Case Background
On May 7, 2018,
4000 South Ocean Property Owner, LLLP (Owner), pursuant to Section 120.542,
Florida Statutes (F.S.), filed a Petition for Variance or Waiver (Petition)
from Rule 25-6.049(5) and (6), Florida Administrative Code (F.A.C.), on behalf
of Hyde Beach House Resort and Residences (Hyde Beach House). The Owner is the
developer of Hyde Beach House, an oceanfront resort condominium to be operated
in Hollywood, Florida. Hyde Beach House
is in Florida Power & Light Company’s (FPL) service territory.
Rule
25-6.049(5), F.A.C., sets forth the conditions under which individual occupancy
units in residential and commercial buildings must be metered for electricity
use and establishes the criteria for exemptions to the individual metering
requirement. Rule 25-6.049(5), F.A.C., also requires that all occupancy units
in condominiums be individually metered by the utility unless they meet one of
the exemptions set forth in paragraphs (a) through (g) of the rule. Rule
25-6.049(6), F.A.C., states that in addition to satisfying the criteria in Rule
25-6.049(5)(g) and (6), F.A.C., the owner or developer of the condominium, the
condominium association, or the customer must attest to the utility that the
criteria for the exemption have been met.
The Owner seeks
a waiver of the individual metering requirement for Hyde Beach House. If granted, the rule waiver would allow the
installation of a single master meter to measure usage for all units in the
condominium. The Owner states that
although Hyde Beach House will be a condominium, the Owner contends that it
will operate in a manner similar to hotels and motels, and that pursuant to
subparagraph (5)(d) of Rule 25-6.049, F.A.C., individual metering is not
required.
Notice of the Petition
was published in the Florida Administrative Register on May 15, 2018, Vol. 44/95.
The comment period expired on May 30, 2018, and no comments were
received. The Commission has jurisdiction pursuant to Sections 366.05, 366.81,
366.82, 120.542, F.S.
Discussion of Issues
Issue 1:
Should the
Commission grant the Owner’s request for waiver of the requirements of Rule
25-6.049(5) and (6), F.A.C.?
Recommendation:
Yes. The
Owner has demonstrated that the purpose of the underlying statutes will be
achieved by other means and the application of the rule would create both a
substantial hardship and a violation of the principles of fairness. The Owner,
as a master meter customer, should be put on notice that: 1) Hyde Beach House
must allocate the cost of electricity to the individual condominium unit owners
using a reasonable apportionment method, consistent with Rule 25-6.049(9)(a),
F.A.C.; and 2) the waiver is effective for only so long as Hyde Beach House is
operated and licensed as a transient occupancy facility. At such time as the condominium is no longer
so operated and licensed, Hyde Beach House must inform FPL of this fact within
10 days and request that FPL install individual meters on all the occupancy
units. In the event such a conversion is
required, Hyde Beach House will be solely responsible for the cost of such
conversion, consistent with Rule 25-6.049(7), F.A.C. (Page, Guffey)
Staff
Analysis: The Hyde Beach House property consists of one building containing 345
units of which 265 are resort units and 77 are traditional units. The 265 resort units are restricted by the
City of Hollywood Zoning Ordinance to stays of no more than 150 days in any
consecutive twelve month period by the same occupant. There is no permanent residency allowed in the
265 resort units. The remaining 77 units
are not restricted as to use, however, all units are sold with the intent to
operate as a part of a hotel, and it is estimated that less than 10 percent of
these 77 units will be used for permanent occupancy.
The Owner
asserts that Hyde Beach House will be operated and licensed as a hotel
condominium as defined in Section 509.242(1), F.S. Gemstone Hotels and Resorts will manage Hyde
Beach House as a first class resort hotel.
Pursuant to Section 509.242(1)(a), F.S., Hyde Beach House will be
registered with the Florida Department of Business and Professional Regulation
as a hotel. According to the Owner, Hyde Beach House will be in direct
competition with hotels and motels in the area.
Rule
25-6.049(5), F.A.C., requires that utilities individually meter each separate
condominium unit. The Owner seeks a
waiver that would allow electricity usage by Hyde Beach House to be billed
under a master meter serving all condominium units instead of an individual
meter for each unit. This would allow
the residential units to be billed on a single commercial account basis,
instead of separate residential accounts.
This consolidated approach to metering would likely result in lower
electricity costs to Hyde Beach House.
Although the Owner projects annual savings in the amount of $42,809.28,
staff’s calculation of Hyde Beach House’s estimated annual savings is
approximately $122,019 using FPL’s current Commission-approved tariffs.
Rule
25-6.049(5)(g), F.A.C., provides an exception to the individual metering
requirement for condominiums that meet the following three criteria: (1) the declaration of condominium
requires that at least 95 percent of the units are used solely for overnight
occupancy as defined in subparagraph (8)(g) of the rule; (2) a registration
desk, lobby and central telephone switchboard are maintained; and (3) a record
is kept for each unit showing every check-in and check-out date for the unit,
including the name(s) of the individual(s) registered to occupy the unit
between each check-in and check-out date.
Hyde Beach House fails to satisfy all criteria for master metering
stated in Rule 25-6.049(5)(g), F.A.C. The condominium documents do not require
that 95 percent of the units be used solely for overnight occupancy as set
forth in Rule 25-6.049(5)(g), F.A.C. The
condominium documents require only 77 percent of the units to be used solely for
overnight occupancy. Hyde Beach House meets the other two criteria contained in
Rule 25-6.049(5)(g)2.and 3., F.A.C., because it will have a registration desk
and a registry with a check-in and check-out date.
