Discussion
of Issues
Issue 1:
Should the Commission approve the renewable energy
tariff and amended standard offer contract filed by Florida Power & Light
Company?
Recommendation:
Yes. The provisions of FPL’s renewable energy tariff
and amended standard offer contract conform to the requirements of Rules
25-17.200 through 25-17.310, F.A.C. The amended standard offer contract offers
multiple payment options so that a developer of renewable generation may select
the payment stream best suited to its financial needs. (Wooten)
Staff Analysis:
Section 366.91(3), F.S., and Rule 25-17.250, F.A.C.,
require that an IOU continuously make available a standard offer contract for
the purchase of firm capacity and energy from RFs qualifying facilities QFs
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 utility’s next
avoidable fossil-fueled generating unit identified in its most recent TYSP, or
if no avoided unit is identified, its next avoidable planned purchase.
FPL has identified a 469 megawatt (MW) natural gas-fueled
combustion turbine (CT) as the next avoidable planned generating unit in its
2025 TYSP.
The projected in-service date of the avoided CT is June 1, 2032, with planned
construction beginning in 2028. Pursuant to Rule 25-17.250, F.A.C., when this
unit is no longer available to be used for the standard offer contract, such as
when the utility commences construction, FPL must file a revised standard offer
contract based on the next unit of the same generating type, if any. Based on
FPL’s 2025 TYSP, there are currently no further avoidable fossil-fueled
generating units identified.
Under FPL’s amended standard offer contract, the RF/QF
operator commits 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 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, 2032), and thereafter, begin receiving capacity payments
in addition to firm 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
contains FPL’s 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 with the projected
in-service date of the avoided unit (June 1, 2032) and continue for 10 years,
while early and early levelized capacity payments begin 4 years prior to the
in-service date, or 2028, for this example.
Table 1-1
Estimated Annual Payments to a 50 MW
Renewable Facility
(94% Capacity Factor)
|
Year
|
Energy Payment
|
Capacity Payment
|
|
Normal
|
Levelized
|
Early
|
Early Levelized
|
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
$(000)
|
|
2026
|
10,835
|
-
|
-
|
-
|
-
|
|
2027
|
12,603
|
-
|
-
|
-
|
-
|
|
2028
|
11,936
|
-
|
-
|
1,975
|
2,204
|
|
2029
|
17,376
|
-
|
-
|
3,427
|
3,778
|
|
2030
|
13,022
|
-
|
-
|
3,497
|
3,778
|
|
2031
|
17,324
|
-
|
-
|
3,568
|
3,778
|
|
2032
|
18,319
|
3,414
|
3,698
|
3,641
|
3,778
|
|
2033
|
15,670
|
5,922
|
6,339
|
3,716
|
3,778
|
|
2034
|
8,401
|
6,043
|
6,339
|
3,792
|
3,778
|
|
2035
|
19,460
|
6,167
|
6,339
|
3,870
|
3,778
|
|
2036
|
12,195
|
6,293
|
6,339
|
3,949
|
3,778
|
|
2037
|
14,736
|
6,422
|
6,339
|
4,030
|
3,778
|
|
2038
|
9,271
|
6,553
|
6,339
|
4,112
|
3,778
|
|
2039
|
20,305
|
6,687
|
6,339
|
4,196
|
3,778
|
|
2040
|
18,798
|
6,824
|
6,339
|
4,282
|
3,778
|
|
2041
|
18,079
|
6,964
|
6,339
|
4,370
|
3,778
|
|
2042
|
11,247
|
7,107
|
6,339
|
4,459
|
3,778
|
|
2043
|
25,975
|
7,252
|
6,339
|
4,495
|
3,778
|
|
2044
|
27,946
|
7,401
|
6,339
|
4,494
|
3,778
|
|
2045
|
20,354
|
3,173
|
2,703
|
1,371
|
1,715
|
|
Total
|
323,852
|
86,223
|
84,323
|
67,438
|
69,963
|
|
Total (NPV)
|
146,420
|
30,779
|
30,779
|
30,779
|
30,779
|
Source:
FPL’s Response to Staff’s First Data Request.
FPL’s amended standard offer contract, in type-and-strike
format, is included as Attachment A to this recommendation. The changes made to
FPL’s tariff sheets are consistent with the updated avoided unit. Revisions include
updates to calendar dates and payment information which reflect the current
economic and financial assumptions for the avoided unit.
Conclusion
The provisions of FPL’s renewable energy tariff and
amended standard offer contract conform to the requirements of Rules 25-17.200
through 25-17.310, F.A.C. The amended standard offer contract offers multiple
payment options so that a developer of renewable generation may select the
payment stream best suited to its financial needs.
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, FPL’s standard offer contract may
subsequently be revised. (Imig, Marquez)
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, FPL’s standard offer contract may
subsequently be revised.
