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HomeMy WebLinkAboutFlorida Public Service Commission Final OrderFILED NOV 22, 2016 DOCUMENT NO. 08963-16 FPSC - COMMISSION CLERK BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Environmental cost recovery clause. DOCKET NO. 160007-EI ORDER NO. PSC-16-0535-FOF-EI ISSUED: November 22, 2016 The following Commissioners participated in the disposition of this matter: JULIE I. BROWN, Chairman LISA POLAK EDGAR ART GRAHAM RONALD A. BRISE JIMMY PATRONIS APPEARANCES: R. WADE LITCHFIELD, ESQUIRE, Vice President and General Counsel, JOHN T. BUTLER, ESQUIRE, Assistant General Counsel — Regulatory, and MARIA J. MONCADA, ESQUIRE, Senior Attorney, 700 Universe Boulevard, Juno Beach, Florida 33408-0420 On behalf of Florida Power & Light Company (FPL) DIANNE M. TRIPLETT, ESQUIRE, Associate General Counsel, 299 First Avenue North, St, Petersburg, Florida 33701, and MATTHEW R. BERNIER, ESQUIRE, Senior Counsel, 106 East College Avenue, Suite 800, Tallahassee, Florida 32301 On behalf of Duke Energy Florida, LLC. (DEF) JAMES D. BEASLEY, ESQUIRE, J. JEFFRY WAHLEN, ESQUIRE, and ASHLEY M. DANIELS, ESQUIRE, Ausley McMullen, P. O. Box 391, Tallahassee, Florida 32302 On behalf of Tampa Electric Company (TECO) JEFFREY A. STONE, ESQUIRE, RUSSELL A. BADDERS, ESQUIRE, and STEVEN R. GRIFFIN, ESQUIRE, Beggs & Lane, P. O. Box 12950, Pensacola, Florida 32591-2950 On behalf of Gulf Power Company (Gulf) JON C. MOYLE, JR., ESQUIRE, and KAREN PUTNAL, ESQUIRE, Moyle Law Firm, P.A., 118 North Gadsden Street, Tallahassee, FL 32312 On behalf of Florida Industrial Power Users Group (FIPUG). ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-El PAGE 2 J. R. KELLY, ESQUIRE, Public Counsel, PATRICIA A. CHRISTENSEN, ESQUIRE, CHARLES REHWINKEL, ESQUIRE, ERIK SAYLER, ESQUIRE, and STEPHANIE MORSE, ESQUIRE elo The Florida Legislature, 111 West Madison Street, Room 812, Tallahassee, Florida 32399-1400 On behalf of the Citizens of the State of Florida (OPC) JAMES W. BREW, ESQUIRE, and LAURA A. WYNN, ESQUIRE, Stone Mattheis Xenopoulos & Brew, P.C., 1025 Thomas Jefferson Street, N.W., Eighth Floor, West Tower, Washington, D.C. 20007, On behalf of White Springs Agricultural Chemicals, Inc., dlbla PCS Phosphate — White Springs (PCS Phosphate) CHARLES W. MURPHY, ESQUIRE, and BIANCA LHERISSON, ESQUIRE, Florida Public Service Commission, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850 On behalf of the Florida Public Service Commission (Staff). MARY ANNE HELTON, ESQUIRE, Deputy General Counsel, Florida Public Service Commission, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399- 0850 Advisor to the Florida Public Service Commission. FINAL ORDER APPROVING PROJECTED EXPENDITURES AND TRUE -UP AMOUNTS FOR ENVIRONMENTAL COST RECOVERY BY THE COMMISSION: BACKGROUND As part of the Public Service Commission's continuing Environmental Cost Recovery Clause proceedings, a hearing was held in this docket on November 2, 2016. We are vested with jurisdiction over the subject matters by the provisions of Section 366.8255, Florida Statutes (F.S.). DECISION The parties have resolved all issues by stipulation as follows: DEF, FPL, Gulf, and TECO support the stipulations. OPC supports stipulation for the deferral of stipulations 9A (addressing Gulf's Scherer Unit 3) and 10 (addressing FPL's projected 2017 costs for its Turkey Point Cooling Canal Monitoring Plan project). OPC does not support or oppose stipulations on all remaining issues. PCS Phosphate and FIPUG do not support or oppose stipulation of all issues. ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-Ei PAGE 3 1. Final Environmental Cost Recovery True -Up Amounts: January 2015 Through December 2015 The final environmental cost recovery amounts for the period ending December 31, 2015, are: FPL $17,817,012 Over -Recovery Duke $1,951,488 Over -Recovery TECO $1,721,184 Over -Recovery Gulf $3,061,120 Over -Recovery 2. Actual/Estimated Environmental Cost Recovery True -Up Amounts: January 2016 Through December 2016 The actual/estimated environmental cost recovery true -up amounts for the period January 2016, through December 2016, are: FPL $6,424,842 Under -Recovery Duke $6,606,430 Over -Recovery TECO $5,755,973 Over -Recovery Gulf $7,840,455 Over -Recovery 3. Projected Environmental Cost Recovery Amounts: January 2017 Through December 2017 The projected environmental cost recovery amounts for the period January 2017, through December 2017, are: FPL* $256,332,720 12 CP and 25% allocation FPL* $256,370,332 12 CP and 1/13th allocation Duke $66,227,010 TECO $81,235,918 Gulf $218,646,595 *Based on the 12 CP and 25% cost allocation for Production Plant proposed by FPL in Docket 1600021-EI, the projected environmental cost recovery amounts for the period January 2017 through December 2017 is $256,332,720. On October 6, 2016, FPL, the Office of Public Counsel, the South Florida Hospital and Healthcare Association and the Florida Retail Federation jointly moved for approval of a proposed stipulation and settlement of FPL's rate case in Docket No. 160021-EI and consolidated dockets (the "Proposed Settlement Agreement"). The Proposed Settlement Agreement would provide for FPL to continue using the 12 CP and 1/13th production cost methodology. If the ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-EI PAGE 4 Commission approves the Proposed Settlement Agreement or otherwise declines to accept FPL's proposed cost allocation methodology, the amount calculated using 12CP and 1113th is $256,370,332. Upon approval of this stipulation by the Commission, FPL will file and serve tariff sheets that reflect the 2017 ECRC factors under the two alternative methodologies so that the Commission may direct Staff to approve administratively whichever set corresponds to the Commission's decision on the allocation methodology in Docket No. 160021-EI and consolidated dockets. 4. Environmental Cost Recovery Amounts, Including True -Up Amounts And Revenue Taxes: January 2017 Through December 2017 The environmental cost recovery amounts, including true -up amounts and revenue taxes, for the period January 2017, through December 2017 are: FPL * $245,116,908 12 CP and 25% allocation FPL * $245,154,547 12 CP and 1/13th allocation Duke $57,710,613 TECO $73,811,867 Gulf $207,894,596 *Based on the 12 CP and 25% Production Plant cost allocation method proposed by FPL in Docket 1600021-EI, the projected environmental cost recovery amounts for the period January 2017 through December 2017 is $245,116,908. If the Commission approves the Proposed Settlement Agreement or otherwise declines to accept FPL's proposed cost allocation methodology, the amount calculated using 12CP and 1/13th is $245,154,547. Upon approval of this stipulation by the Commission, FPL will file and serve tariff sheets that reflect the 2017 ECRC factors under the two alternative methodologies so that the Commission may direct Staff to approve administratively whichever set corresponds to the Commission's decision on the allocation methodology in Docket No. 16002 1 -EI and consolidated dockets. 5. Depreciation Rates: January 2017 Through December 2017 The depreciation rates used to calculate the depreciation expense shall be the rates that are in effect during the period the allowed capital investment is in service. ORDER NO. PSC-16-0535-FOF-El DOCKET NO. 160007-EI PAGE 5 6. Jurisdictional Separation Factors: January 2017 Through December 2017 The appropriate jurisdictional separation factors for the projected period January 2017, through December 2017 are: FPL Retail Energy Jurisdictional Factor 94.89172% Retail CP Demand Jurisdictional Factor 95.04658% Retail GCP Demand Jurisdictional Factor 100.00000% DEF The Energy separation factor is calculated for each month based on retail kWh sales as a percentage of projected total kWh sales. The remaining separation factors are below, consistent with the Revised Stipulation and Settlement Agreement approved in Order No. PSC-13-0598-FOF-El, at p. 54. Transmission Average 12 CP Demand — 70.203% Distribution Primary Demand — 99.561% Production Demand: Production Demand (2012) — 91.683% Production Base — 92.885% Production Intermediate — 72.703% Production Peaking — 95.924% Production A&G — 93.221% TECO The demand jurisdictional separation factor is 99.58992%. The energy jurisdictional separation factors are calculated for each month based on retail kWh sales as a percentage of projected total system kWh sales. These are shown on the schedules sponsored by witness Rusk. GULF The demand jurisdictional separation factor is 97.21125%. Energy jurisdictional separation factors are calculated each month based on retail KWH sales as a percentage of projected total territorial KWH sales. ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-EI PAGE 6 7. Environmental Cost Recovery Factors By Rate Group: January 2017 Through December 2017 The appropriate environmental cost recovery factors for the period January 2017 through December 2017 for each rate group are: FPL FPL's environmental cost recovery factors based on 12 CP & 25% Production Plant cost allocation methodology proposed by FPL in Docket 160021-EI are as follows:* Proposed Cost Allocation Methodology - 12 CP and 25°4 Environmental Cost Recovery Factor (cents/KWH) RS I/RTR I 0.241 GS IIGST I 0.230 OSD11GSDT1/HLFTI 0.217 OS2 0.200 GSLD i /GSLDTI JCS 1 /CST l/HLFT2 0.216 G5 LD2/GSLDT2/CS2/CST2/HLFT3 0,197 GSLD3/GSLDT31C53/CST3 0,194 SST1T 0.180 SST l D I /5ST1 D2/SST1 D3 0,206 C1LC DICILC G 0.197 C1LC T 0.188 MET 0.213 OL1/SLI/PLIiSL1-M 0.126 SL2I GSCUI/5L2-M 0.191 Total 0.228 *If the Commission approves the Proposed Settlement Agreement or otherwise declines to accept FPL's proposed cost allocation methodology, the amounts calculated using 12CP and 1/13th are set forth below. Upon approval of this stipulation by the Commission, FPL will file and serve tariff sheets that reflect the 2017 ECRC factors under the two alternative methodologies so that the Commission may direct Staff to approve administratively whichever set corresponds to the Commission's decision on the allocation methodology in Docket No. 160021-EI and consolidated dockets. ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-EI PAGE 7 Proposed Cost Allocation Methodology - 12 CP and 1/13th Environmental Cost Recovery Factor (cents/KWH) RS 1 /RTR I 0.244 GSIIGSTI 0.230 GSDI/GSDTI/HLFTI 0.215 OS2 0.194 GSLDIIGSLDTIICSI/CST1/HLFT2 0.214 GSLD2/GSLDT2/CS2/CST2/HLFT3 0.192 GSLD3/GSLDT3/CS3/CST3 0.188 SSTIT 0.172 SST1D1/SSTID21SST1D3 0.203 CILC D/CILC G 0.192 CILC T 0.182 MET 0.211 OLi/SL1/PL1/SL1-M 0.106 SL2/ GSCUl/SL2-M 0.185 Total 0.228 ORDER NO. PSC-16-0535-FOF-El DOCKET NO. 160007-E1 PAGE 8 DEF Rate Class ECRC Factors Residential 0.151 cents/kWh General Service Non -Demand al Secondary Voltage @ Primary Voltage @ Transmission Voltage 0.147 cents/kWh 0.146 cents/kWh 0.144 cents/kWh General Service 100% Load Factor 0.139 cents/kWh General Service Demand @Secondary Voltage @ Primary Voltage a} Transmission Voltage 0.144 centslkWh 0.143 cents/kWh 0.141 cents/kWh Curtailable @ Secondary Voltage @ Primary Voltage @ Transmission Voltage 0.168 cents/kWh 0.166 cents/kWh 0.165 cents/kWh Interruptible @ Secondary Voltage @ Primary Voltage @ Transmission Voltage 0.137 cents/kWh 0.136 cents/kWh 0.134 cents/kWh Lighting 0.144 centslkWh. ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. I 60007-EI PAGE 9 TECO Rate Class Factor (/kWh) RS GS, TS GSD, SBF IS LS1 0.389 0.388 Secondary 0.386 Primary 0.382 Transmission 0.378 Secondary 0.379 Primary 0.375 Transmission 0.371 Average Factor GULF 0.381 0.387 RATE CLASS ENVIRONMENTAL COST RECOVERY FACTORS ¢/KWH RS, RSVP, RSTOU 2.158 GS 1.988 GSD, GSDT, GSTOU i .761 LP, LPT 1.549 PX, PXT, RTP, SBS 1.480 OS-I/II 0.580 OSIII 1.383 8. Effective Date For New Environmental Cost Recovery Factors The factors shall be effective beginning with the specified environmental cost recovery cycle and thereafter for the period January 2017 through December 2017. Billing cycles may start before January 1, 2017 and the last cycle may be read after December 31, 2017, so that each customer is billed for twelve months regardless of when the adjustment factor became effective. These charges shall continue in effect until modified by subsequent order of this Commission. ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-El PAGE 10 9A. Carve Out Of Issues Related To Gulf's Recovery Of Its Identified Environmental Compliance Investment And Expenses Associated With Gulf's 25% Ownership Interest In Scherer Unit 3 Issues related to Gulfs recovery of its identified environmental compliance investment and expenses associated with Gulf's 25% ownership interest in Scherer Unit 3 shall be carved out and deferred for resolution in Gulf's rate case ending in Docket No. 160186- El. In order to preserve the relative positions of the parties pending the final decision in Docket No. 160186-EI, and in recognition that all other issues for Gulf in this ECRC proceeding are not contested by any party, Gulf may recover in its 2017 ECRC factors $2,626,661 of O&M expense ($963,913 estimatedlactual true -up for 2016 and $1,662,748 projected for 2017) and $22,695,829 of capital investment recoverable costs ($10,296,496 estimatedlactual true -up for 2016 and $12,399,333 projected for 2017) for environmental compliance activities associated with that portion of Gulfs 25% ownership interest in Scherer Unit 3 not committed to long-term off -system sales after December 31, 2015. Accordingly, Gulf's proposed 2017 cost recovery rates in the ECRC mechanism are approved, without change. The portion attributable to Scherer 3, -- up to 100%, however, is subject to future true -up as set forth below. Qualification for ECRC Recovery. There is no dispute that (a) all of the environmental compliance investment and expenses for Scherer Unit 3 identified by Gulf for recovery through the ECRC mechanism were incurred after April 13, 1993 (the effective date of the ECRC enabling statute); (b) all such costs are for activities that are legally required to comply with a governmentally imposed environmental regulation that was created, became effective, or whose effect was triggered after 1990, which was the last test year in which any portion of Gulf's investment in Scherer Unit 3 was considered in setting Gulf's base rates; and (c) none of the environmental compliance investment and expenses for Scherer Unit 3 identified by Gulf for recovery through the ECRC mechanism are currently being recovered by Gulf through base rates or some other cost recovery mechanism. Therefore, subject to the ultimate ruling on the issue of whether any of the costs associated with the ongoing ownership and operation of Scherer 3 are recoverable from Gulfs retail customers (the "threshold issue"), these costs qualify for recovery through the ECRC. These costs remain subject to a potential Commission determination to roll them into base rates on a prospective basis in accordance with the ECRC enabling statute. Admission of Testimony and Exhibits. The testimony and exhibits of Gulf witnesses Boyett, Burleson, Deason, Liu, Markey and Vick shall be inserted into the record of this proceeding, without objection, as a basis for recovery of all costs identified therein, including the environmental compliance costs associated with Scherer Unit 3, through the ECRC mechanism. That testimony shall also be admitted in Docket No. 160186-EI, subject to appropriate cross-examination, as a basis for Gulf's positions on the carved out ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-EI PAGE 11 and deferred issues and any position that Gulf takes with respect to base rate recovery of Scherer Unit 3 environmental costs. Eligibility for Base Rate Recovery. In the event Gulf prevails on the threshold issue, the Commission retains the authority to determine whether recovery of the Scherer 3 environmental compliance costs on a prospective basis shall continue through the ECRC or shall be included in base rates. The fact that these costs are not included in the 2017 test year revenue requirements requested through the petition, minimum filing requirements, testimony and exhibits submitted by Gulf in Docket No. 160186-El, and are not included in the proposed base rates filed in that docket, shall not disqualify the annualized amount of such costs from being