Florida Senate - 2016 CS for CS for SB 534
By the Committees on Communications, Energy, and Public
Utilities; and Environmental Preservation and Conservation; and
Senator Hays
579-02057-16 2016534c2
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 allow a utility to
16 create a reserve fund upon the commission’s own motion
17 or upon the request of the utility; requiring the
18 commission to adopt rules to govern the
19 implementation, management, and use of the fund;
20 establishing criteria for adjusted rates; specifying
21 expense items that may be the basis for an automatic
22 increase or decrease of a utility’s rates; authorizing
23 the commission to establish by rule additional
24 specified expense items; requiring the commission to
25 consider certain criteria and make findings and
26 allocations among the ratepayers, shareholders,
27 owners, or affiliates when determining reasonable rate
28 case expenses; amending s. 367.0814, F.S.; authorizing
29 the commission to award rate case expenses to recover
30 attorney fees or fees of other outside consultants in
31 certain circumstances; requiring the commission to
32 adopt rules by a certain date; amending s. 367.0816,
33 F.S.; prohibiting a utility from recovering certain
34 expenses for more than one rate case at a time;
35 amending s. 367.111, F.S.; authorizing the commission
36 to review water quality and wastewater service upon
37 its own motion or based on complaints of customers;
38 amending s. 367.165, F.S.; requiring a county that
39 regulates water or wastewater services to comply with
40 the requirements for abandoned water and wastewater
41 systems; amending s. 403.8532, F.S.; authorizing the
42 Department of Environmental Protection to require or
43 request that the Florida Water Pollution Control
44 Financing Corporation make loans, grants, and deposits
45 to for-profit, privately owned, or investor-owned
46 water systems; deleting restrictions on such
47 activities; providing an effective date.
48
49 Be It Enacted by the Legislature of the State of Florida:
50
51 Section 1. Section 159.8105, Florida Statutes, is created
52 to read:
53 159.8105 Allocation of bonds for water and wastewater
54 infrastructure projects.—The division shall review the
55 allocation of private activity bonds to determine the
56 availability of additional allocation and reallocation of bonds
57 for water and wastewater infrastructure projects.
58 Section 2. Paragraph (ooo) is added to subsection (7) of
59 section 212.08, Florida Statutes, to read:
60 212.08 Sales, rental, use, consumption, distribution, and
61 storage tax; specified exemptions.—The sale at retail, the
62 rental, the use, the consumption, the distribution, and the
63 storage to be used or consumed in this state of the following
64 are hereby specifically exempt from the tax imposed by this
65 chapter.
66 (7) MISCELLANEOUS EXEMPTIONS.—Exemptions provided to any
67 entity by this chapter do not inure to any transaction that is
68 otherwise taxable under this chapter when payment is made by a
69 representative or employee of the entity by any means,
70 including, but not limited to, cash, check, or credit card, even
71 when that representative or employee is subsequently reimbursed
72 by the entity. In addition, exemptions provided to any entity by
73 this subsection do not inure to any transaction that is
74 otherwise taxable under this chapter unless the entity has
75 obtained a sales tax exemption certificate from the department
76 or the entity obtains or provides other documentation as
77 required by the department. Eligible purchases or leases made
78 with such a certificate must be in strict compliance with this
79 subsection and departmental rules, and any person who makes an
80 exempt purchase with a certificate that is not in strict
81 compliance with this subsection and the rules is liable for and
82 shall pay the tax. The department may adopt rules to administer
83 this subsection.
84 (ooo) Investor-owned water and wastewater utilities.—Sales
85 or leases to an investor-owned water or wastewater utility
86 holding a certificate of authorization under s. 367.031 are
87 exempt from the tax imposed by this chapter if the sole or
88 primary function of the utility is to construct, maintain, or
89 operate a water or wastewater system in this state and if the
90 goods or services purchased or leased are used in this state.
91 Section 3. Present subsections (9) through (12) of section
92 367.022, Florida Statutes, are redesignated as subsections (10)
93 through (13), respectively, and a new subsection (9) is added to
94 that section, to read:
95 367.022 Exemptions.—The following are not subject to
96 regulation by the commission as a utility nor are they subject
97 to the provisions of this chapter, except as expressly provided:
98 (9) Any person who resells water service to his or her
99 tenants or to individually metered residents for a fee that does
100 not exceed the actual purchase price of the water service plus
101 the actual cost of meter reading and billing, not to exceed 9
102 percent of the actual cost of water service.
