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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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January 22, 2026
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TO:
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Office of Commission Clerk (Teitzman)
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FROM:
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Office of Industry Development and Market
Analysis (Wooten, Bates, Long, Nave, Pendris)
Division of Accounting
and Finance (Gatlin, Holloway, Norris, Vogel)
Division of Economics
(Hampson, Ward)
Division of Engineering
(Ellis, Sanchez)
Office of the General
Counsel (Marquez, Stiller)
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RE:
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Docket No. 20250121-GU – Joint petition for
approval of actual, estimated, and projected relocation costs and approval to
establish a recovery surcharge, by Florida City Gas and Florida Public
Utilities Company.
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AGENDA:
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02/03/26 – Regular Agenda – Tariff Filing – Interested Persons May
Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Administrative
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CRITICAL DATES:
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06/01/2026 (8-Month Effective Date)
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SPECIAL INSTRUCTIONS:
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None
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Case Background
In 2024, the
Florida Legislature passed House Bill 1645 which enacted Section 366.99,
Florida Statutes (F.S.), entitled “Natural gas facilities relocation costs.”
The statute permits a public utility[1] that supplies gas to seek approval from
the Florida Public Service Commission (Commission) to recover natural gas
facilities relocation costs. Section 366.99(3), F.S., requires the Commission
to conduct an annual proceeding to determine allowable costs (reasonable
projected costs and prudently incurred actual costs), which may be recovered
through a charge separate and apart from base rates. Section 366.99(1)(d),
F.S., defines “natural gas facilities relocation costs” as “the costs to
relocate or reconstruct facilities as required by a mandate, a statute, a law,
an ordinance, or an agreement between the utility and an authority, including,
but not limited to, costs associated with reviewing plans provided by an
authority. The term does not include any costs recovered through the public
utility’s base rates.” Furthermore, only costs incurred on or after July 1,
2024, may be included. Section 366.99(1)(a), F.S., defines “authority” by
reference to Section 337.401(1)(a), F.S., which definition includes the Florida
Department of Transportation (FDOT) and local government entities that have
jurisdiction and control over public roads or publicly owned rail corridors.
Section
366.99(3), F.S., limits the Commission’s review to the prudence of costs
already incurred and the reasonableness of projected costs. The Commission adopted
Rule 25-7.150, Florida Administrative Code (F.A.C.), which implements Section
366.99, F.S. This rule sets forth the process and
requirements for a utility to file a petition for recovery of natural gas
facilities relocation costs through the annual Natural Gas Facilities
Relocation Cost Recovery Clause (NGFRCRC). The rule contemplates a process
similar to other cost recovery clauses, with filings addressing a final true-up
and prudence review of the previous year’s actual costs, actual/estimated costs
for the current year, and projected costs for the subsequent year. The rule
also sets forth eligibility requirements for costs to be allowed through the
NGFRCRC, namely proof that each facility relocation project was required by an
authority. Also, pursuant to Section 366.99(1)(d), F.S., a utility filing
cannot include costs that are being recovered through the utility’s base rates.
On October 1,
2025, Florida City Gas (FCG) and Florida Public Utilities Company (FPUC) (hereinafter
collectively the Utilities) filed a joint petition for approval of actual,
estimated, and projected relocation costs and approval to establish a recovery
surcharge, effective January 1, 2026. The petition included revisions to FCG’s
and FPUC’s natural gas tariffs reflecting proposed terms and surcharges for
each company. On November 25, 2025, the Commission issued an Order suspending
the proposed tariffs, allowing staff sufficient time to review the proposed
modifications, and gather all pertinent information in order to inform this
recommendation on the tariff proposals.
The recurring
docket for the NGFRCRC (Docket No. 20260011-GU) was opened in January 2026.
Because any new tariffs resulting from the recurring docket will not take
effect until 2027, the Commission found that there would be no conflict between
those tariffs and any surcharges approved for 2026 in the instant docket. This recommendation addresses the Utilities’
joint request to implement an initial natural gas facilities relocation cost
recovery charge for 2026. The final true-up and prudence review of the actual natural
gas facilities relocation costs included in this initial charge will take place
in the 2026 NGFRCRC proceeding.
