Florida Senate - 2016                                     SB 840
       By Senator Simpson
       18-00767-16                                            2016840__
    1                        A bill to be entitled                      
    2         An act relating to municipal power regulation;
    3         amending s. 163.01, F.S.; requiring certain entities
    4         created under the Interlocal Cooperation Act of 1969
    5         to submit independently prepared financial statements
    6         for certain electric power projects to specified
    7         public entities; providing statement requirements;
    8         providing eligibility requirements for membership on
    9         the governing body of certain entities created under
   10         the Interlocal Cooperation Act of 1969; amending s.
   11         350.0611, F.S.; expanding the duties of the Public
   12         Counsel to include proceedings involving the Florida
   13         Municipal Power Agency; amending s. 366.02, F.S.;
   14         revising the definition of the term “public utility”
   15         to include the Florida Municipal Power Agency;
   16         defining the term “Florida Municipal Power Agency”;
   17         amending s. 366.04, F.S.; exempting the agency from
   18         regulation by the Public Service Commission for
   19         purposes of rates and service; providing an effective
   20         date.
   22         WHEREAS, The Florida Municipal Power Agency is a joint-use
   23  action agency created pursuant to a series of interlocal
   24  agreements with the state’s municipalities to finance, acquire,
   25  contract, manage, and operate its own electric power projects or
   26  jointly accomplish the same purposes with other public or
   27  private utilities, and
   28         WHEREAS, the Florida Municipal Power Agency is governed by
   29  a board of directors, consisting of one board member from each
   30  member municipality, which decides all issues concerning each
   31  project except for the “All-Requirements” power supply project,
   32  and
   33         WHEREAS, the All-Requirements power supply project is
   34  governed by an executive committee, with each All-Requirements
   35  project member municipality that purchases power from the
   36  project appointing one executive committee member, and
   37         WHEREAS, the Auditor General conducted an operational audit
   38  of the Florida Municipal Power Agency and released Report No.
   39  2015-165 to the Joint Legislative Auditing Committee on March
   40  30, 2015, which included findings and recommendations, and
   41         WHEREAS, the Auditor General found many of the Florida
   42  Municipal Power Agency’s hedging activities to be inconsistent
   43  with other joint-use action agencies, leading to net losses of
   44  $247.6 million over the past 12 fiscal years, and
   45         WHEREAS, the Auditor General concluded that several of the
   46  Florida Municipal Power Agency’s personnel and payroll
   47  administration activities may negatively affect future rates,
   48  including the Chief Executive Officer’s employment contract that
   49  provides severance pay and lifetime benefits even if employment
   50  is terminated for cause, and
   51         WHEREAS, the Florida Municipal Power Agency did not
   52  consistently follow its own procurement and competitive
   53  selection policies, one of which may increase the cost of future
   54  bond issues, and
   55         WHEREAS, the Florida Municipal Power Agency’s All
   56  Requirements project agreement to curtail peak-shaving
   57  activities is primarily voluntary, relies on self-reporting, and
   58  contains no penalties for noncompliance, and
   59         WHEREAS, certain All-Requirements project contract
   60  provisions relating to the withdrawal of members are ambiguous,
   61  use a fixed discount rate rather than one based on current
   62  capital costs, and do not provide for independent verification
   63  by a withdrawing member, and
   64         WHEREAS, even though the Florida Municipal Power Agency is
   65  a governmental entity, many of the laws that apply to local
   66  governments do not apply to the agency, and
   67         WHEREAS, the Florida Municipal Power Agency is not subject
   68  to any rate-setting authority, including by the Public Service
   69  Commission, and
   70         WHEREAS, there exists a need to promote transparency and
   71  consistency and to increase public understanding and confidence
   72  in the operation of the Florida Municipal Power Agency by the
   73  member municipalities and the public, including those electric
   74  ratepayers who are not residents of the municipality supplying
   75  electric power but who are subject to a municipality that is
   76  receiving power from the agency, NOW, THEREFORE,
   78  Be It Enacted by the Legislature of the State of Florida:
   80         Section 1. Subsection (19) is added to section 163.01,
   81  Florida Statutes, to read:
   82         163.01 Florida Interlocal Cooperation Act of 1969.—
   83         (19)(a) Any entity created pursuant to this section that
   84  supplies electricity through an interlocal agreement to its
   85  member municipalities shall annually submit to the Public
   86  Service Commission, the Public Counsel, and each member
   87  municipality that participates in the electric power project an
   88  independently prepared financial statement for each individual
   89  generation asset. The financial statement must include:
   90         1. A balance sheet that reflects assets and liabilities
   91  associated with each generation asset, including the plant in
   92  service, accumulated additions and removals, net plant,
   93  depreciation, operations and maintenance expenses, allocations,
   94  and any other material asset and liability categories.
