FLORIDA PUBLIC SERVICE COMMISSION WORKSHOP ON RENEWABLE ENEGY

FLORIDA PUBLIC SERVICE COMMISSION WORKSHOP ON RENEWABLE ENEGY On Behalf of The Sierra Club, Inc. PRESENTED BY: E. Leon Jacobs, Jr. Williams & Jacobs January 19, 2007

FLORIDA ENERGY POLICY ● Driven More Prominently By Externalities ● Vast Scope Undefined Relative to Needs ● Challenged by Phenomenal Growth in Demand ● Highly Vulnerable to Global Markets In Disarray

FLORIDA’S ENERGY MARKET ● Explosive Growth in Consumption – As of 1/04 48, 000 MW - Summer 51, 000 MW - Winter ●Annual Growth rate: 900 MW - 1, 500 MW per year ● At Present Pace, Projected to Build 45 New 500 MW Plants by 2020

FLORIDA’S ENERGY MARKET Transmission Constraints US Department of Energy Transmission Congestion Study Finds High Probability for Congestion Due To Projected Influx of New Power from: - Nuclear ( 2 proposed plants) - Coal ( 7 proposed plants) n

FLORIDA’S ENERGY POLICY Regulators and Policy-makers Challenged By: n (i) (iii) (iv) (vi) Uncertainties in: fuel prices fuel transportation capital costs O&M expenses emission constraints; and decommissioning Risks in : (i) reliability (ii) financing (iii) technology; and (iv) markets n

FLORIDA’S RENEWABLES n n n Florida Policymakers Must Engage In A Systematic Process To Plan Reliable Service At Reasonable Rates This Process Must Deal With Uncertainty and Risk In A Transparent and Objective Fashion The Sierra Club Recommends That The Florida Public Service Commission Address Renewables In the Context of an integrated portfolio management initiative

FLORIDA’S RENEWABLES PORTFOLIO MANAGEMENT - energy resource planning utilizing a diverse, costeffective mix of energy resources, including. supply-side (traditional and renewable) and, . demand-side (DSM, efficiency) options… for integrated resource planning in vertically integrated, regulated utilities, and in deregulated markets where they exist. US Environmental Protection Agency n

FLORIDA’S RENEWABLES PORTFOLIO MANAGEMENT n CRITICAL DIFFERENCE Portfolio Management provides for real assessment, balancing and management of long-term issues to minimize costs and risks. RESULTS Optimized mix of resources that stabilize prices to ratepayers, and manage uncertainties, risks and costs. n

RENEWABLES INTERNATIONALLY Electric Production From Renewables is Emerging Around the World, But Still Low in the US, Even With Dramatic Reductions in Price of Wind Nonhydro renewables, percentage share of electricity production, 2000. By regional grouping n OECD total 2. 0% n North America 2. 0 n Europe 2. 1 n Pacific 1. 6 Selected countries n Iceland n Denmark n Finland n New Zealand n Germany n United Kingdom n United States - 17. 2% 16. 7 12. 3 8. 9 2. 5 1. 3 2. 1 Source: IEA, Renewables Information 2002 (Paris: OECD/IEA 2002).

FLORIDA’S RENEWABLES Renewables Bring Important Benefits, and, as With All Energy Resources, Pose Externalities, Uncertainty and Risk EX: n JEA Biomass Project n Offshore Wind Project n Emissions n Transmission

FLORIDA’S RENEWABLES Most Prominent Strategies to Stimulate Renewables Feed-In Laws Specifies a guaranteed price via tariff, coupled with a utility purchase obligation and planned interconnection. Popular in Europe; Similar to PURPA Standard Offer n Renewable Portfolio Standards (RPS) Specifies a target mix of renewable energy resources for inclusion in a utility’s generation mix; growing popularity in US; little emphasis on price of renewables. n

FLORIDA’S RENEWABLES n Twenty three States (40% of US sales) have enacted RPS

FLORIDA’S RENEWABLES n n It Is Vitally Important That There Be A More Complete Analysis of the True Costs, Risks and Benefits Of Energy Resources Used To Meet the Demand In Florida Portfolio Management Is This Tool

FLORIDA’S ENERGY MARKET ● MOST SIGNIFICANT OPPORTUNITIES - Integrated Planning Development of Demand-Side Strategies Innovation in Energy Efficiency Cultivation of Renewables and Distributed Generation

FLORIDA’S ENERGY MARKET MARGINALIZES PORTFOLIO MANAGEMENT STRATEGIES Alliance to Save Energy reports: “Hundreds of untapped MW savings as a result of underutilization of energy efficiency and renewables”

BUSINESS CASE FOR PORTFOLIO MANAGEMENT STRATEGIES IN FLORIDA ● Demand Rapidly Outstripping Capacity of Supply ● Emergence of EE Technology ● Growing Adoption of Renewables Strategies Around the Country ( economies of scale) ● Governmental Agencies and Other Large Users Must Reduce Energy Costs ● Environmental Benefits Are Valuable ● High Priority for Reliability After Hurricanes

GROWING PUBLIC DEMAND FOR ENERGY ALTERNATIVES IN FLORIDA ● Public Outcry Regarding Outages After Hurricanes ● Chapter 2006 -280, Laws of Florida (SB 888) ● Controversy Over Coal Plants ● Governor’s Hydrogen Initiative ● 2006 Florida Energy Plan ● National Energy Plan