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DATE: |
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TO: |
Office of Commission Clerk (Cole) |
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FROM: |
Division of Accounting and Finance (Barrett, Lester) Division of Economics (Draper) Office of the General Counsel (Barrera, Bennett) |
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RE: |
Docket No. 120001-EI – Fuel and purchased power cost recovery clause with generating performance incentive factor. |
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AGENDA: |
11/27/12 – Regular Agenda – Post-Hearing Decision – Participation is Limited to Commissioners and Staff |
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COMMISSIONERS ASSIGNED: |
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PREHEARING OFFICER: |
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SPECIAL INSTRUCTIONS: |
Decision must be rendered before 12/1/2012 in order to implement new factors for 1/1/2013, or the first billing cycle in 2013. |
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FILE NAME AND LOCATION: |
S:\PSC\AFD\WP\120001.RCM.DOC |
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As part of the continuing fuel and purchased power adjustment and generating performance incentive clause proceedings, an administrative hearing was held by the Commission on November 5, 2012. At the hearing, the Commission addressed several issues listed in Order No. PSC-12-0597-PHO-EI[1] (Prehearing Order) by making bench decisions. The Commission requested that briefs be filed to address the remaining issues, which were timely filed. For the purpose of this post-hearing recommendation, Issue 34 is the “close docket” issue. The numbering of all other issues will remain as set forth in the Prehearing Order.
The Federal Executive Agencies (FEA), Progress Energy Florida, Inc. (PEF), Florida Power & Light (FPL), the Office of Public Counsel (OPC), the Florida Industrial Power Users Group (FIPUG), and White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphates – White Springs (PCS) filed post hearing filings. The Florida Retail Federation (FRF) participated in the hearing phase of this case, but did not file a brief. On November 14, 2012, the Commission received notification from FPL, OPC, and FRF, of a stipulation for Issues 2C, 24B, 24C, and 24D.
This recommendation addresses Issue 1D for Progress Energy Florida (PEF). Issue 1D addresses the amount to be included in PEF’s 2013 projections related to potential insurance recoveries for Crystal River Unit 3 (CR3) from Nuclear Electric Insurance Limited (NEIL). The decision on this issue will affect several “fall-out” issues for fuel and capacity cost recovery.[2]
This recommendation also addresses the parties stipulations of Issues 2C, 24B, 24C, and 24D for Florida Power & Light (FPL). These four issues focus on what effect, if any, the Commission’s future decision in the FPL rate case (Docket No. 120015-EI) will have on the 2012 fuel docket. At the time the testimony was filed and the issues were set in the fuel docket (Docket No. 120001-EI), the schedule set by the Commission for the FPL rate case (Docket No. 120015-EI) included a final decision in the rate case prior to a final decision in the fuel docket. Once the FIPUG/FEA/FPL/SFHHA proposed Settlement Agreement in Docket No. 120015-EI was filed, the Commission schedule changed. Issues 30, 31, and 33 are fall-out issues based upon the Commission’s decision in all other FPL issues.
Issue 2C addresses the fuel factors for FPL’s new RTR-1 Rider. Issue 24B addresses the transfer of incremental security costs from the Capacity Cost Recovery Clause to base rates. Issue 24C addresses the amount to be included in the capacity cost recovery clause for recovery of jurisdictional non-fuel revenue requirements associated with West County Energy Center Unit 3 (WCEC-3) for the period January 2013 through December 2013. Issue 24D addresses the implementation of FPL’s proposed GBRA factor for its proposed Canaveral Modernization Project. The decision on these issues will affect “fall-out” Issues 30, 31, and 33 associated with capacity cost recovery.
Prior to the hearing, Commission staff conducted several informal meetings with the parties in an effort to resolve Issues 2C, 24B, 24C, and 24D. OPC, FPL, and FRF continued those discussions at the conclusion of the hearing and have reached a stipulation on each of the previously contested issues. The remaining parties took no position and did not participate in the post-hearing discussions. Staff has reviewed the stipulations and recommends the Commission approve them.
The Commission has jurisdiction over this subject matter pursuant to the provisions of Chapter 366, Florida Statutes (F.S.), including Sections 366.04, 366.05, and 366.06, F.S. This recommendation addresses the remaining issues in this case.
Issue 1D: What amount, if any, should PEF include in its 2013 projections to account for potential insurance recoveries for Crystal River Unit 3 from Nuclear Electric Insurance Limited?
Recommendation: PEF should include $327.6 million in its 2013 projections to account for potential insurance recoveries from NEIL. This amount is based on NEIL reimbursements assuming one delamination event at CR3. When the final amount of NEIL reimbursements is determined, the difference between that amount and the above amount, if any, should be applied to fuel costs. (Lester, Barrett)
Position of the Parties
PEF: Consistent with last year’s fuel clause recovery order, PEF should base the amount on known facts. Accordingly, PEF should include the remaining $327.6 million, which would be due under the NEIL policy assuming one event, in its 2013 projections.
OPC: No position.
FEA: FEA concurs with the position of FIPUG in addition to the discussion in FEA’s brief.
FIPUG: Given that the first two delamination events are separated by more than 1 year in time, and occurred at different portions of the containment building, these two events, and possibly others, should be considered separate events for the purposes of NEIL replacement fuel insurance coverage. Consequently, additional replacement fuel insurance factor dollars, beyond coverage for only one event, should be assumed when establishing the fuel factor.
