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Episode #27: 'Keeping Municipal Power Affordable While Adding Solar’ with Jacob Williams, CEO of Florida Municipal Power Agency - [an Energy Central Power Perspectives™ Podcast]

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The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. Each two weeks we’ll connect with an Energy Central Power Industry Network...

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  • Jan 26, 2021 1:00 pm GMT
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Utilities are increasingly looking to add renewable power to their grids to meet local, state, and federal clean energy requirements, to satisfy climate-concerned customer bases, and to fulfill internal goals of increasing the sustainability of operations. But the addition of clean energy cannot come at an excessive cost that will be passed onto ratepayers that may already be strained with heavy energy burdens in their monthly bills. Balancing these goals, along with the imperative that power remains reliable and resilient above else, means that utility executives are commonly seeing themselves becoming expert jugglers and multi-taskers. As CEO of Florida Municipal Power Agency, today’s guest Jacob Williams take on even more of a stressful task as his organization seeks to answer the needs of the citizens and representatives from their 30+ municipal member organizations.

As a part of this entry into the Power Perspectives Leadership Series, Jacob spends time with host Jason Price and producer Matt Chester to explain how exactly the municipal power agency model works, how the high energy demand and sometimes spotty sun in the Sunshine State create unique challenges, and the plans and expectations that FMPA is bringing into 2021 and beyond to continue delivering reliable, affordable, and clean power to Floridians. Utility-scale solar continues to be a key solution, but it’s not always as easy as it seems—tune into this episode to hear Jacob explain why.

Prefer to Read vs. Listening? Scroll Down to Read Transcript.

 

Thanks to the sponsors of this episode of the Energy Central Power Perspectives Podcast: West MonroeEsriGuidehouseCPower, and Hancock Software

 

Key Links
Jacob Williams’ Energy Central Profile: https://energycentral.com/member/profile/jacob-williams-1/about 

Florida Municipals Provide Affordable, Reliable and Clean Electricity: https://energycentral.com/c/um/florida-municipals-provide-affordable-reliable-and-clean-electricity

 

TRANSCRIPT

Jason Price:

Welcome to Energy Central Power Perspectives podcast, the show where we connect with utility leaders to discuss the future of the energy industry and the inspiring people making it possible. I'm Jason Price of West Monroe, community ambassador with Energy Central and host of the podcast and based in New York City. Joining me from Orlando, Florida is Matt Chester, Energy Central's community manager and producer of this podcast Power Perspectives. Matt, we finally turned the calendar on 2020, a year like no other that saw challenge after unprecedented challenge thrown at the utility sector. Despite the pandemic, despite the havoc wreaked from hurricanes and wildfires and other natural disasters and amid much political tension, the utility industry was as always tasked with continuing to deliver safe, affordable, reliable, and increasingly clean electricity without interruption. Even if 2020 had been a relatively normal year, the rapidly changing landscape in the utility sector requires steady leadership and adaptation of innovative solutions to keep pace with the transformations taking place across the industry.

Jason Price:

The focus on keeping power bills affordable for customers is of course nothing new. And even as new and innovative technologies get added to the grid and forward-looking clean technologies take up a larger chunk of the energy mix, none of that can come in a way that will create greater undue energy burden on utilities' customer base. The department of energy defines energy burden as the percentage of gross household income spent on energy costs and for lower income households, the energy burden tends to be greater. The DOE reports that low-income homes have an average energy burden of nearly 9% compared with just 3% for the rest of the country while particularly high burdens of up to 30% are recorded in extreme cases. And these undue disparities have only been heightened amid the corona-related recession. Added to the fact that ways to reduce energy use such as efficient appliances or rooftop solar tend to be capital intensive and out of reach for low and medium income households, the high entry cost creates a situation that cannot be ignored.

Jason Price:

The energy burden is a top priority for our guests today. Jacob Williams, the general manager and CEO of Florida Municipal Power Agency. Jacob and his team at FMPA can boast success in maintaining low power costs while simultaneously maintaining reliable supply amid a concerted focus on ramping up availability of clean energy, particularly via utility-scale solar power. Successes in this and lessons learned are made to be shared. So we're excited to dig into how they've been able to accomplish this with Jacob. And Matt, he's achieved this all in your home state of Florida. What do you think of that?

Matt Chester:

Well, they do call it the sunshine state. So I suppose it's only appropriate and given how long we have to keep the AC on during the year, affordability is a high priority. So I'm eager to hear more about these circumstances from Jacob.

