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SEOPW-CRA-M-01-0026
• May 21, 2001 Mr. Arthur Teele Chairperson Community Redevelopment Agency 300 Biscayne Blvd. Way Suite 430 Miami, FL 33131 Re: Technology Center of the Americas Dear Art: As you know, Florida Power & Light is demanding that the Technology Center of the Americas post a bond in order to obtain infrastructure improvements to deliver the necessary primary and redundant power to our facility to support telecommunications and internet infrastructure deployment. The informal agreement between the Technology Center of the Americas and the CRA has always been that the CRA would assist us, where possible, with infrastructure' and related issues. The purpose of this letter is to request such assistance from the CRA and to call upon you to provide us with whatever help is possible with regard to the unforeseen requirements imposed upon us by Florida Power & Light. It is my hope, based on my understanding of the authority of the CRA, that your Board would be in a position to assume the obligations represented by the bond demanded by Florida Power & Light in exchange for an agreement limiting the Board's liability in the event appropriate levels of power are not consumed within the first three years. I would be very happy to discuss this issue further with you or the Board, as you deem appropriate. BKG/In cerely, Brian K. Goodkind Chief Operating Officer of Terremark Worldwide, Inc. on behalf of the Technology Center of the Americas, LLC Terremark Worldwide, Inc. Submitted Into the public record in connection with lte . ®on s U -cn 4 Walter.Foeman City Clerk 01- zs SEOPWiCRA 2601 S. Bayshore Drive. 9th Flmar, Coconut Grove, FL 33133 Office: (305)856-3200 Fax: (305)856-8190 -obn(AMEXrWW) • April 18, 2001 WILLIAM R. BLOOM 305-789-7712 Internet Address: Llwbloom@hklaw.com VIA E-MAIL Commissioner Arthur E. Teele, Jr. City of Miami 3500 Pan American Drive Miami, FL 33133 Re: Technology Center of the Americas - NAP Project Dear Commissioner Teele: As I previously indicated to you Terremark Worldwide, Inc. the developer of the NAP (the "Developer"), is having difficulties in reaching an agreement with Florida Power & Light Company ("FPL") with respect to the electrical requirements for the Project. When the Developer first spoke with representatives of FPL in early 2000 regarding the Project, the Developer indicated that the Project, when fully occupied, could require as much as 100 watts per square foot for electric service. In addition, the Developer advised FPL that service would be required from two FPL substations so that there would be sufficient redundancy to satisfy the requirements of the telecommunications companies that would be occupying the Project. During these discussions FPL expressed delight to be able to service the Project and indicated that it could meet the Project timetable which calls occupancy in mid-2001. At no time during these discussions did FPL indicate to the Developer that the Developer would be obligated to guaranty the level of service requested or make any other payments with respect to the Project other than those ordinarily and customarily required by FPL. Subsequent to these discussions with the Developer, FPL went to the Florida Public Service Commission (the "PSC") and indicated to the PSC that it had been approached by between 40 and 50 developers of SE®PW/CRA 01- 027 01- 026 • 0 Commissioner ArthurP. Teele, Jr. April 18, 2001 Page 2 telecommunications facilities requesting a level of service far in excess of that customarily provided to similar buildings within their service territory. FPL expressed concern to the PSC that it would expend significant dollars to expand its facilities to service these new projects and if the demand did not materialize, FPL and its ratepayers would be burdened with the obligation to pay for the expanded infrastructure that was not required. FPL requested that the PSC approve a performance guaranty agreement (the "Guaranty Agreement") which would require the prospective developer to guaranty to FPL that the requested demand would materialize by the end of a three (3) year ramp -up period. The Developer would be obligated to reimburse FPL for a portion of the costs incurred by FPL in installing the infrastructure required to service the facility if the required demand load does not materialize during the three (3) year ramp -up period. The Developer would be obligated to reimburse FPL for a portion of the cost of the infrastructure to be calculated based upon the difference between the actual demand and the guaranteed demand. FPL has claimed that it is being reasonable to utilize a three (3) year ramp -up period because, based upon its analysis nationwide, it believes that 3 years is more than adequate time for a building to reach 100% occupancy. We believe that the PSC approved the Performance Guaranty based on incomplete information provided by FPL and without adequate input from the Telecommunications industry. In this regard I would like to call the following to your attention: 1. FPL represented to the PSC that between 40 and 50 developers had contacted it regarding requests for service which would be of a level where the Guaranty Agreement would be required. However, since the approval of the Guaranty Agreement in January, 2001, FPL has only had five requests involving a Guaranty Agreement and apparently only one Guaranty Agreement has been executed. We have not been able to confirm who executed the Guaranty Agreement. 2. FPL represented to the PSC that it did not believe the imposition of the Guaranty Agreement was a violation of the Federal Telecommunications Act since they were imposing the Guaranty Agreement on the developer and not on the telecommunications companies who would be the tenants in the building. To the extent that the Guaranty Agreement is construed as a barrier to the telecommunications industry, either direct . or indirect, the Guaranty Agreement could in fact constitute a violation of the Federal Telecommunications Act. SEOPW/CRA 0�- 2'7 - - 01- 026 • • Commissioner Arthuo. Teele, Jr. April 18, 2001 Page 3 3. To our knowledge FPL is not posing the requirements regarding the Guaranty Agreement in a uniform manner. It is our understanding that FPL connected the Exodus building in West Dade to its system without the Guaranty Agreement being executed. 4. While FPL believes it is being fair in utilizing a three year ramp - up period based upon its analysis of other telecom companies nationwide, we believe the more appropriate ramp -up period in the telecommunications industry is five years. The imposition of the three year ramp -up period puts the Developer at a substantial risk under the Guaranty Agreement. 5. FPL failed to disclose to the Developer of the NAP that it contemplated imposing the Guaranty Agreement with respect to the Project. The Developer relied, to its detriment, on its discussions with FPL and has entered into leases with the NAP of the Americas and Global Crossings without addressing the issues raised with respect to the Guaranty Agreement. The imposition of the Guaranty Agreement is particularly burdensome on the NAP because it is being provided with chilled water for the operation of the tenant's HVAC systems through a subsidiary of FPL. Because of required redundancy the load for the back-up chillers required for redundancy for the Project are included in the load calculations, however the demand will not materialize unless there is a failure at the chilled water plant operated by FPL's subsidiary in which event the power utilized at the chilled water plant will be available to operate the redundant chilled water facilities. Notwithstanding this fact, the Developer of the NAP would be required to guaranty the electrical demand of the back-up chilled water facilities which in all likelihood will never materialize which will automatically result in the Developer having liability under the Guaranty Agreement. Over the last 30-60 days, the Developer and FPL have been negotiating to resolve .the issues regarding the Guaranty Agreement. Pursuant to the terms approved from the PSC, FPL is requiring a Guaranty Agreement in the amount of 1.51 times the anticipated costs for the infrastructure required to service the Project. At the present time this will result in Developer being required to post a bond in the approximate amount of $7,500,000. At the end of the three years we would anticipate the Developer would forfeit between 50% and 80% of the amount of the bond. This is a significant monetary risk that was not foreseen or budgeted for by the Developer. SEOPW/CRA 01- 27 01- 026 • Commissioner Arthur,,. Teele, Jr. • April 18, 2001 Page 4 The infrastructure improvements required for servicing the Project primarily consist of the following: 1. Approximately $850,000 for construction of two utility vaults; one at the east end of the Project, and one at the west end of the Project. 2. Approximately $4,100,000 for the construction of a duct -bank which will contain fifteen (15) conduits from the FPL Miramar substation to the Project and from the FPL Railway substation to the Project. Of the fifteen (15) conduits contained in the duct -bank, four (4) will be required when the Project is fully operational. At the present time FPL is requiring five (5) conduits for the Project, including one (1) spare and is obligating the Developer to pay one-third (1 /3) of the cost for constructing the duct -bank. 3. The cost for pulling the wiring through the conduit is estimated at approximately $400,000 per leader. Initially it was anticipated that only one (1) conduit and one (1) leader would be required to service the Project and that additional capacity would be required over time as additional tenants are added to the Project and existing tenants expand within the Project. Ideally, FPL will agree to build - out the duct -bank to accommodate the fifteen (15) conduits which will provide infrastructure improvements for the entire area in addition to the Project but only require the cost associated with one (1) of the conduits to be imposed on the Developer through the Guaranty Agreement. The electrical vaults would be constructed to accommodate the initial service required for the building with ready expansion capabilities to accommodate future growth. The Guaranty Agreement would be structured so that it would only guaranty what the Developer indicates is its anticipated demand load over the next three years, taking into account that the Project will be serviced by the chiller plant operated by FPL's subsidiary and future tenants of the building, and not the Developer, would contract directly with FPL with respect to their electrical requirements. Any Guaranty Agreements required in connection with this anticipated demand would be between the telecommunications company and FPL. The key to this structure is the agreement of FPL to promptly put in the duct -bank containing the fifteen (15) conduits so that the infrastructure is in place to rapidly connect the telecom users to FPL service as future tenants occupy the building and future demand materializes. FPL has indicated by virtue of designing a fifteen (15) conduit duct -bank when only four conduits are required for servicing the NAP Project when fully operational, that infrastructure improvements are required in the Southeast Overtown Park West Community Redevelopment Area to service anticipated SEOPW/CRA 01-- 026 Commissioner Arthu*. Teele, Jr. is April 18, 2001 Page 5 • future