Case Background
On February 4,
2022, Duke Energy Florida, LLC (DEF or Company) filed a request for approval of
a plant account and depreciation rate for electric vehicle direct current fast charge
(DCFC) stations (Petition). The
Company’s request is in accordance with Rule 25-6.0436(3)(b), Florida
Administrative Code (F.A.C.), which requires that: “[u]pon establishing a new
account or subaccount classification, each utility shall request Commission
approval of a depreciation rate for the new plant category.”
Pursuant to Rule
25-6.0436(3)(a), F.A.C., electric utilities are required to maintain
depreciation rates and accumulated depreciation reserves in accounts or
subaccounts in accordance with the Uniform System of Accounts (USOA) for Public
Utilities and Licensees, as found in the Code of Federal Regulations, [1] which is incorporated by reference in Rule
25-6.014(1), F.A.C.
In
June 2021, pursuant to the terms of the Company’s 2021 Settlement Agreement
(2021 Settlement), DEF received Commission authorization to implement three new
Electric Vehicle Programs (EV Programs), which effectively discontinued DEF’s existing
2017 EV Charging Station Pilot Program (2017 EV Pilot).
The
2017 EV Pilot was established and approved as a five-year program and recorded
on DEF’s books as a regulatory asset. While the 2017 EV Pilot has been
discontinued, in accordance with the 2021 Settlement, DEF is allowed to continue
operation of the DCFC stations that were installed during the 2017 EV Pilot
period and to continue to recover associated costs.[4]
As part of the
three new EV Programs, DEF will install Company-owned DCFC stations similar to
those that were first introduced to DEF’s system under the 2017 EV Pilot. However,
in order to properly account
for the depreciation that is related to the new DCFC stations, DEF is
requesting approval to record the costs of these charging stations and all related
equipment in a subaccount of Federal Energy Regulatory Commission (FERC)
Account 370 – Meters. DEF is also requesting approval of a
depreciation rate of 10 percent for equipment so recorded.
Currently, the
Company reports that no
depreciation expense related to the new EV programs has been recorded, as no associated DCFC stations have been placed into service. Therefore, DEF is not requesting any accounting
adjustments, such as transfers of plant investments and associated book
reserves, be performed as part of this docket.
Staff is not
aware of any public comments or concerns regarding this matter.
The Commission
has jurisdiction over this matter pursuant to Sections 366.04, 366.05, and
366.06, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should
DEF's request to establish a new sub-account and annual depreciation rate applicable
to its Company-owned DCFC stations and related equipment be approved, and, if
so, what is the appropriate sub-account and depreciation rate?
Recommendation:
Yes. Staff
recommends that the appropriate sub-account for Company-owned DCFC stations and
related equipment is Account 370.7 – EV Charging Stations. Staff also
recommends an annual depreciation rate of 10 percent applicable to DEF’s DCFC
stations and related equipment be approved. (Kunkler, Smith)
Staff
Analysis:
As
outlined in the case background, the Company reports that no DCFC stations or related depreciation expense associated
with the new EV Programs approved under the 2021 Settlement have been recorded.
The Company is requesting authorization to record and depreciate DCFC stations and
related equipment in proposed Account 370.7 – EV Charging Stations which, if
approved, would be a newly created sub-account of FERC Account 370 – Meters.
Account
Classification
Regulatory
guidance regarding account classification of electric vehicle charging stations
and related equipment is not clearly defined, as there is currently no listing of electric vehicle
charging stations under any plant account within the USOA. However, DEF
references two utilities that currently record depreciation of DCFC stations. These
two referenced utilities are San Diego Gas and Electric (SDG&E) and Florida
Power and Light Company (FPL).
With regard to the
appropriate FERC account or sub-account for recording DCFC stations, DEF references
FERC’s Audit Report of SDG&E (Attachment Staff 1-1(e)) which was included
in FERC Docket No. FA19-3-000. In that report, FERC audit staff concluded
that EV charging stations are more appropriately recorded to either Account 370
– Meters, or Account 371 – Installations on Customer Premises, than any other FERC
account, given the nature of the assets and their control and monitoring
capabilities.
