Findings Of Fact On September 12, 1995, Petitioner became a Florida Power customer. He received electricity service in his name at an apartment located at 2950 N. Pinehill Road #31, Orlando, Florida. From September 1994, through December, 1994, Petitioner occupied the apartment at 2950 N. Pinehill Road #31, Orlando, Florida. Petitioner's meter indicated he used 827 Kwh from September 12, 1994, through October 4, 1994. Petitioner's meter indicated he used 1525 Kwh from October 4, 1994, through November 2, 1994. Petitioner's meter indicated he used 1548 Kwh from November 2, 1994, through December 5, 1994. Petitioner's final bill was for December 5, 1994, through December 28, 1994. The meter indicated he used 221 Kwh for this final period. Respondent's tariff sheet 8.05 filed with the Commission sets forth the length of time within which Respondent must disconnect a customer's service after receiving a disconnect order. Respondent must disconnect service within 3 days of receiving the disconnect order. On December 26, 1994, Petitioner requested that his service be disconnected on December 27, 1994. Respondent disconnected Petitioner's service on December 28, 1994. On January 12, 1995, Petitioner's meter was tested in St. Petersburg, Florida. Petitioner's meter registered 99.96 percent accuracy.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is, RECOMMENDED that the Commission enter a Final Order finding that Respondent acted in compliance with applicable law and did not overbill Petitioner. RECOMMENDED in Tallahassee, Leon County, Florida, this 2nd day of January, 1995. DANIEL S. MANRY, 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 2nd day of January, 1995. COPIES FURNISHED: Rodney Gaddy, Esquire Florida Power Corporation 3201 34th Street, South St. Petersburg, Florida 33711-3828 Thomas Fuller Post Office Box 617217 Orlando, Florida 32861 Robert D. Vandiver, General Counsel Florida Public Service Commission Gerald L. Gunter Building 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Noreen S. Davis, Director Division of Legal Services Florida Public Service Commission Gerald L. Gunter Building 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850
The Issue Whether the application of Petitioner Florida Cities Water Company, to increase the ratios it charges customers for water service in Lee County should be granted. CONCLUSIONS and RECOMMENDATION Conclusions: Factors pertinent to ratemaking and enumerated in Section 367.081, Florida Statutes, have been considered in this pro- ceeding. The Petitioner utility has not justified use of "year-end" rate base; those adjustments which it has supported with a preponderance of evidence have been accepted, those lacking sufficient eviden- tiary support have been rejected. Peti- tioner's application for rate increase should be granted to the extent provided in this Recommended Order; the resulting rates are just, reasonable, compensatory, and not unjustly discriminatory. Recommendation: That the Commission recalculate adjusted rate base, operating income, and the result- ing additional and total gross revenues in a manner consistent with this Recommended Order, and that Petitioner be authorized to file new rates structured on the Base facility charge concept designed to generate the addi- tional and total annual gross revenues so specified.
Findings Of Fact Based upon the evidence presented at hearing, the following facts are determined: I. The Application By its application, the UTILITY seeks authority to increase its rates sufficiently to generate additional annual gross revenues of $1,483,300. It attributes the need for increased revenues to extensive additions recently made to its water plant pursuant to COMMISSION Order No. 6209 entered in Docket 74176-W. The UTILITY claims that the increased investment and higher operating expenses associated with such plant additions effectively reduce its rate of return to 4.2 percent; it asserts that the requested additional revenues are necessary to allow it to earn a fair and reasonable rate of return of 12 percent. (Testimony of Reeves, Cardey; P-2, P-8.) II. Rate Base There are three issues involving the proper determination of rate base in this case: (1) whether "year-end", rather than "average" rate base should be used, (2) whether an Allowance for Funds Used During Construction (AFUDC) for post-test period additions allowed in rate base is proper, and (3) whether connection fees collected from 1969 to 1973 should be recorded as Contributions in Aid of Construction (CIAC) "Year-end" v. "Average Rate Base In determining rate base, absent extraordinary or emergency conditions or situations, "average" rather than "year- end" investment during the test period should be used. City of Miami v. Florida Public Service Commission, 208 So.2d (Fla. 1968). The Florida Supreme Court has suggested that average investment "should not be departed from except in the most unusual and extraordinary situations where not to do so would result in rates too low as to be confiscatory to the utility." Id. at 258. Year-end investment may be used only when a utility is experiencing extraordinary growth. Citizens v. Hawkins, 356 So.2d 254 (Fla. 1978). The UTILITY has not established that it meets the standard for utilization of "year-end" rate base, i.e. , that it has experienced unusual and extraordinary growth. Its customer growth rate averaged 8.2 percent for the last seven years, with a 