Transcript FPL Group - External

FPL Proposal for a
Florida Renewable
Portfolio Standard
FPSC Staff Workshop December 6, 2007
FPL RPS Proposal – More
Analyses
• In order to best ensure an optimal design
and implementation of a Florida RPS, there
is a need for more education, information,
and analysis
– RECs
– Renewable availability
– Renewable cost and impact on rates
– Renewable effectiveness in reducing
GHG emissions
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FPL RPS Proposal – Primary
Objective
• The primary objective should be to reduce
GHG with a focus on solar and wind while
increasing energy security, maintaining
reliable electric service and reasonable
electricity prices for customers.
– Consistent with the Governor’s Executive
Order 07-127
– Requires reliance on clean resources and
energy efficiency
• An RPS should be a means to an end, not
an end unto itself
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FPL RPS Proposal – Available
Sources
• Clean energy sources such as nuclear,
wind, and solar, as well as carbon
reductions due to energy efficiency, should
be recognized and play prominent roles in
meeting a Florida RPS
– All sources that can contribute to the
broad objective of an RPS should qualify
towards meeting an RPS
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FPL RPS Proposal – Encourage
Investment and Development
• While all verifiable sources should be
eligible to meet a Florida RPS, Florida RECs
should be preferred
– The price paid should be capped at 120%
of the national market price produced by
each technology and capped at an
avoided cost of carbon of $20/MWh
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FPL RPS Proposal – Encourage
Investment and Development (cont’d.)
• Allow a 2% ROE adjustment for investment
in new clean/renewable resources, other
than nuclear
• The utility should be able to petition the
FPSC for approval and cost recovery of an
emerging technology that costs more than
the avoided cost of carbon, but has
significant potential to reduce GHG and
provide benefits to customers
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FPL RPS Proposal – Encourage
Investment and Development (cont’d.)
• Need up-front and expedited prudence
determinations and cost recovery approvals with
administrative finality
• Cost Recovery can be accomplished through
existing mechanisms
• Contracts with developers of clean/renewable
resources that go into default should be counted
until a replacement facility can be contracted for
and built.
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FPL RPS Proposal – Multiplier vs.
Carve Outs or Set Asides
• Use a multiplier of 3.5 for preferred
technologies, not carve outs or set asides
– Equalizes energy production for
intermittent resources and allows the
market to decide the best mix to meet an
RPS
• Costs of RECs are much higher in states
with set asides
– NJ Solar = $270*
– National Voluntary Solar Offers = $17*
* Evolution Markets October 2007 REC Monthly Market Update
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FPL RPS Proposal – Multiplier vs.
Carve Outs or Set Asides
• At a Solar REC price of $200, FPL could achieve
a 0.5% solar RPS under a 1% revenue cap
• At a solar REC price of $20/MWh, FPL could
achieve a 5% solar RPS under a 1% revenue
cap
• If there is a 2% set aside for solar and $200
Solar REC prices, the costs to FPL customers
would be about $465 million per year, or about
4% of FPL revenue for solar alone
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Compliance REC Prices in the
USA 2002-2007
Data compiled by Berkley National Laboratories from Evolution Markets
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FPL RPS Proposal – Informing
Customers
• Electric customers should be informed of their
contribution to meeting a Florida RPS through
bill inserts or other mechanisms so customers
can understand their contribution to
clean/renewable energy
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FPL RPS Proposal – Targets
• A thorough assessment should be conducted to
facilitate the setting of appropriate targets,
without interim targets, that could be met
without imposing unacceptable costs or
adversely impacting reliable and safe electric
supply to Florida residents.
– This assessment should be updated every
three years
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FPL RPS Proposal – Targets (cont’d.)
• To avoid imposing unacceptable costs on
customers, expenditures to meet an RPS
should be capped initially at 1% of retail
revenues from the sale of electricity, rising to
2% over 5 years
• FPL suggests initial targets of 5% by 2017,
10% by 2025 and 20% by 2030
– Annual progress reports and analyses of cost
and target attainability should be filed
– Targets require long-term planning; interim
targets should not be required
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FPL RPS Proposal – Harmonize With
Federal Standard
• A Florida RPS should be adjusted/harmonized
with a Federal Standard should one become law
– Isolationism will increase prices to FL
customers
– Utilities will be required to meet both state
and Federal standards
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FPL RPS Proposal – Compliance
• The methods and incentives for complying with
a Florida RPS need to be consistent with the
objective
– Compliance can be met through the purchase
or production of clean/renewable energy or
the purchase of RECs.
– In order to avoid price volatility
“borrowing/banking” of RECs should be
allowed.
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FPL RPS Proposal – Compliance
• If compliance is otherwise unachievable, utilities
may make an Alternative Compliance Payment
(ACP) not to exceed an avoided cost of carbon
of $20/MWh
– The ACP provides a way to comply when no
other option is available
– The ACP is not a penalty
– The utility should administer and use the ACP
funds with oversight by the FPSC
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