103 Section 4. Paragraph (c) is added to subsection (2) of
104 section 367.081, Florida Statutes, and paragraph (b) of
105 subsection (4) and subsection (7) of that section are amended,
106 to read:
107 367.081 Rates; procedure for fixing and changing.—
108 (2)
109 (c) In establishing rates for a utility, upon its own
110 motion or upon the request of a utility, the commission may
111 authorize a utility to create a utility reserve fund for
112 infrastructure repair and replacement for a utility for existing
113 distribution and collection infrastructure that is nearing the
114 end of its useful life or is detrimental to water quality or
115 reliability of service, to be funded by a portion of the rates
116 charged by the utility, by a secured escrow account, or through
117 a letter of credit. The commission shall adopt rules to govern
118 the implementation, management, and use of the fund, including,
119 but not limited to, rules related to expenses for which the fund
120 may be used, segregation of reserve account funds, requirements
121 for a capital improvement plan, and requirements for commission
122 authorization before disbursements are made from the fund.
123 (4)
124 (b) The approved rates of any utility which receives all or
125 any portion of its utility service from a governmental authority
126 or from a water or wastewater utility regulated by the
127 commission and which redistributes that service to its utility
128 customers shall be automatically increased or decreased without
129 hearing, upon verified notice to the commission 45 days before
130 prior to its implementation of the increase or decrease that the
131 utility’s costs for any specified expense item the rates charged
132 by the governmental authority or other utility have changed. The
133 approved rates of any utility which is subject to an increase or
134 decrease in the rates or fees that it is charged for electric
135 power, the amount of ad valorem taxes assessed against its used
136 and useful property, the fees charged by the Department of
137 Environmental Protection in connection with the National
138 Pollutant Discharge Elimination System Program, or the
139 regulatory assessment fees imposed upon it by the commission
140 shall be increased or decreased by the utility, without action
141 by the commission, upon verified notice to the commission 45
142 days prior to its implementation of the increase or decrease
143 that the rates charged by the supplier of the electric power or
144 the taxes imposed by the governmental authority, or the
145 regulatory assessment fees imposed upon it by the commission
146 have changed. The new rates authorized shall reflect the amount
147 of the change of the ad valorem taxes or rates imposed upon the
148 utility by the governmental authority, other utility, or
149 supplier of electric power, or the regulatory assessment fees
150 imposed upon it by the commission. The approved rates of any
151 utility shall be automatically increased, without hearing, upon
152 verified notice to the commission 45 days prior to
153 implementation of the increase that costs have been incurred for
154 water quality or wastewater quality testing required by the
155 Department of Environmental Protection.
156 1. The new rates authorized shall reflect, on an amortized
157 or annual basis, as appropriate, the cost of, or the amount of
158 change in the cost of, the specified expense item, required
159 water quality or wastewater quality testing performed by
160 laboratories approved by the Department of Environmental
161 Protection for that purpose. The new rates, however, shall not
162 reflect the costs of any specified expense item any required
163 water quality or wastewater quality testing already included in
164 a utility’s rates. Specified expense items that are eligible for
165 automatic increase or decrease of a utility’s rates include, but
166 are not limited to:
167 a. The rates charged by a governmental authority or other
168 water or wastewater utility regulated by the commission which
169 provides utility service to the utility.
170 b. The rates or fees that the utility is charged for
171 electric power.
172 c. The amount of ad valorem taxes assessed against the
173 utility’s used and useful property.
174 d. The fees charged by the Department of Environmental
175 Protection in connection with the National Pollutant Discharge
176 Elimination System Program.
177 e. The regulatory assessment fees imposed upon the utility
178 by the commission.
179 f. Costs incurred for water quality or wastewater quality
180 testing required by the Department of Environmental Protection.
181 g. The fees charged for wastewater biosolids disposal.
182 h. Costs incurred for any tank inspection required by the
183 Department of Environmental Protection or a local governmental
184 authority.
185 i. Treatment plant operator and water distribution system
186 operator license fees required by the Department of
187 Environmental Protection or a local governmental authority.
188 j. Water or wastewater operating permit fees charged by the
189 Department of Environmental Protection or a local governmental
190 authority.
191 k. Consumptive or water use permit fees charged by a water
192 management district.
