DISCUSSION DRAFT

August 2, 2001

·Increase energy awareness and promote energy efficiency by creating Florida Clean Energy, Inc., to implement and maintain a well-balanced energy strategy and to increase the efficient use of energy sources throughout Florida

§Private, nonprofit corporation with an independent board of directors and expert staff.

§Funded by non-bypassable “wires charge” on utility customers’ bills.

§Benefits the public by increasing energy awareness, administering programs designed to reduce impacts of high energy costs on low-income customers, designing and implementing programs to install efficiency improvements in Florida’s new and existing buildings and equipment (including state-owned facilities), and designing programs to encourage use of renewable energy.

·Minimize the impact on Florida’s environment of electrical infrastructure and power generation

§Direct the Department of Environmental Protection to conduct rulemaking to determine an appropriate strategy for reducing emissions of SO₂, NOx and Mercury from older power plants with high emissions levels.

§Incorporate incentives in the power plant and transmission line siting processes that encourage applicants to follow a collaborative process to locate sites.

§Continue encouraging ways to efficiently use and reuse water in production of electricity.

·Effect changes necessary to Florida’s transmission siting laws that enable development of needed electrical transmission facilities, consistent with environmental objectives.

§Recognize transmission lines and substations as electrical infrastructure.

§Create clear criteria for crossing state-owned lands.

§Allow and encourage co-location with linear facilities (roads, canals, railroads, etc.).

§Streamline licensing under Transmission Line Siting Act.

§Clarify the Transmission Line Siting Act to allow regional transmission organizations to apply for extensions or improvements of transmission system.

§Grant regional transmission organizations eminent domain authority.

·Modernize electric industry regulation and improve market structure

§Provide investor-owned load-serving utilities more choices for acquiring energy resources.

§Remove prohibition against merchant plants to provide competitive alternatives to utility power plants.

§Create a mechanism overseen by the PSC for transitioning existing generation to the competitive market to further stimulate competition in the wholesale market.

§Require load-serving utilities to employ competitive processes (bidding, negotiating, open market), subject to PSC review, for acquiring capacity and energy resources for their customers.

§Establish criteria for PSC review of new long-term resource additions to assure that: (1) capacity is needed for reliability and is the least-cost resource; (2) reasonable efforts have been made to secure cost-effective conservation; and (3) the utility’s mix of fuel resources is adequately diversified

§Provide for nondiscriminatory access to the transmission system by competitive wholesale providers of electricity by authorizing the transfer of utility transmission assets to a regional transmission organization (regulated by Federal Energy Regulatory Commission).

§Authorize the PSC to monitor competition in the wholesale market, investigate allegations of market improprieties, and petition the FERC for remedies.

§Require annual report by PSC to the Governor and Legislature on the status of competition.

·Assure adequate reserves of electrical generating capacity

§Assure access to Power Plant Siting Act by merchant plants and streamline non-environmental provisions of power plant siting process by eliminating the 5-month up-front need determination by the PSC, clarify ability of merchant plant developers to apply for site certification under Power Plant Siting Act, making the Power Plant Siting Act optional (allow option to pursue permits individually (“local permitting”), and eliminating the Power Plant Siting Board.

§Broaden PSC’s responsibility to require utilities to maintain adequate reserves.

§Require PSC to file annual report on reliability to Governor and Legislature.

§Authorize Governor to require generators to sell to Florida utilities during capacity emergencies.

§Create mandatory reliability standards for the bulk power system that are applicable to all market participants and enforced by the PSC.

·Emphasize customer protection and create incentives for reducing costs

§Assure PSC’s role in protecting against cross-subsidization of competitive services by regulated services.

§Require PSC to consider and implement, if appropriate, performance and/or incentive rate structures for load-serving utilities to provide incentives to encourage: (1) least-cost supply decisions; (2) cost savings; and (3) reliability.

·Expand availability and use of demand-side resources to provide greater reliability, more efficient use of generating plants, lower cost of electricity, lower air emissions, and greater customer satisfaction

§Continue successes in area of load management by requiring load-serving utilities to continue to offer load management programs.

§Require PSC to consider mechanisms that allow customers to directly respond to high market prices for electricity – “Demand Responsiveness”

§Require PSC to develop innovative rate programs for the residential, commercial and industrial sectors, such as real-time pricing and Gulf Power Company’s Good Cents Select Program, that send appropriate price signals to customers.

§Require PSC to investigate ways of reducing barriers to distributed resources, such as microturbines and fuel cells, including the adoption of interconnection standards.

§Require PSC to investigate mechanisms for bringing about “demand bidding,” whereby customers can be compensated appropriately for curtailing use during periods of high electrical demand.

·Encourage development and use of renewable energy with a “portfolio standard”

§Require a portion of utilities’ resources to be from renewable sources available within Florida, including solar, biomass and waste-to-energy.

§PSC to conduct a proceeding to identify the current level of renewables and prescribe an achievable level of new resources.

·Establish mechanism for long-term monitoring of the development and effectiveness of competition in the electric industry

§Not appropriate to implement retail choice until competition has been successfully established at the wholesale level.

§Require PSC to monitor the development of competition in Florida’s wholesale market, retail markets in other states, and policy determinations at the federal level.

§Require the PSC to report by November 1, 2004, with recommendations for whether conditions are favorable for allowing retail choice and whether the state can gain further benefits by allowing customers to choose their electricity supplier.

·Begin the process of transitioning to a tax system that takes into account the changes taking place in the energy industry

§Establish an Energy Taxation Task Force (similar to Telecommunications Taxation Task Force) to study and make recommendations for tax system that is fair, and competitively and revenue neutral.

§Provide appropriate staffing and agency assistance.

·Improve supervision and coordination regarding state energy policy

§Create a new Florida Energy Office to supervise and coordinate the implementation of the State’s Energy Strategy, to serve as an energy information resource for the state, and to be a liaison on energy issues to state and federal agencies, and energy organizations.