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Model Shows Clean Power Plan Could Have No Cost Impact on Florida Ratepayers

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Savings of up to 1 cent per kilowatt-hour may be possible with use of energy efficiency and renewable energy to meet federal target 

Executives of advanced energy companies meet with policymakers in Tallahassee to discuss growth opportunities for industry

[Tallahassee, FL – February 9, 2016]: Implementing the U.S. Environmental Protection Agency’s Clean Power Plan would not increase electricity costs in Florida, and could even provide savings for ratepayers under some scenarios, compared with projected energy costs in 2030. Those are the findings of scenarios run through a new analytic tool developed for the Advanced Energy Economy Institute and applied to Florida. The open-access model is available for free to help state officials and other stakeholders consider compliance options and their economic impacts.

“Modeling Low Cost Approaches to Clean Power Plan Compliance for Florida,” published today by the AEE Institute, presents the results of two specific scenarios that are representative of multiple runs of the new State Tool for Electricity Emissions Reduction (STEER). The demonstrated scenarios are based on varying considerations, but find that in both cases, the least expensive way to reach EPA’s prescribed emission targets includes a significant amount of energy efficiency and renewable energy and does not require any plant retirements beyond those already announced.

The analysis is available for download, as is the STEER-Florida model, which allows users to use publicly available data on Florida energy demand and resources to assess the cost impact of compliance options, just as electric utilities are able to do. 

“STEER is an easy-to-use tool that allows state officials and others to identify the lowest cost path to Clean Power Plan compliance under a variety of assumptions,” said Matt Stanberry, head of analytics for the AEE Institute and Vice President of Market Development for Advanced Energy Economy, a national business association with which the AEE Institute is affiliated. “In the scenarios we have run, STEER identifies a way for Florida to reach its emissions targets in 2030 with no increase in electricity rates compared with business as usual, and even a decrease in rates, if the price of natural gas stays low. In both scenarios, Florida achieves its goal primarily through energy efficiency improvements, and secondarily with increases in renewable energy generation.” 

For each scenario of assumptions run through the tool, STEER identifies the combination of generation sources, efficiency improvements, and other measures that represents the lowest cost means of meeting the state’s electric power needs in 2030 while complying with Clean Power Plan standards for Florida. The compliance period established by EPA for the carbon emission regulation begins in 2022, with final standards for carbon emissions from the electric power sector in each state in 2030.

In the two representative scenarios detailed in the paper, Florida is able to reach compliance with the Clean Power Plan in 2030 with no increase in electricity prices or savings compared with a business-as-usual projection of electricity costs for that year. In a scenario that assumes natural gas prices in 2030 of $6.73/MMBtu, as projected by the U.S. Energy Information Administration, the result of Clean Power Plan compliance is a savings of $0.012 – or one penny – per kilowatt-hour compared with business as usual. (For comparison, the average cost of electricity in Florida in November 2015 was a little under $0.11/kWh.) In this scenario, greater energy efficiency means the state has lower overall demand for electricity.

In the other scenario, which assumes natural gas prices in 2030 at $2.50/MMBtu, or near where they are currently, there is no cost impact at all on electricity prices – neither increase nor decrease – compared with a business-as-usual projection. New renewable energy plays a somewhat smaller role in this scenario than the previous one, and energy efficiency an even greater role. Under this scenario, Florida’s total generation is likely to drop somewhat (while maintaining the current level of imports) with coal and natural gas plants producing less electricity, even as generating capacity increases slightly, adding primarily solar power.

STEER incorporates EPA's projected forecast of increased retail sales, in part due to population growth. Both scenarios assume Florida opts for a rate-based standard for compliance, which considers emissions based on total electric generation. 

AEE Institute is affiliated with Advanced Energy Economy (AEE), a national business association representing a wide range of advanced energy technologies and services.

Release of the STEER-Florida model and scenario analysis came as executives from AEE member companies held meetings today in Tallahassee with legislators and regulators on various policies that may impact the advanced energy industry in Florida. “Advanced Energy in Florida”, report produced for AEE by Navigant Research, found that the advanced energy market in Florida was $6.2 billion in 2014, bigger than the state’s agricultural exports in that year ($4.2 billion). According to the U.S. Census Bureau, Florida is projected to have the fifth fastest rate of population growth in the U.S. Advanced energy technologies will be instrumental in meeting the energy needs of this growing state.

STEER was developed by the University of Michigan and 5 Lakes Energy for the AEE Institute. STEER is being delivered to a number of states as a free, open-access model so that anyone with an interest in thinking about Clean Power Plan compliance will have access to the necessary data and calculations for an informed analysis. First developed for application to EPA’s Clean Power Plan as it was proposed in June 2014, STEER has been revised to account for the changes made by EPA in finalizing the carbon emissions rule.

STEER for FLORIDA is available for download as an Excel spreadsheet, with user manual, at http://info.aee.net/steer-florida. After downloading the model, evaluating any scenario takes only a few minutes, enabling the user to develop a deeper understanding of the tradeoffs involved in various approaches to implementing the Clean Power Plan. STEER optimizes for least cost and analyzes the economic impacts of compliance, including rate impacts to multiple customer classes. The model has a default set of data, which is composed of publicly available data for Florida; however, a user can incorporate more granular data if available.

About Advanced Energy Economy Institute 

The Advanced Energy Economy Institute is a 501 (c)(3) charitable organization whose mission is to raise awareness of the public benefits and opportunities of advanced energy. AEE Institute provides critical data to drive the policy discussion on key issues through commissioned research and reports, data aggregation and analytic tools. AEE Institute also provides a forum where leaders can address energy challenges and opportunities facing the United States. AEE Institute is affiliated with Advanced Energy Economy (AEE), a 501(c)(6) business association, whose purpose is to advance and promote the common business interests of its members and the advanced energy industry as a whole. AEE and its State and Regional Partner organizations are active in 26 states across the country, representing more than 1,000 companies and organizations in the advanced energy industry.

Media Contact

Monique Hanis, 202-391-0884, mhanis@aee.net