PCS: The amount of fuel recoveries in 2013 should reflect all reimbursements authorized under the NEIL policy that has been funded by ratepayers. Upon a final disposition of PEF's insurance claims concerning the current CR3 extended outage, the Commission should require PEF to make a filing in an appropriate docket justifying the bases for its claims and ultimate cost reimbursement by NEIL.
Staff Analysis: This issue involves whether PEF should base its estimated NEIL reimbursements for 2013 on one delamination event at CR3 or two delamination events. PEF has based its projected amount on one event. The amount estimated to be reimbursed reduces estimated fuel costs and fuel factors for 2013 and would be larger if PEF assumed two events.
In the fall of 2009, during a refueling outage, PEF began work to replace the steam generators at CR3. On October 2, 2009, PEF discovered a delamination of layers of concrete for a wall in CR3’s containment building. Since then, CR3 has remained out of service. Should PEF decide to repair the plant, it would not return to service until 2014 or later.[3] (EXH 119, p. 46) On March 14, 2011, a second delamination was discovered during re-tensioning tendons in another wall of the containment building. (EXH 120) The Commission established Docket No. 100437-EI to investigate the prudence and reasonableness of PEF’s actions regarding the delamination and the prudence of PEF’s replacement power costs associated with the outage.[4]
For its CR3 unit, PEF has replacement power insurance and repair insurance with NEIL. (TR 75-76) In the 2010 and 2011 fuel adjustment clause proceedings, the Commission allowed PEF to recover replacement power costs associated with the CR3 outage in 2011 and 2012 fuel factors. These replacement power costs were calculated after deducting estimated amounts for NEIL replacement power reimbursements.[5] The policy has a 12 week deductible and pays for 110 weeks for one event or claim. The single event claim would have covered through August 2012. (TR 87, 104, 108, 112; EXH 121) The policy maximum for one event is $490 million for replacement power reimbursements. (TR 76-77, 79, 81, EXH 119)
NEIL has paid $162 million in replacement power reimbursements to PEF. The amount was paid in six payments from June 2010 to May 2011. These payments covered the period through December 17, 2010. NEIL also has paid $136 million in repair cost reimbursements. Of the $162 million replacement power reimbursements, PEF reduced fuel costs by $147.2 million in 2010 and 2011 and it reduced capacity costs by $3.7 million in 2010. The remaining $10.9 million was included in the 2012 true-up calculation and will reduce 2013 fuel factors. (TR 60, 76, 79, 81, 87-88, 107-108, 177; EXH 119)
In January 2012, PEF entered into a settlement agreement with OPC, FIPUG, FRF, PCS, and FEA.[6] This agreement addressed issues involving nuclear cost recovery, base rates, the CR3 outage, and fuel cost recovery. The PEF settlement calls for NEIL reimbursements for replacement power to reduce fuel costs. [7] (TR 75-76)
In calculating its 2013 fuel factors, PEF reduced fuel costs by $327.6 million. This amount is essentially the $490 million maximum policy amount for one event minus the $162 million already paid. PEF assumed it will receive NEIL reimbursements during 2013. (TR 60, 66, 76-77, 94-95, 108; EXH 21, EXH 119)
PEF stated it based its estimate on one event because any other estimation would be speculative. PEF noted the facts and information available today are the same as in last year’s fuel hearing. PEF further stated that the prudence, timing, substance, pace of the negotiations, and ultimate amount of recovery from NEIL are not at issue in this docket. In support of its argument that the best known information should be the basis for its projection, PEF cited to page 9 of Order No. PSC-11-0579-FOF-EI, issued Dec. 16, 2011 in last year’s fuel docket (110001-EI). In this order, the Commission stated that more facts surrounding the first delamination event were known than for the second and that PEF was reasonable to assume insurance proceeds based on a single event. PEF further argued that there is no evidence in the record of these proceedings to support a fuel factor calculation based on two event coverage from NEIL mainly because PEF does not have the facts needed to do the calculation. In the event that NEIL determines that there are two events and pays PEF accordingly, the Utility stated that it will, as always, true-up to actual costs.
FIPUG proposed this issue and presented its argument through cross examination of PEF witness Olivier, through exhibits, and through its brief. FIPUG believed it is reasonable for PEF to include estimated NEIL payments based on two events. FIPUG analyzed the NEIL policy and concluded that the two delaminations are covered. FIPUG suggested that the Commission seek details about the status of the pending 2009-10 PEF insurance claim for replacement fuel directly from NEIL but understands that NEIL will probably refuse any invitation by the Commission to discuss the pending claim. FIPUG also understands that asking PEF whether NEIL will conclude there was a single event or two events calls for speculation. FIPUG argued that additional replacement fuel insurance factor dollars, beyond coverage for only one event, should be assumed when establishing the fuel factor.
FEA stated that any additional costs to FEA will directly and negatively impact the military mission in Florida. FEA’s goal is to make sure that PEF is operating prudently, while at the same time, providing reliable service. Like FIPUG, FEA believed Progress should file two insurance claims for the delamination that occurred at the Crystal River Unit 3. FEA argued that the paid insurance claim would be a significant savings which in turn would be passed to FEA consumers.
