Case Background
The
Rules
On
August 17, 2018, the Joint Administrative Procedures Committee (JAPC) sent the
Commission a letter providing comments resulting from JAPC’s review of Chapter
25-6, Florida Administrative Code (F.A.C). The letter included comments on Rule
25-6.0440, Territorial Agreements for Electric Utilities, and Rule 25-6.0441,
Territorial Disputes for Electric Utilities, F.A.C.[2]
Rule
25-6.0440, F.A.C., requires all territorial agreements between electric
utilities to be submitted to the Commission for approval. The rule lists the
information that must be provided and sets forth the factors that the
Commission may consider in approving territorial agreements. Rule 25-6.0441,
F.A.C., states that a territorial dispute proceeding may be initiated by a
petition from an electric utility requesting the Commission to resolve the
dispute. The rule lists the information required in the petition and identifies
the factors the Commission may consider in resolving territorial disputes. Both
rules state that the Commission’s consideration is not limited to the factors
that are listed.
The
territorial agreement and territorial dispute rules implement Section
366.04(2), F.S., which gives the Commission the power to approve territorial
agreements and to resolve territorial disputes involving rural electric
cooperatives, municipal electric utilities, and other electric utilities under
its jurisdiction. For territorial disputes, Section 366.04(2)(e), F.S., states
that:
the Commission may consider, but not be
limited to consideration of, 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.
The
factors listed in Section 366.04(2)(e), F.S., are included in the list of factors
in Rule 25-6.0441, F.A.C., although the language is not identical. JAPC’s
interpretation of Section 366.04(2)(e), F.S., is that the Legislature gave the
Commission authority to consider factors other than those listed in the statute
in resolving territorial disputes, but those additional factors need to be
identified in the rule.
JAPC’s
Comments
JAPC’s
letter noted that Rules 25-6.0440 and 25-6.0441, F.A.C., both state that the
Commission “may consider, but not be limited to” certain enumerated factors in
making its determination. JAPC commented
that the use of the quoted phrase in the rules implies that there are
additional expectations or standards that could be enforced that are not
enumerated. JAPC asked the Commission to review Section 120.52(8)(d), F.S.,
which provides that it is an invalid exercise of delegated legislative
authority if a rule is vague, fails to establish adequate standards for agency
decisions, or vests unbridled discretion in the agency.
Procedural
Matters
This
rulemaking was initiated to address JAPC’s comments on Rules 25-6.0440 and
25-6.0441, F.A.C. The Notice of Development of Rulemaking appeared in the
November 18, 2019 edition of the Florida Administrative Register (F.A.R.).
Tampa Electric Company (TECO) and the Florida Electric Cooperatives Association
(FECA) filed comments on December 3, 2019, and Florida Power & Light
Company, Duke Energy Florida, and the Florida Municipal Electric Association
joined FECA’s comments. TECO requested a workshop in its December 3, 2019
comments, and FECA requested a workshop on December 4, 2019. However, TECO and
FECA withdrew their requests for a workshop on February 3, 2020, after staff
revised its draft rule based on comments contained in the requests for
workshop. The Office of Public Counsel was provided the opportunity to comment
on the draft rule amendments.
This
recommendation addresses whether the Commission should amend Rules 25-6.0440
and 25-6.0441, F.A.C. The Commission has jurisdiction under Sections
350.127(2), 366.04(2), (4), (5), and 366.05(7), F.S.
Discussion
of Issues
Issue 1:
Should the Commission propose the amendment of Rule
25-6.0440, Territorial Agreements for Electric Utilities, and Rule 25-6.0441,
Territorial Disputes for Electric Utilities, F.A.C.?