Jason Price:

Indeed. But before we dig into the discussion with our esteemed guests, we'd like to recognize the sponsors of this podcast who made today's episode possible. To West Monroe, West Monroe works with the nation's largest investor-owned utilities and their telecommunications, grid modernization and digital and workforce transformations. From defending a rate case to preparing a business case, West Monroe utilizes a multidisciplinary team that blends utility, operations and technology expertise, covering topics, including aging infrastructure, electric vehicles, AMI, MDM, and ADMS deployment. And industry disruptors like DER and cybersecurity. To Esri, an international supplier of geographic information, GIS software, web GIS, and geodatabase management applications. And to Guidehouse, formally Navigate Research, a premier market research, an advisory firm covering the global energy transformation.

Jason Price:

As I mentioned, today we're going to be joined in the podcast booth by Jacob Williams, the CEO and general manager of Florida Municipal Power Agency. Jacob has held this position since September 2016 and he took up that mantle after an esteemed three decades of experience across the electric utility industry, including at both public power and investor-owned utilities. Among the most notable successes Jacob has achieved at FMCA, has been the continued lowering of costs to customers. Achieved in a way that doesn't sacrifice the utility, embracing new and important technologies on the grid while also keeping clean energy integration as a top priority. Balancing all of these competing goals is no easy task, but with a professional career that spanned energy marketing, trading, integrated resource planning, generation planning and more, it's no wonder that FMPA saw him as the right man for the job.

Jason Price:

As part of the Energy Central community, Jacob recently shared some insights that he's gained in the journey of ensuring FMPA's members who serve nearly 2.6 million customers keep access to low-cost, reliable and clean power in his agency's recent efforts to really ramp up affordable solar power in the sunshine state. I'm so eager to learn more about how FMPA is making the dream of affordable power come true. So let's not delay any further and bring him in. Jacob, welcome to today's Energy Central Power Perspective episode.

Jacob Williams:

Jason and Matt, thanks for having us and we're delighted to be able to serve our 31-member cities that are part of FMPA that serve 2.6 million Floridians. And we've worked very hard in lowering our cost to our members and things that we'll get into while not sacrificing reliability and also moving to a cleaner portfolio in the process.

Jason Price:

Perfect. So let's just jump into things. For our listeners who may not be familiar with FMPA or the Municipal Power Agency model, can you give us a quick summary of who you are and how you differ from the utility model some people may be familiar with?

Jacob Williams:

Sure. FMPA is essentially a group of 31 cities that own FMPA. Think of it as a cooperative of cities and many of them receive some or all of their power from FMPA. It's a not-for-profit and any margins created go back to the members to lower their cost of power. In addition, the members work together and we provide a ray of services from engineering support, project management, technical training, legal consultation, rate guidance, things of that nature that we can do on a scale basis to help our members out, as well as providing them low-cost, reliable and clean power. So, what makes it interesting is that every month I have a board meeting. There are 31 board members there, they are from the cities. They vote what to do. We are very much driven by the owners, the cities, the cities provide electricity to all their communities, essentially they are representing their customers and all the decisions that get made at FMPA.

Jason Price:

Thank you for that. So you stressed in your article that FMPA is constantly working hard to reduce its power costs. Would you tag that as priority number one in your role? And when looking at all the simultaneous targets you're looking at to reach when it comes to affordability versus resilience, versus clean energy and more, can you comment on how the pandemic may have shifted around those priorities, if at all?

Jacob Williams:

Yeah, clearly assuming that we're providing reliable generation to our communities, cost is number one. If you're high cost, you're not providing value here in Florida, as everyone knows Floridians consumes about 25% more electricity than average Americans. They're double what those in California, New York use for electricity. So the price of electricity is very important to our members. So, that that's number one. And this past year, we were proud through the pandemic that we were able to deliver the lowest cost to our member cities in 16 years. So, cost certainly stayed priority all through this and even more so, because in the middle of the pandemic, 23 of our cities lowered their rates by a total of $62 million to their customers for anywhere from one to six months, right in the heart of COVID in April, May, June as a way of recognizing that their customers were needing price breaks as much as they could.

