Florida Power & Light said that its gas-fired repowering projects are the least-cost alternative for ratepayers and that seeking cost recovery for them in a slightly unusual docket at the Florida Public Service Commission is the right approach.
FPL filed its June 28 petition for approval in an environmental cost recovery clause (ECRC) docket at the commission, which is normally for recovery of environmental retrofit costs. FPL plans to add 1,608 MW of combustion turbine (CT) peaking capacity to its generating system at a cost of approximately $822m, including transmission and integration costs, in order to comply with certain environmental regulations.
FPL has 48 peaking gas turbines (GTs) in total among three generation sites: Plant Fort Lauderdale (PFL), Plant Port Everglades (PPE) and Plant Fort Myers (PFM). These GTs entered into commercial operation in the early 1970s. The plan applied for on June 28 would involve installation of five new CTs at PFL and three new CTs at PFM. No new CTs will be installed at PPE.
The new CT units at both PFL and PFM will use natural gas as the primary fuel when available and also will be capable of burning a light fuel oil as a back-up fuel.
- For PFL, the project would result in the retirement of 24 of its 35-MW GTs with a combined summer peak capacity of 840 MW and installation of five CTs with a combined summer rating of 1,005 MW.
- For PFM, the project would result in the retirement of 12 of its 54-MW GTs with a combined summer rating of 648 MW and installation of three CTs with a combined summer peak capacity of 603 MW.
- For PPE, the project would result in the retirement of 12 of its 35-MW GTs with a combined summer rating of 420 MW.
This plan has come in for criticism, including from the DeSoto County Generating unit of LS Power, which said it could sell capacity from its existing 310-MW gas-fired plant, or the plant itself, to FPL at a cheaper cost than the FPL repowering plan.
In Sept. 27 testimony, Juan Enjamio, employed by FPL as Supervisor of Integrated Analysis in the Resource Assessment & Planning Department, rebutted both DeSoto and Florida Industrial Power Users Group (FIPUG) witness Jeffry Pollock.
“FPL has examined all available options to achieve NO2 Compliance, including the proposals to purchase power from or purchase the power plant facility of DeSoto, and has determined that the proposed NO2 Compliance Project remains the most cost effective option for FPL and its customers,” Enjamio wrote.
Other FPL power plant modernizations have gone through regular rate cases at the commission, but this case is different, he added. The purpose of this project is to comply with an environmental requirement, unlike FPL’s prior modernization projects, and the project is therefore appropriate for cost recovery through the ECRC, Enjamio said.
FPL did consider all available options, including existing non-FPL generation facilities. These options included three FPL alternatives, which were:
- The Retrofit Option – Retrofit the gas turbines (GTs) and add emission controls such as Selective Catalytic Reduction (SCR) to meet the new emission standards.
- Retirement Option – Retire the GTs and advance the in-service date of FPL’s next generating unit, which is a new combined cycle unit, as needed to meet the 20% reserve margin reliability criteria.
- Combustion Technology Change Option – Retire the GTs and replace with new technology combustion turbines that provide quick-start capacity.
Geography, quick-start capability are the key criteria
FPL also reviewed whether any existing non-FPL generation facilities could be viable alternatives in addition to its own three proposed alternatives. This analysis considered either purchasing power from or purchasing outright non-FPL facilities. FPL concluded that there were no existing facilities that could be considered as viable options from a technical perspective, Enjamio said. This conclusion was based on the fact that, to be a viable candidate, a generation facility would need to meet two system reliability criteria: it must be located in the specific relevant geographic area, and it must be able to provide quick-start capacity to the system.
The geographical criterion is based on local transmission reliability requirements in Miami-Dade and Broward Counties, and in the Fort Myers area. Miami-Dade and Broward Counties are heavily populated, with the highest concentration of customer load in FPL’s service territory. By 2016, these two counties will have about 10,100 MW of load. Generation in the same area is expected to be about 6,200 MW by summer 2016.
The balance of load not served by generation in the area will be served from imported power. The capability of the transmission system to import power into Miami-Dade and Broward Counties is limited to about 6,400 MW. If the GT generation in Broward County is retired and not replaced in the same geographic area, there is a loss of 1,260 MW in local generation. Transmission reliability simulations indicate that this lost capacity must be replaced with at least 1,000 MW of local generation.
Similarly, the operation of gas turbines at the Fort Myers plant is required to maintain voltage support for the loss of the Fort Myers combined cycle unit. More transmission reliability simulations have indicated that if the existing GTs at Fort Myers were to be retired, a minimum of 600 MW of CT generation is needed in the same geographic area to maintain adequate system reliability for an outage of the Fort Myers combined-cycle unit.