considered or incorporated in the base rates established in Docket No. 160186-EI. The statutory time frames otherwise applicable to Docket No. 160186-EI shall not be affected by consideration of the deferred issues in that docket, the potential for base rate recovery of those costs, or Gulf's submission of supplemental information necessary to identify the annualized test year amount of Scherer 3 investment and expenses to be included in the ultimate determination of prospective base rates. Future True -up. In the event that Gulf prevails on the threshold issue, and the Commission decides that any portion of the Scherer Unit 3 environmental compliance costs should be recovered prospectively through base rates established in Docket 160186- E1 rather than through the ECRC mechanism, then the portion of the environmental compliance costs included in prospective base rate recovery shall be excluded from the actual expenditures addressed through the ECRC mechanism beginning with the effective date of the new base rates. Any over -recovery through the ECRC mechanism that results from such prospective base rate recovery shall be credited to customers with interest in accordance with and through the normal true -up mechanism associated with the ECRC. In the event that Gulf does not ultimately prevail on the threshold issue, the amounts related to Scherer 3 collected through the 2017 cost recovery rates in the ECRC mechanism will be credited to customers with interest, in accordance with and through the normal true -up mechanism associated with the ECRC. 9B. Gulf's Recovery Of Prudently Incurred Costs Associated With Its Plant Scholz CCR Unit Closure Project Gulf shall be allowed to recover, through the ECRC, prudently incurred costs associated with its Plant Scholz CCR Unit Closure project. The Plant Scholz CCR Unit Closure project meets the criteria for cost recovery set forth in Section 366.8255, Florida Statutes and the Commission's Order No. PSC-94-0044- FOF-EI. This project is necessary for Gulf to meet new legally mandated requirements under a governmentally imposed environmental regulation. These new legal requirements are found in the National Pollutant Discharge Elimination System (NPDES) renewal ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-EI PAGE 12 permit for Plant Scholz (FL0002283-005) issued by the Florida Department of Environmental Protection (FDEP) on October 20, 2015 and in the draft NPDES permit modification issued on August 25, 2016. NPDES permit FL0002283-005 requires closure of the existing on -site ash pond at Plant Scholz during the 2015-2020 permit cycle. Pursuant to the permit, Gulf was required to submit a closure plan to the FDEP for its review and approval. After completion of engineering design work, the Plant Scholz closure plan was submitted to FDEP on May 26, 2016, and Gulf received approval of the closure plan on August 26, 2016. The Plant Scholz closure plan requires the construction of an industrial wastewater pond, a groundwater cut-off wall, a wastewater treatment system, a stormwater management system, removing the coal combustion residuals (CCR) material from portions of the pond, transferring CCR material upland to a dry stack area primarily within the footprint of pond, and installing new groundwater monitoring wells at Plant Scholz. The costs for this activity are $845,000 O&M expenses for 2016 and $26,191,933 O&M expenses for 2017. These costs are not recovered through any other cost recovery mechanism or through base rates. 9C. Allocation Of Costs Associated With Gulf's Plant Scholz CCR Unit Closure Project The Plant Scholz CCR Unit Closure project shall be allocated to the rate classes on a demand basis. 