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 Rules
BILL: CS/SB 626
INTRODUCER: Regulated Industries Committee and Senator DiCeglie
SUBJECT: Broadband Internet Service Providers
DATE: April 4, 2023 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Schrader Imhof RI Fav/CS
2. Renner McKay CM Favorable
3. Schrader Twogood RC Favorable
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 626 amends s. 425.04, F.S., regarding the powers of rural electric cooperatives, to specify
that such cooperatives have the power to engage in the provision of broadband service. The bill
also creates a new s. 364.391, F.S., which requires that if a cooperative engages in the provision
of broadband service:
 All poles owned by that cooperative are subject to pole attachment regulation by the
Public Service Commission (PSC) under 366.04(8), F.S., as if the cooperative was a
public utility; and
 The PSC may access the books and records of the cooperative for the limited purpose of
exercising its pole regulatory authority. Such records would be subject to the same
confidentiality protection procedures as other records utilized in PSC proceedings.
The bill also provides that the rural electric cooperative pole attachment regulatory authority
established pursuant to the bill may not be construed to impair the contract rights of a party
to a valid rural electric cooperative pole attachment agreement in existence before July 1,
2023.
The bill has an effective date of July 1, 2023.
BILL: CS/SB 626 Page 2
II. Present Situation:
History of Rural Electric Cooperatives
Rural electric cooperatives are electric utilities that are owned by their consumer members.
These private companies are generally nonprofit, with their principal purpose being to deliver
electrical service to their members. Rural electric cooperatives are mostly located in rural
areas where, at least historically, the return on investment for building or installing electrical
infrastructure was not enough for investor-owned utilities to want to service them.1
Historically, rural homes, farms, and businesses were some of the last places to electrify in
the United States (U.S.). By the mid-1930’s, 90 percent of U.S. urban homes were
electrified,2 however, the opposite was true in rural areas—only one out of 10 rural homes
had electric service.3 This lack of electrical service deeply limited economic development in
rural areas of the country. Despite this impact, the costs to electrify most rural areas were
usually prohibitive and often thought not economically feasible.4 In the limited areas where
rural electric power was available, often the prices paid by such consumers were far higher
than those paid by their urban counterparts.
In 1935, Executive Order 7037, issued by President Franklin Roosevelt, created the Rural
Electrification Administration (REA). One year later, Congress passed the Rural
Electrification Act (Pub. L. 74–605), codifying the REA and creating a loan program to
encourage the growth of rural electrification. Even with these available federal loans,
established investor-owned utilities did not have much interest in building rural systems.
However, there was significant interest from farmer-based electric cooperatives.5 By 1939,
with assistance from REA funds, 413 rural electric cooperatives had been established in the
U.S.,6 and by 1950, 80 percent of U.S. farms had electric service.7
During a reorganization of the United States Department of Agriculture (USDA) in 1994, the
REA was replaced with the Rural Utilities Service, which still exists today. 8 According to the
National Rural Electric Cooperative Association (NRECA), now over 99 percent of U.S.
farms have electrical service.9 Rural electric cooperatives continue to be the most prevalent
way for consumers in rural areas to obtain electrical service.10
1
University of Wisconsin Center for Cooperatives, Research on the Economic Impact of Cooperatives, available at
https://reic.uwcc.wisc.edu/electric/ (last visited Mar. 24, 2023).
2
Id.
3
National Rural Electric Cooperative Association, History, available at https://www.electric.coop/our-organization/history
(last visited Mar. 24, 2023).
4
United States Department of Agriculture, Celebrating the 80th Anniversary of the Rural Electrification Administration, Feb.
21, 2017, available at https://www.usda.gov/media/blog/2016/05/20/celebrating-80th-anniversary-rural-electrification-
administration (last visited March 24, 2023).
5
National Rural Electric Cooperative Association, History, supra note 3.
6
University of Wisconsin Center for Cooperatives, supra note 1.
7
Celebrating the 80th Anniversary of the Rural Electrification Administration, supra note 4.
8
University of Wisconsin Center for Cooperatives, supra note 1.
9
National Rural Electric Cooperative Association, History, supra note 3.
