CS/HB 223

A bill to be entitled
2An act relating to water and wastewater utilities;
3creating s. 367.0819, F.S.; providing for recovery through
4a surcharge of certain costs relating to water and
5wastewater system improvement projects; defining the term
6"nonrevenue-producing project"; requiring utilities to
7submit surcharge tariffs reflecting the surcharge
8calculation for recovery of such costs to the Florida
9Public Service Commission for approval and to provide
10specified notice of such surcharge tariff filings;
11requiring utilities to submit specified sworn affirmations
12to the commission; providing a penalty for false
13statements with regard to such affirmations; authorizing
14the commission to order utilities to make refunds to
15ratepayers under certain conditions; providing
16construction; providing for the automatic approval of the
17surcharge tariff within a specified period after filing
18the surcharge tariff with the commission; requiring the
19surcharge notice to be presented as a separate line item
20on the customer's bill; specifying a limitation for the
21surcharge amount; providing requirements for billing,
22reconciliation, and quarterly adjustment of the surcharge;
23specifying a limitation for recovery of project costs;
24providing project eligibility criteria; specifying water
25and wastewater treatment criteria; providing requirements
26for notice, maintenance, and availability of certain
27records; authorizing the commission to review specified
28projects; providing that surcharges are subject to refund
29under certain conditions; providing an effective date.
31Be It Enacted by the Legislature of the State of Florida:
33     Section 1.  Section 367.0819, Florida Statutes, is created
34to read:
35     367.0819  Recovery of costs for system improvement
37     (1)(a)  In order to promote utility investment in system
38improvement projects, the commission shall allow a utility to
39recover prudently incurred capital costs related to nonrevenue-
40producing projects to enhance water quality, fire protection
41reliability, and long-term system viability through a surcharge
42collected pursuant to this section. The costs of existing or new
43facilities to serve new customers are not recoverable through
44this surcharge.
45     (b)  For purposes of this section, a "nonrevenue-producing
46project" means a project that is not constructed or installed
47for the purpose of serving a new customer.
48     (2)  A utility seeking to establish a surcharge pursuant to
49this section must:
50     (a)  Submit, for commission approval, the proposed
51surcharge tariff establishing a formula for the calculation of
52rates reflecting the surcharge, which rates provide for recovery
53of depreciation and return on investment for each eligible
54project. The return on investment for each eligible project must
55be based on the utility's last authorized pretax rate of return.
56The surcharge must be calculated, applied, and recovered in
57accordance with the utility's last authorized rate structure.
58Until the surcharge is reset pursuant to paragraph (5)(d), the
59total cumulative amount of the surcharge revenue recovered by
60the utility may not exceed 8 percent of the utility's total
61annual retail water service revenues, and, where applicable, 8
62percent of the utility's total annual wastewater service
63revenues, excluding revenue collected through the surcharge, for
64the preceding calendar year.
65     (b)  Provide notice by mail of the initial surcharge tariff
66filing to each customer in the affected service areas and
67publish notice of the surcharge filing in a newspaper of general
68circulation in the affected service areas.
69     (3)(a)  Before implementing a surcharge pursuant to this
70section, the utility shall file a sworn affirmation with the
71commission as to the accuracy of the figures and calculations
72upon which the surcharge or any adjustment thereto is based,
73stating that the change in rates will not cause the utility to
74exceed the range of its last authorized rate of return on
75equity. A person who makes a false statement in the affirmation
76required under this paragraph, which statement he or she does
77not believe to be true in regard to any material matter, commits
78a felony of the third degree, punishable as provided in s.
79775.082, s. 775.083, or s. 775.084.
80     (b)  If, within 15 months after the filing of a utility's
81report pursuant to s. 367.121, the commission finds that the
82utility exceeded the range of its last authorized rate of return
83on equity after the implementation of the surcharge within the
84year for which the report was filed, the commission may order
85the utility to refund, with interest, the difference to the
86ratepayers and adjust rates accordingly. This paragraph may not
87be construed to require a bond or corporate undertaking in order
88for the utility to implement the surcharge.
89     (4)  A surcharge tariff submitted by a utility in
90compliance with paragraph (2)(a) is not subject to s. 367.091
91and shall be approved as a matter of right without hearing
92within 60 days after filing the surcharge tariff with the
94     (5)  A surcharge established pursuant to this section shall
96     (a)  Presented as a separate line item on the customer's
97bill and billed in accordance with the billing cycle in the
98utility's approved tariff. Any changes in the surcharge must be
99reflected on the first bill the customer receives after the
100change of the surcharge.
