Florida Senate - 2011 COMMITTEE AMENDMENT Bill No. SB 950 Barcode 797272 LEGISLATIVE ACTION Senate . House Comm: RCS . 03/23/2011 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Environmental Preservation and Conservation (Jones) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete everything after the enacting clause 4 and insert: 5 6 Section 1. Section 367.0819, Florida Statutes, is created 7 to read: 8 367.0819 Recovery of costs for system improvement 9 projects.— 10 (1)(a) In order to promote utility investment in system 11 improvement projects, the commission shall allow a utility to 12 recover prudently incurred capital costs related to nonrevenue 13 producing projects to enhance water quality, fire protection 14 reliability, and long-term system viability through a surcharge 15 collected pursuant to this section. The costs of existing or new 16 facilities to serve new customers are not recoverable through 17 this surcharge. 18 (b) For purposes of this section, a the term “nonrevenue 19 producing project” means a project that is not constructed or 20 installed for the purpose of serving a new customer. 21 (2) A utility seeking to establish a surcharge pursuant to 22 this section must: 23 (a) Submit, for commission approval, the proposed surcharge 24 tariff establishing a formula for the calculation of rates 25 reflecting the surcharge, which rates provide for recovery of 26 depreciation and return on investment for each eligible project. 27 The return on investment for each eligible project must be based 28 on the utility’s last authorized pretax rate of return. The 29 surcharge must be calculated, applied, and recovered in 30 accordance with the utility’s last authorized rate structure. 31 Until the surcharge is reset pursuant to paragraph (4)(d), the 32 total cumulative amount of the surcharge revenue recovered by 33 the utility may not exceed 8 percent of the utility’s total 34 revenues, excluding revenues collected through the surcharge, 35 for the preceding calendar year. 36 (b) Provide notice by mail of the initial surcharge tariff 37 filing to each customer in the affected service areas and 38 publish notice of the surcharge filing in a newspaper of general 39 circulation in the affected service areas. 40 (c) Before implementing a surcharge under this section, the 41 utility shall file a sworn affirmation as to the accuracy of the 42 figures and calculations upon which surcharge or any adjustment 43 thereto is based, stating that the change in rates will not 44 cause the utility to exceed the range of its last authorized 45 rate of return on equity. Whoever makes a false statement in the 46 affirmation required under this paragraph, which statement he or 47 she does not believe to be true in regard to any material 48 matter, commits a felony of the third degree, punishable as 49 provided in s. 775.082, s. 775.083, or s. 775.084. 50 (d) If, within 15 months after the filing of a utility’s 51 annual report required by s. 367.121, the commission finds that 52 the utility exceeded the range of its last authorized rate of 53 return on equity after the implementation of the surcharge 54 authorized by this section within the year for which the report 55 was filed, the commission may order the utility to refund, with 56 interest, the difference to the ratepayers and adjust rates 57 accordingly. This provision does require a bond or corporate 58 undertaking in order for the utility to implement the surcharge. 59 (3) A surcharge tariff submitted by a utility in compliance 60 with the requirements of paragraph (2)(a) is not subject to s. 61 367.091 and shall be approved as a matter of right without 62 hearing within 60 days after filing the surcharge tariff with 63 the commission. 64 (4) A surcharge established pursuant to this section shall 65 be: 66 (a) Presented as a separate line item on the customer’s 67 bill and billed in accordance with the billing cycle in the 68 utility’s approved tariff. Any changes in the surcharge must be 69 reflected on the first bill the customer receives following the 70 change of the surcharge. 71 (b) Revaluated, and if necessary adjusted, on a quarterly 72 basis to reflect the costs of eligible projects placed into 73 service. The utility shall file the supporting data to increase 74 or reduce the surcharge with the commission for each revaluation 75 along with a sworn affirmation required by paragraph (2)(c), and 76 shall contemporaneously deliver copies of the supporting data 77 and the sworn affirmation to the Office of Public Counsel. The 78 surcharge adjustment is not be subject to s. 367.091 and shall 79 take effect without hearing 45 days after the supporting data 80 and sworn affirmation are filed with the commission and 81 delivered to the Office of Public Counsel. 82 (c) Subject to an annual reconciliation of revenues and 83 costs based on a reconciliation period of 12 months, such period 84 to begin on the date the surcharge tariff is approved as a 85 matter of right pursuant to subsection (3). Within 30 days after 86 the end of each reconciliation period, the utility shall file 87 with the commission, and deliver to the Office of Public 88 Counsel, a reconciliation report that shall compare the actual 89 surcharge revenues received and the actual eligible costs 90 incurred by the utility during the prior period along with the 91 sworn affirmation required by paragraph (2)(c). A reconciliation 92 report filed in accordance with these requirements shall be 93 administratively approved by the commission without hearing 94 within 45 days after filing. The difference between revenue and 95 costs shall be recovered or refunded, as appropriate, by the 96 utility without hearing as an automatic adjustment to the 97 subsequent surcharge calculation. Revenues in excess of system 98 improvement costs shall be refunded with interest to customers 99 pursuant to the commission’s rule on interest for water and 100 wastewater utilities. 