Florida Public Service Commission native order document 01147-2024

FILED 3/13/2024
DOCUMENT NO. 01147-2024
FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
DOCKET NO. 20240022-WS	In re: Proposed Rule 25-30.0371, Acquisition
Adjustments. 	ORDER NO. PSC-2024-0066-NOR-WS
_______________-..11 ISSUED: March 13, 2024
The following Commissioners participated in the disposition of this matter:
BY THE COMMISSION
MIKE LA ROSA, Chairman
ART GRAHAM
GARY F. CLARK
ANDREW GILES FAY
GABRIELLA PASSIDOMO
NOT ICE OF PROPOSED RULE
NOTICE is hereby given that the Florida Public Service Commission, pursuant to Section
120.54, 	Florida 	Statutes, 	has 	proposed 	the 	amendment 	of 	Rule 	25-30.0371 , 	Florida
Administrative Code, relating to water and wastewater utility acquisition adjustments.
The attached Notice of Proposed Rule appeared in the March 13, 2024 edition of the
Florida Administrative Register (Vol. 50/ 51 ).
Requests for hearing on the proposed rule, information regarding the statement of
estimated regulatory costs, or proposals for a lower cost regulatory alternative must be provided
in writing and received by the Office of Commission Clerk, Florida Public Service Commission,
2540 Shumard Oak Blvd., Tallahassee, FL 32399-0862, no later than April 3, 2024.

ORDER NO. PSC-2024-0066-NOR-WS
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By ORDER of the Florida Public Service Commission this 13th day of March, 2024.
DDS
ADAMJ.
Commission C
Florida Publi c Service Commission
2540 Shumard Oak Boulevard
Tallahassee, Florida 32399
(850) 413-6770
www.floridapsc.com
Copies furnished: 	A copy of this document is
provided to the parties of record at the time of
issuance and, if applicable, interested persons.

ORDER NO. PSC-2024-0066-NOR-WS
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PUBLIC SERVICE COMMISSION
RULE NO .: 	RULE TITLE:
Notice of Proposed Rule
25-30.0371 	Acquisition Adjustments
PURPOSE AND EFFECT: To amend the rule to update and clarify the rule to set fo 1ih the
Commission's policy on acquisition adjustments and establish a process whereby a water or
wastewater utility can petition for an acquisition adjustment for a non-viable or viable utility and
what the Commission will consider when evaluating the utili ty's petition.
SUMMARY: The an1endment substantially rewrites the cunent rule, providing: revised and new
definitions; general filing instructions; factors considered in determining whether to grant an
acquisition adjustment; what must be included in the contents of the petition; establishment of
when amortization period begins; recognition of Commission' s authority to review acquisition
adjustment if customer benefits do not materialize or subsequently change; eliminates negative
acquisition adjustment from being included in rate base; incorporated form; and establishment of
notice requirements.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND
LEGISLATIVE RATIFICATION:
The Agency has determined that this will not have an adverse impact on small business or likely
increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one
year after the implementation of the rule. A SERC has been prepared by the Agency.
The SERC examined the factors required by Section 120.541 (2), F.S., and concluded that the
rule will not have an adverse impact on economic growth, business compe ti tiveness, or small
business and that transactional costs are ant icipated to be minimal after implementation of the
rule amendment.
The Agency has determined that the proposed rule is not expected to require legislative
ratifica ti on based on the statement of estimated regulatory costs or if no SERC is required, the
information expressly relied upon and described herein:
Any person who wishes to provide in formation regarding a statement of estimated regulatory
costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within
21 days of this notice.
RULEMAKING AUTHORITY: 350.127(2), 367 .1 21(1)(±) F.S.
LAW IMPLEMENTED: 367.071(5), 367.081(2)(a), (b) F.S.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL
BE SCHEDULED AND ANNOUNCED TN THE FAR.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Douglas
Sunshine, dsunshin@psc.state.fl.us, Office of General Counsel, 2540 Shumard Oak Blvd,
Tallahassee, FL 32399-0850, (850)413-6199.
THE FULL T EXT OF T HE PROPO SED RULE IS:
Substantial rewording of Rule 25-30.0371 follows. See Florida Administrative Code for present
text.
25-30.0371 Acquisition Adju stments.
(1) Definitions. For the purpose of this rule. the following definitions apply:

