|
State of Florida
|
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-
|
|
DATE:
|
September 28, 2020
|
|
TO:
|
Office of Commission Clerk (Teitzman)
|
|
FROM:
|
Office of the General Counsel (Harper,
Kahn)
Division of Accounting
and Finance (Fletcher)
Division of Economics
(Coston, Guffey)
|
|
RE:
|
Docket No. 20200211-EI – Petition for
temporary variance from or waiver of Rule 25-6.097(3), F.A.C., temporary
waiver of Section 6.3 of tariff, and request for expedited ruling, by Florida
Power & Light Company.
|
|
AGENDA:
|
10/06/20 – Regular Agenda – Proposed Agency Action – Interested
Persons May Participate
|
|
COMMISSIONERS ASSIGNED:
|
All Commissioners
|
|
PREHEARING OFFICER:
|
Graham
|
|
CRITICAL DATES:
|
12/10/20 (Pursuant to Section 120.542(8), Florida
Statutes, the Commission must grant or deny the petition by this date)
|
|
SPECIAL INSTRUCTIONS:
|
None
|
|
|
|
|
Case Background
On
September 11, 2020, Florida Power & Light Company (FPL) filed a petition
for a temporary variance from or waiver of the requirements of Rule
25-6.097(3), Florida Administrative Code (F.A.C.), and from Section 6.3 of
FPL’s Tariff. Both Rule 25-6.097,
F.A.C., and Section 6.3 of FPL’s Tariff address the refund of customer
deposits. By its petition, FPL requests that the temporary rule and tariff
variance or waiver (variance) be granted to allow FPL to provide a
one-time accelerated residential customer deposit refund for qualifying
customers to mitigate financial impacts caused by the COVID-19 pandemic. In addition,
FPL requests that the petition be considered on an expedited basis so that
qualifying residential customers may benefit as soon as possible.
Legal
Standard for Rule Variances/Waivers
Section
120.542(1), Florida Statutes (F.S.), states that the purpose of a rule variance
is to provide relief to persons subject to regulation in cases where strict
application of rule requirements can lead to unreasonable, unfair, and
unintended results in particular circumstances. Section 120.542(2), F.S., sets
forth a two-pronged test for granting variances/waivers to rules. If the
petitioner satisfies both prongs of the test, the agency must grant the variance.
First, the
petitioner must show that “application of [the] rule would create a substantial
hardship or would violate principles of fairness.” A “substantial hardship” is
a “demonstrated economic, technological, legal, or other type of hardship.”
Principles of fairness are violated when “the literal application of a rule
affects a particular person in a manner significantly different from the way it
affects other similarly situated persons who are subject to the rule.” Second,
the petitioner must demonstrate that it will achieve the purpose of the
underlying statutes by other means.
Each petitioner
for rule variance has the burden of proving its entitlement to a variance under
its particular circumstances. Thus, the Commission’s determination as to
whether a petitioner should be granted a variance is based on whether the legal
test has been met under the specific circumstances of each petitioner.
Purpose
of the Underlying Statutes
FPL
identifies Sections 366.03, 366.041(1), 366.05(1), and 366.06(1), F.S., as the
implementing authority for Rule 25-6.097, F.A.C. The purpose of these sections
is to ensure that investor- owned utilities charge fair, just, reasonable,
nondiscriminatory, and compensatory rates that are subject to Commission
approval and oversight. FPL alleges that the purposes of these underlying
statutes will still be met if the temporary variance is granted. FPL further
alleges that its petition should be approved because it is not specifically
prohibited by any of the underlying statutes.
Substantial
Hardship
FPL
states that it believes that the “unique and extraordinary nature of the impact
of the COVID-19 pandemic” permits the Commission to consider this issue from
the perspective of FPL’s impacted qualifying residential customers. FPL
observes that Florida has been in a state of public health emergency since
early March and that its qualifying residential
customers are likely to have experienced adverse financial impacts caused by
the COVID-19 pandemic.
Legal
Standard for Tariff Waivers
Unlike rule variances
and waivers, there is no set legal standard for tariff waivers. Public utility tariffs
are subject to review and approval by the Commission. Section 366.05(1)(e), F.S.
The Commission has stated in past cases that the burden is on the utility to
provide sufficient justification for a tariff modification.
