before the federal energy regulatory commission docket no. er10 … · 2010. 8. 12. · docket no....

BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

DOCKET NO. ER10-2061-000

DIRECT TESTIMONY AND EXHIBITS

OF

JOANN T. WEHLE

AMENDED: AUGUST 12, 2010

TAMPA ELECTRIC COMPANY DOCKET NO. ER10-2061-000

EXHIBIT NO. TEC-300 FILED: 07/30/2010 AMENDED: 08/12/10

JOANN T. WEHLE 1

DIRECT TESTIMONY AND EXHIBIT INDEX 2

3

INTRODUCTION..................................................1 4

Qualifications ..........................................1 5

Purpose of Testimony.....................................2 6

60-DAY NOTIFICATION TO THE TARIFF CUSTOMERS...................3 7

CHANGES TO RATE DESIGN AND BUNDLED SERVICE....................4 8

CHANGES TO TITLE AND COMMERICAL TERMS OF THE TARIFF...........9 9

CHANGES TO THE SERVICE AGREEMENTS............................12 10

The Service Agreement With Wauchula.....................12 11

The Service Agreement With St. Cloud....................18 12

The Service Agreement With PEF..........................23 13

CONCLUSION...................................................26 14

EXHIBITS ...................................................38 15

16

Exhibit No. Description 17

TEC-301 Competitive Yardstick Results - Wauchula 18

TEC-302 Load Factor – Tariff Customers 19

20

21

22

23

24

25



BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION 1

PREPARED DIRECT TESTIMONY 2

OF 3

JOANN T. WEHLE 4

5

INTRODUCTION 6

Q. Please state your name, title, and business address. 7

8

A. My name is Joann T. Wehle. I am employed by Tampa 9

Electric Company (“Tampa Electric” or “Company”) as 10

Director of the Wholesale Marketing and Fuels 11

Department. My business address is 702 N. Franklin 12

Street, Tampa, Florida 33602. 13

14

Qualifications 15

Q. Please provide a brief outline of your educational 16

background and business experience. 17

18

A. I received a Bachelor's of Business Administration 19

Degree in Accounting in 1985 from St. Mary's College, 20

South Bend, Indiana. I am a CPA in the State of Florida 21

and worked in several accounting positions prior to 22

joining Tampa Electric. I began my career with Tampa 23

Electric in 1990 as an Auditor in the Audit Services 24

Department. I became Senior Contracts Administrator, 25



2

Fuels in 1995. In 1999, I was promoted to Director, 1

Audit Services and subsequently rejoined the Fuels 2

Department as Director in April 2001. I became 3

Director, Wholesale Marketing and Fuels in August 2002. 4

I am responsible for managing Tampa Electric’s wholesale 5

energy marketing and fuel-related activities. 6

7

Purpose of Testimony 8

Q. Please state the purpose of your testimony. 9

10

A. The purpose of my testimony is to describe the changes 11

Tampa Electric proposes to make to: (1) its Requirements 12

(AR-1) Tariff (“AR-1 Tariff”), to be renamed the 13

"Wholesale Requirements Tariff" (“Tariff”);and (2) the 14

three service agreements under the Tariff with the City 15

of St. Cloud (“St. Cloud”), the City of Wauchula 16

(“Wauchula”), and Florida Power Corporation, d/b/a 17

Progress Energy Florida, Inc. (“PEF” or “FPC”), 18

respectively (individually, “Service Agreement”, and 19

collectively, “Service Agreements”). 20

21

Q. When will these proposed changes take effect? 22

23

A. Tampa Electric proposes that the changes take effect as 24

of October 1, 2010. 25



3

Q. Have you prepared exhibits to support your direct 1

testimony? 2

3

A. Yes. I have prepared the following Exhibits: 4

Exhibit No. TEC-301 Competitive Yardstick Results - 5

Wauchula 6

Exhibit No. TEC-302 Load Factor – Tariff Customers 7

8

60-DAY NOTIFICATION TO THE TARIFF CUSTOMERS 9

Q. Was Tampa Electric required to provide advance 10

notification to its Tariff Customers of this FPA Section 11

205 filing? 12

13

A. Yes, Tampa Electric was required to provide a written 14

pre-notification of this Section 205 filing to the 15

following Tariff Customers: 16

• Wauchula - Per Section 3(b)of the Service Agreement 17

with Wauchula, Tampa Electric was required to 18

provide at least 60 days before filing a “… written 19

notice of the filing and the specific points 20

addressed in the proposed changes …”; 21

• St. Cloud - Per Section 3(b) of the Service 22

Agreement with St. Cloud, Tampa Electric was 23

required to provide at least 60 days before filing 24

a “… written notice of the filing and the specific 25



4

points addressed in the proposed changes …”. 1

2

Q. Was Tampa Electric required to provide PEF with 60 days’ 3

pre-notification before this filing? 4

5

A. No. The Service Agreement with PEF does not include 6

such a provision. 7

8

