Bill Text: FL S1386 | 2013 | Regular Session | Introduced
Bill Title: Water and Wastewater Utility Systems
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2013-05-03 - Died in Communications, Energy, and Public Utilities [S1386 Detail]
Download: Florida-2013-S1386-Introduced.html
Florida Senate - 2013 SB 1386 By Senator Hays 11-00730B-13 20131386__ 1 A bill to be entitled 2 An act relating to water and wastewater utility 3 systems; creating s. 159.810, F.S.; requiring that the 4 Division of Bond Finance of the State Board of 5 Administration review the allocation of private 6 activity bonds to determine the availability of 7 additional allocation or reallocation of bonds for 8 water and wastewater infrastructure projects; amending 9 s. 212.08, F.S.; extending tax exemptions to certain 10 investor-owned water and wastewater utilities; 11 amending s. 367.022, F.S.; exempting from regulation 12 by the Florida Public Service Commission any person 13 who resells water service to certain tenants or 14 residents up to a specified cost; amending s. 367.081, 15 F.S.; establishing criteria for the commission to 16 consider in determining the quality of water and 17 wastewater services provided by a utility; 18 establishing a procedure for the commission to follow 19 if it determines that a utility has failed to provide 20 water and wastewater services that meet certain 21 standards; authorizing rules adopted by the commission 22 to include fines; authorizing the commission to create 23 a utility reserve fund to establish rates for a 24 utility; providing reasons to automatically increase 25 or decrease approved rates of a utility; establishing 26 criteria for such adjusted rates; providing specified 27 expense items that are eligible for automatic increase 28 or decrease of utility rates; providing standards for 29 the commission to establish, by rule, additional 30 specific expense items that are eligible to 31 automatically increase or decrease utility rates; 32 deleting certain requirements for approved utility 33 rates that are automatically increased or decreased, 34 upon notice to the commission, because of an increase 35 or decrease in the fees imposed upon such utility; 36 deleting a prohibition on a utility from using such 37 procedure to increase its rates under certain 38 circumstances; prohibiting the commission from 39 awarding rate case expense under certain 40 circumstances; amending s. 367.0814, F.S.; describing 41 the circumstances under which the commission may and 42 may not award rate case expense to cover attorney fees 43 or fees for other outside consultants; providing that 44 the commission may adopt related rules; amending s. 45 367.0816, F.S.; requiring the commission to determine 46 that the amount of rate case expense is reasonable 47 before such rate case expense can be apportioned for a 48 4-year recovery period; providing limitations on and 49 rules for the 4-year amortized rate case expense 50 recovery; amending s. 403.8532, F.S.; allowing the 51 Department of Environmental Protection to make, or 52 request that the Florida Water Pollution Control 53 Financing Corporation make, loans, grants, and 54 deposits to for-profit privately owned or investor 55 owned systems, and deleting restrictions that provide 56 otherwise; providing an effective date. 57 58 Be It Enacted by the Legislature of the State of Florida: 59 60 Section 1. Section 159.810, Florida Statutes, is created to 61 read: 62 159.810 Allocation bonds for water and wastewater 63 infrastructure projects.—The division shall review the 64 allocation of private activity bonds to determine the 65 availability of additional allocation or reallocation of bonds 66 for water and wastewater infrastructure projects. 67 Section 2. Paragraph (kkk) is added to subsection (7) of 68 section 212.08, Florida Statutes, to read: 69 212.08 Sales, rental, use, consumption, distribution, and 70 storage tax; specified exemptions.—The sale at retail, the 71 rental, the use, the consumption, the distribution, and the 72 storage to be used or consumed in this state of the following 73 are hereby specifically exempt from the tax imposed by this 74 chapter. 75 (7) MISCELLANEOUS EXEMPTIONS.—Exemptions provided to any 76 entity by this chapter do not inure to any transaction that is 77 otherwise taxable under this chapter when payment is made by a 78 representative or employee of the entity by any means, 79 including, but not limited to, cash, check, or credit card, even 80 when that representative or employee is subsequently reimbursed 81 by the entity. In addition, exemptions provided to any entity by 82 this subsection do not inure to any transaction that is 83 otherwise taxable under this chapter unless the entity has 84 obtained a sales tax exemption certificate from the department 85 or the entity obtains or provides other documentation as 86 required by the department. Eligible purchases or leases made 87 with such a certificate must be in strict compliance with this 88 subsection and departmental rules, and any person who makes an 89 exempt purchase with a certificate that is not in strict 90 compliance with this subsection and the rules is liable for and 91 shall pay the tax. The department may adopt rules to administer 92 this subsection. 