10.56 percent gain during the test year. This growth rate has been experienced by many other Florida utilities of similar size and is neither extraordinary nor unusual. Neither is the UTILITY's growth extraordinary when measured in terms of water sold. Between 1975 and 1979, its growth in water sales averaged approximately 11 per- cent, in 1980--6 percent. In terms of plant growth, the UTILITY averaged 19.37 percent over the last seven years; the growth rate for 1979 was 12.03 percent. However, in 3980, its investment in gross plant grew at a 33 percent rate. The UTILITY's growth rate was repeatedly described as "substantial" by its consultant, K. R. Cardey, but substantial growth does not equate to extraordinary or unusual growth as defined by the Florida Supreme Court. Furthermore, the UTILITY did not establish that failure to use "year-end" rate base would reduce its rates to a confiscatory level. See, City of Miami, supra. It follows that "average" investment during the test period is the proper method to utilize in determining rates in this case. (Testimony of Cardey, Deterding.) Appropriateness of Allowance for Funds Used During Construction (AFUDC) After the test period, the UTILITY completed five major additions to its plant, all of which were required by previous order of the COMMISSION. (Order No. 6209, Docket 74176-W.) The COMMISSION agrees that, since it required these post-test period additions, they should be included in rate base at full weight. Since these additions, which total $5,966,569, were under construction during the test period, the COMMISSION contends they should be recorded as Construction Work in Progress (CWIP). The UTILITY agrees that these additions should be included in rate base but seeks to include, as well , an AFUDC allowance in the amount of $326,422.2 AFUDC represents interest that was capitalized on each of these additions while they were under construction during and after the test period. Since these additions are already included in rate base at full weight, the inclusion of AFUDC in rate base would allow the UTILITY to duplicate earnings on its investment. Such a result would be unreasonable, improper, and should not be allowed. (Testimony of Reeves, Deterding; P-1, P-3, P-10, R-2.) Connection Fees: CIAC or Revenue From 1969 through 1973, the UTILITY operated under the regulatory jurisdiction of Lee County, not the COMMISSION. During those years, it was the UTILITY's practice and policy to record connection fees, which totaled $226,582, as revenue, not CIAC. Since connection fees are ordinarily considered CIAC, the COMMISSION proposes to adjust CIAC by $226,582. (Testimony of Deterding, Cardey; P-8, R-2.) Contributions in Aid of Construction are defined as monies used to offset the acquisition, improvement, or construction cost of utility property used to provide service to the public. Section 367.081(2), Florida Statutes (1980). The UTILITY's consultant testified that connection fees collected and credited to revenue by the UTILITY during 1971, 1972, and 1973, totaling $176,773, were "not used to offset the improvements or construction costs of the [UTILITY's] property. (P-8, p. 6.) The COMMISSION, on cross-examination, did not question the accuracy or impeach the credibility of this statement; neither did it present any evidence to controvert or rebut the UTILITY's assertion as to how the connection fees were used. The only evidence on the question presented by the COMMISSION consisted of its accountant's conclusion: "During the years from 1969 to 1973, Florida Cities Water Company recorded many tap-in fees collected as revenue. These should properly be recorded as contributions in aid to construction. This adjustment [of $226,582] adds these contributions." p. 5.)(Testimony of Deterding, Cardey; P-8, R-2.) In its Proposed Recommended Order, the COMMISSION asserts that the UTILITY has the burden of showing: (1) the correctness of collecting funds normally authorized for service availability and using them for another purpose, and (2) the exact manner in which the funds were used. (Proposed Recommended Order, p. 6.) However, there was no evidence in the record to show that the UTILITY's treatment of connection fees during 1971 through 1973, was incorrect or violative of Lee County's regulatory standards. Neither is there any evidence to show that the connection fees collected in those years were used as contributions in aid of construction, i.e., to offset acquisition, improvement, or construction costs. The only evidence presented as to how those fees were actually used was that of the UTILITY's consultant; he testified that those funds were used only to defray operation and other expenses associated with the new customers. This evidence was sufficient to shift to the COMMISSION the burden of presenting evidence on the question or discrediting the evidence presented by the UTILITY. The COMMISSION did neither. It is found, therefore, that the $176,773, representing connection fees collected between 1971 and 1973, do not constitute CIAC, the UTILITY's testimony in this regard being persuasive. (Testimony of Cardey, Deterding; P-8, R-2.) However, as to the years 1969 through 1970, the UTILITY presented no evidence that the $48,809 in connection fees collected during that time were used only for operating and maintenance expenses and not to offset acquisition, improvement, or construction costs. In the absence of such