ACCELERATED DOCUMENT DISTtuBUTION SYSTEMREGULAT(Q INFORMATION DISTRIBUTIONSTEM (RIDE)

ACCESSION NBR:9310180133 DOC.DATE: 93/10/01 NOTARIZED: NOFACIL:50-389 St. Lucie Plant, Unit 2, Florida Power a Light Co.

AUCH.NAME AUTHOR AFFILIATIONJABLON,R.A. Spiegel & McDiarmid

RECIP.NAME RECIPIENT AFFILIATIONLAMBE,B. NRC — No Detailed AffiliationGiven

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

DISTRIBUTION CODE: Z998D COPIES RECEI|IED:LTR / ENCL / SIZE:TITLE: Antitrust Info Re Reg Guide 9.3

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PLEASE HELP US TO REDUCE WASTE! CONTACT THE DOCUMENT CONTROL DESK,ROOM I'1-37 (EXT. 504-2065) TO ELIMINATEYOUR NAME FROM DIS'I'RII3UTIONLISTS I OR DOCUMENTS YOU DON'T NEEDI

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GKORGE SPIEGEL. PCROBERT Ca MCDIERMIDSANDRA J. STREBKLROBERT A.JABLONJAMES N. HORWOODALANJ. ROTHFRANCES E. FRANCESDANIKLI. DAVIDSONDANlfL J. GUTTMANPETER K. MATTDAVIDR. STRAUSBONNIE S. BLAIRTHOMAS C. TRAUGERJOHN J. CORBETTCYNTHIA Sc BOGORADGARY J. NEWELLRENA I. STEINEORP. DANIELBRUNCRSCOTT H. STRAUSSBfN FINKfLSTKINSTEPHEN M FfLDMANMARGARET A, MDGOLDRICK

SPIEGEL 4 MCDIARMIDI350 NEW YORK AVENUE. N W,

WASHINGTON. D.C. 20005.4798

TELEPHONE I202I 8T9.4000TELECOPIER I202) 393.2866

DAVIDKOLKERLISA G. DOWDENRISE J, PETERSPETER J. HOPKINSRUSSELL F. SMITH, IIIKODWO GHARTKY.TAGOCDAVIDC. POMPERTERESA A. FERRANTEMARK S. HEGEDVS

ASAMUELB. JOHNSONNCVCCA YA OAA ONlY

OF COUNSELROBERT A. SALTKSTEINBRADLEYS. WEISSGVY MARTIN

PHILIP E. CLAPPOOYCCNNCNT ATFAIAS DIACCTOIIINOT A NCNCCA OY TNC SAAI

October 1, 1993C

Mr. Bill LambeUnited States Nuclear Regulatory CommissionOne ophite Flint NOrth11555 Rockville Pike (Mail Stop 12E4)Rockville, Maryland 20852

Re: Florida Power & Light Company (St. Lucie Plant,Unit No. 2) Docket No. 50-389A; Operating LicenseNo. 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 LOCIJudge's hearing notice.

Sincerely,

Robert . Jablon

RAJ/kmsEnclosureCC A'avid R. Raskin, Esq. (w/o enclosures)

9310180133 931001''PDR ADOCK''05000389N 'DR

~6I|9'/i

. 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.

CLiSQTFlorida Power & Light Company ) Docket No. ER93-g~=)0

ORDER NOTING AND GRANTING INTERVENTIONS,ACCEPTING FOR FILING AND SUSPENDING RATES,

AS MODIFIED, AND ESTABLISHING HEARING PROCEDURES

Z.

(Issued September 24, 1993)

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FPL March 19, 1993 Filing at 3-4 (~~g Louisville.Ms«6 Electric Company, 62 FERC $ 61;OXS.;.(1993); gntez~ o„..~

1 llCooperative, Znc,. +-~ v:= FERC";-"Sos. 92-1461,(D.C.'i'r. filed October'23,- 1992)9=.

