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DATE:

August 13, 2015

TO:

Office of Commission Clerk (Stauffer)

FROM:

Division of Engineering (Matthews)

Office of the General Counsel (Tan)

RE:

Docket No. 150108-EQ Ė Petition for approval of renewable energy tariff and standard offer contract, by Florida Power & Light Company.

AGENDA:

08/27/15 Ė Regular Agenda Ė Proposed Agency Action Ė 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 offers to purchase capacity and energy from renewable energy generators. 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 utilityís current Ten-Year Site Plan. On April 1, 2015, Florida Power & Light Company (FPL) filed a petition for approval of its standard offer contract and associated rate schedule based on its 2015 Ten-Year Site Plan. On July 7, 2015, FPL filed an amended petition in this docket.

In its 2014 Ten-Year Site Plan, FPL identified avoided units of both the combined cycle (CC) and combustion turbine (CT) technology types. As a result, standard offer contracts for both technology types were included in FPLís 2014 docket filing.[1] However, FPLís 2015 Ten-Year Site Plan identified only one avoided unit of the CC technology type. Therefore, the petition in this docket requests that the standard offer contract and tariff sheets based on the CC technology be approved as revised, and proposes that the contract and tariff sheets based on the CT avoided unit be deleted.

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 Florida Power and Light Company?

Recommendation: 

 Yes. The provisions of the revised standard offer contract and related rate schedule QS-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 QS-2 submitted by FPL be approved as filed. (Matthews)

Staff Analysis: 

 Rule 25-17.250, F.A.C., requires that FPL, 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 Rules 25-17.250(1) and (3), F.A.C., the standard offer contract must provide a term of at least ten years, and the payment terms must be based on the utilityís 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.

FPL has identified a 1,317 MW natural gas-fired facility of the combined cycle (CC) technology type as the next fossil-fueled generating unit in its 2015 Ten-Year Site Plan. The projected in-service date of this unit is June 1, 2023.

The RF/QF operator may elect to make no commitment as to the quantity or timing of its deliveries to FPL, 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 the 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, 2023), 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 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 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 capacity factor of 96 percent, which is the minimum capacity factor required under the contract to qualify for full capacity payments. Normal and levelized capacity payments begin in 2023, reflecting the projected in-service date of the avoided CC unit (June 1, 2023).

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

(96% Capacity Factor)

Year

Energy Payment

Capacity Payment (By Type)

Normal

Levelized

Early

Early Levelized

$(000)

$(000)

$(000)

$(000)

$(000)

2016

16,172

0

0

0

0

2017

12,145

0

0

0

0

2018

13,339

0

0

0

0

2019

17,324

0

0

3,714

4,226

2020

18,140

0

0

3,788

4,226

2021

19,244

0

0

3,864

4,226

2022

22,096

0

0

3,941

4,226

2023

23,867

5,884

6,554

4,020

4,226

2024

22,382

6,008

6,554

4,100

4,226

2025

22,777

6,136

6,554

4,182

4,226

2026

22,122

6,266

6,554

4,266

4,226

2027

22,865

6,399

6,554

4,351

4,226

2028

22,457

6,534

6,554

4,438

4,226

2029

23,182

6,673

6,554

4,527

4,226

2030

25,767

6,814

6,554

4,617

4,226

2031

27,033

6,959

6,554

4,710

4,226

2032

28,211

7,107

6,554

4,804

4,226

2033

29,754

7,257

6,554

4,900

4,226

2034

30,814

7,411

6,554

4,998

4,226

2035

31,948

7,569

6,554

5,098

4,226

Total*

451,638

87,017

85,204

74,318

71,845

NPV (2016$)

209,258

32,062

32,063

32,063

32,063

*Note:† Totals may not add exactly due to rounding of figures.

The type-and-strike format versions of the revised standard offer contract and associated rate schedule QS-2 are included as Attachment A to this recommendation. All of the changes made to the tariff sheets are consistent with the updated avoided unit. Notable revisions include an updated example of monthly capacity payments, as well as updates to calendar dates, as-available energy costs, and estimated unit fuel costs.

Conclusion

The provisions of the revised standard offer contract and associated rate schedule, as filed on April 1, 2015, and pursuant to the amended filing made on July 7, 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 the revised standard offer contract and associated rate schedule QS-2 be approved as filed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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 Commissionís decision files a protest within 21 days of the issuance of the Commissionís proposed agency action order. Potential signatories should be aware that, if a timely protest is filed, FPLís standard offer contract may subsequently be revised. (Tan)

Staff Analysis: 

 This docket should be closed upon the issuance of a consummating order, unless a person whose substantial interests are affected by the Commissionís decision files a protest within 21 days of the issuance of the Commissionís proposed agency action order. Potential signatories should be aware that, if a timely protest is filed, FPLís standard offer contract may subsequently be revised.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



[1] Order No. PSC-14-0393-PAA-EQ in Docket No. 140068-EI, Petition for approval of a renewable energy tariff and standard offer contract, by Florida Power & Light Company.