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State of Florida
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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-
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DATE:
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April 22, 2021
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TO:
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Office of Commission Clerk (Teitzman)
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FROM:
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Office of the General Counsel (Harper) SMC
Division of Accounting
and Finance (Fletcher, Mouring) ALM
Division of Economics
(Coston, Guffey) JGH
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RE:
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Docket No. 20210062-OT – Proposed amendment
of Rule 25-6.0143, F.A.C., Use of Accumulated Provision Accounts 228.1,
228.2, and 228.4 and proposed new Rule 25-7.0143, F.A.C., Use of Accumulated
Provision Accounts 228.1, 228.2, and 228.4.
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AGENDA:
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05/04/21 – Regular Agenda – Rule Proposal – Interested Persons May
Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Fay
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RULE STATUS:
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Proposal May Be Deferred
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SPECIAL INSTRUCTIONS:
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None
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Case Background
Rule 25-6.0143, Florida
Administrative Code (F.A.C.), Use of Accumulated Provision Accounts 228.1,
228.2, and 228.4., provides the
standards for the application of Accumulated Provision Accounts 228.1, 228.2,
and 228.4 for investor-owned electric
utilities. The Commission does not currently have a corresponding rule on this
subject for investor-owned natural gas utilities. Adoption of new Rule
25-7.0143, F.A.C., Use of Accumulated Provision Accounts 228.1, 228.2,
and 228.4, would create a new rule for
the standards for the application of Accumulated Provision Accounts 228.1,
228.2, and 228.4 for natural gas utilities.
The focus of this rulemaking is to amend Rule 25-6.0143, F.A.C., for clarity and specificity. Rule
25-7.0143, F.A.C., is being
created to provide an industry-specific standard for the application of
Accumulated Provision Accounts 228.1, 228.2, and 228.4 for the natural gas
utilities. In general, the
amendment of Rule 25-6.0143, F.A.C., and the adoption of new Rule 25-7.0143,
F.A.C., is intended to provide requirements for the application of
Accumulated Provision Accounts 228.1, 228.2, and 228.4, specifically as they apply to storm-related
damages.
The
Notice of Development of Rulemaking for Rule 25-6.0143, F.A.C., was published in the June 7, 2019 edition of the
Florida Administrative Register, Volume 45, No. 111, in conjunction with the
Commission’s rulemaking on Rules 25-6.030 and 25-6.031, F.A.C., the storm
protection plan and storm protection plan cost recovery clause rulemaking.
During the development of those rules, staff determined that Rule 25-6.0143, F.A.C., needed to be updated.
In
the course of considering potential amendments to Rule 25-6.0143, F.A.C., staff
determined that the gas industry needed a rule similar to Rule 25-6.0143, F.A.C.
Accordingly, a Notice of Development of Rulemaking for new Rule 25-7.0143, F.A.C., was published
in the June 10, 2020 edition of the Florida Administrative Register, Volume 46, No. 113.
A
rule development workshop on both rules was held on June 29, 2020.
Representatives from Florida Power & Light Company (FPL), Tampa Electric
Company (TECO), Duke Energy Florida, LLC (DEF), Gulf Power Company (Gulf),
Florida Public Utilities Company (FPUC), Florida City Gas (FCG), Peoples Gas
System (PGS), and the Office of Public Counsel (OPC) participated at the
workshop and submitted post-workshop comments.
This
recommendation addresses whether the Commission should propose the amendment of
Rule 25-6.0143, F.A.C.,
and propose the adoption of new Rule 25-7.0143, F.A.C. The Commission
has jurisdiction pursuant to Section 366.05(1), Florida
Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission propose the amendment of Rule 25-6.0143, F.A.C., Use of Accumulated
Provision Accounts 228.1, 228.2, and 228.4., and propose the adoption of Rule
25-7.0143, F.A.C., Use of Accumulated Provision Accounts 228.1, 228.2, and
228.4?
