Discussion
of Issues
Issue 1:
Should the Commission approve FPL's proposed URD
tariffs and associated charges?
Recommendation:
Yes. The Commission should approve FPL’s proposed
URD tariffs and associated charges as shown in Attachment A, effective 30 days
after the Commission vote. (Ward)
Staff Analysis:
The URD tariffs provide standard charges for
underground service in new residential subdivisions and represent the
additional costs, if any, the utility incurs to provide underground service in
place of overhead service. The cost of standard overhead construction is
recovered through base rates from all ratepayers. In lieu of overhead
construction, customers have the option of requesting underground facilities.
Typically, the developer of a new residential subdivision would be the utility
customer utilizing the URD tariffs. FPL’s proposed URD tariffs are provided on
pages 1 through 7 of Attachment A.
Traditionally, three standard model subdivision designs
have been the basis upon which each investor-owned utility submits URD tariff
changes for Commission approval: low density, high density, and a high density
subdivision where dwelling units take service at ganged meter pedestals (groups
of meters at the same physical location). Examples of this last subdivision
type include mobile home and recreational vehicle parks. While actual
construction may differ from the model subdivisions, the model subdivisions are
designed to reflect average overhead and underground subdivisions.
In its petition, the utility updated its cost calculations
and supporting documentation for the three subdivision models cost
differentials. The currently approved cost differentials are $0.00 for all
three subdivision models. As shown on Table 1-1, FPL's proposed URD
differential charges remain zero for all three subdivision models. A zero URD
differential charge is typically the result of the avoided storm restoration
costs associated with underground facilities, offsetting any higher labor and
material costs associated with underground construction.
Table 1-1
Comparison of Differential per
Service Lateral
|
Types of
Subdivision
|
Current URD Differential
|
Proposed URD Differential
|
|
Low Density
|
$0
|
$0
|
|
High Density
|
$0
|
$0
|
|
Meter Pedestal
|
$0
|
$0
|
Source: 2019 Order and FPL’s 2023 filing.
Two primary factors impacted the calculation of FPL’s
proposed URD charges which are discussed in greater detail below: (1) updated
labor and material costs and (2) updated operational costs.
Updated Labor and Material Costs
The installation costs of both underground and overhead
facilities include the labor and material costs to provide primary, secondary,
and service distribution lines as well as transformers. The costs of poles are
specific to overhead service while the costs of trenching and backfilling are
specific to underground service. Table 1-2 compares the currently approved 2019
costs and 2023 costs for underground and overhead labor and material for the three
subdivision models.
Table 1-2
Labor and Material Costs
|
Low Density
|
2019 Costs
|
2023 Costs
|
Difference
|
|
Underground Labor/Material Costs
|
$2,558.39
|
$3,452.54
|
$894.15
|
|
Overhead Labor/Material Costs
|
$2,347.86
|
$2,543.92
|
$196.06
|
|
Per Service Lateral Differential
|
$210.53
|
$908.62
|
$698.09
|
|
High Density
|
|
Underground Labor/Material Costs
|
$1,767.54
|
$2,317.97
|
$550.43
|
|
Overhead Labor/Material Costs
|
$1,773.71
|
$1,921.50
|
$147.79
|
|
Per Service Lateral Differential
|
($6.17)
|
$396.47
|
$402.64
|
|
Meter Pedestal
|
|
Underground Labor/Material Costs
|
$1,125.49
|
$1,485.47
|
$359.98
|
|
Overhead Labor/Material Costs
|
$1,397.83
|
$1,533.74
|
$135.91
|
|
Per Service Lateral Differential
|
($272.34)
|
($48.27)
|
$224.07
|
Source: 2019 Order and FPL’s 2023 filing.
While both overhead and
underground labor and material costs increased, underground costs increased at
a higher rate, resulting in an increase in the differential. In response to
staff’s data request the utility explained that the higher overhead and underground
construction costs are primarily driven by increased material costs.
Updated Operational Costs
Rule 25-6.078(4), F.A.C., provides that the differences in
net present value of operational costs between overhead and underground
systems, including average historical storm restoration costs over the life of
the facilities, be included in the URD charge. Operational costs include
operations and maintenance costs and capital costs. The inclusion of the
operational costs is intended to capture longer term costs and benefits of
undergrounding. In response to staff’s data request, FPL stated that the
current URD petition incorporates costs from hurricane events Ian and Nicole. FPL's
methodology to calculate the operational costs was approved in Order No. PSC-08-0774-TRF-EI
and remains the same in the instant docket.
