ML17228A324

Forwards FERC Order Noting & Granting Interventions, Accepting for Filing & Suspending Rates,As Modified & Establishing Hearing Procedures

ML17228A324
Person / Time
Site:	Saint Lucie
Issue date:	10/01/1993
From:	Jablon R SPIEGEL & MCDIARMID
To:	Lambe B NRC
References
ER93-465, ER93-465-000, NUDOCS 9310180133
Download: ML17228A324 (19)

Text

ACCELERATED DOCUMENT DISTtuBUTION SYSTEM REGULAT(Q INFORMATION DISTRIBUTIONSTEM (RIDE)

ACCESSION NBR:9310180133 DOC.DATE: 93/10/01 NOTARIZED: NO DOCKET FACIL:50-389 St. Lucie Plant, Unit 2, Florida Power a Light Co. 05000389 AUCH.NAME AUTHOR AFFILIATION R JABLON,R.A. Spiegel & McDiarmid RECIP.NAME RECIPIENT AFFILIATION LAMBE,B. NRC No Detailed Affiliation Given

SUBJECT:

Forwards FERC order noting S granting interventions, D accepting for f/iling 6 suspending rates, as modified 6 establishing earing procedures.

DISTRIBUTION CODE: Z998D COPIES RECEIlIED:LTR / ENCL / SIZE:

TITLE: Antitrust Info Re Reg Guide 9.3 NOTES:

RECIPIENT COPIES RECIPIENT COPIES ID CODE/NAME LTTR ENCL ID CODE/NAME LTTR ENCL DRP/ADR-2 1 1 PD2-2 LA 1 1 PD2-2 PD 1 1 NORRIS,J 1 1 INTERNAL: NRR/P PTSB 1 1 OGC/AD 15-B-18 1 1 01 1 1 EXTERNAL: NRC PDR 1 1 NSIC 1 1 NOTE TO ALL"RIDS" RECIPIEN TS:

D PLEASE HELP US TO REDUCE WASTE! CONTACT THE DOCUMENT CONTROL DESK, ROOM I'1-37 (EXT. 504-2065) TO ELIMINATEYOUR NAME FROM DIS'I'RII3UTION D LISTS I OR DOCUMENTS YOU DON'T NEEDI TOTAL NUMBER OF COPIES REQUIRED: LTTR 9 ENCL 9

GKORGE SPIEGEL. PC SPIEGEL 4 MCDIARMID DAVID KOLKER ROBERT Ca MCDIERMID LISA G. DOWDEN SANDRA J. STREBKL I350 NEW YORK AVENUE. N W, RISE J, PETERS ROBERT A.JABLON WASHINGTON. D.C. 20005.4798 PETER J. HOPKINS JAMES N. HORWOOD RUSSELL F. SMITH, III ALANJ. ROTH KODWO GHARTKY.TAGOC FRANCES E. FRANCES TELEPHONE I202I 8T9.4000 DAVID C. POMPER DANIKLI. DAVIDSON TERESA A. FERRANTE DANlfL J. GUTTMAN TELECOPIER I202) 393.2866 MARK S. HEGEDVS PETER K. MATT ASAMUEL B. JOHNSON DAVID R. STRAUS NCVCCA YA OAA ONlY BONNIE S. BLAIR THOMAS C. TRAUGER OF COUNSEL JOHN J. CORBETT ROBERT A. SALTKSTEIN CYNTHIA Sc BOGORAD BRADLEY S. WEISS GARY J. NEWELL GVY MARTIN RENA I. STEINEOR P. DANIEL BRUNCR PHILIP E. CLAPP SCOTT H. STRAUSS OOYCCNNCNT ATFAIAS DIACCTOII BfN FINKfLSTKIN INOT A NCNCCA OY TNC SAAI STEPHEN M FfLDMAN MARGARET A, MDGOLDRICK October 1, 1993 C

Mr. Bill Lambe United States Nuclear Regulatory Commission One ophite Flint NOrth 11555 Rockville Pike (Mail Stop 12E4)

Rockville, Maryland 20852 Re: Florida Power & Light Company (St. Lucie Plant, Unit No. 2) Docket No. 50-389A; Operating License No. NPF-16

Dear Bill:

For your information, I enclose the Federal Energy Regulatory Commission hearing order in Florida Power & Li ht

~COCI an , FERC Docket No. ER93-465-000, and the Presiding LOCI Judge's hearing notice.

