Discussion
of Issues
Issue 1:
Should the Commission modify FPL’s
currently-authorized fuel cost recovery factors for the purpose of
incorporating its projected 2024 fuel cost reduction?
Recommendation:
Yes. Staff recommends the Commission authorize
adjustments to FPL’s fuel cost recovery factors for the purpose of
incorporating the Company’s projected net 2024 fuel cost reduction.
Accordingly, FPL’s currently-authorized 2024 fuel cost recovery factors should
be reduced by $661,767,174. (G. Kelley, Zaslow, Higgins)
Staff Analysis:
FPL participated in the Commission’s most-recent
fuel hearing which took place on November 1, 2023. The fuel order stemming from
this proceeding set forth the Company’s fuel and capacity cost recovery factors
effective with the first billing cycle of January 2024. This
Order also authorized changes to FPL’s fuel cost recovery factors coinciding
with the in-service of the 2024 Solar Base Rate Adjustment Project (2024 SoBRA
Project).
The Company’s 2024 SoBRA Project-related generating plants went into service as
anticipated or prior to the planned February 2024 completion date; thus, FPL’s
current fuel cost recovery factors became effective at that time.
FPL Fuel and Purchased Power
Mid-Course Correction
FPL filed for a mid-course correction of its fuel charges
on March 13, 2024. The
Company’s MCC Petition and supporting documentation satisfies the filing
requirements of Rule 25-6.0424(1)(b), F.A.C.
In accordance with the noticing requirement of Rule
25-6.0424(2), F.A.C., FPL filed a letter on January 11, 2024, informing the
Commission that it was projecting an over-recovery position of greater than 10
percent for the current period ending December 31, 2024. The
main factors influencing the decline in actual and projected natural gas prices
in 2024 are elevated quantities of natural gas in storage and milder weather
compared to previous years.
Additionally, FPL included a $5 million fuel cost credit
in its request which reflects a stipulated position (Issue 1) proposed by FPL
and the Office of Public Counsel to resolve replacement power cost matters with
respect to the Company’s nuclear operations.,
This matter is scheduled to be heard by the Commission on March 26, 2024. Staff
notes that should the Commission decline to approve the currently-proposed
stipulation, the credit would be reversed or otherwise amended as ordered and
accounted for in the Company’s 2025 fuel factors provided no other adjustment
is sought this year.
The
factors proposed in this proceeding are currently contemplated to be charged
for 8 months. As is typical procedure, later this year newly developed
12-month-applicable factors will be proposed for authorization to begin with
the first billing cycle of January 2025.
Actual Period-Ending 2023 Fuel Cost
Recovery Position
FPL’s net
fuel cost recovery position at the end of 2023 is an under-recovery of ($956,463,844).
This amount includes FPL’s 2023 actual/estimated over-recovery of $207,586,520.
Decreased
pricing for natural gas is the primary driver of the 2023 over-recovery
identified above. More specifically, the Company estimated an annual natural
gas cost of $4.37 per million British thermal unit (MMBtu) in its 2023
actual/estimated filing. Staff
notes this figure includes delivery costs. However, as indicated in the
Company’s December 2023 A-Schedule, FPL’s average 2023 cost of natural gas was
$4.22 per MMBtu, representing a difference of 3.4 percent.
Natural gas-fired generation comprised approximately 73.0 percent of FPL’s generation
mix in 2023.
Projected 2024 Fuel Cost Recovery
Position
FPL’s 2024
fuel-related revenue requirement has decreased substantially since the filing
of its last cost projection in September 2023.
More specifically, the results of this updated estimate are a reduction in FPL’s
estimated 2024 fuel-related costs in the amount of $624,476,902. The amount of
the 2023 (period-specific net true-up) over-recovery proposed for refund
through new 2024 rates is $37,290,272. Thus, the proposed net or decremental
amount for inclusion into 2024 rates is $661,767,174.
The
primary factor driving the change in projected 2024 fuel costs is lower assumed
pricing for natural gas. More specifically, the underlying market-based natural
gas price data used for the 2024 fuel cost projection was sourced on August 1,
2023.
This underlying data was used to produce an estimated average 2024 delivered
natural gas cost of approximately $5.20 per MMBtu.