PCS agrees with PEF’s $327 million imputation. PCS states that ratepayers should receive the full benefit of the September 2009 delamination which was a covered event under the NEIL policy. PCS argues that the reimbursement imputation that PEF proposes properly serves that purpose. PCS further states that PEF may have no control over NEIL’s process or the timing of the eventual disposition of the CR3 insurance claims. However, PCS recommends that the Commission require PEF to justify the basis for its claims in a separate docket if NEIL disallows coverage.
ANALYSIS
NEIL has stopped making reimbursements pending further review of PEF’s claim. (EXH 119) NEIL has not determined whether it will treat the second delamination as two events for claim purposes. (TR 92-95, 97-98) The claim process has been going on for approximately three years. (TR 99) If NEIL determines two events, on the date a second event is determined to have occurred, reimbursements for the first event would stop and the process would start over. Therefore, the two event scenario does not necessarily mean that each event will result in $490 million in reimbursements. (TR 96-98, 104-105) The first delamination was covered by a NEIL policy for the term April 1, 2009 to April 1, 2010 and the second delamination would be covered by a NEIL policy for the term April 1, 2010 to April 1, 2011. (TR 97-98; EXH 121, EXH 122) Regarding the determination of one event or two events, PEF and NEIL will begin non-binding mediation later this year, which, if unsuccessful, could lead to binding arbitration. (TR 60, 95, 97, 111)
The best information available to PEF today is that NEIL has acknowledged one delamination event and it has not reached a determination regarding a second event. (TR 94-95) PEF witness Olivier stated that assuming receipts of $327.6 million for 2013 is reasonable, given the policy maximum and that NEIL has made payments. In the alternative, she also stated that it would be reasonable to assume no NEIL reimbursements would be received in 2013 given that none were received in 2012 and given that accounting guidance requires certainty. (TR 60, 66, 76-77, 94-95, 108, 110; EXH 21, EXH 119) In its brief, FIPUG acknowledged that NEIL, at this time, has shared no details of its investigation with anyone including PEF. Estimating the replacement power reimbursements based on two events would not be feasible because the starting point – start date – for the second event is unknown and would be speculative. (TR 97-98, 104-105)
According to witness Olivier, PEF is seeking the maximum amount of replacement power reimbursements, including a claim for two events. (TR 116-117) Staff notes that all proceeds from NEIL – for replacement power and for repair – will be applied to benefit customers. (TR 107)
In its brief, FIPUG also raises questions about NEIL’s handling of the PEF claim. FIPUG suggested that the Commission question NEIL as to why it has taken more than three years to resolve PEF’s claim. FIPUG listed eight questions it believes the Commission should require NEIL to answer. (FIPUG BR4-5) FIPUG implied that a reason for the delay is that NEIL is not authorized to conduct business in the State of Florida. (FIPUG BR 4-5) PEF argued that these issues are beyond the scope of this fuel proceeding. Staff believes that the questions raised to the insurance company are beyond the Commission’s jurisdiction. The Commission’s jurisdiction is limited to public utilities as that term is defined by statute. Insurance companies are not regulated by the Commission.
However, the Commission can review whether a utility has prudently procured insurance. It does not appear that FIPUG has raised that issue in this docket. As noted by PCS Phosphate in its brief, this issue may be appropriate in a separate docket if NEIL disallows coverage. That event has not occurred. Accordingly, staff does not believe Commission action on FIPUG’s recommendation to require NEIL to answer questions should be acted upon.
CONCLUSION
Staff notes that whether NEIL will pay PEF based on one delamination event or two is the subject of mediation and possibly binding arbitration later this year. PEF witness Olivier stated that PEF will work to maximize the amount of NEIL proceeds. All NEIL replacement power proceeds will be applied to reduce fuel costs. The Commission will examine the outage and replacement power costs associated with the CR3 steam generator replacement project in Docket No. 100437-EI.
The appropriate amount is $327.6 million for calculating 2013 fuel factors. This amount is based on the assumption of NEIL payments based on one delamination event at CR3. When the final amount of NEIL payments is determined, the difference between that amount and the above amount, if any, should be applied to fuel costs.
Issue 2C: Should FPL’s proposed fuel factors for the new RTR-1 Rider be approved?
Recommendation: Staff recommends the Commission approve the stipulation below. The RTR-1 Rider charges and credits presented in Attachment A reflect the stipulation below. If the Commission approves the stipulation below, it should approve Attachment A. (Draper, Bennett)
Stipulation: In its rate case, Docket No. 120015-EI, FPL proposed a new optional residential time-of-use base rate rider, RTR-1. Under the RTR-1 Rider as proposed in the rate case, the standard residential base energy and fuel factors will be adjusted by applying adders to reflect on-peak usage and credits to reflect off-peak usage. The RTR-1 Rider was approved at the commencement of the hearing by the Commissioners as stipulated Issue 146. Prior to the evidentiary hearing in Docket No. 120015-EI, FPL, FIPUG, FEA, and SFHHA entered into a proposed settlement agreement which they presented to the Commission as a proposed settlement of all issues in Docket No. 120015-EI. The RTR-1 rider is also included in the proposed settlement agreement between FPL, FEA, FIPUG and SFHHA as Tariff Sheet 8.203. The Commission will not have reached a decision and issued a final order in Docket No. 120015-EI prior to its decision in this Docket No. 120001-EI. However, both the stipulation and proposed settlement agreement contemplate that the RTR-1 rider will become effective after FPL’s billing system has been modified to accommodate the rider, which FPL expects to be completed in mid-2013. In Docket No. 120001-EI, FPL has provided fuel factors that correspond to both the RST-1 base rate and the RTR-1 rider.