Recommendation:
Yes. The Commission should propose the amendment of
Rule
25-6.0143, F.A.C., and propose
the adoption of Rule 25-7.0143, F.A.C., as set forth in Attachment
A. The Commission should also certify Rules 25-6.0143 and 25-7.0143, F.A.C.,
as minor violation rules. (Mouring, Harper, Guffey)
Staff Analysis:
Staff
recommends that the Commission amend Rule 25-6.0143, F.A.C., and adopt new Rule 25-7.0143, F.A.C., as set forth
in Attachment A. Staff’s recommended language for Rule 25-7.0143, F.A.C.,
generally mirrors the Commission’s current use of accumulated provision accounts
rule for investor-owned electric utilities. Both rules
address the categories of storm-related costs eligible for certain accounting.
As such, the
recommended amendments discussed below for Rule 25-6.0143, F.A.C., are also
reflected in staff’s recommended language for Rule 25-7.0143, F.A.C.
Rule
25-7.0143, F.A.C.
Draft
Rule 25-7.0143, F.A.C., is virtually identical to the electric rule, Rule
25-6.0143, F.A.C., in that both rules address the storm related costs that will
be allowed to be charged to the reserve under the Incremental Cost and
Capitalization Approach (ICCA) methodology.
Also, draft Rule 25-7.0143, F.A.C., provides an accounting mechanism for
probable liability that is not covered by insurance and a “catch-all” account
for operating provisions that are not covered elsewhere in the rule. This
account must be maintained in such a manner as to show the amount of each
separate provision established by the utility and the nature and amounts of the
debits and credits.
In
addition, draft Rule 25-7.0143, F.A.C., requires the utility to show the level
and annual accrual rate for each account listed in the rule so it can be
evaluated at the time of a rate proceeding and adjusted as necessary. Pursuant
to the draft rule, a utility may petition the Commission for a change in the
provision level and accrual of a certain account outside a rate proceeding
under certain, specified circumstances, but a utility may not fund any account
listed in the rule unless the Commission approves such funding.
Subsection
(1) of Both Rules
Subsection
(1) of draft Rules 25-6.0143 and 25.7.0143, F.A.C., contain provisions for an
account to provide for losses through accident, fire, flood, storms, nuclear
accidents and similar type hazards to the utility’s own property or property
leased from others, which is not covered by insurance. Staff recommends
updating this subsection of the rules to require a utility to notify the
Commission Clerk in writing for each incident expected to exceed 1.5 percent of
jurisdictional revenues for the most recent calendar year.
Staff also recommends updating subsection
(1) in Rule 25-6.0143, F.A.C., and including a provision in new Rule 25-7.0143,
F.AC., for the storm-related costs that will be allowed to be charged to the
reserve under the ICCA methodology. For each of the identified accounts, a
calculation is made to compare the actual average costs for a specific calendar
month to the actual average costs of that same month for each of the previous
three years. The actual costs for a specific calendar month that are in excess
of actual average costs of that same month for each of the previous three
years, would be identified as incremental costs.
For example, staff recommends that rule language be included to address
contract labor and payroll expenses incurred in storm restoration activities
and that such costs must be incurred in any month in which storm damage
restoration activities are conducted. Staff recommends similar clarifications
and rule language be added to address the fuel costs for both company and
contractor vehicles used in storm restoration activities, as well as the
vegetation management costs that are specifically related to storm restoration
activities for the utilities. For all of these cost categories, staff’s
recommended rule language requires that the costs must be greater than the
actual monthly average of contract labor or payroll costs charged to operation
and maintenance expense for the same month in the three previous calendar
years, and each adjustment must be accompanied by a detailed explanation of the
nature of the adjustment. Finally, staff is also recommending an added
“catch-all” provision to the rules, which provides that for any other costs or
expenses not specifically identified in the rules but that are directly and
solely attributable to a storm restoration event, such costs must be explained.
With
regard to the payroll costs, DEF commented that staff’s draft language in
Subsection (1) of Rule 25-6.0143, F.A.C., is unclear as to which payroll
expenses were eligible. It is staff’s intention that the rule language allow
for all payroll and payroll-related
costs, including overtime payroll, to be eligible. Staff believes the rule as
reflected in Attachment A is sufficient to address this point. The other stakeholders
agreed that staff’s recommended language was sufficient and clear in this
regard.
