Commission Conference Agenda

FLORIDA PUBLIC SERVICE COMMISSION

COMMISSION CONFERENCE AGENDA

CONFERENCE DATE AND TIME: Thursday, October 24, 2013, 9:30 a.m.

LOCATION: Betty Easley Conference Center, Joseph P. Cresse Hearing Room 148

DATE ISSUED: October 14, 2013

NOTICE

Persons affected by Commission action on certain items on this agenda may be allowed to address the Commission, either informally or by oral argument, when those items are taken up for discussion at this conference. These items are designated by double asterisks (**) next to the agenda item number.

To participate informally, affected persons need only appear at the agenda conference and request the opportunity to address the Commission on an item listed on agenda. Informal participation is not permitted: (1) on dispositive motions and motions for reconsideration; (2) when a recommended order is taken up by the Commission; (3) in a rulemaking proceeding after the record has been closed; or (4) when the Commission considers a post-hearing recommendation on the merits of a case after the close of the record. The Commission allows informal participation at its discretion in certain types of cases (such as declaratory statements and interim rate orders) in which an order is issued based on a given set of facts without hearing.

See Rule 25-22.0021, F.A.C., concerning Agenda Conference participation and Rule 25-22.0022, F.A.C., concerning oral argument.

Agendas, staff recommendations, and vote sheets are available from the PSC Web site, http://www.floridapsc.com, by selecting Conferences & Meeting Agendas and Commission Conferences of the FPSC. Once filed, a verbatim transcript of the Commission Conference will be available from this page by selecting the conference date, or by selecting Clerk's Office and the Item's docket number, (you can then advance to the Docket Details page and the Document Filings Index for that particular docket). An official vote of "move staff" denotes that the Item's recommendations were approved. If you have any questions, contact the Office of Commission Clerk at (850) 413-6770 or e-mail the clerk at Clerk@psc.state.fl.us.

In accordance with the American with Disabilities Act, persons needing a special accommodation to participate at this proceeding should contact the Office of Commission Clerk no later than five days prior to the conference at 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850, via 1-800-955-8770 (Voice) or 1-800-955-8771 (TDD), Florida Relay Service. Assistive Listening Devices are available at the Office of Commission Clerk, Gerald L. Gunter Building, Room 152.

The Commission Conference has a live video broadcast the day of the conference, which is available from the PSC’s Web site. Upon completion of the conference, the video will be available from the Web site by selecting Conferences & Meeting Agendas, then Audio and Video Event Coverage.

1 ** Consent Agenda

PAA A) Application for Certificate to Provide Local Telecommunications Service.

DOCKET

COMPANY NAME

CERT.NO.

130186‑TX

Citrix Communications LLC

8851

PAA B) Application for Certificate of Authority to Provide Telecommunications Service.

DOCKET NO.	COMPANY NAME
130220‑TX	Onvoy, Inc. d/b/a Onvoy Voice Services

C) Docket No. 130234-EI – Tampa Electric Company (“Company”) seeks the authority to issue, sell and/or exchange equity securities and issue, sell, exchange and/or assume long-term or short-term debt securities and/or to assume liabilities or obligations as guarantor, endorser, or surety during calendar year 2014. The Company also seeks authority to enter into interest rate swaps or other derivative instruments related to debt securities during calendar year 2014.

The amount of all equity and long-term debt securities issued, sold, exchanged or assumed and liabilities and obligations assumed or guaranteed as guarantor, endorser, or surety will not exceed in the aggregate $1.5 billion during calendar year 2014, including any amounts issued to retire existing long-term debt securities. The maximum amount of short-term debt outstanding at any one time will be $1.0 billion during calendar year 2014. This application is for both Tampa Electric Company and its local gas distribution division, Peoples Gas System.

In connection with this application, the Company confirms that the capital raised pursuant to this application will be used in connection with the activities of the Company’s regulated electric and gas divisions and not the unregulated activities of the utilities or their affiliates.

D) Docket No. 130237-EI – Florida Power & Light Company (“FPL” or “Company”) seeks authority to issue and sell and/or exchange any combination of long-term debt and equity securities and/or to assume liabilities or obligations as guarantor, endorser, or surety in an aggregate amount not to exceed $6.1 billion during calendar year 2014. In addition, FPL seeks permission to issue and sell short-term securities during calendar years 2014 and 2015 in an amount or amounts such that the aggregate principal amount of short-term securities outstanding at the time of and including any such sale shall not exceed $4.0 billion.

In connection with this application, FPL confirms that the capital raised pursuant to the application will be used in connection with the activities of FPL and FPL's regulated subsidiaries and not the unregulated activities of FPL or its unregulated subsidiary or affiliates.

Recommendation: The Commission should approve the action requested in the dockets referenced above and close these dockets. For monitoring purposes, Docket Nos. 130234-EI and 130237-EI should remain open until April 30, 2015, to allow the Companies time to file the required Consummation Reports.

8**PAA Docket No. 130010-WS – Application for increase in water rates in Lee County and wastewater rates in Pasco County by Ni Florida, LLC.

