DATE:	July 31, 2014
TO:	Office of Commission Clerk (Stauffer)
FROM:	Office of the General Counsel (M. Brown) Division of Economics (Ollila)
RE:	Docket No. 140123-EU – Joint petition for approval of territorial agreement in Franklin and Liberty Counties by Talquin Electric Cooperative, Inc. and Duke Energy Florida, Inc.
AGENDA:	08/12/14 – Regular Agenda – Proposed Agency Action – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Brown
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			None

 

 Case Background

On June 9, 2014, Talquin Electric Cooperative, Inc. (Talquin) and Duke Energy Florida, Inc., (DEF) filed a joint petition for approval of a territorial agreement (Proposed Agreement) in Franklin and Liberty Counties.  Talquin and DEF were parties to a prior territorial agreement (Prior Agreement) that expired on October 3, 2010.[1] In their joint petition Talquin and DEF assert that they continued to abide by the terms of the Prior Agreement as they negotiated the terms of the Proposed Agreement.  During its evaluation of the joint petition, staff issued two data requests to the parties.  The majority of the questions posed by staff were intended to clarify various new and modified provisions of the Proposed Agreement.

This recommendation addresses the parties’ joint petition for approval of the Proposed Agreement, which is attached to this recommendation (Attachment A).  Attachments B and C to this recommendation provide, respectively, the maps of the territorial boundary and the legal  descriptions of the territory served by each utility in Franklin and Liberty counties. Pursuant to Rule 25-6.0440(1)(f), Florida Administrative Code (F.A.C.), Attachment D contains official Florida Department of Transportation General Highway County maps for Franklin and Liberty Counties depicting boundary lines established by the territorial agreement. The Commission has jurisdiction over this matter pursuant to Section 366.04, Florida Statutes (F.S.).

 

 

 

Discussion of Issues

Issue 1: 

 Should the Commission approve Talquin and DEF’s Proposed Agreement?

Recommendation: 

 Yes, the Commission should approve the Proposed Agreement.  (Ollila, M. Brown)

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 25-6.6044(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).

The parties’ Proposed Agreement maintains the same territorial boundaries as the Prior Agreement, and has a term of 30 years, to be effective when the Commission’s approval is final and no longer subject to appeal.  No customers or facilities will be transferred when the Proposed Agreement is implemented. Therefore, no customers were notified pursuant to Rule 25-6.0440(1), F.A.C., and there is no purchase price to consider pursuant to Rule 25-6.0440(2), F.A.C.  

 

Although no customers will be transferred at this time, the Proposed Agreement contains new provisions intended to clarify the parties’ service obligations in circumstances involving future transfers of customers and facilities, the provision of temporary service outside the established boundary line, and the provision of service to customers whose property traverses the established boundary line.  The parties explained that those provisions “are intended to provide a degree of flexibility where exceptional circumstances so require without infringing on the Commission’s regulatory oversight of territorial boundaries and agreements.”   In those instances where the territorial boundary traverses a customer’s property, the party in whose service area the preponderance of the customer's electric energy usage is expected to occur shall be entitled to serve all of the customer's usage.  In their responses to staff’s data request, the parties affirmed that they would provide notice to the Commission when they implemented this provision to provide service to a new customer on a long-term basis.  

 

Talquin and DEF assert that the Commission has long recognized that properly constructed territorial agreements between adjacent utilities are in the public interest.  They state that the Proposed Agreement will avoid duplication of services and wasteful expenditures, as well as protect the public health and safety from potentially hazardous conditions.  Therefore, Talquin and DEF believe and represent that the Commission’s approval of the Proposed Agreement is in the public interest.

            After review of the petition, the Proposed Agreement, and the parties’ responses to its data requests, staff believes that the Proposed Agreement is in the public interest and will enable Talquin and DEF to better serve their current and future customers.  It appears that the Agreement eliminates any potential uneconomic duplication of facilities and will not cause a decrease in the reliability of electric service.  As such, staff believes that the Proposed Agreement between Talquin and DEF will not cause a detriment to the public interest and recommends that the Commission approve it.

 

Issue 2: 

 Should this docket be closed?

Recommendation: 

 If no person whose substantial interests are affected by the proposed agency action files a protest within 21 days of the issuance of the order, this docket should be closed upon the issuance of a consummating order.  (M. Brown)

Staff Analysis: 

 At the conclusion of the protest period, if no protest is filed this docket should be closed upon the issuance of a consummating order.