Minor Violation Rules Certification
Pursuant
to Section 120.695, F.S., as of July 1, 2017, the agency head shall certify
whether any part of each rule filed for adoption is designated as a minor
violation rule. A minor violation rule is a rule that would not result in
economic or physical harm to a person or an adverse effect on the public
health, safety, or welfare or create a significant threat of such harm when
violated. Staff recommends that the Commission certify Rule 25-6.0143, F.A.C., and
Rule 25-7.0143, F.A.C., as minor violation rules.
Statement of Estimated Regulatory Costs
Pursuant to Section
120.54(3)(b)1., F.S., agencies are encouraged to prepare a statement of
estimated regulatory costs (SERC) before the adoption, amendment, or repeal of
any rule. A SERC was prepared for this
rulemaking and is appended as Attachment B. As required by Section
120.541(2)(a)1., F.S., the SERC analysis includes whether the rule amendments and
rule adoption are likely to have an adverse impact on economic growth, private
sector job creation or employment, or private sector investment in excess of $1
million in the aggregate within five years after implementation. Staff notes
that none of the impact/cost criteria will be exceeded as a result of the
recommended amendments to Rule 25-6.0143 or the adoption new Rule 25-7.0143.
Based
on the utilities’ responses to data requests and discussions with technical
staff that oversee the accumulated provision rules, the recommended proposed
rule amendments and proposed new rule will not likely increase regulatory
costs, as contemplated by Section 120.541, F.S., including any transactional
costs or have an adverse impact on business competitiveness, productivity, or
innovation in excess of $1 million in the aggregate within five years of
implementation. The proposed new rule and rule amendments would not potentially
have adverse impacts on small businesses, would have no implementation cost to
the Commission or other state and local government entities, and would have no
negative impact on small cities or counties.
No
regulatory alternatives were submitted pursuant to Section 120.541(1)(g), F.S.
The SERC concludes that none of the impacts/cost criteria established in
Sections 120.541(2)(a), (c), (d), and (e), F.S., will be exceeded as a result
of the proposed rule amendments or the adoption of the new rule.
Conclusion
The Commission should propose the amendment of Rule
25-6.0143, F.A.C., and the adoption of Rule 25-7.0143, F.A.C., as set forth in
Attachment A. The Commission should certify Rule 25-6.0143, F.A.C., and Rule
25-7.0143, F.A.C., as minor violation rules.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no requests for hearing, information
regarding the SERC, proposals for a lower cost regulatory alternative, or JAPC
comments are filed, the rules should be filed with the Department of State, and
the docket should be closed. (Harper)
Staff Analysis:
If no requests for hearing, information regarding
the SERC, proposals for a lower cost regulatory alternative, or JAPC comments
are filed, the rules should be filed with the Department of State, and the
docket should be closed.
25-6.0143 Use of Accumulated Provision
Accounts 228.1, 228.2, and 228.4.
(1)
Account No. 228.1 Accumulated Provision for Property Insurance.
(a)
This account may be established to provide for losses through accident, fire,
flood, storms, nuclear accidents and similar type hazards to the utility’s own
property or property leased from others, which is not covered by insurance.
This account would also include provisions for the deductible amounts contained
in property loss insurance policies held by the utility as well as
retrospective premium assessments stemming from nuclear accidents under various
insurance programs covering nuclear generating plants. A schedule of risks
covered must shall be maintained, giving a description of the
property involved, the character of risks covered and the accrual rates used.
(b)
Except as provided in paragraphs (1)(f), (1)(g) and (1)(h) charges to this
account must shall be made for all occurrences in accordance with
the schedule of risks to be covered which are not covered by insurance.
Recoveries, insurance proceeds or reimbursements for losses charged to this
account must shall be credited to the account.
(c)
A separate subaccount must shall be established for that portion
of Account No. 228.1 which is designated to cover storm-related damages to the
utility’s own property or property leased from others that is not covered by
insurance. The records supporting the entries to this account must shall
be so kept that the utility can furnish full information as to each storm event
included in this account.
