BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION

In re: Fuel and purchased power cost recovery DOCKET NO. 20210001-EI
clause with generating performance incentive ORDER NO. PSC-2021-0329-PCO-EI
factor. ISSUED: August 30, 2021

The following Commissioners participated in the disposition of this matter:

GARY F. CLARK, Chairman

ART GRAHAM
ANDREW GILES FAY
MIKE LA ROSA
GABRIELLA PASSIDOMO

ORDER APPROVING MID-COURSE CORRECTION

FOR TAMPA ELECTRIC COMPANY

BY THE COMMISSION:

Background

On July 19, 2021, Tampa Electric Company (TECO or Company), filed for a mid-course
correction (TECO MCC Petition) of its 2021 fuel cost recovery factors. TECO’s current fuel
factors were approved at our November 3, 2020 Commission Conference.1

Underlying the approval of TECO’s 2021 factors was the Florida Public Service
Commission’s (Commission) review of the Company’s projected 2021 fuel- and capacity-related
service costs. These service costs are recovered through the fuel and capacity cost recovery
factors that are set/reset annually in this docket. These cost recovery factors are usually effective
for a period of 12 months. However, we require that if an investor-owned electric utility’s fuel or
capacity cost recovery position is projected to exceed a specified range within the standard 12-
month timeframe, the utility shall promptly notify us by letter delivered to the Commission
Clerk. The notification of a 10 percent cost variance shall include a petition for mid-course
correction to the fuel cost recovery or capacity cost recovery factors, or shall include an
explanation of why a mid-course correction is not practical. This requirement is codified by Rule
25-6.0424, Florida Administrative Code (F.A.C.), and is commonly referred to as our “mid-
course correction rule.” Our mid-course correction rule and its codified procedures are discussed
in greater detail below.

1
Order No. PSC-2020-0439-FOF-EI, issued November 16, 2020, in Docket No. 20200001-EI, In re: Fuel and
purchased power cost recovery clause with generating performance incentive factor.
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Mid-Course Correction

Mid-course corrections are used between annual fuel clause hearings whenever costs
deviate from revenue by a significant margin. Under Rule 25-6.0424, F.A.C., a utility must
notify us whenever it expects to experience an under- or over-recovery of greater than 10
percent.

On July 19, 2021, TECO filed its MCC Petition and supporting documentation proposing
a mid-course correction of both its fuel and capacity charges. Specifically, we are being asked to
approve increases in fuel and capacity charges due to the Company now projecting period-
ending 2021 under-recoveries of both fuel and capacity costs that exceed the 10 percent
threshold. The proposed increase to TECO’s currently-authorized fuel charges is being driven by
projected 2021 fuel and capacity costs being greater than originally estimated, as well as other
factors that are discussed further below. Higher natural gas prices is the primary driver of both
under-recoveries. While the factors established in the fuel clause are directly affected by changes
in fuel prices, capacity costs may indirectly be affected as well. In this instance, higher natural
gas prices led to higher capacity costs due to a greater amount of economically-viable energy
(economy purchases carrying an associated capacity cost) available for purchase.

The Company has requested that the proposed revised fuel and capacity factors and
associated tariff become effective beginning with the first billing cycle of September 2021. This
topic is further discussed below. The petition and supporting documentation satisfies the filing
requirements of Rule 25-6.0424(1)(b), F.A.C.2

We are vested with jurisdiction over the subject matter of this proceeding by the
provisions of Chapter 366, Florida Statutes (F.S.), including Sections 366.04, 366.05, and
366.06, F.S.

Decision

Appropriate Adjustment to TECO’s Fuel Factors

TECO participated in our most-recent fuel hearing which took place on November 3,
2020. The Fuel Order issued with respect to TECO set forth the Company’s fuel, purchased
power, and capacity-related cost recovery factors effective with the first billing cycle of January
2021.3 However, as discussed below, both the currently-authorized fuel and capacity cost
recovery factors are now projected to be in under-recovery positions at the end of the year by
greater than 10 percent.