However, as noted above and indicated in its MCC Petition, FPL now estimates
its average cost of natural gas in 2024 will be $4.17 per MMBtu, representing a
decrease of 20.0 percent.
The updated cost estimate was based on natural gas futures/prices sourced on March
1, 2024, or roughly seven months later than the previous estimate used to set
current rates. Natural
gas-fired generation is projected to comprise approximately 70.2 percent of
FPL’s generation mix in 2024.
Recovery Period and Interest Premium
As
proposed, FPL’s refund period for its projected 2024 over-recovery is 8 months
(beginning May 2024 and ending December 2024).[23]
FPL utilized the 30-day AA Financial Commercial Paper Rate published by the
Commission to determine its actual 2023 and 2024 (January and February)
interest amounts.
The projected 2024 monthly interest rate was assumed for all forward months by
using the 30-day AA Financial Commercial Paper Rate published on the first
business day of March 2024 of 0.441 percent (monthly).[25]
Mid-Course Correction Percentage
Following
the methodology prescribed in Rule 25-6.0424(1)(a), F.A.C., the mid-course
percentage is equal to the estimated end-of-period total net true-up, including
interest, divided by the current period’s total actual and estimated
jurisdictional fuel revenue applicable to period, or $661,767,174 /
$3,362,375,577. This
calculation results in a mid-course correction level of approximately 19.7
percent at December 31, 2024.
Fuel Factor
FPL’s
currently-approved annual levelized fuel factor beginning with the first February
2024 billing cycle is 3.718 cents per kilowatt-hour (kWh).
The Company is requesting to decrease its currently-approved 2024 annual
levelized fuel factor beginning May 2024 to 2.970 cents per kWh, a decrease of
approximately 20.1 percent.
Bill Impacts
In Tables
1-1 and 1-2 below, the bill impacts of the MCC to typical residential customers
using 1,000 kWh of electricity a month in FPL’s Peninsular service territory
and FPL’s Northwest (former Gulf Power Company) service territory are shown. Further
below Tables 1-1 and 1-2, staff discusses the impacts of the MCC on
non-residential customers.
|
Table 1-1
FPL Peninsular Service
Territory
|
|
Monthly Residential
Billing Detail for the First 1,000 kWh
|
|
Invoice Component
|
Currently-Approved Charges
April 2024
($)
|
Proposed
Charges
Beginning
May 2024
($)
|
Difference
($)
|
Difference
(%)
|
|
Base Charge
|
$80.72
|
$80.72
|
$0.00
|
0.0%
|
|
Fuel Charge
|
34.19
|
26.70
|
(7.49)
|
(21.9%)
|
|
Conservation
Charge
|
1.24
|
1.24
|
0.00
|
0.0%
|
|
Capacity Charge
|
1.70
|
1.70
|
0.00
|
0.0%
|
|
Environmental
Charge
|
3.32
|
3.32
|
0.00
|
0.0%
|
|
Storm
Protection Plan Charge
|
5.57
|
5.57
|
0.00
|
0.0%
|
|
Storm
Restoration Surcharge
|
0.00
|
0.00
|
0.00
|
0.0%
|
|
Transition
Rider
|
(1.19)
|
(1.19)
|
0.00
|
0.0%
|
|
Gross Receipts
Tax
|
3.33
|
3.13
|
(0.20)
|
(6.0%)
|
|
Total
|
$128.88
|
$121.19
|
($7.69)
|
(6.0%)
|
Bill Impacts - FPL Peninsular
Service Territory
FPL’s
currently-approved total residential charge for the first 1,000 kWh of usage
for April 2024 is $128.88.
