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    Florida PSC Takes Up Petition from Tampa Electric


    November 8, 2022 - Targeted News Service

     

      TALLAHASSEE, Florida, Nov. 8 (TNSsro) -- The Florida Public Service Commission receives petition on the electric docket (No. 20220186-EI) on Nov. 7, 2022:

      * * *

      Petition for Approval of Purchased Power Agreement with Pasco County by Tampa Electric Company

      PETITION FOR APPROVAL OF PURCHASED POWER AGREEMENT WITH PASCO COUNTY

      Pursuant to Sections 120.57 and 366.076, Florida Statutes, and Rule 25-17.200 et seq., Florida Administrative Code ("F.A.C."), Tampa Electric Company ("Petitioner," "Tampa Electric," or "the company"), files this Petition for Approval of a Contract for the Purchase of Contracted Capacity and Associated Energy with Pasco County, Florida ("Pasco") for the purchase of firm capacity and energy from Pasco's waste-to-energy facility. This proposed purchased power agreement (the "Agreement") contains a condition precedent that requires a finding by the Florida Public Service Commission ("Commission") that it is prudent for Tampa Electric to enter the Agreement. Consequently, Tampa Electric respectfully requests that the Commission find, for the reasons set forth below, that it is prudent for the company to enter this Agreement, and to approve the Agreement. In support of this Petition, the company states:

      Introduction

      1. The Petitioner's name and address are:

      Tampa Electric Company

      702 North Franklin Street

      Tampa, Florida 33602

      2. Tampa Electric is a Florida corporation and is a wholly owned subsidiary of TECO Energy, Inc., which is a wholly owned subsidiary of Emera Incorporated. The company is an investor-owned public utility operating under the jurisdiction of the Florida Public Service Commission ("Commission" or "FPSC") pursuant to Chapter 366, Florida Statutes.

      3. Tampa Electric provides retail electric service to over 810,000 customers in a 2,000 square mile service territory in Hillsborough and portions of Polk, Pasco, and Pinellas counties, Florida. Tampa Electric and its approximately 2,400 employees are focused on safety, providing cleaner and greener energy for its communities, and making it easier for its customers to do business with the company - when and where they want.

      4. This Petition represents an original pleading and is not in response to any proposed action by the Commission. Accordingly, the company is not responding to any proposed agency action.

      5. All pleadings, motions, notices, orders, or other documents filed in this proceeding or required to be served upon Tampa Electric shall be served upon the following individuals:

      J. Jeffry Wahlen

      jwahlen@ausley.com

      Malcolm N. Means

      mmeans@ausley.com

      Virginia Ponder

      vponder@ausley.com

      Ausley McMullen

      Post Office Box 391

      Tallahassee, FL 32302

      (850) 224-9115

      (850) 222-7560 (fax)

      * * *

      Paula K. Brown

      regdept@tecoenergy.com

      Manager, Regulatory Coordination

      Tampa Electric Company

      Post Office Box 111

      Tampa, FL 33601

      (813) 228-1444

      (813) 228-1770 (fax)

      Ultimate Facts Alleged

      6. The ultimate facts that entitle Tampa Electric to the relief requested herein are the facts set forth below.

      Introduction and Background

      7. The Florida Legislature has found that "it is in the public interest to promote the development of renewable energy resources in this state" because those resources "have the potential to help diversify fuel types [and] minimize the volatility of fuel costs..." Sec.366.91, Fla. Stat. The Commission implemented Section 366.91, Florida Statutes, by adopting Rules 25-17.200 through 25-17.310, Florida Administrative Code ("F.A.C.").

      8. Pasco owns and operates a waste-to-energy facility in Spring Hill, Florida, which is located within Duke Energy Florida's ("DEF") service territory. The Pasco facility is a 31 MW facility consisting of three municipal waste combustors and one steam turbine electric generator (the "Pasco WTE Facility")./1

      9. The Pasco WTE Facility is a "renewable generating facility" pursuant to Section 366.91, Florida Statutes, and the Commission's rules implementing that statute. Specifically, Rule 25-17.210 defines a "renewable generating facility" as including an electrical generating unit that generates electricity from "biomass," which is defined as a "fuel source that is comprised of, but not limited to, combustible residues or gases from...municipal solid waste, municipal liquid waste treatment operations, and landfill gas." R. 25-17.210(1)-(2), F.A.C. Since the Pasco WTE Facility generates electricity from this category of fuels, it falls under the definition of a "renewable generating facility."

