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ORDER NO. PSC -2019 -0265 -PAA -EQ DOCKET NO. 20190082 -EQ PAGE 2 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 has identified a 1,886 megawatt (MW) natural gas-fired combined cycle (CC) as its next fossil - fueled generating unit in its 2019 Ten -Year Site Plan. The projected in-service date of this unit is June 1, 2026. We believe this unit is sufficient as the avoided unit for standard offer purposes; however, FPL's projected reliability need in 2026 is only 106 MW. We note that approval of a standard offer contract is not an approval to construct future generating units. 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 the 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, 2026), and thereafter, begin receiving capacity payments in addition to the energy payments. If either the early or early 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 contains FPL's estimates of the annual payments for each payment option available under the revised standard offer contract to an operator with a 50 MW facility, operating at a capacity factor of 94 percent, which is the minimum capacity factor required under the contract to qualify for full capacity payments. Normal and levelized capacity payments begin with the projected in-service date of the avoided CC unit (June 1, 2026).