In addition to
FERC’s Audit Report of SDG&E, DEF references FPL and its current utilization
of FERC Account 371.40 with a depreciable life of 15 years for its EV charging
stations and equipment. This account and
depreciation rate are reflected in FPL’s 2021 Depreciation Study, which was included
as part of the 2021 Settlement to FPL’s rate case.
Staff asked DEF
why it considered Account 370 – Meters as the better option over other
accounts, including Account 371 – Installations on Customer Premises. The Company
responded that recording depreciation of DCFC stations and related equipment in
Account 370 – Meters or Account 371 – Installation on Customer Premises is
consistent with guidance from the aforementioned FERC audit report of
SDG&E. DEF further states, “although the DCFC stations are on the
customers’ premises, the Company will utilize the meter for its own use, versus
utilization by the customer on whose premises the meter is installed.” Based on this information, the Company believes
that Account 370 – Meters is the most appropriate account to record the DCFC
stations and related equipment. Staff agrees that Account 370 – Meters is
the appropriate account for DEF’s DCFC stations and related equipment.
DEF also states that, in the event the USOA is modified to designate a specific
account or subaccount for electric vehicle chargers and related equipment, it would
make any required adjustments necessary to align with USOA instructions.
Requested
Depreciation Parameters
The Company has
requested Commission approval of a 10-year average service life (ASL) and a
zero percent net salvage level (NS) for depreciating its DCFC stations and
related equipment. An annual depreciation rate of 10 percent is computed by
using these parameters.[17]
In support of
the proposed ten-year ASL, DEF relied on guidance from the manufacturer of the
DCFC stations, ABB, which indicated that the minimum design life is ten years. DEF also received confirmation from the
Company’s third-party depreciation consultant that a 10-year ASL is typical for
DCFC stations.
Given that
utility-scale energy storage equipment/technology is a relatively new
technology, staff believes the Company’s proposal of an ASL at the bottom-end
of a 10- to 15-year ASL range represents a measured and reasonable approach in
life estimation. Further, staff recognizes that the Commission will have future
opportunities based on existing rules to evaluate DEF’s depreciation data
associated with useful lives and net salvage levels of this equipment and to
order modifications as appropriate.[20]
For the reasons
outlined in this analysis, staff recommends that the appropriate sub-account
for Company-owned DCFC stations and related equipment is Account 370.7 – EV
Charging Stations. Staff also recommends an annual depreciation rate of 10
percent, applicable to DEF’s newly-established Account 370.7 – EV Charging Stations,
be approved.
Issue 2:
If a new
depreciation rate for Company-owned DCFC stations and related equipment is
authorized in Issue 1, what should be the effective date?
Recommendation:
If the
Commission approves staff’s recommendation in Issue 1, staff recommends that
any newly-authorized depreciation rate for Company-owned DCFC stations and
related equipment applicable to Account 370.7 – EV Charging Stations become effective
January 1,
2022. (Smith)
Staff
Analysis:
In
its Petition, DEF requested an implementation date of January 1, 2022 for the proposed
Account 370.7 – EV Charging Stations and accompanying depreciation rate. As
stated earlier, this new sub-account relates to DEF’s DCFC station investments
associated with the Company’s EV Programs, which were approved by the
Commission pursuant to the Company’s 2021 Settlement. The 2021 Settlement has
an effective date of January 1, 2022. Since DEF’s requested implementation date
matches that of the 2021 Settlement, and it is consistent with past Commission
Orders, staff
therefore recommends an implementation date of January 1, 2022.
Issue 3:
Should
this docket be closed?
Recommendation:
If no
person whose substantial interests are affected by the proposed agency action
files a protest within 21 days of the issuance of the order, this docket should
be closed upon the issuance of a consummating order. (Stiller)
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.