93 (kkk) Investor-owned water and wastewater utilities.—Sales 94 or leases to an investor-owned water or wastewater utility 95 operated by a Florida corporation are exempt from the tax 96 imposed by this chapter if the sole or primary function of the 97 corporation is to construct, maintain, or operate a water or 98 wastewater system in this state and if the goods or services 99 purchased or leased are used in this state. 100 Section 3. Present subsections (9) through (12) of section 101 367.022, Florida Statutes, are renumbered as subsections (10) 102 through (13), respectively, and a new subsection (9) is added to 103 that section, to read: 104 367.022 Exemptions.—The following are not subject to 105 regulation by the commission as a utility nor are they subject 106 to the provisions of this chapter, except as expressly provided: 107 (9) Any person who resells water service to his or her 108 tenants or to individually metered residents for a fee that does 109 not exceed the actual purchase price plus: 110 (a) Nine percent of the actual purchase price; or 111 (b) The actual cost of meter reading and billing. 112 Section 4. Subsections (2), (4), and (7) of section 113 367.081, Florida Statutes, are amended to read: 114 367.081 Rates; procedure for fixing and changing.— 115 (2)(a)1. The commission shall,eitherupon request or upon 116 its own motion, fix rates thatwhichare just, reasonable, 117 compensatory, and not unfairly discriminatory. In every such 118 proceeding, the commission shall consider the value and quality 119 of the service and the cost of providing the service, which must 120shallinclude, but need not be limited to, debt interest; the 121 requirements of the utility for working capital; maintenance, 122 depreciation, tax, and operating expenses incurred in the 123 operation of all property used and useful in the public service; 124 and a fair return on the investment of the utility in property 125 used and useful in the public service. However, the commission 126 mayshallnot allow the inclusion of contributions-in-aid-of 127 construction in the rate base of any utility during a rate 128 proceeding, nor shall the commission impute prospective future 129 contributions-in-aid-of-construction against the utility’s 130 investment in property used and useful in the public service; 131 and accumulated depreciation on such contributions-in-aid-of 132 construction mayshallnot be used to reduce the rate base, nor 133 shall depreciation on such contributed assets be considered a 134 cost of providing utility service. 135 2. For purposes of such proceedings, the commission shall 136 consider utility property, including land acquired or facilities 137 constructed or to be constructed within a reasonable time in the 138 future, not to exceed 24 months after the end of the historic 139 base year used to set final rates unless a longer period is 140 approved by the commission, to be used and useful in the public 141 service, if: 142 a. Such property is needed to serve current customers; 143 b. Such property is needed to serve customers 5 years after 144 the end of the test year used in the commission’s final order on 145 a rate request as provided in subsection (6) at a growth rate 146 for equivalent residential connections not to exceed 5 percent 147 per year; or 148 c. Such property is needed to serve customers more than 5 149 full years after the end of the test year used in the 150 commission’s final order on a rate request as provided in 151 subsection (6) only to the extent that the utility presents 152 clear and convincing evidence to justify such consideration. 153 3. In determining the value and quality of water service 154 provided by a utility and whether such utility has satisfied its 155 obligation to provide water service to its customers, the 156 commission must consider the extent to which the utility meets 157 secondary drinking water standards regarding the taste, odor, 158 color, or corrosiveness which are established by the Department 159 of Environmental Protection and the local government. The 160 commission must consider: 161 a. Testimony and evidence provided by customers and the 162 utility. 163 b. Complaints customers have filed over the past 5 years 164 with the commission, the Department of Environmental Protection, 165 the county health departments, or the local government which 166 relate to the taste, odor, color, or corrosiveness. 167 c. The results of past tests required by the Department of 168 Environmental Protection or county health departments which 169 measure the utility’s compliance with the applicable secondary 170 drinking water standards relating to the taste, odor, color, or 171 corrosiveness. 