Florida Public Service Commission native order document 03900-2024

OCR transcription for search; preserved printed pages are authoritative

FILED 5/23/2024
DOCUMENT NO. 03900-2024
FPSC - COMMISSION CLERK

BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION

In re: Petition for approval of Amendment No. || DOCKET NO. 20240038-GU

1 to transportation service agreement between | ORDER NO. PSC-2024-0167-PAA-GU
Peninsula Pipeline Company, Inc. and Florida | ISSUED: May 23, 2024

Public Utilities Company.

The following Commissioners participated in the disposition of this matter:

MIKE LA ROSA, Chairman
ART GRAHAM
GARY F. CLARK
ANDREW GILES FAY
GABRIELLA PASSIDOMO

NOTICE OF PROPOSED AGENCY ACTION
ORDER APPROVING AMENDMENT NO. 1 TO TRANSPORTATION
SERVICE AGREEMENT BETWEEN PENINSULA PIPELINE
COMPANY, INC. AND FLORIDA PUBLIC UTILITIES COMPANY

BY THE COMMISSION:

NOTICE is hereby given by the Florida Public Service Commission that the action
discussed herein is preliminary in nature and will become final unless a person whose interests

are substantially affected files a petition for a formal proceeding, pursuant to Rule 25-22.029,
Florida Administrative Code (F.A.C.).

Background

On February 29, 2024, Peninsula Pipeline Company, Inc. (Peninsula) filed a petition
seeking approval of amendment No. | to transportation service agreement (amendment) between
Peninsula and Florida Public Utilities Company (FPUC). The purpose of the amendment is to
increase supply capability and enhance reliability in St. Cloud, Florida. Peninsula operates as an
intrastate natural gas transmission company as defined by Section 368.103(4), Florida Statutes
(F.S.).! FPUC is a local distribution company subject to our regulatory jurisdiction pursuant to
Chapter 366, F.S. FPUC provides natural gas service to residential, commercial, and industrial
customers in Osceola County, and receives deliveries of natural gas to serve these customers
over interstate transmission pipelines owned by Florida Gas Transmission Company, LLC
(FGT).

' Order No. PSC-06-0023-DS-GP, issued January 9, 2006, in Docket No. 050584-GP, In re: Petition for declaratory
statement by Peninsula Pipeline Company, Inc. concerning recognition as a natural gas transmission company
under Section 368.101, F.S., et seq.

ORDER NO. PSC-2024-0167-PAA-GU
DOCKET NO. 20240038-GU
PAGE 2
Peninsula provides gas transportation service only; it does not engage in the sale of
natural gas to customers. By Order No. PSC-07-1012-TRF-GP (2007 Order), Peninsula 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.2 Pursuant to the
2007 Order, Peninsula is allowed to enter into gas transmission agreements that meet certain
criteria without our prior approval.3 However, Peninsula is requesting our approval of the
proposed amendment as it does not fit any of the enumerated criteria.4 Additionally, Peninsula
and FPUC (collectively “the parties”) are subsidiaries of Chesapeake Utility Corporation, and
agreements between affiliated companies must be approved by us pursuant to Section 368.105,
F.S., and the 2007 Order.
In Order No. PSC-2022-0351-PAA-GU, we approved a firm transportation service
agreement between Peninsula and FPUC (2022 agreement).5 FPUC needed the 2022 agreement
to serve Osceola County by transporting natural gas from an existing city gate interconnection
with FGT. The parties explained that amendment No. 1 reflects the expected new growth in the
St. Cloud area and, therefore, they jointly developed the proposed plan to bring additional natural
gas capacity into the area.
FPUC has proposed to recover its payments to Peninsula through the Purchased Gas
Adjustment (PGA) and swing service rider mechanisms. The PGA allows FPUC to periodically
adjust the price of natural gas supplied to its customer to reflect the actual cost of gas purchased
and delivered on behalf of the customers. The swing service rider allows FPUC to recover
intrastate capacity costs from their transportation customers and is a cents per therm charge that
is included in the monthly customer gas bill of transportation customers. While FPUC would
incur costs associated with these service expansions, new load added to the system should help
spread the costs over a larger customer base.
Pursuant to the proposed amendment, Peninsula would construct, own, and operate two
new natural gas pipelines and a new interconnect with FGT’s system. The proposed project
would enable FPUC to better serve St. Cloud and future potential gas customers in Osceola
County. A copy of the proposed amendment is appended to this Order as Attachment A.
During the evaluation of the petition, Commission staff issued two data requests to the
parties for which responses were received on April 2 and 16, 2024. We have jurisdiction over
this matter pursuant to Sections 366.05(1), 366.06, and 368.105, F.S.
2 Order No. PSC-07-1012-TRF-GP, issued December 21, 2007, in Docket No. 20070570-GP, In re: Petition for
approval of natural gas transmission pipeline tariff by Peninsula Pipeline Company, Inc.
3 Peninsula Pipeline Company, Inc., Intrastate Pipeline Tariff, Original Sheet No. 11, Section 3.
4 Peninsula Pipeline Company, Inc., Intrastate Pipeline Tariff, Original Sheet No. 12, Section 4.
5 Order No. PSC-2022-0351-PAA-GU, issued October 11, 2022, in Docket No. 20220123-GU, In re: Petition for
approval of transportation service agreement to reflect expansion of St. Cloud by Florida Public Utilities Company
and Peninsula Pipeline Company, Inc.

