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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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November 21, 2023
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TO:
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Office of Commission Clerk (Teitzman)
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FROM:
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Office of the General Counsel (Rubottom,
Dike) SMC
Deputy Executive Director,
Administrative (Lynn) ACL
Division of Economics (McNulty, Hampson, Kunkler)
EJD
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RE:
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Docket No. 20230115-EU – Proposed amendment
of Rule 25-6.0131, F.A.C., Regulatory Assessment Fees; Investor-owned
Electric Companies, Municipal Electric Utilities, Rural Electric
Cooperatives.
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AGENDA:
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12/05/23 – Regular Agenda – Rule Proposal – Interested Persons May
Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Administrative
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CRITICAL DATES:
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None
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SPECIAL INSTRUCTIONS:
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None
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Case Background
Rule
25-6.0131, Florida Administrative Code (F.A.C.), Regulatory Assessment Fees; Investor-owned
Electric Companies, Municipal Electric Utilities, Rural Electric Cooperatives,
implements the Commission’s statutory mandate to collect a fee, known as a
regulatory assessment fee (RAF), from each regulated electric company under the
jurisdiction of the Commission as provided in Sections 350.113 and 366.14,
Florida Statutes (F.S.). Specifically, the rule establishes filing requirements
and a rate at which the RAF should be calculated for investor-owned electric
utility companies (IOUs), municipal electric utilities, and rural electric
cooperatives.
Statutory
History
In
Section 350.113, F.S., the Legislature established RAFs as the exclusive
funding mechanism for the Commission. Each
utility or company regulated by the Commission is required to pay a RAF, and collected
RAFs are credited to the Florida Public Service Regulatory Trust Fund (PSC
Trust Fund). Monies from the PSC Trust Fund are to be
used in the operation of the Commission and are withdrawn according to the
Commission’s budget that is set annually by the Legislature.
Each
utility or company under the Commission’s jurisdiction is required to pay a RAF
every six months, and the RAF must be based upon the company’s gross operating
revenues for the preceding six-month period. The Legislature did not prescribe the rate
at which the RAF must be calculated from a company’s revenues, but it did
provide statutory guidance the Commission must follow in establishing and
managing RAF rates through rulemaking. First, the RAF for each industry must,
to the extent practicable, be related to the cost of regulating that industry;
the Commission must therefore endeavor to establish a RAF rate for each
regulated industry that is sufficient to cover the cost of regulating the
utilities or companies in that industry. Second, the RAF rate may not exceed a
maximum rate established by the Legislature for each industry. Third, RAFs collected from one industry
may not be used to subsidize the regulatory costs of another industry.
History
of Commission RAFs for Electric Utilities
Prior
to 1980, the Legislature controlled RAFs directly by statute and set a separate
RAF rate for each industry regulated by the Commission. However, in 1980 the Legislature enacted a
statute that provided a maximum RAF rate for each industry and left it to the
Commission to establish specific RAF rates through agency rulemaking. To implement this change enacted by the
Legislature in the statutory scheme related to RAFs, the Commission adopted its
original RAF rules, including for electric utilities, in 1980 through emergency
rulemaking and adopted them as permanent rules later
that year.
Rule
25-6.0131, F.A.C., was adopted by the Commission in 1983 to replace the
original RAF rules for electric utilities. The RAF rate for municipal electric
utilities and rural electric cooperatives has not been updated since it was
originally established by the Commission in 1980. The RAF rate for IOUs has been amended
five times since it was adopted in 1980, but has not been updated since 1999.
Temporary
Exemption from SERC and Legislative Ratification Requirements
In 2010, the
Legislature amended Section 120.541, F.S., to require agencies to prepare a
statement of estimated regulatory costs (SERC) for any rule that will have an
adverse impact on small business or that is likely to directly or indirectly
increase regulatory costs in excess of $200,000 in the aggregate within one
year after implementation. Since the statute was amended in 2010, Section
120.541, F.S., has also required legislative ratification of all proposed
agency rules that exceed $1 million in regulatory cost impact within a 5-year
period after implementation. During the 2023 legislative session,
however, the Legislature granted the Commission a one-year exemption from the
SERC and ratification requirements for rules amended to increase RAF rates.
Because
of the size of the industries regulated by the Commission, any meaningful
increase in RAFs will trigger ratification. The lengthy time and uncertainty
introduced by the legislative ratification requirement, coupled with the time
required for rulemaking and the additional time required to realize the
collection of RAFs, have prevented the Commission from managing RAF revenues
through rulemaking in any industry since 2010.