172 d. Other tests that the commission deems necessary. 173 4. In determining the value and quality of wastewater 174 service provided by a utility, the commission must consider the 175 extent to which the utility provides wastewater service to its 176 customers which does not cause odor, noise, aerosol drift, or 177 lighting that adversely affects customers. The commission must 178 consider: 179 a. Testimony and evidence provided by customers and the 180 utility. 181 b. Complaints customers have filed over the past 5 years 182 with the commission, the Department of Environmental Protection, 183 the county health departments, or the local government which 184 relate to the alleged odor, noise, aerosol drift, or lighting 185 problem. 186 5. If the commission determines that a utility provides 187 water service that does not meet the secondary water quality 188 standards of the Department of Environmental Protection and the 189 local government regarding taste, odor, color, or corrosiveness, 190 or that a utility provides wastewater service that adversely 191 affects customers due to odor, noise, aerosol drift, or 192 lighting, the utility must provide estimates of the costs and 193 benefits of various solutions to the problems. The utility must 194 meet with its customers to discuss the costs and benefits of the 195 various solutions and report to the commission the conclusions 196 of the meetings. The commission shall adopt rules to assess and 197 enforce as necessary the utility’s compliance with this section. 198 The rules must prescribe penalties, including fines and 199 reduction of return on equity of up to 100 basis points, if a 200 utility fails to adequately address or offer solutions to the 201 water or wastewater problems. 202 203 Notwithstanding the provisions of this paragraph, the commission 204 shall approve rates for service which allow a utility to recover 205 from customers the full amount of environmental compliance 206 costs. Such rates may not include charges for allowances for 207 funds prudently invested or similar charges. For purposes of 208 this requirement, the term “environmental compliance costs” 209 includes all reasonable expenses and fair return on any prudent 210 investment incurred by a utility in complying with the 211 requirements or conditions contained in any permitting, 212 enforcement, or similar decisions of the United States 213 Environmental Protection Agency, the Department of Environmental 214 Protection, a water management district, or any other 215 governmental entity with similar regulatory jurisdiction. 216 (b) In establishing initial rates for a utility, the 217 commission may project the financial and operational data as set 218 out in paragraph (a) to a point in time when the utility is 219 expected to be operating at a reasonable level of capacity. 220 (c) In establishing rates for a utility, the commission may 221 authorize the creation of a utility reserve fund. The commission 222 shall adopt rules to govern the fund, including, but not limited 223 to, rules relating to expenses for which the fund may be used, 224 segregation of reserve account funds, requirements for a capital 225 improvement plan, and requirements for commission authorization 226 before disbursements from the reserve fund. 227 (4)(a) On or before March 31 of each year, the commission 228 by order shall establish a price increase or decrease index for 229 major categories of operating costs incurred by utilities 230 subject to its jurisdiction reflecting the percentage of 231 increase or decrease in such costs from the most recent 12-month 232 historical data available. The commission by rule shall 233 establish the procedure to be used in determining such indices 234 and a procedure by which a utility, without further action by 235 the commission, or the commission on its own motion, may 236 implement an increase or decrease in its rates based upon the 237 application of the indices to the amount of the major categories 238 of operating costs incurred by the utility during the 239 immediately preceding calendar year, except to the extent of any 240 disallowances or adjustments for those expenses of that utility 241 in its most recent rate proceeding before the commission. The 242 rules shall provide that, upon a finding of good cause, 243 including inadequate service, the commission may order a utility 244 to refrain from implementing a rate increase hereunder unless 245 implemented under a bond or corporate undertaking in the same 246 manner as interim rates may be implemented under s. 367.082. A 247 utility may not use this procedure between the official filing 248 date of the rate proceeding and 1 year thereafter, unless the 249 case is completed or terminated at an earlier date. A utility 250 may not use this procedure to increase any operating cost for 251 which an adjustment has been or could be made under paragraph 252 (b), or to increase its rates by application of a price index 253 other than the most recent price index authorized by the 254 commission at the time of filing. 