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However, FPL's taeiff differs from the tariffs appgaved.forEntergy Services,. Znc. {~~), 58 FERC 5 61,234 {1992),and Northeast Utilities Sexvice Company (Re: Public ServiceCompany of New Hampshire)( ), 62 FERC61,294 (1993), particularly in that it does not assure that'irm service will be as 'fixm as:native. load...-. Zntergy~and,«Northeast Utilities were found to possess or be gainingmarket power and their tariffs were 'required as a conditionfor approving market-based power sales and a merger,respectively. FPL has not prepared a maxket power analysisin this case and the tariff accepted for filing and set for

(continued...)

gt g« ~

On March 19, 1993, as completed on July.26, 1993, FloridaPower 6 Light Company (FPL) filed an extensive and comprehensiverate filing designed to overhaul FPL's existing tariff structure.These rate change filings include unilateral changes to FPL'sexisting wholesale'electxic service'ariff (Florida Power & LightCompany, FERC Electric Tariff, First Revised Volume No. 1), FPL'sinterchange contracts, certain specified transmission serviceagreements and related rate schedules with various wholesalecustomers. FPL's filing also includes new "open-access" tariffsthat are available to all other utilities and generators for bulkpower wholesale transmission services. According to FPL, the"centerpiece of FPL's filing is its offering of firm and non-firmwholesale transmission services puxsuant to the rates, terms andconditions equivalent to those that the Commission has deemedadequate in recent orders to mitigate transmission market powerin wholesale bulk power markets." ~

~ ~

Docket No. ER93-465-000 -2-

."»or the following reasons, we will accept FPL's proposedrates (as modified) for filing, suspend them for five months, tobecome effective February 26, 1994, subject to refund, and setthem for heari'ng. We do not set for hearing certain policyquestions identified in FPL's filings and responsive pleadingsconcerning issues that have never been addressed explicitly bythe Commission or that advance new arguments in order to overturnexisting precedents. Given the breadth of FPL's filing and theintexventions, and,,the need to act on FPL's filing within the 60-day statutory period, the Commission will issue a supplementalorder in this proceeding addressing, the policy issues, discussedbelow.

A.

KIUIIIIII ~ ~

Unlike other tariff filings which, while complex, addresseda single subject, FPL's filing completely restructures its entirebusiness relationship with all of its Florida customers. FPL'samended filing contains the followi'ng: (i) Transmi'ssion ServiceTariff Nos. 1, 2 and 3; (ii) amendments to each of FPL'sAgreements to Provide Specified Transmission Service; (iii) anAmendment to the Agreement to Provide Coordination TransmissionService and Additional Transmission Service between FPX and theUtilityBoard of the City of Key Nest, Florida (Key Nest)(Coordination Transmission Agreement); revised Wholesale ElectricService Tariffs for"partial requirements and full requirementsservice; (v) revised Attachments A and B to the Aggregate BillingPartial Requirements Sexvice Agreement between FPL and SeminoleElectric Cooperative, Inc. (Seminole); (vi) amendments to theSexvice Schedules in each of FPL's interchange contracts; (vii)cost support information; and;(viii) prepared'iiect testimony ofFPL witnesses describing the items above. Each of the tariffsand amendments is discussetf" separately. below.: -'

r e ~ ~ 'Qq~

CCb ~

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

It

1/(...continued)"..earing has not been'valuated to mitigate 'any market powerthat FPL may have'. J~i~, American Electric Power ServiceCorporation (M), Docket No. ER93-540-000, 64 FERC $61, (1993), mimeo at 1, n. 2.

Docket No. ER93-465-000 -3-

Federal Power Act, or are legally exempt from such regulation.The tariff also provides t."at ultimate consumers are not eligiblefor transmission service.,

In order to request service, the customer must submit arequest for transmission service giving certain information aboutthe requested service, including a deposit equal to two

