Florida Senate - 2019 SB 796
By Senator Gruters
23-00589-19 2019796__
1 A bill to be entitled
2 An act relating to public utility storm protection
3 plans; creating s. 366.96, F.S.; providing legislative
4 findings; defining terms; requiring public utilities
5 to individually submit to the Public Service
6 Commission, for review and approval, a transmission
7 and distribution storm protection plan as part of the
8 storm hardening plan required by the commission;
9 requiring utilities to update their respective plans
10 on a specified basis; requiring the commission to
11 approve or modify submitted plans within a specified
12 timeframe, taking into consideration specified
13 factors; requiring the commission to conduct an annual
14 proceeding to allow utilities to justify and recover
15 certain costs through a storm protection cost recovery
16 clause; providing that a party may challenge the
17 prudence of certain costs; providing that utilities
18 may not include certain costs in their base rates;
19 providing for the allocation of such costs;
20 authorizing utilities to recover depreciation on
21 certain capital costs through the recovery clause;
22 requiring utilities to record certain costs in a storm
23 protection reserve account, which must be used for a
24 certain purpose; requiring that certain surplus funds
25 be returned to customers through the recovery clause;
26 requiring the commission, under certain circumstances,
27 to establish a factor intended to recover certain
28 required revenue; providing the basis for the factor;
29 requiring that the factor provide for the true-up of
30 certain costs at least annually and that it require
31 that certain refunds or collections related to the
32 true-up include interest; requiring the commission to
33 adopt rules; providing an effective date.
34
35 Be It Enacted by the Legislature of the State of Florida:
36
37 Section 1. Section 366.96, Florida Statutes, is created to
38 read:
39 366.96 Public utility transmission and distribution storm
40 protection plans.—
41 (1) The Legislature finds that:
42 (a) It is in the public interest to promote storm
43 protection activities, such as the overhead hardening of
44 electrical transmission and distribution facilities, the
45 undergrounding of certain electrical distribution lines, and
46 increased vegetation management in this state.
47 (b) Undertaking storm protection for utilities’
48 transmission and distribution systems will substantially
49 strengthen the ability of the public utility’s electric
50 infrastructure to withstand extreme weather conditions, reduce
51 restoration costs and outage times to customers affected by
52 extreme weather conditions, and improve the overall service
53 reliability for customers in this state.
54 (c) When considering issues relating to costs, reliability,
55 storm protection and restoration, and the public convenience and
56 necessity, the future undergrounding of electrical distribution
57 lines must focus primarily on distribution laterals.
58 (d) When considering incurring additional transmission and
59 distribution storm protection costs, it is in the public
60 interest that public utilities mitigate additional costs to
61 utility customers to the extent possible.
62 (2) As used in this section, the term:
63 (a) “Commission” means the Florida Public Service
64 Commission.
65 (b) “Public utility” or “utility” has the same meaning as
66 in s. 366.02(1).
67 (c) “Transmission and distribution storm protection plan”
68 means a public utility plan for the overhead hardening of
69 electrical transmission or distribution facilities, the
70 undergrounding of electrical distribution facilities, and
71 increased vegetation management.
72 (d) “Transmission and distribution storm protection plan
73 costs” means the reasonable and prudent costs of an approved
74 transmission and distribution storm protection plan.
75 (e) “Vegetation management” means actions that a public
76 utility takes to prevent or curtail vegetation from interfering
77 with the utility’s infrastructure, including, but not limited
78 to, mowing the vegetation, applying herbicides, trimming trees,
79 and removing trees or brush near electrical transmission and
80 distribution facilities.
81 (3)(a) As part of the storm hardening plan required by
82 commission rule, a public utility shall submit to the commission
83 for review and approval a transmission and distribution storm
84 protection plan. Such plans must be updated at least every 3
85 years after the date of their initial approval and must be
86 submitted to the commission for approval or modification.
87 (b) To maintain reasonable electric rates, a public
88 utility’s transmission and distribution storm protection plan
89 may not include the undergrounding of more than 4 percent of the
90 utility’s lateral distribution lines per year.
91 (c) A public utility shall include in its transmission and
92 distribution storm protection plan any information required by
93 commission rule to address the electric infrastructure
94 improvements proposed, as well as sufficient information to
95 demonstrate that the transmission and distribution storm
96 protection plan costs are not included in the utility’s base
97 rates, as required in paragraph (5)(c).
98 (4) The commission shall approve or modify, as appropriate,
99 pursuant to chapter 120, the public utility’s transmission and
100 distribution storm protection plan within 6 months after the
101 utility initially submits the plan. The commission shall
102 consider both of the following in its approval process:
103 (a) Whether the transmission and distribution storm
104 protection plan enhances reliability, strengthens
105 infrastructure, and reduces restoration costs and outage times
106 in a prudent, practical, and cost-efficient manner.
107 (b) Whether transmission and distribution storm protection
108 of electric infrastructure is feasible, reasonable, or practical
109 in certain areas of the public utility’s service territory,
110 including, but not limited to, flood zones and rural areas.
111 (5)(a) The commission shall conduct an annual proceeding to
112 allow utilities the opportunity to justify and recover
113 transmission and distribution storm protection plan costs
114 through a storm protection cost recovery clause.
115 (b) All actions taken in the implementation of a
116 transmission and distribution storm protection plan are
117 considered prudent, but a party may challenge the prudence of
118 the costs associated with such actions.
119 (c) The annual transmission and distribution storm
120 protection plan costs recoverable through the storm protection
121 cost recovery clause may not be included in the utility’s base
122 rates and must be allocated to customer classes pursuant to the
123 rate design most recently approved by the commission.
124 (d) If the costs recoverable through a storm protection
125 cost recovery clause are capital expenditures, a public utility
126 may recover, through the storm protection cost recovery clause,
127 the annual depreciation on such costs, calculated at the
128 utility’s then-current approved depreciation rates, and a return
129 on the depreciated balance of the costs calculated at the
130 utility’s weighted average cost of capital using the return on
131 equity last approved by the commission in a rate case or
132 settlement order.
133 (6)(a) If the benefits of a tax reform result in a return
134 to customers as a reduction in a utility’s electric rates, the
135 annual amounts that would otherwise have been returned to
136 customers must be recorded in a storm protection reserve
137 account. Such account must be used to fund the full commission
138 approved annual revenue requirements of the storm protection
139 cost recovery clause.
140 (b) An actual or projected surplus in the storm protection
141 reserve account at the end of a calendar year must be returned
142 to customers through the storm protection cost recovery clause.
143 If the utility projects that the balance of its storm protection
144 reserve will be insufficient to cover the projected full revenue
145 requirements in any calendar year, the commission must establish
146 a factor that, taking into account projected sales, is intended
147 to recover the required cumulative annual revenue for
148 transmission and distribution storm protection costs, net of the
149 amount funded by the storm protection reserve account. The cost
150 recovery factor must be based on costs incurred by, as well as
151 projections of, the transmission and distribution storm
152 protection plan costs for the prospective recovery period.
153 (c) The storm protection cost recovery clause cost-recovery
154 factor must provide for periodic true-up of the utility’s actual
155 transmission and distribution storm protection plan costs
156 relative to the projections under paragraph (b). The true-up
157 must occur at least annually and must further require that any
158 refund or collection made as part of the true-up process include
159 interest based on the 30-day commercial paper rate, as specified
160 by commission rule.
161 (7) The commission shall adopt rules to implement and
162 administer this section.
163 Section 2. This act shall take effect July 1, 2019.