Case Background
On July 19,
2016, Duke Energy Florida, LLC (DEF or company) filed a petition requesting
approval of modifications to and an extension of the approved pilot Economic
Development (ED-1) and Economic Re-Development (EDR-1) riders (economic
development riders). Modifications to these tariffs (Sheet Nos. 6.380 and
6.385) are needed to continue the pilot program for an additional three years,
along with clarifications to the accompanying standard service agreement forms
(Sheet Nos. 7.500 and 7.510). The tariffs and forms in this petition were
initially approved by the Commission in Order No. PSC-13-0598-FOF-EI as part of
DEFs’ Revised and Restated Stipulation and Settlement Agreement (RRSSA). Paragraph 17 and Exhibit 15 of the RRSSA
provided that DEF introduce these tariffs on a pilot basis for three years
(from October 2013 to October 2016). The riders, which require a five-year
electric service contract, provide base rate credits/reduction for new
businesses that meet certain requirements such as minimum load, 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 DEF on August 4, 2016, for which responses were received on August
12, 2016. The tariff pages and service agreement forms 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 DEF's petition to
extend its economic development riders until October 17, 2019, and approve the
revised service agreement forms?
Recommendation:
Yes, the Commission should approve DEF's petition to
extend its economic development riders until October 17, 2019, and approve the
revised service agreement forms. (Guffey)
Staff Analysis:
The economic development riders are designed to
attract new commercial and industrial customers to DEF’s service territory and
foster economic growth. The riders offer base rate electric price incentives
over a five-year period for new or expanding businesses that meet certain
electric load, capital investment, and job creation requirements. As shown in
Table 1-1, the two riders require that the rider customers hire and maintain
the following number of full-time employees.
Table 1-1
Required Full Time Employees
& Capital Investments
|
Rider
|
Minimum kW Load
|
Number of FTEs
|
Capital Investment
|
|
ED-1
|
500
|
25
|
$500,000 or greater
|
|
EDR-1
|
350
|
15
|
$200,000 or greater
|
Source: Tariff Sheet Nos. 6.380 & 6.385
To take service under the subject riders, the customers
must agree to a minimum five-year service agreement and the company will
request verification from the rider customers of the number of jobs created as
a direct result of the riders. DEF states that the first ED-1 customer enrolled
in April 2014, and since then DEF has attracted five more customers for a total
of six (one EDR-1 customer and five ED-1 customers) that has the potential to
create 968 FTE jobs. DEF is also working on attracting additional customers for
whom the economic development rider is a significant factor in their
location/expansion decisions. DEF proposes to extend the pilot program for an additional
three years, until October 17, 2019.
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
|
ED-1
|
EDR-1
|
|
1
|
50%
|
50%
|
|
2
|
40%
|
35%
|
|
3
|
30%
|
15%
|
|
4
|
20%
|
0%
|
|
5
|
10%
|
0%
|
Source: Tariff Sheet Nos. 6.380
& 6.385
The company, in its response to
staff’s data request and a follow-up request, stated that the enrolled customers
are currently not taking service under the economic development riders because
they are not yet ready to commence their respective discounts. The single EDR-1
applicant who is in the process of ramping up the operation expects to meet the
minimum service threshold by September 2016. Of the five ED-1 applicants, four
are ramping up their new operations by installing new equipment, increasing
product output and/or adding more shifts/increasing hours of operation.
However, these four customers have not yet met the minimum ED-1 kW demand
and/or load factor threshold. The company estimates these customers might
receive their discounts in September 2017. The fifth ED-1 applicant has yet to
construct their building.
DEF’s petition states that the
company is not requesting the pilot tariffs be made permanent at this time,
because the company wants additional time to market the tariff and determine
customers’ interest in the program. In response to a staff’s data request and
follow-up question regarding if the company would make the riders permanent
after October 17, 2019, DEF stated that if this petition is approved, DEF would
make a request to the Commission on or before October 17, 2019 to: (1) continue
the riders as is; (2) continue the riders with modifications based on the
experienced gained from the current customers; or (3) discontinue the riders.
The riders appear to be
successful in attracting new load and incremental base revenues to DEF’s
service territory, which benefits the general body of ratepayers. Therefore,
staff recommends that the Commission approve DEF’s petition for an extension of
its economic development riders until October 17, 2019 and approve the revised
service agreement forms as shown in Attachment A to this recommendation.
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. (Mapp)
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.