needs. It is truly unfair to require the Developer of the NAP to be required to pay, through the Guaranty Agreement, a significant portion of the costs for constructing this infrastructure when it is known that the demand will not materialize within FPL's required timeframe and with knowledge that if FPL does not construct the duct -work now the additional capacity will not be available within the timeframe required to service new tenants as required (i.e., approximately six (6) months from the date a lease is signed with a prospective tenant). We believe that the appropriate infrastructure improvements are essential to the redevelopment of the Southeast Overtown Park West Community Redevelopment Area. We thereforerequest any assistance that you can provide in either convincing FPL to construct the appropriately sized duct bank, at its expense anticipating the future demand or assist in finding some other alternative source of funds or guarantees to induce FPL to construct the ducts now in order to relieve the Developer of this expense. Thank you for your assistance in this regard. cc: Mr. Michael Katz Robert Finvarb, Esq. MIA 1 # 1033460 v2 L-1 Very truly yours, HOLLAND & KNIGHT LLP William R. Bloom SEOPW / 01- 27 Oil- 026 nuMi C May 8, 2001 MAY 0 8 aw Dipak Parekh, Executive Director c/o Southeast Overtown/Park West Community Redevelopment Agency 300 Biscayne Boulevard Way, Ste. 430 Miami, Florida 33131 RE: Florida Public Service Commission ("PSC") ruling on Performance Guaranty Agreement by Florida Power and Light Company ("FP&L") Dear Ms. Parekh: As per your request, enclosed please find a copy of the Order Approving Tariff and transcript of the Agenda Conference which was held on Tuesday, December 19, 2000. If you have any questions, please feel free to call my office. RIF/dm Encl. • Sincerely Robert I. Finvarb V. P. & Associate General Counsel Terremark Worldwide Inc. Terremark Worldwide, Inc. SE0PW/0RA 2601 S. Bayshore Drive, 9th Floor, Miami, FL 33133 Office: (305)856-3200 Fax (305)856-8190 0 �1 — 026 laMexnM) J 01- 27 E • ! BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION • In re: Petition for approval of DOCKET NO. 001579-E1 a performance guaranty agreement ORDER NO. PSC-01--0031-TRF-El by Florida Power & Light ISSUED: January 8,. 2001 Company. The following Commissioners participated in the disposition of this matter: J. TERRY DEASON, Chairman E. LEON JACOBS, JR. LILA A. JABER BRAULIO L. BAEZ MICHAEL A. PALECKI ORDER APPROVING Tp,RzFF BY THE COMMISSION: On October 20, 2000, Florida Power & Light Company (FPL) filed a Petition for Approval of a Performance Guaranty Agreement. FPL proposes to require the agreement in cases where applicants for service require a significant expansion of FPL's facilities to meet projected loads that, in FPL's estimation, are speculative and may not materialize. The Commission has jurisdiction over the subject matter pursuant to Sections 366.04 and 366.06, Florida Statutes. Under the proposed agreement, the applicant will be required to provide a performance guaranty. If the revenues materialize as projected, F?L will refund or cancel the guaranty. To support its petition, FPL states that it has recently received between forty and fifty requests for serv;n e from customers whose loads, if they materialize, will require a significant expansion of FPL's distribution and/or transmission facilities. The requests are From telecommunications service prov' ers and property developers who refurbish existing facilities or build new facilities to house the electronic equipment of telecommunications service providers, Internet service providers, and web hosts. The developers prepare the sites with the intent to lease them to the service providers. SEOPW/M q1- 27 01- 026 ORDER NO. PSC-01--0031-TRF-El DOCKET NO. 00157 9--El PAGE 2 FPL asserts that these facilities require very high electric capacity when compared to similarly situated premises..-usid' as office buildings. The proposed facilities- are typically about 1. a0_,..000 square, feet and require up to 70 watts of billing demand per square �t. A typical commercial office building requires about 6 watts per square foot. The existing electric system is therefore often not sufficient to satisfy the electric requirements of these types of facilities. FPL states that it has concerns that the projected load and associated revenues might not materialize in every instance. FPL believes' that due to rapid growth and many participants in the evolving telecommunications services market, some of the projects will not be viable. If the projected revenues do not materialize, FPL's ratepayers will bear the cost of the significant investment made to serve the load. For the above -stated reasons FPL is proposing to require these types of applicants to sign the Performance Guaranty Agreement. The proposed agreement will allow FPL to complete the required upgrades or expansions with assurance that FPL's general body of ratepayers will not bear the incremental costs incurred by FPL in the event the projected load does not materialize. Although FPL's proposal was prompted by the recent activity in the communications field, the agreement will be utilized for any customer that requires a significant investment by FPL and whose projected revenues are uncertain. Under the agreement, an applicant will be .required to post a performance guaranty in the form of cash, a surety bond, or a bank letter of credit. The amount of the performance guaranty is determined using FPL`s estimate of the incremental costs 'it will incur to serve the requested capacity, multiplied by a carrying cost factor. The carrying cost factor represents the carrying cost (return, depreciation, property taxes, and insurance) to FPL over the 30-year life of the investment. We have reviewed the calculation of the carrying cost factor and believe that it is appropriate. The incremental cost represents the difference between the cost FPL would ordinarily incur to provide service to the premises and the cost FPL will incur to meet the requested higher level of capacity. Such incremental costs may include the upgrade to or acceleration of the in --service elate of both transmission and distribution facilities. 01- 27 01-- 026 • • ORDER NO. DOCKET NO. PAGE. 3 PSC-01-0031-TRF-EI 001579-El To illustrate, if an existing structure has in place facilities to supply 8 watts per square foot (baseline capacity), and the applicant for service requests 50 watts•-p'ex'square foot, then..be ..performance„guaranty will be' based only on the cost to provide the incremental capacity of 42 watts per square foot. In the case of a new structure, FPL will determine the amount of capacity that would be typical for a commercial, customer in that location. The performance guaranty calculation will be based on the difference between the capacity requested and the typical capacity. During the 3-year term of the agreement, FPL will compare the "incremental base revenues" collected from the customer to the performance guaranty amount. Incremental base revenues are the difference between the actual revenues received (base revenues) and those revenues FPL would have received from a more typical customer (baseline base revenues). ® If during the three -yeas period the total incremental base revenues received equal or exceed the performance guaranty amount posted, then FPL will refund Lhe total amount of the cash to the customer. If the customer has posted a surety bond or letter of credit, the bond or letter credit will be released or canceled. At the end of the three-year period, if the total incremental base revenues received are less than the performance guaranty amount posted, then a settlement will be made. At that time, the customer who posted a cash guaranty wi.l3. receive a refund equal to the amount of the incremental base revenues paid during the three- year period. The remaining balance of the cash performance guaranty is retained by FPL. Customers who provided a letter of credit or surety bond, will be required to pay FPL an amount equal to the difference between the performance guaranty and incremental base revenues paid during the three-year period. The proposed Performance Guaranty Agreement is appropriate because it provides protection for FPL's general body of ratepayers in the event that the projected loads of customers do not materialize. Such protections are similar to those provided for . pursuant to Rule 25-6.064, Flotida Administrative Code, which applies to customers who require an extension of the utility's distribution facilities in order to receive service. Such SEOPW/CRA 01- 27 01_ 026 • ORDER No. DOCKET NO. PAGE 4 PSC-01-0031-TRF-El 001579-EI customers are required to pay a contribution in aid of construction (CIAO) to help offset the extension cost. Such situations are addressed in Sect-ioh '2.2 'of FPL's General Pules and P,�gul ationsfor electric Service, entitled Availability of Service.. This Commission -approved tariff provision allows FPL to require an applicant for service who requires an extension of FPL's facilities to provide a guaranty, a CIAC calculated pursuant to Commission rules, and/or advances for construction when in FPL's opinion the potential revenues do not justify the cost of the extension. It also provides for a contract minimum monthly payment by the customer when there is doubt as to the level or length of use of the facilities. The underlying purpose of this provision is to ensure that ratepayers are not unduly burdened with the expense of facilities that are not fully utilized. Unlike a CTAC, the proposed Performance Guaranty Agreement allows the applicant for service to receive a full or partial refund of the performance guaranty 'if the projected load and revenues are realized. When meeting with potential customers-, it is FPL's intent to provide analyses demonstrating the level of load that must materialize over the three-year period in order to offset the performance guaranty. FPL believes that the agreement provides an incentive to the applicant to correctly identify the level of service needed. our review of sample analyses provided by FPL indicates that if the projected loads of these types of customers do materialize, they most likely will receive a full refund of the performance guaranty. While we believe that. EPL's proposed agreement is appropriate, we are concerned that the agreement includes no precise mechanism for determining when a performance guaranty will be required from a customer. Deciding when_ to require a performance guaranty is left entirely to FPL's discretion. For this reason, FPL s use o the agreement should be monitored for a minimum of two years. To monitor the application of the tariff, FPL shall file with the Commission monitoring reports that include the following information: 1) for each agreement executed, FFL-shall provide the amount of the performance quaran_y reques e n projected and achieved revenues for a 3--year period, and telecommunications and internet ;ery usto r Nih u t s w' = h for all s.