Discussion
of Issues
Issue 1:
Should the Commission approve the AGDF’s petition,
subject to certain modified conditions, allowing for its proposed Conservation
Demonstration and Development (CDD) program for the participating LDCs: FCG,
FPUC, Sebring, and SJNG?
Recommendation:
Yes, staff recommends the Commission approve AGDF’s
petition, subject to modified conditions agreed to by AGDF, allowing for a CDD
program for FCG, FPUC, Sebring, and SJNG. Such modified conditions include:
1. The program is limited to five years, and may be
extended beyond the initial term, if requested by AGDF at least six months prior
to the end of the five-year period;
2. FCG and FPUC may participate in as many as three
qualified research projects in any calendar year, with expenditures limited to
$75,000 per project per year; Sebring and SJNG may likewise participate in as
many projects limited to $1,000 per year limit;
3. Any single CDD program project must meet the following minimum
eligibility requirements: (a) the proposed measure or program must have an
affect on rate-paying customers; (b) there is a lack of available research or
insufficient data on the proposed measure or program being evaluated; and (c)
there is insufficient Florida-specific data on the proposed program or measure.
In addition, staff recommends that AGDF comply with the
following additional provisions:
4. AGDF members must not undertake commercial/industrial
class CDD research projects/technologies to the exclusion of residential CDD
projects/technologies during the five year period, and should take actions to
strike a reasonable balance between the two types of CDD projects;
5. Within 6 months following the conclusion of the 5-year
term of the CDD program, or concurrent with a request for CDD program
extension, AGDF must file a CDD program status report with the Commission, detailing
AGDF’s research findings, impacts on cost effectiveness, and how the utilities
plan to or have effectively implemented such findings in new and/or existing
DSM programs.
6. In accordance with Sections 366.81 and 366.82, F.S., the
focus of all CDD projects undertaken by member utilities must be increasing energy
efficiency and/or conservation via advances in technologies and/or their
implementation in utility gas distribution systems, end-use gas equipment, or
demand side renewable energy systems. (Barrett)
Staff Analysis:
In its instant petition, AGDF indicates that its
proposed CDD program is similar in many ways to the CDD program approved in the
2010 AGDF Order, which was originally approved by the Commission for a
five-year period ending March 25, 2015. Thereafter, an extension for the CDD
program was approved through December 31, 2017. In
the instant and former petitions, AGDF asserts that the purpose of the CDD
program is to support research and development, demonstration, and monitoring
projects designed to promote energy efficiency, conservation, and reductions in
climate change emissions.
Summary of Instant Petition
AGDF claims that while the proposed
demonstration development program is intended to identify new gas energy
conservation measures, it will also serve a critical role in enhancing and
updating existing gas
conservation programs. Many of the existing gas conservation programs that are
administered by AGDF utilities require updating to reflect various energy and
cost assumptions that change over time. AGDF asserts that this CDD
program would allow funding to complete the analysis required to file updated
conservation programs, most notably, the cost-effectiveness data inputs that
are required for gas conservation program approval.
AGDF asserts that in its new
proposed CDD program, the participating members have addressed the potential
rate impact concerns mentioned in the AGDF Extension Order, and the other
concern about the consistency of the proposed research objectives and
conservation efforts with FEECA. AGDF believes it has done so by developing
minimum eligibility requirements for CDD funding. These requirements include:
(1) the proposed measure or program
must have an affect on rate-paying customers;
(2) there is a lack of available
research or insufficient data on the proposed measure or program being
evaluated; and
(3) there is insufficient
Florida-specific data on the proposed program or measure.
AGDF states that after the minimum
eligibility requirements have been met, the proposed CDD funding project would
then have to comport with one of three CDD categories. The
first category, efficiency, is proposed
to include research projects that focused on appliance efficiency, and
would include demonstration projects that seek to quantify the efficiency and
cost effectiveness of emerging gas end-use equipment and technologies when
installed in Florida. The second category, resiliency, would include CDD research projects that focus on smaller,
on-site, backup electric generation technologies for home and/or commercial use
that are fueled by gas, configured on a standalone basis, or as a combined heat
and power configuration. The third and final category, renewable, is proposed to include research efforts that seek to
identify and encourage the proliferation of customer-owned renewable natural
gas opportunities among commercial and industrial customers across Florida.
In its petition, AGDF asserts
that each participating LDC will report any CDD-related expenses and information
on program participation through the company’s annual conservation cost
recovery clause expense review. AGDF proposed annual, estimated program expense
limits for each LDC, based upon the assumption of approval to offer one (1),
two (2), or three (3) CDD projects in a calendar year.
Based on those limits, AGDF also estimated the corresponding cost recovery
clause impacts for residential customers that would result if the spending
limits it proposed were implemented.
Per its petition, AGDF believes the research
projects its proposes will be specifically designed to determine whether the
programs and technologies analyzed have the technical potential to meet the
statutory provision of forth in Section 366.82(2), F.S., which is to “. . .
increase the conservation of expensive resources, such as petroleum fuels, to
reduce and control the growth rates of electric consumption, to reduce the
growth rates of weather-sensitive peak demand, and to encourage development of
demand-side renewable energy resources.”