255 (b)1. The approved rates of a utility must automatically 256 increase or decrease, without hearing, upon verified notice to 257 the commission 45 days before implementation of the increase or 258 decrease, informing the commission that its costs for a 259 specified expense item have changed. The new rates authorized 260 must reflect, on an amortized or annual basis, as appropriate, 261 the cost or amount of change in the cost of the specified 262 expense item. The new rates may not reflect the costs of a 263 specified expense item already included in the rates of a 264 utility. Specified expense items eligible for automatic increase 265 or decrease of a utility’s rates include, but are not limited 266 to: 267 a. The rates charged by a governmental authority or other 268 water or wastewater utility regulated by the commission which 269 provides utility service to the utility. 270 b. The rates or fees that the utility is charged for 271 electric power. 272 c. The amount of ad valorem taxes assessed against the 273 utility’s used and useful property. 274 d. The fees charged by the Department of Environmental 275 Protection in connection with the National Pollutant Discharge 276 Elimination System Program permit. 277 e. The regulatory assessment fees imposed upon the utility 278 by the commission. 279 f. Costs incurred for water quality or wastewater quality 280 testing required by the Department of Environmental Protection. 281 g. The fees charged for wastewater sludge disposal. 282 h. A loan service fee or loan origination fee associated 283 with a loan related to an eligible project. The commission shall 284 adopt rules to determine eligible projects, which must be 285 limited to projects associated with new infrastructure or 286 improvements to existing infrastructure needed to achieve or 287 maintain compliance with federal, state, and local governmental 288 primary or secondary drinking water standards or wastewater 289 treatment standards that relate to: 290 (I) The provision of water or wastewater service for 291 existing customers; 292 (II) The violation or prevention of a violation of federal, 293 state, and local governmental primary or secondary health 294 standards; 295 (III) The replacement or upgrade of aging water or 296 wastewater infrastructure if needed to achieve or maintain 297 compliance with federal, state, and local governmental primary 298 or secondary regulations; or 299 (IV) Projects consistent with the most recent long-range 300 plan of the utility on file with the commission. Eligible 301 projects do not include projects primarily intended to serve 302 future growth. 303 i. Costs incurred for a tank inspection required by the 304 Department of Environmental Protection or a local governmental 305 authority. 306 j. Operator and distribution license fees required by the 307 Department of Environmental Protection or a local governmental 308 authority. 309 k. Water or wastewater operating permit fees charged by the 310 Department of Environmental Protection or a local governmental 311 authority. 312 l. Consumptive or water use permit fees charged by a water 313 management district. 314 2. A utility may not use this procedure to increase or 315 decrease its rates as a result of an increase or decrease in a 316 specific expense item for which a cost increase or decrease 317 occurred more than 12 months before the filing by the utility. 318 3. The commission may establish by rule additional specific 319 expense items that are eligible to automatically increase or 320 decrease a utility’s rates as provided in this paragraph. To be 321 eligible for such treatment, any additional expense items must 322 be imposed upon the utility by a local, state, or federal law, 323 rule, order, or notice, and must be outside the control of the 324 utility. If the commission exercises its authority to establish 325 such rule, at least once every 5 years the commission must 326 review the rule and determine if each expense item should 327 continue to be eligible for automatic increase or decrease of a 328 utility’s rates, or if any additional items should become 329 eligible for automatic increase or decrease of a utility’s rates 330 as provided in this paragraphThe approved rates of any utility331which receives all or any portion of its utility service from a332governmental authority or from a water or wastewater utility333regulated by the commission and which redistributes that service334to its utility customers shall be automatically increased or335decreased without hearing, upon verified notice to the336commission 45 days prior to its implementation of the increase337or decrease that the rates charged by the governmental authority338or other utility have changed.The approved rates of any utility339which is subject to an increase or decrease in the rates or fees340that it is charged for electric power, the amount of ad