months'erviceunder the tariff. Requests will be evaluated on a first-come, first-serve basis and FPL will make an initial evaluationas to the availability of transmission capacity within 60 days ofthe date of. the request. If the initial evaluation indicatesthat sufficient transmission capacity is available without theneed for grid upgrades, construction of direct assignmentfacilities, or the incurrence of opportunity costs, FPL willtender a service agreement to the customer. If the initialevaluation indicates that there is not sufficient transmissioncapacity available without construction of grid upgrades, directassignment facilities, or incurrence of opportunity costs, FPL-will prepare a system study. FPL will tender a study agreementwithin 20 days of the date of the initial evaluation settingforth the estimated cost of a system study. The system studywill be completed within 60 days (when the application does notinvolve a new generating facility) or 120 days (when theapplication involves a new generating facility) unless FPLnotifies the customer that it is unable to complete the systemstudy within that period, in which case FPL will provide a newestimate of the completion date. The tariff also provides that acustomer may elect to delay the commencement of service for up to3 years by paying a reservation fee equal to one month'stransmission charge for each year, or fraction of a year, thecustomer 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 theservice. FPL states that, wj.th 'respect to 'opportunity costs, itwill define and'alculate'CIie opportunity costs in accordancewith the Commission's rules '.and policies governing the recoveryof opportunity'costs (includ'ing the policies requiring themaintenance of records and reporting. of such„.costs) in effect atthe time FPL seeks recovery 'oX oppor'tunity costs. However, FPLproposes to determine the higher of opportunity costs or averagecosts on an hourly basis. FPL also proposes that opportunitycosts will not be subject to an expansion co'st ceiling when FPL's in the process of removing the constraints giving rise to theopportunity costs or, despite good faith efforts, is unable toal'viate the constraints.

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

Docket No. ER93-465-000 645480average system production costs, if the customer is billed fortransmission service based on average system transmission costs;or (2) 110% of FPL's incremental costs of fuel plus the cost ofany purchased power expenses incurred to provide the energylosses and the capacity costs of FPL's non-nuclear generationfacilities and purchased power resources, if the customer is notbilled for transmission service on the'basis of average systemtransmission costs. FPL also proposes to recover: (1) costsassociated with reactive power (kVARS) through a formula ratethat, based on 1991 data, results in a charge of $ .24/kW/month;(2) a customer charge of $ 650 per month; and (3) the Commission'sannual charges associated with the sezvice.

b.

Under the short-term firm tariff, FPL will provide servicefor periods of from one day to one year. Once the customer 'hasentered into a service agreement, the customer may request short-term service up to one hour in advance for service of one day, upto 24 hours in advance for service of more than one day and lessthan seven days and up to fifteen working days in advance forservice of seven days or more. A deposit is only required fozservice of 2 months or longer, in which case the deposit is equalto the rate for one month's service. Requests will be processedon a first-come, first-serve basis.

FPL proposes a formula average system transmission ratewhich, based on 1991 costs, results in a charge of$ 1.75/kW/month. FPL also proposes to recover opportunity costsas defined and determined in accordance with the Commission'srules and policies in effect at the time FPL seeks recovery ofopportunity costs, but proposes to assess the higher ofopportunity costs or the average system transmission rate asdetermined on'n hourly basis without an expansi'on cost cap onopportunity costs. FPL also proposes to recover 1 mill/kWh fordifficult to quantify costs in addition to the higher of theaverage system transmission cost rate or opportunity costs. FPLalso proposes to charge for losses, kVARS, and the Commission'sannual charges on the same basis as discussed above for the long-term firm transmission tariff.

c

The tariff provides for non-firm transmission service forperiods of one hour to one year. Once the customer has enteredinto 'a service agreement, it must schedule non-firm service atleast 15 minutes prior to the commencement of a transaction ofone hour, at least one hour prior to commencement of atransaction for one hour to one day, at least 24 hours prior toco.-.~encement of a transaction of one day but less than 7 days,and at least 15 days prior to commencement of a transaction for 7days or more. The customer must also give FPL a description of

'Docket No. ER93-465-000 -5-

the proposed transaction including the buyer's avoided cost, theseller's incremental cost, and the pricing of the underlyingpower sale.

(

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

2. Whol a P w T riFPL proposes to amend its wholesale full and partial

requirements power tariff to include formuly. rates consisting ofon-peak and off-peak fuel charges, variable operational andmaintenance (O&M) charges, demand'harges, and a stated customercharge of $ 412 per month per delivery point for full requirementsservice and $ 1,345 per month per delivery point for partialrequirement service. The results of the demand charge componentof the formula rates based on 1991 data are $ 15.46/kW/month forcustomers taking service at transmission level voltage and$ 17.43/kW/month for customers taking service at distributionlevel voltage.