(d)
In determining the costs to be charged to cover storm-related damages, the
utility must shall use an Incremental Cost and Capitalization
Approach methodology (ICCA). Under the ICCA methodology, the costs charged to
cover storm-related damages must shall exclude those costs that
normally would be charged to non-cost recovery clause operating expenses in the
absence of a storm. Under the ICCA methodology for determining the allowable
costs to be charged to cover storm-related damages, the utility will be allowed
to charge to Account No. 228.1 costs that are incremental to costs normally
charged to non-cost recovery clause operating expenses in the absence of a
storm. All costs charged to Account 228.1 are subject to review for prudence
and reasonableness by the Commission. In addition, capital expenditures for the
removal, retirement and replacement of damaged facilities charged to cover
storm-related damages must shall exclude the normal cost for the
removal, retirement and replacement of those facilities in the absence of a
storm. The utility must shall notify the Director of the
Commission Clerk in writing for each incident expected to exceed 1.5 percent
of jurisdictional revenues for the most recent calendar year $10 million.
(e)
The types of storm related costs allowed to be charged to the reserve under the
ICCA methodology include, but are not limited to, the following:
1.
Additional contract labor hired for storm restoration activities incurred in
any month in which storm damage restoration activities are conducted, that are
greater than the actual monthly average of contract labor costs charged to
operation and maintenance expense for the same month in the three previous
calendar years. The utility may adjust historical monthly contract labor costs
charged to operation and maintenance expense from calculated monthly average.
Each adjustment shall be accompanied by a detailed explanation of the nature
and derivation of the adjustment;
2.
Logistics costs of providing meals, lodging, and linens for tents and other
staging areas;
3.
Transportation of crews and other personnel for storm restoration;
4.
Vehicle costs for vehicles specifically rented for storm restoration activities;
5.
Waste management costs specifically related to storm restoration activities;
6.
Rental equipment specifically related to storm restoration activities;
7.
Materials and supplies used to repair and restore service and facilities to
pre-storm condition, such as poles, transformers, meters, light fixtures, wire,
and other electrical equipment, excluding those costs that normally would be
charged to non-cost recovery clause operating expenses in the absence of a
storm;
8.
Payroll Overtime payroll and payroll-related costs for utility
personnel included in storm restoration activities incurred in any month in
which storm damage restoration activities are conducted, that are greater than
the actual monthly average of payroll and payroll-related costs charged to
operation and maintenance expense for the same month in the previous three
calendar years. The utility may adjust historical monthly payroll and
payroll-related costs charged to operation and maintenance expense from
calculated monthly average. Each adjustment shall be accompanied by a detailed
explanation of the nature and derivation of the adjustment;
9.
Fuel cost for company and contractor vehicles used in storm restoration
activities incurred in any month in which storm damage restoration
activities are conducted, that are greater than the actual monthly average of fuel
costs charged to operation and maintenance expense for the same month in the
previous three calendar years. The utility may adjust historical monthly fuel
costs charged to operation and maintenance expense from calculated monthly
average. Each adjustment shall be accompanied by a detailed explanation of the
nature and derivation of the adjustment; and
10.
Cost of public service announcements regarding key storm-related issues, such
as safety and service restoration estimates;.
11.
Vegetation management costs specifically related to storm restoration
activities incurred in any month in which storm damage restoration activities
are conducted, that are greater than the actual monthly average of vegetation
management costs charged to operation and maintenance expense for the same
month in the previous three calendar years. The utility may adjust historical monthly
vegetation management costs charged to operation and maintenance expense from
calculated monthly average. Each adjustment shall be accompanied by a detailed
explanation of the nature and derivation of the adjustment; and
12.
Other costs or expenses not specifically identified in paragraph (1)(e)1.
through (1)(e)11. that are directly and solely attributable to a storm
restoration event.
(f)
The types of storm related costs prohibited from being charged to the reserve
under the ICCA methodology include, but are not limited to, the
following:
1.