2
Document Nos. 08085-2021 and 08252-2021.
3
Order No. PSC-2020-0439-FOF-EI.
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TECO Mid-Course Correction – Fuel and Purchased Power

TECO filed its MCC Petition on July 19, 2021. TECO states that throughout 2021, it has
continuously monitored and evaluated its fuel and purchased power cost recovery revenue and
expenses on an ongoing basis. However, at this point in the accounting cycle, based on mid-year
updates to its cost and revenue projections, TECO now expects a period-ending 2021 under-
recovery of fuel costs in excess of the 10 percent threshold set forth in Rule 25-6.0424(1)(a),
F.A.C. The Company attributes the increase in natural gas costs to reduced levels of both natural
gas production and storage, as well as increased exports of liquefied natural gas. TECO also
states that it expects the aforementioned factors driving natural gas prices higher to persist into
2022. TECO is requesting to collect the under-recovery over a four-month period, or from
September through December 2021.

TECO Mid-Course Correction – Capacity

As part of its request, TECO is proposing to increase its 2021 capacity cost recovery
factors to incorporate a projected 2021 under-recovery of $9,628,629. TECO’s capacity mid-
course correction position following the calculation methodology in Rule 25-6.0424(1)(a),
F.A.C., is 444 percent.4 TECO states the projected under-recovery is caused by greater projected
amounts of economic power purchases due to the increased cost of natural gas making such
options more economically viable.

Incorporated in its capacity MCC request is a final 2020 capacity cost under-recovery of
$3,354,779.5 As proposed, and in similar fashion to the fuel cost recovery proposal, the mid-
course correction related to capacity will be distributed over the same four-month period, or from
September through December 2021.

Period-Ending 2020 Recovery Positions

Fuel

TECO initially projected an under-recovery of ($25,479,055), which is the amount

included in the 2021 fuel factors.6 However, TECO only under-recovered ($21,709,799), leaving
a final 2020 over-recovery, i.e., final 2020 true up amount, of $3,769,256.7 The final 2020 over-
recovery is being proposed for refund in 2021 as part of the mid-course correction.

Capacity

Concerning TECO’s capacity costs, the Company initially projected for 2020 an
actual/estimated over-recovery of $1,771,480.8 However, TECO’s actual 2020 capacity true up

4
Document No. 08196-2021.
5
Document Nos. 08085-2021 and 03197-2021.
6
Order No. PSC-2020-0439-FOF-EI.
7
Document Nos. 08252-2021 and 08266-2021.
8
Document No. 06604-2020.
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was an under-recovery of ($1,583,299), resulting in a final 2020 capacity true-up amount under-
recovery of ($3,354,779).9 This final 2020 under-recovery is being proposed for collection as
part of the capacity mid-course correction.

Projected 2021 Recovery Positions

Fuel

TECO’s original 2021 fuel cost projection filed for the purposes of cost recovery was on
September 3, 2020, as part of its Petition for Approval of Fuel Cost Recovery and Capacity Cost
Recovery Factors for January 2021 through December 2021.10

The underlying market-based natural gas price data used to produce the 2021 projections
was sourced during August 2020. The original projection of future natural gas prices was used to
produce an average delivered natural gas cost of $3.89 per MMBtu for 2021. However, as
indicated in the MCC Petition, TECO now projects that the average delivered cost of natural gas
for 2021 will be $4.34 per MMBtu, which represents an increase of 11.6 percent.11

In Table 1 below, we display the fuel cost and revenue differences between the original
and updated 2021 projections, as well as the other primary accounting components for
determining TECO’s fuel cost recovery position under Rule 25-6.0424, F.A.C.

9
Document No. 03197-2021.
10
Document No. 05951-2020.
11
Updated 2021 pricing information for the months July through December is based on forward market (New York
Mercantile Exchange, or “NYMEX”) data using an average of 5 trading days ending July 2, 2021.
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Table 1
Fuel Mid-Course Correction Components
Difference
Original Mid-Course from
Category Projection Projection Original
($) ($) Projection
(%)
Total Jurisdictional Fuel & Net Power
Transaction Costs 592,624,88012 677,154,125 14.26
Total Jurisdictional Period-Applicable Fuel
Revenues 618,103,935 599,809,922 (2.96)
2021 MCC Actual/Estimated True-Up - (77,344,203) -
2020 True-Up (25,479,055)13 3,769,25614 -
Interest Provision - (105,330) -
Projected 2021 End of Period Total Net
True-Up - (73,680,277)15 -
Sources: Document Nos. 05951-2020 and 08085-2021.
Figures may not sum due to rounding.