If the Company’s mid-course correction is approved, then the current total residential
charge for the first 1,000 kWh of usage beginning in May will be $121.19, a decrease
of 6.0 percent. For non-residential customers, FPL reported that bill decreases
based on average levels of usage for small-size commercial customers would
range from approximately 9.6 to 10 percent, 9.7 percent for medium-size
commercial customers, 9.8 percent for large-size commercial customers, and 12.5
percent for industrial customers.
|
Table 1-2
FPL Northwest Service
Territory
|
|
Monthly Residential
Billing Detail for the First 1,000 kWh
|
|
Invoice Component
|
Currently-Approved Charges April 2024
($)
|
Proposed
Charges
Beginning
May 2024
($)
|
Difference
($)
|
Difference
(%)
|
|
Base Charge
|
$80.72
|
$80.72
|
$0.00
|
0.0%
|
|
Fuel Charge
|
34.19
|
26.70
|
(7.49)
|
(21.9%)
|
|
Conservation
Charge
|
1.24
|
1.24
|
0.00
|
0.0%
|
|
Capacity Charge
|
1.70
|
1.70
|
0.00
|
0.0%
|
|
Environmental
Charge
|
3.32
|
3.32
|
0.00
|
0.0%
|
|
Storm
Protection Plan Charge
|
5.57
|
5.57
|
0.00
|
0.0%
|
|
Storm
Restoration Surcharge
|
0.00
|
0.00
|
0.00
|
0.0%
|
|
Transition
Rider
|
12.64
|
12.64
|
0.00
|
0.0%
|
|
Gross Receipts
Tax
|
3.70
|
3.49
|
(0.21)
|
(5.7%)
|
|
Total
|
$143.08
|
$135.38
|
($7.70)
|
(5.4%)
|
Bill Impacts - FPL Northwest
Service Territory
FPL’s currently-approved
Northwest total residential charge for the first 1,000 kWh of usage for April 2024
is $143.08. If the
Company’s mid-course correction is approved, the current total Northwest
residential charge for the first 1,000 kWh of usage beginning in May will be $135.38,
a decrease of 5.4 percent. For non-residential customers, FPL reported that
bill decreases based on average levels of usage for small-size commercial
customers would range from approximately 9.0 to 8.7 percent, and 8.8 percent
for medium-size commercial customers, and 8.8 percent for large-size commercial
customers. A figure associated with an industrial class for the Northwest
service territory was not identified.
Summary
FPL’s MCC
Petition indicates a need for its fuel cost recovery factors to be revised.
More specifically, the Company’s underlying 2024 projected fuel-related revenue
requirement has been reduced by $624,476,902. Additionally, the Company
proposes to incorporate its period-specific final 2023 fuel cost true-up (over-recovery)
of $37,290,272 into the current period. Thus, FPL’s current fuel cost recovery
factors should be reduced by $661,767,174. The revised fuel cost recovery
factors associated with staff’s recommendation are shown on Appendix A.
Conclusion
Staff recommends the
Commission authorize adjustments to FPL’s fuel cost recovery factors for the
purpose of incorporating the Company’s projected net 2024 fuel cost reduction.
Accordingly, FPL’s currently-authorized 2024 fuel cost recovery factors should be
reduced by $661,767,174.
Issue 2:
If approved by the Commission, what is the appropriate
effective date for FPL’s revised fuel cost recovery factors?
Recommendation:
The fuel cost recovery factors, as shown on Appendix
A, should become effective with the first billing cycle of May 2024. (P.
Kelley, Hampson, Brownless)
Staff Analysis:
Over the last 20 years in the Fuel Clause docket,
the Commission has considered the effective date of rates and charges of
revised fuel cost factors on a case-by-case basis. The Commission has approved
rate decreases to be effective less than 30 days after the date of the
Commission vote because the rate decrease was in the customers’ best interest
to be implemented as soon as possible.
In its MCC Petition, FPL proposes to decrease its 2024 fuel factors beginning
with the first billing cycle of May 2024. In response to Staff’s First Data
Request, FPL stated that it would include a message on customer bills in the
April billing cycle explaining that the utility’s proposed rate decrease is set
to begin in May.
Concerning advisement of the instant request, the Company
has engaged in numerous outreach efforts regarding the potential bill impacts
of the proceeding. Specifically, FPL issued a press release on March 13, 2024,
informing its customers of the potential adjustments related to the mid-course
correction through a web-based billing information portal titled “Rates and
Your Bill.”
Conclusion
Staff recommends that the fuel cost recovery factors, as
shown on Appendix A, become effective with the first billing cycle of May 2024.
Issue 3:
Should this docket be closed?
Recommendation:
No. The 20240001-EI docket is an on-going proceeding
and should remain open. (Brownless, Sandy)
Staff Analysis:
The fuel docket is an on-going proceeding and should
remain open.