10
United States Energy Information Administration, Today in Energy: August 15, 2019, available at
https://www.eia.gov/todayinenergy/detail.php?id=40913 (last visited March 24, 2023).
BILL: CS/SB 626 Page 3
Issues with Electrifying Rural Areas
The issues with electrifying rural areas of the U.S. have generally stemmed from lack of
population density and unique consumer demographics. One issue initially was the voltage of
distribution systems. The low voltage distribution systems used in urban areas would
experience significant and unacceptable voltage drop between the necessary distance runs
needed in rural areas. This problem was overcome by using a higher voltage distribution
network.11 The second issue, which is still present today, is the very different customer base
rural electric cooperatives service versus the rest of the electricity industry.
As of 2019, rural electric cooperatives averaged 7.98 customers per mile of line, as compared
with 32.4 customers per mile of line for the rest of the electricity industry. In addition, while
rural electric cooperatives have ownership of 42 percent of U.S. electricity distribution lines,
their electricity sales only represent 12 percent of the nation’s overall sales. Rural electric
cooperatives have a different customer mix as well. For rural electric cooperatives, 53
percent of their customers are residential, with the remainder being commercial, industrial,
and transportation customers—which generally have much higher energy consumption. For
the U.S. electric industry at-large, the percentage of residential customers is 38 percent.12
These factors lead to rural electric cooperatives receiving significantly less revenue per dollar
of capital investment in distribution. Rural electric cooperatives’ average revenue per mile of
distribution line is $19,135 (versus $79,298 for the rest of the electricity industry) and their
cost of distribution plant per customer is $4,219 (versus $3,698).13 Thus, on a per customer
basis, the distribution of electric power in rural areas is higher versus the rest of the industry.
Rural Electric Cooperatives in Florida
In 1937, the REA drafted the Electric Cooperative Corporation Act as a model state law for
states to adopt for the forming and operating of rural electric cooperatives. Florida’s first
distribution electric cooperatives were formed that same year.14 At that time, much of
Florida’s geographic territory lacked electrical service due to, like most of the U.S., the lack
of enough economic development to make providing service worthwhile for existing electric
companies.
At present, Florida has 18 rural electric cooperatives, with 16 of these cooperatives being
distribution cooperatives and two being generation and transmission cooperatives. These
cooperatives are represented by the Florida Electric Cooperative Association (FECA).15
These cooperatives operate in 57 of Florida’s 67 counties and have more than 2.7 million
11
University of Wisconsin Center for Cooperatives, supra note 1.
12
National Rural Electric Cooperative Association, Fact Sheet: February 2021, available at
https://www.cooperative.com/programs-services/bts/documents/data/electric-co-op-fact-sheet-update-february-2021.pdf (last
visited Mar. 24, 2023).
13
Id.
14
Seminole Electric Cooperative, Empowering our Community, available at https://www.seminole-electric.com/ (last visited
Mar. 24, 2023).
15
Florida Electric Cooperative Association, Members, available at https://feca.com/members/ (last visited Mar 24, 2023).
BILL: CS/SB 626 Page 4
customers.16 Much like other areas of the U.S., 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.17
Florida Public Service Commission
The Florida Public Service Commission (PSC) is an arm of the legislative branch of
government.18 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.19 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.20
The PSC monitors the safety and reliability of the electric power grid21 and may order the
addition or repair of infrastructure as necessary.22 The PSC has broad jurisdiction over the
rates and service of investor-owned electric utilities.23 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.24 Municipally owned utility rates and revenues are regulated by their respective
local governments. Rates and revenues for a cooperative utility are regulated by their
governing body elected by the cooperative’s membership.
Under ch. 364, F.S., telecommunications carriers in Florida are also subject to only limited
PSC regulation. During the 2011 legislative session, the “Regulatory Reform Act” (Act) was
passed and signed into law by the Governor, effective July 1, 2011.25 Under the Act, the
Legislature eliminated most of the PSC’s jurisdiction over telecommunications. However, the
PSC still:
 Maintains the authority to ensure that incumbent local exchange carriers meet their
obligation to provide unbundled access, interconnection, and resale to competitive local
exchange companies in a nondiscriminatory manner;
 Administers the system to provide Telecommunications Relay Services; and
16
Florida Electric Cooperative Association, Our History, available at https://feca.com/our-history/ (last visited Mar 24,
2023).