Table 1-3 presents the pre-operational (shown in Table 1-2),
non-storm operational, and the avoided storm restoration cost differentials
between overhead and underground systems. The proposed differential is $0 when
the calculation results in a negative number.
Table 1-3
Components of the URD
Charges
|
Type of Subdivision
|
Pre-Operational
Costs (A)
|
Non-Storm
Operational Costs (B)
|
Avoided Storm Costs
(C)
|
Proposed URD
Differentials (A)+(B)+(C)
|
|
Low Density
|
$908.62
|
($2,208)
|
($1,387)
|
$0
|
|
High Density
|
$396.47
|
($1,878)
|
($1,388)
|
$0
|
|
Meter Pedestal
|
$0.00
|
($1,878)
|
($1,388)
|
$0
|
Source: FPL’s 2023 filing.
Conclusion
Staff has reviewed FPL’s proposed changes to its URD
tariffs and associated charges, the accompanying work papers, and responses to
staff’s data request. Staff believes FPL’s proposed URD tariffs and associated
charges as filed in the petition are cost-based and recommends approval of the
tariffs shown in Attachment A. Staff recommends that the tariffs be made
effective 30 days after the Commission vote.
Issue 2:
Should the Commission approve FPL's UCD tariffs and
associated charges?
Recommendation:
Yes. The Commission should approve FPL’s proposed
UCD tariffs and associated charges as shown in Attachment A, effective 30 days
after the Commission vote. Staff reviewed FPL's supporting documentation for
the UCD charges and believes the charges are cost based and reasonable. (Ward)
Staff Analysis:
Utilities are not required to file UCD tariffs
pursuant to Rule 25-6.078, F.A.C.; however, as in prior URD petitions, FPL
included proposed UCD tariffs in its petition. The UCD tariffs apply to small
commercial or industrial customers (applicant) that request the installation of
underground electric distribution facilities for a new building. The requested
underground distribution facilities consist of underground service conductors,
placed in conduit, and associated equipment that is installed from overhead
feeder mains (or overhead termination point) to the designed point of delivery
(where the utility's wires are connected to those of the customer). FPL’s
proposed UCD tariffs are provided on pages 8 through 10 of Attachment A.
The UCD charges represent the differential costs for
underground commercial facilities and their equivalent overhead design. The
calculations provided by FPL in its petition employ FPL's standard engineering
design criteria and are based on actual 2022 labor and material costs. Unlike
the URD calculations, the UCD calculations do not include long term operational
and avoided storm restoration costs. In addition, the UCD tariffs provide
credits that apply if the applicant provides trenching, backfilling, or
installs FPL provided conduit or a concrete pad for a pad-mounted transformer.
Staff reviewed FPL's supporting documentation for the UCD
charges and believes the charges are cost based and reasonable. Staff
recommends that the UCD tariffs and associated charges be approved, effective
30 days after the Commission vote.
Issue 3:
Should the Commission approve FPL's proposed
revisions to Tariff Sheet Nos. 6.300 and 9.722?
Recommendation:
Yes. The Commission should approve FPL’s proposed
revisions to Tariff Sheet Nos. 6.300 and 9.722 as shown in Attachment A,
effective 30 days from the Commission vote. Furthermore, staff recommends approval
of FPL’s request to include the waived existing facilities cost for all
non-hardened overhead distribution facilities in net plant in service. (Ward, Knoblauch)
Staff Analysis:
Tariff Sheet No. 6.300 provides the terms under
which applicants are to pay a contribution-in-aid-of-construction (CIAC) for
the conversion of existing overhead distribution facilities to underground. The
CIAC is intended to cover the incremental costs FPL incurs resulting from a
conversion, over and above the cost of serving the conversion area with overhead
facilities. Typically, municipalities request a conversion from overhead to
underground facilities. The formula to calculate CIAC is defined in Rule
25-6.115(8), F.A.C., and in FPL’s Tariff Section 12.1 of Sheet No. 6.300. FPL’s
proposed revisions to Tariff Sheet Nos. 6.300 and 9.722 are provided on pages
11 and 12 of Attachment A.