Critical Date(s):		PAA five month deadline: November 4, 2013
Commissioners Assigned:			All Commissioners
Prehearing Officer:			Graham
Staff:	ENG: Rieger, L'Amoreaux AFD: Fletcher ECO: Bruce, Hudson GCL: Brownless, Crawford

(Proposed Agency Action except for Issues 19 and 20.)

Issue 1: Is the quality of service provided by Ni Florida satisfactory?

Recommendation: The overall quality of water and wastewater services provided by Ni Florida should be considered satisfactory.

Issue 2:

Should the audit adjustments to rate base and operating expenses agreed to by the Utility be made?

Recommendation: Yes. Based on audit adjustments agreed to by the Utility, staff recommends that: (1) plant be increased by $88 for water and decreased by $442 for wastewater; (2) accumulated depreciation be reduced by $185 for water and $9,467 for wastewater; (3) deprecation expense be increased by $3,872 for water and decreased by $1,224 for wastewater; (4) wastewater contribution in aid of construction (CIAC) be decreased by $575; (5) wastewater accumulated amortization of CIAC be increased by $11,479; (6) working capital be decreased by $42,277 for water and increased by $41,229 for wastewater; (7) wastewater revenues be increased by $1,681; and (8) operation and maintenance (O&M) expenses be reduced by $5,462 for water and $14,905 for wastewater.

Issue 3:

Should adjustments be made to the Utility’s pro forma wastewater plant additions?

Recommendation: Yes. The Utility’s pro forma wastewater plant additions should be decreased by $189,584. Accordingly, wastewater accumulated depreciation and depreciation expense should be decreased by $195,356 and $12,174, respectively. In addition, property taxes should be increased by $9,143. Further, consistent with Rule 25-30.433(9), F.A.C., the Utility should be allowed to recover an annual amortized loss of $7,799 on the forced abandonment of lines on US Highway 19.

Issue 4:

What are the used and useful (U&U) percentages for the Utility’s water distribution system and wastewater collection system?

Recommendation:

The Utility’s water distribution system and wastewater collection system should both be considered 100 percent used and useful.

Issue 5:

What is the appropriate working capital allowance?

Recommendation: The appropriate amount of working capital is zero for water and $572,449 for wastewater.

Issue 6:

What is the appropriate rate base for the test year ending September 30, 2012?

Recommendation: The appropriate 13-month average rate base for the test year ending September 30, 2012, is $276,050 for water and $3,366,898 for wastewater.

Issue 7:

What is the appropriate return on equity?

Recommendation: Based on the Commission leverage formula currently in effect, the appropriate return on equity (ROE) is 9.42 percent with an allowed range of plus or minus 100 basis points.

Issue 8:

What is the appropriate weighted average cost of capital including the proper components, amounts, and cost rates associated with the capital structure?

Recommendation: The appropriate weighted average cost of capital for the test year ending September 30, 2012, is 7.84 percent.

Issue 9:

Should any further adjustments be made to test year revenues?

Recommendation: Yes. Test year service revenues should be increased by $1,757 for water and $180 for wastewater.

Issue 10:

Should any further test year expense adjustments be made?

Recommendation: Yes. O&M expenses should be reduced by $2,101, and plant should be increased by $2,101. Corresponding adjustments should be made to increase both accumulated depreciation and depreciation expense by $55. Further, property taxes should be increased by $33.

Issue 11:

Should any further adjustments be made to the Utility’s allocated parent overhead?

Recommendation: Yes. The Utility should be entitled to allocated parent overhead of $43,049 for water and $181,745 for wastewater. As a result, Ni Florida’s allocated overhead for water and wastewater should be further reduced by $19,464 and $74,280, respectively.

Issue 12:

What is the appropriate amount of current rate case expense?

Recommendation: The appropriate amount of rate case expense for the instant case is $149,321. This expense should be recovered over four years for an annual expense of $7,839 for water and $29,491 for wastewater. Thus, Ni Florida’s requested annual rate case expense should be reduced by $3,735 for water and increased by $2,485 for wastewater. This recommendation reflects a reduction of $14,234 for water and $12,478 for wastewater to remove duplicative costs from prior cases that are already included in test year expenses.

Issue 13:

Should any adjustment be made to bad debt expense?

Recommendation: Yes. The Utility should be entitled to bad debt expense of $1,166 for water and $73,591 for wastewater. Based on a three-year average, Ni Florida’s requested level of bad debt expense of $5,222 for water should be reduced by $4,056. Using an adjusted test year methodology, Ni Florida’s requested level of bad debt expense of $36,412 for wastewater should be increased by $37,180. Further, based on staff’s recommended bad debt expense, wastewater operating revenues should be increased by $27,249.

Issue 14:

Should the Commission approve any pro forma expense items for the Utility?

Recommendation: Yes. Pro forma expenses of $5,615 for water and $17,011 for wastewater should be approved. This represents reductions to O&M expense of $4,893 for water and $120,181 for wastewater.

Issue 15:

What is the appropriate revenue requirement?

Recommendation: The following revenue requirement should be approved.

