HB 933

1
A bill to be entitled
2An act relating to electric service rates; amending s.
3366.06, F.S.; providing for the Public Service Commission
4to determine if an electric company should absorb a
5portion of certain increases in fuel cost to its
6customers; amending s. 366.8260, F.S.; providing for an
7electric company to absorb certain customer's share of
8increased rates due to a natural disaster; providing an
9effective date.
10
11     WHEREAS, the State of Florida has seen significant
12increases in the cost of electricity during the past 2 years,
13and
14     WHEREAS, this significant increase in the cost of
15electricity has been extremely burdensome to the citizens of
16Florida due to the damages caused by the series of hurricanes
17that have struck the state during the last 2 years and the
18hardships our citizens have had to endure as a result, and
19     WHEREAS, the Legislature of the State of Florida would like
20to provide the citizens of this state some relief from these
21significant increases in the cost of electricity, NOW,
22THEREFORE,
23
24Be It Enacted by the Legislature of the State of Florida:
25
26     Section 1.  Subsection (1) of section 366.06, Florida
27Statutes, is amended to read:
28     366.06  Rates; procedure for fixing and changing.--
29     (1)(a)  A public utility shall not, directly or indirectly,
30charge or receive any rate not on file with the commission for
31the particular class of service involved, and no change shall be
32made in any schedule. All applications for changes in rates
33shall be made to the commission in writing under rules and
34regulations prescribed, and the commission shall have the
35authority to determine and fix fair, just, and reasonable rates
36that may be requested, demanded, charged, or collected by any
37public utility for its service. The commission shall investigate
38and determine the actual legitimate costs of the property of
39each utility company, actually used and useful in the public
40service, and shall keep a current record of the net investment
41of each public utility company in such property which value, as
42determined by the commission, shall be used for ratemaking
43purposes and shall be the money honestly and prudently invested
44by the public utility company in such property used and useful
45in serving the public, less accrued depreciation, and shall not
46include any goodwill or going-concern value or franchise value
47in excess of payment made therefor. In fixing fair, just, and
48reasonable rates for each customer class, the commission shall,
49to the extent practicable, consider the cost of providing
50service to the class, as well as the rate history, value of
51service, and experience of the public utility; the consumption
52and load characteristics of the various classes of customers;
53and public acceptance of rate structures.
54     (b)  Notwithstanding any other provision of law, when the
55fuel costs for an electric company exceed its fuel costs for the
56preceding calendar year by more than 25 percent, the commission
57shall consider whether the electric company should absorb a
58portion of the increase in fuel cost to its customers. In
59determining the amount of the increased fuel cost that the
60electric company will absorb, the commission shall consider the
61prudence and efficiency of such a requirement and whether the
62increase will place a burden on any customers, giving great
63weight to the testimony of the customers of the electric
64company.
65     Section 2.  Paragraph (n) of subsection (1) and subsection
66(2) of section 366.8260, Florida Statutes, are amended to read:
67     366.8260  Storm-recovery financing.--
68     (1)  DEFINITIONS.--As used in this section, the term:
69     (n)  "Storm-recovery costs" means, at the option and
70request of the electric utility, and as approved by the
71commission pursuant to sub-subparagraph (2)(c)(b)1.b., costs
72incurred or to be incurred by an electric utility in undertaking
73a storm-recovery activity. Such costs shall be net of applicable
74insurance proceeds and, where determined appropriate by the
75commission, shall include adjustments for normal capital
76replacement and operating costs, lost revenues, or other
77potential offsetting adjustments. Storm-recovery costs shall
78include the costs to finance any deficiency or deficiencies in
79storm-recovery reserves until such time as storm-recovery bonds
80are issued, and costs of retiring any existing indebtedness
81relating to storm-recovery activities.
82     (2)  FINANCING ORDERS.--
83     (a)  An electric utility may petition the commission for a
84financing order. For each petition, the electric utility shall:
85     1.  Describe the storm-recovery activities that the
86electric utility has undertaken or proposes to undertake and
87describe the reasons for undertaking the activities.
88     2.  Set forth the known storm-recovery costs and estimate
89the costs of any storm-recovery activities that are not
90completed, or for which the costs are not yet known, as
91identified and requested by the electric utility.
92     3.  Set forth the level of the storm-recovery reserve that
93the utility proposes to establish or replenish and has
94determined would be appropriate to recover through storm-
95recovery bonds and is seeking to so recover and such level that
96the utility is funding or will seek to fund through other means,
97together with a description of the factors and calculations used
98in determining the amounts and methods of recovery.
99     4.  Indicate whether the electric utility proposes to
100finance all or a portion of the storm-recovery costs and storm-
101recovery reserve using storm-recovery bonds. If the electric
102utility proposes to finance a portion of such costs, the
103electric utility shall identify that portion in the petition.
104     5.  Estimate the financing costs related to the storm-
105recovery bonds.
106     6.  Estimate the storm-recovery charges necessary to
107recover the storm-recovery costs, storm-recovery reserve, and
108financing costs and the period for recovery of such costs.