3. Aggregate Billing Partial Requirements ServiceA

FPL proposes to amend its PR Service Agreement with Seminoleto include formula rates which include on-peak and off-peakenergy charges, a variable 0&M charge, a demand charge, and astated customer charge of $ 412 per month per delivery point witha delivery voltage of less than 69 .kV,and $ 1,557 per month perdelivery point with a voltage of 69 kV..or higher. The demandcomponent of the formula results in demand, charges of$ 15.46/kW/month for delivery at .69. kV.or„higher and$ 17. 55/kW/month .for delivery at .lesa than 69,kV.

rt')~ ~ ~10 t4a~'a . 4 *

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FPL has filed revised.tran's'mission ~tes fox; service underits transmission agreements with 20:customeis which incorporatethe same formula rates as proposed under FPL's short-term firm

2/ Or at the customer's option, „one Naif of the differencebetween the seller's incremental costs and the seller'charge to the buyer or one half of the difference betweenthe buyer's avoided costs and the seller's charge to thebuyer.

Docket No. ER93-465-000 -6-

transmission tariff and non-firm transmission tariff discussedabove'. g/

FPL has filed revised rates under its interchange contractswith 20 customers which incorporate formula rates for emergency,scheduled maintenance, and outage interchange services. Foremergency services, FPL proposes to charge the higher of: (1) anenergy charge based on its incremental costs (110% of theincremental fuel costs or the purchased power costs incurred toprovided the service) and demand charges for a minimum of onemonth based on the non-levelized costs of FPL's peakingresoUrces; or (2) 100 mills/kWh. For scheduled maintenanceservice or outage interchange service, FPL proposes an energycharge equal to its incremental costa plus a .formula demandcharge reflecting the average demand costs of FPL's non-nucleargeneration 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 publishedin the Federal Register, 58 Fed. Reg. 17,884 (1993) and 58 Fed.Reg. 43, 869 (1993), with comments, protests and motions tointervene due on or before August 24, 1993.

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

g/ In Docket'No. ER93-922-000, FPL filed revised ratesincorporating formula rates for seven long-term transmissionagreements with various customers. Also, in Docket No.EL93-40-000, the Florida Municipal Power Agency filed acomplaint alleging that the existing rates in the long-termtransmission agreements are excessive. These proceedingsare pending and will be addressed in subsequent orders.

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

Docket No. ER93-465-000 -7-MG483

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 theOrlando Utilities Commission (Orlando) filed respective motionsto intervene.

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

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

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

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

On August 24, 1993, Florida Industrial Power Users Groupfiled a motion to intervene. Also on August 24, 1993, theFlorida Cities, Florida Power, Seminole and Smyrna filed protestsof 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 areinconsistent with the derivation of the unit charges; (2)excessive return on equity; (3) use of rolled-in distributioncosts to calculate the distribution charges'rather'than directlyass'igning "5istribution costs'('4) unsupported transmission anddistribution loss factors.; (5) 'unsupported 'calculations ofreve'nue credits; (6) incorrect billing determinants used incalculating present and proposed revenues; (7) improperdevelopment of the on-peak and off-peak energy charges; (8)inclusion of retail regulatory commission expenses, industryassociation dues, and general research expenses; (9) unsupportedadjustments to certain booked expenses for formula rate

g/ Florida Cities include the 'Florida Municipal Power Agencyand its members which conduct business'with FPL.

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

Docket No. ER93-465-000 -8-

computations; (10) recovery of decommissioning expenses underformula rates without the requirement to file reviseddecommissioning studies; (11) overstatement of costs supportingthe proposed customer charges; (12) determination of the higherof the average system transmission rate or opportunity costs onan hourly basis; (13) excessive kVAR charges, espec'=-lly where acustomer supplies kVARs; (14) inconsistency in the pricing of theenergy charge and the demand charge for interchange services;(15) failure to cap opportunity costs at the cost to expand thesystem to alleviate the constraint; (16) failure to fully define

, opportunity cost calculations in .light of the fact FPL statesthat the opportunity cost calculations are contained in software,that is confidential; (17) failure to include a "but for" test incalculating expansion costs; (18) excessive deposits; (19)improper treatment of certain costs in the formula rates such asgeneral plant, AaG expenses and property insurance; (20) pricesqueeze since only the wholesale customer will be subject toformula rates and retail, customers will not be subject to formularates; (21) failure to normalize extraordiaary costs in theformula rate; (22) vague definition of the equity component ofthe formula; (23) inclusion of the cost of reserves in the ratefor non- firm service; (24) excessive cash worki'ng capital; (25)lack of a provision for Commission review of FPL's depreciationand amortization costs in the formula rates; (26) unsupportedincome tax component in the formula rates; (27) excessivepurchased power costs in the interchange contracts; and (28)inclusion of Account 565, Transmission by Others, in thetransmission charges.