193 2. A utility may not use this procedure to increase its
194 rates as a result of an increase in a specific expense item
195 which occurred water quality or wastewater quality testing or an
196 increase in the cost of purchased water services, sewer
197 services, or electric power or in assessed ad valorem taxes,
198 which increase was initiated more than 12 months before the
199 filing by the utility.
200 3. The commission may establish by rule additional specific
201 expense items that are outside the control of the utility and
202 have been imposed upon the utility by a federal, state, or local
203 law, rule, order, or notice. If the commission establishes such
204 a rule, the commission shall review the rule at least once every
205 5 years and determine whether each expense item should continue
206 to be cause for an automatic increase or decrease and whether
207 additional items should be included.
208 4. The provisions of This subsection does do not prevent a
209 utility from seeking a change in rates pursuant to the
210 provisions of subsection (2).
211 (7) The commission shall determine the reasonableness of
212 rate case expenses and shall disallow all rate case expenses
213 determined to be unreasonable. No rate case expense determined
214 to be unreasonable shall be paid by a consumer.
215 (a) In determining the reasonable level of rate case
216 expense, the commission shall consider the following criteria
217 and disallow a rate case expense based upon:
218 1. The extent to which a utility has utilized or failed to
219 utilize the provisions of paragraph (4)(a) or paragraph (4)(b).
220 2. Whether the customers have received a material benefit
221 as a result of the rate case.
222 3. The amount of time between each rate case.
223 4. The extent to which a utility has used automatic
224 increases or decreases authorized under subsection (4).
225 5. The extent to which, at the time of the initial filing,
226 the utility filed complete documentation as required by
227 commission rule, including, but not limited to, minimum filing
228 requirements.
229 6. Whether the utility’s rate case filing seeks
230 preferential benefits to shareholders, owners, or nonregulated
231 affiliates.
232 7. The proportion of any rate increase approved by the
233 commission as compared to the amount initially requested by the
234 utility.
235 8. The amount of overall rate case expense incurred and
236 requested as compared to the amount of rate increase approved by
237 the commission.
238 9. The quality of service provided by the utility; and
239 10. Such other criteria as it may establish by rule.
240 (b) The commission shall make specific findings of fact,
241 supported by competent, substantial evidence, for each criterion
242 and the extent to which each criterion benefits the customer.
243 The commission may allocate the benefits between the customers
244 and the shareholders, owners, or affiliates accordingly.
245 Section 5. Subsection (3) of section 367.0814, Florida
246 Statutes, is amended to read:
247 367.0814 Staff assistance in changing rates and charges;
248 interim rates.—
249 (3) The provisions of s. 367.081(1), (2)(a), and (3) shall
250 apply in determining the utility’s rates and charges. However,
251 the commission may not award rate case expenses to recover
252 attorney fees or fees of other outside consultants who are
253 engaged for the purpose of preparing or filing the case if a
254 utility receives staff assistance in changing rates and charges
255 pursuant to this section, unless the Office of Public Counsel or
256 interested parties have intervened. The commission may award
257 rate case expenses for attorney fees or fees of other outside
258 consultants if such fees are incurred for the purpose of
259 providing consulting or legal services to the utility after the
260 initial staff report is made available to customers and the
261 utility. If there is a protest or an appeal by a party other
262 than the utility, the commission may award rate case expenses to
263 the utility for attorney fees or fees of other outside
264 consultants for costs incurred after the protest or appeal. By
265 December 31, 2016, the commission must adopt rules to administer
266 this subsection.
267 Section 6. Section 367.0816, Florida Statutes, is amended
268 to read:
269 367.0816 Recovery of rate case expenses.—
270 (1) The amount of rate case expense determined by the
271 commission pursuant to the provisions of this chapter to be
272 recovered through a public utilities rate shall be apportioned
273 for recovery over a period of 4 years. At the conclusion of the
274 recovery period, the rate of the public utility shall be reduced
275 immediately by the amount of rate case expense previously
276 included in rates.
277 (2) A utility may not recover the 4-year amortized rate
278 case expense for more than one rate case at any given time. If
279 the commission approves and a utility implements a rate change
280 from a subsequent rate case pursuant to this section, any
281 unamortized rate case expense for a prior rate case must be
282 discontinued. The unamortized portion of rate case expense for a
283 prior rate case must be removed from rates before the
284 implementation of an additional amortized rate case expense for
285 the most recent rate proceeding.
