The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Rules
BILL: SB 1312
INTRODUCER: Senators Collins and Rodriguez
SUBJECT: Regulatory Assessment Fees
DATE: April 10, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Schrader Imhof RI Favorable
2. Schrader Twogood RC Favorable
I. Summary:
SB 1312 amends s. 120.80, F.S., to add to the list of rules which may be adopted by the Florida
Public Service Commission that are not subject to Florida’s statement of estimated regulatory
costs requirements under s. 120.541, F.S. Specifically, rules regarding the Florida Public Service
Regulatory Trust Fund
1
and the regulatory assessment fees charged to utilities in Florida
2
are
added to the section.
II. Present Situation:
Florida Public Service Commission
The Florida Public Service Commission (PSC) is an arm of the legislative branch of
government.
3
The role of the PSC is to ensure Florida’s consumers receive utility services,
including electric, natural gas, telephone, water, and wastewater, in a safe, affordable, and
reliable manner.
4
In order to do so, the PSC exercises authority over public utilities in one or
more of the following areas: rate base or economic regulation; competitive market oversight; and
monitoring of safety, reliability, and service issues.
5
1
Enacted pursuant to s. 350.113, F.S., which is the fund used for the operation of the Public Service Commission.
2
Enacted pursuant to ss. 364.336, 366.14, 367.145, and 368.109, F.S. Regulatory assessment fees are fees charged to
regulated utilities by the Public Service Commission to fund the costs of regulation.
3
Section 350.001, F.S.
4
See Florida Public Service Commission, Florida Public Service Commission Homepage, http://www.psc.state.fl.us (last
visited Mar 3, 2023).
5
Florida Public Service Commission, About the PSC, https://www.psc.state.fl.us/about (last visited Mar 3, 2023).
REVISED: BILL: SB 1312 Page 2
Electric and Gas Utilities
The PSC monitors the safety and reliability of the electric power grid
6
and may order the
addition or repair of infrastructure as necessary.
7
The PSC has broad jurisdiction over the rates
and service of investor-owned electric and gas utilities.
8
However, the PSC does not fully
regulate municipal electric utilities (utilities owned or operated on behalf of a municipality) or
rural electric cooperatives. The PSC does have jurisdiction over these types of utilities with
regard to rate structure, territorial boundaries, bulk power supply operations, and planning.
9
Municipally-owned utility rates and revenues are regulated by their respective local governments
or local utility boards. Rates and revenues for a cooperative utility are regulated by their
governing body elected by the cooperative’s membership.
Municipal Electric and Gas Utilities, and Special Gas Districts, in Florida
A municipal electric or gas utility is an electric or gas utility owned and operated by a
municipality. Chapter 366, F.S., provides the majority of electric and gas utility regulations for
Florida. While ch. 366, F.S., does not provide a definition, per se, for a “municipal utility,”
variations of this terminology and the concept of these types of utilities appear throughout the
chapter. Currently, Florida has 33 municipal electric utilities that serve over 14 percent of the
state’s electric utility customers.
10
Florida also has 27 municipally-owned gas utilities and four
special gas districts.
11
Rural Electric Cooperatives in Florida
At present, Florida has 18 rural electric cooperatives, with 16 of these cooperatives being
distribution cooperatives and two being generation and transmission cooperatives.
12
These
cooperatives operate in 57 of Florida’s 67 counties and have more than 2.7 million customers.
13
Florida rural electric cooperatives serve a large percentage of area, but have a low customer
density. Specifically, Florida cooperatives serve approximately 10 percent of Florida’s total
electric utility customers, but their service territory covers 60 percent of Florida’s total land
mass. Each cooperative is governed by a board of cooperative members elected by the
cooperative’s membership.
14
6
Section 366.04(5) and (6), F.S.
7
Section 366.05(1) and (8), F.S.
8
Section 366.05, F.S.
9
Florida Public Service Commission, About the PSC, supra note 5.
10
Florida Municipal Electric Association, About Us, https://www.flpublicpower.com/about-us (last visited Mar. 17, 2023).
