Southern States Utilities v. Florida Public Service Com'n, No. 96-4227

CourtCourt of Appeal of Florida (US)
Writing for the CourtBENTON
Citation714 So.2d 1046
Docket NumberNo. 96-4227
Decision Date10 June 1998
Parties23 Fla. L. Weekly D1413 SOUTHERN STATES UTILITIES, n/k/a Florida Water Services Corporation, Appellant/CrossAppellee, v. FLORIDA PUBLIC SERVICE COMMISSION; and Burnt Store Lakes Property Owners Association, Inc., Appellees, and Citizens of the State of Florida; Marco Island Fair Water Rate Defense Committee, Inc.; Citrus County Board of County Commissioners; Sugarmill Woods Civic Association, Inc.; Concerned Citizens of Lehigh Acres; Spring Hill Civic Association, Inc.; East County Water Control District; Hidden Hills Country Club Homeowners Association; Citrus Park Homeowners Association; and Harbour Woods Civic Association, Appellees/CrossAppellants.

Page 1046

714 So.2d 1046
23 Fla. L. Weekly D1413
SOUTHERN STATES UTILITIES, n/k/a Florida Water Services Corporation, Appellant/CrossAppellee,
v.
FLORIDA PUBLIC SERVICE COMMISSION; and Burnt Store Lakes Property Owners Association, Inc., Appellees,
and
Citizens of the State of Florida; Marco Island Fair Water Rate Defense Committee, Inc.; Citrus County Board of County Commissioners; Sugarmill Woods Civic Association, Inc.; Concerned Citizens of Lehigh Acres; Spring Hill Civic Association, Inc.; East County Water Control District; Hidden Hills Country Club Homeowners Association; Citrus Park Homeowners Association; and Harbour Woods Civic Association, Appellees/CrossAppellants.
No. 96-4227.
District Court of Appeal of Florida,
First District.
June 10, 1998.
Rehearing Denied July 5, 1998.

Page 1048

Arthur J. England, Jr., and Joe N. Unger of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami; Kenneth A. Hoffman of Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A., Tallahassee; and Brian P. Armstrong and Matthew J. Feil of Florida Water Services Corporation, Apopka, for Appellant/Cross-Appellee.

Robert D. Vandiver, General Counsel; Mary Anne Helton and Christiana T. Moore of the Florida Public Service Commission, Tallahassee, for Appellee Florida Public Service Commission.

Darol H.M. Carr and David A. Holmes of Farr, Farr, Emerich, Sifrit, Hackett and Carr, P.A., Port Charlotte, for Appellee Burnt Store Lakes Property Owners Association, Inc.

Jack Shreve, Public Counsel; Charles J. Beck and Harold McLean of the Office of Public Counsel, Tallahassee, for Appellee/Cross-Appellant Citizens of the State of Florida.

Frederick C. Kramer of the Law Offices of Frederick C. Kramer, Marco Island, for Appellee/Cross-Appellant Marco Island Fair Water Rate Defense Committee, Inc.

Michael B. Twomey, Tallahassee, for Appellees/Cross-Appellants Citrus County Board of County Commissioners and Sugarmill Woods Civic Association, et al.; Larry M. Haag, County Attorney for Citrus County, Inverness; Arthur Jacobs of Jacobs & Peters, P.A., Fernandina Beach.

B. Kenneth Gatlin and Wayne L. Schiefelbein of Gatlin, Schiefelbein & Cowdery, P.A., Tallahassee, for Amicus Curiae Florida Waterworks Association.

EN BANC

BENTON, Judge.

Revisiting recent cases pertinent to the question, we conclude no statute prohibits resort by the Public Service Commission (PSC)--in an appropriate case--to so-called "capbands" to fix rates that are just, reasonable, compensatory, and not unfairly discriminatory. We decide, however, that the rate order under review must be reversed on other grounds. Accordingly, we reverse the order and remand the case to the PSC for further proceedings.

Florida Water Services Corporation (Florida Water) appeals an order in which the PSC set rates in ninety-seven water and forty-four wastewater service areas that Florida Water serves in more than twenty counties. The rate order denied Florida Water's request for uniform, utility-wide rates, but did approve what have been called capband rates. Instead of setting a different rate within each of Florida Water's service areas solely on the basis of the cost of service there, the PSC grouped service areas by cost of service, then set rates uniformly within each group. In this way, the PSC established nine different water rates and seven different wastewater rates, and assigned a rate to each system that Florida Water operates.

