Case Background
On September 3,
2024, Florida Public Utilities Company (FPUC or utility) filed a petition for
approval of revised swing service rider rates and associated tariffs for the
period January through December 2025. The swing service rider is a cents per
therm charge that is included in the monthly gas bill of transportation
customers, who purchase gas from third party marketers, and therefore do not
pay the Purchased Gas Adjustment (PGA) charge. FPUC is a local natural gas distribution
company (LDC) subject to the regulatory jurisdiction of the Commission pursuant
to Chapter 366, Florida Statutes (F.S.).
The Commission
first approved FPUC’s swing service rider tariff by Order No.
PSC-16-0422-TRF-GU (2016 Order) and the initial swing service rider rates were
in effect for the period March through December 2017. The swing service rider requires FPUC to
file an annual petition to recalculate the swing service rider rates based on
the utility’s actual interstate capacity costs and the most recent 12 months of
usage data. Furthermore, the swing service order requires FPUC to incorporate
the calculated revenues from the swing service rider as a credit to the PGA
proceeding for the concurrent year. The January through December 2024 swing
service rider rates were approved in Order No. PSC-2023-0358-TRF-GU. The proposed modifications to the swing
service rider rate schedule are indicated on Attachment A, with the proposed
2025 swing service rider tariffs on Attachment B.
By Order No.
PSC-2024-0454-PCO-GU, issued October 17, 2024, the Commission suspended the
proposed swing service rider tariffs for further review by staff. During
evaluation of the petition, staff issued a data request to the utility for
which responses were received October 3, 2024. This is staff’s recommendation
to approve the proposed 2025 swing service rider rates and associated tariffs. The
Commission has jurisdiction over this matter pursuant to Sections 366.04,
366.041, 366.05, and 366.06, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve the utility’s proposed
swing service rider rates and associated tariffs for the period January through
December 2025?
Recommendation:
Yes, the Commission should approve the proposed
swing service rider rates in Attachment B for the period January through
December 2025. FPUC’s proposed swing service rider reflects the updated cost of
swing service for transportation customers. Staff reviewed the total projected
intrastate capacity costs and verified that the costs included are appropriate.
Furthermore, the methodology for calculating the swing service rider rates is
consistent with the 2016 Order. (McClelland)
Staff Analysis:
The utility incurs intrastate capacity costs when it
transports natural gas on intrastate pipelines (i.e., pipelines operating
within Florida only). The utility has two types of natural gas customers: sales
and transportation. Sales customers are primarily residential and small
commercial customers that purchase natural gas from an LDC and receive
allocations of intrastate capacity costs through the PGA charge. Transportation
customers receive natural gas from third party marketers, known as shippers
and, therefore, do not pay the PGA charge to the LDC.
The swing service rider allows FPUC to recover allocations of intrastate
capacity costs from transportation customers.
Updated 2025 Swing Service Rider Rates
The updated 2025 swing service rider rates were calculated
based on the same methodology approved in the 2016 Order. As stated in
paragraph 7 of FPUC’s petition, the total intrastate capacity costs for the
period July 2023 through June 2024 are $30,003,382, compared to $31,941,095 for
the period July 2022 through June 2023. The total intrastate capacity costs
reflect payments by FPUC to intrastate pipelines for the transportation of
natural gas, pursuant to Commission-approved transportation agreements.
In response to staff’s first data request, FPUC clarified some
costs included in the intrastate pipeline cost total, in Schedule D of the
petition. Upon staff’s review, there appeared to be significant changes to some
costs, which FPUC clarified were due to a change in the methods of organizing
and classifying costs, and not a material change in costs themselves. In
previous years, the company had listed individual pipeline contracts on
Schedule D. However, the 2025 filing combined all contracts under one line
item, labeled “Peninsula Pipeline.” FPUC stated this was done for
confidentiality purposes. FPUC
further stated there was a year-over-year increase of $1,518,270 to overall
Peninsula Pipeline costs due to new projects becoming operational. FPUC’s
other intrastate capacity costs include payments associated with legal and
consulting fees, software to manage forecasting, usage tracking, and market
tracking.
In 2016, the initial order approving the swing service
rider excluded Interruptible (COM-INTT) and Natural Gas Vehicle (COM-NGVT)
transportation service because of the nature of their services. The utility
explained, in its responses to staff’s first data request, that COM-INTT and
COM-NGVT transportation customers were wrongly included in the 2024 swing
service rider due to a change of personnel. FPUC
states they collected $150,891 from COM-INTT customers and $15,076 from
COM-NGVT customers via the swing service rider. FPUC has refunded the affected
customers and has corrected the 2025 swing service rider to remove the COM-INTT
and COM-NGVT customer classes.
Of the intrastate pipeline costs, $7,367,169 will be
billed directly to certain large special contract customers. The remaining
costs of $22,636,213 will be recovered during the period January 1, 2025
through December 31, 2025.
The utility used actual therm usage data for the period
July 2023 through June 2024 to allocate the intrastate capacity costs. Based on
the usage data, staff agrees that the appropriate split for allocating the cost
is 69.96 percent or $15,837,062 to transportation customers and 30.04 percent
or $6,799,151 to sales customers, as demonstrated on page 4 of FPUC’s petition.
The transportation customers’ share of $15,837,062 is further allocated to the
various transportation rate schedules in proportion with each rate schedule’s
share of the utility’s total throughput. The sales customers’ share of the cost
of $6,799,151 is embedded in the PGA.
To calculate the swing service rider rates, the
transportation customers’ share of the cost is allocated to each transportation
customer class and then divided by the customer class’ number of therms. The
swing service revenues the utility has projected to receive in 2025 totals to $15,837,062.
Credit to the PGA
The total intrastate capacity costs are embedded in the
PGA with the projected 2025 swing service rider revenues incorporated as a
credit in the calculation of the 2025 PGA. The amount credited to the 2025 PGA is
$15,837,062 plus $7,367,169 received from special contract customers, for a
total of $23,204,231.
Conclusion
After reviewing the information provided in the petition
and in response to staff’s data request, staff recommends that the Commission
should approve the proposed swing service rider rates in Attachment B for the period January through December 2025. FPUC’s
proposed swing service rider reflects the updated cost of swing service for
transportation customers. Staff reviewed the total projected intrastate
capacity costs and verified that the costs included are appropriate. Furthermore,
the methodology for calculating the swing service rider rates is consistent
with the 2016 Order.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If Issue 1 is approved and a protest is filed
within 21 days of the issuance of the order, the tariff should remain in
effect, with any revenues held subject to refund, pending resolution of the
protest. If no timely protest is filed, this docket should be closed upon the
issuance of a consummating order. (Sandy)
Staff Analysis:
Yes. If Issue 1 is approved and a protest is filed
within 21 days of the issuance of the order, the tariff should remain in
effect, with any revenues held subject to refund, pending resolution of the
protest. If no timely protest is filed, this docket should be closed upon the
issuance of a consummating order.
