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Customers Protest Florida Gas Transmission Rate Hike Proposal

Several municipal electric and natural gas utilities in Florida have asked FERC to suspend a proposal by Florida Gas Transmission Co. LLC (FGT) to raise its rates and generate more than $64 million in additional annual revenue. 

In a filing last month, FGT proposed combining two of its rates -- Rate Schedule FTS-2 Incremental and FTS-1 Non-Incremental -- and increases to a third, FTS-3 (No. RP15-101). The company also asked the Federal Energy Regulatory Commission (FERC) to approve proposed discount adjustments and asset retirement obligations.

On Wednesday, Florida Cities filed a motion with FERC to intervene and protest to suspend the rate filing for a maximum five-month statutory period, and to schedule to a full evidentiary hearing. Florida Cities includes JEA, the Orlando Utilities Commission, Lakeland Electric, the City of Tallahassee, the City of Gainesville (doing business as Gainesville Regional Utilities) and Florida Gas Utility, a Florida inter-local agency whose membership currently includes more than 20 municipally owned electric and/or gas utilities.

Florida Cities argued that the rate changes proposed by FGT are unreasonable. Specifically, the customers said FGT hasn't satisfied the requirement that it justify all cost-of-service increases.

The cities noted that “FGT alleges a system-wide overall cost-ofservice of approximately $940 million which represents an increase of approximately $434 million or 46% over the cost-of-service established in the settlement in FGT’s last rate case.”

"According to FGT, one of the main reasons for the increase in its cost-of-service is a 'substantial' increase in gas plant since its 2010 rate case, with the inclusion of the Phase VIII Expansion Project facilities," Florida Cities said in its filing. "FGT claims that the over 24% proposed increase in total net gas plant reflects expansions for new customer load on its incremental facilities, substantial capital investment needed to comply with federal pipeline safety requirements, and costs associated with expansions and improvements required by the Florida Department of Transportation. The commission should thoroughly investigate all of the elements of FGT's projected end-of-test period net plant."

Florida Cities also wants FERC to investigate FGT's proposed roll-in of Rate Schedule FTS-2 into FTS-1, and whether FGT has proposed to transfer any costs that should have been assigned to FTS-3 to FTS-1 and FTS-2. The customers also want a hearing to examine depreciation rates, rate of return and discount adjustments.

Although the customers are not seeking a technical conference over FGT's numerous proposed tariff changes, Florida Cities wants a hearing with full discovery to discuss several issues -- an alert day, daily scheduling penalties, maximum hourly entitlements, fuel recovery, pathing requirements, gas quality changes and creditworthiness.

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