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Clear Skies Act Allowance Allocation Alternatives

Clear Skies Act Allowance Allocation Alternatives. R. LaBauve, Vice President Environmental Services February 28, 2005. Leading U.S. Generator. Operating Under construction/ advanced development. More than 30,000 Megawatts (MW). Maine Hydro System. Seabrook (Nuclear).

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Clear Skies Act Allowance Allocation Alternatives

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

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

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

  4. FPL Energy is the largest generator of solar power in the world with 310 MW’s. FPL Energy owns 50% and operates the two largest solar fields in the world: SEGS VIII & IX-Mojave Desert, CA 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.

  5. FPL Group has a diverse fuel mix

  6. FPL Group Generation is Increasing

  7. FPL Group Emission Rates Dropping

  8. Growth states will require additional allowances allocations

  9. 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.

  10. 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)

  11. 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.

  12. 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.

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

  14. FPL is Disadvantaged by Higher Wholesale Fuel Costs

  15. Estimated Cost of Clear Skies Compliance Does not Level Playing Field

  16. Windfall Myth Fuel Cost - $/MWh Source: Resource Data Institute, PowerDat, 2004 • 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.

  17. Clean Air Planning Act Provides More Fuel Neutral Allowance Allocations

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