Case Background
On April 18,
2016, Gulf Power Company (Gulf or company) filed a petition requesting a limited
extension of the company’s experimental Large Business Incentive Rate Rider
(LBIR), Medium Business Incentive Rate Rider (MBIR), and Small Business
Incentive Rate Rider (SBIR), collectively referred to as the riders. The riders
were introduced in the Stipulation and Settlement Agreement that the Commission
approved during Gulf’s 2013 base rate proceeding as a three-year pilot program
(January 1, 2014 through December 31, 2016). The riders, which require a five-year electric
service contract, provide base rate credits for new businesses that meet
certain requirements such as minimum size, job creation, and verification that
the availability of the riders are a significant factor in the customer’s
location or expansion decision.
Staff issued one
data request to Gulf on April 26, 2016, for which responses were received on May
10, 2016. After reviewing the responses, staff requested the company’s
employment verification form referenced in a response which was filed in the
docket on May 16, 2016. The tariff pages with proposed changes are contained in
Attachment A of this recommendation. The Commission has jurisdiction over this
matter pursuant to Sections 288.035 and 366.06, Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission approve Gulf's petition for an
extension of its business incentive rate riders until December 31, 2017?
Recommendation:
Yes, the Commission should approve Gulf's petition
for an extension of its business incentive rate riders until December 31, 2017.
(Guffey)
Staff Analysis:
The business incentive rate riders are designed to
attract new commercial and industrial customers to Gulf’s service territory, and
foster economic growth. The riders offer base rate electric price incentives
over a four-year period for new or expanding businesses that meet certain
electric load, and job creation requirements. The LBIR also requires new capital
investment of at least $1 million. As shown in Table 1-1, the three riders require
that the customers hire and maintain the following number of full-time
employees within one year of receiving power service at the qualified delivery
point.
Table 1-1
Required Full Time Employees
|
Riders
|
kW Load
|
Number of Full Time Employees
|
|
SBIR
|
200 to 349
|
10
|
|
MBIR
|
350 to 999
|
25
|
|
LBIR
|
1,000 kW or greater
|
25 FTEs per 1,000 kW of qualifying load
|
Source: Tariff Sheet Nos. 6.93,
6.95, 6.97.
To take service under the riders, the customers must agree
to a minimum five-year service agreement and submit documentation verifying the
current number of full-time employees. The rider customers are required to
annually complete an employment verification form before receiving additional
year credits. Table 1-2 illustrates the credits that will be applied to base
demand and energy charges.
Table 1-2
Percentage Reduction in Base
Demand & Energy Charges
|
Year
|
SBIR
|
MBIR
|
LBIR
|
|
1
|
20%
|
40%
|
60%
|
|
2
|
15%
|
30%
|
45%
|
|
3
|
10%
|
20%
|
30%
|
|
4
|
5%
|
10%
|
15%
|
|
5
|
0%
|
0%
|
0%
|
Source: Tariff Sheet Nos. 6.93, 6.95, 6.97.
Gulf
stated in its response to staff discovery that since its approval the program
has attracted two retail establishments that started service under the riders
in 2015. This new load resulted in approximately $75,735 in incremental base
revenue and the addition of 79 employees in Gulf’s service territory. The
discount amount associated with the new load to date is $9,513.
Gulf
explained in its petition that it has received commitments from one new and one
expanding customer with a possibility of adding 5,300 new jobs and
approximately 4.5 megawatts (MW) of new load. The availability of the riders
was a significant factor for the customers’ decisions to take service from
Gulf. The customers have commenced initial construction work but do not anticipate
completion of construction and taking service prior to the expiration of the
current riders on December 31, 2016. The company is also actively negotiating with
four potential customers to relocate/expand. If successful, Gulf stated they
will add over 2,000 jobs and will have a new load demand of 25 MW.
If Gulf’s petition is approved, Gulf would make a request
to the Commission on or before December 31, 2017 to: (1) continue the riders in
their existing form; (2) continue the riders with modifications based on
lessons learned; or (3) discontinue the riders in their entirety. Staff notes
that the Commission recently approved Tampa Electric Company’s petition in
Docket No. 160059-EI to extend its economic development rider on a permanent
basis. In response to staff inquiry, Gulf explained that the company wishes to
continue the pilot program for another year to collect additional information
before making a decision on the future of the riders.
The riders appear to be successful in attracting new load
and incremental base revenues to Gulf’s service territory, which benefits the
general body of ratepayers. Therefore, staff recommends that the Commission
should approve Gulf’s petition for an extension of its business incentive rate
riders until December 31, 2017.
Issue 2:
Should this docket be closed?
Recommendation:
If Issue 1 is approved and a protest is filed within
21 days of the issuance of the order, the tariff should remain in effect
pending resolution of the protest. If no timely protest is filed, this docket
should be closed upon the issuance of a consummating order. (Brownless)
Staff Analysis:
If Issue 1 is approved and a protest is filed within
21 days of the issuance of the order, the tariff should remain in effect
pending resolution of the protest. If no timely protest is filed, this docket
should be closed upon the issuance of a consummating order.
