Transcript Alternatives to Foreclosure” or “A Rolling Loan Gathers No

State of the Union for
Florida’s RPS Policy
Presented by Tommy Boroughs
a Partner with the law firm of Holland & Knight LLP
February 18, 2010
Copyright © 2009 Holland & Knight LLP All Rights Reserved
Renewable Portfolio Standard
(“RPS”)
 Requirement that Power-Generating
Utilities Produce More Energy From
Renewable Energy Sources.
Traditional RPS Policy
 Establishes a Minimum Level of
Electricity Sales that Must Come from
Renewable Generation by a Specific
Date.
Definition of Renewable Energy
 "Renewable Energy" means Electrical
Energy Produced From a Method that
Uses One or More of the Following
Fuels or Energy Sources: Biomass,
Solar Energy, Geothermal Energy,
Wind Energy, Ocean Energy, and
Hydroelectric Power.
Definition of Biomass
 "Biomass" Includes the Following Power
Sources: Combustible Residues or Gases
from Forest Products Manufacturing,
Waste, Byproducts, or Products from
Agricultural and Orchard Crops, Waste or
Co-Products, Products form Livestock and
Poultry Operations, Waste or Byproducts
from and Food Processing, Urban Wood
Waste, Municipal Solid Waste, Municipal
Liquid Waste Treatment Operations, and
Landfill Gas.
Reasons for RPS Approach
 Reducing Carbon Emissions from
Electric Utility Sector by Switching a
Percentage of Electric Generation
from Fossil Fuels to Renewable
Sources.
 Reducing dependence upon foreign
fossil fuel sources.
Why an RPS is Specially Important to
Florida
Florida has vast potential for renewable energy:
 Florida could be the "Saudi Arabia" of
Biomass.
• Opportunity fuels: Timber Waste, Agricultural
Waste, Lawn Clippings, Land Fill Waste, Animal
Waste, Food Processing Waste
• Grow Crops (Florida has the Land, Climate and the
Rainfall)
 Solar
 Gulfstream
 Offshore Wind
Recommendation #40 by Florida Energy
Commission – Establish Generation Scenarios
for a Renewable Portfolio Standard
 It is recommended that the Florida Legislature
direct the Florida Public Service Commission to
utilize the ranking established in Ranking of
Electric Generation and Greenhouse Gas
Emission Goals to select generation scenarios to
develop a Renewable Portfolio Standard (RPS)
that will appropriately promote the use and
development of renewable energy resources and
technologies in Florida. Following development
of the RPS by the PSC, the FEC should review
the resulting RPS for possible further
recommendations regarding goals and the scope
of the rates.
Section 366.92 F.S. – Florida Renewable
Energy Policy in HB 7135 (2008)
 The Commission shall adopt rules for a
renewable portfolio standard requiring each
provider to supply renewable energy to its
customers directly, by procuring, or through
renewable energy credits. In developing the
RPS rule, the Commission shall consult the
Department of Environmental Protection and the
Florida Energy and Climate Commission. The
rule shall not be implemented until ratified by
the Legislature. The commission shall present a
draft rule for legislative consideration by
February 1, 2009.
December 31, 2008 Docket of FPSC
Navigant Consulting concluded that:
 Under the unfavorable scenario for renewable
development, which includes a 1 percent rate cap,
renewable energy in Florida could be 5 percent of
IOU retail sales by 2020
 Under the mid-favorable scenario for renewable
development, which includes a 2 percent rate cap,
renewable energy in Florida could be 11 percent of
IOU retail sales by 2020; and
 Under the most favorable scenario for renewable
development, which includes a 5 percent rate cap,
renewable energy in Florida could be 24 percent of
IOU retail sales by 2020
December 31, 2008 Docket of FPSC
 Initial RPS – Section 25-17.400(3) – The
draft rule establishes the following
percentages of the prior year's retail sales for
each IOU to be provided by Florida
renewable energy resources:
1.
2.
3.
4.
By January 1, 2017:
By January 1, 2025:
By January 1, 2033:
By January 1, 2041:
6 percent
10 percent
15 percent
20 percent
January 9, 2009 Action of the FPSC
 The FPSC recommends an aggressive RPS
that requires each IOU to achieve 20
percent renewable energy by 2020. This
aggressive standard is intended to protect
existing renewables, and spur new
renewable developers to enter the Florida
market by establishing a long-term
dedicated market for renewable energy in
the state.
