Case Background
On September 2,
2025, Florida Public Utilities Company (FPUC or Company) filed a petition for
approval of its Gas Utility Access and Replacement Directive (GUARD) cost
recovery factors for January through December 2026. The petition includes the
direct testimony and Exhibit BD-1 of FPUC witness Bryan Dayton providing the
calculations of the proposed factors and Third Revised Sheet No. 7.403.
By Order No.
PSC-2023-0235-PAA-GU (GUARD Order),the
Commission approved FPUC’s 10-year GUARD program consisting of two components: (1)
replacement of problematic pipes and facilities, and (2) relocation of mains and
service lines located in rear easement and other difficult to access areas to
the front lot easements. As established in the GUARD Order, FPUC is
able to recover the revenue requirements of expedited programs to replace
problematic pipes and facilities and to relocate certain facilities in rear
easements and other difficult to access areas in order to enhance the safety of
portions of FPUC’s natural gas distribution system through a monthly surcharge
on customers’ bills. The GUARD Order further established the methodology for
annually setting the GUARD surcharge to recover the costs of the program.
The
methodology to calculate the GUARD program surcharges is the same that was
approved for FPUC’s concluded Gas Replacement and Infrastructure Program. In the GUARD Order, the Commission
directed FPUC to file its annual GUARD program petition to revise the surcharge
on or before September 1 of each year, to implement the revised surcharge
effective January 1 through December 31 of the following year.
By
Order No. PSC-2024-0504-TRF-GU, the Commission approved
FPUC’s 2025 GUARD cost recovery factors and associated
Second Revised Sheet No. 7.403, which was effective from the first billing
cycle of January through the last billing cycle of December 2025.
Included
in this recommendation are Attachment A - list of GUARD projects for 2024-2026
Actual/Forecast, and Attachment B - Third Revised Tariff Sheet No. 7.403
legislative version.
During the
review process, staff issued a data request to FPUC on September 22, 2025, for
which responses were received on October 6, 2025. By Order No. PSC-2025-0392-PCO-GU,
the Commission suspended the proposed tariffs. The Commission has jurisdiction over this
matter pursuant to Sections 366.04, 366.05, and 366.06, Florida Statutes
(F.S.).
Discussion
of Issues
Issue 1:
Should the Commission approve FPUC's 2026 Gas
Utility Access and Replacement Directive (GUARD) cost recovery factors and
associated Third Revised Sheet No. 7.403 for the period January to December
2026?
Recommendation:
Yes. The Commission should approve FPUC's 2026 GUARD
cost recovery factors and associated Third Revised Sheet No. 7.403, included in
Attachment B to this recommendation, to be effective for the first billing
cycle of January 2026 through the last billing cycle of December 2026. The
Commission should also approve FPUC’s request to provide six months of actual
and six months of estimated data in its actual/estimated true-up filings. The
GUARD surcharge would allow FPUC to replace problematic pipes and facilities
and relocate certain facilities located in rear easements to the front
easements, and recover the project costs on an expedited basis. (Guffey)
Staff Analysis:
The GUARD program is driven by risks identified
under FPUC’s Distribution Integrity Management Program and risk assessments
performed by an independent contractor.[5]
As stated by witness Dayton and in responses to staff’s data request, the GUARD
projects are based upon risk assessment categorized as high, medium, and low
risk, by an independent contractor. Projects in high consequence areas and
those of high risk continue to be a priority. The prioritized projects for 2025
and 2026 are included in Attachment A to this recommendation. Attachment A
indicates that FPUC currently has nine projects in-progress which will relocate
30.21 miles of pipes from rear lots to the street front and install 1,568
service lines in Palm Beach and Seminole counties for an estimated investment cost
of $22.6M during 2025. For 2026, 30 projects which include replacing
obsolete/Aldyl-A pipes, span pipes, under building, and relocation of pipes
from rear lot easements to the front lot easements for 53.13 miles and 2,203
service lines in Palm Beach, Polk, Seminole, and Volusia counties are listed
for an estimated investment cost of $25.14M.
The Company requested that the
actual/estimated true up amounts be based on six months of actual data and six
months of projected data. In the past filings, the Company provided seven
months of actual data and five months of projected data. The Company included
this revision in this filing and intends to apply it to all future GUARD filings.
The Company explained that this change would better align FPUC’s GUARD filing
with its sister company, Florida City Gas’ Safety, Access, and Facility
Enhancement (SAFE) program filing, because the annual SAFE filing also utilizes
six months of actual data and six months of estimated data. Furthermore, any
difference between actual and estimated data would be incorporated in the next
year’s true up.
