Citizens of the State of Florida v. Art Graham, etc.
213 So. 3d 703
| Fla. | 2017Background
- FPUC, a non-generating investor-owned electric utility, entered a 2014 settlement with the Office of Public Counsel (OPC) that froze base-rate changes through Dec. 31, 2016 and limited recovery of certain costs through fuel/other cost-recovery clauses, expressly identifying transmission investments as typically base-rate items.
- In Sept. 2015 FPUC sought to recover, via its 2016 fuel adjustment filing, capital and related costs for a $3.5 million interconnection to FPL (an interconnection intended to improve reliability and enable future purchased-power savings).
- OPC and Commission staff objected, arguing the settlement barred recovering transmission capital through the fuel clause; staff recommended denial.
- The Florida Public Service Commission nevertheless approved recovery of the full interconnection costs through the fuel clause, relying on expected reliability and future purchased-power savings, but only analyzed the settlement as to legal/consulting fees, not the construction capital.
- OPC appealed, arguing the Commission failed to apply the settlement and that Order No. 14546 (fuel-clause policy) does not permit recovery of transmission capital through the fuel clause.
Issues
| Issue | Plaintiff's Argument (OPC) | Defendant's Argument (FPUC/Commission) | Held |
|---|---|---|---|
| Whether the settlement agreement barred recovery of FPUC’s FPL interconnection construction costs through the fuel clause | Settlement language bars recovery through cost-recovery clauses for increases in costs of types historically recovered in base rates (including transmission), so the petition is barred | Settlement doesn’t bar recovery here; costs are new and not currently in base rates (or other contract conditions allow recovery) | Held: Settlement applied and barred recovery; Commission failed to analyze/apply it — remand with direction to deny fuel-clause recovery for construction costs |
| Whether the Commission adequately explained its departure from staff and the settlement when approving costs | OPC: Commission departed from essential requirements of law by failing to explain why it did not apply the settlement | Commission: its order addressed fuel-clause merits and cited precedent allowing exceptions; deference should apply | Held: Commission’s explanation was insufficient under administrative-law standards (McDonald and related precedents); reversal required |
| Whether transmission capital construction costs qualify for recovery under the fuel-clause exception in Order No. 14546 | OPC: Fuel clause is for volatile fuel/purchased-power costs; long-lived transmission capital should be in base rates, not the fuel clause | FPUC/Commission: Interconnection enables purchased-power savings and reliability; purchased power is akin to fuel and can justify exception | Held: Construction capital expenditures for transmission interconnection are not eligible for recovery under Order No. 14546’s exception; such capital belongs in base rates |
| Whether the court should remand for further explanation or decide the legal issue itself | OPC: Commission failed to address legal question; court may resolve purely legal issues | Commission: deference to agency and factual findings supports affirmance | Held: Because questions presented were legal, court resolved them and reversed the Commission’s order (directing denial of fuel-clause recovery for the interconnection) |
Key Cases Cited
- Southern Alliance for Clean Energy v. Graham, 113 So.3d 742 (Fla. 2013) (discusses deference to Commission orders and standards for challenging agency action)
- McDonald v. Dep’t of Banking & Finance, 346 So.2d 569 (Fla. 1st DCA 1977) (agency must explicate rationale for discretionary action; failure requires remand or set-aside)
- Seminole Elec. Coop., Inc. v. Dep’t of Envtl. Prot., 985 So.2d 615 (Fla. 5th DCA 2008) (setting aside agency action that disregarded stipulated record or failed to address key analyses)
- Citizens of State v. Graham, 191 So.3d 897 (Fla. 2016) (reaffirmed fuel-clause purpose as addressing volatility and limited recovery of capital/long-term investments)