Florida Public Service Commission native order document 07096-2024

FILED 7/1/2024
DOCUMENT NO. 07096-2024
FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
In re: Request for approval of change in rate
used to capitalize allowance for funds used
during construction (AFUDC) from 6.37% to
6.76%, effective January 1, 2024, by Florida
Power & Li ht Com any.
DOCKET NO. 20240057-EI
ORDER NO. PSC-2024-0223-P AA-EI
ISSUED: July 1, 2024
The following Commissioners participated in the disposition of this matter:
MIKE LA ROSA, Chairman
ARTGRAHAM
GARY F. CLARK
ANDREW GILES FAY
GABRIELLA P ASSIDOMO
NOTICE OF PROPOSED AGENCY ACTION
ORDER APPROVING FLORIDA POWER & LIGHT COMPANY' S
AFUDCRATE
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
Florida Power & Light Company 's (FPL or Company) current Allowance for Funds Used
During Construction (AFUDC) rate of 6.37 percent was approved by Order No. PSC-2023-0142-
p AA-EI, issued April 24, 2023. 1 On April 2, 2024, FPL filed a petition for approval to change
its AFUDC rate from 6.37 percent to 6.76 percent, effective January 1, 2024. 	As required by
Rule 25-6.0141(5), F.A.C., FPL 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.
AFUDCrate
FPL requested an increase in its AFUDC rate from 6.37 percent to 6.76 percent. Rule 25-
6.0141 (3), F.A.C., Allowance for Funds Used During Construction, provides the following
guidance:
'Order No. PSC-2023-0142-PAA-EI, issued April 24, 2023, in Docket No. 20230031-EI, In re: R equ es t for
approval of change in rate used to capitalize allowance for funds u sed during construction (AFUDC) from 6.22% to
6.37%, eff ective 1/1/23, by Florida Power & Light Company.

ORDER NO. PSC-2024-0223-PAA-EI
DOCKET NO. 20240057-EI
PAGE 2
(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,
will be derived using all sources of capital and adjusted using adjustments consistent with
those used by the Commission in the utility’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 must be calculated to two decimal places.
In support of its requested AFUDC rate of 6.76 percent, FPL provided its calculations
and capital structure in Schedules A and B attached to its request. 	We have reviewed the
schedules and determined that the proposed rate was calculated in accordance with Rule 25-
6.0141(3), F.A.C. 	The requested increase in the AFUDC rate is due to an increase of 28 basis
points in the weighted cost of long-term debt, an increase of 6 basis points in the weighted cost
of short-term debt, and an increase of 4 basis points in the weighted cost of common equity. The
cost rate for short-term debt increased from 1.93 percent in 2022 to 4.94 percent in 2023. 	The
cost rate for long-term debt increased from 3.63 percent in 2022 to 4.46 percent in 2023. In its
calculation, the Company appropriately used the mid-point return on equity of 10.8 percent,
which was approved by Order No. PSC-2022-0358-FOF-EI.2
Based on our review, we find that the requested increase in the AFUDC rate from 6.37
percent to 6.76 percent is appropriate and is consistent with Rule 25-6.0141, F.A.C. 	Based on
these facts, an AFUDC rate of 6.76 percent is hereby approved.
Monthly compounding rate
FPL has further requested a monthly compounding rate of 0.005466 to achieve an annual
AFUDC rate of 6.76 percent. 	In support of the requested monthly compounding rate of
0.005466, the Company provided its calculations in Schedule C attached to its request. Rule 25-
6.0141(4)(a), F.A.C., provides the following formula for discounting the annual AFUDC rate to
reflect monthly compounding.
M=[((1+A/100)1/12)-1] x 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 25-6.0141(4), F.A.C., as presented in Attachment 2. Based on these facts,
we hereby approve a monthly compounding AFUDC rate of 0.005466.
2Order No. PSC-2022-0358-FOF-EI, issued October 21, 2022, in Docket No. 20210015-EI, In re: Petition for rate
increase by Florida Power & Light Company.

