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ORDER NO. PSC -2025 -0176 -PAA -EI DOCKET NO. 20250041 EI PAGE 2 FPL requested an increase in its AFUDC rate from 6.76 percent to 6.89 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 6.89 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 primarily to an increase in the common equity balance which increased the weighted average cost of equity by 10.6 basis points, and an increase of 3.6 basis points in the weighted average cost of long-term debt, offset by a decrease of one basis point in the weighted average cost of short-term debt. The cost rate for long-term debt increased from 4.46 percent in 2023 to 4.53 percent in 2024. In its calculation, the Company appropriately used the mitt -point return on equity of 10.8 percent, which was approved by us in Order No. PSC -2022 -0358 -FDF -EI? H. Appropriate Monthly Compounding Rate FPL requested a monthly compounding rate of 0.005568 to achieve an annual AFUDC rate of 6.89 percent. In support of the requested monthly compounding rate of 0.005568, the Company provided its calculations in Schedule C attached to its request. Rule 25-6.0141(4)(x), F.A.C., provides the following formula for discounting the annual AFUDC rate to reflect monthly compounding: M=[((1+A/100)1/12)-1] x 100 Where: M = Discounted monthly AFUDC rate. 'Order No. PSC-2022-0358-FUF-F,i, issued October 21, 2022, in DocW No. 24210015-4 hr re. Pautionfir mte r"nma re by Florida Po r & Light Company. � � - 2