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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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February 16, 2018
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TO:
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Office of Commission Clerk (Stauffer)
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FROM:
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Division of Accounting and Finance (Passett,
Mouring, D. Buys)
Division of Economics
(Draper, Guffey)
Division of Engineering
(P. Buys, Graves)
Office of the General
Counsel (Crawford, Mapp, Janjic)
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RE:
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Docket No. 20170271-EI – Petition for
recovery of costs associated with named tropical systems during the 2015,
2016, and 2017 hurricane seasons and replenishment of storm reserve subject
to final true-up, Tampa Electric Company.
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AGENDA:
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03/01/18 – Regular Agenda – Preliminary Procedural -- Interested
Persons May Participate
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COMMISSIONERS ASSIGNED:
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Brown, Polmann, Fay
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PREHEARING OFFICER:
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Brown
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CRITICAL DATES:
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None
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SPECIAL INSTRUCTIONS:
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None
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Case Background
On December 28,
2017, Tampa Electric Company (Tampa Electric) filed a petition for a limited
proceeding seeking authority to implement interim Storm Cost Recovery Charge factors
to recover a total of $87.4 million for the incremental restoration costs
related to tropical systems named by the National Hurricane Center (“NHC”)
during the 2015, 2016, and 2017 hurricane seasons and to replenish its storm
reserve subject to true-up.
On January 30,
2018, Tampa Electric filed an amended petition, updating the recovery amount to
$102.5 million. In its amended petition, Tampa Electric asserts that as a
result of Tropical Storms Erika and Colin, and Hurricanes Hermine, Matthew and
Irma, Tampa Electric incurred total retail recoverable costs of approximately
$102.5 million, less its pre-storm storm reserve balance of $55.9 million,
resulting in net recoverable costs of $46.6 million. In addition, Tampa
Electric proposes to replenish its storm reserve to the $55.9 million balance
that existed on October 31, 2013. The regulatory assessment fee gross-up adds
an additional $74,000 to the recoverable costs.
Tampa Electric
filed its amended petition pursuant to the provisions of the Amended and
Restated Stipulation and Settlement Agreement (ARSSA) approved by the Commission
in Order No. PSC-2017-0456-S-EI. Pursuant to Paragraph 5 of the ARSSA, Tampa
Electric may petition the Commission to allow the Company to increase the
initial 12 month recovery at rates greater than $4.00/1,000 kWh or for a period
longer than 12 months if Tampa Electric incurs in excess of $100 million of
storm recovery costs that qualify for recovery in a given calendar year,
inclusive of the amount needed to replenish the storm reserve. In its amended
petition, Tampa Electric is seeking recovery through an interim Storm Cost
Recovery Charge factor of $10.07/1,000 kWh beginning with the first billing
cycle in April 2018 and concluding when the storm reserve has been replenished,
which is estimated to be in December 2018.
The Florida
Industrial Power Users Group petitioned to intervene in this docket on January
10, 2018.
The
Commission has jurisdiction over this matter pursuant to Sections 366.04,
366.05, 366.06, and 366.076, Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission authorize Tampa Electric to
implement interim Storm Cost Recovery Charge factors?
Recommendation:
Yes, the Commission should authorize Tampa Electric
to implement interim Storm Cost Recovery Charge factors, subject to refund.
Once the total actual storm costs are known, Tampa Electric should be required
to file documentation of the storm costs for Commission review and true-up of
any excess or shortfall.
The appropriate security to guarantee the funds collected
subject to refund is a corporate undertaking. (Passett, D. Buys)
Staff
Analysis: As stated in the case background, Tampa Electric filed
an amended petition for a limited proceeding seeking authority to implement interim
Storm Cost Recovery Charge factors to recover a total of $102.5 million for the
incremental restoration costs related to named tropical storms and hurricanes during
the 2015, 2016, and 2017 hurricane seasons and to replenish its storm reserve.
