Case Background
On September 16,
2022, Tampa Electric Company (TECO or Company) filed a petition to adjust the
Clean Energy Transition Mechanism (CETM) revenue requirement established in
Paragraph 5 of the 2021 Stipulation and Settlement Agreement (2021 Agreement).
The Commission previously approved the 2021 Agreement in Order No.
PSC-2021-0423-S-EI. Paragraph 5 of the 2021 Agreement provides
for initial CETM charges, or rates, to recover an annual revenue requirement of
$68,550,000, effective January 1, 2022. Per the 2021 Agreement, the CETM is a
levelized annual recovery amount that extends through 2036, and is subject to
periodic factor updates (every three years) as well as adjustments to account
for all rate of return adjustments (i.e. resets to the Company’s mid-point
return on equity) and corporate income tax rate changes.
The CETM is made
up of two cost categories. The first category includes Big Bend Units One, Two,
and Three retirements, as well as the Company’s dismantlement reserve
deficiency for the Big Bend Assets. The second category includes costs
associated with Automated Meter Reading (AMR) meter retirements. All such costs
were identified in testimony and minimum filing requirements (MFRs) in Docket
No. 20210034-EI.
In the instant
petition, TECO requests that the Commission increase the CETM to $69,168,529,
and approve revised customer rates resulting from this change effective January
1, 2023. Such rates are reflected in the
proposed revisions to the Company’s tariff page submitted with its Petition,
and included as Attachment A to the recommendation. Consistent with Subparagraph 5(f) of the 2021
Agreement, TECO seeks this increase in order to reflect TECO’s Revised
Authorized Return on Equity (ROE) mid-point of 10.20 percent effective July 1,
2022, as approved in Order No. PSC-2022-0322-FOF-EI.
The Commission
has jurisdiction over this matter pursuant to Sections 366.06 and 366.076,
Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission approve the updated Clean
Energy Transmission Mechanism (CETM) amount of $69,168,529?
Recommendation:
Yes, the updated 2023 CETM amount of $69,168,529
should be approved. (Norris, Gatlin)
Staff Analysis:
Subparagraphs 5(a) and 5(c) of the 2021 Agreement
provided that TECO transfer retiring AMR assets and certain retiring Big Bend
assets into regulatory asset accounts and recover the costs of those assets
from customers using a levelized CETM tariff with a revenue requirement of
$68,550,000 effective with the first billing cycle in January 2022.
TECO is required to update CETM factors periodically beginning in 2024 and
every three years thereafter until the 15-year CETM period expires as stated in
subparagraph 5(d). However, in subparagraph 5(f), TECO is required to adjust CETM
factors to reflect changes to the Company’s updated overall rate of return,
including, but not limited to, operation of the ROE Trigger mechanism.
As memorialized in Order No. PSC-2022-0322-FOF-EI, the Commission
approved TECO’s petition to implement the ROE Trigger provisions of
subparagraph 2(b) of the 2021 Agreement following an evidentiary hearing on
August 16, 2022. As a
result, the Company’s authorized ROE mid-point was increased by 25 basis points
from 9.95 percent to 10.20 percent, effective as of July 1, 2022, for all
regulatory purposes. In its petition to implement the 2023 CETM, TECO provided
a calculation adjusting the CETM revenue requirement amount to $69,168,529 to
reflect the Company’s 10.20 percent authorized ROE mid-point. Staff reviewed
the Company’s calculations and recommends the updated amount be approved.
Issue 2:
Should the Commission approve TECO's revised CETM
rates and tariff, effective with the first billing cycle of January 2023?
Recommendation:
Yes, the Commission should approve TECO’s revised
CETM rates and tariff, as shown in Attachment A to the recommendation, effective
with the first billing cycle of January 2023. (Draper, Hampson, Kunkler)
Staff Analysis:
TECO’s petition included proposed Fourth Revised
Tariff Sheet No. 6.025 (Exhibits 5 and 6 to the petition), the allocation of
the updated CETM amount of $69.17 million to the rate classes, (Exhibit 3 to
the petition), and the updated CETM factor calculations (Exhibit 4 to the
petition).
As required by the 2021 Agreement, the allocations of the
updated CETM amount to the rate classes are the same used in the initial CETM
calculations. Accordingly, each rate class receives an increase in the
allocated CETM revenue requirement. However, the residential CETM rate
decreases from 0.441 cents per kilowatt-hour (kWh) to 0.430 cents per kWh. Actual
revenues collected from the residential rate class exceeded projected revenues
when the CETM rate was first calculated, requiring a downward adjustment to the
residential CETM rate.
Staff confirmed that the billing determinants used to
calculate the proposed CETM factors are consistent with the billing
determinants in TECO’s most recent Energy Conservation Cost Recovery Clause (ECCR)
filing, and are in compliance with the 2021 Settlement Agreement. TECO’s most
current ECCR filing, in Docket No. 20220002-EI, was filed on August 5, 2022.
Staff has reviewed TECO’s tariff sheets and supporting
documentation. The calculations are accurate. The Commission should approve TECO’s
revised CETM rates and tariff, as shown in Attachment A to the recommendation, effective
with the first billing cycle of January 2023.
Issue
3:
Should this docket be closed?
Recommendation:
If a protest is
filed within 21 days of the issuance of the order, the tariffs 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. (Dose)
Staff Analysis:
If a protest is filed within 21 days of the issuance
of the order, the tariffs 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.
