Case Background
On November 3,
2023, Florida Public Utilities Company (FPUC) and Peoples Gas System, Inc.
(Peoples), collectively the joint petitioners, filed a petition seeking Commission
approval of a first amendment (Amendment No. 1) to the Amended and Restated
Territorial Agreement – Pasco County (Pasco Agreement). In November 2007, the
Commission approved the Pasco Agreement, along with a Master Territorial
Agreement (Master Agreement) and a gas transportation agreement between the
Florida Division of Chesapeake Utilities Corporation and Peoples. This Master Agreement contains terms and
conditions that govern all territorial agreements entered into by Peoples and
Chesapeake. The joint petitioners, through Amendment No. 1, seek the Commission’s
approval to adjust the utilities’ shared service boundary.
Staff issued a data request to the joint petitioners on
November 17, 2023, for which responses were received on December 13, 2023.
On January 10, 2024, the parties filed a corrected version
of Amendment No. 1. The corrected version, initialed by counsel, contains the
date that the amendment was entered into by the parties (October 31, 2023), which
was inadvertently omitted in the original version submitted with the petition.
No other changes were made to the corrected version of Amendment No. 1. Amendment
No. 1 is shown as Attachment A to this recommendation.
The Commission has jurisdiction over this matter pursuant
to Section 366.04, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission approve the proposed Amendment
No. 1 to the Pasco Agreement between
FPUC and Peoples in Pasco County?
Recommendation:
Yes, the Commission should approve
the proposed Amendment No. 1, which transfers a portion of FPUC’s service
territory to Peoples. The proposed Amendment No. 1 would facilitate the
provision of economical and reliable natural gas service by Peoples to prospective
residential and business customers in the proposed transfer area identified as
Service Area B in Amendment No. 1 – Exhibit A, thereby avoiding
duplication of facilities and services. (Kaymak, Barrett, 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.
Unless the Commission determines that the proposed Amendment No. 1 will cause a
detriment to the public interest, the proposed amendment should be approved.
Proposed Amendment to Territorial Agreement
FPUC and
Peoples began territorial agreement discussions after a developer announced plans
for a commercial complex in Service Area B. The previously undeveloped parcel of
land in FPUC’s service territory is located geographically a considerable
distance from the company’s existing natural gas facilities, but very close to
existing facilities operated by Peoples. The proposed Amendment No. 1 will
facilitate serving the new commercial development within the geographic area
described in Amendment No. 1 – Exhibit A as Service Area B (Attachment A). Service
Area B is about 12,212 acres in size, and the new commercial development is
projected to include a grocery store and other retail outparcels totaling about
60,000 square feet. The joint petitioners assert that in the next 5 to 10
years, further development within the Service Area B could result in up to 1,000
new residential and commercial customers.
FPUC
determined that its nearest facilities to Service Area B are approximately 24
miles away in Plant City.
The utility asserted that construction of new facilities from its existing
facilities in Plant City to Service Area B would cost several million dollars. Although
a specific estimate was not developed, FPUC determined it was unable to extend
service to the development economically, and thus pursued the territorial
modifications set forth in this petition.
Peoples,
on the other hand, has natural gas facilities about 320 feet away from Service
Area B on County Road 577 (Curley Road). To provide natural gas services to
Service Area B, Peoples would need to construct 170 linear feet of main lines,
150 linear feet of service lines, and a distinct regulator station, which Peoples
estimate would cost $105,000.
Based on the comparative difference in the amount of required infrastructure, Peoples
can more economically serve the commercial development than FPUC and is willing
to do so.
Pursuant
to Paragraphs 3.D. and 3.E. of the Master Agreement, the joint petitioners have
entered into Amendment No. 1 which, if approved, would transfer Service Area B
from FPUC to Peoples.
Pursuant to Paragraph 5 of Amendment No. 1, the terms and conditions of the Pasco
Agreement would remain unchanged going
forward. Prior to the second anniversary of the Commission’s approval of Amendment
No. 1, and no more frequently than every five years thereafter, Peoples and
FPUC will confer regarding the status of the amendment.
The joint petitioners state that the approval and
implementation of Amendment No. 1 will not cause a decrease in the availability
or reliability of natural gas service provided by either entity, or to the
existing or future ratepayers of either entity, consistent with the standards
set forth in Section 366.04, F.S., and Rule 25-7.0471(2)(c), F.A.C..
As stated in paragraph 6 of the petition, approval of Amendment No. 1 will
enable as many residential and business customers in Pasco County as possible
to receive economical and reliable natural gas service and will not necessitate
the transfer of any existing customers or facilities between the joint petitioners.
Moreover, as stated in paragraph 6, absent the subject amendment, certain
customers in Pasco County would be unable to obtain natural gas service; thus,
the approval of Amendment No. 1 would be in the public interest.
Rule Considerations
Rule 25-7.0471(2), F.A.C., addresses the standards the
Commission should consider for approving territorial agreements for natural gas
utilities. The Rule states:
(2) Standards for Approval. In approving
territorial agreements, the Commission shall consider:
(a) The reasonableness of the purchase
price of any facilities being transferred;
(b) The reasonable likelihood that the
agreement, in and of itself, will not cause a decrease in the reliability of
natural gas service to the existing or future ratepayers of any utility party
to the agreement, and
(c) The reasonable likelihood that the
agreement will eliminate existing or potential uneconomic duplication of
facilities.
(d) Other relevant factors that may arise
from the circumstances of a particular case.
In its review, staff considered each component of Rule
25-7.0471(2), F.A.C. Regarding paragraph (2)(a), staff notes that FPUC agreed
to transfer the pertinent area to Peoples without compensation, which staff
believes is reasonable because no facilities are being transferred.
Regarding paragraph (2)(b), the joint petitioners’ have confirmed that the
availability and reliability of service to existing or future customers will
not be decreased for either petitioner. The joint petitioners verified that there
are no natural gas facilities in Service Area B, and that construction would be
necessary to service that geographic area.
Paragraph (2)(c) has been appropriately considered because, under the proposed territorial agreement,
staff believes uneconomic duplication of facilities would not occur
because Peoples facilities are better positioned to serve the area economically
and efficiently.
Staff believe paragraph(2)(d) gives the Commission the flexibility to address
any other relevant concerns that are case-specific. The joint petitioners
assert that there are none.
Under Rule 25-7.0471(1)(e), F.A.C., a proposed territorial
agreement must provide information regarding the degree of acceptance by
affected customers. Staff notes, however, that in the instant case, there are
no current customers and under this proposed territorial agreement,
no facility transfers are contemplated. In addition, representatives
from FPUC and Peoples have notified staff that the developer is aware of, and
has no objection to, the proposed territorial agreement.
Conclusion
Staff
recommends that the Commission approve the proposed Amendment No. 1, which
transfers a portion of FPUC’s service territory to Peoples. The proposed
Amendment No. 1 would facilitate the provision of economical and reliable
natural gas service by Peoples to residential and business customers in the proposed
transfer area identified as Service Area B in Amendment No. 1 – Exhibit A,
thereby avoiding duplication of facilities and services.
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.