Accordingly, the Commission should approve the fuel factors for both the RST-1 base rate and the RTR-1 rider subject to the following limitations. The existing residential time-of-use base rate (RST-1) will remain in effect until a final order has been issued in Docket No. 120015-EI approving the RTR-1 Rider. The Commission should direct FPL to apply the fuel factors for the RST-1 base rate until the RTR-1 rider goes into effect following the issuance of the final order in Docket No. 120015-EI, and then to switch to the fuel factors for the RTR-1 rider with respect to customers who elect to take service under that rider. It is acknowledged that the OPC, FRF and others have objected to the proposed settlement agreement signed by FPL, FIPUG, SFHHA and FEA in Docket No. 120015-EI and that agreement to the stipulation language on this issue does not constitute waiver by OPC, FRF, or other parties of their objections to the proposed settlement agreement and to any orders impacted by the Commission’s consideration of the proposed settlement agreement.
Issue 8: What are the appropriate fuel adjustment true-up amounts for the period January 2011 through December 2011?
Recommendation: The appropriate fuel adjustment true-up amount for the period January 2011 through December 2011 for PEF is a $201,362,994 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Barrett, Lester)
Position of the Parties
PEF: $201,362,994 under-recovery.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate fuel adjustment true-up amount for the period January 2011 through December 2011.
PEF witness Garrett asserted that the projected end of year balance in 2011 for fuel was $123,159,202 under-recovery. (TR 175) The actual ending balance as of December 31, 2011 for true-up purposes is $324,522,196 under-recovery. When these figures are netted, the final fuel adjustment true-up amount for January through December 2011 is $201,362,994 under-recovery. (Garrett, TR 175; EXH 16)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate fuel adjustment true-up amount for the period January 2011 through December 2011 for PEF is a $201,362,994 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 9: What are the appropriate fuel adjustment actual/estimated true-up amounts for the period January 2012 through December 2012?
Recommendation: The appropriate fuel adjustment actual/estimated true-up amount for the period January 2012 through December 2012 for PEF is a $55,996,082 over-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Barrett, Lester)
Position of the Parties
PEF: $55,996,082 over-recovery.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate fuel adjustment actual/estimated true-up amounts for the period January 2012 through December 2012.
PEF witness Olivier asserted that the fuel adjustment actual/estimated true-up amounts for the period January 2012 through December 2012 included a projected $145,366,912 under-recovery. (TR 65) When this figure is netted against the final fuel adjustment true-up amount for January through December 2011, which is a $201,362,994 under-recovery, the appropriate fuel adjustment actual/estimated true-up amount for the period January 2012 through December 2012 is a $55,996,082 over-recovery. (Olivier, TR 65; Garrett, TR 175; EXHs 16, 20)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate fuel adjustment actual/estimated true-up amount for the period January 2012 through December 2012 for PEF is a $55,996,082 over-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 10: What are the appropriate total fuel adjustment true-up amounts to be collected/refunded from January 2013 to December 2013?
Recommendation: The appropriate total fuel adjustment true-up amount for the period January 2013 through December 2013 for PEF is a $145,366,912 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Barrett, Lester)
Position of the Parties
PEF: $145,366,912 under-recovery.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate total fuel adjustment true-up amounts to be collected/refunded from January 2013 to December 2013.
The appropriate total fuel adjustment true-up amount to be collected/refunded from January 2013 to December 2013 is calculated by summing the fuel adjustment values identified in the prior two issues (Issues 8 & 9). PEF witness Olivier asserted that the appropriate total fuel adjustment true-up amount for the period January 2013 through December 2013 is a $145,366,912 under-recovery. (Olivier, TR 59, 65; EXH 20)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate total fuel adjustment true-up amount for the period January 2013 through December 2013 for PEF is a $145,366,912 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 11: What are the appropriate projected total fuel and purchased power cost recovery amounts for the period January 2013 through December 2013?
Recommendation: The appropriate projected total fuel and purchased power cost recovery amount for PEF for the period January 2013 through December 2013 is $1,234,709,629. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Barrett, Lester)
Position of the Parties
PEF: $1,234,709,629.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate projected total fuel and purchased power cost recovery amounts for the period January 2013 through December 2013.
Schedule E-1, Line 27 of Exhibit MO-2, Part 2 shows that PEF has projected its total fuel and purchased power cost recovery amount for the period January 2013 through December 2013 to be $1,234,709,629. (EXH 20)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate projected total fuel and purchased power cost recovery amount for the period January 2013 through December 2013 is $1,234,709,629. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 18: What are the appropriate projected net fuel and purchased power cost recovery and Generating Performance Incentive amounts to be included in the recovery factor for the period January 2013 through December 2013?
Recommendation: The appropriate projected net fuel and purchased power cost recovery and generating performance incentive amount for PEF to be included in the recovery factor for the period January 2013 through December 2013 is $1,382,565,768. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Barrett, Lester)
Position of the Parties
PEF: $1,382,565,768.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate projected net fuel and purchased power cost recovery and generating performance incentive amount to be included in the recovery factor for the period January 2013 through December 2013.
