| 1 | A bill to be entitled |
| 2 | An act relating to water and wastewater utilities; |
| 3 | creating s. 367.0819, F.S.; providing for recovery through |
| 4 | a surcharge of certain costs relating to water and |
| 5 | wastewater system improvement projects; defining the term |
| 6 | "nonrevenue-producing project"; requiring utilities to |
| 7 | submit surcharge tariffs reflecting the surcharge |
| 8 | calculation for recovery of such costs to the Florida |
| 9 | Public Service Commission for approval and to provide |
| 10 | specified notice of such surcharge tariff filings; |
| 11 | requiring utilities to submit specified sworn affirmations |
| 12 | to the commission; providing a penalty for false |
| 13 | statements with regard to such affirmations; authorizing |
| 14 | the commission to order utilities to make refunds to |
| 15 | ratepayers under certain conditions; providing |
| 16 | construction; providing for the automatic approval of the |
| 17 | surcharge tariff within a specified period after filing |
| 18 | the surcharge tariff with the commission; requiring the |
| 19 | surcharge notice to be presented as a separate line item |
| 20 | on the customer's bill; specifying a limitation for the |
| 21 | surcharge amount; providing requirements for billing, |
| 22 | reconciliation, and quarterly adjustment of the surcharge; |
| 23 | specifying a limitation for recovery of project costs; |
| 24 | providing project eligibility criteria; specifying water |
| 25 | and wastewater treatment criteria; providing requirements |
| 26 | for notice, maintenance, and availability of certain |
| 27 | records; authorizing the commission to review specified |
| 28 | projects; providing that surcharges are subject to refund |
| 29 | under certain conditions; providing an effective date. |
| 30 |
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| 31 | Be It Enacted by the Legislature of the State of Florida: |
| 32 |
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| 33 | Section 1. Section 367.0819, Florida Statutes, is created |
| 34 | to read: |
| 35 | 367.0819 Recovery of costs for system improvement |
| 36 | projects.- |
| 37 | (1)(a) In order to promote utility investment in system |
| 38 | improvement projects, the commission shall allow a utility to |
| 39 | recover prudently incurred capital costs related to nonrevenue- |
| 40 | producing projects to enhance water quality, fire protection |
| 41 | reliability, and long-term system viability through a surcharge |
| 42 | collected pursuant to this section. The costs of existing or new |
| 43 | facilities to serve new customers are not recoverable through |
| 44 | this surcharge. |
| 45 | (b) For purposes of this section, a "nonrevenue-producing |
| 46 | project" means a project that is not constructed or installed |
| 47 | for the purpose of serving a new customer. |
| 48 | (2) A utility seeking to establish a surcharge pursuant to |
| 49 | this section must: |
| 50 | (a) Submit, for commission approval, the proposed |
| 51 | surcharge tariff establishing a formula for the calculation of |
| 52 | rates reflecting the surcharge, which rates provide for recovery |
| 53 | of depreciation and return on investment for each eligible |
| 54 | project. The return on investment for each eligible project must |
| 55 | be based on the utility's last authorized pretax rate of return. |
| 56 | The surcharge must be calculated, applied, and recovered in |
| 57 | accordance with the utility's last authorized rate structure. |
| 58 | Until the surcharge is reset pursuant to paragraph (5)(d), the |
| 59 | total cumulative amount of the surcharge revenue recovered by |
| 60 | the utility may not exceed 8 percent of the utility's total |
| 61 | annual retail water service revenues, and, where applicable, 8 |
| 62 | percent of the utility's total annual wastewater service |
| 63 | revenues, excluding revenue collected through the surcharge, for |
| 64 | the preceding calendar year. |
| 65 | (b) Provide notice by mail of the initial surcharge tariff |
| 66 | filing to each customer in the affected service areas and |
| 67 | publish notice of the surcharge filing in a newspaper of general |
| 68 | circulation in the affected service areas. |
| 69 | (3)(a) Before implementing a surcharge pursuant to this |
| 70 | section, the utility shall file a sworn affirmation with the |
| 71 | commission as to the accuracy of the figures and calculations |
| 72 | upon which the surcharge or any adjustment thereto is based, |
| 73 | stating that the change in rates will not cause the utility to |
| 74 | exceed the range of its last authorized rate of return on |
| 75 | equity. A person who makes a false statement in the affirmation |
| 76 | required under this paragraph, which statement he or she does |
| 77 | not believe to be true in regard to any material matter, commits |
| 78 | a felony of the third degree, punishable as provided in s. |
| 79 | 775.082, s. 775.083, or s. 775.084. |
| 80 | (b) If, within 15 months after the filing of a utility's |
| 81 | report pursuant to s. 367.121, the commission finds that the |
| 82 | utility exceeded the range of its last authorized rate of return |
| 83 | on equity after the implementation of the surcharge within the |
| 84 | year for which the report was filed, the commission may order |
| 85 | the utility to refund, with interest, the difference to the |
| 86 | ratepayers and adjust rates accordingly. This paragraph may not |
| 87 | be construed to require a bond or corporate undertaking in order |
| 88 | for the utility to implement the surcharge. |
| 89 | (4) A surcharge tariff submitted by a utility in |
| 90 | compliance with paragraph (2)(a) is not subject to s. 367.091 |
| 91 | and shall be approved as a matter of right without hearing |
| 92 | within 60 days after filing the surcharge tariff with the |
| 93 | commission. |
| 94 | (5) A surcharge established pursuant to this section shall |
| 95 | be: |
| 96 | (a) Presented as a separate line item on the customer's |
| 97 | bill and billed in accordance with the billing cycle in the |
