|
Page 3
<br /> 402 So.2d 1209,*; 1981 Fla.App.LEXIS 20623,**
<br /> 1,442,561 was paid to the City of Orlando as a franchise
<br /> 11. Art. Yll,§3(a),Fla Const. fee and the OUC also paid the City S 5,542,000 in prof-
<br /> [**7] Expert witnesses for the OUC testified that its. The OUC]seeps as retained earnings about as much
<br /> it was not an uncommon practice in other states for tax as it pays Orlando in profits.
<br /> exempt utilities to make "tax-equivalent" payments to 17. Approximately$2 million per year.
<br /> local governmental bodies providing them with valuable 18. The amount of the fee is based roughly on
<br /> services.Failure to make such payments would have the 6% of the revenues earned in Orlando. Six per-
<br /> effect of discriminating against the county taxpayers cent for a true franchise fee is fairly standard in
<br /> because they presumably would have to pay through Florida.Florida League of Cities,Mwdcipal Udl-
<br /> higher taxes for the free services received by the utility, ities in Florida 122,123(1974).We note that the
<br /> We have found no controlling precedent in Florida PSC now required real franchise fees to be paid
<br /> on this point. In some jurisdictions, such payments are only by the consumers in the cities charging the
<br /> not allowed. "However,the PSC has approved the pay- fees. City of St Petersburg v. Hawkins, 366
<br /> meat of"reasonable" charitable contributions by regu- So.2d 429(Fla 1978).However,this is an area of
<br /> lated utilities and the inclusion of these amounts in oper- discretion available to the PSC.In any event we
<br /> sting expenses of the utility for purposes of calculating do not consider the OUC's franchise fee as a real
<br /> reasonable rates. f3 The allowance or disallowance of franchise payment.
<br /> such"in lieu of tax"payments as operating expenses for The OUC shows the franchise fee as an operating
<br /> purposes of determining the rate structure or rate base of expense, which reduces its net operating income.How-
<br /> a utility is a matter more appropriate for determination
<br /> by the PSC than the courts 14where the payments(as in ever, there [**10] is no franchise agreement between
<br /> this case) are reasonable in amount for the purpose in- the City and the OUC. Further,the OUC witnesses ad-
<br /> tended, are actually made, and are made pursuant to a mitted [*1213] that the franchise fee was treated as
<br /> reasonable ground or basis." additional income on the OUC's reports filed with the
<br /> Federal Power Commission and on its official bond
<br /> 12. State v. Department of Pub. Serv., 19 statements, and that these fiords would be available to
<br /> Wash.2d 200, 142 P.2d 498(1943). pay bonds or other"real"operating expenses if needed.
<br /> [**g] Rosalind argues that the OUC's treatment of the
<br /> 13. City of Miami v Florida Pub. Seryfranchise fee as an operating expense is an improper
<br /> Comm'n, 208 So.2d 249(Fia.1968).See also:In method to mask additional profits. Since the OUC is in
<br /> re Petitions of Burlington Mec. Light Dept, 135 actuality part of the City of Orlando, no payment to a
<br /> Y4 114, 373 A.2d 514(1977);56 Am.Jur.2d Mu- third party is possible.It is merely a transfer of funds
<br /> nicipal Corporation§583(1971). from one pock to another.We agree that the franchise
<br /> 14. See: Occidental Chem. Co. V. Mayo, 351 fee should be considered as additional OUC profit.See:
<br /> So.2d 336(F1a.1977). City of Logansport v. Public Serv. Comm'n of Ind, 202
<br /> 15. In re Petitions of Burlington Eke. Light Ind 523, 177 KE 249, 76A.L.R 838(1931).
<br /> Dep' 135 Vt. 114,373 A.2d 514(1977). However,assuming the franchise fee constitutes ad-
<br /> We conclude that Rosalind failed to establish that ditional profits to the OUC,and should in fact be treated
<br /> the OUC's inclusion of the "in lieu of tax" payments to as such,this does not,by itself,establish that the OUC's
<br /> Orange County as an operating expense was arbitrary or rates are unreasonable.Municipal utilities in Florida are
<br /> unreasonable.'" entitled to earn a profit on their utilities operations,and
<br /> some municipalities in Florida take a higher percentage
<br /> 16. Shevin v. Yarborough, 274 Sa2d 505 of the utility's [**11] profit into general revenues than
<br /> (Fla 1973); Columbus & & Ohio Elec. Co. v Orlando does, even including the franchise-equivalent
<br /> Public Util. Comm'n of Ohio, 58 Ohio St2d 110, payment."
<br /> 388N.E2d 1378(1979).
<br /> of
<br /> R. "FRANCEIISE" PAYMENTS MADE BY OUC 19. The City of Jacksonville receives e,
<br /> TO THE CITY OF ORLANDO. its utility's gross revenue. In an extremee case,
<br /> there may arise the specter of a tax-free town
<br /> The record showed that since 1970, the OUC has made wealthy by its utilities operations both in-
<br /> been paying to the City of Orlando substantial annual side and outside its political limits.
<br /> payments " labeled "franchise-equivalent" fee. [**9] No witness testified that the OUC was earning an
<br /> The OUC pays the franchise fee to Orlando in addition to excessive amount of profit on its operations.Further,the
<br /> profits earned by the OUC. "For example, in 1973, $
<br /> l�
<br /> 1C/
<br />
|