Florida League of Cities

Municipal Utilities (Oppose) – Failed

CS/CS/HB 1277 (Busatta Cabrera) and SB 1510 (Brodeur) impose restrictions on the use of municipal water, wastewater, gas or electric utility revenues to fund general government services and impose restrictions on the imposition of water and wastewater extraterritorial surcharges. CS/CS/HB 1277 requires interlocal agreements for extraterritorial utility service (gas, electric, water and wastewater) to be written and provides that such agreements may not become effective until the provider municipality holds a joint public meeting with the governing body of the recipient jurisdiction. In addition, the bill requires a joint annual customer meeting between the providing municipality and the recipient jurisdictions’ governing bodies for the purpose of obtaining public input on utility matters. CS/CS/HB 1277 imposes a 10% cap of gross utility revenues on any utility enterprise fund transfers to the general fund. Beginning November 2024, municipal utilities providing extraterritorial services are required to submit an annual report to the Public Service Commission with information about the scope and nature of the services. Beginning January 2025, the Public Service Commission is required to aggregate the information submitted by municipal utilities and provide an annual report to the Legislature. SB 1510 specifies that the portion of utility revenues transferred to the general fund may not exceed the transfer rates specified in the bill. The specified transfer rates are based on the average midpoints of the rates of return on equity approved by the Public Service Commission for investor-owned utilities. The bill requires further reductions in the allowable transfer rate based on the percentage of the utility’s retail customers located outside the municipality’s boundaries. The bill further specifies that these reductions do not apply if the utility service is governed by a utility authority board that, through the election of voting members from outside the municipal boundaries, provides for proportionate representation of customers located outside the municipal boundaries. With respect to extraterritorial surcharges, CS/CS/HB 1277 and SB 1510 eliminate the first 25% extraterritorial surcharge that may be imposed without a public hearing. The bills eliminate the second 25% surcharge that may be imposed after a public hearing. In addition, the bills provide that rates, fees and charges that may be imposed on extraterritorial customers shall not exceed 25% (reduced from the 50% allowed under current law) of the total amount the municipality charges customers served within the municipality for corresponding service. The effective date of the bills is July 2025. (O’Hara)