Florida Senate - 2016 CS for SB 534
By the Committee on Environmental Preservation and Conservation;
and Senator Hays
592-01417-16 2016534c1
1 A bill to be entitled
2 An act relating to water and wastewater; creating s.
3 159.8105, F.S.; requiring the Division of Bond Finance
4 of the State Board of Administration to review the
5 allocation of private activity bonds to determine the
6 availability of additional allocation and reallocation
7 of bonds for water and wastewater infrastructure
8 projects; amending s. 212.08, F.S.; extending
9 specified tax exemptions to certain investor-owned
10 water and wastewater utilities; amending s. 367.022,
11 F.S.; exempting from regulation by the Florida Public
12 Service Commission a person who resells water service
13 to certain tenants or residents up to a specified
14 percentage or cost; amending s. 367.081, F.S.;
15 authorizing the commission to create a utility reserve
16 fund; requiring the commission to adopt rules to
17 govern the implementation, management, and use of the
18 fund; establishing criteria for adjusted rates;
19 specifying expense items that may be the basis for an
20 automatic increase or decrease of a utility’s rates;
21 authorizing the commission to establish by rule
22 additional specified expense items; restricting a
23 utility from recovering more than a certain percentage
24 of reasonable rate case expenses; amending s.
25 367.0814, F.S.; authorizing the commission to award
26 rate case expenses to recover attorney fees or fees of
27 other outside consultants in certain circumstances;
28 requiring the commission to adopt rules by a certain
29 date; amending s. 367.0816, F.S.; prohibiting a
30 utility from recovering certain expenses for more than
31 one rate case at a time; amending s. 367.111, F.S.;
32 authorizing the commission to review water quality and
33 wastewater service under certain circumstances;
34 amending s. 403.8532, F.S.; authorizing the Department
35 of Environmental Protection to require or request that
36 the Florida Water Pollution Control Financing
37 Corporation make loans, grants, and deposits to for
38 profit, privately owned, or investor-owned water
39 systems; removing current restrictions on such
40 activities; amending s. 367.171, F.S.; making
41 technical changes; providing an effective date.
42
43 Be It Enacted by the Legislature of the State of Florida:
44
45 Section 1. Section 159.8105, Florida Statutes, is created
46 to read:
47 159.8105 Allocation of bonds for water and wastewater
48 infrastructure projects.—The division shall review the
49 allocation of private activity bonds to determine the
50 availability of additional allocation and reallocation of bonds
51 for water and wastewater infrastructure projects.
52 Section 2. Paragraph (ooo) is added to subsection (7) of
53 section 212.08, Florida Statutes, to read:
54 212.08 Sales, rental, use, consumption, distribution, and
55 storage tax; specified exemptions.—The sale at retail, the
56 rental, the use, the consumption, the distribution, and the
57 storage to be used or consumed in this state of the following
58 are hereby specifically exempt from the tax imposed by this
59 chapter.
60 (7) MISCELLANEOUS EXEMPTIONS.—Exemptions provided to any
61 entity by this chapter do not inure to any transaction that is
62 otherwise taxable under this chapter when payment is made by a
63 representative or employee of the entity by any means,
64 including, but not limited to, cash, check, or credit card, even
65 when that representative or employee is subsequently reimbursed
66 by the entity. In addition, exemptions provided to any entity by
67 this subsection do not inure to any transaction that is
68 otherwise taxable under this chapter unless the entity has
69 obtained a sales tax exemption certificate from the department
70 or the entity obtains or provides other documentation as
71 required by the department. Eligible purchases or leases made
72 with such a certificate must be in strict compliance with this
73 subsection and departmental rules, and any person who makes an
74 exempt purchase with a certificate that is not in strict
75 compliance with this subsection and the rules is liable for and
76 shall pay the tax. The department may adopt rules to administer
77 this subsection.
78 (ooo) Investor-owned water and wastewater utilities.—Sales
79 or leases to an investor-owned water or wastewater utility are
80 exempt from the tax imposed by this chapter if the sole or
81 primary function of the utility is to construct, maintain, or
82 operate a water or wastewater system in this state and if the
83 goods or services purchased or leased are used in this state.
84 Section 3. Present subsections (9) through (12) of section
85 367.022, Florida Statutes, are redesignated as subsections (10)
86 through (13), respectively, and a new subsection (9) is added to
87 that section, to read:
88 367.022 Exemptions.—The following are not subject to
89 regulation by the commission as a utility nor are they subject
90 to the provisions of this chapter, except as expressly provided:
91 (9) Any person who resells water service to his or her
92 tenants or to individually metered residents for a fee that does
93 not exceed the actual purchase price of the water plus the
94 actual cost of meter reading and billing, not to exceed 9
95 percent of the actual cost of service.
