Bill Text: FL S1186 | 2010 | Regular Session | Comm Sub
Bill Title: Renewable Energy [EPSC]
Spectrum: Bipartisan Bill
Status: (Failed) 2010-04-30 - Died in Committee on Policy & Steering Committee on Ways and Means [S1186 Detail]
Download: Florida-2010-S1186-Comm_Sub.html
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 that55represents the unbundled, separable, renewable attribute of56renewable energy produced in Florida and is equivalent to 157megawatt-hour of electricity generated by a source of renewable58energy located in Florida.59(e) “Renewable portfolio standard” or “RPS” means the60minimum percentage of total annual retail electricity sales by a61provider to consumers in Florida that shall be supplied by62renewable energy produced in Florida.63(3) The commission shall adopt rules for a renewable64portfolio standard requiring each provider to supply renewable65energy to its customers directly, by procuring, or through66renewable energy credits. In developing the RPS rule, the67commission shall consult the Department of Environmental68Protection and the Florida Energy and Climate Commission. The69rule shall not be implemented until ratified by the Legislature.70The commission shall present a draft rule for legislative71consideration by February 1, 2009.72(a) In developing the rule, the commission shall evaluate73the current and forecasted levelized cost in cents per kilowatt74hour through 2020 and current and forecasted installed capacity75in kilowatts for each renewable energy generation method through762020.77(b) The commission’s rule:781. Shall include methods of managing the cost of compliance79with the renewable portfolio standard, whether through direct80supply or procurement of renewable power or through the purchase81of renewable energy credits. The commission shall have82rulemaking authority for providing annual cost recovery and83incentive-based adjustments to authorized rates of return on84common equity to providers to incentivize renewable energy.85Notwithstanding s.366.91(3) and (4), upon the ratification of86the rules developed pursuant to this subsection, the commission87may approve projects and power sales agreements with renewable88power producers and the sale of renewable energy credits needed89to comply with the renewable portfolio standard. In the event of90any conflict, this subparagraph shall supersede s.366.91(3) and91(4). However, nothing in this section shall alter the obligation92of each public utility to continuously offer a purchase contract93to producers of renewable energy.942. Shall provide for appropriate compliance measures and95the conditions under which noncompliance shall be excused due to96a determination by the commission that the supply of renewable97energy or renewable energy credits was not adequate to satisfy98the demand for such energy or that the cost of securing99renewable energy or renewable energy credits was cost100prohibitive.1013. May provide added weight to energy provided by wind and102solar photovoltaic over other forms of renewable energy, whether103directly supplied or procured or indirectly obtained through the104purchase of renewable energy credits.1054. Shall determine an appropriate period of time for which106renewable energy credits may be used for purposes of compliance107with the renewable portfolio standard.1085. Shall provide for monitoring of compliance with and109enforcement of the requirements of this section.1106. Shall ensure that energy credited toward compliance with111the requirements of this section is not credited toward any112other purpose.1137. Shall include procedures to track and account for114renewable energy credits, including ownership of renewable115energy credits that are derived from a customer-owned renewable116energy facility as a result of any action by a customer of an117electric power supplier that is independent of a program118sponsored by the electric power supplier.1198. Shall provide for the conditions and options for the120repeal or alteration of the rule in the event that new121provisions of federal law supplant or conflict with the rule.122(c) Beginning on April 1 of the year following final123adoption of the commission’s renewable portfolio standard rule,124each provider shall submit a report to the commission describing125the steps that have been taken in the previous year and the126steps that will be taken in the future to add renewable energy127to the provider’s energy supply portfolio. The report shall128state whether the provider was in compliance with the renewable129portfolio standard during the previous year and how it will130comply with the renewable portfolio standard in the upcoming131year.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 lawdemonstrate the136feasibility 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 resourcesfor renewable energy projects that are zero greenhouse141gas emitting at the point of generation, up to a total of 110142megawatts statewide, and for which the provider has secured143necessary land, zoning permits, and transmission rights within144the 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. 156Such costs shall be deemed reasonable and prudent for purposes157of cost recovery so long as the provider has used reasonable and158customary industry practices in the design, procurement, and159construction of the project in a cost-effective manner160appropriate to the location of the facility. The provider shall161report to the commission as part of the cost-recovery162proceedings the construction costs, in-service costs, operating163and maintenance costs, hourly energy production of the renewable164energy project, and any other information deemed relevant by the165commission. Any provider constructing a clean energy facility166pursuant to this section shall file for cost recovery no later167than 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.