Florida Senate - 2011 CS for CS for SB 950 By the Committees on Communications, Energy, and Public Utilities; and Environmental Preservation and Conservation; and Senator Bennett 579-04274A-11 2011950c2 1 A bill to be entitled 2 An act relating to water and wastewater utilities; 3 creating s. 367.0819, F.S.; providing for the recovery 4 of costs through a surcharge for certain water and 5 wastewater system improvement projects; defining the 6 term “nonrevenue-producing project”; requiring 7 utilities to submit surcharge tariffs reflecting the 8 surcharge calculation for recovery of such costs to 9 the Florida Public Service Commission for approval and 10 to provide specified notice of such surcharge tariff 11 filings; requiring the utility to file a sworn 12 affirmation as to the accuracy of the figures and 13 calculations; providing for penalties; requiring the 14 utility to submit an annual report regarding the rate 15 of return to the commission; allowing the commission 16 to order the utility to make refunds, with interest, 17 under certain circumstances; requiring that the 18 surcharge notice be presented as a separate line item 19 on the customer’s bill; specifying a limitation on the 20 surcharge amount; providing requirements for billing, 21 reconciliation, and quarterly adjustment of the 22 surcharge; specifying a limitation on the recovery of 23 project costs; providing project eligibility criteria; 24 specifying water and wastewater treatment criteria; 25 providing requirements for notice, maintenance, and 26 availability of certain records; authorizing the 27 commission to review specified projects; providing 28 that the surcharge is subject to refund under certain 29 conditions; amending s. 180.191, F.S.; providing an 30 exemption from the rate-setting methodology used to 31 set water and wastewater utility rates for consumers 32 outside the boundaries of a municipality supplying the 33 water or wastewater services; providing an effective 34 date. 35 36 Be It Enacted by the Legislature of the State of Florida: 37 38 Section 1. Section 367.0819, Florida Statutes, is created 39 to read: 40 367.0819 Recovery of costs for system improvement 41 projects.— 42 (1)(a) In order to promote utility investment in system 43 improvement projects, the commission shall allow a utility to 44 recover prudently incurred capital costs related to nonrevenue 45 producing projects to enhance water quality, fire protection 46 reliability, and long-term system viability through a surcharge 47 collected pursuant to this section. The costs of existing or new 48 facilities to serve new customers are not recoverable through 49 this surcharge. 50 (b) For purposes of this section, the term “nonrevenue 51 producing project” means a project that is not constructed or 52 installed for the purpose of serving a new customer. 53 (2) A utility seeking to establish a surcharge pursuant to 54 this section must: 55 (a) Submit, for commission approval, the proposed surcharge 56 tariff establishing a formula for the calculation of rates 57 reflecting the surcharge, which rates provide for recovery of 58 depreciation and return on investment for each eligible project. 59 The return on investment for each eligible project must be based 60 on the utility’s last authorized pretax rate of return. The 61 surcharge must be calculated, applied, and recovered in 62 accordance with the utility’s last authorized rate structure. 63 Until the surcharge is reset pursuant to paragraph (3)(d), the 64 total cumulative amount of the surcharge revenue recovered by 65 the utility may not exceed 8 percent of the utility’s total 66 revenues, excluding revenues collected through the surcharge, 67 for the preceding calendar year. 68 (b) Provide notice by mail of the initial surcharge tariff 69 filing to each customer in the affected service areas and 70 publish notice of the surcharge filing in a newspaper of general 71 circulation in the affected service areas. 72 (c)1. Before implementing a surcharge under this section, 73 file a sworn affirmation as to the accuracy of the figures and 74 calculations upon which surcharge or any adjustment thereto is 75 based, stating that the change in rates will not cause the 76 utility to exceed the range of its last authorized rate of 77 return on equity. Whoever makes a false statement in the 78 affirmation required under this subparagraph, which statement he 79 or she does not believe to be true in regard to any material 80 matter, commits a felony of the third degree, punishable as 81 provided in s. 775.082, s. 775.083, or s. 775.084. 82 2. If, within 15 months after the filing of a utility’s 83 annual report required by s. 367.121, the commission finds that 84 the utility exceeded the range of its last authorized rate of 85 return on equity after the implementation of the surcharge 86 authorized by this section within the year for which the report 87 was filed, the commission may order the utility to refund, with 88 interest, the difference to the ratepayers and adjust rates 89 accordingly. This provision does require a bond or corporate 90 undertaking in order for the utility to implement the surcharge. 91 (3) A surcharge established pursuant to this section shall 92 be: 93 (a) Presented as a separate line item on the customer’s 94 bill and billed in accordance with the billing cycle in the 95 utility’s approved tariff. Any changes in the surcharge must be 96 reflected on the first bill the customer receives following the 97 change of the surcharge. 