Southern States Utilties, Inc. v. Florida Public Service Com'n, s. 96-3334

Citation704 So.2d 555
Decision Date17 June 1997
Docket NumberNos. 96-3334,96-3454 and 96-3489,s. 96-3334
Parties22 Fla. L. Weekly D1492 SOUTHERN STATES UTILITIES, INC. v. FLORIDA PUBLIC SERVICE COMMISSION. KEYSTONE HEIGHTS and Marion Oaks Civic Association v. SOUTHERN STATES UTILITIES, INC., and Florida Public Service Commission. BURNT STORE MARINA v. PUBLIC SERVICE COMMISSION.
CourtCourt of Appeal of Florida (US)

Arthur J. England, Jr. and Joe N. Unger of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, Miami; Kenneth A. Hoffman of Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A., Tallahassee; and Brian P. Armstrong of Southern States Utilities, Inc., Apopka, for Southern States Utilities, Inc.

Robert D. Vandiver, Christiana T. Moore, and Richard C. Bellak, Tallahassee, for Florida Public Service Commission.

Joseph A. McGlothlin and Vicki Gordon Kaufman of McWhirter, Reeves, McGlothlin, Davidson, Rief & Bakas, Tallahassee, for City of Keystone Heights and Marion Oaks Civic Association.

Darol H.M. Carr of Farr, Farr, Emerich, Sifrit, Hackett and Carr, P.A., Port Charlotte, for Burnt Store Marina.

Susan W. Fox of Macfarlane, Ferguson & McMullen, Tampa for Sugarmill Woods Association, Inc., and Michael B. Twomey, Tallahassee for Citrus County Civic Board of County Commissioners.

Michael A. Gross, Assistant Attorney General, Tallahassee and Larry M. Haag, County Attorney, Inverness, Co-counsel for Citrus County.

KAHN, Judge.

Southern States Utilities, Inc. (SSU) appeals an order entered by the Public Service Commission (PSC) on remand from this court's decision in Citrus County v. Southern States Utilities, Inc., 656 So.2d 1307 (Fla. 1st DCA 1995). In that case, we affirmed in part and reversed in part a PSC order approving increased rates and charges for 127 of SSU's water and wastewater service areas based on a uniform statewide rate structure. Specifically, we reversed the order "on the ground that the PSC exceeded its statutory authority when it approved uniform statewide rates for the 127 systems involved in this proceeding, based on the evidence produced." Citrus County, 656 So.2d at 1309. We affirmed the PSC's refusal to take into account SSU's gain on the sale of two of its systems in determining SSU's rates and remanded the cause "for disposition consistent herewith." Id. at 1311. On remand, the PSC approved modified stand-alone rates for SSU's systems. 1 Because the PSC erred, however, in its consideration of GTE Florida Inc. v. Clark, 668 So.2d 971 (Fla.1996), with regard to the issue of whether SSU may surcharge the customers who underpaid under the erroneously approved uniform rates, we reverse and remand this case for further proceedings. In addition, on remand, we direct the PSC to reconsider its decision denying intervention by cross-appellants Keystone Heights, Marion Oaks Civic Association, and Burnt Store Marina. 2

On remand from this court's decision in Citrus County, the PSC found it appropriate to change the rate structure to comply with the court's mandate, and it thus approved a modified stand-alone rate structure for SSU. As the PSC observed in its order, "[t]he utility's revenue requirement was never challenged as a point on appeal" and "[a]ccordingly, it shall not be changed." The PSC further observed, however, "[t]his change in the rate structure results in a rate decrease for some customers and a rate increase for others." The PSC then directed SSU to provide refunds to customers who had overpaid under the erroneous uniform rate structure, but determined that SSU could not collect surcharges from those customers who had underpaid as "such action would violate the prohibition against retroactive ratemaking." The PSC explained that it could order the refunds without violating retroactive ratemaking concepts because SSU had "accepted the risk" of implementing the uniform rates when SSU filed a motion to vacate the stay in effect as a result of Citrus County's appeal:

Upon reviewing the language from the Order Vacating the Stay and the transcripts from the Agenda Conference in which we voted on the utility's Motion to Vacate the Stay, we find that the utility accepted the risk of implementing the rates. It is clear that we recognized the need to secure the revenue increase both as a condition of vacating the stay and to insure funding of refunds in the event refunds were required. Having established a refund condition for those revenues, we can order a refund without violating retroactive ratemaking concepts.

