Funding by electric utilities of local governmental solid waste facilities that generate electricity.

(1) LEGISLATIVE INTENT.—The Legislature declares that it is critical to encourage energy conservation in order to protect the health, prosperity, and general welfare of this state and its citizens. The Legislature also declares that the disposal of solid refuse is an important governmental obligation and that, if the disposal is not accomplished in a proper manner, such refuse poses a definite threat to the public health and welfare. The Legislature further declares that the combustion of refuse by solid waste facilities to supplement the electricity supply not only represents an effective conservation effort but also represents an environmentally preferred alternative to conventional solid waste disposal in this state. Therefore, the Legislature directs the Florida Public Service Commission to establish a funding program to encourage the development by local governments of solid waste facilities that use solid waste as a primary source of fuel for the production of electricity.

(2) DEFINITIONS.—As used in this section, the term:

(a) “Commission” means the Florida Public Service Commission.

(b) “Cost-effective” means that the cost of electrical capacity and energy produced by a solid waste facility financed and constructed pursuant to this section and delivered to an electric utility is no greater than the cost to that utility of producing an equivalent amount of capacity and energy had the alternative facility not been constructed and operated.

(c) “Electric utility” means any electric utility over which the commission has ratesetting authority.

(d) “Electrical component” means the turbine, generator, and associated transmission facilities of a solid waste facility.

(e) “Local government” means any municipality, county, consolidated government, or special district, authority, or commission, or any combination thereof.

(f) “Solid waste facility” means a facility owned or operated by, or on behalf of, a local government for the purpose of disposing of solid waste, as defined in s. 403.703, by any process that produces heat and incorporates, as a part of the facility, the means of converting heat to electrical energy in amounts greater than actually required for the operation of the facility.

(3) ADVANCE FUNDING PROGRAM.—

(a) Upon the petition of a local government, the commission shall have the authority, subject to the provisions of this section, to require an electric utility to enter into a contract with the local government to provide advanced funding to such government for the construction of the electrical component of a solid waste facility.

(b) A contract may not be entered into without the prior approval of the contract by the commission. The commission may approve or disapprove a contract, or it may modify a contract with the concurrence of the parties to the contract. When reviewing a contract, the commission shall consider those items it deems appropriate, including, but not limited to, the cost-effectiveness of the unit and the financial ability of the electric utility to provide the funding. If an electric utility and a local government cannot agree to the terms of a contract, or if it is shown that an electric utility has refused to negotiate a contract with a local government, the commission may prescribe the terms of the contract subject to the provisions of this section. The commission, however, shall not approve a contract which is violative of any of the following provisions:

1. If the commission determines that advanced-capacity payments to the local government during the period of construction are appropriate, such payments must be the lesser of:

a. The net present value of avoided-capacity cost for the electric utility calculated over the period of time during which the local government contracts to provide electrical capacity to the utility. The avoided-capacity cost is that cost established by the commission pursuant to s. 366.05(9) and in effect by commission rule at the time the order approving the contract is issued; or

b. An amount which is not more than the amount of the design costs of the electrical component of the solid waste facility as determined by the commission to be reasonable and prudent at the time of its order, or such portion thereof that is proportionate to the electrical capacity made available by contract to the electric utility.

2. If the commission determines that energy payments to the local government are appropriate, such payments may not be greater than the lesser of:

a. The hourly incremental energy rates of the electric utility as provided for in its approved tariffs over the period of the contract; or

b. The energy costs associated with the avoided-capacity costs of the electric utility as determined by the commission.

3. The electric utility must currently be providing electrical energy at retail within the geographic area of the local government or within the geographic area of one or more of the participating local governments.

4. The amount of financing, including all carrying costs, plus reasonable and prudent administrative costs incurred by the electric utility, must be recovered from the ratepayers of the electric utility pursuant to the provisions of the Florida Energy Efficiency and Conservation Act. An electric utility may not be required to pay to the local government any funding in excess of that collected from its ratepayers.

5. Funding of the electrical component of the solid waste facility must be cost-effective to the ratepayer and must not cause or contribute to the uneconomic duplication of electric facilities.

(4) ADVANCED-CAPACITY PAYMENTS AND REFUNDS.—The amounts required of an electric utility as advanced-capacity payments shall be paid to the local government unit during the construction of the project as established by the contract and approved by the order. Such payments are subject to being refunded in full or proportionately to the electric utility if the electrical component of the solid waste facility fails, for any reason, to operate at a 70-percent-capacity factor based on a 12-month rolling average. Any refund shall be calculated and paid annually. If during the life of the contract a solid waste facility is abandoned, closed down, or rendered illegal by applicable law, ordinance, or regulation, the full amount of any unrefunded advanced-capacity payments is subject to being refunded to the electric utility. Any refund by a local government of advanced-capacity payments to an electric utility shall be refunded by the electric utility to its customers as a credit shown on the customers’ bills as soon as is practicable after the receipt of the refunded portions. The obligation to make a refund is binding on the local government and its successors in interest. In the case of a combination of local governments, if such combination is dissolved or otherwise ceases to function, the refund is a legal and binding obligation of the individual local governments which participated in the formation of the combination, in proportion to their interests.

(5) ELECTRIC ENERGY PRICING PROGRAM.—

(a) The commission shall establish rules relating to the purchase of capacity or energy by electric utilities as defined in this section from solid waste management facilities. In setting these rates solid waste management facilities may be exempted from any risk-related consideration which the commission may use in determining the avoided-capacity cost applicable to other cogenerators, small power producers, or solid waste facilities that are not operated by, or on behalf of, a local government. Such exemptions are intended to foster the development of solid waste management facilities that generate electricity and provide incentives for the development of environmentally sound methods of disposing of solid wastes without imposing undue risk or cost to electric consumers in this state. The commission shall authorize levelized payments for purchase of capacity or energy from a local government solid waste management facility. Payments provided pursuant to this subsection are subject to the terms and conditions set out in subsection (4) for advanced-capacity payments, and such payments are recoverable from ratepayers of the electric utility as provided in subparagraph (3)(b)4.

(b) It is the intent of the Legislature to encourage parties to review contracts in effect as of October 1, 1988, to incorporate the applicable provisions of this section, subject to approval of the commission.

(6) EXEMPTIONS.—A new solid waste facility, as defined in this section, not greater than 75MW, or a solid waste facility expansion of not greater than 50MW, shall be exempt from the need determination process outlined in s. 403.519.

(7) RULES.—The commission shall adopt all rules necessary to implement this section.