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ORDER NO. PSC -2019 -0360 -TRF -EI DOCKET NO. 20190081 -EI PAGE 4 Table 2 Labor and Material Costs (Pre -operational Costs) Low Density 2016 Costs 20M.Costs Difference Underground labor/material costs $2,413.84 $2,558.39 $144.55 Overhead labor/material costs $2,272.49 $2,347.86 $75.37 Per service lateral differential $141.35 $210.53 $69.18 High Density Underground labor/material costs $1,640.45 $1,767.54 $127.09 Overhead labor/material costs $1,691.48 $1,773.71 $82.23 Per service lateral differential ($51.03) ($6.17) ($44.86) Ganged Meter Underground labor/material costs $1,051.82 $1,12;5.49 $73.67 Overhead labor/material costs $1,344.17 $1,397.83 $53.66 Per service lateral differential ($292.35) ($272.34) ($20.01) Source: 2016 Order and FPL's 2019 filing Operational Costs Rule 25-6.078, F.A.C., requires that the differences in net present value of operational costs between overhead and underground systems, including average historical storm restoration costs over the life of the facilities, be included in the URD charge. The non -storm operational costs represent the cost differential between maintaining.and operating an underground versus an overhead system over the life of the facilities. The storm cost component represents storm restoration costs avoided when an area is undergrounded, thereby reducing the cost to restore an overhead system. The avoided storm cost is subtracted from pre -operational and non -storm operational costs, thus reducing the URD differential charge. FPL's methodology to calculate the operational costs was approved in Order No. PSC-08-0774-TRF-El3 and remains the same in the instant docket. Non -storm Operational Costs FPL's operational costs for an overhead system are higher than the operational cost for an underground system, resulting in a negative number as shown in Column B in Table 3. For the low density subdivision, for example, the operational cost differential in 2016 was $208 (indicating that underground operational costs were higher than overhead operational costs). As shown in Table 3, the operational cost differential for the low density subdivision is now -$2,103. FPL explained that the primary reason for this change in operational cost is the increase in overhead operational costs as a result of FPL's increased capital investments associated with its distribution storm hardening initiatives. The utility used a 5 -year average of historical operational costs (2014-2018) for its calculations in this docket. 3 Order No. PSC -08 -0774 -TRF -EI, issued November 24, 2008, in Docket No. 070231 -EI, In re: Petition for approval of 2007 revisions to underground residential and commercial distribution, tariff, by Florida Power & Light Company.