Overview of Florida s s Regulatory Environment October 21 st, 2011 Eduardo Balbis, P.E. Commissioner Florida Public Service Commission
Florida Public Service Commission Gubernatorial Appointees Confirmed by Senate C O M M I S S I O N E R C O M M I S S I O N E R C H A I R M A N C O M M I S S I O N E R C O M M I S S I O N E R Eduardo E. Balbis Lisa Polak Edgar Art Graham Ronald A. Brisé Julie Imanuel Brown West Palm Beach Tallahassee Jacksonville Miami Tampa
The PSC was established in 1887 and regulates: Electric Natural Gas Water & Wastewater Telecommunications
ELECTRIC
PSC s Regulatory Authority: 5 investor-owned electric companies (all aspects of operations, including rates and safety) 35 municipally owned electric companies (limited to safety, rate structure, territorial boundaries, bulk power supply, operations, and planning) 18 rural electric cooperatives (limited to safety, rate structure, territorial boundaries, bulk power supply, operations, and planning)
Investor-Owned Electric Utilities Approximate Company Service Areas
Florida Power Plants 89 Power Plant Sites Source: Department of Environmental Protection All facilities shown are greater than 25 MW
Statewide Generating Fuel Portfolio 2010
State of Florida Generation Fuel Mix (% Total Net Energy for Load) Energy Generation by Fuel Type (% NEL) 60% 50% 40% 30% 20% 10% 0% 15.6% 9.8% 13.4% 36.4% 24.8% 25.1% 17.6% 46.8% 55.5% Nuclear Coal Natural Gas Oil Interchange, NUG, Renewables (1.2%), Other 2000 Actual 2010 Actual 2020 Projected 15.7% 2.4% 0.7% 14.7% 12.2% 5.4%
Florida s Renewable Capacity in MW (2009) Current Florida Reliability Coordinating Council data expected in mid to late July Landfill Gas 35.9 2.9% Hydro 54.5 4.5% Solar 34.5 2.8% Waste Heat 288.9 23.7% Biomass 408.0 33.4% Municipal Solid Waste 398.1 32.6% Total Florida Renewable Capacity: 1,219.9 MW Total Florida Electric Generation Capacity: 58,420 MW (Summer)
Increasing Renewable Generation There are three paths to increasing renewable generation: Utility-Owned Third Party-Owned Customer-Owned
Utility-Owned Renewable Resources Utility-owned renewables are the smallest portion of the total: Represents 13 percent of existing renewables. Hydroelectric generation is limited by Florida s geography. Existing Utility-Owned Renewable Resources (MW) - 165.9 MW Total 43.5 11.2 Solar Biomass Landfill Gas Hydro 0.8 110.3
Building New Renewable Generation Utility-owned renewable generation has three paths: Power Plant Site Act (PPSA) Facilities > 75 MW of steam or solar capacity; cost recovery through base rates. Non-PPSA units Facilities < 75 MW of steam or solar capacity; cost recovery through base rates. Enabling Legislation e.g., Section 366.92(4), F.S., allowed recovery for up to 110 MW through Environmental Cost Recovery Clause.
Third Party Generators A majority of renewable generation is from purchased power: Represents 87 percent of renewable energy generated. Roughly 2/3 of purchases are non-firm. Existing Renewable Purchases (MW) - 1,116.5 MW Total 41.4 2.1 285.9 378.6 Solar Biomass Municipal Solid Waste Waste Heat Landfill Gas 408.6
Purchased Power Agreements Florida statutes require utilities to interconnect with and purchase electricity from renewable and alternative generators. Utilities purchase capacity and energy via two methods: Standard offer contract with flexible pricing options, including levelized capacity payments and fixed energy payment options. Recent Examples of Negotiated Contracts Purchasing Utility Renewable Provider MW PEF Trans World 40 PEF BG&E 45 PEF FB Energy 60 FPL SWA 55 FPL SWA 80 280 Negotiated contracts at rates that do not exceed the utility s cost to produce electricity (avoided cost).
