Discussion
of Issues
Issue 1:
Should the FPL application for authority to issue
and sell securities be approved?
Recommendation:
Yes, FPL’s application for authority to issue and
sell securities during calendar year 2021 should be approved. (Hightower)
Staff Analysis:
FPL seeks authority to issue and sell and/or
exchange any combination of long-term debt and equities; and issue and sell
short-term debt securities during 2021. The amount of equity securities issued
and the maximum principal amount of long-term debt securities issued, will not,
in aggregate, exceed more than $6.35 billion during the calendar year 2021. The
maximum aggregate principal amount of short-term debt at any one time will
total not more than $4.1 million during the calendar year 2021.
FCG seeks Commission approval to make long-term borrowings
from FPL in an aggregate amount not to exceed $300 million in principal at any
one time during 2021 and make short-term borrowings from FPL in an aggregate
amount not to exceed $150 million in principal at any one time during calendar
years 2021. These amounts are included in the long-term and short-term amount totals
requested by FPL discussed above.
Only FPL is
actually issuing securities to the public. FCG is not issuing any securities
but instead is borrowing directly from FPL. The authority FPL is requesting,
the aggregate amount of equity and debt securities, is inclusive of the amount
it will lend to FCG.
Contingent upon the FERC’s approval
of the merger of Gulf and FPL, as discussed below, FPL requests to (i) issue
and sell and/or exchange any combination of the long-term debt and equity
securities described below and/or to assume liabilities or obligations as
guarantor, endorser or surety, together with the aggregate principal amount of
long-term debt and equity securities issued by Gulf and liabilities and
obligations assumed by Gulf as guarantor, endorser or surety, in each case
issued or assumed by Gulf during calendar year 2021 prior to the effectiveness
of the merger, in an aggregate principal amount not to exceed $1.50 billion,
and (ii) issue and sell short-term securities during calendar year 2021 in an
amount or amounts such that the aggregate principal amount of short-term
securities outstanding at the time of and including any such sale should not
exceed $800 million. If approved, these amounts would be incremental to the
long-term and short-term amount totals requested by FPL discussed in the first
paragraph.
Table 1.1
Proposed Transactions:
|
|
FPL, including FCG
|
Florida City Gas, stand alone
|
Gulf, stand alone
|
FPL, contingent upon FPL/Gulf merger (01/01/2021)
|
|
Long-term securities
|
$6.35 billion
|
$300 million
|
$ 1.50 billion
|
$7.85 billion
|
|
Short-term securities
|
$4.1 billion
|
$150 million
|
$ 800 million
|
$4.9 billion
|
Subject to
FERC approval, on January 1, 2021, Gulf will cease to exist as a separate legal
entity and therefore there will be no remaining authority under the Gulf Securities
Application and the Gulf regulated activities would be financed by FPL as set
forth in this Securities Application. Upon the effectiveness of the merger, the
Utility should provide prompt notice to the Commission that the authority
granted under the Gulf Order in Docket No. 20200187-EI should be terminated as
of the effective date of the merger.
In connection with this application, FPL confirms that the
capital raised pursuant to this application will be used in connection with the
regulated activities of FPL and FPL’s subsidiaries and affiliates, including
FCG and Gulf, and not the nonregulated activities of its subsidiaries or
affiliates.
Staff has reviewed the Company’s projected capital
expenditures. The amount requested by the Company, contingent upon the merger,
($12.8 billion, of which $450 million is for FCG) exceeds its expected capital
expenditures ($8.25 billion in 2021). The additional amount requested exceeding
the projected capital expenditures allows for financial flexibility for
unexpected events such as hurricanes, financial market disruptions and other
unforeseen circumstances. Staff believes the requested amounts are reasonable.
Staff recommends FPL’s application for authority to issue and sell securities
during calendar year 2021 be approved.
For monitoring purposes, this
docket should remain open until May 7, 2022, to allow the Company time to file
the required Consummation Report.
Issue 2:
Should this docket be closed?
Recommendation:
No, this docket should remain open. (Lherisson,
Schrader)
Staff Analysis:
For monitoring purposes, this docket should remain
open until May 7, 2022, to allow the Company time to file the required
Consummation Report.