Before SSU acted pursuant to the PSC's decision on remand, however, the Florida Supreme Court issued its opinion in GTE Florida, Inc. v. Clark. Because the PSC determined that Clark might impact its decision on remand, it voted to reconsider its decision.

In Clark, GTE Florida (GTE) appealed a PSC order implementing a remand from the supreme court. 668 So.2d at 972. In that remand, the supreme court had affirmed in part and reversed in part a prior PSC order disposing of a requested rate increase by GTE. Id. The court had reversed the prior order "insofar as it denied GTE recovery of certain costs simply because those expenditures involved purchases from GTE's affiliates" because the court "found that those costs were clearly recoverable and that it was an abuse of discretion for the PSC to deny recovery." Id. In its order implementing the supreme court's remand, however, the PSC allowed recovery of the disputed expenses only on a prospective basis beginning nine months after the mandate issued. Id. In Clark, the supreme court reversed the PSC's order implementing the remand and mandated that GTE be allowed to recover its erroneously disallowed expenses through the use of a surcharge. Id.

In particular, the supreme court rejected the two reasons offered by the PSC for denying GTE's proposed surcharge. The PSC contended (1) GTE's failure to request a stay during the pendency of the appellate and remand processes precluded it from recovering expenses incurred during that period, and (2) the imposition of a surcharge would constitute retroactive ratemaking. Id. The court explained that GTE's failure to request a stay was not dispositive:

Both the Florida Statutes and the Florida Administrative Code have provisions by which GTE could have obtained a stay. However, neither of these mechanisms is mandatory. We view utility ratemaking as a matter of fairness. Equity requires that both ratepayers and utilities be treated in a similar manner.... [E]quity applies to both utilities and ratepayers when an erroneous rate order is entered. It would clearly be inequitable for either utilities or ratepayers to benefit, thereby receiving a windfall, from an erroneous PSC order. The rule providing for stays does not indicate that a stay is a prerequisite to the recovery of an overcharge or the imposition of a surcharge. The rule says nothing about waiver, and the failure to request a stay is not, under these circumstances, dispositive.

Id. at 972-73 (footnote and citations omitted). The court further explained that a surcharge in this circumstance did not constitute retroactive ratemaking:

We also reject the contention that GTE's requested surcharge constitutes retroactive ratemaking. This is not a case where a new rate is requested and then applied retroactively. The surcharge we sanction is implemented to allow GTE to recover costs already expended that should have been lawfully recoverable in the PSC's first order.... The PSC has taken a position contrary to its current stance when a utility has overcharged its ratepayers.... If the customers can benefit in a refund situation, fairness dictates that a surcharge is proper in this situation. We cannot accept the contention that customers will now be subjected to unexpected charges. The Office of Public Counsel has represented the citizen ratepayers at every step of this procedure. We find that the surcharge for recovery of costs expended is not retroactive ratemaking any more so than an order directing a refund would be.

Id. at 973.

In this case, after its reconsideration, the PSC issued an order addressing the...

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2 cases
  • Southern States Utilities v. Florida Public Service Com'n
    • United States
    • Florida District Court of Appeals
    • June 10, 1998
    ...when the PSC relied on the order to reduce equity, and the order has since been overturned on appeal. Southern States Utils. v. Public Serv. Comm'n, 704 So.2d 555 (Fla. 1st DCA 1997). The PSC should revisit this matter on remand in light of the status of ongoing litigation on this issue. Se......
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    ...order of the Florida Public Service Commission (PSC or Commission) entered on remand of Southern States Utils. v. Florida Pub. Serv. Comm'n, 704 So.2d 555 (Fla. 1st DCA 1997)(Southern States I). In the order on appeal, the Commission determined not to require refunds of utility payments mad......

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