2. ~ ~

Entervenors allege that many of the terms and conditions areunjust and unreasonable, for example: (1) the requirement toschedule certain services up to 15 days in advance; (2) theminimum one-month term for outage services; (3) a requirementthat customers must purchase losses from FPL rather thanproviding losses themselves; (4) unavailability of outageservices when the outage involves a transmission facility; (5)resale restrictions; (6) the minimum reliability and reserverequirements; (7) five-year notice requirement for new deliverypoints under the wholesale power tariff and the PR ServiceAgreement; (8) overly broad provisions for interruption; (9)inclusion of system failures for unscheduled outage in thedefinition of force majeure; (10) because transmission dependentutilities (TDU) have been contributing to FPL's average systemtransmission costs, TDUs should be protected from having to payrates based on opportunity costs or expansion costs under the

'ocket No. ER93-465-000 -9-

long-term transmission tariff; 7/ (11) failure to include theNuclear Regulatory Commission (NRC) License conditions in thetransmission tariff; (12), failure to include network transmissionservice; (13) inclusion of generation and distribution strandedinvestment 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) limitationon changes in contract ldemands; (18) failure to ensure that FPLfull'y, responds to all requests within 60 days so that a requestfor service under the tariff will be considered a "good faith"request pursuant to section 211 of the FPA, as amended by theEnergy Policy Act of 1992; (19) failure to include an electronicbulletin board; (20) failure to "unbundle" the various services;(21) failure of FPL to abide by the terms apd conditions of thetariffs when it makes off system sales; and (22) the terms andconditions contained in FPL's proposal adversely affectcompetition for wholesale bulk power in peninsular Florida.

3.

Intervenors also allege that the proposal requires thefollowing clarifications: (1) whether billing errors involvingthe formula rates will be subject to refund; and (2). if FPL fileswith the Commission a proposal to recover additional costs in theformula rates prior to the annual true-up, whether the inclusionof these costs will be effective for the entire period subject tothe true-up.

C. o v

On September 8, 1993, FPL filed an answer toIntervenors'otionsto intervene and requests for.-'relief. In its answer, FPL

consented to the following clarifications in its proposal:C

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

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

rights;*J/-"c.=')7

fd. ~ ag — ~

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'/In E'

63 FERC $ 61,025 (1993), wherethe customers argued that TDUs should be protected fromrates based on opportunity costs or expansion costs, theCommission stated that there may be no expansion requiredwhen an existing customer signs a new contract because, forexample, the load is already being served by the system.The Commission explained that disputes about assignment ofexpansion costs to any customer, including TDUs, may bebrought to the Commission. 63 FERC at 61,148.

8/ FPL Answer at 104.

Docket No. ER93-465-000 -10- GCG486(2) FPL has no objection to clarifying that "to establish a

new delivery point" in Section 2(a) of the PR ServiceAgreement means "to establish a new delivery pointunder the [PR Service Agreement] "; g/

(3) FPL does not object to including a provision requiringFPL to prorate bills when meters are not read within a27-33 day window; Q/

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

(5) , FPL does not object to a requirement to file undersection 205 of the FPA any changes in itsdecommissioning expenses; ~

(6) FPL does not object to correcting an inadvertent dataerror which resulted in certain acquisition costs beingincluded in the formula rates proposed for transmissionand requirements service; ~ and

(7) FPL does not object to correcting an inadvertent errorwhich resulted in certain retail costs being includedin the formula rates proposed for transmission andrequirements service. ~/

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

D. V

On June 21, 1993, Florida Cities filed a motion for adiscovery order in this proceeding. Florida Cities state that inthe course of discovery conducted during their civil litigationagainst FPL, ~/ Florida Cities have discovered significantdamaging 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 LightCompany, M.D. Fla., Case No. 92-35-Civ-3A22.