Jacob Williams:

So they were grateful to be able to take $62 million off their bills over a period of time to help our customers out. We continue during this time though to protect the power plant operators and the employees are... We look to protect all of our team members, but in particular, during COVID, the key thing early on was to make sure that the group of call it eight people at each of our facilities who knows how to run the power plants, that they stayed healthy and available to operate the plants and were successful in doing that. The final thing is through all this, we were able to grow our clean portfolio because we added 150 megawatts of two large-scale solar projects came online on time in June. So in the heart of the pandemic, we were able to provide even cleaner power to our member cities.

Jason Price:

Can you talk a bit more about how FMPA balances the goals of affordability, reliability, and sustainability in its power supply, given that these can sometimes be in direct competition with each other? Customers demand the lights stay on and they're pushing for more renewable energy, but they don't necessarily want to pay more. So how do you address these concerns with customers?

Jacob Williams:

Well, early when I got here in 2016 and early 2017, there was a big member survey of 300 to 600 customers. And I think it was 11 communities member cities and ask them those kinds of questions. How would they like to balance it out? And two key questions came out of it. Number one was how many wanted cleaner power? And the answer was 70%. The second key question though, was how many were willing to pay more for cleaner power? And that was roughly 10% to pay anything significant more for that. And of course, varied from city to city. We have some cities that have average incomes as low as below 30,000 per family unit. We have some cities that were in the 50,000 to 70,000. The majority of our cities are in the lower side, lower income, large number of retirees.

Jacob Williams:

So you start to get a sense for what the social economic of your cities are and the cities then would make decisions accordingly. So one of the balances that we struck early on was the cities as a whole said they want to proceed with some solar power, but they want to do so in a way that does not raise the costs meaningfully to their customers. And they would do it for a small amount, because they knew a small amount of customers were actually interested in paying more for solar. And that's exactly what happened. So some of the city signed up for solar, other cities chose not to because their demographics frankly didn't lead them to do that. And I think that was the wise decision by them. That was the first round of solar that just came on. Since then, we've had a second round of solar projects under development that are at a lower cost.

Jacob Williams:

And so more cities are jumping in there, but again, they're laser-focused on low cost. They just did not want to do anything that would raise the cost of power to their cities and they have tried to manage that accordingly. Obviously they need to improve reliability. The biggest thing we can help them with their reliability is not our generation to their cities, but it's really around their distribution system. And we spend a lot of time trying to help them improve, whether it be better tree trimming, whether it be better pole maintenance, whether it be better fuse coordination, operating practices, all kinds of things, better technology on the system. So we're helping them in that line. And some cities have more capital budget and more budget to spend on that than others. And we have to take each one where they're at and overall move them forward as best we can.

Matt Chester:

Jacob, I'm interested. You mentioned the customer survey you did, and kind of the varying results that you saw potentially by communities' income levels, but were there other characteristics of customers that impacted what they were looking for, whether on solar or other changes? Something like residential versus industrial customers or somewhat different geographies within the region or other factors like that?

Jacob Williams:

Well, obviously Matthew you know here in Florida, there isn't what I would call a lot of industry in Florida. There are big storage facilities, but most of it's either commercial or residential. Most of our members cities, there are a few of them that have some major retailers that have national footprints, but some of our member cities have relatively limited amount of that. And so who are the corporate buyers who are pushing for solar? And in those cases, our members are trying to work with them to provide 100% solar to those facilities via large-scale solar, which we'll talk about. But many of them were basically very much residential-driven with the exception of maybe their own city facilities.

Jacob Williams:

So in the case of one of our communities, they chose to have 100% of their city facilities now powered by solar. Effectively the same amount of kilowatt hours powered by solar that is bought through the electric utility and delivered to their accounts. Geography, a little different. In Key West, you could do solar down at Key West, unfortunately it's a million dollars an acre for property down there. So no one is going to be putting any meaningful solar down in Key West. And so they were very naturally saying we'd be happy to get involved in a large-scale, low-cost utility-scale project in the middle of Central Florida, ship the power down there, let them own a piece of that and bring it down there because putting solar panels in Key West is not a wise use of land down there.

Jason Price:

Let's dig into the solar topic a bit more. So FMPA and 16 other Florida municipal utilities have created what's called the Florida Municipal Solar Project. Can you tell us about this initiative and how that collective action is perhaps able to reach greater accomplishments than the sum of its pieces?

