Incorporating Incorporating an Affordability Rate Cap an Affordability Rate Cap

Into a Florida RPSInto a Florida RPS

FloridaFloridaPublic Service CommissionPublic Service Commission

July 26, 2007July 26, 2007

Kim Owens, P.E.Kim Owens, P.E.

JEA Clean Power JEA Clean Power CoordinatorCoordinator

OverviewOverview

– Affordability Rate Cap Affordability Rate Cap – NationallyNationally

Cost impact studiesCost impact studies Rate caps in RPS designRate caps in RPS design How to define budget and investment? How to define budget and investment?

– JEA Scenario JEA Scenario JEA approved base rate increaseJEA approved base rate increase How much can a rate cap purchase?How much can a rate cap purchase?

– JEA’s renewable energy programJEA’s renewable energy program

Affordability Rate CapAffordability Rate Cap

Will an RPS increase Rates? Will an RPS increase Rates? uncertainuncertain

FMEA RPS proposalFMEA RPS proposal

To protect consumers from uncertain costs To protect consumers from uncertain costs of renewable generationof renewable generation

Flexibility - allows for compliance either Flexibility - allows for compliance either through energy OR investment goalsthrough energy OR investment goals

20 of 28* Analyses Predict Rate 20 of 28* Analyses Predict Rate Increases Increases

of Less Than or Equal to 1%of Less Than or Equal to 1%

* Number of analyses is more than 26 because results for each state in CA/OR/WA (Tellus) are shown separately

-6%

-3%

0%

3%

6%

9%

12%

TX

(U

CS

) -

3%

CA

(T

ellu

s) -

11%

HI (

GD

S)

- 4%

CA

(U

CS

) -

13%

OR

(T

ellu

s) -

11%

PA

(B

&V

) -

7%

CO

(P

PC

) -

9%

CA

(C

RS

) -

17%

WA

(La

zaru

s) -

15%

NY

(D

PS

) -

8%

CO

(U

CS

) -

6%

NE

(U

CS

) -

10%

IA (

WU

C)

- 9%

WI (

UC

S)

- 9%

NY

(P

otom

ac)

- 7%

MD

(S

ynap

se)

- 8%

VT

(S

ynap

se)

- 10

%

VA

(C

EC

) -

17%

AZ

(P

EG

) -

1%

MN

(W

UC

) -

9%

CA

(LA

DW

P)

- 20

%

MA

(S

EA

) -

7%

WA

(T

ellu

s) -

17%

NY

(C

CA

P)

- 5%

NJ

(Rut

gers

) -

14%

RI (

Tel

lus)

- 1

8%

AZ

(P

IRG

) -

20%

NY

(IC

F)

- 8%

Study - Incremental RPS Target %

-0.50

-0.25

0.00

0.25

0.50

0.75

1.00

Average retail (% - left axis)

Average retail (¢/kWh - right axis)

Median retail rate increase = +0.7%Median change in retail rates = +0.04¢5 analyses predict rate savings

Cha

nge

in

Rat

es in

1st

Pea

k T

arge

t Y

r.

Cha

nge

in R

ates

in 1

st P

eak

Tar

get

Yr.

(20

03 ¢

/kW

h)

Source: LBNL, Ryan Wiser, May 2006

-

10,000

20,000

30,000

40,000

VT

(S

ynap

se)

RI

(Tel

lus)

MA

(S

EA

)

NY

(C

CA

P)

NY

(D

PS

)

PA

(B

&V

)

VA

(C

EC

)

NE

(U

CS

)

IA (

WU

C)

MN

(W

UC

)

WI

(UC

S)

TX

(U

CS

)

HI

(GD

S)

AZ

(P

EG

)

CO

(U

CS

)

CO

(P

PC

)

OR

(T

ellu

s)

WA

(T

ellu

s)

WA

(La

zaru

s)

AZ

(P

IRG

)

CA

(T

ellu

s)

CA

(U

CS

)

CA

(C

RS

)

Gen

erat

ion

in 1

st P

eak

Tar

get Y

r. (

GW

h) OtherGeothermalSolarHydroLandfill GasBiomass Co-FireBiomassWind

MidwestEast West

Wind represents 61% of incremental generation: - 90% in Midwest - 62% in East - 51% in West

Source: LBNL, Ryan Wiser, May 2006

Generation TechnologiesGeneration Technologies

Cost Controls in RPS DesignCost Controls in RPS Design

Cost controls take a variety of forms:Cost controls take a variety of forms:– Rate caps; contract rate caps; alternative compliance Rate caps; contract rate caps; alternative compliance

payments; penaltiespayments; penalties

Colorado, New Mexico, Washington have rate Colorado, New Mexico, Washington have rate capscaps– CO (retail rate impact <2% of total annual electric bill CO (retail rate impact <2% of total annual electric bill

for each customer)for each customer)– NM (retail rate impact <1% in 2006 , increasing NM (retail rate impact <1% in 2006 , increasing

0.2%/yr, until 2% in 2011)0.2%/yr, until 2% in 2011)– WA (4% of retail revenue)WA (4% of retail revenue)

