Case Background
On July 2, 2019,
Clay Electric Cooperative, Inc. (Clay) and the City of Ocala Electric Utility
(Ocala), collectively the joint petitioners, filed a petition seeking Commission
approval of a territorial agreement (agreement) delineating their respective
modified service boundaries in Marion County. The proposed agreement, map
depicting the current service territories and proposed changes, and written
descriptions of the territorial boundaries are provided in Attachment A to this
recommendation.
In 1986, the
Commission approved a territorial agreement that established the boundaries for
Clay and Ocala’s service territories in Marion County. The 1986 agreement was a 25-year agreement
which was effective from January 7, 1987 to January 7, 2012. Since 2012, the
parties state that they have continued to honor and operate pursuant to the
terms of the 1986 agreement. Pursuant to Section 6.1, the proposed agreement
will be in effect for a term of 25 years from the date of the issuance of the
Commission Order.
During
the review of this joint petition, staff issued a data request to Clay and
Ocala on July 19, 2019, for which responses were received on August 8, 2019.
The responses have been placed in the docket file. 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 amended
territorial agreement between Clay and Ocala in Marion County?
Recommendation:
Yes, the Commission should approve the amended
territorial agreement between Clay and Ocala in Marion County. The proposed
territorial agreement is in the public interest and it will enable Clay and
Ocala to serve their customers in an efficient manner. (Guffey)
Staff Analysis:
Pursuant to Section 366.04(2)(d), F.S., and Rule
25-6.0440, Florida Administrative Code (F.A.C.), the Commission has the
jurisdiction to approve territorial agreements between and among rural electric
cooperatives, municipal electric utilities, and other electric utilities.
Unless the Commission determines that the agreement will cause a detriment to
the public interest, the agreement should be approved.
Prior to the 1986 agreement, parts of Marion County and areas
east of City of Ocala were being served by both utilities. The 1986 agreement
delineated and established specific service territories in Marion County for Clay
and Ocala. In
the instant docket, the parties state that they have made modest modifications
to their service boundaries in order to accurately reflect land development
that has occurred since 1986 and to provide reliable and efficient service to
the impacted customers.
Through the proposed agreement, the joint petitioners will
transfer 30 (25 residential and 5 general service commercial) customers from Clay
to Ocala. In addition, three residential and two general service commercial
Clay customers will be transferred to Ocala. The joint petitioners explained that
customer transfers will be completed within 36 months of the order approving
the agreement; however, to make the process easy and simple for customers, the
utilities have agreed not to immediately transfer any customers. Customer
transfers will occur when a customer applies for service at a new location or
when a customer changes the type of account (i.e., residential to commercial). The
joint petitioners further stated that any customers not transferred as a result
of a change in service or type of account will be transferred prior to the
expiration of the 36 months. In response to staff’s data request, the joint
petitioners stated that when the 30 CEC customers are transferred to Ocala,
they will be billed pursuant to Ocala’s approved tariffs and when five Ocala
customers are transferred to CEC, they will be billed pursuant to CEC’s
approved tariffs. No special or temporary tariff rates are anticipated for the
transferred customers of both utilities.
The amended territorial agreement also contemplates the
transfer of certain secondary service distribution facilities between the
parties. In response to staff’s data request, the petitioners stated these
facilities have been fully depreciated due to age and condition and therefore
no purchase price is assessed. Rather, the parties will exchange the facilities
on a like-kind basis. The joint petitioners assert that the proposed amended
territorial agreement will prevent uneconomic duplication of facilities and, if
approved, shall continue and remain in effect for a period of 25 years from the
date of the Commission’s Order.
Customer Notification
In accordance with Rule 25-6.0440(1)(d), F.A.C., the
petitioners state that prior to the filing of this petition, the impacted
customers were notified by mail of the transfer and provided a description of
the differences in rates between Clay and Ocala. In
response to staff’s data request, the utilities stated that they have not
received any negative responses from impacted customers. The Commission has not
received any objections from impacted customers either. In response to staff’s
data request, the petitioners provided updated customer notification letters. As
of June 2018, the bill for a Clay residential customer using 1,000 kilowatt-hours
(kWh) per month was $112.90 and the bill for an Ocala residential customer
using 1,000 kWh per month was $114.64.
Conclusion
After review of the petition and the petitioners’ joint
responses to staff’s data request, staff believes that the proposed agreement
is in the public interest and will enable Clay and Ocala to serve their current
and future customers efficiently. It appears that the proposed agreement
eliminates any potential uneconomic duplication of facilities and will not
cause a decrease in reliability of electric service. As such, staff believes
that the proposed agreement between Clay and Ocala will not cause a detriment
to the public interest and recommends Commission approval.
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. (Trierweiler)
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.