Following the methodology prescribed in Rule 25-6.0424(1)(a), F.A.C., the mid-course

percentage is equal to the estimated end-of-period total net true-up amount, including interest,
divided by the current period’s total actual and estimated jurisdictional fuel revenue applicable to
period, or ($73,680,277) / $599,809,922. This calculation results in a mid-course correction level
of (12.3) percent.16

Fuel Factor

TECO’s currently-approved levelized fuel factor is 3.162 cents per kWh.17 The Company
is requesting to increase the current levelized fuel factor to 4.255 cents per kWh (with tax), or by
34.6 percent.18

Capacity

TECO’s original 2021 capacity cost projection filed for the purposes of cost recovery was
on September 3, 2020, as part of its Petition for Approval of Fuel Cost Recovery and Capacity

12
Inclusive of Optimization Mechanism sharing amount, Generation Performance Incentive Factor amount, and
revenue taxes.
13
Represents the estimated under-recovery true-up balance for the period January 2020 through December 2020 as
approved by Order No. PSC-2020-0439-FOF-EI.
14
Represents the total true-up for the period ended December 2020.
15
Represents the period-ending 2021 mid-course correction under-recovery amount.
16
Document No. 08196-2021.
17
Order No. PSC-2020-0439-FOF-EI.
18
Recovery factor shown on “Exhibit B” of the MCC Petition, page 5 of 33, line 13.
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Cost Recovery Factors for January 2021 through December 2021.19 In the filing for 2021 rates,
TECO projected its net capacity cost for 2021 to be $353,890. However, TECO now expects its
2021 net capacity cost to be $8,426,625, for a difference of $8,072,735.

TECO stated the reason for increased capacity-related costs is primarily due to greater
projected amounts of economic power purchases. Similar to the implementation request for
revised fuel factors, the revised capacity factors are contemplated to be effective over the
September through December 2021 time period.

Bill Impact – As-Filed Request

In Table 2 below, we display the bill impact to a typical residential customer using 1,000
kWh of electricity a month associated with new fuel and capacity cost recovery factors becoming
effective in September 2021:

Table 2
Monthly Residential Billing Detail at 1,000 kWh
Proposed
Charges Approved
Currently- Approved
September to
Approved to Proposed
Invoice Component Through Proposed
Charges Difference
December Difference
($) ($)
2021 (%)
($)
Base Charge $67.30 $67.30 - -
Fuel Charge 28.56 39.38 10.82 37.89
Conservation Charge 1.66 1.66 - -
Capacity Charge 0.02 1.70 1.68 8,400.00
Environmental Charge 2.69 2.69 - -
Storm Protection Plan Charge 2.39 2.39 - -
Gross Receipts Tax 2.63 2.95 0.32 12.17
Total $105.25 $118.07 $12.82 12.18%
Source: TECO MCC Petition, Schedule E-10.

TECO’s current total residential charge for the first 1,000 kWh of usage for January
through December 2021 is $105.25. With our approval of TECO’s mid-course correction, the
current total residential charge, beginning September 2021, for the first 1,000 kWh of usage, will
be $118.07. This represents an increase of 12.18 percent. For non-residential customers, TECO
reported that based on average levels of usage and specific rate schedule, bill increases for small
commercial customers would range from approximately 11.1 to 12.7 percent, bill increases for
medium-size commercial customers would range from approximately 12.8 to 15.4 percent, and

19
Document No. 05951-2020.
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bill increases will be approximately 16.0 percent for large commercial/industrial customers.20
TECO’s proposed tariff is shown on Appendix A to this order.

2021 Recovery Option

Due to the magnitude of the requested late-year rate increase, we estimated the effect of a
reduction to TECO’s requested MCC amount, which for ease of reference is ($73,680,277). For
our estimation, the revenue (increase) amount was limited to the actual fuel true-up amount only,
or ($26,698,570).21 The actual true-up is as of the end of June 2021. This option would constitute
a reduction in the amount of ($46,981,707) to TECO’s as-filed request. For recovery purposes,
any amount reduced from TECO’s as-filed request would carry over into 2022.