11
Florida Public Service Commission, 2022 Facts and Figures of the Florida Utility Industry, pg. 13, Apr. 2022 (available
at: https://www.floridapsc.com/pscfiles/website-
files/PDF/Publications/Reports/General/FactsAndFigures/April%202022.pdf). A “special gas district” is a dependent or
independent special district, setup pursuant to ch. 189, F.S., to provide natural gas service. Section 189.012(6), F.S., defines a
“special district” as “a unit of local government created for a special purpose, as opposed to a general purpose, which has
jurisdiction to operate within a limited geographic boundary and is created by general law, special act, local ordinance, or by
rule of the Governor and Cabinet.”
12
Florida Electric Cooperative Association, Members, https://feca.com/members/ (last visited Mar 17, 2023).
13
Florida Electric Cooperative Association, Our History, https://feca.com/our-history/ (last visited Mar 17, 2023).
14
Id. BILL: SB 1312 Page 3
Public Electric and Gas Utilities in Florida
There are four investor-owned electric utility companies (electric IOUs) in Florida: Florida
Power & Light Company (FPL), Duke Energy Florida (Duke), Tampa Electric Company
(TECO), and Florida Public Utilities Corporation (FPUC).
15
In addition, there are eight investor-
owned natural gas utility companies (gas IOUs) in Florida: Florida City Gas, Florida Division of
Chesapeake Utilities, FPUC, FPUC-Fort Meade Division, FPUC-Indiantown Division, Sebring
Gas System, and St. Joe Natural Gas Company. Of these eight gas IOUs, five engage in the
merchant function servicing residential, commercial, and industrial customers: Florida City Gas,
FPUC, FPUC-Fort Meade Division, Peoples Gas System, and St. Joe Natural Gas Company.
Florida Division of Chesapeake Utilities, FPUC-Indiantown Division, and Sebring Gas System
are only engaged in firm transportation service.
16
Electric IOU and Gas IOU rates and revenues are regulated by the PSC and the utilities must file
periodic earnings reports, which allow the PSC to monitor earnings levels on an ongoing basis
and adjust customer rates quickly if a company appears to be overearning.
17
Section 366.041(2), F.S., requires public utilities to provide adequate service to customers. As
compensation for fulfilling that obligation, s. 366.06, F.S., requires the PSC to allow the IOUs to
recover honestly and prudently invested costs of providing service, including investments in
infrastructure and operating expenses used to provide electric service.
18
Water and Wastewater Utilities
Florida’s Water and Wastewater System Regulatory Law, ch. 367, F.S., regulates water and
wastewater systems in the state. Section 367.011, F.S., grants the PSC exclusive jurisdiction over
each utility with respect to its authority, service, and rates. For the chapter, a “utility” is defined
as “a water or wastewater utility and, except as provided in s. 367.022, F.S., includes every
person, lessee, trustee, or receiver owning, operating, managing, or controlling a system, or
proposing construction of a system, who is providing, or proposes to provide, water or
wastewater service to the public for compensation.” Section 367.022, F.S., exempts certain types
of water and wastewater operations from PSC jurisdiction and the provisions of ch. 367, F.S.
(except as expressly provided). Such exempt operations include: municipal water and wastewater
systems, public lodging systems that only provide service to their guests, systems with a 100-
person or less capacity, landlords that include service to their tenants without specific
compensation for such service, and mobile home parks operating both as a mobile home park
and a mobile home subdivision that provide “service within the park and subdivision to a
combination of both tenants and lot owners, provided that the service to tenants is without
specific compensation.”
19
The PSC also does not regulate utilities that have exempted
themselves from regulation pursuant to s. 367.171, F.S.
15
Florida Public Service Commission, 2022 Facts and Figures of the Florida Utility Industry, supra note 11, at 5.
16
Id. Firm transportation service is offered to customers under schedules or contracts which anticipate no interruption under
almost all operating conditions. See Firm transportation service, 18 CFR s. 284.7.
17
PSC, 2022 Annual Report, p. 6, (available at: https://www.floridapsc.com/pscfiles/website-
files/PDF/Publications/Reports/General/AnnualReports/2022.pdf) (last visited: Mar. 16, 2023).