'Docket .No. ER93-465-000 -11-

intervenors in this proceeding and also present as evidence tothe Commission. However, under an agreement with FPL, FloridaCities are prohibited from doing so. Florida Cities thereforerequest that the Commission either: (a) order that all relevantdocuments produced to Florida Cities in the district court casebe produced in this proceeding; or (b) order FPL to producedocuments in response to data requests attached to FloridaCities'otion.

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

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

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

A.

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

=2 ~ v

-„. „-. The Commission will deny Florida Cities'otion for adiscovery 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~Commission .sets specific issues for hearing. ~/...As statedabove, because the Commission plans to set FPL's proposal forhearing, Florida Cities and other intervenors will be free toengage in discovery on these issues to the extent permitted byour regulations and the presiding judge.

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

17/ ~, ~, Entergy Services Inc. and Gulf States Utilities61,001 (1993).

Docket No. ER93-465-000 -12- Q548SB. on 'd ~grinThe Commission's preliminary analysis of FPL's filing and

responsive pleadings indicate that the proposed'ates have notbeen shown to be just and reasonable, and may be unjust,unreasonable, unduly discriminatory or preferential, or otherwiseunlawful. Accordingly, the Commission will accept FPL's rates,as modified to reflect the clarifications set forth in itsSeptember 8 answer, for filing and suspend them as outlinedbelow.

In W xa i ' o , 18 FERC $ 61,189 (1982), weexplained that when our preliminary analysis indicates thatproposed rates may be unjust and unreasonable, and may be

lid *, dgenerally impose a maximum suspension. As our preliminaryanalysis indicates that FPL's proposed rates, as modified, mayproduce substantially excessive revenue, we will suspend theproposed rates for five months. Accordingly, we will acceptFPL's proposed rates for filing, suspend them for five months, tobecome effective on February 26, 1994, and set them (with theexception of various policy issues identified below) for hearing.

C. P

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

(1) whether transmission customers should be prohibitedfrom charging an assignee a higher price than theamount originally paid by the transmission customer tothe utility;

(2) whether a utility should be permitted to compute a ratefor firm transmission opportunity costs equal to thehigher of embedded or opportunity costs on an ggJg --.as opposed to the life-of the-transaction -- basis;

(3) whether a utility should be permitted to eliminate theexpansion cost cap required by w cr wdl ', Ishort-term transactions if construction is not afeasible option;

Docket No. ER93-465-000 -13dp

(4)

(6)

(7)

whether a utility can withhold consent from partialrequirements customers to resell energy purchased underthe utility's tariff to other entities pursuant to anyeconomy sale, coordination sale or similar transactionunless the utili'ty' incremental cost in that hour isexpected to be equal to or less than the energy chargeunder the tariff; and, if not, whether this is anefficient allocation of resources;

the circumstances, if any, under'which a utility maydepart from the standard set forth in~i 61 FERC f 61 ~ 339 (1992)

c~, No. 93-1165 (D.C. Cir. filed Feb. 11, 1993),for calculating the appropriate divisor to use indeveloping non-customer-specific rates;the circumstances, if any, under which a utility may~ p d P d d d P

w 38 FERC f 61,275,40 FERC f 61,236 (1987), and develop hourly

rates to reflect the potential for full hoursutilization; and

the circumstances, if any, under which a utility maydepart from the requirement set forth in ~~

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

p w

ln a section 205 filing, the Commission must find that theproposed rates, terms and conditions of transmission service arejust, reasonable and not unduly discriminatory or preferential.Zn addition, as the United States Supreme Court has stated; the

~ Ccmmission's "important and broad regulatory power ... clearly

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

D.V

p d

A.major issue =raised in this filing concerns competition andthe degree to which the terms and conditions contained in FPL'sfiling, taken as a whole, restrict competition. Zntervenors haveclaimed that there are anticompetitive effects inherent in thefiling. ~/

Ql/ TECO at 2 and Seminole at 119-122, 130-134.

Docket No. ER93-465-000 -14gp 645430'arrieswith it the responsibility to consider, in appropriate

circumstances, the anticompetitive effects of regulated aspectsof interstate utility operations pursuant to 55 202 and 203, andunder like directives contained in 55 205, 206, and 207."

v >, 411 U.S. 747 at 758-59 (1972) . Withenactment of the Energy Policy Act of 1992 and its implicationsfor competition in wholesale power markets, anticompetitiveallegations take on added significance.