TECO’s requested fuel cost recovery increase results in a “first-tier residential factor,”
(i.e., residential charge for the first 1,000 kWh of energy sales) of 3.938 cents per kWh. This
factor produces a fuel charge of $39.38 for the first 1,000 kWh of energy usage.22 Our estimated
first-tier residential factor is 3.295 cents per kWh.23 This would result in an estimated fuel charge
of $32.95 for the first 1,000 kWh of energy usage. The estimated increase in the total bill under
this scenario is approximately $6.23, or a 5.9 percent increase, from $105.25 to $111.48.

Summary

We find that TECO’s fuel cost recovery factors shall be adjusted to incorporate the
projected 2021 end-of-year fuel cost under-recovery. We also find that TECO’s capacity cost
recovery factors shall be adjusted to incorporate the projected 2021 end-of-year capacity cost
under-recovery. The revised fuel and capacity factors associated with our decision herein are
shown on Appendix A.

Conclusion

We hereby approve an adjustment to TECO’s currently-approved fuel cost recovery

factors for the purpose of incorporating the total projected period-ending 2021 under-recovery of
its fuel costs in the amount of $73,680,277. We further approve an adjustment to TECO’s
capacity cost recovery factors to incorporate a projected period-ending 2021 under-recovery of
capacity costs in the amount of $9,628,629.

Appropriate Effective Date

In its petition, TECO has requested that the revised fuel and capacity cost recovery
factors become effective with the first billing cycle of September 2021.

20
Document No. 08196-2021, filed July 21, 2021, TECO’s Responses to Staff’s First Data Request, No. 6.
21
Document No. 08085-2021, Exhibit A, page 2 of 3.
22
Document No. 08085-2021, Schedule E1-E.
23
We note that due to differences in specificity and method of calculating rates, its estimate of the fuel factor and
TECOs calculation may slightly differ.
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Over the last 20 years in the Fuel Clause docket, we have considered the effective date of
rates and charges of revised fuel cost recovery factors on a case-by-case basis. We have
approved fuel cost recovery factor rate decreases effective sooner than the next full billing cycle
after the date of our vote with the range between the vote and the effective date being from 25 to
2 days. The rationale for our action was that it was in the customers’ best interests to implement
the lower rate as soon as possible.24 With regard to fuel cost recovery factor rate increases, we
have approved an effective date of the revised factors ranging from 14 to 29 days after the vote.25
In two of these cases, we noted that the utility had given its customers 30 days’ written notice
before the date of the vote that a fuel cost recovery factor increase had been requested and
provided the proposed effective date of the higher fuel factors.26

In its petition, TECO proposes to collect the current under-recoveries of fuel and capacity
costs over the last four months of the year, beginning with the first billing cycle of September
2021, and ending with the last billing cycle of December 2021. In the instant case, there are 29
days between our vote on August 3rd and the beginning of TECO’s September billing cycle
(September 1).27

Concerning customer advisement of the instant request, TECO states that proposed rate-
change notifications are planned for customer bills beginning with August invoices. With our
decision at the August Commission Conference, TECO will replace the proposed-change
notification with one that describes the approved factors and bill changes, for the remaining
August billing cycles. Additionally, on July 19, 2021, which is the same day TECO submitted its

