Florida Senate - 2018                                    SB 1166
       By Senator Rodriguez
       37-01032-18                                           20181166__
    1                        A bill to be entitled                      
    2         An act relating to storm hardening; amending s.
    3         366.8260, F.S.; defining the term “storm hardening”;
    4         requiring an electric utility, when petitioning the
    5         Public Service Commission for a storm-recovery
    6         financing order, to identify its storm hardening plan,
    7         its compliance with the plan, and its overall prudence
    8         in ensuring electric service reliability; requiring
    9         the commission, when making a determination on a
   10         petition, to consider the utility’s prudence in storm
   11         hardening, previously received storm hardening costs,
   12         and the utility’s prudence in expending such funds;
   13         conforming a cross-reference; requiring that electric
   14         utilities provide a discount on storm-recovery charges
   15         to certain customers who have underground electric
   16         utility distribution lines servicing their property or
   17         who live in certain jurisdictions limiting the
   18         planting of certain types of trees near certain
   19         utility equipment; providing an effective date.
   21  Be It Enacted by the Legislature of the State of Florida:
   23         Section 1. Present paragraphs (k) through (q) of subsection
   24  (1) of section 366.8260, Florida Statutes, are redesignated as
   25  paragraphs (l) through (r), respectively, a new paragraph (k) is
   26  added to that subsection, paragraphs (a) and (b) of subsection
   27  (2) and paragraph (b) of subsection (5) of that section are
   28  amended, present subsections (13), (14), and (15) of that
   29  section are redesignated as subsections (14), (15), and (16),
   30  respectively, and a new subsection (13) is added to that
   31  section, to read:
   32         366.8260 Storm-recovery financing.—
   33         (1) DEFINITIONS.—As used in this section, the term:
   34         (k) “Storm hardening” means upgraded design and
   35  construction practices, as well as maintenance practices, so
   36  that electric transmission and distribution systems are better
   37  able to withstand high winds, storm surges, and flooding
   38  resulting from storms.
   39         (2) FINANCING ORDERS.—
   40         (a) An electric utility may petition the commission for a
   41  financing order. For each petition, the electric utility shall:
   42         1. Describe the storm-recovery activities that the electric
   43  utility has undertaken or proposes to undertake and describe the
   44  reasons for undertaking the activities.
   45         2. Set forth the known storm-recovery costs and estimate
   46  the costs of any storm-recovery activities that are not
   47  completed, or for which the costs are not yet known, as
   48  identified and requested by the electric utility.
   49         3. Set forth the level of the storm-recovery reserve that
   50  the utility proposes to establish or replenish and has
   51  determined would be appropriate to recover through storm
   52  recovery bonds and is seeking to so recover and such level that
   53  the utility is funding or will seek to fund through other means,
   54  together with a description of the factors and calculations used
   55  in determining the amounts and methods of recovery.
   56         4. Indicate whether the electric utility proposes to
   57  finance all or a portion of the storm-recovery costs and storm
   58  recovery reserve using storm-recovery bonds. If the electric
   59  utility proposes to finance a portion of such costs, the
   60  electric utility shall identify that portion in the petition.
   61         5. Estimate the financing costs related to the storm
   62  recovery bonds.
   63         6. Estimate the storm-recovery charges necessary to recover
   64  the storm-recovery costs, storm-recovery reserve, and financing
   65  costs and the period for recovery of such costs.
   66         7. Estimate any cost savings or demonstrate how it would
   67  avoid or significantly mitigate rate impacts to customers
   68  resulting from financing storm-recovery costs with storm
   69  recovery bonds as opposed to the traditional method of
   70  recovering such costs from customers and through alternative
   71  financing methods available to the electric utility.
   72         8.Identify its storm hardening plan for the storm-impacted
   73  area, its compliance with the plan, and its overall prudence in
   74  protecting utility assets and ensuring reliable electric
   75  transmission and distribution service in the storm-impacted
   76  area.
   77         9.8. File with the petition direct testimony supporting the
   78  petition.
   79         (b)1. Proceedings on a petition submitted pursuant to
   80  paragraph (a) shall begin with a petition by an electric utility
   81  and shall be disposed of in accordance with the provisions of
   82  chapter 120 and applicable rules, except that the provisions of
   83  this section, to the extent applicable, shall control.
   84         a. Within 7 days after the filing of a petition, the
   85  commission shall publish a case schedule, which schedule shall
   86  place the matter before the commission on an agenda that will
   87  permit a commission decision no later than 120 days after the
   88  date the petition is filed.
