State of Florida

pscSEAL

 

Public Service Commission

Capital Circle Office Center ● 2540 Shumard Oak Boulevard
Tallahassee, Florida 32399-0850

-M-E-M-O-R-A-N-D-U-M-

 

DATE:

October 20, 2016

TO:

Office of Commission Clerk (Stauffer)

FROM:

Division of Engineering (Lee)

Office of the General Counsel (Murphy)

RE:

Docket No. 160074-EQ Ė Petition for approval of new standard offer rate schedule for energy purchases from cogenerators and renewable facilities and for approval of standard offer contract for purchased of firm capacity and energy, by Florida Public Utilities Company.

AGENDA:

11/01/16 Ė Regular Agenda Ė Proposed Agency Action Ė Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Edgar

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. Florida Public Service Commission (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 utilityís current Ten-Year Site Plan. On April 1, 2016, Florida Public Utilities Company (FPUC) filed a petition for approval of its new Standard Offer Rate Schedule and Standard Offer Contract to replace its existing Renewable Energy (REN) Tariff and its Cogeneration (COG) Tariff, in accordance with the rules cited above and Rules 25-9.003, 25-17.0825, and 25-17.0832, F.A.C.

Because FPUC does not own or operate any electric generating units, it does not have any avoidable units on which to base its Standard Offer Contract. Rule 25-17.250(1), F.A.C., requires that, under these circumstances, the Standard Offer Contract be based on avoiding or deferring a planned purchase. FPUC purchases all of its electric power through purchased power agreements in its Northeast Division from JEA, and in its Northwest Division from Gulf Power Company (Gulf).

On August 11, 2016, FPUC amended its filing to reflect revisions needed based on its review after the original filing of April 1, 2016. On September 27, 2016, FPUC amended its filing with Tariff Sheet Nos. 18 and 24.0 to reflect revisions to the amended filing of August 11, 2016. FPUC also revised its responses to staffís data requests based on its amended filings.

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 new Standard Offer Rate Schedule and Standard Offer Contract filed by Florida Public Utilities Company?

Recommendation: 

 Yes. FPUCís new Standard Offer Rate Schedule and Standard Offer Contract conform to all the requirements of Rule 25-17.0825 and Rules 25-17.200 through 25-17.310, F.A.C., and reflect the avoidable costs associated with FPUCís power purchase agreements. Staff recommends that the Rate Schedule and Standard Offer Contract filed by FPUC be approved as filed. (Lee)

Staff Analysis: 

  Pursuant to Rule 25-17.250, F.A.C., an IOU must 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 a design capacity of 100 kilowatt (kW) or less. FPUC does not own or operate any of its own electric generating facilities and thus does not file a Ten-Year Site Plan. Instead, FPUC purchases its electric energy under long-term, full requirements contracts with wholesale providers.

The proposed standard offer rate schedule consists of three components: (1) the Standard Offer-As Available schedule (SOA); (2) the Standard Offer- Firm Schedule (SOF); and (3) the Standard Offer Contract. The SOA and SOF consolidate FPUC's previous REN and COG tariffs. FPUC states that the new consolidated tariff and Standard Offer Contract have been crafted to comply with the provisions of Chapter 25-17, including Rule 25-17.0825 and Rule 25-17.0832, as they apply to purchases of energy and capacity from RF/QF operators. FPUCís new Standard Offer Contract and rate schedule, with the amended schedules filed on August 11, 2016, and September 27, 2016, is provided as Attachment A. Similar to FPUC's previous REN and COG tariffs, the capacity and energy payments under the proposed rate schedule depend on the terms of FPUCís wholesale contracts with its suppliers for FPUC's Northeast Division and Northwest Division.

Northeast Division

At present, JEA is the full requirements supplier for FPUC's Northeast Division, which consists of Fernandina Beach and Amelia Island. FPUCís revised responses to staffís data request provided the estimates of the annual payments to an operator with a 20 MW facility operating at a capacity factor of 80 percent, for a RF/QF operator located inside the service territory. FPUC estimated that its annual capacity and energy payments would be approximately $3.5 million and $7.9 million respectively, based on the full reduction in JEA billing to FPUC that would include the capacity, energy, environmental, fuel and line loss components.

 

Northwest Division

At present, Gulf is the full requirements supplier for FPUC's Northwest Division, which consists of portions of Jackson, Calhoun, and Liberty counties. FPUCís revised responses to staffís data request provided the estimates of the annual payments to an operator with a 20 MW facility operating at a capacity factor of 80 percent, for a RF/QF operator located inside the service territory. FPUC estimated that its annual capacity and energy payments would be zero and $8.25 million respectively, based on the full reduction in Gulfís billing to FPUC that would include the capacity, energy, environmental, fuel and line loss components. Payments for capacity are projected to remain at zero because there is no reduction in FPUCís capacity payment to Gulf due to the ďratchet provisionĒ included in FPUCís contract with Gulf. This provision set a minimum capacity and precludes any decrease in demand payments to Gulf based on a decrease in the overall demand or the addition of generation resources.

 

Other Contract Terms

Both the SOA (at Sheet No. 18) and the SOF (at Sheet No. 24.0) include updated language to better address line losses and potential issues associated with the location of the RF/QF operators, consistent with Rule 25-17.0825 for the SOA and Rule 25-17.0832 for the SOF. This ensures appropriate accounting of the transmission cost impact due to the location of the RF/QF operators and deliveries are made without creating transmission line constraints on FPUCís system. The Standard Offer Contract also includes additional language at Sheet No. 32, to clarify situations in which FPUC can disconnect the qualifying facilities for unsafe conditions and circumstances under which FPUC will reconnect to the qualifying facilities. These are similar to provisions in standard offer contracts of other IOUs but were not addressed in FPUCís previous Standard Offer Contract.

 

The proposed schedule relies upon the cost of FPUCís underlying full requirements suppliers as the basis for its calculation of energy payments to qualifying facilities. In previously approved tariffs, FPUC's avoided energy payments to qualifying facilities were identified as being current estimates provided for informational purposes only, which were based on data of estimated fuel costs of FPUCís wholesale supplier. FPUC asserts that its new approach clarifies and refines its past practice and eliminates example rates, thus preventing confusion. Upon request, a utility is required by Rule 25-17.0825(5) to provide the most updated data within 30 days. Staff notes that a similar revision removing avoided energy cost projections from the renewable energy tariff of Florida Power & Light Company was approved by the Commission.[1]

In addition, the proposed schedule includes language at Sheet No. 28 to address situations in which FPUC may decline to execute standard offer contract and seek relief from the Commission, in accordance with Rule 25-17.0832(4)(c). Language is also included at Paragraph 13, Sheet No. 16 to address changes in federal or state regulatory requirements, consistent with the provision considered in Rule 25-17.270, F.A.C.

Conclusion

FPUCís new Standard Offer Contracts and related rate schedule conform to all the requirements of Rule 25-17.0825 and Rules 25-17.200 through 25-17.310, F.A.C., and reflect the avoidable costs associated with FPUCís purchased power agreements. Staff recommends that the Rate Schedule and Standard Offer Contract filed by FPUC 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 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, FPUCís Standard Offer Contract may subsequently be revised. (Murphy)

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, FPUCís Standard Offer Contract may subsequently be revised.



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 



[1]Order No. PSC-16-0428-PAA-EQ, issued October 4, 2016, in Docket No. 160070-EQ, In re: Petition for approval of renewable energy tariff and standard offer contract, by Florida Power & Light Company.