Case Background
On November 3,
2015, the Environmental Protection Agency (EPA) published its final rule titled
Steam Electric Power Generating Effluent
Limitations Guidelines (ELG). The ELG establishes limits for wastewater
discharges from flue gas desulfurization processes, fly ash and bottom ash
transport water, leachate from ponds and landfills containing coal combustion
residuals, gasification processes, and flue gas mercury controls. The monthly
averages and daily maximums will be exceeded under current processes at the Big
Bend Station for arsenic, mercury and selenium. The effective date of the rule was
January 4, 2016.
On February 2,
2016, Tampa Electric Company (TECO or Company) petitioned the Florida Public
Service Commission (Commission) to approve the Big Bend Station Effluent
Limitations Guidelines Compliance Study Program (Big Bend ELG Study Program)
for cost recovery through the Environmental Cost Recovery Clause (ECRC). The
Company intends to file for ELG cost recovery at their Polk Station at a later
date. No objections to the petition have been received as of the filing of this
recommendation.
By Section
366.8255, Florida Statutes (F.S.), the Florida Legislature authorized the
recovery of prudently incurred environmental compliance costs through the ECRC.
The method for cost recovery of such costs was first established by Order No.
PSC-94-0044-FOF-EI, issued on January 12, 1994. The Commission has jurisdiction over this
matter pursuant to Section 366.8255, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve Tampa Electric
Company’s petition for approval of a new environmental program for cost
recovery through the Environmental Cost Recovery Clause?
Recommendation:
Yes. Staff recommends that the Commission approve
TECO’s proposed Big Bend Station Effluent Limitations Guidelines Compliance
Study Program for cost recovery through the Environmental Cost Recovery Clause.
Staff recommends the O&M costs associated with this new environmental
program be allocated to rate classes on an energy basis. (Mtenga)
Staff Analysis:
The EPA’s ELG rule establishes limits for wastewater
discharges from flue gas desulfurization
processes, fly ash and bottom ash transport water, leachate from ponds
and landfills containing coal combustion residuals, gasification processes, and
flue gas mercury controls. TECO’s
facilities, including four coal-fired steam electric power generating units
equipped with a flue gas desulfurization system located at the Big Bend Station,
are affected by the ELG. The generating units’ treatment system will need to be
modified or replaced in order to achieve compliance with the new EPA
regulations. The Company is proposing the Big Bend ELG Study Program to
determine the most appropriate ELG compliance measures for the Big Bend Station.
The measures selected in order to achieve ELG compliance will be the subject of
a follow-up petition after completion of the Big Bend ELG Study Program and
selection of the various compliance measures.
The activities planned by TECO for the Big Bend ELG Study Program
include expenditures in 2016 to 2017. The expected scope of work for the study
includes data review, site visits, design development, and technological
evaluations including a conceptual design of selected alternatives. The
estimated amounts for the Big Bend ELG Study Program are detailed in Table 1-1
below.
Table 1-1
Estimated Expenditures for
Big Bend ELG Study Program
|
|
Year
|
O&M Costs($)
|
|
Phase 1
|
2016
|
100,000
|
|
Phase 2
|
2017
|
300,000
|
Source: TECO’s responses to staff’s first data request No.
8 and TECO petition
TECO
provided high level cost estimates based on experiences with previous studies
and environmental compliance project management. Staff notes that the Company
does not currently have a breakdown of the component activities. Table
1-2 below, shows the estimated residential customer bill impacts resulting from
the compliance study program.
Table 1-2
Estimated Residential
Customer Bill Impacts
|
Year
|
˘/1,000 kWh
|
˘/ 1,200 kWh
|
|
2017
|
2.126
|
2.551
|
|
2018
|
0.000
|
0.000
|
|
2019
|
0.000
|
0.000
|
Source: TECO’s response to staff’s first data request No.
10
Based on the petition and TECO’s responses to staff data
requests, staff recommends that the proposed Big Bend ELG Study Program is
necessary for compliance with the EPA’s ELG rule.
The criteria for ECRC recovery relevant to this docket,
established by Order No. PSC-94-0044-FOF-EI, are:
(1) The
activities are legally required to comply with governmentally imposed environmental
regulation enacted, became effective, or whose effect was triggered after the company’s
last test year upon which rates are based; and
(2) None
of the expenditures are being recovered through some other cost recovery mechanisms
or through base rates.
Based on staff’s analysis of the docket material, the activities
proposed in TECO’s petition meet these criteria. Staff recommends that, based
on the information in the docket file and in the ELG rule, these activities are
essential projects that would not be necessary but for TECO’s obligation to
comply with government-imposed environmental regulation.
The need for these compliance activities was triggered after TECO’s last test
year upon which rates are currently based. Finally,
the costs of the proposed compliance study activities are not currently being
recovered through some other cost recovery mechanisms or through base rates.
Staff notes that the resonanableness and prudence of the individual
expenditures related to TECO’s Big Bend ELG Study Program will continue to be
subject to the Commission’s review in future ECRC proceedings.
Conclusion
Staff recommends that the Commission approve TECO’s proposed
Big Bend ELG Study Program for cost recovery through the ECRC. Staff recommends
the O&M costs associated with this new environmental program be allocated
to rate classes based on energy basis.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. This docket should be closed upon issuance of a
Consummating Order unless a person whose substantial interests are affected by
the Commission’s decision files a protest within 21 days of the issuance of the
proposed agency action. (Murphy)
Staff Analysis:
If no timely protest to the proposed agency action
is filed within 21 days, this docket should be closed upon issuance of a
Consummating Order, unless a person whose substantial interests are affected by
the Commission’s decision files a protest within 21 days of the issuance of the
proposed agency action.