- ;mi I r c me s, o req es ervYce n:c, requires a significant upgrade o exi as nVlslorle underthe ar1 anguaq who were not required to execute an agreement, FPL shall prove e SEOPW/ CRA viders, or 01 - 27 01 - 026 , ORDER DOCKET PAGE S NO. PSC-01-0031-TRF-El NO. 001579-EI 1® explanation as to why the applicant was not����i red t9 Cl glLthe aj_emPnt The purpose of the second filing requirement. is to ensure that all similarly situated customers are being treated fairly. The first monitoring report. shall contain data from the first 6 month period that the tariff is effective, and the report shall be submitted no later than July 31, 2001. The second monitoring report shall contain data from the second six month period that the tariff is effective, and the second report shall be submitted no later than March 1, 2002. The third monitoring report shall contain data from the second one-year period that the tariff is effective, and the report shall be submitted no later than March 1, 2003. In summary, the we find that FPL's proposed Performance Guaranty Agreement should assure that the general. body of ratepayers will not be burdened with an investment in facilities that are not needed, and will provide incentive to customers to realistically estimate their need for electric service. The Performance Guaranty Agreement is therefore approved. The tariff shall become effective on December 19, 2000. Based on the foregoing, it is ORDERED by the Florida Public Service Commission that the Performance Guaranty Agreement proposed by Florida Power & Light is approved. It is further ORDERED that monitoring reports shall be submitted as described in the body of this Order. It is further ORDERED that if a protest is filed within 21 days of issuance of the order, the tariff shall remain in effect with any charges held subject to refund pending resolution of the protest. It is further ORDER-Ecrtha-. if no timely protest is filed, this docket shall be -closed upon the issuance of a.Consummating Order. By ORDER of the Florida Public Service Commissiow this 8th Day of January, 2001. BLANCA S. BAY6, Director Division of Records and Reporting SEOPW/CIA 01- 27 01- 02'16 • 0 • ORDER NO. PSC-01-0031-TRF-El DOCKET NO. 0015-19-EI PAGE 6 By: Isl Kay Flynn___ Kay Flynn, Chief Y Bureau of Records ( S E A L ) MKS This is a facsimile copy. A signed copy of the order may be obtained by calling 1.-850-415-6770. r)ISSENT Commissioner Jaber dissents. I respectfully dissent from the majority opinion. I have no argument with the notion that investment advanced by the utility should not become' stranded by an overly optimistic commercial customer, who first demands service -- and its attending investment -- only to Evaporate when its market fades away or it meets with other economic misfortune. Most importantly, this should not happen at the expense of residential retail customers. However, I believe that we as regulators also have a responsibility to ensure that service is provided and priced without undue discrimination. I believe that the performance guaranties tendered by florid az%td--ap-prroved by t e ma3orzty, ac . criteria which would ensure nondiscriminatory a p ication to semi ar y .5 ua e customers. In fact, it could be argued" that the ma�oxa. y as, to an admittedly mild extent, delegated its discretion to FPL to privately decide which of its customers are subject to performance guaranties, and perhaps to what extent. Moreover,we state regulators are expected by both state and federal authorities to encourage the deployment. of advanced telecommunications capability.- It is apparent to me that to permit FPL to consult their own unpublished criteria (if any) as to who pays a performance guaranty includes no assurance that F?L1.5 actions will result in competition neutral decisions with respect to that issue_ SE®PW/C[A 01- 27 01- 026 0 .9 ORDER NO. PSC-01=0031-TRF-EI DOCKET NO. 001579-El PAGE 7 With appropriate inclusion of criteria ensuring nondiscriminatory application of performance guaranties,..J cduld enthusiastically support the measure, perhaps ,everr to t`he extent of regiriny_...otiher electric utilities •over which we exercise jurisdiction to follow suit. NOTICE OF FURTHER PROCEEDING$ The Florida Public Service Commission is required by Section 120.569(1), Florida Statutes, to notify parties of any administrative hearing or judicial review of Commission orders that is available under Sections 120.57 or 120.68, Florida Statutes, as well as the procedures -and time limits that apply. This notice should not be construed to mean all requests for an administrative hearing or judicial review will be granted or result in the relief sought. Mediation may be available on a case -by -case basis. if mediation is conducted, it does not affect a substantially interested person's right to a hearing. The Commission's decision on this tariff is interim in nature and will become final, unless a person whose substantial interests are•affected by the proposed action files a petition for a formal proceeding, in the form provided by Rule 28-106.201, Florida Administrative Code. This petition must be received by the Direc•tbr, Division of Records and Reporting, 2540 Shumdrd Oak Boulevard, Tallahassee, Florida 32399-0850, by the close of business.on January.29, 2001. In the absence of such a petition, this Order shall become final and effective upon the issuance of a Consummating carder. Any objection or protest filed in this docket before the i5suaxice date of this order is considered abandoned unless it satisfies the Foregoing conditions and is renewed within the specified protest period. SE®PW/CIA 01- 27 01- 026 State of Florida ublic Znbzrz Comml5510r[ CAPUA\L CIRCLE OFFICE CFN-MR • 2540 SFIUMARD OAK BOULEVARD + ' TALLAHA55EE, FLORLUA 32399-0850 •��ooWt -M-E-M- o-R-A-N-D-U-M- DATE :'-, - - DECEMB'ER- ` p 2.M-0 TO: DIRECTOR, DIVISION OF RECORDS AND REPORTING (SAYO) FROM: DIVISION OF ECONOMIC REGULATION (E. DRAPER)�� DIVISION OF SAFETY AND ELECTRIC RELIABILITY (LEE) - DIVISION OF LEGAL SERVICES (STERN) Rq i�F 11AK RE: DOCKET NO. 001579--EI - PETITION FOR APPROVAL OF A, PERFORMANCE GUARANTY AGREEMENT BY FLORIDA POWER & LIGHT COMPANY. AGENDA: 12/19/00 - REGULAR AGENDA - TARIFF FILING - INTERESTED PERSONS MAY PARTICIPATE CRITICAL DATES: 60-DAY SUSPENSION LATS: 12/19/0-0 SPECIAL INSTRUCTIONS: NONE FILE NAME AND LOCATION: S:\PSC\ECR\WP\001579.?CM CASE BACKGROUND On October 20, 2000, Florida Power and Light Company (FPL) filed a Petition for Approval of a Performance Guaranty Agreement. FPL proposes to use the agreement in cases where applicants for service require a significant e::pansion of FPL's facilities to meet projected loads that, in FZIL' s opinion, may not mat -.I; ia1 i ae . The Commission has ju=isdictyon over the Subject matter pursuant to Sectio:is 366._04. and 365.06, Florida Statutes. SEopw / CRA 01- 27 01- 026 DOCKET NO. 001579-EI DATE: December 7, 2000 IDISCUS ION _ S OF ISSUES ISSUE 1: Should the Commission approve Florida Power and Light Company' s Petition for Approval of a * Performance Guaranty Agreement? RECOMMENDATION: Yes, the proposed tariff •sho— ldi be approved, provided FPL files with the Commission monitoring reports as described in tha staff analysis. [E. DRAPER, LEE] STAFFANALYSIS: On October 20, 2000, Florida Power and Light. Company (FPL) filed a Petition for Approval of a Performance Guaranty Agreement (agreement). FPL proposes to require the agreement in cases where .applicants for service require a significant expansion of FPL's facilities to meet projected loads that, in FPL's estimation, are speculative and may not materialize. Under the proposed agreement, the applicant will be required to provide a "Performance Guaranty". If the revenues materialize as projected, FPL will refund or cancel the guaranty. To support its petition, FPL states that it has recently received between forty and fifty requests for service from customers- whose- Toads, °if they materialize, will require a significant expansion of FPL's distribution and/or transmission facilities. The requests are from telecommunications service providers and property developers who refurbish existing facilities or build new facilities to house the electronic equipment of telecommunications service providers, Internet service providers, and web hosts. The developers prepare the sites with the intent to lease them to the service providers. FPL asserts that these facilities require very high electric capacity when compared to similarly situated premises used as office buildings. The proposed facilities are typically about 100,000 square feet and require up to 70 watts of billing demand per square foot. A typical commercial, office building requires about 6 watts per square foot. The existing electric system. is therefore often rot sufficient to satisfy the electric requirements of these types of .facilities_ FPL states that it has concerns that the projected load and associated revenues might not materialize in every instance. FPL believes that due to rapid growth and many participants in the evolving telecommunications services market, some of the projects will not be viable. If the projected revenues do not materialize, 2 - SEOP`h1/M 01- 27 01-- 026 • DOCKET NO. 00157;- •El DpxE:.December 7, 2000 FPL's ratepayers will bear the cost of the significant, investment made to serve the load. For the above stated reasons FPL is proposing to require these types of applicants to sign the Performance Guaranty Agreement. The proposed agreement will allow FPL to complete the required upgrades or expansions with assurance that F'P'L'.s,• gene-ra'l" body of ratepayers will not bear the incremental Costs incurred by FPL in the -event- the- prbjectee"load does not. materialize. Although FPL's proposal was prompted by.the recent activity in the communications. field, the agreement will be utilized for any customer that requires a significant investment by FPL and whose projected revenues are uncertain. Under the agreement, an applicant will be required to post a Performance Guaranty in the form 4f cash, a surety bond, or a bank letter of credit. The amount of the Performance Guaranty is determined using FPL's estimate of the incremental costs it will incur to serve the requested capacity, multiplied by a carrying cost factor. The carrying cost factor represents the carrying cost (return, depreciation, property taxes, and insurance) to FPL over the 30-year life of the investment. Staff reviewed the calculation _of,_ the carrying cost _factor and_ believes_ that_ it. is appropriate. - The incremental cost represents the difference between the cost FPL would ordinarily incur to provide service to the premises and the cost FPL will incur to meet the requested higher level of capacity. Such incremental, costs may include the upgrade to or acceleration of the in-service date of both cransm.ission and distribution facilities. To illustrate, if an existing structure has in place facilities to supply 3 watts per square foot ("Saseline capacity')' and the applicant for service requests 50 watts per square foot, then the performance guaranty will be based only on the cost to provide the incremental capacity (42 watts per square foot). In the case of a new structure, FPL will determine the amount of capacity that would be typical for a com,-nercial customer in that location. The performance guaranty calculation will be based on the diffarer.ce between the capacity requested and the typical. capacity. During the 3-year term of the agreement, xP" will compare the "Incremental Base Revenues" col-lected from the customer to the Performance Guaranty amount. incremental Base Revenues are the difference between the actual revenues received ("bast' Revenues") - 3 sE®Pw / 01- 27 01- 026 DOCKET NO. 001579-EI DATE: December 7, 2000 and those revenues w a FP would e L ld u have received from a more typical customer ("Baseline Base Revenues"). If during: the three-year period the total Incremental Base Revenues received equal or exceed the Performance. Guaranty