Discussion
of Issues
Issue 1:
Should UIF’s Request for Oral Argument on its Motion
for Reconsideration of Order No. PSC-2021-0206-FOF-WS be Granted?
Recommendation:
No.
Staff recommends that oral argument was not requested consistent with the
requirements of Rule 25-22.0022, Florida Administrative Code (F.A.C.), and that
the pleadings are sufficient for the disposition of this matter. However, if
the Commission chooses to hear oral argument at its discretion, staff
recommends providing 5 minutes per party. (Trierweiler)
Staff Analysis:
Law
Rule 25-22.0022(1), F.A.C., allows a party to request oral
argument before the Commission for any motion by separate written pleading
filed concurrently with the motion on which argument is requested. Failure to
timely file a request for oral argument constitutes a waiver thereof. Granting
or denying oral argument is within the sole discretion of the Commission. Rule
25-22.0022(3), F.A.C. Pursuant to Rule 25-22.0022(2), F.A.C., the Commission
may request oral argument at its discretion.
UIF’s Position
UIF contends that because the repression adjustment was
not discussed in the Staff Recommendation and was not addressed by the Commissioners
at the post-hearing Commission Conference, the Commissioners would benefit by
hearing oral argument on the issue. UIF requests fifteen (15) minutes for each
party. OPC did not file a response to UIF’s Request for Oral Argument.
Staff Analysis
As discussed in the case background, the Utility’s Request
for Oral Argument was not filed concurrently with the Motion, as required by
Rule 25-22.0022(1), F.A.C. Further, staff believes that the pleadings are
sufficient on their face for the Commission to evaluate and decide UIF’s
Motion. Staff recommends that UIF’s Request should be denied as unnecessary for
the disposition of this matter, and because its request for oral argument was
not made consistent with the requirements of Rule 25-22.022, F.A.C. However, if
the Commission, in its discretion, chooses to hear oral argument, staff
recommends 5 minutes per party is sufficient.
Issue 2:
Should
UIF’s Motion for Reconsideration of Order No. PSC-2021-0206-FOF-WS
be Granted?
Recommendation:
No. UIF’s Motion for Reconsideration should be
denied as being untimely filed. However, if the Commission wishes to address
the substance of UIF’s Motion, staff recommends the Motion should be denied
because UIF fails to raise a point of fact or law that the Commission
overlooked or failed to consider in rendering its decision. (Trierweiler)
Staff Analysis:
Law
Rule 25-22.060(3), F.A.C., applies to requests for
reconsideration of final orders, and states:
(3) Time. A
motion for reconsideration of a final order shall be filed within 15 days after
issuance of the order. A response to a motion for reconsideration or a cross
motion for reconsideration shall be served within 7 days of service of the
motion for reconsideration to which the response or cross motion is directed. A
response to a cross motion for reconsideration shall be served within 7 days of
service of the cross motion.
The standard of review for reconsideration of a Commission
order is whether the motion identifies a point of fact or law that Commission overlooked
or failed to consider in rendering the order. See 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
162 (Fla. 1st DCA 1981). In a motion for
reconsideration, it is not appropriate to reargue matters that have already
been considered. Sherwood v. State,
111 So. 2d 96 (Fla. 3rd DCA 1959); citing State
ex. rel. Jaytex Realty Co. v. Green, 105 So. 2d 817 (Fla. 1st DCA
1958). Furthermore, a motion for
reconsideration should not be granted “based upon an arbitrary feeling that a
mistake may have been made, but should be based upon specific factual matters
set forth in the record and susceptible to review.” Stewart Bonded Warehouse, Inc.
UIF’s Motion
UIF states in its Motion that a water
repression adjustment quantifies changes in consumption in response to an increase
in price. UIF also states that the Commission has historically estimated that
the rate by which residential customers will reduce their water consumption in
response to an increase in price - elasticity of demand - is four percent of
discretionary usage for every ten percent increase in price. UIF asserts that inclusion
of a repression adjustment is a long-standing Commission practice. According to
UIF, the Commission’s failure to apply a repression adjustment establishes that
this Motion clearly meets the strict standard for reconsideration of a point of
fact being overlooked.
In its Motion, UIF concedes that it did
not present evidence on repression as it and other utilities have done in the
past. To support its position, UIF cites to prior Commission orders addressing
base rate proceedings for Commission-regulated water and wastewater utilities,
in which repression adjustments were made to reflect anticipated reductions in
the number of gallons sold.
In Final Order No. PSC-2021-0206, the Commission
approved a 10.20 percent increase in water rates and a 22.82 percent increase
in wastewater rates, which UIF asserts requires a repression adjustment in
order for UIF to have a fair opportunity to achieve its authorized rate of
return consistent with the Commission’s practice of applying a repression
adjustment. UIF estimates that the repression adjustment revenues should have
been approximately $250,000 for water and $250,000 for wastewater, for a total
annual revenue shortfall of approximately $500,000. UIF contends this results
in a rate of return of closer to the lower end of its authorized rate of return
of 8.75 percent, almost assuring the need for another rate case in less than four
years.