Statutory
Requirements for a Waiver
Section 120.542(2), F.S., establishes the circumstances
when waivers of and variances from agency rules shall be granted:
When the person subject to the rule demonstrates that
the purpose of the underlying statute will be or has been achieved by other
means by the person and when application of a rule would create a substantial
hardship or would violate principles of fairness.
Purpose
of the Underlying Statute
Pursuant to Section 120.542, F.S., the petitioner seeking
a rule waiver must demonstrate that the purpose of the underlying statute will
be or has been achieved by other means. Rule
25-6.049, F.A.C., implements Sections 366.05(1), 366.81, and 366.82, F.S. Section 366.05(1), F.S., grants the
Commission the authority to prescribe rate classifications and service rules
and regulations to be observed by the investor-owned electric utilities. Rule
25-6.049(5) and (6), F.A.C., implements these statutes by setting forth the
conditions under which individual occupancy must be metered by the utility.
Sections 366.81
and 366.82, F.S., are known collectively as the Florida Energy
Efficiency and Conservation Act (FEECA) and direct the Commission to
adopt goals and approve plans related to the conservation of electric energy. The
requirement that individual occupancy units be individually metered serves the
conservation goals of FEECA because if unit owners are responsible for costs based
on their actual electricity consumption, they are more likely to conserve energy
in order to minimize the cost of energy.
Staff believes
that master metering also serves the intent of FEECA. Because of the nature of Hyde Beach House’s
operation, conservation efforts are most effectively carried out by the
building manager. Based on the
representations of the Owner, staff believes that Hyde Beach House condominium
will be operated in a manner similar to that of timeshare plans, hotels, and
motels. Conservation efforts in such
cases are more effectively carried out by the building manager, who can
implement measures to reduce the overall electricity consumption of the
facility.
If master
metering is implemented, Rule 25-6.049(9)(a), F.A.C., provides that the cost of
electricity may be allocated to individual occupancy units using “reasonable
apportionment methods.” The Owner states
that if the requested waiver is granted, the cost of electricity to Hyde Beach
House will be recovered from the unit owners through a pro rata apportionment.
This is the same apportionment method that will be used for other common
expenses which are not consumed by and metered to individual units. Staff
believes that this apportionment method is reasonable and meets the purpose of
Section 366.05(1), F.S.
Substantial Hardship or Violation of
Principles of Fairness
Pursuant to
Section 120.542, F.S., a petition for variance or waiver must also demonstrate
that application of the rule would create a substantial hardship or violate
principles of fairness. Substantial
hardship is defined as a demonstrated economic, technological, legal or other
type of hardship to the person requesting the waiver. Principles of fairness are violated when the
literal application of a rule affects a particular person in a manner
significantly different from the way it affects other similarly situated
persons who are subject to the rule.
Staff believes that the Owner has demonstrated that when the rule is applied
to Hyde Beach House, a substantial hardship occurs and there is a violation of
the principles of fairness.
The Owner
asserts that application of the rule will cause a substantial hardship for Hyde
Beach House because it will place Hyde Beach House at a competitive
disadvantage in regard to the motels and hotels with which it will compete for
guests. Because motels and hotels are
exempt from the individual metering requirement under paragraph (d) of Rule
25-6.049(5), F.A.C., they benefit from the lower electricity costs of master
metering. The Owner states that if Hyde
Beach House is required to individually meter, it will incur higher
energy costs than its competitors. Staff believes that the application of the
rule in this instance will result in substantial economic hardship for Hyde Beach
House.
Section 120.542(2), F.S., states that principles of
fairness are violated when the literal application of a rule affects a
particular person in a manner significantly different from the way it affects
other similarly situated persons who are subject to the rule. The Owner asserts that Hyde Beach House will
operate in a manner similar to other hotels and motels in the area. Staff believes that applying the rule to Hyde
Beach House in this particular instance will result in treatment that is disparate. Staff believes that the different treatment
of similar facilities resulting from the application of Rule 25-6.049(6),
F.A.C., to Hyde Beach House constitutes a violation of the principles of
fairness as defined in Section 120.542(2), F.S.
Conclusion: Based upon the foregoing, staff
believes that the Petition should be granted.
The Owner has demonstrated that the purpose of the underlying statutes
will be achieved by means other than the individual metering rule and that
application of Rule 25-6.049(5) and (6), F.A.C., would create a substantial
hardship and violate principles of fairness for Hyde Beach House. Therefore,
staff recommends that the requested rule waiver be granted, provided that:
1)
Hyde Beach House allocates the cost of electricity to
the individual owners using a reasonable apportionment method, consistent with
Rule 25-6.049(9)(a), F.A.C.;
2)
The waiver is effective for only so long as the
condominium is operated and licensed as a transient occupancy facility. At such time as the condominium is no longer
so operated and licensed, Hyde Beach House must inform FPL within 10 days and
request FPL to install individual meters on all the occupancy units. In the event such a conversion to individual
metering is required, Hyde Beach House will be solely responsible for the cost
of such conversion, pursuant to Rule 25-6.049(7), F.A.C.
These recommended conditions are
similar to those the Commission set forth in Order Nos. PSC-05-0258-PAA-EU,
PSC-04-0861-PAA-EU,
PSC-03-1472-PAA-EU,
PSC-11-0253-PAA-EU,
PSC-15-0363-PAA-EU,
and PSC-15-0565-PAA-EUthat
address waivers of the individual metering requirement for condominium
facilities.
