Florida state regulators on Sept. 16 approved Florida Power & Light’s (FPL) petition, filed in July, to discontinue its mechanism for governmental recovery of undergrounding fees (MGRUF) involving electric distribution facilities due to lack of interest.
The MGRUF tariff provides local governments with an optional mechanism for the recovery of the costs of converting overhead electric service to underground service through a fee on FPL’s electric bill, the state Public Service Commission (PSC) said in its order issued on Sept. 16.
“FPL indicates that it has received few inquiries since the inception of the MGRUF in 2003, and has not executed any MGRUF agreements with local governments,” the PSC said. “FPL does not believe there will be any realistic prospects for widespread participation in the MGRUF.”
The PSC noted that it approved FPL’s MGRUF in 2003 as a mechanism for local governments to recover costs they incur in association with the conversion of overhead to underground electric service within their boundaries.
The fee charged to customers under the MGRUF would include FPL’s computer programming costs as well. The programming costs include start-up costs such as the modification of the billing system to add a line item to the electric bill and the cost of identifying each account for customers who would be charged the fee. The programming costs eligible for recovery from a participating municipality are capped at the lesser of 10% of the conversion costs, or $50,000, the PSC added.
When FPL petitioned for approval of the MGRUF in 2003, it expected 20 to 25 municipalities would participate in the program and estimated that the start-up programming costs would be between $1m and $1.5m.
FPL said that to date, no municipality has chose to use the MGRUF and to the company’s knowledge, there have been no such agreements executed by any other investor-owned electric utility (IOU) in Florida.
Furthermore, the PSC added, FPL’s current estimate of the necessary initial programming cost is $2m, which has led the company to conclude that the mechanism is not economically viable for a small number of program participants.
To avoid burdening the general body of ratepayers, FPL said it would need to amend the MGRUF tariff to charge the first participating municipality the full programming costs incurred to implement the MGRUF, perhaps with a provision for a portion of that charge to be returned if other municipalities subsequently chose to participate, the PSC said.
FPL does not believe that any municipality could justify charging its residents $2m in programming costs in addition to the cost of the planned underground conversion work, the PSC added.
“Based on FPL’s representations that there has been no participation in the MGRUF program and few serious inquiries about it since the program inception, as well as the absence of any similar agreements executed by other IOUs in Florida, we find that the company’s petition to discontinue the MGRUF and to cancel original tariff sheets … is reasonable and shall be approved,” the PSC said.