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’s 2018 Ten-Year Site Plan does not
include any avoidable fossil fueled generating units, but has a projected
planned purchase of 325 megawatt (MW) in 2019 that is FPL’s next planned
purchase that could be avoided or deferred. FPL has also identified its next
avoidable unit which is a 1,778 MW natural gas-fired combined cycle unit at a
greenfield site with an expected in-service date of June 1, 2028. 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. (Wooten,
Wright, Higgins)
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. FPL’s 2018 Ten-Year Site Plan
does not include any avoidable fossil fueled generating units but has a
projected planned purchase of 325 MW in 2019 that would be FPL’s next planned
purchase that could be avoided or deferred. However, in an effort to encourage
renewable generation, FPL has identified its next avoidable unit as a 1,778 MW
natural gas-fired combined cycle unit at a greenfield site with an expected
in-service date of June 1, 2028. Both the avoided unit and avoided planned
purchase options are available for FPL’s revised standard offer contract.
Under FPL’s standard offer contract, the RF/QF operator
commits 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 energy payments. If either the early or 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 estimates of the annual payments for each payment option
available under the revised standard offer contract to an operator choosing the
2028 avoided unit option. This is available to an operator with a 50 MW
facility operating at a capacity factor of 94 percent that meets the minimum requirement
specified in 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 unit (June 1, 2028).
Table 1 - Estimated Annual Payments to a 50 MW
Renewable Facility
94 Percent Capacity Factor
|
Year
|
Energy Payment
|
Capacity Payment (By Type)
|
|
Normal
|
Levelized
|
Early
|
Early Levelized
|
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
|
2019
|
10,808
|
-
|
-
|
-
|
-
|
|
2020
|
9,513
|
-
|
-
|
-
|
-
|
|
2021
|
7,836
|
-
|
-
|
-
|
-
|
|
2022
|
8,501
|
-
|
-
|
-
|
-
|
|
2023
|
9,237
|
-
|
-
|
-
|
-
|
|
2024
|
9,730
|
-
|
-
|
2,445
|
2,825
|
|
2025
|
10,236
|
-
|
-
|
2,506
|
2,825
|
|
2026
|
11,235
|
-
|
-
|
2,569
|
2,825
|
|
2027
|
13,098
|
-
|
-
|
2,633
|
2,825
|
|
2028
|
12,312
|
4,111
|
4,581
|
2,699
|
2,825
|
|
2029
|
12,446
|
4,214
|
4,581
|
2,766
|
2,825
|
|
2030
|
12,992
|
4,319
|
4,581
|
2,835
|
2,825
|
|
2031
|
13,453
|
4,427
|
4,581
|
2,906
|
2,825
|
|
2032
|
13,930
|
4,538
|
4,581
|
2,978
|
2,825
|
|
2033
|
14,132
|
4,652
|
4,581
|
3,053
|
2,825
|
|
2034
|
14,483
|
4,768
|
4,581
|
3,129
|
2,825
|
|
2035
|
14,806
|
4,887
|
4,581
|
3,208
|
2,825
|
|
2036
|
15,178
|
5,009
|
4,581
|
3,288
|
2,825
|
|
2037
|
15,475
|
5,134
|
4,581
|
3,370
|
2,825
|
|
2038
|
15,820
|
5,263
|
4,581
|
3,454
|
2,825
|
|
Total
|
256,132
|
51,323
|
50,391
|
43,839
|
42,373
|
|
NPV (2019$)
|
115,228
|
15,671
|
15,671
|
15,671
|
15,671
|
Source: FPL’s
Supplemental Response to Staff’s First Data Request.
Table 2
below, contains estimates of the annual payments for each payment option
available under the revised standard offer contract if an operator chooses the
avoided planned power purchase contract. This contract is available to an
operator with a 50 MW facility operating at a capacity factor of 94 percent that
meets the minimum requirement specified in the contract to qualify for full
capacity payments. Normal and levelized capacity payments begin in 2019,
reflecting the projected purchase date of the avoided purchase (June 1, 2019).
Table 2 - Estimated
Annual Payments to a 50 MW Renewable Facility
94 Percent Capacity Factor
|
Year
|
Energy Payment
|
Capacity Payment (By Type)
|
|
Normal
|
Levelized
|
Early
|
Early Levelized
|
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
|
2019
|
10,808
|
1,200
|
111.4
|
585.0
|
101.3
|
|
2020
|
9,513
|
-
|
111.4
|
-
|
101.3
|
|
2021
|
7,836
|
-
|
111.4
|
-
|
101.3
|
|
2022
|
8,501
|
-
|
111.4
|
-
|
101.3
|
|
2023
|
9,237
|
-
|
111.4
|
-
|
101.3
|
|
2024
|
9,730
|
-
|
111.4
|
-
|
101.3
|
|
2025
|
10,236
|
-
|
111.4
|
-
|
101.3
|
|
2026
|
11,235
|
-
|
111.4
|
-
|
101.3
|
|
2027
|
13,097
|
-
|
111.4
|
-
|
101.3
|
|
2028
|
12,948
|
-
|
111.4
|
-
|
101.3
|
|
2029
|
12,831
|
-
|
111.4
|
-
|
101.3
|
|
2030
|
13,175
|
-
|
111.4
|
-
|
101.3
|
|
2031
|
16,168
|
-
|
111.4
|
-
|
101.3
|
|
2032
|
14,297
|
-
|
111.4
|
-
|
101.3
|
|
2033
|
14,224
|
-
|
111.4
|
-
|
101.3
|
|
2034
|
15,670
|
-
|
111.4
|
-
|
101.3
|
|
2035
|
15,904
|
-
|
111.4
|
-
|
101.3
|
|
2036
|
15,985
|
-
|
111.4
|
-
|
101.3
|
|
2037
|
16,901
|
-
|
111.4
|
-
|
101.3
|
|
2038
|
17,123
|
-
|
111.4
|
-
|
101.3
|
|
Total
|
266,330
|
1,200
|
2,228
|
585.0
|
2,025
|
|
NPV (2019$)
|
118,240
|
1,033
|
1,033
|
1,033
|
1,033
|
Source: FPL’s Supplemental Response to Staff’s First 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. All of the changes made to the tariff sheets are
consistent with the updated avoided unit and an avoided unit selection option. Revisions
include updates to dates and payment information which reflect the current
economic and financial assumptions for the avoided unit and purchased power costs.
Additional language was introduced in Revised
Sheet 9.033 and Original Sheet 9.033.1 that addressed “Capacity Delivery Date”
and “Delivery Date Conditions” that must be satisfied by the QF. In response to
a staff data request, FPL explained the clarifying language is significant and
essential for FPL because the Capacity Delivery Date is the date when the QF is
required to deliver to FPL, and is also the date when FPL is required to
receive and pay the Committed Capacity amount. FPL further clarified that the
additional Delivery Date Conditions are consistent with sound commercial practice
and will ensure that the QF will generate and deliver to FPL electric energy
safely and reliably for the Term of the Standard Offer Contract.
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’s 2018 Ten-Year Site Plan does not include any
avoidable fossil fueled generating units, but has a projected planned purchase
of 325 megawatt (MW) in 2019 that is FPL’s next planned purchase that could be
avoided or deferred. FPL has also identified its next avoidable unit as a 1,778
MW natural gas-fired combined cycle unit at a greenfield site with an expected
in-service date of June 1, 2028. 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)
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.