evidence, the COMMISSION testimony that connection fees should ordinarily be treated as CIAC is persuasive. The connection fees collected during 1969 and 1970, calculated to be $49,809, are therefore properly included as CIAC. (Testimony of Deterding, Cardey; P-8, R-2.) In light of the above findings and the absence of disagreement concerning other adjustments proposed by the COMMISSION, the elements of the UTILITY's adjusted rate base are: RATE BASE Test Year Ended March 31, 1980 Utility Plat in Service $ 11,178,094 Construction Work in Progress 5,966,569 3/ Accumulated Appreciation (626, 160) CIAC,(Net of Amortization) (3,041,747) 4/ Advances for Construction (111,567) AFUDC (326,422) 5/ Working Capital Allowance 146,911 Materials and Supplies 117,450 Income Tax Lay [To be calculated based on additional gross revenues rec- opmended herein.] RATE BASE [To be determined upon recalculation.] In order to determine the adjusted rate base which should be utilized, Income Tax Lag requires recalculation in a manner consistent with the above findings and Section III below. (Testimony of Cardey, Deterding; P-1, P-3, P-8, P-10, R- 2.) III. Operating Income Operating Expense: Water Royalty Charge In calculating operating income for the test year, the UTILITY included $18,577 as an operating expense attributed to a $.03 per gallon royalty charge it paid an affiliate for water pumped from the Green Meadows well field. The UTILITY operates this water field on a 21-acre site and has easements to locate 26 wells. It pays no other cost for the water. The COMMISSION disputes the reasonableness of this charge because it is not an arms-length transaction, and the UTILITY has not explained the basis of the $.03 charge, the cost to the affiliate of the land involved and its subsequent sales price (the affiliate reserving the water use rights) , and the identity of the present owner. The COMMISSION's accountant testified that reasonableness of the charge could be determined by analyzing the costs of the rental of the land based on the original cost of the property to the affiliate. In response, the UTILITY established that the $18,577 expense is less than it would cost tide UTILITY, in terms of annual revenue requirements, to purchase the land involved. But the UTILITY failed to address the cost of renting the property, based on the affiliate's acquisition costs, or furnish information necessary to make such a determination. The COMMISSION is entitled to clearly scrutinize the expenses claimed by a utility and require that their reasonableness be shown. Tide UTILITY did not adequately explain or support the reasonableness of its claimed royalty expense, and it should therefore be disallowed. (Testimony of Reeves, Deterding; P-6, R-2.) Depreciation and Taxes: Adjustments Attributable to Post-Test Period Plant Additions The parties disagree on whether adjustments should be made to test year operating expenses to reflect increases in depreciation and taxes due to the five post-test year plant additions completed subsequent to the test period. The evidence is uncontroverted that these plant additions, including the Green Meadows water treatment plant and related facilities, were required by prior COMMISSION order and that they were necessary to provide service to existing customers of the UTILITY. The parties have also agreed that the full cost of these additions should be included in rate base, at full weight. The operating expenses of the UTILITY during the test year should be adjusted as was rate base, for known and no net changes in order to reflect conditions which will prevail when the rates become effective. The UTILITY's 2.1 percent composite depreciation rate should thus be applied against the new plant additions, and tide resulting depreciation expense included in the cost of providing service. Similarly, taxes (other than income) on the $5,960,569 worth of plant additions are known and eminent, are a cost of providing service, and should be included as an adjustment to test year taxes. The COMMISSION presented no policy or factual justification or explanation for its opposition to these adjustments to test year operating expenses. It does not contend that these expenses are other than known and eminent, attributable to the government-ordered plant additions, and will be part of the cost of providing service during the period the new rates will be in effect. The UTILITY's evidence in support of these adjustments is therefore persuasive. (Testimony of Cardey, Deterding; P-1, P-8, P-10, R-2.) Similarly, the UTILITY contended that test year income tax should be adjusted to reflect changes in revenue, operating expenses, depreciation, taxes, and interest expenses attributed to operation of the new plant addition. The COMMISSION offered no reason or explanation why such an income tax adjustment should not be made; changes in income tax due to the operation of the plant additions are known and eminent, and should be allowed as adjustments to test year expenses in order to adequately represent the UTILITY's future costs of service. However, due to the findings herein relating to use of "average rate base, the AFUDC allowance, treatment of connection fees previously collected, the water royalty charge, depreciation, and taxes, the income tax adjustment proposed by the UTILITY requires recalculation. (Testimony of Cardey, Deterding; P-1, P-0, P-10, R-2.) In light of the above findings, and the