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.
   35  Be It Enacted by the Legislature of the State of Florida:
   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.