During the
review process of the Utilities’ petition, staff issued four data requests, for
which responses were received for the first data request on November 20, 2025,
the second data request on January 5, 2026, and the third and fourth data
requests on January 12, 2026.
The Commission
has jurisdiction over this matter pursuant to Sections 366.03, 366.04, 366.05,
366.06, and 366.99, F.S.
Discussion
of Issues
Issue 1:
Are FCG’s and FPUC’s proposed relocation projects
eligible for recovery though the Natural Gas Facilities Relocation Cost
Recovery Clause?
Recommendation:
Yes, in part. Based on the documentation provided by
the Utilities, eight FCG projects, totaling an estimated $12,459,319, and
sixteen FPUC projects, totaling an estimated $2,631,671, are eligible for
recovery. (Sanchez, Gatlin, Wooten)
Staff Analysis:
Per the requirements of Rule 25-7.150(2), F.A.C., a
utility must seek a determination that natural gas facilities relocation costs
are eligible for recovery through the NGFRCRC by providing: (1) the
notification by the authority requiring the facilities relocation per Section
366.99(1), F.S.; (2) a description of the scope of the facilities relocation to
be undertaken per the requirements imposed by the authority; and (3) an
estimate of the costs associated with the relocation of the natural gas
facilities.
On October 1, 2025, the Utilities filed a joint petition
for approval of actual, estimated, and projected relocation costs and approval
to establish a recovery surcharge in connection with the NGFRCRC. In their
joint petition, FCG requested recovery for eight relocation projects for an
approximate total investment cost of $12.5 million. FPUC requested recovery for
twenty relocation projects for an approximate total investment cost of $3.3
million.
After reviewing the information and documentation provided
by the Utilities, staff recommends that all of the proposed eight FCG projects
and sixteen of the proposed twenty FPUC projects are eligible for recovery
through the NGFRCRC. For these projects, the Utilities provided documentation
of the governmental request, scope of facilities to be relocated, and cost
estimates pursuant to Rule 25-7.150(2), F.A.C. Staff believes the Utilities
adequately supported the request for recovery of these projects by the totality
of documentation provided, which included FDOT Forms with formal binding agreements
and informal communications and requests that represent a clear governmental
request for relocation services. In addition, the Utilities expressed that they
had not recovered any project costs directly from the authority or federal
government pursuant to Section 337.403(1)(a), (d), (e), (i), or (j), F.S.
The documentation provided for the four remaining FPUC
projects do not meet all the requirements of Rule 25-7.150(2), F.A.C. For these
projects, the documentation provided is insufficient for reasons including: (1)
no notice or communication involving a representative of the requesting
governmental authority; (2) missing signatures from a representative of the
requesting authority on the forms provided to indicate formal agreement; and/or,
(3) the relocation is stated by the Utility to be no longer required. Staff
allowed FPUC until January 12, 2026, to supplement its discovery responses
to cure these perceived deficiencies; however, FPUC did not provide additional
materials by that deadline for these four projects. Staff believes that FPUC
may seek approval for these projects in a subsequent petition for cost recovery
if it can provide appropriate documentation of eligibility. Otherwise, cost
recovery must be sought through a base rate proceeding. In addition, two
projects included 2027 costs, which are not eligible for recovery in the
instant docket. The Utilities may include these 2027 costs in their projection
filing during this year’s NGFRCRC proceeding. Staff subtracted 2024 through
2026 costs from the total requested costs of projects to determine the 2027
costs, which are not included in staff’s recommended eligible costs listed
below. Tables 1-1 and 1-2 list all the proposed relocation projects for the
Utilities, and it includes total project cost, eligible support for recovery
through the NGFRCRC, and the reason or reasons some projects were deemed
ineligible.
