Bill Summary – FastDemocracy

The Florida Senate
                  BILL ANALYSIS AND FISCAL IMPACT STATEMENT
              (This document is based on the provisions contained in the legislation as of the latest date listed below.)
                     Prepared By: The Professional Staff of the Committee on Regulated Industries
BILL:           SB 1548
INTRODUCER:     Senator Gruters
SUBJECT:        Energy
DATE:           January 26, 2024                REVISED:
           ANALYST                    STAFF DIRECTOR                 REFERENCE                                 ACTION
1. Schrader                         Imhof                                 RI              Pre-meeting
2.                                                                       ATD
3.                                                                        FP
  I.    Summary:
        SB 1548 amends several sections of Florida law and creates new statutory provisions relating to
        energy. In summary, the bill:
         Prohibits the Florida Department of Transportation (FDOT) from assigning or transferring its
           permitting rights across any transportation right-of-way operated by the FDOT to a third
           party or governmental entity that does not operate the transportation right-of-way without
           prior approval of the Legislature.
         Prohibits the FDOT and local government entities from requiring a utility within a public
           road operated by the authority to be relocated on behalf of any other third-party or
           governmental agency project related to a separate public or private road or transportation
           corridor.
         Requires the Public Service Commission (PSC) to create targeted storm reserve amounts for
           public utilities.
         Directs the Florida Department of Commerce (FDC) to expand eligibility for the Low-
           Income Energy Assistance Program (LIHEAP) to persons in certain federal disability
           programs.
         Directs the FDC to develop a process for automated LIHEAP payments to home energy
           suppliers.
         Directs the PSC to conduct, or cause to be conducted, a study of small nuclear reactors.
        The bill has an effective date of July 1, 2024.
BILL:     SB 1548                                                                                                      Page 2
    II.    Present Situation:
           Disposal of Real Property Acquired for Transportation Purposes
           The Florida Department of Transportation (FDOT) acquires land throughout the state to utilize
           for transportation facilities1 and secure rights-of-way through purchase, lease, exchange,
           donation, or other types of acquisition.2 The FDOT is authorized to convey acquired property it
           determines not to be needed for the construction, operation, and maintenance of a transportation
           facility.3
           Generally, the FDOT may dispose of the property through negotiations, sealed competitive bids,
           auctions, or any other means the FDOT deems to be in its best interest.4 A sale of unneeded
           property may not occur at a price less than the FDOT’s current estimate of value except that:
            If the property has been donated to the state for transportation purposes and a transportation
              facility has not been constructed for at least 5 years, plans have not been prepared for the
              construction of such facility, and the property is not located in a transportation corridor, the
              governmental entity may authorize reconveyance of the donated property for no
              consideration to the original donor or the donor’s heirs, successors, assigns, or
              representatives.5
            If the property is to be used for a public purpose, including, but not limited to, affordable
              housing as provided in ss. 125.379 and 166.0451, F.S., the property may be conveyed
              without consideration to a governmental entity.6
            If the property was originally acquired specifically to provide replacement housing for
              persons displaced by transportation projects, the FDOT may negotiate for the sale of such
              property as replacement housing.7
            If the FDOT determines the property requires significant costs to be incurred or that
              continued ownership of the property exposes the FDOT to significant liability risks, the
              FDOT may use the projected maintenance costs over the next ten years to offset the
              property’s value in establishing a value for disposal of the property, even if that value is
              zero.8
            If, at the discretion of the FDOT, a sale to a person other than an abutting property owner
              would be inequitable, the property may be sold to the abutting owner for the FDOT’s current
              estimate of value.
1
  “Transportation facility” means any means for the transportation of people or property from place to place which is
constructed, operated, or maintained in whole or in part from public funds. The term includes the property or property rights,
both real and personal, which have been or may be established by public bodies for the transportation of people or property
from place to place. See s. 334.03(30), F.S.
2
  Section 337.25(1), F.S.
3
  Section 337.25(4), F.S.
4
  Id.
5
  Section 337.25(4)(a), F.S.
6
  Section 337.25(4)(b), F.S.
7
  Section 337.25(4)(c), F.S.
8
  Section 337.25(4)(d), F.S.
BILL:   SB 1548                                                                                                  Page 3
         Payment for Moving or Removing Utilities and Exceptions
         Section 337.403(1), F.S., requires utilities to bear the cost of relocating utility facilities placed
         upon, under, over, or within the right-of-way limits of any public road or publicly owned rail
         corridor which is found by the authority9 to be unreasonably interfering in any way with the
         convenient, safe, or continuous use, or the maintenance, improvement, extension, or expansion,
         of such public road or publicly owned rail corridor. Utility owners, upon 30 days’ notice, must
         eliminate the unreasonable interference within a reasonable time or an agreed time, at their own
         expense. Numerous exceptions are provided to this provision, and are located in s.
