|
State of Florida
|
Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
|
|
DATE:
|
May 21, 2025
|
|
TO:
|
Office of Commission Clerk (Teitzman)
|
|
FROM:
|
Office of the General Counsel (Dose, Sandy,
Sunshine, Crawford) JSC
Division of Accounting
and Finance (Bardin, Buys, Byrne, Ferrer, Przygocki, Sewards, York) ALM
Division of Economics
(Bethea, Bruce, Hudson) EJD
Division of Engineering
(Smith II) TB
|
|
RE:
|
Docket No. 20250038-WS – Petition for an
acquisition adjustment for a non-viable utility, by CSWR-Florida Utility
Operating Company, LLC.
Docket No. 20250043-WS –
Petition for an acquisition adjustment for a non-viable utility, by
CSWR-Florida Utility Operating Company, LLC.
Docket No. 20250047-WS –
Petition for an acquisition adjustment for a non-viable utility, by
CSWR-Florida Utility Operating Company, LLC.
Docket No. 20250052-WS –
Application for increase in water and wastewater rates in Brevard, Citrus,
Duval, Highlands, Marion, and Volusia Counties by CSWR-Florida Utility
Operating Company.
|
|
AGENDA:
|
06/03/25 – Regular Agenda – Motion to Dismiss – Oral Argument
Requested – Participation is at the Discretion of the Commission
|
|
COMMISSIONERS ASSIGNED:
|
All Commissioners
|
|
PREHEARING OFFICER:
|
Fay (20250038-WS)
Fay
(20250043-WS)
Fay
(20250047-WS)
Clark
(20250052-WS)
|
|
CRITICAL DATES:
|
None
|
|
SPECIAL INSTRUCTIONS:
|
None
|
|
|
|
|
Case Background
Pursuant to Rule
25-30.0371, Florida Administrative Code (F.A.C.), a positive acquisition
adjustment may occur when the purchase price of a utility is greater than the net
book value of the acquired utility’s assets. If approved, a positive acquisition
adjustment increases rate base. Rule 25-30.0371, F.A.C., was amended on June
17, 2024. The previous version of the Rule required a showing of extraordinary
circumstances to be entitled to a positive acquisition adjustment, and
utilities requested the acquisition adjustment at the time of transfer. By
contrast, the amended version of the rule provides a list of factors that the
Commission shall consider in determining whether a positive acquisition
adjustment is warranted. The amended version of the rule also allows utilities
to seek approval of the acquisition adjustment at either the time of transfer
or at anytime within 3 years of the Commission order approving the transfer of
the certificate of authorization. While the prior version of Rule 25-30.0371,
F.A.C., was still effective, Central States Water Resources-Florida Utility
Operating Company, LLC (CSWR or Utility) requested and was denied positive
acquisition adjustments for three utilities that CSWR acquired.
In Docket No.
20210133-SU, CSWR acquired the North Peninsula Utilities Corporation wastewater
system (North Peninsula) and included a request for a positive acquisition
adjustment at the time of its transfer to CSWR. The Commission approved the
transfer but denied the positive acquisition adjustment by Order No.
PSC-2022-0116-PAA-SU. The proposed agency action (PAA) Order provided all
parties notice that the decision to deny the positive acquisition adjustment
would become final and effective upon issuance of a Consummating Order unless a
hearing was requested. After no petition for a formal proceeding was filed by
any substantially affected person, Consummating Order PSC-2022-0137-CO-SU
issued on April 11, 2022, making Order No. PSC-2022-0116-PAA-SU final and
effective.
In Docket No.
20210093-WU, CSWR acquired the Aquarina Utilities, Inc. water and wastewater
systems (Aquarina) and included a request for a positive acquisition adjustment
at the time of its transfer to CSWR. The Commission approved the transfer but
denied the positive acquisition adjustment by Order No. PSC-2022-0115-PAA-WS
which provided all parties notice that the decision to deny the positive
acquisition adjustment would become final and effective upon issuance of a
Consummating Order unless a hearing was requested. After no petition for a
formal proceeding was filed by any substantially affected person, Consummating
Order PSC-2022-0133-CO-WS issued on April 8, 2022, making Order No.
PSC-2022-0115-PAA-WS final and effective.
