The Issue Whether Petitioner is responsible for the payment of electric use at a customer’s rental property.
Findings Of Fact Petitioner, Eddy Grosse, filed a complaint against Respondent, Florida Power and Light Company, alleging that he was not responsible for electric use of tenants of his rental property who failed to pay for their electric use. On August 5, 1996, the Intervenor, Florida Public Service Commission entered a Notice of Proposed Agency Action Order Affirming Liability for Unpaid Balance, holding that Mr. Grosse was liable to the Respondent for the unpaid balance of $871.12. Mr. Grosse requested an administrative hearing on August 26, 1996. The case was forwarded to the Division of Administrative Hearings on December 9, 1996. On January 9, 1997, the undersigned Administrative Law Judge issued a Notice of Hearing by Video, scheduling the final hearing for February 28, 1997. The Notice was sent to Mr. Grosse. The hearing was scheduled to commence at 9:00 a.m. Because of technical difficulties with the video equipment the hearing actually commenced at 10:00 a.m. Mr. Grosse did not appear at the final hearing and did not notify the Division of Administrative Hearings that he would not be appearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order should be entered dismissing Petitioner’s Petition for an Administrative Hearing and finding Petitioner liable for the unpaid balance of $871.12. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 14th day of February, 1997. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 1997. COPIES FURNISHED: William Cochran Keating IV, Esquire Lorna R. Wagner, Esquire Florida Public Service Commission Gerald L. Gunter Building 2540 Shumard Oak Boulevard Tallahassee, Florida 32399 Bob Stone Florida Power and Light Company Law Department 9250 West Flagler Street Miami, Florida 33174 Mr. Eddy Grosse 3501 Southwest 130 Avenue Hollywood, Florida 33027 Blanca Bayo, Director of Recording Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 William D. Talbott, Executive Director Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Rob Vandiver, General Counsel Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850
Findings Of Fact Petitioner, Edward W. Horsman, filed an application August 14, 1984, pursuant to Chapter 489, Florida Statutes, for certification by examination as an electrical contractor. On October 12, 1984 Respondent denied Petitioner's application on the basis that he lacked sufficient experience in the trade to qualify for the licensure examination. Section 489.521, Fla. Stat., and Rule 21GG-5.02(1), F.A.C. Petitioner filed a timely request for a hearing pursuant to Section 120.57, Fla. Stat. Petitioner has 20 years experience in the electrical construction industry. From 1965-1980 Petitioner was employed by Spaulding Electric Company, an electrical contractor in Detroit, Michigan. While employed by Spaulding, Petitioner worked as a wireman for one and one-half years, a foreman for one and one- half years, a field superintendent for four years, an estimator for one and one-half years, chief estimator for one and one-half years, and as manager of electrical construction for five years. Petitioner's managerial and supervisory experience included supervision of draftsmen in plan preparation, bid estimates, negotiation of contracts, overall supervision of construction, scheduling and purchasing. From 1980-1982 Petitioner was employed by Lastar Electric Company, an electrical contractor in Madison Heights, Michigan. Petitioner's managerial and supervisory experience at Lastar comported with his duties at Spaulding. In December 1982 Petitioner was laid off by Lastar, due to an economic recession which plagued Detroit, Michigan. From December 1982 until February 1984, Petitioner operated his own consulting firm in Rochester, Michigan, providing estimating and project management services for electrical contractors. Business was poor, and few contracts were acquired. In February 1984 Respondent relocated to Englewood, Florida, and undertook his current employment with Baldwin Electric, Inc. Respondent seeks to be licensed as the qualifying agent for Larry's Electric, Inc., a wholly owned subsidiary of Baldwin Electric, Inc.
The Issue The issue is whether Florida Administrative Code Rule 25-6.109(4)(a), constitutes an invalid exercise of delegated legislative authority as defined in Sections 120.52(8)(b) and 120.52(8)(c), Florida Statutes.
Findings Of Fact Ocean Properties is one of FPL's commercial retail electric customers. FPL, Progress, TECO, and Gulf are public utilities and electric utilities within the meaning of Section 366.02, Florida Statutes. They are extensively regulated by PSC. Ocean Properties has challenged Florida Administrative Code Rule 25-6.109(4)(a), which provides as follows: (4) Interest. (a) In the case of refunds which the Commission orders to be made with interest, the average monthly interest rate until the refund is posted to the customer's account shall be based on the thirty (30) day commercial paper rate for high grade, unsecured notes sold through dealers by major corporation in multiples of $1,000 as regularly published in the Wall Street Journal. PSC adopted Florida Administrative Code Rule 25-6.109(4) in 1983 and has never amended it. At the time that Ocean Properties filed the petition at issue here, Ocean Properties was a party to a proceeding before PSC concerning alleged inaccuracies in certain thermal demand meters owned and installed by FPL. Ocean Properties and several of FPL's other customers filed complaints with PSC, alleging that that the meters over-registered their electric service demand and that they were overcharged for retail electric service. The customers asked PSC to order FPL to refund the overcharges. On November 19, 2003, PSC issued a Proposed Agency Action Order, ordering refunds for the overcharges and stating that the interest rate rule would apply to determine the amount of interest to be paid by FPL to the customers. Ocean Properties, among others, challenged the Proposed Agency Action Order in a Petition for Formal Administrative Hearing Pursuant to Sections 120.569 and 120.57(1), Florida Statutes. On June 25, 2004, Ocean Properties filed its rule challenge petition in the instant case. In a letter dated July 6, 2004, PSC requested the Bureau of Administrative Code to add Section 366.05(1), Florida Statutes, as additional Specific Authority and Section 366.07, Florida Statutes, as additional Law Implemented for the interest rate rule. On July 8, 2004, Ocean Properties, PSC, and FPL filed a motion to place the instant case in abeyance, stating as follows in relevant part: In the event that Ocean chooses to proceed with this rule challenge following the issuance of a final order in Docket No. 030623-EI, and also files with the Commission a timely motion for reconsideration of that final order, the Commission will defer ruling on Ocean's motion for reconsideration until after the entry of a final order in this rule challenge proceeding and FPL will not object to such deferral. Without conceding its relevance or potential effect, FPL agrees that the Commission is entitled to consider the final order in the rule challenge case in resolving any such motion for reconsideration. The Commission staff agrees to address the potential effect of a final order in the rule challenge case in making its recommendation on the motion for reconsideration. By joining in this motion, none of the parties waives any position or argument that is otherwise available to it in this proceeding, in Docket No. 030623-EI, or on appeal of the final order in either proceeding; provided, however, that if the Commission's final order applies the challenged rule to Ocean, and the challenged rule is subsequently invalidated in [DOAH] Case No. 04-2250RX, neither the Commission nor FPL will assert on appeal that Ocean is nevertheless bound by the invalidated rule based on the fact that the determination of invalidity came after the Commission's final order as opposed to having been issued in July 2004. On November 4, 2004, PSC conducted a formal administrative hearing. During the hearing, Ocean Properties argued, among other things, that Section 687.01, Florida Statutes, which governs rates of interest in commercial relationships when there is no contract, should apply to the refunds. Ocean Properties argued that the statutory interest rate should apply because Florida Administrative Code Rule 25-6.109(4)(a) is an invalid exercise of delegated legislative authority. Additionally, Ocean Properties argued to the PSC that Kissimmee Utility Authority v. Better Plastics, Ins., 526 So. 2d 46 (Fla. 1988) should control. In that case, the Florida Supreme Court decided that Section 687.01, Florida Statutes, is applicable when calculating interest on utility overcharge refunds. See Kissimmee Utility Authority v. Better Plastics, Ins., 526 So. 2d at 47. In a Final Order Resolving Complaints dated February 25, 2005, PSC ordered FPL to refund to its customers the overcharges that resulted from use of the thermal demand meters. PSC also ordered FPL to pay interest on the amount refunded based on the interest rate rule. PSC distinguished Kissimmee Utility Authority as involving a municipal utility that was not subject to PSC's broad ratemaking authority under Chapter 366, Florida Statutes. On March 14, 2005, Ocean Properties and other customers filed a Motion for Reconsideration of PSC's Final Order Resolving Complaints. The motion references the instant case and asks the Commission to reconsider its decision concerning the proper interest to be applied to the refunds. On March 21, 2005, FPL filed a Response in Opposition to Customers' Motion for Reconsideration with PSC. The response refers to FPL's current tariff that is titled "Florida Power & Light Company, General Rules and Regulations for Electric Service." The tariff referenced in the response is the official and effective tariff on file with PSC. In a letter dated March 24,2005, PSC requested the Bureau of Administrative Code to add Section 366.04(1), Florida Statutes, as additional Law Implemented for the interest rate rule. FPL's General Rules and Regulations for Electric Service state as follows in pertinent part:
The Issue Whether Respondent unlawfully tampered with the utility meter at his residence in order to avoid payment of utility charges. Whether Respondent damaged his utility meter as a result of the alleged tampering with his utility meter. Whether the actions of Respondent violated the provisions of Sections 943.1395(5),(6), Florida Statutes and Rule 11B- 27.0011(4)(b), Florida Administrative Code by perpetration of an act which would constitute failure to maintain good moral character, as required by Subsection 943.13(7), Florida Statutes.
