Florida Senate - 2016                              CS for SB 534
       
       
        
       By the Committee on Environmental Preservation and Conservation;
       and Senator Hays
       
       
       
       
       592-01417-16                                           2016534c1
    1                        A bill to be entitled                      
    2         An act relating to water and wastewater; creating s.
    3         159.8105, F.S.; requiring the Division of Bond Finance
    4         of the State Board of Administration to review the
    5         allocation of private activity bonds to determine the
    6         availability of additional allocation and reallocation
    7         of bonds for water and wastewater infrastructure
    8         projects; amending s. 212.08, F.S.; extending
    9         specified tax exemptions to certain investor-owned
   10         water and wastewater utilities; amending s. 367.022,
   11         F.S.; exempting from regulation by the Florida Public
   12         Service Commission a person who resells water service
   13         to certain tenants or residents up to a specified
   14         percentage or cost; amending s. 367.081, F.S.;
   15         authorizing the commission to create a utility reserve
   16         fund; requiring the commission to adopt rules to
   17         govern the implementation, management, and use of the
   18         fund; establishing criteria for adjusted rates;
   19         specifying expense items that may be the basis for an
   20         automatic increase or decrease of a utility’s rates;
   21         authorizing the commission to establish by rule
   22         additional specified expense items; restricting a
   23         utility from recovering more than a certain percentage
   24         of reasonable rate case expenses; amending s.
   25         367.0814, F.S.; authorizing the commission to award
   26         rate case expenses to recover attorney fees or fees of
   27         other outside consultants in certain circumstances;
   28         requiring the commission to adopt rules by a certain
   29         date; amending s. 367.0816, F.S.; prohibiting a
   30         utility from recovering certain expenses for more than
   31         one rate case at a time; amending s. 367.111, F.S.;
   32         authorizing the commission to review water quality and
   33         wastewater service under certain circumstances;
   34         amending s. 403.8532, F.S.; authorizing the Department
   35         of Environmental Protection to require or request that
   36         the Florida Water Pollution Control Financing
   37         Corporation make loans, grants, and deposits to for
   38         profit, privately owned, or investor-owned water
   39         systems; removing current restrictions on such
   40         activities; amending s. 367.171, F.S.; making
   41         technical changes; providing an effective date.
   42          
   43  Be It Enacted by the Legislature of the State of Florida:
   44  
   45         Section 1. Section 159.8105, Florida Statutes, is created
   46  to read:
   47         159.8105 Allocation of bonds for water and wastewater
   48  infrastructure projects.—The division shall review the
   49  allocation of private activity bonds to determine the
   50  availability of additional allocation and reallocation of bonds
   51  for water and wastewater infrastructure projects.
   52         Section 2. Paragraph (ooo) is added to subsection (7) of
   53  section 212.08, Florida Statutes, to read:
   54         212.08 Sales, rental, use, consumption, distribution, and
   55  storage tax; specified exemptions.—The sale at retail, the
   56  rental, the use, the consumption, the distribution, and the
   57  storage to be used or consumed in this state of the following
   58  are hereby specifically exempt from the tax imposed by this
   59  chapter.
   60         (7) MISCELLANEOUS EXEMPTIONS.—Exemptions provided to any
   61  entity by this chapter do not inure to any transaction that is
   62  otherwise taxable under this chapter when payment is made by a
   63  representative or employee of the entity by any means,
   64  including, but not limited to, cash, check, or credit card, even
   65  when that representative or employee is subsequently reimbursed
   66  by the entity. In addition, exemptions provided to any entity by
   67  this subsection do not inure to any transaction that is
   68  otherwise taxable under this chapter unless the entity has
   69  obtained a sales tax exemption certificate from the department
   70  or the entity obtains or provides other documentation as
   71  required by the department. Eligible purchases or leases made
   72  with such a certificate must be in strict compliance with this
   73  subsection and departmental rules, and any person who makes an
   74  exempt purchase with a certificate that is not in strict
   75  compliance with this subsection and the rules is liable for and
   76  shall pay the tax. The department may adopt rules to administer
   77  this subsection.