18
Id.
19
Section 367.022(2), F.S. BILL: SB 1312 Page 4
Currently, the PSC has over 149 water, wastewater, and water and wastewater utilities that are
under its regulatory authority.
20
Telecommunications Carriers
Under ch. 364, F.S., telecommunications carriers in Florida are also subject to only limited PSC
regulation. During the 2011 legislative session, the “Regulatory Reform Act” (act) was passed
and signed into law by the Governor, effective July 1, 2011.
21
Under the act, the Legislature
eliminated most of the PSC’s jurisdiction over telecommunications. However, the PSC still:
Maintains the authority to ensure that incumbent local exchange carriers meet their obligation
to provide unbundled access, interconnection, and resale to competitive local exchange
companies in a nondiscriminatory manner;
Administers the system to provide Telecommunications Relay Services; and
Oversees the Federal Lifeline Assistance program for Florida.
22
Natural Gas Transmission
Natural gas transmission companies are regulated by the PSC under ch. 368, F.S. The term
“natural gas transmission company,” as defined in s. 368.103, F.S., “means any person owning
or operating for compensation facilities located wholly within this state for the transmission or
delivery for sale of natural gas.” The term does not include “any person that owns or operates
facilities primarily for the local distribution of natural gas or that is subject to the jurisdiction of
the Federal Energy Regulatory Commission under the Natural Gas Act, 15 U.S.C. ss. 717 et seq.,
or any municipalities or any agency thereof, or a special district created by special act to
distribute natural gas.” Section 364.104, F.S., authorizes the PSC to “fix and regulate rates and
services of natural gas transmission companies, including, without limitation, rules and
regulations for:”
Determining customers and services classifications;
Determining rate applicability; and
“Ensuring that the provision (including access to transmission) or abandonment of service by
a natural gas transmission company is not unreasonably preferential, prejudicial, or unduly
discriminatory.”
Section 368.105, F.S., provides the procedures for the PSC to set rates and services requirements
for natural gas transmission companies in Florida.
Under chapter 368, F.S., the PSC is authorized to inspect intrastate natural gas systems to ensure
compliance with rules and regulations regarding safety standards.
23
Currently, Florida has 3
major pipelines: Florida Gas Transmission Company, Gulfstream Natural Gas System, and Sabal
Trail Interstate Pipeline. The state also has two minor pipelines: Gulf South Pipeline Company
and Southern Natural Gas.
24
20
Email from Mark Futrell, Deputy Executive Director—Technical, Florida Public Service Commission, to Senate Regulated
Industries Staff (Mar 19, 2023)(on file with the Senate Regulated Industries Committee).
21
Ch. 2011-36, Laws of Fla.
22
Florida Public Service Commission, About the PSC, supra note 5.
23
Florida Public Service Commission, 2022 Facts and Figures of the Florida Utility Industry, supra note 11, at 13.
24
Id. BILL: SB 1312 Page 5
Regulatory Assessment Fees
The PSC collects Regulatory Assessment Fees (RAFs) from all of the utilities under its
jurisdiction. RAFs, license fees, other fees, and any other charges collected by the PSC are
credited to the Florida Public Service Regulatory Trust Fund (PSC Trust Fund).
25
Florida law
generally directs the PSC to manage its trust fund in such a manner that each utility industry
funds its own regulation.
26
Thus, the RAF rate for each industry is designed to correlate with the
complexity and cost of regulating that industry. While the PSC’s budget is set annually by the
Legislature, as approved by the Governor, Florida general revenue funds are not used to support
the PSC’s regulatory activities. The operations of the PSC are funded from the PSC Trust Fund
as appropriated in the General Appropriation Act approved by the Legislature. The PSC does not
receive any funding from the General Revenue Fund.
27
Water and wastewater utilities can include the cost of RAFs utilizing the “pass-through”
provisions in s. 367.081(4)(b), F.S. This provision allows utilities to revise their rates
automatically to account for changes in certain specified expenses (such as RAFs, certain
governmental fees and permitting costs, and taxes). A utility using this provision must provide
verified notice to the PSC 45 days prior to the implementation of the increase or decrease. The
electric and gas utility industries do not have a similar “pass-through” provision.
