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DATE:

July 9, 2015

TO:

Office of Commission Clerk (Stauffer)

FROM:

Division of Engineering (Mtenga)

Office of the General Counsel (Corbari)

RE:

Docket No. 150105-EI – Petition for approval of revisions to standard offer contract and rate schedule COG-2, by Tampa Electric Company.

AGENDA:

07/21/15Regular Agenda – Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Administrative

CRITICAL DATES:

None

SPECIAL INSTRUCTIONS:

None

 

 Case Background

Section 366.91(3), Florida Statutes (F.S.), requires that each investor-owned utility (IOU) continuously offer to purchase capacity and energy from renewable energy generators. Commission Rules 25-17.200 through 25-17.310, Florida Administrative Code (F.A.C.), implement the statute and require each IOU to file with the Commission by April 1 of each year, a standard offer contract to purchase the capacity and energy from such renewable generators, with estimated payments based on the next avoidable fossil-fueled generating unit of each technology type identified in the utility’s current Ten-Year Site Plan. On April 1, 2015, Tampa Electric Company (TECO) filed a petition for approval of its standard offer contract and associated rate schedule based on its 2015 Ten-Year Site Plan. 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 revised standard offer contract filed by Tampa Electric Company?

Recommendation: 

 Yes. The provisions of the revised standard offer contract and related rate schedule COG-2 conform to all requirements of Rules 25-17.200 through 25-17.310, F.A.C. The revised standard offer contract provides flexibility in the arrangements for payments so that a developer of renewable generation may select the payment stream best suited to its financial needs. Staff recommends that the revised standard offer contract and related rate schedule COG-2 submitted by TECO be approved as filed. (Mtenga)

Staff Analysis: 

 Rule 25-17.250, F.A.C., requires that TECO, 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 kilowatt (kW) or less. Pursuant to Rule 25-17.250(1), 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 as identified in its most recent Ten-Year Site Plan, or if no avoided unit is identified, its next avoidable planned purchase. TECO identified a 220 MW natural gas-fired combustion turbine (CT) as its next avoidable fossil-fueled generating unit in its 2014 Ten-Year Site Plan. The projected in-service date of the unit is May 1, 2021.

The RF/QF operator may elect to make no commitment as to the quantity or timing of its deliveries to TECO, 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 the 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 set down in the standard offer.

In order to promote renewable generation, the Commission requires an 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, May 1, 2021), and thereafter will receive capacity payments in addition to the energy payments. If either the early or early levelized option is selected, then the operator will begin to receive capacity payments earlier than the in-service date of the avoided unit. However, payments made under the early capacity payments option 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 options.

Table 1 below estimates 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 90 percent capacity factor, which is the minimum capacity factor required to qualify for full capacity payments. Normal and levalized capacity payments begin 2021, reflecting the projected in-service date of the avoided unit (May 1, 2021).

 

 

Table 1-Estimated Annual Payments to a 50 MW Renewable Facility

(90% Capacity Factor)

Year

Energy Payment

Capacity Payment (By Type)

Normal

Levelized

Early

Early Levelized

($000)

($000)

($000)

($000)

($000)

2016

15,010

0

0

2,469

2,824

2017

13,460

0

0

2,522

2,833

2018

13,844

0

0

2,576

2,843

2019

14,126

0

0

2,632

2,853

2020

14,992

0

0

2,689

2,863

2021

16,126

2,916

4,846

2,747

2,874

2022

15,859

4,468

4,863

2,806

2,884

2023

16,557

4,565

4,880

2,867

2,895

2024

17,134

4,663

4,898

2,929

2,906

2025

17,835

4,764

4,916

2,993

2,918

2026

18,125

4,867

4,935

3,057

2,930

2027

18,464

4,973

4,954

3,123

2,942

2028

19,808

5,080

4,973

3,191

2,954

2029

20,777

5,190

4,994

3,260

2,967

2030

22,173

5,302

5,014

3,331

2,980

2031

22,649

5,417

5,035

3,403

2,993

2032

24,257

5,534

5,057

3,476

3,007

2033

26,181

5,654

5,079

3,552

3,021

2034

26,530

5,776

5,102

3,628

3,036

2035

28,149

5,901

5,125

3,707

3,050

Total

382,055

75,072

74,671

60,959

58,574

2015 NPV

194,598

32,262

32,262

32,262

32,262

 

 

The type-and-strike format versions of the revised standard offer contract and associated rate schedule are included in Attachment A. Revisions include updates to the avoided unit, dates, and payment information which reflect the current economic and financial assumptions for the avoided unit. In addition, the date of the avoided unit was shifted from May 1, 2020, to May 1, 2021.

 

Conclusion

The provisions of TECO’s revised standard offer contract and related rate schedule COG-2, as filed on April 1, 2015, conform to all of the requirements of Rules 25-17.200 through 25-17.310, F.A.C. The revised standard offer contract provides flexibility in the arrangements for payments so that a developer of renewable generation may select the payment stream best suited to its financial needs. Staff recommends that TECO’s revised standard offer contract and related rate schedule COG-2 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, TECO’s standard offer contract may subsequently be revised. (Corbari)

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 should be aware that, if a timely protest is filed, TECO’s standard offer contract may subsequently be revised.