Jacob Williams:

Sure. The municipal solar power project ended up being done in two phases. The initial phase was 225 megawatts of projects that was committed to 75 megawatts a piece, the reason 75 megawatts a piece is because in Florida there's a citing rule that basically everything 74.5 and below has a much easier sighting than larger. So, in Florida, you're going to see 75 megawatt plants all over the place or sites all over the place. But we had three of them contracted for, two of them came online, I think we contracted for them in late 17, early 18. And then they came online in June of 2022 the three sites. The third site got delayed to 2023. After we started the first set of sites forward, then another two sites were selected. And so now we're going to have another 150 coming online in 2023 along with that third site.

Jacob Williams:

So, all in all that takes us up 375 megawatts of solar that's coming into being as a result of the Florida Municipal Solar Project. How that was accomplished is no one single utility could do this on their own. You need a square mile essentially for every site. And so when these communities looked at what's the best value for my property in my city limits? Was it to take a square mile worth of land and turn it into a solar field, or was it to actually work together with all the other 15 or 16 cities and have places out in literally the middle of nowhere and then bring the power in from those sites? And that is how we negotiated together for those projects. And we let all those negotiations and very streamlined process to make that happen.

Jacob Williams:

In that way, it preserves the value of the land in and around the city areas that as we all know in Florida, there's so many people moving to Florida, that all of our communities are seeing growth and new people showing up and developments are around the edges. And many of our communities don't want to give that land up for a solar facility [inaudible 00:17:03] nearly the taxing impact, the economic impact that housing would have in that area.

Jason Price:

Sure. Coming from the unique position of a municipal power agency. So you may not have the resources or freedom to pursue the same type of large-scale investment projects that your peers and investor-owned utilities can, whether the goal is for reducing costs, increasing renewables, or providing other benefits to customers. So do you think this hampers your efforts to truly dive into clean energy and utility-scale solar in any other way? Or since you are smaller scale, do you find yourself having opportunities to try out new things that the bigger players perhaps cannot?

Jacob Williams:

Yeah. It's an interesting question. An individual municipal, many of them would struggle in doing projects like this. They don't have the scale. They may have limited resources financially, limited analytical people skills to do that. Through the joint action agency, through the municipal power agency, 31 cities or some subset of them can band together and those resources can be brought to place. If you think about it, the Florida municipals provide 15% of all the electricity in the State of Florida. And given the size, that's quite a [inaudible 00:18:17] that you can work with. So, the other piece of it is that the renewable projects, as we said there are 75 megawatts in size each site. That's a lot different than doing a 300 to 600 megawatt state-of-the-art combined cycle plant. And so it works in the scale that we're talking about. And then finally, each member city can then select how much they want of a piece of a project.

Jacob Williams:

So someone says, "Hey, I want three megawatts." Someone says, "I want 30." Someone says, "I want five." Someone says, "I want none." That's all allowable and they can work together. And as long as we add it all up to get a project in place. And so far, we haven't had a problem. We started assuming we'd do one 75 megawatt project. And we had enough interest for three in round one. Then we went back out for another 75 and we ended up with two sites, 150. So, our team that was working with our members headed up by Susan Schumann. We were surprised, kept coming back more and more and more interest in all kinds of things that was going on.

Jacob Williams:

Certain cities wanted more and more and so we could meet their needs while other cities said, "Cost is most important. We don't want any." So truly, I think we have a little bit of flexibility. If you're under utility rate structure [inaudible 00:19:34] that it's a common rate to everybody. So you're paying for your share of that cost of a project, whether or not you want it or not. So we probably have a little more flexibility in that respect.

Jason Price:

Interesting. And bringing it back to affordability and benefit to customers, what impacts would rate payers notice with this effort?

Jacob Williams:

Well, so for other cities that are taking some power off this, it's a very small impact, well under 1% increase in their bill from their participation in it. For other cities, there's no impact. And so that's so far the scale. For individual customers in some of our cities who have said, if you as a customer, let's say the City of Kissimmee, they're taking 100% of their electricity for the city facilities from the solar project. Well, there they're probably going to pay upwards of 10% more for their electricity, but they've chosen to be 100% renewable, so to speak. And so, you could pay 10% more if you want to go 100% solar. For an average customer, who's not willing to do any more it's a very small to no impact, in some city there's zero impact. So, it's allowed entities to decide who should get solar, which cities would want to, and try not to pass along to customers who don't want to pay more for their electricity. That's been a nice feature.

Jason Price:

All right. Well, now I'm going to ask you to look into a crystal ball. The past 10 years have been quite busy for the advancement of solar, both in terms of technology advancement and installations, making much more in roads across the industry. So by the end of the next decade, Jacob, where do you see solar going? How will it benefit and not be a burden to the rate payers who need affordable energy and what role will FMPA play in that affordable solar future?

