Local utilities, like Ocala Electric, could see more state regulation
City of Ocala Electric bills compared to other municipality-owned utilities as well as Investor Owned Utilities (IOU) in 2022.
Florida House and Senate members last week filed proposals that would increase state regulation of many municipal electric utilities.
The proposals would ramp up the Florida Public Service Commission’s regulation of municipal utilities that serve electric customers outside of city boundaries. While the commission has oversight of certain issues for municipal utilities, it does not regulate their rates.
Under the bills (HB 1331 and SB 1380), the commission would have power to regulate municipal utilities with customers outside city boundaries more like private utilities such as Florida Power & Light, Duke Energy Florida and Tampa Electric Co. The commission has authority over the private companies’ rates.
The bills emerged after a House panel in recent weeks raised concerns about municipal utilities that serve customers outside city limits, including whether cities are using too much money from the utilities to bolster their general funds. Residents who live outside municipal boundaries can’t vote for city officials.
“Obviously, the local governments really can utilize those funds that come in from the municipal utilities as a way to avoid raising taxes on their constituents because they’re raiding the piggy bank of the utility,” Rep. Wyman Duggan, R-Jacksonville, said during a meeting last month of the House Energy, Communications & Cybersecurity Subcommittee. “But … ultimately the bill will come due because money that wasn’t spent on upgrading the utility ultimately will have to be spent from somewhere.”
Rep. Chuck Clemons, R-Newberry, pointed to questions about financial management at Gainesville Regional Utilities, saying about 40 percent of its ratepayers live outside the Gainesville boundaries.
“The people that are funding this (electric system) bill, they’re beyond concerned, they’re becoming angry with the lack of fiscal responsibility running the local utility,” Clemons said. “Where do they turn for help? That’s my question.”
For the City of Ocala, almost 40% of their 53,788 customers live outside city limits.
Amy Zubaly, executive director of the Florida Municipal Electric Association, said in a statement last week that her organization is “reviewing the proposed legislation that would add additional state regulation to municipal utilities to determine its impact on our communities and the affordability of customers’ rates.” The state has 33 municipal electric utilities, including in cities such as Jacksonville, Orlando, Lakeland, Gainesville and Tallahassee.
“Our member utilities are reinvesting utility revenues into the community through system hardening and resiliency, and they provide direct services to their communities, from employees who volunteer to collect charitable donations to hosting community events to lighting ball fields and playgrounds,” Zubaly said. “Everything Florida’s municipal utilities do is centered on making their communities stronger and the quality of life better for their family, friends and neighbors.”
Jody Finklea, general counsel of the Florida Municipal Electric Association, told the House panel in February that the Public Service Commission already regulates municipal utilities on issues such as storm-system hardening and what is known as “rate structure.” That involves how rates are apportioned between different groups of customers, such as residential and commercial customers — but does not include setting the municipal utilities’ rates.
Finklea said municipal utilities can impose service taxes on people who live within the city boundaries and equivalent surcharges on electric customers outside the boundaries.
While both newly filed bills would lead to stepped-up regulation for municipal utilities, the House version would go further than the Senate proposal. As examples, it would place restrictions on such things as transfers of money to city general funds and could affect cities that own water or wastewater utilities.
Ocala Gazette staff contributed to this report.