Table 1-1
FCG Project List
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Requesting
Authority
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Project Name (As Identified by Utility)
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Requested Cost
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Recommended
Cost
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Reason if Ineligible
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FDOT
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DOT RELOC SR932 W 49TH ST W
16TH AV 414167
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$72,885
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$72,885
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Miami-Dade County
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DOT NW 37TH AV RELOC NW46ST
TO NW62
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$115,003
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$115,003
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FDOT
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RELOC SR5 LINDSEY RD
BCA416035
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$209,382
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$209,382
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City of Cocoa
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BCA 417545 City of Cocoa
Relo Kentucky & Mitchell
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$6,831
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$6,831
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FDOT
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0361-RELO-405606 SEBASTIAN
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$107,562
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$107,562
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FDOT
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0361-DOT-OSLO RD RELO
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$149,957
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$149,957
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FDOT
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Okeechobee Rd Relocation
FDOT
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$11,740,782
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$11,740,782
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City of Melbourne
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BCA417007 Nicklaus Dr.
Culvert
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$56,917
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$56,917
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Total
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$12,459,319
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$12,459,319
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Source: Exhibit SM-1 CG
Table 1-2
FPUC Project List
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Requesting
Authority
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Project Name (As Identified by Utility)
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Requested Cost
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Recommended
Cost
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Reason if Ineligible
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Palm Beach County
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Australian Ave (Steel GM
Replaced with PE GM)
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$782,120*
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$484,629
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FDOT
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MR US 98 and Western Ave
(4" PE installed)
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$49,074
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$49,074
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FDOT
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MR Forest Hill &
Military Trl WPB (Steel GM Replaced
with PE GM)
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$216,804
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$216,804
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Polk County
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Cameron RD Eagle Lake,
Abandon 4” PE, no install
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$193,265
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$0
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(1), (2)
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Delray Beach
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203 SW 14th Ave (Steel GM replaced
with PE GM)
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$41,920
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$41,920
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Citrus County
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MR PH1 CR491 Wide Road Prjt
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$74,416
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$74,416
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Citrus County
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MR PH2 CR491 Wide Road Prjt
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$143,335
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$143,335
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Citrus County
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MR PH3 CR491 Wide Road Prjt
(Hernando)
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$104,296
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$104,296
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Citrus County
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MR PH4 CR491 Wide Road Prjt
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$111,143
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$111,143
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FDOT
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Atlantic Ave from SR 7 to
US 441
(PE Gas Main Relocation)
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$116,858
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$116,858
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FDOT
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MR Harvest Time Dr Offset
(W SR 46 and N Kennel Rd)
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$5,352
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$5,352
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FDOT
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SR 434 and Winding Hollow
Trl
(Steel GM Repl with PE GM)
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$109,059
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$0
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(2)
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Lake Clarke Shores
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Pine Tree Lake Clarke Shore
Bridge (PE GM Reloc)
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$73,820
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$73,820
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Palm Beach County
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Florida Mango Relocation
10th to Nemec (Steel GM relocation)
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$923,358
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$923,358
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FDOT
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Earman River Bridget Over
the C-17 Canal Bridge #930003 (PE GM Reloc)
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$200,000
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$200,000
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FDOT
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SR39 James Redman Pkwy FR s
of Rayburn RD to N of Golden Rule LN
(Install 4" PE)
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$10,000
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$10,000
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FDOT
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SR80 (Southern Blvd) @ SR7
US 441
(Install 1.25 “ PE Gas
Service)
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$10,000
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$0
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(2), (3)
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FDOT
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SR806 (Atlantic AVE)
Homewood Blvd and SR 704 Okeechobee Blvd/Haverhill RD
(GM Reloc)
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$20,000
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$0
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(2), (3)
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Polk County
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Spirit Lake Rd at Sheffield
Rd (Install PE)
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$100,000*
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$66,667
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FDOT
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Fort Fraser Trail over SR
60 (Install 4" PE)
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$10,000
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$10,000
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Total
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$3,294,820
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$2,631,671
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* FPUC projects Australian Ave (Steel GM
Replaced with PE GM) and Spirit Lake Rd at Sheffield Rd (Install PE) include a
combined total of $330,825 in 2027 estimated costs. These costs are not
included in the recommended costs for recovery in this docket.