Rates for RAFs are set by PSC rule, subject to maximum rates established by statute. RAFs are
charged as a percentage of gross operating revenues derived from intrastate business, subject to
certain exclusions. Chart 1 below provides the current RAFs for Florida utilities, by industry.
25
Section 350.113, F.S.
26
Specifically:
Section 364.336(2) and (3), F.S., requires the PSC to reduce the RAFs for telecommunications industry after the
Regulatory Reform Act of 2011 to reflect the PSC’s reduced regulatory oversight of that industry;
Section 367.145(3), F.S., requires that RAFs collected pursuant to the water and wastewater RAF collection
authorization may only be used to cover the cost of regulating water and wastewater systems. Also, fees collected under
the electricity utility industry, gas utility industry, and telecommunications industry RAF collection authorizations may
not be used to pay for the cost of water and wastewater regulation; and
Section 368.109, F.S., states that the RAFs set by the PSC for the natural gas transmission (i.e. natural gas pipeline)
industry must, to the extent practicable, be related to the cost of regulating that industry.
27
Florida Public Service Commission, Bill Analysis for SB 1312/HB 1593, Mar. 10, 2023 (on file with the Senate Regulated
Industries Committee). BILL: SB 1312 Page 6
Chart 1: Regulatory Assessment Fees by Florida Utility Industry
Utility Type Current RAF Statutory Maximum
Investor-owned Gas Utilities 0.5%
28
0.5%
29
Municipal Gas Utilities 0.1919%
30
0.25%
31
Natural Gas Transmission 0.25%
32
0.25%
33
Telecommunications
Companies
0.16%
34
0.25%
35
Water and Wastewater
Utilities
4.5%
36
4.5%
37
Investor-owned Electric
Utilities
0.072%
38
0.125%
39
Municipal Electric Utilities
and Rural Electric
Cooperatives
0.015625%
40
0.015625%
41
In its analysis of the bill, the PSC points out that “other agencies are exempted from ratification
and [statement of estimated regulatory costs procedures (SERC)] because the need for additional
legislative scrutiny imposed by ratification was met by the standards imposed under the
substantive statutes being implemented by rule.”
42
For RAFs, as shown above, each statute
authorizing the PSC to charge RAFs includes a statutory cap on what the PSC can charge. The
maximum RAFs that could be charged by the PSC are subject to statutory control of the
maximum fiscal impact.
Rulemaking Authority and Legislative Ratification
A rule is an “agency statement of general applicability that implements, interprets, or prescribes
law or policy.”
43
Rulemaking authority is delegated by the Legislature in law to an agency, and
authorizes an agency to adopt, develop, establish, or otherwise create a rule.
44
An agency may
not engage in rulemaking unless it has a legislative grant of authority to do so.
45
The statutory
28
Fla. Admin. Code R. 25-7.0131, (2013).
29
Section 366.14, F.S.
30
Fla. Admin. Code R. 25-7.0131, (2013).
31
Section 366.14, F.S.
32
Fla. Admin. Code R. 25-7.101, (2013).
33
Section 368.109, F.S.
34
Fla. Admin. Code R. 25-4.0161, (2011).
35
Section 364.336, F.S.
36
Fla. Admin. Code R. 25-30.120, (2013).
37
Section 367.145, F.S.
38
Fla. Admin. Code R. 25-6.0131, (2013).
39
Section 366.14, F.S.
40
Fla. Admin. Code R. 25-6.0131, (2013).
41
Section 366.14, F.S.
42
Florida Public Service Commission, Bill Analysis for SB 1312/HB 1593, supra note 27.
43
Section 120.52(16), F.S.
44
Section 120.52(17), F.S.
45
See ss. 120.52(8) and 120.536, F.S. BILL: SB 1312 Page 7
authority for rulemaking must be specific enough to guide an agency’s rulemaking and an
agency rule must not exceed the bounds of authority granted by the Legislature.
