FL
Florida House Bill H0125

Florida 2023 Regular Session

Florida House Bill H0125 Compare Versions

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1010 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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14+A bill to be entitled 1
1515 An act relating to utility system rate base values; 2
1616 creating s. 367.0811, F.S.; providing legislative 3
1717 findings; defining the term "rate stabilization plan"; 4
1818 establishing an alternative procedure by which the 5
1919 Florida Public Service Commission may establish a rate 6
2020 base value for certain acquired utility systems; 7
2121 requiring that the approved rate base value be 8
2222 reflected in the acquiring utility's next general rate 9
2323 case for ratemaking purposes; establishing a procedure 10
2424 for appraisal of the acquired utility system; 11
2525 providing the contents required for a petition to the 12
2626 commission for approval of the rate base value of the 13
2727 acquired utility system; providing duties of t he 14
2828 commission regarding petitions; authorizing the 15
2929 commission to set rates for and classify certain 16
3030 acquired utility systems; providing applicability; 17
3131 requiring the commission to take certain factors into 18
3232 consideration for certain rate base value petitions ; 19
3333 requiring the commission to adopt rules; providing an 20
3434 effective date. 21
3535 22
3636 Be It Enacted by the Legislature of the State of Florida: 23
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3838 Section 1. Section 367.0811, Florida Statutes, is created 25
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4747 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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5151 to read: 26
5252 367.0811 Rates; alternative procedure for estab lishing 27
5353 rate base value of acquired utility system. — 28
5454 (1) The Legislature finds that it is in the public 29
5555 interest to promote consolidation efforts with water and 30
5656 wastewater utility systems in order to encourage economies of 31
5757 scale, better access to lower m aterial and supply costs, better 32
5858 access to capital, improvement in utility infrastructure, and 33
5959 improvement in the quality of service overall. 34
6060 (2) As used in this section, the term "rate stabilization 35
6161 plan" means an acquiring utility's plan to implement rate 36
6262 changes incrementally over a period of time to mitigate rate 37
6363 increases and to predictably achieve consolidated pricing over 38
6464 time. 39
6565 (3)(a) If a utility acquires an existing utility system, 40
6666 including a system described in s. 367.022(2), the utility ma y 41
6767 petition the commission to establish a rate base value for the 42
6868 utility system being acquired using the valuation process in 43
6969 this section instead of the cost method pursuant to s. 367.081. 44
7070 (b) The rate base value established by the commission 45
7171 under this section shall be used for ratemaking purposes in the 46
7272 acquiring utility's next general rate case. The rate base value 47
7373 may not exceed the lesser of the purchase price negotiated 48
7474 between the parties to the acquisition transaction or the 49
7575 average of the three appraisals conducted under subsection (4) 50
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8484 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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8888 and may not be adjusted for contribution -in-aid-of-construction 51
8989 or used and useful in serving the public. However, the rate base 52
9090 value may include reasonable transaction and closing costs 53
9191 incurred by the acquiring utility and reasonable fees paid to 54
9292 the appraisers. 55
9393 (4)(a) For purposes of this section, the utility system 56
9494 being acquired shall be appraised by three licensed appraisers 57
9595 chosen from a list established by the commission. Appraisals 58
9696 shall be paid for by t he buyer. Each appraiser shall provide an 59
9797 appraisal of the value of the utility system being acquired that 60
9898 is consistent with the Uniform Standards of Professional 61
9999 Appraisal Practice. 62
100100 (b) The acquiring utility and the utility system being 63
101101 acquired shall jointly retain a licensed engineer to conduct an 64
102102 assessment of the tangible assets of the utility system being 65
103103 acquired, and the assessment shall be provided to the three 66
104104 appraisers for use in determining the value of the utility 67
105105 system being acquired. 68
106106 (5) A petition filed under this section to establish the 69
107107 rate base value for a utility system being acquired must contain 70
108108 all of the following: 71
109109 (a) The requested rate base value for the utility system 72
110110 being acquired. 73
111111 (b) Copies of the appraisals require d by this section, 74
112112 including the average of the valuations produced by each 75
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121121 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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125125 appraisal. 76
126126 (c) A copy of the assessment of tangible assets required 77
127127 by this section. 78
128128 (d) A 3-year plan to address each deficiency identified by 79
129129 the assessment of tangible asset s required by this section. The 80
130130 plan must address impact on quality of service and any planned 81
131131 improvements to water quality. 82
132132 (e) The 5-year projected rate impact on the customers of 83
133133 the utility system being acquired, including, but not limited 84
134134 to, the rate impact of all of the following: 85
135135 1. Any cost efficiencies expected to result from the 86
136136 acquisition transaction. 87
137137 2. Use of this section, instead of the cost method 88
138138 pursuant to s. 367.081, to establish the rate base value. 89
139139 (f) The contract of sale. 90
140140 (g) The estimated value of fees and transaction and 91
141141 closing costs to be incurred by the acquiring utility. 92
142142 (h) A tariff, including rates equal to the rates of the 93
143143 utility system being acquired, and a rate stabilization plan, if 94
144144 applicable to the acquis ition. A rate stabilization plan must be 95
145145 filed if the acquisition would result in a significant 96
146146 individual increase in rates during the period identified in 97
147147 paragraph (e). 98
148148 (6)(a) If the petition meets the filing requirements of 99
149149 subsection (5), the commis sion, no later than 8 months after the 100
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158158 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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162162 date the complete petition is filed, shall issue a final order 101
163163 on the petition. 102
164164 (b) The commission may, in the public interest, grant the 103
165165 petition, in whole or in part, or with modifications or may deny 104
166166 the petition. 105
167167 (c) The commission may not approve a rate base value 106
168168 higher than that requested in the petition. 107
169169 (7) Notwithstanding any provision in this section, the 108
170170 commission may, pursuant to this chapter, set rates for the 109
171171 acquired utility system in future rate cases and may classify 110
172172 the acquired utility system as a separate entity for ratemaking 111
173173 purposes if it is deemed to be in the public interest. 112
174174 (8) This section applies to acquiring utilities that are 113
175175 engaged in an arms-length acquisition of a water or wa stewater 114
176176 system, or both, and: 115
177177 (a) Provide water or wastewater service, or both, to more 116
178178 than 10,000 customers; or 117
179179 (b) Are permitted to produce at least 3 million gallons 118
180180 per day of drinking water. 119
181181 (9) At minimum, in considering a rate base value pet ition 120
182182 pursuant to this section, the commission must consider all of 121
183183 the following in serving the public interest and pursuant to the 122
184184 goals of this section: 123
185185 (a) Improvements in quality of service. 124
186186 (b) Improvements in compliance with regulatory 125
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195195 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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199199 requirements. 126
200200 (c) Rate reductions or rate stability over a long -term 127
201201 period. 128
202202 (d) Cost efficiencies. 129
203203 (e) A demonstration that the purchase is being made as 130
204204 part of an arms-length transaction. 131
205205 (f) Economies of scale to be generated by the transaction. 132
206206 (g) A comparison of the acquiring utility's net book 133
207207 value, to the extent available, and the proposed rate base value 134
208208 of the utility being acquired. 135
209209 (h) A demonstration that the acquiring utility has greater 136
210210 access to capital than the utility being acquired. 137
211211 (10) The commission may set reasonable performance goals 138
212212 based on the standards specified in subsection (9) and review 139
213213 utility performance regarding these standards in a rate 140
214214 proceeding. 141
215215 (11) The commission shall adopt rules to implement this 142
216216 section. 143
217217 Section 2. This act shall take effect July 1, 2023. 144