   78         (ooo) Investor-owned water and wastewater utilities.—Sales
   79  or leases to an investor-owned water or wastewater utility are
   80  exempt from the tax imposed by this chapter if the sole or
   81  primary function of the utility is to construct, maintain, or
   82  operate a water or wastewater system in this state and if the
   83  goods or services purchased or leased are used in this state.
   84         Section 3. Present subsections (9) through (12) of section
   85  367.022, Florida Statutes, are redesignated as subsections (10)
   86  through (13), respectively, and a new subsection (9) is added to
   87  that section, to read:
   88         367.022 Exemptions.—The following are not subject to
   89  regulation by the commission as a utility nor are they subject
   90  to the provisions of this chapter, except as expressly provided:
   91         (9)Any person who resells water service to his or her
   92  tenants or to individually metered residents for a fee that does
   93  not exceed the actual purchase price of the water plus the
   94  actual cost of meter reading and billing, not to exceed 9
   95  percent of the actual cost of service.
   96         Section 4. Paragraph (c) is added to subsection (2) of
   97  section 367.081, Florida Statutes, and paragraph (b) of
   98  subsection (4) and subsection (7) of that section are amended,
   99  to read:
  100         367.081 Rates; procedure for fixing and changing.—
  101         (2)
  102         (c) In establishing rates for a utility, the commission may
  103  create a utility reserve fund for infrastructure repair and
  104  replacement for a utility for existing distribution and
  105  collection infrastructure that is nearing the end of its useful
  106  life or is detrimental to water quality or reliability of
  107  service, to be funded by a portion of the rates charged by the
  108  utility, by a secured escrow account, or through a letter of
  109  credit. The commission shall adopt rules to govern the
  110  implementation, management, and use of the fund, including, but
  111  not limited to, rules related to expenses for which the fund may
  112  be used, segregation of reserve account funds, requirements for
  113  a capital improvement plan, and requirements for commission
  114  authorization before disbursements are made from the fund.
  115         (4)
  116         (b) The approved rates of any utility which receives all or
  117  any portion of its utility service from a governmental authority
  118  or from a water or wastewater utility regulated by the
  119  commission and which redistributes that service to its utility
  120  customers shall be automatically increased or decreased without
  121  hearing, upon verified notice to the commission 45 days prior to
  122  its implementation of the increase or decrease that the
  123  utility’s costs for any specified expense item the rates charged
  124  by the governmental authority or other utility have changed. The
  125  approved rates of any utility which is subject to an increase or
  126  decrease in the rates or fees that it is charged for electric
  127  power, the amount of ad valorem taxes assessed against its used
  128  and useful property, the fees charged by the Department of
  129  Environmental Protection in connection with the National
  130  Pollutant Discharge Elimination System Program, or the
  131  regulatory assessment fees imposed upon it by the commission
  132  shall be increased or decreased by the utility, without action
  133  by the commission, upon verified notice to the commission 45
  134  days prior to its implementation of the increase or decrease
  135  that the rates charged by the supplier of the electric power or
  136  the taxes imposed by the governmental authority, or the
  137  regulatory assessment fees imposed upon it by the commission
  138  have changed. The new rates authorized shall reflect the amount
  139  of the change of the ad valorem taxes or rates imposed upon the
  140  utility by the governmental authority, other utility, or
  141  supplier of electric power, or the regulatory assessment fees
  142  imposed upon it by the commission. The approved rates of any
  143  utility shall be automatically increased, without hearing, upon
  144  verified notice to the commission 45 days prior to
  145  implementation of the increase that costs have been incurred for
  146  water quality or wastewater quality testing required by the
  147  Department of Environmental Protection.
  148         1. The new rates authorized shall reflect, on an amortized
  149  or annual basis, as appropriate, the cost of, or the amount of
  150  change in the cost of, the specified expense item, required
  151  water quality or wastewater quality testing performed by
  152  laboratories approved by the Department of Environmental
  153  Protection for that purpose. The new rates, however, shall not
  154  reflect the costs of any specified expense item any required
  155  water quality or wastewater quality testing already included in
  156  a utility’s rates. Specified expense items that are eligible for
  157  automatic increase or decrease of a utility’s rates include, but
  158  are not limited to:
  159         a. The rates charged by a governmental authority or other
  160  water or wastewater utility regulated by the commission which
  161  provides utility service to the utility.
