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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

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 3

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

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

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

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.

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

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

Compliance REC Prices in the USA 2002-2007

Data compiled by Berkley National Laboratories from Evolution Markets


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


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


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 13

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


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.

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