Case Background
On
July 2, 2020, Peoples Gas System (Peoples or Company) filed a petition
(Petition) for approval to track, record as a regulatory asset, and defer
incremental costs resulting from the COVID-19 pandemic. Peoples has requested
deferral of incremental bad debt expense and safety-related costs attributable
to COVID-19. Given the ongoing nature of the COVID-19 pandemic, the total
extent of Peoples’ COVID-19-related costs is not known at this time. Commission
consideration of the potential recovery of the regulatory asset will be
addressed in a future proceeding. The Office of Public Counsel (OPC) filed a
notice of intervention, which was acknowledged by Order PSC-2020-0229-PCO-GU on
July 9, 2020.
Staff
filed its recommendation regarding Peoples’ Petition on August 6, 2020,
recommending approval of the requested regulatory asset and noting that the
approval would issue as a procedural order. The Commission considered the
Petition at its August 19, 2020, Agenda Conference and approved staff’s recommendation.
The Commission memorialized its approval in Order PSC-2020-0305-PCO-GU (Order),
entered on September 4, 2020, which allowed Peoples to establish a regulatory
asset to record costs incurred due to COVID-19. The Order was entered as a
procedural order, not as proposed agency action (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.). No
reconsideration was timely requested with respect to the Order issued in this
docket.
The
action taken with respect to the regulatory asset requested in this docket was
substantially identical to the action taken with respect to a similar request
for a COVID-19 related regulatory asset by Gulf Power Company (Gulf) in Docket
No. 20200151-EI, In re: Petition for
approval of a regulatory asset to record costs incurred due to COVID-19, by
Gulf Power Company. OPC timely filed
a motion for reconsideration and appeal with respect to the procedural order
that issued in the Gulf regulatory asset docket.
Staff’s recommendation regarding OPC’s motion for reconsideration in the
Gulf docket is also scheduled to be heard at the October 6, 2020 Agenda
Conference. Consistent with staff’s
recommendation in Docket No. 20200151-EI to grant reconsideration and reissue
Order No. PSC-2020-0262-PCO-EI as a PAA order,
staff is recommending that the Commission reconsider on its own motion
the issuance of Order No. 2020-0305-PCO-GU in this docket, vacate the
procedural Order, and reissue the Order as proposed agency action.
The
Commission has jurisdiction over this matter pursuant to Sections 366.04 and
366.06, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission reconsider, on its own motion,
the issuance of Order No. PSC-2020-0305-PCO-GU as a procedural order?
Recommendation:
Yes. The Order overlooked a point of law affecting
notice and the point of entry for a substantially affected person to challenge
the establishment of a regulatory asset. On its own motion, the Commission
should vacate Order No. PSC-2020-0229-PCO-GU and reissue it as proposed agency
action (PAA). (Stiller, Crawford)
Staff Analysis:
Standard of Review
The appropriate standard of review for reconsideration is
whether a point of fact or law 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).
The doctrine of administrative finality provides that
there must be a terminal point in every proceeding both administrative and
judicial, at which the parties and the public may rely on a decision as being
final and dispositive of the rights and issues involved therein. A decision,
once final, may only be modified if there is a significant change in circumstances
or if modification is required in the public interest. Florida
Power Corp. v. Garcia, 780 So. 2d 34 (Fla. 2001); Peoples Gas System, Inc. v. Mason, 187 So. 2d 335 (Fla. 1966).
However, the Florida Supreme Court has also found that the
Commission has the inherent power and the statutory duty to correct errors in
its orders to protect the interests of the public. Reedy
Creek Utilities Co. v. FPSC, 418 So. 2d 249 (Fla. 1982). For example, in Reedy Creek, the Court affirmed that the
Commission correctly amended an erroneous order, two and half months after its
issuance, where the appellant did not change its position during the lapse of
time between orders, and suffered no prejudice as a consequence. Reedy Creek, 418 So.2d at 253; see also Peoples Gas System, Inc. v. Mason,
187 So. 2d 335 (Fla. 1966) (“We have no doubt that such powers [to regulate
public utilities] may, in proper instances, be exercised on the initiative of
the commission.”).
Analysis
The 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 for
which staff urges reconsideration 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”) and 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”). In previous PAA orders establishing regulatory
assets, parties were not foreclosed from challenging the creation of the
regulatory asset itself, as was the case in this Order and the Gulf regulatory
asset in Docket No. 20200151-EI.
Importantly, 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.
Conclusion
As discussed in staff’s
recommendation in Docket No. 20200151-EI, OPC persuasively argues that the
establishment of a regulatory asset may affect a person’s substantial interests
because it provides for the immediate accounting treatment of certain expenses
and the related accrual of carrying costs. A person adversely affected by such
a decision should have the present opportunity to challenge the establishment
of this accounting treatment and the definition of its terms. Being able to
address the subsequent cost recovery requested pursuant to an established
regulatory asset does not afford an adequate opportunity to address the
appropriateness of the regulatory asset itself. By issuing as a procedural,
rather than PAA, order, the Commission inadvertently overlooked a point of law
in making its decision: to afford an opportunity for an adversely affected
person the opportunity to request an administrative hearing regarding the
creation of the Peoples’ regulatory asset, consistent with the requirements of
Section 120.569, F.S., Decisions which
affect substantial interests.
Accordingly, staff recommends that the Commission should reconsider, on
its own motion, the issuance of Order No. PSC-2020-0305-PCO-GU as a procedural order.
Staff recommends that appropriate
action the Commission should take on reconsideration is that the Commission
vacate the procedural Order and reissue 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.
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.
