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:

June 29, 2017

TO:

Office of Commission Clerk (Stauffer)

FROM:

Division of Engineering (Matthews, Thompson)

Office of the General Counsel (Corbari)

RE:

Docket No. 170077-EQ Ė Petition for approval of renewable energy tariff and standard offer contract, by Florida Power & Light Company.

AGENDA:

07/13/17 Ė Regular Agenda Ė Proposed Agency Action Ė Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Administrative

CRITICAL DATES:

None

SPECIAL INSTRUCTIONS:

Staff recommends the Commission simultaneously consider Docket Nos. 170070-EQ, 170072-EQ, 170075-EQ, & 170076-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 and small qualifying facilities. 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 revised 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 3, 2017, Florida Power & Light Company (FPL) filed a petition for approval of its revised standard offer contract and rate schedule based on its 2017 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 renewable energy tariff and standard offer contract filed by Florida Power & Light Company?

Recommendation: 

 Yes. The provisions of FPLís revised renewable energy tariff and standard offer contract conform to all requirements of Rules 25-17.200 through 25-17.310, F.A.C. FPLís 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 FPLís revised renewable energy tariff and standard offer contract be approved as filed. (Thompson)

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 10 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 1,163 megawatt (MW) natural gas-fired combined cycle (CC) as its next fossil-fueled generating unit in its 2017 Ten-Year Site Plan. The projected in-service date of this unit is June 1, 2022.

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 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 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, 2022), 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, contains FPLís 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 in 2022, reflecting the projected in-service date of the avoided CC unit (June 1, 2022).

 

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)

2018

11,197

-††

-††

2,761

3,200

2019

14,915

-††

-††

2,816

3,200

2020

11,148

-††

-††

2,872

3,200

2021

10,984

-††

-††

2,929

3,200

2022

11,201

4,201

4,775

2,988

3,200

2023

11,133

4,289

4,775

3,048

3,200

2024

12,500

4,378

4,775

3,109

3,200

2025

12,420

4,470

4,775

3,171

3,200

2026

13,715

4,563

4,775

3,234

3,200

2027

14,650

4,658

4,775

3,299

3,200

2028

13,941

4,756

4,775

3,365

3,200

2029

14,672

4,855

4,775

3,432

3,200

2030

14,989

4,956

4,775

3,501

3,200

2031

14,375

5,060

4,775

3,571

3,200

2032

15,902

5,166

4,775

3,642

3,200

2033

16,620

5,274

4,775

3,715

3,200

2034

15,600

5,384

4,775

3,790

3,200

2035

16,001

5,497

4,775

3,865

3,200

2036

16,495

5,611

4,775

3,943

3,200

2037

16,657

5,729

4,775

4,022

3,200

Total

262,455

78,845

76,392

67,074

63,996

NPV (2018$)

134,640

32,443

32,443

32,443

32,443

Source: FPLís Response to Staffís First Data Request[1]

 

FPLís revised renewable energy tariff and standard offer contract, in type-and-strike format, are included as Attachment A to this recommendation. Revisions include updates to the avoided unit, dates, and payment information which reflect the current economic and financial assumptions for the avoided unit costs.

Conclusion

The provisions of FPLís revised renewable energy tariff and standard offer contract conform to all requirements of Rules 25-17.200 through 25-17.310, F.A.C. FPLís 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 FPLís revised renewable energy tariff and standard offer contract 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, FPLís 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 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]Document No. 05113-17, dated May 31, 2017, in Docket No. 170077-EQ.