Florida Public Service Commission native order document 02811-2023

FILED 4/21/2023
DOCUMENT NO. 02811-2023
FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
In re: Petition requesting approval of an
AFUDC rate, effective January 1, 2023, by
Florida Public Utilities Com an .
DOCKET NO. 20220210-EI
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ORDER NO. PSC-2023-0140-PAA-EI
ISSUED: April 21, 2023
The following Commissioners participated in the disposition of this matter:
ANDREW GILES FAY, Chairman
ARTGRAHAM
GARY F. CLARK
MIKE LAROSA
GABRIELLA P ASSIDOMO
NOTICE OF PROPOSED AGENCY ACTION
ORDER APPROVING AFUDC RA TE FOR 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 a nd 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 Public Utilities Company (FPUC or Company) does not currently have an
authorized rate for an Allowance for Funds Used During Construction (AFUDC). On December
9, 2022, FPUC (the electric division) filed its petition requesting approval of an AFUDC rate of
6.80 percent, effective on January 1, 2023. The Company 's request did not comport with the
filing requirements specified in Rule 25-6.0141, Florida Administrative Code (F.A.C). On
December 20, 2022, FPUC filed an amended petition requesting approval of an AFUDC rate of
6.80 percent, effective October 1, 2022. Our staff filed its initial recommendation for this matter
on January 27, 2023, for the February 8, 2023 Commission Conference. On February 3, 2023,
the recommendation was withdrawn from the February 8, 2023 Commission Conference to allow
our staff more time to evaluate the Company 's adjustments to the capital structure used to
calculate the AFUDC rate. An informal meeting was held telephonically with FPUC, the Office
of Public Counsel (OPC), and our staff to resolve the concerns of the parties. On March 3, 2023,
FPUC filed revised Schedules A, B, and C1 in support of an AFUDC rate of 5.82 percent to be
1 Schedule A shows the capital structure, cost rates and weighted average cost of capital that is the basis for the
AFUDC rate; Schedule B shows the capital structure adjustments including the unadjusted capital structure,

ORDER NO. PSC-2023-0140-PAA-EI
DOCKET NO. 20220210-EI
PAGE 2
effective October 1, 2022.2 Subsequently, FPUC realized Schedules A, B, and C, filed on March
3, 2023, did not reflect the appropriate adjustment to the accumulated deferred tax balance in the
capital structure. Corrected versions of Schedules A, B, and C were submitted by FPUC to our
staff on March 17, 2023, reflecting an AFUDC rate of 5.12 percent.3 We have jurisdiction over
this matter pursuant to Chapter 366, Florida Statutes (F.S.), including Sections 366.04, 366.05,
and 366.06, F.S.
Decision
I. 	AFUDC Rate
Based on its amended petition filed on December 20, 2022, and revised Schedules A and
B submitted on March 17, 2023, FPUC requested approval of an AFUDC rate of 5.12 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 5.12 percent, FPUC provided its calculations
and capital structure in Schedules A and B submitted on March 17, 2023. 4 Schedule A included
the 13-month average capital structure ended September 30, 2022. We reviewed the schedules
and determined that the proposed rate was calculated in accordance with Rule 25-6.0141(3),
F.A.C. In its calculation, the Company appropriately used the mid-point return on equity of
10.25 percent, which was approved by Order No. PSC-2014-0517-S-EI.5 	The AFUDC rate
calculation and capital structure are presented in Attachment 1, attached to this Order.
Based on our review, we find that the requested AFUDC rate of 5.12 percent is
appropriate and shall be approved.
reconciling adjustments and adjusted capital structure that are the basis for the AFUDC rate; Schedule C shows the
calculation of the monthly AFUDC rate.
2Document No. 01750-2023.
3Document No. 02318-2023.
4Document No. 02318-2023.
5Order No. PSC-2014-0517-S-EI, issued September 29, 2014, in Docket No. 20140025-EI, In re: Application for
rate increase by Florida Public Service Commission.