In Docket
20210095-WU, CSWR acquired the Sunshine Utilities of Central Florida, Inc.
water systems (Sunshine) and included a request for a positive acquisition
adjustment at the time of its transfer to CSWR. The Commission approved the
transfer but denied the positive acquisition adjustment by Order No. PSC-2022-0120-PAA-WU.
The PAA Order provided all parties notice that the decision to deny the
positive acquisition adjustment would become final and effective upon issuance
of a Consummating Order unless a hearing was requested. After no petition for a
formal hearing was filed by any substantially affected person, Consummating
Order PSC-2022-0136-CO-WU issued on April 11, 2022, making Order No.
PSC-2022-0120-PAA-WU final and effective.
Between March 6,
2025 and March 18, 2025, CSWR filed three petitions requesting positive
acquisition adjustments relating to its 2022 acquisitions of North Peninsula, Aquarina,
and Sunshine under the amended version of Rule 25-30.0371, F.A.C. These
requests were assigned Docket Nos. 20250038-WS, 20250043-WS, and 20250047-WS,
respectively. None of the three petitions referenced the Commission’s previous
denial of CSWR’s request for positive acquisition adjustments at the time of
the 2022 transfers, but instead listed information required under the amended
rule, such as planned infrastructure additions and maintenance needed to
improve the utilities’ quality of service or compliance with environmental
regulations.
On March 20,
2025, CSWR filed a letter requesting approval of a test year for a rate increase
and rate consolidation and Docket No. 20250052-WS was opened. Per the letter
approving CSWR’s test year, the Utility was expected to file its minimum filing
requirements (MFRs) no later than May 23, 2025; however, on May 19, 2025, CSWR filed a
letter requesting a two-week extension to file its MFRs no later than June 6,
2025.
On April 17,
2025, the Office of Public Counsel (OPC) filed a Motion to Dismiss with
Prejudice or Alternative Motion for Summary Final Order and to Hold Docket No.
20250052-WS in Abeyance (Motion). In its Motion to Dismiss, OPC argues that the
doctrine of administrative finality precludes CSWR from obtaining a positive
acquisition adjustment on each of its utilities that were previously denied a
positive acquisition adjustment by the Commission at the time of transfer. In
its Alternative Motion for Summary Final Order, OPC contends that there is no
issue as to any material fact and that the Commission should therefore enter a
final judgment denying the acquisition adjustments. In its Motion for Abeyance,
OPC requests that the Commission hold CSWR’s pending rate case in abeyance
until the issue of the requests for positive acquisition adjustments is
resolved.
On April 24,
2025, CSWR filed its Response in Opposition to Citizens’ Motion to Dismiss with
Prejudice or Alternative Motion for Summary Final Order and to Hold Docket No.
20250052-WS in Abeyance (Response). In its Response, CSWR contends that
administrative finality did not attach to the previous acquisition adjustment
denials, that there are changed circumstances that warrant a positive
acquisition adjustment in the instant cases, and that the requested positive
acquisition adjustments are in the public interest. Concurrent with its
Response, CSWR filed a Request for Oral Argument on OPC’s Motion.
Staff’s recommendation
addresses CSWR’s request for oral argument, and the appropriate disposition of
OPC’s Motion to dismiss CSWR’s petitions for acquisition adjustment and request
to hold CSWR’s rate case in abeyance. The Commission has jurisdiction pursuant
to Sections 367.071, 367.081, and 367.121, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should CSWR’s Request for Oral Argument on Citizens’
Motion to Dismiss with Prejudice or Alternative Motion for Summary Final Order
and to Hold Docket No. 20250052-WS in Abeyance be granted?
Recommendation:
No. Staff believes that the pleadings are sufficient
on their face for the Commission to evaluate and rule on the Motion. However,
if the Commission wants to exercise its discretion to hear oral argument, staff
recommends that 5 minutes per party is sufficient. (Dose)
Staff Analysis:
Law
Rule 25-22.0022(1), F.A.C., allows a party to request oral
argument before the Commission for any dispositive motion by filing a separate
written pleading filed concurrently with the motion on which argument is
requested, and stating with particularity why oral argument would aid the
Commission. Granting or denying oral argument is within the sole discretion of
the Commission under Rule 25-22.0022(3), F.A.C.
CSWR’s Position
CSWR argues that because of the unique legal issues
involved, oral argument may aid the Commission in understanding and evaluating
the issues to be decided and would allow the Commission to ask questions of the
parties. CSWR requests ten minutes of oral argument per party.
