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ORDER NO. PSC -2018 -0316 -PAA -EQ DOCKET NO. 20180083 -EQ PAGE 2 We have jurisdiction over this standard offer contract pursuant to Sections 366.04 through 366.06 and 366.91, F.S. Review Rule 25-17.250, F.A.C., requires that FPL, an IOU, continuously make available a standard offer contract for the purchase of firm capacity and energy from renewable generating facilities (RF) and small qualifying facilities (QF) with design capacities of 100 kilowatts (kW) or less. Pursuant to Rules 25-17.250(1) and (3), F.A.C., the standard offer contract must provide a term of at least 10 years, and the payment terms must be based on the Utility's next avoidable fossil -fueled generating unit identified in its most recent Ten -Year Site Plan or, if no avoided unit is identified, its next avoidable planned purchase. FPL's 2018 Ten -Year Site Plan does not include any avoidable fossil fueled generating units, but has a projected planned purchase of 325 MW in 2019 that would be FPL's next planned purchase that could be avoided or deferred. However, in an effort to encourage renewable generation, FPL has identified its next avoidable unit as a 1,778 MW natural gas-fired combined cycle unit at a greenfield site with an expected in-service date of June 1, 2028. Both the avoided unit and avoided planned purchase options are available for FPL's revised standard offer contract. Under FPL's standard offer contract, the RF/QF operator commits to certain minimum performance requirements based on the identified avoided unit, such as being operational and delivering an agreed upon amount of capacity by the in-service date of the avoided unit, and thereby becomes eligible for capacity payments in addition to payments received for energy. The standard offer contract may also serve as a starting point for negotiation of contract terms by providing payment information to an RF/QF operator, in a situation where one or both parties desire particular contract terms other than those established in the standard offer. In order to promote renewable generation, we require an IOU to offer multiple options for capacity payments, including the options to receive early or levelized payments. If the RF/QF operator elects to receive capacity payments under the normal or levelized contract options, it will receive as -available energy payments only until the in-service date of the avoided unit (in this case June 1, 2028), and thereafter begin receiving capacity payments in addition to energy payments. If either the early or levelized option is selected, then the operator will begin receiving capacity payments earlier than the in-service date of the avoided unit. However, payments made under the early capacity payment options tend to be lower in the later years of the contract term because the net present value (NPV) of the total payments must remain equal for all contract payment options. Table 1 below contains estimates of the annual payments for each payment option available under the revised standard offer contract to an operator choosing the 2028 avoided unit option. This is available to an operator with a 50 MW facility operating at a capacity factor of 94 percent that meets the minimum requirement specified in the contract to qualify for full capacity payments. Normal and levelized capacity payments begin in 2028, reflecting the projected in- service date of the avoided unit (June 1, 2028). D z.