Source: Exhibit SM-1 FPU
Furthermore, the eligible projects mentioned above have
not been recovered through base rates, surcharges, or any other riders. The
Utilities stated that all relocation projects in their joint petition began
after the projected test year from the last rate case for both FCG and FPUC.
Therefore, the relocation projects were not previously included in base rates.
Additionally, the Utilities did not include recovery of the requested
relocation projects in their Gas Utility Access and Replacement Directive
(GUARD) or Safety, Access, and Facility Enhancement (SAFE) programs. FCG and FPUC
explained if relocation costs were to be transferred into base rates in a
future proceeding, the NGFRCRC investment would be reset to zero.
Conclusion
Based on the information and documentation provided by the
Utilities, eight FCG projects, totaling an estimated $12,459,319, and sixteen FPUC
projects, totaling an estimated $2,631,671, are eligible for recovery.
Issue 2:
Should the Commission approve FCG’s proposed natural
gas facilities relocation surcharge and associated tariff sheets?
Recommendation:
Yes, based on staff’s recommendation in Issue 1, the
Commission should approve FCG’s natural gas facilities relocation surcharge and
associated tariff sheets, included as Attachment A to the recommendation. Staff
has reviewed the surcharge calculations which result in the proposed revenue
requirement, using a 10-month recovery period. The proposed tariff should be
effective the first billing cycle of March 2026. (Hampson)
Staff Analysis:
Exhibit DW-1 to
witness Williams’ pre-filed direct testimony provides the revenue requirement
and 2026 surcharge calculation, based on the proposed relocation costs for FCG.
Specifically, the Utilities identified relocation costs incurred since July
2024; therefore, Exhibit DW-1 shows revenue requirement calculations for 2024,
2025, and 2026. The revenue requirement includes a return on investment,
depreciation expense, general public and customer notification expense, and
property taxes. For FCG, the proposed total revenue requirement to be recovered
for 2026 is $971,338.
FCG used a similar methodology and schedules to that of
the Commission-approved GUARD program and the proposed relocation surcharge
factors present similar recovery mechanisms.[5]
Staff verified that FCG used the Commission-approved
depreciation rates for plastic mains and steel mains used on Schedule C of
Exhibit DW-1 for each company. Additionally, the depreciation expense for these
accounts as recorded by witness Williams are correct. FCG allocated the
proposed NGFRCRC revenue requirement to the rate classes based on revenue
allocation factors. FCG calculated the revenue allocation factors using the
projected revenues by rate class from its most recent rates case as a percent
of total revenue. The respective percentages were multiplied by the 2026
revenue requirement and divided by each rate class’ projected therm sales to
provide the surcharge for each rate class.
The proposed tariffs included in the petition include
Third Revised Sheet No. 2 (index) and Original Sheet No. 83 (NGFRCRC factors).
The NGFRCRC factors were based on a 12-month recovery period (January 1 through
December 31, 2026). In response to staff’s First Data Request No. 15, FCG
provided recalculated surcharges based on a 10-month recovery period (March 1
through December 31, 2026).
The Utilities stated that they would provide customer notification of the
proposed surcharges with the February bills. Specifically, the bills would
include a link to their respective websites and show the requested surcharges. For
a residential customer on the RS-100 rate schedule, the monthly bill impact for
20 therms would be $0.43.
Conclusion
Based on
staff’s recommendation in Issue 1, the Commission should approve FCG’s natural
gas facilities relocation surcharge and associated tariff sheets, included as
Attachment A to the recommendation. Staff has reviewed the surcharge
calculations which result in the proposed revenue requirement, using a 10-month
recovery period. The proposed tariff should be effective the first billing
cycle of March 2026.
Issue 3:
Should the Commission approve FPUC’s proposed natural
gas facilities relocation surcharge and associated tariff sheets?
