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 Regulated Industries
BILL: SB 1380
INTRODUCER: Senator Martin
SUBJECT: Municipal Electric Utilities
DATE: March 20, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Schrader Imhof RI Pre-meeting
2. AEG
3. FP
I. Summary:
SB 1380 makes revisions to Florida’s public utility code to establish that if a municipal electric
utility operates outside of the municipality’s corporate boundaries, the Florida Public Service
Commission (PSC) must regulate that utility as a public utility. This would essentially regulate
such a municipal utility as if it was an investor-owned electric utility and give the PSC additional
authority over such a municipal utility’s rate setting and customer service complaints.
II. Present Situation:
Florida Public Service Commission
The PSC is an arm of the legislative branch of government.
1
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.
2
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.
3
1
Section 350.001, F.S.
2
See Florida Public Service Commission, Florida Public Service Commission Homepage, http://www.psc.state.fl.us (last
visited Mar 3, 2023).
3
Florida Public Service Commission, About the PSC, https://www.psc.state.fl.us/about (last visited Mar 16, 2023).
REVISED: BILL: SB 1380 Page 2
Jurisdiction of the Florida Public Service Commission for Electric Utilities
The PSC monitors the safety and reliability of the electric power grid
4
and may order the
addition or repair of infrastructure as necessary.
5
The PSC has broad jurisdiction over the rates
and service of investor-owned electric utilities
6
—defined under s. 366.02, F.S., as “public
utilities.”
7
Excluded from the definition of public utilities, however, are cooperatives organized
and existing under the Rural Electric Cooperative Law of the state; a municipality or any agency
thereof.
8
Thus, the PSC does not fully regulate municipal electric utilities or rural electric
cooperatives.
However, 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. Rates and
revenues for a cooperative utility are regulated by its governing body elected by the
cooperative’s membership.
Municipal Electric Utilities in Florida
A municipal electric utility is an electric 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 electric utility,” 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
The unified interests of municipal electric utilities are represented by the Florida Municipal
Electric Association (FMEA).
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. These
cooperatives are represented by the Florida Electric Cooperative Association (FECA).
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
4
Section 366.04(5) and (6), F.S.
5
Section 366.05(1) and (8), F.S.
6
Section 366.05, F.S.
7
Section 366.02(8), F.S., defines a “public utility,” in part, as “every person, corporation, partnership, association, or other
legal entity and their lessees, trustees, or receivers supplying electricity or gas (natural, manufactured, or similar gaseous
substance) to or for the public in the state.”
8
Id.
9
Florida Public Service Commission, About the PSC, supra note 3.
10
Florida Municipal Electric Association, About Us, https://www.flpublicpower.com/about-us (last visited Mar. 17, 2023).
11
Id.
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). BILL: SB 1380 Page 3
mass. Each cooperative is governed by a board of cooperative members elected by the
cooperative’s membership.
14
Public Electric Utilities in Florida
There are four investor-owned electric utility companies (IOUs) in Florida: Florida Power &
Light Company (FPL), Duke Energy Florida (Duke), Tampa Electric Company (TECO), and
Florida Public Utilities Corporation (FPUC).
15
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.
16
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.
17
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 (Trust Fund).
18
Florida law
generally directs the PSC to manage its trust fund in such a manner that each industry funds its
own regulation.
19
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.
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.
Chart 1: Regulatory Assessment Fees by Florida Utility Industry
Utility Type Current RAF Statutory Maximum
14
Id.
15
Florida Public Service Commission, 2022 Facts and Figures of the Florida Utility Industry, pg. 5 ,Apr. 2022 (available at:
https://www.floridapsc.com/pscfiles/website-files/PDF/Publications/Reports/General/FactsAndFigures/April%202022.pdf)
16
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).
17
Id.
18
Section 350.113, F.S.
19
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.
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. BILL: SB 1380 Page 4
Investor-owned Gas Utilities 0.5%
20
0.5%
21
Municipal Gas Utilities 0.1919%
22
0.25%
23
Natural Gas Transmission 0.25%
24
0.25%
25
Telecommunications
Companies
0.16%
26
0.25%
27
Water and Wastewater
Utilities
4.5%
28
4.5%
29
Investor-owned Electric
Utilities
0.072%
30
0.125%
31
Municipal Electric Utilities
and Rural Electric
Cooperatives
0.015625%
32
0.015625%
33
The Florida Senate
By a significant margin, municipal electric utilities and rural electric cooperatives have the
lowest RAF rates of all Florida utilities (the next closest is investor-owned electric utilities, with
RAF rates over 4.5 times that of municipal electric utilities and rural electric cooperatives).
