Florida City Gas's $11.5 million rate increase is expected to improve the company's resilience, allotting money for LNG storage, system upgrade work and storm response.
Some of that revenue allowance, granted March 26 by the Florida Public Service Commission, will go toward building an LNG facility, which Florida City Gas said should help the company provide more reliable service. The facility is expected to provide an additional 10,000 Dth/d of capacity and include three storage tanks holding a total of 270,000 gallons of LNG.
The settlement agreement also authorized Florida City Gas to set up a storm reserve to support restoration efforts in the event of weather-related system damage. The Southern Co. subsidiary can put $57,500 into the account annually, with a target reserve of $800,000.
The utility will be able to continue work on its Safety, Access and Facility Enhancement program, under which the company is modernizing its system. The Florida PSC originally approved the program in August 2015 to help improve safety and reliability.
The rate case also accounted for the effects of revisions to the federal tax code that decreased the corporate income tax rate from 35% to 21%. The reduction in tax expenses is passed through to ratepayers, resulting in roughly $4.5 million in savings for customers.
Altogether, the average residential customer should see an increase of about $1.45 per month, or roughly 5.3%, the company said. The revenue increase in the settlement agreement — reached among Florida City Gas, the Florida Office of Public Counsel and federal agencies associated with Tyndall Air Force Base — fell short of the utility's $15.8 million requested rate hike.