Florida Senate - 2010                             CS for SB 1186
       
       
       
       By the Committee on Communications, Energy, and Public
       Utilities; and Senators Bennett and Smith
       
       
       
       579-04914-10                                          20101186c1
    1                        A bill to be entitled                      
    2         An act relating to renewable energy; amending s.
    3         366.92, F.S.; revising legislative intent regarding
    4         the state’s renewable energy policy; deleting
    5         provisions requiring that the Public Service
    6         Commission adopt rules for a renewable portfolio
    7         standard; requiring that the commission provide for
    8         full cost recovery; requiring that each provider of
    9         Florida renewable energy resources build such
   10         resources, convert existing fossil fuel generation
   11         plants to a renewable energy resource, or purchase
   12         renewable energy; providing that each provider may
   13         purchase or produce renewable energy having capacity
   14         or energy costs in excess of the fully avoided cost
   15         limitations; specifying such cost limitations;
   16         providing for renewable attributes; providing
   17         guidelines for cost recovery; amending s. 366.8255,
   18         F.S.; revising the definition of the term
   19         “environmental laws or regulations” to include any
   20         federal or state law requiring an electric utility to
   21         provide electricity from renewable energy; revising
   22         the definition of the term “environmental compliance
   23         costs” to conform to changes made by the act;
   24         providing an effective date.
   25  
   26  Be It Enacted by the Legislature of the State of Florida:
   27  
   28         Section 1. Section 366.92, Florida Statutes, is amended to
   29  read:
   30         366.92 Florida renewable energy policy.—
   31         (1) In order to stimulate the state’s economy, encourage
   32  businesses to invest in clean technologies, and foster research,
   33  development, manufacturing, construction, and jobs in new and
   34  renewable energy, it is the intent of the Legislature to promote
   35  the development of renewable energy; protect the economic
   36  viability of Florida’s existing renewable energy facilities;
   37  diversify the types of fuel used to generate electricity in
   38  Florida; lessen Florida’s dependence on natural gas and fuel oil
   39  for the production of electricity; minimize the volatility of
   40  fuel costs; encourage investment within the state; improve
   41  environmental conditions; and, at the same time, minimize the
   42  costs of renewable power supply to electric utilities and their
   43  customers. It is the further intent of the Legislature that all
   44  prudently incurred costs of renewable energy shall be
   45  recoverable from electric utility customers through the
   46  environmental cost recovery clause.
   47         (2) As used in this section, the term:
   48         (a) “Florida renewable energy resources” means renewable
   49  energy, as defined in s. 377.803, that is produced in Florida.
   50         (b) “Provider” means a “utility” as defined in s.
   51  366.8255(1)(a).
   52         (c) “Renewable energy” means renewable energy as defined in
   53  s. 366.91(2)(d).
   54         (d) “Renewable energy credit” or “REC” means a product that
   55  represents the unbundled, separable, renewable attribute of
   56  renewable energy produced in Florida and is equivalent to 1
   57  megawatt-hour of electricity generated by a source of renewable
   58  energy located in Florida.
   59         (e) “Renewable portfolio standard” or “RPS” means the
   60  minimum percentage of total annual retail electricity sales by a
   61  provider to consumers in Florida that shall be supplied by
   62  renewable energy produced in Florida.
   63         (3) The commission shall adopt rules for a renewable
   64  portfolio standard requiring each provider to supply renewable
   65  energy to its customers directly, by procuring, or through
   66  renewable energy credits. In developing the RPS rule, the
   67  commission shall consult the Department of Environmental
   68  Protection and the Florida Energy and Climate Commission. The
   69  rule shall not be implemented until ratified by the Legislature.
   70  The commission shall present a draft rule for legislative
   71  consideration by February 1, 2009.
   72         (a) In developing the rule, the commission shall evaluate
   73  the current and forecasted levelized cost in cents per kilowatt
   74  hour through 2020 and current and forecasted installed capacity
   75  in kilowatts for each renewable energy generation method through
   76  2020.
   77         (b) The commission’s rule:
   78         1. Shall include methods of managing the cost of compliance
   79  with the renewable portfolio standard, whether through direct
   80  supply or procurement of renewable power or through the purchase
   81  of renewable energy credits. The commission shall have
   82  rulemaking authority for providing annual cost recovery and
   83  incentive-based adjustments to authorized rates of return on
   84  common equity to providers to incentivize renewable energy.
