Case Background
On
April 21, 2021, Tampa Electric Company (TECO or Company) petitioned the Florida
Public Service Commission (Commission) to approve the Bayside Station Section
316(b) Compliance Project (Project) for cost recovery through the Environmental
Cost Recovery Clause (ECRC). TECO stated that the project is required to comply
with the Environmental Protection Agency’s (EPA) final rule regarding Section
316(b) of the Clean Water Act.
The
EPA adopted a rule pursuant to Section 316(b) of the Clean Water Act on September
7, 2004. This rule established requirements for reducing mortality of aquatic
organisms as a result of cooling water intake structures (CWIS) at existing
power plants. In 2004, TECO requested Commission approval for cost recovery
through the ECRC for a Comprehensive Demonstration Study, which was needed to
comply with the new Section 316(b) rule. Cost recovery for the study was
approved by the Commission in Docket No. 20041300-EI.
The
2004 Section 316(b) rule changes were challenged and the EPA published a final rule
regarding Section 316(b) (EPA Rule or Rule) on August 15, 2014, which outlined
the requirements for CWIS at existing facilities. The EPA Rule requires that the best
technology available be applied to the design and operation of CWIS to minimize
adverse impacts to aquatic life. In 2018, TECO petitioned the Commission for
cost recovery through the ECRC for its Big Bend Unit 1 Section 316(b)
Impingement Mortality project in order to comply with the EPA Rule. The
Commission approved ECRC cost recovery for the Big Bend project by Order No.
PSC-2018-0594-FOF-EI, issued December 20, 2018. The proposed Bayside Station Section
316(b) Compliance Project is substantially similar to the previously approved
Big Bend Unit 1 Section 316(b) Impingement Mortality project.
Pursuant to
Section 366.8255, Florida Statutes (F.S.), the Florida Legislature authorized
the recovery of prudently incurred investor-owned electric utility environmental
compliance costs through the ECRC. The method for cost recovery for such costs
was first established by Order No. PSC-94-0044-FOF-EI, issued on January 12,
1994. The Commission has jurisdiction over this
matter pursuant to Section 366.8255, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve Tampa Electric
Company’s petition for approval of the Bayside Station Section 316(b)
Compliance Project for cost recovery through the Environmental Cost Recovery
Clause?
Recommendation:
Yes. Staff recommends that TECO’s Bayside Station
Section 316(b) Compliance Project is necessary to comply with the EPA’s Section
316(b) rule. Consistent with prior ECRC orders, operation and maintenance
(O&M) costs associated with the Project should be allocated to appropriate
rate classes on an energy basis and capital costs should be allocated on a
demand basis. (Doehling, Wu)
Staff Analysis:
The EPA Rule establishes requirements for CWIS at
existing facilities. The Rule requires that the best technology available be
applied to the design and operation of CWIS to minimize impingement mortality
and entrainment of
aquatic life. The Rule allows for seven different approaches for impingement
mortality compliance. For entrainment compliance, the Rule requires the
evaluation of closed-cycle cooling, alternative water supplies, and fine mesh
screens for a site-specific determination by the Florida Department of
Environmental Protection (DEP) Director. In addition, the Rule requires that a
Compliance Optimization Study be performed once the Project is in-service to
validate the effectiveness of the Project.
In its petition, TECO states that it evaluated its
compliance options and identified modified traveling screens with a fish return
as the most cost-effective solution to comply with the EPA Rule. TECO also stated
that its Project is required to comply with the impingement mortality
requirements of the Rule. While the Project may also reduce the entrainment of
aquatic life, entrainment compliance must be determined after the Project is
in-service, based on the DEP Director’s review of the Project’s performance. If
the DEP Director determines that additional improvements are needed to meet
entrainment requirements, TECO intends to address them through a subsequent
petition.
The work to be completed includes retrofitting existing
coarse mesh screens with modified traveling screens and the installation of two
return pipes to release fish away from the influence of the CWIS. Staff notes
that this project is substantially similar to TECO’s Commission-approved Big
Bend Unit 1 Section 316(b) Impingement Mortality Project.
Engineering work for the Bayside Station Section 316(b) Compliance Project will
begin near the end of 2021, construction in the third quarter of 2022, and is
expected to be placed in-service in the fourth quarter of 2023.