Other Procedural
Issues
A Notice of Rule
Development for Rule 25-6.0131, F.A.C., appeared in the September 12, 2023,
edition of the Florida Administrative Register, Vol. 49, No. 177. Staff held a
rule development workshop on September 27, 2023. Participating in the workshop
were the Office of Public Counsel and Tampa Electric Company. No post-workshop
comments were filed.
This
recommendation addresses whether the Commission should propose the amendment of
Rule 25-6.0131, F.A.C., Regulatory Assessment Fees; Investor-owned Electric
Companies, Municipal Electric Utilities, Rural Electric Cooperatives. The
Commission has jurisdiction pursuant to Sections 120.54, 350.113, 366.05, and 366.14,
F.S.
Discussion
of Issues
Issue 1:
Should the Commission propose the amendment of Rule 25-6.0131,
F.A.C., Regulatory Assessment Fees; Investor-owned Electric Companies,
Municipal Electric Utilities, Rural Electric Cooperatives?
Recommendation:
Yes, the Commission should propose the amendment of
Rule 25-6.0131, F.A.C., as set forth in Attachment A. The Commission should
also certify that Rule 25-6.0131, F.A.C., is a rule the violation of which
would be a minor rule violation pursuant to Section 120.695, F.S. (Rubottom, Lynn,
McNulty).
Staff Analysis:
Rule 25-6.0131, F.A.C., implements the Commission’s
statutory mandate to establish and collect RAFs from electric utilities. The
purpose of this rulemaking is to update the rate at which RAFs are calculated
for electric utilities to accurately reflect the cost of regulation.
Current Situation and Future Projections
The Commission’s overall cost of regulation has exceeded
its collected RAF revenues in seven of the last eleven years. In recent years,
Commission management has used internal cost controls to mitigate the
difference in revenues and expenditures. However, recent legislative changes
and mandates have increased the Commission’s costs,
and staff projects that without any offsetting increase in revenues, the annual
deficit will increase significantly over the next three to five years. (Table
1-1).
Table 1-1
Source: Commission Staff
Projected deficits in the electric industry are
particularly concerning. Regulation of electric IOUs accounts for the largest
share of the Commission’s total regulatory workload and therefore of the
Commission’s total expenditures. Looking at FY 26/27, staff calculates that the
projected cost of regulating IOUs will be $18,233,324 and that the projected
RAF revenues from IOUs, based on the current RAF rate of 0.00072, will be
$15,473,309, resulting in a projected shortfall of $2,760,015.
When the Commission’s revenues consistently do not match
expenditures, the PSC Trust Fund is depleted over time as deposits fail to
replace the agency’s annual operating budget appropriated by the Legislature.
Under current RAF rates and the projected annual budget deficit described above,
staff projects that the PSC Trust Fund balance will decline substantially over
the next few years. (Table 1-2).
Table 1-2
Source:
Commission Staff
The current status and near-term projections of the PSC
Trust Fund balance and of the Commission’s annual revenues and expenditures in
the electric industry demonstrate a need to raise agency revenues by increasing
RAF rates for IOUs.
Calculation of Recommended RAF Rates for Electric
Companies
In order to calculate a new RAF rate that would address
the projected shortfall in the Commission’s budget for the electric industry,
staff first determined how much additional revenue is needed to cover the cost
of regulation. For IOUs, and separately for municipal and cooperative utilities,
staff looked at projections for FY 26/27 and performed the following
calculation to determine the projected revenue deficit:
Cost of Regulation
– (Utility Gross Revenues x Current RAF Rate) = Revenue Deficit
For electric IOUs in FY 26/27, staff projected a cost of
regulation of $18,233,324 and utilities’ aggregate gross revenues of $21,490,706,756.
Applying the current RAF rate of 0.00072, staff projected a deficit of
$2,760,015. Staff
calculated that increasing the RAF rate for electric IOUs from 0.00072 to
0.000848 would result in an increase of nearly $2.8 million in Commission revenues
for FY 26/27, covering the projected shortfall.
For municipal and cooperative electric utilities in FY
26/27, staff projected a cost of regulation of $849,208 and utilities’
aggregate gross revenues of $8,573,862,477. Applying the current RAF rate of
0.00015625, staff projected a surplus of $490,458. Staff
calculated that decreasing the RAF rate for municipal electric utilities and
rural electric cooperatives from 0.00015625 to 0.00009905 would result in a
decrease of nearly $500,000 in Commission revenues for FY 26/27, avoiding the
projected surplus.
