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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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February 10, 2023
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TO:
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Office of Commission Clerk (Teitzman)
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FROM:
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Division of Economics (Guffey, Draper,
Hampson, Ward)
Division of Accounting
and Finance (Norris)
Office of the General
Counsel (Sandy, Crawford)
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RE:
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Docket No. 20220067-GU – Petition for rate
increase by Florida Public Utilities Company, Florida Division of Chesapeake
Utilities Corporation, Florida Public Utilities Company - Fort Meade, and
Florida Public Utilities Company - Indiantown Division.
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AGENDA:
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02/21/23 – Special Agenda – Post-Hearing Decision – Participation
is Limited to Commissioners and Staff
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COMMISSIONERS ASSIGNED:
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Clark, Fay, Passidomo
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PREHEARING OFFICER:
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Passidomo
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CRITICAL DATES:
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06/21/23 (12-Month Effective Date)
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SPECIAL INSTRUCTIONS:
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None
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Case Background
This
proceeding commenced on May 24, 2022, with the filing of a petition for a
permanent rate increase and to consolidate the four natural gas utilities into
one utility operating under the name Florida Public Utilities Company, by Florida
Public Utilities Company (FPUC), Florida Division of Chesapeake Utilities
Corporation (CFG), Florida Public Utilities Company-Fort Meade (Ft. Meade), and
Florida Public Utilities Company-Indiantown Division (Indiantown) (collectively
the Company). The four natural gas utilities provide sales and transportation
of natural gas and are public utilities subject to the Commission’s regulatory
jurisdiction under Chapter 366, Florida Statutes (F.S.). Pursuant to Section
366.06(2) and (4), F.S., the Company requested that this rate case be processed
using the Commission’s hearing process.
In
Order No. PSC-2022-0308-PCO-GU, the Commission approved interim rates. The interim rates went into effect
September 1, 2022.
An
administrative hearing was held from October 25 through 26, 2022. At the
hearing, the Commission approved the following stipulated Issues: 8, 10, 15,
19, 20, 32, 35 (partial stipulation), 36, 43, 62, and 67. At the January 24,
2023 Special Agenda Conference, the Commission approved an increase to
operating revenues of $27,074,145 for FPUC, $9,317,084 for CFG, $358,377 for
Indiantown, and $159,418 for Ft. Meade. The total Company target revenues,
including other operating revenue, is $98,637,474. The staff-calculated final revenue
requirement calculations that reflect the Commission-approved increase to
operating revenues are contained in Attachment A to the recommendation.
At the January
24, 2023 Special Agenda Conference, the Commission approved in Issue 57 the
Company’s cost of service study. Pursuant to the Commission vote in Issue 58,
the Company developed rates and charges for 16 consolidated rate classes with
different rates applicable to: (1) FPUC and CFG, (2) Ft. Meade, and (3)
Indiantown. Currently, the Company has 54 rate classes across the four
utilities. Furthermore, in Issue 58, the Commission approved the Company’s
proposal to set the Ft. Meade average increase to 19 percent and to 24 percent
for Indiantown to protect these customers from significant increases resulting
from the consolidation. Therefore, to mitigate the level of increase to the Ft.
Meade and Indiantown customers, who represent about one percent of the
Company’s total customers, the final target revenue for Ft. Meade and
Indiantown is set below the cost of service revenue requirement.
This
recommendation addresses the issues that were not addressed at the January 24,
2023 Special Agenda Conference: Issue 59 (customer charges), Issue 60 (per
therm distribution charges), Issue 65 (effective date), and Issue 70 (close
docket).
Attachment B to
the recommendation contains the rates and charges that were in effect prior to
the interim rates and the Commission-approved interim rates, which went into
effect September 1, 2022. Attachment C contains a summary of the proposed rates
and charges.
On February 7,
2023, the Company filed a revised cost of service study reflecting the final
Commission-approved revenue requirement. The proposed customer and per therm
distribution charges are calculated in the revised cost of service study. On
February 8, 2023, the Company filed revised tariffs, which are included in
Attachment D to the recommendation. The Commission has jurisdiction over this matter
pursuant to Chapter 366, F.S., including Sections 366.06 and 366.071, F.S.
Discussion
of Issues
Issue 59:
Are FPUC’s proposed customer charges for Florida
Public Utilities Company, CFG, Fort Meade, and Indiantown appropriate?
Recommendation:
The proposed customer charges as provided in the
tariffs in Attachment D to the recommendation should be approved. (Hampson,
Guffey, Ward)
Position of the Parties
FPUC:
Yes. Customer charges for the consolidated rate
classes were set to minimize bill impacts for customers with different usage
ranges and differing existing customer charges.
OPC:
No, unless
the proposed customer charges for Florida Public Utilities Company, CFG,
Fort Meade, and Indiantown are
non-discriminatory and consistent with OPC’s recommendation on the other issues
in this docket.
FIPUG:
Adopts the
position of OPC.