Sincerely, Robert . Jablon RAJ/kms CC A'avid Enclosure R. Raskin, Esq. (w/o enclosures) 9310180133 931001 ~6Il

'DR 9'/i PDR ADOCK05000389 N

. C 6854~

UNITED STAT"-S OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A. Bailey, James J. Hoecker, William L. Massey, and Donald F. Santa, Jr.

Florida Power & Light Company )

CLiSQT Docket No. ER93-g~=)0 ORDER NOTING AND GRANTING INTERVENTIONS, ACCEPTING FOR FILING AND SUSPENDING RATES, AS MODIFIED, AND ESTABLISHING HEARING PROCEDURES (Issued September 24, 1993)

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On March 19, 1993, as completed on July.26, 1993, Florida Power 6 Light Company (FPL) filed an extensive and comprehensive rate filing designed to overhaul FPL's existing tariff structure.

These rate change filings include unilateral changes to FPL's existing wholesale'electxic service'ariff (Florida Power & Light Company, FERC Electric Tariff, First Revised Volume No. 1), FPL's interchange contracts, certain specified transmission service agreements and related rate schedules with various wholesale customers. FPL's filing also includes new "open-access" tariffs that are available to all other utilities and generators for bulk power wholesale transmission services. According to FPL, the "centerpiece of FPL's filing is its offering of firm and non-firm wholesale transmission services puxsuant to the rates, terms and conditions equivalent to those that the Commission has deemed adequate in recent orders to mitigate transmission market power in wholesale bulk power markets." ~

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FPL March 19, Electric 1993 Company, Filing at 3-4 (~~g 62 FERC $ 61;OXS.;.(1993);

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However, FPL's taeiff differs from the tariffs

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Entergy Services,. Znc. {~~), appgaved.for 58 FERC 5 61,234 {1992),

and Northeast Utilities Sexvice Company (Re: Public Service Company of New Hampshire)( ), 62 FERC 61,294 (1993), particularly

'irm in that it does not assure that service will be as 'fixm as:native. load...-. Zntergy~and,<<

Northeast Utilities were found to possess or be gaining market power and their tariffs were 'required as a condition for approving market-based power sales and a merger, respectively. FPL has not prepared a maxket power analysis in this case and the tariff accepted for filing and set for (continued...)

~ ~

Docket No. ER93-465-000 .">>or the following reasons, we will accept FPL's proposed rates (as modified) for filing, suspend them for five months, to become effective February 26, 1994, subject to refund, and set them for heari'ng. We do not set for hearing certain policy questions identified in FPL's filings and responsive pleadings concerning issues that have never been addressed explicitly by the Commission or that advance new arguments in order to overturn existing precedents. Given the breadth of FPL's filing and the intexventions, and,,the need to act on FPL's filing within the 60-day statutory period, the Commission will issue a supplemental order in this proceeding addressing, the policy issues, discussed below.

KIUIIIII A. I ~ ~

Unlike other tariff filings which, while complex, addressed a single subject, FPL's filing completely restructures its entire business relationship with all of its Florida customers. FPL's amended filing contains the followi'ng: (i) Transmi'ssion Service Tariff Nos. 1, 2 and 3; (ii) amendments to each of FPL's Agreements to Provide Specified Transmission Service; (iii) an Amendment to the Agreement to Provide Coordination Transmission Service and Additional Transmission Service between FPX Utility Board of the City of Key Nest, Florida (Key Nest)and the (Coordination Transmission Agreement); revised Wholesale Electric Service Tariffs for"partial requirements and full requirements service; (v) revised Attachments A and B to the Aggregate Billing Partial Requirements Sexvice Agreement between FPL and Seminole Electric Cooperative, Inc. (Seminole); (vi) amendments to the Sexvice Schedules in each of FPL's interchange contracts; (vii) cost support information; and;(viii) prepared'iiect testimony of FPL witnesses describing the items above. Each of the tariffs and amendments is discussetf" separately.

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The tariff provides for firm transmission"- sexvice for periods of one year m'enn'e=.- ~e transmission service is available to entities'hat.: (1) engage in generation, transmission or distribution of electricity at wholesale or retail; and (2) are subject to regulation under state laws, the It 1/(...continued)

"..earing has not been'valuated to mitigate 'any market power that FPL may have'. J~i~, American Electric Power Service Corporation (M), Docket No. ER93-540-000, 64 FERC $

61, (1993), mimeo at 1, n. 2.

Docket No. ER93-465-000 Federal Power Act, or are legally exempt from such regulation.

