Case Background
On
May 22, 2020, Gulf Power Company (Gulf or Company) filed a petition (Petition)
for approval to establish a regulatory asset to record costs incurred due to
Coronavirus Disease 2019 (COVID-19). Approval of the Petition would allow Gulf
to place incremental bad debt expense and safety-related costs attributable to
COVID-19 into the regulatory asset for deferred accounting treatment. The
Office of Public Counsel (OPC or Citizens) intervened and became a party to
this docket. Vote Solar, the Southern Alliance for
Clean Energy, AARP, and the CLEO Institute appeared in this docket as
interested persons.
Staff
filed its recommendation regarding Gulf’s Petition on June 24, 2020,
recommending approval of the requested regulatory asset, noting that the
approval would issue as a procedural order. The Commission considered the
Petition at it its July 7, 2020, Agenda Conference. OPC addressed the
Commission at that Conference and raised several objections to the relief
sought in the Petition. OPC did not
provide specific argument at the Agenda Conference that the Commission’s
decision should issue as a proposed agency action (PAA) order, rather than as a
procedural order. The Commission approved staff’s recommendation and Gulf’s
Petition by Order PSC-2020-0262-PCO-EI (Order), issued July 27, 2020, which
allowed Gulf to establish a regulatory asset to record costs incurred due to
COVID-19. The Order was entered as a procedural order, not as PAA, and
contained the following language:
A substantially affected party’s point of
entry to request an evidentiary hearing before this Commission will be afforded
in such a future proceeding addressing cost recovery of the regulatory asset.
Order
at 2.
The
Notice of Further Proceedings or Judicial Review attached to the Order did not
provide the opportunity for substantially affected persons to request a
hearing. It did advise parties who are adversely affected by the Order of the
opportunity to request reconsideration under Rule 25-22.0376, Florida
Administrative Code (F.A.C.).
On
August 6, 2020, OPC timely filed a Motion for Reconsideration (Motion) and, in
the Alternative, Petition for Evidentiary Hearing (Petition). In the Motion,
OPC avers that the Commission overlooked the requirements of Rule 25-22.029,
F.A.C., and precedent and policy relating to deferred accounting methods when
it entered the Order. OPC argues that the Commission’s decision to approve the
petition and allow Gulf to establish a regulatory asset affects the substantial
interests of Citizens and, accordingly, the Order should have been issued as
PAA with the opportunity for substantially affected persons to request a full
evidentiary hearing.
Along
with the Motion, as an alternative, OPC submitted the Petition requesting
formal proceedings under Sections 120.569 and 120.57, Florida Statutes (F.S.).
OPC filed the Petition on the alternative legal theory that the Order is PAA
notwithstanding being labelled as procedural. In the Petition, OPC forwards its
substantive arguments in opposition to establishment of the regulatory asset.
OPC makes the policy argument that the Commission has in the past limited the
recovery of analogous expenses to situations where the utility is not earning
within its range. OPC also argues on the facts that the Order fails to
sufficiently define and limit the cost categories that may be considered
eligible for recovery. OPC requests the opportunity to conduct discovery and
that the Commission conduct an evidentiary hearing.
Gulf timely
filed a Response in Opposition to the Motion (Response) on August 13, 2020, and
objected to the relief requested by OPC. Gulf also argues that because OPC is
not adversely affected by the Order, the Commission need not reach the merits
of the Motion. Gulf supports Commission confirmation of the Order as
procedural, not PAA, and does not believe a hearing on the Petition is required
or appropriate.
On August 26,
2020, OPC filed notice with the Commission that it had filed a Notice of
Administrative Appeal of the Order to the Florida Supreme Court. The Court
acknowledged the Notice and assigned a case number (SC20-2171), but has taken
no further action.
Neither OPC nor
Gulf requested oral argument regarding OPC’s Motion for Reconsideration. Pursuant to Rule 25-22-0022, F.A.C., the
Commission may hear argument from the parties at its discretion.
The Commission
has jurisdiction pursuant to Sections 366.04 and 366.06, F.S.
Discussion
of Issues
Issue 1:
Should the Motion for Reconsideration be
granted?
Recommendation:
Yes, the Motion should be granted.