These rates reflect the comparatively lower regulatory costs the PSC incurs in regulating these
types of utilities due, in large part, to the PSC having limited jurisdiction over them.
Limited Public Service Commission Regulation over Municipal Electric Utilities Nationally
Often, state public service commission jurisdiction over the activities of municipal electric
utilities is limited. The typical reasoning for state public service commissions’ limited (or no)
jurisdiction and regulatory authority over municipal electric utilities is that they are effectively
20
Fla. Admin. Code R. 25-7.0131, (2013).
21
Section 366.14, F.S.
22
Fla. Admin. Code R. 25-7.0131, (2013).
23
Section 366.14, F.S.
24
Fla. Admin. Code R. 25-7.101, (2013).
25
Section 368.109, F.S.
26
Fla. Admin. Code R. 25-4.0161, (2011).
27
Section 364.336, F.S.
28
Fla. Admin. Code R. 25-30.120, (2013).
29
Section 367.145, F.S.
30
Fla. Admin. Code R. 25-6.0131, (2013).
31
Section 366.14, F.S.
32
Fla. Admin. Code R. 25-6.0131, (2013).
33
Section 366.14, F.S. BILL: SB 1380 Page 5
regulated by the residents of the municipalities which own and operate them.
34
Thus, customer
complaints can be handled by municipal officials who are accountable to the populace they serve
through the local democratic process. Revenues from the utility can be reinvested in the system
or be used as additional funds—in addition to tax revenue—to be invested in municipal services,
like fire and police, and facilities.
35
However, municipal electric utilities do not always operate solely within their corporate limits.
Thus, utility revenue invested in non-utility municipal services may not actually benefit a person
living outside the municipality’s corporate boundaries. Also, such persons may also not be able
to vote on the municipal officials with control over the utility.
For customers who live outside of the corporate limits of the municipality that owns and operates
the municipal utility, the opportunity for redress may be limited as the officials of that
municipality may not be directly accountable (at least through the electoral process) to a non-
resident. Other concerns about local governance or control of municipal utilities include lack of
experience or expertise in utility regulation or governance (at least as compared to state public
service commissions), lack of investigative powers and viable procedures for handling of
complaints or standards violations, ratemaking influence, and pursuit of other social or political
goals over operational efficiency.
36
Given concerns about the nature of local or self-regulation of municipal utilities, many states
fully or partially regulate these utilities’ activities.
37
This includes several states that regulate
municipal electric utility rates in some manner when those utilities operate outside of the
34
Paul A. Meyer, The Municipally Owned Electric Company's Exemption from Utility Commission Regulation: The
Consumer's Perspective, 33 Case W. Rsrv. L. Rev. 294, 312-14 (1983) (Available at:
https://scholarlycommons.law.case.edu/caselrev/vol33/iss2/7).
35
Florida Municipal Electric Association, Benefits of Public Power, https://www.flpublicpower.com/benefits-of-public-
power (last visited Mar. 15, 2023).
36
Paul A. Meyer, supra note 34.
37
American Public Power Association, Authority of State Commissions to Regulate Rates of Public Power Utilities, June
2014 (available at
https://www.publicpower.org/system/files/documents/Rate%20Regulation%20of%20PP%20chart%20412.pdf), and Paul A.
Meyer, supra note 34. BILL: SB 1380 Page 6
municipal corporate limits. These states include Colorado,
38
Kansas,
39
Mississippi,
40
New
Hampshire,
41
New Jersey,
42
Pennsylvania,
43
South Carolina,
44
and Wyoming.
45
Current Municipal Electric Utilities Serving Customers Outside of Their Corporate
Boundaries in Florida
In August 2018, PSC staff issued a data request to FMEA for information regarding the
percentage of customers who are inside and outside of the municipality’s city limits or corporate
boundaries. Of the 29 counties listed in FMEA’s response, FMEA identified 25 municipalities
that provided electric services outside of their corporate boundaries.