Florida Water does not take issue with this aspect of the rate order. The cross-appellants (with the exception of the Office of Public Counsel) contend, however, that the PSC's capband methodology is impermissible under Citrus County v. Southern States Utilities, 656 So.2d 1307 (Fla. 1st DCA 1995), and argue that the PSC's use of the methodology requires reversal. On the other hand, Burnt Store Lakes Property Owners Association, Inc. has participated in support of the capband methodology.

Florida Water urges reversal of the order because (Florida Water alleges) the PSC resorted to a novel method to determine the used and useful percentage of investment in transmission, distribution, and collection systems for mixed use areas (commercial and residential, single family and multiple family); employed a novel used and useful methodology to calculate the used and useful percentage of investment in wastewater treatment plants; did not allow full recovery in rates of costs prudently incurred in constructing reuse facilities; disallowed a previously granted allowance for funds prudently invested (AFPI); denied a requested adjustment to accumulated depreciation to reflect prudent investment in plant not deemed used and useful, thereby precluding recovery of investment made prior to Florida Water's initial AFPI application; approved

Page 1049

refunds for wastewater customers in two service areas where interim rates calculated on a stand alone basis exceeded final rates; and reduced Florida Water's equity in the amount of a refund ordered by the PSC, even though the refund order had been stayed pending appeal and has since been overturned.

Here, as in the proceedings before the PSC, the Office of Public Counsel contends that the rate base for Florida Water's Lehigh Acres water and wastewater utilities should be discounted because a Florida Water affiliate acquired the utilities for less than book value. The Office of Public Counsel also seeks a remand "to the PSC with instructions to calculate refunds of interim rates on a system-by-system basis." Because issues pertaining to refunds may well be moot, once the PSC sets new permanent rates on remand, addressing these issues at this juncture would be premature.

In the Citrus County case, we first grappled with how to treat multiple water and sewer systems in single ownership when setting water and sewer rates for various systems in a single proceeding. We said:

The Water and Wastewater System Regulatory Law, codified at chapter 367, Florida Statutes, grants the PSC authority to set rates for those utilities within its jurisdiction. We conclude that chapter 367 does not give the PSC authority to set uniform statewide rates that cover a number of utility systems related only in their fiscal functions by reason of common ownership. Florida law instead allows uniform rates only for a utility system that is composed of facilities and land functionally related in the providing of water and wastewater utility service to the public. Section 367.171(7), Florida Statutes (1991), grants the PSC exclusive jurisdiction, with some exceptions, over "all utility systems whose service transverses county boundaries." The term "system" is defined as "facilities and land used or useful in providing service and, upon a finding by the commission, may include a combination of functionally related facilities and land." § 367.021(11), Fla. Stat. (1991) (emphasis added).

Citrus County, 656 So.2d at 1309-1310. Examining the question anew, we find no statutory basis for our earlier conclusion that uniform rates--particularly within groups of systems that have comparable costs of providing service--must depend on a finding that "facilities and land ... used to provide ... water and wastewater services are functionally related." Id. at 1311.

Jurisdictional Question Distinct

The cross-appellants rely on Citrus County for the proposition that capbands cannot be used in setting rates for systems that are not "functionally related." Because there is no issue as to the PSC's jurisdiction over the systems involved in the present case, we conclude the question of "functional relatedness" does not arise. Under chapter 367, "functional relatedness" is purely a jurisdictional concept.

We initially construed the phrase "functionally related" in Board of County Commissioners v. Beard, 601 So.2d 590 (Fla. 1st DCA 1992). The issue there was whether the St. Johns County Water and Sewer Authority could exercise jurisdiction over the Jacksonville Suburban Utilities Corporation (JSUC), which did business in Duval, Nassau, and St. Johns counties. The statute provided:

Notwithstanding anything in this section to the contrary, the commission shall have exclusive jurisdiction over all utility systems whose service transverses [sic] county boundaries, whether the counties involved are jurisdictional or nonjurisdictional, except for utility systems that are subject to, and remain subject to, interlocal utility agreements in effect as of January 1, 1991, that create a single governmental authority to regulate the utility systems whose service transverses county boundaries, provided that no such inter-local agreement shall divest commission jurisdiction over such systems, any portion of which provides service within a county that is subject to commission jurisdiction under § 367.171.

§ 367.171(7), Fla. Stat. (Supp.1990). We affirmed the PSC's determination that it had exclusive jurisdiction over JSUC on the basis

Page 1050

of the "functional interrelatedness of its Duval and St. Johns facilities ... administratively and operationally," and eschewed "a requirement of physical connection." Beard, 601 So.2d at 593. Similar jurisdictional disputes gave rise to the later decision in Hernando County v. Florida Public Service Commission, 685 So.2d 48, 52 (Fla. 1st DCA 1996) (stating that the PSC's jurisdiction hinges on whether "facilities forming the asserted 'system' exist in contiguous counties across which the service travels").