OPC has demonstrated that a point of law was overlooked regarding the point of
entry for a substantially affected person to challenge the establishment of a
regulatory asset. Order No. PSC-2020-0262-PCO-EI should be vacated and reissued
as proposed agency action (PAA). (Stiller, Crawford)
Staff Analysis:
The authority for a party to request
reconsideration is found in two Commission rules: Rule 25-22.0376(1), F.A.C., regarding reconsideration of
non-final orders, and Rule 25-22.060, F.A.C., regarding reconsideration of
final orders. OPC filed the Motion alternatively under both rules, contending
that “the true nature of the order is unknown.” However, the standard for
review under either rule is the same.
Standard of Review
The appropriate standard of review in a motion for
reconsideration is whether the motion identifies a point of fact or law that
was overlooked or that the Commission failed to consider in rendering its
Order. Stewart Bonded Warehouse, Inc. v. Bevis, 294 So. 2d 315 (Fla.
1974); Diamond Cab Co. v. King, 146
So. 2d 889 (Fla. 1962); and Pingree v.
Quaintance, 394 So. 2d 161 (Fla. 1st DCA 1981).
In a motion for reconsideration, it is not appropriate to reargue
matters that the Commission has already considered. Sherwood
v. State, 111 So. 2d 96 (Fla. 3d DCA 1959), citing State ex. rel. Jaytex Realty Co. v. Green, 105 So. 2d 817 (Fla. 1st
DCA 1958).
OPC Motion for
Reconsideration
OPC’s argument for reconsideration begins with the premise
that the Order “is the functional and legal equivalent of a PAA Order.” Motion
at 3. OPC contends that because it bears the hallmarks of a PAA, yet was issued
as a procedural order, the Order improperly provided no opportunity for
substantially affected persons to request an evidentiary hearing. As the basis
for reconsideration on this issue, OPC asserts that the Commission overlooked the
point of law in Rule 25-22.029, F.A.C., regarding when it is appropriate to
enter a PAA Order and, specifically, the requirement to afford persons the
right to request an evidentiary hearing when a decision may affect their
substantial interests.
OPC argues that the establishment of the regulatory asset
affects the substantial interests of Citizens because it provides for the
immediate accounting treatment of certain expenses and the related accrual of
carrying costs. OPC argues that it should have the present opportunity to
challenge the establishment of this accounting treatment and the definition of
its terms. To the extent expenses are deemed eligible and are allowed to be
placed in the regulatory asset consistent with this initial approval, OPC
argues that applicable accounting standards makes future recovery “probable,”
which is further defined as “likely to occur,” and such treatment underscores
the impact to substantial interests realized by this initial approval.
OPC argues that although these interests are immediately
affected and Citizens have numerous facts and legal arguments to present,
the establishment of the regulatory asset essentially became dispositive and
final upon entry of the Order with no prior hearing and no right to request one
to present these matters and create a record for full consideration. Motion at
4. OPC notes that the Commission docket was closed upon entry of the Order. OPC
further notes the notice of rights attached to the Order advised of only
appellate review of final agency action, and not the right to file a petition
and request an evidentiary hearing.
Gulf Response to
Motion
Gulf first argues that the OPC Motion improperly presents
arguments on the PAA issue for the first time in seeking reconsideration. Gulf
argues that Commission precedent expressly disallows this practice and that the
Motion should be summarily denied on this basis.
Gulf next argues that OPC has not demonstrated that it is
“adversely affected” as is required under Rule 25-22.0376, F.A.C., for a party
to request reconsideration. Gulf takes the position that the following language
in the Order belies any claim that OPC is immediately affected:
This approval to establish a regulatory asset, for
accounting purposes, does not limit our ability to review the amounts, recovery
method, recovery period, and other related matters for reasonableness in a
future proceeding in which the regulatory asset is included. A substantially
affected party’s point of entry to request an evidentiary hearing before this
Commission will be afforded in such a future proceeding addressing cost recovery
of the regulatory asset.
Order at 2. Gulf also asserts that the Commission is not
bound by the accounting principles upon which OPC relies to makes its arguments
regarding recovery of the regulatory asset being “probable” or “likely to
occur.” Finally, Gulf argues that the regulatory asset will have no rate impact
until reviewed and approved by the Commission in a rate proceeding, and that
OPC will be afforded its full opportunity to examine the regulatory asset costs
during that proceeding.
Analysis
Gulf is correct that the
specific issue of the Order being treated as PAA or procedural was not raised
by OPC in its oral comments to the Commission at the July 7, 2020, Agenda
Conference. However, the very factors that are pivotal in making such a
determination were the subject of robust discussion among the Commissioners and
counsel. For example, counsel for OPC noted in her opening remarks that
establishment of a regulatory asset “virtually assures recovery from
customers.” One commissioner asked staff about “the cost impacts
from any action today that would arise to the customer.”