ORDER NO. PSC-2023-0140-PAA-EI
DOCKET NO. 20220210-EI
PAGE 3
II. 	Monthly Compounding Rate
FPUC requested a monthly compounding rate of 0.004170 to achieve an annual AFUDC
rate of 5.12 percent. In support of the requested monthly compounding rate of 0.004170, the
Company provided its calculations in Schedule C included in its corrected response to our staff’s
data request submitted on March 17, 2023.6 Rule 25-6.0141(4)(a), F.A.C., provides the following
formula for discounting the annual AFUDC rate to reflect monthly compounding.
M = [((1 + A/100)1/12)-1] x 100
Where: M = discounted monthly AFUDC rate
A = annual AFUDC rate
The rule also requires that the monthly compounding rate be calculated to six decimal places.
We reviewed the Company’s calculation and determined it was derived in accordance
with Rule 25-6.0141(4), F.A.C., as presented in Attachment 2, attached hereto. Therefore, we
find that a monthly compounding AFUDC rate of 0.004170 shall be approved.
III. 	Effective Date
FPUC’s requested AFUDC rate was calculated using the most recent 13-month average
capital structure for the period ended September 30, 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 	October 	1, 	2022, 	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 Public Utilities
Company’s AFUDC rate of 5.12 percent based on a 13-month average capital structure for the
period ending September 30, 2022 shall be approved. It is further
ORDERED that the appropriate monthly compounding rate to achieve an annual AFUDC
rate of 5.12 percent shall be 0.004170. It is further
6Document No. 02318-2023.

ORD ER NO. PSC -2023 -0140-PAA-EI
DOCKET NO. 202202 10-EI
PAGE4
ORD ERED th at th e AFU DC ra te sha ll be effective October I, 2022, for a ll p ur poses. It is
further
O RD ERED that th e prov isions of thi s Order, iss ued as proposed agency ac ti on, sha ll
become fin al a nd effective up on th e issuance of a Co ns umm a tin g Order un less an appropriate
petition, in th e fo rm prov id ed by Rul e 28 -1 06.20 I , Flo rid a Ad m in istra ti ve Co de, is receive d by
th e Co mmi ssion Cle rk , 2540 S hum a rd Oak Bo ul evard, Ta ll ahassee, Flor id a 32399-0850, by the
close of bus in ess on th e date se t fo 11h in th e "No ti ce of Further Proceedings" attached hereto. It
is fu r th er
DD
O RD ERED that in th e eve nt t hi s Orde r becomes fi nal, t hi s docket shal l be closed.
By ORDER of th e Flo ri da Public Serv ic e Co mm ission this 2 1st day of Apri l, 2023.
Flo rid a Public Service Commission
25 40 S hum ard Oak Bo ul eva rd
Ta ll ahassee, Florida 32399
(850) 4 13-6770
www .fl o ri dapsc .com
Co pi es furni shed: 	A copy of this document is
prov ide d to th e pa rt ies of record at the time of
issuance a nd , if app li cable, interested pe r so ns.

ORDER NO. PSC-2023-0140-PAA-EI
DOCKET NO. 20220210-EI
PAGE 5
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 May 12, 2023.
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-2023-0140-PAA-EI 	Attachment 1
DOCKET NO. 20220210-EI
PAGE 6
FLORIDA PUBLIC UTILITIES COMPANY
CAPITAL STRUCTURE USED FOR THE REQUESTED AFDUC RATE
AS OF SEPTEMBER 30, 2022
COMPANY AS FILED
CAPITAL COMPONENTS
JURISDICTIONAL
AVERAGE
CAPITAL
RATIO
COST OF
CAPITAL
WEIGHTED
COST OF
CAPITAL
COMMON EQUITY 	$42,066,879 	38.73% 	10.25% 	3.97%
LONG-TERM DEBT 	30,217,101 	27.82% 	3.34% 	0.93%
SHORT-TERM DEBT 	9,456,215 	8.71% 	1.66%* 	0.14%
CUSTOMER DEPOSITS 	3,922,366 	3.61% 	2.29%* 	0.08%
DEFERRED INCOME TAXES 	22,962,105 	21.14% 	0.00% 	0.00%
TOTAL 	$108,624,666 	100.00% 	5.12%
* 13-MONTH AVERAGE

ORDER NO. PSC-2023-0140-PAA-EI 	Attachment 2
DOCKET NO. 20220210-EI
PAGE 7
FLORIDA PUBLIC UTILITIES COMPANY
METHODOLOGY FOR COMPOUNDING AFUDC RATE
AS OF SEPTEMBER 30, 2022
COMPANY AS FILED
MONTHS 	AFUDC BASE
MONTHLY
AFUDC RATE
CUMULATIVE
AFUDC RATE
1 	1.000000 	0.004170 	0.004170
2 	1.004170 	0.004187 	0.008357
3 	1.008357 	0.004205 	0.012561
4 	1.012561 	0.004222 	0.016783
5 	1.016783 	0.004240 	0.021023
6 	1.021023 	0.004257 	0.025280
7 	1.025280 	0.004275 	0.029556
8 	1.029556 	0.004293 	0.033848
9 	1.033848 	0.004311 	0.038159
10 	1.038159 	0.004329 	0.042488
11 	1.042488 	0.004347 	0.046835
12 	1.046835 	0.004365 	0.051200
Annual Rate (R) = 0.0512
Monthly Rate = ((1+R)^(1/12))-1 = 0.004170