  162         b. The rates or fees that the utility is charged for
  163  electric power.
  164         c. The amount of ad valorem taxes assessed against the
  165  utility’s used and useful property.
  166         d. The fees charged by the Department of Environmental
  167  Protection in connection with the National Pollutant Discharge
  168  Elimination System Program.
  169         e. The regulatory assessment fees imposed upon the utility
  170  by the commission.
  171         f. Costs incurred for water quality or wastewater quality
  172  testing required by the Department of Environmental Protection.
  173         g. The fees charged for wastewater biosolids disposal.
  174         h. Costs incurred for any tank inspection required by the
  175  Department of Environmental Protection or a local governmental
  176  authority.
  177         i. Treatment plant operator and water distribution system
  178  operator license fees required by the Department of
  179  Environmental Protection or a local governmental authority.
  180         j. Water or wastewater operating permit fees charged by the
  181  Department of Environmental Protection or a local governmental
  182  authority.
  183         k. Consumptive or water use permit fees charged by a water
  184  management district.
  185         2. A utility may not use this procedure to increase its
  186  rates as a result of an increase in a specific expense item
  187  which occurred water quality or wastewater quality testing or an
  188  increase in the cost of purchased water services, sewer
  189  services, or electric power or in assessed ad valorem taxes,
  190  which increase was initiated more than 12 months before the
  191  filing by the utility.
  192         3. The commission may establish by rule additional specific
  193  expense items that are outside the control of the utility and
  194  have been imposed upon the utility by a federal, state, or local
  195  law, rule, order, or notice. If the commission establishes such
  196  a rule, the commission shall review the rule at least once every
  197  5 years and determine if each expense item should continue to be
  198  cause for an automatic increase or decrease and whether
  199  additional items should be included.
  200         4.The provisions of This subsection does do not prevent a
  201  utility from seeking a change in rates pursuant to the
  202  provisions of subsection (2).
  203         (7) The commission shall determine the reasonableness of
  204  rate case expenses and shall disallow all rate case expenses
  205  determined to be unreasonable. No rate case expense determined
  206  to be unreasonable shall be paid by a consumer. In determining
  207  the reasonable level of rate case expense, the commission shall
  208  consider the extent to which a utility has utilized or failed to
  209  utilize the provisions of paragraph (4)(a) or paragraph (4)(b)
  210  and such other criteria as it may establish by rule. A utility
  211  may recover only up to 50 percent of rate case expenses that are
  212  determined to be reasonable.
  213         Section 5. Subsection (3) of section 367.0814, Florida
  214  Statutes, is amended to read:
  215         367.0814 Staff assistance in changing rates and charges;
  216  interim rates.—
  217         (3) The provisions of s. 367.081(1), (2)(a), and (3) shall
  218  apply in determining the utility’s rates and charges. However,
  219  the commission may not award rate case expenses to recover
  220  attorney fees or fees of other outside consultants who are
  221  engaged for the purpose of preparing or filing the case if a
  222  utility receives staff assistance in changing rates and charges
  223  pursuant to this section, unless the Office of Public Counsel or
  224  interested parties have intervened. The commission may award
  225  rate case expenses for attorney fees or fees of other outside
  226  consultants if such fees are incurred for the purpose of
  227  providing consulting or legal services to the utility after the
  228  initial staff report is made available to customers and the
  229  utility. If there is a protest or appeal by a party other than
  230  the utility, the commission may award rate case expenses to the
  231  utility for attorney fees or fees of other outside consultants
  232  for costs incurred after the protest or appeal. By December 31,
  233  2016, the commission must adopt rules to administer this
  234  subsection.
