DATE:	March 5, 2012
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Economic Regulation (Draper, Kummer) Office of the General Counsel (Klancke, Barrera, Young)
RE:	Docket No. 110138-EI – Petition for increase in rates by Gulf Power Company.
AGENDA:	03/12/12 – Special Agenda – Post hearing decision; participation is limited to Commissioners and Staff
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Edgar
CRITICAL DATES:			3/12/12 (8-Month Effective Date)
SPECIAL INSTRUCTIONS:			None
FILE NAME AND LOCATION:			S:\PSC\ECR\WP\110138A.RCM.DOC

 

 Case Background

This proceeding commenced on July 8, 2011, with the filing of a petition for a permanent rate increase by Gulf Power Company (Gulf).  Gulf requested an increase in its base rates and charges to generate $93,504,000 in additional gross annual revenues.  Gulf also requested an interim rate increase in its base rates and charges to generate $38,549,000 in additional gross annual revenues.  The Commission approved the interim rate request in Order No. PSC-11-0382-PCO-EI.[1]  Pursuant to a stipulation approved in Order No. PSC-11-0553-FOF-EI,[2] Gulf filed supplemental testimony on November 8, 2011, for an additional base rate increase of $8,104,000 for the inclusion of the Crist Units 6 and 7 turbine upgrade projects in the instant proceeding.  As a result, Gulf’s total requested base rate increase was revised to $101,608,000.

A technical hearing was conducted December 12-15, 2011.  At the January 10, 2012, Commission Conference, the Commission approved the parties’ Motion for Approval of Partial Settlement Agreements effectively dropping Issues 11, 62, 63, and 80, while approving the proposed stipulation of Issues 106 (cost of service methodology), 107 (treatment of distribution costs), and 108 (allocation of revenue increase to rate classes).  At the February 27, 2012, Agenda Conference (revenue requirement agenda), the Commission approved an increase to operating revenues of $64,101,662 for the 2012 projected test year.  The Commission also approved a $4,021,905 January 2013 step increase to reflect the inclusion of Crist Units 6 and 7 Turbine Upgrade Projects in rate base rather than through the Environmental Cost Recovery Clause (Issue 9).  The final revenue increase for 2012 and 2013 is shown in Schedule 1. 

This recommendation addresses the rates issues that were not addressed at the revenue requirement agenda, specifically, Issues 109 (customer charges), 110 (demand charges), 111 (energy charges), 112 (outdoor lighting charges), and 114 (standby charges).  Staff notes that at the revenue requirement agenda, the Commission approved in Issue 109 renaming the customer charge “base charge.”  Based on the Commission vote at the January 10, 2012, and the revenue requirement agenda, Gulf filed a compliance cost of service study on March 1, 2012.  The compliance cost of service study establishes the revenue requirement for each rate class and final rates and charges for the 2012 base rate increase and the 2013 base rate step increase.    

The first step in designing final rates is to spread the overall approved rate increase to the various rate classes.  The methodology for allocating the rate increase to the rate classes has been approved in stipulated Issue 108.  The class revenue requirement is then translated into actual rates.  The revenue requirement for each class is first reduced by the base charge revenues.  The 2012 base charges reflect customer-related unit costs as derived from the cost of service methodology the Commission approved in stipulated Issue 106, however, the proposed base charges are set at not more than a 50 percent increase above the current base charges.  For example, the 2012 unit cost from the cost of service study for the residential base charge is $19.50, however, Gulf proposed a $15 residential base charge, a 50 percent increase from the $10 base charge that was in effect prior to interim.  The demand and energy charges reflect the cost associated with providing service, and are then adjusted to preserve the relationship between energy and demand charges for the present rates and other rate design considerations.  The transformer ownership discounts (credits) were derived using the methodology the Commission approved in Issue 115.  All charges and credits are designed to result in the recovery of the total revenues allocated to each rate class.  The 2013 base rate step increase represents an across the board increase.

The 2012 charges and credits for all rate classes except outdoor lighting are shown in Schedule 2, and the 2013 charges and credits for all rate classes except outdoor lighting are shown in Schedule 3.   The outdoor lighting charges for 2012 and 2013 are shown in Schedule 4.

