Discussion
of Issues
Issue 1:
Should the Commission approve Florida Public Utility
Company’s proposed DSM Plan and program standards?
Recommendation:
Yes. FPUC’s DSM Plan is consistent with the proposed
programs used to establish its DSM goals and is projected to meet the annual
numeric conservation goals approved by the Commission in the 2024 Goalsetting
Order. In addition, staff has reviewed FPUC’s program participation standards
and they appear to be consistent with FPUC’s DSM Plan. Therefore, staff
recommends that the Commission should allow FPUC to file for cost recovery of
the programs included in its proposed DSM Plan in the Energy Conservation Cost
Recovery (ECCR) proceeding. However, FPUC must demonstrate that the
expenditures to implement its DSM programs are reasonable and prudent in order
to recover those expenditures. (Davis)
Staff Analysis:
Section
366.82(7), F.S., requires that following the adoption of annual conservation
goals, the Commission shall also require each utility subject to FEECA to
develop a DSM plan to meet its conservation goals. Rule 25-17.0021(4), Florida
Administrative Code (F.A.C.), requires each electric utility subject to FEECA
to file its DSM plan, which consists of one or more DSM programs, and program
participation standards for Commission approval. The Commission considers the
appropriateness of DSM programs by evaluating the following criteria, first
outlined in Order No. 22176: (1) whether the program advances the policy
objectives of FEECA and its implementing rules (such as reducing demand and
energy usage); (2) whether the program is directly monitorable and yields
measurable results; and (3) whether the program is cost-effective. Pursuant
to 366.82(7), F.S., the Commission may then elect to approve, modify, or deny
the utility’s DSM plan.
FPUC’s Proposed DSM Plan
Staff
reviewed FPUC’s DSM Plan, including its demand and energy savings,
cost-effectiveness, and rate impact. Overall, the programs within the proposed
DSM Plan are consistent with the proposed DSM programs evaluated by the
Commission in the 2024 DSM Goalsetting proceeding. A complete list of the
programs and a brief description of each can be found in Attachment A. Staff
has also reviewed FPUC’s program participation standards, which can be found in
Attachment B, and they appear to be consistent with FPUC’s DSM Plan.
FPUC’s proposed DSM Plan consists of 7 programs in total,
including 4 residential and 3 commercial/industrial programs. FPUC’s DSM plan
includes retaining the Residential HVAC program and rebranding the Residential
Energy Survey program as “Efficiency 1st” with a stronger emphasis
on do-it-yourself energy-saving installations. These programs include updated
rebate amounts, and a new weatherization and home energy kit. FPUC is
addressing limited participation in commercial programs by adding an interior
lighting option and increased rebate amounts for the Commercial HVAC program.
In addition, FPUC is launching a new low income program called “Efficiency for
All.” This program will assist low income families with energy efficiencies
that will benefit all customers. Also, FPUC will be introducing a new web-based
platform to enhance delivery of the Efficiency 1st survey program.
The projected program demand and energy savings meet the
goals established by the Commission in the 2024 Goalsetting Order, and the
programs included in FPUC’s DSM Plan are directly monitorable and measurable. As
required by Rule 25-17.008, F.A.C., FPUC provided a cost-effectiveness analysis
for the programs included in its DSM plan using the Rate Impact Measure (RIM), Total
Resource Cost (TRC), and the Participants tests. All of the DSM programs passed
the Participants test, all but 2 passed the TRC test, and all failed the RIM
test. Staff notes that the cost-effectiveness of the DSM programs is consistent
with what was provided in the 2024 DSM Goalsetting proceeding. Overall, staff
recommends that FPUC’s DSM plan and program standards be approved.
FPUC is responsible for continuing to monitor actual
participation in its programs, and requesting modifications to its DSM plan and/or
program standards as necessary to meet the annual conservation goals. If FPUC
is unable to meet the annual conservation goals established by the Commission,
the Utility may be subject to appropriate action by the Commission, up to and
including financial penalties. Table 1-1 shows an estimate of the annual ECCR
expenditures and monthly rate impact on a typical residential customer for
FPUC’s DSM Plan.
