Incorporating an Affordability Rate Cap Into a Florida RPS Florida Public Service Commission July 26, 2007 Kim Owens, P.E. JEA Clean Power Coordinator

Overview –Affordability Rate Cap –Nationally Cost impact studies Rate caps in RPS design How to define budget and investment? How to define budget and investment? –JEA Scenario JEA approved base rate increase How much can a rate cap purchase? –JEA’s renewable energy program

Affordability Rate Cap Will an RPS increase Rates? uncertain FMEA RPS proposal To protect consumers from uncertain costs of renewable generation Flexibility - allows for compliance either through energy OR investment goals

20 of 28* Analyses Predict Rate Increases 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 Source: LBNL, Ryan Wiser, May 2006

Wind represents 61% of incremental generation: - 90% in Midwest - 62% in East - 51% in West Source: LBNL, Ryan Wiser, May 2006 Generation Technologies

Cost Controls in RPS Design Cost controls take a variety of forms: –Rate caps; contract rate caps; alternative compliance payments; penalties Colorado, New Mexico, Washington have rate caps –CO (retail rate impact <2% of total annual electric bill for each customer) –NM (retail rate impact <1% in 2006, increasing 0.2%/yr, until 2% in 2011) –WA (4% of retail revenue)

Defining Budget and Investment Budget –% of electric revenues OR –Maximum increase to retail rate Investment –Marginal costs of renewable resource above cost of conventional resource –Loss revenues on debt service and base operating costs if capacity is not avoided (for energy efficiency resources)

JEA Rates JEA electric revenue – $1.03 B (FY06) JEA Sales – 14 Million MWH (FY06) Impact of 1% rate increase on residential 1,000 kwh/mo $0.96/mo (based on FY08 rates) 1% rate increase may seem like a minimal impact for our customers but they are absorbing other rate increases

FY 2008 Residential Customer Bill Comparison 1000 kWh) ExistingFY08 FY 08 Change Customer Charge $ 5.50 Energy Charge Fuel current rate Sub-Total Sub-Total $ $ % Environmental Charge Variable Fuel Rate adjustment Additional Charges Total JEA Electric Charges Total JEA Electric Charges $ $ % $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 purchase? JEA Renewables $10 M incremental revenue: 100 MW base load (80% CF) biomass project at $65/Mwh all in cost as a power purchase –Displaces $30/MWH average marginal off-peak energy 40% of the year and $65/MWH average marginal on-peak energy 60% of the year. –Total system energy produced is 700,800 MWH or 5% of sales A 1% revenue investment in renewables yields a 100 MW base load facility and 5% of retail sales from renewables

What does 1% of revenues purchase? Energy Efficiency JEA’s DSM portfolio proposal: –Interruptible, load control, new construction, lighting and low-income programs –$13M investment in 3 years –40 MW demand reduction –60,000 MWH reduction Upfront costs for JEA will yield future reduction in peak generation and fuel costs

JEA Renewable Energy Program Clean Power Program MW Solar Photovoltaic 0.32 Solar Thermal 9 Biogas15.8 Wind10 Biomass13 Efficiency Projects 43 Total Planned 91 MW Biomass RFP – August 2007 JEA DSM and EE Portfolio launch – FY08 R&D –Biodiesel turbine test –100 KW hydro turbine –Solar thermal system peak reduction study 411,500 MWH* Or 3% of Sales *50% from efficiency

Questions Contact me: Kim Owens 21 West Church Street,T-12 Jacksonville, FL (904)