Another commissioner followed with a question to staff about whether the
requested approval “is not really a preliminary step.”
Staff responded, as OPC has quoted in its Motion, that the requested Commission
action was “closer to approval than disapproval, [in] the creation of a
regulatory asset, but by no means constitutes a guarantee [of recovery].”
While it was not couched in literal terms of a procedural versus PAA order,
this discussion makes clear to staff that the appropriate classification of the
Order was discussed at the Agenda Conference, and is not being raised for the
first time in the Motion.
The purpose of reconsideration is to bring to the
Commission’s attention a specific point that, had it been considered when
presented in the first instance, would have required a different decision. State ex. rel. Jaytex Realty Co. v. Green,
105 So. 2d 817, 819 (Fla. 1st DCA 1958) (Wigginton, J., concurring); Sherwood v. State, 111 So. 2d 96 (Fla.
3rd DCA 1959). Because the Commission’s discussion of and questions regarding
the nature of approval of a regulatory asset focused generally on whether that
approval was preliminary, staff believes that the kind of order issuing from
the Commission’s decision might have been different, if the specific PAA vs. procedural issue had
been squarely presented.
Staff does not read the holdings
in the orders cited by Gulf for the blanket proposition that an issue not
specifically raised by a party may never be raised on reconsideration. The most
recent order cited by Gulf involves an unusual situation where a non-party
filed an untimely motion to intervene and for reconsideration of a Commission
order dismissing a request to intervene filed by a completely unrelated entity.
The Commission summarily denied the motion on the ground that the non-party’s
attempt to cure the deficiencies in another entity’s pleading by injecting
entirely new issues into the proceeding was beyond the scope of
reconsideration.
The relevant holding in the second most recent of those orders is very similar
and summed up in the following sentence: “A motion for reconsideration
is not the appropriate vehicle for bolstering allegations and making new
arguments to cure an earlier, deficient pleading.”
The two other orders cited by Gulf are slight fact variations of the same theme
with the same outcome.
OPC has not been a party or putative party to a
proceeding, unsuccessfully filed a pleading or motion, and then sought
reconsideration by injecting a new issue, all of which are common facts in the
orders cited by Gulf. The general principle in those orders – that
reconsideration may not be used as a vehicle to resurrect or save a prior
pleading by raising an entirely new issue – remains accurate but does not
preclude the Commission from considering OPC’s Motion. As discussed more fully
above, the transcript demonstrates that Commissioners and counsel discussed the
relevant facts but overlooked the threshold point of procedural law.
That question of whether the
Order is PAA or procedural depends on the nature of the action taken by the
Commission. “[A]n agency must grant affected parties a clear point of entry,
within a specified time after some recognizable event in investigatory or other
free-form proceedings, to formal or informal proceedings under Section
120.57.” Capelletti Bros., Inc. v. Dept. of Transp., 362 So.2d 346, 348 (Fla. 1st DCA 1978). This
point of entry is case and agency specific. “An agency normally has some
discretion in determining at what point ‘the necessary or convenient
procedures, unknown to the APA, by which an agency transacts its day-to-day
business’ crystallize into ‘agency
action’ and so necessitate the offering of a point of entry.” Global Tel Link Corp. v. Dept. of
Corrections, 2013 WL 5955693, *13 (DOAH Recommended Order Nov. 1, 2013)
(citing and quoting Capeletti Bros.,
362 So. 2d at 348)).
When previously presented with
petitions seeking approval of regulatory assets, the Commission has addressed
them by entering PAA orders.
These prior regulatory asset orders are similar in many respects to the Order.
All of them contain an express reservation of the right for future Commission
review of the reasonableness of expenses similar to the one included in the
Order.
While those prior orders were considered on more detailed requests than the one
made in the limited petition that commenced this docket, the underlying request
to establish a regulatory asset is the same and staff believes the precedent of
treating approval as PAA applies equally.
The phrase in the Order here
under reconsideration that expressly allows a future challenge by a
substantially affected person (“A party’s point of entry to request an
evidentiary hearing before this Commission will be afforded in such a future
proceeding addressing cost recovery of the regulatory asset”) is substantively
different from prior Commission orders on regulatory assets (“Approval of a
regulatory asset does not prohibit the Commission from reviewing the amount for
reasonableness in future rate proceedings”). Gulf contends that OPC is not
adversely affected because of this phrase and because the Commission is
expressly allowing substantially affected persons to challenge any future cost
recovery request made by Gulf associated with the regulatory asset. Gulf argues that OPC is, therefore,
ineligible to file for reconsideration.