Comparing Instant and Prior Petitions
Staff has
identified the following notable differences between AGDF’s 2009 CDD petition
(Docket No. 20090122-EG) and the instant petition:
a.
In the prior docket, AGDF’s request was for a temporary
CDD program, and that is what the Commission approved. The instant petition sought
approval of a permanent CDD program, but as discussed below, AGDF later agreed
to other temporary options.
b.
In the former docket, PGS was a full participant,
whereas in the instant case, it is not a full participant, but may engage
jointly on some of AGDF’s CDD projects. AGDF explained that the reason PGS is
not included in its proposal is that PGS already has an established CDD program
approved by the Commission.
c.
In the instant petition, AGDF is proposing individual
and program total caps based on a maximum of 3 projects in any one year,
whereas in 2009, the maximum number of projects was not specified.
d.
The instant petition sets forth minimum eligibility
requirements and proposes three CDD categories, which are features that were
not included in the AGDF’s petition filed in Docket No. 20090122-EG.
Analysis
Discussed below are topic areas
that concerned staff as it considered AGDF’s petition and data request
responses.
Initial Request for Permanent Program
As referenced above, AGDF
initially sought a permanent CDD program via its petition. Staff’s main concern
with this request was that no other DSM programs have been conferred permanent
status and, moreover, all FEECA utilities’ goals are subject to review every
five years per Rule 25-17.0021(1), F.A.C, at which time all programs are simultaneously
under review. In discussions with staff on March 6, 2024, staff relayed its
concern that a permanent program would not appear to comport with our existing
rule. Staff also conveyed that, because CDD research programs have not been
pursued in any meaningful way by any Florida gas investor- owned utilities since
the expiration of the prior CDD program in 2018, instituting a permanent
program at this stage of CDD program development did not seem to be well
supported.
On April 18, 2024, in response to
staff concerns regarding this issue and other matters, AGDF submitted a letter to
staff that stated that AGDF is amenable to a 5-year program limitation, as long
as it is not precluded from seeking an extension. Alternatively,
the letter sets forth that a 5-year reporting requirement may be more
administratively efficient, and would provide staff with sufficient information
to initiate a docket if needed to address program concerns. Staff agrees with
the former approach, wherein the proposed CDD program would have a 5 year
program limitation and AGDF would have the option to seek Commission approval
for a program extension. Staff believes there is much to be learned about any
new CDD program, and that the better approach would be to limit the CDD program
to set time period, with an option to extend the program based upon the level
of success achieved as reported and reviewed. Therefore, staff recommends that
the modifications set forth by the April 18, 2024 letter be incorporated into
the order approving the program.
Cost Caps and Rate Impacts
In its petition, AGDF sought
approval to allow FPUC and FCG to each have an annual spending limit of $75,000
per project, for up to a maximum of three projects, or a maximum annual incremental
amount of $225,000 per utility. Additionally, the petition proposed an annual
spending limit of $5,000 per project for SJNG, and an annual spending limit of
$2,000 per project for Sebring. AGDF presented expected residential natural gas
cost recovery clause factor (rate) impacts resulting from these limits which,
upon consultation with staff, AGDF agreed resulted in rate impacts that were
excessive, especially for Sebring and SJNG.
In AGDF’s April 18, 2024 response letter to staff, it reduced its
requested annual spending limits for Sebring and SJNG to $1,000 for each
utility, regardless of the number of projects undertaken. Table 1-1 below reflects
the most current spending limits AGDF proposes:
Table 1-1
AGDF’s Proposed CDD
Program Expense Limits (per year)
|
LDC
|
One (1) CDD Project
|
Two (2) CDD Projects
|
Three (3) CDD Projects
|
|
FPUC
|
$75,000
|
$150,000
|
$225,000
|
|
FCG
|
$75,000
|
$150,000
|
$225,000
|
|
Sebring
|
$1,000
|
$1,000
|
$1,000
|
|
SJNG
|
$1,000
|
$1,000
|
$1,000
|
In addition, AGDF corrected a
cost allocation error to the residential rate impacts appearing in its petition,
in which all costs were assigned to the residential class. With the cost allocation
corrected and with an annual spending limit of $1,000 for Sebring and SJNG, the
proposed incremental rate impacts have been substantially moderated. The
percent increase in for Sebring’s residential rate under the new limit would be
about 2.5 percent for up to three CDD projects, while the percent increase for
SJNG residential rate would be under 1 percent for up to three projects. With
these revisions, staff agrees that the new spending limits for each of the
member utilities are reasonable. Table 1-2 below shows the rate impacts with
the allocation correctly applied and with the $1,000 limits in place for
Sebring and SJNG:
Table 1-2
Updated Proposed Cost
Recovery Impacts for CDD Programs
All Clause factors
shown in Table 1-2 are cents per therm.
Program Approvals by Category
AGDF states that its three
categories for CDD projects (i.e. efficiency, resiliency, and renewable)
showcase the range of potential research projects that could be undertaken.