UIF concludes by asking the Commission to
reconsider the lack of a repression adjustment and increase UIF’s revenue
requirement to incorporate the expected repression in usage, so UIF can have an
opportunity to earn its authorized return.
OPC’s Response
OPC asserts that UIF entered into a stipulation of Issue
36, as
reflected in Prehearing Order No. PSC-2021-0064-PHO-WS, issued January 29, 2021,
which OPC did not oppose. OPC avers that the stipulation of Issue 36 resolved
all rate design matters, including the single reference to a repression adjustment
listed in UIF's Application, filed June 30, 2020. Moreover, OPC argues that UIF
did not present testimony to explain or support a repression adjustment and
that by its own admission, UIF simply "did not present evidence on
repression." Therefore, OPC contends that even if the issue had not been
resolved by UIF 's stipulation, the Utility failed to carry its burden of proof
for a repression adjustment.
OPC notes that UIF's witnesses, Swain and Seidman, each
referenced repression only tangentially in an exhibit schedule concerning the
Used and Useful (U&U) status of just one of UIF's systems - Pennbrooke.
While acknowledging demand had dropped at Pennbrooke, the witnesses proposed that
the U&U for that one system should remain at 100% "to reflect reduced
demand due to repression and conservation."
OPC argues that no statute or administrative rule requires
the Commission to apply a repression adjustment to rate increases in all cases.
Instead, application of a repression adjustment is subject to the discretion of
the Commission. OPC reasons that the law does not require a repression
adjustment in cases in which a utility fails to present testimony or evidence
to support such an adjustment.
OPC cites to Florida Power Corp. v. Cresse, 413 So.
2d 1187, 1191 (Fla. 1982), for the premise that the burden of proof is always
on a utility seeking a rate change. OPC notes that the Commission’s rules do
not require the Commission to automatically apply a repression adjustment to
rate increases of a certain amount and thus, argues that UIF’s reliance on staff
to automatically include a repression adjustment has no legal basis. Moreover, OPC
argues that UIF’s stipulation negated any reliance on alleged but unfounded
“long-standing Commission practice.” OPC asserts that to allow a utility to
merely list allegations or requests in its petition, fail to produce evidence,
and then expect all aspects of the petition to be granted, would establish a
dangerous precedent and represent a shift in the burden of proof away from the
petitioning utility.
OPC also takes issue with UIF’s complaint that the
Commission did not discuss a repression adjustment during the post-hearing Commission
Conference. OPC notes that in light of the stipulation to which UIF agreed, there
was no basis for the Commission to delve into that topic. OPC asserts that even
if a repression adjustment had been at issue, UIF resolved the matter via stipulation.
OPC also asserts that the lack of a particular discussion of one item in a
document or proceeding is not presumptive proof that the item or matter was not
considered by the tribunal at all. OPC
argues that there is no reason to believe the Commission overlooked or failed
to consider a repression adjustment and that the record evidence shows that all
aspects of rate design were considered, and that UIF’s stipulation fully
addressed and resolved the issue.
OPC characterizes UIF’s Motion an attempt to use
reconsideration as a tactic to reargue the case or persuade the Commission to change
its mind in the absence of evidence to support the change, and that such use of
reconsideration is contrary to law. OPC
concludes that that UIF’s Motion fails to meet the requirements for
reconsideration under Rule 25-22.060, F.A.C., and that granting UIF’s Motion
would be a departure from established Commission policy and would result in reversible
error.
Staff Analysis
Untimely Filing of the Motion
Although OPC chose not to raise the matter in its Response,
UIF’s Motion should have been filed within 15 days, pursuant to Rule
25-22.060(3), F.A.C. Failure to file a timely motion for reconsideration shall
constitute waiver of the right to do so. Rule 25-22.060(1)(d), F.A.C. As
discussed in the case background, any request for reconsideration of Order No.
PSC-2021-0206-FOF-WS was due to be filed by June 21, 2021.
UIF inadvertently filed two copies of its Request for Oral Argument on June 18,
2021. While timely served to counsel for OPC and staff, UIF’s Motion for
Reconsideration was not filed with the Commission Clerk until July 2, 2021,
when the error was discovered by staff, and a copy of the Motion was placed by
staff in the docket file. The time limitation for filing reconsideration is
jurisdictional, and the Commission does not have the authority to enlarge it.
Staff recommends that UIF’s Motion should be denied on the basis of
untimeliness. However, if the Commission addresses the substance of UIF’s
Motion,
staff recommends it should be denied for the reasons set forth below.
