Fla. Admin. Code Ann. R. 25-6.0141 - Allowance for Funds Used During Construction
(1) Definition of terms of this rule.
(a) Allowance for funds used during
construction (AFDUC) is the carrying cost of funding an eligible utility
project investment during its construction.
(b) A project means a temporary endeavor with
a defined beginning and end series of tasks that need to be completed in order
to reach a specific outcome (e.g., a specific utility investment placed into
service or devoted to public use for the provision of electric service),
designed to produce an in-service plant investment result.
(2) Construction work in progress (CWIP) or
nuclear fuel in process (NFIP) not under a lease agreement that is not included
in rate base may accrue AFUDC under the following conditions:
(a) Eligible projects. The following projects
may be included in CWIP or NFIP and accrue AFUDC:
1. Projects that involve gross additions to
plant in excess of 0.40 percent of the sum of the total balance in Account 101,
Electric Plant in Service, and Account 106, Completed Construction not
Classified, at the time the project commences and
a. Are expected to be completed in excess of
one year after commencement of construction, or
b. Were originally expected to be completed
in one year or less and are suspended for six months or more, or are not ready
for service after one year.
2. A utility may bundle related projects that
achieve a specific outcome if it demonstrates that the total cost of the
bundled projects excluding AFUDC is less than the total cost of the unbundled
projects.
(b) Ineligible
projects. The following projects may be included in CWIP or NFIP, but may not
accrue AFUDC:
1. Projects, or portions
thereof, that do not exceed the level of CWIP or NFIP included in rate base in
the utility's last rate case.
2.
Projects where gross additions to plant are less than 0.40 percent of the sum
of the total balance in Account 101, Electric Plant in Service, and Account
106, Completed Construction not Classified, at the time the project
commences.
3. Projects expected to
be completed in less than one year after commencement of
construction.
4. Property that has
been classified as Property Held for Future Use.
(c) Unless otherwise authorized by the
Commission, the following projects may not be included in CWIP or NFIP, nor
accrue AFUDC:
1. Projects that are
reimbursable by another party.
2.
Projects that have been cancelled.
3. Purchases of assets which are ready for
service when acquired.
4. Portions
of projects providing service during the construction
period.
(d) Other
conditions. Accrual of AFUDC is subject to the following conditions:
1. Accrual of AFUDC is not to be reversed
when a project originally expected to be completed in excess of one year is
completed in one year or less;
2.
AFUDC may not be accrued retroactively if a project expected to be completed in
one year or less is subsequently suspended for six months, or is not ready for
service after one year;
3. When a
project is completed and ready for service, it must be immediately transferred
to the appropriate plant account(s) or Account 106, Completed Construction Not
Classified, and may no longer accrue AFUDC;
4. Where a work order covers the construction
of more than one property unit, the AFUDC accrual must cease on the costs
related to each unit when that unit reaches an in-service status;
5. When the construction activities for an
ongoing project are expected to be suspended for a period exceeding six months,
the utility must notify the Commission of the suspension and the reason(s) for
the suspension, and must submit a proposed accounting treatment for the
suspended project; and
6. When the
construction activities for a suspended project are resumed, the previously
accumulated costs of the project may not accrue AFUDC if such costs have been
included in rate base for ratemaking purposes. However, the accrual of AFUDC
may be resumed when the previously accumulated costs are no longer included in
rate base for ratemaking purposes.
(e) Subaccounts. Account 107, Construction
Work in Progress, and Account 120.1, Nuclear Fuel in Process of Refinement,
Conversion, Enrichment and Fabrication, must be subdivided so as to segregate
the cost of construction projects that are eligible for AFUDC from the cost of
construction projects that are ineligible for AFUDC.
(f) Prior to the commencement of construction
on a project, a utility may file a petition to seek approval to include an
individual project in rate base that would otherwise qualify for AFUDC
treatment per paragraph (2)(a).
(g)
On a prospective basis, the Commission, upon its own motion, may determine that
the potential impact on rates may require the exclusion of an amount of CWIP
from a utility's rate base that does not qualify for AFUDC treatment per
paragraph (2)(a) and to allow the utility to accrue AFUDC on that excluded
amount.
(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 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.
(4) Discounted
monthly AFUDC rate. A discounted monthly AFUDC rate, calculated to six decimal
places, must be employed to ensure that the annual AFUDC charged does not
exceed authorized levels.
(a) The formula used
to discount the annual AFUDC rate to reflect monthly compounding is as follows:
M = [((1 + A/100)1/12)-1] x 100 Where:
M = discounted monthly AFUDC rate
A = annual AFUDC rate
(b) The monthly AFUDC rate, carried out to
six decimal places, must be applied to the average monthly balance of eligible
CWIP and NFIP that is not included in rate base.
(5) The following schedules must be filed
with each petition for a change in AFUDC rate:
(a) Schedule A. A schedule showing the
capital structure, cost rates and weighted average cost of capital that are the
basis for the AFUDC rate in subsection (3).
(b) Schedule B. A schedule showing capital
structure adjustments including the unadjusted capital structure, reconciling
adjustments and adjusted capital structure that are the basis for the AFUDC
rate in subsection (3).
(c)
Schedule C. A schedule showing the calculation of the monthly AFUDC rate using
the methodology set out in this rule.
(6) 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.
(7)
Each utility charging AFUDC must include in its December Earnings Surveillance
Reports to the Commission Schedules A and B identified in subsection (4) of
this rule, as well as disclosure of the AFUDC rate it is currently
charging.
(8) The Commission may,
on its own motion, initiate a proceeding to revise a utility's AFUDC
rate.
(9) Each utility must include
in its Forecasted Surveillance Report a schedule of individual projects that
commence during that forecasted period and are estimated to have a gross cost
in excess of 0.40 percent of the sum of the total balance in Account 101,
Electric Plant in Service, and Account 106, Completed Construction not
Classified. The schedule must include the following minimum information:
(a) Description of the project.
(b) Estimated total cost of the
project.
(c) Estimated construction
commencement date.
(d) Estimated
in-service date.
Notes
Rulemaking Authority 350.127(2), 366.05(1) FS. Law Implemented 350.115, 366.04(2)(a), (f) 366.06(1), (2), 366.08 FS.
New 8-11-86, Formerly 25-6.141, Amended 11-13-86, 12-7-87, 1-7-97, 12-30-19, 1-26-21.
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