CS for SB 1238                             First Engrossed (ntc)
    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  public utility’s prudent investments, including rate of return,
   35  and for prudently incurred expenses associated with such
   36  investments, in natural gas reserves if the utility has at least
   37  65 percent natural-gas-fueled generation. The commission shall
   38  adopt by rule no later than December 31, 2017, standards by
   39  which it will determine the prudence of such gas reserve
   40  investments. The standards must include, at a minimum, all of
   41  the following:
   42         1.A requirement that each natural gas reserve investment
   43  be projected to generate savings for customers over the life of
   44  the investment.
   45         2.A requirement that the total volume of natural gas
   46  produced from all of a utility’s natural gas reserve investments
   47  not exceed the following percentages of the utility’s average
   48  projected daily burn of natural gas:
   49         a.7.5 percent in 2018;
   50         b.10 percent in 2019;
   51         c.12.5 percent in 2020; and
   52         d.15 percent in 2021 and thereafter.
   53         3.A requirement that each investment be made in natural
   54  gas projects that have at least 50 percent of the wells within
   55  the project classified as proved gas reserves and the remaining
   56  wells within the project classified as probable gas reserves by
   57  the Securities and Exchange Commission.
   58         4.A prohibition against the recovery by a utility of the
   59  costs of natural gas extracted from the state by means of any
   60  well stimulation treatment, including hydraulic fracturing, acid
   61  fracturing, and matrix acidizing.
   62         5.A prohibition against the recovery by a utility of the
   63  costs of natural gas extracted from the waters of the state,
   64  from the waters of the United States, or from international
   65  waters.
   67  No provision of this chapter shall be construed or applied to
   68  impede, prevent, or prohibit any municipally owned electric
   69  utility system from distributing at retail electrical energy
   70  within its corporate limits, as such corporate limits exist on
   71  July 1, 1974; however, existing territorial agreements shall not
   72  be altered or abridged hereby.
   73         Section 2. (1)Annually, each public utility shall file
   74  with the Public Service Commission a detailed comparison of all
   75  gas reserve projects entered into on behalf of the utility and
   76  any affiliate or subsidiary of the utility’s parent company as
   77  part of its risk management plan. The information must be the
   78  same for each gas reserve project entered into by any affiliate
   79  or subsidiary which was used to support or justify the
   80  appropriateness of each gas reserve project entered into during
   81  the reporting period. The filing must:
   82         (a)Show all material assumptions relied upon to support
   83  each gas reserve project, including the capital investment
   84  amount;
   85         (b)Calculate the associated revenue requirement for each
   86  gas reserve project; and
   87         (c)Provide the net present value savings for each gas
   88  reserve project entered into by any affiliate or subsidiary of a
   89  parent company.
   90         (2)For any gas reserve project, the utility shall use an
   91  independent third-party auditor in performing audits of the
   92  associated transactions. Subaccounts that correspond on a one
   93  on-one basis with the oil and gas system of accounts shall be
   94  established and used by the utility for each investment in a gas
   95  reserve project.
   96         (3)A public utility may enter into a gas reserves project
   97  only if there is a transportation path available to deliver the
   98  gas produced from that project to the public utility’s service
   99  territory. The costs of any new transportation needed to deliver
  100  gas from a gas reserve project must be taken into consideration
  101  when analyzing the economics of that project.
  102         Section 3. This act shall take effect July 1, 2017.