|
402 So.2d 1209,*; 1981 Fla.App.LEXPage 4IS 20623,**
<br /> one expert witness for Rosalind was not allowed to testi_ [*1214] However, experts for the OUC testified
<br /> fy that the OUC's rates were unreasonably high, and he that the OUC's operations are more comparable to the
<br /> admitted he was not qualified to so testify. The OUC's private utilities in Florida because of its size and the
<br /> expert witnesses all testified the OUC's rates were rea- [**141 fact that it has a substantial generating capacity.
<br /> sonable.We conclude that Rosalind failed to establish by The municipal utilities in the Federal Power Commis.
<br /> a preponderance of the evidence that the OUC was earn- sion's Report were considerably smaller than the OUC
<br /> ing an excessive profit,or that its rates were unreasona- and many had no generative capacity.At least one public
<br /> bly high for the years in issue. See: Killion v. City of service commission allowed a city utility a rate of return
<br /> Paris; 192 Tenn.446,241 S W 2d 524(1951). on equity comparable to private industry, " and the
<br /> III. WAS THE 13.5% RATE OF RETURN ON courts in our jurisdiction frequently equate municipal
<br /> EQUITY USED BY ORLANDO UTILITIES COM utilities with privately owned utilities. m Where there is
<br /> MISSION IN SETTING [**12] ITS RATES SHOWN conflicting expert testimony concerning the proper rate
<br /> TO BE UNREASONABLE AND ARBITRARY? of return on equity standard to be applied to municipal
<br /> utilities, we cannot say the lower court erred in finding
<br /> The record showed that the OUC used the rate of for the OUC on this point.b We note however,that this
<br /> 13.5°x6 in calculating the needed rate of return on equity is precisely the type of ruling relating to rate structure
<br /> in setting its rates for the years in question.The testimo- that the PSC should determine.15
<br /> ny established that the rate of return among inves-
<br /> tor-owned Florida utilities from 1972 to 1977 ranged 23. Re Municipality of Anchorage d/b/a An-
<br /> from 12.75% to 16.35%, and that the PSC had estab- chorage Water Utility, 19 PUR 4th 278 (Alaska
<br /> lished from 13% to 15% as a "reasonable" zone. Both Pub.Util.Comm'nFebruary 29,1977).
<br /> appellant and appellees agree that a utility should be al. 24. Hander v. City of Jacksonville, 97 Fla;
<br /> lowed to earn a reasonable rate of return on its equity,20 807, 122 So. 220 (1929); F.dris v. Sebring Util.
<br /> but they disagree what industry earnings standard should Comm'n 237 So.2d 585, cert. denied,240 So.2d
<br /> be applied. 643
<br /> (F7a.1970); 12 E. McQuillin, Municipal
<br /> 20. In re Permian Basin,390 U.S. 747, 88 S. [**151 Corporations§35.37a(1970).
<br /> Ct. 1344, 20 L.Ed 2d 312(1968);Federal Pow- 25. Columbus S Ohio Elec. v Public Utdl
<br /> er Comm'n v Hope Natural Gas Co., 320 U.S Comm'n of Ohio, 58 Ohio&2d 120, 388 N.E2d
<br /> 591,64 S. Q.281,88 L.Ed 333(1944), 1378(1979).
<br /> Rosalind argued that because the OUC is a 26• The expert witness from the PSC express-
<br /> city-owned utility,the court should not consider the rate Iy refused to answer this question.
<br /> of return on equity allowed to privately owned utilities. Rosalind's expert witness testified that if the Orlando
<br /> Some states' public service commissions do not allow franchise fee was treated as profit as we conclude it
<br /> municipal utilities to receive [**13] as high a rate of should be, then the OUC was earning approximately a
<br /> return as a private utility"because they pay no taxes,are 16% rate of return on equity rather than, 13.5%. The
<br /> able to raise fimds through bonds at lower interest rates, OUC's witnesses conceded that disallowance of such a
<br /> and their"stockholders,"or cities who take their profits, large"operating expense"would indeed affect the OUC'a
<br /> pay no taxes either. Rosalind showed that the average income yield perhaps as much as 2%. Assuming the
<br /> rate of return on equity fnr municipal utilities,as shown OUC is really setting its rates to earn 16%rate of return
<br /> in a 1973 Federal Power Commission Report,u was only on equity,this figure exceeds the PSC's range of reason-
<br /> 8.1%. The expert witness for Rosalind also testified that ablenew,or certainly sits on the extremely high side of
<br /> a municipal utility should not cam a rate of return on the range.'*However,rates may be higher than the PSC's
<br /> equity higher than 6% to 9%, and that OUC's calcula- "reasonable"range but still not be confiscatory and arbi-
<br /> tions based on 13.5 would make its rates unreasonable. trary. "Although this is a close question,we are reluc-
<br /> tant to Wile that one percentage point topples the OUC
<br /> 21. In re Petitions of Burlington Elec. Light into the confiscatory or excessive range."
<br /> Dept, 135 Vt. 114, 373 A.1d 514 (1977); in re
<br /> Wanahah Water Co., No. 24511 (N.Y. P.S.C. 27. Government owned municipals are con-
<br /> March 26,1968), sidered by authorities to foster lower rates in pri.
<br /> 22. Federal Power Commission, Statistics of vete utilities because of lower nate competition.
<br /> Publicly Owned Electric Utilities in the United R. Hellman, Government Competition in the
<br /> States 1973(1974). Electric Utility Industry A 7heoradcal and Em-
<br /> pirical Study 39 (1972). In this case Orlando
<br /> Utilities Commission has disproved the none.
<br /> 5�
<br />
|