DATE:	January 11, 2012
TO:	Office of Commission Clerk (Cole)
FROM:	Office of the General Counsel (Barrera) Division of Economic Regulation (Rieger)
RE:	Docket No. 110272-EU – Joint petition for approval of a territorial agreement in Lake County between City of Leesburg, a Florida municipality and Sumter Electric Cooperative, Inc., a Florida Cooperative.
AGENDA:	01/24/12 – Regular Agenda – Proposed Agency Action – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Brisé
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			None
FILE NAME AND LOCATION:			S:\PSC\GCL\WP\110272.RCM.DOC

 

 Case Background

On September 20, 2011, Sumter Electric Cooperative, Inc. (SECO) and the City of Leesburg (Leesburg) filed a joint petition for approval of an amended territorial agreement (new agreement) between the two utilities in Lake County.  SECO and Leesburg are parties to a currently effective territorial agreement (current agreement) delineating their respective service territories in Lake county, which was approved by Order No. 25079.[1] 

The current agreement approved by Order No. 25079 had a duration period of twenty years.  This recommendation addresses the parties’ joint petition for approval of an amended agreement to replace the current agreement.  The Commission has jurisdiction over the matter pursuant to Section 366.04, Florida Statutes (F.S.).

 

Discussion of Issues

Issue 1: 

 Should the Commission approve the joint petition of a territorial agreement in Lake County between Leesburg and SECO?

Recommendation: 

 Yes.  The joint petition of a territorial agreement between Leesburg and SECO should be approved.  (Barrera, Rieger)

Staff Analysis: 

 On September 20, 2011, SECO and Leesburg filed a joint petition for approval of a new agreement.  According to the new agreement, the respective areas of service of both parties are contiguous in many places in Lake County; and to avoid duplication of service, the parties entered into the current agreement.  The parties desire to amend and restate the current agreement in its entirety through the amended agreement in order to gain further operational efficiencies and customer service improvements in the retail service territory.  The new agreement shall continue and remain in effect for a period of twenty years from the date of Commission approval.  However, either party may terminate at the end of the fifteenth year.  The new agreement, as well as associated maps and territory description, are included as Attachment A.

The new agreement considers the future transfer of two customers from SECO to Leesburg.  Under the current agreement, these customers are located within Leesburg’s service territory and are currently served by SECO.  The affected customers are identified in an exhibit attached to the new agreement.  According to the new agreement and the customer notices attached to the new agreement, the parties expect the transfer of the affected customers to be completed within 36 months.  It was also noted in the new agreement that the Commission will be notified in writing if circumstances require additional time to complete the transfer.  However, in the joint petition for approval of the territorial agreement, it was indicated that the transfer would be completed within 18 months.  In response to staff’s inquiry about the discrepancy, the parties explained that at the time the notice was sent to the customers, the parties wanted to allow maximum time to make the transfer.  The parties now intend to have the transfer made within 18 months.  In reference to related distribution facilities used exclusively for providing service to the affected customers, the terms of the new agreement allows a transfer if the receiving party elects to purchase the facilities.

Also, prior to the filing of the joint petition, the affected customers were sent written notification.  The petition indicated that as of the time of the filing, no negative responses have been received.  According to the petition, a summary of the responses ultimately received, if any, will be provided by a supplemental filing.  With respect to customer deposits, the parties have indicated that the two affected customers, based on payment history and longevity of service, have no deposits with SECO.  Leesburg will not require a deposit from the two customers at this time; however, it reserves the right to require a deposit from future customers at the transfer locations and for security in the event of a negative change in payment practice.

Staff would point out that this new agreement relates to a similar agreement between Florida Power Corporation, now Progress Energy Florida, Inc. (PEF) and Leesburg.[2]  The parties have indicated that PEF has been notified and has expressed no objection.  The parties have also pointed out that the new territory agreement is not intended to alter and does not alter the existing territorial agreement between PEF and Leesburg (or the existing territorial agreement between PEF and SECO).  Also, in response to a data request, staff learned that the boundary between the parties to the new agreement does not coincide with the city limits of Leesburg.  The proposed boundary provides Leesburg territory outside its municipal boundaries and SECO territory within Leesburg’s municipal boundaries.  Further, SECO has previously served areas within Leesburg’s municipal boundaries and will continue to do so as a result of the proposed new territorial agreement.

Pursuant to Section 366.04(2)(d), F.S., the Commission has the jurisdiction to approve territorial agreements between and among rural electric cooperatives, municipal electric utilities, and other electric utilities.  Pursuant to Rule 25-6.0440(2), Florida Administrative Code, in approving territorial agreements, the Commission may consider the reasonableness of the purchase price of any facilities being transferred, the likelihood that the agreement will not cause a decrease in the reliability of electric service to existing or future ratepayers, and the likelihood that the agreement will eliminate existing or potential uneconomic duplication of facilities.  Unless the Commission determines that the agreement will cause a detriment to the public interest, the agreement should be approved.  Utilities Commission of the City of New Smyrna v. Florida Public Service Commission, 469 So. 2d 731 (Fla. 1985). 

It appears that the amended agreement proposed by Leesburg and SECO eliminates existing or potential uneconomic duplication of facilities and does not cause a decrease in the reliability of electric service to existing or future ratepayers.  Based on all of the above, staff recommends that the joint petition of a territorial agreement between the Leesburg and SECO is in the public interest and should be approved. 

 

 

 

Issue 2: 

 Should this docket be closed?

Recommendation: 

 Yes.  If no person whose substantial interests are affected files a protest to the Commission’s proposed agency action order within 21 days, the docket may be closed upon issuance of a consummating order.  (Barrera)

Staff Analysis: 

 If no person whose substantial interests are affected files a protest to the Commission’s proposed agency action order within 21 days, the docket may be closed upon issuance of a consummating order.