valorem341taxes assessed against its used and useful property, the fees342charged by the Department of Environmental Protection in343connection with the National Pollutant Discharge Elimination344System Program, or the regulatory assessment fees imposed upon345it by the commission shall be increased or decreased by the346utility, without action by the commission, upon verified notice347to the commission 45 days prior to its implementation of the348increase or decrease that the rates charged by the supplier of349the electric power or the taxes imposed by the governmental350authority, or the regulatory assessment fees imposed upon it by351the commission have changed. The new rates authorized shall352reflect the amount of the change of the ad valorem taxes or353rates imposed upon the utility by the governmental authority,354other utility, or supplier of electric power, or the regulatory355assessment fees imposed upon it by the commission. The approved356rates of any utility shall be automatically increased, without357hearing, upon verified notice to the commission 45 days prior to358implementation of the increase that costs have been incurred for359water quality or wastewater quality testing required by the360Department of Environmental Protection. The new rates authorized361shall reflect, on an amortized basis, the cost of, or the amount362of change in the cost of, required water quality or wastewater363quality testing performed by laboratories approved by the364Department of Environmental Protection for that purpose. The new365rates, however, shall not reflect the costs of any required366water quality or wastewater quality testing already included in367a utility’s rates. A utility may not use this procedure to368increase its rates as a result of water quality or wastewater369quality testing or an increase in the cost of purchased water370services, sewer services, or electric power or in assessed ad371valorem taxes, which increase was initiated more than 12 months372before the filing by the utility.373 4. The provisions of this subsection do not prevent a 374 utility from seeking a change in rates pursuant to the 375 provisions of subsection (2). 376 (c) Before implementing a change in rates under this 377 subsection, the utility shall file an affirmation under oath as 378 to the accuracy of the figures and calculations upon which the 379 change in rates is based, stating that the change will not cause 380 the utility to exceed the range of its last authorized rate of 381 return on equity. Whoever makes a false statement in the 382 affirmation required hereunder, which statement he or she does 383 not believe to be true in regard to any material matter, commits 384is guilty ofa felony of the third degree, punishable as 385 provided in s. 775.082, s. 775.083, or s. 775.084. 386 (d) If, within 15 months after the filing of a utility’s 387 annual report required by s. 367.121, the commission finds that 388 the utility exceeded the range of its last authorized rate of 389 return on equity after an adjustment in rates as authorized by 390 this subsection was implemented within the year for which the 391 report was filed or was implemented in the preceding year, the 392 commission may order the utility to refund, with interest, the 393 difference to the ratepayers and adjust rates accordingly. This 394 provision doesshallnotbe construed torequire a bond or 395 corporate undertaking not otherwise required. 396 (e) Notwithstanding anything herein to the contrary, a 397 utility may not adjust its rates under this subsection more than 398 two times in any 12-month period. For the purpose of this 399 paragraph, a combined application or simultaneously filed 400 applications that were filed under the provisions of paragraphs 401 (a) and (b) shall be considered one rate adjustment. 402 (f) The commission shall, at leastmay regularly, not less403often thanonce each year, establish by order a leverage formula 404 or formulae that reasonably reflect the range of returns on 405 common equity for an average water or wastewater utility and 406 which, for purposes of this section, shall be used to calculate 407 the last authorized rate of return on equity for any utility 408 which otherwise would have no established rate of return on 409 equity. In any other proceeding in which an authorized rate of 410 return on equity is to be established, a utility, in lieu of 411 presenting evidence on its rate of return on common equity, may 412 move the commission to adopt the range of rates of return on 413 common equity that has been established under this paragraph. 414 (7) The commission shall determine the reasonableness of 415 rate case expenses and shall disallow all rate case expenses 416 determined to be unreasonable. No rate case expense determined 417 to be unreasonable shall be paid by a consumer. In determining 418 the reasonable level of rate case expense the commission shall 419 consider the extent to which a utility has utilized or failed to 420 utilize the provisions of paragraph (4)(a) or paragraph (4)(b) 421 and such other criteria as it may establish by rule. The 422 commission may not award rate case expense that exceeds the 423 total rate increase approved by the commission, not including 424 any rate case expense, in a rate case filed pursuant to this 425 section. 