Gulf Power Co. v. Bevis
| Decision Date | 13 June 1974 |
| Docket Number | 44199 and 44801,44198,Nos. 44189,44190,s. 44189 |
| Citation | 296 So.2d 482 |
| Parties | GULF POWER COMPANY, a corporation, Petitioner, v. William H. BEVIS et al., Respondents. CITY GAS COMPANY OF FLORIDA, a corporation, Petitioner, v. William H. BEVIS et al., Respondents. FLORIDA POWER & LIGHT COMPANY, Petitioner, v. FLORIDA PUBLIC SERVICE COMMISSION, Respondent. FLORIDA GAS COMPANY, Petitioner, v. William H. BEVIS et al., Respondents. SOUTHEASTERN TELEPHONE COMPANY and Florida Central Telephone Company, corporations, Petitioners, v. William H. BEVIS et al., Respondents. |
| Court | Florida Supreme Court |
D. Fred McMullen and Lee L. Willis, Ausley, McMullen, McGehee, Carothers & Proctor, Tallahassee, Bert H. Lane, Beggs, Lane, Daniel, Gaines & Davis, Pensacola, and Earl B. Hadlow, Mahoney, Hadlow Chambers & Adams, Jacksonville, for petitioners Gulf Power Co., etc. and City Gas Co. of Florida.
William C. Steel, Shepard King, and Charles A. Citrin, McCarthy, Steel, Hector & Davis, Miami, and Earl B. Hadlow, Mahoney, Hadlow, Chambers & Adams, Jacksonville, for petitioner Florida Power and Light Co.
R. Y. Patterson, Jr., and Norman E. Duke, Winter Park, for petitioner, Florida Gas Co.
D. Fred McMullen and Lee L. Willis, Ausley, McMullen, McGehee, Carothers & Proctor, Tallahassee, and Karl Berolzheimer, Ross, Hardies, O'Keefe, Babcock & Parsons, Chicago, Ill., for petitioners Southeastern Telephone Co. and Florida Cent. Telephone Co.
William L. Weeks, Donald R. Alexander, Tallahassee, Arthur J. England, Jr., Miami, Counsel for Governor, Arthur C. Canaday, Tallahassee, Gen. Counsel for Governor, Robert L. Shevin, Atty. Gen., and William R. Hanley, Asst. Atty. Gen., for respondents William H. Bevis, and others in Gulf Power Co., City Gas Co. of Florida, Florida Power and Light Co., Florida Gas Co., and Southeastern Telephone Co. and Florida Cent. Telephone Co.
Earl B. Hadlow and W. H. Adams, III, Mahoney, Hadlow, Chambers & Adams, and Walter H. Alford, Jacksonville, for Southern Bell Telephone and Telegraph Co.
Arthur C. Canaday, Tallahassee, Gen. Counsel for Governor, Arthur J. England, Jr., Miami, Sp. Counsel for Governor, Robert L. Shevin, Atty. Gen., and William R. Hanley, Asst. Atty. Gen., for amicus curiae in Southeastern Telephone Co. and Florida Cent. Telephone Co.
We have for review by writ of certiorari Rule 25--14.02 adopted by the Public Service Commission which provides that in rate proceedings the Commission will treat as an operating expense so much of the Florida corporate income tax imposed by Chapter 220, Florida Statutes, F.S.A., enacted to implement Section 5(b), Art. VII, Florida Constitution, F.S.A., as is necessary to prevent the allowable earnings of a regulated company from falling below the minimum fair, just and reasonable rate of return allowed by the Commission from time to time. We have consolidated herewith sua sponte Case No. 44,801, inasmuch as it involves the same issues raised by the other petitioners here. In a footnote hereto Commission's Rule 25--14.02, along with Rule 25--14.01, are set out in full. 1
The Petitioner utilities herein contend the Commission's corporate income tax concept embodied in its rule is contrary to the intent of the Legislature in enacting Chapter 220, Florida Statutes, F.S.A., and will unconstitutionally deprive a utility of the opportunity to earn a fair rate of return by requiring the computation thereof without allowing the utility to recover All tax expenses for which it is legally obligated.
Specifically, Petitioners contend a utility is entitled to earn a fair return on the value of its property devoted to public utility service. That is, a return over and above the normal costs of doing business such as maintenance and operating costs, depreciation expenses, And taxes, which they contend the utility is entitled to recover through its rates in addition to a return on investment. They contend that money that has been lawfully spent for payment of taxes, or for which the utility is obligated, as a cost of doing business constitutes no part of the fair return to which the utility is entitled, and the dollar paid out or required to be paid out for taxes is no more available as income than a dollar spent for labor or any other legitimate expense. They cite Fed. Power Com. v. Hope Nat. Gas Co. (1944), 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333, to the effect that:
Petitioners particularly rely upon this Court's pronouncement in Gulf Power Co. v. Bevis (Fla.1974), 289 So.2d 401, that the Florida corporate income tax must be considered 'as another cost of doing business . . . the same as other operating expenses.'
