Duke Energy Florida delays large load rate

Duke Energy Florida has asked the Florida Public Service Commission not to set a new rate for large load customers yet. The utility made its case in a Tuesday hearing, arguing its proposed large load tariff provisions are enough to shield other ratepayers from unfairly covering data center costs.

Florida's Public Counsel, Walt Trierweiler, argued the proposal does not satisfy Florida's SB 484 law, signed in May. That law requires public utilities to provide certain minimum tariff and service requirements for large load customers.

"The proposal doesn't attempt to comply with the most basic provisions of SB 484 because Duke claims it doesn't have to," Trierweiler said. He stated Duke cites a settlement agreement preventing immediate rate hikes, but the Office of Public Counsel argues no such agreement exempts the utility from the law.

Compliance and Opposition

Duke Energy Florida is the first investor-owned utility to submit its SB 484 compliance proposal. Its plan includes a 20-year minimum service term for large load customers. It also changes its Contribution in Aid of Construction tariff, requiring large load applicants to advance the total estimated costs to extend service.

Bradley Marshall, a senior attorney for Earthjustice, argued at the hearing. He represented the group Florida Rising. Marshall warned that if a data center bubble bursts, general customers could be stuck paying for unneeded generation and transmission infrastructure. "This is a case of first impression, and the Commission must get this right," he said. He cited an existing affordability crisis and said Duke's proposal fails to make data centers pay their full cost.

John Moyle, an attorney for the Florida Industrial Power Users Group, argued the opposite. He cautioned against a rushed response to data centers that could inadvertently harm large load customers.

Rate Recovery and Legal Provisions

Dianne Triplett, an attorney for Duke, argued no party has shown how approving the tariff could raise any customer's rates before the end of 2027. This is the term of Duke's settlement. "Base rates are frozen during the settlement period," Triplett said. She added that significant large load costs are unlikely during that time, and if they occur, shareholders would bear them.

Major Ryan Thompson, an attorney for the Florida PSC's Office of General Counsel, questioned Duke witnesses. He noted the utility's 2024 settlement agreement has a clause allowing it to modify base rates due to a "government imposition." Matthew Chatelain, a Duke Energy Corp. manager, said he was aware of the clause but unsure what would trigger it.

The clause prevents Duke from seeking recovery of costs traditionally covered in base rates, with exceptions. One exception is for costs that are the direct result of new governmental requirements. Thompson asked if that provision would surprise Chatelain; it would not.

Market Competitiveness

Thompson also questioned Steve Wishart, a witness for Duke from Concentric Energy Advisors. Wishart had testified that utilities compete for large load users, but Florida is not a top-tier market for data centers. Thompson asked if using "average embedded" rates would make Florida more attractive to data centers compared to an "incremental cost" tariff.

Wishart confirmed that average embedded rates are attractive to data centers due to a perception of fairness. He also testified this structure definitely costs data centers more long-term because of asset depreciation.