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 shall not 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 which are 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 shall not be more than 50 percent in excess of the total amount
53 the municipality charges consumers served within the
54 municipality for corresponding service. No Such rates, fees, and
55 charges may not shall be 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.