UTILITY's lack of opposition to other adjustments proposed by the COMMISSION, the known elements of adjusted operating income are: operating revenues of $2,419,437 and operating expense (operation) of $1,175,291. In order to determine adjusted operating income which should be used in this case, depreciation, taxes other than income, and income taxes require recalculation consistent with the findings contained in Sections II and III, infra. (Testimony of Cardey, Deterding; P-1, P-8, P-10, R- 2.) IV. Capital Structure, Cost of Capital, and Rate of Return The parties agree that UTILITY's capital structure and cost of capital are as follows: CAPITALIZATION COMPOSITE WEIGHT Rate 15 pct. 16 pct. Long-Term Debt 49.33 pct. 10.68 pct. 5.27 pct. 5.27 pct. Equity Capital 41.25 15-18 6.19 6.60 Subtotal 90.58 pct. 11.46 pct. 11.87 Deferred Federal Income Taxes 4.74 pct. -0- -0- -0- Customer Deposits .90 8.00 .07 .07 subtotal 96.22 Investment Tax Credit 3.79 pct. Average 11.53 .45 pct. 11.94 pct. .45 TOTAL 100.00 pct. 11.98 pct. 12.39 pct. They are also in agreement that a 12 percent return on the UTILITY's rate base, including a 15-16 percent return on equity, is a fair and reasonable rate of return. (COMMISSION's Proposed Recommended Order, p. 7; P-8, P-5.) V. Additional Required Revenues In order to determine the additional gross revenues which the UTILITY should file rates designed to generate, the authorized operating income should be computed by multiplying 12 percent times the adjusted rate base computed pursuant to Paragraph 10 above. The UTILITY should then be authorized to earn additional gross revenues equivalent to thee difference between the authorized operating income and the adjusted test year operating income computed pursuant to Paragraph 14 above. VI. Rate Structure and Rates The UTILITY proposes, with the COMMISSION's concurrence, that its new rates be structured in accordance with the Base Facility Charge Rate Design (BFC) and that the 25 percent surcharge currently imposed on general service customers be eliminated. The new BFC rate structure design contains a customer charge and a gallonage charge, both of which are directly related to the cost of providing the service. The customer charge assures that all customers pay their pro rata share of certain fixed and operating costs of the UTILITY which are not related to the amount of water used by the customer. The gallonage charge is based on the actual amounts of water used. With implementation of the base facility charge system, the UTILITY should lower its current $20 charge for reconnections during working hours to $10; similarly, its current $25 charge for reconnection after working hours should be reduced to $15. These lower charges are sufficient to cover the costs associated with the service rendered. The UTILITY also proposes various increases in its service availability, or connection charges. These increases, based on increased construction costs, will be used to finance additional facilities and stabilize rates to existing customers. The BFC rate design system proposed by the UTILITY is fair, reasonable, and nondiscriminatory. In light of the foregoing, it is unnecessary to consider the "alternative" rate structure which was presented to the COMMISSION staff on the day of hearing. With such time constraints, meaningful review of the "alternative" rate structure proposal was not possible. (Testimony of Byrd, Collier; R-1, R-3.) VII. Adequacy of Service Customer testimony criticized the 25 percent surcharge currently Imposed on general service customers, and the magnitude of the requested rate increase. Several customers complained of the quality of the water supplied. Under the proposed rate structure, tide surcharge on general service customers will be eliminated. While several customers complained of sediment in their drinking water, testimony established that the new Green Meadows softening plant should help alleviate that problem. The water supplied by the UTILITY meets all regulatory and health standards of the Health Department and the Florida Department of Environmental Regulation. The UTILITY is currently under no citation for violation of any regulatory standards. It is found that the quality of the water service offered by the UTILITY is adequate. (Testimony of Collier, Reeves, Customers; P-7.) VIII. Franchise Fees The UTILITY has collected $395,000 in "franchise fees" for Lee County, but has not paid them to the county due to questions surrounding the legality of the franchise fee. Neither have the funds been placed in a special escrow account pending resolution of this controversy. The UTILITY should ensure that such franchise fees are deposited in a special interest-bearing escrow account, and take steps to ensure that this controversy is resolved without further delay. (Testimony of Cardey; Late-filed Exhibit P-12.)
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the COMMISSION recalculate adjusted rate base, operating income, and the resulting additional and total gross revenues in a manner consistent with this Recommended Orders and that Petitioner be authorized to file new rates structured on the base facility charge concept designed to generate the additional and total annual gross revenues so specified. DONE AND ENTERED this 27th day of February, 1981, in Tallahassee, Florida. R. L. CALEEN, JR. 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 27th day of February, 1981.