Findings Of Fact Respondent was certified by the Petitioner as a law enforcement officer on August 31, 1971 and was issued certificate number GF-8215. In 1988, Respondent was charged in the County Court of Orange County, Florida with two misdemeanor offenses of willfully altering or tampering with a meter or other apparatus belonging to a utility and theft of utilities, in violation of subsections 812.01(2), Florida Statutes. On April 20, 1988, Respondent entered a plea of nolo contendere to the offence of Theft of Utilities. The court withheld adjudication and placed Respondent on unsupervised probation for a term of one year with the condition that he remain at liberty without violating the law and he complete 50 hours of voluntary service. In addition, Respondent paid approximately $6,000 in restitution to OUC. The state announced a nolle prosequi of Count 1 of the Information. Respondent successfully completed his probationary period. On February 25, 1986, Robert Carney, OUC employee, was dispatched to Respondent's residence in response to Respondent's complaint of "flickering lights". He observed the lugs on the meter base of the electric utility meter, located on the outside screened porch, to be burned out. There was no plastic seal on the meter base at the time of his inspection, and the prongs on the meter looked worn but the meter was operating properly. He advised someone at the residence to call an electrician and left new lugs to be installed. No other services were performed at Respondent's home by OUC. On the same date, Respondent hired an electrical contractor who observed that the right hand jaw assembly was burned out. He replaced the entire jaw assembly and reinstalled the meter. On June 11, 1987, after receiving a complaint, Frank J. Scalletta, Investigator, Revenue Protection Unit, OUC, went to 326 Ventura Avenue, Orlando, the residence of Respondent. He observed the meter, OUC #5C14567, in an inverted position, with the padlock open and the seal intact but lying inside. An electrical meter installed upside down will run backwards and reduce the number of kilowatt hours of electricity that is recorded as being fed into a building, resulting in an incorrect reading. On June 11, 1987 electric meter #5C14567 was removed from the meter box at Respondent's residence. It was replaced with a new electrical meter reading zero, which had been tested on May 26, 1987 and shown to be 99.92% accurate. A seal was installed to the base to avoid tampering. Meter #5C14567 had "shiny blades" down to bare copper on all four blades, which is evidence of possible tampering. Test results on meter #5C14567 indicate that it was operating normally when removed from Respondent's home and that the worn prongs resulted from being pulled and inserted into the meter box from between 50 and 100 times. One of the prongs showed signs of heat damage. Respondent's consumption of electricity was monitored from the date of the installation of the replacement meter until the end of 1989. Comparisons of Respondent's consumption level from 1979 to July, 1987 showed a significant increase in Respondent's consumption of electricity after July 13, 1987. This increase in consumption has been maintained through December, 1989. The comparison indicates that for the month of October 1985 there was a negative (or minus) reading on the meter. Respondent lived alone at 326 Ventura Avenue, Orlando, Florida since 1979, except for a teenage son who resided with him for approximately two months during the year. During the period in question (February, 1986-July, 1987), he had done a substantial amount of overtime and worked a second job when no one was at home. During the summer of 1987, Respondent had surgery on a cyst and he used his hot tub extensively to facilitate the healing of his cyst, resulting in increased electrical consumption. Respondent denied tampering with the meter or knowingly receiving electricity without it being reported for payment. Respondent testified that he entered a plea of nolo contendere to the charge of theft of utilities because the court proceedings had taken six months up to that time and high media attention gave him great anxiety. In addition, legal fees had mounted to over $12,000 and had nearly depleted his savings. Respondent has been a law enforcement officer for over 25 years and has had no prior disciplinary problems. Respondent served for many years with the Winter Park Police Department, was promoted to the rank of Captain with the Orange County Sheriff's Department, and presently serves as Chief of Police for the City of Eatonville, Florida. Several witnesses testified as to Respondent's good character and reputation for truth and honesty in the law enforcement community and the community at large.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent be found guilty of the following offense: Failure to maintain good moral character, as required by Subsection 943.13(7), Florida Statutes (1989). It is further RECOMMENDED that Respondent's certification be suspended for a period of six months, followed by a probationary period of one year, subject to the successful completion of such career development training and counseling as the Commission may impose. DONE AND ENTERED this 4th day of April, 1990, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1990. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Proposed Findings of Fact Submitted by Petitioner: Petitioner waived the filing of proposed findings of fact. Proposed Findings of Fact Submitted by Respondent: Accepted: unnumbered paragraphs 1,2,3,4 (on page 1) The remainder of Respondent's proposed findings found on page two through four are accepted in part and rejected in part as: fact and argument intermixed; recitation of testimony of the witness; against the greater weight of the evidence; irrelevant evidence. COPIES FURNISHED: Joseph S. White, Esquire Assistant General Counsel Department of Law Enforcement Post Office Box 1489 Tallahassee, FL 32302 Joseph Morrell, Esquire Woolfork, Morrell, and Williams, P.A. Post Office Box 540085 Orlando, FL 32854-0085 Dana Baird General Counsel 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1925 Margaret Jones, Clerk Human Relations Commission 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1925
Findings Of Fact Carmine Amato is a real estate broker holding license number 0110690, and is the broker for Wise Realty in Broward County, Florida, which he wholly owns. Amerigo DiPietro is a real estate salesman holding license number 0326813. At all times in question, DiPietro was employed by Wise Realty, and Amato was his supervising broker. In August, 1980, DiPietro took a sales contract from Charles and Jennie Conroy for the sale of their home in Broward County, Florida, described as Lot 3, Block 5 of Margate Estates, Section 3. DiPietro suggested to the Conroys that they could afford a larger home by selling their present house and using the equity to put a down payment on a new house. The Conroys subsequently contracted to buy a larger and more expensive house in Broward County from the Hocenics, said house described as Lot 13, Block 8 of Kimberly Forrest. DiPietro found buyers, the Meads, for the Conroys' house; however, the Meads were unable to qualify, and the contract did not close. The Conroys were anxious to close on the Hocenics' house and, as a result, sought a loan from Security Pacific Finance Company, said loan being referred to as a "swing" loan. The Conroys used this swing loan to close on the Hocenics' house, and this loan was secured by a security interest in their old home and the Hocenics' home. The Conroys were not induced in any manner by the Respondents to seek this swing loan. Having obtained the loan, the Conroys closed on the Hocenics' house, moved out of their old house and into the Hocenics' house, and assumed financial responsibility for both homes. Because the Conroys were short $2400, DiPietro took a note from the Conroys payable from the proceeds of the sale of their house. This represented money due DiPietro, which the Conroys could not pay at closing. DiPietro continued to attempt to sell the Conroys' old home and found another buyer, the La Serras. The La Serras qualified, but the Conroys could not raise $3400 needed to pay off their obligation at the closing of the sale of their old home. Because of this, the La Serra transaction did not close. In an effort to save the deal and close the La Serra contract, DiPietro made every effort, even agreeing to take a note for the commissions due to Wise's sales people, who represented both buyer and seller. The Conroys refused to close. With the swing loan almost due, Mrs. Conroy asked DiPietro if he and Amato would buy their old house outright. Eventually, DiPietro and Amato agreed to buy the house and accept financial responsibility for the first mortgage if the Conroys would agree to certain conditions. DiPietro indicated from the outset that neither he nor Amato had sufficient cash to purchase the house outright, and that financing would have to be arranged. DiPietro also advised the Conroys that, if this financing could not be arranged, the swing loan would have to be extended, and that it would be necessary for the Conroys to work with Amato and him to arrange for the extension of this loan. The specific conditions which the Conroys would have to meet were as follow: (a) the Conroys would give Amato and DiPietro a quit claim deed to their old house; (b) the Conroys would do those things necessary to extend the swing loan another six months; and (c) DiPietro and Amato would assume immediate financial responsibility for the house and, during the six months' period, sell it or arrange for long-term financing. The Conroys concurred in this agreement and executed a quit claim deed to their old house to the Respondents. DiPietro tried three different companies, seeking substitute financing for the house. When he failed in this, DiPietro contacted Mr. Conroy about renewing the swing loan. Mr. Conroy accompanied DiPietro to Security Pacific to renew the swing loan. DiPietro attempted to get Security Pacific to substitute any of a number of pieces of property owned by Amato and him for the Conroys' new house and to release its security interest in said house. Because of Security Pacific's excellent equity position in this new house, Security Pacific was unwilling to release its encumbrance on the Conroys' house. Security Pacific said it would release its interest in the