Schedule E-1, Line 33 of Exhibit MO-2, Part 2 shows that PEF has projected its total fuel and purchased power cost recovery amount for the period January 2013 through December 2013 to be $1,382,565,768. (EXH 20)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate projected net fuel and purchased power cost recovery and Generating Performance Incentive amounts to be included in the recovery factor for the period January 2013 through December 2013 is $1,382,565,768. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 20: What are the appropriate levelized fuel cost recovery factors for the period January 2013 through December 2013?
Recommendation: The appropriate levelized fuel cost recovery factor for PEF for the period January 2013 through December 2013 is 3.698 cents per kWh. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Barrett, Lester)
Position of the Parties
PEF: 3.698 cents per kWh (adjusted for jurisdictional losses).
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate levelized fuel cost recovery factor for the period January 2013 through December 2013.
PEF witness Olivier asserted that the Company is projecting a levelized fuel cost recovery factor of 3.698 cents per kWh (adjusted for jurisdictional losses) for the period January 2013 through December 2013. (TR 64; EXH 20)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate levelized fuel cost recovery factor for PEF for the period January 2013 through December 2013 is 3.698 cents per kWh. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 22: What are the appropriate fuel cost recovery factors for each rate class/delivery voltage level class adjusted for line losses?
Recommendation: The appropriate fuel cost recovery factors for PEF for each rate class/delivery voltage level class adjusted for line losses are set forth in Attachment B. If the Commission modifies the staff recommendation in Issue 1D, PEF should be ordered to file revised Schedules E within three business days of the Commission vote showing all calculations of the fuel factors implementing the vote for administrative approval by staff. (Draper)
Position of the Parties
PEF: The appropriate factors are those included on page 15 of the pre-hearing order, Order No. PSC-12-0597-PHO-EI.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate fuel cost recovery factors for each rate class/delivery voltage level class adjusted for line losses.
Schedule E-1-D of Exhibit MO-2, Part 2 shows PEF’s 2013 projected fuel cost recovery factors for each rate class/delivery voltage level class adjusted for line losses. (EXH 20)
Staff reviewed PEF’s testimony and exhibits for this issue. Staff believes the appropriate fuel cost recovery factors for each rate class/delivery voltage level class adjusted for line losses are set forth in Attachment B. If the Commission modifies the staff recommendation in Issue 1D, PEF should be ordered to file revised Schedules E within three business days of the Commission vote showing all calculations of the fuel factors implementing the vote for administrative approval by staff.
Issue 24B: Should an adjustment be made to transfer incremental security costs from the Capacity Cost Recovery Clause to base rates?
Recommendation: Staff recommends the Commission approve the stipulation below. (Bennett)
Stipulation: The issue of the transfer of incremental security costs to base rates is in Issues 67 and 68 in the pending rate case in Docket 120015-EI. Since the Commission will not have reached a decision on this issue in the rate case prior to the decision in Docket 120001-EI, incremental security rates should be treated per the terms of the Stipulation and Settlement Agreement approved in the prior FPL rate case, Docket No. 080677-EI. Once the decision has been made by the Commission in Docket No. 120015-EI or in the event FPL implements a base rate increase prior to a Commission decision in 120015-EI, (as permitted by Section 366.06(3), F.S.), there is a potential for FPL to recover its incremental security costs in both base rates and in the capacity cost recovery factors. Accordingly, any over recovery resulting from the timing of the Commission’s decision in Docket No. 120015-EI related to this issue will be handled through the regular true-up process or by mid-course correction.
It is acknowledged that the OPC, FRF and others have objected to the proposed settlement agreement signed by FPL, FIPUG, SFHHA and FEA in Docket No. 120015-EI and that agreement to the stipulation language on this issue does not constitute waiver by OPC and FRF of those objections to the proposed settlement agreement or orders impacted by the Commission’s consideration of the proposed settlement agreement.
Issue 24C: What amount should be included in the capacity cost recovery clause for recovery of jurisdictional non-fuel revenue requirements associated with West County Energy Center Unit 3 (WCEC-3) for the period January 2013 through December 2013?
Recommendation: Staff recommends the Commission approve the stipulation below. (Bennett)
Stipulation: The Commission will not have addressed or reached a decision in Docket 120015-EI, until after the date of the Commission's decision in Docket 120001-EI. The costs associated with the WCEC-3 should be treated in accordance with the terms of the Stipulation and Settlement approved in Docket No. 080677-EI, the prior FPL rate case. The Stipulation and Settlement Agreement approved in Docket No. 080677-EI contemplated the cost recovery of the revenue requirements associated with WCEC-3 would be limited to the fuel savings created by this plant. The recovery through the capacity clause of revenue requirements for WCEC-3 limited by fuel savings should continue until the Commission renders its decision in Docket No. 120015-EI. From the date the Commission renders its decision in Docket No. 120015-EI forward, the collection of revenue requirements for WCEC-3 will be as directed by the Commission in Docket No. 120015-EI. No party waives any rights, positions or arguments it might otherwise have, at the time the Commission’s decision in Docket No. 120015 becomes final and effective, which shall be on the date of the Commission vote, with regard to any alleged retroactive application or the prospective application of the full amount of the WCEC3 revenue requirements. Any over or under recovery resulting from the timing of the Commission’s decision in Docket No. 120015-EI related to this issue should be handled through the regular true-up process or by mid-course correction.
It is acknowledged that the OPC, FRF and others have objected to the proposed settlement agreement signed by FPL, FIPUG, SFHHA and FEA in Docket No. 120015-EI and that agreement to the stipulation language on this issue does not constitute waiver by OPC and FRF of those objections to the proposed settlement agreement or orders impacted by the Commission’s consideration of the proposed settlement agreement.
