Case Background
On
June 9, 2016, the City of Bartow (Bartow) and Duke Energy Florida, LLC (DEF)
filed a joint petition for approval of an amended territorial agreement
(agreement) in Polk County. The proposed agreement is Attachment A to the
petition, while the maps and written descriptions delineating the area to be
served by the proposed agreement are provided in the petition as Exhibits A and
D respectively (due to the volume of the exhibits, they have not been attached
to this recommendation).
The
Commission approved the existing territorial agreement between Bartow and DEF
in 1986. The existing agreement was for a term of
30 years and the joint petitioners desire to amend and continue the existing
agreement. The joint petitioners negotiated the proposed agreement delineating
their respective service boundaries in Polk County for a term of 30 years. If
approved, the agreement would result in the transfer of two commercial
customers from DEF to Bartow. There will be no customer transfers from Bartow to
DEF. The transfer will be implemented when it’s operationally feasible for
Bartow to serve the two customers, but no later than 12 months after the
approval of the proposed agreement by the Commission.
During the
evaluation of this joint petition, staff issued one data request to the joint
petitioners for which responses were received on June 28, 2016. 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 the proposed
territorial agreement between Bartow and DEF?
Recommendation:
Yes, the Commission should approve the proposed
territorial agreement between Bartow and DEF. (Guffey)
Staff Analysis:
Pursuant to Section 366.04(2)(d), F.S. and Rule
25-6.0440(2), Florida Administrative Code (F.A.C.), the Commission has the
jurisdiction to approve territorial agreements between and among rural electric
cooperatives, municipal electric utilities, and other electric utilities. Unless
the Commission determines that the agreement will cause a detriment to the
public interest, the agreement should be approved.
Through the proposed agreement, the joint petitioners
desire to essentially continue the existing agreement and clearly delineate the
territorial boundaries within Polk County in order to serve customers reliably
and economically. The proposed agreement does not change the territorial
boundaries; however, two commercial customers will be transferred from DEF to
Bartow. In response to staff’s data request, DEF stated that during the
in-field due diligence process to determine if there were any encroachments by
one utility into the service area territory of the other utility, one of the
two customers that will be transferred was discovered within Bartow’s service
territory but was being served by DEF. The second customer to be transferred is
currently being served by DEF because it was not operationally and economically
feasible for Bartow to serve the customer previously. DEF and Bartow have
agreed that Bartow will serve the two customers if the proposed agreement is
approved.
In addition to transferring the two customers, the joint
petitioners updated the territorial boundary maps using Geographic Information
System (GIS) software to demonstrate the boundary lines in greater detail. The
petitioners negotiated the proposed agreement for a 30-year term and after the
expiration of that term the agreement will remain in effect until and unless
either party provides a written notice of termination. Pursuant to Section 1.8
of the proposed agreement, the effective date of the agreement would be the
date on which a Consummating Order is issued by the Commission, provided no
timely protests are filed.
The petitioners state that in
accordance with Rule 25-6.0440(1)(d), F.A.C., the two commercial customers that
would be transferred between utilities pursuant to the proposed agreement were
notified by mail of the transfer and a description of the differences between DEF’s
and Bartow’s rates was provided. As
of March 2016, the rate comparison for these customers, using 1,500 kilowatt
hours, was $175.95 for DEF and $204.50 for Bartow. DEF will apply the customers’
deposits to their last electric bill and will directly refund any surplus. With
regard to the degree of acceptance by the affected customers, the petitioners state
that DEF has not received any feedback, questions, or concerns from the customers.
The joint petitioners expect that the customer transfers will be completed
within 12 months of the effective date of the proposed agreement and will
notify the Commission in writing if additional time is needed.
Pursuant to Section 3.3 (Compensation of Related Service
Facilities) and Section 3.4 (Transfer Segment Closings) of the proposed
agreement, Bartow may elect to purchase the electric facilities used
exclusively for providing electric service to the transferred customers by
using a common engineering cost estimation methodology such as the
Handy-Whitman index to determine the value. In response to staff’s data
request, the petitioners stated that at this time the parties do not plan to
exchange or purchase the required facilities. Upon further inquiry, the
petitioners stated that Bartow will not be using DEF’s facilities to serve the
two customers. DEF will remove its facilities after the transfer and either
retire or re-use the facilities if possible.
The joint petitioners assert that the proposed agreement
will avoid duplication of services and wasteful expenditures and will protect
the public health and safety from potentially hazardous conditions. The joint
petitioners 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 joint petitioners’ responses to staff’s data request, staff believes that
the proposed agreement is in the public interest and will enable Bartow and DEF
to better serve their current and future customers. It appears that the
proposed 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 Bartow 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 protest is filed
by a person whose substantial interests are affected within 21days of the
issuance of the Order, this docket should be closed upon the issuance of a
Consummating Order. (Trierweiler)
Staff Analysis:
If no protest is filed by a person whose substantial
interests are affected within 21days of the issuance of the Order, this docket
should be closed upon the issuance of a Consummating Order.