Therefore, staff recommends that the RAF rate for electric
IOUs be increased from 0.00072 to 0.000848. The new rate would be well below
the statutory RAF cap of 0.00125,
and the impact of the new RAF rate on individual IOU customers, based on a
residential monthly bill for 1,000 kilowatt-hours (kWh), would come to an
increase of approximately $0.02. (Table 1-3 below).
Staff also
recommends that the RAF rate for municipal electric utilities and rural electric
cooperatives be decreased from 0.00015625 to 0.00009905. The new rate will be
below the statutory RAF cap of 0.00015625,
and the impact of the new RAF rate on individual municipal and cooperative
customers, based on a residential monthly bill for 1,000 kWh, would come to a
decrease of approximately $0.01. (Table 1-3 below).
Table 1-3
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IOUs
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Munis/Coops
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Statutory RAF Cap
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0.00125
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0.00015625
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Current RAF Rate
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0.00072
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0.00015625
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Recommended RAF Rate
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0.000848
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0.00009905
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Impact on Customers
(Based on Residential Bill at 1,000 kWh)
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$0.02
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-$0.01
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Source: Commission Staff
Recommended Amendments to Rule 25-6.0131, F.A.C.
Staff recommends that the Commission amend Rule 25-6.0131,
F.A.C., including the forms incorporated by reference, as set forth in
Attachment A. Updated RAF rates, as detailed above, are the only substantive
amendments staff is recommending to Rule 25-6.0131, F.A.C. Other recommended
amendments to the rule are non-substantive, designed to provide consistency and
clarity to the rule language.
Minor Violation Rules Certification
Pursuant
to Section 120.695, F.S., for each rule filed for adoption, the agency head
shall certify whether any part of the rule is designated as a rule the
violation of which would be a minor violation. Rule 25-6.0131, F.A.C., is on
the Commission’s minor violation rule list because violation of the rule would
not result in economic or physical harm to a person or adverse effects on the
public health, safety, or welfare and would not create a significant threat of
such harm. The proposed amendments to the rule would not alter the likelihood
or risk of such harms in the event of a violation. Thus, if the Commission
proposes the amendment, staff recommends that the Commission certify that Rule
25-6.0131, F.A.C., is a rule the violation of which would be a minor violation
pursuant to Section 120.695, F.S.
Statement of Estimated Regulatory Costs
As discussed above, rules adopted by the Commission during
the 2023-2024 fiscal year to implement Sections 350.113 and 366.14, F.S., are
not subject to the SERC requirement of Section 120.541, F.S.
Therefore, no SERC has been prepared.
Conclusion
Based on the foregoing, staff recommends that the
Commission propose the amendment of Rule 25-6.0131, F.A.C., as set forth in
Attachment A. In addition, staff recommends that the Commission certify that
Rule 25-6.0131, F.A.C., is a rule the violation of which would be a minor rule
violation pursuant to Section 120.695, F.S. If the Commission proposes the
amendment, staff notes that each electric company’s next RAF payment following
the effective date of the amended rule will be calculated using the new RAF rate
applied to the company’s gross operating revenues for the entire six-month
period in which the amended rule becomes effective.
Issue 2:
Should this docket be closed?
Recommendation:
Yes, if no requests for hearing or JAPC comments are
filed, the rule should be filed for adoption with the Department of State, and
the docket should be closed. (Rubottom).
Staff Analysis:
If no requests for hearing or JAPC comments are
filed, the rule should be filed with the Department of State for adoption, and
the docket should be closed. Staff notes that if there are no requests for
hearing or JAPC comments filed, the rule will be filed for adoption on
approximately January 9, 2024, and will become effective on approximately
January 29, 2024.
25-6.0131
Regulatory Assessment Fees; Investor-owned Electric Companies, Municipal
Electric Utilities, Rural Electric Cooperatives.
(1) As applicable and as provided in
Section 350.113, F.S., and Section 366.14, F.S., each company, utility,
or cooperative shall remit to the Commission a fee based upon its gross
operating revenue. This fee shall be referred to as a regulatory assessment
fee. Regardless of the gross operating revenue of a company, utility, or
cooperative, a minimum annual regulatory assessment fee of $25 shall be
imposed.
(a) Each investor-owned electric
company shall pay a regulatory assessment fee in the amount of 0.000848 .00072
of its gross operating revenues derived from intrastate business,
excluding sales for resale between investor-owned electric companies public
utilities, municipal electric utilities, and rural electric cooperatives or
any combination thereof.