101     (b)  Revaluated, and adjusted if necessary, quarterly to
102reflect the costs of eligible projects placed into service. The
103utility shall file the supporting data to increase or reduce the
104surcharge with the commission for each revaluation along with a
105sworn affirmation pursuant to paragraph (3)(a) and shall
106contemporaneously deliver copies of the supporting data and the
107sworn affirmation to the Office of the Public Counsel. The
108surcharge adjustment is not subject to s. 367.091 and shall take
109effect without hearing 45 days after the supporting data and
110sworn affirmation are filed with the commission and delivered to
111the Office of the Public Counsel.
112     (c)  Subject to an annual reconciliation of revenues and
113costs based on a reconciliation period of 12 months to begin on
114the date the surcharge is approved as a matter of right pursuant
115to subsection (4). Within 30 days after the end of each
116reconciliation period, the utility shall file with the
117commission, and deliver to the Office of the Public Counsel, a
118reconciliation report that compares the actual surcharge
119revenues received and the actual eligible costs incurred by the
120utility during the prior period along with the sworn affirmation
121required by paragraph (3)(a). A reconciliation report filed in
122accordance with this paragraph shall be administratively
123approved by the commission without hearing within 45 days after
124filing. The difference between revenue and costs shall be
125recovered or refunded, as appropriate, by the utility without
126hearing as an automatic adjustment to the subsequent surcharge
127calculation. Revenues in excess of system-improvement costs
128shall be refunded with interest to customers pursuant to the
129commission's rule on interest for water and wastewater
131     (d)  Reset at zero as of the effective date of new base
132rates that provide for prospective recovery of the costs that
133had previously been recovered under the surcharge. Thereafter,
134only the costs of new eligible projects that have not previously
135been included in the base rate of the utility shall be reflected
136in the surcharge.
137     (6)  Recovery of project costs pursuant to this section
138does not preclude such costs from being included in base rates
139in subsequent rate proceedings. However, a project cost
140recovered in base rates may not be recovered through a surcharge
141established pursuant to this section.
142     (7)  A project is eligible for recovery of costs through
143the surcharge if it is:
144     (a)  Completed and placed into service after the test year
145upon which base rates were last established by the commission
146for the utility; and
147     (b)  For the construction of nonrevenue-producing
148improvement projects that are used for the production,
149treatment, transmission, storage, distribution, or provision of
150potable or recycled water to the public or for the collection,
151transportation, or disposal of wastewater for the public. Such
152projects may include, but are not limited to, water quality
153improvement projects designed to achieve primary or secondary
154water standards as determined by the Department of Environmental
155Protection, the United States Environmental Protection Agency,
156or any other governmental entity having similar regulatory
157jurisdiction; wastewater quality improvement projects; main,
158service line, and valve replacement projects; main relining and
159rehabilitation projects; fire and flushing hydrant installation
160and replacement projects; main extension projects to eliminate
161dead ends; interconnection projects; water, wastewater, and
162reuse meter installation and replacement projects; wastewater
163collection, replacement, relining, and rehabilitation projects;
164and manhole replacement and rehabilitation projects.
165     (8)  Water and wastewater treatment includes production of
166any sodium solution, excluding sodium hypochlorite, used in
167conjunction with the treatment process but does not include the
168onsite manufacturing of liquid chlorine or bleach.
169     (9)  Upon approval of the surcharge tariff, the utility
170shall maintain and make available for public inspection during
171normal business hours at each utility location or on the
172utility's website a detailed schedule for each completed
173project, including the plant account number and title, the
174category of the project, the project name and description, the
175cost of the project in the month of closing, and the month and
176year of closing. Notice of the availability of the schedules for
177public inspection shall be posted in each office of the utility.
178     (10)  The commission may review the prudence of all
179projects subject to the surcharge in the utility's next base
180rate proceeding following the commission's initial approval of
181the surcharge pursuant to subsection (4). Revenues from such
182surcharges are subject to refund if the commission subsequently
183determines that the costs of a project were not prudently
184incurred or that the project is not used and useful in the
185public service, and any such refund shall be made pursuant to
186the commission's rule on refunds for water and wastewater
188     Section 2.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.