   89         b. No later than 135 days after the date the petition is
   90  filed, the commission shall issue a financing order or an order
   91  rejecting the petition. A party to the commission proceeding may
   92  petition the commission for reconsideration of the financing
   93  order within 5 days after the date of its issuance. The
   94  commission shall issue a financing order authorizing financing
   95  of reasonable and prudent storm-recovery costs, the storm
   96  recovery reserve amount determined appropriate by the
   97  commission, and financing costs if the commission finds that the
   98  issuance of the storm-recovery bonds and the imposition of
   99  storm-recovery charges authorized by the order are reasonably
  100  expected to result in lower overall costs or would avoid or
  101  significantly mitigate rate impacts to customers as compared
  102  with alternative methods of financing or recovering storm
  103  recovery costs and storm-recovery reserve. Any determination of
  104  whether storm-recovery costs are reasonable and prudent shall be
  105  made with reference to the general public interest in, and the
  106  scope of effort required to provide, the safe and expeditious
  107  restoration of electric service. Such determination must also
  108  consider whether the utility has acted prudently in adequately
  109  storm hardening its electric transmission and distribution
  110  service, whether the utility has already requested and
  111  previously received storm hardening costs from customers, and
  112  whether such funds were expended in a prudent manner.
  113         2. In a financing order issued to an electric utility, the
  114  commission shall:
  115         a. Except as provided in sub-subparagraph f. and in
  116  subparagraph 4., specify the amount of storm-recovery costs and
  117  the level of storm-recovery reserves, taking into consideration,
  118  to the extent the commission deems appropriate, any other
  119  methods used to recover these costs, and describe and estimate
  120  the amount of financing costs which may be recovered through
  121  storm-recovery charges; and specify the period over which such
  122  costs may be recovered.
  123         b. Determine that the proposed structuring, expected
  124  pricing, and financing costs of the storm-recovery bonds are
  125  reasonably expected to result in lower overall costs or would
  126  avoid or significantly mitigate rate impacts to customers as
  127  compared with alternative methods of financing or recovering
  128  storm-recovery costs.
  129         c. Provide that, for the period specified pursuant to sub
  130  subparagraph a., the imposition and collection of storm-recovery
  131  charges authorized in the financing order shall be paid by all
  132  customers receiving transmission or distribution service from
  133  the electric utility or its successors or assignees under
  134  commission-approved rate schedules or under special contracts,
  135  even if the customer elects to purchase electricity from an
  136  alternative electric supplier following a fundamental change in
  137  regulation of public utilities in the state.
  138         d. Determine what portion, if any, of the storm-recovery
  139  reserves must be held in a funded reserve and any limitations on
  140  how the reserve may be held, accessed, or used.
  141         e. Include a formula-based mechanism for making expeditious
  142  periodic adjustments in the storm-recovery charges that
  143  customers are required to pay under the financing order and for
  144  making any adjustments that are necessary to correct for any
  145  overcollection or undercollection of the charges or to otherwise
  146  ensure the timely payment of storm-recovery bonds and financing
  147  costs and other required amounts and charges payable in
  148  connection with the storm-recovery bonds.
  149         f. Specify the storm-recovery property that is, or shall
  150  be, created in favor of an electric utility or its successors or
  151  assignees and that shall be used to pay or secure storm-recovery
  152  bonds and financing costs.
  153         g. Specify the degree of flexibility to be afforded to the
  154  electric utility in establishing the terms and conditions of the
  155  storm-recovery bonds, including, but not limited to, repayment
  156  schedules, interest rates, and other financing costs.
  157         h. Provide that storm-recovery charges be allocated to the
  158  customer classes using the criteria set out in s. 366.06(1), in
  159  the manner in which these costs or their equivalent were
  160  allocated in the cost-of-service study approved in connection
  161  with the electric utility’s last rate case. If the electric
  162  utility’s last rate case was resolved by a settlement agreement,
  163  the cost-of-service methodology filed by the electric utility in
  164  that case shall be used.
  165         i. Provide that, after the final terms of an issuance of
  166  storm-recovery bonds have been established and prior to the
  167  issuance of storm-recovery bonds, the electric utility shall
  168  determine the resulting initial storm-recovery charge in
  169  accordance with the financing order and such initial storm
  170  recovery charge shall be final and effective upon the issuance
  171  of such storm-recovery bonds without further commission action.
