Citizens of Fla. v. Fla. Pub. Serv. Comm'n

• Decision Date: 28 August 2014
• Docket Number: No. SC13–144.,SC13–144.
• Citation: 146 So.3d 1143
• Parties: CITIZENS OF the STATE of Florida, etc., Appellant, v. FLORIDA PUBLIC SERVICE COMMISSION, et al., Appellees.
• Court: Florida Supreme Court

146 So.3d 1143

CITIZENS OF the STATE of Florida, etc., Appellant

v.FLORIDA PUBLIC SERVICE COMMISSION, et al., Appellees.

No. SC13–144.

Supreme Court of Florida.

Aug. 28, 2014.

James Ray Kelly, Public Counsel, Joseph Allan McGlothlin, Associate Public Counsel, Charles John Rehwinkel, Deputy Public Counsel, and Patricia Ann Christensen, Associate Public Counsel, Office of Public Counsel, Tallahassee, FL, for Appellant.

S. Curtis Kiser, General Counsel, Samantha M. Cibula, Attorney Supervisor, and Rosanne Gervasi, Senior Attorney, Tallahassee, FL, for Appellee Florida Public Service Commission.

Jon Cameron Moyle, Jr., Moyle Law Firm, Tallahassee, FL, and Kenneth L. Wiseman and Mark F. Sundback, Andrews Kurth, L.L.P., Washington, District of Columbia, for Appellee Florida Industrial Power Users Group and South Florida Hospital and Health Care Association.

John T. Butler, Assistant General Counsel–Regulatory and María Jose Moncada, Principal Attorney, Florida Power and Light Company, Juno Beach, FL, and Alvin Bruce Davis and Raúl B. Mañón, Squire Sanders (US) LLP, Miami, FL, for Appellee Florida Power and Light Company.

Julie Nepveu, AARP Foundation Litigation, Washington, District of Columbia, and Jack L. McRay, AARP Florida, Tallahassee, FL, for Amicus Curiae AARP.

Opinion

LABARGA, C.J.

This case is before the Court on appeal from a decision of the Florida Public Service Commission (the Commission) relating to the rates of a public utility providing electric service. See In re Petition of Fla. Power & Light Co., Docket No. 120015–EI, Order No. PSC–13–0023–S–EI, 2013 WL 209584 (F.P.S.C. Jan. 14, 2013). We have jurisdiction. See art. V, § 3(b)(2), Fla. Const. Florida Power & Light (FPL) filed an application for a rate base increase pursuant to section 366.06(1), Florida Statutes (2012). Three intervenors to the proceedings below—the Florida Industrial Power Users Group (FIPUG), South Florida Hospital and Healthcare Association (SFHHA), and Federal Executive Agencies (FEA)—and FPL reached a negotiated settlement agreement, and the Commission approved the agreement to resolve FPL's application for a rate base increase despite Citizens of the State of Florida's (Citizens) objection to the Commission's consideration and approval of the negotiated settlement agreement prior to and during evidentiary hearings pertaining exclusively to the settlement agreement. For the reasons explained below, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On March 19, 2012, FPL filed an application with the Commission for a permanent increase of base rates of $516.5 million to satisfy revenue requirements and a proposed return on equity (ROE) of 11.5% beginning in January 2013, and a generation base revenue adjustment (GBRA) of $173.9 million for the Cape Canaveral modernization project beginning in the summer of 2013. With its petition, FPL filed its minimum filing requirements (MFR) and the prefiled testimony and exhibits of fifteen witnesses who addressed FPL's request.

Citizens, represented by the Office of Public Counsel (OPC),¹ filed its notice of intervention on March 19, 2012. Other affected parties also filed petitions for leave to intervene, which were granted in separate orders. On July 2, 2012, Citizens filed the testimony of seven expert witnesses. These witnesses opined that no rate increase was warranted and that the Commission should require FPL to reduce its rates. Other intervenors, including FIPUG, SFHHA, and FEA, submitted testimony opposing FPL's request. Between the March filing and July 2012, FPL began negotiating a settlement with FEA, FIPUG, and SFHHA.² In July, FPL first presented Citizens with the negotiated settlement. Shortly thereafter, FPL filed the testimony of seventeen rebuttal witnesses.