Base rate recoverable regular payroll and regular-payroll related costs for
utility managerial and non-managerial personnel;
1.2.
Bonuses or any other special compensation for utility personnel not eligible
for overtime pay;
2.3.
Base rate recoverable Ddepreciation expenses, insurance costs
and lease expenses for utility-owned or utility-leased vehicles and aircraft;
3.
4. Utility employee assistance costs;
4.5.
Utility employee training costs incurred prior to 72 hours before the storm
event;
5.6.Utility
advertising, media relations or public relations costs, except for public
service announcements regarding key storm-related issues as listed above in
subparagraph (1)(e)10.;
6.7.
Utility call center and customer service costs, except for non-budgeted
overtime or other non-budgeted incremental costs associated with the storm
event;
8.
Tree trimming expenses, incurred in any month in which storm damage restoration
activities are conducted, that are less than the actual monthly average of tree
trimming costs charged to operation and maintenance expense for the same month
in the three previous calendar years;
7.9.
Utility lost revenues from services not provided; and
8.10.
Replenishment of the utility’s materials and supplies inventories.
(g)
Under the ICCA methodology for determining the allowable costs to be charged to
cover storm-related damages, certain costs may be charged to Account 228.1 only
after review and approval by the Commission. Prior to the Commission’s
determination of the appropriateness of including such costs in Account No.
228.1, the costs may be deferred in Account No. 186, Miscellaneous Deferred
Debits. The deferred costs must be incurred prior to June 1 of the year
following the storm event. By September 30 a utility must shall
file a petition for the disposition of any costs deferred prior to June 1 of
the year following the storm event giving rise to the deferred costs. These
costs include, but are not limited to, the following:
1.
Costs of normal non-storm related activities which must be performed by
employees or contractors not assigned to storm damage restoration activities
(“back-fill work”) or normal non-storm related activities which must be
performed following the restoration of service after a storm by an employee or
contractor assigned to storm damage restoration activities in addition to the
employee’s or contractor’s regular activities (“catch-up work”); and
2.
Uncollectible accounts expenses.
(h)
A utility may, at its own option, charge storm-related costs as operating
expenses rather than charging them to Account No. 228.1. The utility must
shall notify the Director of the Commission Clerk in writing and
provide a schedule of the amounts charged to operating expenses for each
incident exceeding 0.5 percent of jurisdictional revenues for the most
recent calendar year $5 million. The schedule must shall
be filed annually by February 15 of each year for information pertaining to the
previous calendar year.
(i)
If the charges to Account No. 228.1 exceed the account balance, the excess must
shall be carried as a debit balance in Account No. 182.3 228.1
and no request for a deferral of the excess or for the establishment of a
regulatory asset is necessary.
(j)
A utility may petition the Commission for the recovery of a debit balance in
Account No. 182.3 discussed in paragraph (1)(i) 228.1 plus an
amount to replenish the storm reserve through a surcharge, securitization or
other cost recovery mechanism.
(k)
A utility must shall not establish or change an annual accrual
amount or a target accumulated balance amount for Account No. 228.1 without
prior Commission approval.
(l)
Each utility must shall file a Storm Damage Self-Insurance
Reserve Study (Study) with the Commission Clerk by January 15, 2011 and at
least once every 5 years thereafter from the submission date of the previously
filed study. A Study must shall be filed whenever the utility is
seeking a change to either the target accumulated balance or the annual accrual
amount for Account No. 228.1. At a minimum, the Study must shall
include data for determining a target balance for, and the annual accrual
amount to, Account No. 228.1.
(m)
Each utility must shall file a report with the Director of
the Commission Clerk providing information concerning its efforts to obtain
commercial insurance for its transmission and distribution facilities and any
other programs or proposals that were considered. The report must shall
also include a summary of the amounts recorded in Account 228.1. The report must
shall be filed annually by February 15 of each year for information
pertaining to the previous calendar year.
(2)
Account No. 228.2 Accumulated Provision for Injuries and Damages.
