Florida PSC rejects LS Power complaint over Florida Power bid process

The members of the Florida Public Public Service Commission on April 16 unanimously rejected a March 26 complaint from DeSoto County Generating Co. LLC that a Florida Power & Light request for proposals (RFP) process unfairly rejected any possibility of a prospective purchase of DeSoto’s existing gas-fired plant by the utility.

The vote sheet from the April 16 meeting shows that the commission agreed with its staff that Florida Power & Light had not violated any state statutes.

Florida Power & Light on March 31 told the commission that the objections to its March 16 request for proposals (RFP) for new capacity that had been lodged by DeSoto County Generating are not viable under Florida statute. DeSoto County Generating, an affiliate of LS Power Development with a 310-MW gas/oil-fired power plant in Florida, had on March 26 objected to the commission about certain terms of the RFP, which covers new FPL capacity needs beginning in 2019.

DeSoto had five objections to the terms of the RFP. “Before addressing the dubious ‘merits’ of DeSoto’s individual objections, three initial observations are warranted,” said FPL’s March 31 response. “First, the standard the Commission has set forth [under state code] (hereinafter referred to as ‘the Bid Rule’) for the RFP objection process is whether the RFP violates the Bid Rule. It is not whether the terms of the RFP are consistent with the RFP terms of another electric utility in or outside of Florida or with any other criterion that (a) has not been subjected to the rulemaking requirements and procedures of the Florida Administrative Procedure Act (‘APA’) and (b) is not included in any form in the Bid Rule. Second, the objections contain many unsupported assertions. If there was support for these unfounded assertions, Desoto should have provided it. In the absence of such support, Desoto’s assertions should be viewed skeptically. Third, the objections request more relief than the Commission contemplated providing when it adopted this process for addressing objections to an RFP. In considering the relief requested in this rule-created objections process under [state code], the Commission should recognize that it is not making a decision that determines parties’ substantial interests under the requirements of [state code]. It is simply offering guidance on the compliance of the terms of the RFP with the Bid Rule and is not authorized under the Bid Rule to grant any other relief.”

The DeSoto Facility is a 310 MW (summer net) simple-cycle combustion turbine plant capable of operating on both natural gas and No. 2 fuel oil. It is located in Arcadia, Florida, and is interconnected to FPL’s transmission system and to the Florida Gas Transmission Co. natural gas pipeline. It consists of two GE 7241FA combustion turbine units with a combined summer net capacity of 310 MW when firing natural gas. The facility achieved commercial operation in June 2002 and has operated reliably, though it is currently on inactive reserve.

“DeSoto is a potential participant in FPL’s RFP process,” said DeSoto in its March 26 complaint. “Specifically, DeSoto would like to offer to sell capacity and energy from the DeSoto Facility to FPL to meet part of its generating capacity needs over the relevant planning horizon. Such sale could potentially come in the form of a sale of the DeSoto Facility itself or pursuant to a power purchase agreement (‘PPA’), as it has done in the past.

“DeSoto objects to FPL’s exclusion of proposals offering the sale of an existing generating unit or a new turnkey generating unit from consideration in the RFP process. This RFP constraint is unfair and violates Rule 25-22.082(5), F.A.C., because it is facially anti-competitive, as well as facially contrary to the public interest, because it limits the universe or population of generation supply alternatives that FPL will even consider as being potentially cost-effective alternatives for its customers. It is also unduly discriminatory because it plainly forecloses an entire class of potential suppliers – those who would offer to sell FPL a power plant – from consideration in the RFP process.

“The sound basis for DeSoto’s Objection is proven by the recent experience of Duke Energy Florida, which, having gone through an RFP process for certain power supply needs, eventually determined that the purchase of an existing facility, Calpine‘s Osprey Energy Facility in Auburndale, Florida, represents the most cost-effective alternative available to Duke and its customers.

“According to its RFP, FPL indicates that it intends to retire certain gas turbine units at its Lauderdale, Port Everglades, and Ft. Myers plant sites and to replace that capacity with new CTs at its Lauderdale and Ft. Myers sites. The DeSoto Facility is located electrically in the same transmission area as the Ft. Myers units, and DeSoto believes that it would be more cost-effective for FPL to purchase the DeSoto Facility instead of adding some (possibly all) of the proposed CTs at the Ft. Myers site. Clearly, FPL’s overall generation expansion plan over the relevant planning horizon, which is probably from now through 2049 (30 years after the proposed in-service date of the Okeechobee Clean Energy Center), is at issue in this RFP process and in any subsequent need determination proceeding, yet in a conference call with bidders on March 24 , FPL’ s representative stated that no proposals in the instant RFP process would be considered as potential cost-effective alternatives to FPL’s proposed CTs. This is another example of an FPL-imposed restriction on participation in its RFP process that is unfair and violates Rule 25-22.082(10), F.A.C., because it limits creative, and potentially cost-effective, responses to the RFP from potential participants.”

The Okeechobee Clean Energy Center, due for commercial operation by 2019, is Florida Power & Light’s net major power project and is a benchmark for this RFP. This is a gas-fired, combined-cycle project of 1,622 MW (net summer) in size. FPL owns 2,800 acres of land in Northeast Okeechobee County and plans to use about 200 acres of it for development of this combined cycle (CC) unit. A CC unit at this site has been determined to be FPL’s best self-build option for meeting its capacity needs beginning in 2019. FPL’s CC unit at the Okeechobee site, and the RFP proposals, will be evaluated by FPL and an Independent Evaluator to determine which option(s) is the best selection for FPL’s customers.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.