Clear Skies Act Allowance Allocation Alternatives R. LaBauve, Vice President Environmental Services February 28, 2005.

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Presentation transcript:

Clear Skies Act Allowance Allocation Alternatives R. LaBauve, Vice President Environmental Services February 28, 2005

Leading U.S. Generator Stateline (wind) Stateline (wind)Vansycle(wind) Wind North (Altamont area) (Altamont area) POSDEF (coal) Wind South (Tehachapi area) SEGS (solar) Blythe(CC) Gray County (wind) Lamar (CC) (CC) Forney (CC) Southwest Mesa (wind) King Mt. (wind) Woodward Mt. (wind) Indian Mesa (wind) Lake Benton II (wind) (wind) Somerset (wind) Doswell (CC) (CT) (CC) (CT) Cherokee (CC) Maine Hydro System Cape (GT Oil) W.F. Wyman (Oil) Operating Under construction/ advanced development Bayswater (CT) Montfort (wind) (wind) Calhoun (CT) Bellingham(CC) Marcus Hook (CC) (CC) Mountaineer (wind) Stateline II (wind) Stateline II (wind) North Dakota Wind Energy Center I & II (wind) South Dakota Wind Energy Center (wind) Cerro Gordo (wind) (wind) Marcus Hook (CT) (CT) Hancock (wind) (wind) New Mexico (wind) (wind) High Winds (wind) (wind) Jamaica Bay (CT) Delaware Mt. (wind) Rhode Island State Energy Center (CC) Mill Run (wind) Green Mountain (wind) Sayreville (CC) (CC) Waymart(wind) Oklahoma I (wind) (wind) Wyoming (wind) Meyersdale (wind) (wind) ZWHC (wind) Cabazon (wind) Green Power (wind) Seabrook (Nuclear) FPL – 19,122 MW (gas, oil, coal, nuclear) FPL – 19,122 MW (gas, oil, coal, nuclear) Martin 8 (CC) Manatee 3 (CC) (CC) WPP3 (wind) WPP93 (wind) More than 30,000 Megawatts (MW) Long Island OWP (Wind) Weatherford (wind) Callahan (wind) (wind) WPP 94 (wind) Turkey Point 5 (CC)

FPL Energy is the largest wind generator in the U.S. with more than 2,750 MW’s in operation.

FPL Energy owns 50% and operates the two largest solar fields in the world: SEGS VIII & IX-Mojave Desert, CA FPL Energy is the largest generator of solar power in the world with 310 MW’s. In February, 2005 FPL Energy purchased a 45% interest in the SEGS III-VII solar plants and will operate the 141 MW facility. The power from the SEGS project is sold to Southern California Edison.

FPL Group has a diverse fuel mix

FPL Group Generation is Increasing

FPL Group Emission Rates Dropping

Growth states will require additional allowances allocations

Multipollutant Emissions Reduction Legislation History Title IV of 1990 Clean Air Act implemented market- based allowance trading system (cap & trade). SO2 allowances were distributed to affected facilities utilizing heat input method of allocation, based on amount of fuel burned in a baseline year(s). One-time heat input method disadvantages companies that have invested in early reductions, or companies that are in growth states.

Multipollutant Emissions Reduction Legislation--Output Based Allocations An updating, output-based allocation method distributes allowances based on a Generation Performance Standard (GPS) calculated from the ratio of the targeted emissions in tons as compared to the national electric generation total (MWh) :  National Emission Target Limit (tons)__ –National Electric Generation Total (MWhs) = GPS (tons/MWh); The resultant GPS is used to allocate allowances to affected facilities.  GPS (tons/MWh) X Unit’s Generation (MWhs) = Unit’s Allowance Allocation (Tons)

Multipollutant Emissions Reduction Legislation--Output Based Allocations Distributes allowances based on unit performance by rewarding efficiency. Facilities emitting in excess of a national Generation Performance Standard would purchase allowances. Fuel neutral, levels the playing field for all generation.

Multipollutant Emissions Reduction Legislation--Output Based Allocations Allowances can be allocated to non-emitting generation. Efficient power plants will benefit from output- based allocations regardless of fuel type. Updating allocations adjust for efficiency improvement, new facilities and regional shifts in generation.

Oil & gas-fired companies pay more for cleaner fuel & higher efficiency

FPL is Disadvantaged by Higher Wholesale Fuel Costs

Estimated Cost of Clear Skies Compliance Does not Level Playing Field

Windfall Myth Source: Resource Data Institute, PowerDat, 2004 Fuel Cost - $/MWh Florida (FRCC) rate payers pay considerably higher fuel costs for cleaner generation. An output-based allocation provides no windfall to clean generators, but merely levelizes the playing field with low-cost-fuel generators.

Clean Air Planning Act Provides More Fuel Neutral Allowance Allocations