20240159

Financial risks and concerns:
- The proposed flexible gas service (FGS) tariff is structured so that shareholders, not the general body of ratepayers, bear the risk of any investments made to serve FGS customers. All capital costs, expenses, and revenues associated with the FGS tariff are placed below-the-line in earnings surveillance reports and future rate cases, ensuring that existing customers do not subsidize FGS rates or bear associated costs. The negotiated rates under the FGS tariff cannot be set lower than the incremental cost of providing service to the customer. Additionally, any difference between the standard tariff rate and the FGS contract rate is not recoverable from other customers through cost recovery clauses or future base rate cases, protecting the general body of ratepayers from financial exposure 1, 2, 3.

Timeline risks and concerns:
- The docket outlines a multi-step administrative process with clear points where implementation could be delayed:
- The proposed tariff changes must be reviewed and administratively approved by staff, with changes to Florida City Gas's (FCG) tariff effective no earlier than September 1, 2025. Changes to Florida Public Utilities Company’s (FPUC) tariff go into effect 30 days from the commission’s vote.
- If a protest is filed within 21 days of the issuance of the order, the tariffs remain in effect but are held subject to refund until the protest is resolved, potentially delaying final implementation.
- The docket remains open until staff verifies that FCG’s tariffs have been filed and implemented; only then is it closed administratively 2, 3.
- These procedures introduce potential delays related to administrative review, possible protests, and the verification process before full implementation.

In summary, financial risks have been shifted away from general ratepayers, focusing exposure on shareholders and FGS customers, while timeline risks stem from administrative, protest, and verification processes that could delay the finalization and implementation of the tariff changes.

The primary stakeholders in docket 20240159-GU are:

- Florida Public Utilities Company (FPUC)
- Florida City Gas (FCG)
- Chesapeake Utilities Corporation (parent company of both FPUC and FCG since September 2023)
- Florida Public Service Commission (FPSC) staff and Commissioners
- Pool managers (entities managing gas supply pools for customers)
- Customers of FPUC and FCG

Positions on the proposals:

- FPUC and FCG (and their parent, Chesapeake) are the petitioners seeking approval for changes to standardize and align their transportation service tariffs and to implement a flexible gas service tariff for FCG. They support these proposals, arguing that the changes will promote efficiency, consistency, and competitiveness, and that protections are in place so existing customers are not adversely affected or required to subsidize new flexible gas service customers 1, 1.
- FPSC staff recommended suspending the proposed tariff revisions temporarily to allow more time for review and information gathering before making a final recommendation to the Commission. This is a procedural position rather than substantive opposition or support to the content of the proposals 2, 3, 3.
- The FPSC Commissioners have, to date, voted to approve staff’s recommendation to suspend the tariff changes for further review and have kept the docket open pending a final decision 2, 4.
- Pool managers and customers are considered stakeholders affected by the proposed changes, especially regarding the transition to new standardized transportation programs. The companies have committed to consulting with pool managers and providing adequate notice before implementation, but there is no explicit record in the excerpts of pool managers or customers formally supporting or opposing the proposals 1.

No excerpts indicate any stakeholder explicitly opposing the proposed tariff changes; the only procedural opposition is the suspension for further review by FPSC staff and commissioners. There may be disputed issues of material fact as the proceeding continues, but as of the excerpts provided, all major parties are either in support (petitioners) or withholding judgment pending further review (FPSC staff and commissioners) 1, 1.

The docket identifies two main areas of growth:

1. Standardization and Alignment of Transportation Service Tariffs
- Growth Area: The companies (Florida Public Utilities Company and Florida City Gas) are working to standardize and align their transportation service tariffs as part of a broader effort to consolidate operations and achieve consistency following Chesapeake Utilities Corporation's acquisition of Florida City Gas in 2023.
- Key Considerations:
- Eliminating inconsistencies across the companies’ platforms to streamline service and operational processes.
- Benefits to ratepayers and the utilities include operational efficiency, reduction in administrative burdens, and enhanced ability to manage system integrity and penalties across a unified network.
- The consolidation is intended to provide a more equitable and consistent methodology for capacity release and allocation, addressing challenges in accessing secondary pipeline capacity, especially during peak demand periods.
- Technical implementation includes moving both companies to the same gas management software and aligning operational controls, capacity release methodologies, and imbalance settlement provisions 1, 2, 2.

