Discussion
of Issues
Issue 1:
Should the Commission approve the Amended Agreement
between TECO and Lakeland in Polk County, dated June 30, 2025?
Recommendation:
Yes, the Commission should approve the proposed Amended
Agreement between TECO and Lakeland in Polk County, as reflected in Attachments
A and B. The agreement satisfies the standards for approval set forth in Rule
25-6.0440(2), Florida Administrative Code, and would allow the joint
petitioners to gain further operational efficiencies, support near-term
development activity, and improve service delivery in their respective retail
service areas. (Pope)
Staff Analysis:
Pursuant to
Section 366.04(2)(d), F.S., and Rule 25-6.0440(2), Florida Administrative Code
(F.A.C.), the Commission has jurisdiction to approve territorial agreements
between and among rural electric cooperatives, municipal electric utilities,
and other electric utilities. Unless the Commission determines that such an
agreement is detrimental to the public interest, it should be approved.
Rule
25-6.0440(2), F.A.C., outlines the standards the Commission may consider in
evaluating territorial agreements, including:
(a) The reasonableness of the purchase price of any
facilities being transferred;
(b) The reasonable likelihood that the agreement, in and of
itself, will not cause a decrease in the reliability of electrical service to
the existing or future ratepayers of any utility party to the agreement;
(c) The reasonable likelihood that the agreement will
eliminate existing or potential uneconomic duplication of facilities; and
(d) Any other factor the Commission finds relevant in
reaching a determination that the territorial agreement is in the public
interest.
Proposed 2025 Amended Agreement
TECO and Lakeland executed the proposed Amended
Agreement
on June 30, 2025, to modify their
existing 1991 agreement and formalize permanent service assignments for two
subdivisions located in Polk County. Through the Amended Agreement, the joint
petitioners seek to:
(1) Replace the temporary
service arrangements previously authorized in Order No. PSC-2025-0089-PAA-EU
with permanent boundary adjustments;
(2) Avoid the uneconomic
duplication of facilities by assigning service responsibility to the utility
with nearby infrastructure already in place; and
(3) Clarify territorial
boundaries in the affected area to support long-term service planning and
operational efficiency.
These combined objectives are
expected to improve customer service, support ongoing development activity, and
reduce the need for redundant infrastructure.
The Amended Agreement includes all
terms and conditions, along with written boundary descriptions,
parcel-specific maps reflecting the proposed territorial changes, and documentation
of the lots affected by the proposed reassignment. Under the proposed Amended Agreement, the joint petitioners
request that the same parcels for which the utilities sought and received the
authority to offer temporary retail electric service be reassigned permanently.
The utilities assert that in the prior docket as well as in the instant one,
the utility seeking reassignment has distribution facilities in closer
proximity and maintains sufficient capacity to serve the respective
developments, which minimizes costs and avoids uneconomic duplication of
facilities.
Pursuant to Section 5.1 of the Amended Agreement, if approved, the
agreement would remain in effect for 15 years from the date the Commission
issues its final order and the order is no longer subject to judicial review.
Thereafter, the agreement would automatically renew for successive one year
periods, unless terminated by either party with at least 12 months’ written
notice in accordance with Section 7.3.
Proposed Boundary Changes
The Amended Agreement formalizes the reassignment of parcels within two
developments, Cadence Crossing Phase 2 and Schaller Preserve, that were the
subject of temporary service arrangements previously approved by the Commission
by Order No. PSC-2025-0089-PAA-EU. No customer transfers are proposed under the
agreement.
The proposed service reassignments under the Amended Agreement result from
negotiations between TECO and Lakeland and are intended to avoid duplication of
electric infrastructure and unnecessary costs.
Cadence Crossing Phase 2 includes
34 lots located within Lakeland’s territory, which were temporarily assigned to
TECO in late 2024 to allow for timely construction and service activation. TECO
has since completed approximately 40 percent of the required infrastructure and
anticipates full energization by the end of 2025. Schaller Preserve includes 39
lots located within TECO’s territory, which were temporarily assigned to
Lakeland. As of July 2025, no construction has commenced at Schaller Preserve,
and service is not expected before February 2027.
