FPL Proposal for a Florida Renewable Portfolio Standard

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FPL Proposal for a Florida Renewable Portfolio
Standard

• FPSC Staff Workshop December 6, 2007

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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 Governors 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 (contd.)

• 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 (contd.)

• 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
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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 (contd.)

• 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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