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Fla. commission proceeds with rules for hardening grid for utilities

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Fla. commission proceeds with rules for hardening grid for utilities

Florida regulators voted Oct. 3 to adopt draft rules calling for investor-owned utilities to harden their electrical grid in exchange for recovering related costs through a dedicated clause.

The Florida Public Service Commission's draft criteria for storm protection plans and a new rate mechanism are part of a recent state law that requires utilities to submit a 10-year transmission and distribution storm protection plan to the PSC. If approved by regulators, the utilities would then be able to recover costs from related activities in a recovery clause rather than financing their programs through base rates.

In reviewing a utility's storm protection plan, the PSC will consider: restoration costs and outage times; how feasible it is for grid hardening in certain service territories; estimated costs and benefits to the utility and its customers; and the estimated annual rate impact during the first three years of the plan.

Originally the PSC staff recommended draft rules requiring investor-owned utilities to include detailed descriptions of proposed grid hardening projects for the first three years of the 10-year plan. However, the PSC decided to adopt NextEra Energy Inc. subsidiary Florida Power & Light Co.'s suggestion to submit broader information for projects in the second and third years of the plan after FPL and other investor-owned utilities said it would not be feasible to provide specifics so far in the future.

"Utilities' investment in storm hardening strengthens Florida's grid to reduce power outages and speed restoration after a storm," PSC chairman Art Graham said in a statement. "The proposed storm protection plan rules will further protect Florida's consumers, including those most vulnerable."

Strong hurricanes have pounded the Sunshine State in recent years, testing utilities' restoration capabilities and storm reserves and hitting customers' monthly bills. In May, the PSC approved NextEra unit Gulf Power Co.'s request to recover $342 million in costs associated with Hurricane Michael and to replenish the company's storm reserve, adding $8 to the average customer's monthly bill. FPL was able to forego seeking $1.3 billion from ratepayers for Hurricane Irma restoration costs thanks to the federal tax overhaul that passed at the end of 2017.

It is not completely clear how customers of Florida's investor-owned utilities – FPL, Gulf Power, Duke Energy Florida LLC, Tampa Electric Co. and Florida Public Utilities Co. – will see their bills impacted by the recovery clause. State Sen. Joe Gruters, the legislation's sponsor, said he thought at most ratepayers' bill would go up by $1 but avoid much higher bills in the long run.

"All you have to do is look at Gulf Power and their $8/month ratepayer increase request in the PSC and you could see we're better off doing this now and taking the necessary steps," Gruters told S&P Global Market Intelligence in March.

As required by the new law, proposed rules are due by Oct. 31. If the commission's order does not receive requests for hearings, the proposed rules will be filed with the Department of State for adoption.