The Commission wishes to encourage competitive bulk powermarkets and would not look favorably upon rates, terms orconditions of service that diminish such competition. The issueof whether FPL's filing will have anticompetitive effects on thewholesale bulk power market in penisular Florida is thus properlya subject of this hearing.

The parties may pursue at hearing all other issues (with oneexception) raised in FPL's filing and the responsive pleadings.The one exception is the argument raised by Florida Cities thatthe rates are unjust and unreasonable because they do not providefor network service. ~ In this regard, Florida Cities arguethat FPL must provide network service because: (1) it iscomparable to the service FPL provides itself; and (2) FPL'sNuclear Regulatory Commission License conditions require networkservice. However, the Commission notes that these same issuesare also raised by Florida Cities in Docket Nos. EL93-51-000 andTX93-4-000 ( w 'V w

hhh p hyp dd ~ P hCommission. The Commission believes that it is more appropriateto address these issues in Docket Nos. EL93-51-000 and TX93-4-000and not in this proceeding.

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

(B) Intervenors'otions for preliminary discovery arehereby denied without,prejudice for the reasons stated in thisorder..

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

~1 / Other Intervenors argue that the, tariff shouldto include network service. As the Commission~KP, ~us~, FPL 's free to limit its voluntarypo'nt-to-point service and parties may requestCommission order network service under sectionFPA.

be expandedexplained intariff tothat the211 of the

Docket No. ER93-465-000 -15-

(D) pursuant to the authority contained in and subject tothe jurisdiction conferred upon the Federal Energy RegulatoryCommission by section 402 (a) of the Department of FnergyOrganization Act and by the Federal Power Act,, particularlysections 205 and 206 thereof, and pursuant to the Commission'sRules of Practice and Procedure and the Regulations under theFederal Power Act (18 C.F.R. Chapter I), a public hearing shallbe held concerning the justness and xeasonableness of FPL'sproposed rates. The hearing shall not consider the policy issuesraised in FPL's filing and identified in the body of this order..

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

(F) The Commission's trial staff is hereby directed toserve top sheets within fifteen (15) days of the date of thisorder.

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

(H) The Commission hereby orders initiation of pricesqueeze procedures and further orders that this proceeding bephased so that price squeeze procedures begin after issuance of aCommission opinion establishing a rate which, but forconsideration of price squeeze, would be just and reasonable.The presiding judge may modify this schedule for good cause. Theprice;squeeze portio'n of this case shall be 'governed by the

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

':."::prior''o the initi'ation of %he price -squeeze jihase of thisproceeding.

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

By the'ommission.

(SEAL)Linwood A Watson, Jr.,

Acting Secretary.

k

Mme"..

'f

UBITED STATES OF AMERICAFSDERAL 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 onOctober 21, 1993 at, 10:00 A.M. in a Commidsion hearing room todiscuss the issues set for hearing and to establish a trialschedule 1/ similar to that reflected by my order in SouthernNatural Gas Company, 58 FERC $ 63,027 (1992)g/. The trialschedule also will provide for the filing by the company ofsupplemental direct testimony on the competition issues set forhearing and those "clarifications" that the company has agreed tomake to the revised rates that bear on the cost of service issuesset for hearing. The trial schedule also will include dates fororal argument on discovery disputes under the discovery deadlinesof the trial schedule.

Well in advance of the prehearing conference, I expect theparties and Staff to exchange trial schedule proposals and torefine those proposals at the Top Sheet conference informallyconvened by Staff to discuss its Top Sheets and any otherproposals for settlement of the case. I also expect the partiesand Staff to exchange proposals for an appropriate protectiveorder and to seek to resolve any differences at the Top Sheetconference convened by the Staff.

The company promptly shall provide me with two copies of itstariff filing and narrative summaries of the pre-filed directtestimony and exhibits which denote the material points set forthin the testimony and supporting exhibits by page and linereferences and exhibit nu s.

;P

Bruce L. BirchmanPresiding Administrative Law Judge

1/ A proposed trial date shall avoid a calendar conflict with myApril 4, 1994 hearing in Docket No. RP85-177-102, Texas EasternTransmission Company. That hearing may require a month or more.

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