Case Background
On August 26,
2022, Tampa Electric Company (TECO or Company) filed a petition to implement the
2023 Generation Base Rate Adjustment (GBRA) provisions in its 2021 rate case Stipulation
and Settlement Agreement (settlement agreement). The Commission previously
approved the settlement agreement in Order No. PSC-2021-0423-S-EI (settlement order). The GBRA provisions of the settlement agreement
provide for an increase in base rates to reflect the 2023 GBRA amount of
$89,754,622, effective with the first billing cycle of January 2023. In this
petition, TECO proposed to increase the GBRA amount to $91,011,994, to reflect
the increased return on equity (ROE) allowed by a trigger provision of the 2021
settlement agreement and approved by the Commission on August 16, 2022, in
Docket No. 20220122-EI.
This
item was deferred from the October 4, 2022 Agenda Conference to give the
Company time to update its request to reflect the impact of the Inflation
Reduction Act of 2022 (IRA). The Company now has indicated it is in the process
of updating the 2023 GBRA and is in discussions with the Office of Public
Counsel about its proposed update. The Company is requesting the Commission
consider staff’s recommendation now so the 2023 GBRA can go into effect with
the first billing cycle of January 2023. The Company agrees to collect the rate
increase reflected in the 2023 GBRA subject to refund. The Company will refund
the difference between the 2023 GBRA, as reflected in the Original Petition and
staff’s recommendation, and the 2023 GBRA as adjusted for the IRA, once the
2023 GBRA adjusted for the IRA has been approved by the Commission.
On October
10, 2022, TECO filed a letter in the docket file waiving the 60-day file and
suspend provision of Section 366.06(3), Florida Statutes (F.S.). The
Commission has jurisdiction over this matter pursuant to Section 366.076, Florida
Statutes (F.S.). F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve the updated GBRA
amount of $91,011,994?
Recommendation:
Yes, the updated 2023 GBRA amount of $91,011,994
should be approved. (Gatlin, Norris)
Staff Analysis:
As discussed in the Case Background, subparagraphs
4(a) and (b) of the 2021 settlement agreement provide that TECO’s base rates
will increase by $89,754,622 effective with the first billing cycle in January
2023.
The calculation of this GBRA amount was based on the authorized return on
equity (ROE) mid-point of 9.95 percent as specified in subparagraph 2(a).
However, subparagraph 4(d) states that if the Company’s authorized ROE
mid-point changes by operation of subparagraph 2(b) prior to the effective date
of the rate adjustment specified in subparagraph 4(b), the calculation of the
2023 GBRA amount shall be updated to reflect the new authorized ROE.
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 settlement agreement following an evidentiary
hearing on August 16, 2022. As
a result, the Company’s authorized ROE midpoint 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 GBRA, TECO
provided a calculation updating the GBRA amount to $91,011,994 to reflect the
Company’s 10.20 percent authorized ROE mid-point. Staff reviewed the Company’s
calculation and recommends the updated amount be approved.
Issue 2:
Should the Commission approve TECO’s revised tariffs
to implement the GBRA increase effective January 2023?
Recommendation:
Yes, the Commission should approve TECO’s revised
tariffs to implement the GBRA increase effective with the first billing cycle
of January 2023 as approved in the settlement order. (Draper)
Staff Analysis:
TECO’s petition includes the proposed tariff
sheets, the allocation of the revenue increase to the various rate classes and
calculations showing the revenue from the sale of electricity by rate schedule
under current and proposed rates. A residential customer who uses 1,000
kilowatt-hours (kWh) per month will see an increase of $6.76 on the base rate portion of their monthly bill as a
result of the GBRA increase.
Subparagraph 4(e) of the settlement agreement, which addresses
the GBRA increase and was approved by Order No. PSC-2021-0423-S-EI, states:
… the GBRAs shall be reflected on customer bills by
allocating each GBRA revenue requirement to rate classes as shown in Exhibit K
and demand and energy base rate charges shall be increased on an equal
percentage basis (to the extent practicable) within each class to recover the
allocated revenue requirement increase for each class, and shall be calculated
based upon the billing determinants used in the company’s then-most-current-ECCR
filing with the Commission for the twelve months following the effective date
of any respective GBRA. For GSD, GSLDPR, and GSLDSU rate classes, the increase
will be recovered exclusively based on demand charges.
TECO’s most current Energy Conservation Cost Recovery
Clause (ECCR) filing in Docket No. 20220002-EI was filed on August 5, 2022.
Staff has confirmed that the billing determinants used in calculating the
proposed GBRA base rate charges are consistent with the billing determinants in
TECO’s most recent ECCR filing, and in compliance with the language of the settlement
agreement.
Staff has also reviewed TECO’s proposed 2023 GBRA tariff
sheets and supporting documentation. The calculations are accurate and reflect
the language of the approved settlement agreement. The Commission should
approve TECO’s tariff rate changes to implement the updated GBRA increase of
$91,011,994, due to the ROE trigger provision in the settlement agreement.
Pursuant to the settlement order, the rate changes should become effective with
the first billing cycle of January 2023. TECO should notify its customers of
the approved new rates, by way of bill notification, in the December 2022
billing cycle.
Issue 3:
Should this docket be closed?
Recommendation:
If Issues 1 and 2 are
approved and 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. (Stiller)
Staff Analysis:
If Issues 1 and 2 are
approved and 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.