The requested recovery of $102.5 million
represents net retail recoverable costs of approximately $46.6 million, plus an
additional $55.9 million to replenish the storm reserve to the balance that
existed on October 31, 2013. In addition, the $102.5 million includes a regulatory
assessment fee gross-up of $74,000. The amended petition was filed pursuant to
the provisions of the ARSSA approved by the Commission in Order No. PSC-2017-0456-S-EI. Tampa
Electric further asserts that this amount was calculated in accordance with the
Incremental Cost and Capitalization Approach (ICCA) methodology prescribed in
Rule 25-6.0143, Florida Administrative Code (F.A.C.).
Pursuant to Paragraph 5 of the ARSSA, Tampa Electric may
petition the Commission to allow the Company to increase the initial 12 month
recovery at rates greater than $4.00/1,000 kWh or for a period longer than 12
months if Tampa Electric incurs in excess of $100 million of storm recovery
costs that qualify for recovery in a given calendar year, inclusive of the
amount needed to replenish the storm reserve. Tampa Electric has requested an interim
Storm Cost Recovery Charge factor of $10.07 on a monthly 1,000 kWh residential
bill, effective from April 2018 through December 2018.
The approval of interim Storm Cost Recovery Charge factors
is preliminary in nature and is subject to refund pending a further review once
the total actual storm restoration costs are known. After the actual costs are
reviewed for prudence and reasonableness, and are compared to the actual amount
recovered through the interim storm charge, a determination will be made
whether any over/under recovery has occurred. The disposition of any over/under
recovery, and associated interest, would be considered by the Commission at a
later date.
Based on a review of the information provided by Tampa Electric in its amended
petition, staff recommends that the Commission authorize Tampa Electric to implement
interim Storm Cost Recovery Charge factors, subject to refund. Once the total actual
storm costs are known, Tampa Electric should be required to file documentation
of the storm costs for Commission review and true-up of any excess or
shortfall. It is important to emphasize that this recommendation is only for interim
Storm Cost Recovery Charge factors, and is not a confirmation of prudence of
costs nor an approval of Tampa Electric’s plans. This is merely a
recommendation to allow the Company to begin recovery on an interim basis in accordance
with the current ARSSA, subject to refund following a hearing or a full
opportunity for a formal proceeding.
Staff recommends that all funds collected subject to
refund be secured by a corporate undertaking. The criteria for a corporate
undertaking include sufficient liquidity, ownership equity, profitability, and
interest coverage to guarantee any potential refund. Staff believes TECO has
adequate resources to support a corporate undertaking in the amount requested.
Issue 2:
Should the Commission approve Tampa Electric’s
proposed tariffs and associated charges?
Recommendation:
Yes. The Commission should approve Tampa Electric’s
tariffs as proposed in the amended petition to go into effect with the first
billing cycle in April 2018. (Guffey)
Staff Analysis:
Tampa Electric is seeking approval of interim Storm
Cost Recovery Charge factors as shown in proposed Fourth Revised Tariff Sheet
No. 6.022 (Attachment A to this recommendation). Appendix F to the amended
petition includes revisions to all tariffs reflecting the addition of the
interim storm recovery charges as shown on Tariff Sheet No. 6.022. A
residential customer who uses 1,000 kilowatt-hours will see a $10.07 increase
on the monthly bill for the period beginning with the first billing cycle in
April 2018.
In response to staff’s request for additional information,
Tampa Electric stated that customers will be notified of the interim Storm Cost
Recovery Charge factors via bill inserts on the first billing cycle in February
2018. The company has also prepared a FAQ document for Tampa Electric Customer
Service Professionals to use for customer inquiries regarding the interim storm
recovery charge. Tampa Electric also
issued a news/press release which outlined the interim Storm Cost Recovery
Charge factors on December 28, 2017 and provided customer notices for staff
review.
Staff recommends that the Commission should approve Tampa
Electric’s proposed tariffs to go into effect with the first billing cycle in
April 2018.
Issue 3:
Should this docket be closed?
Recommendation:
No, this docket should remain open pending final
reconciliation of actual recoverable storm costs with the amount collected
pursuant to the interim Storm Cost Recovery Charge factors, and the calculation
of a refund or additional charge if warranted. (Janjic)
Staff Analysis:
This docket should remain open pending final
reconciliation of actual recoverable storm costs with the amount collected
pursuant to the interim Storm Cost Recovery Charge factors, and the calculation
of a refund or additional charge if warranted.