Conroys' house only if the amount of the loan was paid down to an amount that the old house could secure. Neither Amato, DiPietro nor Conroy could afford to do this. Security Pacific said it would renew the loan only upon the Conroys' reapplication. Lastly, Security Pacific made clear that it still looked to the Conroys and to their new house as primary security on the swing loan. During all this time, the Conroys' old home was vacant. It had been vandalized and had suffered significant damage which decreased its value. In addition, no yard maintenance had been performed during the period since the Conroys had moved out. To be salable, substantial repairs and maintenance had to be performed by DiPietro and Amato. The revelation that Security Pacific looked to him and his wife for payment of the loan secured by their new house frightened Mr. Conroy. The Conroys were already financially strapped, having been responsible for the payments on both houses during this time. With the swing loan nearly due, and envisioning the loss of both houses and being left with an unsatisfied $28,000 debt, Conroy went to an attorney. The attorney advised Conroy not to join with DiPietro and Amato in extending the swing loan. When the swing loan was not extended, Security Pacific commenced foreclosure proceedings. Amato and DiPietro kept up the payments on the first mortgage, although Mrs. Conroy had to complain at first when these payments were late. The first three payments (July, August and September) were delayed following transfer from the Conroys to Amato and DiPietro. DiPietro and Amato did not promise to assume sole responsibility for the swing loan. DiPietro's representation was that they would try to refinance the property, and that if they could not refinance it they would assume primary responsibility for payment of the swing loan if the Conroys would join with them in extending the swing loan. Respondent Amato never saw or spoke to the Conroys and never made any promises which he did not fulfill. When the foreclosure action commenced, DiPietro stepped up his effort to sell the Conroys' old house and, approximately six to eight weeks later, sold it after substantial repairs were completed. The sales price was $57,000. At the time of the sale, approximately $32,000 was owed on the house to Security Pacific, and approximately $21,000 was owed to Heritage Mortgage Company on the first mortgage. Respondent Amato had put approximately $2,000 into repairs on the house, and Wise Realty was owed a note of approximately $2400 representing commission on the Hocenic/Conroy sale.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the following is recommended: That the charges against the Respondent, Carmine Amato, be dismissed, it having been found that he had no contact with the Conroys, could not have made any representations to them, and is not guilty of Violating Section 475.25(1)(b), Florida Statutes; and That the charges against the Respondent, Amerigo DiPietro, be dismissed, it having been found that he made no misrepresentations to the Conroys and therefore did not violate Section 475.25(1)(b), Florida Statutes. DONE and RECOMMENDED this 14th day of April, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 1983. COPIES FURNISHED: Fred Langford, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Lawrence F. Kranert, Jr., Esquire 1000 South Federal Highway, Suite 103 Fort Lauderdale, Florida 33316 David F. Hannan, Esquire 3300 Inverrary Boulevard, Suite 200 Lauderhill, Florida 33319 Harold Huff, Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 William M. Furlow, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Petitioner GDU is a wholly-owned subsidiary of General Development Corporation and has eight operating divisions. At the end of the 1979 test year, the petitioner's Port Malabar Division had 3,899 water connections and 3,760 sewer connections. At the end of July, 1981, the system was serving 4,852 water customers and 4,332 sewer customers. During the test year, petitioner's Port Malabar water system consisted of 16 shallow wells, 47 miles of distribution and transmission lines, and a three million gallon per day lime softening treatment plant with two storage facilities. The sewer system consisted of 17 lift stations, about 44 miles of collection and force mains and a treatment plant-rated at two million gallons per day. During the test year, 28 employees were assigned to the water and sewer operations. At the time of the August hearing, petitioner had 34 employees. Quality of Service The water and sewer service customers of petitioner who testified at the hearing were primarily concerned about the magnitude of the proposed rate increase and its impact upon persons with fixed incomes. Many customers testified that they were satisfied with the water and sewer service provided to them. The few complaints voiced about service included odor from a new lift station, the high mineral content of the water, water lost during construction projects, interruptions in service without notice, and, on occasion, dirty water. Petitioner maintains a customer service and local billing office in the Port Malabar area. It is the customary practice of petitioner to give its customers advance notice of any interruption in service. Water utilized for construction purposes is metered and billed to the individual contractors. The odor problem from the recently installed lift station has been resolved. Petitioner has an ongoing program for monitoring water quality and compliance with state and federal water quality standards. All drinking water requirements and standards for sewage treatment plant effluent have been complied with by petitioner. Petitioner presently has 3 sewage treatment plant operators and is attempting to secure one more operator to meet the Department of Environmental Regulation's requirement of four. Used and Useful The term "used and useful" is a ratemaking term to establish that portion of investment upon which a utility is entitled to earn a return. Facilities which are used and useful are those used to serve present customers, with a reasonable reserve added for future customers. A knowledge of engineering principles is necessary to perform a used and useful analysis. The used and useful analysis performed by petitioner resulted in a determination that the water treatment plant is 100 percent used and useful. The methodology utilized was to take the maximum day's water production during the test year and add an allowance for 18 months' growth based on an average of the prior three years growth rates. The actual growth rate of 953 water customers between the end of the test year and July, 1981, a 24.4 percent increase, closely matched the increase used in petitioner's calculations. The eighteen month period is representative of the period of time required for a utility to design, receive approval, complete construction and place the facility in usage. The utility's methodology made no allowance for fire demand and thus the results are conservative. Using a similar methodology, the PSC engineering expert also found the water plant to be 100 percent used and useful. The Office of Public Counsel's accounting expert determined that the petitioner's water plant was only 81 percent used and useful. His methodology utilized a peak day flow different than that utilized by petitioner for the reasons that he felt it was more representative of actual customer demand and did not reflect excess water loss. This witness also felt that the use of the marginal reserve or growth factor resulted in the inclusion of plant associated with future customers and allowed the utility to over-recover its depreciation expenses. Petitioner's used and useful analysis of water distribution mains resulted in the determination that $162,501 should be deemed held for future use and therefore excluded from rate base. For purposes of this calculation, petitioner utilized as-built plans and excluded those mains in sparsely settled areas unless they fronted on an occupied lot or on a fire hydrant located within 500 feet of an occupied lot. The PSC expert witness determined that the water distribution system was 100 percent used and useful. The OPC's witness determined that the used and useful portion of the water distribution system was 80.96 percent. His analysis was apparently based on the actual billings during the test year as compared to the total potential connections. By averaging the average daily flow and the average maximum flow days, and then adding an eighteen month allowance for future growth, the petitioner determined that the sewage treatment plant was 60.5 percent used and useful. Maximum flow days are more significant than average days from an engineering design perspective, and thus petitioner's calculations are quite conservative. The PSC witness determined that the sewage treatment plant was 100 percent used and useful. Based upon average daily flow and making no allowance for growth, the OPC's witness determined that the sewer plant was only 40 percent used and useful. His rationale for using the average daily flow was not adequately explained. Comparing the actual connections plus an eighteen month allowance for growth to potential connections, petitioner determined that the sewage collection and distribution mains are 100 percent used and useful. The PSC witness agreed. The witness for the OPC calculated the sewage collection line system as being only 73.4 percent used and useful, apparently giving no weight to a growth allowance. Water Loss Petitioner calculates its unaccounted for water loss at 9 percent, though a little over 1 percent is due to meter slippage because of mechanical design. Petitioner's meters are read on a monthly basis and are calibrated by a private firm once a year for the water meters and twice a year for the sewer meters. A range for water loss between 10 percent and 15 percent is considered reasonable in the industry. Pointing to the facts that many Florida water utilities have water losses at 5 percent or lower and that petitioner's own water losses were less in 1980, the OPC witness felt that the unaccounted for water should be calculated at a 5 percent rate. Construction Work in Progress A portion of the assets carried on the petitioner's books as construction work in progress (CWIP) were actually completed, paid for, in service and generating revenues during the test year. These assets--$246,9l6 of water mains and $1,053,476 of sewer mains--were