Table 1-1
FPUC’s DSM Plan Annual ECCR
Costs and Estimated Monthly Impact
|
Year
|
Annual ECCR Costs
($)
|
Residential Customer
($/1,200 kWh-mo)
|
|
2025
|
$731,191
|
$1.45
|
|
2026
|
$753,127
|
$1.45
|
|
2027
|
$775,721
|
$1.45
|
|
2028
|
$798,992
|
$1.45
|
|
2029
|
$822,962
|
$1.45
|
|
2030
|
$847,651
|
$1.45
|
|
2031
|
$873,080
|
$1.45
|
|
2032
|
$899,273
|
$1.45
|
|
2033
|
$926,251
|
$1.45
|
|
2034
|
$954,038
|
$1.45
|
|
Total
|
$8,382,285
|
-
|
Source: FPUC’s Response to
Staff’s First Data Request.
Conclusion
FPUC’s DSM Plan is consistent with the proposed programs
used to establish its DSM goals and is projected to meet the annual numeric
conservation goals approved by the Commission in the 2024 Goalsetting Order. In
addition, staff has reviewed FPUC’s program participation standards and they
appear to be consistent with FPUC’s DSM Plan. Therefore, staff recommends that
the Commission should allow FPUC to file for cost recovery of the programs
included in its proposed DSM Plan in the ECCR proceeding. However, FPUC must
demonstrate that the expenditures to implement its DSM programs are reasonable
and prudent in order to recover those expenditures.
Issue 2:
Should the Commission approve FPUC's LED Lighting
program and associated program standards?
Recommendation:
Staff recommends approval of FPUC’s proposed LED Lighting
program with three proposed modifications: (1) remove communication expenses, (2)
remove net base rate items for new LEDs, and (3) adjust the amount to be
recovered and the credit to reflect the remaining balance and number of
fixtures as of the date of the Commission’s approval. The Commission should approve
FPUC’s request to create a regulatory asset related to the unrecovered amount
of the non-LED lighting as adjusted. Further, the Commission should find that
the approval to record the regulatory asset for accounting purposes does not
limit the Commission’s ability to review the amounts and recovery period for
reasonableness in a future proceeding in which the regulatory asset is
included. The Commission should also grant staff administrative authority to
approve the revised program standards. (Ellis, Higgins)
Staff Analysis:
In addition to the DSM Plan described in Issue 1,
FPUC is also separately proposing an additional new program. FPUC is not
seeking to have the demand and energy savings associated with the additional
program included in the calculation of the Utility’s annual numeric
conservation goals.
Utility’s Proposed LED Lighting Program
The LED Lighting program is a program focused on the
replacement of existing non-LED outside lighting, such as high pressure sodium
(HPS) or metal halide (MH) lights, with LED lighting options that are more
efficient. The proposed program is structured as a temporary, two-year
conservation initiative (beginning the first quarter of 2025) aimed at
recovering depreciation and investment-related expenses through the
aforementioned targeted conservation measure. Specifically, the program focuses
on offsetting costs associated with converting 7,122 streetlamps to
high-efficiency LEDs. FPUC seeks to recover the unrecovered plant costs of the
HPS and MH lights of the old non-LED lighting, incremental expenses for the new
LED lighting, and additional marketing expenses associated with the program. Unlike
traditional conservation programs, in which a participating customer receives a
rebate or credit, the Utility would receive a credit for each non-LED light
replaced, to be recovered through the ECCR Clause.
By Order No. PSC-2022-0132-TRF-EI, the Commission closed
FPUC’s Rate Schedule LS of non-LED offerings to new customers and included LED
replacement options.
However, the Utility has not yet replaced all the existing customers’ lighting
fixtures. The proposed LED Lighting program would expedite the remaining
conversion process.
FPUC is seeking recovery of a regulatory asset over two
years based upon the projected cost of (1) unrecovered plant costs of the HPS
and MH lights, (2) net rate base expenses associated with the new LED lights,
such as return on investment, depreciation, and property taxes, and (3)
communication expenses for customers. For purposes of cost recovery, FPUC
requests recovery in the ECCR of the unamortized costs for HPS and MH lights
removed both during the prior year and current year, or are expected to be
removed through the projection year.