The tariff also provides t."at ultimate consumers are not eligible for transmission service.,

In order to request service, the customer must submit a request for transmission service giving certain information about the requested service, including a deposit equal to two under the tariff. Requests will be evaluated on a first-months'ervice come, first-serve basis and FPL will make an initial evaluation as to the availability of transmission capacity within 60 days of the date of. the request. If the initial evaluation indicates that sufficient transmission capacity is available without the need for grid upgrades, construction of direct assignment facilities, or the incurrence of opportunity costs, FPL will tender a service agreement to the customer. If the initial evaluation indicates that there is not sufficient transmission capacity available without construction of grid upgrades, direct assignment facilities, or incurrence of opportunity costs, FPL-will prepare a system study. FPL will tender a study agreement within 20 days of the date of the initial evaluation setting forth the estimated cost of a system study. The system study will be completed within 60 days (when the application does not involve a new generating facility) or 120 days (when the application involves a new generating facility) unless FPL notifies the customer that study within that period, it in is unable to complete the system which case FPL will provide a new estimate of the completion date. The tariff also provides that a customer may elect to delay the commencement of service for up to 3 years by paying a reservation fee equal to one month's transmission charge for each year, or fraction of a year, the customer wishes to delay the commencement of service.

FPL proposes a transmission charge equal to .the higher of:

(1) the average system costs ($ 1'.75/kW/month. based on 1991 data);

or (2) the cost incurred to expand its grid to provide the service. FPL states that, wj.th 'respect to 'opportunity costs, will define and'alculate'CIie opportunity costs in accordance it with the Commission's rules '.and policies governing the recovery of opportunity'costs (includ'ing the policies requiring the maintenance of records and reporting. of such.costs) in effect at the time FPL seeks recovery 'oX oppor'tunity costs. However, FPL proposes to determine the higher of opportunity costs or average costs on an hourly basis. FPL also proposes that opportunity costs will not be subject to an expansion co'st ceiling when FPL

's in the process of removing the constraints giving rise to the opportunity costs or, despite good faith efforts, is unable to al'viate the constraints.

PL proposes to recover the cost of any directly assignable facilities and stranded costs. FPL also proposes to recover energy and capacity losses on one of two bases: (1) formula energy and capacity rates based on average system energy and

Docket No. ER93-465-000 645480 average system production costs, if the customer is billed for transmission service based on average system transmission costs; or (2) 110% of FPL's incremental costs of fuel plus the cost of any purchased power expenses incurred to provide the energy losses and the capacity costs of FPL's non-nuclear generation facilities and purchased power resources, if the customer is not billed for transmission service on the'basis of average system transmission costs. FPL also proposes to recover: (1) costs associated with reactive power (kVARS) through a formula rate that, based on 1991 data, results in a charge of $ .24/kW/month; (2) a customer charge of $ 650 per month; and (3) the Commission's annual charges associated with the sezvice.

b.

Under the short-term firm for periods of tariff, FPL will provide service from one day to one year. Once the customer 'has entered into a service agreement, the customer may request short-term service up to one hour in advance for service of one to 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> in advance for service of more than one day andday, less up than seven days and up to fifteen working days in advance for service of seven days or more. A deposit is only required foz service of 2 months or longer, in which case the deposit is equal to the rate for one month's service. Requests will be processed on a first-come, first-serve basis.

FPL proposes a formula average system transmission rate which, based on 1991 costs, results in a charge of

$ 1.75/kW/month. FPL also proposes to recover opportunity costs as defined and determined in accordance with the Commission's rules and policies in effect at the time FPL seeks recovery of opportunity costs, but proposes to assess the higher of opportunity costs or the average system transmission rate as determined on'n hourly basis without an expansi'on cost cap on opportunity costs. FPL also proposes to recover 1 mill/kWh for difficult to quantify costs in addition to the higher of the average system transmission cost rate or opportunity costs. FPL also proposes to charge for losses, kVARS, and the Commission's annual charges on the same basis as discussed above for the long-term firm transmission tariff.

c The tariff provides for non-firm transmission service for periods of one hour to one year. Once the customer has entered into 'a service agreement, it must schedule non-firm service least 15 minutes prior to the commencement of a transaction at one hour, at least one hour prior to commencement of a of transaction for one hour to one day, at least 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> prior to co.-.~encement of a transaction of one day but less than 7 days, and at least 15 days prior to commencement of a transaction for 7 days or more. The customer must also give FPL a description of

'Docket No. ER93-465-000 the proposed transaction including the buyer's avoided cost, the seller's incremental cost, and the pricing of the underlying power sale.