On August 14, 2012, a prehearing conference was conducted and 193 disputed issues of fact were identified in FPL's petition. On August 15, 2012, the signatories to the settlement agreement—FEA, FIPUG, SFHHA, and FPL—filed joint motions to suspend the procedural schedule and approve the settlement agreement. The proposed settlement agreement set an ROE of 10.7% and an initial rate base increase of $378 million annually, scheduled to take effect in January 2013. Further, although not part of FPL's initial petition, FPL would receive a GBRA for the Cape Canaveral modernization project and receive GBRAs of $236 million and $217.9 million, respectively, for its Riviera Beach and Port Everglades modernization projects upon entering commercial operations in 2014 and 2016. The agreement also gave FPL the ability to amortize up to $209 million of its accumulated fossil plant dismantlement reserve during its four-year term and postpone the periodic analysis of the status of the fossil dismantlement reserve balance that otherwise would be required by the Commission's rule, unless the Commission ordered otherwise. Although Citizens and the signatories each requested a suspension of the hearing schedule to consider the settlement agreement on the merits, the Commission denied the requests and proceeded with the hearing as scheduled on August 20.

A full evidentiary hearing was held on the rate case on August 20–24 and August 27–31, 2012. Prior to the hearing, the parties filed direct and rebuttal testimony of all witnesses, along with the exhibits they intended to sponsor. They also engaged in extensive discovery and filed prehearing statements. A prehearing conference was held on August 14, 2012, and a prehearing order was issued on August 17, 2012. On August 30, 2012, during the rate case hearing, the Commission announced on the record, in conformity with an order establishing procedure on August 27, 2012, that the hearing would reconvene on September 27, 2012, to discuss the proposed settlement agreement.

At the September 27, 2012, hearing, the Commission determined that the proposed settlement agreement raised five new disputed issues of material fact supplemental to the disputed issues presented in the initial petition. The issues were: (1) whether the GBRAs for the Cape Canaveral, Riviera Beach, and Port Everglades modernization projects were in the public interest; (2) whether the amortization of a portion of FPL's fossil dismantlement reserve was in the public interest; (3) whether the postponement of filing depreciation or dismantlement studies by FPL was in the public interest; (4) whether the incentive mechanism for gain sharing between customers and FPL was in the public interest; and (5) whether the settlement agreement was in the public interest. As a result, the Commission elected to schedule a hearing to take additional testimony limited to the five new disputed issues of fact. In an order issued on October 3, 2012, the hearing was scheduled for November 19–21, 2012. The parties filed direct and rebuttal testimony of all witnesses as to the settlement issues, along with the exhibits they intended to sponsor. The parties also engaged in discovery. The formal hearing reconvened on November 19, 2012, and concluded on November 20, 2012. Post-hearing briefs were filed on November 30, 2012.

On December 13, 2012, the Commission held a special agenda conference to rule upon the merits of the proposed settlement agreement. After the Commission voiced its concern with a few items, the Commission recessed to give all the parties an opportunity to engage in further settlement negotiations.

When presented with the modified settlement agreement, the Commission found that it satisfied all of the Commission's concerns and that it established fair, just, and reasonable rates and that it was in the public interest. The final order memorialized this finding on January 14, 2013, and incorporated the approved settlement. The final order also listed the major differences between the proposed agreement and the modified agreement. However, the 193 disputed issues of fact identified in FPL's petition were not entirely addressed by the Commission in its final order. The details of the procedures followed by the Commission, testimony and evidence introduced at the hearings, and the Commission's final order that are relevant to the issues raised on appeal will be discussed below.

Citizens now appeals the Commission's decision and contends that: (1) the Commission erred by approving a non-unanimous negotiated settlement agreement over Citizens' objection; (2) the Commission violated Citizens' due process rights by creating a rushed hearing track to consider the settlement agreement; and (3) the Commission's decision that the settlement agreement and its terms result in rates that are fair, just, reasonable, and in the public interest is not supported by competent, substantial evidence.

ANALYSIS

Standard of Review

As we have consistently held, when reviewing an order of the Commission, this Court affords great deference to the Commission's findings. S. Alliance for Clean Energy v. Graham, 113 So.3d 742, 752 (Fla.2013) (noting that this Court has repeatedly held that “[the Commission's] orders, and concomitant interpretations of statutes and legislative policies that it is charged with enforcing, are entitled to great deference.”). “Commission orders come to this Court clothed with the presumption that they are reasonable and just.” W. Fla. Elec. Coop. Ass'n, Inc. v. Jacobs, 887 So.2d 1200, 1204 (Fla.2004) (citing Gulf Coast Elec. Coop., Inc. v. Johnson, 727 So.2d 259, 262 (Fla.1999) ); see also BellSouth Telecomm., Inc. v. Johnson, 708 So.2d 594, 596 (Fla.1998) (noting that Commission orders carry a presumption of validity). Moreover, “[t]o overcome these presumptions, a party challenging an order of the Commission on appeal has the burden of showing a departure from the essential requirements of law and the legislation controlling the issue, or that the findings of the Commission are not supported by competent, substantial evidence.” S. Alliance for Clean Energy, 113 So.3d at 752 (quoting Crist v. Jaber, 908 So.2d 426, 430 (Fla.2005) (citing Jacobs, 887 So.2d at...