amount posted, then FPL will refund the total amount of- the cash to the customer. It the customer has posted a sure,A�y.bond or 'letter of credit, the bond or letter credit will 'be - released. or canceled. At the end of the three-year period, if the total Incremental Base Revenues received are less than the Performance Guaranty amount posted, then a settlement will be made. At that time, the customer who posted a cash guaranty will, receive a refund equal to the amount of the Incremental Base Revenues paid during the three- year period. The remaining balance of the cash Performance Guaranty is retained by FPL. Customers who provided a letter of credit or surety bond, will be required to -pay FPL an amount equal to the difference between the Performance Guaranty and Incremental Base Revenues paid during the three -.year period. - Staff- believes -- that- FPL'-s --proposed- -- Performance -- Gua-ranty- Agreement is appropriate because it provides protection for FPL's general body of ratepayers in the event that the projected loads of customers do not materialize. Such protections are similar to those provided for pursuant to Rule 25-6.064, Florida Administrative Code, which applies to customers who require an extension of the utility's distribution facilities in order to receive service. Such customers are required to pay a contribution in aid of construction (CLkC) to help offset the extension cost. .Such situations are addressed in Section 2.2 of FPL's General Rules and Regulations for Electric Service, entitled Availability of Service. This Commission -approved tariff provision allows FPL to require an applicant for service who requires an extension of FPL's facilities to provide a guaranty, a CIAO calculated pursuant to Commission .rulesr and/or advances for construction when in FRL's opinion the potential revenues do not justify the cost of the extension. It also provides for a contract minimum monthly payment by the customer when there. is doubt as to the level or length of use of the facilities. - The urderiying purpose of this provision is to ensure that ratepayers are not unduly burdened with the expenses of facilities that are not fully utilized. The staff would also note that, unlike a CIAC, the proposed Performance Guaranty Agreement allows the applicant for service to 01- 27 01- 026 0 DOCKET NO. 00157-, EI DATE: December 7, 2000 receive a full or partial refund of the Performance Guaranty if the projected load and revenues are realized. when meeting with - potential customers, it is FPL's intent to provide analyses demonstrating the level of load that must materialize over the three-year period in order to offset the Performance Guaranty. FPL believes that the agreement provides an incentive to the applicant to correctly identify the level of service needed.- ---'ttaff has reviewed sample analyses provided by FPL that demonstrate that if the"p-roject�d- Toads off" these types of customers do materialize, they most likely will receive a full refund of the Performance Guaranty. While the staff believes that FPL's proposed agreement is appropriate, the staff has some concerns that the agreement includes no precise mechanism for determining when a performance guaranty will be required from a customer. Deciding when to require a performance guaranty is left entirely to FPL's discretion. For this reason, FPL's use of the agreement should'be monitored for a minimum of two years. To monitor the application of the tariff, the staff proposes that FPL file with the Commission annual monitoring reports that include -the -fol-lowing- information:. 1) for'- each- agreement executed; -- FPL should provide the amount of the performance guaranty requested and the total projected revenues for a 3-year period, and 2) for all telecommunications and int-ernet service providers, or Similar customers, who request service which requires a significant upgrade of existing facilities as envisioned under the tariff language, and who were not required to exec -ate an agreement, FPL should provide an explanation as to why the applicant was not required to sign the agreement. The purpose of the second filing raquirement is to ensure that all similarly customers are being treated fairly. The reports should be submitted once a year for at least two years. The reports should be filed with the Commission for the staff to review no later than March 1 for the previous year' s monitoring. In summary, the staff believes that FPL's proposed Performance Guaranty agreement is appropriate, and should be approved. The agreement should ensure that the general body of ratepayers will not -be burdened with an investment in facilities that are not needed, and will provide incentive to customers to realistically estimate their need for electric service- 5 SFOPW/CRA 01- 27 01- 026 • DOCKET NO. 001579-El DATE: December 7, 2000 ISSUE 2; what is the appropriate effective date of the proposed tariff? RP-COMMENDATzoN: The proposed tariff should become effective on December 19, 2000. In the event that a timely protest if filed, the tariff should remain in effect with any increase held subject to refund pending resolution of the protest.. [E�: DFAPZR, STERN] STAPP ANALYSIS; If the Commission approves the proposed tariff, it should become effective on December 19, 2000. ISSUE_3: Should this docket be closed? RECOMa=ATION: Yes, if no protest is filed within 21 days of the issuance of the order. [STERN] STAFF ANALYSIS: If _a protest is filed within 21 days of the Commission order approving this tariff, the tariff should remain in effect pending resolution of the protest, with any charges held subject to refund pending resolution of the protest. If no protest is filed, this docket should be closed upon the issuance of a Consummating Order. SEOPW/Dim. 01- 27 01= WE Performance Guaranty Aareement FVRR Factor 0 c � r3 Deferred Cuaeni Prop Tax Total Rev PV Rev Gbme P Tax Dap Back Amum Accum Beginning Ending Axv Rate Boo}, Debt Eq '1 lnveeimgnt Rate Tax Dap Dep Rats Tax D Book De gate Hasa Rate Base Base ND Return Return Taxes Taxes R Ins noq 5eq Rev RN Yael 3.4296 6.05°b 38.58% 1.50 8.15% 3.73°h 38 333°k 38 _ 33 1,000 90� 933 33 _ 34 _59 2 36 15 - 179 179 1613 67g� 917 ' 941 33 32 57 15 21 1A 173 t60 i.000 722% = 72 333'k 1i0 _ --- 176 1W 9(7 871 _ 894 _33 31 54 _ 13 21 _14 _ 16B 142871 B26 ` 898 _33 29 _51^_`_`126 I 4 1,000 6.18°,b _;GL 3M% 23B _ 133 _ - Zi 12 �153 _ 111 717 f ,000 5.71 ` 57 3.33`r'a 295 _�167 82ii ___ 764 f305 - _ - - 49 -" $ 21 •' -' 12 148 _99 816 ^I 5 1 028 00- 8,29% �.s . 53 _33M _348 200 784 _ 743 -=76 33 �9b " 44 � B -_ 21 1 i _._I� - BB 904 _ 1,000 -. 4.89% 49 8.33% _ 397 -233 743 703 _ "21 1 } -135 �_ 78 982 4.52% 45 _ 3339b 442 787 70(3 68t3 685 33 _ 19 _4 2U .__. ?fl 129 - • I -_ , I.000. _ 4.46°n ,- 45 3W-' 487 300 688 628 `_647 _ 33 - _ ._ _ _ _ 1 112 43 3 33°6 532 383 fr28 690 609 33 �21 37 4 7 `J 8 - - fi1 _ 10 .. 1,000 4.46°l� - - - -- - - -35 ' q -` 17 _ 9 -'118 .ri4 -1 166_ I t1 t�00D _4 46°% 45 3.33`± __ 676 _367 b90 _ _553 _ 571 33 r20 4 . ---1� .-_8 112 47 1,213 4.48% 45 3.33% 62] 400 553 615 334 33 18 �32 . __ _ 12 _._ -- qg5 _g3 17 3U 4 14 8 1fl7 -' 42 1�25b __L_1 4.4W. ._. 45 SM% 665 433 .15 477. 4 " j 101 _ 37 � 91 I ,ODO "-` q3g m458 _ 33 16 _ ` 13 -- d 1 - 1,0'J_0 4.Q8.� 45 933`i'o 770 407 477 •-� - 4 12 -� 7 ^ 9G _ _ 32 SUO 439 402 421 33 14 -1323 i,000 4.48% 45 ^ 333°k �ivS -`� 383 - 33 13 �_� 'I _ _ 14 ._ _ 6 �_ 90 _ 28 f,35 i f 1,000 4;Q6% 45 _ 3;3350 799 - 533 `ram g_5 24_ y,37 . I `_.45 33390 844 567 364 ^326 `� 345 33 12 21 _ 4 .. - - a I 17 1�000 A.4&% 32$ _ - 308 33 -11 F9 -4 7 - _� e M 79 21 1�?g 1MM 4 46°.b ° 2$g ^ 1$ _l; 414 Q: i _ �45 3.33 4 688 - __ -- _ q "` g 4 73 - 4i - 1 -_ 1,OUD _-_ 4.g896 45 3,33% 933 __ 833 289 _ - 251 _ 270 -33 _ 9 16 __ _- _ 69 13 _ 1.429 45 9 3% T 978 _^ £67 25 E 213 232 39 8 �14 4 _ 4 4 T 2 ` 1 _000 L_b-A 1 000 7D0 213 _ tf14 199 __33 7 -12 __. J4 _ _ 32 .__ 3 - 63 __y3 _ 1L443 a I I yt 1,0^OD 2.23% 22 3 3346 a-- -. -174 33 11 �13� -- 19 - -- ^r ' 59 _ 11 -- 1,451 7.000 ^ 3.3396 •1,000 _733 184 1fr4 --1 - 6 9 -_ 23 -19 2 Sti 10 1� 84 j' 1000 3� .�,� _.7s7 ltia t43 - - - - ; - 1D _ ba 24 U-= _ 3.339b � 1.0DO 800 143 42- �133 33 _ 4 _-a - j3 _7T _ -. I -1a.- - -_ 113 33 - _ _� 2 5U -8 1,480 -�, 1 0U3 " , `� 3.3396 1 000 833 123 - 1`2 47 7 ,487-1000.1,Q00 887 102 - 02 33 3 - 6 .. --- --r- '- 3 333b 1000 ,� 61 72 33 - 16 - 1 ._ - 44 6 1�493 1,000 t.- A611 �41 5t �33 2 �`^3 -_.�3 15 @ 44 3 8 1 003 967 -. 1 2 _�� 14 _1 38 l 4 ___._j t,000 3.3396 1.000 967 41 2D _ 31 33 ^ --35 4 1,506 1,000 - 3=% t.DOU t.D00 2A 0 ` 10 33 0 -- i {Ss 13 PVRR-Factor = 1.51 V) O � " wAI bled Av raae COc. 1 i - WACC eti Ratio cost Prs-T�x Aft Tax w W 45.0% 7.6% 3.42% 2. t 0% Q 1 qufiy 55.0% 11.0% A,%_ c I! N N ' r ffr w 1:19P , • � 1 (,'�rw�lyP'ViiRFeW�,t4iStw�atl i • 11 ® rV-1A/ aAGtJVvL BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Florida Power & Light Company's ) Docket No. /')Q l S 7 Request for Approval of a Performance ) Guaranty Agreement ) Date Filed: October 19, 2000 FLORIDA, POWER & LIGHT COMPANY'S PETITION FOR APPROVAL OF A PERFORMANCE GUARANTY AGREEMENT NOW BEFORE THIS COMMISSION, through undersigned Counsel, comes Florida Power & Light Company ("FPL" or the "Company") and hereby requests approval of a performance guaranty agreement. In support of this Petition, FPL states as follows: 1. FPL is a public utility subject to the jurisdiction of the Florida Public Service Commission ("Commission") under Chapter 366, Florida Statutes. FPL's General Offices are located at 9250 West Flagler Street, Miami, FL 33174. 2. Any pleading, motion, notice, order or other document required to be served upon the petitioner or filed by any party to this proceeding should be served upon the following individuals: William G. Walker, III Vice President Florida Power & Light Company 215 South Monroe Street Suite 810 Tallahassee, FL 32301-1859 (850) 224-7517 (850) 224-7191(telecopier) R. Wade Litchfield Senior Attorney Florida Power & Light Company 700 Universe Boulevard Juno Beach, Florida 33408-0420 (561) 691-7101 (561) 691-7135 (telecopier) 3. FPL is seeking Commission approval of a Performance Guaranty Agreement ® ("Guaranty Agreement"). The Guaranty Agreement will be included in FPL's tariff as Original SEOPW/CRA ��— V r DOCUIJUNT �iU41 R-UJE 13489 OCT2000 Sheet Nos. 9.95D, 9.951, 9.952 and 9.953. The Guaranty Agreement is included herewith in Exhibit A. Upon approval of the Guaranty Agreement, FPL will submit for administrative approval a tariff sheet revising FPL's index of Standard Forms. 4. Pursuant to Section 2.2, "Availability of Service," of FPL's Genera.1,.ules and M Regulations.fm Electne Service, prior to constructing an extension of its facilities to furnish electric service the Company may require a guaranty, cash contribution in aid of construction, and/or advances for construction, "when in the Company's opinion the immediate or potential revenues do not justify the cost of the extension." Consistent with this provision, FPL is regttesting Cornmissiot 'approval of the; attached C-iasanty.Agreement for use in cases where aiz applicant for sdririce has tequested.the Company to expand significantly the elec;tric"SY 'st' ' to meet projected lcaiai'that; in - the Company's estimation, are speculative or based on untested assumptions. If the projected loads • don't materialize, actual revenues may not justify the cost of the e,cteusion. In other words, upon receipt of an application for a level of service that is significantly in excess of what would typically be expected for a building or premises of similar size, type and location, FPL will require the applicant to provide written assurance (through the execution of the Guaranty Agreement) that ` FPL's other customers will not bear the incremental costs incurred'by FPL far the expansion if the projected revenue from the increased load does not materialize. 