24
Order No. PSC-08-0825-PCO-EI, issued December 22, 2008, in Docket No. 080001-EI, In re: Fuel and purchased
power cost recovery clause with generating performance incentive factor; Order No. PSC-09-0254-PCO-EI, issued
April 27, 2009, in Docket No. 090001-EI, In re: Fuel and purchased power cost recovery clause with generating
performance incentive factor; Order No. PSC-11-0581-PCO-EI, issued on December 19, 2011, in Docket No.
110001-EI, In re: Fuel and purchased power cost recovery clause with generating performance incentive factor;
Order No. PSC-12-0342-PCO-EI, issued July 2, 2012, in Docket No. 120001-EI, In re: Fuel and purchased power
cost recovery clause with generating performance incentive factor; Order No. PSC-2012-0082-PCO-EI, issued
February 24, 2012, in Docket No. 120001-EI, In re: Fuel and purchased power cost recovery clause with generating
performance incentive factor; Order No. PSC-15-0161-PCO-EI, issued April 30, 2015, in Docket No. 150001-EI, In
re: Fuel and purchased power cost recovery clause with generating performance incentive factor; Order No. PSC-
2018-0313-PCO-EI, issued June 18, 2018, in Docket No. 20180001-EI, In re: Fuel and purchased power cost
recovery clause with generating performance incentive factor; Order PSC-2020-0154-PCO-EI, issued May 14,
2020, in Docket No. 20200001-EI, In re: Fuel and purchased power cost recovery clause with generating
performance incentive factor.
25
Order No. PSC-03-0381-PCO-EI, issued March 19, 2003, in Docket No. 030001-EI, In re: Fuel and purchased
power cost recovery clause with generating performance incentive factor; Order No. PSC-03-0382-PCO-EI, issued
March 19, 2003, in Docket No. 030001-EI, In re: Fuel and purchased power cost recovery clause with generating
performance incentive factor; Order No. PSC-03-0400, issued March 24, 2003, in Docket No. 030001-EI, In re:
Fuel and purchased power cost recovery clause with generating performance incentive factor; Order No. PSC-03-
0849-PCO-EI, issued July 22, 2003, in Docket No. 030001-EI, In re: Fuel and purchased power cost recovery
clause with generating performance incentive factor; Order No. PSC-09-0213-PCO-EI, issued April 9, 2009, in
Docket No. 090001-EI, In re: Fuel and purchased power cost recovery clause with generating performance
incentive factor; Order No. PSC-2019-0109-PCO-EI, issued March 22, 2019, in Docket No. 20190001-EI, In re:
Fuel and purchased power cost recovery clause with generating performance incentive factor.
26
Order No. PSC-09-0213-PCO-EI; Order No. PSC-2019-0109-PCO-EI.
27
Document No. 08196-2021, filed July 21, 2021, TECO’s Responses to Staff’s First Data Request, No. 5.
ORDER NO. PSC-2021-0329-PCO-EI
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MCC Petition, the Company posted a "news release" on its website describing the proposal.
Finally, TECO provided that its front-l ine customer service professionals are trained to respond
to questions about the mid-course changes. 28

Conclusion

We find that the fuel cost recovery and capacity factors as shown on Appendix A shall
become effective with the first billing cycle of September 2021.

Therefore, it is

ORDERED by the Florida Public Service Commission that Tampa Electric Company's
cuITently-approved fuel and capacity factors shall be adjusted for the purpose of incorporating
the total projected period-ending 2021 under-recovery of its fuel costs in the amount of
$73,680,277. We further approve an adjustment to TECO's capacity cost recovery factors to
incorporate a projected period-ending 2021 under-recovery of capacity costs in the amount of
$9,628,629. It is further

ORDERED that the fuel cost recovery and capacity factors as shown on Append ix A
shall become effective with the first billing cycle of September 2021 . It is further

ORDERED that the fue l and purchased power cost recovery clause docket is an on-going
proceeding and shall remain open.

By ORDER of the Florida Public Service Co js 30th day of August, 2021.

Florida Public Service Commission

2540 Shumard Oak Boulevard
Tallahassee, Florida 32399
(850) 413 -6770
www.floridapsc.com

Copies furnished: A copy of trus document is

provided to the patties of record at the time of
issuance and, if applicable, interested persons.
JSC

28 Documem No. 08 196-2021, filed July 21, 2021 , TECO's Responses to Staff's First Data Request, No. 8.
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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 or judicial review of Commission orders
that is available under Sections 120.57 or 120.68, 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 or judicial review 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.

Any party adversely affected by this order, which is preliminary, procedural or

intermediate in nature, may request: (1) reconsideration within 10 days pursuant to Rule 25-
22.0376, Florida Administrative Code; or (2) judicial review by the Florida Supreme Court, in
the case of an electric, gas or telephone utility, or the First District Court of Appeal, in the case
of a water or wastewater utility. A motion for reconsideration shall be filed with the Office of
Commission Clerk, in the form prescribed by Rule 25-22.0376, Florida Administrative Code.
Judicial review of a preliminary, procedural or intermediate ruling or order is available if review
of the final action will not provide an adequate remedy. Such review may be requested from the
appropriate court, as described above, pursuant to Rule 9.100, Florida Rules of Appellate
Procedure.
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