OPC’s Position
OPC has not responded to CSWR’s Request for Oral Argument.
Conclusion
Granting or denying oral argument is within the sole
discretion of the Commission. Staff believes that the pleadings are sufficient
on their face for the Commission to evaluate and decide OPC’s Motion. However,
if the Commission wants to exercise its discretion to hear oral argument, staff
recommends 5 minutes per party as sufficient.
Issue 2:
Should OPC’s Motion to Dismiss with Prejudice or
Alternative Motion for Summary Final Order be granted?
Recommendation:
Staff recommends that OPC’s Motion to Dismiss should
be granted in part and denied in part. Dismissal is appropriate and should be
granted, however, the Motion to Dismiss should not be granted with prejudice.
Administrative finality has attached to the prior denials of CSWR’s requested
acquisition adjustments and CSWR has not demonstrated a significant change in
circumstances or that it is in the public interest to reverse the Commission’s
prior denials. Furthermore, CSWR is improperly seeking retroactive application
of Rule 25-30.0371, F.A.C. However, CSWR should be allowed the opportunity to
cure the defect in its petition to demonstrate either a change of circumstances
or that reversing the prior denials is in the public interest. Therefore, the
motion should not be granted with prejudice. If the Commission approves staff’s
recommendation to grant OPC’s Motion to Dismiss, then OPC’s Alternative Motion
for Summary Final Order would become moot. If, however, the Commission denies
OPC’s Motion to Dismiss, staff recommends that the Commission deny OPC’s
Alternative Motion for Summary Final Order. (Dose)
Staff Analysis:
Law
In the seminal case of Peoples
Gas Systems, Inc. v. Mason, the Florida Supreme Court held:
[O]rders of administrative agencies must eventually
pass out of the agency’s control and become final and no longer subject to
modification. This rule assures that there will be a terminal point in every
proceeding at which the parties and the public may rely on a decision as being
final and dispositive of the rights and issues involved therein.
187 So. 2d 335, 339 (Fla. 1966). While administrative
finality generally applies to final orders,
finality does not attach “when there has been a significant change of
circumstances or there is a demonstrated public interest.” Delray Medical Center, Inc., v. State Agency for Health Care
Administration, 5 So. 3d 26, 29 (Fla. 4th DCA 2009).
When an administrative rule is revised, retroactive
application of the new rule is generally prohibited. Envtl. Trust v. Dept. of Envtl. Prot., 714 So. 2d 493, 500 (Fla. 1st
DCA 1998). However, “retroactive application of a rule may be proper if the
rule merely clarifies or explains a previous rule.” Id. A revised rule “is presumed to operate prospectively in the
absence of express language to the contrary.” Jordan v. Dept. of Prof. Reg., 522 So. 2d 450, 453 (Fla. 1st DCA
1988).
Res judicata and administrative finality both prevent
relitigation, but they differ in scope. Res judicata, a common law doctrine,
applies to court judgments and bars relitigation of the same claim between the
same parties. Administrative finality, on the other hand, applies to
administrative agency decisions. See
Delray at 29. The Florida Supreme Court has recognized that the legal
principles of res judicata do not neatly fit within the scope of administrative
proceedings, because the actions of administrative agencies are usually
concerned with deciding issues according to a public interest that often
changes with shifting circumstances and passage of time. Id., citing Peoples Gas Sys., Inc. v. Mason, 187 So. 2d 335, 339
(Fla. 1966).
Standard of Review
A motion to dismiss raises as a question of law the
sufficiency of the facts alleged to state a cause of action. In order to sustain a motion to dismiss, the
moving party must show that, accepting all allegations as true, the petition
still fails to state a cause of action for which relief may be granted. The moving party must specify the grounds for
the motion to dismiss, and all material allegations must be construed against
the moving party in determining if the petitioner has stated the necessary
allegations. A sufficiency determination should be confined
to the petition and documents incorporated therein, and the grounds asserted in
the motion to dismiss.
To evaluate a motion to dismiss, all allegations in the
petition must be viewed as true and in the light most favorable to the
petitioner in order to determine whether there is a cause of action upon which
relief may be granted. The
“[d]ismissal of a petition shall, at least once, be without prejudice to
petitioner's filing a timely amended petition curing the defect, unless it
conclusively appears from the face of the petition that the defect cannot be
cured.”