  172         j. Include any other conditions that the commission
  173  considers appropriate and that are not otherwise inconsistent
  174  with this section.
  176  In performing the responsibilities of this subparagraph and
  177  subparagraph 5., the commission may engage outside consultants
  178  or counsel. Any expenses associated with such services shall be
  179  included as part of financing costs and included in storm
  180  recovery charges.
  181         3. A financing order issued to an electric utility may
  182  provide that creation of the electric utility’s storm-recovery
  183  property pursuant to sub-subparagraph 2.f. is conditioned upon,
  184  and shall be simultaneous with, the sale or other transfer of
  185  the storm-recovery property to an assignee and the pledge of the
  186  storm-recovery property to secure storm-recovery bonds.
  187         4. If the commission issues a financing order, the electric
  188  utility shall file with the commission at least biannually a
  189  petition or a letter applying the formula-based mechanism
  190  pursuant to sub-subparagraph 2.e. and, based on estimates of
  191  consumption for each rate class and other mathematical factors,
  192  requesting administrative approval to make the adjustments
  193  described in sub-subparagraph 2.e. The review of such a request
  194  shall be limited to determining whether there is any
  195  mathematical error in the application of the formula-based
  196  mechanism relating to the appropriate amount of any
  197  overcollection or undercollection of storm-recovery charges and
  198  the amount of an adjustment. Such adjustments shall ensure the
  199  recovery of revenues sufficient to provide for the payment of
  200  principal, interest, acquisition, defeasance, financing costs,
  201  or redemption premium and other fees, costs, and charges in
  202  respect of storm-recovery bonds approved under the financing
  203  order. Within 60 days after receiving an electric utility’s
  204  request pursuant to this paragraph, the commission shall either
  205  approve the request or inform the electric utility of any
  206  mathematical errors in its calculation. If the commission
  207  informs the utility of mathematical errors in its calculation,
  208  the utility may correct its error and refile its request. The
  209  timeframes previously described in this paragraph shall apply to
  210  a refiled request.
  211         5. Within 120 days after the issuance of storm-recovery
  212  bonds, the electric utility shall file with the commission
  213  information on the actual costs of the storm-recovery bond
  214  issuance. The commission shall review such information to
  215  determine if such costs incurred in the issuance of the bonds
  216  resulted in the lowest overall costs that were reasonably
  217  consistent with market conditions at the time of the issuance
  218  and the terms of the financing order. The commission may
  219  disallow any incremental issuance costs in excess of the lowest
  220  overall costs by requiring the utility to make a contribution to
  221  the storm reserve in an amount equal to the excess of actual
  222  issuance costs incurred, and paid for out of storm-recovery bond
  223  proceeds, and the lowest overall issuance costs as determined by
  224  the commission. The commission may not make adjustments to the
  225  storm-recovery charges for any such excess issuance costs.
  226         6. Subsequent to the earlier of the transfer of storm
  227  recovery property to an assignee or the issuance of storm
  228  recovery bonds authorized thereby, a financing order is
  229  irrevocable and, except as provided in subparagraph 4. and
  230  paragraph (c), the commission may not amend, modify, or
  231  terminate the financing order by any subsequent action or
  232  reduce, impair, postpone, terminate, or otherwise adjust storm
  233  recovery charges approved in the financing order. After the
  234  issuance of a financing order, the electric utility retains sole
  235  discretion regarding whether to assign, sell, or otherwise
  236  transfer storm-recovery property or to cause the storm-recovery
  237  bonds to be issued, including the right to defer or postpone
  238  such assignment, sale, transfer, or issuance.
  239         (5) STORM-RECOVERY PROPERTY.—
  240         (b)1. Except as specified in this section, the Uniform
  241  Commercial Code does not apply to storm-recovery property or any
  242  right, title, or interest of a utility or assignee described in
  243  subparagraph (1)(p)1. (1)(o)1., whether before or after the
  244  issuance of the financing order. In addition, such right, title,
  245  or interest pertaining to a financing order, including, but not
  246  limited to, the associated storm-recovery property and any
  247  revenues, collections, claims, rights to payment, payments,
  248  money, or proceeds of or arising from storm-recovery charges
  249  pursuant to such order, may shall not be deemed proceeds of any
  250  right or interest other than in the financing order and the
  251  storm-recovery property arising from the order.