ORDER NO. PSC-2024-0167-PAA-GU
DOCKET NO. 20240038-GU
PAGE 3
Decision
1. 	Proposed Amendment to the Transportation Service Agreement for St. Cloud
The parties entered into the proposed firm transportation service agreement to enable
FPUC to reinforce its St. Cloud distribution system and meet expected increased natural gas
demand in Osceola County. The parties argue that the proposed amendment has the added
benefit of providing FPUC with an additional source of gas (via the Peninsula pipelines) and
building a new interconnection with the FGT pipeline.
In response to Commission staff’s second data request, the parties stated that they had a
desire to amend the 2022 agreement to extend the term of the agreement. In the original 2022
agreement, the 20-year term begins on the “In-Service Date.” The amendment adds the
additional phrase “Segment In-Service Dates” to the agreement. These dates are tied to the
commencement of commercial operations of each new segment. The parties explained that, in
effect, the amendment would extend the original 20-year term by the difference between the
original in-service date and the last segment in-service date.
Pursuant to the 2022 agreement, after the expiration of the initial term, the agreement and
proposed amendment were to be extended on a year-to-year basis, unless either party gives no
less than 90 days of written notification of termination. If either party desires to negotiate
modifications to the rates or terms of this agreement, they may do so no less than 120 days prior
to expiration of the current active term, subject to our approval of the amendment.
2. 	Proposed St. Cloud Expansion Project
As described in paragraph 12 of the petition, part one of the south expansion would begin
with Peninsula constructing a new interconnect with FGT. Peninsula would then construct 9.18
miles of 6-inch coated steel pipeline traveling along Canoe Creek Road and concluding at an
existing pipeline along Hickory Tree Road. A copy of the project map is appended to this Order
as Attachment B. The south expansion is shown on the project map as the longer blue line. The
new interconnect with FGT is labeled on the map as “New St. Cloud FGT Tap.”
Part two of the south expansion project, as depicted by the shorter blue line on the project
map, would start near the intersection of Canoe Creek Road and Nolte Road. Peninsula would
construct approximately 0.67 miles of 6-inch coated steel pipeline following the right of way on
Canoe Creek Road, and would terminating at the area of planned new development, Green Island
Ranch. The parties explained in the petition that this development will consist of approximately
14,000 new homes.
The proposed north expansion project would begin from the previously discussed New
St. Cloud FGT Tap. From this location, Peninsula would build approximately 3.09 miles of 6-
inch coated steel pipeline following north along Hickory Tree and Narcoossee Road and
terminating at a planned new development, Center Lake Branch. The parties explained in the
petition that this development will consist of approximately 3,900 new homes.