10. Deferral Of Issues Related To FPL's Recovery Of Its Projected 2017 Costs For The Turkey Point Cooling Canal Monitoring Plan Project Issues related to FPL's recovery of its projected 2017 costs for the Turkey Point Cooling Canal Monitoring Plan project shall be deferred for resolution in the 2017 ECRC docket. FPL may recover in its 2017 ECRC factors the projected $73,776,441 of O&M expense shown on Form 42-2P and $1,449,647 of capital investment recoverable costs shown on Form 42-3P, filed on September 6, 2016 as part of FPL's 2017 projection filing, with both amounts subject to refund through the ECRC true -up mechanism, including interest calculated as provided therein. FPL will file its direct testimony in support of the 2017 TPCCMP project costs as part of its 2017 actual/estimated true -up filing. It is the parties' desire that, to the extent possible, the order establishing procedure for Docket 170007-EI reflect a schedule for the TPCCMP project issues that provides intervenor and Staff no fewer than five weeks to file testimony after FPL's direct testimony; and provides FPL no fewer than three weeks thereafter to file its rebuttal testimony. ORDER NO. PSC-I6-0535-FOF-EI DOCKET NO. 160007-El PAGE 13 11. DEF's Proposed Treatment For Bartow-Anclote Pipeline And Turner CT Projects, As Proposed In DEF's 2016 Estimated Actual And 2017 Projection Filings The Commission shall approve DEF's proposed treatment for Bartow-Anclote Pipeline and Turner CT projects, as proposed in DEF's 2016 Estimated Actual and 2017 Projected Filings. DEF's proposed treatment for the Bartow-Anclote Pipeline and Turner CT projects is consistent with prior Commission approvals in Order No. PSC-11-0553-FOF-EI and PSC-13-0381-PAA-EI. 12. Approval Of Revised Tariffs Reflecting The Environmental Cost Recovery Amounts And Environmental Cost Recovery Factors The Commission approves the revised tariffs reflecting the environmental cost recovery amounts and environmental cost recovery factors determined to be appropriate in this proceeding. Staff is directed to verify that the revised tariffs are consistent with the Commission's decision.. Based on the foregoing, it is ORDERED by the Florida Public Service Commission that the stipulations and findings set forth in the body of this order are hereby approved. It is further ORDERED that each utility that was a party to this docket shall abide by the stipulations and findings herein which are applicable to it. It is further ORDERED that the utilities named herein are authorized to collect the environmental cost recovery amounts and use the factors approved herein beginning with the first billing cycle for 2017. The first billing cycle may start before January 1, 2016, and thereafter, the environmental cost recovery factors shall remain in effect until modified by this Commission. It is further ORDERED that the Environmental Cost Recovery Clause docket is an on -going docket and shall remain open. ORDER NO. PSC-16-0535-FOF-EI DOCKET NO. 160007-EI PAGE 14 BYL By ORDER of the Florida Public Service Commission this 22nd day of November, 2016. &CLIO-64--) fRa CARLOTTA S. STAUFF Commission Clerk Florida Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399 (850) 413-6770 www.floridapsc.com Copies furnished: A copy of this document is provided to the parties of record at the time of issuance and, if applicable, interested persons. NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW 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. Any party adversely affected by the Commission's final action in this matter may request: 1) reconsideration of the decision by filing a motion for reconsideration with the Office of Commission Clerk, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850, within fifteen (15) days of the issuance of this order in the form prescribed by Rule 25-22.060, Florida Administrative Code; or 2) judicial review by the Florida Supreme Court in the case of an electric, gas or telephone utility or the First District Court of Appeal in the case of a water and/or wastewater utility by filing a notice of appeal with the Office of Commission Clerk, and filing a copy of the notice of appeal and the filing fee with the appropriate court, This filing must be completed within thirty (30) days after the issuance of this order, pursuant to Rule 9.110, Florida Rules of Appellate Procedure. The notice of appeal must be in the form specified in Rule 9,900(a), Florida Rules of Appellate Procedure.