FLORIDA PUBLIC SERVICE FLORIDA PUBLIC SERVICE COMMISSIONCOMMISSION

WORKSHOP ON RENEWABLE WORKSHOP ON RENEWABLE ENEGYENEGYOn Behalf of On Behalf of

The Sierra Club, Inc.The Sierra Club, Inc.

PRESENTED BY:PRESENTED BY:E. Leon Jacobs, Jr.E. Leon Jacobs, Jr.Williams & Jacobs Williams & Jacobs

January 19, 2007January 19, 2007

FLORIDA ENERGY POLICYFLORIDA ENERGY POLICY

● ● Driven More Prominently By Externalities Driven More Prominently By Externalities

● ● Vast Scope Undefined Relative to NeedsVast Scope Undefined Relative to Needs

● ● Challenged by Phenomenal Growth in Challenged by Phenomenal Growth in DemandDemand

● ● Highly Vulnerable to Global Highly Vulnerable to Global

Markets In DisarrayMarkets In Disarray

FLORIDA’S ENERGY MARKETFLORIDA’S ENERGY MARKET

● ● Explosive Growth in Consumption – Explosive Growth in Consumption – As of 1/04As of 1/04

48,000 MW - Summer48,000 MW - Summer

51,000 MW - Winter51,000 MW - Winter

●●Annual Growth rate: 900 MW - 1,500 Annual Growth rate: 900 MW - 1,500 MW per yearMW per year

●● At Present Pace, Projected to BuildAt Present Pace, Projected to Build

45 New 500 MW Plants by 202045 New 500 MW Plants by 2020

FLORIDA’S ENERGY MARKETFLORIDA’S ENERGY MARKET

Transmission ConstraintsTransmission Constraints

US Department of Energy Transmission US Department of Energy Transmission Congestion Study Congestion Study

Finds High Probability for Congestion Finds High Probability for Congestion Due To Projected Influx of New Power Due To Projected Influx of New Power from:from:

- Nuclear ( 2 proposed plants)Nuclear ( 2 proposed plants)

-- Coal ( 7 proposed plants)Coal ( 7 proposed plants)

FLORIDA’S ENERGY POLICYFLORIDA’S ENERGY POLICY

Regulators and Policy-makers Challenged By:Regulators and Policy-makers Challenged By: UncertaintiesUncertainties in: in: (i)(i) fuel pricesfuel prices(ii)(ii) fuel transportationfuel transportation(iii)(iii) capital costscapital costs(iv)(iv) O&M expensesO&M expenses(v)(v) emission constraints; and emission constraints; and (vi)(vi) decommissioningdecommissioning

RisksRisks in : in : (i) reliability(i) reliability (ii) financing(ii) financing (iii) technology; and (iii) technology; and (iv) markets(iv) markets

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES Florida Policymakers Must Engage In A Florida Policymakers Must Engage In A

Systematic Process To Plan Reliable Systematic Process To Plan Reliable Service At Reasonable RatesService At Reasonable Rates

This Process Must Deal With Uncertainty This Process Must Deal With Uncertainty and Risk In A Transparent and Objective and Risk In A Transparent and Objective FashionFashion

The Sierra Club Recommends That The The Sierra Club Recommends That The Florida Public Service Commission Address Florida Public Service Commission Address Renewables In the Context of an Renewables In the Context of an integrated portfolio management initiativeintegrated portfolio management initiative

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES PORTFOLIO MANAGEMENTPORTFOLIO MANAGEMENT - energy resource planning utilizing a diverse, - energy resource planning utilizing a diverse,

cost-effective mix of energy resources, cost-effective mix of energy resources, including including . supply-side (traditional and renewable) and, . supply-side (traditional and renewable) and, . demand-side (DSM, efficiency) options…. demand-side (DSM, efficiency) options…for integrated resource planning in vertically for integrated resource planning in vertically integrated, regulated utilities, and in integrated, regulated utilities, and in deregulated markets where they exist.deregulated markets where they exist.

US EnvironmentalUS Environmental Protection AgencyProtection Agency

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES

PORTFOLIO MANAGEMENTPORTFOLIO MANAGEMENT CRITICAL DIFFERENCECRITICAL DIFFERENCE

Portfolio Management provides for real Portfolio Management provides for real assessment, balancing and management of assessment, balancing and management of long-term issues to minimize costs and risks.long-term issues to minimize costs and risks.

RESULTSRESULTS

Optimized mix of resources that stabilize prices Optimized mix of resources that stabilize prices to ratepayers, and manage uncertainties, to ratepayers, and manage uncertainties, risks and costs.risks and costs.