Section 120.57(1)(h), F.S., provides that a summary final
order shall be granted if it is determined from the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits,
if any, that (1) no genuine issue as to any material fact exists, and (2) the
moving party is entitled as a matter of law to the entry of a final summary
order. The purpose of a summary final order is to avoid the expense and delay
of trial when no dispute exists concerning the material facts.
OPC’s Motion to Dismiss or Alternative Motion for
Summary Final Order
In its Motion to Dismiss, OPC argues that administrative
finality has attached to the prior denials of CSWR’s positive acquisition
adjustments and that CSWR cannot reapply for the same. OPC contends that CSWR failed
to demonstrate the applicability of the exceptions to administrative finality,
of a significant change in circumstances or a demonstrated public interest.
(OPC Motion 5) Specifically, OPC claims that the only change in circumstance
from CSWR’s previous petitions is the amendment to the acquisition adjustment
rule, and that the amended rule does not have retroactive application. (OPC
Motion 4-5) Consequently, OPC believes that administrative finality has
attached to CSWR’s requests for positive acquisition adjustments and that the
new petitions should be dismissed. (OPC Motion 4-5)
In its Alternative Motion for Summary Final Order, OPC
asks the Commission to enter final judgment denying the acquisition
adjustments. OPC contends that administrative finality attached because the
acquisition adjustments were all previously denied and that Consummating Orders
were issued on each denial. (OPC Motion 5) Further, OPC argues that there are
no changes in circumstances beyond the change in the current rule and that the
rule does not apply retroactively. (OPC Motion 5) OPC thus claims that there is
no genuine issue as to any material fact, and that OPC is thus entitled as a
matter of law to entry of a final order denying the acquisition adjustments.
(OPC Motion 5)
CSWR’s Response
In its Response, CSWR rejects OPC’s contentions primarily
based on the argument that administrative finality did not attach to the
denials of the acquisition adjustments it requested in the three transfers at
issue. CSWR argues that administrative finality does not attach because rather
than asking the Commission to second-guess its earlier denial of the
acquisition adjustments, CSWR is instead presenting the Commission with a new
application involving different facts and applying a different law. CSWR cites
to Commission precedent wherein the Commission allowed OPC’s requests for negative
acquisition adjustments where the same negative acquisition adjustments were
previously denied. (CSWR
Response 4-6) CSWR contends that OPC is changing its position from those
previous cases in which OPC argued that administrative finality did not attach
to previously denied acquisition adjustments. (CSWR Response 6)
CSWR goes on to make numerous arguments in its response
premised on the absence of administrative finality. Those arguments are
addressed herein.
First, CSWR argues that it is not asking the Commission to
reconsider its prior decisions under the prior version of the rule. Instead of
seeking reconsideration in which the Commission would second-guess its prior
denial of acquisition adjustments, CSWR contends that it has timely filed a new
petition under the new version of the rule. (CSWR Response 9-10) CSWR claims
that while OPC refers to administrative finality, OPC is really arguing res
judicata to prohibit CSWR from requesting acquisition adjustments a second
time. (CSWR Response 10)
Second, CSWR claims that the facts and circumstances have
changed since the time of the transfers for all three systems for which a
positive acquisition adjustment is requested. Specifically, CSWR claims that in
the three years since the purchases, it has learned significant facts about all
three systems that had not yet occurred or were not known at the time of the
transfers in 2022, such as the extreme level of deterioration of wastewater
treatment facilities, the work needed to come into environmental compliance,
and the former owner’s insolvency and how that impacted the operation of the
system. (CSWR Response 11-12) CSWR asserts that these new facts and changed
conditions demonstrate that administrative finality cannot apply to the denied
acquisition adjustments for these systems. (CSWR Response 11-12)
Third, CSWR argues that revisions to the acquisition
adjustment rule since the transfer of the systems constitute changed
circumstances that preclude the application of administrative finality. In
support, CSWR cites Delray which held
that the repeal of an administrative rule constituted changed circumstances
such that administrative finality did not apply to a hospital’s second
application for a certificate of need. (CSWR Response 12-13) CSWR argues that
just as need was evaluated differently in the second application in Delray, so acquisition adjustments should
now be evaluated differently under the amended rule. (CSWR Response 13)
Fourth, CSWR contends that no person has taken any action
in reliance on the Commission’s prior denials of the requested acquisition
adjustments. CSWR states that a key element to administrative finality is that
parties or the public have taken action in reliance on the prior decision and
that no such action is present for any of its previously denied acquisition
adjustments. (CSWR Response 13-14)
Fifth, CSWR states that an acquisition adjustment is a
