Case Background
On
August 2, 2023, Florida Keys Electric Cooperative Association, Inc. (FKEC) and
the Utility Board of the City of Key West, d/b/a Keys Energy Services (KEYS),
filed a joint petition for renewal of territorial agreement and approval of a first
amendment (First Amendment). The Commission approved a territorial agreement
between FKEC and KEYS, (collectively, the parties) in 1991 (1991 Territorial Agreement). The 1991 Territorial Agreement expired in September
2021 at the end of its 30-year term and automatically renewed for an additional
30 years. Although the two utilities did not seek Commission approval of their
renewed 1991 Territorial Agreement at the end of its first 30-year term, as
required by the 1991 Territorial Agreement, the parties stated that they have abided
by the conditions of the agreement with the exception of the provision of
electric service to Pigeon Key.
The
proposed First Amendment addresses a modification to the existing service
territory boundary to allow FKEC to provide electric service to Pigeon Key,
which currently lies in KEYS’ service territory. Pigeon Key was designated as a National Historic Landmark
in 1990. In 1992, the Pigeon Key Foundation, Inc., (Foundation) was created as a non-profit organization
to preserve and protect Pigeon Key. The Foundation has been utilizing
self-service generators during the past 29 years and has requested electric
service and hence the need for the proposed First Amendment.
The
1991 Territorial Agreement and territorial map are Attachment A and the
proposed First Amendment, including the map depicting the modified service boundary,
is included in Attachment B to this recommendation.
During the
review process, staff issued two data requests to the parties on August 10 and
29, 2023. Responses were received on August 23 and on September 7, 2023. Staff
also had an informal telephonic meeting with the parties on September 7, 2023. This
recommendation addresses the renewal of the 1991 Territorial Agreement,
proposed First Amendment to the 1991 Territorial Agreement and associated
revised boundary map. The Commission has jurisdiction over this matter pursuant
to Sections 366.04 and 366.05, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission approve the renewal of the
1991 Territorial Agreement and the proposed First Amendment to the 1991 Territorial
Agreement and associated revised boundary map between Florida Keys Electric
Cooperative Association, Inc. and the Utility Board of the City of Key West,
d/b/a Keys Energy Services, in Monroe County?
Recommendation:
Yes, the Commission should approve the renewal of
the 1991 Territorial Agreement and the proposed First Amendment to the 1991
Territorial Agreement and associated revised boundary map between FKEC and KEYS
in Monroe County. The renewal of the 1991 Territorial Agreement and proposed
First Amendment would enable FKEC to provide electric service to the Foundation
pursuant to the proposed revised service boundary and avoid duplication of
service. (Guffey, McClelland)
Staff Analysis:
FKEC is a rural electric cooperative and KEYS is a
municipal electric utility. Pursuant to Section 366.04(2)(d), F.S., and Rule
25-6.0440(2), F.A.C., the Commission has the jurisdiction to approve
territorial agreements between and among rural electric cooperatives, municipal
electric utilities, and other electric utilities. Unless the Commission
determines that the agreement will cause a detriment to the public interest,
the agreement should be approved.
1991 Territorial Agreement
FKEC and KEYS entered into an
electric service territorial agreement in June 1991, which the Commission
approved in September 1991.
The 1991 Territorial Agreement which had a 30-year term, clearly identified the
geographic areas to be served by each utility which allowed the two utilities
to prevent potential uneconomic duplication of facilities and hazardous
situations within their specified service territories. There were no customer
or facility transfers contemplated in the 1991 Agreement.
The 1991 Territorial Agreement’s
30-year term expired in September 2021 and automatically renewed for an additional
30 years since neither of the parties gave notice to not renew. Paragraph 11 of
the 1991 petition recognized that any modifications, changes, or corrections
must be approved by this Commission. Additionally, Section 5.1 of the 1991
Agreement states that:
each such renewal of
this Agreement shall require prerequisite approval of the Commission with the
same effect as the original Commission approval of this Agreement as required
and approved for in Article 4 hereof.
The parties explained that due to
staffing changes there was a delay in filing a petition with the Commission for
renewal of the 1991 Territorial Agreement.
However, the parties stated that with the exception of the provision of
electric service to Pigeon Key, which is discussed below and the subject of the
proposed First Amendment, the parties abided by the 1991 Territorial Agreements
and have had no disputes.
Proposed First Amendment to the 1991 Agreement
Through the proposed First Amendment to the 1991 Territorial
Agreement, the parties seek to modify the service territory boundary and allow
FKEC to provide electric service to Pigeon Key at the request of the
Foundation. Prior to the Foundation’s request for electric service, neither
KEYS nor FKEC provided electric service to the island. Provision of electricity
by KEYS to the Pigeon Key poses significant engineering and economic challenges
due to the geographic and environmental conditions. Although KEYS owns electric
transmission poles approximately 350 feet from the island, the poles do not
carry distribution lines and KEYS does not have the ability to step down the
electricity. The parties state that if KEYS were to extend the distribution
lines to Pigeon Key, the most economical method to do so would cost
approximately $6 million.
The costs incurred by FKEC to add facilities within its
service boundary in order to connect to the Foundation’s point of service is $6,011.53. Considering
the above-stated challenges if KEYS were to provide electric service to the
Foundation, allowing FKEC to provide electric service to the Foundation is the most
economical and practical solution.
In response to staff discovery, the parties stated that
FKEC has been providing service to the Foundation since May 2021.
The parties acknowledge that they should have requested Commission approval of
the First Amendment to the 1991 Agreement prior to providing service to the
Foundation; however, the parties explained that due to staffing changes there
was a delay in filing a petition with the Commission.
Pursuant to Rule 25-6.0440(1)(d), F.A.C., affected
customers must be notified of difference in service and rates. In June 2023,
FKEC provided the Foundation a customer notice indicating the rates and tariffs
that would be applicable to the Foundation. The Foundation receives electric
service under FKEC’s General Service Demand tariff. In response to staff’s data
request, the parties provided a copy of FKEC’s customer notification and
applicable tariff information.
The parties informed staff that there have been no customer comments or
objections regarding this proposed territorial amendment and no customer
comments have been filed in the docket file.
Conclusion
After review of the petition, the
1991 Territorial Agreement, the First Amendment to the 1991 Territorial
Agreement, evaluation of responses to staff’s data requests, and informal telephonic
meeting with the parties, staff believes that the renewal of the 1991 Territorial
Agreement and First Amendment would not be a detriment to the public interest
and would enable FKEC to serve the Pigeon Key Foundation in an efficient
manner. It appears that the 1991 Agreement and First Amendment and associated
modified boundary map would eliminate any potential uneconomic duplication of
facilities and not cause a decrease in the reliability of electric service. As
such, staff believes that the Commission should approve the renewal of the 1991
Territorial Agreement between FKEC and KEYS along with the proposed First Amendment
to the 1991 Territorial Agreement and associated revised service boundary map,
effective on the date of the final Commission order. FKEC and KEYS should be
put on notice that any further modifications to the Territorial Agreement
should be promptly submitted to the Commission for its review and approval.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. 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.
(Stiller)
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.