Q. Did Tampa Electric provide its required 60-day pre-9

notifications to representatives of Wauchula and St. 10

Cloud by May 31, 2010? 11

12

A. Yes. Tampa Electric provided written pre-notification 13

to representatives of Wauchula and St. Cloud, which was 14

delivered on May 28, 2010. Though not required as 15

mentioned above, Tampa Electric provided similar written 16

pre-notification on the same date to representatives of 17

PEF. In addition, during that same week in May 2010, 18

representatives of Tampa Electric met with 19

representatives of these three parties individually to 20

explain the proposed changes expected to be in this 21

Section 205 filing. 22

23

CHANGES TO RATE DESIGN AND BUNDLED SERVICES 24

Q. Please describe the proposed changes to the rate design 25



5

under the Tariff. 1

2

A. Tampa Electric proposes to modify the Tariff rates from 3

fixed, stated rates to a cost-of-service formula rate 4

that will be adjusted annually based on the actual costs 5

of providing service to these customers. The formula 6

rate will be administered according to protocols that 7

provide the timeline and procedures for the annual 8

update, customer review, and informal and formal 9

challenges. The formula rate and protocols are 10

described and supported in the testimony of Tampa 11

Electric witness Alan C. Heintz. 12

13

Q. Why is Tampa Electric proposing to adopt a formula rate? 14

15

A. Adoption of a formula rate will allow Tampa Electric to 16

reflect changes in its production-related revenue 17

requirement, and thereby recover the costs of providing 18

wholesale requirements service, on a more timely basis. 19

The timely recovery of costs will support the 20

construction, operation, and maintenance of needed 21

generation facilities and compliance with related 22

environmental requirements, and will thereby help to 23

ensure the reliability of Tampa Electric’s service to 24

its requirements customers. The formula rate will track 25



6

both increases and decreases in costs, thus preventing 1

the under- or over-recovery of costs, avoiding the need 2

for resource-intensive stated rate change proceedings, 3

and providing requirements customers with pricing 4

information that more accurately reflects the current 5

cost of the services they are receiving. 6

7

Q. How does Tampa Electric propose to treat fuel expenses 8

in the formula rate? 9

10

A. Under the proposed new rate structure, Tampa Electric 11

will recover fuel expenses through the formula rate on a 12

monthly basis and eliminate the current wholesale fuel 13

adjustment cost recovery clause. Therefore, the Tariff 14

customers will be billed for actual fuel expenses each 15

month. The formula rate Schedule A-2.1, shown in Mr. 16

Heintz’s Exhibit No. TEC-102, is a worksheet that will 17

be used to calculate the monthly fuel charge. The 18

wholesale fuel adjustment clause over/(under) recovery 19

balances, as calculated under the existing rate 20

structure at the time of the transition to the formula 21

rate, will be refunded or charged to the customers 22

during the course of the initial partial rate year. 23

24

Q. What changes to the Tariff Contract are proposed to give 25



7

effect to the adoption of a formula rate? 1

2

A. The existing stated rates in Sections 2.2(A) and (B) of 3

the Tariff will be replaced with references in Section 4

2.1 of the Tariff to the formula rate template and 5

formula rate implementation protocols to be included in 6

Appendix A and Appendix B, respectively, of the Tariff. 7

The existing fuel adjustment clause provisions contained 8

in Section 2.2(C) of the Tariff will be removed. . 9

10

Q. Please describe the proposed changes to the bundled 11

services under the Tariff. 12

13

A. Tampa Electric proposes that the Tariff rates, which are 14

currently bundled, be unbundled when the new rates take 15

effect. The formerly bundled transmission services on 16

Tampa Electric’s system will be provided under the 17

Company’s Open Access Transmission Tariff (“OATT”). 18

Tampa Electric will be the transmission customer of 19

record under the Company’s OATT for the services needed 20

on Tampa Electric’s system to deliver power under the 21

Service Agreements. Tampa Electric will bill all 22

current and future Tariff Customers, as applicable, for 23

any direct or third-party transmission service costs 24

incurred to deliver power under the Tariff’s Service 25



8

Agreements, including the costs of ancillary services 1

and losses. 2

3

Q. Why is Tampa Electric proposing to unbundle the services 4

under the Tariff? 5

6

A. Tampa Electric proposes to unbundle the services under 7