FPUC seeks to create a regulatory asset for the
unrecovered plant associated with the HPS and MH lights, which would be
expensed for each light replaced with the intention of resulting in zero balance
at the end of the program. FPUC plans to file a petition to address the net
unrecovered cost of the new LED lights in a future tariff proceeding.
The Utility estimates the unamortized costs for the HPS
and MH lighting to be $1,224,541 for 7,122 lights, or $171.94 per light, as of
the end of December 2024. This value would be adjusted at the beginning of the
program to reflect actual costs as of the date of the Commission’s decision.
The net rate base expenses, an estimated $206,638 over the two year period, and
communication expenses of $15,000, brings the total of program cost to $1,446,179,
or $203.06 per light that would be recovered in the ECCR by FPUC. This results
in an annual cost of the program of $723,090, assuming approximately 300
fixtures are replaced monthly using a combination of utility staff and
contractors. This results in a rate impact of $1.44/mo. for 2025 and $1.40/mo.
for 2026 for a typical residential 1,200 kWh monthly bill. Table 2-1 summarizes
the proposed costs to be recovered under the program.
Table 2-1
FPUC Proposed LED Lighting
Program Expenses
|
Expense
|
2025
($)
|
2026
($)
|
Total
($)
|
Unit Cost*
($/Fixture)
|
|
Non-LED Lighting Expenses
|
|
|
|
|
|
Unrecovered Depreciation
|
$612,271
|
$612,271
|
$1,224,542
|
$171.94
|
|
New LED Lighting Expenses
|
|
|
|
|
|
Net Return on Investment
|
$3,397
|
$215,876
|
$219,273
|
$30.79
|
|
Net Depreciation Expense
|
($68,454)
|
$5,496
|
($62,958)
|
($8.84)
|
|
Net Property Taxes
|
$0
|
$50,322
|
$50,322
|
$7.07
|
|
Administrative Expenses
|
|
|
|
|
|
Marketing/Communications
|
$7,500
|
$7,500
|
$15,000
|
$2.11
|
|
Total
|
554,714
|
$891,465
|
$1,446,179
|
$203.06
|
Source:
FPUC’s Petition.
Review of Proposed Program
Staff agrees that approval of the LED Lighting program
would result in net energy savings that advance the intent of FEECA. The amount
of savings per light fixture and number of light fixtures covered are both
monitorable and measurable factors. Overall, with the Utility’s requested
expenses, the program has a cost-effectiveness ratio above 1.0 for both the RIM
(1.075) and TRC (1.824) tests.
The proposed program is similar in structure to Tampa
Electric Company’s (TECO’s) Street and Outdoor Lighting Conversion Program,
which also featured recovery of unamortized cost of non-LED lighting. In
the TECO Order, the Commission allowed recovery of the unrecovered plant
associated with the non-LED lighting but excluded recovery of
advertising/communication expenses. TECO did not request recovery of
incremental rate base costs associated with the new LED lighting.
Staff recommends that the Commission approve, for cost
recovery in the ECCR, the unamortized portion of the HPS and MH lighting. This is
appropriate for DSM because the lighting program serves a conservation purpose,
is cost-effective, and furthers FEECA objectives. As such, the program is
eligible for recovery in the ECCR. Moreover, staff recommends that the
Commission approve the creation of a regulatory asset for the amount associated
with the unrecovered plant (i.e., the non-LED lights to be converted). The
establishment of a regulatory asset is appropriate, because it will allow for
FPUC to recover the associated costs over a multi-year period as contemplated
in the petition.
Staff recommends, however, that the following requested
expenses associated with the LED program be denied. First, communication
expenses should be removed. Communication expenses would not be appropriate as
participation in the DSM program is non-voluntary and done at the Utility’s
discretion, not the lighting customer’s. The removal of communication expenses
is also consistent with the Commission’s prior Order for TECO.
Second, net rate base expenses should be removed. Customers
will be paying rates under FPUC’s Rate Schedule LS for the new LED lights,
which is the appropriate place for recovery of new assets. Rate base expense
recovery is more appropriate in a base rate case, not a clause. Based on the
values in Table 2-1, these two adjustments reduce FPUC’s request by $221,637.
