WEST FLORIDA ELEC. CO-OPERATIVE ASSOCIATION v. Jacobs, SC02-176.

• Decision Date: 21 October 2004
• Docket Number: No. SC02-176.,SC02-176.
• Citation: 887 So.2d 1200
• Parties: WEST FLORIDA ELECTRIC COOPERATIVE ASSOCIATION, INC., Appellant, v. E. Leon JACOBS, Jr., etc., et al., Appellees.
• Court: Florida Supreme Court

887 So.2d 1200

WEST FLORIDA ELECTRIC COOPERATIVE ASSOCIATION, INC., Appellant, v. E. Leon JACOBS, Jr., etc., et al., Appellees.

No. SC02-176.

Supreme Court of Florida.

October 21, 2004.

John H. Haswell of Chandler, Lang, Haswell & Cole, P.A., Gainesville, FL; and Frank E. Bondurant, Marianna, FL, for Appellant.

Harold McLean, General Counsel, Richard C. Bellack, Associate General Counsel, Florida Public Service Commission, Tallahassee, FL, for Appellee Florida Public Service Commission.

Jeffrey A. Stone, Russell A. Badders and R. Andrew Kent of Beggs & Lane, LLP, Pensacola, FL, for Appellee Gulf Power Company.

CANTERO, J.

We review a decision of the Florida Public Service Commission settling a territorial dispute between two utilities competing to provide electric service to a natural gas company's compression station, located in a rural area of Washington County. We have jurisdiction. See art. V, § 3(b)(2), Fla. Const. The issues are (1) whether, in awarding service to appellee Gulf Power Company, the commission failed to consider the appellant's historical presence in the area and gave undue weight to the customer's preference; and (2) whether the commission departed from the essential requirements of law in drawing the territorial boundary around the footprint of the motors of the new compression station, rather than around the entire rural area. We affirm.

I.

Appellant West Florida Electric Cooperative Association provides electric service in Washington County to homes and farms in a rural area within a four-mile radius of a location known as Hinson's Crossroads. It provides 120/240 volt electric service to Florida Gas Transmission (FGT), which owns and operates a natural gas-fired gas compression station in the area. The station is part of FGT's natural gas pipeline, which runs through Florida. Appellee Gulf Power also provides electric service in Washington County, although not in the Hinson's Crossroads area.

In the mid-1990s, FGT decided to build another compression station on its 35- acre site, which would use two 15,000-horsepower electric motors. FGT contracted with Enron Compression Services (ECS) to provide the compression, i.e., the mechanical energy from the motors. ECS in turn sought to contract with Gulf Power to provide electricity to drive the motors. When ECS and Gulf Power requested the commission's approval through a petition for declaratory statement, West Florida petitioned the commission for resolution of the territorial dispute.

Section 366.04, Florida Statutes (2000), grants the commission authority to resolve territorial disputes between utilities. The commission's overarching concern in settling such disputes is the avoidance of uneconomic duplication. Section 366.04(5) provides that the commission "shall further have jurisdiction over the planning, development, and maintenance of a coordinated electric power grid throughout Florida to assure ... the avoidance of further uneconomic duplication of generation, transmission, and distribution facilities." See Gulf Coast Elec. Coop., Inc. v. Johnson, 727 So.2d 259, 264 (Fla.1999)

(stating that commission "is to be guided by this statutory mandate to avoid further uneconomic duplication of facilities in its decisions regarding territorial agreements and territorial disputes"). The statute also outlines certain factors that the commission "may consider, but not be limited to consideration of," in resolving a dispute. § 366.04(2)(e), Fla. Stat. (2000). These are "the ability of the utilities to expand services within their own capabilities and the nature of the area involved, including population, the degree of urbanization of the area, its proximity to other urban areas, and the present and reasonably foreseeable future requirements of the area for other utility services." Id.

The commission's regulations implementing section 366.04 are contained in the Florida Administrative Code. They list the following four nonexclusive factors that the commission may consider in resolving territorial disputes:

(a) the capability of each utility to provide reliable electric service within the disputed area with its existing facilities and the extent to which additional facilities are needed;

(b) the nature of the disputed area including population and the type of utilities seeking to serve it, and degree of urbanization of the area and its proximity to other urban areas, and the present and reasonably foreseeable future requirements of the area for other utility services;

(c) the cost of each utility to provide distribution and subtransmission facilities to the disputed area presently and in the future; and

(d) customer preference if all other factors are substantially equal.