Issue 24D: If the Commission approves the Proposed FPL Rate Case Settlement Agreement that was filed in Docket No. 120015-EI on August 15, 2012 (the “Proposed Settlement Agreement”), should the Commission approve FPL’s proposed GBRA factor of 3.527 percent for the Canaveral Modernization Project?
Recommendation: Staff recommends the Commission approve the stipulation below. (Bennett)
Stipulation: The Commission will not have addressed or reached a decision in Docket 120015-EI, until after the date of the Commission's decision in Docket 120001-EI. Accordingly, the Commission should reserve ruling on this issue until the Commission has issued its final order in Docket No. 120015-EI at which time the Commission should schedule a decision on this issue for a regular agenda conference that would permit the approved GBRA factor to be implemented when the Canaveral Modernization Project goes into service. The decision on this issue will be made in Docket No. 130001-EI based on the amount, if any, that the Commission approves for GBRA recovery in Docket No. 120015-EI.
It is acknowledged that the OPC, FRF and others have objected to the proposed settlement agreement signed by FPL, FIPUG, SFHHA and FEA in Docket No. 120015-EI and that agreement to the stipulation language on this issue does not constitute waiver by OPC and FRF of those objections to the proposed settlement agreement or orders impacted by the Commission’s consideration of the proposed settlement agreement.
Issue 27: What are the appropriate capacity cost recovery true-up amounts for the period January 2011 through December 2011?
Recommendation: The appropriate capacity cost recovery true-up amount for PEF for the period January 2011 through December 2011 is a $4,389,550 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Lester, Barrett)
Position of the Parties
PEF: $4,389,550 under-recovery.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: With respect to PEF, all capacity cost recovery amounts and the resultant capacity factors for the period January 2013 through December 2013 must reflect the removal all of 2011 expenditures, including carrying costs, for the CR3 EPU project..
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate capacity adjustment true-up amount for the period January 2011 through December 2011.
PEF witness Garrett asserted that the projected end of year balance in 2011 for capacity was a $20,667,503 over-recovery. (TR 175) The actual ending balance as of December 31, 2011 for true-up purposes was a $16,277,953 over-recovery. When these figures are netted, the final fuel adjustment true-up amount for January through December 2011 is a $4,389,550 under-recovery. (Garrett, TR 175; Olivier, TR 61; EXH 17)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate capacity cost recovery true-up amount for the period January 2011 through December 2011 is a $4,389,550 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 28: What are the appropriate capacity cost recovery actual/estimated true-up amounts for the period January 2012 through December 2012?
Recommendation: The appropriate capacity cost recovery actual/estimated true-up amount for PEF for the period January 2012 through December 2012 is a $6,096,072 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Lester, Barrett)
Position of the Parties
PEF: $6,096,072 under-recovery.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: No position.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate capacity cost recovery actual/estimated true-up amounts for the period January 2012 through December 2012.
Schedule E12-B, Line 52 of Exhibit MO-2, Part 3 shows that PEF has estimated its capacity cost recovery actual/estimated true-up amounts for the period January 2012 through December 2012 to be a $6,096,072 under-recovery. (EXH 21)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate capacity cost recovery actual/estimated true-up amount for the period January 2012 through December 2012 is a $6,096,072 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 29: What are the appropriate total capacity cost recovery true-up amounts to be collected/refunded during the period January 2013 through December 2013?
Recommendation: The appropriate total capacity cost recovery true-up amount for PEF for the period January 2013 through December 2013 is a $10,485,622 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Lester, Barrett)
Position of the Parties
PEF: $10,485,622 under-recovery.
OPC: No position.
FEA: No position.
FIPUG: No position.
PCS: With respect to PEF, all capacity cost recovery amounts and the resultant capacity factors for the period January 2013 through December 2013 must reflect the removal all of 2011 expenditures, including carrying costs, for the CR3 EPU project.
Staff Analysis: This is a “fallout” issue for PEF to address the appropriate total capacity cost recovery true-up amounts to be collected/refunded from January 2013 to December 2013.
The appropriate total capacity cost recovery true-up amounts to be collected/refunded from January 2013 to December 2013 is calculated by summing the amounts identified in the prior two issues (Issues 27 & 28). PEF witness Olivier asserted that the appropriate total capacity cost recovery true-up amount for the period January 2013 through December 2013 is a $10,485,622 under-recovery. (Olivier, TR 61, 71) In addition, Schedule E12-B, Line 56 of Exhibit MO-2, Part 3 shows that PEF has estimated its total capacity cost recovery true-up amounts to be collected/refunded from January 2013 to December 2013 to be a $10,485,622 under-recovery. (EXH 21)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate total capacity cost recovery true-up amounts for the period January 2013 through December 2013 is a $10,485,622 under-recovery. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 30: What are the appropriate projected total capacity cost recovery amounts for the period January 2013 through December 2013?
Recommendation (FPL): The appropriate projected total capacity cost recovery amount for the period January 2013 through December 2013 is $518,848,705, excluding prior period true-ups, revenue taxes, nuclear cost recovery amount, and WCEC-3 jurisdictional non-fuel revenue requirements. (Lester, Barrett)
Recommendation (PEF): The appropriate projected total capacity cost recovery amount for the period January 2013 through December 2013 is $385,072,136. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Lester, Barrett)
Position of the Parties
FPL: $518,848,705 jurisdictionalized capacity payments for the period January 2013 through December 2013 excluding prior period true-ups, revenue taxes, nuclear cost recovery amount, and WCEC-3 jurisdictional non-fuel revenue requirements. This amount is subject to adjustment pursuant to Issue 24B.
