Case Background
On September 1,
2021 Florida City Gas (FCG or utility) filed a petition for approval of its
safety, access, and facility enhancement program (SAFE) true-up and 2022 cost
recovery factors. The SAFE program was originally approved by the Commission in
Order No. PSC-15-0390-TRF-GU (2015 order) to recover the cost of relocating on
an expedited basis certain existing gas mains and associated facilities from
rear lot easements to the street front. In the 2015 order, the Commission found
that the relocation of mains and services to the street front provides for more
direct access to the facilities and will enhance the level of service provided
to all customers through improved safety and reliability. The SAFE factor is a
surcharge on customers’ bills.
The Commission
ordered the utility to file an annual petition, beginning in 2016, for review
and resetting of the SAFE factors to true-up any prior over- or under-recovery
and to set the surcharge for the coming year. The SAFE program is a 10-year
program that was effective in 2015 and should finish in 2025. The utility’s
annual progress in the SAFE program is shown in Attachment A to the
recommendation. The current 2021 SAFE factors were approved by Order No.
PSC-2020-0456-TRF-GU (2020 order). The proposed 2022 SAFE factors are shown
in Attachment B to the recommendation on Tariff Sheet No. 79.
During
the review process of the petition, staff issued one data request and responses
were received on October 6, 2021. In its filing, the utility waived the 60-day
suspension deadline pursuant to Section 366.06(3), Florida Statutes (F.S.). The
Commission has jurisdiction over the matter pursuant to Sections 366.03,
366.04, 366.05, 366.06, and Chapter 368, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve FCG’s proposed SAFE tariff
for the period January through December 2022?
Recommendation:
Yes. The Commission should approve FCG’s proposed SAFE
tariff for the period January through December 2022. (Forrest)
Staff Analysis:
Under the SAFE program, FCG will relocate or replace 254.3
miles of mains and 11,443 associated service lines from rear property easements
to the street over a 10-year period, ending in 2025. The utility began its
mains and services replacements at the end of 2015. The surcharges have been in
effect since January 2016. During 2021, the utility has replaced 26 miles of
mains and 1,105 services as shown in Attachment A to the petition.
True-ups by Year
As required by the 2015 order,
the utility’s calculations for the 2022 revenue requirement and SAFE factors
include a final true-up for 2020, an estimated/actual true-up for 2021, and
projected costs for 2022.
Final True-up for 2020
FCG stated that the revenues collected for 2020 were
$1,449,091, compared to a revenue requirement of $1,589,766, resulting in an
under-recovery of $140,674. Adding the 2019 final over-recovery of $211,530 and
the $140,674 under-recovery of 2020, including interest, results in a final
2020 over-recovery of $82,915.
Actual/Estimated 2021 True-up
FCG provided actual revenues for
January through June and forecast revenues for July through December 2021,
totaling $2,588,062, as compared to a projected revenue requirement of
$3,182,760, resulting in an under-recovery of $594,699. Adding the 2020 over-recovery
of $82,915 to the 2021 under-recovery of $594,699, the resulting total 2021
true-up, including interest, is an under-recovery of $520,582.
Projected 2022 Costs
The utility’s projected
investment for 2022 is $39,273,733 for its seven projects in Miami-Dade and
Brevard counties. This is an approximate increase of $10 million from 2021 in
the annual SAFE investment as contemplated in the 2015 order. The revenue
requirement, which includes a return on investment, depreciation, and taxes is
$4,148,112. The return on investment calculation includes federal income taxes,
regulatory assessment fees, and bad debt. After adding the 2021 under-recovery
of $520,582, the total revenue requirement is $4,668,694. Table 1-1 displays
the projected 2022 revenue requirement calculation.
Table 1-1
2022 Revenue Requirements
Calculation
|
2022 Projected Investment
|
$39,273,733
|
|
Return on Investment
|
$2,580,536
|
|
Depreciation Expense
|
940,762
|
|
Property Tax Expense
|
626,814
|
|
2022 Revenue Requirement
|
$4,148,112
|
|
Plus 2021 Under-recovery
|
$520,582
|
|
Total 2022 Revenue Requirement
|
$4,668,694
|
Source: Attachment C of the
petition
Proposed 2022 SAFE Factors
The SAFE factors are fixed
monthly charges. FCG’s cost allocation methodology was approved in the 2015
order and was used in the instant filing. The approved methodology allocates
the current cost of a 2-inch pipe to all customers on a per customer basis and
allocates the incremental cost of replacing a 4-inch pipe to customers who use
over 6,000 therms per year. For customers who require 4-inch pipes, the cost
allocation takes into account that the minimum pipe is insufficient to serve
their demand and, thus, allocates an incremental per foot cost in addition to
the all-customer cost. The resulting allocation factors are applied to the 2022
total revenue requirement to develop the monthly SAFE factors.
The proposed fixed monthly SAFE
factor is $3.17 for customers using less than 6,000 therms per year (current
factor is $1.84). The proposed monthly SAFE factor for customers using more
than 6,000 therms per year is $6.39 (current factor is $3.43).
Conclusion
Staff has reviewed FCG’s filing
and supporting documentation and believes that the calculations of the 2022
SAFE factors are consistent with the methodology approved in the 2015 order and
are reasonable and accurate. Staff recommends approval of the utility’s
proposed SAFE tariff for the period January through December 2022.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If Issue 1 is approved and a protest is filed
within 21 days of issuance of the order, the tariff should remain in effect,
with any revenues held subject to refund, pending resolution of the protest. If
no timely protest is filed, this docket should remain closed upon the issuance
of a consummating order. (Osborn, Crawford)
Staff Analysis:
If Issue 1 is approved and a protest is filed within
21 days of issuance of the order, the tariff should remain in effect, with any
revenues held subject to refund, pending resolution of the protest. If no
timely protest is filed, this docket should remain closed upon the issuance of
a consummating order.
