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402 So. 2d 1209, *; 1981 Fla. App. LEXIS 20623, ** one expert witness for Rosalind was not allowed to testi- fy that the OUC's rates were unreasonably high, and he admitted he was not qualified to so testify. The OUC's expert witnesses all testified the OUC's rates were rea- sonable. We conclude that Rosalind failed to establish by a preponderance of the evidence that the OUC was earn- ing an excessive profit, or that its rates were unreasona- bly high for the years in issue. See: Killion v. City of Paris, 192 Tent 446, 241 S. W 2d 524 (1951). • III. WAS THE 13.5% RATE OF RETURN ON EQUITY USED BY ORLANDO UTILITIES COM- MISSION OMMISSION IN SETTING [**12] ITS RATES SHOWN TO BE UNREASONABLE AND ARBITRARY? The record showed that the OUC used the rate of 13.5% in calculating the needed rate of return on equity in setting its rates for the years in question. The testimo- ny established that the rate of return among inves- tor-owned Florida utilities from 1972 to 1977 ranged from 12.75% to 16.35%, and that the PSC had estab- lished from 13% to 15% as a "reasonable" zone. Both appellant and appellees agree that a utility should be al- lowed to earn a reasonable rate of return on its equity, 30 but they disagree what industry earnings standard should be applied. 20. In re Permian Basin, 390 U.S. 747, 88 S a 1344, 20 L. Ed 2d 312 (1968); Federal Pow- er Comm'n v. Hope Natural Gas Co., 320 U.S 591, 64 S. a 281, 88 L. Ed 333 (1944). Rosalind argued that because the OUC is a city -owned utility, the court should not consider the rate of return on equity allowed to privately owned utilities. Some states' public service commissions do not allow municipal utilities to receive [**13] as high a rate of return as a private utility 31 because they pay no taxes, are able to raise funds through bonds at lower interest rates, and their "stockholders," or cities who take their profits, pay no taxes either. Rosalind showed that the average rate of return on equity for municipal utilities, as shown in a 1973 Federal Power Commission Report, u was only 8.1%. The expert witness for Rosalind also testified that a municipal utility should not earn a rate of return on equity higher than 6% to 9%, and that OUC's calcula- tions based on 13.5 would make its rates unreasonable. 21. In re Petitions of Burlington Elec. Light Dept 135Vt. 114, 373 A.2d 514 (1977); In re Wanakah Water CO., No. 24511 (N.Y. P.S.C. March 26, 1968). 22. Federal Power Commission, Statistics of Publicly Owned Electric Utilities in the United States 1973(1974). Page 4 [*12141 However, experts for the OUC testified that the OUC's operations are more comparable to the private utilities in Florida because of its size and the [**14] fact that it has a substantial generating capacity. The municipal utilities in the Federal Power Commis- sion's Report were considerably smaller than the OUC and many had no generative capacity. At least one public service commission allowed a city utility a rate of return on equity comparable to private industry, n and the courts in our jurisdiction frequently equate municipal utilities with privately owned utilities.'" Where there is conflicting expert testimony concerning the proper rate of return on equity standard to be applied to municipal utilities, we cannot say the lower court erred in finding for the OUC on this point. b We note however, that this is precisely the type of ruling relating to rate structure that the PSC should determine. 25 23. Re Municipality of Anchorage d/b/a An- chorage Water Utility, 19 PUR 4th 278 (Alaska Pub. Util. Comm'n February 28, 1977). 24. Hamler v. City of Jacksonville, 97 Fla. 807, 122 So. 220 (1929); Edris v. Sebring Util. Comm'n 237 So.2d 585, cert. denied,' 240 So.2d 643 (Fla 1970); 12 E. McQuillin, Municipal Corporations § 3537a (1970). [4*15] 25. Columbus 5 Ohio Elec. v. Public Util Comm'n of Ohio, 58 Ohio St.2d 120, 388 N.E2d 1378 (1979). 26. The expert witness from the PSC express- ly refused to answer this question. Rosalind's expert witness testified that if the Orlando franchise fee was treated as profit as we conclude it should be, then the OUC was earning approximately a 16% rate of .return on equity rather than 13.5%. The OUC's witnesses conceded that disallowance of such a large "operating expense" would indeed affect the OUC's income yield perhaps as much as 2%. Assuming the OUC is really setting its rates to earn 16% rate of return on equity, this figure exceeds the PSCs range ofreason- ableness, or certainly sits on the extremely high side of the range. "However, rates may be higher than the PSC's "reasonable" range but still not be confiscatory and arbi- trary. " Although this is a close question, we are reluc- tant to rule that one percentage point topples the OUC into the confiscatory or excessive range.' 27. Government owned municipals are con- sidered by authorities to foster lower rates in pri- vate utilities because of lower rate competition. R. Hellman, Government Competition in the Electric Utility Industry A Theoretical and Em- pirical Study 39 (1972). In this case Orlando Utilities Commission has disproved the norm. 57