PEF: $385,072,136.
OPC: Capacity cost recovery amounts and related factors must be based on a lawful, final order in Docket No. 120015-EI prior to FPL implementing changes in rates as a result of this Docket.
FEA: No position
FIPUG: No position
PCS: No position.
Staff Analysis: This issue addresses the appropriate projected total capacity cost recovery amounts for the period January 2013 through December 2013.
FPL
Exhibit TJK-8, attached to the direct testimony of witness Terry J. Keith, shows FPL’s projected 2013 Capacity Payments. Line 10 of Column 14 of this exhibit shows that FPL estimated its total jurisdictional capacity payments for the period January 2013 through December 2013 to be $518,848,705. (EXH 13)
Staff reviewed FPL’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate projected total capacity cost recovery amounts for the period January 2013 through December 2013 is $518,848,705, excluding prior period true-ups, revenue taxes, nuclear cost recovery amount, and WCEC-3 jurisdictional non-fuel revenue requirements.
PEF
For PEF, Schedule E12-A, Line 33 of Exhibit MO-2, Part 3 (Revised on 10/2/12) shows that PEF estimated its total capacity cost recovery amounts for the period January 2013 through December 2013 to be $385,072,136. (EXH 21)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate projected total capacity cost recovery amounts for the period January 2013 through December 2013 is $385,072,136. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 31: What are the appropriate projected net purchased power capacity cost recovery amounts to be included in the recovery factor for the period January 2013 through December 2013?
Recommendation (FPL): The appropriate projected net purchased power capacity cost recovery amount to be included in the recovery factor for the period January 2013 through December 2013 is $864,438,406, including prior period true-ups, revenue taxes, and the nuclear cost recovery amount. (Lester, Barrett)
Recommendation (PEF): The appropriate projected net purchased power capacity cost recovery amount to be included in the recovery factor for the period January 2013 through December 2013 is $395,842,560. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Lester, Barrett)
Position of the Parties
FPL: The projected net purchased power capacity cost recovery amount to be recovered over the period January 2013 through December 2013 is $864,438,406 including prior period true-ups, revenue taxes, the nuclear cost recovery amount, and the projected fuel savings for WCEC3. This amount is subject to adjustment pursuant to Issue 24C.
PEF: The appropriate projected net purchased power capacity cost recovery amount, excluding nuclear cost recovery, is $395,842,560. The appropriate nuclear cost recovery amount is that which is approved in Issue 23A.
OPC: Capacity cost recovery amounts and related factors must be based on a lawful, final order in Docket No. 120015-EI prior to FPL implementing changes in rates as a result of this Docket.
FEA: No position
FIPUG: No position
PCS: No position.
Staff Analysis: This issue addresses the appropriate projected net purchased power capacity cost recovery amounts to be included in the recovery factor for the period January 2013 through December 2013.
FPL
Exhibit TJK-8, attached to the direct testimony of witness Terry J. Keith, shows FPL’s projected 2013 Capacity Payments. Line 16 of Column 14 of this exhibit shows that FPL estimated its total jurisdictional capacity payments for the period January 2013 through December 2013 to be $731,449,407. FPL provided an exhibit showing the WCEC-3 projected fuel savings for 2013 of $132,989,000. These amounts sum to $864,438,406. (EXH 13, EXH 116)
Staff reviewed FPL’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate projected net purchased power capacity cost recovery amounts to be included in the recovery factor for the period January 2013 through December 2013 is $731,449,407, including prior period true-ups, revenue taxes, and the nuclear cost recovery amount.
PEF
For PEF, Schedule E12-A, Line 37 of Exhibit MO-2, Part 3 (Revised on 10/2/12) shows that PEF estimated its net purchased power capacity cost recovery amounts to be included in the recovery factor for the period January 2013 through December 2013 to be $395,842,560. (EXH 21)
Staff reviewed PEF’s testimony, exhibits, and calculations for this issue. Staff believes the appropriate projected net purchased power capacity cost recovery amounts to be included in the recovery factor for the period January 2013 through December 2013 is $395,842,560. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision.
Issue 33: What are the appropriate capacity cost recovery factors for the period January 2013 through December 2013?
Recommendation (FPL): The appropriate capacity cost recovery factors for the period January 2013 through December 2013 are set forth in Attachment C. (Draper)
Recommendation (PEF): The appropriate capacity cost recovery factors for the period January 2013 through December 2013 are set forth in Attachment D. If the Commission modifies staff’s recommendation in Issue 1D, PEF should revise its filings to reflect the Commission’s decision. (Draper)
Position of the Parties
FPL: The January 2013 through December 2013 factors are as follows:
PEF: The factors submitted in revised Schedule E12-E, column 10, in Exhibit MO-2, Part 3, after the Commission’s vote on the appropriate nuclear cost recovery amounts to be included in the Capacity Cost Recovery Clause
OPC: Capacity cost recovery amounts and related factors must be based on a lawful, final order in Docket No. 120015-EI prior to FPL implementing changes in rates as a result of this Docket.