46
Florida Office of Public Counsel
The Florida Office of Public Counsel (OPC) is established and regulated pursuant to ss. 350.061
through 350.0614, F.S. The purpose of the OPC is to provide legal representation for the people
of the state in utility related matters in proceedings before the PSC, and in proceedings before
counties pursuant to s. 367.171(8), F.S. It intervenes in rate proceedings before the PSC and
counties involving electric utilities, as well as in proceedings involving gas, water, and
wastewater utilities.
47
38
Colo. Rev. Stat. s. 40-3.5-102, provides that “in the event that any rate, charge, tariff, or voluntary plan established within
the authorized service area which lies outside the jurisdictional limits of the municipality varies from the rate, charge, tariff,
or voluntary plan established for the same class of customers or recipients of any such service within the authorized service
area which lies inside the jurisdictional limits of the municipality, such rate, charge, tariff, or voluntary plan shall not become
effective until reviewed and approved by the commission.”
39
Kan. Stat. s. 66-104, provides that “the term ‘public utility’ shall also include that portion of every municipally owned or
operated electric or gas utility located in an area outside of and more than three miles from the corporate limits of such
municipality.”
40
Miss. Code. ss. 77-3-3 and 77-3-3, provides that the Mississippi Public Service Commission has jurisdiction over the
portions of municipal utilities operating more than one mile outside of that municipality’s boundaries.
41
N.H. Rev. Stat. s. 362:4-a, provides that “a municipal corporation furnishing electric utility services shall not be considered
a public utility under this title if it serves customers outside of its municipal boundaries and charges such customers a rate no
higher than that charged to its customers within the municipality, and provides those customers a quantity and quality of
electricity equal to that served customers within the municipality.”
42
N.J. Stat. s. 40:62-24, provides that “every municipality in supplying electricity…beyond its corporate limits is hereby
declared to be a public utility. The Board of Public Utilities shall have the same supervision and regulation of, and
jurisdiction and control over such municipality in respect to its acts in supplying electricity…beyond its corporate limits, and
of and over the property, property rights, equipment, facilities and franchises used in supplying electricity…beyond its
corporate limits as over other public utilities.”
43
66 Pa. Stat. and Cons. Stat. s. 1301, provides that “public utility service being furnished or rendered by a municipal
corporation, or by the operating agencies of any municipal corporation, beyond its corporate limits, shall be subject to
regulation and control by the commission as to rates, with the same force, and in like manner, as if such service were
rendered by a public utility.”
44
S.C. Code s. 58-27-10, provides that the “term ‘electrical utility’ includes municipalities to the extent of their business,
property, rates, transactions, and operations without the corporate limits of the municipality.”
45
Wyo. Stat. s 37-1-101, provides that municipal utilities are exempt from public utility regulation by the Wyoming Public
Service Commission except “as may extend services outside the corporate limits of a municipality.”
46
Florida Public Service Commission, Bill Analysis for SB 1380 (Mar. 17, 2023) (on file with the Senate Regulated
Industries Committee).
47
Florida Office of Public Counsel, About Us, https://www.floridaopc.gov/Pages/About.aspx (last visited: Mar. 17, 2023). BILL: SB 1380 Page 7
III. Effect of Proposed Changes:
Section 1 amends s. 366.02, F.S., to expand the definition of public utility to include a
municipality, or any agency thereof, supplying electricity to any retail electric customer
receiving service at a physical address located outside that municipality’s corporate boundaries.
Based on the 2018 data received by the PSC from the FMEA, this could increase the number of
public electric utilities under the PSC’s jurisdiction from four under current law, to 29.
Section 2 amends s. 366.04, F.S., to expand the PSC’s jurisdiction to include the municipal
entities defined as “public utilities” in Section 1 of the bill. The bill also provides that such
utilities qualify as “public utilities” and shall be regulated under ch. 366, F.S., for a minimum of
five years. The section also directs the PSC to adopt rules to implement these provisions.
Section 3 of the bill amends s. 366.11, F.S., to make conforming revisions to changes made by
the act.
Section 4 of the bill provides an effective date of July 1, 2023.
