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DATE: |
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TO: |
Office of Commission Clerk (Cole) |
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FROM: |
Office of the General Counsel (Cowdery) Division of Economic Regulation (Hinton, Lester, Franklin, Hewitt) |
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RE: |
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AGENDA: |
05/18/10 – Regular Agenda – Interested Persons May Participate |
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COMMISSIONERS ASSIGNED: |
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PREHEARING OFFICER: |
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SPECIAL INSTRUCTIONS: |
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FILE NAME AND LOCATION: |
S:\PSC\GCL\WP\100084.RCM.DOC |
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The Commission conducts an annual fuel and purchased power cost recovery clause (fuel clause) hearing[1] as part of its authority to set fair and reasonable electric utility rates pursuant to Section 366.05, Florida Statutes (F.S.). Through a procedure established by Commission orders[2] and as part of the fuel clause proceeding, utilities or other parties may petition for a mid-course correction to fuel factors previously approved in the most recent fuel clause hearing. Mid-course corrections are preliminary procedural decisions which are used by the Commission between the annual fuel hearings whenever costs deviate from revenues by a significant margin. Any over-recoveries or under-recoveries caused by or resulting from the new factor adopted by the mid-course correction may be included in the following year’s fuel factor as addressed in the annual fuel clause proceeding.
The Commission has not enacted rules concerning the petition for mid-course correction procedure because the fuel clause proceedings are exempted by subparagraph 120.80(13)(a), F.S., from the rulemaking provisions of Chapter 120, F.S.[3] If not for this exemption, the Commission would have been required to initiate rulemaking concerning the fuel clause proceedings, to the extent that there exist agency requirements meeting the statutory definition of “rule.”[4]
As part of its duty to maintain a continuous review of the administrative rulemaking process, the Joint Administrative Procedures Committee (JAPC) staff requested that the Commission adopt a rule to prescribe the application process for mid-course corrections. By letter dated July 24, 2009, to the Commission’s General Counsel and Executive Director, JAPC staff stated that subsection 366.06(1), F.S., specifically mandates that all applications for changes in rates shall be made under rules and regulations prescribed by the Commission,[5] and that this specific mandate controls over the subparagraph 120.80(13)(a) general exemption from rulemaking for fuel clause proceedings. JAPC staff indicated to Commission staff that codifying the current mid-course correction application procedure in a rule will resolve its concerns in this regard.
In response to JAPC staff’s request, staff initiated rulemaking in this docket in order to codify the current Commission procedure for filing petitions for mid-course corrections. The Notice of Proposed Rule Development was published in the December 18, 2009 edition of the Florida Administrative Weekly. No requests for a rule development workshop were received, and thus a rule development workshop was not held. This item was deferred from two previous agenda conferences in order to address comments received concerning Form PSC/ECR 009-E. Staff invited comment on draft rule Form PSC/ECR 009-E, and received written comments from Florida Power & Light Company (FPL), Florida Public Utilities Company (FPUC), Progress Energy Florida, Inc. (PEF), and Tampa Electric Company (TECO). In addition, staff conducted a noticed teleconference on April 27, 2010, to discuss these comments, at which FPL, FPUC, PEF, TECO, and Gulf Power Company (collectively referred to as the IOUs) participated.
This recommendation addresses whether the Commission should propose the adoption of Rule 25-6.0424, F.A.C. The Commission has jurisdiction pursuant to Sections 120.54, F.S., and 366.06(1), F.S.
Issue 1:
Should the Commission propose the adoption of Rule 25-6.0424, F.A.C., Petition for Mid-Course Correction?
Recommendation:
Yes, the Commission should propose the adoption of this rule as set forth in Attachment A. (Cowdery, Hinton, Lester, Franklin, Hewitt)
Staff Analysis: Draft Rule 25-6.0424 is appended to the recommendation as Attachment A. The following is a summary of the rule.
Subsection (1) of Rule 25-6.0424 identifies the filing requirements for a petition for mid-course correction. Subparagraph (a) requires the filing of the estimated percentage of year-end over-recovery or under-recovery calculated using the estimated End-of-Period Total Net True-up divided by the current period’s total actual and estimated Jurisdictional Fuel Revenue Applicable to Period. Relevant terms are defined. The appropriate method for determining the over-recovery or under-recovery percentage for capacity costs is explained. The language of subparagraph (a) codifies the filing requirements set forth by Commission order in the fuel and purchased power cost recovery clause, Docket No. 070001-EI.[6] This information is necessary to determine the appropriateness and the level of mid-course correction.
