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Court rebukes Public Service Commissioners for 'ill serving' rate payers

In a rebuke to the Public Service Commission, a state appellate court ruled Monday that the utility regulator hurt utility customers when it refused to explain why it banned the public’s lawyers from asking questions in certain rate cases. 

The ruling by the First District Court of Appeal in Tallahassee ordered the PSC to explain why it refuses to allow the Office of Public Counsel to conduct discovery in pending rate cases as had previously been the tradition. 

The Office of Public Counsel is the agency whose lawyers are charged with representing the public in rate cases. They argued the PSC was inviting lawsuits from them by refusing to explain why they refused to allow the public's lawyers from asking questions and seeking discovery in rate case proceedings known as “proposed agency action" or PAA.

The cost of those lawsuits are borne by the public. In a 3-0 decision, the appellate court agreed.  

“The PSC ill serves rate payers by insisting that utilities incur the expense of litigating and re-litigating this issue in a piecemeal manner before pre-hearing officers in individual PAA rate cases,’’ wrote Chief Judge Robert T. Benton of the First DCA.

Public Counsel J.R. Kelly said the PSC ruling “severely undercut our ability to represent ratepayers” because the PSC, unlike the lawyers for the public counsel, “don’t ask questions like we do because they don’t represent the ratepayers.”

The ruling is a setback for the PSC, which in recent years has handed down a series of decisions that have tightened the legal access of the Office of Public Counsel while it has expanded the access of utilities.

For example, the PSC ruled, and the Florida Supreme Court agreed last year, that state law does not require the OPC to sign off a settlement in a rate case. The decision allowed regulators to work out a multi-year rate increase with Florida Power & Light without the public’s input.

The ruling Monday stems from a 2102 rate case involving Water Management Services, Inc., a privately-owned water utility that serves St.George Island in North Florida.  The company asked for an abbreviated rate case process, known as the “proposed agency action.”

The proceeding is not a full rate case and does not involve an evidentiary hearing but, by law, the utility must file information, the PSC issues an order, and the public counsel has 21 days to contest it or the order becomes final.

 When Kelly’s office asked for discovery information from WMSI in 2012, the company refused to turn it over. The hearing officer in the case, Commissioner Julie I. Brown, sided with the company, saying that until a final order was issued the PSC staff “is engaged in a free-form proceeding outside the scope of the Florida Administrative Procedures Act.”

Kelly did not challenge the ruling at the time but, a year later, asked the PSC to explain in a declaratory statement why it has departed from the tradition of allowing discovery in these cases. The PSC refused to issue the opinion and, on Monday, the court reversed it. 

“There is no indication here, however, that OPC is abusing the declaratory statement process to intrude upon or make an end run around ongoing judicial or administrative proceedings,’’ the court wrote. “Indeed, OPC now accepts the order entered in the WMSI proceeding, even while it challenges future application of one rationale for the order as policy incompatible with governing rules and statutes.”

PSC spokeswoman Cindy Muir said in a statement that the PSC will likely issue the declaratory statement to address the issue this summer.

“While the First District Court of Appeal has not overturned a PSC decision in years, as always, we will comply with the court’s mandates,’’ she said.

Kelly said the case was the latest erosion of the public’s standing in rate cases. Since the 2013 decision, all water and wastewater utilities are now using the “proposed agency action” process, he said.

“We can’t ask anything; we can’t seek discovery,’’ Kelly said. “All we can do is write a letter to the PSC saying we think you can look at this.”

He said that if the PSC issues its declaratory statement and continues to prohibit his office from asking questions through the discovery process, “we’ll be back at the First DCA with another appeal.”