Case Background
On November 12,
2021, Florida Public Utilities Company (FPUC) filed a petition for approval to
reinstate its Non-Firm Energy Program tariff. The Non-Firm Energy Program
tariff was initially approved by the Commission as an experimental 15-month
pilot program limited to a maximum of three participants. Under the pilot program, FPUC purchased
non-firm energy from Florida Power & Light Company (FPL), pursuant to its
wholesale purchased power contract with FPL, and resold the non-firm energy to
qualifying industrial customers with self-generation capabilities. The pilot
program expired on December 31, 2020. After evaluating the pilot program’s
results, FPUC now proposes to reinstate the Non-Firm Energy Program tariff
permanently and to expand the tariff to all eligible General Service – Large
Demand 1 (GSLD1) and Standby customers.
On November 30,
2021, FPUC filed corrected tariff sheets to address errors identified in the
tariff sheets filed in the original petition. At the January 11, 2022 Agenda Conference,
the proposed tariff was suspended to allow staff a sufficient opportunity to
gather and evaluate all pertinent information in order to present the
Commission with an informed recommendation. During the evaluation of the petition,
staff issued one data request to FPUC and received responses on December 14,
2021. In addition, staff held an informal conference call with FPUC
representatives on January 5, 2022.
The corrected
tariff sheets, as filed on November 30, 2021, are shown in Attachment A to this
recommendation. The Commission has jurisdiction over this matter pursuant to
Sections 366.03, 366.04, 366.05, and 366.06, Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission approve FPUC’s petition to
reinstate its Non-Firm Energy Program tariff?
Recommendation:
Yes, the Commission should approve FPUC’s request to
reinstate its Non-Firm Energy Program tariff. After evaluating the results of its
pilot program, FPUC has demonstrated the program’s benefits to the general body
of ratepayers and program participants. The proposed tariff sheets are shown in
Attachment A to this recommendation. (Hampson)
Staff Analysis:
The proposed Non-Firm Energy tariff is designed for
FPUC to purchase non-firm energy from FPL and sell the non-firm energy to
qualifying industrial customers. Non-firm energy is purchased typically for
short periods of time and may be interrupted when necessary. To qualify for the
proposed tariff, customers must own dispatchable self-generation and qualify
for FPUC's General Service Large-Demand 1 tariffs, Standby tariffs, or have
executed a Special Contract approved by the Commission.
FPUC does not generate electricity to serve its customers;
rather, FPUC currently purchases power, predominately from FPL, to serve its
customers pursuant to wholesale purchased power agreements. FPUC recovers its
payments for wholesale power from its customers through the fuel and purchased
power cost recovery clause factors (fuel factors) the Commission approves in
the annual fuel clause hearing.
On April 10, 2017, FPUC and FPL executed a Native Load
Firm All Requirements Power and Energy Agreement that includes a provision
allowing FPUC to purchase non-firm energy from FPL pursuant to FPL’s wholesale
TS-1 tariff. The TS-1 tariff is an economy energy tariff under which FPL sells
non-firm energy at its forecasted incremental fuel cost to wholesale customers.
The TS-1 tariff has been approved by the Federal Energy Regulatory Commission.
During the pilot program, service was limited to a maximum
of three participants. Only two customers took service under the pilot program,
both located in FPUC’s Northeast Division on Amelia Island in Nassau County.
There were no eligible customers in FPUC’s Northwest Division, nor does FPUC
expect there to be any potentially eligible customers in the foreseeable future.
However, FPUC stated that the utility will be able to provide non-firm service
under the tariff to its Northwest Division once FPL completes its transmission
expansion to the former Gulf Power Company territory.
FPUC has included minor modifications to the Non-Firm
Energy Program tariff from the prior pilot program. Specifically, FPUC has
proposed modifications to the tariff including: expanding participation to any
eligible customers, removing references to the tariff being experimental, and
clarifying that times shown are Eastern Standard Time (EST) or daylight saving
time.
