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ORDER NO. PSC -2023 -0142 -PAA -EI DOCKET NO. 2023003 1 -EI PAGE 2 Decision I. AFUDC Rate FPL requested an increase in its AFUDC rate from 6.22 percent to 6.37 percent. Rule 25- 6.0141(3), F.A.C., Allowance for Funds Used During Construction, provides the following guidance: (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, will 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. In support of its requested AFUDC rate of 6.37 percent, FPL provided its calculations and capital structure in Schedules A and B attached to its request. We reviewed the schedules and determined that the proposed rate was calculated in accordance with Rule 25-6.0141(3), F.A.C. The requested increase in the AFUDC rate is due to an increase of 37 basis points in the weighted cost of common equity, offset by a decrease of 17 basis points in the weighted cost of long-term debt, and a decrease of 5 basis points in the weighted cost of short-term debt. In its calculation, the Company appropriately used the mid -point return on equity of 10.80 percent, which was approved by Order No. PSC-2022-0358-FOF-EI, issued October 1, 2022? The AFUDC rate calculation and capital structure are presented in Attachment 1, attached to this Order. H. Appropriate Monthly Compounding Rate FPL requested a monthly compounding rate of 0.005159 to achieve an annual AFUDC rate of 6.37 percent. In support of the requested monthly compounding rate of 0.065159, the Company provided its calculations in Schedule C attached to its request. Rule 25-6.0141(4), F.A.C., provides a formula for discounting the annual AFUDC rate to reflect monthly compounding. The rule also requires that the monthly compounding rate be calculated to six decimal places. 2Order No. PSC-2022-0358-FOF-El, issued October 21, 2022, in Docket No. 20210015-E1, In re: Petition for rate increase by Florida Power & Light Company. r7,e--Z-