   95         2. An income statement that reflects each generation
   96  asset’s operational and financial activities for the reporting
   97  period, including revenues, expenses, gains, and losses. Any
   98  gains or losses from hedging activities associated with the
   99  generation asset shall be separately itemized.
  100         3. A statement of cash flows that identifies changes in the
  101  generation asset’s cash flows during the reporting period.
  102         4. The current fair market value for each generation asset.
  103  The current fair market value shall be determined assuming the
  104  price that a willing buyer would pay a willing seller for the
  105  generation asset, with neither party being under any compulsion
  106  to buy or sell and both having reasonable knowledge of relevant
  107  facts, and assuming all risk of ownership, loss, and
  108  decommissioning, as applicable. The current fair market value
  109  statement shall include the overall fair market value of the
  110  generation asset as a whole and each member municipality’s
  111  equity position net of the entity’s debt, based on the current
  112  fair market generation asset value. The current fair market
  113  value statement shall include, after considering the market
  114  value of the generation assets, the net return of equity or the
  115  cost to exit the entity for each member municipality.
  116         (b) To serve as a member of the governing body of an entity
  117  created pursuant to this section for the purpose of supplying
  118  electricity to its member municipalities, each member of the
  119  governing body must be an elected official from one of the
  120  entity’s member municipalities. Current members of a governing
  121  body of such an entity who are not elected officials may
  122  continue to serve until expiration of their terms but no later
  123  than July 1, 2018.
  124         Section 2. Section 350.0611, Florida Statutes, is amended
  125  to read:
  126         350.0611 Public Counsel; duties and powers.—It shall be the
  127  duty of the Public Counsel to provide legal representation for
  128  the people of the state in proceedings before the commission,
  129  and in proceedings before counties pursuant to s. 367.171(8),
  130  and in proceedings before the Florida Municipal Power Agency.
  131  The Public Counsel shall have such powers as are necessary to
  132  carry out the duties of his or her office, including, but not
  133  limited to, the following specific powers:
  134         (1) To recommend to the commission, or the counties, or the
  135  Florida Municipal Power Agency, by petition, the commencement of
  136  any proceeding or action or to appear, in the name of the state
  137  or its citizens, in any proceeding or action before the
  138  commission, or the counties, or the agency, and urge therein any
  139  position which he or she deems to be in the public interest,
  140  whether consistent or inconsistent with positions previously
  141  adopted by the commission, or the counties, or the agency, and
  142  utilize therein all forms of discovery available to attorneys in
  143  civil actions generally, subject to protective orders of the
  144  commission or the counties which shall be reviewable by summary
  145  procedure in the circuit courts of this state;
  146         (2) To have access to and use of all files, records, and
  147  data of the commission, or the counties, or the Florida
  148  Municipal Power Agency available to any other attorney
  149  representing parties in a proceeding before the commission, or
  150  the counties, or the agency;
  151         (3) In any proceeding in which he or she has participated
  152  as a party, to seek review of any determination, finding, or
  153  order of the commission, or the counties, the Florida Municipal
  154  Power Agency, or of any hearing examiner designated by the
  155  commission, or the counties, or the agency, in the name of the
  156  state or its citizens;
  157         (4) To prepare and issue reports, recommendations, and
  158  proposed orders to the commission, the Governor, and the
  159  Legislature on any matter or subject within the jurisdiction of
  160  the commission or the Florida Municipal Power Agency, and to
  161  make such recommendations as he or she deems appropriate for
  162  legislation relative to commission or agency procedures, rules,
  163  jurisdiction, personnel, and functions; and
  164         (5) To appear before other state agencies, federal
  165  agencies, and state and federal courts in connection with
  166  matters under the jurisdiction of the commission or the Florida
  167  Municipal Power Agency, in the name of the state or its
  168  citizens.
  170  As used in this section, the term “Florida Municipal Power
  171  Agency” or “agency” has the same meaning as provided in s.
  172  366.02.