reflected as CWIP because the bookkeeping process of classifying them to the proper plant accounts had not been completed. The assets were subjected to the petitioner's used and useful analysis, and they should be reclassified as utility plant in service. A utility is entitled to recover the cost of carrying its construction program. The two alternative methods of recovery are to allow the average balance of CWIP to be included in rate base or to allow the interest or other return on the construction balances to be capitalized as part of the cost of the asset and amortized over its useful life. This latter method is referred to as allowance for funds used during construction (AFUDC). If AFUDC is not added to the rate base and if the amount of construction is reasonable based upon engineering standards, CWIP should be includable in rate base. Over the long run, this method is less costly to customers than charging AFUDC. Petitioner did not charge AFUDC on the assets claimed as CWIP and the amounts claimed were less than in previous years and met the standard of reasonableness. The witness for the OPC was of the opinion that CWIP should be excluded from rate base because the assets benefited the utility rather than the current customers, and current ratepayers should not be required to finance the utility's investments. He further felt that if these funds were included in rate base, the result would be a mismatch between rate base and the utility's income statement. Contributions-in-Aid-of-Construction Petitioner has properly excluded from its rate base those moneys which represent CIAC. However, it has included in rate base accumulated depreciation on CIAC. Petitioner has done this by adding back to rate base that portion of total accumulated depreciation associated with CIAC after subtracting both total accumulated depreciation and CIAC from plant in service. The PSC method reaches the same result by subtracting from plant in service both total accumulated depreciation and net CIAC (CIAC less accumulated depreciation on CIAC). If the depreciation expense on contributed property has already been included as an above-the-line expense and re- covered through rates, accumulated depreciation corresponding to such expenses should be removed from rate base. Petitioner has never recovered depreciation on contributed property as an expense for ratemaking purposes. Working Capital An allowance for working capital should be included in rate base. Petitioner utilized the formula approach for calculating its working capital needs. This methodology is recognized by PSC rule and is a simplistic, rule-of- thumb approach. It is calculated by taking one-eighth or 12 1/2 percent of the utility's annual operation and maintenance expenses. It does not reflect some items which provide a source of working capital and it does not necessarily measure the actual working capital requirements or investment of any particular company, The result obtained from using the formula approach must be reduced by an amount for federal income tax lag. The balance sheet approach to determine working capital requirements is generally preferred by the PSC staff and its use is urged by the Office of Public Counsel in this proceeding. This method involves deducting current liabilities from current assets to determine the amount of funds the utility has currently available to meet its working capital needs. The balance sheet approach more accurately addresses the specific working capital variables of the company to which it is applied. The PSC's accounting witness recommended use of the formula approach in this case because of the absence of a staff audit of the petitioner's balance sheet, In actuality, the difference in terms of dollars between the two approaches, as calculated by the petitioner and the OPC, is an immaterial amount. On cross-examination and rebuttal, the intervenor's calculation of working capital requirements by use of the balance sheet approach was shown to be incorrect and the result obtained was therefore understated. Federal Income Tax Petitioner GDU is a wholly-owned subsidiary of General Development Corporation which is a wholly-owned subsidiary of GDV, Inc. GDU files its federal income tax returns as part of the consolidated group which contains no other public utilities. Using this subsidiary approach, each member of the group computes its tax liability as if it were a freestanding company. Petitioner computed its federal income tax liability at the full statutory rate of 46 percent. While the petitioner's actual capital structure is almost 100 percent equity, its tax was computed by recognizing its parent company's capital structure. Petitioner did not contribute any tax losses that could be used by the group on its consolidated return. A certified public accountant with the PSC staff agreed with the petitioner's use of the subsidiary approach and the 46 percent statutory rate for calculation of petitioner's federal income tax expense. During the 1979 test year, the consolidated group actually paid taxes to the Internal Revenue Service at less than the 46 percent statutory rate. This was the result of losses at the parent company level. The witness for the OPC was of the opinion that the petitioner's tax expense should be calculated so as to recognize the actual tax expense of the corporation as a whole and that only those taxes which are eventually flowed through to the Internal Revenue Service should be claimed. He would calculate petitioner's effective tax rate by use of a "payout ratio" methodology which involves adjusting the statutory rate by the ratio of taxes actually paid to the IRS to the total taxes paid by all subsidiaries. Depreciation Rate On the basis of an estimation of the average service lives for each of its primary plant accounts, petitioner has calculated an overall depreciation rate of 3.43 percent for water assets and 3.11 percent for sewer assets. This component method of depreciation has been used by petitioner for over twenty years. In estimating the service lives of its assets, petitioner relied upon its experience with its own water and sewer assets in Florida and recognized that such assets are affected by Florida's high temperatures and humidity levels and the flat topography. The composite 2.5 percent depreciation rate customarily utilized by the PSC assumes a forty year service life of assets. In actuality, petitioner has retired two of its wells in less than twenty years and most of its meters have been replaced. The service lives used by petitioner are comparable with other depreciation data from the PSC, a National Association of Regulatory Utility Commissioner's (NARUC) survey and a Texas Public Service Commission survey on average service lives. The petitioner's witnesses were of the opinion that the 2.5 percent rate or forty year composite service life is not appropriate because it does not consider the unique physical characteristics of water and sewer systems in Florida. The OPC urges the application of the 2.5 percent overall depreciation rate on the basis that petitioner did not produce sufficient evidence that a change from Commission policy was necessary. Inflation Adjustment Petitioner proposes to adjust certain operating and maintenance expenses upward by 8.3 percent as an allowance for the effect of inflation on those expenses. No adjustment is proposed for those items which were the subject of other adjustments or for those items not expected to increase directly with inflation. The figure of 8.3 percent was derived from a three- year average of percentage increases in the Consumer Price Index (CPI) from 1976 through 1979. The CPI is a "market basket" approach to measuring inflation on the average consumer, and includes such items as foodstuffs and home mortgages. Based upon its 1980 expense figures and discounting increases in expenses attributable to growth in customers, petitioner experienced a 10 percent inflationary increase for water operations and a 9 percent increase for sewer operations for 1980 over 1979. Since at least 1976, petitioner has never earned its authorized rate of return, primarily due to the effects of inflation. The PSC staff has not audited the petitioner's 1980 expense figures. Such figures have been audited by an outside CPA firm for financial purposes, but not for regulatory purposes. The 10 percent and 9 percent increases in water and in sewer operations measure only increased costs and do not account for increased revenues. Pursuant to a 1980 amendment to Chapter 367, Florida Statutes, public utilities are now entitled to automatically adjust their major categories of operating costs incurred during the previous calendar year by applying a price increase or decrease index to those costs. Section 367.081(4)(a), Florida Statutes. The PSC has established an 8.99 percent index for application by utilities in 1981. Highland Shores/Knecht Road Adjustments It is anticipated that the City of Palm Bay will purchase petitioner's water distribution system serving one commercial and 54 residential customers in the Highland Shores subdivision and 8 customers on Knecht Road. Petitioner eliminated certain amounts from its revenues, variable expenses and rate base to reflect this transaction, but did not adjust non-variable fixed costs which would not be affected by loss of these customers. Adjustments were made to chemical and electrical expenses and depreciation and property taxes associated with the plant serving those areas. No adjustments were made to payroll or other labor expenses. Petitioner presented evidence that the loss of those customers would not reduce personnel requirements or labor costs. The witness for the OPC proposed across-the-board adjustments for all operating and maintenance expenses based upon percentages of consumption and usage figures associated with these areas. Cost of Capital In actuality, the capital structure of petitioner consists almost entirely of equity invested in the utility by its parent, General Development Corporation. With adjustments for funds not available to petitioner, petitioner used its parent's capital structure in performing its cost of money analysis since the ultimate source of its equity funding consists of a mixture of debt and equity at the parent company level. All parties agreed that the proper capital structure to use in this case is that of petitioner's parent, General Development Corporation. Employing a discounted cash flow method and a risk premium