         337.403(1)(a)-(j), F.S. The requirements of 337.403(1), F.S., apply even if the utility facility is
         within a public utility easement and the utility has a franchise agreement with the authority,
         absent some other agreement to the contrary regarding costs of relocation.10
         Florida Public Service Commission
         The Florida Public Service Commission (PSC) is an arm of the legislative branch of
         government.11 The role of the PSC is to ensure Florida’s consumers receive utility services,
         including electric, natural gas, telephone, water, and wastewater, in a safe, affordable, and
         reliable manner.12 In order to do so, the PSC exercises authority over public utilities in one or
         more of the following areas: rate base or economic regulation; competitive market oversight; and
         monitoring of safety, reliability, and service issues.13
         Electric and Gas Utilities
         The PSC monitors the safety and reliability of the electric power grid14 and may order the
         addition or repair of infrastructure as necessary.15 The PSC has broad jurisdiction over the rates
         and service of investor-owned electric and gas utilities.16 However, the PSC does not fully
         regulate municipal electric utilities (utilities owned or operated on behalf of a municipality) or
         rural electric cooperatives. The PSC does have jurisdiction over these types of utilities with
         regard to rate structure, territorial boundaries, bulk power supply operations, and planning.17
         Municipally-owned utility rates and revenues are regulated by their respective local governments
         or local utility boards. Rates and revenues for a cooperative utility are regulated by their
         governing body elected by the cooperative’s membership.
         Municipal Electric and Gas Utilities, and Special Gas Districts, in Florida
         A municipal electric or gas utility is an electric or gas utility owned and operated by a
         municipality. Chapter 366, F.S., provides the majority of electric and gas utility regulations for
9
  As used in ss. 337.401-337.404, F.S., “the authority” means the FDOT and local government entities.
Section 337.401(1)(a), F.S.
10
   Lee County Electric Coop., Inc. v. City of Cape Coral, 159 So. 3d 126, 130 (Fla. 2d DCA 2014).
11
   Section 350.001, F.S.
12
   See Florida Public Service Commission, Florida Public Service Commission Homepage, http://www.psc.state.fl.us (last
visited Jan. 25, 2024).
13
   Florida Public Service Commission, About the PSC, https://www.psc.state.fl.us/about (last visited Jan. 25, 2024).
14
   Section 366.04(5) and (6), F.S.
15
   Section 366.05(1) and (8), F.S.
16
   Section 366.05, F.S.
17
   Florida Public Service Commission, About the PSC, supra note 13.
BILL:   SB 1548                                                                                                           Page 4
         Florida. While ch. 366, F.S., does not provide a definition, per se, for a “municipal utility,”
         variations of this terminology and the concept of these types of utilities appear throughout the
         chapter. Currently, Florida has 33 municipal electric utilities that serve over 14 percent of the
         state’s electric utility customers.18 Florida also has 27 municipally-owned gas utilities and four
         special gas districts.19
         Rural Electric Cooperatives in Florida
         At present, Florida has 18 rural electric cooperatives, with 16 of these cooperatives being
         distribution cooperatives and two being generation and transmission cooperatives.20 These
         cooperatives operate in 57 of Florida’s 67 counties and have more than 2.7 million customers.21
         Florida rural electric cooperatives serve a large percentage of area, but have a low customer
         density. Specifically, Florida cooperatives serve approximately 10 percent of Florida’s total
         electric utility customers, but their service territory covers 60 percent of Florida’s total land
         mass. Each cooperative is governed by a board of cooperative members elected by the
         cooperative’s membership.22
         Public Electric and Gas Utilities in Florida
         There are four investor-owned electric utility companies (electric IOUs) in Florida: Florida
         Power & Light Company (FPL), Duke Energy Florida (Duke), Tampa Electric Company
         (TECO), and Florida Public Utilities Corporation (FPUC).23 In addition, there are eight investor-
         owned natural gas utility companies (gas IOUs) in Florida: Florida City Gas, Florida Division of
         Chesapeake Utilities, FPUC, FPUC-Fort Meade Division, FPUC-Indiantown Division, Peoples
         Gas System, Sebring Gas System, and St. Joe Natural Gas Company. Of these eight gas IOUs,
         five engage in the merchant function servicing residential, commercial, and industrial customers:
         Florida City Gas, FPUC, FPUC-Fort Meade Division, Peoples Gas System, and St. Joe Natural
         Gas Company. Florida Division of Chesapeake Utilities, FPUC-Indiantown Division, and
         Sebring Gas System are only engaged in firm transportation service.24
         Electric IOU and Gas IOU rates and revenues are regulated by the PSC and the utilities must file
         periodic earnings reports, which allow the PSC to monitor earnings levels on an ongoing basis
         and adjust customer rates quickly if a company appears to be overearning.25
18
   Florida Municipal Electric Association, About Us, https://www.flpublicpower.com/about-us (last visited Jan. 25, 2024).
