Laserfiche WebLink
• <br />• <br />ORDER NO. PSC -2017 -0359 -PAA -EI <br />DOCKET NO. 20170097 -El <br />PAGE 3 <br />Further supporting its request, FPL held consultations with its engineering subject matter <br />experts, as well as energy storage equipment manufacturers, to arrive at the proposed 10 -year <br />ASL and zero percent NS level. FPL contends its proposal is reasonable given the newness of <br />the technology and an industry -wide lack of available retirement and salvage data. <br />Given the fact that utility -scale energy storage equipment/technology is in its infancy <br />phase of development and application, we find that an ASL at the bottom -end of a 10- to 15 -year <br />range represents a measured and reasonable approach in life estimation. Further, we will have <br />future opportunities to evaluate FPL's depreciation data associated with useful lives and net <br />salvage levels and order modifications as appropriate.9 We also find that the Company's account <br />classifications outlined in its petition, to which any newly -established depreciation rate would <br />apply, comport with recent accounting guidance from the FERC. Further, any depreciation rate <br />we approve here will initially only be used for accounting purposes and will have no impact on <br />base rates during the term of the Company's 2016 Settlement Agreement.10 <br />For the reasons outlined above, we hereby approve an annual depreciation rate of 10 <br />percent, applicable to FPL's newly -established Account 348 - Energy Storage Equipment — <br />Production, Account 351 - Energy Storage Equipment — Transmission, and Account 363 - <br />Energy Storage Equipment — Distribution. <br />FPL has also requested authorization to transfer of certain investment and corresponding <br />reserve amounts related to energy storage equipment presently on FPL's books.11 These <br />investments, which are listed in Table 1 below, are FPL's Community Storage facilities, Florida <br />Bay Everglades National Park facilities, Miami Open Tennis Stadium facilities, and South West <br />facilities. These assets are currently recorded in FERC Account 362 — Station Equipment, and <br />are being depreciated at the authorized rate of 1.9 percent for that account.12 <br />The energy storage equipment listed in Table 1 was deployed as part of the Company's <br />participation in the "White House Summit on Scaling Renewable Energy and Storage." The <br />Summit, which was held in 2016, was essentially for the purpose of exchanging ideas and <br />exploring ways to "scale -up" and/or "grid -scale" energy storage technologies. We previously <br />reviewed a portion of these energy storage investments in FPL's last rate case, Docket No. <br />160021 -EI, In re: Petition for rate increase by Florida Power & Light Company.13 <br />FPL's methodology for determining its proposed plant investment apportionments from <br />Account 362 - Station Equipment to Account 348 - Energy Storage Equipment — Production and <br />Account 363 - Energy Storage Equipment — Distribution, focused on how the assets were utilized <br />on the Company's system. Specifically, if the asset is used for peak shaving, it's classified as a <br />production investment and recorded to account 348. If an asset is used for frequency response, <br />9 Rule 25-6.0436(4)(a), F.A.C., requires investor-owned electric companies to file a depreciation study for <br />Commission review at least once every four years from submission of the previous study and/or pursuant to <br />Commission order. <br />10 Pursuant to the terms of the 2016 Settlement Agreement, approved by Order No. PSC -16 -0560 -AS -EI, ¶ 18, FPL: <br />"will pursue cost recovery for the Battery Storage Pilot in its next general base rate case ...". <br />11 Rule 25-6.0436(2)(b), F.A.C., requires that: "[n]o utility shall reallocate accumulated depreciation reserves among <br />any primary accounts and sub -accounts without prior Commission approval." <br />12 Order No. PSC -16 -0560 -AS -EI. <br />13 See Docket No. 160021 -EI, Staff's Thirty -Second Set of Interrogatories, No. 403 (Hearing Exhibit 429). <br />2.- 14 <br />