the Tariff because doing so will allow the Company to 8

recover on a more complete and timely basis the full 9

cost of the transmission services associated with these 10

wholesale sales. In order to serve these wholesale 11

sales, firm transmission capacity must be set aside on 12

Tampa Electric’s system at a level commensurate with the 13

sales. Unbundling the rates will ensure that the full 14

cost of that capacity, as reflected in the rates under 15

Tampa Electric’s OATT and passed through to the Tariff 16

customers, will be included in the assessed charges on a 17

transparent and non-discriminatory basis. 18

19

Q. What changes to the Tariff are proposed to give effect 20

to the unbundling of services? 21

22

A. The proposed formula rate will not recover transmission-23

related costs. In the Tariff, new language is proposed 24

for inclusion in Section 2.2 to the effect that Tampa 25



9

Electric will be responsible for obtaining the 1

transmission and ancillary services reservations on its 2

own transmission system that are necessary to render 3

service under the Tariff, and that Tampa Electric’s 4

charges to the customer for services under the Tariff 5

each month will include the costs billed to Tampa 6

Electric under its OATT for the services obtained to 7

effect sales to the customer under the Tariff. 8

9

CHANGES TO TITLE AND COMMERCIAL TERMS OF THE TARIFF 10

Q. Does Tampa Electric propose any other changes to the 11

Tariff? 12

13

A. Yes. In order to conform the title of the Tariff to 14

more conventional usage, Tampa Electric proposes to 15

change the title from “Rate Schedule AR-1 – All 16

Requirements (Full or Partial Requirements)” to 17

“Wholesale Requirements Tariff.” Tampa Electric also 18

proposes some changes to the terms and conditions of the 19

Tariff to reflect current commercial practices and 20

Commission policy. 21

• Tampa Electric proposes to revise Section 1.2 22

(Available Points of Delivery) of the Tariff to 23

provide that service under the Tariff will be 24

subject to the availability of necessary 25



10

transmission and ancillary services on Tampa 1

Electric’s transmission system and the systems of 2

other utilities, and that title and risk of loss 3

with respect to electric capacity and energy sold 4

under the Tariff will pass from Tampa Electric to 5

the customer at the specified points of delivery 6

detailed in the Service Agreement. 7

• Tampa Electric proposes to revise Section 1.6 8

(Regulatory Control) to reflect current FERC policy 9

that only non-conforming service agreements need be 10

filed with the FERC. 11

• Tampa Electric proposes that Section 2.4 of the 12

Tariff be replaced with provisions regarding the 13

timing of payment and the handling of disputes, 14

similar to language in the Master Purchase and Sale 15

Agreement developed by the Edison Electric 16

Institute and the National Energy Marketers 17

Association (“EEI”) and customarily used in the 18

energy trading industry. Use of these provisions 19

will benefit both parties, will provide greater 20

clarity, and will provide greater consistency with 21

Tampa Electric’s other existing energy sales 22

agreements. 23


Tariff be revised to reflect a more typical 25



11

indemnity provision. The proposed changes are 1

reciprocal, and the added clarity will benefit both 2

parties. 3


Tariff be modified to identify certain events of 5

default and to shorten the period of nonpayment 6

that will constitute an event of default to 30 7

days. These are commercially reasonable terms 8

today and are consistent with what is common in the 9

industry. 10

• Tampa Electric proposes that a new Section 3.10 be 11

added to the Tariff to address the creditworthiness 12

of the customer. This section requires that the 13

customer provide financial information on a regular 14

basis and that the customer provide a “Performance 15

Assurance”, such as a guaranty or collateral, when 16

appropriate. These are typical protections 17

afforded a seller of power and are customarily used 18

in the energy trading industry. 19

• Last, Tampa Electric proposes that a new Section 20

3.11 be added to the Tariff requiring both parties 21

to comply with applicable law. This provision is 22

customary and will benefit both parties. 23

24

Q. Will these proposed changes affect the existing Service 25



12

Agreements? 1

2

A. Yes. As these are changes to the Tariff, which is 3

incorporated by reference into existing agreements, they 4

will affect the existing Service Agreements. However, 5

because language in Service Agreements controls over 6

Tariff language where there is a conflict, to the extent 7

any existing Service Agreement deals with a subject 8

