Discussion
of Issues
Issue 1:
Should the Commission
approve the renewable energy tariff and amended standard offer contract filed
by Florida Power & Light Company?
Recommendation:
Yes. The provisions of FPL’s renewable energy tariff
and amended standard offer contract conform to the requirements of Rules
25-17.200 through 25-17.310, F.A.C. The amended standard offer contract offers
multiple payment options so that a developer of renewable generation may select
the payment stream best suited to its financial needs. (Wooten, Knoblauch)
Staff Analysis:
Section 366.91(3), F.S., and Rule 25-17.250, F.A.C.,
require that 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 TYSP, or if no avoided unit is
identified, its next avoidable planned purchase. While FPL’s 2023 TYSP does not
feature an avoidable fossil-fueled generating unit or planned purchases that
could be deferred during the planning period, FPL has identified a 1,991
megawatt (MW) combined cycle with a projected in-service date of June 1, 2033,
as the next avoidable planned generating unit based on its current planning
process. In order to comply with the rule, the Commission has previously
approved using a unit outside of the TYSP planning period as the avoided unit
for standard offer contract purposes.
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 each 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, 2033), and thereafter, begin
receiving capacity payments in addition to firm 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
contains FPL’s estimates of the annual payments for each payment option
available under the revised standard offer contract to 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 with the projected
in-service date of the avoided unit (June 1, 2033) and continue for 10 years,
while early and early levelized capacity payments begin 4 years prior to the
in-service date, or 2029 for this example.
Table 1 - Estimated
Annual Payments to a 50 MW Renewable Facility
(94% Capacity Factor)
|
Year
|
Energy Payment
|
Capacity Payment
|
|
Normal
|
Levelized
|
Early
|
Early Levelized
|
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
|
2024
|
16,263
|
-
|
-
|
-
|
-
|
|
2025
|
14,648
|
-
|
-
|
-
|
-
|
|
2026
|
14,581
|
-
|
-
|
-
|
-
|
|
2027
|
14,793
|
-
|
-
|
-
|
-
|
|
2028
|
12,878
|
-
|
-
|
-
|
-
|
|
2029
|
11,500
|
-
|
-
|
1,620
|
1,812
|
|
2030
|
11,465
|
-
|
-
|
2,811
|
3,106
|
|
2031
|
11,752
|
-
|
-
|
2,870
|
3,106
|
|
2032
|
10,675
|
-
|
-
|
2,929
|
3,106
|
|
2033
|
11,553
|
2,792
|
3,029
|
2,990
|
3,106
|
|
2034
|
11,858
|
4,844
|
5,192
|
3,052
|
3,106
|
|
2035
|
10,887
|
4,945
|
5,192
|
3,116
|
3,106
|
|
2036
|
12,682
|
5,048
|
5,192
|
3,181
|
3,106
|
|
2037
|
13,318
|
5,153
|
5,192
|
3,247
|
3,106
|
|
2038
|
14,875
|
5,260
|
5,192
|
3,314
|
3,106
|
|
2039
|
14,581
|
5,369
|
5,192
|
3,383
|
3,106
|
|
2040
|
15,128
|
5,481
|
5,192
|
3,454
|
3,106
|
|
2041
|
15,149
|
5,595
|
5,192
|
3,526
|
3,106
|
|
2042
|
14,788
|
5,712
|
5,192
|
3,599
|
3,106
|
|
2043
|
15,608
|
2,400
|
2,163
|
1,512
|
1,294
|
|
Total
|
258,385
|
52,599
|
51,920
|
44,605
|
43,485
|
|
Total (NPV)
|
129,412
|
16,890
|
16,890
|
16,890
|
16,890
|
Source: FPL’s Response to Staff’s First Data Request
FPL’s standard
offer contract, in type-and-strike format, is included as Attachment A to this
recommendation. The changes made to FPL’s tariff sheets are consistent with the
updated avoided unit. Revisions include updates to calendar dates and payment
information which reflect the current economic and financial assumptions for
the avoided unit.
Conclusion
The provisions of FPL’s renewable energy tariff and
amended standard offer contract conform to the requirements of Rules 25-17.200
through 25-17.310, F.A.C. The amended standard offer contract offers multiple
payment options so that a developer of renewable generation may select the
payment stream best suited to its financial needs.
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. (Imig)
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.
