GTE Florida Inc. v. Deason, No. 82003

CourtFlorida Supreme Court
Writing for the CourtPER CURIAM; GRIMES, C.J., OVERTON, SHAW, KOGAN and HARDING, JJ., and McDONALD
Citation642 So.2d 545
Parties19 Fla. L. Weekly S362 GTE FLORIDA INCORPORATED, Appellant, v. J. Terry DEASON, etc., et al., Appellee.
Decision Date07 July 1994
Docket NumberNo. 82003

Page 545

642 So.2d 545
19 Fla. L. Weekly S362
GTE FLORIDA INCORPORATED, Appellant,
v.
J. Terry DEASON, etc., et al., Appellee.
No. 82003.
Supreme Court of Florida.
July 7, 1994.
Rehearing Denied Sept. 22, 1994.

Thomas R. Parker, James V. Carideo, Joe W. Foster, Kimberly Caswell and M. Eric Edgington, Tampa, for appellant.

Robert D. Vandiver, Gen. Counsel and David E. Smith, Director of Appeals, Florida Public Service Com'n, and Jack Shreve, Public Counsel and Harold McLean, Associate Public Counsel, for Citizens of State of Florida, Tallahassee, for appellees.

PER CURIAM.

We have on appeal a decision by the Florida Public Service Commission relating to rates or service of telephone utilities. We have jurisdiction. Art. V, Sec. 3(b)(2), Fla.Const.; Sec. 364.381, Fla.Stat. (1993).

In 1992, GTE Florida Incorporated asked the Public Service Commission (PSC) to approve a telephone rate increase in gross annual revenues of $110,997,618, later revised downward to $65,994,207. After hearings, the PSC denied the request and reduced revenues by about $14,500,000.

GTE Florida filed a motion for reconsideration. The PSC took up the motion in a meeting lasting less than an hour. At this point the PSC decreased the negative revenue requirement by about $831,000 to $13,500,000.

Ten million dollars of the total reduction arose from GTE's use of Statement of Financial Accounting Standards 106 ("SFAS 106"), which embodied expenses GTE Florida claimed in connection with certain post-retirement benefits. GTE contended that the $10,000,000 reduction was improperly based on the PSC's unsupported opinion of GTE Florida's 1994 financial conditions, rather than the established 1992 test year and the 1993 rate year contained in the record.

The PSC disallowed some of the cost of services supplied by GTE Data Services, an affiliate of GTE Florida. As grounds, the PSC held that the transaction with the affiliate was not "arms length" and therefore was subject to greater scrutiny. Specifically, the affiliate would only be entitled to cost plus a reasonable return, which was set at 11.25 percent. The evidence showed, however, that GTE Data Services charged GTE Florida rates equal to or less than those charged to nonaffiliates.

The cost of supplies purchased from GTE Supply was disallowed for the same reason. The PSC found that the relationship with GTE Supply provided substantial benefits, however, and allowed a greater return to GTE Supply. The evidence showed that GTE Supply sold commodities to GTE Florida at a discount of about 2.5 to 3 percent lower than the cost to nonaffiliates.

The PSC also based its order on a calculation of GTE Florida's capital structure, which the corporation disputes. The calculation involved a wholly owned subsidiary, GTE Communications, which sells deregulated offerings. The PSC reduced GTE Florida's capital structure by 100 percent of the equity value of GTE Communications. GTE Florida contended that the reduction should have been adjusted to represent proportionately its own sources of capital, which include forms of debt such as bonds.

Regarding SFAS 106, our research has disclosed that this relatively new accounting standard 1 has created some confusion throughout the nation. In simple terms, SFAS 106 establishes a new "accrual" method of accounting for costs associated with post-retirement benefits other than pensions (PBOPs), replacing the earlier "pay-as-you-go" accounting method. Under the accrual method, PBOP costs are deemed "paid" for financial accounting purposes as each employee earns them rather than when the PBOPs are actually paid to employees after retirement. Thus, SFAS 106 essentially is a change in the timing at which PBOP costs are used to offset company profits for accounting purposes. However,...

To continue reading

Request your trial
3 practice notes
  • Welch v. State, No. SC06-698.
    • United States
    • United States State Supreme Court of Florida
    • 25 Septiembre 2008
    ...the strike, the trial judge focused on the grounds for the defense's objection. This failure constitutes reversible error. See Abshire, 642 So.2d at 545 (reversing the defendant's conviction, vacating his death sentence, and remanding the case on the ground that the State's gender-based per......
  • SUGARMILL WOODS CIVIC ASSOCIATION, INC. v. Florida Water Services …, No. 1D98-727.
    • United States
    • Court of Appeal of Florida (US)
    • 24 Mayo 2001
    ...from the supreme court holding that GTE could recover costs related to purchases from GTE's affiliates. See GTE Florida, Inc. v. Deason, 642 So.2d 545 (Fla.1994). In its order on remand, the Commission allowed recovery of those costs on a prospective basis only, starting on a date over nine......
  • GTE Florida Inc. v. Clark, No. 85776
    • United States
    • United States State Supreme Court of Florida
    • 29 Febrero 1996
    ...those costs were clearly recoverable and that it was an abuse of discretion for the PSC to deny recovery. GTE Florida Inc. v. Deason, 642 So.2d 545 (Fla.1994). Accordingly, we issued our mandate on July 7, 1994, and remanded for further action. The PSC, in implementing our decision, entered......
3 cases
  • Welch v. State, No. SC06-698.
    • United States
    • United States State Supreme Court of Florida
    • 25 Septiembre 2008
    ...the strike, the trial judge focused on the grounds for the defense's objection. This failure constitutes reversible error. See Abshire, 642 So.2d at 545 (reversing the defendant's conviction, vacating his death sentence, and remanding the case on the ground that the State's gender-based per......
  • SUGARMILL WOODS CIVIC ASSOCIATION, INC. v. Florida Water Services …, No. 1D98-727.
    • United States
    • Court of Appeal of Florida (US)
    • 24 Mayo 2001
    ...from the supreme court holding that GTE could recover costs related to purchases from GTE's affiliates. See GTE Florida, Inc. v. Deason, 642 So.2d 545 (Fla.1994). In its order on remand, the Commission allowed recovery of those costs on a prospective basis only, starting on a date over nine......
  • GTE Florida Inc. v. Clark, No. 85776
    • United States
    • United States State Supreme Court of Florida
    • 29 Febrero 1996
    ...those costs were clearly recoverable and that it was an abuse of discretion for the PSC to deny recovery. GTE Florida Inc. v. Deason, 642 So.2d 545 (Fla.1994). Accordingly, we issued our mandate on July 7, 1994, and remanded for further action. The PSC, in implementing our decision, entered......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT