Florida Power Corp. v. Cresse, 60604

• Decision Date: 29 April 1982
• Docket Number: No. 60604,60604
• Citation: 413 So.2d 1187
• Parties: FLORIDA POWER CORPORATION, Appellant, v. Joseph P. CRESSE, et al., Appellees.
• Court: Florida Supreme Court

Page 1187

413 So.2d 1187

FLORIDA POWER CORPORATION, Appellant, v. Joseph P. CRESSE, et al., Appellees.

No. 60604.

Supreme Court of Florida.

April 29, 1982.

Sylvia H. Walbolt and Donald E. Hemke of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tampa, and S. A. Brandimore and R. W. Neiser, St. Petersburg, for appellant.

William S. Bilenky, Gen. Counsel, Pamela Johnson, Associate Gen. Counsel and Michael B. Twomey, Staff Counsel, Florida Public Service Commission, Tallahassee, for appellees.

Jack Shreve, Public Counsel and J. Roger Howe, Associate Public Counsel, Tallahassee, for the citizens of the State of Florida.

ADKINS, Justice.

We have for review an order of appellee, the Florida Public Service Commission (hereinafter the PSC), relating to rates of appellant Florida Power Corporation (hereinafter FPC), a utility providing electric service. We have jurisdiction. Art. V, § 3(b)(2), Fla.Const. (1980).

In February, 1980, FPC's Crystal River No. 3 nuclear power plant (hereinafter CR3) was forced to shut down and as a result remained out of service for 167 days. Because of the outage, FPC had to switch to more expensive fossil fuel generation and incurred much higher fuel expenses than had been projected for that time period.

At a subsequent "true-up" hearing, where cost projections for a period are compared with the actual results thereof and adjustments are made to account for underrecovery or overrecovery by the utility, FPC petitioned for authority to recover $46.3 million which it contended was the underrecovery for the period in question. The PSC initially withheld approval of the recovery of $22.8 million of the amount requested pending hearings on the matter, but at the completion thereof allowed recovery of all but $3.5 million.

Recovery of the $3.5 million was denied because of the PSC's finding that the shut-down of CR3 had been extended one week by FPC's failure to have on hand a replacement decay heat pump. The PSC found that a replacement heat pump should have been kept in inventory by FPC and reasoned that the excess fuel costs attributable to the extra week should be borne by the utility rather than the public. This appeal followed.

In ruling that FPC must bear responsibility for any portion of the outage attributable to its failure to have on hand a replacement heat pump, the PSC noted that the utility had experienced problems with the troublesome pump on two prior occasions and had decided in early 1979 to order a spare pump for inventory. Because of an administrative error, however, FPC failed to order the spare pump and so had one neither on hand nor on order when the outage occurred. The PSC concluded that FPC's prior troubles with the heat pump, its recognition of the necessity of having a spare pump on hand, as evidenced by the decision to order such, and the failure to procure a spare justified the withholding of the $3.5 million.

FPC argues that the facts do not support a finding of mismanagement and that it is entitled to the full amount requested. It notes the impracticality of maintaining a complete inventory of spare parts for a nuclear power plant and asserts that in light of both its own experience with the equipment and of national data bank information, the lack of a spare pump was not an unreasonable state of affairs. FPC also notes that the part not on hand, the pump casing, is a non-moving part with a very low probability of failure and that the utility did have spares for the moving parts of the pump. It is improper, FPC contends, to use hindsight and hold it responsible for the lack of a spare when, in the utility's opinion, its actions were reasonable and correct at the time. We, however, do not agree that there is no evidence of mismanagement.

First, there is the prior trouble which FPC had experienced with the pump in question. On one occasion the pump casing was found to be "out of kilter" and was machined in an attempt to correct the problem. On another, the pump shaft failed, the utility did not have the necessary parts on hand to repair the unit, and as a result the outage caused thereby was extended by 15 days. The above incidents ought to have put FPC on notice that the heat pump was a likely source of trouble and that problems there could lead to extended outages if the necessary repair and replacement equipment was not kept on hand. The PSC's finding of management imprudence cannot be characterized as "hindsight" in view of FPC's experience with the heat pump prior to the incident with which we are concerned.

Also supporting the PSC's finding is the evidence of the utility's decision to order a replacement pump for inventory. FPC's witness at the hearings before the PSC stated that the decision to order an entire spare heat pump was made after the shaft failure incident. That decision indicates recognition by management that a spare heat pump was a necessity for proper operation of the plant. FPC argues that the decision proves nothing of the sort, but instead simply shows the exercise of an abundance of care by management. Regardless of FPC's interpretation, however, the PSC concluded that the utility's management was guilty of imprudence in not having a replacement available during the outage. There was substantial and competent evidence for that conclusion and so we will not interfere with that aspect of the PSC's decision. Surf Coast Tours, Inc. v. Florida Public Service Commission, 385 So.2d...