Committee approves PSC reform bill adding financial expertise and requiring stronger justification for rate orders

The Senate Regulated Industries Committee voted to report favorably CS for SB 354, a sweeping bill that would change the structure and some procedures of the Florida Public Service Commission (PSC) and add new requirements for how the PSC reviews utility rate requests and storm-protection plans.

Senator Gaetz, presenting the substitute bill, said the PSC has operated as a “black hole” that too often accepts utility justifications without adequate independent explanation. The substitute increases the number of commissioners from five to seven and requires that one commissioner be a certified public accountant and another be a chartered financial analyst. The substitute also directs the PSC to provide “reasoned explanations” and cite facts when accepting or denying settlement agreements, to benchmark and report annually on utility returns and executive compensation, and to limit when utilities may request changes to rates by requiring the PSC to establish a filing schedule.

Supporters told the committee the bill would add accountability and better equip the PSC to analyze sophisticated financial filings. Bill Herman, who identified himself as having more than 40 years of utility experience and an MBA with a concentration in finance, told the panel adding CPAs and financial expertise on the commission would “cut through the fog” of rate filings. AARP representatives urged tighter control of return-on-equity levels, citing national comparisons and high returns currently approved in Florida.

Opponents raised concerns about unintended consequences, particularly for nonprofit water and wastewater systems. Alicia Keeter, executive director of the Florida Rural Water Association, asked lawmakers to work with small systems to avoid creating a process that could expose smaller nonprofit systems to costly challenges and possible financial distress. Senator Gates said the substitute includes a local resolution process for complaints and retains an ability for the PSC to review and, in some cases, assert jurisdiction over nonprofit systems that do not meet clear governance standards.

The substitute also changes the PSC’s review of utility storm-protection plans by requiring a forecasted customer benefit that exceeds the forecasted cost and an assessment whether costs are “reasonable and prudent” given expected benefits. Supporters framed that as a needed check before hundreds of millions or billions in recovery funding is passed through rates.

After discussion the committee adopted the substitute and reported the bill favorably. The roll call recorded multiple affirmative votes and at least one negative vote; the committee printed CS for SB 354 as reported favorably.