ORDER NO. PSC-2024-0066-NOR-WS
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(a) "Acquisition adjustment" means the difference between the purchase p1ice of utility
system assets to an acquiring utility and the net book value of the acquired utility's assets.
(b) "Good cause" means a showing of financial hardship, unforeseen events. or other events
outside the utility's control.
(c) " Positive acquisition adjustment" means the purchase price is greater than the net book
value.
(d) "Negative acquisition adjustment" means the purchase price is less than the net book
value.
(e) "No n-viable utility" means a utility that meets either of the following subparagraphs:
1. A utility that is currently unable or is projected to be unable to provide and maintain safe,
adequate. and reliable service and facilities to its customers over the 5-year period following the
date of acquisition due to:
a. Failure to comply with or a history of enforcement or compliance actions bv federal, state,
or local regulatory agencies based on violations of primary or exceedance of secondary water
quality standards or other health, safety, and environmental standards; and
b. Insufficient investment, repair, maintenance of assets or an inability to acquire and
maintain adequate managerial, operational, financial, or technical capabilities to ensure safe and
reliable service to its customers; or 	2. A utility that is insolvent, i.e.. unable to pay
debts.
(f) " Viable utility" means all utilities that are not non-viable as defined in paragraph (1 )(e) of
this rule.
(2) Petition. A utility that acquires another utility may petition the Commission to establish
an acquisition adjustment under either subsection (3) or subsection (4) of this rule to in clude
some or all of a positive acquisition adjustment in the acquired utility's rate base. A utility may
seek approval of a positive acquisition adjustment at the time the utilitv seeks approval to
transfer the certificate of authorization or anytime within 3 years of the issuance date of the
Commission order approving the transfer of the certificate of authorization. The utility may
request an extension of the 3-year period. which must include a statement of good cause. The
petition for a positive acquisition adjustment may be made as a separate filing or as part of a rate
proceeding.
(3) Positive Acquisition Adjustments for Non -Viable Utility.
(a) A full or partial positive acquisition adjustment will be allowed if it is demonstrated that
the acquired utility meets the definition of non-viable utility under paragraph ( 1)(e) of this rule:
that the purchase was made as part of an arms-length transaction; and that customers from the
acquired utility will benefit from the acquisition. In deterrnining whether the acquired utility
customers benefit, the Commission will consider the following factors:
1. Anticipated improvements in quality of service;
2. Anticipated improvements in compliance with water or wastewater regulatorv
requirements:
3. Anticipated impacts on the cost of providing service over the next 5 years from the date of
acquisition:
4. Anticipated cost efficiencies. including any economies of scale;
5. Ability to attract capital at reasonable cost; and
6. The professional and experienced managerial. financial, technical. and operational
resources of the acquiring utility.

ORDER NO. PSC-2024-0066-NOR-WS
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(b) Contents of Petition. The acquiring utility must file the following information in its
petition:
l. The amount of the acquisition adjustment requested;
2. The amortization period requested;
3. An explanation of how the acquisition was made as part of an arms-length transaction;
4. The contract of sale, including the estimated cost of the fees and transaction closing costs
to be incurred by the acquiring utility;
5. A calculation of the net book value of the acquired utility including the composite
remaining life of the assets purchased;
6. A statement as to whether the acquired utility is insolvent or unable to service its debt
obligations;
7. A description of the acquiring utility's manageriaJ, operational, financial, or technical
capabilities to fmnish and maintain safe and adequate service and facilities over the next 5 years
from the date of acquisition;
8. Any notices of violation, consent decrees or other regulatory actions issued by a federal,
state, regionaJ, or local agency regarding the provision of the acquired utilitv's water or
wastewater service over the past 5 years from the date of acquisition, including any notices of
violation of primary or notices of exceedances of secondary water quality standards;
9. The acquired utility's annual capital investments and operations and maintenance
expenses over the past 5 years from the date of acquisition, if existing:
I 0. Any planned infrastructure additions and maintenance by the acquiring utility to improve
the acquired utility's quality of service or compliance with environmental regulations;
11. Any engineering studies or appraisals the acquiring utility procured pertaining to the
purchase of the acquired utility;
12. The 5-year projected impact on the cost of providing service to the customers of the
utility system being acquired, including the impact of any operation and maintenance cost
savings and economies of scale expected to result from U1e acquisition transaction, the impact of
the cost of any plant infrastructure additions, and the impact of the acquisition adjustment; and
13. An explanation as to how the acqu iring utility has greater access to capital than the
acquired utility. if applicable.
(4) Positive Acquisition Adjustments for Viable Utility.
(a) A full or partial positive acquisition adjustment will be allowed if the acquiring utility
demonstrates that the purchase was made as part of an arms-length transaction and the
transaction incorporating the full or partial positive acquisition adjustment is projected to provide
a positive cumulative present value of the revenue requirements (CPVRR) customer benefit over
a 5-year period from the date of acquisition. If the CPVRR does not result in a positive customer
benefit over the 5-year period, the Commission will consider the following factors in
determ ining whether to allow a full or partial acquisition adjustment:
I. Anticipated improvements in quality of service and compliance with any regulatory
requirements;
2. Anticipated rate reductions or rate stability over the next 5 years from the date of
acquisition:
3. Anticipated cost savings;
4. Increased ability to attract capital at reasonable cost:
5. Lower overall cost of capital; and

