Florida Senate - 2017                             CS for SB 1238
       By the Committee on Rules; and Senator Bean
       595-04435-17                                          20171238c1
    1                        A bill to be entitled                      
    2         An act relating to utility investments in gas
    3         reserves; amending s. 366.04, F.S.; revising the
    4         jurisdiction of the Public Service Commission over
    5         public utilities to include the approval of cost
    6         recovery for certain gas reserve investments;
    7         requiring the commission to adopt, by rule, standards
    8         by which it will determine the prudence of such
    9         investments; requiring each public utility to file
   10         with the commission a comparison of all gas reserve
   11         projects entered into on behalf of the utility and any
   12         affiliate or subsidiary of the parent company as part
   13         of its risk management plan; specifying the
   14         requirements of the filing; requiring the use of a
   15         third-party auditor for audits of associated
   16         transactions for a gas reserve project; requiring a
   17         public utility entering into a gas reserves project to
   18         have a transportation path between the project and the
   19         utility’s service territory; specifying the accounting
   20         of the costs of any new transportation in the economic
   21         analysis of projects; providing an effective date.
   23  Be It Enacted by the Legislature of the State of Florida:
   25         Section 1. Present paragraphs (d), (e), and (f) of
   26  subsection (2) of section 366.04, Florida Statutes, are
   27  redesignated as paragraphs (e), (f), and (g), respectively, and
   28  a new paragraph (d) is added to that subsection, to read:
   29         366.04 Jurisdiction of commission.—
   30         (2) In the exercise of its jurisdiction, the commission
   31  shall have power over electric utilities for the following
   32  purposes:
   33         (d)To approve cost recovery by adjustment clause for a
   34  utility’s prudent investments, including rate of return, and for
   35  prudently incurred expenses associated with such investments, in
   36  natural gas reserves if the utility has at least 65 percent
   37  natural-gas-fueled generation. The commission shall adopt by
   38  rule no later than December 31, 2017, standards by which it will
   39  determine the prudence of such gas reserve investments. The
   40  standards must include, at a minimum, all of the following:
   41         1.A requirement that each natural gas reserve investment
   42  be projected to generate savings for customers over the life of
   43  the investment.
   44         2.A requirement that the total volume of natural gas
   45  produced from all of a utility’s natural gas reserve investments
   46  not exceed the following percentages of the utility’s average
   47  projected daily burn of natural gas:
   48         a.7.5 percent in 2018;
   49         b.10 percent in 2019;
   50         c.12.5 percent in 2020; and
   51         d.15 percent in 2021 and thereafter.
   52         3.A requirement that each investment be made in natural
   53  gas projects that have at least 50 percent of the wells within
   54  the project classified as proved gas reserves and the remaining
   55  wells within the project classified as probable gas reserves by
   56  the Securities and Exchange Commission.
   57         4.A prohibition against the recovery by a utility of the
   58  costs of natural gas extracted from the state by means of any
   59  well stimulation treatment, including hydraulic fracturing, acid
   60  fracturing, and matrix acidizing.
   61         5.A prohibition against the recovery by a utility of the
   62  costs of natural gas extracted from the waters of the state,
   63  from the waters of the United States, or from international
   64  waters.
   66  No provision of this chapter shall be construed or applied to
   67  impede, prevent, or prohibit any municipally owned electric
   68  utility system from distributing at retail electrical energy
   69  within its corporate limits, as such corporate limits exist on
   70  July 1, 1974; however, existing territorial agreements shall not
   71  be altered or abridged hereby.
   72         Section 2. (1)Annually, each public utility shall file
   73  with the Public Service Commission a detailed comparison of all
   74  gas reserve projects entered into on behalf of the utility and
   75  any affiliate or subsidiary of the utility’s parent company as
   76  part of its risk management plan. The information must be the
   77  same for each gas reserve project entered into by any affiliate
   78  or subsidiary which was used to support or justify the
   79  appropriateness of each gas reserve project entered into during
   80  the reporting period. The filing must:
   81         (a)Show all material assumptions relied upon to support
   82  each gas reserve project, including the capital investment
   83  amount;
   84         (b)Calculate the associated revenue requirement for each
   85  gas reserve project; and
   86         (c)Provide the net present value savings for each gas
   87  reserve project entered into by any affiliate or subsidiary of a
   88  parent company.
   89         (2)For any gas reserve project, the utility shall use an
   90  independent third-party auditor in performing audits of the
   91  associated transactions. Subaccounts that correspond on a one
   92  on-one basis with the oil and gas system of accounts shall be
   93  established and used by the utility for each investment in a gas
   94  reserve project.
   95         (3)A public utility may enter into a gas reserves project
   96  only if there is a transportation path available to deliver the
   97  gas produced from that project to the public utility’s service
   98  territory. The costs of any new transportation needed to deliver
   99  gas from a gas reserve project must be taken into consideration
  100  when analyzing the economics of that project.
  101         Section 3. This act shall take effect July 1, 2017.