Florida Public Service Commission native order document 02821-2023

FILED 4/24/2023
DOCUMENT NO. 02821-2023
FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
In re: Request for approval of change in rate
used to capitalize allowance for funds used
during construction (AFUDC) from 6.22% to
6.37%, effective January 1, 2023, by Florida
Power & Li ht Com any.
DOCKET NO. 20230031-EI
ORDER NO. PSC-2023-0142-PAA-EI
ISSUED: April 24, 2023
The following Commissioners participated in the disposition of this matter:
ANDREW GILES FAY, Chairman
ART GRAHAM
GARYF.CLARK
MIKE LAROSA
GABRIELLA P ASSIDOMO
NOTICE OF PROPOSED AGENCY ACTION
ORDER APPROVING CHANGE IN RA TE FOR ALLOWANCE FOR FUNDS USED
DURING CONSTRUCTION
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
Florida Power & Light Company's (FPL or Company) current Allowance for Funds Used
During Construction (AFUDC) rate of 6.22 percent was approved by Order No. PSC-2019-0218-
EI, issued June 3, 2019. 1 On March 2, 2023, FPL filed its request for approval to change its
AFUDC rate from 6.22 percent to 6.37 percent, effective January 1, 2023. As required by Rule
25-6.014(5), Florida Administrative Code, (F.A.C.), FPL filed with its request Schedules A, B,
and C identifying the capital structure, capital structure adju stments, and the methodology used
to calculate the monthly AFUDC rate. We have jurisdiction over this matter pursuant to Chapter
366, Florida Statutes (F.S.), including Sections 366.074, 366.05, and 366.06, F.S.
'Ord er No. PSC-2019-0218-PAA-EI, issued June 3, 2019, in Docket No. 20190087-EI, In re: Request for approval
of change in rate used to capitalize allowance for funds used during construction (AFUDC) from 5.97% to 6.22 %,
eff ective January I, 20 I 9, by Florida Power & Light Company.

ORDER NO. PSC-2023-0142-PAA-EI
DOCKET NO. 20230031-EI
PAGE 2
Decision
I. 	AFUDC Rate
FPL requested an increase in its AFUDC rate from 6.22 percent to 6.37 percent. Rule 25-
6.0141(3), F.A.C., Allowance for Funds Used During Construction, provides the following
guidance:
(3) The applicable AFUDC rate will be determined as follows:
(a) The most recent 13-month average embedded cost of capital, except as noted
below, will be derived using all sources of capital and adjusted using
adjustments consistent with those used by the Commission in the utility’s last
rate case.
(b) The cost rates for the components in the capital structure will be the midpoint
of the last allowed return on common equity, the most recent 13-month
average cost of short-term debt and customer deposits, and a zero cost rate for
deferred taxes and all investment tax credits. The cost of long-term debt and
preferred stock will be based on end of period cost. The annual percentage
rate must be calculated to two decimal places.
In support of its requested AFUDC rate of 6.37 percent, FPL provided its calculations
and capital structure in Schedules A and B attached to its request. We reviewed the schedules
and determined that the proposed rate was calculated in accordance with Rule 25-6.0141(3),
F.A.C. The requested increase in the AFUDC rate is due to an increase of 37 basis points in the
weighted cost of common equity, offset by a decrease of 17 basis points in the weighted cost of
long-term debt, and a decrease of 5 basis points in the weighted cost of short-term debt. In its
calculation, the Company appropriately used the mid-point return on equity of 10.80 percent,
which was approved by Order No. PSC-2022-0358-FOF-EI, issued October 1, 2022.2 The
AFUDC rate calculation and capital structure are presented in Attachment 1, attached to this
Order.
II. 	Appropriate Monthly Compounding Rate
FPL requested a monthly compounding rate of 0.005159 to achieve an annual AFUDC
rate of 6.37 percent. In support of the requested monthly compounding rate of 0.005159, the
Company provided its calculations in Schedule C attached to its request. Rule 25-6.0141(4),
F.A.C., 	provides 	a 	formula 	for 	discounting 	the 	annual 	AFUDC 	rate 	to 	reflect 	monthly
compounding. The rule also requires that the monthly compounding rate be calculated to six
decimal places.
2Order No. PSC-2022-0358-FOF-El, issued October 21, 2022, in Docket No. 20210015-El, In re: Petition for rate
increase by Florida Power & Light Company.

ORDER NO. PSC-2023-0142-PAA-EI
DOCKET NO. 20230031-EI
PAGE 3
We reviewed the Company’s calculations and determined that they comply with the
requirements Rule 25-6.0141(4), F.A.C., as shown on Attachment 2 to this Order. Therefore, we
find that a monthly compounding AFUDC rate of 0.005159 shall be approved.
III. 	Effective Date
FPL’s requested AFUDC rate was calculated using a 13-month average capital structure
for the period ended December 31, 2022. Rule 25-6.0141(6), F.A.C., provides that:
No utility may charge or change its AFUDC rate without prior Commission
approval. The new AFUDC rate will be effective the month following the end of
the 12-month period used to establish that rate and may not be retroactively
applied to a previous fiscal year unless authorized by the Commission.
The 	Company’s 	requested 	effective 	date 	of 	January 	1, 	2023, 	complies 	with 	the
requirement that the effective date does not precede the period used to calculate the rate, and
therefore shall be approved.
Based on the foregoing, it is
ORDERED by the Florida Public Service Commission that Florida Power & Light
Company’s AFUDC rate shall be increased from 6.22 percent to 6.37 percent for the reasons set
forth herein. It is further
ORDERED that Florida Power & Light Company’s monthly compounding rate shall be
changed to 0.005159. It is further
Ordered that Florida Power & Light Company’s revised AFUDC rate shall be effective
January 1, 2023, for all purposes. 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 28-106.201, 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
ORDERED that in the event this Order becomes final, this docket shall be closed.

