OV OFF. OF ENV. AFF.
JANCE a. ALVCo
BRIAN H, DI EAU
LIOABETI C. SOWMAN
PtTIE C. CUNNINNAMN
RALMP A. OM6CO
TMONAB M. OtROSE
WILLIAM N. GREEN
WADE L. HOPPING
FRANK E. MATTHEWS
nICnHAR D. MCLSON
MICHAEL P. PETROVICH
DAVID L. POWELL
WILLIAM 0. PRESTON
DOUGLAS S. ROBLERT
oARY P. SAMS
ROBERT P. 6MITH
CHERYL 0. BTUART
13:49 No.008 P.01
HOPPING GREEN SAMS & SMITH
ATTORNEYS AND COUNSELORS
113 SOUTH CALHOUN STREET
POST OFrICi BOX e*Be
TALLAHASSEE. FLORIDA 323 a
FAX 4(04) CZ4-B51I
FAX 4904) 4i6-3415
Writer's Direct Dial No.
January 13, 1997
GART K, HUNTER. JR.
JONATHAN T. JOMN=ON
nROINT A. MANNING
ANGELA R. MORRISON
OARY V. PERIO
KAREN M. PCTERBON
R. SCOTT RUTH
W. STCVC *YCES
T. KENT WETHMRELL, II
W. RoaECR POKES
Mr. Dan Stengle
Office of the Governor
Tallahassee, Florida 32399
.3 r W
J021 ft '11
OP fte Opr
As I previously informed you, 1 represent the Florida Water Works Association who
believe that the Public Service Commission is currently impeding their efforts to install adequate
reuse facilities and perform other environmentally required desirable tasks by the way they are
fixing rates. Attached is a proposed amendment which would correct the problem yet leave the
PSC in ultimate charge of rate making. We believe that the language is consistent with the
recommendations of the Governor's Water Supply Task Force. This afternoon 1 will be meeting
individually with several Public Service Commissioners to give them a heads-up about this
If you have any questions or comments about it, please let me know as soon as possible.
Assuming no violent reaction against this language, I will be seeking sponsors for the
introduction of it during the 1997 regular session. Your comments and thoughts are solicited.
I hope the administration will support this approach not only in principal but the words which
we have written on the attached draft.
Wade L. Hopping .
cc: Estus Whitfidd
GOV OFF. OF ENV. AFF. TEL:1-904-922-62C
PSC AMENEMETS TO WATER LEQZSLATION
January 10, 1997
Section 1. Section 367.021, Florida Statutes, is amended by
adding new subsection (14):
(14) "Environmentally required costs" means all reasonable
expenses and a fair return on the investments required to comply
with federal, state, and local environmental laws and regulations.
The commission shall be bound by the determinations, permitting,
and enforcement decisions of the United States Environmental
Protection Agency, the Department of Environmental Protection or a
Water Management District, or other entity with jurisdiction to
require compliance, as to (a) the need for, capacity of, and type
of facilities, including land and processes, required for
compliance, and (b) the need for, capacity of, and type of
facilities, including land and processes, to be included as part of
any reuse system or project.
Section 2. Subsection (10) is added to section 367.022,
Florida Statutes, to read:
367.022 Exemptions.--The following are not subject to
regulation by the commission as a utility nor are they subject to
the provisions of this chapter, except as expressly provided:
(10) Any person providing only non-potable water for
irrigation purposes in a yeographiq area where potable water
13:4, .,0.008 P.02
GOV OFF. OF FNV. AFF. TEL:1-904-922-62C0 Jan 12,97 13:4.,.uu0
service is available from a governmental utility and who has
provided such irrigation service continually since January 1. 1985.
Section 3. Section 367.081(2), Florida Statutes, is amended
367.081 Rates; procedure for fixing and changing.-
(2) (a) The commission shall, either upon request or upon its own
motion, fix rates which are just, reasonable, compensatory, and not
unfairly discriminatory. In every such proceeding, the commission
shall consider the value and quality of the service and the cost of
providing the service, which shall include, but not be limited to,
debt interest; the requirements of the utility for working capital;
maintenance, depreciation, tax, and operating expenses incurred in
the operation of all property used and useful in the public
service; and a fair return on the investment of the utility in
property used and useful in the public service. However, the
commission shall not allow the inclusion of
contributions-in-aid-of-construction in the rate base of any
utility during a rate proceeding; and accumulated depreciation on
such contributions-in-aid-of-construction shall not be used to
reduce the rate base, nor shall depreciation on such contributed
assets be considered a cost of providing utility service. The
eemmissiea- shal- &lo -oonaider -the investment- f- -the -ut-ility- in
land-aequired -or- -fav-i-l--ite- constructed-er- s -be con-et-roted- in- the
publ ie intreet- -iteiM n -a reasonable- -trae -in the- -future-,- -ao te
AAA ~ h-)
13:5z ., -.008 P.04
TEL:1-904-922-62GC Jan 12,97
For purposes of such proceeding, to determine whether
utility property is "used and useful in the public service." the
commission shall apnlv the following :
a. All utility property needed to serve current customers
shall be considered fully used and useful in the public service.