However, litigation in the future over amounts, recovery method, or the scope,
period, types, or subsets of allowable expenses does not address the
appropriateness of the creation of the regulatory asset in the first instance,
which is the subject of this proceeding.
For example, in General Development Utilities, Inc. v.
Department of Environmental Regulation, the First District considered
whether a letter that informed its recipient of an agency “decision” to
establish a zero waste load allocation provided a point of entry even though
the letter stated that a challenge could be brought to this issue in a later permit
proceeding. 417 So. 2d 1068 (Fla. 1st DCA 1982). The
court wrote as follows:
We pointed out in Capeletti Brothers, Inc. v. State Department
of Transportation, 362 So. 2d 346, 348, (Fla. 1st DCA 1978) that
“an agency must grant affected parties a clear point of entry, within a
specified time after some recognizable event in investigatory or other
free-form proceedings, to formal or informal proceedings under section
120.57.” Now we find it necessary to add a postscript: simply
providing a point of entry is not enough if the point of entry is so remote
from the agency action as to be ineffectual as a vehicle for affording a party
whose substantial interests are or will be affected by agency action a prompt
opportunity to challenge disputed issues of material fact in a 120.57 hearing.
The opportunity afforded GDU in this instance does not meet this standard.
Id. at
1070. Because the letter stated that “the
Department has conducted water quality studies and adopted the results of those
studies,” the court found the agency had “taken a position, reduced it to
writing, and disseminated it to the affected party who must now submit a
proposed schedule for compliance, or hazard nonrenewal of its permits.” Id. Staff finds the facts of this
case and its holding persuasive in recommending that the Commission not accept
Gulf’s argument.
Conclusion
Staff recommends that
OPC’s Motion for Reconsideration should be granted because it identifies a
point of law the Commission overlooked or failed to consider by issuing Order
No. PSC-2020-0262-PCO-EI as a procedural, rather than PAA, order. Staff agrees
that the decision, to allow Gulf to create and book certain costs in a
regulatory asset for the purposes of potential future cost recovery, is a
decision which affects substantial interests pursuant to Section 120.569,
F.S. The ability to participate in a
future cost recovery proceeding for costs booked in the regulatory asset would
not afford an adequate point of entry to contest the appropriateness of the
regulatory asset itself.
As relief for the
alleged error in overlooking the PAA requirements in Rule 25-22.029, F.A.C.,
OPC requests that the Commission “verify the proposed agency action nature of
[the] Order.” Motion at 10. Staff recommends that the Commission afford this
relief by vacating the Order and reentering it as PAA. See Sclease v. Constr. Indus. Licensing Bd., 881 So. 2d 98, 98 (Fla. 1st DCA 2004) (“an agency has authority to vacate and reenter
otherwise final orders in order to avoid due process problems”). Staff
believes that vacating and reentering the Order as PAA will require only two,
non-substantive modifications to the Order. First, the appropriate PAA Notice of
Further Proceedings or Judicial Review should be substituted for the Notice applicable
to procedural orders that was attached to the Order. Second, the phrase on page
2 regarding the ability for substantially affected persons to bring a later
administrative challenge
should be omitted.
If the Commission vacates the Order, the OPC’s
Alternative Petition for an Evidentiary Hearing will be rendered moot. See Curless v. Clay Cty., 395 So. 2d
255, 258 (Fla. 1st DCA 1981) (challenge to government action
rendered moot when that action is repealed or replaced). The Petition will not
serve as a placeholder challenge to a not-yet-issued PAA. See S. Fla. Cargo Carriers Ass'n, Inc. v. State Bd. of Pilot Comm'rs,
627 So. 2d 597, 599 (Fla. 1st DCA 1993) (a petition filed
prior to the agency formulating preliminary agency action and giving notice of
the point of entry is premature).
Issue 2:
Should this docket be closed?
Recommendation:
If no protest is filed by a person whose
substantial interests are affected within 21 days of the issuance of the Order,
a Consummating Order should be issued and the docket should remain open for the
purpose of filing monthly status reports. (Stiller)
Staff Analysis:
If no protest is filed by a person whose
substantial interests are affected within 21 days of the issuance of the Order,
a Consummating Order should be issued. The docket should remain open for the
Company to file its monthly reports.