(e.g., has its own indemnity provision), that provision 9

in the Service Agreement will apply instead of the 10

Tariff provision. 11

12

Q. Is Tampa Electric proposing any changes to the form of 13

service agreement under the Tariff? 14

15

A. Tampa Electric proposes to add certain terms and 16

conditions to the form of service agreement to reflect 17

current commercial practices. The language for these 18

additions is what is customarily used in the energy 19

trading industry. 20

21

Q. What specific provisions does Tampa Electric propose for 22

the form of service agreement under the Tariff? 23

24

A. Tampa Electric proposes to add the following provisions: 25



13

• A new Section 7 (Recording) is proposed to provide 1

that the parties consent to the recording of 2

telephonic conversations between them. A new 3

Section 8 (Imaged Agreement) is also proposed to 4

provide that electronic images of the original of 5

the executed service agreement or other related 6

documentation may be photocopied and stored on 7

computer tapes and disks, and that these images and 8

any recordings are admissible into evidence as the 9

originals. Proposed Sections 7 and 8 reflect 10

common commercial practices. 11

• Tampa Electric proposes to add a new Section 9 12

(Confidentiality) to protect, to the extent 13

permitted by law, the parties’ mutual interest in 14

the confidentiality of communications between them 15

in the performance of the service agreement. Once 16

again, the new Section is intended to provide 17

protections that are common in current commercial 18

practice. 19

20

Q. Will these changes to the form of service agreement 21

affect the terms of the existing Service Agreements? 22

23

A. No. These changes will be applicable only to new 24

service agreements under the Tariff on a prospective 25



14

basis. Tampa Electric does not propose to modify the 1

existing Service Agreements with these new provisions 2

unless any existing customer requests that its Service 3

Agreement be amended to include these provisions. 4

5

CHANGES TO THE SERVICE AGREEMENTS 6

The Service Agreement with Wauchula 7

Q. Please describe the proposed revisions to the specific 8

Service Agreement with Wauchula. 9

10

A. Along with editorial revisions necessary to conform 11

references to the Tariff, Tampa Electric proposes to 12

make five additional revisions to the Service Agreement 13

with Wauchula. 14

15

First, Tampa Electric proposes to remove language that 16

is outdated and therefore no longer applicable. The 17

language proposed for removal from the Wauchula Service 18

Agreement includes: 19

(1) the language of Section 1 that refers to Wauchula's 20

purchase of power from Tampa Electric's Big Bend 21

Power Station under a now-expired letter of 22

commitment with Tampa Electric, and the use of 23

power generated at the now-inoperative Wauchula 24

Generating Station, as additional sources of power 25



15

for Wauchula; 1

(2) the language of Section 3(b), as also referenced in 2

Section 4, that places a moratorium on rate changes 3

through December 31, 1995; 4

(3) the language of Section 3(c) that specifies billing 5

demand during the term of a now-expired letter of 6

commitment with Tampa Electric; and 7

(4) the language of Section 7 that refers to an 8

anticipated investment in facilities to establish a 9

direct interconnection between Tampa Electric and 10

Wauchula, which was never effected. 11

12

Second, Tampa Electric proposes to revise Section 3(b) 13

to remove the requirement for Tampa Electric to notify 14

Wauchula in writing 60 days prior to making a filing 15

under Section 205 of the Federal Power Act (“FPA”) to 16

amend the Tariff or Service Agreement. Under Tampa 17

Electric’s proposed formulaic rate design, the annual 18

formula rate updates will occur with adequate notice and 19

opportunity for the affected customers, including 20

Wauchula, to review and, if desired, challenge the 21

information provided in the annual update, as described 22

in the formula rate implementation protocols, which are 23

proposed in Appendix B to the Tariff. Furthermore, the 24

notice requirement in Section 3(b) of the Wauchula 25



16

Service Agreement calls for a notice that exceeds the 1

statutory requirement to provide a minimum of 60 days’ 2

notice between a company’s submission of a Section 205 3

filing and the effective date of the filing. 4

5

Third, Tampa Electric proposes to revise Section 4 to 6

provide that Tampa Electric will procure any 7

transmission and ancillary services that are necessary 8

to deliver power to Wauchula, whether under Tampa 9