      10. Rule 25-17.240 states that "investor-owned utilities and renewable generating facilities are encouraged to negotiate contracts for the purchase of firm capacity and energy/2 to avoid or defer construction of planned utility generating units and provide fuel diversity, fuel price stability, and energy security." R. 25-17.240(1), F.A.C.

      11. In 2021, Tampa Electric and Pasco entered into negotiations regarding a potential power purchase agreement for power generated by the Pasco WTE Facility.

      12. The result of these negotiations is a tentative power purchase agreement that will go into effect if the Commission finds that the Agreement is prudent for purposes of cost recovery. The redacted, non-confidential version/3 of the Agreement is attached as Exhibit 1 and is incorporated herein by reference.

      Basic Terms

      13. Under the Agreement, Pasco commits to provide 21 megawatts of firm, must-take energy with a monthly availability of at least 92 percent at the Tampa Electric-DEF service territory boundary. The Agreement's pricing structure is an energy rate with no capacity payment. In the event Pasco completes planned capacity upgrades for the facility, the capacity in the Agreement would increase from 21 megawatts to 25 megawatts automatically.

      14. The Agreement contains protections for Tampa Electric and the company's customers if the Pasco WTE Facility fails to achieve the availability target. First, in a month in which Pasco fails to meet the availability target, Tampa Electric will pay Pasco a lower energy price for that month, provided Pasco can first supply the energy from an equivalent energy source within the power market. Second, if the Pasco WTE Facility has an availability less than seventy percent (70%) for any six (6) months in a given contract year, this failure is considered a default. If Pasco fails to cure that deficiency as specified in the Agreement, Tampa Electric may recover from Pasco the costs of obtaining replacement power for the balance of the Agreement.

      15. The Agreement has a ten-year term which would begin in January 2025 if approved by the Commission and would expire in December 2034.

      16. DEF will provide transmission service to deliver the firm capacity and energy from the Pasco WTE Facility to the Tampa Electric transmission interface. This service is consistent with Rule 25-17.230(5), F.A.C., which provides that each investor-owned utility must, upon request by a renewable generating facility, provide transmission service to wheel firm energy and capacity produced by the renewable generating facility to another electric utility.

      17. The parties agreed to a transmission cost-sharing provision with respect to DEF's transmission costs. Pursuant to this "Pasco Transmission Cost Cap," Pasco will pay for firm DEF transmission up to the cap amount, after which Tampa Electric will cover the remaining costs. Based on DEF's projected transmission prices, Tampa Electric does not expect to incur transmission costs under this provision until 2028, if at all. Tampa Electric projects that the Agreement will provide savings to customers even if the company incurs some of the DEF transmission expenses.

      Renewable Energy Credits

      18. Rule 25-17.280 governs tradeable renewable energy credits ("TRECs") produced by a renewable generating facility. It states that TRECs "shall remain the exclusive property of the renewable generating facility," and prohibits utilities from placing conditions upon TRECs "unless agreed to by the renewable generating facility." R. 25-17.280, F.A.C.

      19. As the Commission has previously recognized, utility and renewable generating facilities are free to include provisions governing treatment of TRECs in negotiated contracts. See, e.g. Order No. PSC-2009-0562-PAA-EQ, issued August 14, 2009, in Docket No. 20090150-EQ (discussing utility's right of first refusal to purchase environmental attributes in negotiated contract with solid waste combustion facility).

      20. Pursuant to Rule 25-17.280, Tampa Electric and Pasco agreed to several provisions governing treatment of RECs./4 Specifically:

      a. Tampa Electric will receive RECs for all energy it purchases from the Pasco WTE Facility at zero cost.

      b. If, however, the State of Florida or federal government establishes a monetary value for those RECs, Tampa Electric will pay Pasco either the state or federal value for the RECs, whichever is higher.

      c. If no government-established value exists for the RECs during the term of the Agreement, Pasco retains the right to find a third-party buyer for the RECs. If Pasco exercises that right and locates a buyer, Tampa Electric has a right of first refusal to purchase the RECs at the negotiated price or to sell the RECs to the third party and pass the revenue through to Pasco.

      Prudency

      21. Rule 25-17.240(2) of the Florida Administrative Code provides that a negotiated contract between a renewable generating facility and an investor-owned utility is prudent for cost-recovery purposes if the utility demonstrates that: (1) the contract will contribute towards the deferral or avoidance of additional capacity construction or other capacity-related costs; (2) the contract will provide fuel diversity, fuel price stability, and energy security; and (3) the contract price does not exceed "full avoided costs."/5 See Rule 25-17.240(2), F.A.C.

