Case Background
On July 17, 2019,
Florida Power & Light Company (FPL) and Okefenoke Rural Electric Membership
Corporation (Okefenoke), collectively the joint petitioners, filed a petition
seeking Commission approval of clarification and amendment (2019 amendment) to
the joint petitioners’ current territorial agreement as it relates to certain
boundaries in Nassau County.
In May 1992, FPL
filed three petitions to resolve territorial disputes with Okefenoke in Baker
and Nassau Counties. The three dockets were consolidated for hearing purposes;
however, after lengthy negotiations the parties reached an agreement the
Commission approved in 1995 (1995 agreement). The parties currently operate pursuant to the
1995 agreement. The proposed 2019 amendment would correct a discrepancy in the
maps delineating the territorial boundaries approved in the 1995 agreement in
an area known as the Crawford Diamond in Nassau County and allow FPL to provide
electric service to the adjacent property. All other provisions of the 1995
agreement would remain in effect. There are no customer transfers contemplated
in the 2019 amendment. The 1995 agreement is included as Exhibit A to the joint
petition in the instant docket.
During the
review of this petition, staff issued two data requests to the joint
petitioners for which responses were received on August 27, 2019. The responses
have been placed in the docket file. In response to staff’s first data request,
FPL provided an updated page 1 of the 2019 amendment to indicate the date of
the amendment. On September 20, 2019, the joint petitioners filed the signature
page of the 2019 amendment. The 2019 amendment, dated July 13, 2019, is
provided in Attachment A to this recommendation. 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 2019 clarification
and amendment to the 1995 territorial agreement between FPL and Okefenoke?
Recommendation:
Yes, the Commission should approve the proposed 2019
clarification and amendment to the 1995 territorial agreement between FPL and
Okefenoke. The proposed amendment will resolve the boundary line discrepancy
that exists in the area referred to as the Crawford Diamond in Nassau County and
will enable FPL and Okefenoke to serve their customers in an efficient manner. (Guffey, Coston, Draper)
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 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.
FPL is an investor-owned utility operating under the
jurisdiction of this Commission pursuant to Chapter 366, F.S. Okefenoke is a
rural electric corporation organized and existing under the laws of Georgia and
registered to conduct business in Florida pursuant to Section 425.27, F.S. Both petitioners presently provide electric
service in Baker and Nassau Counties and are operating pursuant to the 1995 agreement.
The 1995 agreement does not specify a term; Section 4.1 of the 1995 agreement states
that the agreement will continue and remain in effect until the Commission, by
order, modifies or withdraws its approval after proper noticing and hearing.
Through the proposed 2019 amendment, the joint petitioners
seek to clarify a discrepancy in the maps approved in the 1995 agreement and to
amend the 1995 agreement to allow FPL to serve a property which is currently
located within Okefenoke’s service territory. The proposed amendment involves
an area called the Crawford Diamond, which is located in Nassau County. The
Crawford Diamond is a 1,815 acre property which is zoned as an industrial park.
The petitioners explained that the Crawford Diamond is located adjacent to
railroads and road infrastructure. FPL explained to staff in response to a data
request that, through its economic development team, it is promoting this
location to attract new commercial and industrial customers. In addition, FPL
explained to staff that it is conducting preliminary engineering and permitting
to potentially construct the Nassau Solar Energy Center in the Crawford
Diamond. However, there are no customers or electric service facilities in the
Crawford Diamond or the adjacent property at this time. The clarification and
the amendment to the 1995 agreement are discussed below.
The joint petition states that two conflicting maps
approved in the 1995 agreement can be interpreted to allow both FPL and Okefenoke
to serve a portion of the Crawford Diamond. The 1995 agreement includes several
pages of maps (shown in Attachment A to the order approving the 1995
agreement). Specifically, the petition states that the map on page 25 of the
1995 agreement and the maps on pages 47 and 48 of the maps are not consistent. The
area of discrepancy within the Crawford Diamond is shown on page 7 of 13 in
Attachment A to this recommendation. The parties now seek to clarify the
discrepancy and amend the territorial boundaries approved in the 1995 agreement
to allow FPL to serve the area of discrepancy.
