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Carlos Alvarez, Esq. December 11, 2014 Page 6 • 22.01%higher than the rates of FPL in December 2004; • 45.01%higher than the rates of FPL in December 2005; • 9.56%higher than the rates of FPL in December 2006; • 31.12%higher than the rates of FPL in December 2007; • 30.23%higher than the rates of FPL in December 2008; • 30.63% higher than the rates of FPL in December 2009; • 26.46%higher than the rates of FPL in December 2010; • 21.57% higher than the rates of FPL in December 2011; • 31.45%higher than the rates of FPL in December 2012; and • 41.19%higher than the rates of FPL in December 2013. Because FPL is an investor-owned utility, its electric rates are regulated by the PSC under Chapter 366, Florida Statutes. In contrast, as a municipal electric utility, the City and its electric utility rates are not regulated by the PSC. See §§ 366.04 and 366.02(1), Fla. Stat. (providing the PSC with the jurisdiction to regulate rates and services of a "public utility," but excluding municipalities from the definition of"public utility"). Instead,the City's electric utility is managed and its rates are set exclusively by the City Council. Ch. 14439, § 40, Laws of Fla. (1929). The City Council Members are elected by the citizens who reside inside the City's corporate limits. Under Florida law, the rate levels of a municipal electric utility like the City are not regulated by the PSC because there is an expectation that citizen-ratepayers of a municipal electric utility have an adequate voice in regulating their own electric rates. This expectation is based on the premise that elected municipal officials are ultimately responsible to their citizen-ratepayers for all rate impacts associated with their operation of the municipal utility system. In other words, if a customer believes that an elected official is not properly managing the municipal electric utility,then that customer can vote the elected official out of office. However,because approximately 62%of the City's electric customers are non-residents of the City, a significant majority of the City's electric customers cannot vote in City elections, and thus have no voice in electing those officials that manage the City's electric utility system and set their electric rates. Although the City is not subject to the PSC's rate-setting jurisdiction,the City is still required by law to set rates that are reasonable. The special act creating the City provides that the "City Council may by ordinance make reasonable regulations as to the use of any public utility and may fix reasonable rates for service furnished by public utilities to consumers." § 40, Ch. 14439, Laws of Fla. (1929) (emphasis added). In the Town's view,the City has engaged in oppressive rate-making practices that require the Town and its residents to unfairly subsidize City operations that are not related to the furnishing of electric service to customers. For example, the City has set its electric rates so that the Town and other captive non-resident customers are required to produce millions of dollars of surplus electric revenues that the City then diverts to the City's General Operating Fund. Those diverted surplus revenues are then used to cover non-utility costs, including propping up the City's unfunded pension obligations to current and former employees that had nothing to do with the operation of the City's electric utility or the furnishing of electric service. In addition, the City is diverting these surplus electric revenues from non-resident customers as a surrogate for ad valorem tp