Case Background
By Order issued
March 23, 2023, the Commission approved Florida Power & Light Company’s
(FPL or Company) petition for a limited proceeding seeking authority to
implement an interim storm restoration recovery charge to recover $1.3 billion
for the incremental restoration costs related to Hurricanes Ian and Nicole and
to replenish the storm reserve. This amount included $18.8 million in
interest.
The Commission
also approved the alternate storm charge calculation FPL proposed in its
petition, which combined the recovery of incremental storm costs associated
with Hurricanes Ian and Nicole with the remaining amounts to be collected for
Hurricanes Michael, Sally, and Zeta, which have been previously approved by the
Commission for Gulf Power Company (GPC). This alternate calculation estimated a
total of $1.5 billion for incremental restoration costs related to Hurricanes
Michael, Sally, Zeta, Ian, and Nicole, to replenish the storm reserve, and
included $21.6 million in interest. FPL filed its petition pursuant to the
provisions of the 2021 Settlement Agreement (2021 Settlement) approved by the
Commission in Order No. PSC-2021-0446-S-EI.
On September 5,
2023, FPL filed a supplemental petition to reduce the interim storm surcharge
based on its internal review and finalization of the invoices and storm costs
associated with Hurricanes Ian and Nicole. As a result of this internal
process, the estimated incremental storm restoration cost related to the two
storms decreased from the original estimate of $1.3 billion to $1.1 billion.
Thus, the total estimate reflected in the alternative storm charge calculation
decreased from $1.5 billion to $1.3 billion. FPL has proposed amended reduced interim
storm restoration charges applicable to all rate classes, effective with the
first billing cycle of January 2024 and continuing through March 2024, subject
to a final true-up.
The Commission
has jurisdiction over this matter pursuant to Sections 366.04, 366.05, 366.06,
and 366.076, Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission authorize FPL to implement an
amended interim storm restoration recovery charge?
Recommendation:
Yes. The Commission should authorize FPL to
implement an amended interim storm restoration recovery charge, subject to
refund. Once the total actual storm costs are known, FPL should be required to
file documentation of the storm costs for Commission review and true up of any
excess or shortfall. (Norris)
Staff Analysis:
As stated in the Case Background, FPL filed a
supplemental petition to reduce the interim storm surcharge based on its
internal review and finalization of the invoices and storm costs associated
with Hurricanes Ian and Nicole. As a result of this internal process, the
estimated incremental storm restoration cost related to the two storms
decreased from the original estimate of $1.3 billion to $1.1 billion. Thus, the
estimate of total costs reflected in the alternative storm charge calculation
decreased from $1.5 billion to $1.3 billion. Included in that total is FPL’s
request to replenish the storm reserve to the pre-storm level of $219.9
million.
The initial interim petition was filed pursuant to the
provisions of the 2021 Settlement approved by the Commission in Order No.
PSC-2021-0446-S-EI. Storm restoration costs for Ian and Nicole were incurred
during the term of the 2021 Settlement. Based on the updated estimates for the
two storms, the current interim storm surcharge would result in an over-recovery
of approximately $200 million if allowed to remain effective through March
2024.
The approval of an interim storm restoration recovery
charge is preliminary in nature and is subject to refund pending further review
once the total actual storm restoration costs are known. After the actual costs
are reviewed for prudence and reasonableness, and are compared to the actual
amount recovered through the interim storm restoration recovery charge, a
determination will be made whether any over/under recovery has occurred. The
disposition of any over/under recovery, and associated interest, will be
considered by the Commission at a later date. However, staff recommends
amending the interim storm surcharge to reflect the known and measurable
changes identified by the Company in advance of the final disposition.
Based on a review of the information provided by FPL in
its supplemental petition, staff recommends that the Commission authorize the
Company to implement an amended interim storm restoration recovery charge
subject to refund. Once the total actual storm costs are known, FPL should be
required to file documentation of the storm costs for Commission review and
true-up of any excess or shortfall.
Issue 2:
Should the Commission approve FPL’s proposed amended
interim storm restoration recovery charge tariff as shown in Attachment A to
the recommendation?
Recommendation:
Yes. The Commission should approve FPL’s proposal to
revise the interim storm restoration recovery surcharges and associated tariff,
as shown in Attachment A to this recommendation. The tariff should become
effective the first billing cycle of January 2024. The interim storm
restoration surcharges should be subject to final true-up once the final total
actual storm-related costs are known and filed. (Hampson)
Staff Analysis:
FPL has proposed to decrease the currently effective
interim storm restoration recovery surcharges based on the Company’s internal
review of storm costs, as discussed in Issue 1. In paragraph 10 of the
petition, FPL states that the updated surcharges are allocated to the rate
classes consistent with the rate design approved in FPL’s most recent rate
case.
Staff has reviewed the allocation to rate classes and believes that the
allocations provided in Appendix D to the petition are consistent with those
approved in FPL’s most recent rate case. Furthermore, staff has reviewed the
derivation of the surcharges provided in Appendix D to the petition. Staff
agrees that the surcharges have been calculated correctly, using projected kilowatt
hour (kWh) sales for January through March 2024. The proposed interim storm
restoration recovery factors should remain in effect until a final true-up is
approved by the Commission.
The proposed interim storm restoration surcharges are
shown on First Revised Tariff Sheet No. 8.030.7, provided in Appendix F to the
petition. For residential customers the proposed surcharge would be 0.665 cents
per kWh, which equates to a total surcharge of $6.65 for a 1,000 kWh monthly
bill. The current surcharge is 1.53 cents per kWh, which equates to a total
surcharge of $15.30 for a 1,000 kWh monthly bill. The storm cost recovery
surcharge would be included in the non-fuel energy charge on customer bills.
Staff recommends that the Commission approve FPL’s
proposal to revise the interim storm restoration recovery surcharges and
associated tariff, as shown in Attachment A to this recommendation. The tariff
should become effective the first billing cycle of January 2024. The proposed
interim storm restoration recovery factors should remain in effect until a
final true-up is approved by the Commission. The interim storm restoration
surcharges should be subject to final true-up once the final total actual
storm-related costs are known and filed.
Issue 3:
Should this docket be closed?
Recommendation:
No. This docket should remain open pending final
reconciliation of actual recoverable storm costs with the amount collected
pursuant to the interim storm restoration recovery charge and the calculation
of a refund or additional charge if warranted. (Stiller)
Staff Analysis:
No, this docket should remain open pending final
reconciliation of actual recoverable storm costs with the amount collected
pursuant to the interim storm restoration recovery charge and the calculation
of a refund or additional charge if warranted.
