Choctawhatchee Elec. Coop., Inc. v. Graham

• Court: Florida Supreme Court
• Writing for the Court: LABARGA
• Citation: Choctawhatchee Elec. Coop., Inc. v. Graham, 132 So.3d 208 (Fla. 2014)
• Decision Date: 09 January 2014
• Docket Number: No. SC11–1830.,SC11–1830.
• Parties: CHOCTAWHATCHEE ELECTRIC COOPERATIVE, INC., Appellant, v. Art GRAHAM, etc., et al., Appellees.

132 So.3d 208

CHOCTAWHATCHEE ELECTRIC COOPERATIVE, INC., Appellant,

v.Art GRAHAM, etc., et al., Appellees.

No. SC11–1830.

Supreme Court of Florida.

Jan. 9, 2014.

Norman H. Horton Jr. and Robert J. Telfer III of Messer, Caparello & Slef, P.A., Tallahassee, FL; Marsha E. Rule and Martin P. McDonnell of Rutledge, Ecenia & Purnell, P.A., Tallahassee, FL; and William B. Willingham and Michelle Hersehell of Florida Electric Cooperatives Association, Inc., Tallahassee, FL, for Appellants.

S. Curtis Kiser, General Counsel, Samantha M. Cibula, Attorney Supervisor, and Kathryn G.W. Cowdery, Senior Attorney of the Florida Public Service Commission, Tallahassee, FL; Steven R. Griffin, Jeffrey A. Stone, and Russell A. Badders of Beggs & Lane, LLP., Pensacola, FL, for Appellees.

LABARGA, J.

We review a decision of the Florida Public Service Commission (the Commission) relating to the service of a public utility providing electric service. We have jurisdiction. Seeart. V, § 3(b)(2), Fla. Const. The Commission settled a territorial dispute between two utilities: appellant Choctawhatchee Electric Cooperative, Inc. (CHELCO), and appellee Gulf Power Company (Gulf Power). CHELCO and Gulf Power each sought the right to provide electric service for Freedom Walk, a proposed multi-purpose development located in Okaloosa County. The Commission awarded Gulf Power the right to serve Freedom Walk. For the reasons explained below, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Freedom Walk is an approximately 179–acre proposed development within the city of Crestview in Okaloosa County. The development, owned by Emerald Coast Partners, LLC, was designated by local ordinance in 2007 as a Community Development District. The developer's plans for Freedom Walk include both residential and commercial establishments.

In 2010, CHELCO petitioned the Commission to resolve a territorial dispute between CHELCO and Gulf Power regarding the right to provide electric service to Freedom Walk. In 2011, the Commission held a hearing on the dispute, following which the Commission issued its order resolving the dispute in favor of Gulf Power.¹ In the order, the Commission concluded that because the multiple factors it considered were substantially equal, customer preference would determine the outcome of the dispute. The Commission concluded that customer preference favored Gulf Power and awarded Gulf Power the right to serve Freedom Walk. The Commission also determined that Gulf Power was entitled to a preference as an investor-owned utility.

On appeal, CHELCO challenges the Commission's findings and conclusions in four areas: (1) cost to provide service; (2) ability to provide service; (3) uneconomic duplication of facilities; and (4) customer preference as the determining factor. The Florida Electric Cooperatives Association (FECA) filed an amicus brief in support of CHELCO.

ANALYSIS

Standard of Review

CHELCO's appeal of the Commission's order invokes this Court's mandatory jurisdiction under article V of the Florida Constitution. Specifically, our mandatory jurisdiction includes review of actions by the Public Service Commission related to electric service. Seeart. V, § 3(b)(2), Fla. Const. As we fulfill our constitutional obligation, we are mindful of the scope of our review, and we afford deference to the Commission's findings. As we have consistently observed, “[c]ommission orders come to this Court clothed with the presumption that they are reasonable and just.” W. Fla. Elec. Coop. Ass'n v. Jacobs, 887 So.2d 1200, 1204 (Fla.2004) (citing Gulf Coast Elec. Coop. v. Johnson, 727 So.2d 259, 262 (Fla.1999)). Thus, CHELCO cannot prevail on appeal unless the Commission departed from the essential requirements of law. Id. (citing AmeriSteel Corp. v. Clark, 691 So.2d 473, 477 (Fla.1997)). We will not disturb the Commission's findings and conclusions if they are supported by competent substantial evidence in the record and are not clearly erroneous. Id.

