Discussion
of Issues
Issue 1:
Should the Commission approve the proposed new Territorial
Agreement between the City of Gulf Breeze and the Okaloosa Gas District in
southern Santa Rosa County?
Recommendation:
Yes, the Commission should approve the proposed new
Territorial Agreement between the City Gulf Breeze and the Okaloosa Gas
District in southern Santa Rosa County. The proposed Agreement will define the
parties’ respective service areas in southern Santa Rosa County pursuant to the
amended Chapter 2021-262, Laws of Florida, and comply with the legislative
directive that the Disputed Area be determined by a final order of the
Commission. Additionally, the proposed Agreement will avoid duplication of
service and mitigate the potential for future disputes. (Guffey)
Staff Analysis:
Pursuant to Section 366.04(3)(a), F.S., and Rule 25-7.0471,
Florida Administrative Code (F.A.C.), the Commission has the jurisdiction to
approve territorial agreements between natural gas utilities. For purposes of
this subsection, Section 366.04(3)(c), F.S., defines natural gas utility to
include municipalities and gas districts. Unless the Commission determines that
the Agreement will cause a detriment to the public interest, it should be
approved.
Gulf Breeze is a Florida municipal corporation which owns
and operates a natural gas distribution system and has been providing natural
gas service since 1964. Its service area includes portions of Escambia and
Santa Rosa counties and currently provides retail natural gas service to 4,780
customers in Santa Rosa County.
The District is an independent special district created by
the Florida Legislature in 1953 to own and operate natural gas transmission and
distribution systems in Okaloosa County. In 2000, the Legislature expanded in Chapter
2000-443, Laws of Florida, the District’s service area to include portions of
Santa Rosa and Walton counties. The District provides natural gas service to
50,994 residential, commercial, and industrial customers, as well as military
installations, within its entire service area. As
stated in paragraph 4 of the petition, the District currently serves 4,798
customers in Santa Rosa County. The District’s member municipalities are
Crestview, Niceville, Valparaiso, and Fort Walton Beach.
In 2021, the Florida Legislature again expanded the
service area of the District to include all of Santa Rosa County with two
defined areas excluded. The first excluded area is:
The area within the corporate limits of the City of
Gulf Breeze and the area from the eastern boundary of the corporate limits of
the City of Gulf Breeze extending easterly approximately 11 miles to the line
defined as the eastern boundary of Sections 4, 9, 16, 21, and 28 of Township 2
South, Range 27 West, which extends north and south from Santa Rosa Sound to
East Bay.
The second excluded area (Disputed Area) is:
The area from the line defined as the eastern boundary
of Sections 4, 9, 16, 21, and 28 of Township 2 South, Range 27 West, which
extend north and south from Santa Rosa Sound to East Bay, and extending
easterly to the line starting at the intersection of US Highway 98 and Shannon
Drive, going due south to Santa Rosa Sound, thence turning due north continuing
to Manatee Road; thence turning west until the intersection of Basswood Drive;
thence turning north until intersecting the Tom King Bayou tributary south of
Cove Road; thence following this branch northwest to Tom King Bayou, thence
north to East Bay is presently claimed as a service area by the District and
by the City of Gulf Breeze and shall not be deemed to be included or excluded
as a service area for the District. The service rights for this area shall be
determined by a final nonappealable order of the Florida Public Service
Commission or any successor agency.
Chapter 2021-262, Laws of Florida 2021 (emphasis added).
In response to staff’s data request, the joint petitioners
explained that historically the service areas of the two parties have been
geographically dispersed such that an agreement was not necessary.
However, over the years, as a consequence of natural growth, portions of the
parties’ service areas have begun to converge in southern Santa Rosa County
near the Dividing Line as defined in the proposed Agreement (separating Gulf
Breeze and the District’s service area).
With respect to the Disputed Area referenced in Chapter
2021-262, Laws of Florida, the parties explained that after discussions among
the parties and members of the local legislative delegation, the Disputed Area
was excluded from the service area determination in recognition of the fact
that the City and the District both provided service to the area and claimed
certain rights. Therefore, resolution of service rights was reserved for
determination by the Commission.
Proposed Territorial Agreement
The proposed Agreement defines the Parties’ respective
service territories in the Disputed Area by establishing a “Dividing Line” that
transects the Disputed Area. The Dividing Line is shown on composite Exhibit B
of Attachment A to the recommendation (page 10 of 10 of Attachment A). The
joint petitioners assert that the proposed new Agreement will formalize the
Dividing Line, comply with the legislative directive, eliminate duplication of
service and expenditures, and avoid the potential for future disputes. The
joint petitioners also assert that the proposed boundary modification will not
decrease service reliability to their existing or future customers.
The proposed Agreement will become effective on the day
the Commission Order becomes final and will continue in effect until
termination or modification is approved by the Commission or mandated by a
government entity. In response to staff’s data request, the parties confirmed
that there is no specified termination date for the proposed Agreement.
Infrastructure and Customer Transfer and Notification
The Parties explained in the petition that the Dividing
Line in the Agreement has been drawn to avoid the need to transfer any
customers or utility facilities, with the exception of one residential customer
of Gulf Breeze. Pursuant to Section 4(b) of the Agreement, the customer will be
transferred following the effective date of this Agreement and upon written
notification from the District stating it is prepared to provide service to the
transferred customer. On August 17, 2022, Gulf Breeze notified the customer of
the transfer and provided rate comparisons. Pursuant to the customer
notification, the District will waive the $55 service activation fee and Gulf
Breeze will credit the customer’s $50 deposit towards any outstanding amounts
due and refund the remainder. The
parties assert that they have not received a response or objections from the
customer.
Along with the customer transfer, approximately 1,200 feet
of pipeline and associated infrastructure will be transferred to the District.
The District will pay $24,163.05, representing the depreciated value of the
infrastructure to Gulf Breeze.
Conclusion
After review of
the joint petition and the petitioners’ joint responses to Commission staff’s
data request, staff believes that the proposed Agreement is in the public
interest and will enable Gulf Breeze and the District to serve their current
and future customers efficiently. The proposed Agreement will define the
parties’ respective service areas in southern Santa Rosa County pursuant to the
amended Chapter 2021-262, Laws of Florida, and comply with the legislative
directive that the Disputed Area be determined by a final order of this
Commission. Additionally, the proposed Agreement will avoid duplication of
service and mitigate the potential for future disputes. Therefore, staff
recommends that the Commission should approve the proposed Territorial
Agreement between the City Gulf Breeze and the Okaloosa Gas District in
southern Santa Rosa County.
Issue 2:
Should this docket be closed?
Recommendation:
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. (Dose)
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.