ORDER NO. PSC-2024-0167-PAA-GU
DOCKET NO. 20240038-GU
PAGE 4
In response to Commission staff’s first data request, the parties stated that FPUC did not
issue 	Formal 	Request 	for 	Proposals 	to 	other 	entities. 	FPUC 	explained 	that 	in 	previous
discussions and requests with FGT for other projects, FGT has declined to bid on projects related
to constructing, owning, and operating laterals such as the proposed expansion project in this
petition, which are not a focus of FGT’s expansion activities.
3. 	Anticipated System Benefits
In paragraph 10 of the petition, the parties expressed that this new project builds upon the
original Peninsula pipeline system in order to reinforce portions of FPUC’s system. The parties
further explained that the amendment reflects the construction of additional facilities necessary
for FPUC to expand its service to serve new growth in the St. Cloud area. The parties further
explained in paragraph 12 of the petition that the proposed project would reinforce FPUC’s St.
Cloud distribution system with an additional source of interstate gas with the potential to provide
natural gas service to future customers in Osceola County. In addition to the expected growth in
residential customers discussed above, FPUC also expects approximately 44 commercial
customers and one industrial customer to take natural gas service.
4. 	Option for Second Phase of Construction
In paragraph 14 of the petition, the parties discuss an option for a second phase of
construction that can be built off the extensions of the initial project. FPUC anticipates additional
growth in the St. Cloud area that would likely require additional pipeline capacity. The proposed
optional phase will ensure that, within a timely manner, FPUC is able to request that Peninsula
build the necessary pipeline facilities in the event of new growth. The rates for the optional
second phase are based on current estimates, but would only be applicable within the defined
time frame. If the optional second phase does materialize, the parties stated that they would
negotiate new rates and file for approval of a new amendment.
5. 	Negotiated Monthly Reservation Payments to Peninsula
In paragraph 17 of the petition, the parties expressed that the negotiated monthly
reservation charge contained in the proposed amendment is consistent with market rates, because
the rates are substantially the same as rates set forth in similar agreements as required by Section
368.105(3)(b), F.S. The parties explained that Peninsula would recover the pipeline construction
costs through the monthly reservation charge to FPUC, as shown in Exhibit B to the proposed
amendment. The monthly reservation charge is designed to recover costs such as, but not limited
to, engineering, permitting, materials, and installation costs associated with the pipeline and
related facilities, ongoing maintenance including Pipeline and Hazardous Materials Safety
Administration compliance, safety requirements, property taxes, gas control, and Peninsula’s
return on investment.
6. 	Conclusion
Upon a full review of the petition and the parties’ responses to Commission staff’s data
request, we approve the proposed amendment No. 1 to the firm transportation service agreement

ORDER NO. PSC-2024-0167-PAA-GU
DOCKET NO. 20240038-GU
PAGES
dated 	February 26, 	2024, 	between FPUC and 	Peninsula. 	The firm 	transportation service
agreement is reasonable and meets the requirements of Section 368.105, F.S. Furthennore, the
proposed firm transportation service agreement benefits FPUC's current and potential future
customers by having an additional source of gas for the growing areas in Osceola County.
Based on the foregoing, it is
ORDERED by the Florida Public Service Commission that Amendment No. 1 to the
transportation service agreement between Penjnsula Pipeline Company, Tnc. and Florida Public
Utilities Company is hereby approved. It is further
ORDERED that the provisions of this Order, issued as proposed agency action, shall
become final and effective upon the issuance of a Consummating Order unless an appropriate
petition, in the form provided by Rule 28-106.20 I, Florida Administrative Code, is received by
the Commission Clerk, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850, by the
close of business on the date set forth in the "Notice of Further Proceedings" attached hereto. 	It
is further
SPS
ORDERED that in the event thls Order becomes final, this docket shall be closed.
By ORDER of the Florida Public Service Commission this 23rd day of May, 2024.
Commission 	erk
Florida Public Service Commission
2540 Shumard Oak Boulevard
Tallahassee, Florida 32399
(850) 413-6770
www.floridapsc.com
Copies furnished: 	A copy of this document is
provided to Lhe parties of record at the time of
issuance and, if applicable, interested persons.

ORDER NO. PSC-2024-0167-PAA-GU
DOCKET NO. 20240038-GU
PAGE 6
NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW
The Florida Public Service Commission is required by Section 120.569(1), Florida
Statutes, to notify parties of any administrative hearing that is available under Section 120.57,
Florida Statutes, as well as the procedures and time limits that apply. This notice should not be
construed to mean all requests for an administrative hearing will be granted or result in the relief
sought.
Mediation may be available on a case-by-case basis. 	If mediation is conducted, it does
not affect a substantially interested person's right to a hearing.
The action proposed herein is preliminary in nature. Any person whose substantial
interests are affected by the action proposed by this order may file a petition for a formal
proceeding, in the form provided by Rule 28-106.201, Florida Administrative Code. 	This
petition must be received by the Office of Commission Clerk, 2540 Shumard Oak Boulevard,
Tallahassee, Florida 32399-0850, by the close of business on June 13, 2024.
In the absence of such a petition, this order shall become final and effective upon the
issuance of a Consummating Order.
Any objection or protest filed in this/these docket(s) before the issuance date of this order
is considered abandoned unless it satisfies the foregoing conditions and is renewed within the
specified protest period.

