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Florida Commission Approves Gulf Power's Hurricane Sally Rate Change Petitions

March 4, 2021
PSC approves reduction in ECRC charges for early retirement of Plant Crist Units, an interim charge to recover hurricane restoration costs.

The Florida Public Service Commission (PSC) recently approved two Gulf Power Co. petitions related to impacts from Hurricane Sally. The PSC approved a reduction in Gulf's 2021 Environmental Cost Recovery Clause (ECRC) charges for the early retirement of Plant Crist Units 4 to 7 because of damage from Hurricane Sally, and an interim charge, subject to refund, to recover restoration costs related to Hurricane Sally.

Gulf requested to create two regulatory assets for the retirement of the Plant Crist Units and defer recovery to a future proceeding. The two regulatory assets represent an unrecovered US$67.6 million in base rate capital investment and US$394.5 million in ECRC capital investments because of the early retirement of these coal generation assets. This translates to a US$3.71 monthly reduction on a 1000-kWh residential bill through December 2021.

"Instead of retiring the Crist Units at the end of this year as planned, Gulf decided to accelerate the plants' retirement to October 2020, following damage from Hurricane Sally," said PSC Chairman Gary Clark. "As a result, customers will benefit from the reduced ECRC charge that more than offsets Gulf's Hurricane Sally interim restoration charge."

The PSC also approved Gulf's petition for an interim charge to recover costs related to Hurricane Sally. Hurricane Sally made landfall on the morning of Sept. 16, 2020, across Gulf Shores, Alabama, later dumping more than 2 ft of rain in areas between Mobile, Alabama, and the Florida panhandle.

The interim hurricane restoration monthly charge for Gulf residential customers is US$3/1000 kWh, beginning March 2021. Combined with the US$3.71 ECRC reduction, Gulf residential customers will see a net monthly bill reduction of US$0.71 on a 1000-kWh bill.

Gulf estimated a total of US$206 million for incremental restoration costs related to Hurricane Sally. Prior to Hurricane Sally, Gulf's Storm Reserve was fully depleted and in a deficit position, primarily because of incremental costs incurred from Hurricane Michael. Gulf’s petition was based on its Stipulation and Settlement Agreement approved by the PSC in 2017, which allows Gulf to collect hurricane-related costs and maintain a storm reserve fund. A hearing will be set in the future to consider whether the costs are reasonable and prudent.

"Even though Hurricane Sally did not make landfall in Florida, the storm impacted Gulf's service area, causing flooding, power outages, and infrastructure damage," said Clark. "With PSC approval, Gulf will be able to replenish its storm reserve fund to help with future restoration costs."

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