ORDER NO. PSC-2024-0223-PAA-EI
DOCKET NO. 20240057-EI
PAGE 3
Effective date
FPL’s requested AFUDC rate was calculated using the most recent 13-month average
capital structure for the period ended December 31, 2023. Rule 25-6.0141(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, 	2024, 	complies 	with 	the
requirement that the effective date does not precede the period used to calculate the rate, and is
hereby approved.
Based on the foregoing, it is
ORDERED by the Florida Public Service Commission that Florida Power & Light
Company’s request to change its AFUDC rate to 6.76 percent based on a 13-month average
capital structure for the period ended December 31, 2023, is hereby granted. It is further
ORDERED that the appropriate rate to achieve an annual AFUDC rate of 6.76 percent is
0.005466. It is further
ORDERED that the AFUDC rate shall become effective January 1, 2024, for all
purposes. 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 this order, this docket shall be
closed upon the issuance of a Consummating Order.

ORDER NO. PSC-2024-0223-PAA-EI
DOC KET NO. 20240057-EI
PAGE4
By ORDER of the Florida Public Service Commission this lfil day of Jul v, 2024.
SBr
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AJ?A1v1J . ~ZM/N
Commission Clerk·
Florida Public Service Commiss ion
2540 Shumard Oak Boulevard
Tallahassee, Florida 32399
(850) 413-6770
www.floridapsc.com
Copies furnished: 	A copy of this document is
provided to the parties of record at the time of
issuance and, if applicable, interested persons.
NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW
The Florida Public Service Commission is required 	by Section 	120.569( I), Florida
Statutes, to notify pa 11i es of any administrative hea r ing 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 availab le 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 tile a petition fo r a formal
proceeding, in the form provided by Rule 28-106.20 I, 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 Jul y 22, 2024.
In the absence of such a petition, this order shall become final and effective upon the
issuance of a Consummat in g 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-2024-0223-PAA-EI
DOCKET NO. 20240057-EI
PAGE 5
ATTACHMENT 1
FLORIDA POWER & LIGHT COMPANY
CAPITAL STRUCTURE USED FOR THE REQUESTED AFUDC RATE
AS OF DECEMBER 31, 2023
COMPANY AS FILED
CAPITAL COMPONENTS
JURISDICTIONAL
AVERAGE
CAPITAL
RATIO
COST OF
CAPITAL
WEIGHTED
COST OF
CAPITAL
COMMON EQUITY 	$29,781,990,449 	48.44% 	10.80% 	5.23%
LONG-TERM DEBT 	$19,576,710,609 	31.84% 	4.46% 	1.42%
SHORT-TERM DEBT 	$1,130,101,159 	1.84% 	4.94%* 	0.09%
CUSTOMER DEPOSITS 	$488,703,160 	0.79% 	2.11%* 	0.02%
DEFERRED INCOME TAXES 	$6,938,457,552 	11.29% 	0.00% 	0.00%
FAS 109 DEFERRED INC. TAX 	$2,730,231,950 	4.44% 	0.00% 	0.00%
INVESTMENT TAX CREDITS 	$833,949,980 	1.36% 	0.00% 	0.00%
TOTAL 	$61,480,144,859 	100.00% 	6.76%
* 13-MONTH AVERAGE

ORDER NO. PSC-2024-0223-PAA-EI
DOCKET NO. 20240057-EI
PAGE 6
ATTACHMENT 2
FLORIDA POWER & LIGHT COMPANY
METHODOLOGY FOR COMPOUNDING AFUDC RATE
AS OF DECEMBER 31, 2023
COMPANY AS FILED
MONTHS 	AFUDC BASE
MONTHLY
AFUDC RATE
CUMULATIVE
AFUDC RATE
1 	1.000000 	0.005466 	0.005466
2 	1.005466 	0.005496 	0.010962
3 	1.010962 	0.005526 	0.016488
4 	1.016488 	0.005556 	0.022044
5 	1.022044 	0.005586 	0.027630
6 	1.027630 	0.005617 	0.033247
7 	1.033247 	0.005648 	0.038895
8 	1.038895 	0.005679 	0.044574
9 	1.044574 	0.005710 	0.050283
10 	1.050283 	0.005741 	0.056024
11 	1.056024 	0.005772 	0.061796
12 	1.061796 	0.005804 	0.067600
Annual Rate (R) = 0.0676
Monthly Rate = ((1+R)^(1/12))-1 = 0.005466