Case Background
In 2013, Duke
Energy Florida, LLC (DEF) announced its decision to retire its nuclear plant,
Crystal River Unit 3 (CR3), in Citrus County, Florida. The retirement of CR3
was the subject of two settlement agreements. The first settlement agreement,
reached in 2012, was a global settlement that addressed several issues,
including issues related to a potential CR3 retirement. The second settlement agreement, the
Revised and Restated Stipulation and Settlement Agreement (RRSSA), reached in
2013, replaced and supplanted the 2012 settlement agreement. The parties to the RRSSA were DEF, the
Office of Public Counsel (OPC), the Florida Industrial Power Users Group
(FIPUG), the Florida Retail Federation (FRF), and White Springs Agricultural
Chemicals, Inc., d/b/a PCS Phosphate (PCS Phosphate).
The RRSSA
contemplated that DEF would recover through increased base rate charges the
combined costs of two items associated with the retirement of CR3, the projected
Dry Cask Storage (DCS) facility costs and the CR3 Regulatory Asset. Subsequent
to approval of the RRSSA, the Commission approved two amendments. Collectively, these amendments allowed for
securitization of the CR3 Regulatory Asset, leaving only the DCS facility costs
to be recovered through base rates.
On June 15,
2016, DEF filed a petition for approval of a Third Stipulation to Amend the
RRSSA (Third RRSSA Amendment). All parties to the RRSSA, including DEF, OPC,
FIPUG, FRF, and PCS Phosphate, are signatories to the Third RRSSA Amendment.
The Commission
has jurisdiction pursuant to Sections 366.04 and 366.05, Florida Statutes
(F.S.).
Discussion
of Issues
Issue 1:
Should DEF’s petition to approve the Third
Stipulation to Amend the RRSSA (Third RRSSA Amendment) be approved?
Recommendation:
Yes. The Third RRSSA Amendment contained in
Attachment A of this recommendation is in the public interest and should be
approved. Recovery of the Dry Cask Storage (DCS) facility costs through the
Capacity Cost Recovery Clause (CCR Clause) would allow annual review and
adjustment, including potential credits from Department of Energy (DOE) awards.
(Ellis)
Staff Analysis:
In its petition for approval of the Third RRSSA
Amendment, attached to this recommendation as Attachment A, DEF states that the
parties requested changes would shift recovery of the DCS facility costs from
increases in base rates to the CCR Clause. Prior to the modifications, DCS facility costs
would have been recovered through uniform percentage increases in demand and
energy rates, updated at least once every 4 years for a period up to 20 years,
and with true-up through the CCR Clause.
Recognizing a previous Commission decision, the deferral
of amortization for some costs associated with the DCS facility is included in
the Third RRSSA Amendment.
The time period for amortization of capital costs associated with the DCS could
also be modified through agreement of all parties and approval of the
Commission. Cost allocation would remain based upon the methodology outlined in
the RRSSA.
The Third RRSSA Amendment alters two paragraphs within the
RRSSA to reflect the shift from base rates to the CCR Clause. Paragraph 5(e)(1)
is amended to reflect the DCS facility costs are not to be combined with the
CR3 Regulatory Asset, but rather are to be recovered through the CCR Clause. DEF
states the parties determined that to preserve the intended cost recovery
allocation of DCS facility costs, the Third RRSSA Amendment is necessary given
the change in circumstances of the CR3 Regulatory Asset. As noted by DEF in
response to staff’s data request, the CR3 Regulatory Asset was securitized in
June 2016 and is now held in a bankruptcy-remote facility and for all intents
and purposes is isolated from further regulatory action. DEF notes it did not
seek to add the DCS facility costs to this balance for securitization due to
outstanding legal actions with the DOE stemming from its failure to remove
spent nuclear fuel from the CR3 facility. If approved, DEF would also be
required to credit the CCR Clause for any applicable award from the DOE. The Commission
would have an opportunity to review DCS facility costs on an annual basis in
the CCR Clause proceedings, including DOE awards.
Paragraph 21, which addresses those portions of the RRSSA
that extend beyond December 2018, is amended to reflect that recovery of DCS
facility costs through the CCR Clause may continue past 2018. Prior to the
modifications, the recovery of DCS facility costs would have ended with the CR3
Regulatory Asset or approximately 20 years.
Conclusion
Staff agrees that the Third RRSSA Amendment contained in
Attachment A of this recommendation is in the public interest and should be
approved. Recovery of the DCS facility costs through the CCR Clause would allow
annual review and adjustment, including potential credits from DOE awards.
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
Commission’s Proposed Agency Action Order. (Janjic)
Staff Analysis:
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
Commission’s Proposed Agency Action Order.