Fla. Admin. Code R. 25-6.0441(2).

Pursuant to these authorities, the commission held a hearing to resolve the dispute and applied the factors listed in rule 25-6.0441(2). Regarding factors (a) and (c), West Florida and Gulf Power stipulated, and the commission found, that neither utility could adequately serve the new station, that the estimated cost to build the required six-mile transmission line would be the same for both utilities (about $5.5 million), and that both had equal access to Gulf Power's 230 kilovolt (kV) system, which was needed to power the new motors. The commission also found that both utilities could provide reliable service through the additional facilities. Regarding factor (b), the commission found that both utilities served rural areas in Washington County, such as the disputed area, but that the needs of the new compression station were unique because the new motors required 230 kV service. The commission accepted West Florida's claim that the dispute encompassed the entire Hinson's Crossroads area. It noted, however, that no territorial agreement existed between the utilities in the disputed area and concluded that it need not establish a territorial boundary around Hinson's Crossroads. Instead, it drew the boundary around the footprint of the two electric motors of the new compression station.

The commission thus determined that none of these factors substantially favored either utility. As a result, the commission found that factor (d) — ECS's undisputed preference for Gulf — was determinative. The commission further found that neither economic nor uneconomic duplication of services would result from an award of service to Gulf Power. Based on these findings, the commission awarded service to Gulf Power.

II.

Commission orders come to this Court clothed with the presumption that they are reasonable and just. Johnson, 727 So.2d at 262. The party challenging such an order thus must show a departure from the essential requirements of law. Ameristeel Corp. v. Clark, 691 So.2d 473, 477 (Fla.1997). This Court will approve the commission's findings and conclusions if they are based upon competent, substantial evidence and are not clearly erroneous. Id.

West Florida first argues that the commission's order is not supported by competent, substantial evidence. It concedes that factors (b) and (c) are not at issue. It also does not contest the commission's findings as to factor (a) (service reliability) except to argue that the commission should have weighed the utility's testimony that awarding service to West Florida potentially would result in more reliable service to West Florida's other customers. As the commission found, however, West Florida already provided reliable service to the area and would continue to do so. Accordingly, we find that competent, substantial evidence supports the commission's finding of no additional reliability benefit.

As to factor (d) (customer preference), West Florida concedes that ECS prefers Gulf Power. It argues, however, that by considering ECS's preference for Gulf Power to be determinative, the commission permitted "customer choice" to determine selection of the service provider, in contravention of cases from this Court. We disagree. We previously have held that customer preference should be considered a significant factor where the other factors in rule 25-6.0441 are substantially equal. See Gulf Coast Elec. Coop., Inc. v. Clark, 674 So.2d 120, 123 (Fla.1996)

. Although we also have warned that an "individual has no organic, economic or political right to service by a particular utility merely because he deems it advantageous to himself," Lee County Elec. Coop. v. Marks, 501 So.2d 585, 587 (Fla.1987), the commission's order in no way violates this principle. The commission followed section 366.04, Florida Statutes, and rule 25-6.0441(2) by assessing a number of factors. Determining in this case that factors (a) through (c) of rule 25-6.0441(2) were "substantially equal," the commission then considered subsection (d), the customer's preference, and found that factor to be determinative. We hold that competent, substantial evidence supports the commission's findings and that the commission did not depart from the essential requirements of law by considering customer preference.

III.

West Florida also argues that all relevant factors were not substantially equal so as to allow the commission to consider customer preference. It contends that the commission failed to consider the utility's historical presence in the area. Neither the statute nor the rule, however, requires the commission to consider a utility's historical presence in an area. See § 366.04, Fla. Stat. (2000); Fla. Admin. Code R. 25-6.0441. Because the listed factors are not exclusive, however, the commission is free to consider other factors, including historical presence. See id.

The governing statute charges the commission to avoid "further uneconomic duplication of generation, transmission, and distribution facilities." § 366.04(5), Fla. Stat. (2000). The historical presence of one utility in an area thus may be relevant in determining whether uneconomic duplication would result from an award of service to another. Accordingly, the...