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402 So.2d 1209,*;1981 Fla.App.LEXIS 20623,*" Page 2
<br /> utility has the burden of showing S that the rates are out- therefore its rate of return on capital,far above what oth-
<br /> side or beyond the"zone of reasonableness," 6 as estab- er municipal utilities and private utilities are allowed to
<br /> lished by the evidence, and not necessarily by the PSC, earn.Rosalind also argued that the OUC should not have
<br /> so as to be confiscatory or discriminatory. ' Absent a been allowed to set its rates so as to earn as high a return
<br /> controlling statute, a municipal utility, like any other on its equity as an investor-owned utility.The OUC ar-
<br /> utility,is entitled to earn a reasonable rate of return on its gues that these matters relate to the method of calculating
<br /> capital°and its rates may be set so that it earns a rate of rates and not to the reasonableness of the rates them-
<br /> return on its equity comparable to other similar busi- selves. Obviously the method of calculating rates im-
<br /> nesses.° pacts on their reasonableness,and it is a proper subject
<br /> for judicial review. 20 We shall consider each point raised
<br /> 4. Cooper x Tampa Elea Co., 154 Fla. 410, by Rosalind separately.
<br /> 17 So.2d 785 (1944); City of Pompano Beach v
<br /> OitnraA 389 So.2d 283(Fla. 4th DCA 1980);and 10. In re Permian Basin Area Rate Cases,
<br /> 64Am.Jur.2iJ Public Utilities§§80,89(1972). 390 U.S. 747, 88 S. Ct. 1344, 20 L Ed 2d 312
<br /> 5. Mohme v. City of Cocoa 328 So.2d 422 (1968) (reviewed method of regulation); Banton
<br /> (Fla 1976); Miami Bridge Co. v Miami Beach v.Belt Line R Corp.,268 U.S. 413, 45 S.Ct.S34,
<br /> By. Co., 152 Fla.458, 12 So.2d 438(1943);12 E. 69 L. Ed 1020 (1925) (reviewing operating ex-
<br /> McQuillin, Municipal Corporations, § 35.37a penses); Wichita Gas Ca v.Public Serv.CommW
<br /> (1970). of Kan, 2 F.Supp. 792(D.Kan1933),modified,
<br /> [**41 290 U.S.561, 54 S Ct. 321, 78 L.Ed 500(1934)
<br /> 6. Federal Power Comm'n v. Hope Natural (reviewed proper operating expenses and fair rate
<br /> Gas Co., 320 U.S. 591, 64 S. Ct 281, 88 L. Eel of return on utility property); Shevin v Yar-
<br /> 333 (1944); Cooksey v. Utilities Comm'n, 261 borough, 274 So.2d 505 (Fla 1973) (reviewed
<br /> So.2d 129(Fla 1972);Pinellas Apartment Assn, method to calculate rate base,inclusion of items
<br /> Inc.v.City of St.Petersburg,294 So.2d 676(Fla in operating expenses); City of Miami v. Florida
<br /> 2d DCA 1974);§180.131(2), F7aStat (1979); 64 Public Serv. Comin'rr, 208 So.2d 249 (Fla.1968)
<br /> Am.Jur.2d Public Utilities §§ 135, 190 (1972); (reviewed method to compute rate of return);
<br /> Annot.,127 A.L.R 94(1940). Hawaiian Elec. Co.,Inc., 56 Haw.260,535 P.2d
<br /> 7. Miami Bridge Co.v.Munni Beach Ry.Co., 1102,83 A.LR 3d 951(1975)(reviewed ,pmmo-
<br /> 152 Fla 458, 12 So.2d 438(1943);City of Pom- 6ional" expenses as operating expenses); ,State V.
<br /> pano Beach v. Oltma% 389 So.2d 283 (Fla 4th Department of Pub. Serv., 19 Wash 2d 200, 142
<br /> DCA 1980); Clay Util. Co. x City of Jackson- P.2d 498(1943)(reviewed operating expenses).
<br /> ville, 227 So.2d 516(Fla 1st DCA 1969); see:
<br /> Edrls v. Sebring Wil. Comm'n, 237 So.2d 585 [**6] I. "IN LIEU OF TAX" PAYMENTS
<br /> (Fla. 2d DCA), cert denied, 240 So.2d 643 MADE BY ORLANDO UTILITIES COM WSSION TO
<br /> (F1a.1970); Wichita Go Co. v. Public Sere. ORANGE COUNTY.
<br /> Comm'n of Kan„ 2 F. Supp. 792 (D.Kan.1933), The record established that the OUC made payments
<br /> modified,290 U.S 561, 54 S Ck 321, 78 L. Ed totaling approximately $ 1,114,000 to Orange County
<br /> 500 (1934); 64 Am.Jur.2d Public Utilities § 86 from 1973 through 1978. The amount of each annual
<br /> (1972),29 C.J.S.Electricity§33(1965). payment was based on I%of the retail sales of electricity
<br /> S. The parties all agree that basing rates on to the OUC's customers outside the City of Orlando,but
<br /> "cost of capital" is the most universally adopted within Orange County.Witnesses for the OUC testified
<br /> and reasonable method in the industry.The OUC [*1212] that these payments were somewhat less than a
<br /> has employed this method in setting its rates. private utility would have paid Orange County for ad
<br /> 9. Federal Power Comm'n v. Hope Natural valorem taxes based on the value of OUC's property lo-
<br /> Gas Co., 320 U.S. 591, 64 S. Ct. 281, 88 L. Ed sated within Orange County,and that the payments were
<br /> 333 (1944); City of Logansport v. Public Serp. for police and fire protection and other services afforded
<br /> Comm'n of Ind. 202 Ind 523, 177 N.E 249, 76 the utility by the County.
<br /> A.LR 838(1931).
<br /> Rosalind argued that the City's property could not
<br /> [**5] Rosalind argued that certain payments made legally be taxed by the County absent a general statute,"
<br /> by the OUC to Orange County "in lieu of taxes" and which does not now exist,that the amount paid to Or-
<br /> payments in the nature of franchise fees paid by the OUC ange County was not a valid obligation of the OUC,but
<br /> to the City of Orlando were improper operating expens- rather was a "gift", and therefore it should not serve to
<br /> es, and if disallowed as operating expenses, the results reduce the OUC's income by allowing the utility to treat
<br /> would substantially increase the OUC's income, and it as an operating expense.
<br /> -.we
<br /> V
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