Third, the amount of the regulatory asset and the credit
per light should be adjusted to reflect the remaining balance and number of
fixtures as of the date of program approval. This is because pursuant to
Section 366.82(7), F.S., any incremental lighting replaced before the
Commission’s approval of the DSM program are not be eligible without the
Commission’s prior approval.
Furthermore, Commission approval of FPUC’s regulatory
asset in this case does not limit the Commission’s ability to review the
amounts and recovery period for reasonableness in a future proceeding in which
the regulatory asset is included. In other words, any remaining balance in the
regulatory asset at the end of the LED Lighting program should be evaluated in
a future proceeding for recovery.
To reflect the changes, staff recommends FPUC be required
to file the updated unrecovered balance as adjusted above and number of fixtures
as of the Commission’s decision, and revised program standards with a per-light
credit value reflecting the updated values. Staff recommends that the
Commission grant staff administrative authority to approve these revised
program standards, provided they are consistent with the Commission’s decision.
Conclusion
Staff recommends approval of FPUC’s proposed LED Lighting
program with three proposed modifications: (1) remove communication expenses, (2)
remove net base rate items for new LEDs, and (3) adjust the amount to be
recovered and the credit to reflect the remaining balance and number of
fixtures as of the date of the Commission’s approval. The Commission should
approve FPUC’s request to create a regulatory asset related to the unrecovered
amount of the non-LED lighting as adjusted. Further, the Commission should find
that the approval to record the regulatory asset for accounting purposes does
not limit the Commission’s ability to review the amounts and recovery period
for reasonableness in a future proceeding in which the regulatory assets are
included. The Commission should also grant staff administrative authority to
approve the revised program standards.
Issue 3:
Should this docket be closed?
Recommendation:
Yes. If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, this docket should be closed upon the issuance of a
consummating order. (Marquez, Farooqi)
Staff Analysis:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, this docket should be closed upon the issuance of a
consummating order.
Florida Public Utility Company 2025 – 2034 DSM Programs
Residential Programs:
Residential Energy Survey Program
(Efficiency First)
The Efficiency First Program provides
FPUC's residential customers with energy conservation advice that encourages
the implementation of efficiency measures that result in energy savings. Once
implemented, these measures also lower FPUC's energy requirements and improve
operating efficiencies.
Residential
Heating and Cooling Efficiency Upgrade Program
The Residential Heating and
Cooling Upgrade Program incentivize customers operating inefficient heat pumps
and air conditioners to replace them with more efficient units. This program
provides incentives to install a new heat pump or replace older heat pumps or
air conditioners with more efficient units.
Low-Income Energy Outreach
(Efficiency for All)
The Efficiency for All Program is
aimed at enhancing energy efficiency in low-income households and communities.
Participants will complete online energy surveys and monitor their monthly
energy consumption. Upon reaching specific milestones, the participants will
receive tiered incentives such as weatherization kits, smart power strips, and
programmable thermostats.
Residential
Small Appliance Program
This program offers a $25 rebate
to residential customers who purchase an Energy-Star certified clothes washer.
These washers use approximately 20% less energy and 30% less water than
standard models, leading to significant utility savings over time and reduce
environmental impacts.
Commercial Programs:
Commercial
Heating and Cooling Efficiency Upgrade Program
The Commercial Heating and Cooling Efficiency Upgrade
Program provides rebates to small commercial customers (customers with a
maximum 5 ton units) if the customers install a high-efficiency central air
conditioner or heat pump with a minimum 15 SEER.
Commercial
Chiller Upgrade Program
This program aims to mitigate the growth of peak demand and
energy consumption across FPUC's commercial and industrial sectors. To achieve
this, the program requires customers to replace existing chillers with more
efficient systems.
Commercial Indoor Lighting
Program
The Commercial Exterior and
Interior Lighting Program is a new addition to FPUC’s energy conservation
offerings. This program encourages non-residential customers to replace
outdated, inefficient lighting systems with modern, energy-efficient
alternatives. Incentives are based on projected annual energy savings and accommodates
a wide range of end-use applications.