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FPL proposes a transmission charge equal to the: (1) higher of one third the savings to the buyer or seller g/ or 2 mills/kWh; or (2) at the customer's option, the same average system transmission rate, including kVAR and loss charges, applicable for short-term firm service plus 1 mill/kWh for difficult to quantify costs.

2. Whol a P w T ri FPL proposes to amend its wholesale full and partial requirements power tariff to include formuly. rates consisting of on-peak and off-peak fuel charges, variable operational and maintenance (O&M) charges, demand'harges, and a stated customer charge of $ 412 per month per delivery point for full requirements service and $ 1,345 per month per delivery point for partial

'a requirement service. The results of the demand charge component of the formula rates based on 1991 data are $ 15.46/kW/month for customers taking service at transmission level voltage and

$ 17.43/kW/month for customers taking service at distribution level voltage.

3. Aggregate Billing Partial Requirements Service A

FPL proposes to amend its PR Service Agreement with Seminole to include formula rates which include on-peak and off-peak energy charges, a variable 0&M charge, a demand charge, and a stated customer charge of $ 412 per month per delivery point with a delivery voltage of less than 69 .kV,and $ 1,557 per month per delivery point with a voltage of 69 kV..or higher. The demand component of the formula results in demand, charges of

$ 15.46/kW/month for delivery at .69. kV.orhigher and

$ 17. 55/kW/month .for delivery at .lesa than 69,kV.

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• FPL has filed revised.tran's'mission ~tes fox; service under C C its transmission agreements with 20:customeis which incorporate the same formula rates as proposed under FPL's short-term firm 2/ Or at the customer's option, one Naif of the difference between the seller's incremental costs and the seller' charge to the buyer or one half of the difference between the buyer's avoided costs and the seller's charge to the buyer.

Docket No. ER93-465-000 transmission above'.

tariff and non-firm transmission tariff discussed g/

FPL has filed revised rates under its interchange contracts with 20 customers which incorporate formula rates for emergency, scheduled maintenance, and outage interchange services. For emergency services, FPL proposes to charge the higher of: (1) an energy charge based on its incremental costs (110% of the incremental fuel costs or the purchased power costs incurred to provided the service) and demand charges for a minimum of one month based on the non-levelized costs of FPL's peaking resoUrces; or (2) 100 mills/kWh. For scheduled maintenance service or outage interchange service, FPL proposes an energy charge equal to its incremental costa plus a .formula demand charge reflecting the average demand costs of FPL's non-nuclear generation plus purchased power costs. +/

FPL requests an effective date of September 26, 1993, sixty-one days after its'amended filing.

Notices of FPL's original and amended filings were published in the Federal Register, 58 Fed. Reg. 17,884 (1993) and 58 Fed.

Reg. 43, 869 (1993), with comments, protests and motions to intervene due on or before August 24, 1993.

B. I On April 9, 1993, Florida Power Corporation (Florida Power) filed a motion to intervene.

g/ In Docket'No. ER93-922-000, FPL filed revised rates incorporating formula rates for seven long-term transmission agreements with various customers. Also, in Docket No.

EL93-40-000, the Florida Municipal Power Agency filed a complaint alleging that the existing rates in the long-term transmission agreements are excessive. These proceedings are pending and will be addressed in subsequent orders.

4/ FPL has two forms of em rgency, scheduled maintenance and outage interchange service. Schedules AF, BF, and DF contain system average transmission costs as well as the production costs described above and Schedules AS, BS, and DS contain only the production costs described above because the schedules apply to transactions where the transmission service is provided under separate transmission agreements.

MG483 Docket No. ER93-465-000 On April 12, 1993, the Jacksonville Electric Authority (Jacksonville), Florida Cities, Q/ Seminole, Tampa Electric

.Company (Tampa), the Utilities Commission of New Smyrna Beach, Florida (Smyrna), Chicago ~Enezgy Exchange, Inc. (Chicago) and the Orlando Utilities Commission (Orlando) filed respective motions to intervene.

Gn April 28, 1993, Farmland Hydro, L.P. filed a motion to intervene.

On May 12, 1993, Southern Company Services, Inc. (Southern) filed a motion to intervene.

On August 19, 1993, Tampa Electric Company (Tampa) filed a protest and motion to intervene.

On August 20, 1993, the Ad Hoc Coalition of Local Governments (Coalition) f/ filed a motion to intervene.

On August 24, 1993, Florida Industrial Power Users Group filed a motion to intervene. Also on August 24, 1993, the Florida Cities, Florida Power, Seminole and Smyrna filed protests of FPL's amended filing and/or supplemental motions to intervene.

