Case Background
On August 25,
2016, the City of Alachua (Alachua) and Duke Energy Florida, LLC (DEF) filed a
joint petition for approval of an amended territorial agreement (proposed agreement)
in Alachua County. The proposed agreement is attached to the petition, while
the maps and written descriptions are not attached to this recommendation due
to the volume of exhibits.
The Commission
approved the existing territorial agreement between Alachua and DEF in 1996. The existing agreement was for a term of 20
years, and the joint petitioners desire to amend and continue the agreement.
The joint petitioners negotiated the proposed agreement delineating their
respective service boundaries in Alachua County for a term of an additional 20 years.
If approved, the agreement will result in the transfer of one commercial
customer, and one residential customer from DEF to Alachua. There will be no
customer transfers from Alachua to DEF. The transfer will be implemented when
it is operationally feasible for Alachua to serve the two customers, but no
later than 24 months after the approval and written notice of the proposed
agreement by the Commission. 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 the City of
Alachua and DEF?
Recommendation: Yes. The proposed agreement is
an extension of the existing agreement set to expire in 2016. It is in the
public interest and will enable Alachua and DEF to better serve their current
and future customers. It eliminates any potential uneconomic duplication of
facilities and staff believes it will not cause a decrease in the reliability
of electric service. Staff recommends that the Commission should approve the
proposed territorial agreement between Alachua and DEF. (Whitchurch, Guffey,
Coston)
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 jurisdiction to approve territorial
agreements between, and among, rural electric cooperatives, municipal electric
utilities, and investor-owned 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 continue the existing agreement and verify the territorial boundaries
within Alachua County in order to serve customers reliably and economically.
The proposed agreement modifies the territorial boundaries to eliminate split
parcels. In response to staff’s data request, DEF stated that during the
in-field due diligence process, it found the extra-territorial customers to be
inadvertently served by the company. As a result, one commercial customer and
one residential customer will be transferred from DEF to Alachua. 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 20-year
term with the condition that after the expiration date, the agreement will
remain in effect until and unless either party provides a written notice of
termination at least 12 months prior to termination. Pursuant to Section 1.8 of
the proposed agreement, the effective date of the agreement will be the date on
which a final Order is issued by the Commission, provided no timely protests
are filed.
In accordance with Rule 25-6.0440(1)(d), F.A.C., the
petitioners state that the impacted customers pursuant to the proposed
agreement were notified by mail of the transfer and provided a description of
the differences in rates between DEF and Alachua. As
of June 2016, the rate comparison for the non-demand commercial customer, using
1,500 kilowatt-hours, was $171.22 for DEF and $186.43 for Alachua. As of June 2016,
the rate comparison for the residential customer, using 1,000 kilowatt-hours,
was $111.95 for DEF and $120.40 for Alachua. DEF will apply any deposits of the
two customers that will be transferred 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 24 months of the
effective date of the proposed agreement and will notify the Commission in
writing if additional time is needed.
Pursuant to section 3.4 (compensation of related service
facilities) of the proposed agreement, Alachua may elect to purchase electric
distribution facilities used exclusively for providing electric service to the
transferred customers. To determine the facilities’ value, DEF will use a common
engineering cost elimination methodology such as the Hanley-Whitman index. In
response to staff’s data request, the joint petitioners stated that Alachua
does not intend to purchase any facilities from DEF in order to provide service
to the two transferred customers. Alachua states it has existing facilities
that can serve these two customers.
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.
Conclusion: 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 Alachua 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 recommends that the Commission
should approve the proposed territorial agreement between Alachua and DEF.
Issue
2: Should this docket be closed?
Recommendation:
If no protest is filed by a person whose substantial interests
are affected within 21 days of the issuance of the Order, this docket should be
closed upon the issuance of a Consummating Order. (Taylor)
Staff
Analysis: If no protest is filed by a person whose substantial
interests are affected within 21 days of the issuance of the Order, this docket
should be closed upon the issuance of a Consummating Order.
