Case Background
On April 13,
2022, the City of Lakeland, on behalf of Lakeland Electric (Lakeland) and the
City of Bartow (Bartow), filed a joint petition for approval of a modification
(New Territorial Agreement) to their territorial agreement first approved by
the Commission in 1984 (Legacy Agreement) in Polk County. In 2006, Lakeland and Bartow entered into
an informal agreement to swap a portion of each other’s service territory.
While the intent of both parties was to formalize their agreement and submit it
to their respective city councils and the Commission, those actions were never
completed by the parties. No customers were impacted by this informal
agreement, as the affected territories at the time were vacant land. While the
Legacy Agreement expired in 2009, the utilities have continued to operate under
the general parameters of that agreement.
The proposed New
Territorial Agreement reflects the 2006 service territory swap and new
subdivision developments that have occurred since 2006. The proposed New Territorial
Agreement is included in Attachment A to this recommendation. The relevant maps
including a map depicting the swapped territory and timeline of subdivision
development are shown in Attachment B to this recommendation.
During
the review process, staff issued its first data request to the joint
petitioners on April 15, 2022. After review of this request, the joint
petitioners requested an informal meeting with staff to discuss the unique
circumstances involving the proposed New Territorial Agreement. An informal
conference call was held on April 21, 2022, during which the joint petitioners
provided additional information not contained in the petition and explained the
circumstances leading up to the proposed New Territorial Agreement.
As
a result of the discussions and additional information received at the informal
conference call, staff withdrew its first data request on April 26, 2022 to
allow the joint petitioners to file a supplemental response, which included
additional information and maps. The supplemental response was filed on April
29, 2022, and included the information requested in staff’s first data request.
After review of the supplemental information, staff issued its second data
request on May 10, 2022, for which responses were filed on May 20, 2022. The
Commission has jurisdiction over this matter pursuant to Section 366.04,
Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission approve the proposed New
Territorial Agreement in Polk County between Lakeland and Bartow?
Recommendation:
Yes, the Commission should approve the proposed New
Territorial Agreement in Polk County between Lakeland and Bartow. The approval
of this New Territorial Agreement will enable Lakeland and Bartow to accurately
reflect their current service areas, better serve existing and future customers
in Polk County, and will not be a detriment to the public interest. (Guffey)
Staff Analysis:
Pursuant to Section 366.04(2)(d), F.S., and Rule
25-6.0440(2), Florida Administrative Code (F.A.C.), the Commission has the
jurisdiction to approve territorial agreements between and among rural electric
cooperatives, municipal electric utilities, and other electric utilities. Unless
the Commission determines that the modification to the Legacy Agreement will
cause a detriment to the public interest, the proposed New Territorial Agreement
should be approved.
The Proposed New Territorial Agreement
In 1983, Lakeland and Bartow
entered into a territorial agreement which was approved by the Commission in
1984. The Legacy Agreement had a term of 25 years (1984-2009). In 2006,
Lakeland and Bartow informally agreed to swap a portion of their respective
electric service areas because it allowed for better infrastructure access to
serve future development. While the utilities entered into a written agreement
dated May 19, 2006, to swap this territory, they did not seek nor receive
Commission approval as required by Rule 25-6.0440(1), F.A.C. The May 19, 2006
agreement indicates that the joint petitioners had intended to file a petition
with the Commission to amend their service territories; however, the joint
petitioners explained that as a result of utility staffing changes and due to
an administrative oversight a timely
petition was not filed.
In the 2006 territory swap,
Bartow acquired from Lakeland the Wind Meadows subdivision which is comprised of
39.65 acres. During the time of the territory swap, the Wind Meadows was a
platted subdivision (no customers) and it is located within Bartow’s city
limits. Between August 2006 and April 2022, the Wind Meadows subdivision was
developed and now consists of 134 homes. The
joint petitioners explained that in 2006, Bartow had the capacity and readily
accessible facilities available to serve the future Wind Meadows subdivision.
In return, in 2006 Lakeland acquired
58.19 acres of vacant pastureland from Bartow’s service territory. In May 2022,
construction started and the pastureland is being developed as the Wind Meadows
South subdivision, with 145 potential new residential customers. During the
recent platting and development of the Wind Meadows South subdivision on this
pastureland, the developer and Lakeland realized that the 2006 service
territory swap and boundary adjustment had not been submitted to the Commission
for approval. Thereafter, the parties also became aware that the Legacy
Agreement had expired in 2009, at the end of its 25-year term. From 2009 to
date, the parties have continued to abide by the terms of the Legacy Agreement
as modified by the informal agreement and have worked cooperatively to serve
their customers. There are currently no outstanding service issues or territorial
disputes between the subject utilities.
To remedy the unapproved
territory swap and the expired territorial agreement, on April 4, 2022, the
joint petitioners entered into the New Territorial Agreement (see Attachment A).
Through the New Territorial Agreement, Lakeland and Bartow desire to define
specific areas of their respective electric service areas corresponding to the Wind
Meadows and Wind Meadows South subdivisions in Polk County. The swapped
territory and the above discussed subdivisions, along with their development
timelines, are depicted on a map in Attachment B to this recommendation.
The proposed New Territorial Agreement
does not contemplate any customer or facility transfers and therefore no
customer notification is required pursuant to Rule 25-6.0440(1)(d), F.A.C. If
there is a need to transfer customers and facilities in the future during the
term of the agreement, pursuant to Article 2, the transfers will be based on
sound economic and engineering practices.
The proposed New Territorial Agreement
is for an initial term of 15 years and after that, the agreement would
automatically renew for successive 5-year terms. If either of the parties
desire not to renew for successive 5-year terms, the party should provide to
the other party written notification of their desire to not renew, no less than
12 months prior to automatic extension date. Any modifications to this proposed
agreement will be submitted to the Commission for its review and approval.
Conclusion
Both Lakeland and Bartow should
be cautioned if they enter into other territorial agreements or amendments in
the future, such documents should be timely submitted for Commission approval
pursuant to Rule 25-6.0440, F.A.C. After review of the joint petition, the
supplemental information, responses to staff’s second data request, and the
informal meeting with the joint petitioners, staff believes the proposed New
Territorial Agreement will not cause a detriment to the public interest, will
eliminate any potential uneconomic duplication of facilities, and will not
cause a decrease in reliability of electric service to the present or future
customers of Lakeland or Bartow. Therefore, staff recommends that the
Commission approve the proposed new Territorial Agreement between Lakeland and
Bartow in Polk County.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no protest is filed by a person whose
substantial interests are affected within 21 days of the issuance of the Order,
this docket should be closed upon the issuance of the Consummating Order.
(Brownless)
Staff Analysis:
If no protest is filed by a person whose substantial
interests are affected within 21 days of the issuance of the Order, this docket
should be closed upon the issuance of a Consummating Order.