(a)
This account may be established to meet the probable liability, not covered by
insurance, for deaths or injuries to employees or others and for damages to
property neither owned nor held under lease by the utility. When liability for
any injury or damage is admitted or settled by the utility either voluntarily
or because of the decision of a Court or other lawful authority, such as a
workman’s compensation board, the admitted liability or the amount of the
settlement must shall be charged to this account.
(b)
Charges to this account must shall be made for all losses
covered. Detailed supporting records of charges made to this account must
shall be maintained in such a way that the year the event occurred which
gave rise to the loss can be associated with the settlement. Recoveries or
reimbursements for losses charged to the account must shall be
credited to the account.
(3)
Account No. 228.4 Accumulated Miscellaneous Operating Provisions.
(a)
This account may be established for operating provisions which are not covered
elsewhere. This account must shall be maintained in such a manner
as to show the amount of each separate provision established by the utility and
the nature and amounts of the debits and credits thereto. Each separate
provision must shall be identified as to purpose and the specific
events to be charged to the account to ensure that all such events and only
those events are charged to the provision accounts.
(b)
Charges to this account must shall be made for all costs or
losses covered. Recoveries or reimbursements for amounts charged to this
account must shall be credited hereto.
(4)(a)
The provision level and annual accrual rate for each account listed in
subsections (1) through (3) must shall be evaluated at the time
of a rate proceeding and adjusted as necessary. However, a utility may petition
the Commission for a change in the provision level and accrual outside a rate
proceeding.
(b)
If a utility elects to use any of the above listed accumulated provision
accounts, each and every loss or cost which is covered by the account must
shall be charged to that account and must shall not be
charged directly to expenses except as provided for in paragraphs (1)(f),
(1)(g) and (1)(h). Charges must shall be made to accumulated
provision accounts regardless of the balance in those accounts.
(c)
No utility must shall fund any account listed in subsections (1)
through (3) unless the Commission approves such funding. Existing funded provisions
which have not been approved by the Commission must shall be
credited by the amount of the funded balance with a corresponding debit to the
appropriate current asset account, resulting in an unfunded provision.
Rulemaking
Authority 366.05(1) FS. Law Implemented 350.115, 366.04(2)(a) FS. History–New
3-17-88, Amended 6-11-07,___________.
25-7.0143 Use of Accumulated Provision
Accounts 228.1, 228.2, and 228.4.
(1)
Account No. 228.1 Accumulated Provision for Property Insurance.
(a)
This account may be established to provide for losses through accident, fire,
flood, storms and similar type hazards to the utility’s own property or
property leased from others, which is not covered by insurance. A schedule of
risks covered must be maintained, giving a description of the property
involved, the character of risks covered and the accrual rates used.
(b)
Except as provided in paragraphs (1)(f), (1)(g) and (1)(h) charges to this
account must be made for all occurrences in accordance with the schedule of
risks to be covered which are not covered by insurance. Recoveries, insurance
proceeds or reimbursements for losses charged to this account must be credited
to the account.
(c)
A separate subaccount must be established for that portion of Account No. 228.1
which is designated to cover storm-related damages to the utility’s own
property or property leased from others that is not covered by insurance. The
records supporting the entries to this account must be so kept that the utility
can furnish full information as to each storm event included in this account.
(d)
In determining the costs to be charged to cover storm-related damages, the
utility must use an Incremental Cost and Capitalization Approach methodology
(ICCA). Under the ICCA methodology, the costs charged to cover storm-related
damages must exclude those costs that normally would be charged to non-cost
recovery clause operating expenses in the absence of a storm. Under the ICCA
methodology for determining the allowable costs to be charged to cover
storm-related damages, the utility will be allowed to charge to Account No.
228.1 costs that are incremental to costs normally charged to non-cost recovery
clause operating expenses in the absence of a storm. All costs charged to
Account 228.1 are subject to review for prudence and reasonableness by the
Commission. In addition, capital expenditures for the removal, retirement and
replacement of damaged facilities charged to cover storm-related damages must
exclude the normal cost for the removal, retirement and replacement of those
facilities in the absence of a storm. The utility must notify the Commission
Clerk in writing for each incident expected to exceed 1.5 percent of
jurisdictional revenues for the most recent calendar year.