analysis, petitioner has determined tat its cost of equity capital ranges from 18.06 percent to 22.32 percent, with a midpoint of 20.19 percent. Under the discounted cash flow method, the five year annual growth rates of ten water utilities were averaged and added to the average dividend yield for those utilities, to obtain an 18.06 percent return on equity. Under the risk premium analysis, petitioner analyzed utility debt costs by considering the current costs and yields of bonds, and then added a 4 percent risk premium to reflect the higher yield associated with equity as compared to debt. This analysis resulted in equity ranges between 20.59 percent and 22.32 percent. These figures are comparable to the combination of dividend yield and price appreciation of the Fortune 500 companies. The OPC witness concluded that a reasonable return on equity for petitioner would be between 14 percent and 14.5 percent. In measuring this cost of equity for petitioner, the comparable earnings method and a discounted cash flow method was employed. The former method involves an observation of the equity returns achieved by companies of comparable risks. Mr. Parcell examined the earnings of unregulated companies and large public utilities. His discounted cash flow method combined dividend yield and growth in retained earnings for nine water companies. The petitioner presented evidence that its current cost of debt is 15.3 percent instead of the 10.89 percent originally indicated in its application. Rate Case Expenses Petitioner originally estimated its rate case expenses at $25,000 based upon the assumption that there were only two issues in dispute between the utility and the PSC staff and that the proceedings could be handled by in-house personnel. Following the intervention of the Office of Public Counsel, the corresponding increase in the number of issues to be litigaged and the six additional days of actual hearing, petitioner is claiming that rate case expenses are $105,787. This figure is based upon the hourly rates of various professionals and the actual expenses incurred for the hearings. Petitioner expects the rates which will result from these proceedings to be in effect for no more than two years. This is consistent with petitioner's past history. Petitioner therefore seeks to amortize its rate case expenses over a two-year period and to divide them equally between the water and sewer operations. The OPC presented testimony expressing the opinion that the expenses claimed by petitioner in this proceeding were unreasonable and entirely out of line. It was pointed out that the expenses requested amount to about 20 percent of the total proposed revenue increase. It is contended that the hourly rates charged by petitioner's witnesses are excessive and that it was unreasonable to engage more than one witness per issue in a case of this magnitude. The hourly rates charged by the OPC's witnesses were set pursuant to an annual contract between those witnesses and the Office of Public Counsel. The OPC also believes that rate case expenses should be amortized over a three to five year period to properly take into account the newly enacted automatic pass-through provisions of Chapter 367, Florida Statutes, which should increase the time between rate cases. One witness testifying for the OPC did not feel that rate case expenses should be recovered at all through rates. The PSC staff witness did not feel that the rate case expenses claimed by petitioner were excessive when compared with other utilities of similar size.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that the issues in dispute in this proceeding be resolved as follows: That the quality of water and sewer service provided by petitioner to its customers be found satisfactory; That 100 percent of petitioner's water treatment plant, 60.5 percent of its sewage treatment plant and 100 percent of its sewage collection and distribution system be found to be used and useful in the public service and that $162,501 attributable to petitioner's water distribution lines be excluded from rate base; That petitioner's water loss of 9 percent is not excessive; That those assets in service during the test year carried on the utility's books as construction work in progress be transferred to utility plant in service and the remaining amount of CWIP proposed by petitioner for inclusion in rate base is reasonable; That accumulated depreciation on contributions-in-aid-of-construction not be excluded from petitioner's rate base; That the formula approach utilized by petitioner in determining its working capital requirements is appropriate in this case; That the petitioner's federal tax expenses be calculated at the 46 percent statutory rate; That the composite rates of depreciation of 3.11 percent on petitioner's sewer division and 3.43 percent on its water division be adopted; That petitioner's proposed 8.3 percent inflation adjustment for certain operation and maintenance expenses be rejected; That the adjustments proposed by petitioner for loss of its Highland Shores/Knecht Road customers are appropriate; That the capital structure of General Development Corporation be utilized to determine petitioner's cost of capital; that petitioner's cost of debt is 15.3 percent and that petitioner's cost of equity is 18.06 percent; and That rate case expenses in the amount of $105,787 are reasonable. Respectfully submitted and entered this 8th day of December, 1981, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of December, 1981. COPIES FURNISHED: Gary P. Sams, Esquire and Richard D. Melson, Esquire Hopping, Boyd, Green & Sams Suite 420 Lewis State Bank Building Tallahassee, Florida 32301 Nancy H. Roen, Esquire General Development Utilities, Inc. 1111 South Bayshore Drive Miami, Florida 33131 Gregory J. Krasovsky, Esquire Florida Public Service Commission 101 East Gaines Street Tallahassee, Florida 32301 Jack Shreve, Esquire Stephen C. Burgess, Esquire and Suzanne S. Brownless, Esquire Room 4, Holland Building Tallahassee, Florida 32301 Steve Tribble, Clerk Florida Public Service Commission 101 East Gaines Street Tallahassee, Florida 32301
The Issue The issues in this case are whether Petitioner tampered with her electricity meter and, if so, whether Respondent has established a reasonable estimate of the un-metered electricity consumed, for which Petitioner could be retroactively billed.
Findings Of Fact Respondent Florida Power & Light Company ("FPL") is a utility that sells electricity to residential and commercial customers in Florida; as such, FPL is subject to the PSC's regulatory jurisdiction. FPL measures the amount of electricity used by its residential customers in kilowatt-hours ("kWhs"). A customer's cumulative electricity usage is recorded on a meter. Each month, a meter reader looks at a customer's meter and records the current cumulative total of kWhs consumed. From the current cumulative total of kWhs is subtracted the previous month's cumulative total, which equation produces the number of kWhs used during the preceding month, for which amount the customer is then billed. For example, if a meter read on May 5, 2005, shows a current cumulative total of 6950 kWhs, and if the same meter, when read on April 5, 2005, had shown 5750 kWhs, then the customer's usage, for the 30-day period from April 5, 2005, to May 5, 2005, is 1200 kWhs. The customer will then be sent a bill for May 2005 reflecting the cost of 1200 kWhs of electricity. Petitioner Leticia Callard ("Callard") is one of FPL's residential customers. Years before the present dispute arose, FPL installed meter #5C35633 at the house in Miami, Florida, where Callard resides. Meter #5C35633 has five dials on its face that display kWhs. The dials are protected under a glass canopy, which is sealed to the meter to guard the meter's integrity. The dials cannot be accessed without breaking the seal. On July 5, 2001, a meter reader conducted a regularly scheduled reading, for billing purposes, of meter #5C35633. (A customer's monthly invoice from FPL tells which day the meter reader will next look at the customer's meter.) He recorded a cumulative total of 5361 kWhs. This was a red flag because the previous reading, taken on June 5, 2001, had been 5733 kWhs. Thus, the meter appeared to have run backwards. This is known as a "regressive reading." A regressive reading is suspicious because the dials on a properly functioning meter should move in only one direction——forward. When a regressive reading is taken, FPL investigates further to determine if meter tampering has occurred. Accordingly, FPL sent an investigator named Chase Vessels to the Callard residence to conduct an unscheduled reading of meter #5C35633. (An unscheduled reading——that is, one taken between the normal monthly meter-read dates——is called a "check reading." Check readings are useful in investigating possible meter tampering because they occur without advance warning to the customer.) Mr. Vessels read the meter on July 6, 2001, which then showed 5497 kWhs. This, too, was a regressive reading relative to that taken on June 5, 2001. Mr. Vessels discovered that the seal on meter #5C35633 was broken and had been "rigged" to appear intact. Mr. Vessels also noticed that there were smudges on the face of the meter around the dials, suggesting that someone might have been manipulating the dials. Another check reading was taken on July 16, 2001, at which time Callard's meter showed 6515 cumulative kWhs. Thereafter, Mr. Vessels attempted to make additional check readings but was unable to access the meter without alerting the customer. He finally saw the meter again on June 27, 2002. On that date, Mr. Vessels again noted the rigged seal and the smudges on the meter's face, near the dials. Believing that tampering likely had taken place, FPL directed Edward List to remove meter #5C35633 and replace it with another one, which he did on July 24, 2002. Mr. List also observed the rigged seal and the smudges around the dials on meter #5C35633. When he removed the meter, Mr. List placed a sticker on the canopy, which he initialed, identifying the date of removal and the location from which the meter was taken. Mr. List then sent meter #5C35633 back to FPL for testing. At FPL's Meter Technology Center, James Bartlett inspected and tested meter #5C35633. He confirmed that the seal was broken, and that the meter's face was scratched and smudged. Further, when Mr. Bartlett tested the meter, he found that it was "off scale," meaning