(b) Each municipal electric utility and
rural electric cooperative shall pay a regulatory assessment fee in the amount
of 0.00009905 0.00015625 of its gross operating revenues derived
from intrastate business, excluding sales for resale between investor-owned
electric companies public utilities, municipal electric utilities,
and rural electric cooperatives or any combination thereof.
(2) Regulatory assessment fees are due
each January 30 for the preceding period or any part of the period from July 1
until December 31, and on July 30 for the preceding period or any part of the
period from January 1 until June 30.
(3) If the due date falls on a
Saturday, Sunday, or a holiday, the due date is extended to the next business
day. If the fees are sent by registered mail, the date of the registration is
the United States Postal Service’s postmark date. If the fees are sent by
certified mail and the receipt is postmarked by a postal employee, the date on
the receipt is the United States Postal Service’s postmark date. The postmarked
certified mail receipt is evidence that the fees were delivered. Regulatory
assessment fees are considered paid on the date they are postmarked by the
United States Postal Service or received and logged in by the Commission’s
Division of Administrative and Information Technology Services in Tallahassee.
Fees are considered timely paid if properly addressed, with sufficient postage
and postmarked no later than the due date.
(4) Commission Form PSC/ECO PSC/AFD
68 (12/23) (01/99), entitled “Investor-Owned Electric Utility
Regulatory Assessment Fee Return,”; is available at [new
hyperlink] http://www.flrules.org/Gateway/reference.asp?No=Ref-02610;
Commission Form PSC/ECO PSC/AFD 69 (12/23) (07/96),
entitled “Municipal Electric Utility Regulatory Assessment Fee Return,”
is available at [new hyperlink] http://www.flrules.org/Gateway/reference.asp?No=Ref-02611;
and Commission Form PSC/ECO PSC/AFD 70 (12/23) (07/96),
entitled “Rural Electric Cooperative Regulatory Assessment Fee Return,”
is available at [new hyperlink] http://www.flrules.org/Gateway/reference.asp?No=Ref-02612.
These forms are incorporated into this rule by reference and may be also be
obtained from the Commission’s Division of Administrative and Information
Technology Services. The failure of a company, utility, or
cooperative to receive a return form shall not excuse the company,
utility, or cooperative from its obligation to timely remit the
regulatory assessment fees.
(5) Each company, utility, or
cooperative shall have up to and including the due date in which to:
(a) Remit the total amount of its fee;
or
(b) Remit an amount which the company,
utility, or cooperative estimates is its full fee.
(6) Where the company, utility, or
cooperative remits less than its full fee, the remainder of the full fee shall
be due on or before the 30th day from the due date and shall, where the amount
remitted was less than 90 percent of the total regulatory assessment fee,
include interest as provided by paragraph (8)(b) of this rule.
(7) A company, utility, or
cooperative may request either a 15-day or a 30-day extension of its due
date for payment of regulatory assessment fees or for filing its return form by
submitting to the Division of Administrative and Information Technology
Services Commission Form PSC/AIT 124 (12/11), entitled “Regulatory
Assessment Fee Extension Request,” which is incorporated into this rule by
reference and is available at: http://www.flrules.org/Gateway/reference.asp?No=Ref-02620.
This form may also be obtained from the Commission’s Division of Administrative
and Information Technology Services.
(a) The request for extension must be
received by the Division of Administrative and Information Technology Services
at least two weeks before the due date.
(b) The request for extension will not
be granted if the company, utility, or cooperative has any unpaid
regulatory assessment fees, penalties, or interest due from a prior period.
(c) Where a company, utility, or
cooperative receives an extension of its due date pursuant to this rule, the
entity shall remit a charge as set out in Section 350.113(5), F.S., in addition
to the regulatory assessment fee.
(8) The delinquency of any amount due
to the Commission from the company, utility, or cooperative pursuant to the
provisions of Section 350.113, F.S., and this rule, begins with the first
calendar day after any date established as the due date either by operation of
this rule or by an extension pursuant to this rule.
(a) A penalty, as set out in Section
350.113(4), F.S., shall apply to any such delinquent amounts.
(b) Interest at the rate of 12 percent
per annum shall apply to any such delinquent amounts.
Rulemaking Authority
350.127(2), 366.05 FS. Law Implemented 350.113, 366.14 FS. History–New 5-18-83,
Amended 2-9-84, Formerly 25-6.131, Amended 6-18-86, 10-16-86, 3-7-89, 2-19-92,
7-7-96, 1-1-99, 5-7-13, .
