Settlement Approved On Utility Hurricane Costs

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Tallahassee, FL - With little discussion, the Florida Public Service Commission on Tuesday approved a settlement about Gulf Power’s costs of restoring power and rebuilding damaged parts of the electric system after Hurricane Michael in 2018.

Gulf reached the settlement with the state Office of Public Counsel, which represents consumers, and attorneys for federal-government agencies. Gulf last year contended that it should be able to recoup $295 million from customers for its storm-related costs, but the Office of Public Counsel disputed that amount.

The settlement trimmed $5 million from Gulf’s request, along with requiring the utility in the future to take steps to better track storm-related costs. Utilities have long been able to pass along storm-restoration costs to customers, but they must be able to justify the costs to the Public Service Commission.

Gulf, the largest utility in Northwest Florida, faced a major restoration effort after the Category 5 Hurricane Michael slammed into the Panama City area in October 2018 and barreled north into Georgia. Among other things, Gulf needed 8,000 workers, including 7,000 from other utilities or contractors, to help restore the system, according to a filing at the commission.

Gulf in early 2019 estimated that its Michael-related costs would total $342 million and received approval from the commission to begin recouping the money from customers in July 2019 on an interim basis.

But it needed to return to the commission for final approval of actual costs. The utility in November put those costs at $295 million, which led to a months-long process that resulted in the settlement.

Among the disputed issues in the case were whether costs of some materials and supplies were storm-related or whether they were more normal operating expenses.

The interim approval last year of restoration costs added $8 a month to the bills of Gulf residential customers who use 1,000 kilowatt hours of electricity a month --- a common benchmark in the utility industry. The interim plan was based on the charges being in place for five years.

In the November filing seeking $295 million in actual costs, Gulf proposed keeping in place the $8-a-month charge but said it would be needed for 53 months, rather than five years.

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