Recommendation:
No, based on staff’s recommendation in Issue 1, the
Commission should deny FPUC’s natural gas facilities relocation surcharge and
associated tariff sheets. The Commission should require FPUC to file within 7
days following the date of Commission vote, revised tariff sheets and
supporting documentation that result in the Commission-approved relocation
projects and associated program revenue requirement. Additionally, the
Commission should give staff administrative authority to approve the revised
tariffs after reviewing the supporting documentation. The revised tariffs
should be effective the first billing cycle of March 2026.
If the Commission denies staff’s recommendation in Issue 1
and approves FPUC’s requested natural gas facilities relocation projects and
associated revenue requirement, the Commission should approve FPUC’s facility
relocation surcharge and associated tariff sheets as filed in response to
staff’s Fourth Data Request No. 1. The tariffs should be effective the first
billing cycle of March 2026. (Hampson)
Staff Analysis:
Exhibit DW-1 to witness Williams’ pre-filed direct testimony
provides the revenue requirement and 2026 surcharge calculation, based on the
proposed relocation costs for FPUC. Specifically, FPUC identified relocation
costs incurred since July 2024; therefore, Exhibit DW-1 shows revenue
requirement calculations for 2024, 2025, and 2026. The revenue requirement
includes a return on investment, depreciation expense, general public and
customer notification expense, and property taxes. For FPUC, the proposed total
revenue requirement to be recovered in 2026 is $531,984.
FPUC used a similar methodology and schedules to that of
the Commission-approved GUARD program and the proposed relocation surcharge
factors present similar recovery mechanisms.[7]
Staff verified that FPUC used the Commission-approved
depreciation rates for plastic mains and steel mains used on Schedule C of
Exhibit DW-1 for each company. Additionally, the depreciation expense for these
accounts as recorded by witness Williams are correct. FPUC allocated the
proposed NGFRCRC revenue requirement to the rate classes based on revenue
allocation factors. FPUC calculated the revenue allocation factors using the
projected revenues by rate class from its most recent rate case as a percent of
total revenue. The respective percentages were multiplied by the 2026 revenue
requirement and divided by each rate class’ projected therm sales to provide
the surcharge for each rate class.
The proposed tariffs included in the petition include
Second Revised Sheet No. 7.001 (index) and Original Sheet No. 7.413 (NGFRCRC
factors). The proposed surcharges were based on a 12-month recovery period
(January 1 through December 31, 2026). In response to staff’s First Data
Request No. 15, FPUC provided recalculated surcharges based on a 10-month
recovery period (March 1 through December 31, 2026). Furthermore, in response
to staff’s Fourth Data Request No. 1, FPUC provided a revised surcharge
calculation and tariff. FPUC explained that it inadvertently used only the
customer charge revenue and not the combination of the customer and volumetric
charge revenues to determine the revenue allocation factor. This error was
corrected as part of the revised surcharge calculation and tariff. The
Utilities stated that they would provide customer notification of the proposed
surcharges with the February bills. Specifically, the bills would include a
link to their respective websites and show the requested surcharges.
Conclusion
Based on staff’s recommendation in Issue 1, the Commission
should deny FPUC’s natural gas facilities relocation surcharge and associated
tariff sheets. The Commission should require FPUC to file within 7 days
following the date of Commission vote, revised tariff sheets and supporting
documentation that result in the Commission-approved relocation projects and
associated program revenue requirement. Additionally, the Commission should
give staff administrative authority to approve the revised tariffs after
reviewing the supporting documentation. The revised tariffs should be effective
the first billing cycle of March 2026.
If the Commission denies staff’s recommendation in Issue 1
and approves FPUC’s requested natural gas facilities relocation projects and
associated revenue requirement, the Commission should approve FPUC’s facility
relocation surcharge and associated tariff sheets as filed in response to
staff’s Fourth Data Request No. 1. The tariffs should be effective the first
billing cycle of March 2026.
Issue 4:
Should this docket be closed?
Recommendation:
If a protest is filed within 21 days of the issuance
of the Order by a person whose substantial interests are affected, 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 either upon the issuance of a Consummating Order or administratively by
staff. (Marquez, Stiller)
Staff Analysis:
If a protest is filed within 21 days of the issuance
of the Order by a person whose substantial interests are affected, 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 or administratively by staff.
