Florida Senate - 2012 SB 1244
By Senator Hays
20-00198C-12 20121244__
1 A bill to be entitled
2 An act relating to water and wastewater utilities;
3 amending s. 367.081, F.S.; prohibiting the Public
4 Service Commission from approving tiered rates that
5 are based upon consumption by the customer; requiring
6 the commission to find a utility’s rate case expense
7 unreasonable if the utility’s quality of service is
8 marginal or unsatisfactory; providing an exception;
9 amending s. 367.0816, F.S.; limiting the amount that
10 certain utilities may recover as rate case expense to
11 50 percent of the total amount; limiting the recovery
12 of rate case expense to one case at a time; amending
13 s. 367.111, F.S.; requiring that systems be designed
14 and operated to meet certain standards; requiring the
15 commission to establish specific criteria for the
16 evaluation of water and wastewater service; providing
17 guidelines; requiring the commission to impose certain
18 financial penalties against a utility that fails to
19 meet the criteria; providing for calculating the
20 penalty; limiting the application of the standards to
21 water and wastewater utilities that have $1 million or
22 more of annual operating revenues; authorizing the
23 commission to adopt rules; amending s. 367.165, F.S.;
24 providing for the continuation of service if a
25 utility’s certificate of authority is revoked or
26 suspended; requiring the commission to notify the
27 county or counties in which a utility is located that
28 its certificate of authority is revoked or suspended;
29 requiring the county or counties to assume operation
30 and control; providing that any rate structure of a
31 water or wastewater utility which increases the rate
32 based upon increased consumption by the customer is
33 void and of no effect; creating the Study Committee on
34 Investor-Owned Water and Wastewater Utility Systems;
35 providing for membership and terms of service;
36 prohibiting compensation of the members; providing for
37 reimbursement of the members for certain expenses;
38 providing for removal or suspension of members by the
39 appointing authority; requiring the Public Service
40 Commission to provide staff, information, assistance,
41 and facilities that are deemed necessary for the
42 committee to perform its duties; providing for funding
43 from the Florida Public Service Regulatory Trust Fund;
44 providing duties for the committee; providing for
45 public meetings; requiring the committee to report to
46 the Governor and Legislature its findings and make
47 recommendation for legislative changes; providing for
48 future termination of the committee; providing an
49 effective date.
50
51 Be It Enacted by the Legislature of the State of Florida:
52
53 Section 1. Subsections (1) and (7) of section 367.081,
54 Florida Statutes, are amended to read:
55 367.081 Rates; procedure for fixing and changing.—
56 (1) Except as provided in subsection (4) or subsection (6),
57 a utility may only charge only rates and charges that have been
58 approved by the commission. However, the commission may not
59 approve tiered rates that are based upon consumption by the
60 customer.
61 (7) The commission shall determine the reasonableness of
62 rate case expenses and shall disallow all rate case expenses
63 determined to be unreasonable. No rate case expense determined
64 to be unreasonable shall be paid by a consumer. In determining
65 the reasonable level of rate case expense, the commission shall
66 consider the extent to which a utility has utilized or failed to
67 utilize the provisions of paragraph (4)(a) or paragraph (4)(b)
68 and such other criteria as the commission establishes it may
69 establish by rule. In a rate case proceeding, if the commission
70 finds that a utility’s quality of service is marginal or
71 unsatisfactory, the commission shall find the utility’s rate
72 case expense unreasonable unless the commission finds a
73 compelling reason to determine that all or a portion of the
74 expense is reasonable.
75 Section 2. Section 367.0816, Florida Statutes, is amended
76 to read:
77 367.0816 Recovery of rate case expenses.—
78 (1) The amount of rate case expense determined by the
79 commission to be reasonable pursuant to s. 367.081 the
80 provisions of this chapter to be recovered through a public
81 utilities rate shall be apportioned for recovery through the
82 utility’s rates over a period of 4 years. At the conclusion of
83 the recovery period, the rate of the public utility shall be
84 reduced immediately by the amount of rate case expense
85 previously included in rates. A utility that has $1 million or
86 more of annual operating revenues for water or wastewater
87 operations, including its affiliated systems in this state, may
88 recover no more than 50 percent of the total amount of rate case
89 expense that the commission determines is reasonable.
90 (2) A utility may recover the 4-year amortized rate case
91 expense for only one rate case at a time. Any unamortized rate
92 case expense for a prior rate proceeding must be removed from
93 rates before the inclusion of any additional amortized rate case
94 expense for the most recent rate proceeding.
