Case Background
On September 3,
2021, Tampa Electric Company (TECO or Company) filed an Application with the
Commission for Authority to Issue and Sell Securities (Initial Application).
TECO’s Initial Application requested authority for up to $800 million in
outstanding short-term debt. On November 5, 2021, the Commission issued Order
No. PSC-2021-0414-FOF-EI,
approving TECO’s Initial Application. On December 15, 2021, TECO filed a
petition requesting that the Commission amend Order No. PSC-2021-0414-FOF-EI by
increasing the limit on short-term debt for 2022 from $800 million to $1
billion. The Commission has jurisdiction over this matter pursuant to Chapter
366, Florida Statutes (F.S.), including Section 366.04, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve TECO's petition to amend the
authority granted in Order No.
PSC-2021-0414-FOF-EI by increasing TECO's limit on short-term debt for 2022 from
$800 million to $1 billion?
Recommendation:
Yes. TECO’s petition to amend the authority granted
in Order No. PSC-2021-0414-FOF-EI by increasing TECO's limit on short-term debt
for 2022 from $800 million to $1 billion should be approved. (Mathis)
Staff Analysis: On September 3, 2021, TECO
filed its Initial Application for authority to issue and sell securities for
the fiscal period of 12 months ending December 31, 2022, pursuant to Section
366.04, F.S., and Chapter 25-8, Florida Administrative Code (F.A.C.). The Commission
approved the Initial Application for authority to issue $800 million in
short-term debt in 2022 by Order No. PSC-2021-0414-FOF-EI, issued November 5,
2021.
Beginning in March of 2020, the COVID-19 pandemic caused a tightening
of credit markets, which in turn increased borrowing rates for various products
including term loans. As a result, the Company did not pursue any additional
term loans by the time it filed its Initial Application. In the fourth quarter
of 2021, short-term loan rates returned to favorable levels and once again
became an attractive source of liquidity for the Company. In order to take
advantage of the favorable rates, TECO entered into a new term loan agreement
with a group of banks on December 17, 2021. TECO had not considered entering into
a new term loan prior to the updated pricing, and as a result the Company did
not factor the amount of a new term loan into its Initial Application. The instant
petition rectifies this issue by factoring in the amount of the new term loan and
requesting that the short-term debt limit for 2022 be increased from $800
million to $1 billion. The increase in short-term debt provides TECO with
flexibility to better manage its short-term borrowing costs in 2022. The newly
requested amount for the short-term debt limit in 2022 is consistent with the
amount for the short-term debt limit in 2021 granted to TECO by Order No.
PSC-2020-0468-FOF-EI.
The requested amendment to Order No. PSC-2021-0414-FOF-EI applies only to the limit on
short-term debt outstanding for 2022. TECO does not seek modification or
amendment of any of the other terms set out in Order No. PSC-2021-0414-FOF-EI.
Based on its review, staff believes TECO’s
request to increase its short-term debt limit from $800 million to $1 billion
is appropriate and recommends it be approved.
Issue 2:
Should this docket be closed?
Recommendation:
For
monitoring purposes, this docket should remain open until May 5, 2023, to allow
the Company time to file the required Consummation Report. (Sandy)
Staff Analysis:
For monitoring purposes, this docket should remain
open until May 5, 2023, to allow the Company time to file the required
Consummation Report.
