Case Background
On September 25,
2017, Gulf Power Company (Gulf or company) filed a petition requesting
modifications to its Extra Large Business Incentive Rate Rider (XLBIR), Large
Business Incentive Rate Rider (LBIR), Medium Business Incentive Rate Rider
(MBIR), and Small Business Incentive Rate Rider (SBIR), known collectively as
the riders. The riders collectively share a 100 megawatt (MW) subscription
limitation. Gulf is requesting in this petition to remove this limitation. The company’s
riders were approved by the Commission as a three-year pilot program (January
1, 2014 through December 31, 2016) pursuant to the Stipulation and Settlement
Agreement in Gulf’s 2013 base rate proceeding. On June 9, 2016, the Commission approved a
limited extension of the riders, changing the termination date from December
31, 2016 to December 31, 2017. On May 16, 2017, as part of the
Stipulation and Settlement Agreement in Gulf’s 2016 base rate proceeding, the
Commission made the program a permanent tariff option. The XLBIR was also approved as part of the
agreement. The riders, which require a five-year electric service contract (the
XLBIR requires a ten-year contract), provide base rate credits for new
businesses that meet certain requirements such as minimum monthly load, job
creation, and capital investment. Customers must also verify that the
availability of the riders is a significant factor in their location or
expansion decision.
Staff issued a
data request to Gulf on October 6, 2017, and the company responded on October
13, 2017. Attachment A of this recommendation provides the rider tariff sheets indicating
the proposed changes. 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 Gulf’s petition for
modifications to its Business Incentive Rate Riders?
Recommendation:
Yes, the Commission should approve Gulf’s petition
for modifications to its Business Incentive Rate Riders effective November 7,
2017. (Morgan)
Staff Analysis:
The riders are designed to attract new commercial
and industrial customers to Gulf’s service territory and foster economic
growth. The riders offer base rate electric price incentives over a four to
nine-year period for new or expanding businesses that meet certain electric
load and full-time employee (FTE) requirements. Table 1-1 shows the requirements
for customers to join each rider.
Table 1-1
Requirements by Rider
|
Rider
|
Monthly Load
|
Number of FTEs
|
Capital Investment
|
|
XLBIR
|
5 MW
|
50
|
$1,000,000
|
|
LBIR
|
1,000 kW
|
50
|
$1,000,000
|
|
MBIR
|
350 kW
|
25
|
None
|
|
SBIR
|
200 kW
|
10
|
None
|
Source: Tariff Sheet Nos. 6.93, 6.95, 6.97, 6.104
Eligible
customers must agree to a minimum five-year service agreement (ten-year
agreement in the XLBIR) and submit documentation verifying the current number
of FTEs, each year. Table 1-2 illustrates the credits by rider which will be
applied to the customer’s base demand and energy charges.
Table 1-2
Reduction in Base Demand and
Energy Charges
|
Year
|
XLBIR*
|
LBIR
|
MBIR
|
SBIR
|
|
1
|
60%
|
60%
|
40%
|
20%
|
|
2
|
53%
|
45%
|
30%
|
15%
|
|
3
|
47%
|
30%
|
20%
|
10%
|
|
4
|
40%
|
15%
|
10%
|
5%
|
|
5-9*
|
33% to 7 %
|
None
|
None
|
None
|
Source: Tariff
Sheet Nos. 6.93, 6.95, 6.97, 6.104
* Not
shown, the credits for the XLBIR decline from 27 percent in Year 6 to 7 percent
in Year 9. In Year 10, there are no credits.
In response to staff’s data request, Gulf stated that it
currently has two subscribers to the riders, which carry a 504 kW load, employ
94 FTEs, and have a total capital investment of $3.6 million. These subscribers
have received total credits of $42,059 to date. Gulf has four additional
customers that have committed to joining the riders. These four customers are
expected to bring a 15.5 MW load, 5,640 jobs, and $42 million in electricity
revenue to Gulf’s territory between 2017 and 2018.
In addition, Gulf has begun negotiations with prospective
customers whose load would bring the riders’ total near or over the 100 MW
limit. The company states that the limit hinders negotiations due to the
uncertainty of the riders’ future capacity. The 100 MW limit was originally
placed on a three-year pilot program. Gulf asserts that removal of the limit on
the now-permanent program will enhance its effectiveness. Per Rule 25-6.0426, Florida
Administrative Code, utilities can recover 95 percent of economic development
expenses, not to exceed the lesser of 0.15 percent of annual revenues or $3
million. Despite this rule, Gulf is not seeking recovery of its economic
development expenses as part of this request.
Gulf has demonstrated that the riders have successfully
attracted new load, jobs, capital investment, and incremental base revenues to
Gulf’s service territory. The riders provide benefits to the general body of
ratepayers through additional revenue and load, over which fixed costs are
spread. Also, at this time, Gulf is not seeking recovery of these expenses. Therefore,
staff recommends that the Commission should approve Gulf’s petition for
modifications to its Business Incentive Rate Riders effective November 7, 2017.
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 tariffs should remain in effect, with any revenue
held subject to refund, pending resolution of a protest. If no timely protest
is filed, this docket should be closed upon the issuance of a consummating
order. (Trierweiler)
Staff Analysis:
If Issue 1 is approved and a protest is filed within 21 days of the
issuance of the order, the tariffs should remain in effect, with any revenue
held subject to refund, pending resolution of a protest. If no timely protest
is filed, this docket should be closed upon the issuance of a consummating
order.