5. The specific situation that has given rise to this Petition is the recent receipt by FPL of -numerous requests for expansion to its system to meet very high projected electric loads at 'premises to be used to house the electronic equipment of telecommunications service providers, including alternate or competitive local exchange companidl -, internet service providers, and web hosts. The facilities themselves include planned fiber "hotels" or "condos," switching stations, and = network access points or "NAPS." The requested concentration of load at several of these premises SP®PW/CRA 1- 026 0 r-I LJ exceeds 70 watts per square foot. ''Such a high load concentzation will"require eithefthe'e: paiasidri' .'bf existing•electric:facilities,;otthe construction of new. facilities subs'taiitially"iri excess;bf-that which' ordinarily, would be'required to provide efectiic service to'sirailarly situated.ptemnises; 6. Currently, there is a "rush to market" philosophy among these telecomuunications semgP-grovid.rs.andrthe. developers who are attempting to provide the physical facilities necessary to accommodate the rapid growth in the telecommunications services markets. FPL is 'working closely with these developers and service providers to support the development of this new telecommunications infrastructure, which FPL believes could be important to the long-term expansion of Florida's economy and particularly to the attraction of "high-tech" commerce to the State. 7. However, the electric system expansions that are necessary to meet the many "high- tech" customer requests FPL }gas received, and expects to continue receiving, will require millions of dollars in expenditures by FPL. Further, because of the many -proposed entrants'affd facilities in the new'.and evolving telecommunications services market,•it is not clear that all of the plai 11ed-sites trillb6 completed or; once completed, that the projected occupan CY and-electria•load will!- ` matei ialize:: For this reason, FPL seeks CoTnMission approval of the Guaranty Agreement. This will allow FPL to build the requested expansions with assurance that FPL's other customers will not bear the incremental costs of the "unusual" or excess electric facilities in the event the projected loads do not materialize. 8. Upon execution of the Guaranty Agreement, an applicant will be required to' post a "Performance Guaranty." The applicant has the option of posting the guaranty in cash or as a surety bond, or irrevocable bank letter of credit. As set forth in the Guaranty Agreement, the amount of the performance Guaranty is determined based on the Company's estimate of the SE®Pw/CRA 01— 026 01— 27 • • ! . "incremental" costs it will incur to meet the service request. The incremental cost represents the difference between: (i) the costs the Company ordinarily would incur to provide a more typical level of service to the premises based on past experience and tested assumptions and (ii) the costs the Company estimates it will incur to meet the requested level of service, multiplied, by.a present value reveryue.,requirement,factor..Tbus; fhe.Guaranty Agreement only requires a PerforznanceGuaian relating to the "excess" or "non -customary" facilities necessary to xneet the increased level of service requested. 9. FPL will refund (or cancel) the Performance Guaranty in whole if, within three (3) years from the in-service date, incremental base revenues at least equal the amount of the Performance Guaranty. Incremental base revenue is defined in the Guaranty Agreement and represents the difference between base revenue actually received and a baseline amount of base revenue that the Company estimates is attributable either to the pre-existing capacity or to an amount of capacity more typical for the premises. To the extent that incremental base revenues offset some but not all of the incremental costs of the expansion, the applicant would receive a partial refund equal to the amount of the incremental base revenues received. 10. The approach, contemplated by the Guaranty Agreement generally is consistent with the principles that underlie Rule 25-6.080 of the Florida. Administrative code ("F.A.C."). in addition, the purpose served by the Guaranty Agreement is similar to that which also is served by the rules pertaining to contributions -inn -aid -of construction ("CIAC"), i.e., placing responsibility for the cost of unusual or excess facilities on the applicant for the service extension. However, unlike the application of CIAC charges for line extensions, the Guaranty Agreement applies to situations where there is a requested expansion of FPL's facilities beyond that which is typically necessary to serve the premises and the applicant's projected future electric load is based bn speculative op SEOPW/ CRA ©1- 01- 27 Q`:6 0 • Aiee�� i)dpli-oii$.lc-Alg'b,-'Untike.-?t..CIAC,charge. the P6_rf6iEan--ceGfi,-L # y will be tdWmed br f:caAcr_jjed.if projqled-rev.e.nues!.areYdalitf,-d. In any case, the differential cost between underground and overhead construction in non -underground designated areas would continue to be collected as CIAC. 11, FPL respectfully submits that the Guaranty Agreerftefit is consistent with the Company's rights, under its tariff and under and is in the public interest. WINREFORE, for the above and foregoing reasons, Florida Power & Light Company respcctAdly requests that the Commission grant this Petition for Approval of a Performance Guaranty Agreement and approve said agreement for use. Respectfully submitted, By d R. ad Litchfield ad L Flor a Authorized House Counsel Attorney for Florida Power & Light Company 700 Uziiverse Boulevard Juno Beach, Florida 33408-0420 (561) 691-7101 (561) 691-7135 telecopier -EOPW I CRA 5 01- 27 • • FLORIDA POWER & LIGHT COMPANY Original Sheet No. 9.9SO PERFORMANCE GUA LINTY AGREEMENT This Performance Guaranty Agreement ("Agreement"), made this day of 20 , is by and between (hereinafter "Applicant') acid FLORIDA POWER & LIGHT COMPANY, a corporation organized and existing under the laws of the State of Florida, (hereinafter the "Company"). WiTNESSETH-d ' Whereas, in connection with the property located at _ Florida (the "Premises"), Applicant has requested that Company install electric infrastructure in order to provide electric service to the Premises; Whereas, Applicant's estimate of the electric power needs of the Premises will require an expansion of Company's present electric system, beyond that which typically would be necessary to provide service to the Premises; Whereas, because of the uncertainty associated with Applicant's projections of the electric power needs of the Premises, Company may not fully recover its investment in such infrastructure expansion, thus potentially burdening Company's other electric customers; and Whereas, Applicant is willing. to provide assurance that Company will recover its investment in the expansion of Company's electric system based on Applicant's projections in the event that the estimated load at the Premises does not materialize; Now, therefore, in recognition of the foregoing premises and in consideration of the covenants and promises set forth herein below, Company and Applicant do hereby as ec as follows; ARTICLE I - DEF E41T IONS 1.01 "Base Revenue" is the portion of electric revenue received by Company for electric service to the Premises consisting only of applicable base demand charges and base non -fuel energy charges. Base Revenue excludes, without limitation, capacity payment, customer, conservation, environmental, and fuel charges, franchise fees, and taxes. 1.02 "Baseline Base Revenue" is the estimated portion of Base Revenue received during the Performance Guaranty Period that Company attributes to Baseline Capacity. Baseline Base Revenue is calculated by multiplying the Baseline Capacity (as defined in Section 1.03) by the base demand charge and adding to that amount the product of Baseline Capacity, actual load factor, the number of hours in the billing period, and the applicable base non -fuel energy charge. 1.03 "Baseline Capacity'', as determined by Company, is (a) the currently existing capacity where Company has in place facilities ready and available to provide electric service to the Premises albeit at a lower level of capacity than requested; or (b) the amount of capacity necessary to provide service to a more typical level of load given the location and/or type of facility or building, where Company does not have in place facilities ready and available to provide electric service to the Premises. (Continued on 5hcutNo. 9.951) SEOPW/M Issued by: P. J. Evanson, President d 1 _ 27 01 -026 - Ll • • • FLORIDA POWER & LIGHT COMPANY (Continued from Sheet No. 9.950) Sheet No. 9.951 1.04 "Incremental Base Revenue" is actual Base Revenue received during the Performance Guaranty Period for electric service rendered to the Premises in excess of Baseline Base Revenue. 1.05 "Incremental Capacity," as determined by Company, is the positive difference, if any, Between Baseline Capacity and the amount of capacity (measured in kW) necessary to meet Applicant .5 projections of electric load at the Premises. 1,06 "Performance Guaranty Period" is the period of time commencing with the day on which the requested level of service is installed and available to Customer, as determined by Company, (`In -Service Date'), and ending on the third anniversary of the In -Service Date ("Expiration Date'). ARTICLE 11 • PERFORMANCE GUARANTY AMOUNT 2.01 For purposes of this Agreement, the derivation of Incremental Capacity is shown in the following table. Incremental Capacity (1) Existing Structure (2) New Structure (3) Total Structure (2)+(3) a. Square Footage -b. Requested-watts/sq ft _ c. Baseline Capacity watts/sq ft A-M - d. Requested Capacity (in kW)(a * b / 1000) e._ Baseline Capacity (in kW) (a * c / 1000) f Incremental Capacity (ui k (d - e) 2.02 The amount of the Performance Guaranty is the cost, as determined by Company, of the Incremental Capacity multiplied by a factor of 1.51. The cost of the Incremental Capacity is the positive difference, if any, between Company's estimated cost of providing the requested Ievel of capacity and Baseline Capacity. Applicant agrees to provide Company a Performance Guaranty in the amount specified in the table below prior to Company installing the facilities necessary to provide the Incremental Capacity to serve the Premises. Performance Guaranty (1) Existing Structure (2) New Structure (3) Total Structure (2 + 3) a. Cost of requested capacity h. Cost of Baseline Capacity 1 -0- c. Incremental cost (a — b) d. Present value factor 1.51 1.51 1.51 e. Performance Guaranty (c * d) (Continued on Sheet No. 9.952) N-73 SEOPW/ORA Issued by: p. J. Evanson,, President 01_ • • • _ _ _._ .,. • a - -- - lingrnal meet No. 9.952 (Continued from Sheet No. 9.951) ARTICLE III - PAYMENT AND REFUND 3.01 At Applicant's option, the Performance Guaranty may be, posted with Company in cash, or may be secured either by a surety bond or irrevocable bank letter of credit in a form acceptable to Company. In the event that lndremental Base Revenue is less than the Performance Guaranty, Applicant shall pay to Conn any.. the- Performance Guaranty, less the amount of Incremental Base Revenue. 