Florida Public Service Commission native order document 03024-2026

FILED 5/20/2026
DOCUMENT NO. 03024-2026
FPSC 	- COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
In re: Petition for approval of change in rate
used to capitalize allowance for funds used
during construction (AFUDC) from 7.08% to
7.18%, effective January 	1, 2026, by Peoples
Gas System, Inc._
DOCKET NO. 20260024-GU
ORDER NO. PSC-2026-0159-PAA-GU
ISSUED: May 20, 2026
The following Commissioners participated in the disposition of this matter:
GARY F. CLARK
MIKE LA ROSA
BOBBY PAYNE
ANA ORTEGA
NOTICE OF PROPOSED AGENCY ACTION
ORDER APPROVING PEOPLES GAS SYSTEM’S CHANGE
IN AFUDC RATE
BY THE COMMISSION:
NOTICE 	is 	hereby 	given by 	the 	Florida 	Public 	Service Commission 	that 	the 	action
discussed herein 	is preliminary 	in nature and will become 	final unless a person whose 	interests
are 	substantially 	affected 	files a petition 	for a formal proceeding, pursuant 	to Rule 	25-22.029,
Florida Administrative Code (F.A.C.).
Background
Peoples Gas System, Inc.’s (PGS or Company) current Allowance for Funds Used During
Construction (AFUDC) rate of 7.08 percent was approved by Order No. PSC-2024-0168-PAA-
GU, issued May 23, 2024. 1 On February 	13, 2026, PGS 	filed a petition 	for approval 	to change
its AFUDC 	rate from 7.08 percent 	to 7.18 	percent, 	effective January 	1, 	2026. 	As required by
Rule 	25-7.014(5), 	F.A.C., PGS 	filed with 	its 	petition 	Schedules A, 	B, and C 	identifying 	the
capital 	structure, 	capital 	structure 	adjustments, 	and 	the 	methodology 	used 	to 	calculate 	the
monthly AFUDC 	rate. We have jurisdiction over 	this matter pursuant 	to Chapter 366, Florida
Statutes (F.S.), including Sections 366.04, 366.05, and 366.06, F.S.
1Order No. PSC-2024-0 168-PAA-GU, 	issued May 	23, 2024, 	in Docket No. 20240035-GU, In
re: Petition for approval of change 	in 	rate used to 	capitalize allowance for funds used during
construction from 6.00% to 7.08% effective January 	1, 2024, by Peoples Gas System, Inc.

ORDER NO. PSC-2026-0159-PAA-GU
DOCKET NO. 20260024-GU
PAGE 2
Decision
AFUDC rate
PGS requested an increase in its AFUDC rate from 7.08 percent to 7.18 percent. 	Rule
25-7.0141(3), F.A.C., Allowance for Funds Used During Construction, provides the following
guidance:
(3) The applicable AFUDC rate will be determined as follows:
(a) The most recent 13-month average embedded cost of capital, except as noted
below, must be derived using all sources of capital and adjusted using adjustments
consistent with those used by the Commission in the Company’s last rate case.
(b) The cost rates for the components in the capital structure will be the midpoint
of the last allowed return on common equity, the most recent 13-month average
cost of short-term debt and customer deposits and a zero cost rate for deferred
taxes and all investment tax credits. The cost of long-term debt and preferred
stock will be based on end of period cost. The annual percentage rate will be
calculated to two decimal places.
In support of its requested AFUDC rate of 7.18 percent, PGS provided its calculations
and capital structure in Schedules A and B attached to its petition. 	We have reviewed the
schedules and determined that the proposed rate was calculated in accordance with Rule 25-
7.0141(3), F.A.C., as presented in Attachment 1 herein. 	The requested increase in the AFUDC
rate is due to an increase of 45 basis points in the weighted cost of long-term debt, a decrease of
46 basis points in the weighted cost of short-term debt, and an increase of 11 basis points in the
weighted cost of common equity. 	PGS’s cost rate for short-term debt decreased from 5.84
percent in 2023 to 5.22 percent in 2025. 	Over the same period, PGS’s cost rate for long-term
debt remained constant at 5.68 percent. The short-term debt cost rate change was primarily due
to market conditions and the Federal Open Market Committee changing interest rates. 	In its
calculation, the Company appropriately used the mid-point return on equity of 10.30 percent,
which was approved by Order No. PSC-2025-0413-S-GU. 2
Based on our review, we find that the requested increase in the AFUDC rate from 7.08
percent to 7.18 percent is appropriate and consistent with Rule 25-7.0141, F.A.C. Therefore, an
AFUDC rate of 7.18 percent is hereby approved.
Compounding rate
PGS requested a monthly compounding rate of 0.005795 percent to achieve an annual
AFUDC rate of 7.18 percent. 	In support of the requested monthly compounding rate of
0.005795 percent, the Company provided its calculations in Schedule C attached to its request.
2 Order No. PSC-2024-0413-S-GU, issued October 31, 2025, in Docket No. 20250029-GU, In re: Petition for rate
increase by Peoples Gas System Inc.