On September 14, 1993, the Florida Public Service Commission (Florida Commission) filed a motion to intervene out-of-time.

Intervenors have raised'various cost of service issues',

including (1) the customers'illing determinants are inconsistent with the derivation of the unit charges; (2) excessive return on equity; (3) use of rolled-in distribution costs to calculate the distribution charges'rather'than directly ass'igning "5istribution costs'('4) unsupported transmission and distribution loss factors.; (5) 'unsupported 'calculations of reve'nue credits; (6) incorrect billing determinants used in calculating present and proposed revenues; (7) improper development of the on-peak and off-peak energy charges; (8) inclusion of retail regulatory commission expenses, industry association dues, and general research expenses; (9) unsupported adjustments to certain booked expenses for formula rate g/ Florida Cities include the 'Florida Municipal Power Agency and its members which conduct business'with FPL.

g/ The Coalition is an ad hoc group of local government entities (cities, counties, and school boards) which receive electric service at retail from FPL's wholesale customers.

Docket No. ER93-465-000 computations; (10) recovery of decommissioning expenses under formula rates without the requirement to file revised decommissioning studies; (11) overstatement of costs supporting the proposed customer charges; (12) determination of the higher of the average system transmission rate or opportunity costs on an hourly basis; (13) excessive kVAR charges, espec'=-lly where a customer supplies kVARs; (14) inconsistency in the pricing of the energy charge and the demand charge for interchange services; (15) failure to cap opportunity costs at the cost to expand the system to alleviate the constraint; (16) failure to fully define opportunity cost calculations in .light of the fact FPL states that the opportunity cost calculations are contained in software, that is confidential; (17) failure to include a "but for" test in calculating expansion costs; (18) excessive deposits; (19) improper treatment of certain costs in the formula rates such as general plant, AaG expenses and property insurance; (20) price squeeze since only the wholesale customer will be subject to formula rates and retail, customers will not be subject to formula rates; (21) failure to normalize extraordiaary costs in the formula rate; (22) vague definition of the equity component of the formula; (23) inclusion of the cost of reserves in the rate for non- firm service; (24) excessive cash worki'ng capital; (25) lack of a provision for Commission review of FPL's depreciation and amortization costs in the formula rates; (26) unsupported income tax component in the formula rates; (27) excessive purchased power costs in the interchange contracts; and (28) inclusion of Account 565, Transmission by Others, in the transmission charges.

2. ~ ~

Entervenors allege that many of the terms and conditions are unjust and unreasonable, for example: (1) the requirement to schedule certain services up to 15 days in advance; (2) the minimum one-month term for outage services; (3) a requirement that customers must purchase losses from FPL rather than providing losses themselves; (4) unavailability of outage services when the outage involves a transmission facility; (5) resale restrictions; (6) the minimum reliability and reserve requirements; (7) five-year notice requirement for new delivery points under the wholesale power tariff and the PR Service Agreement; (8) overly broad provisions for interruption; (9) inclusion of system failures for unscheduled outage in the definition of force majeure; (10) because transmission dependent utilities (TDU) have been contributing to FPL's average system transmission costs, TDUs should be protected from having to pay rates based on opportunity costs or expansion costs under the

'ocket No. ER93-465-000 long-term transmission tariff; 7/ (11) failure to include the Nuclear Regulatory Commission (NRC) License conditions in the transmission tariff; (12), failure to include network transmission service; (13) inclusion of generation and distribution stranded investment in a transmission tariff; '(14) FPL's ability to re-estimate expansion costs during the term of the agreement; (15) no pro rata reduction in the demand charge during interruptions; (16) overly restrictive availability provisions; (17) limitation on changes in contract ldemands; (18) failure to ensure that FPL full'y, responds to all requests within 60 days so that a request for service under the tariff will be considered a "good faith" request pursuant to section 211 of the FPA, as amended by the Energy Policy Act of 1992; (19) failure to include an electronic bulletin board; (20) failure to "unbundle" the various services; (21) failure of FPL to abide by the terms apd conditions of the it tariffs when makes off system conditions contained in FPL's proposal adversely affect sales; and (22) the terms and competition for wholesale bulk power in peninsular Florida.

3.

Intervenors also allege that the proposal requires the following clarifications: (1) whether billing errors involving the formula rates will be subject to refund; and (2). if FPL files with the Commission a proposal to recover additional costs in the formula rates prior to the annual true-up, whether the inclusion of these costs will be effective for the entire period subject to the true-up.