Electric's OATT or on the system of a third party such 10

as PEF, and that the cost of such services will be 11

passed through to Wauchula, along with the costs of 12

losses on both systems. This proposed revision reflects 13

the unbundling of services under the Tariff, as 14

described earlier in my testimony. 15

16

Fourth, Tampa Electric proposes to revise Section 6 to 17

provide that either party (rather than only Wauchula) 18

may terminate the Wauchula Service Agreement at the end 19

of the Initial Term or following any one-year extension 20

by providing the other party with at least one year’s 21

written notice. This change will make the right 22

reciprocal, and thus more equitable. A longer notice 23

period (e.g., three years) is not proposed because there 24

are barely three years remaining in the Initial Term, 25



17

which ends on December 31, 2013. 1

2

Fifth, Tampa Electric proposes to remove altogether the 3

provisions of Section 10 of the Wauchula Service 4

Agreement. Currently, Section 10 defines an annual 5

market comparison called the Competitive Yardstick 6

(“Yardstick”), and establishes rights for each party 7

based on the results of this market comparison process. 8

Wauchula is permitted to terminate the Wauchula Service 9

Agreement upon one year’s notice if cumulative charges 10

under the Tariff exceed the Yardstick by a certain 11

percentage. In addition, Tampa Electric is granted an 12

exclusive right to negotiate an extension of its service 13

to Wauchula in the event the cumulative charges under 14

the Tariff are below the Yardstick benchmark by greater 15

than five percent. As of the end of 2009, the Company 16

was 9.7 percent below the Yardstick benchmark. Tampa 17

Electric has chosen during this period to forgo 18

exercising its stated right under the existing Service 19

Agreement to request exclusive negotiations with 20

Wauchula for an extension of the existing Service 21

Agreement. Exhibit No. TEC-301 provides the 1993-2009 22

historical results of the Yardstick. 23

24

To eliminate the administrative burden of calculating 25



18

the Yardstick on an annual basis, Tampa Electric 1

proposes to forgo its vested Yardstick rights and remove 2

the provisions of Section 10 from the Wauchula Service 3

Agreement. This change will not disadvantage Wauchula 4

because it already has a vested right under Section 6 to 5

terminate the Wauchula Service Agreement upon one year's 6

notice based on the fact that a direct interconnection 7

between Tampa Electric and Wauchula was not established 8

by the end of 2007. Furthermore, with the proposed 9

formula rate, Wauchula will know that the rates it is 10

charged reflect Tampa Electric's actual costs of 11

providing the power on an annual basis, and Wauchula's 12

existing termination rights under Section 6 will allow 13

it to exit the Wauchula Service Agreement if desired. 14

15

The Service Agreement with St. Cloud 16

Q. What revisions does Tampa Electric propose to make to 17

the Service Agreement with St. Cloud? 18

19


references to the Tariff, Tampa Electric proposes to 21

make seven additional revisions to the Service Agreement 22

with St. Cloud. 23

24

First, Tampa Electric proposes to remove the language of 25



19

Section 3(b) that places a moratorium on rate changes 1

through December 31, 1995. This language is no longer 2

applicable, since it is outdated. 3

4

Second, Tampa Electric proposes to revise Section 3(b) 5

to remove the requirement for Tampa Electric to notify 6

St. Cloud in writing 60 days prior to making a filing 7

under FPA Section 205 to amend the Tariff and/or St. 8

Cloud Service Agreement. This change is proposed for 9

the same reasons the change is proposed in the Service 10

Agreement with Wauchula, as described earlier in my 11

testimony. 12

13

Third, Tampa Electric proposes to revise Section 3(c) 14

(i) to specify that the contract demand will remain at 15

15 MW for any extensions of the St. Cloud Service 16

Agreement. The Service Agreement is currently silent 17

regarding the contract demand for such potential 18

extensions. Tampa Electric proposes to specify the 19

contract demand amount applicable to possible extensions 20

to eliminate the potential need to file an amended 21

Service Agreement for any extended term. 22

23

Fourth, Tampa Electric proposes to revise Sections 3(c) 24

(ii) and (iii) to include a minimum load factor of 40 25



20

percent for energy charges. The Tariff provides for 1

full or partial requirements service, and sales under 2

the Tariff, which are priced on a system average basis, 3

should not be used for peak-shaving or other low load 4

factor service. A minimum load factor amount for 5