ORDER NO. PSC-2024-0167-PAA-GU Attachment A
DOCKET NO. 20240038-GU Page | of 6
PAGE 7

ATTACHMENT A

Transportation Service Agreement Amendment — St.
Cloud

ORDER NO. PSC-2024-0167-PAA-GU Attachment A
DOCKET NO. 20240038-GU Page 2 of 6
PAGE 8

FIRST AMENDMENT TO
FIRM TRANSPORTATION SERVICE AGREEMENT

This First Amendment to Firm Transportation Service Agreement (“Amendment No. 1”) is made
and entered into this 26 day of February, 2024, by and between Florida Public Utilities Company,
a corporation of the state of Florida (herein called (“Shipper”) and Peninsula Pipeline Company,
Inc., a corporation of the State of Delaware (herein called “Company” and jointly with Shipper
called “Parties”) to amend certain provisions of the Firm Transportation Service Agreement dated
June 20, 2022 between Company and Shipper.

WITNESSETH

WHEREAS, Company and Shipper are parties to that certain Firm Transportation Service
Agreement entered into on Jume 20, 2022, and approved by the Florida Public Service Commission
(FPSC”) in Docket No. 20220123-GU (the “Agreement”), pursuant to which Company provides Shipper
with firm transportation in Osceola County, Florida; and

WHEREAS, the Parties desire to amend the Agreement to extend the term of the Agreement,
to add Monthly Reservation Charges for three (3) new Points of Delivery, to be constructed by
Company (“Project”) in two separate phases. As specified in the Exhibit B, Segment I (a) of the
Project will enable natural gas service to two (2) additional points of delivery and Segment I (b)
will consist of an additional steel pipeline extension .

NOW THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, the sufficiency of which is hereby acknowledged, Company and
Shipper do covenant and agree as follows:

1. Capitalized terms not otherwise defined herein shall have the meanings given to such
terms in the Agreement.

2. Article I of the Agreement is hereby amended to by adding new definitions as follows:

“Phase Notification” means the notification from the Shipper to begin construction of
additional routes; and

“Segment In-Service Date” means the date that Company has commenced commercial
operations of the specified Segment of the Project, that construction has been completed
on the specified Segment and that the Segment has been inspected and tested as required
by applicable law.

Notice of Segment In Service Date - Company will use Commercially Reasonable
Efforts to notify Shipper in writing in advance of the date on which cach segment is
expected to be in service. Company shall confirm the actual Segment In-Service Date to

ORDER NO. PSC-2024-0167-PAA-GU Attachment A
DOCKET NO. 20240038-GU Page 3 of 6
PAGE 9

Shipper in writing no later than five (5) days after such date.

3, Atticle III Section 3.1 of the Agreement is hereby amended by replacing it with the
following:

The Monthly Reservation Charge for Firm Transportation Service provided under this
Agreement shall be as set forth in Exhibit B of this Agreement and shall be charged to
the Shipper beginning on the Segment In-Service Date and shall thereafter be assessed
in accordance with the terms and conditions set forth herein.

4. Article IV of the Agreement is further amended by adding Section 4.5. in its entirety
and replacing it with the following:

Shipper has twelve (12) months from the final Segment In-Service Date of Phase I to notify the
Company to begin construction of any of the Phase IJ additional Points of Delivery or Delivery
Points as described in Exhibit B at the rates and terms set forth herein. If the Shipper notifies the
Company after twelve (12) months, the Company may request the opportunity to negotiate a
modification of the rates or terms of this Agreement to be effective for the remainder of the
Current Term, and the parties shall negotiate such modification in good faith. Any such new rate
will be implemented pending regulatory approval, and Exhibit A or B updated accordingly, on
the In-Service Date of the additional Points of Delivery or Delivery Points. Notwithstanding the
above, and regardless of whether notification occurs within twelve (12) months, if there is a
material impact on project costs including but not limited to interest rates, materials, ROW, or
labor after the notification and before the commencement of permitting, such as a material change
in the construction fee or the cost of steel, the Company may also request the opportunity to
negotiate a modification of the rates or terms of this Agreement to be effective for the
remainder of the Current Term, and the parties shall negotiate such modification in good faith.
The Parties hereto acknowledge that any amendments to this Agreement shall be filed with the
Florida Public Service Commission for approval.

