Florida Senate - 2020 CS for SB 658 By the Committee on Innovation, Industry, and Technology; and Senator Albritton 580-03760-20 2020658c1 1 A bill to be entitled 2 An act relating to water and wastewater systems; 3 amending s. 180.191, F.S.; requiring a municipality to 4 charge customers receiving its utility services 5 outside the municipal boundaries the same rates, fees, 6 and charges as it charges customers within the 7 municipality under certain circumstances; creating s. 8 367.0712, F.S.; authorizing certain water and 9 wastewater utilities to establish a rate base value by 10 using the fair market value when acquiring a utility 11 system; establishing a procedure to determine the fair 12 market value; requiring the rate base value to be 13 reflected in the acquiring utility’s next rate case 14 for ratemaking purposes; specifying the contents 15 required for an application to the Public Service 16 Commission for approval of the rate base value of the 17 utility system; specifying duties of the commission 18 regarding applications; specifying the commission’s 19 retained authority; providing applicability; requiring 20 the commission to adopt rules; providing an effective 21 date. 22 23 Be It Enacted by the Legislature of the State of Florida: 24 25 Section 1. Present subsections (2), (3), and (4) of section 26 180.191, Florida Statutes, are redesignated as subsections (3), 27 (4), and (5), respectively, a new subsection (2) is added to 28 that section, and subsection (1) of that section is amended, to 29 read: 30 180.191 Limitation on rates charged consumer outside city 31 limits.— 32 (1) Except as provided in subsection (2), any municipality 33 within the state operating a water or sewer utility outside of 34 the boundaries of such municipality shall charge consumers 35 outside the boundaries rates, fees, and charges determined in 36 one of the following manners: 37 (a) It may charge the same rates, fees, and charges as 38 consumers inside the municipal boundaries. However, in addition 39 thereto, the municipality may add a surcharge of not more than 40 25 percent of such rates, fees, and charges to consumers outside 41 the boundaries. Fixing of such rates, fees, and charges in this 42 manner does
shallnot require a public hearing except as may be 43 provided for service to consumers inside the municipality. 44 (b) It may charge rates, fees, and charges that are just 45 and equitable and that whichare based on the same factors used 46 in fixing the rates, fees, and charges for consumers inside the 47 municipal boundaries. In addition thereto, the municipality may 48 add a surcharge not to exceed 25 percent of such rates, fees, 49 and charges for said services to consumers outside the 50 boundaries. However, the total of all such rates, fees, and 51 charges for the services to consumers outside the boundaries may 52 shallnot be more than 50 percent in excess of the total amount 53 the municipality charges consumers served within the 54 municipality for corresponding service. NoSuch rates, fees, and 55 charges may not shallbe fixed until after a public hearing at 56 which all of the users of the water or sewer systems; owners, 57 tenants, or occupants of property served or to be served 58 thereby; and all others interested shall have an opportunity to 59 be heard concerning the proposed rates, fees, and charges. Any 60 change or revision of such rates, fees, or charges may be made 61 in the same manner as such rates, fees, or charges were 62 originally established, but if such change or revision is to be 63 made substantially pro rata as to all classes of service, both 64 inside and outside the municipality, no hearing or notice shall 65 be required. 66 (2) Any municipality within the state operating a water or 67 sewer utility providing service to customers in another 68 recipient municipality from infrastructure located in the 69 recipient municipality shall charge the customers in the 70 recipient municipality the same rates, fees, and charges as it 71 does the customers inside its own municipal boundaries. 72 Section 2. Section 367.0712, Florida Statutes, is created 73 to read: 74 367.0712 Determination of value.— 75 (1) When a utility acquires an existing utility system, the 76 utility may establish a rate base value of the acquired utility 77 system by using the fair market value of the utility system 78 instead of the system’s original cost. 79 (2)(a) The fair market value of a utility system to be 80 acquired must be based on appraisals conducted by two licensed 81 appraisers chosen from a list established by the commission. 82 1. One appraiser shall represent and be paid by the 83 acquiring utility and one appraiser shall represent and be paid 84 by the utility system being acquired. 85 2. Each appraiser shall determine the fair market value 86 using the Uniform Standards of Professional Appraisal Practice, 87 employing cost, market, and income approaches in assessing the 88 value. 89 3. For ratemaking purposes, the fair market value is the 90 average of the two appraisals. 91 4. The original source of funding for the utility system 92 being acquired is not relevant to an evaluation of fair market 93 value. 94 (b) The acquiring utility and utility system being acquired 95 shall jointly retain a licensed engineer to conduct an 96 assessment of the tangible assets of the utility system and the 97 assessment shall be used by the two appraisers in determining 98 the fair market value of the system. 99 (c) The acquiring utility may include in the cost of the 100 acquired utility system: 101 1. Reasonable fees paid to the appraisers, if approved by 102 the commission. 103 2. Reasonable transaction and closing costs incurred by the 104 acquiring utility. 105 (d) The rate base value of the acquired utility system, 106 which must be reflected in the acquiring utility’s next general 107 rate case for ratemaking purposes, is equal to the lesser of the 108 purchase price negotiated between the parties to the sale or the 109 fair market value, and the fees and costs authorized in 110 paragraph (c). 111 (3) An application to the commission for approval of the 112 rate base value of the utility system to be acquired must 113 contain the following: 114 (a) Copies of the appraisals performed by the appraisers 115 pursuant to paragraph (2)(a). 116 (b) Each deficiency identified by the engineering 117 assessment conducted pursuant to paragraph (2)(b) and a 3-year 118 plan for prudent and necessary infrastructure improvements. 119 (c) The projected rate impact for the selling utility’s 120 customers for the next 5 years. 121 (d) The average of the appraisals, which shall constitute 122 the fair market value of the system. 123 (e) The assessment of tangible assets pursuant to (2)(b). 124 (f) The contract of sale. 125 (g) The estimated value of fees and transaction and closing 126 costs to be incurred by the acquiring utility. 127 (h) A tariff, including rates equal to the rates of the 128 selling utility. 129 (4) If the application complies with the requirements of 130 subsection (3), the commission shall issue a final order 131 approving or denying the application within 8 months after the 132 date on which the application was filed. An order approving an 133 application shall determine the rate base value of the acquired 134 utility system for ratemaking purposes in a manner consistent 135 with this section. 136 (5) Notwithstanding any provision in this section, the 137 commission retains its authority under this chapter to set rates 138 for the acquired utility system in future rate cases and may 139 classify the acquired utility system as a separate entity for 140 ratemaking purposes, consistent with the public interest. 141 (6) This section applies to acquiring utilities that 142 provide water and wastewater services to more than 10,000 143 customers and are engaged in a voluntary and mutually agreeable 144 acquisition of a water and wastewater system. 145 (7) The commission shall adopt rules to implement this 146 section. 147 Section 3. This act shall take effect July 1, 2020.