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Renewable energy legislation is being hailed by Florida's big investor-owned utilities (IOUs) -- but not so much by small-scale producers who fear they'll be cut out of the action.
Still others say the bills could be doomed as bargaining chips in negotiations over offshore oil drilling next session.
Proponents say House Bill 7229 is crucial to promoting projects like Florida Power & Light's planned 75-megawatt solar plant at Babcock Ranch in southwest Florida. The bill offers financial incentives for developing such ventures.
Other energy measures -- including House Bill 1471 and Senate Bills 992 and 1886 -- contain similar features.
But several renewable-energy groups say the legislative proposals are skewed to benefit FPL and other large investor-owned utilities.
"They have a lot of political and economic power, but the public interest is in getting a more distributed grid," says Craig Williams of the Florida Renewable Energy Alliance in Gainesville.
FPL and other big utilities are perennially among the states biggest political contributors. In the last 15 months, FPL, Teco and Progress Energy have given the state Republican and Democratic parties a combined $2.25 million, ranking their donations second behind the health-care industry.
Still, utilities have been frustrated by a lack of legislative action. A renewable-energy bill favored by the industry died last session, making passage more urgent this year.
"We really can't afford as a state for that to happen again," said Eric Silagy, FPL vice president and chief development officer.
Among the industrys lucrative priorities embedded in HB 7229: the ability to build solar plants and charge customers for the full cost without going through the Public Service Commission to prove the new power generation is needed.
Under the solar-centric deal, which would help the state's two largest utilities compensate for a portion of the rate-increase revenues they were denied by the PSC in January, FPL could raise up to $450 million a year more from customers.Progress Energy could generate $190 million.
Advocates say these amounts reflect modest increases in monthly bills to cover solar costs, which would move renewable energy forward and move the state away from its current heavy reliance on fossil fuels.
But what's good for utility giants is not in the best interest of ratepayers, according to smaller competitors in the renewable-energy sector who say theyre better local job generators and more cost-efficient power producers.
The big investor-owned utilities have a track record with large out-of-state businesses, says Mike Antheil of the Florida Alliance for Renewable Energy.
The House stripped out any language to benefit small-scale systems and local installers. Tax credits stripped out. Third-party providers stripped out.
We want to incentivize small-scale systems. These truly create jobs and recycle dollars in the local market.
Smaller operators complain that, in a perverse way, Floridas regulatory mechanisms favor large investor-owned utilities and shut down local competition -- much as Ma Bell did when it held a monopoly in telephone service.
Under PSC rules, investor-owned utilities enjoy a regulated return of 17 percent vs. a 7-10 percent rate of return received by many unregulated power providers, Antheil said.
Mathematically, a small-scale system will provide power cheaper. The IOU doesn't even have to capture its first ray of sunlight at a $100 million plant to be guaranteed a return, he said.
Theres a problem when you have an IOU (investor-owned utility) owning a private, unregulated development arm that pays itself, Antheil added.
While small renewable operators want lawmakers to incentivize competition to produce lower energy prices, supporters of HB 7229 say the legislation protects ratepayers.
Recent amendments cap costs associated with renewable power at 2 percent in the first year, 1 percent more in the second year and 1 percent more in the third year for a total of 4 percent after three years.
The cap protects consumers and allows all utilities to play, says Lisa Hall, senior vice president with Salter Mitchell public relations. She cited a recent survey in Fort Myers that indicated ratepayers would be willing to pay more for cleaner energy.
But skeptics contend that the pending legislation inappropriately favors large, publicly owned and regulated utilities -- particularly those that are ramping up solar-power operations.
The amendments reduce the total credit available for production, storage and distribution of biodiesel and ethanol costs while creating a new corporate investment tax credit for investments in solar energy systems.
The additions also require public utilities to continuously purchase renewable energy from producers that meet specified operating requirements ... with the costs to the utility recoverable from its ratepayers.
Proponents say these are essential to ensure reliability in the power grid, and particularly to move solar energy forward in the Sunshine State.
FPL has three solar projects completed or nearing completion: a 25-megawatt DeSoto facility in DeSoto County, a 10-megawatt plant on the Kennedy Space Center and a 75-megawatt plant in Martin County.
All three were constructed at a cost to Florida taxpayers of approximately $700 million.
FPL's plants were built under a 2008 law that allowed utilities to pass along the cost of plants generating up to 110 megawatts of clean energy -- without regulators deciding whether the extra energy is needed for projects proposed by July 2009. FPL says that kind of provision is needed to proceed with other solar projects.
Late amendments to HB 7229 incentivize solar power, as long as utilitiesdont do more than 80 percent of their renewable energy as solar.
But critics note that FPL's DeSoto County solar plant is generating electricity at 26 cents a kilowatt hour, higher than projections. By contrast, the Florida Biomass Coalition, which includes Florida Crystals, Mosaic and Waste Management Inc.,says its technology can crank out power at 7.4 cents per kilowatt hour.
A 2009 study by Navigant Consulting affirmed that costs for solar power are significantly higher than other renewable energy sources. The study estimated solar power costs about $7,100 per potential kilowatt, dropping to $4,300 by 2020. By comparison, energy generated by solid biomass plants costs $4,000 per kilowatt and wind power $2,470.
Michael Dobson, president of Florida Energy Producers, said the pending legislation does encourage more renewable energy, but the bad thing is, it still maintains the status quo in that it passes additional costs to consumers."
Amid clashing numbers and growing concerns about costs, the House delayed a scheduled vote on HB 7229 Monday. Some insiders speculated that the energy bills could be sidelined for the year.
Two lobbyists speaking on condition on anonymity predict that renewable-energy measures could -- as they were last year -- be set aside until the next legislative session.
They would be used as bargaining chips in the debate over offshore-drilling, said one lobbyist. Drilling legislation was put off this year, but House Speaker-designate Dean Cannon, R-Winter Park, has pledged to pursue the controversial issue in 2011.
No matter what happens, the small-scale market will go from bad to worse, Antheil said.
PACE PASSES: In related energy legislation, the House on Monday unanimously passed a bill that encourages local governments to help Florida homeowners and businesses retrofit their properties with clean technology.
House Bill 7179 authorizes municipalities or special districts to issue bonds backed by property tax liens on the buildings of owners who take Property Assessed Clean Energy loans from the bond pool. The property owner repays the loan over a 10-, 15- or 20-year period through an increase on their annual property taxes equal to 1/20th of the loan plus interest.
PACE financing was named by the Harvard Business Review as one of the Breakthrough Ideas for 2010.
"It has the potential to result in significant green job creation for Florida at no cost to taxpayers -- only real estate owners who opt in will pay the cost of the improvements," said House Majority Leader Adam Hasner, R-Delray Beach.
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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
