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DATE:

July 9, 2015

TO:

Office of Commission Clerk (Stauffer)

FROM:

Division of Engineering (Matthews)

Office of the General Counsel (Corbari)

RE:

Docket No. 150106-EQ – Petition for approval of amended standard offer contract (Schedule COG-2) and amended interconnection agreement, by Duke Energy Florida, Inc.

AGENDA:

07/21/15Regular Agenda – Proposed Agency Action – Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Administrative

CRITICAL DATES:

None

SPECIAL INSTRUCTIONS:

Staff recommends the Commission simultaneously consider Docket Nos. 150101-EQ, 150104-EQ, 150105-EQ, and 150106-EQ.

 

 Case Background

Section 366.91(3), Florida Statutes (F.S.) requires that each investor-owned utility (IOU) continuously offers to purchase capacity and energy from renewable generating facilities (RF) and small qualifying facilities (QF). 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 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, Duke Energy Florida, Inc. (DEF) filed a petition for approval of its standard offer contract and associated rate schedule based on its 2015 Ten-Year Site Plan.

After the Commission approved DEF’s 2014 standard offer contract by FPSC Order No. PSC-14-0391-PAA-EI,[1] DEF filed a petition on June 25, 2014, for approval of modifications to its as-available purchase tariff and interconnection agreement. Previous to these changes being made, the interconnection agreement was a section within the standard offer contract. The purpose of the modifications was to separate the interconnection agreement from the other components of the as-available purchase tariff, along with other technical and formatting changes, so that the interconnection agreement exists as a stand-alone document. The petition was approved by FPSC Order No. PSC-14-0589-PAA-EI.[2] The approved changes require that any RF/QF operator seeking to sell capacity and/or energy to DEF under its standard offer contract must also separately execute the interconnection agreement.

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 and amended interconnection agreement filed by Duke Energy Florida?

Recommendation: 

 Yes. The provisions of the revised standard offer contract and associated rate schedule, along with the updated interconnection agreement, 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 associated rate schedule, along with the updated interconnection agreement, submitted by DEF be approved as filed. (Matthews)

Staff Analysis: 

 Rule 25-17.250, F.A.C., requires that DEF, an IOU, continuously makes 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 Rule 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.

DEF has identified an 811 MW natural gas-fueled combustion turbine (CT) facility as its next planned generating unit in its 2015 Ten-Year Site Plan. The projected in-service date of the unit is June 1, 2024.

The RF/QF operator may elect to make no commitment as to the quantity or timing of its deliveries to DEF, 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 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 can 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, 2024), and thereafter begin receiving capacity payments in addition to the 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 payments 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 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 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 in 2024, reflecting the projected in-service date of the avoided unit (June 1, 2024).

 

 

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

(94% Capacity Factor)

Year

Energy Payment

Capacity Payment (By Type)

Normal

Levelized

Early

Early Levelized

$(000)

$(000)

$(000)

$(000)

$(000)

2016

15,121

-

-

-

-

2017

15,344

-

-

-

-

2018

15,800

-

-

-

-

2019

17,257

-

-

-

-

2020

19,817

-

-

-

-

2021

20,573

-

-

-

-

2022

21,342

-

-

2,074

2,350

2023

22,229

-

-

2,125

2,355

2024

23,286

1,624

1,818

2,179

2,361

2025

24,057

2,854

3,125

2,233

2,367

2026

24,701

2,925

3,132

2,289

2,373

2027

25,233

2,998

3,140

2,346

2,379

2028

26,105

3,073

3,148

2,405

2,385

2029

26,564

3,150

3,156

2,465

2,391

2030

27,444

3,229

3,165

2,526

2,398

2031

28,508

3,309

3,173

2,590

2,404

2032

29,610

3,392

3,182

2,654

2,411

2033

30,745

3,477

3,191

2,721

2,418

2034

30,944

3,564

3,200

2,789

2,426

2035

32,935

3,653

3,210

2,858

2,433

Total

444,681

33,593

33,433

31,395

31,017

NPV (2016$)

242,338

14,558

14,558

14,558

14,558

 

The type-and-strike format versions of the revised standard offer contract and associated rate schedule, as well as the interconnection agreement, are included as Attachment A to this recommendation. All of the changes made to DEF’s tariff sheets are consistent with the updated avoided unit. Notable revisions include an updated example of monthly capacity payments, updates to calendar dates, as-available energy costs, estimated fuel costs, and the stand-alone interconnection agreement. The interconnection agreement has an additional section detailing technical parameters such as voltage, harmonics, and reactive power requirements. Other changes are primarily intended to improve the flow of the document.

Conclusion

The provisions of DEF’s revised standard offer contract and associated rate schedule, as filed on April 1, 2015, 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 my select the payment stream best suited to its financial needs. Staff recommends that DEF’s revised standard offer contract and related rate schedule, as well as the updated interconnection agreement, 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, DEF’s standard offer contract may subsequently be revised. (Corbari)

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, DEF’s standard offer contract may subsequently be revised.

 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



[1] FPSC Order No. PSC-14-0391-PAA-EI, issued July 28, 2014, in Docket No. 140065-EI, Petition for approval of amended standard offer contract COG-2 by Duke Energy Florida, Inc.

[2] FPSC Order No. PSC-14-0589-PAA-EI, issued October 21, 2014, in Docket No. 140137-EI, Petition for approval of modifications to tariff sheet Nos. 9.100 through 9.330 and tariff sheet Nos. 9.700 through 9.709 as-available purchase tariff and interconnection agreement, by Duke Energy Florida, Inc.