Customers who choose to take service under the proposed
tariff agree to a minimum of 12 months of service; service will continue
thereafter until the customer submits a written notice of termination to
FPUC. Pursuant to the proposed tariff,
FPL will notify FPUC each Friday morning of the hourly non-firm energy prices
starting Sunday at midnight. FPUC will
then notify the participating customers of the non-firm energy prices by Friday
10 am EST. The customers must submit to FPUC their non-firm energy purchases,
or nominations, for the following week by 2 pm of the same day and FPUC will
forward that information to FPL. While participating customers are not
obligated to nominate non-firm energy for any specific period, they must
nominate a minimum of 1,500 megawatt-hours per year.
The non-firm energy costs charged by FPL to FPUC will be
directly passed by the utility to the non-firm customers. Subject to the
proposed tariff sheets, the utility would not assess any administrative,
energy, or demand surcharges under the proposed tariff. In response to staff’s
data request in Docket No. 20190132-EI, FPUC explained it expects the Non-firm
Energy program’s administrative costs to be minimal. During
the call with staff on January 5, 2022, FPUC confirmed that it had not incurred
any additional administrative costs during the pilot program. However, if
administrative charges are appropriate in the future, FPUC should petition the
Commission to modify the proposed tariffs. In response to staff’s first data
request, FPUC stated that the cost to purchase non-firm energy from FPL and
revenues received from customers participating in the Non-Firm Energy Program
would not be included in the utility's annual fuel clause hearing.
Pilot Program Results
In response to staff’s data request in Docket No.
20190132-EI, FPUC explained that it would determine the success or failure of
the Non-Firm Energy pilot program based upon the total utilization of non-firm
energy by customers participating in the pilot.
Additionally, FPUC stated in its response that the goal of the pilot program is
to provide a benefit to all customers while improving the overall load factor
for the electrical usage on Amelia Island.
Pilot Program Participation
During the pilot program, FPUC provided service to two
qualifying industrial customers: Rayonier Advanced Materials (Rayonier) and
WestRock. Both customers produce paper and lumber products and operate on
Amelia Island. Rayonier and WestRock have on-site generation that provides the
majority of their energy and capacity requirements. FPUC serves as a back-up
energy resource for these customers. The amount of energy Rayonier and WestRock
purchase from the utility varies based on the operational status of the
facilities. If approved, FPUC stated that both Rayonier and WestRock indicated
they would participate in the program.
In this petition, FPUC states that the pilot program
allowed the participants to purchase non-firm energy at a lower price than the
cost to self-generate. In response to staff’s first data request, FPUC
demonstrated that electric utilization increased for non-firm energy customers
during the pilot program. Specifically, in 2020 when the pilot program was
effective, energy purchases increased by 156 percent and demand purchases
increased by 3,923 percent compared to 2018.
Furthermore, allowing participants to purchase non-firm energy at a lower price
than the cost to self-generate could provide a benefit to participants by
reducing their production costs.
Overall Load Factor on Amelia Island
FPUC states that, prior to the pilot program, the overall
load factor on Amelia Island was impacted by the demand and energy purchases of
these customers. When
these customers made short term purchases of electricity from FPUC, it
increased FPUC's monthly maximum demand. However, this increase in demand did
not increase the total energy amount by the same percentage, which resulted in
a negative impact on the utility's load factor. FPUC’s load factor is
considered by wholesale energy providers when negotiating the pricing contained
in purchased power contracts. An improved load factor should benefit FPUC’s
general body of ratepayers through lower fuel factors when future agreements
for wholesale power are negotiated.
In response to staff’s first data request, the utility
demonstrated that the Northeast Division’s load factor improved as a result of
the pilot program. Without the Non-Firm Energy Program the overall load factor
on Amelia Island was 46 percent, while the overall load factor with the
Non-Firm Program was 52 percent, using data from the 12-month period ending
December 31, 2020.
Conclusion
The Commission should approve FPUC’s petition to reinstate
the Non-Firm Energy Program tariffs. After evaluating the results of its pilot
program, FPUC has demonstrated the program’s benefits to the general body of
ratepayers and program participants. The proposed tariff sheets are shown in
Attachment A to this recommendation.
Issue 2:
Should this docket be closed?
Recommendation:
If Issue 1 is approved and a protest is filed within
21 days of the 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 be closed upon the issuance of a
consummating order. (Lherisson)
Staff Analysis:
If Issue 1 is approved and a protest is filed within
21 days of the 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 be closed upon the issuance of a
consummating order.