95 Section 3. Subsection (2) of section 367.111, Florida
96 Statutes, is amended, and subsection (3) is added to that
97 section, to read:
98 367.111 Service.—
99 (2) Each utility shall provide to each customer person
100 reasonably entitled thereto such safe, efficient, and sufficient
101 service as is prescribed by part VI of chapter 403 and parts I
102 and II of chapter 373, or rules adopted pursuant to those parts;
103 however, the thereto; but such service may shall not be less
104 safe, less efficient, or less sufficient than is consistent with
105 the approved engineering design of the system and the reasonable
106 and proper operation of the utility in the public interest. Each
107 water utility system shall be designed and operated so that the
108 water supplied to all customers is reasonably free from
109 objectionable taste, color, odor, or sand or other sediment. If
110 the commission finds that a utility has failed to provide its
111 customers with water or wastewater service that meets the
112 standards adopted promulgated by the Department of Environmental
113 Protection or the water management districts, or required by
114 this section, the commission may reduce the utility’s return on
115 equity until the standards are met.
116 (3) Each utility shall provide to each retail customer a
117 satisfactory quality of service. The commission shall establish
118 specific criteria for evaluating the quality of a utility’s
119 water and wastewater service.
120 (a) Quality of service shall be deemed satisfactory,
121 marginal, or unsatisfactory.
122 (b) Criteria shall include, but are not limited to,
123 consideration of compliance with:
124 1. This chapter;
125 2. Relevant rules and orders of the commission, the
126 Department of Environmental Protection, and appropriate water
127 management districts; and
128 3. The utility’s approved tariff.
129 (c) If the commission finds that a utility has failed to
130 meet the criteria, the commission shall impose a financial
131 penalty against the utility. The commission shall establish by
132 rule penalties that increase proportionally to a decrease in the
133 quality of service as determined according to the criteria.
134 1. The maximum financial penalty may not exceed an amount
135 equal to 50 basis points on a utility’s most recent rate of
136 return on equity approved by the commission.
137 2. Any financial penalty imposed shall be refunded in a
138 timely and equitable manner as a credit to the retail customers
139 of the utility.
140 (d) This subsection applies to a water or wastewater
141 utility that has $1 million or more of annual operating revenues
142 for water or wastewater services, including all affiliated
143 systems located in this state.
144 (e) The utility must establish that it provides
145 satisfactory quality of service, and failure to do so may result
146 in a penalty. The utility may not recover from its ratepayers
147 any expense that arises from a proceeding held pursuant to this
148 subsection.
149 (f) The commission shall adopt rules to administer this
150 subsection.
151 Section 4. Section 367.165, Florida Statutes, is amended to
152 read:
153 367.165 Continuity of service in instances of revocation or
154 suspension of certificate; abandonment.—It is the intent of the
155 Legislature that water or wastewater service to the customers of
156 a utility not be interrupted by the revocation or suspension of
157 the utility’s certificate of authorization or the abandonment or
158 placement into receivership of the utility. To that end:
159 (1) Within 30 days after the issuance of a final order of
160 suspension or revocation of a utility’s certificate of
161 authorization, the commission shall notify the county or
162 counties in which the utility is located of the effective date
163 of the suspension or revocation. The county or counties shall
164 assume operation and control of the utility pursuant to the
165 procedures provided in chapter 74.
166 (2)(a)(1) A No person, lessee, trustee, or receiver owning,
167 operating, managing, or controlling a utility may not shall
168 abandon the utility without giving 60 days’ notice to the county
169 or counties in which the utility is located and to the
170 commission. Anyone who violates the provisions of this paragraph
171 commits subsection is guilty of a misdemeanor of the first
172 degree, punishable as provided in s. 775.082 or s. 775.083. Each
173 day of such abandonment constitutes a separate offense. In
174 addition, the such act of abandonment is a violation of this
175 chapter, and the commission may impose upon the utility a
176 penalty for each such offense of not more than $5,000 or may
177 amend, suspend, or revoke its certificate of authorization.;
178 Each day of such abandonment without prior notice constitutes a
179 separate offense.
180 (b)(2) After receiving such notice, the county, or counties
181 acting jointly if more than one county is affected, shall
182 petition the circuit court of the judicial circuit in which the
183 such utility is domiciled to appoint a receiver, which may be
184 the governing body of a political subdivision or any other
185 person deemed appropriate. The receiver shall operate the
186 utility from the date of abandonment until such time as the
187 receiver disposes of the property of the utility in a manner
188 designed to continue the efficient and effective operation of
189 utility service.
