On June 20, 2000, the Florida Public Service Commission (FPSC) voted to approve staff’s recommendation to grant an industrial customer group’s request to permit "self-service wheeling" in the service territory of Tampa Electric Company (TECO) if certain conditions are met. Florida has not enacted legislation authorizing retail electric competition. As proposed by the Florida Industrial Power Users Group (FIPUG), "self-service wheeling" involves a generating facility located outside or inside TECO’s franchise area wheeling power to another location owned by the same customer inside TECO’s franchise area. The customer receiving the wheeled power must be a TECO non-firm retail customer, meaning a customer who is subject to a tariff under which its power supply could be interrupted in certain circumstances. Under the FIPUG proposal and under an existing FPSC rule, TECO would be obligated to provide transmission and distribution services to wheel the power to the retail customer.
The FPSC staff recommendation concluded that the self-wheeling approval sought by FIPUG should be permitted provided the self-wheeling proposal meets conditions contained in administrative rule, Rule 25-17.0883 as discussed further below. A request to self-wheel under Rule 25-17.0883 will be treated as a request to obtain transmission and distribution services from TECO. A customer may petition the FPSC for relief if TECO fails to wheel the power as requested. At the FPSC’s meeting on June 20, 2000, the scope of Rule 25-17.0883 was clarified to state that the rule pertains to more circumstances than just the FIPUG self-wheeling proposal. For example, the rule does not limit self-wheeling to situations where a non-firm customer is interrupted or is purchasing buy-through power. No customer has yet asked to self-wheel power and FIPUG did not identify any non-firm retail customers who may seek permission to self-wheel.
Rule 25-17.0883 requires utilities to provide transmission and distribution services to retail customers for the transmission of power generated at one location of a customer’s facilities to another location when certain conditions are met. One of the conditions requires that the provision of self-wheeled power and its associated charges, terms, and other conditions may not be "reasonably projected to result in higher cost electric service to the utility’s general body of retail and wholesale customers." This requirement will be analyzed using the FPSC’s "cost effectiveness methodology", and this methodology may be adjusted to reflect "the qualifying facility’s contribution to the utility for standby service and wheeling charges, other utility program costs, the fact that qualifying facility self-service performance can be precisely metered and monitored, and taking into consideration the unique load characteristics of the qualifying facility compared to other conservation programs." The rule also requires that the provision of self-wheeled power and its associated charges, terms and other conditions may not "adversely affect the adequacy or reliability of electric service to all customers."
The issue of self-wheeling arose in a motion filed by FIPUG seeking relief for power interruptions. TECO has 33 customers who receive service under IS-1 and IS-3 rate schedules. These rate schedules are for "non-firm" customers, who have agreed to have their power interrupted in exchange for rates discounted by 54 percent of average retail rates. All of these non-firm customers have also elected a "buy-through" option in which the customers can elect to direct TECO to purchase power on their behalf to avoid actual interruption of service. TECO is the exclusive agent for these buy-through power purchases. FIPUG claimed that in 1999 TECO’s non-firm customers were interrupted on 16 occasions and TECO purchased power on their behalf on 139 occasions. The price for replacement power, FIPUG claims, has reached up to $3,400 per megawatt-hour. The tariff permits TECO to interrupt power to these non-firm customers when the reliability of power for TECO’s firm customers is threatened, but not for "economic" reasons.
FIPUG alleged that TECO interrupted non-firm customers for economic reasons, and also alleged that, because of TECO’s small reserve margin, the FPSC has authority during these periods of curtailment to grant non-firm customers relief enabling them to purchase less expensive substitute power. FIPUG asserted that TECO engages in wholesale power sales at peak times when its non-firm customers are interrupted or exposed to buy-through power costs. TECO contested this assertion, stating that its policy is to not make such sales while simultaneously making buy-through purchases for its non-firm customers, although TECO recognized that some minimal sales may actually occur as a result of concluding pre-existing sales. According to the FPSC staff, the source of the dispute may lie in a contract TECO has to sell wholesale power to the Florida Municipal Power Agency (FMPA). The FMPA contract, scheduled to expire on March 15, 2001, reduced TECO’s reserve margin to near 15 percent. FIPUG requested that the relief it seeks be available until January 1, 2004, when TECO expects to have a reserve margin of 20 percent. The staff found that FIPUG had not satisfactorily demonstrated that TECO interrupted non-firm customers for economic reasons, and denied FIPUG’s request to curtail TECO’s lawful wholesale power sales.
FIPUG also requested that TECO’s non-firm retail customers be permitted to obtain energy from providers other than TECO, either through contracts with other utilities or other power generators. The staff concluded that this would establish retail wheeling, contrary to state law, and would impose a burden on the remaining customers to generate revenue to recover the utility’s fixed costs. The PSC staff did, however, comment that non-firm retail customers could potentially arrange to "shop" for power but still have TECO take title to the power, depending on whether it is feasible in terms of economic, legal, regulatory, operational, and financial factors. The staff also denied FIPUG’s request that the FPSC direct TECO to reduce the buy-through power rate. In support of its recommendation, the staff stated customers may not be relieved of their obligation to pay base rate charges and that the $0.002 per kWh fee added for buy-through purchases is in lieu of other per kWh charges, such as non-fuel energy charges and adjustment clause charges.
The FPSC is scheduled to issue an order reflecting its June 20 vote and decision by July 10, 2000.