that it was not measuring kWhs as accurately as it should have been. Based on the above facts, which are established by credible and persuasive evidence in the record, the undersigned finds and determines that, more likely than not, meter #5C35633 was tampered with, preventing FPL from fully charging Callard for her actual electricity consumption. Specifically, it is determined that Callard (or someone) physically manipulated the meter's dials, rolling them backwards to reduce the cumulative total of kWhs used and hence understate usage. More difficult to determine is when this tampering occurred. As FPL acknowledges, tampering of this sort is episodic, and affects only the instant billing cycle. That is, if a customer were to tamper with his meter on, say, May 15, 2005, then the bill covering the period that includes May 15, 2005, would be inaccurate, but future bills would be correct (assuming no further tampering), just as bills covering earlier periods would be accurate or not depending on whether tampering had previously occurred during those periods. To come up with a reasonable estimate of the energy used but not paid for, then, it is necessary to establish, in some reasonable fashion, the period(s) affected by the tampering. FPL estimates that from the billing cycle which ended on January 2, 1997,1 until July 5, 2002, Callard used a total of 101623 kWhs for which she was not billed, due to meter tampering. The cost of this amount of electricity, according to FPL, is $8,930.97. For reasons that will be discussed later, it is determined that FPL's estimate of the amount of "un-metered" electricity significantly overstates Callard's probable actual usage and hence is not reasonable. FPL has introduced enough data into the record, however, for the fact-finder to make a reasonable determination of the amount of un-metered electricity that Callard used. As a starting point, the evidence shows the total kWhs for which Callard was actually billed each month from January 1997 to July 2002. Thus, Callard's annual "as billed" electricity usage for each of the years in question, expressed in kWhs, can easily be ascertained. The figures are as follows: 1997: 23899 1998: 27483 1999: 13383 2000: 14840 2001: 14134 In addition, from January 2002 to July 2002, Callard was billed for 8395 kWhs, according to readings taken from meter #5C35633. It does not take a trained eye to spot the dramatic difference between the years 1997 and 1998, on the one hand, and 1999 through 2001 (and 2002) on the other. Based on these figures, the undersigned made the tentative determination that the tampering probably began in 1999. To confirm or falsify this preliminary determination, the undersigned considered the concept of Percentage of Annual Usage, Monthly ("PAUM"). PAUM shows what part of a customer's annual energy consumption occurred in a given month; it is calculated by dividing the year's total usage (in kWhs) into the subject month's usage. Thus, for example, if a customer consumed 30000 kWhs in 2004, and if his usage in May 2004 was 3000 kWhs, then the customer's PAUM for May 2004 would be 0.10, or 10 percent. PAUM is a useful datum because residential customers tend to use more or less energy depending on the time of year. As Floridians know from common experience, for example, electricity usage in this state tends to increase in the hot summer months, when air conditioners are running, and decrease in the milder autumn or winter months, when windows are open. To estimate un-metered electricity usage, FPL employs a methodology that factors in the PAUMs of an average customer for each of the months during which tampering is suspected to have occurred. Thus, in this case, FPL produced numbers that purportedly are the average customer's PAUMs for every month from January 1997 through July 2002. The following table shows the PAUMs of an average customer, according to FPL. 1997 1998 1999 2000 2001 2002 JAN 6.84 6.88 7.51 6.57 7.43 7.43 FEB 6.59 5.75 6.32 5.79 6.48 6.48 MAR 7.03 5.82 5.72 6.13 6.78 6.78 APR 6.96 6.23 7.04 6.73 7.08 7.08 MAY 7.65 7.38 8.12 9.44 7.26 7.26 JUN 9.41 9.90 9.06 10.09 9.24 9.24 JUL 10.35 10.93 9.77 10.54 10.14 10.14 AUG 10.59 10.71 11.23 10.54 10.20 SEP 10.26 10.82 10.81 10.43 11.01 OCT 9.50 9.99 9.70 9.54 9.15 NOV 7.82 8.08 7.78 7.29 7.73 DEC 7.00 7.52 6.94 6.91 7.50 Using an average customer's PAUMs, it is possible to calculate an actual customer's estimated annual usage ("EAU") even if there is a paucity of reliable data concerning the actual customer's true usage. Suppose, for example, that FPL suspects Smith is tampering with his meter and, as a result, conducts check readings on May 10, 2000, and May 20, 2000, recording cumulative totals of 7250 kWhs and 8420 kWhs, respectively. This tells FPL that Smith used 1170 kWhs in 10 days, or 117 kWhs per day. The June 2000 billing cycle is 30 days, so FPL can estimate that Smith's actual usage for that month should be approximately 3510 (30 x 117).2 If the average customer's PAUM for June 2000 is 10.09 percent, then FPL can calculate an EAU for Smith, based on the two check readings. The formula is: EAU = kWhs(JUN2000) PAUM(JUN2000) In this example, therefore, EAU would be 3510 ÷ 0.1009, which equals 34787. If Smith were billed for only 27500 kWhs in 2000, then the estimated amount of un-metered electricity for that period, based on an EAU of 34787, would be 7287 kWhs (34787 – 27500). Here, FPL failed to introduce any evidence explaining how the average customer's PAUMs were derived, or by whom. Moreover, there is no evidence shedding light on whether the average PAUMs were based on usage data collected in a particular county or counties, or throughout the state. Nor does the evidence show whether the usage data from which the average customer's PAUMs were derived reflect the consumption patterns of FPL customers specifically, or some other, broader group of electricity consumers.3 The undersigned therefore has determined that it would be unreasonable to apply these average PAUMs against Callard to determine EAUs for the years in question, except as a last resort, in the absence of better data. As it happens, there might be better data concerning Callard's usage patterns. Using the kWhs for which Callard was actually billed for each of the months in issue, it is possible to calculate Callard-specific PAUMs. Based on the number of kWhs for which Callard was billed each month from January 1997 through July 2002, Callard's PAUMs were as follows: 1997 1998 1999 2000 2001 2002 JAN 5.10 5.27 10.16 4.10 18.25 6.88 FEB 5.04 3.21 4.86 4.55 0.06 6.91 MAR 4.23 3.60 4.55 5.16 10.26 6.30 APR 4.14 3.60 6.55 4.75 6.86 9.75 MAY 4.47 4.78 7.96 5.60 6.19 10.68 JUN 11.00 10.09 8.13 7.96 7.33 10.57 JUL 14.40 15.14 9.86 11.93 4.05 8.37 AUG 14.75 14.68 22.54 8.42 11.70 SEP 15.25 14.73 5.75 23.09 9.67 OCT 10.24 11.51 5.56 10.16 8.98 NOV 6.59 8.32 5.51 7.94 8.79 DEC 4.78 5.07 8.57 6.34 7.87 Once again, the figures show a marked difference between the years 1997 and 1998, on the one hand, and 1999 through July 2002 on the other. The PAUMs for 1997 and 1998 are consistent with one another and indicate practically identical seasonal usage patterns. In contrast, from 1999 forward, the PAUMs are punctuated with several facially anomalous figures, as well as a number of irregular seasonal figures. Beginning with the facial anomalies, note the extremely high PAUMs for August 1999 and September 2000——22.54 percent and 23.09 percent, respectively. These numbers are plainly out of line with the corresponding PAUMs for 1997 and 1998. Further, it seems unlikely that a customer would consume nearly one quarter of her entire annual electricity demand in one month. The same observations can be made about January 2001, whose PAUM, at 18.25 percent, is not only inconsistent with the corresponding PAUMs for 1997 and 1998, but also suggests, implausibly, that Callard used nearly one-fifth of a year's worth of electricity in one month. The PAUM for February 2001 is facially anomalous, too, but for the opposite reason: it is highly unlikely that a customer would use so little electricity (just 1/1667th of a year's supply) in a given month. The seasonal abnormalities are nearly as striking. Take the PAUMs for January 1999; July 1999; September 1999; October 1999; August 2000; March 2001; July 2001; April 2002; May 2002; and July 2002. None of these is consistent with the putatively normal seasonal use patterns reflected in the PAUMs for 1997 and 1998. Plus, the undersigned considers it highly improbable, for example, that Callard used just 4.04 percent of her annual energy demand in the hot summer month of July 2001 or, conversely, consumed a heavy 10.26 of her annual usage that year in the usually mild month of March. These figures, in short, are not believable. The likeliest explanation for the anomalous PAUMs during the years 1999 through 2002 is that meter tampering skewed the usage percentages. Thus, the undersigned believes that Callard's PAUMs, as calculated based on "as billed" kWhs, buttress his preliminary determination that the tampering began in 1999, raising the inference that Callard's PAUMs for 1997 and 1998, as shown in the table above, likely reflect her actual seasonal usage patterns for those years. To verify the validity of such an inference, the undersigned compared the average of Callard's PAUMs for 1997 and 1998 to the average of the average customer's PAUMs for the same years as reported by FPL. The table below shows the numbers. Callard FPL JAN 5.19 6.86 FEB 4.13 6.17 MAR 3.92 6.43 APR 3.87 6.60 MAY 4.63 7.54 JUN 10.55 9.66 JUL 14.77 10.64 AUG 14.72 10.65 SEP 14.99 10.54 OCT 10.88 9.75 NOV 7.46 7.95 DEC 4.93 7.26 Comparing one column to the other reveals that Callard's seasonal usage patterns mirror those of FPL's average customer; the energy consumption of both rises and falls in tandem throughout the year. Indeed, the PAUMs for January, June, October, and November are quite close (within about one percentage point, on average). To be sure, these figures reveal that Callard used about four percent more electricity than the average customer during the hottest summer months (July, August, September) and approximately two-and-a-half percent less during the milder winter and spring months. But the undersigned considers such disparities to be of far less consequence than the identity of the usage patterns.4 In sum, the comparison of Callard's average PAUMs for 1997 and 1998 to the average of FPL's average customer's PAUMs for those