January 9, 2009 Action of the FPSC
 RPS Percentage and Timing – Section 2517.400(3), Florida Administrative Code
(F.A.C.), of the draft rule establishes the
following standards of the prior year's retail
sales for each IOU to be provided by Florida
renewable energy resources:
1.
7 percent by January 1, 2013
2.
12 percent by January 1, 2016
3.
18 percent by January 1, 2019
4.
20 percent by January 1, 2021
Components of the FPSC's Draft RPS Rule
 General Concept - Compliance through
RECs. Requires IOUs to generate through
self-build renewables, or to purchase
sufficient RECs from other utilities or nonutility renewable generators to meet RPS
requirements. Establishes REC market to
facilitate short-term spot market and longterm negotiated contracts for RECs from all
in-state renewable facilities (unless subject
to FEECA).
Components of the FPSC's Draft RPS Rule
 Rate Cap – Charges to utility customers
are initially capped at an amount equal to
2 percent of the utility's annual retail
revenues. The rule provides the FPSC
with the flexibility to review and modify
the rate cap, if appropriate, annually in the
cost recovery proceeding or in a
proceeding initiated on is own motion.
Components of the FPSC’s Draft RPS Rule
 Frequency of Review – RPS reviewed at least
once every 3 years.
 Mandatory Standards or Aspirational Goals –
Mandatory, due to the presence of penalties that
would be assessed to the utility's stockholders.
However, non-compliance may be excused due
to lack of sufficient renewable energy credits or
prohibitive cost (i.e. costs over 2 percent rate
cap).
 Rewards and Penalties – Penalty of up to 50
basis points for unexcused non-compliance to be
assessed to the utility's stockholders. No
specified rewards.
Components of the FPSC's Draft RPS Rule
 Solar and Wind Carve-Out - Carve-out for
solar and wind, such that 25 percent of
RPS requirements, must be met with these
resources. Also, 3/4 of 2 percent rate cap
(1.5 percent) funding is allocated to solar
and wind resources. The rule provides the
FPSC with the flexibility to review and
modify the allocation of the rate cap
annually, if appropriate.
Components of the FPSC's Draft RPS Rule
 Cost Recovery – Establishes a
dedicated cost recovery clause for all
costs associated with renewables. The
incremental cost of compliance with
the RPS would appear separately on
customer bills.
2009 Legislative Proposal – Bill No. SB 1154
 Proposed Florida Clean Portfolio Standard
(CPS) for Investor-Owned Utilities
 General Concept – For Investor-Owned
Utilities Only, 20% of sales by the end of
2020 must be from renewable energy
and/or clean energy [i.e., new nuclear
energy, or IGCC with carbon capture and
sequestration (CCS)], with up to 25% of
the percentage goal in each year allowed
from new nuclear and or IGCC with CCS.
2009 Legislative Proposal – Bill No. SB 1154
 Proposed Florida Clean Portfolio Standard
(CPS) for Investor-Owned Utilities
 CPS Percentage and timing of Goals:
7% by 2013 (for 2012)
12% by 2016 (for 2015)
18% by 2019 (for 2018)
20% by 2021 (for 2020)
2009 Legislative Proposal – Bill No. SB 1154
 Essentially, the deadline is December 31
for the year preceding the deadline (e.g.
for 2013, the goal is 7% on 12/31/2012).
 Rate Cap – 2% of retail electricity sales
above avoided cost (power supply costs of
"the generation source it (the utility)
would have otherwise built or the energy
or capacity, or both, it would have
purchased from another source").
2009 Legislative Proposal – Bill No. SB 1154
 Proposed Florida Clean Portfolio Standard
(CPS) for Investor-Owned Utilities
 Mandatory vs. Aspirational - Mandatory
for IOUs. However, non-compliance may
be excused due to lack of sufficient clean
resources available or prohibitive cost
(i.e., costs exceed 2% rate cap).
2009 Legislative Proposal – Bill No. SB 1154
 Spending Limits – Up to 1% of CPS costs
may come from Class I clean energy
resources (solar and wind).
 Up to 1% of CPS costs may come from
Class II clean energy resources (other
renewables).
 No expenses from Class III clean energy
resources (new nuclear and/or IGCC with
CCS) may be used for CPS compliance
Thank You for Attending.
Tommy Boroughs
Holland & Knight LLP
[email protected]
407.244.5132