98 (b) Revaluated, and if necessary adjusted, on a quarterly 99 basis to reflect the costs of eligible projects placed into 100 service. The utility shall file the supporting data to increase 101 or reduce the surcharge with the commission for each 102 revaluation, along with a sworn affirmation required by 103 subparagraph (2)(c)1. 104 (c) Subject to an annual reconciliation of revenues and 105 costs based on a reconciliation period of 12 months, such period 106 to begin on the date the surcharge tariff is approved. Within 30 107 days after the end of each reconciliation period, the utility 108 shall file with the commission, and deliver to the Office of 109 Public Counsel, a reconciliation report that compares the actual 110 surcharge revenues received and the actual eligible costs 111 incurred by the utility during the prior period, along with the 112 sworn affirmation required by subparagraph (2)(c)1. A 113 reconciliation report filed in accordance with these 114 requirements shall be administratively approved by the 115 commission without hearing within 45 days after filing. The 116 difference between revenue and costs shall be recovered or 117 refunded, as appropriate, by the utility without hearing as an 118 automatic adjustment to the subsequent surcharge calculation. 119 Revenues in excess of system-improvement costs shall be refunded 120 with interest to customers pursuant to the commission’s rule on 121 interest for water and wastewater utilities. 122 (d) Reset at zero as of the effective date of new base 123 rates that provide for prospective recovery of the costs that 124 had previously been recovered under the surcharge. Thereafter, 125 only the costs of new eligible projects that have not previously 126 been included in the base rate of the utility shall be reflected 127 in the surcharge. 128 (4) Recovery of project costs pursuant to this section does 129 not preclude such costs from being included in base rates in 130 subsequent rate proceedings. However, a project cost recovered 131 in base rates may not be recovered through a surcharge 132 established pursuant to this section. 133 (5) A project is eligible for recovery of costs through the 134 surcharge if it is: 135 (a) Completed and placed into service after the test year 136 upon which base rates were last established by the commission 137 for the utility; and 138 (b) For the construction of nonrevenue-producing 139 improvement projects that are used for the production, 140 treatment, transmission, storage, distribution, or provision of 141 potable or recycled water to the public or for the collection, 142 transportation, or disposal of wastewater for the public. Such 143 projects may include, but are not limited to, water quality 144 improvement projects designed to achieve primary or secondary 145 water standards as determined by the Department of Environmental 146 Protection, the United States Environmental Protection Agency, 147 or any other governmental entity having similar regulatory 148 jurisdiction; wastewater quality improvement projects; main, 149 service line, and valve replacement projects; main relining and 150 rehabilitation projects; fire and flushing hydrant installation 151 and replacement projects; main extension to eliminate dead ends; 152 interconnection projects; water, wastewater, and reuse meter 153 installation and replacement projects; wastewater collection, 154 replacement, relining, and rehabilitation projects; and manhole 155 replacement and rehabilitation projects. 156 (6) Water and wastewater treatment includes production of 157 any sodium solution, excluding sodium hypochlorite, used in 158 conjunction with the treatment process, but does not include the 159 onsite manufacturing of liquid chlorine or bleach. 160 (7) Upon approval of the surcharge tariff, the utility 161 shall maintain and make available for public inspection during 162 normal business hours at each utility location or on the 163 utility’s website a detailed schedule for each completed 164 project, including the plant account number and title, the 165 category of the project, the project name and description, the 166 cost of the project in the month of closing, and the month and 167 year of closing. Notice of the availability of the schedules for 168 public inspection shall be posted in each office of the utility. 169 (8) The commission may review the prudence of all projects 170 subject to the surcharge in the utility’s next base rate 171 proceeding following the commission’s initial approval of the 172 surcharge pursuant to subsection (2). Revenues from such 173 surcharges are subject to refund if the commission subsequently 174 determines that the costs of a project were not prudently 175 incurred or that the project is not used and useful in the 176 public service, and any such refund shall be made pursuant to 177 the commission’s rule on refunds for water and wastewater 178 utilities. 179 Section 2. Subsection (5) is added to section 180.191, 180 Florida Statutes, to read: 181 180.191 Limitation on rates charged consumer outside city 182 limits.— 183 (5) Any water and wastewater utility customer outside the 184 boundaries of a municipality that is located within a county 185 having a population of more than 1.5 million persons, as 186 reported in the most recent United States Decennial Census, that 187 was incorporated after 2002, and that has a population in excess 188 of 80,000 persons at the time of its incorporation, is exempt 189 from the rate-setting methodology set forth in subsection (1) 190 which otherwise applies to consumers outside the boundaries of 191 the municipality that provides water or wastewater services. 192 Section 3. This act shall take effect July 1, 2011.