b. All utility property needed to serve future customers no
later than 5 years from the commission's final action on a rate
request as provided in paragraph (6) below shall be considered
fully used and useful in the public service.
j. All utility property needed to serve future customers 5
to 10 years from the commission's final action on a rate request as
provided in Paragraph (6) below shall be rebuttably presumed to be
used and useful in the public service.
d. All utility property needed to serve future customers 10
to 15 years from the commission's final action on a rate request as
Provided in Paragraph (6) below shall be rebuttably presumed not to
be used and useful in the public service.
e. All utility property needed to serve future customers 15
or more years after the commission's final action on a rate request
as provided in paragraph (6) below shall not be considered used and
useful in the public service for purposes of ouch nroceedina.
2. Notwithstanding the provisions of sub-paraaraph 1. above.
the commission shall approve rates for service that allow a utility
GOV OFF. OF ENV. AFF.
13:5' .,\.008 P.05
TEL:1-904-922-62GC Jan 12,97
GOV OFF. OF ENV. AFF.
to recover the full amount of environmentally required costs from
(b) In establishing initial rates for a utility, the commission
may project the financial and operational data as set out in
paragraph (a) to a point in time when the utility is expected to be
operating at a reasonable level of capacity.
Section 4. Sections 367.0817(2) and (3), Florida Statutes,
are amended to read:
(2) The commission shall review the utility's reuse project
plan and shall determine whether the projected costs are prudent
and the proposed rates are reasonable and in the public interest.
The commission shall issue a proposed agency action order to
approve or disapprove the utility's reuse project plan. The
commission shall enter its vote on the proposed agency action
within 5 months of the date of filing. If the commission's
proposed agency action is protested, the final decision shall be
rendered within 8 months of the date the protest is filed. Any
proceeding conducted to consider the utility's reuse project plan
under this section shall be a limited proceeding in accordance with
s. 367.0822 and shall only consider matters related to the
utility's proposed reuse project.
(3) All prudent costs of a reuse project shall be recovered
in rates for service from current customers in this limited
nrocaedina. The Legislature finds that reuse benefits water,
wastewater, and reuse customers. The commission shall allow a
GOV OFF. OF ENV. AFF.
13:5- ,o .008 P.06
TEL:1-904-922-620O Jan 12,97
utility to recover the ll costs of a reuse project from the
utility's current water, wastewater, or reuse customers or any
combination thereof as-deemed -approepriate -by -bAeoommi-eedo in the
Section 5. Section 367.171(6), Florida Statutes, is amended
(6) Any county in which utilities as herein defined were
regulated by the commission on or after January 1, 1980, which
subsequently cease to be so regulated, shall, within 90 days of the
cessation of commission regulation or the effective date of this
ac., adopt and follow as minimum standards of regulation the
provisions of sections 367.021. section 367.081, except for
paragraph (4)(a), section 367.0817. and section 367.082, except
that the word "commission" shall be read as "the governing body of
such county" when the context implies or admits. The authorized
rate of return shall be no less than the weighted cost of the
capital of the utility, including debt and equity.
Section 6. Section 367.171(8), Florida Statutes, is amended
(8) Each county which is excluded from the provisions of this
chapter shall regulate the rates of all utilities in that county
which would otherwise be subject to regulation by the commission
pursuant to sections 367.021 and 367.0817 and section 367.081(1),
(2), (3), and (6). The county shall not regulate the rates or
TEL:1-904-922-6200 Jan 12,97
charges of any system or facility which would otherwise be exempt
from commission regulation pursuant to section 367.022(2). For
this purpose the county or its agency shall proceed as though the
county or agency is the commission.
GQV PFF. OF ENV. AFF.
13:52 No.008 P.07