      22. It is prudent for Tampa Electric to enter into the Agreement based on consideration of each of these factors.

      a. First, the Agreement will contribute towards the deferral of additional capacity construction by providing 21 megawatts (or 25 MW, if Pasco completes a planned capacity upgrade) of firm, must-take energy to Tampa Electric.

      b. Second, the Agreement will provide fuel diversity, fuel price stability, and energy security in the form of firm capacity and energy generated by a renewable energy facility. The Agreement adds a new non-fossil-fueled resource to the company's energy supply portfolio, thereby reducing reliance on natural gas, providing a physical hedge against fossil fuel price volatility, and reducing overall generation fleet CO2 emissions.

      c. Finally, the Agreement price does not exceed "full avoided costs." The pricing for the Agreement is based on the company's designated avoided unit at the time that contract negotiations began, which was the generating unit identified in Tampa Electric's retail tariff schedule COG-2, effective July 8, 2021. The price structure of the Agreement has no capacity payment but is instead an "all-in" energy rate (i.e., dollars per megawatt-hour). The initial price is fixed for the first five years and steps up to a higher energy price in years 6-10. The Agreement is ultimately expected to provide savings to customers ranging from $4.3 million to $11.4 million, depending on the future capacity of the Pasco WTE Facility and depending on future DEF transmission costs.

      23. The Agreement also contains provisions that mitigate risk to Tampa Electric's customers. As mentioned above, the Agreement requires Pasco to maintain specified levels of unit availability and provides Tampa Electric with remedies in the event that Pasco does not achieve those availability levels. Furthermore, the "all-in" energy rate eliminates the risk that the company could pay fixed costs during periods of non-delivery since the company pays only for the energy Pasco is able to deliver.

      24. Based on the above, it is prudent for Tampa Electric to enter into the Agreement under the criteria set out in Rule 25-17.240. The Agreement is expected to contribute to the deferral of capacity construction or capacity-related costs and will provide fuel diversity, fuel price stability, and energy security at a price below full avoided cost.

      Other

      25. Tampa Electric is not aware of any disputed issues of material fact associated with this Petition.

      26. Tampa Electric is entitled to the relief requested pursuant to Chapters 366 and 120, Florida Statutes, and Rule 25-17.200 et seq.

      WHEREFORE, Tampa Electric respectfully requests that the Commission enter an Order finding that it is prudent for cost-recovery purposes for Tampa Electric to enter into a power purchase agreement with Pasco for the purchase of firm capacity and energy from the Pasco WTE Facility, and for all other relief as may be reasonable and proper.

      DATED this 4th day of November 2022.

      Respectfully submitted,

      J. JEFFRY WAHLEN

      jwahlen@ausley.com

      MALCOLM N. MEANS

      mmeans@ausley.com

      VIRGINIA PONDER

      vponder@ausley.com

      Ausley McMullen

      Post Office Box 391

      Tallahassee, FL 32302

      (850) 224-9115

      ATTORNEYS FOR TAMPA ELECTRIC COMPANY

      * * *

      Footnotes:

      1/ See Florida Department of Environmental Protection, Conditions of Certification for Pasco County Resource Generating Facility, available at http://publicfiles.dep.state.fl.us/Siting/Outgoing/Web/Certification/pa87_23_2021_G.pdf.

      2/ The term "firm capacity and energy" is defined as "capacity and energy produced and sold by a qualifying facility pursuant to a negotiated contract..." R. 25-17.0832(1), F.A.C.

      3/ Tampa Electric considers certain terms of the Agreement to be "confidential proprietary business information" under Section 366.093, Florida Statutes, and Rule 25-22.006, F.A.C. Tampa Electric will accordingly file the confidential, non-redacted version of the Agreement under separate cover along with a request for confidential classification.

      4/ While Rule 25-17.280 refers to "TRECs," the Agreement utilizes the term "renewable energy credits" or "RECs," which is a common industry term. The Agreement contemplates that the RECs generated by the Pasco WTE Facility may be tradeable during the term of the Agreement, and the provisions described below address how the parties will address REC transactions. As a practical matter, therefore, the terms REC and TREC are interchangeable.

      5/ Rule 25-17.210(3) defines "full avoided costs" as "the incremental costs to the purchasing utility of the electric energy or capacity, or both, which, but for the purchase from a renewable generating facility, such utility would generate itself or purchase from another source."

      * * *

      Original text here: http://www.floridapsc.com/library/filings/2022/10936-2022/10936-2022.pdf

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