ORDER NO. PSC-2026-0159-PAA-GU
DOCKET NO. 20260024-GU
PAGE 3
Rule 25-7.0141(4)(a), F.A.C., provides the following formula for discounting the annual
AFUDC rate to reflect the monthly compounding.
M = [((1 + A÷100) 1/12
) − 1] ×100
Where: M = Discounted monthly AFUDC rate
A = Annual AFUDC rate
The rule also requires that the monthly compounding rate be calculated to six decimal places.
We have reviewed the Company’s calculation and determined it was derived in
accordance with Rule 25-7.0141(4), F.A.C., as presented in Attachment 2 herein. 	Therefore, a
monthly compounding rate of 0.005795 percent is hereby approved.
Effective date
PGS’s requested AFUDC rate was calculated using the most recent 13-month average
capital structure for the period ended December 31, 2025. Rule 25-7.0141(6), F.A.C., provides
that:
No utility may charge or change its AFUDC rate without prior Commission
approval. The new AFUDC rate will be effective the month following the end of
the 12-month period used to establish that rate and may not be retroactively
applied to a previous fiscal year unless authorized by the Commission.
The 	Company’s 	requested 	effective 	date 	of 	January 	1, 	2026, 	complies 	with 	the
requirement that the effective date does not precede the period used to calculate the rate, and
therefore, is approved.
Based on the foregoing, it is
ORDERED that Peoples Gas System’s Petition for Approval of Change in Rate Used to
Capitalize Allowance for Funds Used During Construction is hereby granted. It is further
ORDERED that the appropriate AFUDC rate for Peoples Gas System is 7.18 percent
based on a 13-month average capital structure for the period ended December 31, 2025. 	It is
further
ORDERED that the appropriate monthly compounding rate to achieve an annual AFUDC
rate of 7.18 percent is 0.005795 percent. It is further
ORDERED that the AFUDC rate is effective as of January 1, 2026, for all purposes. It is
further
ORDERED that the provisions of this Order, issued as proposed agency action, shall
become final and effective upon the issuance of a Consummating Order unless an appropriate

ORDER NO. PSC-2026-0159-PAA-GU
DOCKET NO. 20260024-GU
PAGE 4
petition, 	in the form provided by Rule 28-106.201, Florida Administrative Code, 	is received by
the Commission Clerk, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850, by the
close of business on the date 	set forth in the “Notice of Further Proceedings” attached hereto. 	It
is further
ORDERED 	that 	if no 	person whose 	substantial 	interests 	are 	affected by 	the proposed
agency 	action 	files a 	protest within 21 	days of the issuance of the 	order, 	this docket 	shall be
closed upon the issuance of a consummating order.
By ORDER of the Florida Public Service Commission this 20th day of May . 2026 	.
ADAM¿TEITZM^N
Commission Clerk
Florida Public Service Commission
2540 Shumard Oak Boulevard
Tallahassee, Florida 32399
(850)413-6770
www.floridapsc.com
SBr
Copies 	furnished: A 	copy 	of 	this 	document 	is
provided 	to 	the 	parties 	of record 	at 	the 	time 	of
issuance and, 	if applicable, interested persons.