Findings Of Fact On June 20, 1981, Petitioner, Laverne A. Nolte, filed a household application for cooling assistance under the Low Income Energy Assistance Program with Respondent, Department of Health and Rehabilitative Services. Petitioner resides in Dade County, Florida, which is a part of the South Cooling Climatic Region for purposes of determining the level of assistance to be given claimants. Respondent reviewed Petitioner's application, and because she receives government assistance for electricity in the private housing project where she resides, determined that Petitioner lives in a household that is partially vulnerable to the rising cost of cooling energy. This means a governmental entity is partially responsible for paying a portion of her energy bill. According to Department regulations, Nolte was entitled to only $75 in energy assistance, and a check was issued to her for that amount. Applicant is the only member of her household. Her total monthly countable income is $238 which falls within acceptable income limitations prescribed by the Department. Except for living in a partially vulnerable household, Nolte was otherwise qualified to receive $290 in total cooling assistance benefits. Petitioner acknowledged that when her application was filed, she received $12 per month in governmental assistance to offset in part her electric bill. This was subsequently increased to $25 per month in July, 1981. However, she contends this aid is minimal in relation to her actual utility bill, and that it is unfair to cut her cooling assistance benefits to $75 for receiving such a small amount of aid.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the request of Petitioner, Laverne A. Nolte, for additional cooling assistance be DENIED. DONE AND ENTERED this 29th day of January, 1982, 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 29th day of January, 1982. COPIES FURNISHED: Laverne A. Nolte 1301 Northwest Seventh Street, #212 Miami, Florida 33125 Leonard Helfand, Esquire Suite 1040 401 Northwest Second Avenue Miami, Florida 33128
The Issue The issue in this case is whether Kenneth Tuch is liable to Florida Power and Light Company for receipt of unmeasured electric energy and if so, what amount is due?
Findings Of Fact Kenneth Tuch resides alone at 1924 N.E. 25th Street, Ft. Lauderdale, Florida. He receives his electric current from Florida Power and Light Company. In June of 1985, an employee of American Cable Company went to Mr. Tuch's home to investigate a complaint about the quality of cable television reception at the Tuch residence. The employee noticed that the air conditioning was on in the Tuch residence while he was investigating the complaint. When following the cable lines outside the home, he noticed the electric meter was not operating. He provided this information to Florida Power and Light which sent two employees to the Tuch residence on June 20, 1985. They found the air conditioning and swimming pool pump were on, but the electric meter disk did not turn. The meter seal was opened and the meter was removed from its socket, and photographed. The photographs demonstrate that the potential clip of the meter was open. The potential clip is used when testing a meter. When it is open no registration of electric current is made. The meter was originally placed at the Tuch residence in 1960. The potential clip could not have been open then, for it never would have registered any electric consumption were that the case. The potential clip would not have fallen into the open position on its own. There was tampering with the potential clip because a screw in the slot in the center of the clip had been tightened to keep the clip in the open position. In addition, the picture of the potential clip and the screws (FP&L Exhibit 5) show wear and tear on the screw. Marks on the area around the screw slot in the center of the potential clip show that the clip has been slid back and forth. These facts prove a deliberate attempt to divert unmeasured electricity. The meter seal consists of a wire bail of a horseshoe shape which fits into a rectangular base body approximately 1 and 1/4 inches by 3/4 inch by 1/8 inch. The seal removed from Tuch's meter bears the inscription on one side "77 FP&LS" and on the other side, the numbers "0379126". The condition of the seal was such that by tugging on the wire bail, it would loosen from the body of the seal, and open, but the bail could be replaced into the seal body giving the impression on casual observation that the seal was intact. While the inscription on the seal indicates that it is a genuine Florida Power and Light seal, it is not in the condition in which seals are originally placed. It is not possible to open the wire bail of a seal and thereby gain access to the meter canopy without tampering with the seal. The billings for consumption of electricity at the Tuch residence show an erratic pattern of monthly electric consumption during the period for which Florida Power and Light has records available, January 1982 through June 1986. For the years 1982 through 1984, Mr. Tuch was billed for an average of 11,022.33 kilowatts per year. On June 20, 1985, the meter at the Tuch residence was replaced with a new meter which was locked in place. Readings were taken from the new meter on June 21, June 27, July 2 and July 9. During those 19 days, 1,063 kilowatts had been consumed for an average use of 55.9 kilowatts per day. This equals 1,677 kilowatts for a 30 day period. An average percentage of use chart was introduced into evidence as the basis for distributing the total yearly kilowatt consumption based upon seasonal variations in consumption. According to the chart 9.8 percent of the total kilowatts used by Florida Power and Light customers in 1985 were consumed in the July billing period. That being so, the total estimated annual usage given a July bill of 1,677 kilowatts would be 17,112 kilowatts. The total additional billing on that basis for 1982, 1983, 1984 and 1985 (through the date of the discovery of the tampering) would be $1,829.57. A potential problem with this methodology for determining annual usage is that it extrapolates a bill for a one year period based on readings taken over only 19 days. As a