Case Background
On June 5, 2026,
SeaCoast Gas Transmission, LLC (SeaCoast) filed a petition seeking approval of
a firm service agreement with Peoples Gas System, Inc. (Peoples, collectively,
the Parties). SeaCoast operates as an intrastate natural gas transmission
company as defined in Section 368.103, Florida Statutes (F.S.), and only
transports natural gas. Peoples is a local distribution company which owns and
operates natural gas distribution facilities to serve retail customers and is
subject to the Commission's regulatory jurisdiction under Chapter 366.
By Order No.
PSC-08-0747-TRF-GP, SeaCoast received approval of an intrastate gas pipeline
tariff that allows it to construct and operate intrastate pipeline facilities
and to actively pursue agreements with natural gas customers. SeaCoast provides transportation service
only; it does not engage in the sale of natural gas. Pursuant to Order No.
PSC-08-0747-TRF-GP, SeaCoast is allowed to enter into certain gas transmission
agreements without prior Commission approval. However, SeaCoast is requesting
Commission approval of this proposed agreement as it does not fit any of the
criteria enumerated in the tariff for which Commission approval would not be
required. The Parties are subsidiaries of TECO Gas Operations, Inc., and
agreements between affiliated companies must be approved by the Commission
pursuant to Section 368.105, F.S., and Order No. PSC-08-0747-TRF-GP. In 2015,
2019,
and 2021
the Commission approved similar transportation agreements between Peoples and
SeaCoast.
The proposed Agreement is contained in Attachment A to
this recommendation. Attachment B to the recommendation contains the project
map. During the evaluation of the instant petition, staff issued two data requests
to the Parties, for which responses were received on July 8, 2026, and July 28,
2026. The
Commission has jurisdiction over this matter pursuant to Sections 366.05(1),
366.06, and 368.105, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve the proposed Firm
Service Agreement dated June 5, 2026, between SeaCoast and Peoples?
Recommendation:
Yes, the Commission should approve the proposed firm
service agreement between SeaCoast and Peoples, dated June 5, 2026. Based on
the petition and the responses to staff’s data requests, SeaCoast has supported
the importance of the need for pipeline extensions to serve customers in Lee
and Collier Counties. Staff believes that the proposed Agreement is
cost-effective, reasonable, meets the requirements of Section 368.105, F.S.,
and benefits Peoples’ customers. (Kelley, Davis)
Staff Analysis:
Peoples has entered into the proposed
Agreement with SeaCoast to expand gas flow into Fort Myers, Naples, and the
surrounding areas in Lee and Collier Counties to serve growth and safeguard
system reliability for existing and new customers. To provide intrastate transportation
of gas to Peoples, SeaCoast would construct an interconnection with an existing
Florida Gas Transmission Company, LLC (FGT) pipeline serving Lee and Collier
Counties. SeaCoast would also construct an approximately 24 mile, eight-inch
steel high-pressure transmission pipeline originating at the new FGT and SeaCoast
interconnection and continuing south to the intersection of Corkscrew Road and
State Road 41. SeaCoast would also construct two interconnections between
SeaCoast and Peoples along the new pipeline, the first at Palm Beach Boulevard
and the second at Corkscrew Road and State Road 41. The planned pipeline extension
would resolve existing capacity
constraints by boosting system pressure, increasing delivery capacity, and
ensuring long-term operational reliability.
In paragraph 10 of the petition,
SeaCoast explained that it estimates the permitting process would take approximately
10 months, with construction anticipated to begin in September 2027. SeaCoast
estimated that the proposed transmission pipeline would be completed by the third
quarter of 2028. SeaCoast stated that it projects approximately 37,961 existing
customers, including 34,396 residential and 3,589 commercial/industrial
customers, would benefit from the expansion project through increased
resiliency and reliability. In
addition, SeaCoast stated that the proposed project would support additional
customer growth and customer growth that has already occurred.
The negotiated reservation charge
(confidential) included in the proposed Agreement is designed to allow SeaCoast
to recover its operational and maintenance costs, depreciation, taxes, and
return on investment associated with the new transmission pipeline.
SeaCoast stated in paragraph 12 of its petition, that the rate set forth in the
Agreement is a market-based rate reflecting the costs expected to be incurred
under prevailing market conditions. SeaCoast asserted that the agreement is
just, reasonable and not unreasonably preferential or unduly discriminatory,
and therefore, consistent with Section 368.105(3)(b), F.S. While specific
circumstances vary by projects due to pipe sizing, construction conditions,
permitting, etc., staff believes that the information provided by SeaCoast for
the proposed pipeline appears reasonable and comparable to similar agreements.
Consideration of Potential Alternatives to the
SeaCoast Extension
In response to staff’s first data
request, SeaCoast stated that Peoples did not issue a formal request for
proposals for the construction of the proposed pipeline facilities. SeaCoast explained
that Peoples evaluated other options to meet demand and improve delivery of gas
to customers in Lee and Collier Counties. Such alternatives included compression,
additional pipeline facilities, a larger diameter pipeline, and an interstate
pipeline solution. Installing
a compressor station was rejected due to cost limitations and maximum allowable
operating pressure (MAOP) safety boundaries and it also failed to resolve the
single-gate-station vulnerability; constructing a pipeline across Corkscrew
Boulevard lacked the required pressure to support the system; a larger pipe
size failed to provide a meaningful capacity increase because the core backbone
system is restricted by an existing 8-inch pipeline diameter; and, expanding
the single existing gate station was deemed technically unfeasible because it
cannot push enough gas to the farthest southern reaches of the system. Seacoast
explained that FGT provided a proposal to expand its system to meet the project
requirement. However, FGT’s proposal was not cost-effective in comparison to
the proposal from SeaCoast and could not be completed within Peoples’ time
requirements.
The Parties further explained, in
response to staff’s data request, that Peoples selected the SeaCoast project
because it provides Peoples with the best option to achieve long-term system
supply, reliability, pressure support, and cost effectiveness for the customers
in Lee and Collier Counties.
Peoples’ Cost Recovery of Payments to SeaCoast
Peoples' payments to SeaCoast would
be included in the calculation of the Purchased Gas Adjustment (PGA) clause factor.
Consistent with the methodology approved by the Commission in Docket No. 20000810-GU,
a portion of the costs would be paid by transportation customers taking service
under Peoples' Natural Choice Transportation Service program via the swing
service charge mechanism.
Swing service charge revenues collected from transportation customers would
then be credited back to the PGA. Sales customers purchase their gas from Peoples
and are subject to Peoples' PGA charge.
Conclusion
Based on the
petition and the Parties' responses to staff’s data requests, the Parties have
supported the importance of the need for pipeline extensions to service
customers in Lee and Collier Counties. Staff believes that the proposed
Agreement is cost-effective, reasonable, meets the requirements of Section
368.105, F.S., and benefits Peoples’ customers. Staff therefore recommends
approval of the proposed Agreement between the Parties, dated June 5, 2026.
Issue 2:
Should this docket be closed?
Recommendation:
If no protest is filed
by a person whose substantial interests are affected within 21 days of the
issuance of the Order, this docket should be closed upon the issuance of a
Consummating Order. (Brownless)
Staff Analysis:
If no protest is filed by
a person whose substantial interests are affected within 21 days of the
issuance of the Order, this docket should be closed upon the issuance of a
Consummating Order.