Paragraph (12) of Rule 25-6.115, F.A.C., allows a utility
to waive all or any portion of the cost for providing underground facilities.
If the utility waives any charge, the utility is required to reduce net plant
in service unless this Commission determines that there is a quantifiable
benefit to the general body of ratepayers commensurate with the waived charge.
In Order No. PSC-2018-0050-TRF-EI, the Commission approved
FPL’s revised Tariff Sheet No. 6.300 to exclude the cost of the existing
facilities from the CIAC calculation for underground conversions of existing
non-hardened overhead feeder facilities and to include the waived existing
facilities cost in net plant in service pursuant to Rule 25-6.115, F.A.C.
In this filing, FPL seeks to revise Tariff Sheet No. 6.300
to clarify that the costs for all existing non-storm hardened distribution
facilities costs, which include both feeders and laterals, from the calculation
of CIAC. The current tariff, as approved in Order No. PSC-2018-0050-TRF-EI,
only refers to feeders. FPL further requests that the Commission determine that
there are quantifiable benefits to excluding the existing costs for all
non-hardened overhead distribution facilities, i.e., both feeders and laterals.
FPL also proposes to modify existing language and include
additional language to its Underground Facilities Conversion Agreement, on
Tariff Sheet No. 9.722. The proposed tariff modifications state that all
facilities within the project must be converted to underground. In its
petition, FPL stated that the proposed revisions are not a substantive change,
but rather intended to clarify the scope of the underground conversion project
and avoid or reduce customer confusion.
Storm Protection Plan and Cost Recovery
In February 2020, Rules 25-6.030, F.A.C., Storm Protection Plan
(SPP), and 25-6.031, F.A.C., Storm Protection Plan Cost Recovery Clause (SPP Clause),
were codified to implement Section 366.96, F.S. The SPPs cover the immediate
10-year planning period and are filed with the Commission at least every three
years. The plans must explain the systematic approach the utility will follow
to achieve the objectives of reducing restoration costs and outage times
associated with extreme weather events and enhancing reliability. The SPP
Clause allows the utility to seek recovery from the general body of ratepayers
for prudently incurred SPP costs through an annual proceeding. On April 11,
2022, FPL filed its proposed SPP for the period 2023-2032 for Commission
approval, which was approved with modification by Order No.
PSC-2022-0389-FOF-EI.[6]
Benefits to the General Body of Ratepayers
Order No. PSC-2018-0050-TRF-EI lists the benefits FPL provided to
support excluding existing facilities costs from the calculation of CIAC for
underground conversions of the existing non-hardened overhead facilities, that
otherwise would be subject to hardening. In the instant petition, FPL listed similar
benefits to the general body of ratepayers that the proposed revision to Tariff
Sheet No. 6.300 would provide. First, FPL affirmed that the general body of
ratepayers would pay no additional costs for the undergrounding conversions as
the costs would have been included as a part of FPL’s SPP to harden all
overhead distribution facilities. Further, FPL asserted that due to the
converting customer accelerating the timeline of when FPL would have hardened
the facilities, the general body of ratepayers would receive the benefits of
such hardening sooner. FPL stated that even in instances where facilities would
have been kept overhead but hardened according to its SPP, undergrounding
provides greater storm resiliency and day-to-day reliability, which benefits
all customers. Additionally, voluntary underground conversions would help to
mitigate the need for storm restoration work in the converted area and thus
result in those resources being utilized elsewhere. Finally, FPL asserted that
the proposed revision to Tariff Sheet No. 6.300 could further incentivize
customers to voluntarily pay for the conversion of non-hardened facilities and
this would reduce the number of hardening projects that the general body of
customers would pay for through the SPP Clause. A similar tariff was approved
for Duke Energy Florida, LLC. in 2022.
Conclusion
Staff recommends that the Commission approve FPL’s
revisions to Tariff Sheet Nos. 6.300 and 9.722, effective 30 days after the
Commission vote. Furthermore, staff recommends approval of FPL’s request to
include the waived existing facilities cost for all non-hardened overhead
distribution facilities in net plant in service.
Issue 4:
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.
(Thompson)
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.