  252         2. The creation, attachment, granting, perfection,
  253  priority, and enforcement of liens and security interests in
  254  storm-recovery property to secure storm-recovery bonds is
  255  governed solely by this section and not by the Uniform
  256  Commercial Code.
  257         3. A valid, enforceable, and attached lien and security
  258  interest in storm-recovery property may be created only upon the
  259  later of:
  260         a. The issuance of a financing order;
  261         b. The execution and delivery of a security agreement with
  262  a financing party in connection with the issuance of storm
  263  recovery bonds; or
  264         c. The receipt of value for the storm-recovery bonds.
  266  A valid, enforceable, and attached security interest shall be
  267  perfected against third parties as of the date of filing of a
  268  financing statement in the Florida Secured Transaction Registry,
  269  as such registry is defined in Article 9 of the Uniform
  270  Commercial Code, in accordance with subparagraph 4., and shall
  271  thereafter be a continuously perfected lien; and such security
  272  interest in the storm-recovery property and all proceeds of such
  273  storm-recovery property, whether or not billed, accrued, or
  274  collected, and whether or not deposited into a deposit account
  275  and however evidenced, shall have priority in accordance with
  276  subparagraph 8. and take precedence over any subsequent judicial
  277  or other lien creditor. No continuation statement need be filed
  278  to maintain such perfection.
  279         4. Financing statements required to be filed pursuant to
  280  this section shall be filed, maintained, and indexed in the same
  281  manner and in the same system of records maintained for the
  282  filing of financing statements in the Florida Secured
  283  Transaction Registry under Article 9 of the Uniform Commercial
  284  Code. The filing of such a financing statement shall be the only
  285  method of perfecting a lien or security interest on storm
  286  recovery property.
  287         5. The priority of a lien and security interest perfected
  288  under this paragraph is not impaired by any later modification
  289  of the financing order or storm-recovery property or by the
  290  commingling of funds arising from storm-recovery property with
  291  other funds, and any other security interest that may apply to
  292  those funds shall be terminated as to all funds transferred to a
  293  segregated account for the benefit of an assignee or a financing
  294  party or to an assignee or financing party directly.
  295         6. If a default or termination occurs under the terms of
  296  the storm-recovery bonds, the financing parties or their
  297  representatives may foreclose on or otherwise enforce their lien
  298  and security interest in any storm-recovery property as if they
  299  were a secured party under Article 9 of the Uniform Commercial
  300  Code; and a court may order that amounts arising from storm
  301  recovery property be transferred to a separate account for the
  302  financing parties’ benefit, to which their lien and security
  303  interest shall apply. On application by or on behalf of the
  304  financing parties to a circuit court of this state, such court
  305  shall order the sequestration and payment to the financing
  306  parties of revenues arising from the storm-recovery property.
  307         7. The interest of a pledgee of an interest or any rights
  308  in any storm-recovery property is not perfected until filing as
  309  provided in subparagraph 4.
  310         8. The priority of the conflicting interests of pledgees in
  311  the same interest or rights in any storm-recovery property is
  312  determined as follows:
  313         a. Conflicting perfected interests or rights of pledgees
  314  rank according to priority in time of perfection. Priority dates
  315  from the time a filing covering the interest or right is made in
  316  accordance with this paragraph.
  317         b. A perfected interest or right of a pledgee has priority
  318  over a conflicting unperfected interest or right of a pledgee.
  319         c. A perfected interest or right of a pledgee has priority
  320  over a person who becomes a lien creditor after the perfection
  321  of such pledgee’s interest or right.
  323         (a)In areas where an electric utility customer or group of
  324  customers, such as a homeowners’ association, has underground
  325  electric utility distribution lines servicing their property or
  326  group of properties, the electric utility serving those
  327  customers must provide a 15 percent discount on any storm
  328  recovery charge over other customers of the same class who do
  329  not have underground distribution lines servicing their
  330  property. This paragraph applies only when such distribution
  331  lines were undergrounded at the direct request of, and upon the
  332  assessment of an impact or other discrete fee to, the current or
  333  previous customer or group of customers serviced at such
  334  property or group of properties.
  335         (b)If a local government adopts an ordinance prohibiting
  336  the planting of trees, other than small trees that will reach a
  337  maximum height of 10 feet, within 5 lateral feet, at ground
  338  level, of any overhead utility distribution or transmission
  339  line, an electric utility shall provide a 15 percent discount on
  340  any storm-recovery charge to customers within such local
  341  government’s jurisdiction over other customers of the same class
  342  who are not within such jurisdiction.
  343         Section 2. This act shall take effect July 1, 2018.