While terminating a territorial agreement between Florida Power & Light Company (FPL) and the City of Vero Beach (COVB) and approving an associated asset purchase and sale agreement, the Florida Public Service Commission approved a positive asset acquisition rate amortization adjustment—only the second on record in cases before the commission. The change results in FPL service to all COVB customers, both inside the municipality and out. Under the agreement, FPL will acquire COVB’s electric utility assets and operations for $185 million. The commission directed FPL to charge customers in the added territory the same rates it charges its existing customers.

The approval of a positive acquisition adjustment for rate-making purposes means that the utility can recover the actual purchase price premium from all of its customers in rates. The approved $114 million positive acquisition adjustment would equate to an estimate impact of $0.11 per 1,000 kWh on a monthly residential bill. In all but one of the past cases where the commission has addressed the issue, it has stated that a purchase price premium should be disallowed unless it is shown that extraordinary circumstances exist.

The commission noted that customer savings alone may not be sufficient to demonstrate extraordinary circumstances. The combination of factors cited by the commission that support the consideration and subsequent approval of a positive acquisition adjustment in this case are: (1) approximately 60% of COVB’s electric customers live outside COVB’s municipal boundaries; (2) there have been years of complex litigation between these customers and the COVB attempting to transfer these customers from COVB to FPL; (3) the customers living outside the municipal boundaries have tried for many years to seek legislative redress for their complaints; and (4) the COVB has had two voter referenda that show that the majority of COVB customers support a sale of the COVB electric utility to FPL. Re Florida Power & Light Co., Docket Nos. 20170235-EI & 20170236-EU, Order No. PSC-2018-0566-FOF-EU, Nov. 30, 2018 (Fla.P.S.C.)
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