AGDF asserts that the objective for the efficiency category will be for
studying technologies that improve the efficiency of appliances and gas end-use
equipment. Research for the resiliency category is aimed at increasing a
building’s resiliency by studying gas-fired back-up electric generating and/or
combined heat-and-power systems and technologies that may be developed for
residential or commercial applications. Research under the renewable category
seeks to evaluate technologies and opportunities for the cost-effective use of
renewable natural gas in place of, or in combination with,
traditionally-sources gas in order to achieve greater efficiency and/or to
reduce overall methane emissions.
Despite the framework presented
in AGDF’s petition, staff is concerned that no specific project proposal for
any category was provided. Via data requests, staff sought detailed and
descriptive information on projects to be pursued under these categories, and
none were provided.
AGDF stated that it sought program approvals first (before project details were
developed or available) because its member companies “require the program
account[s] to allocate costs associated with prioritizing CDD projects and
soliciting research proposals.”
Also, staff is uncertain whether
projects under the resiliency or the renewable categories could rightfully be
described as conservation. In the April 18, 2024 letter, AGDF stated that any
potential technology or program studied in the resiliency category would be
subject to the data inputs outlined in the cost-effectiveness tests of other
conservation programs.
Staff has concerns that projects under the resiliency and renewable categories
could result in load building without a demonstration that such research is
designed to result in conservation. In accordance with Sections 366.81 and
366.82, F.S., staff believes the focus of all CDD projects undertaken by member
utilities must be increasing energy efficiency and/or conservation via advances
in technologies and/or their implementation in utility gas distribution systems,
end-use gas equipment, or demand side renewable energy systems. All proposed
projects for any category must comply with the FEECA Statutes as relates to
conservation in order to qualify for cost recovery. Staff believes that, if
AGDF is uncertain whether a planned CDD project meets the statutory
requirements, it should seek affirmation of the acceptability of the project
from the Commission before engaging in such a project and seeking related cost
recovery.
Reporting Requirements
In light of the concerns that
staff has regarding the cost and rate impacts and program categories, staff
recommends reporting requirements be included in the order approving the
program. In as much as the proposed CDD program represents a new program for
the AGDF member utilities included in the instant petition, staff believes the
Commission would benefit from relevant program implementation and results information
from AGDF provided subject to a reporting requirement. As referenced earlier,
the AGDF Extension Order included a reporting requirement,
and staff believes a similar provision should be applied to the instant case. Within
6 months following the conclusion of the 5-year term of the CDD program, or
concurrent with a request for CDD program extension, staff believes AGDF should
be compelled to file a CDD program status report with the Commission, detailing
the successes and limitations of each CDD project and the CDD program in
general. Staff believes the program status report should clearly delineate what
AGDF’s research findings have been, impacts on cost effectiveness, and how the
utilities have effectively implemented such findings in new and/or existing DSM
programs.
Conclusion
Staff recommends the Commission approve AGDF’s petition,
subject to modified conditions agreed to by AGDF, allowing for a CDD program
for FCG, FPUC, Sebring, and SJNG. Such modified conditions include:
1. The program is limited to five years, and may be
extended beyond the initial term, if requested by AGDF at least six months
prior to the end of the five-year period;
2. FCG and FPUC may participate in as many as three
qualified research projects in any calendar year, with expenditures limited to
$75,000 per project per year; Sebring and SJNG may likewise participate in as
many projects limited to $1,000 per year limit (total, all projects);
3. Any single CDD program project must meet the following
minimum eligibility requirements: (a) the proposed measure or program must have
an affect on rate-paying customers; (b) there is a lack of available research
or insufficient data on the proposed measure or program being evaluated; and
(c) there is insufficient Florida-specific data on the proposed program or
measure.
In addition, staff recommends that AGDF comply with the
following additional provisions:
4. AGDF members must not undertake commercial/industrial
class CDD research projects/technologies to the exclusion of residential CDD
projects/technologies during the five year period, and should take actions to
strike a reasonable balance between the two types of CDD projects;
5. Within 6 months following the conclusion of the 5-year
term of the CDD program, or concurrent with a request for CDD program
extension, AGDF must file a CDD program status report with the Commission,
detailing AGDF’s research findings, impacts on cost effectiveness, and how the
utilities plan to or have effectively implemented such findings in new and/or
existing DSM programs.
6. In accordance with Sections 366.81 and 366.82, F.S.,
the focus of all CDD projects undertaken by member utilities must be increasing
energy efficiency and/or conservation via advances in technologies and/or their
implementation in utility gas distribution systems, end-use gas equipment, or
demand side renewable energy systems.
Issue 2:
Should this docket be closed?
Recommendation:
If Issue 1 is approved, and no protest is filed
within 21 days of the issuance of the order, a consummating order should be
issued and the docket should be closed. (Imig)
Staff Analysis:
If Issue 1 is approved, and no protest is filed
within 21 days of the issuance of the order, a consummating order should be
issued and the docket should be closed.