In their
petition, the joint petitioners stated that the maps in Composite Exhibit A
reflect only those changes necessary to address the Schaller Preserve and
Cadence Crossing subdivisions, and clarified that the maps control in the event
of any conflict with the legal descriptions. No other parcel-level or
boundary-wide adjustments were proposed in this filing.
The joint petitioners
assert that each utility is better positioned to serve the respective
developments due to the proximity of existing facilities and the absence of
system capacity constraints.
The Amended Agreement does not involve any transfer of existing customer
accounts, as the affected parcels are either currently unserved or were
temporarily authorized for service by the utility now seeking permanent
designation. As such, the proposed Amended Agreement avoids disruption to
existing customers and minimizes administrative complexity.
In response to
staff’s July 2025 data request, the petitioners confirmed that no additional
parcel-level modifications are included in this agreement. The petitioners also
indicated that no new cost estimates, system studies, or engineering analyses
were performed in support of the petition, citing the minimal load impact and
previously approved service arrangement as sufficient justification.
Staff Review
As noted previously, Rule 25-6.0440(2), F.A.C.
provides guidance for the Commission regarding standards for approving
territorial agreements for electric utilities. Rule 25-6.0440(2)(a), F.A.C.,
addresses the reasonableness of the purchase price for facilities that may be
subject to transfer between utilities. For the instant matter, the joint
petitioners state the rule is inapplicable in this instance, since there are no
facilities that TECO and Lakeland are transferring to one another. Staff agrees.
Rule 25-6.0440(2)(b), F.A.C., sets forth that the Commission should
consider the reasonable likelihood
that the proposed territorial agreement, in and of itself, will not cause a
decrease in the reliability of electrical service to the existing or future
ratepayers of either utility. According to the joint petitioners, each utility’s system planning team
reviewed the proposed service area changes and determined that the agreement
will not negatively impact the reliability of service to current or future
customers. The utilities explained that their
respective system planning teams reviewed the proposed service areas subject to
transfer, and determined the expected load would be minimal and would not
impact reliability for either utility.
Staff believes the utilities’
assertions are reasonable.
Rule 25-6.0440(2)(c), F.A.C., requires the Commission to
consider the reasonable likelihood that the agreement will eliminate existing
or potential uneconomic duplication of facilities. The joint petitioners state
that each utility is better positioned to serve the assigned parcels based on
the proximity of existing facilities and the absence of capacity constraints;
the parcels are either unserved or were temporarily authorized for service by
the utility now seeking permanent designation. In staff’s review of utility
facilities provided by the joint petitioners in Docket No. 20240171-EU, the proposed
permanent boundary assignments align service with the nearest adequately sized
facilities and avoid duplicative extensions. No new engineering or cost
analyses were prepared for this filing. Based on the foregoing, staff finds a
reasonable likelihood that the agreement eliminates existing or potential
uneconomic duplication under Rule 25-6.0440(2)(c), F.A.C.
The final rule providing guidance for approving territorial agreements is
Rule 25-6.0440(2)(d), F.A.C., which allows the Commission to consider other
relevant factors on a case-by-case basis. Staff notes there are no specific
factors that are evident under this consideration. Because no active customers
are being transferred, the original petition did not include comparative
billing information which would have been required pursuant to Rule
25-6.0440(1)(d), F.A.C.. Therefore, staff did not consider or perform any rate
impact analysis. The petitioners state that they do not anticipate any future
customer objections related to the reassignment of service rights.
Conclusion
Based on the above analysis, staff believes the Commission
should approve the proposed Amended Agreement between TECO and Lakeland, as
reflected in Attachments A and B. The agreement satisfies the Standards for
Approval set forth in Rule 25-6.0440(2), F.A.C., and would allow the joint
petitioners to gain further operational efficiencies, support near-term
development activity, and improve service delivery in their respective retail
service areas.
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. (Bloom)
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.
