Florida Senate - 2016 COMMITTEE AMENDMENT Bill No. SB 840 Ì325140jÎ325140 LEGISLATIVE ACTION Senate . House Comm: RCS . 02/23/2016 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Communications, Energy, and Public Utilities (Garcia) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete everything after the enacting clause 4 and insert: 5 Section 1. Subsection (19) is added to section 163.01, 6 Florida Statutes, to read: 7 163.01 Florida Interlocal Cooperation Act of 1969.— 8 (19)(a) Any entity created pursuant to this section that 9 supplies electricity through an interlocal agreement to its 10 member municipalities shall annually submit to the Public 11 Service Commission and each member municipality that 12 participates in the electric power project an independently 13 prepared financial statement for each individual generation 14 asset. The financial statement must include: 15 1. A balance sheet that reflects assets and liabilities 16 associated with each generation asset, including the plant in 17 service, accumulated additions and removals, net plant, 18 depreciation, operations and maintenance expenses, allocations, 19 and any other material asset and liability categories. 20 2. An income statement that reflects each generation 21 asset’s operational and financial activities for the reporting 22 period, including revenues, expenses, gains, and losses. Any 23 gains or losses from hedging activities associated with the 24 generation asset shall be separately itemized. 25 3. A statement of cash flows that identifies changes in the 26 generation asset’s cash flows during the reporting period. 27 4. The current fair market value for each generation asset. 28 The current fair market value shall be determined assuming the 29 price that a willing buyer would pay a willing seller for the 30 generation asset, with neither party being under any compulsion 31 to buy or sell and both having reasonable knowledge of relevant 32 facts, and assuming all risk of ownership, loss, and 33 decommissioning, as applicable. The current fair market value 34 statement shall include the overall fair market value of the 35 generation asset as a whole and each member municipality’s 36 equity position net of the entity’s debt, based on the current 37 fair market generation asset value. The current fair market 38 value statement shall include, after considering the market 39 value of the generation assets, the net return of equity or the 40 cost to exit the entity for each member municipality. 41 (b) To serve as a member of the governing body of an entity 42 created pursuant to this section for the purpose of supplying 43 electricity to its member municipalities, each member of the 44 governing body must be an elected official from one of the 45 entity’s member municipalities. Current members of a governing 46 body of such an entity who are not elected officials may 47 continue to serve until expiration of their terms but no later 48 than July 1, 2018. 49 Section 2. This act shall take effect July 1, 2016. 50 51 ================= T I T L E A M E N D M E N T ================ 52 And the title is amended as follows: 53 Delete everything before the enacting clause 54 and insert: 55 A bill to be entitled 56 An act relating to municipal power regulation; 57 amending s. 163.01, F.S.; requiring certain entities 58 created under the Interlocal Cooperation Act of 1969 59 to submit independently prepared financial statements 60 for certain electric power projects to specified 61 public entities; providing statement requirements; 62 providing eligibility requirements for membership on 63 the governing body of certain entities created under 64 the Interlocal Cooperation Act of 1969; providing an 65 effective date. 66 67 WHEREAS, The Florida Municipal Power Agency is a joint-use 68 action agency created pursuant to a series of interlocal 69 agreements with the state’s municipalities to finance, acquire, 70 contract, manage, and operate its own electric power projects or 71 jointly accomplish the same purposes with other public or 72 private utilities, and 73 WHEREAS, the Florida Municipal Power Agency is governed by 74 a board of directors, consisting of one board member from each 75 member municipality, which decides all issues concerning each 76 project except for the “All-Requirements” power supply project, 77 and 78 WHEREAS, the All-Requirements power supply project is 79 governed by an executive committee, with each All-Requirements 80 project member municipality that purchases power from the 81 project appointing one executive committee member, and 82 WHEREAS, the Auditor General conducted an operational audit 83 of the Florida Municipal Power Agency and released Report No. 84 2015-165 to the Joint Legislative Auditing Committee on March 85 30, 2015, which included findings and recommendations, and 86 WHEREAS, the Auditor General found many of the Florida 87 Municipal Power Agency’s hedging activities to be inconsistent 88 with other joint-use action agencies, leading to net losses of 89 $247.6 million over the past 12 fiscal years, and 90 WHEREAS, the Auditor General concluded that several of the 91 Florida Municipal Power Agency’s personnel and payroll 92 administration activities may negatively affect future rates, 93 including the Chief Executive Officer’s employment contract that 94 provides severance pay and lifetime benefits even if employment 95 is terminated for cause, and 96 WHEREAS, the Florida Municipal Power Agency did not 97 consistently follow its own procurement and competitive 98 selection policies, one of which may increase the cost of future 99 bond issues, and 100 WHEREAS, the Florida Municipal Power Agency’s All 101 Requirements project agreement to curtail peak-shaving 102 activities is primarily voluntary, relies on self-reporting, and 103 contains no penalties for noncompliance, and 104 WHEREAS, certain All-Requirements project contract 105 provisions relating to the withdrawal of members are ambiguous, 106 use a fixed discount rate rather than one based on current 107 capital costs, and do not provide for independent verification 108 by a withdrawing member, and 109 WHEREAS, even though the Florida Municipal Power Agency is 110 a governmental entity, many of the laws that apply to local 111 governments do not apply to the agency, and 112 WHEREAS, the Florida Municipal Power Agency is not subject 113 to any rate-setting authority, including by the Public Service 114 Commission, and 115 WHEREAS, there exists a need to promote transparency and 116 consistency and to increase public understanding and confidence 117 in the operation of the Florida Municipal Power Agency by the 118 member municipalities and the public, including those electric 119 ratepayers who are not residents of the municipality supplying 120 electric power but who are subject to a municipality that is 121 receiving power from the agency, NOW, THEREFORE,