FPUC’s True-Ups by Year
FPUC’s calculation for the 2026 GUARD revenue requirement
includes a final true-up for 2024, actual/estimated true-up for 2025, and
projected costs for 2026.
Final 2024 GUARD True-Up
Company witness Dayton states that the January through
December 2024 true-up resulted in an under-recovery of $701,550, inclusive of
interest. As shown in Schedule C-1 of the petition, the 2023 ending balance was
an over-recovery of $571,835. Combined with the 2024 under-recovery of $1,283,709,
and year-end monthly interest expense of $10,324 associated with any over- and
under-recoveries results in a final 2024 under-recovery of $701,550.
Actual/Estimated 2025 GUARD True-Up
The January through December 2024 GUARD investment and
associated revenue requirement amounts are shown on Exhibit BD-1, page 2 of 7.
In 2024, the actual beginning balance was an under-recovery of $701,550 (inclusive
of interest). As shown on Exhibit BD-1, page 3 of 7, the 2025 actual (January
through June) and forecasted (July through December) GUARD true-up is an over-recovery
of $658,951 (inclusive of interest), resulting in an overall under-recovery of
$42,599. As shown in Table 1-1 below, this under-recovery is being applied to
the 2026 GUARD revenue requirement, resulting in a higher revenue requirement
to be recovered from customers in 2026.
Projected 2026 GUARD Revenue Requirement
For 2026, FPUC plans to invest $24,902,464 ($18,023,786
for mains, $5,998,678 for service lines, and $880,000 for meters), resulting in
a total qualified investment of $110,515,998 (including the year-end 2025
investment) in 2026. The GUARD program revenue requirement includes a return on
investment, depreciation expense, extending customer-owned fuel lines (to
connect to meters which require to be relocated due to safety issues), customer
notification expense, and property taxes. All expenses are dependent upon the
level of investment costs. After adding the 2025 under-recovery true-up amount
of $42,599, the 2026 GUARD revenue requirement to be recovered through the
proposed surcharges is $10,180,614.
Table 1-1
2026 GUARD Revenue
Requirement Calculation
|
2026 Total Qualified
Investment
|
$110,515,998
|
|
2026 Return on Investment
|
$6,842,806
|
|
Depreciation Expenses
|
$1,615,761
|
|
Fuel Line Expenses
|
$24,000
|
|
Property/Ad Valorem Tax Expense
|
$1,635,408
|
|
Customer Notification Expense
|
$20,040
|
|
2026 Net GUARD Revenue Requirement
|
$10,138,015
|
|
Plus 2025 Under-Recovery
|
$42,599
|
|
2026 Total Revenue Requirement
|
$10,180,614
|
Source: Witness Dayton’s Testimony Exhibit BD-1, Schedule
C-2, Page 4 of 7.
Proposed 2026 GUARD Surcharges
As approved in the 2023 GUARD Order, the total 2026
revenue requirement is allocated to the rate classes using the same methodology
used for the allocation of mains and service lines in the cost of service study
used in the Company’s most recent rate case. The respective percentages were
multiplied by the 2026 revenue requirement and divided by each rate class’s
projected therm sales to provide the GUARD surcharge for each rate class. This
methodology was originally established by the 2012 Order approving FPUC’s GRIP
program.
In 2025, the monthly bill impact was $2.22 for a residential
customer using 20 therms per month or $26.64 per year. The proposed 2026 GUARD
surcharge for FPUC’s residential customers who use 20 therms a month on the
Residential Service tariff (RES-2) would pay $0.26015 per therm compared to the
2025 GUARD surcharge of $0.11116 per therm. The monthly bill impact for 2026
would be $5.20 for a residential customer using 20 therms per month or $62.44
per year. The proposed GUARD surcharges are shown in Attachment B, in Third
Revised Sheet No. 7.403.
Conclusion
The Commission should approve FPUC's 2026 GUARD cost
recovery factors and associated Third Revised Sheet No. 7.403, included in
Attachment B to this recommendation, to be effective for the first billing
cycle of January 2026 through the last billing cycle of December 2026. The
Commission should also approve FPUC’s request to provide six months of actual
and six months of estimated data in its actual/estimated true-up filings. The
GUARD surcharge would allow FPUC to replace problematic pipes and facilities
and relocate certain facilities located in rear easements to the front
easements, and recover the project costs on an expedited basis.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If a
protest is filed within 21 days of the issuance of the order, the tariffs
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. (Dose)
Staff Analysis:
If a protest is filed within 21 days of the issuance
of the order, the tariffs 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.