RENEWABLES RENEWABLES INTERNATIONALLYINTERNATIONALLY

Electric Production From Renewables is Emerging Around the World, Electric Production From Renewables is Emerging Around the World, But Still Low in the US, Even With Dramatic Reductions in Price of But Still Low in the US, Even With Dramatic Reductions in Price of

WindWind

Nonhydro renewables, percentage share of electricity production, 2000. By regional grouping OECD total 2.0% North America 2.0 Europe 2.1 Pacific 1.6

Selected countries Iceland 17.2% Denmark 16.7 Finland 12.3 New Zealand 8.9 Germany 2.5 United Kingdom 1.3 United States 2.1

- Source: IEA, Renewables Information 2002 (Paris: OECD/IEA 2002).

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES

Renewables Bring Important Benefits, Renewables Bring Important Benefits, and, as With All Energy Resources, Pose and, as With All Energy Resources, Pose Externalities, Uncertainty and RiskExternalities, Uncertainty and Risk

EX: EX: JEA Biomass ProjectJEA Biomass Project Offshore Wind ProjectOffshore Wind Project EmissionsEmissions Transmission Transmission

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES

Most Prominent Strategies to Stimulate RenewablesMost Prominent Strategies to Stimulate Renewables

Feed-In LawsFeed-In LawsSpecifies a guaranteed price via tariff, coupled with a Specifies a guaranteed price via tariff, coupled with a

utility purchase obligation and planned utility purchase obligation and planned interconnection. interconnection. Popular in Europe; Similar to PURPA Standard Offer Popular in Europe; Similar to PURPA Standard Offer

Renewable Portfolio Standards (RPS)Renewable Portfolio Standards (RPS)Specifies a target mix of renewable energy resources for Specifies a target mix of renewable energy resources for

inclusion in a utility’s generation mix; growing inclusion in a utility’s generation mix; growing popularity in US; little emphasis on price of renewables.popularity in US; little emphasis on price of renewables.

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES

Twenty three States (40% of US Twenty three States (40% of US sales) have enacted RPSsales) have enacted RPS

FLORIDA’S RENEWABLESFLORIDA’S RENEWABLES

It Is Vitally Important That There Be A It Is Vitally Important That There Be A More Complete Analysis of the True More Complete Analysis of the True Costs, Risks and Benefits Of Energy Costs, Risks and Benefits Of Energy Resources Used To Meet the Demand Resources Used To Meet the Demand In FloridaIn Florida

Portfolio Management Is This ToolPortfolio Management Is This Tool

FLORIDA’S ENERGY MARKETFLORIDA’S ENERGY MARKET

● ● MOST SIGNIFICANT OPPORTUNITIESMOST SIGNIFICANT OPPORTUNITIES

-- Integrated PlanningIntegrated Planning

- - Development of Demand-Side StrategiesDevelopment of Demand-Side Strategies

- - Innovation in Energy EfficiencyInnovation in Energy Efficiency

-- Cultivation of Renewables and Distributed Cultivation of Renewables and Distributed GenerationGeneration

FLORIDA’S ENERGY MARKETFLORIDA’S ENERGY MARKET

MARGINALIZES MARGINALIZES PORTFOLIO MANAGEMENT STRATEGIESPORTFOLIO MANAGEMENT STRATEGIES

Alliance to Save Energy reports:Alliance to Save Energy reports:

““Hundreds of untapped MW savings as a result Hundreds of untapped MW savings as a result of underutilization of energy efficiency and of underutilization of energy efficiency and renewables”renewables”

BUSINESS CASE FOR PORTFOLIO BUSINESS CASE FOR PORTFOLIO MANAGEMENT STRATEGIES IN FLORIDAMANAGEMENT STRATEGIES IN FLORIDA

●● Demand Rapidly Outstripping Capacity of Demand Rapidly Outstripping Capacity of SupplySupply

●● Emergence of EE TechnologyEmergence of EE Technology

●● Growing Adoption of Renewables Strategies Growing Adoption of Renewables Strategies Around the Country ( economies of scale)Around the Country ( economies of scale)

●● Governmental Agencies and Other Large Users Governmental Agencies and Other Large Users Must Reduce Energy CostsMust Reduce Energy Costs

●● Environmental Benefits Are ValuableEnvironmental Benefits Are Valuable

●● High Priority for Reliability After HurricanesHigh Priority for Reliability After Hurricanes

GROWING PUBLIC DEMAND FOR GROWING PUBLIC DEMAND FOR ENERGY ALTERNATIVES IN FLORIDAENERGY ALTERNATIVES IN FLORIDA

● ● Public Outcry Regarding Outages After Public Outcry Regarding Outages After HurricanesHurricanes

●● Chapter 2006-280, Laws of Florida (SB 888)Chapter 2006-280, Laws of Florida (SB 888)

● ● Controversy Over Coal PlantsControversy Over Coal Plants

● ● Governor’s Hydrogen InitiativeGovernor’s Hydrogen Initiative

●● 2006 Florida Energy Plan2006 Florida Energy Plan

●● National Energy PlanNational Energy Plan