(e)
The types of storm related costs allowed to be charged to the reserve under the
ICCA methodology include the following:
1.
Additional contract labor hired for storm restoration activities incurred in
any month in which storm damage restoration activities are conducted, that are
greater than the actual monthly average of contract labor costs charged to
operation and maintenance expense for the same month in the three previous
calendar years. The utility may adjust historical monthly contract labor costs
charged to operation and maintenance expense from calculated monthly average.
Each adjustment must be accompanied by a detailed explanation of the nature and
derivation of the adjustment;
2.
Logistics costs of providing meals, lodging, and linens for tents and other staging
areas;
3.
Transportation of crews and other personnel for storm restoration;
4.
Vehicle costs for vehicles specifically rented for storm restoration
activities;
5.
Waste management costs specifically related to storm restoration activities;
6.
Rental equipment specifically related to storm restoration activities;
7.
Materials and supplies used to repair and restore service and facilities to
pre-storm condition, excluding those costs that normally would be charged to
non-cost recovery clause operating expenses in the absence of a storm;
8.
Payroll and payroll-related costs for utility personnel included in storm
restoration activities incurred in any month in which storm damage restoration
activities are conducted, that are greater than the actual monthly average of
payroll and payroll-related costs charged to operation and maintenance expense
for the same month in the three previous calendar years. The utility may adjust
historical monthly payroll and payroll-related costs charged to operation and
maintenance expense from calculated monthly average. Each adjustment must be
accompanied by a detailed explanation of the nature and derivation of the
adjustment;
9.
Fuel cost for company and contractor vehicles used in storm restoration
activities incurred in any month in which storm damage restoration activities
are conducted, that are greater than the actual monthly average of fuel costs
charged to operation and maintenance expense for the same month in the three
previous calendar years. The utility may adjust historical monthly fuel costs
charged to operation and maintenance expense from calculated monthly average.
Each adjustment must be accompanied by a detailed explanation of the nature and
derivation of the adjustment;
10.
Cost of public service announcements regarding key storm-related issues, such
as safety and service restoration estimates;
11.
Vegetation management expenses specifically related to storm restoration
activities incurred in any month in which storm damage restoration activities are
conducted, that are greater than the actual monthly average of vegetation
management costs charged to operation and maintenance expense for the same
month in the previous three calendar years. The utility may adjust historical
monthly vegetation management costs charged to operation and maintenance
expense from calculated monthly average. Each adjustment must be accompanied by
a detailed explanation of the nature and derivation of the adjustment; and
12.
Other costs or expenses not specifically identified in paragraph (1)(e)1.
through (1)(e)11. that are directly and solely attributable to a storm
restoration event.
(f)
The types of storm related costs prohibited from being charged to the reserve
under the ICCA methodology include the following:
1.
Bonuses or any other special compensation for utility personnel not eligible
for overtime pay;
2.
Depreciation expenses, insurance costs and lease expenses for utility-owned or
utility-leased vehicles and aircraft;
3.
Utility employee assistance costs;
4.
Utility employee training costs incurred prior to 72 hours before the storm
event;
5.
Utility advertising, media relations or public relations costs, except for
public service announcements regarding key storm-related issues as listed above
in subparagraph (1)(e)10.;
6.
Utility call center and customer service costs, except for non-budgeted
overtime or other non-budgeted incremental costs associated with the storm
event;
7.
Utility lost revenues from services not provided; and
8.
Replenishment of the utility’s materials and supplies inventories.
(g)
Under the ICCA methodology for determining the allowable costs to be charged to
cover storm-related damages, certain costs may be charged to Account 228.1 only
after review and approval by the Commission. Prior to the Commission’s
determination of the appropriateness of including such costs in Account No.
228.1, the costs may be deferred in Account No. 186, Miscellaneous Deferred
Debits. The deferred costs must be incurred prior to June 1 of the year following
the storm event. By September 30 a utility must file a petition for the
disposition of any costs deferred prior to June 1 of the year following the
storm event giving rise to the deferred costs. These costs include the
following:
1.