Without pausing to examine the joint effect these two decisions may have on a jurisdictional question we have no need to decide here, 1 it is enough for present purposes to reiterate that both Beard and Hernando County concern only whether the PSC has authority to exercise jurisdiction to the exclusion of local government. Neither decision purports to limit in any way the manner in which the PSC sets rates in cases like the present one in which the PSC's ratemaking authority is conceded.

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6 practice notes
  • Childers v. State, No. 1D03-2154.
    • United States
    • Court of Appeal of Florida (US)
    • 28 Junio 2006
    ...(en banc decision on rehearing vacating and superseding published panel decision). See also S. States Utils. v. Fla. Pub. Serv. Comm'n, 714 So.2d 1046 (Fla. 1st DCA 1998) (en banc decision released by administrative division without antecedent publication of panel decision); Scantling v. St......
  • Childers v. State, No. 1D03-2154.
    • United States
    • Court of Appeal of Florida (US)
    • 28 Junio 2006
    ...(en banc decision on rehearing vacating and superseding published panel decision). See also S. States Utils. v. Fla. Pub. Serv. Comm'n, 714 So.2d 1046 (Fla. 1st DCA 1998) (en banc decision released by administrative division without antecedent publication of panel decision); Scantling v. St......
  • FLORIDA PUBLIC SERV. v. FLORIDA WATERWORKS, No. 98-1280.
    • United States
    • Court of Appeal of Florida (US)
    • 10 Mayo 1999
    ...Ass'n v. Florida Public Serv. Comm'n, 473 So.2d 237, 243 (Fla. 1st DCA 1985)." Southern States Utils. v. Florida Pub. Serv. Comm'n, 714 So.2d 1046, 1057 (Fla. 1st DCA 1998). Consistently since the statute was amended to disallow contributions-in-aid-of-construction in rate base, Ch. 80-99, ......
  • SUGARMILL WOODS CIVIC ASSOCIATION, INC. v. Florida Water Services …, No. 1D98-727.
    • United States
    • Court of Appeal of Florida (US)
    • 24 Mayo 2001
    ...this court2 sitting en banc issued its opinion in Southern States Utils. n/k/a Florida Water Servs. Corp. v. Florida Pub. Serv. Comm'n, 714 So.2d 1046, 1051 (Fla. 1st DCA 1998)(Southern States II), an appeal of a Commission order in a subsequently filed rate proceeding involving SSU. The So......
  • Request a trial to view additional results
6 cases
  • Childers v. State, No. 1D03-2154.
    • United States
    • Court of Appeal of Florida (US)
    • 28 Junio 2006
    ...(en banc decision on rehearing vacating and superseding published panel decision). See also S. States Utils. v. Fla. Pub. Serv. Comm'n, 714 So.2d 1046 (Fla. 1st DCA 1998) (en banc decision released by administrative division without antecedent publication of panel decision); Scantling v. St......
  • Childers v. State, No. 1D03-2154.
    • United States
    • Court of Appeal of Florida (US)
    • 28 Junio 2006
    ...(en banc decision on rehearing vacating and superseding published panel decision). See also S. States Utils. v. Fla. Pub. Serv. Comm'n, 714 So.2d 1046 (Fla. 1st DCA 1998) (en banc decision released by administrative division without antecedent publication of panel decision); Scantling v. St......
  • FLORIDA PUBLIC SERV. v. FLORIDA WATERWORKS, No. 98-1280.
    • United States
    • Court of Appeal of Florida (US)
    • 10 Mayo 1999
    ...Ass'n v. Florida Public Serv. Comm'n, 473 So.2d 237, 243 (Fla. 1st DCA 1985)." Southern States Utils. v. Florida Pub. Serv. Comm'n, 714 So.2d 1046, 1057 (Fla. 1st DCA 1998). Consistently since the statute was amended to disallow contributions-in-aid-of-construction in rate base, Ch. 80-99, ......
  • SUGARMILL WOODS CIVIC ASSOCIATION, INC. v. Florida Water Services …, No. 1D98-727.
    • United States
    • Court of Appeal of Florida (US)
    • 24 Mayo 2001
    ...this court2 sitting en banc issued its opinion in Southern States Utils. n/k/a Florida Water Servs. Corp. v. Florida Pub. Serv. Comm'n, 714 So.2d 1046, 1051 (Fla. 1st DCA 1998)(Southern States II), an appeal of a Commission order in a subsequently filed rate proceeding involving SSU. The So......
  • Request a trial to view additional results

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