2. Implementation of a Flexible Gas Service (FGS) Tariff for Florida City Gas
- Growth Area: Introduction of an FGS tariff for Florida City Gas, modeled on the existing FPUC tariff, to allow greater pricing flexibility and competitiveness.
- Key Considerations:
- The FGS tariff is primarily targeted at new customers, particularly large industrial users, who have viable fuel alternatives and may bypass the utility's system.
- Protective measures are included to ensure existing customers are not adversely impacted or required to subsidize new FGS customers; incremental costs are excluded from the rate base and there is no cost-shifting to standard tariff customers.
- The FGS rate will have a floor equivalent to the incremental cost of service, ensuring the company remains competitive while protecting the financial interests of existing customers.
- The FGS expansion is seen as necessary in a market where customers increasingly have alternative fuel options and expect flexible pricing to remain with or switch to company service 2, 2.

Key events and submissions in this proceeding include:

- September 2023: Chesapeake Utilities Corporation purchased Florida City Gas (FCG) from NextEra Energy, becoming the parent company of both FCG and Florida Public Utilities Company (FPUC) 1, 2.

- November 20, 2024: FPUC and FCG jointly filed a petition with the Florida Public Service Commission (FPSC) for approval of tariff changes to standardize and align their transportation service tariffs and to implement a flexible gas service tariff for FCG. No rate changes were proposed at this time 1, 2, 3.

- January 7, 2025: The joint petition was placed on the FPSC regular agenda as a tariff suspension item; staff recommended suspension to allow for further review 2.

- January 27, 2025: The FPSC issued Order No. PSC-2025-0030-PCO-GU, suspending the proposed tariff revisions to provide staff sufficient time for review. The docket was ordered to remain open until a Commission decision on the revisions 1, 1.

- May 28, 2025: The FPSC issued an order stating that the docket would remain open until staff verified that FCG’s tariffs had been filed and implemented. Following this verification, the docket would be closed administratively. The order specified that the Commission’s decision is interim in nature and outlined procedures and deadlines for any administrative hearing or judicial review, with a deadline for filing a formal proceeding petition by June 18, 2025 4.

- September 1, 2025 (earliest): The proposed changes to FCG’s transportation service tariffs are requested to have a delayed effective date of not earlier than this date 3.

This timeline covers the acquisition, petition filing, regulatory review, suspension of proposed changes, and projected implementation dates relevant to this docket.

Docket 20240159-GU concerns a joint petition by Florida Public Utilities Company (FPUC) and Florida City Gas (FCG) seeking approval from the Florida Public Service Commission (FPSC) to standardize and align their natural gas transportation service tariffs, as well as to implement a flexible gas service (FGS) tariff for FCG. This action follows the acquisition of FCG by Chesapeake Utilities Corporation in September 2023, making Chesapeake the parent company of both FPUC and FCG. The companies aim to eliminate inconsistencies between their platforms, consolidate programs, and allocate costs appropriately, with the ultimate goal of creating a single, consolidated tariff in a future rate case. No immediate rate changes are proposed in this filing.

Key elements include:
- Standardizing transportation service tariffs across both companies to achieve consistency in natural gas service provision.
- Implementing an FGS tariff for FCG, similar to that previously approved for other Florida utilities, targeting large customers with alternative fuel options. The FGS tariff is designed so that existing customers do not subsidize new FGS customers, with all incremental costs and revenues associated with FGS excluded from the general rate base.
- Aligning nomination and balancing procedures, and consolidating gas management systems to streamline operations.
- The FPSC has suspended the proposed tariff revisions pending a thorough review to ensure all necessary information is gathered before making a final decision. The docket remains open until a final commission decision is made and all implementation steps are verified.

This standardization effort is part of a broader plan to eventually consolidate rates and rate structures across FPUC and FCG in a future proceeding 1, 2, 3.