   85  Notwithstanding s. 366.91(3) and (4), upon the ratification of
   86  the rules developed pursuant to this subsection, the commission
   87  may approve projects and power sales agreements with renewable
   88  power producers and the sale of renewable energy credits needed
   89  to comply with the renewable portfolio standard. In the event of
   90  any conflict, this subparagraph shall supersede s. 366.91(3) and
   91  (4). However, nothing in this section shall alter the obligation
   92  of each public utility to continuously offer a purchase contract
   93  to producers of renewable energy.
   94         2. Shall provide for appropriate compliance measures and
   95  the conditions under which noncompliance shall be excused due to
   96  a determination by the commission that the supply of renewable
   97  energy or renewable energy credits was not adequate to satisfy
   98  the demand for such energy or that the cost of securing
   99  renewable energy or renewable energy credits was cost
  100  prohibitive.
  101         3. May provide added weight to energy provided by wind and
  102  solar photovoltaic over other forms of renewable energy, whether
  103  directly supplied or procured or indirectly obtained through the
  104  purchase of renewable energy credits.
  105         4. Shall determine an appropriate period of time for which
  106  renewable energy credits may be used for purposes of compliance
  107  with the renewable portfolio standard.
  108         5. Shall provide for monitoring of compliance with and
  109  enforcement of the requirements of this section.
  110         6. Shall ensure that energy credited toward compliance with
  111  the requirements of this section is not credited toward any
  112  other purpose.
  113         7. Shall include procedures to track and account for
  114  renewable energy credits, including ownership of renewable
  115  energy credits that are derived from a customer-owned renewable
  116  energy facility as a result of any action by a customer of an
  117  electric power supplier that is independent of a program
  118  sponsored by the electric power supplier.
  119         8. Shall provide for the conditions and options for the
  120  repeal or alteration of the rule in the event that new
  121  provisions of federal law supplant or conflict with the rule.
  122         (c) Beginning on April 1 of the year following final
  123  adoption of the commission’s renewable portfolio standard rule,
  124  each provider shall submit a report to the commission describing
  125  the steps that have been taken in the previous year and the
  126  steps that will be taken in the future to add renewable energy
  127  to the provider’s energy supply portfolio. The report shall
  128  state whether the provider was in compliance with the renewable
  129  portfolio standard during the previous year and how it will
  130  comply with the renewable portfolio standard in the upcoming
  131  year.
  132         (3)(4) In order to promote the development of Florida
  133  renewable energy resources and the delivery of renewable energy
  134  in the state, pending the adoption of final renewable energy
  135  portfolio standards under federal or state law demonstrate the
  136  feasibility and viability of clean energy systems, the
  137  commission shall provide for full cost recovery under the
  138  environmental cost-recovery clause of all reasonable and prudent
  139  costs incurred by a provider of Florida renewable energy
  140  resources for renewable energy projects that are zero greenhouse
  141  gas emitting at the point of generation, up to a total of 110
  142  megawatts statewide, and for which the provider has secured
  143  necessary land, zoning permits, and transmission rights within
  144  the state. Pursuant to this section, a provider may build
  145  Florida renewable energy resources, convert existing fossil fuel
  146  generation plants to a Florida renewable energy resource, or
  147  purchase renewable energy. Such providers shall recover all
  148  reasonable and prudent costs associated with building Florida
  149  renewable energy resources, converting existing fossil fuel
  150  generation plants to a Florida renewable energy resource, or
  151  purchasing renewable energy under the environmental cost
  152  recovery clause. Each provider has the sole discretion to
  153  determine the type and technology of the Florida renewable
  154  energy resources that it elects to build and determine whether
  155  to self-build or contract for purchase power with a third party.
  156  Such costs shall be deemed reasonable and prudent for purposes
  157  of cost recovery so long as the provider has used reasonable and
  158  customary industry practices in the design, procurement, and
  159  construction of the project in a cost-effective manner
  160  appropriate to the location of the facility. The provider shall
  161  report to the commission as part of the cost-recovery
  162  proceedings the construction costs, in-service costs, operating
  163  and maintenance costs, hourly energy production of the renewable
  164  energy project, and any other information deemed relevant by the
  165  commission. Any provider constructing a clean energy facility
  166  pursuant to this section shall file for cost recovery no later
  167  than July 1, 2009.