96 Section 4. Paragraph (c) is added to subsection (2) of
97 section 367.081, Florida Statutes, and paragraph (b) of
98 subsection (4) and subsection (7) of that section are amended,
99 to read:
100 367.081 Rates; procedure for fixing and changing.—
101 (2)
102 (c) In establishing rates for a utility, the commission may
103 create a utility reserve fund for infrastructure repair and
104 replacement for a utility for existing distribution and
105 collection infrastructure that is nearing the end of its useful
106 life or is detrimental to water quality or reliability of
107 service, to be funded by a portion of the rates charged by the
108 utility, by a secured escrow account, or through a letter of
109 credit. The commission shall adopt rules to govern the
110 implementation, management, and use of the fund, including, but
111 not limited to, rules related to expenses for which the fund may
112 be used, segregation of reserve account funds, requirements for
113 a capital improvement plan, and requirements for commission
114 authorization before disbursements are made from the fund.
115 (4)
116 (b) The approved rates of any utility which receives all or
117 any portion of its utility service from a governmental authority
118 or from a water or wastewater utility regulated by the
119 commission and which redistributes that service to its utility
120 customers shall be automatically increased or decreased without
121 hearing, upon verified notice to the commission 45 days prior to
122 its implementation of the increase or decrease that the
123 utility’s costs for any specified expense item the rates charged
124 by the governmental authority or other utility have changed. The
125 approved rates of any utility which is subject to an increase or
126 decrease in the rates or fees that it is charged for electric
127 power, the amount of ad valorem taxes assessed against its used
128 and useful property, the fees charged by the Department of
129 Environmental Protection in connection with the National
130 Pollutant Discharge Elimination System Program, or the
131 regulatory assessment fees imposed upon it by the commission
132 shall be increased or decreased by the utility, without action
133 by the commission, upon verified notice to the commission 45
134 days prior to its implementation of the increase or decrease
135 that the rates charged by the supplier of the electric power or
136 the taxes imposed by the governmental authority, or the
137 regulatory assessment fees imposed upon it by the commission
138 have changed. The new rates authorized shall reflect the amount
139 of the change of the ad valorem taxes or rates imposed upon the
140 utility by the governmental authority, other utility, or
141 supplier of electric power, or the regulatory assessment fees
142 imposed upon it by the commission. The approved rates of any
143 utility shall be automatically increased, without hearing, upon
144 verified notice to the commission 45 days prior to
145 implementation of the increase that costs have been incurred for
146 water quality or wastewater quality testing required by the
147 Department of Environmental Protection.
148 1. The new rates authorized shall reflect, on an amortized
149 or annual basis, as appropriate, the cost of, or the amount of
150 change in the cost of, the specified expense item, required
151 water quality or wastewater quality testing performed by
152 laboratories approved by the Department of Environmental
153 Protection for that purpose. The new rates, however, shall not
154 reflect the costs of any specified expense item any required
155 water quality or wastewater quality testing already included in
156 a utility’s rates. Specified expense items that are eligible for
157 automatic increase or decrease of a utility’s rates include, but
158 are not limited to:
159 a. The rates charged by a governmental authority or other
160 water or wastewater utility regulated by the commission which
161 provides utility service to the utility.
162 b. The rates or fees that the utility is charged for
163 electric power.
164 c. The amount of ad valorem taxes assessed against the
165 utility’s used and useful property.
166 d. The fees charged by the Department of Environmental
167 Protection in connection with the National Pollutant Discharge
168 Elimination System Program.
169 e. The regulatory assessment fees imposed upon the utility
170 by the commission.
171 f. Costs incurred for water quality or wastewater quality
172 testing required by the Department of Environmental Protection.
173 g. The fees charged for wastewater biosolids disposal.
174 h. Costs incurred for any tank inspection required by the
175 Department of Environmental Protection or a local governmental
176 authority.
177 i. Treatment plant operator and water distribution system
178 operator license fees required by the Department of
179 Environmental Protection or a local governmental authority.
180 j. Water or wastewater operating permit fees charged by the
181 Department of Environmental Protection or a local governmental
182 authority.
183 k. Consumptive or water use permit fees charged by a water
184 management district.
185 2. A utility may not use this procedure to increase its
186 rates as a result of an increase in a specific expense item
187 which occurred water quality or wastewater quality testing or an
188 increase in the cost of purchased water services, sewer
189 services, or electric power or in assessed ad valorem taxes,
190 which increase was initiated more than 12 months before the
191 filing by the utility.
192 3. The commission may establish by rule additional specific
193 expense items that are outside the control of the utility and
194 have been imposed upon the utility by a federal, state, or local
195 law, rule, order, or notice. If the commission establishes such
196 a rule, the commission shall review the rule at least once every
197 5 years and determine if each expense item should continue to be
198 cause for an automatic increase or decrease and whether
199 additional items should be included.
200 4. The provisions of This subsection does do not prevent a
201 utility from seeking a change in rates pursuant to the
202 provisions of subsection (2).
203 (7) The commission shall determine the reasonableness of
204 rate case expenses and shall disallow all rate case expenses
205 determined to be unreasonable. No rate case expense determined
206 to be unreasonable shall be paid by a consumer. In determining
207 the reasonable level of rate case expense, the commission shall
208 consider the extent to which a utility has utilized or failed to
209 utilize the provisions of paragraph (4)(a) or paragraph (4)(b)
210 and such other criteria as it may establish by rule. A utility
211 may recover only up to 50 percent of rate case expenses that are
212 determined to be reasonable.