Recommendation:
Yes, the Commission should propose the amendment of
Rules 25-6.0440 and 25-6.0441, F.A.C., as set forth in Attachment A. The
Commission should also certify Rules 25-6.0440 and 25-6.0441, F.A.C., as minor
violation rules. (Cowdery, Guffey)
Staff Analysis:
The Commission adopted
Rules 25-6.0440 and 25-6.0441, F.A.C., to implement its authority under Section
366.04(2), F.S., to approve territorial agreements and resolve territorial
disputes. Both rules list factors the Commission may consider in making its
determinations. The language in both
rules states that the Commission’s consideration is “not limited to” the listed
factors. In its rule review letter, JAPC conveyed its concern that the phrase
“may consider, but not be limited to the consideration of,” implied that there
are additional expectations or standards that could be enforced, which could be
considered an invalid exercise of delegated legislative authority under
Section 120.52(8)(c), F.S.
In order to address JAPC’s
concern, staff is recommending that the phrase “but not be limited to
consideration of” be deleted from both rules. In lieu of this phrase, staff is
recommending that a criterion be added to each rule that allows the Commission
to consider “[a]ny other factor the Commission finds relevant in reaching a
determination” that the territorial agreement or resolution of the territorial
dispute “is in the public interest.” In addition, staff recommends that the
territorial dispute rule be amended for clarity to state that the Commission’s
consideration of the listed factors is in addition to the factors listed in
Section 366.04(2)(e), F.S.
Florida courts have held that
both the resolution of territorial disputes and the approval of territorial
agreements should ultimately be guided by the public interest standard. Gulf Coast Elec. Co-op., Inc. v. Johnson,
727 So. 2d 259, 264 (Fla. 1999). As a part of this public interest test, the
Commission should ensure its decision prevents the uneconomic duplication of
generation, transmission, and distribution assets. Id.; see
Section 366.05, F.S. Staff believes that the recommended amendments of
these rules will adhere to the public interest standard.
This draft language ensures that the
Commission has wide latitude to consider factors that may be unique to each
dispute or agreement. At the same time, the draft language limits the
Commission’s discretion, using the judicially approved public interest test,
and satisfies JAPC’s concerns.
In addition, staff is also
recommending some non-substantive amendments to both rules. These recommended
amendments are to update and clarify the rules.
Minor Violation
Rules Certification
Pursuant to Section 120.695, F.S., the agency head must
certify for each rule filed for adoption whether any part of the rule is
designated as a rule the violation of which would be a minor violation. Rules
25-6.0440 and 25-6.0441, F.A.C., are currently listed on the Commission’s
website as rules for which a violation would be minor because violation of the
rules would not result in economic or physical harm to a person or have an
adverse effect on the public health, safety, or welfare or create a significant
threat of such harm. The amendments to the rules would not change their status
as minor violation rules. Thus, staff recommends that the Commission certify
Rules 25-6.0440 and 25-6.0441, F.A.C., as minor violation rules.
Statement of
Estimated Regulatory Costs
Pursuant to Section 120.54(3)(b), F.S., agencies are
encouraged to prepare a statement of estimated regulatory costs (SERC) before
the adoption, amendment, or repeal of any rule. The SERC is appended as
Attachment B to this recommendation.
The SERC concludes that the rules will not likely directly
or indirectly increase regulatory costs in excess of $200,000 in the aggregate
in Florida within one year after implementation. Further, the SERC economic analysis concludes
that the rules will not likely have an adverse impact on economic growth,
private sector job creation or employment, private sector investment, business
competitiveness, productivity, or innovation in excess of $1 million in the
aggregate within five years of implementation. Thus, the rules do not require
legislative ratification pursuant to Section 120.541(3), F.S. In addition, the
SERC states that the rules will not have an adverse impact on small business
and will have no impact on small cities or counties. No regulatory alternatives
were submitted pursuant to paragraph 120.541(1)(a), F.S. None of the
impact/cost criteria established in paragraph 120.541(2)(a), F.S., will be
exceeded as a result of the recommended amendments to Rules 25-6.0440 and 25-6.0441,
F.A.C.