ORDER NO. PSC-2024-0066-NOR-WS
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6. Additional professional and experienced managerial, financial. techrucaJ, and operational
resources.
(b) Contents of Petition. The acquiring utility must file the following information in its
petition:
1. The amount of the acquisition adjustment requested;
2. The amortization period requested;
3. An explanation of how the acquisition was made as patt of an arms-length transaction;
4. The contract of sale, including the estimated cost of fees and transaction closing costs to be
incurred by the acquiring utility:
5. A calculation of the net book value of the acquired utility including the composite
remaining life of the assets purchased;
6. A CPVRR in the form of a spreadsheet. Form PSC 1034 (3/24), entitled "Water and/or
Wastewater Utilities Cumulative Present Value of the Revenue Requirements for Acquisition
Adjustment Worksheet," which is incorporated by reference in this rule and is available at
[hyperlinkl, is an example CPVRR that may be completed and included in the acquiring utility 's
petition to comply with this subparagraph. The form may also be obtained from the
Commission's website, www.floridapsc.com:
7. An Excel spreadsheet with the data and information included in the CPVRR analysis with
the spreadsheet formulas intact;
8. All supporting data and assumptions used in the CPVRR spreadsheet;
9. A description of any anticipated improvements or planned infrastructure additions and
maintenance by the acquiring utility;
10. A description, including any supporting data, of any anticipated cost savings resulting
from the acquisition:
11. The 5-year projected rate impact on the customers of the utility system being acquired,
including the rate impact of any cost efficiencies and economies of scale ex pected to result from
the acquisition transaction, the rate impact of the cost of any plant infrastructure additions, and
the rate impact of the acquisition adjustment; and
12. Anv engineering studies or appraisals the acquiring utility procured pertaining to the
purchase of the acquired utility.
(5) Amo,tization Period for a Positive Acquisition Adjustment. Th e Commission will set the
amortization period in the order approving the positive acquisition adjustment. Amortization of
the acquisition adjustment will begin on the date of issuance of the order approving the positive
acquisition adjustment or on the date the sale closes, whichever occurs last.
(6) Nothing herein removes the Commission's existing authority to review a positive
acquisition adjustment if the Commission finds that customer benefits did not materialize or
subsequently changed within 5 years of the date of the order approving the positive acquisition
adjustment.
(7) Negative Acquisition Adjustment. A negative acquisition adjustment will not be included
in rate base.
(8) Notice. At the time the petition is filed with the Commission, the acquiring utility must
provide a draft notice for review by Commission staff. Commission staff will review the draft
notice within 7 days. Once staff has approved the notice. the acquiring utility must provide
notice by regular mail to the Office of Public Counsel and by regular mail or perso nal service to
each customer and owner of property located within the service area for both the acquiring utility

ORDER NO. PSC-2024-0066-NOR-WS
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and the utility being acquired, to the extent the utilities' customers are within the Commission's
jurisdiction. The notice required by this rule may be combined with the notice of Application for
Authority to Transfer issued pursuant to Rule 25-30.030, F.A.C., or for existing customers, the
notice may be included in their next bill. The notice must contain:
(a) Title: Notice of Utility's Petition to Establish an Acquisition Adjustment;
(b) A statement that the utility has filed a petition with the Commission to establish an
acquisition adjustment for either a viable or a non-viable utility system:
(c) The date the petition was filed with the Commission;
(d) The docket number associated with the petition;
(e) A statement of the 5-year projected rate impact or the anticipated effect of the requested
acquisition adjustment on rates for the next five years;
(t) A statement that the utility's petition is available on the Commission' s website:
(g) The acquiring utility's address, telephone number, and business hours; and
(h) A statement that any customer substantially affected by the petition may file a motion to
intervene in accordance with Rule 28-106.205, F.A.C.
Rulemaking Authority 350. 127(2), 367.1 2 / (J)(j) FS. l aw Implemented 367.071(5), 367.08!(2)(a), 367./2 / (l)(a). (b) FS.
Historyr-New 8-./-02, Amended I l -22 -1 0"-_
NAME OF PERSON ORIGINATING PROPOSED RULE: Mark Cicchetti
NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Florida Public
Service Commission
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: March 5, 2024
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: Vol. 49, No.
61 , March 29 , 2023