decision relating to ratemaking, which is continuous and never final. CSWR
cites to Rule 25-30.371, F.A.C., which states that a petition for a positive
acquisition adjustment is a request “to include some or all of a positive
acquisition adjustment in the acquired utility’s rate base.” (CSWR Response 14)
CSWR asserts that since acquisition adjustments are related to ratemaking,
whether to grant or deny an acquisition adjustment is not an issue capable of
finality and CSWR is not precluded from future petitions for acquisition
adjustments. (CSWR Response 14-15)
Sixth, CSWR contends that the public interest favors
considering the petitions on their merits as the purpose of the amended rule is
to encourage consolidation and acquisition of failing water and wastewater
systems. CSWR claims that under the prior version of the Rule, no positive
acquisition adjustment was ever granted thereby limiting the acquisition and
rehabilitation of failing systems and harming customers of those systems. (CSWR
Response 15-16)
Lastly, CSWR asserts that it is not applying the new
version of the Rule retroactively. Rather, CSWR claims it is making new
petitions based on new facts and cost and revenue projections rather than a
single event that occurred before the new rule became effective. (CSWR Response
16) CSWR contends that the amended rule allows for petitions for acquisition
adjustments to be filed within three years of the transfer order and that this
new Rule recognizes that facts relating to the condition of the transferred
systems and the impact of the transfer on customers take time to become fully
developed. (CSWR Response 16) Rather than applying the new Rule to completed
events, CSWR claims that its application applies the current procedural
standards to new petitions properly brought before the Commission. (CSWR
Response 17-19)
Staff Analysis
I.
Administrative Finality
Staff recommends that the Commission find that
administrative finality has attached to CSWR’s previously denied positive acquisition
adjustments and that the instant petitions should therefore be dismissed;
however, CSWR should be allowed the opportunity to conduct discovery to
demonstrate either a change of circumstances or that reversal of the prior
denials is in the public interest and so prejudice should not attach. The
Commission’s decision to deny the positive acquisition adjustments at the time
of transfer issued as proposed agency action. As no request for hearing was
made, the Commission’s decisions were consummated, becoming final and effective
agency action. To overcome administrative finality, CSWR must show either a significant
change of circumstances or that it is in the public interest to overrule the
prior denials. Delray, 5 So. 3d at
29. CSWR has failed to demonstrate either a significant change of circumstance
or that reversing the Commission’s prior denial is in the public interest.
1.
Significant Change of Circumstances
In the instant petitions, CSWR cites to a number of facts
about each system that it contends were not known at the time of the transfer.
However, staff does not believe that these constitute changed circumstances
sufficient to disturb the administrative finality that has attached to the
transfer orders. Each of the transfer orders recounts operational and
regulatory non-compliance issues CSWR knew of at the time of acquisition. While
CSWR identified several improvements it intended to implement in an effort to
rectify these issues, the Commission found that CSWR did not demonstrate extraordinary
circumstances in support of its requested positive acquisition adjustment at
the time of transfer. While the Commission did not find the Utility's
anticipated improvements to justify extraordinary circumstances sufficient to
warrant the requested positive acquisition adjustment, it noted that
improvements may be considered for prudency and cost recovery in a future rate
proceeding. In the three years since CSWR has owned and operated the utilities,
it may have identified further details regarding the operational issues for
each utility, or better quantified the costs needed to bring each utility into
operational and regulatory compliance. However, this does not constitute a sufficient
“change in circumstances.”
CSWR cites to the Delray
decision for the proposition that a revision to a rule constitutes changed
circumstances sufficient to overcome administrative finality. The decision in Delray dealt with the repeal of an
administrative rule. In Delray, the
administrative law judge also relied on additional significant changes in
circumstances for the medical facility in question which were sufficient to
overcome administrative finality.
No such changed circumstances exist for the instant petitions and so Delray is inapplicable to this case.
2.
Public Interest
CSWR claims that no person has taken any action in
reliance on the Commission’s prior denials of the acquisition adjustments and
that the public interest favors consideration of the instant petitions on their
merits. Staff disagrees with both of these assertions. Customers of North
Peninsula, Aquarina, and Sunshine have been paying rates since the acquisitions
that do not account for the requested acquisition adjustments and so these
customers have relied on the prior denials since the time the transfers became
effective. Rather than being in the public
interest, undoing the prior denials and allowing an acquisition adjustment now
would only be in the interest of the Utility because it would allow the Utility
to recover costs from customers that were previously denied.
