Case Background
On September 2,
2025, 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 2026. 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). 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 2025 swing
service rider rates were approved in Order No. PSC-2024-0487-TRF-GU. The proposed modifications to the swing
service rider rate schedule are included in Attachment A to the recommendation.
During the
October 2025 Agenda, the Commission voted to suspend the proposed swing service
rider tariffs for further review by staff. During evaluation of the petition,
staff issued one data request to the utility, for which responses were received
October 1, 2025. Staff also sent an email to ask follow up
questions about the marginal increase from 2024 to 2025 for the Peninsula
Pipeline contracts on October 14, 2025, after which the company sent a response
on October 15, 2025. This is staff’s recommendation to approve
the proposed 2026 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 2026?
Recommendation:
Yes, the Commission should approve the proposed
swing service rider rates for the period January through December 2026, as
provided in Attachment A to the recommendation. 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.
(Nguyen)
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 2026 Swing Service Rider Rates
The updated 2026 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 intrastate capacity costs, other related
costs, and LDC-LDC interconnects for
the period July 2024 through June 2025 are $37,509,443, compared to
$30,003,382, for the period July 2023 through June 2024.
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 addition, FPUC’s other
intrastate capacity cost changes include payments associated with legal and
consulting fees, software to manage forecasting, usage tracking, and market
tracking. Of
the intrastate pipeline costs, $7,367,169 will be recovered through special
contracts. The remaining costs of $30,142,275 will be recovered during the
period January 1, 2026 through December 31, 2026.
Updated Swing Service Costs
The increase in cost recovered for the swing service rider
can be mainly contributed to the addition of an increase in operational projects
undertaken by Peninsula and two new contracts. In the response to staff’s first
data request, FPUC states Peninsula pipeline provides gas transportation
services to FPUC. FPUC then explained in the response received on October 15,
2025, that five Commission-approved pipeline expansion projects became
operational in the current year, causing a $5.2 million increase. Another $1.2
million is due to three other Peninsula projects being in-service for a full
year, rather than the partial year in-service from July 2023 to June 2024.
One of the new contracts was to Nassau County Tampa
Electric Company, which FPUC clarified is for Peoples Gas to provide firm
transportation capacity service for a limited duration allowing FPUC access to
potentially cheaper, less volatile and more liquid gas supply at an alternate
receipt location. The
second new contract reflects renewable natural gas (RNG) purchases from BP RNG.
FPUC entered into an agreement with BP to buy RNG that has been stripped of its
environmental attributes. The gas supply is purchased at prevailing commodity
market index pricing.
Calculation of Swing Service Charges
The utility used actual therm usage data for the period July
2024 through June 2025 to allocate the intrastate capacity costs. Based on the
usage data, staff agrees that the appropriate split for allocating the cost is 68.14
percent, or $20,538,170, to transportation customers and 31.86 percent, or $9,604,104,
to PGA customers, as demonstrated on page 3 of the instant petition. The sales
customers’ share of the cost of $9,604,104 is embedded in the PGA.
The transportation customers’ share of $20,538,170 is
allocated to the various transportation rate schedules based on the percent of
peak and average usage.
These costs were then divided by the rate schedule’s actual billed volumes to
calculate the cost recovery factor to be billed directly to the transportation
customers as the swing service rider rates.
Credit to the PGA
The total intrastate capacity costs are embedded in the
PGA with the projected 2026 swing service rider revenues incorporated as a
credit in the calculation of the 2026 PGA. On page 3 of the instant petition,
FPUC states, the amount credited to the 2026 PGA is $20,538,170 plus $7,367,169
received from special contract customers, for a total of $27,905,339.
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 for the period January
through December 2026, as provided in Attachment A to the recommendation.
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. (Bloom)
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.
