Florida utility seeks approval to recover costs related to enhancing distribution system

Florida Public Utilities Company (FPUC), in a Feb. 14 petition filed with the Florida Public Service Commission, sought approval of a program that would enable it to recover costs, inclusive of an appropriate return on investment, related to enhancing its electric distribution system to improve reliability and outage response.

Like the Gas Replacement Infrastructure Program (GRIP) for the company’s gas divisions, the proposed Electric System Transformation and Reliability (ESTAR) program is based upon the data used in FPUC’s last electric rate proceeding.

The company noted that it is Florida’s smallest investor-owned utility, serving about 32,000 customers, and that its electric operations consist of two separate divisions – one located on Amelia Island and the other serving a largely rural service territory in the north central Panhandle.

Since the merger with Chesapeake Utilities Corporation, which acquired FPUC in 2009, FPUC said that it has invested about $29m for reliability projects to harden its electric distribution system and address operational issues that had produced repeated outages. Those investments include the hardening of more than 182 miles of power lines, including those that serve critical facilities; inspection of more than 23,692 poles; and replacement of those that are failing or no longer meet the appropriate system standards.

The company added that the facilities of its Northeast Division are often exposed to extreme conditions, such as last year’s Hurricane Matthew, which leads to abnormally high levels of corrosion in critical parts, such as connectors, making any necessary restoration effort longer and more difficult because those parts must be replaced.

The Northwest Division likewise has aging infrastructure with its own accompanying challenges, including limited access and distant, rural, wet and wooded locations, the company said.

Across both divisions, extended outages are also experienced due to the high number of wood poles, FPUC said, adding that it is currently inspecting wood poles on an eight-year cycle, replacing the failed distribution poles with a higher strength class wood pole, and upgrading the 69-kV wood poles with a concrete pole based upon higher wind loading requirements of the National Electrical Safety Code.

The company said that it has included recovery of those higher strength class poles within its ESTAR proposal.

FPUC said that its plan also includes implementation of a Supervisory Control and Data Acquisition System (SCADA), and that it intends to pursue installation of an advanced metering infrastructure (AMI) system.

Discussing capital modernization projects, FPUC noted that there are numerous identified projects that are directly related to improving the reliability of its distribution system, including wood pole replacements, substation upgrades, transformer replacements, work on overhead re-conductors, and upgrading of conductors.

Another planned investment, the company added, is to continue replacing the 69-kV wood transmission poles with concrete poles, which are engineered to withstand 150 mph winds.

FPUC said that it contemplates completing all of the projects in under six years, and that while it is providing information regarding all critical projects, including those undertaken since the last rate case, its request for recovery of the proposed ESTAR surcharge contemplates only recovery of revenue and associated expenses beginning in 2017.

The ESTAR mechanism does not contemplate retroactive recovery of the revenue requirement associated with capital investments that occurred from October 2015 through December 2016, FPUC said, adding that for those projects undertaken before 2017, only the capital investments have been included for recovery through the ESTAR mechanism.

Noting that it has initiated the process for obtaining its next purchase power agreements, FPUC said that it anticipates that its customers will see fuel savings associated with those agreements, and that those expected fuel savings could offset some of the costs associated with the improvements requested within the program.

The company said that it proposes the implementation of the ESTAR surcharge mechanism with specific factors for each rate classification, using the cost of service methodology from its last rate case. The resultant surcharge factors for each rate classification would be put in place for an initial seven-month period, beginning on June 1, and thereafter, the company proposes an annual filing, which would detail, for instance, the investments made for each category of the ESTAR program.

FPUC noted that it contemplates that the program will be of a limited duration, and that in many ways, it views the program as a bridge to its next rate case.

FPUC requested that the proposed surcharge factors, if approved, be implemented for the period beginning June 1 through Dec. 31, and proposed to submit true up in September for rates to go into effect January 2018.

The proposed FPUC ESTAR surcharge factors for the initial, seven-month period, if approved, would have a rate impact for the typical FPUC residential customer using 12,000 kWh annually of about $6.24 per month, FPUC said.

About Corina Rivera-Linares 3067 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.