Discussion
of Issues
Issue 1:
Should the Joint Motion For Approval of Settlement
Agreement between FPL and OPC be approved?
Recommendation:
Yes. (Barrett, Lester, Breman, Matthews)
Staff Analysis:
FPL’s St. Lucie Nuclear Station is located on Hutchinson
Island, near Fort Pierce, Florida. The station features two baseload generating
units, Unit 1 and Unit 2, with Net Summer Capacity ratings of 981 and 987
megawatts, respectively. Generally, when an outage event occurs, other
resources in the fleet of generating plants are dispatched to make up for the
load not being supplied by the off-line unit. Based upon the duration of an
outage and the capacity reduction attributable to the outage, replacement power
costs for an out-of-service unit can be calculated. The Commission has
historically allowed for cost recovery of replacement power costs, unless it is
determined that the outage resulted from an imprudent action by the utility.
As noted previously, the Joint Petition is a comprehensive
settlement that resolves open issues in the Fuel Clause related to outage
events that occurred at St. Lucie Unit 2 in 2014 and 2015, as described below.
March
2014 Outage (Issue 3J, previously identified as Issue 2N)
In March 2014, St. Lucie Unit 2 entered a planned outage
for refueling and for other maintenance activities. During the start-up for
bringing the unit back into service, FPL discovered foreign material in one of
the unit’s steam generators, necessitating an 18 day extension of the outage.
OPC proposed Issue 2N in the 2014 Fuel Clause proceeding to address the cost
recovery of the replacement power due to the extension of the planned outage at
St. Lucie Unit 2. By Order No. PSC-14-0439-PCO-EI, the
Commission deferred consideration of Issue 2N to the 2015 Fuel Clause, when the
final true up of 2014 fuel costs would be addressed.
In the 2015 Fuel Clause proceeding, a revised list of
issues meant that Issue 2N from the 2014 Fuel Clause proceeding was then identified
as Issue 3J. FPL stated that it was in negotiations with its vendor regarding
the March 2014 outage at St. Lucie Unit 2, but those negotiations would not be
concluded in time to be presented at the 2015 Fuel Clause hearing. Therefore, by
Order No. PSC-15-0586-FOF-EI, the
Commission again deferred considering the cost recovery of the replacement
power due to the extension of the planned outage at St. Lucie Unit 2.
February
2015 Outage (Part 1 of Issue 3O)
An unplanned outage occurred at St. Lucie Unit 2 in
February 2015 that lasted about 4 days. This outage was triggered when condenser tube
chemistry limits were exceeded due to seawater leakage in a hotwell. In the
Joint Motion, FPL states that the leaking condenser tube and an additional 187
other tubes were repaired.
April
2015 Outage (Part 2 of Issue 3O)
The April
2015 outage involved work repairing a leak identified in the safety injection
tank discharge header. Engineering analysis determined that vibration fatigue was
the source of the leak, and FPL replaced the affected piping, modified the
support structure for the piping in order to prevent future problems, and also
revised the engineering standard to include more detail for piping supports.
In
preparing for the 2015 Fuel Clause hearing, a single issue, Issue 3O, was added
to address the cost recovery of replacement power due to the February and April
outages. As reflected in Order No. PSC-15-0512-PHO-EI (Prehearing Order), the
parties agreed to drop Issue 3O with the understanding that any party could
raise it again in this year’s (2016) Fuel Clause proceeding.
Analysis of the Joint
Motion
Staff and OPC served discovery requests to FPL in order to
learn more about all of the outage events at St. Lucie Unit 2. In the Joint Motion, OPC stated it
reviewed FPL’s prepared testimony and exhibits and has conducted both formal
and informal discovery regarding the causes of all 3 outages before it entered
into the Settlement Agreement with FPL. As the Settlement Agreement states, FPL
reached a confidential agreement with one of the vendors that performed work at
St. Lucie Unit 2 during the March 2014 planned outage. As a result of the FPL
vendor settlement, FPL will credit $8 million to the Fuel Clause for the
purpose of calculating the fuel cost recovery factors for 2017, which will be
set in the November hearing for Docket No. 160001-EI. The Signatories believe
the $8 million credit as part of the Settlement Agreement resolves Issue 3J
from Docket No. 150001-EI in its entirety, such that FPL’s recovery of
replacement power costs associated with the extended refueling outage in March
2014 will not be disputed in Docket No. 160001-EI or any other Commission
proceeding. FPL and OPC agree that each entered into the Settlement Agreement
voluntarily, that it fairly and reasonably balances the various positions of
the parties on issues in these proceedings, and that it serves the best
interests of the customers they represent and the public interest in general. The
Signatories believe that the Settlement Agreement is reasonable and in the
public interest.
For Issue 3O, the Signatories assert that cost recovery
for replacement power associated with
the February and April 2015 outage events will not be disputed in this year’s
(2016) Fuel Clause proceeding, or in any other Commission proceeding. Based on
testimony and discovery responses in this docket, staff concurs.
The Joint Motion is a comprehensive settlement that
resolves open issues in the Fuel Clause related to the three outage events described
above. Due to the fact that the Signatories were able to reach the proposed
stipulation on these issues well in advance of the hearing, and in order to
provide greater certainty as to the scope of issues to be addressed in this
year’s Fuel Clause hearing, the Signatories have requested that the Commission
consider the Joint Motion at the first available Agenda Conference and approve
it at that time. The Joint Motion further states that the parties to the Docket
No. 160001-EI should be permitted to address the Settlement Agreement at the
Agenda Conference. Staff believes the Joint Motion presents an opportunity to
fully resolve these matters in advance of the November hearing in Docket No.
160001-EI, and therefore avoid the time and expense of protracted litigation of
disputes over the April 2014, February 2015 and April 2015 outages in this or
future proceedings. As set forth in the Joint Motion, FPL will credit $8
million to the Fuel Clause for the purpose of calculating the 2017 Fuel Clause
factors, which will be approved in the hearing for Docket No. 160001-EI. Staff
notes that the Settlement Agreement
results in FPL’s customers being refunded for replacement power costs that were
incurred in 2014, notwithstanding that there has been no finding of imprudence
with respect to any portion of these outages.
Staff believes it
is reasonable and appropriate to approve the Joint Motion, because approval
will avoid the time and expense of litigating these issues in Docket No.
160001-EI or future proceedings. The Signatories assert that the
Settlement Agreement resolves Issues 3J and 3O from Docket No. 150001-EI in
their entirety, and staff agrees. Upon approval, cost recovery for
replacement power associated with these
outage events will not be disputed in this year’s (2016) Fuel Clause
proceeding, or in any other Commission proceeding. The Signatories believe that
the Settlement Agreement is reasonable and in the public interest. Staff
agrees.
Summary
The Joint Motion is a comprehensive settlement that
resolves open issues in the Fuel Clause. Staff and OPC thoroughly reviewed the
materials FPL provided about these outages. Staff believes FPL took appropriate
and reasonable actions to restore St. Lucie Unit 2 from these outage events,
and staff acknowledges that no active party in Docket No. 160001-EI has
asserted a contrary position on this Joint Motion.
Therefore, staff recommends that the Joint Motion between FPL
and OPC be approved.
Issue 2:
Should this docket be closed?
Recommendation:
No. The fuel docket is on-going and should remain
open. (Janjic)
Staff Analysis:
The fuel docket is on-going and should remain open.