Absence of Evidence in the Record
In its Motion, UIF cites to 11 Commission
orders addressing base rate increases for Commission-regulated water and
wastewater utilities, in which repression adjustments were made to reflect
anticipated reductions in the number of gallons sold. However, 9 of the 11
cases referenced by UIF were conducted pursuant to the Commission’s Proposed
Agency Action (PAA) process. If a utility is dissatisfied with the Commission’s
PAA order, it can request an administrative hearing, at which it bears the
ultimate burden to support its rate request and to place into evidence the
various components that go into setting rates, including testimony and evidence
as to the appropriate repression adjustment, if any.
The other two orders cited by UIF were
post-hearing decisions, issued after the Commission conducted an administrative
hearing. In both instances, the repression adjustments were supported by
expert testimony. For example, a repression adjustment was prominently featured
in UIF’s 2016 rate case, where UIF filed evidence in support of the repression
adjustment issue in the record, which included the testimony of the Utility’s own
expert witness, that was then countered by the testimony of the Commission staff
witness. UIF provided no citations to Commission orders where a
repression adjustment was made after conducting a hearing in which no evidence
was provided regarding such an adjustment. Nor did UIF cite to a case where a
repression adjustment was made after an across-the-board increase to service
rates was approved by the Commission.
Despite UIF’s admission in its Motion that it failed to
provide evidence or testimony to support a repression adjustment in this docket,
the Utility claims that Commission staff should have applied it anyway because
the Utility requested it in its Application. The
Commission’s long-standing practice is that the ultimate burden of proof to
establish a record sufficient to support requested rates lies with the utility
seeking a rate change. When
the record is devoid of the evidence required to support a repression
adjustment, the Commission cannot create that evidence after the fact and
retroactively apply it to the approved rates. Indeed, as the record is silent, UIF’s
speculated revenue shortfall amounts due to the absence of a repression
adjustment cannot be verified. Further, as discussed below, a repression
adjustment would not be appropriate in this case, where an across-the-board increase
to water and wastewater service rates was made.
UIF’s Stipulation to Issues 34 and 36
As discussed in the case background, Type 2 stipulations
were agreed to by UIF and approved by the Commission with respect to the rate
structure for water (Issue 34) and wastewater (Issue 36) rate structure,
resulting in an across-the-board increase to water and wastewater service
rates. The Commission does not apply a repression adjustment to
across-the-board rate increases. The application of an across-the-board
increase results in the existing rates being increased uniformly by the
percentage increase in the revenue requirement. Under the application of
an across-the-board increase, all parameters of rate design are held constant,
such as the base facility charge recovery allocation, rate blocks, and billing
determinants. Factoring in a repression adjustment negates the premise of an
across-the-board increase because cost recovery would have to be redistributed
to account for any anticipated reduction in gallons and related operation and
maintenance expenses. As OPC notes in its response, UIF’s stipulation to water
and wastewater rate structure is an across-the-board rate increase where staff
does not apply a repression reduction. These stipulations resolved all rate
design matters, including the passing reference to a repression adjustment
listed in UIF's Application. OPC did not oppose approval of the stipulation,
and UIF’s stipulation to Issues 34 and 36 is not contested in its Motion.
Conclusion
As stated above, staff recommends that UIF’s Motion should
be denied as having been untimely filed. However, if the Commission addresses
the substance of UIF’s Motion, staff recommends it should be denied for the
following reasons. The standard of review for reconsideration of a Commission
order is whether the motion identifies a point of fact or law that Commission overlooked
or failed to consider in rendering the order. The
lack of a particular discussion of one item in a document or proceeding is not
presumptive proof that the item or matter was not considered by the tribunal. Furthermore,
a motion for reconsideration should not be granted “based upon an arbitrary
feeling that a mistake may have been made, but should be based upon specific
factual matters set forth in the record and susceptible to review.”
UIF’s assertion, that the absence of a repression
adjustment in the staff recommendation and subsequent final order suggests that
the Commission overlooked the issue, is contrary to UIF’s admission in its
Motion that it offered no evidence in support of a repression adjustment in the
record or at Hearing. It further ignores UIF’s stipulation to an
across-the-board rate increase to water and wastewater service rates, reflected
in the Final Order of this proceeding. The Utility, who has the burden of
proof, admits that the record is silent on this issue; therefore, there was
nothing for the Commission to consider, other than the proposed stipulations it
approved. Rather than overlooking a repression adjustment, the adjustment wasn’t
relevant considering the absence of evidence in the record and in light of
UIF’s stipulation to Issues 34 and 36. Accordingly, staff recommends that UIF’s
Motion for Reconsideration should be denied.
Issue 3:
Should this docket be closed?
Recommendation:
Yes,
this docket should be closed. (Trierweiler)
Staff Analysis:
This
docket should be closed.