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.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None. BILL: SB 1380 Page 8
B. Private Sector Impact:
As discussed in more detail below, SB 1380 could have an impact on regulatory
assessment fees (RAFs) paid by utilities impacted by the bill and may impact the
availability of municipal bonds for such utilities. This could have a private sector impact
by raising utility rates for the customers of these utilities—at least as a result of these
factors. However, this rate impact could be more than offset by the PSC rate setting
authority established under the bill and the more stringent rate setting requirements
provided in ch. 366, F.S., for public utilities. Thus, how the revised PSC regulation of
each of these utilities would impact these utilities’ overall rates is unknown at this time.
C. Government Sector Impact:
In its analysis the PSC states that it would anticipate a workload increase as a result of SB
1380 as the number of public electric utilities under its jurisdiction could increase from
four to 25. However, such an impact would be based upon newly regulated municipal-
owned utilities’ decisions regarding the seeking of cost recovery. However, given that
any of these newly regulated public utilities must seek PSC approval for any change in
rates, the PSC expects the workload impact to be significant and additional staffing and
other resources may be needed (the PSC anticipates that the number of rate cases “would
immediately sextuple”). Also, as a result of the bill, any service complaints for these
newly regulated public utilities would be handled by the PSC instead of, as is currently,
members of the municipal Commission or municipal utility board. Any such complaints
filed with the PSC would also require a point of entry to request an administrative
hearing by the affected customers and utility. This function will also require additional
resources for the PSC.
48
With an increase in rate cases, the OPC, which represents ratepayers in front of the PSC,
may also see a significant increase in potential work load. The OPC would also likely
require additional staffing and other resources to respond to the revisions pursuant to this
bill.
By a significant margin, municipal electric utilities and rural electric cooperatives have
the lowest RAF rates of all Florida utilities (the next closest is investor-owned electric
utilities, with RAF rates over 4.5 times that of municipal electric utilities and rural
electric cooperatives). These rates reflect the comparatively lower regulatory costs the
PSC incurs in regulating these types of utilities due, in large part, to the PSC having
limited jurisdiction over them. However, municipal electric utilities that fall under the
jurisdiction of the PSC as a public utility, as a result of the bill, would pay a RAF rate
about 4.5 times higher than they do currently. This increased fee may be passed-through
to the customers of those utilities as part of their rates.
Municipalities with electric utilities that would be classified as public utilities under SB
1380 would likely incur additional regulatory costs under the bill as they will have new
regulatory responsibilities to the PSC.
48
Public Service Commission, supra note 46. BILL: SB 1380 Page 9
The PSC also states that it would expect, based on its recent history, that the rules it
would adopt pursuant to SB 1380 would face an administrative challenge.
49
Municipal electric utilities currently benefit from being able to utilize low-cost, tax-
exempt, municipal bonds to finance utility improvements. It is unclear whether regulating
these utilities as public utilities could impact the availability of these bonds. If such
access were to negatively impact the availability of these bonds, it could increase rates
for these utilities in the future.
50
VI. Technical Deficiencies:
None.
VII. Related Issues:
In the proposed revisions to s. 366.02(8), F.S., the definition of public utility is effectively
expanded to include municipal electric utilities that operate outside of their respective
municipality’s corporate boundaries. The revisions to s. 366.04(10), F.S., in setting the revised
jurisdiction of the PSC, provide that such utilities “qualify as a public utility and shall be
regulated under this chapter for a minimum of 5 years.” Chapter 366, F.S., establishes
regulations for public utilities, rural electric cooperatives, natural gas utilities, and municipal
electric utilities. Thus, it is unclear under the revisions to s. 366.04(10), F.S., if a municipal-
owned utility was to cease serving areas outside of its corporate boundaries whether it would
immediately be reverted to being regulated as a municipal electric utility or would continue to be
regulated as a public utility for at least five years. If the intent is to have these municipal utilities
be regulated as public utilities for these five years, this line could be revised to read, “qualify as a
public utility and shall be regulated as such under this chapter for a minimum of 5 years.”
The provisions of SB 1380 potentially make an over seven-fold increase to the number of public
electric utilities under the regulation of the PSC. The effective date of July 1, 2023, may not give
the PSC adequate time to adjust organizationally in terms of physical plant, staffing, and
processes for such a substantial increase in the number of public electric utilities under its rate
setting authority. In addition, municipalities may need time to adjust organizationally as they
have not previously been subject to PSC rate setting or service complaint authority.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 366.02, 366.04, and
366.11.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
49
Id.
50
Id. BILL: SB 1380 Page 10
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.