17
Id.
18
Section 350.001, F.S.
19
See Florida Public Service Commission, Florida Public Service Commission Homepage, available at
http://www.psc.state.fl.us (last visited Mar 24, 2023).
20
Florida Public Service Commission, About the PSC, available at https://www.psc.state.fl.us/about (last visited Mar 24,
2023).
21
Section 366.04(5) and (6), F.S.
22
Section 366.05(1) and (8), F.S.
23
Section 366.05, F.S.
24
Florida Public Service Commission, About the PSC, supra note 20.
25
Ch. 2011-36, Laws of Florida.
BILL: CS/SB 626 Page 5
 Oversees the Federal Lifeline Assistance program for Florida.26
Regulatory Assessment Fees
The PSC collects Regulatory Assessment Fees (RAFs) from all of the utilities under its
jurisdiction. RAFs, license fees, other fees, and any other charges collected by the PSC are
credited to the Florida Public Service Regulatory Trust Fund (Trust Fund).27 Florida law
generally directs the PSC to manage its trust fund in such a manner that each industry funds
its own regulation.28 While the PSC’s budget is set annually by the Legislature, as approved
by the Governor, Florida general revenue funds are not used to support the PSC’s regulatory
activities.
Rates for RAFs are set by PSC rule, subject to maximum rates established by statute. RAFs
are charged as a percentage of gross operating revenues derived from intrastate business,
subject to certain exclusions. Chart 1 below provides the current RAFs for Florida utilities,
by industry.
26
Florida Public Service Commission, About the PSC, supra note 20.
27
Section 350.113, F.S.
28
Specifically:
 Section 364.336(2) and (3), F.S., requires the PSC to reduce the RAFs for telecommunications industry after the
Regulatory Reform Act of 2011 to reflect the PSC’s reduced regulatory oversight of that industry;
 Section 367.145(3), F.S., requires that RAFs collected pursuant to the water and wastewater RAF collection
authorization may only be used to cover the cost of regulating water and wastewater systems. Also, fees collected under
the electricity utility industry, gas utility industry, and telecommunications industry RAF collection authorizations may
not be used to pay for the cost of water and wastewater regulation.
 Section 368.109, F.S., states that the RAFs set by the PSC for the natural gas transmission (i.e. natural gas pipeline)
industry must, to the extent practicable, be related to the cost of regulating that industry.
BILL: CS/SB 626 Page 6
Chart 1: Regulatory Assessment Fees by Florida Utility Industry
Utility Type Current RAF Statutory Maximum
29
Investor-owned Gas Utilities 0.5% 0.5%30
31
Municipal Gas Utilities 0.1919% 0.25%32
Natural Gas Transmission 0.25%33 0.25%34
Telecommunications 0.16%35 0.25%36
Companies
Water and Wastewater 4.5%37 4.5%38
Utilities
Investor-owned Electric 0.072%39 0.125%40
Utilities
Municipal Electric Utilities 0.015625%41 0.015625%42
and Rural Electric
Cooperatives
By a significant margin, municipal electric utilities and rural electric cooperatives have the
lowest RAF rates of all Florida utilities (the next closest is investor-owned electric utilities,
with RAF rates over 4.5 times that of municipal electric utilities and rural electric
cooperatives). These rates reflect the comparatively lower regulatory costs the PSC incurs in
regulating these types of utilities due, in large part, to the PSC having limited jurisdiction
over them.
Certificates of Authority
Section 364.33, F.S., specifies that a person may not provide telecommunications services to
the public without either a certificate of authority or a certificate of necessity. As part of the
Regulatory Reform Act, the PSC was directed to stop issuing certificates of authority after
July 1, 2011; however, existing certificates remain valid. Certificates of authority may be
transferred to said holder’s parent company, an affiliate, or another person holding a
certificate of necessity or authority (or such entity’s parent company or an affiliate) without
prior approval of the P