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2014 Legislation Affecting Water Utilities

2014 Legislation Affecting Water Utilities

Chapter 2014-68, relating to water utilities was signed into law by Governor Rick Scott on June 13, 2014.  The law takes affect July 1, 2014.

The law amends Chapter 367 by creating two new statutes, 367.072, Petition to revoke certificate of authorization and 367.0812, Rate fixing; quality of water service as a criterion.  Section 367.072 authorizes the Florida Public Service Commission (FPSC or Commission) to revoke the certificate of a water utility regulated by the Commission upon petition by 65% of the customers of the service area covered by the certificate when water quality issues are presented and the FPSC finds it is in the best interests of the customers to revoke the certificate. The law provides the process for filing the petition and notifying the affected utility of the petition.  The petition must specify “each issue the customers have with the quality of service, each time the issue was reported to the utility and how long each issue has existed.”  If the issues identified in the petition support a reasonable likelihood that the utility is failing to provide quality water service the utility is prohibited from filing a rate case until the Commission has issued a final order on the petition.  In addressing the issues raised in the petition the affected utility is to address state and federal water quality standards and the relationship between the utility and its customers including information on customer complaints.  In deciding whether to dismiss the petition, require the utility to take steps to correct quality of water issues or revoke the utility’s certificate the Commission is to evaluate the quality of water service provided and any other factor the Commission deems relevant.  The Commission is required to adopt by rule the format of and requirements for a petition to revoke a certificate.

New section 367.0812 adds the requirement that the Commission consider “the extent to which the utility provides water service that meets secondary water quality standards as established by the Department of Environmental Protection” (DEP) in setting rates for a water utility.  The Commission is to consider testimony and evidence provided by customers and the utility, results of past tests by the county health department or DEP that measure compliance with secondary water standards, and customer complaints regarding secondary water standards that have been filed with the Commission, DEP, the respective local government, or a county health department over the last five years and a finding by DEP as to whether the utility failed to provide water service that meets secondary standards.  The Commission may consider results of any updated test.  The affected utility is to “create an estimate of the costs and benefits of a plausible solution to each issue identified by the Commission” and the utility is to meet with customers to discuss the estimated “costs and benefits of and time necessary for implementing a plausible solution.”  The utility is to inform the Commission if the utility and customers agree on a solution  to an issue and the cost of the solution, or if the customers and utility prefer a different solution and the cost of that preferred solution.  The Commission is authorized to require the utility to implement a solution that is in the best interests of the customers and provide for cost-recovery for that solution.  The Commission may also impose penalties for a utility’s failure to resolve water quality issues, which penalties include fines, a reduced return on equity, or a denial of all or part of a rate increase until the water quality is found to be satisfactory.  The Commission is authorized to adopt rules “to assess and enforce compliance” with section 367.0812.

The law also provides an appropriation to the Commission for three full-time positions to implement new section 367.0812.