286 Section 7. Subsection (3) is added to section 367.111,
287 Florida Statutes, to read:
288 367.111 Service.—
289 (3) The commission may, on its own motion or based on
290 complaints of customers of a water utility subject to its
291 jurisdiction, review water quality as it pertains to secondary
292 drinking water standards established by the Department of
293 Environmental Protection. The commission may, on its own motion
294 or based on complaints of customers of a wastewater utility
295 subject to its jurisdiction, review wastewater service as it
296 pertains to odor, noise, aerosol drift, or lighting.
297 Section 8. Section 367.165, Florida Statutes, is amended to
298 read:
299 367.165 Abandonment.—It is the intent of the Legislature
300 that water or wastewater service to the customers of a utility
301 not be interrupted by the abandonment or placement into
302 receivership of the utility. Notwithstanding s. 367.171, this
303 section applies to each county. To that end:
304 (1) A No person, lessee, trustee, or receiver owning,
305 operating, managing, or controlling a utility may not shall
306 abandon the utility without giving 60 days’ notice to the county
307 or counties in which the utility is located and to the
308 commission. Anyone who violates the provisions of this
309 subsection is guilty of a misdemeanor of the first degree,
310 punishable as provided in s. 775.082 or s. 775.083. Each day of
311 such abandonment constitutes a separate offense. In addition,
312 such act is a violation of this chapter, and the commission may
313 impose upon the utility a penalty for each such offense of not
314 more than $5,000 or may amend, suspend, or revoke its
315 certificate of authorization; each day of such abandonment
316 without prior notice constitutes a separate offense.
317 (2) After receiving such notice, the county, or counties
318 acting jointly if more than one county is affected, shall
319 petition the circuit court of the judicial circuit in which such
320 utility is domiciled to appoint a receiver, which may be the
321 governing body of a political subdivision or any other person
322 deemed appropriate. The receiver shall operate the utility from
323 the date of abandonment until such time as the receiver disposes
324 of the property of the utility in a manner designed to continue
325 the efficient and effective operation of utility service.
326 (3) The notification to the commission under subsection (1)
327 is sufficient cause for revocation, suspension, or amendment of
328 the certificate of authorization of the utility as of the date
329 of abandonment. The receiver operating such utility shall be
330 considered to hold a temporary authorization from the
331 commission, and the approved rates of the utility shall be
332 deemed to be the interim rates of the receiver until modified by
333 the commission.
334 Section 9. Subsection (3) of section 403.8532, Florida
335 Statutes, is amended to read:
336 403.8532 Drinking water state revolving loan fund; use;
337 rules.—
338 (3) The department may make, or request that the
339 corporation make, loans, grants, and deposits to community water
340 systems; for-profit, privately owned, or investor-owned water
341 systems;, nonprofit, transient, noncommunity water systems;, and
342 nonprofit, nontransient, noncommunity water systems to assist
343 them in planning, designing, and constructing public water
344 systems, unless such public water systems are for-profit
345 privately owned or investor-owned systems that regularly serve
346 1,500 service connections or more within a single certified or
347 franchised area. However, a for-profit privately owned or
348 investor-owned public water system that regularly serves 1,500
349 service connections or more within a single certified or
350 franchised area may qualify for a loan only if the proposed
351 project will result in the consolidation of two or more public
352 water systems. The department may provide loan guarantees,
353 purchase loan insurance, and refinance local debt through the
354 issue of new loans for projects approved by the department.
355 Public water systems may borrow funds made available pursuant to
356 this section and may pledge any revenues or other adequate
357 security available to them to repay any funds borrowed.
358 (a) The department shall administer loans so that amounts
359 credited to the Drinking Water Revolving Loan Trust Fund in any
360 fiscal year are reserved for the following purposes:
361 1. At least 15 percent for qualifying small public water
362 systems.
363 2. Up to 15 percent for qualifying financially
364 disadvantaged communities.
365 (b) If an insufficient number of the projects for which
366 funds are reserved under this subsection have been submitted to
367 the department at the time the funding priority list authorized
368 under this section is adopted, the reservation of these funds no
369 longer applies. The department may award the unreserved funds as
370 otherwise provided in this section.
371 Section 10. This act shall take effect July 1, 2016.