On the other side of the question at issue, the Commission as justification for its rule states therein that:
In its brief the Commission alludes to general propositions that rules and orders of the Commission have been held by this Court to come before it
General Telephone Company of Florida v. Carter (Fla.1959), 115 So.2d 554, 556.
It further contends that the Commission is reposed with plenary powers in exercising its jurisdiction and control over utility companies and their rates. Storey v. Mayo (Fla.1968), 217 So.2d 304.
The Commission points out that F.S. Section 336.041 F.S.A., provides 'no public utility shall be denied a reasonable rate of return upon its rate base,' and so long as a utility's rates and charges are fair and reasonable and it is earning a reasonable rate of return upon its investment, all statutory requirements will have been met. Therefore the Commission contends that if after application of the subject rule for implementation of a 'sharing concept' among the utility, its stockholders and rate payers, the utility is still earning a minimum fair and reasonable rate of return, the statutory criteria for rate fixing with the 'sharing concept' included will have been legally followed. The Commission points out that the rule provides all rate-fixing procedures and computations
'shall be in such a manner that the amount of tax cost to be borne by customers of those companies shall be no more than is required to assure those companies a minimum fair, reasonable and just rate of return.'
Under the formula of the rule the Commission contends the utilities will have suffered no constitutional deprivation of rights nor will they have been treated in any manner other than that which is consistent with the requirements of law.
The Commission contends the rule does not destroy 'the zone of reasonableness concept' employed in rate fixing since earnings at any point within the zone, whether they be at the floor, ceiling or midpoint, represent a fair and reasonable return. This is so, argues the Commission, because the zone merely sets the limits within which the rate can fluctuate and still remain just and reasonable.
The Commission further maintains the Petitioners' contentions cannot withstand the 'end result' doctrine's practicable and rational application, citing the doctrine's origin and effect as enunciated in Federal Power Comm. v. Hope Natural Gas Co., supra, which doctrine has also been adopted by the Florida Supreme Court. Thus the Commission contends that if its rule eventuates a final result of a fair and reasonable return to a utility including the 'sharing concept' none can say the return amounted to a confiscation or unlawful deprivation to the utility.
The Commission states there is ample precedent in the rate-making field for disallowance of certain operating expenses for rate-making purposes and the same have been held not chargeable to rate payers but deductible from the profits of the company and thus charged instead to the investors of the utility. The Commission cites such disallowed items from operating expense as certain litigation costs, excessive salaries of officers of utilities, political and lobbying expenses, civic and service club dues.
It was argued before this Court without contradiction that certain Federal tax surcharges have been disallowed as operating costs in rate-fixing cases.
In its brief filed in this review Southern Bell Telephone Company, while stoutly maintaining the Commission's rule is illegal, obliquely appears to agree that even without a rule no complete 'pass-on' of the corporate income tax to rate payers ever happens. It contends the normal rule-less practical result of the impact of the tax is as follows:
'. . . However, contrary to the Commission's assumption, the 'sharing concept' does not require adoption of the Commission's rule. The tax burden is shared under the application of the Gulf Power principle. As this court pointed out in its Gulf Power opinion, treating the tax as a normal operating expense does not result in a total 'pass through' of the tax but instead achieves a fair 'sharing between utility and user.'
'All the utilities which were earning above the fair and reasonable rate when the tax was enacted necessarily have to...
To continue reading
Request your trial
-
Dekle, In re
...who recused himself because of the furor, a portion of the Dekle opinion was quoted from in part and not disavowed. See Gulf Power Co. v. Bevis (Fla.1974), 296 So.2d 482. The Commission's counsel conceded at the evidentiary hearing in this inquiry that the Mason ex parte memo had no effect ......
-
United Tel. Co. of Florida v. Mann
...Gulf Power Co. v. Bevis, 289 So.2d 401 (Fla.1974). A fair rate of return is for the benefit of the utility's investors. Gulf Power Co. v. Bevis, 296 So.2d 482 (Fla.1974). This amount "should be sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain c......
-
Sarasota County v. Tamaron Utilities, Inc., s. 82-1594
...investors and helps maintain the utility's financial integrity. Federal Power Commission v. Hope Natural Gas Co.; Gulf Power Co. v. Bevis, 296 So.2d 482 (Fla.1974). Additionally, a utility must be allowed to earn a rate of return sufficient to meet operating expenses. Village of Virginia Ga......
-
Boyd, In re, 74--18
...companies and its stockholders with the ratepayers and not a complete 'pass through' of the tax to the ratepayers. See Gulf Power Company v. Bevis, Fla., 296 So.2d 482. Justice Roberts testified that the Mason memo had no improper impact upon the Court in its disposition of the Insofar as t......