In this instance, FPL has proposed a temporary tariff
waiver/variance. FPL states that it will process deposit refunds for qualifying
residential customers within the week after an order approving the petition
becomes final. After processing the deposit refund, FPL proposes to immediately
resume normal application under Section 6.3 of its Tariff.
Procedural
Matters
Pursuant to Section 120.542(6), F.S., notice of FPL’s
petition was published in the September 14, 2020 edition of the Florida
Administrative Register, Vol. 46, No. 180. On September 18, 2020, staff
requested additional information from FPL regarding its petition. FPL provided
its response to staff’s request for additional information on September 22,
2020. As of the date of the filing of this recommendation, no comments have
been submitted on the petition.
Pursuant to Section 120.542(8),
F.S., a petition for variance must be granted or denied within 90 days of receipt
by the agency or the petition is deemed approved. Accordingly, the Commission
must approve or deny FPL’s petition by December 10, 2020. Although the petition
has not been filed as an emergency rule variance, FPL requests the Commission
consider the petition on an expedited basis.
This recommendation addresses
whether the Commission should grant FPL’s petition. The Commission has
jurisdiction under Sections 120.542, 366.03, 366.041(1), 366.05(1), and
366.06(1), F.S.
Discussion
of Issues
Issue 1:
Should FPL’s petition for temporary variance from or
waiver of Rule 25-6.097(3), F.A.C., and Section 6.3 of FPL’s Tariff be granted?
Recommendation:
A rule waiver or variance
is unnecessary under the plain language of Rule 25-6.097, F.A.C. The Commission
should grant FPL’s petition for a temporary variance from or waiver of Section
6.3 of FPL’s Tariff. If FPL’s petition is approved, the Commission should require
FPL to file a notice in this docket when it begins and concludes implementing
the deposit refund. (Harper, Kahn, Coston, Guffey, Fletcher)
Staff Analysis:
FPL is asking the
Commission for a temporary variance from or waiver of Rule 25-6.097(3), F.A.C.,
and Section 6.3 of the FPL Tariff, so that it can provide an accelerated refund
of cash deposits to qualifying residential customers who may be experiencing
economic hardships due to the ongoing COVID-19 pandemic and the associated
economic impacts.
Rule Waiver or Variance is
Unnecessary
Rule 25-6.097(2), F.A.C., gives
investor-owned electric utilities the discretion to require any applicant for
service to satisfactorily establish credit. Rule 25-6.097(2)(b), F.A.C., states that
credit will be deemed so established if the applicant pays a cash deposit.
Rule 25-6.097(3), F.A.C., provides,
in pertinent part, that after a customer has established a satisfactory payment
record after continuous service for a period of 23 months, the utility must
refund the residential customer’s deposits, provided the customer has not in
the preceding 12 months:
(a) Made more than
one late payment of a bill (after expiration of 20 days from the date of
mailing or delivery by the utility).
(b) Paid with a
check refused by a bank.
(c) Been
disconnected for nonpayment, or at any time.
(d) Tampered with
the electric meter, or
(e) Used service in
a fraudulent or unauthorized manner.
The rule, therefore, contemplates
a two element test for when an electrical utility must refund a deposit to a qualifying residential customer:
(1) the residential
customer must have maintained continuous service for 23 months; and
(2) the residential
customer has demonstrated what FPL characterizes as a “good payment history” by
complying with paragraphs (3)(a)-(e) of Rule 25-6.097, F.A.C., for the
preceding 12 months.
Nonetheless, Rule 25-6.097(5)(b),
F.A.C., states that “[n]othing in this rule shall prohibit a utility from
refunding at any time a deposit with any accrued interest.”
FPL requests a temporary variance
of the provisions of Rule 25-6.907(3), F.A.C., to allow the 23-month service
period be abbreviated to a 12-month period, with no change to the provision
requiring that the residential customer maintain a 12-month good payment
history. Staff believes that it is unnecessary to determine whether FPL has
carried its burdens under Section 120.542(2), F.S., for a temporary rule waiver
or variance because the plain language of Rule 25-6.097(5)(b), F.A.C.,
expressly provides that a utility may refund cash deposits to residential
customers at any time. Moreover, while Rule 25-6.097(3), F.A.C., requires that
the utility must refund a customer’s deposit after the customer has established
a satisfactory payment record and has had continuous service for a period of 23
months, nothing in Rule 25-6.097(3), F.A.C., prohibits the utility from
refunding a deposit prior to the 23-month time period in the rule.
Temporary Variance from or
Waiver of Section 6.3 of FPL’s Tariff
FPL also asks for a temporary
variance from or waiver of the provisions in Section 6.3 of its Tariff. Section
6.3 of FPL’s Tariff states, in pertinent part, that “[a]fter a residential [c]ustomer
has established a prompt payment record and has had continuous service for a
period of not less than 23 months, the Company will no longer require a
[s]ecurity [d]eposit or guaranty for that account, provided the [c]ustomer has
not, in the preceding twelve (12) months” violated any of the provisions in Rule
25-6.097(3)(a)-(e), F.A.C., as recited above. Once these conditions have been
met, the Tariff further states that the deposit “will be refunded.”
Under the terms of Section
6.1(1)(a)-(c) of FPL’s Tariff, all “applicants” are required to provide a
security deposit or guaranty or to satisfy FPL’s application requirements to be
exempted from the deposit requirement before FPL will begin to render service.
The Tariff does not explicitly incorporate a provision analogous to Rule
25-6.097(5)(b), F.A.C., that would give FPL the discretion to return a
residential customer’s deposit prior to the customer’s satisfaction of the
aforementioned 23 month/12 month durational requirements. Consequentially,
staff believes the Tariff provisions are mandatory, rather than permissive, in
nature and that Commission approval of a tariff variance is required for FPL to
issue the refund as set forth in its petition.
While there is no legal standard
for tariff modifications analogous to the one included in Section 120.542,
F.S., for rule variances and waivers, staff believes that FPL has provided
sufficient justification for the Commission to approve FPL’s request for a
temporary variance of Section 6.3 of its Tariff. If
the Commission approves the temporary variance, FPL estimates that
approximately $9 million to $11 million worth of deposit funds plus statutory
interest could be returned to approximately 50 to 60 thousand qualifying
residential customers, or approximately 1 percent of FPL’s total residential
customer base.
In general, customer deposits are
designed to minimize the exposure of bad debt expense for the utility, and
ultimately, for the general body of ratepayers. However, FPL alleges that it
will incur only a negligible effect on FPL’s financial status if the tariff
provision is temporarily changed. FPL estimates that once the deposit refund is
processed, it may cause FPL’s weighted average cost rate of customer deposits
to decrease by less than one basis point, or approximately 0.0005 percent. With
respect to its total weighted average cost of capital, FPL estimates an increase
of less than one basis point, or approximately 0.001 percent.
Further, FPL estimates that its cost of implementing the deposit refund will
have zero associated program costs other than non-incremental analytical time
and that any potential risks relating to a customer related default will be
modest and contained due to the limited nature of its request.
FPL plans to implement the
deposit refund by identifying all qualifying residential customers “as of a
single date within the week following an order approving the petition becoming
final.” Once that happens, FPL states that those residential customers’
accounts will be flagged as having qualified for the deposit refund. FPL’s
existing Customer Information System will then automatically calculate the
applicable statutory interest rate and credit that amount to the customer’s
electric account. FPL expects the entire process to take no more than a week. Once
the one-time accelerated deposit refund has been fully issued, the temporary
tariff variance would expire and FPL would then revert back to the 23-month continuous
service period specified in Section 6.3 of its Tariff.
Conclusion
Based on the above, staff
believes that a temporary rule waiver or variance is unnecessary under the
plain language of Rule 25-6.097, F.A.C. In addition, staff believes a temporary
variance of or waiver of Section 6.3 of FPL’s Tariff is justified. Therefore, staff
recommends that the Commission grant FPL’s petition for a temporary variance
from or waiver of Section 6.3 of FPL’s Tariff. If FPL’s petition is approved, staff
recommends that the Commission require FPL to file a notice in this docket when
it begins and concludes implementing the deposit refund.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, a consummating order should be issued and this docket
should be closed. (Harper, Kahn)
Staff Analysis:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, a consummating order should be issued and this docket
should be closed.