5. By this Amendment No. 1, Exhibit B is added to the Agreement.

6. The Parties agree to execute and file with the Commission a petition for approval of this
Amendment No. 1 within thirty (30) days of execution by both Parties.

7. Except as modified by this Amendment No. 1, the Agreement shall remain unchanged and
shall remain in full force and effect, including original Exhibit A.

ORDER NO. PSC-2024-0167-PAA-GU Attachment A
DOCKET NO. 20240038-GU Page 4 of 6
PAGE 10

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives.

COMPANY SHIPPER
Peninsula Pipeline Company, Inc. Florida Pablic Utilities Company
py Wiliam Hancock By: Stet Sytureeter-
William Hancock Jeffrey $. Sylvester
Title: Assistant Vice President Title: President and Chief Operating Officer
Date 02/27/2024 Date: 02/27/2024

ORDER NO. PSC-2024-0167-PAA-GU Attachment A
DOCKET NO. 20240038-GU Page 5 of 6
PAGE 11

EXHIBIT B TO

AMENDMENT No. 1 TO FIRMTRANSPORTATIONSER VICE AGREEMENT

BETWEEN
PENINSULA PIPELINE COMPANY, INC.
AND
FLORIDA PUBLIC UTILITIES COMPANY
DATED
February 26, 2024

Phase I Construction
Description of Transporter Delivery Point(s)

1. Segment I (a) A new Florida Gas Transmission gate

at or near Hickory Tree Road and Jan Land Boulevard

2. Interconnect with the existing PPC pipeline at or near Canoe Creek Road and Nolte
Road

Description of Point(s) of Delivery

Phase [ Pipeline Segments Monthly Reservation Charges:
1. Segment I (b)- At or near South Narcoosee Road and Ralph Miller Road GD
2. Segment I (c)- At or near Canoe Creek Road and Sullivan Drive (aa

Phase I Total Monthly Reservation Charge: Gee)
Phase I Construction

Description of Transporter Delivery Point(s)

Segment I (a) A new interconnect with Florida Gas Transmission
and existing PPC pipeline at or near TBD

Phase II Description of Point(s) of Delivery

Segment II (b) A three mile extension At or near TBD

Phase II Total Monthly Reservation Charge

Phase I and Phase II Total Monthly Reservation Charge
Total MDTQ (Dekatherms): QO t/Day
MHTP:

This charge is subject to adjustment pursuant to the terms of this Agreement and is additive
to the Initial Monthly Reservation Charge!

ORDER NO. PSC-2024-0167-PAA-GU Attachment A
DOCKET NO. 20240038-GU Page 6 of 6
PAGE 12

Unauthorized Use Rate (in addition to Monthly Reservation Charge): @§fEach Day
Unauthorized Use

! The Parties to this Agreement acknowledge and recognize that the facilities to be installed represent an extension
of existing facilities currently used by the Company to provide service to Shipper in Osceola County. The pricing
hereunder does not otherwise duplicate charges for service from the existing interconnection “Delivery Point”
(renamed “Point of Delivery” herein) with the existing Twin Lakes/St. Cloud Pipeline located at the intersection
of Hickory Tree Road and Nolte Road owned and operated by Peninsula Pipeline Company, Inc, approved as part
of the original Agreement in Docket No, 20220123-GU.

ORDER NO. PSC-2024-0167-PAA-GU Attachment B
DOCKET NO. 20240038-GU Page | of 2
PAGE 13

ATTACHMENT B

Project Map

=
Kissimmee
0
1
2
4 Miles
New St Cloud FGT Tap
18
=
Legend
St. Cloud North
St. Cloud South
PENINSULA
St Cloud Expansion
Existing Pipeline
PIPELINE
Created: 2/20/2024
PAGE 14
DOCKET NO. 20240038-GU
ORDER NO. PSC-2024-0167-PAA-GU
Attachment B Page 2 of 2