426 Section 5. Subsection (3) of section 367.0814, Florida 427 Statutes, is amended to read: 428 367.0814 Staff assistance in changing rates and charges; 429 interim rates.— 430 (3) The provisions of s. 367.081(1), (2)(a), (2)(c),and431 (3), and (7) shall apply in determining the utility’s rates and 432 charges. However, the commission may not award rate case expense 433 to cover fees for attorneys or other outside consultants who are 434 engaged for purposes of preparing or filing the case if a 435 utility receives staff assistance in changing rates and charges 436 pursuant to this section, unless the Office of Public Counsel or 437 interested parties have intervened. The commission may award 438 rate case expense for attorney fees or other outside consultant 439 fees if the fees are incurred for the purpose of providing 440 consulting or legal services to the utility after the initial 441 staff report is made available to customers and the utility. If 442 there is a protest or appeal by a party other than the utility, 443 the commission may award rate case expense to the utility for 444 attorney fees or other outside consultant fees for costs 445 incurred after the protest or appeal. The commission may adopt 446 rules to implement this subsection. 447 Section 6. Section 367.0816, Florida Statutes, is amended 448 to read: 449 367.0816 Recovery of rate case expenses.— 450 (1) The amount of rate case expense determined to be 451 reasonable by the commission pursuant to s. 367.081the452provisions of this chapter to be recovered through a public453utilities rateshall be apportioned for recovery over a period 454 of 4 years. At the conclusion of the recovery period, the rate 455 of the public utility shall be reduced immediately by the amount 456 of rate case expense previously included in rates. 457 (2) A utility may recover the 4-year amortized rate case 458 expense for only one rate case at a time. If the commission 459 approves and a utility implements a rate change from a 460 subsequent rate case pursuant to this section, the utility 461 forfeits any unamortized rate case expense from a prior rate 462 case. The unamortized portion of rate case expense for a prior 463 case must be removed from rates before the implementation of an 464 additional amortized rate case expense for the most recent rate 465 proceeding. This limitation does not apply to the recovery of 466 rate case expense for a limited proceeding filed pursuant to s. 467 367.0822. 468 Section 7. Subsection (3) of section 403.8532, Florida 469 Statutes, is amended to read: 470 403.8532 Drinking water state revolving loan fund; use; 471 rules.— 472 (3) The department may make, or request that the 473 corporation make, loans, grants, and deposits to community water 474 systems, for-profit privately owned or investor-owned systems, 475 nonprofit transient noncommunity water systems, and nonprofit 476 nontransient noncommunity water systems to assist them in 477 planning, designing, and constructing public water systems,478unless such public water systems are for-profit privately owned479or investor-owned systems that regularly serve 1,500 service480connections or more within a single certified or franchised481area.However, a for-profit privately owned or investor-owned482public water system that regularly serves 1,500 service483connections or more within a single certified or franchised area484may qualify for a loan only if the proposed project will result485in the consolidation of two or more public water systems.The 486 department may provide loan guarantees, purchase loan insurance, 487 and refinance local debt through the issue of new loans for 488 projects approved by the department. Public water systems may 489 borrow funds made available pursuant to this section and may 490 pledge any revenues or other adequate security available to them 491 to repay any funds borrowed. 492 (a) The department shall administer loans so that amounts 493 credited to the Drinking Water Revolving Loan Trust Fund in any 494 fiscal year are reserved for the following purposes: 495 1. At least 15 percent for qualifying small public water 496 systems. 497 2. Up to 15 percent for qualifying financially 498 disadvantaged communities. 499 (b) If an insufficient number of the projects for which 500 funds are reserved under this subsection have been submitted to 501 the department at the time the funding priority list authorized 502 under this section is adopted, the reservation of these funds no 503 longer applies. The department may award the unreserved funds as 504 otherwise provided in this section. 505 Section 8. This act shall take effect July 1, 2013.