C. o v On September 8, 1993, FPL filed an answer to to intervene and requests for.-'relief. In its answer, Intervenors'otions FPL consented to the following clarifications in its proposal:

C (1) FPL has no objection to adding a provision to the interchange schedules-stating that term 'provisions are

- not intended-to limit a party'-s section 205 or 206 unilatera'1:=.filing f

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63 FERC $ 61,025 (1993), where the customers argued that TDUs should be protected from rates based on opportunity costs or expansion costs, the Commission stated that there may be no expansion required when an existing customer signs a new contract because, for example, the load is already being served by the system.

The Commission explained that disputes about assignment of expansion costs to any customer, including TDUs, may be brought to the Commission. 63 FERC at 61,148.

8/ FPL Answer at 104.

Docket No. ER93-465-000 GCG486 (2) FPL has no objection to clarifying that "to establish a new delivery point" in Section 2(a) of the PR Service Agreement means "to establish a new delivery point under the [PR Service Agreement] "; g/

(3) FPL does not object to including a provision requiring FPL to prorate bills when meters are not read within a 27-33 day window; Q/

(4) FPL does not object to removing section 8(a) of the PR Service Agreement; ~/

(5) FPL does not object to a requirement to file under section 205 of the FPA any changes in its decommissioning expenses; ~

(6) FPL does not object to correcting an inadvertent data error which resulted in certain acquisition costs being rates proposed for transmission included in the formula and requirements service; ~ and (7) FPL does not object to correcting an inadvertent error which resulted in certain retail costs being included in the formula rates proposed for transmission and requirements service. ~/

On September 13, 1993, Tampa filed a response to FPL's answer.

D. V On June 21, 1993, Florida Cities filed a motion for a discovery order in this proceeding. Florida Cities state that in the course of discovery conducted during their civil litigation against FPL, ~/ Florida Cities have discovered significant damaging evidence which they would like to share with other g./ ~T at 135.

~/ ~l at 135.

11/ >d. at 135.

12/ ~E. at 154.

~1/ ~l at 162.

'4/ ~Z . at 165.

~1 / Florida Municipal Power Agency v. Florida Power E Light Company, M.D. Fla., Case No. 92-35-Civ-3A22.

'Docket .No. ER93-465-000 intervenors in this proceeding and also present as evidence to the Commission. However, under an agreement with FPL, Florida Cities are prohibited from doing so. Florida Cities therefore request that the Commission either: (a) order that all relevant documents produced to Florida Cities in the district court case be produced in this proceeding; or (b) order FPL to produce documents in response to data requests attached to Florida Cities'otion.

On July 6, 1993, Seminole filed an answer in support of Florida Cities'otion.

On July 6, 1993, as supplemented on August 13, 1993, FPL filhd an answer in opposition to Florida Cities'otion.

On July 20, 1993, Florida Cities filed a response to FPL's July 6 answer.

A.

Pursuant to Rule 214 of the Commission's Rules of 'Practice and Procedure, ~/ the timely, unopposed motions to intervene of each of the entities cited in Part II(B) above serve to make them parties to this proceeding. Pursuant to Rule 214(d) of the Commission's Rules of Practice and Procedure, the Commission finds that good cause exists to grant the untimely, unopposed motion to intervene of the Florida Commission, given the constituency which =-it represents, the early stage of this proceeding and the Msence -of any undue prejudice or delay.

=2 ~ v

-. -. The Commission will deny Florida Cities'otion for a discovery order without prejudice. As the Commission has stated

.in the.past, parties are undergo obligation under our Rules of

.Practice and Procedure to engage in discovery until the

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Commission .sets specific issues for hearing. ~/...As stated above, because the Commission plans to set FPL's proposal for hearing, Florida Cities and other intervenors will be free to engage in discovery on these issues to the extent permitted by our regulations and the presiding judge.

16/ 18 C.F.R. 5 385.214 (1993)..

17/ ~, ~, Entergy Services Inc. and Gulf States Utilities 61,001 (1993).

Docket No. ER93-465-000 B. on The Commission's

'd ~grin preliminary analysis of FPL's Q548S filing and responsive pleadings indicate that the proposed'ates have not been shown to be just and reasonable, and may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful. Accordingly, the Commission will accept FPL's rates, as modified to reflect the clarifications set forth in its September 8 answer, for filing and suspend them as outlined below.