requirements service that is not load-following is 6

therefore appropriate. The recent actual load factors 7

of the partial requirements customers are provided in my 8

Exhibit No. TEC-302. 9

10

Fifth, Tampa Electric proposes to revise Section 3(d) to 11

state that any requested increase in the contracted 12

demand will be subject to Tampa Electric’s ability to 13

procure firm transmission service for the time period 14

requested to deliver such added capacity. 15

16

Sixth, Tampa Electric proposes to revise Section 3(e) of 17

the Service Agreement to require that St. Cloud's 18

notification to Tampa Electric of forecasted scheduled 19

energy for each clock hour of the next day must occur no 20

later than 9:00 a.m. (rather than 11:00 a.m., as 21

currently provided). This revision is necessary to 22

conform the timing of notification to Tampa Electric’s 23

daily operations planning process. Since the St. Cloud 24

Service Agreement was executed, Tampa Electric’s 25



21

generation fuel mix and, consequently, its operating 1

practices, have changed dramatically with the addition 2

of a significant amount of natural gas-fired generation 3

capacity to its system. Tampa Electric commits 4

generation, schedules firm purchases, nominates natural 5

gas, and engages the power markets for resources to 6

serve its projected load, including its requirements 7

customers, and most of these activities occur by 9:00 8

a.m. of the previous day. Therefore, changing the 9

deadline for St. Cloud's notification will allow the 10

Company to meet the needs of its requirements customers 11

within its least-cost operations planning activities. 12

The current timeframe has the potential to result in 13

additional system costs when requirements customer 14

scheduling is conducted after daily operations planning 15

activities are largely complete. This change does not 16

preclude St. Cloud from surveying the market prior to 17

scheduling its energy under the Service Agreement. 18

19

In addition, Tampa Electric proposes to revise Section 20

3(e) to provide that any changes to the previously 21

scheduled capacity must be made with at least two full 22

hours’ notice prior to the actual delivery of the 23

scheduled energy (rather than one hour prior, as 24

currently provided). This proposed change will allow 25



22

Tampa Electric to optimize its purchase and sales 1

activities in the next-hour market to the benefit of its 2

native load customers. It also will help to ensure that 3

a Tariff customer’s use of the Tariff matches the cost 4

basis for the Tariff rates. Requirements service 5

provides power at system average fuel costs. By 6

modifying the scheduling requirements, Tampa Electric 7

proposes to remove the ability for a customer to conduct 8

trades in the short-term wholesale power market that may 9

result in cross-subsidization of fuel costs by retail 10

customers. Furthermore, the current scheduling 11

timeframe for same-day changes precludes Tampa Electric 12

from including these changes in its planning process to 13

optimize system performance and to participate in the 14

short-term wholesale market to reduce its overall system 15

operating costs. 16

17

Seventh, Tampa Electric proposes to revise Section 4 to 18

provide that Tampa Electric will procure any 19

transmission and ancillary services that are necessary 20

to deliver power to St. Cloud, whether under Tampa 21

Electric's OATT or on the system of a third party and 22

that the cost of such services, including losses, that 23

is incurred by Tampa Electric will be passed through to 24

St. Cloud. With reference to services on Tampa 25



23

Electric's system, Section 4 as revised provides that 1

the Company will obtain firm point-to-point 2

transmission service for delivery on a transmission 3

path consistent with the OUC Delivery Point described 4

in Exhibit A of the St. Cloud Service Agreement, and 5

will obtain non-firm point-to-point transmission 6

service, as needed and as available, for delivery on a 7

transmission path consistent with the PEF Delivery 8

Point described in Exhibit A of the St. Cloud Service 9

Agreement, treating the points of delivery between the 10

Tampa Electric and PEF transmission systems as 11

secondary delivery points under the standing 12

reservation of firm capacity in accordance with the 13

terms of Tampa Electric’s OATT. The proposed revisions 14

to Section 4 reflect the unbundling of services under 15

the Tariff, as described earlier in my testimony. 16

17

The Service Agreement with PEF 18

Q. What revisions does Tampa Electric propose to make to 19

the Service Agreement with PEF? 20

21


