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ORDER NO. PSC -2022 -0433 -TRF -EI
<br />DOCKET NO. 20220165 -El
<br />PAGE 2
<br />has elected to use PTCs instead of ITCs because it provides a greater tax benefit and customer
<br />savings. The application of PTCs to FPL's six rate base solar facilities results in a tax savings of
<br />$31,195,561. In comparison, the amortization of ITCs is $1,773,277 per year. The ITC
<br />amortization, and a $7,548,582 adjustment to account for the impact to the capital structure due
<br />to a net decrease of unamortized ITCs and increase in accumulated deferred income taxes
<br />(ADITs), is netted against the PTC balance. In addition, state income tax expense and other non -
<br />jurisdictional adjustments increased by $1,223,010 due to the removal of the ITCs and is also
<br />offset against PTC tax savings. In total, the net change in FPL's jurisdictional adjusted base
<br />revenue requirement is a reduction of $35,747,856.2 We have reviewed FPL's calculations in its
<br />amended petition filed on November 14, 2022, and find that they are reasonable and appropriate.
<br />FPL's calculations are summarized in Table 1. For these reasons, we hereby approve FPL's
<br />calculations of net tax savings of $35,747,856 for 2022 resulting from the Company's election to
<br />use PTCs instead of ITCs as allowed by the IRA.
<br />TABLE 1
<br />CALCULATION OF PTC IMPACT ON 2022 REVENUE REQUIREMENT
<br />Production Tax Credits
<br />$31,195,561
<br />ITC Amortization Removal
<br />1,773,277
<br />State Income Tax Expense and Other Non -Jurisdictional Adjustments
<br />1,223,010
<br />ITC Ca ital Structure Impact
<br />7,548,582
<br />Net Reduction in 2022 Revenue Requirement
<br />35 747 85
<br />Source: DN 11040-2022.
<br />FPL's application of PTCs has reduced its 2022 jurisdictional adjusted revenue
<br />requirement by $35,747,856. Paragraph 13(a) of its 2021 Settlement states: "[a]ny effects of tax
<br />reform on the retail revenue requirements (but no earlier than January 1, 2022) through the date
<br />of the base rate adjustment shall be flowed back to, or collected from, customers through the
<br />Capacity Cost Recovery Clause (CCR) on the same basis as used in any base rate adjustment."'
<br />The impact of this refund on the capacity cost portion of a 1,000 kilowatt-hour (kWh)
<br />residential bill for January 2023 will be a credit of $1.97 on the 1,000 kWh residential bill. The
<br />Company believes applying the entire 2022 refund to a single month, with a commensurate one-
<br />month rate impact, will provide a more noticeable reduction to customers' bills than spreading
<br />the refund over a full twelve-month period. After January, or from February through December
<br />2023, the proposed residential capacity charge will be $2.12 per 1,000 kWh.' We have reviewed
<br />the Company's calculation of the net tax savings from the effective date of the IRA, through the
<br />base rate adjustment, and hereby approve a refund of $35,747,856 in January 2023 through a
<br />one-time reduction to FPL's CCR factors.
<br />'Document No. 11040-2022, Exhibit A-5, page 1 of 1, Line 5.
<br />3Order No. PSC -2021 -0446 -S -EI, issued December 2, 2021, in Docket No. 20210015 -EI, In re: Petition for rate
<br />increase by Florida Power & Light Company; and Order No. PSC -2021 -0446A -S -EI, issued December 9, 2021, in
<br />Docket No. 20210015 -EI, Petition for rate increase by Florida Power & Light Company.
<br />4Proposed in Docket No. 20220001 -EI.
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