| 98 | utility's approved tariff. Any changes in the surcharge must be |
| 99 | reflected on the first bill the customer receives after the |
| 100 | change of the surcharge. |
| 101 | (b) Revaluated, and adjusted if necessary, quarterly to |
| 102 | reflect the costs of eligible projects placed into service. The |
| 103 | utility shall file the supporting data to increase or reduce the |
| 104 | surcharge with the commission for each revaluation along with a |
| 105 | sworn affirmation pursuant to paragraph (3)(a) and shall |
| 106 | contemporaneously deliver copies of the supporting data and the |
| 107 | sworn affirmation to the Office of the Public Counsel. The |
| 108 | surcharge adjustment is not subject to s. 367.091 and shall take |
| 109 | effect without hearing 45 days after the supporting data and |
| 110 | sworn affirmation are filed with the commission and delivered to |
| 111 | the Office of the Public Counsel. |
| 112 | (c) Subject to an annual reconciliation of revenues and |
| 113 | costs based on a reconciliation period of 12 months to begin on |
| 114 | the date the surcharge is approved as a matter of right pursuant |
| 115 | to subsection (4). Within 30 days after the end of each |
| 116 | reconciliation period, the utility shall file with the |
| 117 | commission, and deliver to the Office of the Public Counsel, a |
| 118 | reconciliation report that compares the actual surcharge |
| 119 | revenues received and the actual eligible costs incurred by the |
| 120 | utility during the prior period along with the sworn affirmation |
| 121 | required by paragraph (3)(a). A reconciliation report filed in |
| 122 | accordance with this paragraph shall be administratively |
| 123 | approved by the commission without hearing within 45 days after |
| 124 | filing. The difference between revenue and costs shall be |
| 125 | recovered or refunded, as appropriate, by the utility without |
| 126 | hearing as an automatic adjustment to the subsequent surcharge |
| 127 | calculation. Revenues in excess of system-improvement costs |
| 128 | shall be refunded with interest to customers pursuant to the |
| 129 | commission's rule on interest for water and wastewater |
| 130 | utilities. |
| 131 | (d) Reset at zero as of the effective date of new base |
| 132 | rates that provide for prospective recovery of the costs that |
| 133 | had previously been recovered under the surcharge. Thereafter, |
| 134 | only the costs of new eligible projects that have not previously |
| 135 | been included in the base rate of the utility shall be reflected |
| 136 | in the surcharge. |
| 137 | (6) Recovery of project costs pursuant to this section |
| 138 | does not preclude such costs from being included in base rates |
| 139 | in subsequent rate proceedings. However, a project cost |
| 140 | recovered in base rates may not be recovered through a surcharge |
| 141 | established pursuant to this section. |
| 142 | (7) A project is eligible for recovery of costs through |
| 143 | the surcharge if it is: |
| 144 | (a) Completed and placed into service after the test year |
| 145 | upon which base rates were last established by the commission |
| 146 | for the utility; and |
| 147 | (b) For the construction of nonrevenue-producing |
| 148 | improvement projects that are used for the production, |
| 149 | treatment, transmission, storage, distribution, or provision of |
| 150 | potable or recycled water to the public or for the collection, |
| 151 | transportation, or disposal of wastewater for the public. Such |
| 152 | projects may include, but are not limited to, water quality |
| 153 | improvement projects designed to achieve primary or secondary |
| 154 | water standards as determined by the Department of Environmental |
| 155 | Protection, the United States Environmental Protection Agency, |
| 156 | or any other governmental entity having similar regulatory |
| 157 | jurisdiction; wastewater quality improvement projects; main, |
| 158 | service line, and valve replacement projects; main relining and |
| 159 | rehabilitation projects; fire and flushing hydrant installation |
| 160 | and replacement projects; main extension projects to eliminate |
| 161 | dead ends; interconnection projects; water, wastewater, and |
| 162 | reuse meter installation and replacement projects; wastewater |
| 163 | collection, replacement, relining, and rehabilitation projects; |
| 164 | and manhole replacement and rehabilitation projects. |
| 165 | (8) Water and wastewater treatment includes production of |
| 166 | any sodium solution, excluding sodium hypochlorite, used in |
| 167 | conjunction with the treatment process but does not include the |
| 168 | onsite manufacturing of liquid chlorine or bleach. |
| 169 | (9) Upon approval of the surcharge tariff, the utility |
| 170 | shall maintain and make available for public inspection during |
| 171 | normal business hours at each utility location or on the |
| 172 | utility's website a detailed schedule for each completed |
| 173 | project, including the plant account number and title, the |
| 174 | category of the project, the project name and description, the |
| 175 | cost of the project in the month of closing, and the month and |
| 176 | year of closing. Notice of the availability of the schedules for |
| 177 | public inspection shall be posted in each office of the utility. |
| 178 | (10) The commission may review the prudence of all |
| 179 | projects subject to the surcharge in the utility's next base |
| 180 | rate proceeding following the commission's initial approval of |
| 181 | the surcharge pursuant to subsection (4). Revenues from such |
| 182 | surcharges are subject to refund if the commission subsequently |
| 183 | determines that the costs of a project were not prudently |
| 184 | incurred or that the project is not used and useful in the |
| 185 | public service, and any such refund shall be made pursuant to |
| 186 | the commission's rule on refunds for water and wastewater |
| 187 | utilities. |
| 188 | Section 2. This act shall take effect July 1, 2011. |