ORDER N O.PS C-20 23 -0 142-PAA- EI
DO CKET NO. 2023003 1- EI
PAG E 4
By ORD ER of the Florida Pub li c Service Commission t hi s 24th d ay of Ap ril, 2023.
AAW
Co mmi ss ion Clerk
Florida Pub li c Serv ice Commiss ion
2540 Shumard Oak Boulevard
Ta ll ahassee, Florida 32399
(850) 4 13-6770
www. fl oridapsc.com
Cop ies furnished: 	A copy of thi s do cument is
provided to the pa rti es of record at the time of
issuance and, if app li cable, interes ted per so ns.
NOTICE OF FURTHER PROCEEDINGS OR JUDIC IAL REV IEW
The Florida Public Serv ice Co mmi ssion is requ ired by Section 120.569( 1), Florida
Statutes, to notify parties of an y admin istrati ve hearing that is ava il able under Section 120.57,
Flo ri da Statutes, as well as the proce du res and time limits that apply. Thi s notice should not be
construed to mean a ll requests fo r an a dm inistrative hearing will be granted or re sult in th e re li ef
so ught.
Mediat ion ma y be a va il able on a case-by-case ba sis. 	If m ed iation is conducted, it does
not affect a s ub s ta ntial ly interes ted perso n's rig ht to a hear in g.
The action propo se d herein is pre li minary in nature. Any per so n whose s ub s ta ntial
int erests are affected by the action proposed by this order may ti le a petition for a forma l
proceeding, in the form prov ided by Ru le 28- 106.20 I, Florida Adm inistrative Code. 	T hi s
petition must be receive d by th e Office of Co mm ission Cle rk , 2540 Shumard Oak Boulevard,
Ta ll ahassee, Florida 32399- 08 50, by the close of bus in ess on Ma y 15, 2023.
In the abse nce of s uc h a petition, this order sha ll become fin al and e ffe c ti ve up on the
iss uance of a Consummat in g Orde r.
An y objection or protest fi led in this/th ese docket(s) before th e issuance date of this order
is co nside red abandoned un less it sa tisfies the forego ing co nd itions and is renewed wit hi n th e
specified protest period.

ORDER NO. PSC-2023-0142-PAA-EI
DOCKET NO. 20230031-EI 	Attachment 1
PAGE 5
FLORIDA POWER & LIGHT COMPANY
CAPITAL STRUCTURE USED FOR THE REQUESTED AFDUC RATE
AS OF DECEMBER 31, 2022
COMPANY AS FILED
CAPITAL COMPONENTS
JURISDICTIONAL
AVERAGE
CAPITAL
RATIO
COST OF
CAPITAL
WEIGHTED
COST OF
CAPITAL
COMMON EQUITY 	$26,855,347,514 	48.08% 	10.80% 	5.19%
LONG-TERM DEBT 	17,473,378,641 	31.29% 	3.63% 	1.14%
SHORT-TERM DEBT 	807,452,438 	1.45% 	1.93%* 	0.03%
CUSTOMER DEPOSITS 	431,270,364 	0.77% 	2.12%* 	0.02%
DEFERRED INCOME TAXES 	6,310,858,685 	11.30% 	0.00% 	0.00%
FAS 109 DEFERRED INC. TAX 	3,029,951,855 	5.43% 	0.00% 	0.00%
INVESTMENT TAX CREDITS 	942,149,496 	1.69% 	0.00% 	0.00%
TOTAL 	$55,850,408,993 	100.00% 	6.37%
* 13-MONTH AVERAGE

ORDER NO. PSC-2023-0142-PAA-EI
DOCKET NO. 20230031-EI 	Attachment 2
PAGE 6
FLORIDA POWER & LIGHT COMPANY
METHODOLOGY FOR COMPOUNDING AFUDC RATE
AS OF DECEMBER 31, 2022
COMPANY AS FILED
MONTHS 	AFUDC BASE
MONTHLY
AFUDC RATE
CUMULATIVE
AFUDC RATE
1 	1.000000 	0.005159 	0.005159
2 	1.005159 	0.005186 	0.010345
3 	1.010345 	0.005213 	0.015558
4 	1.015558 	0.005240 	0.020798
5 	1.020798 	0.005267 	0.026064
6 	1.026064 	0.005294 	0.031358
7 	1.031358 	0.005321 	0.036679
8 	1.036679 	0.005349 	0.042028
9 	1.042028 	0.005376 	0.047404
10 	1.047404 	0.005404 	0.052808
11 	1.052808 	0.005432 	0.058240
12 	1.058240 	0.005460 	0.063700
Annual Rate (R) = 0.0637
Monthly Rate = ((1+R)^(1/12))-1 = 0.005159