This week the House Energy and Utilities Subcommittee heard a presentation by Public Service Commissioner Julie Imanuel Brown regarding the Study Committee on Investor Owned Utilities.   The issues and recommendations from the Study Committee Report are summarized as follows: 

Issue:  Inability of small utilities to take advantage of quantity discounts for equipment and materials.

Recommendations: 

  • Legislative direction for DMS to authorize investor-owned utilities as eligible users under state purchasing contracts
  • That Florida Rural Water Association develop an online exchange for new and/or used equipment, materials and supplies

Issue:  Inability of small utilities to attract capital at reasonable cost to fund aging infrastructure replacements ad to comply with water quality standards.

Recommendations: 

  • That Legislature opens the availability of the State Revolving Fund (SRF) to all investor-owned water utilities.
  • That DEP investigate the possibility of streamlining the SRF process.
  • That Legislature amends §367.081(4)(b) and the PSC amends its rules to allow pass-through of loan service fees related to loans for infrastructure needs for existing customers
  • That the Legislature send a memorial to Congress encouraging action to relax restrictions on tax-exempt private activity bonds (PABs) for water and wastewater infrastructure projects, and to allow investor-owned utilities access to wastewater loan programs. 
  • Increase the allocation of PABs in Florida to increase allocation of water and wastewater projects.

Issue:  Small investor-owned utilities do not have tax exemptions or incentives that government-owned or non-profit utilities enjoy.

Recommendations: 

  • Extend ad valorem and property tax exemptions to investor-owned water and wastewater utilities
  • Extend sales tax exemptions to investor-owned water and wastewater utilities

Issue: Since many resellers are exempt from regulation and cannot recover the cost of meter reading or billing, they are often reluctant to install meters or measure service.

Recommendation: 

  • PSC-exempt resellers should be allowed to charge up to 9% to recover metter reader and billing costs, while retaining exempt status. 

Issue:  Availability of affordable and accessible financing

Recommendation:  Statutory authorization for PSC rulemaking to create infrastructure repair and replacement reserve account. 

Issue:  Rate case expenses, amortized over a four-year term begin to “pancake” when a utility files more than one rate case in a four year period.   All rate case expenses are recoverable, offering no incentive to control expenses. 

Recommendations

  • PSC prohibit recovery of rate case expenses in Staff Assisted Rare Cases (SARCs) prior to preliminary staff report.
  • Prohibit recovery of rate case expenses for more than one case at a time.
  • Prohibit recovery of rate case expenses in excess of approved increase minus rate case expense
  • PSC revise noticing requirement to inform customers of the expense reduction and provide the rate comparison that appears in the final rate case order.