3.02 If, during the Performance Guaranty period, Incremental Base Revenue equals or exceeds the Performance Guaranty: a) if Applicant posted a cash Performance Guamty, Company will promptly refund such funds; or b) if Applicant secured the Performance Guaranty through a surety bond, or irrevocable letter of credit, such bond or letter of credit shall be released or cancelled, or the amount secured by such instrument shall be reduced by the amount of the Performance Guaranty, as applicable. 3.03 In the event that Company's construction of facilities shown on Exhibit A commences but is not completed due to a change in Applicant's plans or other circumstances related to the Premises that are not within Company's control, or if twelve months following the effective date of this Agreement Company has been unable to complete the requested installation and provide an In -Service Date due to changes or delays in Applicant's schedule or plans, Company shall be immediately entitled to an amount of the Performance Guaranty equal to Company's construction expenditures incurred in cormeetion with this Agreement. Thereafter, Company may elect to terrninate this Agreement and the balance, if any, of the Performance Guaranty will be refunded if Applicant posted a cash Performance Guaranty. ARTICLE W — TERM OF AGREEMENT The term of this Agreement shall commence on the date first above written and end on the ExpiTation Date, or on, the date Incremental )3ase Revenue equals the Performance Guaranty, whichever is earlier, unless terminated earlier pursuant to Section 3.03. ARTICLE V - FINAL SETTLEMENT Upon the termination or expiration of this Agreement, any portion of the Performance Guaranty not previously refunded or otherwise eligible for refund under the terms Of this Agreement shall be retained by Company, and any remaining balance of the Performance Guaranty that is subject to a letter of credit or surety bond shall become immediately due and payable. ARTICLE VI - TITLE AND O'WNERSRIP Title to and complete ownership and control over the above -referenced expansion shall at all times remain with Company and Company shall have the right to use the same for the purpose of serving other customers. ARTICLE VII - ENTIRE AGREEMENT This Agreement supersedes all previous agreements, or representations, whether written or oral., between Company and Applicant -made with respect to the matters herein contained, and when duly executed constitutes the entire agreement between the parties hereto. (Continued on Sheet No_ 9,953) SEOPW/CRA i 026 Issued by: P. J. Evanson. President • • • FLORIDA. POWER & LIGHT COMPANY Original Sheet No. 9.953 (Continued from Sheet No. 9.952) ARTICLE YM - HEMS, SUCCESSORS AND ASSIGNS This Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto, but Applicant shall not assign this Agreement without first having obtained the written consent of Company, such consent not to be unreasonably withheld. • " ARTICLE IX — SUBJECT TO FPSC RULES This Agrecment is subject to the Mules and Orders of the FPSC and to FPL's Electric Tariff, including, but not limited to the General Rules and Regulations for Electric Service (collectively "Regulations"), as such Regulations are now written, or as they may be hereafter revised, amended or supplemented. In the event of any conflict between the terms of this Agreement and the Regulations, the provisions of said Regulations shall control, as they are now written, or as they may be hereafter revised, amended or supplemented, and, at Company's request, Customer agrees to conform this Agreement to such provisions, or enter into a new Agreement reflecting such provisions. This Agreement shall not be used in lieu of applicable requirements set forth in the Regulations pertaining to contributions in aid of construction, advances or deposits. In 'Witness Whereof, Applicant and Company hereby have caused this Agreement to be executed in triplicate by their duly authorized representatives to be effective as of the day and year first written above. Charges and Terms Accepted by: FLORIDA POWER & LIGHT COMPANY Applicant (PrintiType Name of Organization) By: By, Signature (Authorized Representative) (Print or Type Name) Title: Title: Signature (Authorized Representative) (Print or Type Name) SEOpW/ORA Issued by: P. J. Evanson, President ,.-antract Calculation ExqM _pies • • P--� Existinq Structure dh�2. Incremental Capacity Existing Structure New Structure Total Structure (2) (2)+(3) a. Square Footage ----------- 200,000 200,000 b. Requested watts/sq ft c. Baseline• Capacity wattstsq ft * . d I Capacity (in W (a b 1000) 10,000 10,000 _Requnsle e. Baseline Capacity (in W (a * G / 1000) (1,600) Trf—lkwl-----, ib,.YMT77MP 4" , P 0, 4 nw'Wt -.., 4 SIN 5 OWN ft�fta .•F q .0 1 Guaranty Performance Deposit Existing Structure New Structure Total Structure (1) - (2) (3) (2)+(3) a, Cost of requested capacity . . ......... 3.000,000 31000,00E . . b, Cost of Baseline Capacily 0 — --- — -------- ------ -- — — — ---------- c. Incremental cost (a — b) ------------- 3,000,000 1 3,000,000 d. Present value factor 1.51 1.51 1,51 ti'a Ar - - - - - - - - - - - - IEEE -- - - - - - - - - - - New Structure 64 -:g4- rX,4� Incremental Capacity Existing Structure New Structure Total Structure (1) (2) (3) (2)+(3) a. Square_Footage_ — - ---- ----- --- 100,000 — -------------- ------ — --------- — b. Requested i c. Baseline Capacity 6 d. Requested Capacity (in kW) (a **_b 11000) --------- 3,500 3,500 - 1 ----- e, Baseline Capacity (in kW (a * c I 1000) (600) (600) .777 -:77-= - .:Coniiact'Sdctio 61 011�,�, Guaranty Performance Deposit Existing Structure New Structure I Total Structure (2) (3) — at-oit—of requested capacity .... 2,000,000 2,000,000 — : - - --------- .... . b_-CaF(�f Baseline (500,000) — ----- (500,000) --------- incremental cost (a — b) 1,500,000 1,500,000 T Present value factor ------1-51 ------ e;: Guaranty Performance. Ddp;,Stt 7- '. .2 I265,000; - : -,.."..2,265,000 C)emo Exampless.x1skCOMtract Examples SEOpW/CRA, 026 27 10/8/00 9;50 PM 0 12/01/00 • ,'PL PERFORMANCE GUARANTY EXAMPLE Purpose: To illustrate variations in construction costs duc to amounts of load requested and location of customer facilities, i.e., high versus low congestion Teleco / Internet customer / Large Load customer West Dade Site (less congestion) Size of Bldg: 120,000 sq, ft. Load Requested: 12 MW (100 watts/,-q. ft.) Est. Cost to Serve: $373,852 Performance Guaranty $564,517 Description: Install Trench, Duct and Cable to provide (1) 23 kv feeder and associated transformation equipment. Example (2) Teleco / Internet customer / Large Load customer Downtown Miami (congested area) (tAsting building) Sue of Bldg: 1,000,000 sq. it. Load Requested: 29.5 MW (29.5 watts/sq. ft.) i;st. Cost to Serve: $3,296,822 Performance Guaranty $4,978,201 Description: Install Trench, Duct & Manhole, eable to provide (4) 13 lcv feeders and associated transformation equipment, SBOPW/CIS 01 - 27 01- 026 MAR,02-01 :.03:23PM FROM- � � T-811 P.02/40 F-965 BEFORE THS FLORIDA PMLIC SERVICE COMMISSION IN RE; DO=T 140. 001579-EI - Petition for approval, of a performance guaranty agreement by Florida Power & Light Company. BEFORE: CHAIRMAN d. TERRY DWLSOX . COMMISSIONER E. LEON JACOBS, JR. COMMISSIONER LILA A. JA.aER COMMISSIONER BRAULIO L. BAE2 COMMISSIONER MICHAEL A. PALECKI PROCEEDINGS: ITEM NUMBER: DATE: PLACE: REPORTED BY: r� FITC-0-k O) "I PIN IN 29 Tuesday, December 19, 2000 4075 Esplanade Way, Room 148 Tallahassee, Florida MARY ALLE.N NEEL Registered Professional Reporter ACCtnRATE STENOTYPE REPORTERS SE®PW/CRA 100 SALEM COURT �} q TALLAHA (SEE, 67IORIDA 32301 0 1 �v c� MAR-C2-01 03:23PM FROM - T-811 P-03/40 F-965 • 2 PARTICIPANTS: ELISABETH DRAPER, Commission Staff. ROBERT EL:EAS, on behalf of the Commission Staff. WADE LITC11VIELD, on behalf of Florida Power & Light Company. MfiRLENE STERN, on behalf of the Commission Staff . STAFF RECOWUMDATION Issue 1: should the Commission approve Florida Power & Light Company's Petition for Approval of a Performance Guaranty Agreement? Recommendation: Yea. The proposed tariff should be approved, provided FPL files with the Commission monitoring reports as described in the analys;.a portion of staff+s December 7, 2000 memorandum. Issue 2: What is the appropriate effective date of the proposed tariff? Recommendation: The proposed tariff should become effective on December 19, 2000. In the event that a timely protest is filed, the tariff should remain in effect with any increase held subject to refund pending resolution of the protest. Issue 3: Should this docket be closed? Recommendation. Yes, if no protest is filed within 21 days of the issuance of the order. SE®PW/m 01-- 27 Of- 096 I�AR-02-01 03:23PM FROM- T-811 P.04/40 F-965 3 1 caAIm4AN DEASON: Item 2.9 2 MS. DRAPER: Commissioners, Item 29 is 3 FP&L's proposed performance guaranty agreement. 4 The staff has a correction to make on page 5 of 5 the recommendation. The first full paragraph 6 which begins, "To monitor the application of the 7 tariff," if you go to the fifth line, "and the g total projected revenues," and insert, "andJ 9 achieved revenues for a three-year period." 10 COMMISSIONER 7ACOBS- Z'm sorry. What page 11 was that? 1.2 MS. DRAPER; Page 5. 13 CHAIRMAN DEASON: You want projected 14 revenues, and you want earnings; correct? 15 MS. DRAPER-: And achieved revenues. i6 CHAIRMAN DEASCN: And achieved? 17 MS. DRAPER: Achieved revenues, so we can is see whether the customer's revenues are going -- 19 CHAIRMAN DEASox: okay. Achieved revenue? 20 MS. DRAPER; Yes. 21 COMMISSIONER JAHER: Now, how are'they 22 going to give you that? I had a question about .23 your correction. unless I'm reading it wrong, • 24 they can't give you what their earned revenues 25 are for a three-year period; right? That's not SE®PW/CRA 01- 27 € 1 026 MA,R-02-01 03:23PM FROM- T-811 P.05AO F-965 4 1 what you mean. 2 MS, DRAPER: No. Once a year we'll get the 3 report. 4 COMMISSIONER JABER: For a period of three S years. 6 MS. DRAPER: Actually, we asked for ? monitoring a minimum of two years, but we can 8 extend that. 9 CHAIRMAN DEASON: Okay. Are the parties 10 here to make a presentation or answer questions? 11 MR. LITCHFIELD; Answer questions. 12 CHAIRMAX REASON: Very well. Questions, 13 Commissioners? 14 COMMISSIONER BAEZ: I had some questions 15 of staff, and I guess under the category of when 16 worlds collide. 17 I had a question as to, by our approval of 18 this tariff, how we can be seen to have impacted 19 or created a barrier under the Telecom Act -- 20 COMMISSIONER JABER- Right. 21 COMMISSIONLR BAEZ: -- for competitors. 