same years persuades the undersigned that the average PAUMs for Callard reasonably reflect her true usage patterns. Thus, the undersigned finds and determines that, more likely than not, the tampering began in 1999——and that Callard is not liable for un-metered electricity usage during 1997 and 1998. From the foregoing determination it is possible to home-in on a reasonable EAU for Callard. A good starting point is the average of Callard's total kWhs for 1997 and 1998, which is 25691.5 As an average of true annual usage figures (i.e. numbers untainted by tampering), this number should be a reasonably accurate predictor of Callard's probable annual usages in the years 1999 to 2002. Comparing this average figure to the EAUs that can be derived from meter readings taken in subsequent years at times when tampering is not suspected should either confirm the reliability of 25691 as a valid predictor of subsequent annual usage, or invalidate it. Recall the check readings of 5497 and 6515, respectively, that were taken on July 6, 2001, and July 16, 2001. These readings show that Callard consumed 1018 kWhs in 10 days, or 101.8 kWhs per day during the August 2001 billing cycle. Since that was a 29-day billing period, it is reasonable to infer that Callard should have been billed for approximately 2952 kWhs in August 2001 (29 x 101.8). Because Callard's average PAUM for August is 14.72 percent, the EAU based on these check readings is 20054 (2952 ÷ 0.1472). Next, there is a reading of 1774 kWhs, which was taken on August 5, 2002, from the replacement meter that had been installed on July 24, 2002. This reading demonstrates that Callard used 1774 kWhs in 12 days, or 147.8 kWhs per day during the August 2002 billing cycle. This was a 31-day cycle, so it is reasonable to infer that Callard should have consumed 4582 kWhs in August 2002.6 Because Callard's average PAUM for August is 14.72 percent, the EAU based on this initial reading from the replacement meter is 31128 (4582 ÷ 0.1472). The average of the respective EAUs based on the check readings from July 2001 and the reading of the replacement meter on August 5, 2002, is 25591 kWhs7——which is remarkably similar to the average of Callard's total kWhs for 1997 and 1998. (The latter figure, again, is 25691.) That these averages are so close not only reconfirms the undersigned's determination that no tampering occurred in 1997 and 1998, but also persuades him that in any month where the number of Callard's "as billed" kWhs produces an EAU within the range of 20054 kWhs to 31128 kWhs, tampering is unlikely to have occurred. Using the "as billed" kWhs for each month from January 1999 to July 2002, and applying the average of Callard's PAUMs for 1997 and 1998 as shown in paragraph 29 above, the undersigned calculated an EAU for every month in which tampering might have occurred. The results are set forth in the table below. 1999 2000 2001 2002 JAN 26204 11715 49692 18728 FEB 15738 16344 194 23632 MAR 15536 19541 36990 22679 APR 22661 18217 25065 35556 MAY 23002 17948 18098 32570 JUN 10313 11204 9820 14142 JUL 8937 11984 3873 8003 AUG 20489 8485 11230 SEP 5137 22855 9119 OCT 6838 13860 11664 NOV 9879 15804 16662 DEC 23266 19087 22556 It is easy to spot, in the above figures, the months where tampering likely occurred: they are the months whose "as billed" kWhs number produces an EAU of less than 20054 (usually quite a bit less). Likewise, the months where tampering probably did not occur are readily distinguished: they are the ones where the EAU is greater than 20054. As it happens, there are not many close calls. The figures for most months either reflect obvious tampering or clearly appear to be legitimate. Based on the above data, the undersigned finds and determines that, in all likelihood, tampering did not occur in the following 14 months: January, April, May, August, and December 1999; September 2000; January, March, April, and December 2001; and February, March, April, and May 2002.8 The average EAU for these 14 months is 27658. Therefore, the undersigned finds and determines that a reasonable EAU for 1999, 2000, and 2001 is 27658 (a figure, incidentally, that differs little from Callard's actual annual usage in 1998). To determine an EAU for the first seven months of 2002, the undersigned added Callard's average PAUMs for those months and found that Callard used, on average, 47.06 percent of her annual electricity consumption during the months from January to July. Thus, it is found and determined that a reasonable EAU for the first seven months of 2002 is 13016 (27658 x 0.4706). With these numbers in hand, the reasonable amount of un-metered electricity consumption for which Callard is liable can now be ascertained, as shown in the following table: EAU "As Billed" Usage Difference (Un- Metered Usage) 1999 27658 13383 14275 2000 27658 14840 12818 2001 27658 14134 13524 2002 13016 8385 4621 It is found and determined that from January 1999 to July 2002, Callard consumed a total of 45238 kWhs of electricity for which she was not billed, due to meter tampering. The value of 45238 kWhs of electricity, delivered during the period at issue, is $3,975.66.9 It was previously found that FPL's estimate of the amount of Callard's un-metered electricity usage was unreasonable. The undersigned will now summarize the reasoning behind this determination. FPL's first methodological flaw was assuming, without proving, that the meter tampering began in January 1997. In this regard, FPL offered no evidence——at least none that was persuasive——that Callard's meter was tampered with that year, or in 1998 for that matter. In fact, contrary to FPL's assumption, the data in evidence persuasively establish that no meter tampering occurred during 1997 and 1998. Thus, it would be unreasonable to retroactively bill Callard for the months from January 1997 through December 1998, as FPL proposes to do. FPL's second methodological flaw was assuming, without proving, that the average customer's PAUMs (which figures were not really properly proved, either) could reasonably be applied to Callard. The unreasonableness of this particular assumption is magnified by the fact that there exists reliable data (from 1997 and 1998, when no tampering occurred) about Callard's actual PAUMs, making resort to the average customer's PAUMs unnecessary. These two flaws led FPL to derive an EAU for Callard for the years in question (including, erroneously, 1997 and 1998) that significantly and unreasonably overstated her probable usage. To calculate an EAU, FPL first assumed that tampering had not occurred in July 1998, September 1998, November 1998, or during the initial 12 days' service of the replacement meter, from July 24, 2002 to August 5, 2002. (FPL did not persuasively explain its selection of the particular months of 1998, but for reasons already detailed, the undersigned agrees and has found that no tampering occurred then——or at any other time in 1998.) Next, FPL calculated an EAU for each of the foregoing periods, using the "as billed" kWhs for the chosen months of 1998 and a projected monthly total for August 2002, to each of which was applied the average customer's PAUM for the respective period. The following table shows the numbers. Month/Year KWhs Avg. FPL Customer's PAUM EAU July 1998 4160 10.93 38060 September 1998 4048 10.82 37412 November 1998 2286 8.08 28292 August 2002 444010 10.20 43529 Taking the average of the foregoing EAUs, FPL concluded that Callard's true annual usage from January 1997 to July 2002 averaged 36824 kWhs. (This figure is substantially greater than the amount the undersigned ultimately has determined reflects Callard's average annual usage——27658.) As an aside, the undersigned observes that if accurate PAUMs are applied to reliable figures for monthly kWhs consumption, then the resulting EAUs, as calculated from the periodic readings, should be fairly close to one another. With this in mind, notice what happens when Callard's average PAUMs (based on 1997 and 1998 usages) are substituted for the average customer's PAUMs in FPL's equations: Month/Year KWhs Callard's Avg. PAUM EAU July 1998 4160 14.77 28165 September 1998 4048 14.99 27005 November 1998 2286 7.46 30643 August 2002 4440 14.72 30163 Using Callard's average PAUMs for the periods in question produces EAUs that are, more so than FPL's numbers, fairly close to one another, which outcome persuasively reestablishes that Callard's average PAUMs are true numbers, and hence more reasonably applied in this case than the average FPL customer's PAUMs.11 Indeed, a comparison of the two preceding tables underscores the unreasonableness of FPL's methodology. Notice that FPL happened to pick the three peak summer months (July, August, and September), when Callard's usage exceeds the average customer's by 4.2 percent on average. FPL's approach has a built-in bias against Callard and is guaranteed to produce inflated EAUs. At any rate, once FPL had concluded that Callard's average annual usage should be 36824 kWhs, it multiplied that figure times the average customer's PAUM for each of the 67 months from January 1997 to July 2002, producing monthly "re- bill" amounts of kWhs. For example, the average customer's PAUM for December 2001 is 7.5 percent. Thus, FPL contends that Callard should have been billed for 2762 kWhs that month (36824 x .075); it refers to this figure (2762) as the "re-bill" amount for December 2001. FPL then added together all the "re-bill" figures, subtracted therefrom the aggregate of the "as billed" numbers, and came up with a difference of 101623 kWhs, for which FPL contends Callard is liable. This amount, however, exceeds a reasonable estimate of the un-metered energy consumed, by 56385 kWhs. The undersigned therefore rejects FPL's calculation. As a final point, FPL claims that it is entitled to recover from Callard $348.21 as reimbursement for investigative costs. FPL failed to offer any proof, however, concerning the goods and/or services upon which it spent this sum. Consequently, while the amount requested is neither shocking nor unreasonable on its face, there is no evidential basis on which the undersigned can make a finding that the sum of $348.21 is reasonable in this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order authorizing FPL to retroactively bill Callard $3,975.66 for the un-metered energy she used from January 1999 through July 2002. DONE AND ENTERED this 13th day of May, 2005, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 2005.