46
Prior to the adoption, amendment, or repeal of any rule, an agency must file a notice of the
proposed rule in the Florida Administrative Register.
47
The notice of the proposed rule must
include:
An explanation of the purpose and effect;
The specific legal authority for the rule;
The full text of the rule; and
A summary of the agency’s SERC, if one is prepared.
48
Within 21 days of the notice, the public may provide an agency with information regarding the
SERC or provide proposals for a lower cost alternative to the rule.
49
SERC Requirements
Pursuant to s. 120.541, F.S., agencies must prepare the SERC for a rule that has an adverse
impact on small businesses or that increases regulatory costs more than $200,000 within one year
after implementation of the rule.
50
A SERC must include estimates of the following:
The number of people and entities affected by the proposed rule;
The cost to the agency and other governmental entities to implement the proposed rule;
Transactional costs likely to be incurred for compliance; and
An analysis of the proposed rule’s impact on small businesses, counties, and cities.
51
The SERC must also include an economic analysis on the likelihood that the proposed rule will
have an adverse impact in excess of $1 million within the first five years of implementation on:
Economic growth, private-sector job creation or employment, or private-sector investment;
Business competitiveness,
52
productivity, or innovation; or
Regulatory costs, including any transactional costs.
53
46
See Sloban v. Florida Board of Pharmacy, 982 So.2d 26 (Fla. 1st DCA 2008) and Southwest Florida Water Management
District v. Save the Manatee Club, Inc., 773 So.2d 594 (Fla 1st DCA 2000).
47
See ss. 120.54(2)(a) and 120.55(1)(b), F.S.
48
Section 120.54(3)(a)1., F.S.
49
See ss. 120.54(3)(a)1., and 120.541(1)(a), F.S.
50
Section 120.541(1)(a), F.S.
51
Section 120.541(2)(b)-(e), F.S. A small city has an unincarcerated population of 10,000 or less. A small county has an
unincarcerated population of 75,000 or less. A small business employs less than 200 people, and has a net worth of $5 million
or less.
52
Business competitiveness includes the ability of those doing business in Florida to compete with those doing business in
other states or domestic markets.
53
Section 120.541(2)(a), F.S. BILL: SB 1312 Page 8
If the economic analysis results in an adverse impact or regulatory costs in excess of $1 million
within 5 years after implementation of the rule, then the Legislature must ratify the rule in order
for it to take effect.
54
Current Public Service Commission Exemptions to SERC
Currently, the PSC has exemptions to SERC requirements, as provided under s. 120.541, F.S.,
for the following rulemaking delegations:
Pole attachment provisions under s. 366.04(8), F.S.
Safety, vegetation management, repair, replacement, maintenance, relocation, emergency
response, and storm restoration requirements for poles of communication services providers
under s. 366.04(9), F.S.
Redundancy and transfer of ownership provisions regarding poles under s. 366.97, F.S.
III. Effect of Proposed Changes:
Section 1 of the bill amends s. 120.80, F.S., to add ss. 350.113, 364.336, 366.14, 367.145, and
368.109, F.S., to the rules which may be adopted by the PSC that are not subject to Florida’s
SERC requirements under s. 120.541, F.S. Section 350.113, F.S., creates and provides the
requirements for the Florida Public Service Regulatory Trust Fund. Sections 364.336, 366.14,
367.145, and 368.109, F.S., contain the RAF provisions for the telecommunications, electric and
gas, water and wastewater, and natural gas transmission industries, respectively.
Section 2 of the bill provides that it shall become effective upon becoming a law.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
54
Section 120.541(3), F.S. Legislative ratification is not required for adoption of federal standards, amendments to the Florida
Building Code, or amendments to the Florida Fire Prevention Code. See s. 120.541(4), F.S. BILL: SB 1312 Page 9
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
While the bill does not substantially financially impact the private sector, it does reduce
the process requirements for the PSC to amend RAFs. If the PSC was to amend the RAF
rates paid by utilities, such amended costs would likely impact utility rates.
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends section 12.80 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.