22 And am I off base, or is this not evena concern 23 for us? I'm being too general. Here's what my 24 concern is. 25 CHAIRMAN DEASON: We're on, Item 29. SEOPW/CRA, d1- 02�s J -- 27 MAR-02-01 03:23PM FROM- T-611 P.06/40 F-965 • • 5 1 COMMISSIONER BAEZ: Yes, I know, 2 C =RMAN REASON: Okay. 3 COMMISSIONER JASER: No, I hope you're not 4 off base, because I had the same question, so 5 two of us would be off base. 6 COMMISSIONER BAEZ: here's what Ism 7 concerned about. We approve a tariff that is 8 somehow admittedly geared towards 9 telecommunications service providers, or at 3.0 least it's the commuriicationa providers that are 11 giving rise to this need for the tariff. By us 12 approving it, we are somehow blessing something 13 that can be interpreted as creating a barrier to 14 entry for these telecommunications service 15 providers that would somehow be inconsistent 16 with the 'Telecommunications Act, My question 3.7 is: Did we consider it? I throw it to the 18 Commissioners. Should we consider it before we 19 approve something like this? 20 MS. STERN: I think we were thinking -- 21 that's one of the considerations when we put in 22 the monitoring in here, to make sure that there 23 were not companies that were being discriminated 24 against, so we could see how Florida Power & 25 bight was -- who it was offering the performance 5E®�W/� ai-- 020 0 27 MAR-02-01 03:24PM FROM- T-811 P.07/40 F-965 6 1 guaranty to and who it was not offering the 2 performance guaranty to. 3 There's a similar -- another thing that we 4 considered is that there's a similar -- this 5 sort of parallels the C2AC statute, costs in aid 6 of construction, whereby if the utility has to 7 build additional facilities or expand its B facilities, customers have to contribute to 9 that. And there's no sort of threshold or 10 bright line test for -- wall, the utility has 11 the discretion to decide when it gets a 12 contribution in aid of.construction and when it 13 doesn't, and its the same here. So on that 14 basis, because it's similar to that statute, we is felt that it was -- is COMMISSIOMR 7ABER. No, but, see, the 17 discrimination -- if there's potential for 16 discrimination, wouldn't it occur at the 19 contract -- entering the contract? in other 20 words, one of the questions I had, is this 21 because of the NAP issue in South Florida? I 22 }mow the utility is Florida rower & Light. Is 23 this as a result of the requests you're getting 24 for service in South Florida? Is this related 25 to the network access point? SE®PW/ ®1- 026 ®1- 2 MAR-02-01 03:24PM FROM- • • T-811 P.08/40 F-985 7 1 MR. LITCUFIELDs Yes. Wade Litchfield on 2 behalf of Plorida Power a Light company. 3 Pri-ncipally, the driver for this issue and 4 this proposed guaranty agreement is the 5 development of, among other things, the NAP in 6 South Florida, and fiber condos and other 7 infrastructure that will support an expanded 8 telecommunication business. 9 But to address Commissioner Baez's point 10 with respect to the 192 Telecommunications Act, 11 the people that are approaching Florida Power & 12 Light Company to.build out this infrastructure, 13 with very few exceptions, are developers who are 14 speculating that if they build it, they will 15 come. They are equipping fiber condos and 16 things of that nature. So in a few instances, 17 we are receiving requests directly from the is internet service providers and telecom entities, 19 but the vast majority of requests come from 20 developers who are looking to build out the 21 infrastructure and then seek and.obtain the 23 tenants for this infrastructure. 23 COMMISSIONER BAEZ: Right. And I guess 24 that's a distinction.I wasn't clear on as well. 25 I mean, are we requiring, or would the Company SEOPW/CRA 01- 026 01 - ' 7 MAR-02-01 03:24PM FROM- ® T-811 P.09/40 F-965 e 1 be requiring contracts from the end user or 2 contracts from the developer? And I see those 3 as two different things. I think you're right. 4 M. LITCHFIELD. From the applicant, who 5 in most cases will be the developer. 6 COMMISSIONFR EAEZ: So just to be clear, 7 the projected revenues that we're talking about 8 is actual -- what the Company would be looking 9 at is how quickly or how successfully the fiber 10 condo that it's, you know -- 11 MR. LITCHFIELD; flow quickly, for example, 12 a building would be leased out to full 13 occupancy, how quickly the tenants who take 14 occupancy bring in their equipment, how quickly is their business comes up to their expectations. 16 So a lot of factors go into it, which actually 17 leads me to a point that I probably should have 18 raised earlier with respect to the reporting 19 obligation. 20 We're comfortable providing projected 21 revenue, but to the extent that we have the 22 information from the customer to make those 23 computations. in some cases we may not -- for 24 example, a developer is coming in in a new 25 building and may not have a hard estimate as to SEOPW/CRk r.2� 41 -. 026 0� MAR-02-01 03:24PM FROM- 0 T-811 P.10/40 F-965 9 1 when his tenants are going to come on line. So 2 the ramp -up period, so to speak, will not be 3 very firm for us to make very good estimates, 4 but I t1link we're willing to provide you 5 whatever we can at that point as long as we have 6 that understanding. 7 COMMISSIONER JABER: Well, in some cases 8 the developer is also the taco provider or the 9 ISP. And how do you -- BellSouth comes to mind. 10 FP&L Group comes to mind. And how do -- what 11 criteria will you use in asking for a 12 performance_ agreement.from.one developer/1SP.or Z3 provides versus another? 14 MR. LITCHFIELD: Because the projected 15 load requirements are multiples of what we have IS in place now in the same type of commercial 17 building, our expectation is that they would all 1s be asked to provide a performance guaranty 19 agreement. We're talking about five to eight to 20 ten times what typically we would install for a 21 building of a similar size in a similar 22 location. 23 CAAAIRKAN DEASON: But staff s 24 recommendation indicates that it's for those `T®PW/, Ji- 27 01- 026 MAR-02-01 03:11PM FROM- ® T-809 P.24/39 F-958 24 1 understanding as to whether or not the terms and 2 provisions of the guaranty here are adequate for 3 our marketplace. We can't look exactly, but we 9 can get some parallels. 5 MR. LITCHYIHLD: May I suggest something 6 that might get us through an interim phase 7 here? if we could offer this on a voluntary g basis and allow -- I haven't pitched this to my 9 client. I might get slapped. But if we could 10 offer this on a voluntary basis, then those who 11 wanted to move forward could move forward, and 12 those who .did not want.to sign.this performance 13 guaranty would be free to petition the 14 Commission for some other arrangements. 15 COMMISSIONER BAEZ: I just wanted to say 16 something. You know, my concerns are real, but 17 I had no -- it's not my intention for everyone 18. to walk away with nothing today. And because I 19 think the fact that you mentioned that there's 20 5o providers or somewhere in that area that are 21 willing or are interested and are rushing to 22 market, as commissioner Jacobs characterized it, 23 you know, that too raises an issue. I mean, for 24 want of making it fair for everybody, we're 25 standing in everybody's way, so maybe we do need SEOpW / ,. 27 01- 026 01- MAR-02-01 03:11PM FROM- � � T-809 P.25/39 F-958 25 1 to get out of our way on this. 2 And I guess my question would be, and 3 probably along the lines of your suggestion, 4 because we've realized that there are questions 5 that we need to answer, and perhaps staff may 6 have questions that they want to look into, is 7 there any way that we can have this in place or g allow them, you know, properly to offer it so g that.we can let the providers start operating or 10 get the ball rolling on this subject to our, you 11 know, further review, or whatever issues there 12 may be,_tha_t they_get, you know, addressed. 13 MR. ELT.A.S. I believe so. Section 366.071, 14 Interim Rates Procedure, "The Commission may, 15 during any proceeding for a change in rates, 16 upon its own motion, or upon petition from any _._ _._._, ..... 17 party, or by a tariff filing of a public 18 utility, authorize the collection of interim 19 rates until the effective date of the final 20 order." 21 I don't see any distinction between a 22 tariff filed pursuant to the file -and -suspend 23 statute, which this is, and a genera], rate ® 24 proceeding with respect to the application of 25 the interim statute, given that language. 2 01- 026 MAR-02-01 03 :11 PSI FROM- T-800 P.26/39 F-958 2 3 5 6 e 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 think you can put this in place on an interim baaia pending a final decision, with the understanding that we're going to address the question of how the tariff is going to be applied, and with the expectatioxi that the standards under which it's going to be applied are going to be determined, and the effect on the telecommunications market further considered and addressed to your satisfaction. COMMISSIONER HAEZ: That sounds fine. I think that helps me. I don't know bow the Company feels -about -that, MR. LITCHFIELD; I think that meets our short-term needs. CghIRMAN REASON: Let me ask a question at this point. Why is it that the CIAC policy that we have in place is not sufficient to meet the requirements here? COMMISSIONER. JAEER: The CIAC policy that we have -- CHAIRMAN DEA5ON: Is it normally just directed towards residential customers, or is there a CIAC policy for these type customers as well? MS. DRAPER: Well, CIAC only covers SE®PW/CRA 01- 27 01 0 �F' I�AR-02-01 03:11PM FROM- T-809 P.2T/39 F-958 27 1 extension of distribution facilities, and it 2 only covens the cost for new poles and 3 conductors. So, for example, any upgrades to a 4 substation or transmission lines or transformers 5 would not be covered, 6 CHAIRMAN DEASON: And that's the primary 7 bulk of the investment for these customers, is e going to be at that level as opposed to 9 distribution and poles? 10 MS. DRAPER: Yes. 11 CHAIRMAN DEASON: It's going to be at a 12 _ substation type -- 13 MS. DRAPER: it might be substation, might 14 be transmission upgrades. 15 And the second reason is that CTAC requires 16 a projection of revenues, which RP&L tells us is 17 kind of hard to do in this case. 18 CHAIRMANQ DEASON: All right, Commissioners. 19 What's your pleasure? 20 COMMISSIONER TABZ: Well, I would offer it 21 up, with the Company's agreement, you know, on 22 an interim basis, we can approve it. Now, I 23 don't know how formally we would do that. We 24 can wait for counsel to put words in my mouth. 25 CHAIRMAN DEASON: Bob? $$®PW/CRA 0 -� 27 01- 026 iAAR-02-01 03:11PM FROM- T-809 P.28/39 F-958 1 2 3 4 5 6 7 6 9 10 Ia. 12 13 14 15 16 17 1$ 1s 20 21 22 23 24 25 28 MR. LITCHFIELD; May I ask a question with respect to how the interim rate would be applied? We would potentially on the basis of these performance guaranty agreements that might be executed by prospective customers be expending a great deal of money over the next six to 12 months, in the tens of trillions of dollars over the next 12 months, we expect. And the question I have is, if the Commission were -- I don't think you will, but if the Commission were at the end of the day to decide that we didn't: want to have any such performance guaranty agreement, then where would that leave the dollars that we had spent? COMMISSIONER BAEZ: Well, I don't know to what extent.you get some comfort from me. My questions were probably more of a legal nature than anything else, and I had no trouble -- if it were suggested to approve the tariff as is, you would get my support, So as far as I'm concerned, I don't.believe that you have a concern in that, that you should have a concern, and I wouldn't expeot that the determinations or any decisions that the nnmmiasioners make. or at least from my 01 27 01- 026 1AR-02-01 03:12PM FROM- ® T-809 P.29/39 F-958 29 1 perspective, would involve whether or not you're 2 going to get an adequate security for the work 3 that you need to do. I don't believe that 4 that's an issue. That's certainly not an issue 5 that I want to discuss, whether the propriety of 6 doing it all is -- 7 MR. ELIAS: And I think the first thing is 8 that I don't think that we're envisioning a g process that would take 12 months to come to a 10 final conclusion. i mean, I see this as 11 probably something that we can bring back to you 12 at -- 13 coMMISSIONER BAEZ: I'm sorry, Bob. I 14 can't hear you. 15 MR. ELIAS: I'm sorry. I don't see this as 16 a process that's going to take us 12 months to 17 cotfte to conclusion on. I think the time frame 18 for bringing this back to you will be 19 considerably shorter than that. 20 commiSSIONER HAEZ: Much, much shorter? 