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Board of County Commissioners Warch 7, 2011 Page Three regulating rates), approving territorial agreements and resolving territorial disputes. This limited jurisdiction could impact the outcome of the Faherty/Heran case. In their petition, Dr. Faherty and Mr. Heran asked the PSC to take several steps: (1) to act, on its own motion, to determine that a territorial dispute exists with respect to the City and FPL territorial service areas, and ultimately to enter a new PSC order redefining the territorial service areas in a manner more favorable to non-resident customers; (2) to require that City rates be changed to eliminate or reduce the "subsidy" that is transferred from the City electric utility to the City general fund; (3) to address and mitigate the "taxation without representation" situation that exists for the 61% of City customers who are non-residents; and (4) to enforce the 2008 Mayfield legislation by requiring the City to hold a referendum and possibly create a utility authority, depending on the outcome of the referendum. The County Attorney's view of the Faherty/Heran petition is that they face an uphill battle because they are asking the PSC to take steps which the PSC has not previously taken, and because, given the PSC's limited jurisdiction over municipal electric utilities, there is, a question whether the PSC has jurisdiction over some of the issues raised — but the battle is not hopeless. The Faherty/Heran petition raises the fundamental issue of whether the PSC should protect, or the legislature should change the law to protect, non-resident customers of municipal electric utilities. Customers living inside city limits can protect themselves by voting in city elections, but customers living outside city limits have no protection — which becomes a serious issue when a city uses its utility to subsidize its general fund and thereby reduce taxes for city residents. Fundamental fairness would seem to require some level of protection for these non- resident customers. Thus, whether or not the PSC has jurisdiction, it may be motivated to find a way to protect non-resident customers; or, it may use the Faherty/Heran case as a platform to develop a factual record on the issue, and use the factual record to request that the legislature change the law to protect non- resident customers; or, of course, the PSC could conclude that it has no jurisdiction over the issues and do nothing. However the case develops, the battle will not be without its opponents, because there are other cities in Florida who are subsidizing their general fund just like the City of Vero Beach, and these cities are represented by powerful trade groups, all of whom will oppose any steps by the PSC or the legislature to prohibit the subsidy practice. If the County intervenes in the Faherty/Heran case, substantial work and expense may be required. In theory, the County can intervene for the simple purpose of staying informed of developments in the case. However, realities may force, the County to become far more involved. Dr. Faherty and Mr. Heran are not attorneys and they do not have attorneys representing them in the proceeding. Thus, if the County intervenes, it is likely that the County's outside utility attorney (hired in September 2010) will end up doing most of the legal work. Also, the political reality is that once the County is in the case, non-resident customers of the City system may not be satisfied with anything less than a full effort. The County's outside utility attorney has estimated that a full evidentiary case before the PSC could cost the County up to $200,000. Thus, intervention with less than a full effort may not be possible, and intervention with a full effort will be expensive. F:bUmme)kU,,da,GENERAL\B C CM8.da M—WRC-COM(Electric 1- ).dc 142