Table 15-1

Revenue Requirement

Test Year Revenue

$ Increase

Revenue

Requirement

% Increase

Water

$248,095

($2,593)

$245,502

(1.05%)

Wastewater

$1,772,461

$148,311

$1,920,772

8.37%

Issue 16:

What are the appropriate rate structures and rates for the Utility’s water and wastewater systems?

Recommendation: The appropriate rate structure for the water system’s residential customers is a continuation of the base facility charge (BFC) and three tier inclining block rate structure. The usage blocks should be: (1) 0-3,000 gallons; (2) 3,000-6,000 gallons; and (3) usage in excess of 6,000 gallons with usage block rate factors of 1.00, 1.20, and 1.50, respectively. The appropriate rate structure for the water system’s general service customers is a continuation of the BFC and uniform gallonage charge. The appropriate rate structure for the RV park is a continuation of a BFC based on the settlement number of ERCs in the RV park and the general service gallonage charge. The appropriate rate structure for the wastewater system’s residential, general service, and bulk customer is a traditional BFC and gallonage charge. The residential wastewater gallonage cap should be reduced to 8,000 gallons per month. The general and bulk service gallonage charge should be 1.2 times greater than the residential gallonage charge.

The appropriate monthly water and wastewater rates are shown on Schedule Nos. 4-A and 4-B, respectively, of staff’s memorandum dated October 14, 2013. The Utility should file revised tariff sheets and a proposed customer notice to reflect the Commission-approved rates. The approved rates should be effective for service rendered on or after the stamped approval date on the tariff sheet, pursuant to Rule 25-30.475(1), F.A.C. In addition, the approved rates should not be implemented until staff has approved the proposed customer notice and the notice has been received by the customers. The Utility should provide proof of the date notice was given within 10 days of the date of the notice.

Issue 17: Should the Commission approve Ni Florida’s requested elder valve charge for its wastewater system?

Recommendation: No. Ni Florida’s requested elder valve miscellaneous service charge for its wastewater system should not be approved.

Issue 18: What is the appropriate initial customer deposit for Ni Florida’s wastewater?

Recommendation: Staff recommends that the appropriate initial customer deposit for residential wastewater be set at $72 for 5/8” x 3/4” meters. General services should beset at two times the average estimated monthly bill. The approved initial customer deposits should be effective for services rendered on or after the stamped approval date on the tariff sheets, pursuant to Rule 25-30.475, F.A.C. Ni Florida should be required to collect the approved initial customer deposit until authorized to change them by the Commission in a subsequent proceeding.

Issue 19: What is the appropriate amount by which rates should be reduced four years after the established effective date to reflect the removal of the amortized rate case expense as required by Section 367.0816 F.S.?

Recommendation: The water and wastewater rates should be reduced as shown on Schedule Nos. 4-A and 4-B, of staff’s memorandum dated October 14, 2013, to remove rate case expense grossed up for regulatory assessment fees and amortized over a four-year period. The decrease in rates should become effective immediately following the expiration of the four-year rate case expense recovery period, pursuant to Section 367.0816, F.S. Ni Florida should be required to file revised tariffs and a proposed customer notice setting forth the lower rates and the reason for the reduction no later than one month prior to the actual date of the required rate reduction. If the Utility files this reduction in conjunction with a price index or pass-through rate adjustment, separate data should be filed for the price index and/or pass-through increase or decrease and the reduction in the rates due to the amortized rate case expense.

Issue 20: Should the Utility be required to provide proof, within 90 days of an effective order finalizing this docket, that it has adjusted its books for all the applicable National Association of Regulatory Utility Commissioners (NARUC) Uniform System of Accounts (USOA) primary accounts associated with the Commission-approved adjustments?

Recommendation: Yes. To ensure that the Utility adjusts its books in accordance with the Commission’s decision, Ni Florida should provide proof, within 90 days of the final order in this docket, that the adjustments for all the applicable NARUC USOA primary accounts have been made.

Issue 21: Should this docket be closed?

Recommendation:

No. If no timely protest is received from a substantially affected person upon expiration of the protest period, the PAA Order should become final upon issuance of a Consummating Order. However, this docket should remain open for staff’s verification that the tariff sheets and customer notice have been filed by the Utility and approved by staff, verification that the Utility has provided proof that the adjustments for all the NARUC USOA primary accounts have been made and approved by Commission staff. Once these actions are complete, this docket should be closed administratively.

Critical Date(s):		11/19/13 - 90-day rule waiver deadline
Commissioners Assigned:			All Commissioners
Prehearing Officer:			Administrative
Staff:	GCL: Page ECO: Rome

Critical Date(s):		None
Commissioners Assigned:			All Commissioners
Prehearing Officer:			Administrative
Staff:	TEL: Beard, Earnhart GCL: Hopkins

Critical Date(s):		8-Month Effective Date: 5/5/14
Commissioners Assigned:			All Commissioners
Prehearing Officer:			Administrative
Staff:	ECO: Garl GCL: Lawson

Critical Date(s):		60-Day Suspension Date: 10/30/13
Commissioners Assigned:			All Commissioners
Prehearing Officer:			Administrative
Staff:	ECO: Garl GCL: Lawson