect to commit to certain minimum
performance requirements based on the identified avoided unit, such as being
operational and delivering an agreed upon amount of capacity by the in-service
date of the avoided unit, and thereby becomes eligible for capacity payments in
addition to payments received for energy. The standard offer contract may also
serve as a starting point for negotiation of contract terms by providing
payment information to an RF/QF operator, in a situation where one or both
parties desire particular contract terms other than those established in the
standard offer.
In order to promote renewable generation, the Commission
requires the IOU to offer multiple options for capacity payments, including the
options to receive early or levelized payments. If the RF/QF operator elects to
receive capacity payments under the normal or levelized contract options, it
will receive as-available energy payments only until the in-service date of the
avoided unit (in this case June 1, 2028), and thereafter, begin receiving
capacity payments in addition to the energy payments. If either the early or
early levelized option is selected, then the operator will begin receiving
capacity payments earlier than the in-service date of the avoided unit.
However, payments made under the early capacity payment options tend to be
lower in the later years of the contract term because the net present value
(NPV) of the total payments must remain equal for all contract payment options.
Table 1
below contains FPL’s estimates of the annual payments for each payment option
available under the revised standard offer contract. It assumes an operator
with a 50 MW facility, operating at a capacity factor of 94 percent, which is
the minimum capacity factor required under the contract to qualify for full
capacity payments. Normal and levelized capacity payments begin in 2028,
reflecting the projected in-service date of the avoided CC unit (June 1, 2028).
Table 1 - Estimated Annual Payments to
a 50 MW Renewable Facility
(94% Capacity Factor)
|
Year
|
Energy Payment
|
Capacity Payment (By Type)
|
|
Normal
|
Levelized
|
Early
|
Early Levelized
|
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
|
2018
|
11,440
|
-
|
-
|
-
|
-
|
|
2019
|
13,394
|
-
|
-
|
-
|
-
|
|
2020
|
10,973
|
-
|
-
|
-
|
-
|
|
2021
|
11,645
|
-
|
-
|
-
|
-
|
|
2022
|
10,885
|
-
|
-
|
-
|
-
|
|
2023
|
11,133
|
-
|
-
|
-
|
-
|
|
2024
|
12,500
|
-
|
-
|
2,534
|
2,905
|
|
2025
|
12,420
|
-
|
-
|
2,598
|
2,905
|
|
2026
|
13,715
|
-
|
-
|
2,663
|
2,905
|
|
2027
|
14,649
|
-
|
-
|
2,729
|
2,905
|
|
2028
|
13,941
|
4,354
|
4,806
|
2,797
|
2,905
|
|
2029
|
15,373
|
4,463
|
4,806
|
2,867
|
2,905
|
|
2030
|
14,989
|
4,574
|
4,806
|
2,939
|
2,905
|
|
2031
|
15,169
|
4,689
|
4,806
|
3,013
|
2,905
|
|
2032
|
15,902
|
4,806
|
4,806
|
3,088
|
2,905
|
|
2033
|
16,620
|
4,926
|
4,806
|
3,165
|
2,905
|
|
2034
|
15,600
|
5,049
|
4,806
|
3,244
|
2,905
|
|
2035
|
16,001
|
5,175
|
4,806
|
3,325
|
2,905
|
|
2036
|
16,495
|
5,605
|
4,806
|
3,408
|
2,905
|
|
2037
|
16,657
|
5,437
|
4,806
|
4,494
|
2,905
|
|
Total
|
279,501
|
48,777
|
48,061
|
41,864
|
40,668
|
|
NPV (2018$)
|
134,265
|
15,847
|
15,847
|
15,847
|
15,847
|
Source: FPL’s Response to Staff’s Second Data Request
FPL’s revised
renewable energy tariff and standard offer contract, in type-and-strike format,
are included as Attachment A to this recommendation. Revisions include updates
to the avoided unit, dates, and payment information which reflect the current
economic and financial assumptions for the avoided unit costs.
Conclusion
The provisions of FPL’s revised renewable energy tariff
and standard offer contract conform to the requirements of Rules 25-17.200
through 25-17.310, F.A.C. FPL does not have any avoidable fossil fueled
generating units or avoidable power purchases in the upcoming 10-year planning
period. However, FPL has identified its next avoidable unit rather than offer
only energy payments in its standard offer contract. FPL’s revised standard
offer contract provides flexibility in the arrangement for payments so that a
developer of renewable generation may select the payment stream best suited to
its financial needs. Staff recommends that FPL’s revised renewable energy
tariff and standard offer contract 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, FPL’s standard offer contract may
subsequently be revised. (Dziechciarz, Cuello)
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, FPL’s standard offer contract may
subsequently be revised.
