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 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
FPL has identified a natural gas-fueled combustion turbine
(CT) pair, with a combined 465 megawatt (MW) capacity, as the next avoidable
planned generating unit in its 2026 TYSP. The projected in-service date of the avoided
CT pair is June 2032, with planned construction beginning in 2028.
Under FPL’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, 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
2032), 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 2032) and continue for 10 years, while early and early
levelized capacity payments begin 4 years prior to the in-service date, or
2028, 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)
|
|
2027
|
11,031
|
-
|
-
|
-
|
-
|
|
2028
|
14,364
|
-
|
-
|
2,827
|
3,445
|
|
2029
|
13,047
|
-
|
-
|
4,930
|
5,906
|
|
2030
|
7,925
|
-
|
-
|
5,075
|
5,906
|
|
2031
|
14,414
|
-
|
-
|
5,225
|
5,906
|
|
2032
|
15,226
|
4,578
|
5,368
|
5,379
|
5,906
|
|
2033
|
16,999
|
7,983
|
9,202
|
5,538
|
5,906
|
|
2034
|
11,686
|
8,218
|
9,202
|
5,701
|
5,906
|
|
2035
|
16,622
|
8,460
|
9,202
|
5,869
|
5,906
|
|
2036
|
18,814
|
8,709
|
9,202
|
6,042
|
5,906
|
|
2037
|
17,680
|
8,966
|
9,202
|
6,220
|
5,906
|
|
2038
|
19,269
|
9,231
|
9,202
|
6,404
|
5,906
|
|
2039
|
19,786
|
9,503
|
9,202
|
6,593
|
5,906
|
|
2040
|
20,642
|
9,783
|
9,202
|
6,787
|
5,906
|
|
2041
|
22,767
|
10,072
|
9,202
|
6,987
|
5,906
|
|
2042
|
22,361
|
10,369
|
9,202
|
7,193
|
5,906
|
|
2043
|
24,929
|
10,675
|
9,202
|
7,406
|
5,906
|
|
2044
|
24,825
|
10,989
|
9,202
|
7,624
|
5,906
|
|
2045
|
28,537
|
11,314
|
9,202
|
7,849
|
5,906
|
|
2046
|
25,750
|
4,912
|
3,834
|
3,408
|
2,461
|
|
Total
|
366,672
|
133,760
|
128,824
|
113,056
|
106,311
|
|
Total (NPV)
|
155,772
|
48,526
|
48,526
|
48,526
|
48,526
|
Source:
FPL’s Response to Staff’s First Data Request.
FPL’s amended 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 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.
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.