• , i '

In W xa o , 18 FERC $ 61,189 (1982), we explained that when our preliminary analysis indicates that proposed rates may be unjust and unreasonable, and may be generally lid impose a maximum suspension.

d As our preliminary analysis indicates that FPL's proposed rates, as modified, may produce substantially excessive revenue, we will suspend the proposed rates for five months. Accordingly, we will accept FPL's proposed rates for filing, suspend them for five months, to become effective on February 26, 1994, and set them (with the exception of various policy issues identified below) for hearing.

C. P As noted, FPL's filing constitutes a complete restructuring of its wholesale and transmission business and, as such, the filing is far more extensive in scope than any ever filed with this Commission. The Commission's preliminary review of FPL's filing and responsive pleadings indicates that certain aspects of FPL's proposal raise questions regarding the Commission's pricing policies which do not require a trial-type evidentiary hearing in this proceeding. These policy issues'are as follows:

(1) whether transmission customers should be prohibited from charging an assignee a higher price than the amount originally paid by the transmission customer to the utility; (2) whether a utility should be permitted to compute a rate for firm transmission opportunity costs equal to the higher of embedded or opportunity costs on an ggJg --.

as opposed to the life-of the-transaction -- basis; whether a utility should be permitted to eliminate the (3) dl ',

expansion cost cap required by w cr short-term transactions feasible option; I

if construction is not w

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Docket No. ER93-465-000 -13dp (4) whether a utility can withhold consent from partial requirements customers to resell energy purchased under the utility's tariff to other entities pursuant to any economy sale, coordination sale or similar transaction unless the utili'ty' incremental cost in that hour is expected to be equal to or less than the energy charge under the tariff; and, if efficient allocation of resources; not, whether this is an the circumstances, depart from the if standard any, under'which a utility may set forth in

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61 FERC No. 93-1165 (D.C.

f 61 339 (1992)

Cir. filed Feb. 11, 1993),

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for calculating the appropriate divisor to use in developing non-customer-specific rates; (6) the circumstances,

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under which a d P utility may w 38 FERC f 61,275, 40 FERC f 61,236 (1987), and develop hourly rates to reflect the potential for full hours utilization; and if (7) the circumstances, any, under which a depart from the requirement set forth in

~~

utility may

'10 FERC (1980), that utilities must develop demand and energy f 61,295 charges on a consistent basis.

Given the breadth of FPL's filing and the 'interventions, and the limited amount of time available in which to act on FPL's filing, the Commission cannot now address each of these important issues in the detail that they deserve. Accordingly, the Commission will issue a supplemental order dealing with each of the policy issues stated above.

p w D.

V A.major issue =raised in this filing concerns competition and p d the degree to which the terms and conditions contained in FPL's filing, taken as a whole, restrict competition. Zntervenors have claimed that there are anticompetitive effects inherent in the filing. ~/

ln a section 205 filing, the Commission must find that the proposed rates, terms and conditions of transmission service are just, reasonable and not unduly discriminatory or preferential.

Zn addition, as the United States Supreme Court has stated; the

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Ccmmission's "important and broad regulatory power ... clearly Ql/ TECO at 2 and Seminole at 119-122, 130-134.

Docket No. ER93-465-000 -14gp 645430 with it the responsibility circumstances, the anticompetitive to consider, in appropriate effects of regulated aspects

'arries of interstate utility operations pursuant to 55 202 and 203, and under like directives contained in 55 205, 206, and 207."

v >, 411 U.S. 747 at 758-59 (1972) . With enactment of the Energy Policy Act of 1992 and its implications for competition in wholesale power markets, anticompetitive allegations take on added significance.

The Commission wishes to encourage competitive bulk power markets and would not look favorably upon rates, terms or conditions of service that diminish such competition. The issue of whether FPL's filing will have anticompetitive effects on the wholesale bulk power market in penisular Florida is thus properly a subject of this hearing.

The parties may pursue at hearing all other issues (with one exception) raised in FPL's filing and the responsive pleadings.

The one exception is the argument raised by Florida Cities that

~

the rates are unjust and unreasonable because they do not provide for network service. In this regard, Florida Cities argue that FPL must provide network service because: (1) it is comparable to the service FPL provides itself; and (2) FPL's Nuclear Regulatory Commission License conditions require network service. However, the Commission notes that these same issues are also raised by Florida Cities in Docket Nos. EL93-51-000 and TX93-4-000 ( w 'V w hhh p hyp dd P h Commission. The Commission believes that it

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is more appropriate to address these issues in Docket Nos. EL93-51-000 and TX93-4-000 and not in this proceeding.

(A) Florida Commission's untimely motion to intervene is hereby granted.

