A look at how one utility put its required regular decommissioning report to support a change in depreciation rates.
When Tampa Electric Co. needed a new decommissioning report on its five fossil fuel-fired power stations, as part of its regular update to the Florida Public Service Commission (FPSC), the regulated utility turned to analysts at Burns & McDonnell for assistance. This study — required once every four years as part of its depreciation rates update — provides an estimate of total decommissioning obligations at the end of a plant's useful life. Finalized in March 2011, the study was filed with the FPSC in support of proposed new depreciation rates.
As the principal subsidiary of TECO Energy Inc., Tampa Electric delivers 4,600 megawatts of generating capacity to more than 672,000 residential, commercial and industrial customers in west central Florida. Electric generating plants include Bayside combustion turbines (CTs, natural gas), Big Bend Steam Units (coal), Big Bend CT (natural gas/oil), Polk Unit 1 integrated gasification combined cycle (coal) and Polk Units 2-5 CTs (natural gas/oil).
"We provided them with a comprehensive look at decommissioning, as well as a full study that would hold up to regulatory scrutiny," explains Jeff Kopp, a Burns & McDonnell analyst. "In turn, this allows Tampa Electric to support the costs expected to be incurred upon retiring any of these plants as part of its depreciation filing with the FPSC."
As an example of the work performed, through extensive drawing reviews and site visits, Burns & McDonnell developed accurate estimates of scrap metal quantities expected at plant dismantling - and then adequately accounted for the expected scrap value. "Efforts like that essentially save future ratepayers money," he adds, "because it means the utility appropriately charges customers through its annual depreciation rates to recover a more accurate estimate of future demolition costs."