check on the method Florida Power and Light also placed in evidence the readings for approximately six months actual usage after replacement of the meter which had been tampered with. Mr. Tuch used 7,865 kilowatts during the 172 day period from June 20 through December 31, 1985. This was an average use of 45.72 kilowatts per day. When multiplied by 365 days the estimated yearly usage is 16,690 kilowatts. This results in a billing $17.52 lower than the extrapolation and shows the reasonableness of using the 19 day period to project annual usage. The electric meter removed from Mr. Tuch's residence was tested, but due to its age was then destroyed. Florida Power and Light rendered its additional bill two months later. Mr. Tuch therefore did not have the opportunity to inspect or test the meter. Florida Power and Light tested the meter appropriately before it was destroyed and it was accurately registering current flow when the potential clip was closed. If this case involved questions about the accuracy of the registration on the meter which had been removed, Mr. Tuch's inability to test the meter would have seriously impaired the fairness of this proceeding. The testimony and photographic evidence, which is accepted, is that the potential clip was open, and thus the meter would register no use of current at all. Essentially the meter had been turned on and off. This tampering caused the underregistration, not inaccuracy of the meter's measurement ability. In this case, the inability to test the old meter did not prejudice Mr. Tuch. Florida Power and Light is not entitled to recover $157. 88 in investigative costs. The witness proffered to testify about investigative costs was listed in interrogatories as a witness on matters of corporate policy. See Notice of Serving Answers to Interrogatories filed April 21, 1986. While it may be corporate policy to bill those who divert current for investigative charges, the exhibit purporting to set out the costs incurred in the Tuch investigation was admitted to show the corporate form for recording charges. No evidence of the charges in this specific case was admitted (Transcript 196-97). 1/
Recommendation It is RECOMMENDED that a final order be entered by the Public Service Commission requiring Kenneth Tuch to pay Florida Power and Light $1,829.57 for current diverted. If such payment is not made, electric service to Mr. Tuch's residence at 1924 N.E. 25th Street, Ft. Lauderdale, Florida, should be discontinued. DONE AND ORDERED this 29th day of January, 1987, in Tallahassee, Florida WILLIAM R. DORSEY, JR. 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 29th day of January, 1987.
Findings Of Fact All parties involved concurred that there is a necessity for expanded generating capacity to serve Gulf's customers and that the two initial units of 500mw each can meet this requirement. The parties stipulated that the power plant site certification application submitted by Gulf (Exhibit 1) deals sufficiently with the issue of operational safeguards and further that DER's proposed conditions of certification contain a condition that adequately addresses that issue. All agencies involved recommended certification; however, DER's recommendation was predicated upon Gulf complying with the general and special conditions or certifications contained in Exhibits 4 and 5. Gulf agreed to all those conditions but three, viz: 1. That the water intake and return lines to the river cross the wetlands on a trestle instead of the causeway proposed by Gulf; 2. A more extensive monitoring program and without termination date than the fixed period monitoring program proposed by Gulf; and 3. Restrictions upon use of herbicides to clear transmission line corridors in excess of those placed by federal and state authorities. In addition DER proposed in general conditions of certification 11(a) and (b) to modify in the future the conditions of certification by any new or more stringent department rule enacted pursuant to Chapter 120 F.S. Gulf objected to this condition of certification and submitted a brief in opposition thereto. I With respect to Item number 1 the proposed causeway will occupy some 8 acres of wetlands. It is proposed to commence the causeway at elevation + 58 feet (above MSL), which is the 25 year predicted high water flood level in the Choctawhatchee River flood plain, and continue the causeway some 2400 feet at this elevation tot he river bank. The base of the proposed causeway will have a maximum width of 130 feet at a point near the river's edge where the causeway height will be 23 feet (T91). The top width is roughly 60 feet (T90) of which 18 feet will be paved surface. To the north of the access road will be a buried electrical service to carry electricity to the pumps. In the causeway to the south of the access road will be buried two intake lines of 30 inch diameter and one water discharge line. Near the river end of the causeway a vehicle turn-around area will be provided. The causeway across the wetlands will run in a southwesterly direction from plant site parallel to the principal direction of flood water flow when the river is out of its banks. Five oval-shaped culverts will be placed in the causeway at the lowest points of natural contour and permit water to pass through the causeway to equalize levels on both sides of the causeway. These culverts will be 6 feet wide by 3 feet 8 inches high. During the wet season water will be standing in most of these culverts. If the causeway were built in the same location, but without culverts, so as to block any flow normal to the causeway, the build up of water on the north side of the causeway would be only 1 or 2 inches at full flood stage of 57 feet (T146).1 Accordingly, the causeway would have little, if any, effect on the water flow in the wetlands over which this causeway passes; and, but for the 8 acres of wetlands eliminated by the construction of the causeway, the ecological function of these wetlands will be virtually unimpaired. As a collector of sediment from the flood waters the flood plain would also be unimpaired by the construction of the causeway (T154). The cost of constructing the causeway as proposed is $216,000. As a condition of certification (Ex 5 D 1 b) DER