Jacob Williams:

Well, I think before you step forward, you got to ask a question. We started call it 2015 with no solar in the State of Florida, even though it's "the sunshine state" as Matthew noted. Our solar is extremely different than the solar profile of the West. We have 20%, 25% less solar energy availability per day than does Arizona. Because for those who've come to Florida, it's great in February and March, sunny days most of the time, but throughout the summer, we have cloud cover coming in every afternoon and thunderstorms all over the place. So, our solar is not only spotty day-to-day, it's spotty in a 15-minute cycles. And so we're going to grow solar in the state. We're going to go from zero on the state to probably 7,000 megawatts in 2025, maybe 10,000 to 12,000 megawatts overall in the state by 2030, just rough numbers.

Jacob Williams:

That is going to be a huge impact on the system and potential of massive swings of a single resource of power, given the weather patterns every day. So, we're going to grow solar. There's no doubt about that, but it is going to create a major set of operational concerns that are going to have to be managed and managed well. And it will either lead to a lot more gas generation being available at a heartbeat notice to run. And a lot of spinning and sitting on the sideline, or if cost-effective batteries becomes a key player. Unfortunately right now the battery technologies cost and effectiveness are not nearly what it needs to be to be at a large-scale power installation to run a whole state. Lithium-ion, we're going to need a jump from lithium-ion to a better technology for both cost and performance.

Jacob Williams:

Lithium-ion is great for cars. It's great for your phones, not great on a large-scale utility operation, where your costs are important. If you want to do a demonstration, a lot of demonstration projects that use it. So we've got a few things to do. One, we're going to grow solar, tons of utility-scale sites will come online. And then it's a matter of the generation that's out there is going to operate with a lot of wild swings it's not used to, unless of course the battery technology gets cost-effective and helps meet those needs. So, that's a challenge and our operators that run the grid here in Florida, we're a peninsula state. We can't rely on the rest of the country for power. We can't like California work in full power from the North or from the South or from the East. It's Florida, and that's essentially it. We've got a small set of connections to Georgia, but really it's Florida and that's it. So, some unique challenges down here as we see the growth over the next 10 years.

Jason Price:

That's great. Well, this has been a terrific conversation, Jacob, and I want to thank you for sharing your insight with us on today's episode of the podcast. We will stay tuned to see how utility-scale solar market continues to evolve. Thank you for joining us today.

Jacob Williams:

Thank you, Jason and Matthew.

Jason Price:

You can always reach Jacob through the Energy Central platform or directly with FMPA, where he welcomes your questions and comments. Once again, I'm your host, Jason Price. Plugin, and stay fully charged in the discussion by hopping into the community at energycentral.com. See you next time at the Energy Central Power Perspectives podcast.

 


About Energy Central Podcasts

As a reminder, the Energy Central Power Perspectives™ Podcast is always looking for the authors of the most insightful articles and the members with most impactful voices within the Energy Central community to invite them to discuss further so we can dive even deeper into these compelling topics. Posting twice per month (on the second and fourth Tuesdays), we'll seek to connect with professionals in the utility industry who are engaging in creative or innovative work that will be of interest to their colleagues and peers across the Energy Central community. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

The Energy Central Power Perspectives™ Podcast is hosted by Jason PriceCommunity Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.  

If you want to be a guest on a future episode of the Energy Central Power Perspectives™ Podcast, let us know! We’ll be pulling guests from our community members who submit engaging content that gets our community talking, and perhaps that next guest will be you! Likewise, if you see an article submitted by a fellow Energy Central community member that you’d like to see broken down in more detail in a conversation, feel free to send us a note to nominate them.  For more information, contact us at community@energycentral.com. Podcast interviews are free for Expert Members and professionals who work for a utility.  We have package offers available for solution providers and vendors. 

Happy listening, and stay tuned for episode #19 in a few weeks! Like what you hear, have a suggestion for future episodes, or a question for our guest? Leave a note in the comments below.

All new episodes of the Energy Central Power Perspectives™ Podcast will be posted to the relevant Energy Central community group, but you can also subscribe to the podcast at all the major podcast outlets, including:


Thanks to the sponsors of this episode of the Energy Central Power Perspectives Podcast: West MonroeEsriGuidehouseCPower, and Hancock Software

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