FEA: No position.
FIPUG: No position.
PCS: With respect to PEF, all capacity cost recovery amounts and the resultant capacity factors for the period January 2013 through December 2013 must reflect the removal all of 2011 expenditures, including carrying costs, for the CR3 EPU project.
Staff Analysis: This issue addresses the appropriate capacity cost recovery factors for the period January 2013 through December 2013.
The FPL capacity factors shown in Attachment B reflect the capacity factors FPL filed on November 1, 2012, and were entered into the hearing as Exhibit 116. The factors reflect the stipulation for Issues 24B and 24C.
Staff notes that both FPL’s and PEF’s capacity factors are subject to revision based on the Commission’s vote on November 26, 2012 on the appropriate nuclear cost recovery amounts to be included in the capacity cost recovery clause. Stipulated issues 23A and 24A provide that Commission staff is granted administrative authority to verify that the capacity factors are consistent with the Commission’s vote on November 26, 2012. In addition, based on the stipulation for 23A for PEF, staff will verify that the capacity factors are consistent with page 147 of Order No. PSC-12-0104-FOF-EI.
Issue 34:
Should this docket be closed?
Recommendation:
No. The Fuel and Purchased Power Cost Recovery Clause is an on-going docket and should remain open. (Barrera)
Staff Analysis:
The Fuel and Purchased Power Cost Recovery Clause is an on-going docket and should remain open.
Attachment A
2013 RTR-1 Fuel Charges/Credits (Issue 2C)
|
January 2013 through May 2013 |
||
|
cents per kWh |
||
|
Rate Schedule |
January-March / November-December |
April-October |
|
RTR-1 On-Peak |
0.579 |
1.596 |
|
RTR-1 Off-Peak |
(0.212) |
(0.819) |
|
June 2013 through December 2013 |
||
|
cents per kWh |
||
|
Rate Schedule |
January-March / November-December |
April-October |
|
RTR-1 On-Peak |
0.551 |
1.517 |
|
RTR-1 Off-Peak |
(0.201) |
(0.777) |
Attachment B
2013 Fuel Factors for PEF (Issue 22)
|
Fuel Cost Factors (cents/kWh) |
||||||
|
|
Time of Use |
|||||
|
Group |
Delivery Voltage Level |
First Tier Factor |
Second Tier Factors |
Levelized Factors |
On- Peak |
Off-Peak |
|
A |
Transmission |
-- |
-- |
3.629 |
5.128 |
2.914 |
|
B |
Distribution Primary |
-- |
-- |
3.666 |
5.180 |
2.944 |
|
C |
Distribution Secondary |
3.393 |
4.393 |
3.703 |
5.232 |
2.974 |
|
D |
Lighting |
-- |
-- |
3.396 |
-- |
-- |
If the Commission modifies the staff recommendation in Issue 1D in any other manner, PEF should be ordered to file revised Schedules E within three business days of the Commission vote showing all calculations of the fuel factors implementing the vote for administrative approval by staff.
Attachment C
2013 Capacity Factors for FPL (Issue 33)
|
RATE SCHEDULE |
Capacity Recovery Factor ($/KW) |
Capacity Recovery Factor ($/kwh) |
RDC ($/KW) |
SDD ($/KW) |
|
RS1/RST1 |
- |
0.00938 |
- |
- |
|
GS1/GST1/WIES1 |
- |
0.00793 |
- |
- |
|
GSD1/GSDT1/HLFT1 |
2.90 |
- |
- |
- |
|
OS2 |
- |
0.00811 |
- |
- |
|
GSLD1/GSLDT1/CS1/CST1/HLFT2 |
2.99 |
- |
- |
- |
|
GSLD2/GSLDT2/CS2/CST2/HLFT3 |
3.05 |
- |
- |
- |
|
GSLD3/GSLDT3/CS3/CST3 |
3.35 |
- |
- |
- |
|
SST1T/ISST1T |
- |
- |
$0.40 |
$0.19 |
|
SST1D1/ SST1D2/SST1D3/ISST1D |
- |
- |
$0.41 |
$0.20 |
|
CILC D/CILC G |
3.50 |
- |
- |
- |
|
CILC T |
3.38 |
- |
- |
- |
|
MET |
3.48 |
- |
- |
- |
|
OL1/SL1/PL1 |
- |
0.00254 |
- |
- |
|
SL2, GSCU1 |
- |
0.00591 |
- |
- |
Attachment D
2013 Capacity Factors for PEF (Issue 33)
|
PEF - Capacity Cost Recovery Factors |
|
|
Rate Class |
Capacity Cost Recovery Factors (cents per kWh) |
|
Residential |
1.738 |
|
General Service Non-Demand |
|
|
Secondary Voltage |
1.379 |
|
Primary Voltage |
1.365 |
|
Transmission Voltage |
1.351 |
|
General Service 100% Load Factor |
0.948 |
|
General Service Demand |
|
|
Secondary Voltage |
1.184 |
|
Primary Voltage |
1.172 |
|
Transmission Voltage |
1.160 |
|
Curtailable |
|
|
Secondary Voltage |
0.893 |
|
Primary Voltage |
0.884 |
|
Transmission Voltage |
0.875 |
|
Interruptible |
|
|
Secondary Voltage |
0.961 |
|
Primary Voltage |
0.951 |
|
Transmission Voltage |
0.942 |
|
Lighting |
0.252 |