190 (c)(3) The notification to the commission under paragraph
191 (a) subsection (1) is sufficient cause for revocation,
192 suspension, or amendment of the certificate of authorization of
193 the utility as of the date of abandonment. The receiver
194 operating the such utility shall be considered to hold a
195 temporary authorization from the commission, and the approved
196 rates of the utility are shall be deemed to be the interim rates
197 of the receiver until modified by the commission.
198 Section 5. Effective July 1, 2012, any rate structure of a
199 water or wastewater utility which provides for an increase in
200 the rate based upon an increase in consumption by the customer
201 is void and of no effect.
202 Section 6. Study Committee on Investor-Owned Water and
203 Wastewater Utility Systems.—
204 (1) There is created a Study Committee on Investor-Owned
205 Water and Wastewater Utility Systems, which shall be composed of
206 17 members designated and appointed as follows:
207 (a) Two Senators appointed by the President of the Senate,
208 one of whom shall be appointed as chair by the President of the
209 Senate.
210 (b) Two Representatives appointed by the Speaker of the
211 House of Representatives.
212 (c) The Secretary of Environmental Protection or his or her
213 designee, who shall be a nonvoting member of the committee.
214 (d) The chair of the Public Service Commission or his or
215 her designee, who shall be a nonvoting member of the committee.
216 (e) A representative of a water management district
217 appointed by the Governor.
218 (f) A representative of a water or wastewater system owned
219 or operated by a municipal government appointed by the Governor.
220 (g) A representative of a water or wastewater system owned
221 or operated by a county government appointed by the Governor.
222 (h) The chair of a county commission that regulates
223 inventor-owned water or wastewater utility systems, who shall be
224 a nonvoting member of the committee.
225 (i) A representative of a county health department
226 appointed by the Governor, who shall be a nonvoting member of
227 the committee.
228 (j) A representative of the Florida Rural Water Association
229 appointed by the Governor.
230 (k) A representative of a small investor-owned water or
231 wastewater utility appointed by the Governor.
232 (l) A representative of a large investor-owned water or
233 wastewater utility appointed by the Governor.
234 (m) The Public Counsel or his or her designee.
235 (n) A customer of a Class C water or wastewater utility
236 appointed by the Governor.
237 (o) A representative of a government authority that was
238 created pursuant to chapter 367, Florida Statutes, appointed by
239 the Governor.
240 (2) The members shall serve until the work of the committee
241 is complete and the committee is terminated, except that if a
242 member no longer serves in the position required for
243 appointment, the member shall be replaced by the individual who
244 serves in such position.
245 (3) Members of the committee shall serve without
246 compensation, but are entitled to reimbursement for all
247 reasonable and necessary expenses, including travel expenses, in
248 the performance of their duties as provided in s. 112.061,
249 Florida Statutes.
250 (4) The appointing authority may remove or suspend a member
251 appointed by it for cause, including, but not limited to,
252 failure to attend two or more meetings of the committee.
253 (5) The Public Service Commission shall provide the staff,
254 information, assistance, and facilities as are deemed necessary
255 for the committee to carry out its duties under this section.
256 Funding for the committee shall be paid from the Florida Public
257 Service Regulatory Trust Fund.
258 (6) The committee shall identify issues of concern of
259 investor-owned water and wastewater utility systems,
260 particularly small systems, and their customers and research
261 possible solutions. In addition, the committee shall consider:
262 (a) The ability of a small investor-owned water and
263 wastewater utility to achieve economies of scale when purchasing
264 equipment, commodities, or services.
265 (b) The availability of low interest loans to a small,
266 privately owned water or wastewater utility.
267 (c) Any tax incentives or exemptions, temporary or
268 permanent, which are available to a small water or wastewater
269 utility.
270 (d) The impact on customer rates if a utility purchases an
271 existing water or wastewater utility system.
272 (e) The impact on customer rates of a utility providing
273 service through the use of a reseller.
274 (f) Other issues that the committee identifies during its
275 investigation.
276 (7) The committee shall meet at the time and location as
277 the chair determines, except that the committee shall meet a
278 minimum of four times. At least two meetings must be held in an
279 area that is centrally located to utility customers who have
280 recently been affected by a significant increase in water or
281 wastewater utility rates. The public shall be given the
282 opportunity to speak at the meeting.
283 (8) By December 31, 2012, the committee shall prepare and
284 submit to the Governor, the President of the Senate, and the
285 Speaker of the House of Representatives a report detailing its
286 findings pursuant to subsection (6) and making specific
287 legislative recommendations.
288 (9) This section expires and the committee terminates June
289 30, 2013.
290 Section 7. This act shall take effect July 1, 2012.