21 MR. ELIAS; Yes. 22 COMMISSIONER SAE2: Sut agate, you know, I 23 would like to make it clear, certainly none of 24 my concerns gravitate towards that area. I 25 think a tariff is.appropriate,'and certainly I SEOPW/CRA 01-- 27 41- 026 ?N+R-02-01 03:12PM FROM- 7-809 P.30/39 F-958 30 3. don't have a concern over what the numbers may 2 tend to be. I'm more concerned over what kind 3 of possible applications it can take. 4 COMMISSIONER PAUCKI: Commissioners, I 5 have no -- 6. COMMISSIONER SAEZ: I don't know if the 7 Commissioners -- excuse me. I'm sorry. 8 COMMISSIONER MECKI: I really have no 9 problem with the tariff in its present form 10 except for one thing. I would like to see some 11 recourse to an aggrieved customer. If a 12 customer wanted to come before the Commission, I 13 think the customer should have that avenue, and 14 I think it should be clearly stated in the 15 tariff. If it was, I would have no reluctance 16 to pass this tariff in its present form. 17 COMMISSIONER BAEZ: And I guess that's is really what we're trying to -- my understanding 19 is that you can either vote a tariff up or down. 20 MR. ELIAS: Or they can agree to 21 modifications. 22 COMMISSIONER BAEZ: Can they agree to 23 modifications? 24 MR. EiIAS: Yea, here and now. j 25 COMMISSIONER BAEZ: And I don't know that SE®PW/ CRk 01 - 026 01- 27 ►AAR'-02-01 03 c 12PM FROM- . T-809 P.31/39 F-958 • • • 1 2 3 4 5 6 7 B 9 10 11 12 13 14 is is 17 is 19 20 21 22 23 24 25 31 we Iva given them enough direction on what kind of modifications. Certainly Commissioner Palecki has offered one up that sounds interesting, but I -- COMMISSIONER JASER: Which is better? Is it better to do something on an interim basis or let you come back at the next agenda? My only questions were, if this is really, really good, then why not apply it statewide; and what criteria, having the criteria in the application of this articulated some place or memorialized some place that you all can review it thoroughly and perhaps run it through Walter's group, not because, you know, I think that the only thing we should be looking at is the effect on the telecommunications industry, but the unintended consequences. And really, all I had in mind was a very quick review by staff, getting together with the parties. ,And how many agendas do you need for that? MR. ELIAS; Well, to answer your first question first, I think suspending the tariff and bringing it back to you based on responses to the questions that were posed is cleaner. It �ya1-- 02.6 MAA-02-01 03:12PM FROM- T-809 P.32/39 F-958 32 1 doesn't speak to -- you know, it doesn't plow 2 any new ground as far as interpretations of the 3 interim statute or doing something differently 4 than we've done before or, you know, putting the 5 Company at risk for investment that might not be 6 realized. 7 COMMISSIONZR BAEZ: But how does that g affect at least a perceived need to move on? 9 MR. ELIAS: Well, and again -- 10 COMMISSIONER BAEZ: I mean, we're really 11 not interested in holding people up. 12 MR. ELIAS: To the second question, I would. 13 -think that, without having to talk to any of the 14 CMP folks, that we could probably bring 15 something back for the January 16th agenda. 16 CHAIRMAN DEASON: But the Company has 17 indicated that there are customers out there who 1s want to get on with their projects, and this may 19 be an impediment during the interim period. 20 That's the problem that I have. if there are 21 customers out therewho are ready, willing, and 22 able to sign and they want to get their projects 23 going, and here we are sitting in Tallahassee, 24 and we're portrayed as, you know, the 25 Tallalmosee bureaucrats that are preventing SEOPW/CRA 0l- 27 01- 02.6 hq�R-02-01 03:12PN FR0M- T-809 P.33/39 F-958 r� � 0 1 2 3 4 5 6 7 8 9 10 it 12 13 14 X5 16 17 is 19 20 21 22. 23 24 25 33 economic development, and I don't want that to be portrayed. COMMISSIONER JABER: Well, and as.one of those people, I don't want to be portrayed as a Tallahassee bureaucrat. COMMISSIONER BAEZ: Hear, hear. COMMISSIONER JABER: No. I think, Chairman Deason, it's quite the contrary. I think this whole Commission is very much pro -economic development. But that's precisely our point. So, no, I certainly don't want to be portrayed as a bureaucrat. It's quite the opposite. I want to do this right. And if you've presented to us a great idea, theca why shouldn't it apply to everyone? I mean, you're to be commended because you're the first that has brought this to our attention. But are you really going to sign those people up during the next two weeks? What is January 16th to you; number one? Number two, my guess is if those are customers that are.willing to sign that agreement, those are probably big customers, and you want to go ahead and provide service to them. SF OpW/ 01- 026 lUR-02-01 03:12PM FROlA- T-809 P.34/39 F-958 • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1s 16 17 IS 19 20 21 22 23 24 25 34 I don't know. I don't see it as us sitting here in Tallahassee being bureaucratic. CHAIRMAN DEASON: I didn't say we were. I said it could be portrayed as such. And there is a tendency for people to look at Tallahassee and gay that's all that lives in Tallahassee. COMMISSIONER JABER: And those news people that just left. .COMMISSIONER PALECKI: I would very much like to see some sort of mechanism in place so that the Company could start signing those customers as soon as possible. COMMISSIONER BAEZ: Does that fit into the su.spension? MR. EI,IAS: No. xf the tariff is suspended, it's not operative. • ��� ---�� - COMMISSIONER BAEZ: I understand. And then it can change; right? it can get -- MR. BLIAS: Well, the idea would be that we would bring it back. CHAIRMAN DEASON: Can't we approve a tariff; and if we see there are problems with it, we can show -cause the Company to come in and show why their tariff should not be canceled? MR. ELTAS: Well, it wouldn't be in the SE®pw/C RA oi- 026 MAR-02-01 03:13PM FROM- T-809 P.35/39 F-958 35 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 is 16 17 is 19 20 21 22 23 24 25 nature of a show cause. It would be -- the standard of proof is not quite as onerous as it is in that circumstance. We could approve this, and if we determined that it was not just, fair, and reasonable, on our own motion determine that the tariff should be withdrawn, issue a determination to that effect subject to protest, and then in the event that someone did choose to protest, conduct a hearing on it. So I mean, we can have it become effective today and then take action to eliminate the tariff offering at any future point. CHAIRMAN DEASON: And let me ask you this. Even if we approve it in its present form, is there a recourse for a customer out there who can always file a complaint -- MR. ELIAB: That was my next -- that was going to be my next point. CHAIRMAN REASON: -- Baying that in my circumstances, Yam being unduly discriminated against, or this is -- MR. ELTAS': Not just, fair, and reasonable. At any time, a customer can do that. COMMISSIONER BAEZ: Well, being the one SE®PW/CI A 01.-- 026 01- 27 MAR-02-01 03:13PM FROM-- 0 0 T-609 P.36/39 F-958 36 1 that started this whole thing, I'm comfortable 2 with that, and I'm comfortable with what the 3 chairman is suggesting, with the understanding 4 that, you know, staff can go back and review 5 this a little closer for the issues that we've 6 brought up and having that avenue open to us. 7 CHAIRMAN DEASON: we are requiring periodic 8 reports to be filed anyway; correct? 9 MR. ELIAS: Yes. 10 CHAIRMAN DEASON-. Those reports are 11 yearly? 12 MR. ELIAS: Yearly. 13 CHAIRMAN DEASON: Maybe we want to see 14 those every six months. is that a problem, or 15 do you think we can get any -- is that -- 16 MR. LITCHFIELD; That's not a problem. We 17 could give you the first report six months from 18 the effective date of the tariff and then go to 19 annually thereafter. 20 COMMISSIONER, BAEZ: That's fine with me. 21 CHAIRMAN D£ASON: okay. I8'staff 22 comfortable with that? 23 MS. DRAPER: Yes. 24 CHAIRMAN REASON: Is there a motion? 25 COMMISSIONER BAEZ: Moved as discussed, SEOPW/CRA 01-..._Q .�. . 01- 27 MAR-02-01 03:13PM FROM- T-809 P.37/39 F-958 37 �- ---- - -- 1 with reports -- with the recommendation 2 requiring the first report in six months. 3 COMMISSIONER PALECKI: I -- 4 COMMISSIONER JACOBS: That said, I'll 5 second it. I'm sorry. 6 COMMISSIONER PALECKI: I was going to 7 second it. g COMMISSIONER. JACOBS; Go right ahead. g COMMISSIONER PAILECKI: I would second it. 10 And as far as Commissioner Jaber's concern that ^- ••- •- - it it might be something that we want to see 12 applicable on a statewide basis, I suspect that 13 the other electric utilities that are in this 14 room will probably see this as something that 15 they want to file on their own. So I wouldn't 16 be surprised if we see something being filed by 17 each of the investor -owned electrics. 18 CHAIRMAN DEASON. We have a motion and a 19 second. All in favor say "aye." 20 COMMISSIONER JACOBS. Aye. 21 COMMISSIONER SAEZ: Aye. 22 COMMISSIONER PALECKt. .Aye. 23 CBAIRMRN DEASON: Show that it's unanimous. 24 COMMISSIONER JABER: No, nay. 25 CAAIRMAN DEMON; Oh, I'm sorry. I waH SE®PW/ CRA 01- 026 U1� �~� MAR-02-01 03:13PM FROM- � ® T-809 P.38/39 F-958 38 • 1 jumping to a conclusion there. it is approved Z on a four -to -one vote. Commissioner saber 3 dissents. 4 (Conclusion Of consideration of Item 29.) 5 6 8 9 10 21 12 . 13 14 15 16 17 18 19 20 21 22 23 24 25 SE®PW/CRA ©1- 026 �1- 2/ MAR-02-01 03:13PM FROL- 0 • T-809 P.39/39 F-958 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICAT$ OF REPORTER STATE OF FLORIDA) COUNTY OF IRON ) 39 I, MARY ALLEN NEEL, do hereby certify that the foregoing proceedings were taken before me at the time and place therein designated; that my shorthand notes were thereafter transcribed under my supervision; and that the foregoing pages numbered i through 38 are a true and correct transcription of my stenographic notes. I FURTHER CERTIFY that I am not a relative, employee, attorney or counsel of any of the parties, or relative or employee of such attorney or counsel, or financially interested in the action. DATED THIS 28th clay of December, 2000, MARY ALLEN NEEL, RPR 100 Salem Court Tallahassee, Florida 32301 (850) 878-2221 SE®PW/CRA ©1- 026 47 WAR-02-01 03:13PM FROM- T-809 P.39/39 F-958 39 1 2 CERTIFICATE OF REPORTER 3 . 4 STATE OF FLORIDA) ' 5 CO=Y OF TZON ) 6 7 I, MARY ALLEN HEEL, do hereby certify that the 8 foregoing proceedings were taken before me at the time i 9 and place therein designated; that my shorthand notes to were thereafter transcribed under my supervision; and 11 that the foregoing pages numbered 1 through 38 are a 12 true and correct transcription of my stenographic 13 notes. 14 I FURTHER CERTIFY that I am not a relative, is employee, attorney or counsel of any of the parties, t 16 or relative or employee of such attorney or counsel, 17 or financially interested in the action. 18 DATED THIS 28th day of December, 2000. 19 20 21 22 MARY AL' LZ7 NEEL, RPR 23 100 Salem Court Tallahassee, Florida 32301 24 (850) 878-2221 25 SEOPW/CRA 04 -- 10 )6 V 1 7,