prescribed "a trestle shall be used for access to the platform for all areas west of station 14 + 00." This includes the access across the wetlands and presumably it is DER's position that the intake and discharge pipes from the Choctawhatchee River shall be placed upon a trestle structure rather than upon a causeway. The only evidence presented with respect to the cost of the trestle structure was presented by Gulf that a concrete pile trestle to support the pipes and access road would cost some $900,000. A creosoted pile trestle to perform the same function would cost approximately $600,000 and to provide fire protection for the piling would cost another $250,000, which would place the cost of either type trestle some four times the cost of the causeway. No maintenance costs or useful life comparisons of the trestle and causeway were presented. Both trestle and causeway would require the same corridor to be cleared thus the construction of either would result in the same ecological damage. Thereafter, however, the vegetation and other indicia of wetlands could return under the trestle. While evidence was presented that the causeway would occupy 8 acres of former wetlands no evidence was presented of the area occupied by the piling of the trestle. It is obvious that this would be a small fraction of the area occupied by the causeway, but not necessarily insignificant. Gulf opposed the trestle concept for two additional reasons. The exposed pipe on the trestle, if of steel, would require painting and would conduct heat from the sun to the water passing through the pipe. Testimony was presented that ecologists not present had evaluated wetlands in general as having an ecological value of between $1,000 and $20,000 per acre per year. If these figures have economic reality all wetland should have a market value of at least $10,000 per acre. Regardless of this if we assume the values presented are real and the cost for the access corridors are correct, the following economic comparisons can be made. The difference in the cost of the causeway and trestle is approximately $700,000. If this money is borrowed by Gulf at 8 1/2 percent interest the interest cost is almost $60,000 per year. Since this would be a valid capital expense this interest cost will be reflected in the rates of Gulf's customers. If the wetlands are ecologically worth $7,500 per acre per year the 8 acres here involved would also have a value of $60,000 per year. In this connection it should be noted that DER's condition of certification specifying trestle across wetlands was based solely on ecological factors and cost was not considered (T308). During the course of the hearing considerable evidence was presented regarding a third alternative for piping water to and from the river, viz. in pipes buried across the wetlands. This evidence was insufficient in numerous aspects to give it viability; however, several aspects of this proposal are worthy of note. Any pipe that is used to carry cooling water requires some degree of slope to permit the pipe to be drained. From a position near SR 179 (where if underground pipes are used the pumps would have to be placed to provide access for maintenance) the pipe could be buried; but, at some point in the flood plain, the pipe would have to be placed upon a trestle to maintain slope to the river's edge (T287). Burying pipes across the wetlands would have the least ecological impact upon the wetlands. Once the pipe path was trenched, suitable bearing material placed in the trench to support the pipe, the pipe laid and the trench back filled the wetlands would return to natural state and the area involved resume most of the characteristics of wetlands. Problems associated with this proposal include providing all-weather access to the inside of the pipe; obtaining suction on pumps located 2400 feet laterally and 12 + feet above the level of the water to be pumped; long periods of shutdown in case a section of pipe required replacement; and routine engineering problems in obtaining a constant slope upon installation. Regardless of the path taken by these pipes some difficulties with corbicula clams are expected. These creatures are endemic to the Choctawhatchee River and will be entrained in the pipe. There they will attach themselves and as they grow restrict the flow in the pipes. Although chlorination at the inlet is expected to help control this problem periodic cleaning of the intake pipes may be required. Accordingly, access to these pipes at all stages of the water level in the flood plain is an important concern. While testimony presented that it was possible to obtain suction with pumps located 2400 feet laterally and 12 feet higher than the level of the water to be pumped, it was also acknowledged that this 2400 feet of 30 inch pipe would "probably" have to be primed before the pumps could pick up suction. (T305-306). Cost and feasibility of providing all weather access to the buried pipes, and of providing capability to prime the remote pumps was not presented. Furthermore the cost associated with burying the pipes across the wetlands was not presented. Accordingly this concept should not be further considered. II With respect to the biological monitoring program to be carried out by Gulf to determine the effects of the power plant on river organisms, DER, as a condition of certification, proposes a program that will continue for the life of the plant regardless of the conclusions reached from such monitoring. Gulf, on the other hand, proposes a monitoring program to commence prior to the operation of Unit I to determine the base line conditions and continue for one year after commencement of operations of Unit I. Thereafter when Unit II comes on line the monitoring program would be reinstituted and continue for one more year. Since Unit II is scheduled to come on line one year after Unit I the monitoring program proposed by Gulf would actually be continuous for about 2 1/2 years. All parties generally agreed that monitoring is required to ascertain the ecological effects of the plant on the aquatic life in the river. One type monitoring is needed to determine the effect of impingement and entrainment at the intake. The intake structure is designed so the plant