Discussion
of Issues
Issue 1:
Should Gulf Power Company’s petition for
modification of the authority to issue and sell securities be approved?
Recommendation:
Yes. Gulf Power Company’s petition for modification
of the authority to issue and sell securities filed on January 7, 2019 should
be approved as requested. (Richards)
Staff Analysis:
On January 7, 2019, Gulf submitted a petition for
modification of the Company’s previously approved securities application to
reflect the acquisition of the company by NextEra and to request an increase of
the amount of securities authorized.
Gulf was acquired by and became a wholly-owned subsidiary
of NextEra on January 1, 2019, and will no longer be able to receive equity
funds from and/or issue common equity securities to Gulf’s former parent, the
Southern Company. Gulf requests approval to issue and sell and/or exchange any
combination of the long-term debt and equity securities described and/or to
assume liabilities or obligations as guarantor, endorser or surety in an
aggregate amount not to exceed $1.2 billion during calendar year 2019. The
currently authorized amount of long-term debt and equity securities is $600
million. Gulf also requests to increase the maximum principal amount of
short-term debt previously approved from $500 million to $600 million. The net
increase in funding from the previously approved securities application is $600
million in long-term debt and equity securities and $100 million in short-term
debt.
In its petition, Gulf explained the requested
modifications are necessary to reflect the new ownership and the anticipated
increased issuances of securities required due to the significant storm-related
expenses incurred as a result of Hurricane Michael; to fund the cost of the
prompt restoration, reconstruction and/or repair of facilities damaged or
destroyed during calendar year 2019 due to the occurrence of any man-made or
natural disaster or event or otherwise.
Staff has reviewed Gulf’s projected capital expenditures.
The amount of long-term securities requested ($1.2 billion) exceeds Gulf’s
expected capital expenditures ($262.8 million). The additional amount requested
exceeding the projected capital expenditures allows for financial flexibility
with regard to unexpected events such as hurricanes, financial market
disruptions and other unforeseen circumstances.
In connection with this security application, Gulf
confirms that the capital raised pursuant to this authority will be used in
connection with the regulated activities of Gulf and its affiliates, and not
the non-regulated activities of its affiliates. Staff believes the requested
amounts are appropriate and recommends Gulf’s petition to issue securities be
modified as requested.
Issue 2:
Should this docket be closed?
Recommendation:
No. This docket should remain open until Gulf Power
Company has filed the required Consummation Report. (Schrader)
Staff Analysis:
For monitoring purposes, this docket should remain
open until May 1, 2020, to allow Gulf Power Company time to file the required
Consummation Report.