  235         Section 6. Section 367.0816, Florida Statutes, is amended
  236  to read:
  237         367.0816 Recovery of rate case expenses.—
  238         (1) The amount of rate case expense determined by the
  239  commission pursuant to the provisions of this chapter to be
  240  recovered through a public utilities rate shall be apportioned
  241  for recovery over a period of 4 years. At the conclusion of the
  242  recovery period, the rate of the public utility shall be reduced
  243  immediately by the amount of rate case expense previously
  244  included in rates.
  245         (2) A utility may not recover the 4-year amortized rate
  246  case expense for more than one rate case at any given time. If
  247  the commission approves and a utility implements a rate change
  248  from a subsequent rate case pursuant to this section, any
  249  unamortized rate case expense for a prior rate case must be
  250  discontinued. The unamortized portion of rate case expense for a
  251  prior rate case must be removed from rates before the
  252  implementation of an additional amortized rate case expense for
  253  the most recent rate proceeding.
  254         Section 7. Subsection (3) is added to section 367.111,
  255  Florida Statutes, to read:
  256         367.111 Service.—
  257         (3) The commission may, on its own motion or based on
  258  complaints of customers of a water utility subject to its
  259  jurisdiction, review water quality as it pertains to secondary
  260  drinking water standards established by the Department of
  261  Environmental Protection. The commission may, on its own motion
  262  or based on complaints of customers of a wastewater utility
  263  subject to its jurisdiction, review wastewater service as it
  264  pertains to odor, noise, aerosol drift, or lighting.
  265         Section 8. Subsection (3) of section 403.8532, Florida
  266  Statutes, is amended to read:
  267         403.8532 Drinking water state revolving loan fund; use;
  268  rules.—
  269         (3) The department may make, or request that the
  270  corporation make, loans, grants, and deposits to community water
  271  systems; for-profit, privately owned, or investor-owned water
  272  systems;, nonprofit, transient, noncommunity water systems;, and
  273  nonprofit, nontransient, noncommunity water systems to assist
  274  them in planning, designing, and constructing public water
  275  systems, unless such public water systems are for-profit
  276  privately owned or investor-owned systems that regularly serve
  277  1,500 service connections or more within a single certified or
  278  franchised area. However, a for-profit privately owned or
  279  investor-owned public water system that regularly serves 1,500
  280  service connections or more within a single certified or
  281  franchised area may qualify for a loan only if the proposed
  282  project will result in the consolidation of two or more public
  283  water systems. The department may provide loan guarantees,
  284  purchase loan insurance, and refinance local debt through the
  285  issue of new loans for projects approved by the department.
  286  Public water systems may borrow funds made available pursuant to
  287  this section and may pledge any revenues or other adequate
  288  security available to them to repay any funds borrowed.
  289         (a) The department shall administer loans so that amounts
  290  credited to the Drinking Water Revolving Loan Trust Fund in any
  291  fiscal year are reserved for the following purposes:
  292         1. At least 15 percent for qualifying small public water
  293  systems.
  294         2. Up to 15 percent for qualifying financially
  295  disadvantaged communities.
  296         (b) If an insufficient number of the projects for which
  297  funds are reserved under this subsection have been submitted to
  298  the department at the time the funding priority list authorized
  299  under this section is adopted, the reservation of these funds no
  300  longer applies. The department may award the unreserved funds as
  301  otherwise provided in this section.
  302         Section 9. Subsection (8) of section 367.171, Florida
  303  Statutes, is amended to read:
  304         367.171 Effectiveness of this chapter.—
  305         (8) Each county that which is not subject to excluded from
  306  the provisions of this chapter shall regulate the rates of all
  307  utilities in that county which would otherwise be subject to
  308  regulation by the commission pursuant to s. 367.081(1), (2),
  309  (3), and (6) and s. 367.165. The county shall not regulate the
  310  rates or charges of any system or facility that which would
  311  otherwise be exempt from commission regulation pursuant to s.
  312  367.022(2). For this purpose the county or its agency shall
  313  proceed as though the county or agency is the commission.
  314         Section 10. This act shall take effect July 1, 2016.