The
estimated cost for the Project is $10.1 million, including the compliance
optimization study, as seen in Table 1-1. The Project has an expected service
life of 20 years, with annual in-service O&M costs of $512,000 beginning in
2024. The costs in Table 1-1 were developed by TECO based on actual costs from
TECO’s Big Bend Unit 1 Section 316(b) Impingement Mortality Project. Labor
costs from central Florida were used along with estimates on the major equipment
such as the traveling screens. A draft layout of the fish return system was
created, and material requirements were estimated. Further, Table 1-2 shows the
estimated annual impact of the Project on residential customer bills.
Table 1-1
Estimated Capital and
O&M Costs
|
|
2021
($000)
|
2022
($000)
|
2023
($000)
|
2024
($000)
|
2025
($000)
|
Total
($000)
|
|
Capital
|
|
|
|
|
|
|
|
Engineering
|
375
|
75
|
75
|
-
|
-
|
525
|
|
Equipment
|
450
|
4,425
|
1,125
|
-
|
-
|
6,000
|
|
Construction
|
-
|
1,850
|
750
|
-
|
-
|
2,600
|
|
Owners Costs
|
125
|
125
|
125
|
-
|
-
|
375
|
|
Demolition / Retirement
|
-
|
30
|
30
|
-
|
-
|
60
|
|
Total Capital
|
950
|
6,505
|
2,105
|
-
|
-
|
9,560
|
|
|
|
|
|
|
|
|
|
Compliance
Optimization Study
|
-
|
-
|
-
|
270
|
270
|
540
|
|
|
|
|
|
|
|
|
|
In-Service Annual
O&M
|
|
|
|
|
|
|
|
Variable O&M
|
-
|
-
|
-
|
134
|
134
|
N/A
|
|
Operating Labor
|
-
|
-
|
-
|
50
|
50
|
N/A
|
|
Maintenance Material
|
-
|
-
|
-
|
198
|
198
|
N/A
|
|
Maintenance Labor
|
-
|
-
|
-
|
130
|
130
|
N/A
|
|
Total O&M
|
-
|
-
|
-
|
512
|
512
|
N/A
|
Source: TECO’s petition
Table 1-2
Residential Bill Impact
(1,000 kWh Monthly Usage)
|
Year
|
Estimated Annual
Impact
|
|
2022
|
|
$ 0.162
|
|
2023
|
|
$ 0.050
|
|
2024
|
|
$ 0.320
|
|
2025
|
|
$ 0.004
|
Source: TECO’s response to
Staff’s Third Data Request No. 2
Based on TECO’s
petition and the Company’s responses to staff’s data requests,
staff recommends that TECO’s ECRC Project is necessary for compliance with the EPA
Rule. The Commission’s criteria for ECRC recovery relevant to this docket,
established by Order No. PSC-94-0044-FOF-EI, are:
(1)
The activities are legally required to comply with
governmentally imposed environmental regulation enacted, became effective, or
whose effect was triggered after the Company’s last test year upon which rates
are based; and
(2)
None of the expenditures are being recovered through
some other cost recovery mechanism or through base rates.
Staff recommends that the activities proposed in TECO’s
petition meet these criteria. These activities are necessary for TECO to comply
with governmentally imposed environmental regulation. The need for the
above-referenced compliance activities were triggered after TECO’s last test
year upon which rates are currently based. Specifically,
the need for these activities was triggered by the renewal of the facility’s
National Pollutant Discharge Elimination System Permit, which requires
compliance with the EPA Rule. Finally, the costs of the proposed compliance
activities are not currently being recovered through some other cost recovery
mechanism or through base rates. Staff notes that the reasonableness and
prudence of individual expenditures related to the Project will continue to be
subject to the Commission’s review in future ECRC proceedings.
Conclusion
Staff recommends that TECO’s Bayside Station Section
316(b) Compliance Project is necessary to comply with the EPA’s Section 316(b)
Rule. Consistent with prior ECRC orders, O&M costs associated with the
Project should be allocated to appropriate rate classes on an energy basis and
capital costs should be allocated on a demand basis.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. This docket should be closed upon issuance of
a Consummating Order unless a person whose substantial interests are affected
by the Commission’s decision files a protest within 21 days of the issuance of
the Proposed Agency Action Order. (Weisenfeld)
Staff Analysis:
At the conclusion of
the protest period, if no protest is filed, this docket should be closed upon
the issuance of a Consummating Order.