Four facilities were identified that would meet this geographic criterion:
- Miami-Dade Resource Recovery in Miami-Dade County, 77 MW;
- Broward South Resource Recovery in Broward County, 66 MW;
- Broward North Resource Recovery in Broward County, 68 MW; and
- DeSoto County Generating (LS Power) in DeSoto County, 310 MW.
But FPL decided these facilities would not be able to provide the required quick-start performance, i.e., be off-line and then be able to start quickly enough and produce the required amounts of generation within the 15- and 30-minute required intervals. The three resource recovery facilities utilize steam generation technology that is clearly unsuited to quick-start operation.
The DeSoto facility consists of CTs, but they utilize older technology that does not have the control systems and equipment needed to respond as required. Therefore, based on the information available at the time of FPL’s filing in this docket, FPL concluded that none of these four facilities could be considered as a viable option to provide the capacity needed.
FPL says LS Power offer to add DeSoto quick-start capability not enough
Since the time when the June 28 filing was made in this docket, FPL has received additional information from LS Power. LS Power has offered to sell the DeSoto facility, after making upgrades that are said to support quick-start capability for the CTs. Based on analysis of this additional information, and considering that it meets the geographic criterion, FPL has modeled the DeSoto unit as though it is capable of meeting the quick-start requirement, Enjamio said.
FPL has developed four additional alternatives using the DeSoto CTs. The first two of these alternatives assume that FPL would buy the DeSoto facility in 2014, as proposed by LS Power. The last two of these alternatives assume that FPL would enter into a ten-year power purchase agreement (PPA) starting in 2014, on the terms that LS Power has proposed.
- The first alternative assumes that, in addition to purchasing the DeSoto facilities in 2014, FPL will build two 200 MW class CTs at Fort Myers in 2016. This combination will result in approximately 700 MW of CT capacity at Fort Myers and DeSoto.
- The second alternative assumes that in addition to purchasing DeSoto in 2014, FPL will build two 150 MW class CTs at Fort Myers in 2016. This combination will result in approximately 600 MW of CT capacity at Fort Myers and DeSoto. This combined capacity of 600 MW represents about the same amount of capacity FPL assumed would be required in its own proposal for three 200 MW class CTs at Fort Myers.
- The third alternative assumes that FPL enters into a ten-year PPA with DeSoto starting in 2014, and FPL builds two 200 MW class CTs at Fort Myers in 2016. This combination will result in about 700 MW of CT capacity at Fort Myers and DeSoto in 2016. In 2024, when the PPA is terminated, FPL will then build one 200 MW class CT at Fort Myers to replace the lost PPA capacity. At that point, total capacity at Fort Myers will be 600 MW.
- The fourth alternative assumes that FPL enters into a ten-year PPA with DeSoto starting in 2014, and FPL will build two 150 MW class CTs at Fort Myers in 2016. This combination will result in about 600 MW of CT capacity at Fort Myers and DeSoto in 2016. In 2024, when the PPA is terminated, FPL would then build two 150 MW class CT at Fort Myers to replace the lost PPA capacity.
Uncertainty exists concerning additional costs that FPL would have to incur to operate the DeSoto facility and FPL’s estimate of approximately $20m of upfront costs that FPL would need to incur to bring the facility up to the standard of FPL’s generating fleet. Since FPL’s June 28 initial filing in this docket and based on industry responses to a request for proposals (RFP) for CTs, FPL has also obtained more accurate information on the costs of CT technologies. This up-to-date information results in extended maintenance intervals and hence lower capital-part cost estimates for the type of CTs that FPL proposes to install at Lauderdale and Ft. Myers.
The results of the newest economic evaluation show that FPL’s original plan continues to be the lowest cost option for FPL and its customers. This option results in $48m lower cumulative present value of revenue requirement (CPVRR) than the first DeSoto purchase alternative and $70m lower CPVRR than the second DeSoto purchase alternative. When compared to the DeSoto alternatives which assume a 10-year PPA, the FPL project results in $56m lower CPVRR than the third alternative, and $142m lower in CPVRR than the fourth alternative.
Besides the cost issue, FPL has concerns with relying on a PPA for quick-start capacity that is needed to maintain system reliability. “My economic analysis confirms that, even if one set aside those serious reliability concerns, the DeSoto PPA alternatives would not be economically attractive for FPL and its customers,” Enjamio wrote.