109     7.  Estimate any cost savings or demonstrate how it would
110avoid or significantly mitigate rate impacts to customers
111resulting from financing storm-recovery costs with storm-
112recovery bonds as opposed to the traditional method of
113recovering such costs from customers and through alternative
114financing methods available to the electric utility.
115     8.  File with the petition direct testimony supporting the
116petition.
117     (b)1.  In the event of a natural disaster, any customer who
118is without power for more than 21 days shall be exempt from any
119increased rates resulting from the cost attributed to the
120natural disaster and the electric company shall absorb these
121customers' share of the increased rates.
122     2.  Any such costs attributable to natural disasters or
123increased fuel costs shall not be considered as lost revenue by
124the commission in determining any rate increases.
125     (c)(b)1.  Proceedings on a petition submitted pursuant to
126paragraph (a) shall begin with a petition by an electric utility
127and shall be disposed of in accordance with the provisions of
128chapter 120 and applicable rules, except that the provisions of
129this section, to the extent applicable, shall control.
130     a.  Within 7 days after the filing of a petition, the
131commission shall publish a case schedule, which schedule shall
132place the matter before the commission on an agenda that will
133permit a commission decision no later than 120 days after the
134date the petition is filed.
135     b.  No later than 135 days after the date the petition is
136filed, the commission shall issue a financing order or an order
137rejecting the petition. A party to the commission proceeding may
138petition the commission for reconsideration of the financing
139order within 5 days after the date of its issuance. The
140commission shall issue a financing order authorizing financing
141of reasonable and prudent storm-recovery costs, the storm-
142recovery reserve amount determined appropriate by the
143commission, and financing costs if the commission finds that the
144issuance of the storm-recovery bonds and the imposition of
145storm-recovery charges authorized by the order are reasonably
146expected to result in lower overall costs or would avoid or
147significantly mitigate rate impacts to customers as compared
148with alternative methods of financing or recovering storm-
149recovery costs and storm-recovery reserve. Any determination of
150whether storm-recovery costs are reasonable and prudent shall be
151made with reference to the general public interest in, and the
152scope of effort required to provide, the safe and expeditious
153restoration of electric service.
154     2.  In a financing order issued to an electric utility, the
155commission shall:
156     a.  Except as provided in sub-subparagraph f. and in
157subparagraph 4., specify the amount of storm-recovery costs and
158the level of storm-recovery reserves, taking into consideration,
159to the extent the commission deems appropriate, any other
160methods used to recover these costs, and describe and estimate
161the amount of financing costs which may be recovered through
162storm-recovery charges; and specify the period over which such
163costs may be recovered.
164     b.  Determine that the proposed structuring, expected
165pricing, and financing costs of the storm-recovery bonds are
166reasonably expected to result in lower overall costs or would
167avoid or significantly mitigate rate impacts to customers as
168compared with alternative methods of financing or recovering
169storm-recovery costs.
170     c.  Provide that, for the period specified pursuant to sub-
171subparagraph a., the imposition and collection of storm-recovery
172charges authorized in the financing order shall be paid by all
173customers receiving transmission or distribution service from
174the electric utility or its successors or assignees under
175commission-approved rate schedules or under special contracts,
176even if the customer elects to purchase electricity from an
177alternative electric supplier following a fundamental change in
178regulation of public utilities in the state.
179     d.  Determine what portion, if any, of the storm-recovery
180reserves must be held in a funded reserve and any limitations on
181how the reserve may be held, accessed, or used.
182     e.  Include a formula-based mechanism for making
183expeditious periodic adjustments in the storm-recovery charges
184that customers are required to pay under the financing order and
185for making any adjustments that are necessary to correct for any
186overcollection or undercollection of the charges or to otherwise
187ensure the timely payment of storm-recovery bonds and financing
188costs and other required amounts and charges payable in
189connection with the storm-recovery bonds.
190     f.  Specify the storm-recovery property that is, or shall
191be, created in favor of an electric utility or its successors or
192assignees and that shall be used to pay or secure storm-recovery
193bonds and financing costs.
194     g.  Specify the degree of flexibility to be afforded to the
195electric utility in establishing the terms and conditions of the
196storm-recovery bonds, including, but not limited to, repayment
197schedules, interest rates, and other financing costs.
198     h.  Provide that storm-recovery charges be allocated to the
199customer classes using the criteria set out in s. 366.06(1), in
200the manner in which these costs or their equivalent were
201allocated in the cost-of-service study approved in connection
202with the electric utility's last rate case. If the electric
203utility's last rate case was resolved by a settlement agreement,
204the cost-of-service methodology filed by the electric utility in
205that case shall be used.
206     i.  Provide that, after the final terms of an issuance of
207storm-recovery bonds have been established and prior to the
208issuance of storm-recovery bonds, the electric utility shall
209determine the resulting initial storm-recovery charge in
210accordance with the financing order and such initial storm-
211recovery charge shall be final and effective upon the issuance
212of such storm-recovery bonds without further commission action.
213     j.  Include any other conditions that the commission
214considers appropriate and that are not otherwise inconsistent
215with this section.