references to the Tariff, Tampa Electric proposes five 23

additional revisions to the Service Agreement with PEF. 24

25



24

First, Tampa Electric proposes to remove the language of 1

Section 3(b) that places a moratorium on rate changes 2

through December 31, 1995. This language is outdated 3

and no longer applicable. 4

5

Second, Tampa Electric proposes to revise Section 3(c) 6

(i) to specify that the contract demand will remain at 7

70 MW during any extension to the Initial Term of the 8

PEF Service Agreement. The PEF Service Agreement is 9

currently silent regarding the contract demand for 10

extensions. Tampa Electric proposes to specify the 11

contract demand applicable to extensions, which will 12

eliminate the need to file an amended Service Agreement 13

for an extended term. 14

15

Third, Tampa Electric proposes to revise Section 3(e) to 16

require that PEF's notification to Tampa Electric of 17

forecasted scheduled energy for each clock hour of the 18

next day must occur no later than 9:00 a.m. (rather than 19

11:00 a.m., as currently provided). In addition, Tampa 20

Electric proposes to revise Section 3(e) to provide that 21

PEF may make adjustments to the previously scheduled 22

capacity with at least two full hours’ notice (rather 23

than one hour, as currently provided) prior to delivery 24

of the scheduled energy. These scheduling changes are 25



25

necessary for the same reasons discussed for making the 1

changes in the Service Agreement with St. Cloud earlier 2

in my testimony. 3

4

Fourth, Tampa Electric proposes to revise Section 3(f) 5

to replace outdated references to the Florida Electric 6

Power Coordinating Group ("FCG") with references to the 7

Florida Reliability Coordinating Council, Inc. ("FRCC"), 8

which is the FCG’s successor. 9

10

Fifth, Tampa Electric proposes to add a new Section 3A 11

to provide that Tampa Electric will procure any 12

transmission and ancillary services under Tampa 13

Electric's OATT that are necessary to deliver power to 14

PEF, and that the cost of such services, including 15

losses, that is incurred by Tampa Electric will be 16

passed through to PEF. This proposed new Section 17

reflects the unbundling of services under the Tariff, as 18

described earlier in my testimony. 19

20

Q. Does Tampa Electric propose to add a 40 percent minimum 21

load factor requirement to the energy charge billing 22

determinants under Section 3(c) of the Service Agreement 23

with PEF? 24

25



26

A. No. Such a revision is prohibited by the terms of 1

Section 3(b) of the PEF Service Agreement. 2

3

Q. What is the current status of the existing Service 4

Agreement with PEF? 5

6

A. Tampa Electric has received a letter from PEF in which 7

PEF has exercised its right under Section 8 to terminate 8

this Service Agreement upon expiration of its initial 9

term on February 28, 2011. Tampa Electric expects to 10

file a notice of termination of the PEF Service 11

Agreement later this year. 12

13

CONCLUSION 14

Q. What is the effect of the proposed revisions to the 15

Tariff and Service Agreements? 16

17

A. The proposed revisions accomplish a variety of 18

objectives, including the following: 19

• Rates, terms, and conditions are adjusted to recover 20

the Company’s costs to provide the various services; 21

• Production and transmission services are unbundled, 22

consistent with FERC policy; 23

• Commercial terms and conditions are conformed more 24

closely to current peninsular Florida wholesale 25



27

energy marketplace practices; 1

• The need for future filings to address the contract 2

demands applicable to any future extensions of the 3

Service Agreements with St. Cloud and PEF is 4

eliminated; 5

• Potential fuel cross-subsidization issues are 6

limited; 7

• The least-cost planning process for the Company’s 8

wholesale requirements customers is better 9

facilitated; and 10

• Dated, expired, or unexercisable provisions in the 11

various Service Agreements are removed. 12

13

Q. Does this conclude your direct testimony? 14

15

A. Yes, it does. 16

17

18

19

20

21

22

23

24

25


WITNESS: WEHLE

28

EXHIBITS

OF

JOANN T. WEHLE


WITNESS: WEHLE

29

Table of Contents

Exhibit NO. TITLE PAGE

TEC-301 Competitive Yardstick Results - Wauchula 30

TEC-302 Load Factor – Tariff Customers 31

Cumulative Total Charges

Competitive Yardstick

Wauchula's Savings

1993 2,111,144 2,803,344 692,199

1994 2,148,044 2,886,619 738,574

1995 2,253,926 3,000,730 746,804

1996 2,203,190 3,115,741 912,551

1997 2,343,636 2,974,324 630,688

1998 2,484,368 2,976,541 492,173

1999 2,856,419 3,013,224 156,804

2000 3,146,839 3,306,199 159,360

2001 3,428,767 3,324,881 (103,886)

