Florida Senate - 2019 SB 796 By Senator Gruters 23-00589-19 2019796__ 1 A bill to be entitled 2 An act relating to public utility storm protection 3 plans; creating s. 366.96, F.S.; providing legislative 4 findings; defining terms; requiring public utilities 5 to individually submit to the Public Service 6 Commission, for review and approval, a transmission 7 and distribution storm protection plan as part of the 8 storm hardening plan required by the commission; 9 requiring utilities to update their respective plans 10 on a specified basis; requiring the commission to 11 approve or modify submitted plans within a specified 12 timeframe, taking into consideration specified 13 factors; requiring the commission to conduct an annual 14 proceeding to allow utilities to justify and recover 15 certain costs through a storm protection cost recovery 16 clause; providing that a party may challenge the 17 prudence of certain costs; providing that utilities 18 may not include certain costs in their base rates; 19 providing for the allocation of such costs; 20 authorizing utilities to recover depreciation on 21 certain capital costs through the recovery clause; 22 requiring utilities to record certain costs in a storm 23 protection reserve account, which must be used for a 24 certain purpose; requiring that certain surplus funds 25 be returned to customers through the recovery clause; 26 requiring the commission, under certain circumstances, 27 to establish a factor intended to recover certain 28 required revenue; providing the basis for the factor; 29 requiring that the factor provide for the true-up of 30 certain costs at least annually and that it require 31 that certain refunds or collections related to the 32 true-up include interest; requiring the commission to 33 adopt rules; providing an effective date. 34 35 Be It Enacted by the Legislature of the State of Florida: 36 37 Section 1. Section 366.96, Florida Statutes, is created to 38 read: 39 366.96 Public utility transmission and distribution storm 40 protection plans.— 41 (1) The Legislature finds that: 42 (a) It is in the public interest to promote storm 43 protection activities, such as the overhead hardening of 44 electrical transmission and distribution facilities, the 45 undergrounding of certain electrical distribution lines, and 46 increased vegetation management in this state. 47 (b) Undertaking storm protection for utilities’ 48 transmission and distribution systems will substantially 49 strengthen the ability of the public utility’s electric 50 infrastructure to withstand extreme weather conditions, reduce 51 restoration costs and outage times to customers affected by 52 extreme weather conditions, and improve the overall service 53 reliability for customers in this state. 54 (c) When considering issues relating to costs, reliability, 55 storm protection and restoration, and the public convenience and 56 necessity, the future undergrounding of electrical distribution 57 lines must focus primarily on distribution laterals. 58 (d) When considering incurring additional transmission and 59 distribution storm protection costs, it is in the public 60 interest that public utilities mitigate additional costs to 61 utility customers to the extent possible. 62 (2) As used in this section, the term: 63 (a) “Commission” means the Florida Public Service 64 Commission. 65 (b) “Public utility” or “utility” has the same meaning as 66 in s. 366.02(1). 67 (c) “Transmission and distribution storm protection plan” 68 means a public utility plan for the overhead hardening of 69 electrical transmission or distribution facilities, the 70 undergrounding of electrical distribution facilities, and 71 increased vegetation management. 72 (d) “Transmission and distribution storm protection plan 73 costs” means the reasonable and prudent costs of an approved 74 transmission and distribution storm protection plan. 75 (e) “Vegetation management” means actions that a public 76 utility takes to prevent or curtail vegetation from interfering 77 with the utility’s infrastructure, including, but not limited 78 to, mowing the vegetation, applying herbicides, trimming trees, 79 and removing trees or brush near electrical transmission and 80 distribution facilities. 81 (3)(a) As part of the storm hardening plan required by 82 commission rule, a public utility shall submit to the commission 83 for review and approval a transmission and distribution storm 84 protection plan. Such plans must be updated at least every 3 85 years after the date of their initial approval and must be 86 submitted to the commission for approval or modification. 87 (b) To maintain reasonable electric rates, a public 88 utility’s transmission and distribution storm protection plan 89 may not include the undergrounding of more than 4 percent of the 90 utility’s lateral distribution lines per year. 91 (c) A public utility shall include in its transmission and 92 distribution storm protection plan any information required by 93 commission rule to address the electric infrastructure 94 improvements proposed, as well as sufficient information to 95 demonstrate that the transmission and distribution storm 96 protection plan costs are not included in the utility’s base 97 rates, as required in paragraph (5)(c). 98 (4) The commission shall approve or modify, as appropriate, 99 pursuant to chapter 120, the public utility’s transmission and 100 distribution storm protection plan within 6 months after the 101 utility initially submits the plan. The commission shall 102 consider both of the following in its approval process: 103 (a) Whether the transmission and distribution storm 104 protection plan enhances reliability, strengthens 105 infrastructure, and reduces restoration costs and outage times 106 in a prudent, practical, and cost-efficient manner. 107 (b) Whether transmission and distribution storm protection 108 of electric infrastructure is feasible, reasonable, or practical 109 in certain areas of the public utility’s service territory, 110 including, but not limited to, flood zones and rural areas. 111 (5)(a) The commission shall conduct an annual proceeding to 112 allow utilities the opportunity to justify and recover 113 transmission and distribution storm protection plan costs 114 through a storm protection cost recovery clause. 115 (b) All actions taken in the implementation of a 116 transmission and distribution storm protection plan are 117 considered prudent, but a party may challenge the prudence of 118 the costs associated with such actions. 119 (c) The annual transmission and distribution storm 120 protection plan costs recoverable through the storm protection 121 cost recovery clause may not be included in the utility’s base 122 rates and must be allocated to customer classes pursuant to the 123 rate design most recently approved by the commission. 124 (d) If the costs recoverable through a storm protection 125 cost recovery clause are capital expenditures, a public utility 126 may recover, through the storm protection cost recovery clause, 127 the annual depreciation on such costs, calculated at the 128 utility’s then-current approved depreciation rates, and a return 129 on the depreciated balance of the costs calculated at the 130 utility’s weighted average cost of capital using the return on 131 equity last approved by the commission in a rate case or 132 settlement order. 133 (6)(a) If the benefits of a tax reform result in a return 134 to customers as a reduction in a utility’s electric rates, the 135 annual amounts that would otherwise have been returned to 136 customers must be recorded in a storm protection reserve 137 account. Such account must be used to fund the full commission 138 approved annual revenue requirements of the storm protection 139 cost recovery clause. 140 (b) An actual or projected surplus in the storm protection 141 reserve account at the end of a calendar year must be returned 142 to customers through the storm protection cost recovery clause. 143 If the utility projects that the balance of its storm protection 144 reserve will be insufficient to cover the projected full revenue 145 requirements in any calendar year, the commission must establish 146 a factor that, taking into account projected sales, is intended 147 to recover the required cumulative annual revenue for 148 transmission and distribution storm protection costs, net of the 149 amount funded by the storm protection reserve account. The cost 150 recovery factor must be based on costs incurred by, as well as 151 projections of, the transmission and distribution storm 152 protection plan costs for the prospective recovery period. 153 (c) The storm protection cost recovery clause cost-recovery 154 factor must provide for periodic true-up of the utility’s actual 155 transmission and distribution storm protection plan costs 156 relative to the projections under paragraph (b). The true-up 157 must occur at least annually and must further require that any 158 refund or collection made as part of the true-up process include 159 interest based on the 30-day commercial paper rate, as specified 160 by commission rule. 161 (7) The commission shall adopt rules to implement and 162 administer this section. 163 Section 2. This act shall take effect July 1, 2019.