Defining Defining Budget and Investment Budget and Investment

Budget Budget – % of electric revenues OR% of electric revenues OR– Maximum increase to retail rateMaximum increase to retail rate

InvestmentInvestment– Marginal costs of renewable resource above Marginal costs of renewable resource above

cost of conventional resourcecost of conventional resource– Loss revenues on debt service and base Loss revenues on debt service and base

operating costs if capacity is not avoided (for operating costs if capacity is not avoided (for energy efficiency resources)energy efficiency resources)

JEA RatesJEA Rates

JEA electric revenue – $1.03 B (FY06)JEA electric revenue – $1.03 B (FY06)JEA Sales – 14 Million MWH (FY06)JEA Sales – 14 Million MWH (FY06)Impact of 1% rate increase on residential Impact of 1% rate increase on residential customer @ 1,000 kwh/mo customer @ 1,000 kwh/mo

$0.96/mo (based on FY08 rates)$0.96/mo (based on FY08 rates)

1% rate increase may seem like a minimal 1% rate increase may seem like a minimal impact for our customers but they are impact for our customers but they are absorbing other rate increasesabsorbing other rate increases

FY 2008 Residential Customer Bill ComparisonFY 2008 Residential Customer Bill Comparison(Consumption @ 1000 kWh)(Consumption @ 1000 kWh)

ExistingExisting FY08FY08 FY 08 FY 08 ChangeChange

Customer ChargeCustomer Charge $ 5.50$ 5.50 $ 5.50$ 5.50

Energy ChargeEnergy Charge 44.1544.15 49.6749.67

Fuel Charge @ current rateFuel Charge @ current rate 38.68 38.68 38.6838.68

Sub-TotalSub-Total $ 88.33$ 88.33 $ 93.85$ 93.85 6.25%6.25%

Environmental ChargeEnvironmental Charge -- 0.620.62

Variable Fuel Rate adjustmentVariable Fuel Rate adjustment -- 1.461.46

Additional ChargesAdditional Charges - - 2.082.08

Total JEA Electric ChargesTotal JEA Electric Charges $ 88.33$ 88.33 $ 95.93$ 95.93 8.60%8.60%

$7.60 per month increase

JEA Base Rate Increases Phased in Over 4 Years – Residential class of customers will receive 5.5%, 5.25% and 3% increases in FY09, FY10 and FY11

What does 1% of revenues What does 1% of revenues purchase?purchase?

JEA RenewablesJEA Renewables$10 M incremental revenue:$10 M incremental revenue:100 MW base load (80% CF) biomass project at $65/Mwh 100 MW base load (80% CF) biomass project at $65/Mwh all in cost as a power purchaseall in cost as a power purchase– Displaces $30/MWH average marginal off-peak energy 40% of Displaces $30/MWH average marginal off-peak energy 40% of

the year and $65/MWH average marginal on-peak energy 60% of the year and $65/MWH average marginal on-peak energy 60% of the year.the year.

– Total system energy produced is 700,800 MWH or 5% of salesTotal system energy produced is 700,800 MWH or 5% of sales

A 1% revenue investment in A 1% revenue investment in renewables yields a 100 MW renewables yields a 100 MW base load facility and 5% of retail base load facility and 5% of retail sales from renewablessales from renewables

What does 1% of revenues What does 1% of revenues purchase?purchase?

Energy EfficiencyEnergy Efficiency

JEA’s DSM portfolio proposal: JEA’s DSM portfolio proposal: – Interruptible, load control, new construction, lighting Interruptible, load control, new construction, lighting

and low-income programsand low-income programs– $13M investment in 3 years $13M investment in 3 years – 40 MW demand reduction40 MW demand reduction– 60,000 MWH reduction60,000 MWH reduction

Upfront costs for JEA will yield future reduction Upfront costs for JEA will yield future reduction in peak generation and fuel costsin peak generation and fuel costs

JEA Renewable Energy ProgramJEA Renewable Energy Program

Clean Power Clean Power ProgramProgram MWMW

Solar Solar PhotovoltaicPhotovoltaic

0.320.32

Solar ThermalSolar Thermal 99

BiogasBiogas 15.815.8

WindWind 1010

BiomassBiomass 1313

Efficiency Efficiency ProjectsProjects

4343

Total PlannedTotal Planned 91 MW91 MW

Biomass RFP – Biomass RFP – August 2007August 2007

JEA DSM and EE JEA DSM and EE Portfolio launch – Portfolio launch – FY08FY08

R&DR&D– Biodiesel turbine testBiodiesel turbine test– 100 KW hydro turbine 100 KW hydro turbine – Solar thermal system Solar thermal system

peak reduction studypeak reduction study

411,500 MWH*

Or 3% of Sales

*50% from efficiency

QuestionsQuestions

Contact me: Contact me:

Kim OwensKim Owens

21 West Church 21 West Church Street,T-12Street,T-12

Jacksonville, FL 32202Jacksonville, FL 32202

(904) 665-4673(904) 665-4673

owenkc2@jea.comowenkc2@jea.com