2002 3,782,731 3,443,082 (339,649)

2003 3,956,319 3,913,141 (43,178)

2004 3,771,736 3,871,979 100,244

2005 4,378,155 4,745,211 367,056

2006 5,563,494 5,066,741 (496,753)

2007 5,249,819 5,635,152 385,333

2008 5,013,939 6,335,170 1,321,231

2009 5,399,660 6,127,732 728,072 Cumulative Service Period (1993 - 2009) 60,092,187 66,539,810 6,447,623

9.7%

Competitive Yardstick ResultsWauchula

Tampa Electric's charges for the Cumulative Service Period (1993 - 2009) are below the Competitive Yardstick by

30

TAMPA ELECTRIC COMPANYDOCKET NO. ER10-2061-000EXHIBIT NO. TEC-301WITNESS: WEHLEFILED: 07/30/2010AMENDED: 08/12/10PAGE 1 OF 1

Janu

ary

Febr

uary

Mar

chAp

rilM

ayJu

neJu

lyAu

gust

Se

ptem

ber

Oct

ober

Nov

embe

rD

ecem

ber

City

of W

auch

ula

2006

61%

47%

68%

61%

64%

65%

63%

68%

67%

64%

70%

79%

2007

79%

45%

74%

59%

64%

70%

66%

68%

67%

63%

62%

67%

2008

49%

66%

71%

66%

56%

76%

62%

63%

69%

69%

65%

58%

2009

46%

46%

61%

68%

61%

68%

66%

69%

65%

60%

61%

68%

2010

48%

57%

50%

69%

66%

66%

City

of S

t. C

loud

2006

41%

39%

45%

55%

52%

52%

45%

65%

32%

34%

33%

26%

2007

18%

44%

42%

60%

53%

48%

55%

71%

42%

61%

53%

34%

2008

30%

37%

60%

76%

78%

57%

48%

47%

51%

43%

28%

17%

2009

9%6%

10%

20%

16%

17%

18%

13%

17%

29%

18%

19%

2010

31%

24%

16%

3%44

%41

%

Prog

ress

Ene

rgy

Flor

ida

2006

81%

51%

42%

46%

44%

57%

63%

82%

58%

55%

47%

43%

2007

40%

67%

42%

67%

61%

56%

59%

70%

63%

78%

49%

36%

2008

48%

51%

51%

62%

63%

52%

60%

76%

82%

58%

47%

32%

2009

15%

20%

6%12

%23

%22

%16

%17

%4%

15%

3%4%

2010

36%

19%

18%

7%34

%49

%

Load

Fac

tor

Tarif

f Cus

tom

ers

31

TAMPA ELECTRIC COMPANYDOCKET NO. ER10-2061-000EXHIBIT NO. TEC-302WITNESS: WEHLEFILED: 07/30/2010AMENDED: 08/12/10PAGE 1 OF 1

UNITED STATES OF AMERICABEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

In the Matter of ))

Tampa Electric Company ) Docket No. ER1O-2061-000

STATE OF FLORIDA )) SS

COUNTY OF HILLSBOROUGH )

VERIFICATION

Joann T. Wehie, being first duly sworn, deposes and states that she is the witness

identified in the foregoing prepared testimony, and that the statements of fact in the

testimony and supporting exhibits are true and correct to the best of her knowledge,

information, and belief.

Jin T. Wehie

SUBSCRIBED AND SWORN before methe 5 day of August 2010

______________

NoPubllcSatijojd7

_

yOnDD645

Notary Public

My commission expires on: 4A I, ‘2t9//

BEFORE THEFEDERAL ENERGY REGULATORY COMMISSIONJTW Exhibits 301-302 Clean_bates_bates_bates.pdfJTW Exhibit 301_batesJTW Exhibit 302_batesJTW Exhibit 303_batesExh 303 Demand

JTW Exhibit 304_batesJTW Exhibit 302 REVISED_bates.pdfExh 302 Ld Factor

before the federal energy regulatory commission docket no. er10 … · 2010. 8. 12. · docket no....

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