The proposed 2019 amendment also seeks Commission approval
to allow FPL to serve potential future customers in a 335.86 acre property that
is adjacent to the area of discrepancy discussed above. The property is
currently in Okefenoke’s service territory. Page 8 of 13 in Attachment A to
this recommendation indicates the revised territorial boundary lines.
In addition to the proposed 2019 amendment, FPL and Okefenoke
have entered into a Memorandum of Understanding (MOU) dated November 15, 2018.
The joint petitioners attached the MOU in Exhibit E of their petition in the
instant docket. The joint petitioners are not seeking Commission approval of
the MOU. The joint petitioners explained that the MOU represents the negotiated
provisions necessary to resolve the discrepancy in the 1995 agreement maps. The
MOU also includes other terms and provisions that are not generally included in
territorial agreements for Commission approval. The MOU will terminate if the
Commission does not issue an order approving the 2019 amendment by December 31,
2019.
Pursuant to the MOU, FPL plans to construct an FPL-owned
substation and associated transmission and distribution lines in the Crawford
Diamond. FPL will also build a second substation and transfer this substation to
Okefenoke for $10 (Okefenoke substation). Any transmission assets installed by
FPL to serve the Okefenoke substation would be retained by FPL. In response to
staff’s second data request, FPL estimates the construction cost for the Okefenoke
substation to be approximately $6.8 to $7.6 million. The Okefenoke substation
will be constructed on FPL land which then will be transferred to Okefenoke
pursuant to a special warranty deed. Exhibit A to the MOU shows that the
Okefenoke substation will be built at the boundary line between FPL and
Okefenoke. FPL stated that once the Okefenoke substation is completed, and the
transfer of ownership of the substation and the land on which it is located has
been made from FPL to Okefenoke, FPL will come back to the Commission to
request further modification of the territorial agreement and indicate that the
subject property has been transferred to Okefenoke and will thereafter be part
of Okefenoke’s service territory.
In an email provided to staff that has been included in
the docket file, FPL asserts that it is currently not seeking recovery of any
costs to build the Okefenoke substation and FPL is not asking the Commission in
this docket to make a prudence determination regarding FPL’s activities. FPL
stated that if the Commission approves the proposed 2019 amendment and the costs
to construct the Okefenoke substation are incurred, FPL may seek recovery of
those costs in a future base rate filing. If such a filing is made by FPL, the
Commission would be asked to review the cost and prudence associated with the Okefenoke
substation and the associated transmission assets FPL would retain.
Conclusion
The joint petitioners assert that the 2019 amendment will
provide certainty to future electric customers and the joint petitioners
regarding the provision of electric service within the Crawford Diamond. No
customers will be transferred as a result of the proposed 2019 amendment. The
joint petitioner’s further state the proposed 2019 amendment represents a
mutually agreeable solution to the boundary discrepancy, provides benefits to
both FPL and Okefenoke, and eliminates the need for the Commission to resolve a
potential future territorial dispute.
After review of the petition, the responses to staff’s
data requests, and a follow-up response from FPL, staff believes that the
proposed 2019 amendment is in the public interest. The proposed amendment will
resolve the boundary line discrepancy that exists in the area referred to as
the Crawford Diamond in Nassau County and will enable FPL and Okefenoke to
serve their customers in an efficient manner. In addition, no current customers
will be affected as a result of the proposed 2019 amendment. As such, staff
believes that the proposed clarification and amendment to the 1995 agreement
between FPL and Okefenoke will not cause a detriment to the public interest and
recommends Commission approval.
However, the Commission should note that in approving the
2019 amendment, the Commission makes no finding regarding the prudence or
potential recovery of the costs to construct the Okefenoke substation that will
be transferred to Okefenoke. Those costs would be subject of a future,
appropriate rate proceeding.
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. (Schrader)
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.