Staff Analysis:
PARTIES’ ARGUMENTS
FPUC
The Company stated that the customer charges for the
consolidated rate classes were set in a way that would minimize bill impacts
for customers with different usage ranges and differing existing customer
charges. (FPUC BR 80)
OPC
OPC stated that FPUC’s proposed customer charges are not
appropriate unless they are non-discriminatory and consistent with OPC’s
recommendation on other issues. (OPC BR 56)
FIPUG
FIPUG adopted the position of OPC. (FIPUG BR 1)
ANALYSIS
The customer charges as shown in Attachment C to the
recommendation, in combination with the per therm distribution charges shown in
Issue 60, are designed to allow the Company to recover the total Commission-approved
revenue requirement. Further, the Commission approved the Company’s proposed cost
of service methodology in Issue 57 and the consolidated rate classes in Issue
58 at the January 24, 2023 Special Agenda Conference.
The proposed customer charges as provided in the tariffs
in Attachment D to the recommendation should be approved.
Issue 60:
Are FPUC’s proposed per therm distribution charges
for Florida Public Utilities Company, CFG, Fort Meade, and Indiantown
appropriate?
Recommendation:
The proposed per therm distribution charges as provided
in the tariffs in Attachment D to the recommendation should be approved. (Hampson,
Guffey, Ward)
Position of the Parties
FPUC:
The appropriate methodology for developing rates by
first calculating the portion of revenues recovered through the customer charge
and then recovering the remaining targeted revenues through the volumetric
charges is that set forth by FPUC Witness Taylor. The rates, however, should be adjusted to
reflect approved depreciation rates, and the adjustments and stipulations
otherwise reflected herein.
OPC:
No, unless
the proposed per therm distribution charges for Florida Public Utilities
Company, CFG, Fort Meade, and Indiantown
are non-discriminatory and consistent with OPC’s recommendation on the other
issues in this docket.
FIPUG:
Adopts the
position of OPC.
Staff Analysis:
PARTIES’ ARGUMENTS
FPUC
FPUC stated that the per therm, or volumetric, charges are
set forth in MFR Schedule H-1. (FPUC BR 82; EXH 123) Monthly forecasted volumes
were derived by allocating the total annual forecasted volumes among the months
based on the historical monthly data. (FPUC BR 82) The monthly therm use per
customer was derived by dividing the monthly forecasted volumes by the
forecasted annual total customers. (FPUC BR 82; EXH 75)
OPC
OPC stated that FPUC’s proposed per therm distribution
charges are not appropriate unless they are non-discriminatory and consistent
with OPC’s recommendation on other issues. (OPC BR 57)
FIPUG
FIPUG adopted the position of OPC. (FIPUG BR 1)
ANALYSIS
FPUC and Ft. Meade have sales customers that purchase
natural gas from the utility. Therefore, the per therm charges for FPUC and Ft.
Meade are referred to as non-fuel energy charge. Indiantown and CFG only offer
transportation service, with all their customers receiving natural gas from
third-party marketers. Therefore, the per therm charges for Indiantown and CFG
are referred to as transportation charges.
Staff has reviewed the Company’s revised cost of service
filing and it reflects the Commission-approved total Company revenue
requirement. Further, the Commission approved the Company’s proposed cost of
service methodology in Issue 57 and the consolidated rate classes in Issue 58
at the January 24, 2023 Special Agenda Conference.
Staff notes that proposed residential rate schedules
RES/REST-1 and RES/REST-2 will be applicable to existing customers using less
than 250 therms annually. Proposed residential rate schedule RES/REST-3 will be
available to existing customers using 250 therms or greater annually and all
new residential customers after February 28, 2023.
The proposed per therm distribution charges as provided in
the tariffs in Attachment D to the recommendation should be approved.
Issue 65:
What is the appropriate effective date of FPUC’s
revised rates and charges?
Recommendation:
Staff recommends that the rates and charges approved
by the Commission should become effective March 1, 2023. The Commission should
approve the proposed tariffs as provided in Attachment D to the recommendation.
(Guffey, Hampson, Sandy)
Staff Analysis:
PARTIES’ ARGUMENTS
FPUC
No additional argument was provided in FPUC’s brief on
this issue.
OPC
OPC
stated that once the Commission determines the appropriate rates and charges
and tariffs, the effective date of FPUC’s revised rates and charges should
allow time for adequate notice to customers and prompt implementation after the
Commission’s final order in this matter. (OPC BR 59)
FIPUG
FIPUG adopted the position of OPC. (FIPUG BR 1)
ANALYSIS
FPUC provided direct notice of the
prospective rate increase to its customers during the first week of February,
and also posted notice of the rate increase on its website. The information
provided clearly identifies a comparison between current and proposed rates,
and that the rates ultimately approved by the Commission will not exceed those
identified in the notice. Staff recommends that the rates and charges approved
by the Commission should become effective March 1, 2023. The Commission should
approve the proposed tariffs as provided in Attachment D to the recommendation.
Issue 70:
Should this docket be closed?
Recommendation:
After the final order is issued, this
docket should be closed. (Sandy)
Position of
the Parties
FPUC:
Yes.
This docket should be closed after the time for filing an appeal has run.
OPC:
Yes,
after the time for appeal of any final order fully resolving this case has
passed.
FIPUG:
Adopts
the position of OPC.
Staff Analysis:
PARTIES’
ARGUMENTS
FPUC
FPUC stated
this docket should be closed after the time for filing an appeal has run. (FPUC
BR 90)
OPC
OPC
contended the docket should be closed after the time for appeal of any final
order fully resolving this case has passed. (OPC BR 63)
FIPUG
FIPUG
adopted the position of OPC. (FIPUG BR 1)
ANALYSIS
After the final order is issued, this
docket should be closed.