(B) Intervenors'otions for preliminary discovery are hereby denied without, prejudice for the reasons stated in this order..

(C) FPL's proposed rates are hereby accepted for filing and suspended for five months to become effective February 26, 1994, subject to refund.

~1 / Other Intervenors argue that the, tariff should be expanded to include network service. As the Commission explained in

~us~, FPL 's free to limit its tariff to po'nt-to-point service and parties mayvoluntary

~KP, request that the Commission order network service under section 211 of the FPA.

Docket No. ER93-465-000 (D) pursuant to the authority contained in and subject to the jurisdiction conferred upon the Federal Energy Regulatory Commission by section 402 (a) of the Department of Fnergy Organization Act and by the Federal Power Act,, particularly sections 205 and 206 thereof, and pursuant to the Commission's Rules of Practice and Procedure and the Regulations under the Federal Power Act (18 C.F.R. Chapter I), a public hearing shall be held concerning the justness and xeasonableness of FPL's proposed rates. The hearing shall not consider the policy issues raised in FPL's filing and identified in the body of this order..

(E) The Commission will issue a supplemental order in this proceed'ng concerning the policy issues identified in the body of this order.

(F) The Commission's trial staff is hereby directed to serve top sheets within fifteen (15) days of the date of this order.

(G) A presiding administrative law judge, to be designated by the Chief Administrative Law Judge, shall convene a prehearing conference in this proceeding, to be held within approximately fifteen (15) days after service of trial staff top sheets,'n a hearing room of the Federal Energy Regulatory Commission, 810 First Street, N.E., Washington, D.C. 20426. The presiding judge is authorized to establish procedural dates and to rule on all motions (except motions to dismi.ss) as provided fox in the Commission's Rules of Practice and Procedure.

(H) The Commission hereby orders initiation of price squeeze procedures and further orders that this proceeding be phased so that price squeeze procedures begin after issuance of a Commission opinion establishing a rate which, but for consideration of price squeeze, would be just and reasonable.

The presiding judge may modify this schedule for good cause. The price;squeeze portio'n of this case shall be 'governed by the

=.. 'procedures set- for'th in section 2.X7 ef lheZommission s regulations, 1S 'C.P.;R. 3..2.:-XV (1993)~, 'as:they 'may be modified

':."::prioro the initi'ation of %he price -squeeze jihase of this proceeding.

(I) FPL is hereby advised that <ate schedule designations will be assigned at a later date after a supplemental order is issued in this proceeding.

By the'ommission.

(SEAL) Linwood A Watson, Jr.,

Acting Secretary.

k Mme"..

'f

UBITED STATES OF AMERICA FSDERAL ENERGY REGULATORY COMMISSION 645655

'c. dKlerisQ~ower & Light Company Docket No. ER93-465-000 ORDER CONVENING PREHEARING CONFERENCE (Issued September 28, 1993)

Under the Commission's-hearing order of September 24, 1993, 64 FERC $ 61,361, a prehearing conference will be convened on October 21, 1993 at, 10:00 A.M. in a Commidsion hearing room to discuss the issues set for hearing and to establish a trial schedule 1/ similar to that reflected by my order in Southern Natural Gas Company, 58 FERC $ 63,027 (1992)g/. The trial schedule also will provide for the filing by the company of supplemental direct testimony on the competition issues set for hearing and those "clarifications" that the company has agreed to make to the revised rates that bear on the cost of service issues set for hearing. The trial schedule also will include dates for oral argument on discovery disputes under the discovery deadlines of the trial schedule.

Well in advance of the prehearing conference, I expect the parties and Staff to exchange trial schedule proposals and to refine those proposals at the Top Sheet conference informally convened by Staff to discuss its Top Sheets and any other proposals for settlement of the case. I also expect the parties and Staff to exchange proposals for an appropriate protective order and to seek to resolve any differences at the Top Sheet conference convened by the Staff.

The company promptly shall provide me with two copies of its tariff filing and narrative summaries of the pre-filed direct testimony and exhibits which denote the material points set forth in the testimony and supporting exhibits by page and line references and exhibit nu s.

P Bruce L. Birchman Presiding Administrative Law Judge 1/ A proposed trial date shall avoid a calendar conflict with my April 4, 1994 hearing in Docket No. RP85-177-102, Texas Eastern Transmission Company. That hearing may require a month or more.

2/ Another example of a joint narrative stipulation of issues is included in my order ie Southern Natural Gas Company, 62 FERC $ 63,006 (1992).