3.
Finality of Ratemaking
CSWR contends that an acquisition adjustment is a decision
relating to ratemaking, which is never truly capable of finality. In support it
cites to Sunshine Utilities v. Florida
Public Service Commission, 577 So. 2d 663 (Fla. 1st DCA 1991), noting that
the court held the Commission could go back four years later to correct an
order containing an erroneous assumption, and requiring the utility to make a
refund to customers. However, CSWR is not alleging that the prior transfer
orders were erroneous and require correction; rather, the Utility contends that
the Commission should entertain new requests for acquisition adjustments under
the amended rule. Therefore, Sunshine
does not appear applicable because the Commission correctly applied the prior
acquisition adjustment rule.
Additionally, CSWR’s assertion that acquisition
adjustments are related to ratemaking and therefore can never be final does not
comport with the acquisition adjustment rule in its amended or prior form.
Rather than being a subject of ratemaking, acquisition adjustments are a
function of a purchase that goes to establishing net book value of a utility.
Under the old rule, the Commission required a company to request an acquisition
adjustment at the time of the transfer of the water or wastewater certificate.
The acquisition adjustment was therefore a one-time request and not subject to
subsequent requests in a rate case, limited proceeding, or other petition.
While expanding the timeframe during which a utility may request an acquisition
adjustment, the amended rule still limits utilities to requesting within three
years of the order authorizing the transfer of the certificate. Under either,
there is a temporal limit in which the utility may request an acquisition
adjustment and CSWR is therefore incorrect in its assertion that acquisition
adjustment decisions can never be final.
CSWR cites to two Commission cases for the proposition
that acquisition adjustments can be requested multiple times. Both cases cited
predate the implementation of Rule 25-30.0371, F.A.C.
However, in both, the Commission relied on a finding of extraordinary
circumstances to determine whether an acquisition adjustment was warranted. In
both instances, which involved OPC making a subsequent request for a negative
acquisition adjustment, the cited cases still relied on changed circumstances
or public interest for the Commission to reverse course.
CSWR first cites to Order No. PSC-93-1675-FOF-WS, by
which the Commission granted OPC’s request for a negative acquisition
adjustment after previously denying it. By Order No. 23728, the Commission
found no extraordinary circumstances to warrant a negative acquisition
adjustment in the transfer of Jasmine Lakes Services, Inc. to Jasmine Lakes
Utilities Corporation (JLUC).
In JLUC’s subsequent rate case in Docket No. 920148-WS, the Commission granted
OPC’s request for a negative acquisition adjustment despite having previously
denied the same. In its decision to allow the subsequent request for a negative
acquisition adjustment, the Commission relied on public interest, finding it
“patently unfair and unjust to the customers of this utility, for the investors
to receive a return on that portion of the original purchase price that was
less than rate base.” As
discussed above, there is no such compelling public interest to allow CSWR’s instant
petitions for positive acquisition adjustments.
The second case CSWR cites to is Docket No. 991437-WS in
which the Commission allowed OPC’s request for a negative acquisition
adjustment after previously denying OPC’s request in the transfer docket. By
Order No. PSC-98-1092-FOF-WS, the Commission granted a transfer and amendments
of water and wastewater certificates to Wedgefield Utilities, Inc.
(Wedgefield).
Although OPC requested a negative acquisition adjustment at the time of
transfer, the Commission denied OPC’s request finding no extraordinary
circumstances to warrant the negative acquisition adjustment.
In Wedgefield’s subsequent rate case, OPC again requested a negative
acquisition adjustment. Wedgefield filed a Motion for Summary Final Order
claiming that the negative acquisition adjustment was decided and that OPC
could not relitigate the issue. By Order No. PSC-00-2388-AS-WU, the Commission
denied Wedgefield’s Motion for Summary Final Order and instead allowed OPC time
“to establish through its discovery a change in circumstances sufficient to
overcome [the Commission’s] previous decision” denying the negative acquisition
adjustment. Wedgefield
subsequently filed a renewed Motion for Summary Final Order and was again
denied, and OPC was allowed to go forward at hearing to argue for a negative
acquisition adjustment.
