Discussion
of Issues
Issue 1:
Should the Commission authorize FPL to implement an
interim storm restoration recovery charge?
Recommendation:
Yes. The Commission should authorize FPL to
implement an 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 total storm costs for Commission review and true-up of any
excess or shortfall. (Hinson)
Staff Analysis:
As stated in the Case Background, FPL filed a petition
for a limited proceeding seeking authority to implement an interim storm
restoration charge to recover an estimated total of $1.2 billion for
incremental storm restoration costs for the Storms and to replenish its storm
reserve. In its petition, FPL requested to replenish the storm reserve to $150
million.
The petition was filed pursuant to the provisions of the
2021 Settlement approved by the Commission in Order Nos. PSC-2021-0446-S-EI and
PSC-2021-0446A-S-EI. Pursuant to paragraph 10 of the 2021 Settlement, FPL can
begin recovery of storm costs 60 days following the filing of a petition for
recovery.
In its petition, FPL asserted that it incurred approximate
recoverable costs in the amount of $113.5 million for Hurricane Debby, $157.8
million for Hurricane Helene, and $811.1 million for Hurricane Milton. The
Company further asserted that all amounts were calculated in accordance with
the Incremental Cost and Capitalization Approach methodology prescribed in Rule
25-6.0143, Florida Administrative Code.
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 or under recovery, and associated interest, will be
considered by the Commission at a later date.
Based on a review of the information provided by FPL in
its petition, staff recommends that the Commission authorize the Company to
implement an 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:
What is the appropriate security to guarantee the
amount collected subject to refund through the interim storm restoration
recovery charge?
Recommendation:
The appropriate security to guarantee the funds
collected subject to refund is a corporate undertaking. (Quigley)
Staff Analysis:
Staff recommends that all funds collected subject to
refund be secured by a corporate undertaking. The criteria for a corporate
undertaking include sufficient liquidity, ownership equity, profitability, and
interest coverage to guarantee any potential refund. FPL requested a 12-month
collection period from January 2025 through December 2025 for the Interim Storm
Recovery charges of approximately $1.2 billion related to the Storms. Staff
reviewed FPL’s three most recent annual reports filed with the Commission
(2023, 2022, and 2021) to determine if the Company can support a corporate
undertaking to guarantee the funds collected for recovery of incremental storm
restoration costs related to all the weather events. FPL’s financial
information demonstrates the Company has acceptable levels of liquidity,
ownership equity, profitability, and interest coverage to support a potential
refund of $1.2 billion. Moreover, it is improbable FPL will be required to
refund the entire requested amount.
Staff believes FPL has adequate resources to support a
corporate undertaking in the amount requested. Based on this analysis, staff
recommends that a corporate undertaking of $1.2 billion is acceptable. This
brief financial analysis is only appropriate for deciding if the Company can
support a corporate undertaking in the amount proposed and should not be
considered a finding regarding staff's position on other issues in this
proceeding.
Issue 3:
Should the Commission approve FPL's proposed interim
storm restoration recovery charge tariff as shown in Attachment A of the recommendation?
Recommendation:
Yes. The Commission should approve FPL’s proposal to
revise the interim storm restoration recovery tariff and associated surcharges,
as shown in Attachment A to this recommendation. The tariff should become
effective the first billing cycle of January 2025. The interim storm
restoration surcharges should be subject to final true-up once the total actual
storm costs are known. (P. Kelley)
Staff Analysis:
FPL calculated the interim storm surcharge for the
12-month period of January 1, 2025 through December 31, 2025, subject to
true-up once the final total recoverable storm amount is known and determined.
In paragraph 24 of the petition, FPL states that the updated surcharges are
allocated to the rate classes consistent with the rate design approved in the
2021 Settlement. Staff has reviewed the allocation to rate classes and believes
that the allocations provided in Appendix F 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 F to the petition. Staff
agrees that the surcharges have been calculated correctly, using projected
kilowatt hour (kWh) sales for January through December 2025.
The proposed interim storm restoration surcharges are
shown on Fifth Revised Tariff Sheet No. 8.030.7, provided in Appendix G to the
petition. For residential customers, the proposed surcharge would be 1.202
cents per kWh, which equates to a total surcharge of $12.02 for a 1,000 kWh
monthly bill. The storm cost recovery surcharge would be included in the
non-fuel energy charge on customer bills.
Paragraph 10(b) of the 2021 Settlement states that FPL may
petition to the Commission for recovery of storm costs at a rate beyond $4.00
on a 1,000 kWh residential bill if FPL incurs in excess of $800 million of
storm recovery costs. As discussed in Issue 1 to the recommendation, FPL has
requested to recover $1.2 billion in incremental storm restoration costs.
Staff recommends that the Commission approve FPL’s
proposed interim storm restoration recovery tariff and associated surcharges,
as shown in Attachment A to this recommendation. The tariff should become
effective the first billing cycle of January 2025. The interim storm
restoration surcharges should be subject to final true-up once the total actual
storm costs are known.
Issue 4:
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. (Brownless)
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.
