Florida high court reverses public utilities ruling

By Dee Thompson | Apr 7, 2017

TALLAHASSEE, Fla. -- The Florida Supreme Court has reversed a lower court’s ruling in a rate case involving the Florida Public Utilities Company (FPUC).

TALLAHASSEE, Fla. -- The Florida Supreme Court has reversed a lower court’s ruling in a rate case involving the Florida Public Utilities Company (FPUC).

The case is Citizens of the State of Florida v. Art Graham. Graham is chairman of the Florida Public Service Commission. FPUC makes wholesale purchase agreements with other electric utilities and purchases power from them. It doesn’t produce power.

In August 2016 FPUC “...entered into a settlement agreement with the Office of Public Counsel (OPC) in resolution of its then pending petition for an increase in base rates,” according to the Florida Supreme Court order

FPUC petitioned for a rate increase of power base rates in 2014. According to the Supreme Court opinion, “Section I of the settlement agreement prohibits FPUC from increasing its base rates thereafter until at least Dec. 31, 2016.”

However, contrary to that agreement, FPUC petitioned the OPC in September 2015, asking approval to increase rates in 2016 so it could recover costs of the construction of building a new connection with Florida Power and Light Company (FPL). That petition was approved all of the interconnection costs. Those costs were substantial, as the Supreme Court order notes: “Specifically, FPUC sought to initially recover $107,333 in depreciation expense, taxes other than income taxes, and a return on investment associated with the $3.5 million dollar cost of its interconnection project.”

In a reversal of that petition, the Florida Supreme Court stated “[1] the commission departed from the requirements of law by failing to properly consider and apply the terms of the settlement agreement with regard to FPUC’s petition, [2] the commission erred in concluding that such construction capital expenditures are capable of recovery through fuel clause proceedings, and [3] the settlement agreement prohibited FPUC from petitioning the commission for recovery of costs associated with the transmission interconnection project through fuel clause proceedings.” (Justia U.S. Law Opinion Summary)            

Kim Colton, an energy attorney based in Utah with Snell and Wilmer LLP and is not licensed in Florida, but notes “It really is not a lot of money. Our investor-owned utilities in Utah have hundreds of thousands of customers, so this dispute would not be a big deal unless it hit in the fifty to a hundred million dollar range.”

Colton told the Florida Record, “In my view it’s sort of unusual for a rate case to make it to a judicial review. The court talks extensively about its standard of review and says we’re going to defer a lot to the commission. They say that, and then they say ‘we can’t defer this far.’ there’s not a lot of money. It’s unusual for an appellate court to reach in and hear the case, and secondly to go ahead and overturn a commission.

“I am persuaded by the opinion. I am not persuaded by the dissent. Based on what is reported I think they had to go in and say there are at least two reasons to reverse.”

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