(e) The jurisdictional net book value of any existing generating plant that is retired as a result of operation of the power plant shall be recovered through an increase in base rate charges over a period not to exceed 5 years. At the end of the recovery period, base rates shall be reduced by an amount equal to the increase associated with the recovery of the retired generating plant.
In compliance with Rule 25-6.0423(7), F.A.C., FPL submitted its calculation of the annualized base rate revenue requirements for the turbine gantry crane phase for the first 12 months of operations. This calculation is shown on Schedule 1. Staff has reviewed the calculation of the $354,225 jurisdictional annual revenue requirement. Staff believes that FPL’s proposed annual revenue requirement has been calculated in compliance with Rule 25-6.0423(7), F.A.C.
The 2009 expenditures related to the turbine gantry crane phase are still under review in Docket No. 100009-EI. A final determination of the reasonableness and prudence of the 2009 expenditures will be made during 2010. Per Attachment A to FPL’s petition, the increase in Electric Plant in Service included in the calculation is $2,455,535 ($2,446,914 jurisdictional), net of joint owners. If the $2,455,535 amount is revised based on a final audit and review of the 2009 expenditures, the annual revenue requirement will have to be recalculated. This would require a true-up of the revenues already collected and a revision of the related tariffs. Therefore, staff further recommends that the approval of the $354,225 base rate increase be made subject to true-up and revision based on the final review of the 2009 turbine gantry crane phase expenditures in Docket No. 100009-EI.
Issue 2:
Should FPL’s request to increase its base rates by $16,924 for the 5-year amortization of the EPU assets that are being retired during 2009 be approved?
Recommendation:
No. FPL’s request to increase its base rates by $16,924 for the 5-year amortization of the EPU assets that are being retired during 2009 should be reduced to $7,136, a reduction of $9,788. (Slemkewicz)
Staff Analysis:
FPL has requested approval to increase its base rates by $16,924 for the 5-year amortization of EPU assets that are being retired during 2009 pursuant to Rule 25-6.0423(7)(e), F.A.C., which states:
The jurisdictional net book value of any existing generating plant that is retired as a result of operation of the power plant shall be recovered through an increase in base rate charges over a period not to exceed 5 years. At the end of the recovery period, base rates shall be reduced by an amount equal to the increase associated with the recovery of the retired generating plant.
Per Attachment A to FPL’s petition, the net book value of the EPU asset retirements will be $202,424 at December 31, 2009. This results in an annual amortization of $40,485 over the 5-year period. In addition, FPL has proposed to offset the annual amortization by an annual depreciation credit of $23,502, resulting in a net annual amortization of $16,983 ($16,924 jurisdictional).
In the Company’s updated response to Staff’s First Data
Request,[3]
FPL filed a revision of the calculation of the 5-year amortization of the EPU
assets that are being retired during 2009 (See Schedule 1). The revisions were
an adjustment to recognize the participant’s share of the EPU assets and an
adjustment to recognize property taxes included in base rates. After making
these adjustments, the 5-year amortization of $40,485 was reduced to $21,209, and
the offsetting credits were revised to $14,166. The resulting net annual
amortization is $7,043 ($7,136 jurisdictional). Staff agrees with these
adjustments and recommends that $7,136 is the appropriate annual amount for the
5-year amortization of the EPU assets that are being retired during 2009.
Issue 3:
Should the Commission approve FPL’s revised proposal to delay the implementation of any base rate increase approved in this docket until it can be combined with a subsequent base rate increase in a future Nuclear Cost Recovery base rate filing?
Recommendation:
No. The Commission should approve FPL’s original proposal to implement any base rate increase approved in this docket on the same date as any approved base rate revision in its pending base rate proceeding in Docket No. 080677-EI. Because the recommended base rate increase does not result in a change to any of the rate classes’ base rate charge, no revision to the tariff sheets approved in Docket No. 080677-EI is required. (Slemkewicz, Kaley Thompson)
Staff Analysis:
FPL originally requested that any base rate increase approved in this docket be implemented on the same date as any approved base rate revision in its pending base rate proceeding in Docket No. 080677-EI.[4] FPL asked that those costs be allocated to retail rate classes and developed into individual rates consistent with methods and billing determinants approved in the base rate proceeding. FPL has stated that it plans to file one complete set of tariff sheets with new rates to include the increase requested in this docket and that approved in Docket No. 080677-EI.
On January 22, 2010, FPL sent an e-mail[5] to the parties stating that the gantry crane revenue requirement was not sufficient by itself to change base rates. Based on the wording in the e-mail, it was not clear whether FPL’s petition was being revised in some manner. In order to adequately evaluate the impact of FPL’s e-mail, the recommendation was deferred. During a noticed informal meeting on February 15, 2010, FPL indicated that the gantry crane investment and expenses would be included in rate base and net operating income for earnings surveillance purposes. However, the requested gantry crane operating revenue increase would not be implemented until it was combined with other operating revenue increases in the next Nuclear Cost Recovery base rate filing.
Rule 25-6.0423(7), F.A.C., requires that a utility file a petition for a base rate increase when any operating units or systems are placed in commercial service. In accordance with this provision, FPL filed a petition to include the gantry crane revenue requirements in base rates. By its January 22, 2010, e-mail and subsequent discussions at the February 15, 2010, informal meeting, FPL effectively amended its petition to request that the implementation of its requested base rate increase be deferred until it is added to a future base rate increase. Staff does not believe that Rule 25-6.0423(7), F.A.C., contemplated the deferral of the required base rate increases until a sufficient dollar amount was accumulated that would result in a tariff change. Based on the amount and in-service date timing of the Nuclear Cost Recovery projects that give rise to any base rate increases, the deferral of the base rate increase could last for an indefinite and extended period of time.
Staff does not agree with FPL’s revised proposal to defer the implementation of the proposed base rate increase until it is combined with other operating revenue increases in a future Nuclear Cost Recovery base rate filing. Instead, staff agrees with FPL’s original proposal that any revenue increase granted in this docket be implemented at the same time as any revenue increase granted in the rate case. That insures that customers will not experience multiple rate changes which can lead to customer confusion and frustration. The effective date of any base rate change is an issue in the rate case docket. Because the recommended base rate increase does not result in a change to any of the rate classes’ base rate charge, no revision to the tariff sheets approved in Docket No. 080677-EI is required.
Issue 4:
Should this docket be closed?
Recommendation:
If no person whose substantial interests are affected by the proposed agency action files a protest within 21 days of the issuance of the order, this docket should be closed upon the issuance of a consummating order. (A. Williams)
Staff Analysis:
If no person whose substantial interests are affected by the proposed agency action files a protest within 21 days of the issuance of the order, this docket should be closed upon the issuance of a consummating order.
Schedule 1