Residential bill impacts.  Schedule 5 shows Gulf’s 1,000 kilowatt-hours (kWh) monthly residential bill at prior to interim, interim, and 2012 rates.  As a result of this rate case, a residential customer who uses 1,000 kWh per month, will see a $8.35 increase effective April 2012 in the base rate portion of the bill.  However, with a recent decrease in the fuel charge, the total monthly bill will increase from $122.67 to $126.53, or by $3.86.  Schedule 5 also shows 2012 bill impacts at various other residential consumption levels.  The 2013 base rate step increase will have a $0.48 impact on the base rate portion of the 1,000 kWh residential bill.

The 2012 revised charges will be effective for meter readings taken on or after 30 days following the date of the Commission vote approving the charges which, under the current schedule, would mean for meter readings on or after April 11, 2012.  The 2013 revised charges, according to the Commission vote in Issue 9, would be effective January 1, 2013, or the actual in-service date of the scheduled December 2012 upgrade, whichever is later.

The Commission approved in Issue 119 that the docket should be closed 32 days after issuance of the order, to allow the time for filing an appeal to run.

The Commission has jurisdiction over these matters pursuant to Sections 366.06 and 366.071, F.S.

Discussion of Issues

Issue 109: 

 What are the appropriate customer charges?

Recommendation: 

 The appropriate customer, or base charges, for 2012 are shown in Schedule 2, and the appropriate base charges for 2013 are shown in Schedule 3.  The 2012 revised charges and credits should be effective for meter readings taken on or after 30 days following the date of the Commission vote approving the rates and charges which, under the current schedule, would mean for meter readings on or after April 11, 2012.  Staff requests that the Commission grant staff the authority to administratively approve the tariffs filed to implement the charges and credits presented in Schedules 2, 3, and 4.   (Draper)

Staff Analysis: 

 At the revenue requirement agenda the Commission approved Gulf’s proposal to rename the customer charge “base charge.”  The appropriate base charges for 2012 are shown in Schedule 2, and the appropriate base charges for 2013 are shown in Schedule 3.  The 2012 revised charges and credits should be effective for meter readings taken on or after 30 days following the date of the Commission vote approving the rates and charges which, under the current schedule, would mean for meter readings on or after April 11, 2012.  Staff requests that the Commission grant staff the authority to administratively approve the tariffs filed to implement the charges and credits presented in Schedules 2, 3, and 4.

 

 

 

 

 

 

Issue 110: 

 What are the appropriate demand charges?

Recommendation: 

 The appropriate demand charges for 2012 are shown in Schedule 2, and the appropriate demand charges for 2013 are shown in Schedule 3.  (Draper)

Staff Analysis: 

 The appropriate demand charges for 2012 are shown in Schedule 2, and the appropriate demand charges for 2013 are shown in Schedule 3.

 

 

 

 

Issue 111: 

 What are the appropriate energy charges?

Recommendation: 

 The appropriate energy charges for 2012 are shown in Schedule 2, and the appropriate energy charges for 2013 are shown in Schedule 3.  (Draper)

Staff Analysis: 

 The appropriate energy charges for 2012 are shown in Schedule 2, and the appropriate energy charges for 2013 are shown in Schedule 3.

 

 

 

 

 

 

Issue 112: 

 What are the appropriate charges for the outdoor service (OS) lighting rate schedules?

Recommendation: 

 The appropriate charges for the OS rate schedule for 2012 and 2013 are shown in Schedule 4.  (Kummer)

Staff Analysis: 

 The appropriate charges for the OS rate schedule for 2012 and 2013 are shown in Schedule 4.

 

 

 

 

 

 

Issue 114: 

 What are the appropriate charges under the Standby and Supplemental Service (SBS) rate schedule?

Recommendation: 

 The appropriate SBS charges for 2012 are shown in Schedule 2, and the appropriate SBS charges for 2013 are shown in Schedule 3.  (Draper)

Staff Analysis: 

 The appropriate SBS charges for 2012 are shown in Schedule 2, and the appropriate SBS charges for 2013 are shown in Schedule 3.