DATE:	November 29, 2012
TO:	Office of Commission Clerk (Cole)
FROM:	Office of the General Counsel (M. Brown) Division of Economics (King) Division of Engineering (Ellis, Watts)
RE:	Docket No. 120237-EU – Joint petition for approval of territorial agreement in Alachua County by Central Florida Electric Cooperative, Inc., and City of Newberry, a Florida municipal corporation.
AGENDA:	12/10/12 – Regular Agenda – Proposed Agency Action – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Brown
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			None
FILE NAME AND LOCATION:			S:\PSC\ECO\WP\120237.RCM.DOC

 

 Case Background

            On September 21, 2012, Central Florida Electric Cooperative, Inc., (CFEC) and the City of Newberry (Newberry) filed a joint petition for approval of a territorial agreement (agreement) in Alachua County.  Newberry and CFEC have been serving customers in the city limits without a territorial agreement since approximately 1995. The proposed agreement (Attachment A) would clearly define the boundaries of each party to allow for improvement or expansion by Newberry or CFEC without the threat of territorial disputes arising in the future.  If approved, the agreement would result in the transfer of 18 customers from CFEC to Newberry.  These customers were sent a notification letter regarding the territorial agreement and no customer has filed comments in response to the notification.

 

            This recommendation addresses the parties’ joint petition for approval of the territorial 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 for approval of the territorial agreement in Alachua County between CFEC and Newberry?

Recommendation: 

 Yes.  The territorial agreement between CFEC and Newberry will not cause a detriment to the public interest; therefore, it should be approved. (M. Brown, King)

Staff Analysis: 

 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.  Rule 25-6.0440(2), F.A.C., states that 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). 

Newberry and CFEC have been serving customers in the city limits without a territorial agreement since approximately 1995.  The agreement, filed on September 21, 2012, clearly defines the boundaries of each party to allow the utilities to improve and expand their territories without the threat of future territorial disputes.  The agreement would become effective upon the Commission’s approval and would remain in place for 15 years.  In addition, the parties believe that the modification to the territorial boundaries will prevent duplication of capital expenditures within the proposed area of transfer.  Specifically, in order to serve Nations Park, a newly constructed youth baseball stadium owned by the City and located in the south side of the city limits, CFEC or Newberry would need to install a three-phase line.  Since Newberry has a right to serve its own facilities and the cost for Newberry to extend service was estimated to be less than CFEC’s cost, CFEC agreed that Newberry should provide service to Nations Park.  

Further, in response to staff’s data request, the parties explained that:

·        the modifications to the boundaries will increase operational efficiencies by shortening the response time for after-hour emergencies, repairs, and maintenance since Newberry’s service area is approximately 2.5 square miles and its maintenance yard is only 2 miles from any point in its distribution system;

·        the modifications to the territorial boundaries will improve customer service for the proposed transferred customers due to the proximity and availability of Newberry services to their residences;

·        although 15 of the 18 proposed transferred customer accounts reside outside of the city limits of Newberry, the parties claimed that each customer has the right to participate in all city commission meetings to address issues with Newberry's electric utility;

·        no customer has filed comments in response to the notification letters sent regarding the territorial agreement; and,

·        if a customer is required to have a deposit with CFEC, the amount of the deposit collected by Newberry will not exceed the deposit amount imposed by CFEC.  Newberry will not request a deposit if the customer was not required to have a deposit with CFEC.

            The parties indicated that the transfer of the 18 customers and related facilities would be completed within 12 months.  The parties also provided residential bill comparisons for the period January 2010 through March 2012, which indicate that CFEC’s and Newberry’s bills are similar.  Thus, the 18 customers being transferred will see only minimal bill impacts.

 

            It appears that the proposed agreement eliminates the potential uneconomic duplication of facilities and will not cause a decrease in the reliability of electric service.  Therefore, based on the above, staff believes that the proposed territorial agreement will not cause a detriment to the public interest and should be approved. 

 

Issue 2: 

 Should this docket be closed?

Recommendation: 

 Yes.  If no person whose interests are substantially affected timely files a protest to the Commission’s Proposed Agency Action Order, this docket should be closed upon issuance of a Consummating Order.  (Brown)

Staff Analysis: 

 If no person whose interests are substantially affected timely files a protest to the Commission’s Proposed Agency Action Order, this docket should be closed upon issuance of a Consummating Order.