216
217In performing the responsibilities of this subparagraph and
218subparagraph 5., the commission may engage outside consultants
219or counsel. Any expenses associated with such services shall be
220included as part of financing costs and included in storm-
221recovery charges.
222     3.  A financing order issued to an electric utility may
223provide that creation of the electric utility's storm-recovery
224property pursuant to sub-subparagraph 2.f. is conditioned upon,
225and shall be simultaneous with, the sale or other transfer of
226the storm-recovery property to an assignee and the pledge of the
227storm-recovery property to secure storm-recovery bonds.
228     4.  If the commission issues a financing order, the
229electric utility shall file with the commission at least
230biannually a petition or a letter applying the formula-based
231mechanism pursuant to sub-subparagraph 2.e. and, based on
232estimates of consumption for each rate class and other
233mathematical factors, requesting administrative approval to make
234the adjustments described in sub-subparagraph 2.e. The review of
235such a request shall be limited to determining whether there is
236any mathematical error in the application of the formula-based
237mechanism relating to the appropriate amount of any
238overcollection or undercollection of storm-recovery charges and
239the amount of an adjustment. Such adjustments shall ensure the
240recovery of revenues sufficient to provide for the payment of
241principal, interest, acquisition, defeasance, financing costs,
242or redemption premium and other fees, costs, and charges in
243respect of storm-recovery bonds approved under the financing
244order. Within 60 days after receiving an electric utility's
245request pursuant to this paragraph, the commission shall either
246approve the request or inform the electric utility of any
247mathematical errors in its calculation. If the commission
248informs the utility of mathematical errors in its calculation,
249the utility may correct its error and refile its request. The
250timeframes previously described in this paragraph shall apply to
251a refiled request.
252     5.  Within 120 days after the issuance of storm-recovery
253bonds, the electric utility shall file with the commission
254information on the actual costs of the storm-recovery bond
255issuance. The commission shall review such information to
256determine if such costs incurred in the issuance of the bonds
257resulted in the lowest overall costs that were reasonably
258consistent with market conditions at the time of the issuance
259and the terms of the financing order. The commission may
260disallow any incremental issuance costs in excess of the lowest
261overall costs by requiring the utility to make a contribution to
262the storm reserve in an amount equal to the excess of actual
263issuance costs incurred, and paid for out of storm-recovery bond
264proceeds, and the lowest overall issuance costs as determined by
265the commission. The commission may not make adjustments to the
266storm-recovery charges for any such excess issuance costs.
267     6.  Subsequent to the earlier of the transfer of storm-
268recovery property to an assignee or the issuance of storm-
269recovery bonds authorized thereby, a financing order is
270irrevocable and, except as provided in subparagraph 4. and
271paragraph (d) (c), the commission may not amend, modify, or
272terminate the financing order by any subsequent action or
273reduce, impair, postpone, terminate, or otherwise adjust storm-
274recovery charges approved in the financing order. After the
275issuance of a financing order, the electric utility retains sole
276discretion regarding whether to assign, sell, or otherwise
277transfer storm-recovery property or to cause the storm-recovery
278bonds to be issued, including the right to defer or postpone
279such assignment, sale, transfer, or issuance.
280     (d)(c)  At the request of an electric utility, the
281commission may commence a proceeding and issue a subsequent
282financing order that provides for retiring and refunding storm-
283recovery bonds issued pursuant to the original financing order
284if the commission finds that the subsequent financing order
285satisfies all of the criteria specified in paragraph (c) (b).
286Effective on retirement of the refunded storm-recovery bonds and
287the issuance of new storm-recovery bonds, the commission shall
288adjust the related storm-recovery charges accordingly.
289     (e)(d)  Within 30 days after the commission issues an order
290pursuant to paragraph (c) (b) or a decision denying a request
291for reconsideration or, if the request for reconsideration is
292granted, within 30 days after the commission issues its decision
293on reconsideration, an adversely affected party may petition for
294judicial review in the Florida Supreme Court. The petition for
295review shall be served upon the executive director of the
296commission personally or by service at the office of the
297commission. Review on appeal shall be based solely on the record
298before the commission and briefs to the court and shall be
299limited to determining whether the order issued pursuant to
300paragraph (c) (b), or the order on reconsideration, conforms to
301the constitution and laws of this state and the United States
302and is within the authority of the commission under this
303section. Inasmuch as delay in the determination of the appeal of
304a financing order will delay the issuance of storm-recovery
305bonds, thereby diminishing savings to customers which might be
306achieved if such bonds were issued as contemplated by a
307financing order, the Supreme Court shall proceed to hear and
308determine the action as expeditiously as practicable and give
309the action precedence over other matters not accorded similar
310precedence by law.
311     (f)(e)1.  A financing order remains in effect until the
312storm-recovery bonds issued pursuant to the order have been paid
313in full and the commission-approved financing costs of such
314bonds have been recovered in full.
315     2.  A financing order issued to an electric utility shall
316remain in effect and unabated notwithstanding the
317reorganization, bankruptcy, or other insolvency proceedings of
318the electric utility or its successors or assignees.
319     Section 3.  This act shall take effect July 1, 2006.


CODING: Words stricken are deletions; words underlined are additions.