Discussion
of Issues
Issue 1:
Should the Commission approve the amended standard
offer contract and associated rate schedule COG-2 filed by Tampa Electric Company?
Recommendation:
Yes. The provisions of
TECO's amended standard offer contract and associated rate schedule COG-2 meet
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. (Willis)
Staff Analysis:
Legal Standard
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 RFs
and QFs 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, 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. Standard
offer contracts are further subject to the applicable provisions of Rules
25-17.082 through 25-17.091, F.A.C. The Commission’s review of standard offer
contracts is in accordance with goals to integrate nontraditional sources of
power pursuant to the Florida Energy Efficiency and Conservation Act and
diversify Florida’s energy generation portfolio.
Analysis
TECO has identified a 224
megawatt (MW) natural
gas-fueled combustion turbine with an in-service date of January 2031, as the
next avoidable planned generating unit based on its current planning process.
Under TECO's amended 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. In this way, the RF/QF 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 January 2031). Thereafter, they 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 TECO's
estimates of the annual payments for the normal and levelized capacity payment
options available under the revised standard offer contract to an operator with
a 50 MW facility, operating at a capacity factor of 80 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 (January 2031), and continue for 10 years, while early and early levelized
capacity payments begin four (4) years prior to the in-service date, or January
2027 in this case.
Table 1
Estimated
Annual Payments to a 50 MW Renewable Facility
(80% Capacity Factor)
|
Year
|
Energy Payments
|
Capacity Payments
|
|
Normal
|
Levelized
|
Early
|
Early Levelized
|
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
|
2027
|
13,132
|
-
|
-
|
4,225
|
5,324
|
|
2028
|
10,975
|
-
|
-
|
4,356
|
5,324
|
|
2029
|
9,518
|
-
|
-
|
4,490
|
5,324
|
|
2030
|
9,785
|
-
|
-
|
4,628
|
5,324
|
|
2031
|
11,024
|
6,577
|
7,960
|
4,771
|
5,324
|
|
2032
|
10,987
|
6,779
|
7,960
|
4,918
|
5,324
|
|
2033
|
11,931
|
6,988
|
7,960
|
5,070
|
5,324
|
|
2034
|
12,615
|
7,204
|
7,960
|
5,227
|
5,324
|
|
2035
|
15,163
|
7,426
|
7,960
|
5,388
|
5,324
|
|
2036
|
17,085
|
7,656
|
7,960
|
5,555
|
5,324
|
|
2037
|
17,930
|
7,892
|
7,960
|
5,727
|
5,324
|
|
2038
|
21,523
|
8,136
|
7,960
|
5,904
|
5,324
|
|
2039
|
23,370
|
8,388
|
7,960
|
6,086
|
5,324
|
|
2040
|
25,914
|
8,647
|
7,960
|
6,275
|
5,324
|
|
2041
|
26,551
|
8,914
|
7,960
|
6,469
|
5,324
|
|
2042
|
27,486
|
9,190
|
7,960
|
6,670
|
5,324
|
|
2043
|
29,172
|
9,475
|
7,960
|
6,876
|
5,324
|
|
2044
|
30,808
|
9,768
|
7,960
|
7,089
|
5,324
|
|
2045
|
32,835
|
10,071
|
7,960
|
7,309
|
5,324
|
|
2046
|
32,403
|
10,383
|
7,960
|
7,536
|
5,324
|
|
Sum
|
390,207
|
133,495
|
127,358
|
114,570
|
106,489
|
|
NPV Sum
|
178,436
|
57,792
|
57,792
|
57,792
|
57,792
|
Source:
TECO’s Response to Staff’s First Data Request.
TECO's amended standard
offer contract, in type-and-strike format, is included as Attachment A to this
recommendation. The changes made to TECO's tariff sheets are consistent with
the updated avoided unit. Revisions include the updates to calendar dates and
payment information, which reflect the current economic and financial
assumptions for the avoided unit.
Conclusion
The
provisions of TECO's amended standard offer contract and associated rate
schedule COG-2 meet 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. The Commission should approve the amended
standard offer contract and rate schedule COG-2.
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, TECO’s standard offer contract may
subsequently be revised. (Hixon, Marquez)
Staff Analysis:
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 be aware that, if a timely protest is filed, TECO’s
standard offer contract may subsequently be revised.