In denying Wedgefield’s motions for summary final order, the Commission allowed
OPC the opportunity to demonstrate a change of circumstances to overcome the
prior denial of the requested negative acquisition adjustment. Furthermore, the
Commission ultimately approved a settlement agreement in Docket 991437-WU
between Wedgefield and OPC that made the interim rates permanent without
addressing OPC’s requested negative acquisition adjustment.
Contrary to CSWR’s position, these cases do not stand for
the proposition that “an acquisition adjustment can be requested multiple
times, and the Commission has agreed.” Rather, these cases demonstrate that to
disturb any decision of the Commission to which administrative finality has
attached – including the denial of a positive acquisition adjustment – an
appropriate change in circumstances or public interest reason must be
demonstrated. As discussed above, CSWR has failed to demonstrate a significant
change of circumstances sufficient to overcome the prior denials of the three
requested positive acquisition adjustments.
4.
Res Judicata
CSWR’s assertion that OPC is essentially arguing res
judicata rather than administrative finality is without merit. Res judicata is
a judicial concept that bars relitigation of the same claim between the same
parties. However, OPC’s argument is focused on the factors relevant to
administrative finality, namely, whether there are changed circumstances
warranting reconsideration of the denied acquisition adjustments or if an
acquisition adjustment is in the public interest. Therefore, CSWR’s claim that
OPC is arguing res judicata is without merit and irrelevant.
5.
Dismissal Without Prejudice
While staff recommends granting OPC’s Motion to Dismiss,
staff further recommends not granting the Motion with prejudice. CSWR has
failed to demonstrate either a significant change in circumstances or that
reversing the prior denials of its acquisition adjustment requests is in the
public interest. Therefore, dismissal is appropriate. However, pursuant to
Section 120.569(2)(c), F.S., dismissal should be without prejudice at least
once to allow a party time to cure the defect in its petition. CSWR should be
afforded the opportunity to cure the defects in its petition, if possible, and
so OPC’s Motion to Dismiss should be granted without prejudice.
II.
Retroactive Application of Rule 25-30.0371, F.A.C.
In addition to failing to overcome administrative
finality, CSWR is seeking retroactive application of the new rule. While CSWR
denies that it is seeking retroactive application of the amended rule, it is
asking the Commission to apply the new rule to transfers of systems that took
place over two years before the amended rule came into effect. Rather than
merely clarify or restate the old rule, the new rule was a substantive rewrite
of the Commission’s acquisition adjustment policy, such that retroactive
application is inappropriate.
Furthermore, the Commission should not apply new rules retroactively absent
express language or intent in the rule for retroactive application.
In the instant rule, there is no such retroactive application and so CSWR’s
argument fails.
III.
OPC’s Alternative Motion for Summary Final Order
If the Commission approves staff’s recommendation to grant
OPC’s Motion to Dismiss then OPC’s Alternative Motion for Summary Final Order
would become moot. If, however, the Commission denies OPC’s Motion to Dismiss,
staff recommends that the Commission deny OPC’s Alternative Motion for Summary
Final Order. A Summary Final Order is only appropriate where (1) no genuine
issue as to any material fact exists, and (2) the moving party is entitled as a
matter of law to the entry of a final summary order. Summary final judgment is
therefore generally appropriate only after discovery on all factual issues has
been completed. In the instant case, CSWR asserts that there are changed
circumstances that warrant consideration of a positive acquisition adjustment.
As such, an issue as to a material fact exists such that a Summary Final Order
is inappropriate in this case. Further, no discovery has been conducted with
respect to CSWR’s three petitions for positive acquisition adjustment. Under
these circumstances, the Commission should deny OPC’s Alternative Motion for
Summary Final Order.
Conclusion
Staff recommends
that OPC’s Motion to Dismiss should be granted in part and denied in part.
Dismissal is appropriate and should be granted, however, the Motion to Dismiss
should not be granted with prejudice. Administrative finality has attached to
the prior denials of CSWR’s requested acquisition adjustments and CSWR has not
demonstrated a significant change in circumstances or that it is in the public
interest to reverse the Commission’s prior denials. Furthermore, CSWR is
improperly seeking retroactive application of Rule 25-30.0371, F.A.C. However,
CSWR should be allowed the opportunity to cure the defect in its petition to
demonstrate either a change of circumstances or that reversing the prior
denials is in the public interest. Therefore, the motion should not be granted
with prejudice. If the Commission approves staff’s recommendation to grant
OPC’s Motion to Dismiss, then OPC’s Alternative Motion for Summary Final Order
would become moot. If, however, the Commission denies OPC’s Motion to Dismiss,
staff recommends that the Commission deny OPC’s Alternative Motion for Summary
Final Order.