213 Section 5. Subsection (3) of section 367.0814, Florida
214 Statutes, is amended to read:
215 367.0814 Staff assistance in changing rates and charges;
216 interim rates.—
217 (3) The provisions of s. 367.081(1), (2)(a), and (3) shall
218 apply in determining the utility’s rates and charges. However,
219 the commission may not award rate case expenses to recover
220 attorney fees or fees of other outside consultants who are
221 engaged for the purpose of preparing or filing the case if a
222 utility receives staff assistance in changing rates and charges
223 pursuant to this section, unless the Office of Public Counsel or
224 interested parties have intervened. The commission may award
225 rate case expenses for attorney fees or fees of other outside
226 consultants if such fees are incurred for the purpose of
227 providing consulting or legal services to the utility after the
228 initial staff report is made available to customers and the
229 utility. If there is a protest or appeal by a party other than
230 the utility, the commission may award rate case expenses to the
231 utility for attorney fees or fees of other outside consultants
232 for costs incurred after the protest or appeal. By December 31,
233 2016, the commission must adopt rules to administer this
234 subsection.
235 Section 6. Section 367.0816, Florida Statutes, is amended
236 to read:
237 367.0816 Recovery of rate case expenses.—
238 (1) The amount of rate case expense determined by the
239 commission pursuant to the provisions of this chapter to be
240 recovered through a public utilities rate shall be apportioned
241 for recovery over a period of 4 years. At the conclusion of the
242 recovery period, the rate of the public utility shall be reduced
243 immediately by the amount of rate case expense previously
244 included in rates.
245 (2) A utility may not recover the 4-year amortized rate
246 case expense for more than one rate case at any given time. If
247 the commission approves and a utility implements a rate change
248 from a subsequent rate case pursuant to this section, any
249 unamortized rate case expense for a prior rate case must be
250 discontinued. The unamortized portion of rate case expense for a
251 prior rate case must be removed from rates before the
252 implementation of an additional amortized rate case expense for
253 the most recent rate proceeding.
254 Section 7. Subsection (3) is added to section 367.111,
255 Florida Statutes, to read:
256 367.111 Service.—
257 (3) The commission may, on its own motion or based on
258 complaints of customers of a water utility subject to its
259 jurisdiction, review water quality as it pertains to secondary
260 drinking water standards established by the Department of
261 Environmental Protection. The commission may, on its own motion
262 or based on complaints of customers of a wastewater utility
263 subject to its jurisdiction, review wastewater service as it
264 pertains to odor, noise, aerosol drift, or lighting.
265 Section 8. Subsection (3) of section 403.8532, Florida
266 Statutes, is amended to read:
267 403.8532 Drinking water state revolving loan fund; use;
268 rules.—
269 (3) The department may make, or request that the
270 corporation make, loans, grants, and deposits to community water
271 systems; for-profit, privately owned, or investor-owned water
272 systems;, nonprofit, transient, noncommunity water systems;, and
273 nonprofit, nontransient, noncommunity water systems to assist
274 them in planning, designing, and constructing public water
275 systems, unless such public water systems are for-profit
276 privately owned or investor-owned systems that regularly serve
277 1,500 service connections or more within a single certified or
278 franchised area. However, a for-profit privately owned or
279 investor-owned public water system that regularly serves 1,500
280 service connections or more within a single certified or
281 franchised area may qualify for a loan only if the proposed
282 project will result in the consolidation of two or more public
283 water systems. The department may provide loan guarantees,
284 purchase loan insurance, and refinance local debt through the
285 issue of new loans for projects approved by the department.
286 Public water systems may borrow funds made available pursuant to
287 this section and may pledge any revenues or other adequate
288 security available to them to repay any funds borrowed.
289 (a) The department shall administer loans so that amounts
290 credited to the Drinking Water Revolving Loan Trust Fund in any
291 fiscal year are reserved for the following purposes:
292 1. At least 15 percent for qualifying small public water
293 systems.
294 2. Up to 15 percent for qualifying financially
295 disadvantaged communities.
296 (b) If an insufficient number of the projects for which
297 funds are reserved under this subsection have been submitted to
298 the department at the time the funding priority list authorized
299 under this section is adopted, the reservation of these funds no
300 longer applies. The department may award the unreserved funds as
301 otherwise provided in this section.
302 Section 9. Subsection (8) of section 367.171, Florida
303 Statutes, is amended to read:
304 367.171 Effectiveness of this chapter.—
305 (8) Each county that which is not subject to excluded from
306 the provisions of this chapter shall regulate the rates of all
307 utilities in that county which would otherwise be subject to
308 regulation by the commission pursuant to s. 367.081(1), (2),
309 (3), and (6) and s. 367.165. The county shall not regulate the
310 rates or charges of any system or facility that which would
311 otherwise be exempt from commission regulation pursuant to s.
312 367.022(2). For this purpose the county or its agency shall
313 proceed as though the county or agency is the commission.
314 Section 10. This act shall take effect July 1, 2016.