Conclusion
Staff
recommends that the Commission should propose the amendment of Rules 25-6.0440
and 25-6.0441, F.A.C., as set forth in Attachment A. The Commission should also
certify Rules 25-6.0440 and 25-6.0441, F.A.C., as minor violation rules.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no requests for hearing, information
regarding the SERC, proposals for a lower cost regulatory alternative, or JAPC
comments are filed, the rule should be filed with the Department of State, and
the docket should be closed. (Cowdery)
Staff Analysis:
If no requests for hearing, information regarding
the SERC, proposals for a lower cost regulatory alternative, or JAPC comments
are filed, the rule may be filed with the Department of State and the docket
should be closed.
25-6.0440 Territorial Agreements for
Electric Utilities.
(1)
All territorial agreements between electric utilities must shall
be submitted to the Commission for approval. Each territorial agreement must
shall clearly identify the geographical area to be served by each
utility. The submission must shall include:
(a)
A map and a written description of the area,
(b)
The terms and conditions pertaining to implementation of the agreement, and any
other terms and conditions pertaining to the agreement,
(c)
The number and class of customers to be transferred,
(d)
Assurance that the affected customers have been contacted and the difference in
rates explained,
(e)
Information with respect to the degree of acceptance by affected customers,
i.e., the number in favor of and those opposed to the transfer, and
(f)
An official Florida Department of Transportation (DOT) General Highway County
map for each affected county depicting boundary lines established by the
territorial agreement. Upon approval of the agreement, any modification,
changes, or corrections to this agreement must be approved by this Commission.
(2)
Standards for Approval. In approving territorial agreements, the Commission may
consider, but not be limited to consideration of:
(a)
The reasonableness of the purchase price of any facilities being transferred;
(b)
The reasonable likelihood that the agreement, in and of itself, will not cause
a decrease in the reliability of electrical service to the existing or future
ratepayers of any utility party to the agreement; and
(c)
The reasonable likelihood that the agreement will eliminate existing or
potential uneconomic duplication of facilities; and.
(d)
Any other factor the Commission finds relevant in reaching a determination that
the territorial agreement is in the public interest.
(3)
The Commission may require additional relevant information from the parties of
the agreement, if so warranted.
Rulemaking
Authority 350.127(2), 366.05(1) FS. Law Implemented 366.04(2), (4), (5),
366.05(7) FS. History–New 3-4-90, Amended 2-13-96, ____________.
25-6.0441 Territorial Disputes for
Electric Utilities.
(1)
A territorial dispute proceeding may be initiated by a petition from an
electric utility requesting the Commission to resolve the dispute. Additionally
the Commission may, on its own motion, identify the existence of a dispute and
order the affected parties to participate in a proceeding to resolve it. Each
utility that which is a party to a territorial dispute must
shall provide a map and a written description of the disputed area along
with the conditions that caused the dispute. Each utility party must shall
also provide a description of the existing and planned load to be served in the
area of dispute and a description of the type, additional cost, and reliability
of electrical facilities and other utility services to be provided within the
disputed area.
(2)
In resolving territorial disputes, the Commission may consider, in addition
to the factors listed in s. 366.04(2)(e): but not be limited to
consideration of:
(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, the 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)
Any other factor the Commission finds relevant in reaching a determination that
the resolution of the territorial dispute is in the public interest; and
(e)
(d) If all other factors are substantially equal, customer Customer
preference if all other factors are substantially equal.
(3)
The Commission may require additional relevant information from the parties of
the dispute, if so warranted.
(4)
Upon resolution of each territorial dispute, the parties to the dispute must
shall submit to the Commission an official Florida Department of
Transportation (DOT) General Highway County map for each affected county
depicting boundary lines established by the resolution of the territorial
dispute.
Rulemaking
Authority 350.127(2), 366.05(1) FS. Law Implemented 366.04(2), (4), (5),
366.05(7) FS. History–New 3-4-90, Amended 2-13-96,_________.