ORDER NO. PSC-2026-0159-PAA-GU
DOCKET NO. 20260024-GU
PAGE 5
NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW
The Florida Public Service Commission is required by Section 120.569(1), Florida
Statutes, to notify parties of any administrative hearing that is available under Section 120.57,
Florida Statutes, as well as the procedures and time limits that apply. This notice should not be
construed to mean all requests for an administrative hearing will be granted or result in the relief
sought.
Mediation may be available on a case-by-case basis. 	If mediation is conducted, it does
not affect a substantially interested person's right to a hearing.
The action proposed herein is preliminary in nature. Any person whose substantial
interests are affected by the action proposed by this order may file a petition for a formal
proceeding, in the form provided by Rule 28-106.201, Florida Administrative Code. 	This
petition must be received by the Office of Commission Clerk, 2540 Shumard Oak Boulevard,
Tallahassee, Florida 32399-0850, by the close of business on June 10, 2026.
In the absence of such a petition, this order shall become final and effective upon the
issuance of a Consummating Order.
Any objection or protest filed in this/these docket(s) before the issuance date of this order
is considered abandoned unless it satisfies the foregoing conditions and is renewed within the
specified protest period.

ORDER NO. PSC-2026-0159-PAA-GU
DOCKET NO. 20260024-GU
PAGE 6
ATTACHMENT 1
PEOPLES GAS COMPANY
CAPITAL STRUCTURE USED FOR THE REQUESTED AFUDC RATE
AS OF DECEMBER 31, 2025
CAPITAL COMPONENTS
JURISDICTIONAL
AVERAGE
CAPITAL
RATIO
COST OF
CAPITAL
WEIGHTED
COST OF
CAPITAL
COMMON EQUITY 	$1,219,552,000 	47.78% 	10.30% 	4.92%
LONG-TERM DEBT 	$897,250,000 	35.15% 	5.68% 	2.00%
SHORT-TERM DEBT 	$112,727,000 	4.42% 	5.22%* 	0.23%
CUSTOMER DEPOSITS 	$30,291,000 	1.19% 	2.43%* 	0.03%
DEFERRED INCOME TAXES 	$292,464,000 	11.46% 	0.00% 	0.00%
TOTAL 	$2,552,284,000 	100.00% 	7.18%
* 13-MONTH AVERAGE
COMMISSION APPROVED

ORDER NO. PSC-2026-0159-PAA-GU
DOCKET NO. 20260024-GU
PAGE 7
ATTACHMENT 2
PEOPLES GAS COMPANY
CAPITAL STRUCTURE USED FOR THE REQUESTED AFUDC RATE
AS OF DECEMBER 31, 2025
CAPITAL COMPONENTS
JURISDICTIONAL
AVERAGE
CAPITAL
RATIO
COST OF
CAPITAL
WEIGHTED
COST OF
CAPITAL
COMMON EQUITY 	$1,219,552,000 	47.78% 	10.30% 	4.92%
LONG-TERM DEBT 	$897,250,000 	35.15% 	5.68% 	2.00%
SHORT-TERM DEBT 	$112,727,000 	4.42% 	5.22%* 	0.23%
CUSTOMER DEPOSITS 	$30,291,000 	1.19% 	2.43%* 	0.03%
DEFERRED INCOME TAXES 	$292,464,000 	11.46% 	0.00% 	0.00%
TOTAL 	$2,552,284,000 	100.00% 	7.18%
* 13-MONTH AVERAGE
COMMISSION APPROVED