Subparagraph (b) of Rule 25-6.0424 identifies the schedules required to be filed as part of a petition for mid-course correction. A utility filing a petition for a fuel mid-course correction is required to file schedules E1 through E10 of Form PSC/ECR 009-E (xx/xx), entitled “Mid-Course Correction Schedules.” These are the same schedules which utilities have historically filed for such a petition. A utility filing a petition for a capacity mid-course correction is required to file schedules E12-A through E12-E of Form PSC/ECR 009-E. These schedules codify the information that the IOUs have historically been required to file for such a petition. Subparagraph (b) also states that the form may be obtained from the Commission’s Division of Economic Regulation. As stated in the Case Background section of this recommendation, staff received comments from the IOUs concerning Form PSC/ECR 009-E. Staff discussed these suggestions with the IOUs during the noticed conference call, and incorporated suggestions into the form, consistent with those discussions.
Subsection (2) codifies the current requirement from Docket No. 070001-EI, that in the event that the absolute value of the over-recovery or under-recovery is 10 percent or greater, the utility shall promptly notify the Commission. Subsection (2) also codifies the current requirement that the notification of a 10 percent or greater estimated over-recovery or under-recovery shall include a petition for mid-course correction or shall include an explanation of why a mid-course correction is not practical. This requirement is important to ensure that excessive over-recoveries or under-recoveries are addressed as soon as practicable. In addition, subsection (2) codifies Commission policy that a utility is not precluded from requesting a mid-course correction prior to reaching the 10 percent threshold requiring Commission notification.
Subsection (3) of Rule 25-6.0424 states that 10 copies of the petition must be filed with the Commission Clerk and a copy sent to the Director of the Division of Economic Regulation at ECR@psc.state.fl.us. Subsection (3) also identifies the Director of the Division of Economic Regulation as the designee of the Commission for purposes of determining whether the utility has met the minimum filing requirements imposed by the rule.
Statement of Estimated Regulatory Cost (SERC)
The Statement of Estimated Regulatory Costs (Attachment B) notes that Rule 25-6.0424 should not result in incremental costs for the Commission and that there could be some minor benefit from codifying the mid-course correction requirements. The SERC states that customers and small businesses and local governments would not be affected. The SERC also states that the 5 investor-owned electric utilities which are regulated by the Commission should have no transactional costs as a result of the adoption of the rule and that there could be some minimal benefits because the requirements for a petition for a mid-course correction will be specifically set forth in one place with the implementation of a rule.
Based upon the above, staff recommends that the Commission propose the adoption of Rule 25-6.0424, F.A.C., as set forth in Attachment A.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. (Cowdery)
Staff Analysis:
If no requests for hearing or comments are filed, the rule may be filed with the Department of State, and then this docket may be closed.
[1] E.g., Docket No. 100001-EI, In re: Fuel and purchased power cost recovery clause with generating performance incentive factor.
[2] Order No. 13694, issued September 20, 1984, in Docket No. 840001-EI and Docket No. 840003-GU, In re: Fuel and purchased power cost recovery clause with generating performance incentive factor; In re: Purchased gas cost recovery clause; Order No. PSC-98-0691-FOF-PU, issued May 19, 1998, in Docket No. 980269-PU, In re: Consideration of change in frequency and timing of hearing for the fuel and purchased power cost recovery clause, capacity cost recovery clause, generating performance incentive factor, energy conservation cost recovery clause, purchased gas adjustment (PGA) true-up, and environmental cost recovery clause; and Order No. PSC-07-0333-PAA-EI, issued April 16, 2007, in Docket No. 070001-EI, In re: Fuel and purchased power cost recovery clause with generating performance incentive factor.
[3] Subparagraph 120.80(13)(a) states: “Agency statements that relate to cost-recovery clauses, factors, or mechanisms implemented pursuant to chapter 366, relating to public utilities, are exempt from the provisions of s. 120.54(1)(a).”
[4] Subparagraph 120.54(1)(a) states that each agency statement defined as a rule by Section 120.52, F.S., is required to be adopted by the rulemaking procedure of Section 120.54 as soon as feasible and practicable. Subject to certain exceptions, a “rule” means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule.
[5] Subsection 366.06(1) states: “All applications for changes in rates shall be made to the commission in writing under rules and regulations prescribed, and the commission shall have the authority to determine and fix fair, just, and reasonable rates that may be requested, demanded, charged, or collected by any public utility for its service.”
[6] See footnote 2.