  173         Section 3. Subsection (1) of section 366.02, Florida
  174  Statutes, is amended, and subsection (4) is added to that
  175  section, to read:
  176         366.02 Definitions.—As used in this chapter:
  177         (1) “Public utility” means every person, corporation,
  178  partnership, association, or other legal entity and their
  179  lessees, trustees, or receivers supplying electricity or gas
  180  (natural, manufactured, or similar gaseous substance) to or for
  181  the public within this state, including the Florida Municipal
  182  Power Agency. However,; but the term public utility” does not
  183  include either a cooperative now or hereafter organized and
  184  existing under the Rural Electric Cooperative Law of the state;
  185  a municipality or any agency thereof; any dependent or
  186  independent special natural gas district; any natural gas
  187  transmission pipeline company making only sales or
  188  transportation delivery of natural gas at wholesale and to
  189  direct industrial consumers; any entity selling or arranging for
  190  sales of natural gas which neither owns nor operates natural gas
  191  transmission or distribution facilities within the state; or a
  192  person supplying liquefied petroleum gas, in either liquid or
  193  gaseous form, irrespective of the method of distribution or
  194  delivery, or owning or operating facilities beyond the outlet of
  195  a meter through which natural gas is supplied for compression
  196  and delivery into motor vehicle fuel tanks or other
  197  transportation containers, unless such person also supplies
  198  electricity or manufactured or natural gas.
  199         (4) “Florida Municipal Power Agency” means the legal
  200  entity, or a successor entity, formed under s. 163.01 by
  201  interlocal agreement among municipalities.
  202         Section 4. Subsection (1) of section 366.04, Florida
  203  Statutes, is amended to read:
  204         366.04 Jurisdiction of commission.—
  205         (1) In addition to its existing functions, the commission
  206  shall have jurisdiction to regulate and supervise each public
  207  utility with respect to its rates and service, except for the
  208  Florida Municipal Power Agency; assumption by it of liabilities
  209  or obligations as guarantor, endorser, or surety; and the
  210  issuance and sale of its securities, except a security which is
  211  a note or draft maturing not more than 1 year after the date of
  212  such issuance and sale and aggregating (together with all other
  213  then-outstanding notes and drafts of a maturity of 1 year or
  214  less on which such public utility is liable) not more than 5
  215  percent of the par value of the other securities of the public
  216  utility then outstanding. In the case of securities having no
  217  par value, the par value for the purpose of this section shall
  218  be the fair market value as of the date of issue. The
  219  commission, upon application by a public utility, may authorize
  220  the utility to issue and sell securities of one or more
  221  offerings, or of one or more types, over a period of up to 12
  222  months; or, if the securities are notes or drafts maturing not
  223  more than 1 year after the date of issuance and sale, the
  224  commission, upon such application, may authorize the utility to
  225  issue and sell such securities over a period of up to 24 months.
  226  The commission may take final action to grant an application by
  227  a public utility to issue and sell securities or to assume
  228  liabilities or obligations after having given notice in the
  229  Florida Administrative Register published at least 7 days in
  230  advance of final agency action. In taking final action on such
  231  application, the commission may deny authorization for the
  232  issuance or sale of a security or assumption of a liability or
  233  obligation if the security, liability, or obligation is for
  234  nonutility purposes; and shall deny authorization for the
  235  issuance or sale of a security or assumption of a liability or
  236  obligation if the financial viability of the public utility is
  237  adversely affected such that the public utility’s ability to
  238  provide reasonable service at reasonable rates is jeopardized.
  239  Securities issued by a public utility or liabilities or
  240  obligations assumed by a public utility as guarantor, endorser,
  241  or surety pursuant to an order of the commission, which order is
  242  certified by the clerk of the commission and which order
  243  approves or authorizes the issuance and sale of such securities
  244  or the assumption of such liabilities or obligations, shall not
  245  be invalidated by a modification, repeal, or amendment to that
  246  order or by a supplemental order; however, the commission’s
  247  approval of the issuance of securities or the assumption of
  248  liabilities or obligations shall constitute approval only as to
  249  the legality of the issue or assumption, and in no way shall it
  250  be considered commission approval of the rates, service,
  251  accounts, valuation, estimates, or determinations of cost or any
  252  other such matter. The jurisdiction conferred upon the
  253  commission shall be exclusive and superior to that of all other
  254  boards, agencies, political subdivisions, municipalities, towns,
  255  villages, or counties, and, in case of conflict therewith, all
  256  lawful acts, orders, rules, and regulations of the commission
  257  shall in each instance prevail.
  258         Section 5. This act shall take effect July 1, 2016.