Issue 3: Should OPC’s Motion to Hold Docket No. 20250052-WS in Abeyance
be granted?
Recommendation:
If the Commission approves staff’s recommendation in
Issue 2, OPC’s request to hold Docket No. 20250052-WS in abeyance is moot. If
staff’s recommendation in Issue 2 is denied, OPC’s Motion to Hold Docket No.
20250052-WS in Abeyance should be denied. (Sandy)
Staff Analysis:
Motion for Abeyance
OPC’s Motion includes a request to hold CSWR’s pending
rate case in abeyance until the Commission has disposed of CSWR’s requests for
positive acquisition adjustments.
OPC states that under Rule 28-106.211, F.A.C. the presiding officer may issue
any orders necessary to “effectuate discovery, to prevent delay, and to promote
the just, speedy, and inexpensive determination of all aspects of the case.”
OPC contends that because acquisition adjustments are inextricably intertwined
with rates, the parties would incur unnecessary rate case expense by litigating
the issue in the acquisition adjustment and rate case dockets simultaneously.
(OPC Motion 6) Furthermore, OPC notes that without an abeyance, the parties
would be subject to multiple sets of MFRs in the rate case, leading to
confusion and yet more unnecessary rate case expense. (OPC Motion 6)
CSWR’s Response
On April 24, 2025, CSWR filed its Response to OPC’s
Motion. CSWR contends that OPC is
seeking to deprive the Utility of its statutory and due process rights to fix
rates which are just, reasonable, compensatory, and not unfairly
discriminatory. (CSWR Response 19) CSWR contends that an abeyance would create
the very delay in its rate case that Rule 28-106.211, F.A.C. is meant to avoid.
(CSWR Response 20) Further, CSWR contends it is currently operating at a
substantial loss, and any delay in its rate case would force the Utility to
continue operating at a loss, therefore denying it just, reasonable, and
compensatory rates. (CSWR Response 21-22)
Staff Analysis
OPC correctly states that under Rule 28-106.211, F.A.C.,
the presiding officer has the power to grant an abeyance if he deems it
necessary. However, staff disagrees that an abeyance is necessary or
appropriate in this instance. OPC’s Motion to Dismiss CSWR’s acquisition
adjustment petitions, if granted, would be dispositive of those dockets. If the
Commission grants staff’s recommendation in Issue 2, the parties’ arguments
related to holding Docket No. 20250052-WS in Abeyance become moot, because
there would be no concurrent litigation of both the acquisition adjustment and
rate case dockets.
If the Commission denies staff’s recommendation in Issue 2
and the acquisition adjustment petitions are allowed to proceed, staff
recommends that the request for abeyance should still be denied. If CSWR’s
requests for acquisition adjustments were to proceed concurrently with the
Utility’s rate case, the effect on the rate case MFRs would be de minimis. In
at least two recent rate proceedings, the Commission has allowed filings with
multiple sets of MFRs without bifurcation or holding any part of the proceeding
in abeyance.
Consequently, staff does not believe that any additional expense would rise to
the level necessary to hold the pending rate case in abeyance. Ultimately, OPC
has not stated sufficient grounds to disrupt a utility’s statutory right to
pursue timely rate relief under Section 367.081, F.S.
Conclusion
If the Commission approves staff’s recommendation in Issue
2, OPC’s request to hold Docket No. 20250052-WS in abeyance is moot. If staff’s
recommendation in Issue 2 is denied, OPC’s Motion to Hold Docket No.
20250052-WS in Abeyance should be denied.
Issue 4:
Should these dockets be closed?
Recommendation:
After the final order is issued, Docket Nos.
20250038-WS, 20250043-WS, and 20250047-WS should be closed. Docket No.
20250052-WS should remain open to allow the Commission to address CSWR’s requested
rates. (Dose)
Staff Analysis:
After the final order is issued, Docket Nos.
20250038-WS, 20250043-WS, and 20250047-WS should be closed. Docket No.
20250052-WS should remain open to allow the Commission to address CSWR’s
requested rates.