Applicable Law

We now turn to the law that applies to the Commission's resolution of disputes between electric utilities. The jurisdiction of the Commission is set forth in chapter 366, Florida Statutes (2010), which governs public utilities. Specifically, the Commission's authority to settle territorial disputes such as the present one between CHELCO and Gulf Power is found in section 366.04(2), which provides that “the commission shall have power over electric utilities ... [t]o resolve, upon petition of a utility or on its own motion, any territorial dispute involving service areas between and among rural electric cooperatives, municipal electric utilities, and other electric utilities under its jurisdiction.” § 366.04(2)(e), Fla. Stat. (2010).

When resolving territorial disputes, the Commission must be especially mindful of its responsibility to avoid “further uneconomic duplication of generation, transmission, and distribution facilities.” § 366.04(5), Fla. Stat. (2010). Moreover, the Commission is guided by multiple factors that are set forth by statute and by administrative rule. The statutory factors, which are not exclusive, include “the ability of the utilities to expand services within their own capabilities and the nature of the area involved, including population, the degree of urbanization of the area, its proximity to other urban areas, and the present and reasonably foreseeable future requirements of the area for other utility services.” § 366.04(2)(e), Fla. Stat. (2010). Additionally, rule 25–6.0441, contained in the Florida Administrative Code, provides as follows:

25–6.0441. Territorial Disputes for Electric Utilities

....

(2) In resolving territorial disputes, the Commission may consider, but not be limited to consideration of:

(a) The capability of each utility to provide reliable electric service within the disputed area with its existing facilities and the extent to which additional facilities are needed;

(b) The nature of the disputed area including population and the type of utilities seeking to serve it, and degree of urbanization of the area and its proximity to other urban areas, and the present and reasonably foreseeable future requirements of the area for other utility services;

(c) The cost of each utility to provide distribution and subtransmission facilities to the disputed area presently and in the future; and

(d) Customer preference if all other factors are substantially equal.

Fla. Admin. Code R. 25–6.0441 (2010).

The Freedom Walk Dispute

Because the Commission determined that the factors it considered with respect to CHELCO and Gulf Power were substantially equal, it relied on customer preference to settle the dispute. CHELCO argues that certain factors were not substantially equal and that therefore, the Commission should not have reached the issue of customer preference. To the extent that the Commission did ultimately rely on customer preference, CHELCO also argues that the Commission erred when it determined that customer preference favors Gulf Power. As we evaluate CHELCO's claims, we stress the deference to which the Commission's order is entitled, and we emphasize that the Court will not substitute itself as the finder of fact. Indeed, as we observed in Chicken ‘ N’ Things v. Murray, 329 So.2d 302, 305 (Fla.1976), even when this Court differs with the Commission's view as to the effect of the evidence as a whole, an order will be upheld “so long as there is competent substantial evidence to support the orders.” We now address CHELCO's claims, beginning with the factors that CHELCO argues are not substantially equal. We then turn to the issue of customer preference.

Cost to Extend Service to Freedom Walk

CHELCO challenges the Commission's findings and conclusions related to the two utilities' costs to extend service to Freedom Walk. Rule 25–6.0441(2)(c) of the Florida Administrative Code provides that the Commission may consider “[t]he costs of each utility to provide distribution and subtransmission facilities to [Freedom Walk] presently and in the future.” As a part of this analysis, the Commission evaluated both CHELCO's and Gulf Power's costs to extend service to the Freedom Walk development.

The Commission concluded that CHELCO would not incur any cost to extend service to Freedom Walk apart from existing facilities and planned upgrades, and CHELCO does not challenge that conclusion. However, CHELCO does challenge the Commission's findings and conclusions as to Gulf Power's actual cost to extend service to Freedom Walk. Moreover, CHELCO argues that the difference in the two utilities' costs demonstrates that those costs are not substantially equal.

The parties agree that in order to provide service to Freedom Walk, Gulf Power would have to extend its existing three-phase utility line that runs along Old Bethel Road by 2,130 feet in order to reach the Freedom Walk area. The existing utility line would be extended at a cost of $89,738. Gulf Power offered testimony that this line extension project is the only investment or upgrade necessary to extend electric service to Freedom Walk that is independent of existing facilities and planned upgrades. Ultimately, the Commission determined that $89,738 is the total cost that Gulf Power would incur in order to extend service to Freedom Walk.

However, CHELCO contends that the Commission erred when it excluded a $40,000 transformer upgrade cost from Gulf Power's total cost to extend service to Freedom Walk. The record indicates that Gulf Power planned a large substation conversion project that would occur over the course of several years. One aspect of the project would upgrade Gulf Power's Airport Road substation. Although the Airport Road substation upgrade would eventually serve Freedom Walk, the completion of the conversion was not dependent on Gulf Power being awarded the right to serve the development. Gulf Power estimated that the Airport Road substation upgrade would happen between the years of 2011 an...