101 (d) Reset at zero as of the effective date of new base 102 rates that provide for prospective recovery of the costs that 103 had previously been recovered under the surcharge. Thereafter, 104 only the costs of new eligible projects that have not previously 105 been included in the base rate of the utility shall be reflected 106 in the surcharge. 107 (5) Recovery of project costs pursuant to this section does 108 not preclude such costs from being included in base rates in 109 subsequent rate proceedings. However, a project cost recovered 110 in base rates may not be recovered through a surcharge 111 established pursuant to this section. 112 (6) A project is eligible for recovery of costs through the 113 surcharge if it is: 114 (a) Completed and placed into service after the test year 115 upon which base rates were last established by the commission 116 for the utility; and 117 (b) For the construction of nonrevenue-producing 118 improvement projects that are used for the production, 119 treatment, transmission, storage, distribution, or provision of 120 potable or recycled water to the public or for the collection, 121 transportation, or disposal of wastewater for the public. Such 122 projects may include, but are not limited to, water quality 123 improvement projects designed to achieve primary or secondary 124 water standards as determined by the Department of Environmental 125 Protection, the United States Environmental Protection Agency, 126 or any other governmental entity having similar regulatory 127 jurisdiction; wastewater quality improvement projects; main, 128 service line, and valve replacement projects; main relining and 129 rehabilitation projects; fire and flushing hydrant installation 130 and replacement projects; main extension to eliminate dead ends; 131 interconnection projects; water, wastewater, and reuse meter 132 installation and replacement projects; wastewater collection, 133 replacement, relining, and rehabilitation projects; and manhole 134 replacement and rehabilitation projects. 135 (7) Water and wastewater treatment includes production of 136 any sodium solution, excluding sodium hypochlorite, used in 137 conjunction with the treatment process, but does not include the 138 onsite manufacturing of liquid chlorine or bleach. 139 (8) Upon approval of the surcharge tariff, the utility 140 shall maintain and make available for public inspection during 141 normal business hours at each utility location or on the 142 utility’s website a detailed schedule for each completed 143 project, including the plant account number and title, the 144 category of the project, the project name and description, the 145 cost of the project in the month of closing, and the month and 146 year of closing. Notice of the availability of the schedules for 147 public inspection shall be posted in each office of the utility. 148 (9) The commission may review the prudence of all projects 149 subject to the surcharge in the utility’s next base rate 150 proceeding following the commission’s initial approval of the 151 surcharge pursuant to subsection (3). Revenues from such 152 surcharges are subject to refund if the commission subsequently 153 determines that the costs of a project were not prudently 154 incurred or that the project is not used and useful in the 155 public service, and any such refund shall be made pursuant to 156 the commission’s rule on refunds for water and wastewater 157 utilities. 158 Section 2. This act shall take effect July 1, 2011. 159 160 ================= T I T L E A M E N D M E N T ================ 161 And the title is amended as follows: 162 163 Delete everything before the enacting clause 164 and insert: 165 A bill to be entitled 166 An act relating to water and wastewater utilities; 167 creating s. 367.0819, F.S.; providing for recovery 168 through a surcharge of certain costs relating to water 169 and wastewater system improvement projects; defining a 170 the term “nonrevenue-producing project”; requiring 171 utilities to submit surcharge tariffs reflecting the 172 surcharge calculation for recovery of such costs to 173 the Florida Public Service Commission for approval and 174 to provide specified notice of such surcharge tariff 175 filings; providing for the automatic approval of the 176 surcharge tariff within a specified period after 177 filing the surcharge tariff with the commission; 178 requiring the utility to file a sworn affirmation as 179 to the accuracy of the figures and calculations; 180 providing for penalties; requiring the utility to 181 submit an annual report regarding the rate of return 182 to the commission; allowing the commission to order 183 the utility to make refunds, with interest, under 184 certain circumstances; requiring the surcharge notice 185 be presented as a separate line item on the customer’s 186 bill; specifying a limitation for the surcharge 187 amount; providing requirements for billing, 188 reconciliation, and quarterly adjustment of the 189 surcharge; specifying a limitation for recovery of 190 project costs; providing project eligibility criteria; 191 specifying water and wastewater treatment criteria; 192 providing requirements for notice, maintenance, and 193 availability of certain records; authorizing the 194 commission to review specified projects; providing 195 that surcharges are subject to refund under certain 196 conditions; providing an effective date.