  168         (4) Pending the adoption of a state or federal renewable
  169  portfolio standard, each provider may purchase or produce
  170  Florida renewable energy having capacity or energy costs in
  171  excess of the fully avoided cost limitations in s. 366.051,
  172  subject to the limitations and conditions specified in
  173  paragraphs (a) and (b).
  174         (a) The cost of producing or purchasing Florida renewable
  175  energy in any calendar year in excess of the fully avoided cost
  176  limitations in s. 366.051 shall not exceed 2 percent in 2010 and
  177  2011, 3 percent in 2012, or 4 percent in 2013 and thereafter of
  178  the investor-owned utility’s total revenue from retail sales of
  179  electricity for the calendar year 2009. Pursuant to this
  180  section, costs shall be computed using a methodology that
  181  averages the revenue requirements of the renewable energy
  182  resource or the purchases over their economic lives. Costs
  183  incurred by a provider in 2010 for Florida renewable energy
  184  resources for which construction is commenced or for renewable
  185  energy purchased on or after the effective date of this act
  186  shall be counted toward and included in the calculation of the
  187  cost cap. Costs for renewable energy resources approved by the
  188  commission for cost recovery through the environmental cost
  189  recovery clause before the effective date of this act shall not
  190  be subject to or included in the calculation of the cost cap.
  191         (b) If a provider pays costs for purchased power above the
  192  limitations set out in s. 366.051, the seller shall surrender to
  193  the provider all renewable attributes of the energy being
  194  purchased by the provider.
  195         (5) Each municipal electric utility and rural electric
  196  cooperative shall develop standards for the promotion,
  197  encouragement, and expansion of the use of renewable energy
  198  resources and energy conservation and efficiency measures. On or
  199  before April 1, 2009, and annually thereafter, each municipal
  200  electric utility and electric cooperative shall submit to the
  201  commission a report that identifies such standards.
  202         (6) All prudently incurred costs of renewable energy shall
  203  be recoverable under s. 366.8255.
  204         (a) The costs incurred by a provider in connection with the
  205  construction or conversion, operation, and maintenance of a
  206  Florida renewable energy resource shall be deemed to be prudent
  207  for purposes of cost recovery so long as the provider has used
  208  reasonable and customary industry practices in the design,
  209  procurement, and construction of the project in a cost-effective
  210  manner appropriate for the type of Florida renewable energy
  211  resource and appropriate to the location of the facility. The
  212  provider shall report to the commission as part of the cost
  213  recovery proceedings the construction costs, in-service costs,
  214  operating and maintenance costs, hourly energy production of the
  215  renewable energy project, and any other information deemed
  216  relevant by the commission.
  217         (b) The commission shall allow full cost recovery over the
  218  entire useful life of the Florida renewable energy resource of
  219  the revenue requirements using traditional declining balance
  220  amortization through the environmental cost-recovery clause of
  221  all reasonable and prudent costs incurred by the provider
  222  related to or resulting from activities under this section,
  223  including, but not limited to, the following:
  224         1. The siting, licensing, engineering, design, permitting,
  225  construction, operation, and maintenance of Florida renewable
  226  energy resources and associated transmission facilities by the
  227  provider. Cost includes, but is not limited to, all capital
  228  investments, including rate of return and any applicable taxes
  229  and all expenses, including operation and maintenance expenses,
  230  for the purposes stated in this subsection;
  231         2. The reasonable and prudent costs associated with the
  232  purchase of capacity and energy from new renewable energy
  233  resources; or
  234         3. The reasonable and prudent costs for conversion of
  235  existing fossil fuel generating plants to a Florida renewable
  236  energy resource, including the costs of retirement of the fossil
  237  fuel generation plant.
  238         (c) Notwithstanding any other provision to the contrary,
  239  the commission shall allow a provider to recover all reasonable
  240  and prudent costs incurred to comply with a federal renewable
  241  portfolio standard, including costs to purchase renewable energy
  242  credits or alternative compliance payments.