Costs of normal non-storm related activities which must be performed by
employees or contractors not assigned to storm damage restoration activities
(“back-fill work”) or normal non-storm related activities which must be
performed following the restoration of service after a storm by an employee or
contractor assigned to storm damage restoration activities in addition to the
employee’s or contractor’s regular activities (“catch-up work”); and
2.
Uncollectible accounts expenses.
(h)
A utility may, at its own option, charge storm-related costs as operating
expenses rather than charging them to Account No. 228.1. The utility must
notify the Commission Clerk in writing and provide a schedule of the amounts
charged to operating expenses for each incident exceeding 0.5 percent of
jurisdictional revenues for the most recent calendar year. The schedule must be
filed annually by February 15 of each year for information pertaining to the
previous calendar year.
(i)
If the charges to Account No. 228.1 exceed the account balance, the excess must
be carried as a debit balance in Account No. 182.3 and no request for a
deferral of the excess or for the establishment of a regulatory asset is
necessary.
(j)
A utility may petition the Commission for the recovery of a debit balance in
Account No. 182.3 discussed in paragraph (1)(i) plus an amount to replenish the
storm reserve through a surcharge, securitization or other cost recovery
mechanism.
(k)
A utility must not establish or change an annual accrual amount or a target
accumulated balance amount for Account No. 228.1 without prior Commission
approval.
(l)
Each utility must file a Storm Damage Self-Insurance Reserve Study (Study) with
the Commission Clerk by January 15, 2022 and at least once every 5 years
thereafter from the submission date of the previously filed study. A Study must
be filed whenever the utility is seeking a change to either the target
accumulated balance or the annual accrual amount for Account No. 228.1. At a
minimum, the Study must include data for determining a target balance for, and
the annual accrual amount to, Account No. 228.1.
(2)
Account No. 228.2 Accumulated Provision for Injuries and Damages.
(a)
This account may be established to meet the probable liability, not covered by
insurance, for deaths or injuries to employees or others and for damages to
property neither owned nor held under lease by the utility. When liability for
any injury or damage is admitted or settled by the utility either voluntarily
or because of the decision of a Court or other lawful authority, such as a
workman’s compensation board, the admitted liability or the amount of the
settlement must be charged to this account.
(b)
Charges to this account must be made for all losses covered. Detailed
supporting records of charges made to this account must be maintained in such a
way that the year the event occurred which gave rise to the loss can be
associated with the settlement. Recoveries or reimbursements for losses charged
to the account must be credited to the account.
(3)
Account No. 228.4 Accumulated Miscellaneous Operating Provisions.
(a)
This account may be established for operating provisions which are not covered
elsewhere. This account must be maintained in such a manner as to show the
amount of each separate provision established by the utility and the nature and
amounts of the debits and credits thereto. Each separate provision must be
identified as to purpose and the specific events to be charged to the account
to ensure that all such events and only those events are charged to the
provision accounts.
(b)
Charges to this account must be made for all costs or losses covered.
Recoveries or reimbursements for amounts charged to this account must be
credited hereto.
(4)(a)
The provision level and annual accrual rate for each account listed in
subsections (1) through (3) must be evaluated at the time of a rate proceeding
and adjusted as necessary. However, a utility may petition the Commission for a
change in the provision level and accrual outside a rate proceeding.
(b)
If a utility elects to use any of the above listed accumulated provision
accounts, each and every loss or cost which is covered by the account must be
charged to that account and must not be charged directly to expenses except as
provided for in paragraphs (1)(f), (1)(g) and (1)(h). Charges must be made to
accumulated provision accounts regardless of the balance in those accounts.
(c)
No utility must fund any account listed in subsections (1) through (3) unless
the Commission approves such funding. Existing funded provisions which have not
been approved by the Commission must be credited by the amount of the funded
balance with a corresponding debit to the appropriate current asset account,
resulting in an unfunded provision.
Rulemaking
Authority 366.05(1) FS. Law Implemented 350.115, 366.04(2)(a) FS. History -
New______.
