Florida Senate - 2016                              CS for SB 840
       
       
        
       By the Committee on Communications, Energy, and Public
       Utilities; and Senator Simpson
       
       579-04015-16                                           2016840c1
    1                        A bill to be entitled                      
    2         An act relating to municipal power regulation;
    3         amending s. 163.01, F.S.; requiring certain entities
    4         created under the Interlocal Cooperation Act of 1969
    5         to submit independently prepared financial statements
    6         for certain electric power projects to specified
    7         public entities; providing statement requirements;
    8         providing eligibility requirements for membership on
    9         the governing body of certain entities created under
   10         the Interlocal Cooperation Act of 1969; providing an
   11         effective date.
   12  
   13         WHEREAS, The Florida Municipal Power Agency is a joint-use
   14  action agency created pursuant to a series of interlocal
   15  agreements with the state’s municipalities to finance, acquire,
   16  contract, manage, and operate its own electric power projects or
   17  jointly accomplish the same purposes with other public or
   18  private utilities, and
   19         WHEREAS, the Florida Municipal Power Agency is governed by
   20  a board of directors, consisting of one board member from each
   21  member municipality, which decides all issues concerning each
   22  project except for the “All-Requirements” power supply project,
   23  and
   24         WHEREAS, the All-Requirements power supply project is
   25  governed by an executive committee, with each All-Requirements
   26  project member municipality that purchases power from the
   27  project appointing one executive committee member, and
   28         WHEREAS, the Auditor General conducted an operational audit
   29  of the Florida Municipal Power Agency and released Report No.
   30  2015-165 to the Joint Legislative Auditing Committee on March
   31  30, 2015, which included findings and recommendations, and
   32         WHEREAS, the Auditor General found many of the Florida
   33  Municipal Power Agency’s hedging activities to be inconsistent
   34  with other joint-use action agencies, leading to net losses of
   35  $247.6 million over the past 12 fiscal years, and
   36         WHEREAS, the Auditor General concluded that several of the
   37  Florida Municipal Power Agency’s personnel and payroll
   38  administration activities may negatively affect future rates,
   39  including the Chief Executive Officer’s employment contract that
   40  provides severance pay and lifetime benefits even if employment
   41  is terminated for cause, and
   42         WHEREAS, the Florida Municipal Power Agency did not
   43  consistently follow its own procurement and competitive
   44  selection policies, one of which may increase the cost of future
   45  bond issues, and
   46         WHEREAS, the Florida Municipal Power Agency’s All
   47  Requirements project agreement to curtail peak-shaving
   48  activities is primarily voluntary, relies on self-reporting, and
   49  contains no penalties for noncompliance, and
   50         WHEREAS, certain All-Requirements project contract
   51  provisions relating to the withdrawal of members are ambiguous,
   52  use a fixed discount rate rather than one based on current
   53  capital costs, and do not provide for independent verification
   54  by a withdrawing member, and
   55         WHEREAS, even though the Florida Municipal Power Agency is
   56  a governmental entity, many of the laws that apply to local
   57  governments do not apply to the agency, and
   58         WHEREAS, the Florida Municipal Power Agency is not subject
   59  to any rate-setting authority, including by the Public Service
   60  Commission, and
   61         WHEREAS, there exists a need to promote transparency and
   62  consistency and to increase public understanding and confidence
   63  in the operation of the Florida Municipal Power Agency by the
   64  member municipalities and the public, including those electric
   65  ratepayers who are not residents of the municipality supplying
   66  electric power but who are subject to a municipality that is
   67  receiving power from the agency, NOW, THEREFORE,
   68  
   69  Be It Enacted by the Legislature of the State of Florida:
   70  
   71         Section 1. Subsection (19) is added to section 163.01,
   72  Florida Statutes, to read:
   73         163.01 Florida Interlocal Cooperation Act of 1969.—
   74         (19)(a)Any entity created pursuant to this section that
   75  supplies electricity through an interlocal agreement to its
   76  member municipalities shall annually submit to the Public
   77  Service Commission and each member municipality that
   78  participates in the electric power project an independently
   79  prepared financial statement for each individual generation
   80  asset. The financial statement must include:
   81         1.A balance sheet that reflects assets and liabilities
   82  associated with each generation asset, including the plant in
   83  service, accumulated additions and removals, net plant,
   84  depreciation, operations and maintenance expenses, allocations,
   85  and any other material asset and liability categories.
   86         2.An income statement that reflects each generation
   87  asset’s operational and financial activities for the reporting
   88  period, including revenues, expenses, gains, and losses. Any
   89  gains or losses from hedging activities associated with the
   90  generation asset shall be separately itemized.
   91         3.A statement of cash flows that identifies changes in the
   92  generation asset’s cash flows during the reporting period.
   93         4.The current fair market value for each generation asset.
   94  The current fair market value shall be determined assuming the
   95  price that a willing buyer would pay a willing seller for the
   96  generation asset, with neither party being under any compulsion
   97  to buy or sell and both having reasonable knowledge of relevant
   98  facts, and assuming all risk of ownership, loss, and
   99  decommissioning, as applicable. The current fair market value
  100  statement shall include the overall fair market value of the
  101  generation asset as a whole and each member municipality’s
  102  equity position net of the entity’s debt, based on the current
  103  fair market generation asset value. The current fair market
  104  value statement shall include, after considering the market
  105  value of the generation assets, the net return of equity or the
  106  cost to exit the entity for each member municipality.
  107         (b)To serve as a member of the governing body of an entity
  108  created pursuant to this section for the purpose of supplying
  109  electricity to its member municipalities, each member of the
  110  governing body must be an elected official from one of the
  111  entity’s member municipalities. Current members of a governing
  112  body of such an entity who are not elected officials may
  113  continue to serve until expiration of their terms but no later
  114  than July 1, 2018.
  115         Section 2. This act shall take effect July 1, 2016.
  116