  243         (d) In addition to the full cost recovery for such
  244  renewable energy projects, a return on equity of not less than
  245  50 basis points above the top of the range of the provider’s
  246  last authorized rate of return on equity, approved by the
  247  commission for energy projects, shall be approved and provided
  248  for such renewable energy projects if a majority value of the
  249  energy-producing components incorporated into such projects are
  250  manufactured or assembled within this state.
  251         (7)(6) Nothing in this section or actions taken pursuant to
  252  this section shall be construed to impede or impair terms and
  253  conditions of existing contracts or be a basis for renegotiating
  254  or repricing existing contracts.
  255         (8) Nothing in this section impedes or impairs a provider’s
  256  full cost recovery of all reasonable and prudent costs incurred
  257  for renewable energy projects approved by the commission as
  258  eligible for cost recovery through the environmental cost
  259  recovery clause before the effective date of this act. Nothing
  260  in this section requires a provider to build Florida renewable
  261  energy resources, convert existing fossil fuel generation plants
  262  to a Florida renewable resource, or purchase renewable energy.
  263  Furthermore a provider is not required to contract for
  264  generation at a price above its avoided cost if doing so would
  265  be inconsistent with or violate the Public Utility Regulatory
  266  Policies Act of 1978, as amended.
  267         (9)(7) The Commission may adopt rules to administer and
  268  implement the provisions of this section.
  269         Section 2. Subsection (1) of section 366.8255, Florida
  270  Statutes, is amended to read:
  271         366.8255 Environmental cost recovery.—
  272         (1) As used in this section, the term:
  273         (a) “Electric utility” or “utility” means any investor
  274  owned electric utility that owns, maintains, or operates an
  275  electric generation, transmission, or distribution system within
  276  the State of Florida and that is regulated under this chapter.
  277         (b) “Commission” means the Florida Public Service
  278  Commission.
  279         (c) “Environmental laws or regulations” includes all
  280  federal, state, or local statutes, administrative regulations,
  281  orders, ordinances, resolutions, or other requirements that
  282  apply to electric utilities and are designed to protect the
  283  environment, including any federal or state law that requires an
  284  electric utility to provide electricity from renewable energy.
  285         (d) “Environmental compliance costs” includes all costs or
  286  expenses incurred by an electric utility in complying with
  287  environmental laws or regulations, including, but not limited
  288  to:
  289         1. Inservice capital investments, including the electric
  290  utility’s last authorized rate of return on equity thereon.
  291         2. Operation and maintenance expenses.
  292         3. Fuel procurement costs.
  293         4. Purchased power costs.
  294         5. Emission allowance costs.
  295         6. Direct taxes on environmental equipment.
  296         7. Costs or expenses prudently incurred by an electric
  297  utility pursuant to an agreement entered into on or after the
  298  effective date of this act and prior to October 1, 2002, between
  299  the electric utility and the Florida Department of Environmental
  300  Protection or the United States Environmental Protection Agency
  301  for the exclusive purpose of ensuring compliance with ozone
  302  ambient air quality standards by an electrical generating
  303  facility owned by the electric utility.
  304         8. Costs or expenses prudently incurred for the
  305  quantification, reporting, and third-party verification as
  306  required for participation in greenhouse gas emission registries
  307  for greenhouse gases as defined in s. 403.44.
  308         9. Costs or expenses prudently incurred for scientific
  309  research and geological assessments of carbon capture and
  310  storage conducted in this state for the purpose of reducing an
  311  electric utility’s greenhouse gas emissions when such costs or
  312  expenses are incurred in joint research projects with Florida
  313  state government agencies and Florida state universities.
  314         10. Costs or expenses prudently incurred to comply with any
  315  environmental laws or regulations requiring that any portion of
  316  the electric utility’s energy sales, demand, or other measures
  317  of the provision of electricity to its customers be derived from
  318  renewable energy, however defined, either produced by the
  319  electric utility itself or purchased from another source, or
  320  through credits purchased to comply in whole or in part with
  321  such provisions, including costs or expenses associated with
  322  setting up and participating in market or other mechanisms for
  323  trading such renewable energy credits.
  324         Section 3. This act shall take effect upon becoming a law.


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