of the intake screen is parallel to the current flow. This largely eliminates impingement of fish and other aquatic life on the intake screen as the current flow would tend to wash aquatic life off the screen. Since water is drawn into the intake at a speed of 1/2 foot per second those aquatic life in the volume of water entering which are small enough to pass through the screens will be entrained and killed in the filters. It is to determine the quantity and composition of the aquatic life so destroyed that this part of the monitoring program is intended. The second part of the monitoring program involves ascertaining the aquatic life in the river above the plant and below the point of discharge of the returned cooling water in order to ascertain the effect of the discharged water on the aquatic organisms. With respect to the entrainment monitoring there was considerable confusion in the testimony regarding anticipated findings. Gulf's witness stated that at low river and low flow conditions the greatest number of organisms would be entrained. While it is obvious that the greatest percentage of available water will be removed from the river during low flow conditions (since the same quantity or volume of water will be withdrawn as at high flow conditions) it is not obvious that there will be a higher density of aquatic organisms in the river at this same time; and no one so testified. In fact the testimony was that various organisms in the water may change radically (of a magnitude of 1,000 to 1) at various times throughout the year. It would appear that whatever concentration of aquatic organisms that exist in the thalweg of the river would exist in the water withdrawn through the intake pipes and be entrained. Those organisms that exist in slack water portions of the river, swim or otherwise remain out of the current passing near the intake would not be entrained. Thus a sampling point in the current near the intake would provide adequate information on the effects of entrainment. The program proposed by Gulf and contained in Exhibit 21 appears adequate for this determination. With respect to the monitoring required to ascertain the effects of the plant operation on the river ecosystems Gulf proposed sampling only periphyton while DER's condition or certification (Exhibit 5) provides for a sampling to include phytoplankton, zoo plankton, ichthyoplankton, nutrient analysis, benthos and fish. These samples would be taken at points above and below the plant intake and discharge for the obvious determination of the effects on the river ecological system resulting from the discharge of the used cooling water back into the system. In this regard it should be pointed out that the water to be discharged will be treated to remove heat, solids, and other concentrations that would affect compliance with the EPA standards. No valid cost estimates for the monitoring program proposed by either Gulf or DER was presented. One witness upon cross examination gave a ball park "guesstimate" of $50,000 per year for Gulf's proposed program and $100,000 per year for DER's program. The witness expressly disallowed any credit for the accuracy of these figures and accordingly they are disregarded. They are inserted here simply because cost of the end product, electricity, is a factor to be considered in determining under what conditions this certification should be granted. As noted above, Gulf proposes to continue the monitoring program for approximately 30 months (until one year after Unit II has come on line) while DER proposes a monitoring program that will continue for the life of the plant. The biological community sampling program contained in Exhibit 5, part II C should be followed. The time during which these programs should be continued will be discussed under Conclusions. III All parties generally agreed that the use of herbicides was required to clear vegetation from transmission line corridors in wet areas where mechanical equipment cannot operate. Gulf proposes to use Kuron, a herbicide approved by both state and federal authorities. It will be used in wet areas only at a frequency not to exceed once per year and in accordance with manufacturer's instructions admitted into evidence as Exhibit 22. At the hearing DER appeared to take the position that approval by DER should be obtained prior to each time the herbicide is used. The evidence presented clearly shows that Kuron is a safe non- persistent herbicide which, when applied in accordance with instructions, will cause no harm to untargeted vegetation. All of the transmission line routes were not finalized at the time of the hearing but when the remainder of these corridors are finalized there appears to be no reason that Gulf should not provide DER with a map of these corridors indicating thereon those areas in which herbicides will be used. IV No factual evidence regarding general conditions of certification 11(a) and (b) was presented. Accordingly these will be treated solely as a matter of law.
Recommendation It is RECOMMENDED that the application of Gulf Power Company for a power plant site certificate be granted so as to authorize the construction and operation of a coal-fired steam generating electrical power plant near Carryville, Florida in accordance with Exhibit 1. It is further RECOMMENDED that this approval be conditioned upon compliance by Gulf with the conditions of certification contained in Exhibit 4 and 5 except conditions II D 1 (b) (Exhibit 5), general conditions 11(a) and (b), (Exhibit 4), and that condition II C (Exhibit 5) be modified to provide such monitoring shall commence not less than six months prior to completion of Unit I and continue for a period of three years after completion of Unit II. At this time Gulf may petition DER for authority to discontinue said monitoring or to modify same and if such request is not approved Gulf shall be entitled to a hearing at which evidence shall be presented from which a determination can be made whether the benefits of said monitoring program justify the costs involved. DONE AND ENTERED this 19th day of January, 1976, in Tallahassee, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida (904) 488-9675
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