19
   Florida Public Service Commission, 2023 Facts and Figures of the Florida Utility Industry, pg. 13, Apr. 2023 (available
at: https://www.floridapsc.com/pscfiles/website-
files/PDF/Publications/Reports/General/FactsAndFigures/April%202023.pdf). A “special gas district” is a dependent or
independent special district, setup pursuant to ch. 189, F.S., to provide natural gas service. Section 189.012(6), F.S., defines a
“special district” as “a unit of local government created for a special purpose, as opposed to a general purpose, which has
jurisdiction to operate within a limited geographic boundary and is created by general law, special act, local ordinance, or by
rule of the Governor and Cabinet.”
20
   Florida Electric Cooperative Association, Members, https://feca.com/members/ (last visited Jan. 25, 2024).
21
   Florida Electric Cooperative Association, Our History, https://feca.com/our-history/ (last visited Jan. 25, 2024).
22
   Id.
23
   Florida Public Service Commission, 2023 Facts and Figures of the Florida Utility Industry, supra note 19, at 5.
24
   Id at 14. Firm transportation service is offered to customers under schedules or contracts which anticipate no interruption
under almost all operating conditions. See Firm transportation service, 18 CFR s. 284.7.
25
   PSC, 2022 Annual Report, p. 6, (available at: https://www.floridapsc.com/pscfiles/website-
files/PDF/Publications/Reports/General/AnnualReports/2022.pdf) (last visited Jan. 25, 2024).
BILL:   SB 1548                                                                                                Page 5
         Section 366.041(2), F.S., requires public utilities to provide adequate service to customers. As
         compensation for fulfilling that obligation, s. 366.06, F.S., requires the PSC to allow the IOUs to
         recover honestly and prudently invested costs of providing service, including investments in
         infrastructure and operating expenses used to provide electric service.26
         Storm Reserves for Public Utilities
         Storm reserves are a form of self-insurance used by utilities to collect in advance from ratepayers
         costs to recover from storms. Such reserves are an accounting technique allowing utilities to
         reduce the immediate impact of storms on ratepayers and spread them over time.27
         In Florida, the PSC allows utilities to establish storm reserve accounts and fund them according
         to PSC rule and orders of the PSC. Many storm restoration cost orders at the PSC include
         provisions for impacted utilities to replenish their storm reserve accounts.28
         Under PSC rule, the types of storm-related costs that can be charged to a storm reserve include:
          Additional contract labor hired for storm restoration activities incurred in any month in
            which storm damage restoration activities are conducted, that are greater than the actual
            monthly average of contract labor costs charged to operation and maintenance expense for
            the same month in the three previous calendar years;
          Logistics for providing meals, lodging, and linens for tents and other staging areas;
          Transportation of crews and other personnel for storm restoration;
          Vehicles specifically rented for storm restoration activities;
          Waste management costs specifically related to storm restoration activities;
          Rental equipment specifically related to storm restoration activities;
          Materials and supplies used to repair and restore service and facilities to pre-storm condition,
            excluding those costs that normally would be charged to non-cost recovery clause operating
            expenses in the absence of a storm;
          Payroll and payroll-related costs for utility personnel included in storm restoration activities
            incurred in any month in which storm damage restoration activities are conducted, that are
            greater than the actual monthly average of payroll and payroll-related costs charged to
            operation and maintenance expense for the same month in the three previous calendar years;
          Fuel company and contractor vehicles used in storm restoration activities incurred in any
            month in which storm damage restoration activities are conducted, that are greater than the
            actual monthly average of fuel costs charged to operation and maintenance expense for the
            same month in the three previous calendar years;
          Public service announcements regarding key storm-related issues, such as safety and service
            restoration estimates;
26
   Id.
27
   Energy South, Enabling Energy Resiliency Through a Storm Reserve Fund, https://medium.com/@EnergySouth/enabling-
energy-resiliency-through-a-storm-reserve-fund-add806aa0b59, Aug. 19, 2015 (last visited Jan. 25, 2024).
28
   See, for example, In Re: Petition for Ltd. Proceeding for Recovery of Incremental Storm Restoration Costs Related to
Hurricane Idalia, by Duke Energy Florida, LLC. in Re: Petition for Ltd. Proceeding for Recovery of Incremental Storm
Restoration Costs Related to Hurricanes Elsa, Eta, Isaias, Ian, Nicole, & Tropical Storm Fred, by Duke Energy Florida,
LLC., 2023 WL 8879275 (Dec. 19, 2023); In Re: Petition for Recovery of Costs Associated with Named Tropical Sys. During
the 2018-2022 Hurricane Seasons & Replenishment of Storm Reserve, by Tampa Elec. Co., 2023 WL 8119138 (Nov. 20,
2023); and In Re: Petition for Rate Increase by Florida City Gas., 2023 WL 3966515 (June 9, 2023).
BILL:   SB 1548                                                                                             Page 6
            Vegetation management expenses specifically related to storm restoration activities incurred
             in any month in which storm damage restoration activities are conducted, that are greater
             than the actual monthly average of vegetation management costs charged to operation and
             maintenance expense for the same month in the previous three calendar years; and
            Other costs or expenses not specifically identified above that are directly and solely
             attributable to a storm restoration event.29
         Low-Inc