Findings Of Fact Petitioner, Jack Rubenfeld, resides at Apartment 201, Building 220, 10466 Sunrise Lake Boulevard, Sunrise, Florida. He leases the apartment from Sol Berman, who is the owner of the apartment. Berman is the person who made application for electric service at Apartment 201 with respondent, Florida Power and Light Company (FPL), and all electric bills are sent in Berman's name to the Sunrise address. However, under the Berman-Rubenfeld lease, Rubenfeld is required to pay all electric bills for service rendered by FPL to the apartment, and has done so since moving into the apartment in January, 1985. FPL is subject to the regulatory jurisdiction of the Florida Public Service Commission (FPSC or agency). As such, it is required to file a tariff with the agency setting forth its approved rates and charges, and pertinent regulations governing election service. Paragraph 7.3 of FPL Tariff Sheet 6.060 provides that: When service used is measured by meters, the company's accounts thereof shall be accepted and received at all times, places and counts as prima facie evidence of the quantity of electricity used by the customer unless it is established that the meter is not accurate within the limits specified by the commission. For the first seven months of 1985, Rubenfeld received bills from FPL reflecting the following meter readings, kilowatt hours (KWH) and charges: Service To Reading KWH Charges 01/22/85 08615 439 $42.66 02/21/85 09052 437 43.93 03/21/85 09372 320 33.95 04/22/85 09559 187 23.01 05/21/85 09943 384 40.28 06/20/85 10600 657 64.23 07/22/85 11202 602 59.41 All bills were timely paid by Rubenfeld. 4. On an undisclosed date in July, Rubenfeld and his wife, who are the only occupants of the apartment, left the State to visit New York City. While he was gone, he left the central air-conditioning unit on at 80 degrees, and his dehumidifier unit at an undisclosed setting. It is not known when Rubenfeld returned to Florida. On or about August 21, 1985, Rubenfeld's meter was read by an FPL meter reader who recorded a meter reading of 11,418 KWH and consumption during the prior thirty days of 216 KWH. A bill for $25.54 was thereafter sent to Rubenfeld who paid it on August 26, 1985. However, a subsequent examination of Rubenfeld's account, as discussed hereinafter, led FPL to believe that the meter reader misread a "1" for a "2" on the meter, and the correct meter reading should have been 12,418 (and not 11,418), or 1,000 KWH more than Rubenfeld's bill reflected. According to FPL testimony, such an error is not an unusual occurrence in its business. On or about September 20, 1985, a meter reader checked Rubenfeld's meter and noted a reading of 13,463, or a consumption of 2,045 K since the meter was last read on August 21. This equated to a bill of $201.12 for the thirty day consumption period. It is this bill that is in dispute. At the same time, FPL accounting personnel noted that Rubenfeld's consumption on the September 20 reading was outside the normal range and accordingly directed that Rubenfeld's meter be reread on September 30 to verify the accuracy of the September 20 reading. The check reading found the earlier reading to be correct. The bill was then mailed to Rubenfeld who understandably became irate and questioned its accuracy. After Rubenfeld complained to FPL personnel, a second check reading was performed on October 8, and a third on October 14. In addition, at Rubenfeld's request, FPL removed Rubenfeld's meter for testing on October 21 and found it to be within allowable guidelines set forth in Rule 25-6.52, Florida Administrative Code. The three check readings made on September 30, October 8 and October 14 were also used as a cross-check to determine whether Rubenfeld's consumption during that period of time was comparable to what he had supposedly used during August and September. The check reading on September 30, or ten days after the meter was last read on September 20, revealed consumption of 354 KWH during the ten day period, or 35.4 KWH per day. The second check reading on October 8 revealed that during the preceding eight day period, Rubenfeld had used 241 KWH, or 30.1 KWH per day. The final check reading on October 14 reflected that Rubenfeld has used 232 KWH over the preceding six days, or 38.6 KWH per day. By annualizing those amounts over a full thirty day period, which is comparable to the billing cycle, Rubenfeld's monthly consumption would have been approximately 1062, 903 and 1158 KWH, respectively, based upon his consumption during that twenty-four day period. Based upon the above checks and testing, FPL concluded that the meter reader had erred on the August 21 reading, and substantially understated Rubenfeld's actual consumption on that bill. However, in an effort to give Rubenfeld the benefit of the lower cost per KWH charged on the first 750 KWH used by a customer during each billing cycle, FPL rebilled the account over a two month period, thereby spreading the high consumption over two billing periods. Rubenfeld contended that he could not have used around 1000 KWH per month during July-August and August-September, particularly since he gas gone during a part of that time. However, he conceded he left two major appliances (air- conditioner and dehumidifier) operating while he was absent from the state, and uncontradicted testimony established that the apartment unit and appliances could have easily used the consumption in question.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That a Final Order be entered finding that the electric bill in the amount of $201.00 was properly assessed and that it be paid by petitioner. DONE AND ORDERED this 15th day of October, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1986.
Findings Of Fact Petitioner, Harry M. Noland, Jr., learned of the low income energy assistance program through a notice received with his telephone bill. That program is administered by respondent, Department of Health and Rehabilitative Services (HRS). On December 6, 1983 Noland filled out an application for low income energy assistance at the Cocoa office of HRS. He did so after being advised by HRS personnel that he was qualified to do so. The application indicated that Noland resided with his wife at 3915 Indian River Drive, Cocoa, Florida. It also reflected that he and his wife had no income whatsoever at the time the application was filed, but that he had applied for food stamps. The application was reviewed by a Ms. J. Bunch, an HRS temporary worker, who sent Noland a "request for information" on December 6, 1983. It read as follows: Needed is your income for the month of December, 1983. If you receives (sic) Social Security or SSI a letter from the Social Security office is needed, if you are working a verification of income form is enclosed to be filled out by employer and return it to this office. If you are unemployed a statement is needed explaining how you (are) paying expenses. The statement has to (be) signed and dated and (send) it to this office. The notice stated that the above information had to be brought or mailed to the office no later than December 20, 1983 or the application would be denied. Noland received the above notice and on December 15 prepared the following written reply: This is to verify that I have been unemployed since September 30, 1983, and presently have no prospects for employment. He hand-delivered his reply to Ms. Bunch the same day. She asked how he was paying his current expenses, and Noland told her he had no funds and was therefore unable to pay any current bills and expenses. Bunch accepted this oral reply, told Noland it was "okay", and gave him the impression that no further information was needed to comply with the notice mailed on December 6. In December, 1983 HRS policy was for the program workers to make a written notation in an applicant's file when any clarifying information was obtained by telephone or when the applicant (Noland) was personally interviewed. For some unexplained reason, no written notation was made by Bunch in Noland's file. Noland was not told by Bunch that his application was still incomplete, and she did not request him to put his oral reply in writing. Had she done so, Noland would have provided further written information on a timely basis. Except for the "incomplete" written reply, Noland otherwise qualified for assistance. At a later undisclosed date, Noland's application was reviewed and found to be deficient because he had not fully responded to the "request for information". Thereafter, it sent a notice of denial to Noland on February 15, 1984. That prompted the instant proceeding. HRS processed some 3,287 applications at its Cocoa office between November 1 and December 16, 1983, the last day for filing the same. Only three temporary workers were employed to perform this task. The HRS representative testified that workers were extremely busy during the time Noland visited the Cocoa office due to the manpower shortage and time constraints imposed on that office.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Harry M. Noland, Jr. for low income energy assistance be approved and that he be given the appropriate benefits under Rule 10C-29.19, Florida Administrative Code. DONE and ENTERED this 3rd day of April, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 1984. COPIES FURNISHED: Mr. Harry M. Noland, Jr. 3915 Indiana River Drive Cocoa, Florida 32922 Gary L. Clark, Esquire 400 West Robinson Street Suite 912 Orlando, Florida 32801 David H. Pingree, Secretary 1323 Winewood Boulevard Tallahassee, Florida 32301