Customer-Owned Renewables Standard interconnection, net metering, and other policies have resulted in a steady growth of smaller customer-owned renewable resources. Net Metering Connections: 2,833 Total Net Metering Capacity (MW): 20.4 MW 463 3.269 494 Investor-Owned Municipal Rural Electric Cooperatives 4.103 1,876 13.032
C R I T I C A L I S S U E S Electric Fuel Diversity Nuclear Conservation Goals Natural Gas Price Stability EPA Regulations ($4.4B to $6.7B)
Natural Gas
PSC s Regulatory Authority: 7 investor-owned natural gas utilities (all aspects of operations, including safety) 27 municipally owned natural gas utilities (limited to safety and territorial boundaries) 4 special gas districts (limited to safety and territorial boundaries) Safety jurisdiction also applies to housing authorities and sales laterals off of interstate pipelines. (Interstate pipelines are subject to the direct jurisdiction of the U.S. Dept. of Transportation.)
Natural Gas Companies in Florida
Natural Gas Pipelines in Florida
Shale Gas Development
Shale Gas Developments Location of Shale Gas Current Major Shale Plays: Barnett Fayetteville Haynesville Marcellus Eagle Ford Woodford 23
Bcf/d 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 Shale Gas Developments Estimated Growth by Basin Estimated growth of nearly 15 Bcf/d from 2005 to 2011 Woodford Eagle Ford Marcellus Haynesville Fayetteville Barnett 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 24 Source: Wood Mackenzie
How About Shale Production by Itself? 2011 Navigant Consulting, Inc. 25
Trillion Cubic Feet Supply Trends Looking Forward 2007 U.S. Natural Gas Supply Sources Forecast 2011 U.S. Natural Gas Supply Sources Forecast 28 28 26 LNG Imports Alaskan Production 26 Alaskan Production 24 24 22 LNG Imports 22 Net Pipeline Imports 20 Net Pipeline Imports 20 18 Shale Gas 18 Shale Gas 16 16 14 14 12 12 10 10 8 8 Base and Conventional Production (all sources) 6 6 Base and Conventional Production (all sources) 4 4 2 2 0 0 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 Trillion Cubic Feet EIA projects shale gas will offset declining base and conventional production and meet growing U.S. natural gas demand 26 Source: U.S. Department of Energy, 2007 & 2011 Annual Energy Outlooks
U.S. Demand Trends Projected Growth Bcf/day 80 70 60 50 40 30 20 10 0 0.1 Bcf/day (0.1%) U.S. Natural Gas Demand 2010 Total 60.2 Bcf/day 19.4 Bcf/day (32%) 18.6 Bcf/day (31%) 22.1 Bcf/day (37%) Transportation Power Generation Industrial Residential & Commercial 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2020 Total ~72.5 Bcf/day 0.8 Bcf/day (1%) 29.2 Bcf/day (40%) 20.2 Bcf/day (28%) 22.3 Bcf/day (31%) Power generation is projected to be the driver for gas demand growth Source: El Paso 27
Shale Gas Developments Production 1,600 1,400 1,200 Efficiency and Gas Rig Count July 2008: Total Rig Count (1,394) NYMEX Henry Hub ~$13/MMBtu May 2011: Gross Production 69.4 Bcf/day 75 70 Natural Gas Rigwell Count 1,000 800 600 400 200 0 Hurricanes Katrina, Rita (49 Bcf/day) Hurricane Ike (56 Bcf/day) June 2009: Total Rig Count (596) NYMEX Henry Hub ~$4/MMBtu 65 60 55 50 45 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Gross Production (Bcf/day) Horizontal Rigs Directional Rigs Vertical Rigs Lower 48 States Production Total production has increased while the rigwell count has decreased The percentage of horizontal rigs of total grew from ~10% in Jan 2005 to ~70% in May 2011 28 Source: Smith International, EIA 914 Production Report
C R I T I C A L I S S U E S Natural Gas Interstate Pipeline Capacity Natural Gas Vehicles Fuel Diversity Environmental Regulations
WATER & WASTEWATER
Water & Wastewater Jurisdictional Counties (36) 158 investor-owned water and/or wastewater utilities in 36 Florida counties.
C R I T I C A L I S S U E S Water & Wastewater Aging Systems Conservation High Cost Systems (Private vs. Government-Owned)
TELECOMMUNICATIONS
Incumbent Local Exchange Telephone Companies
C R I T I C A L I S S U E S Telecommunications New Legislation Changing PSC Authority
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