Court Reverses Rate‐setting Order

Abstract

Florida Water Services Corporation appealed an order in which the Public Service Commission (PSC) set rates in 97 water and 47 wastewater service areas that Florida Water serves in more than 20 counties. The rate order denied Florida Water's request for uniform, utility‐wide rates but approved capband rates. Instead of setting a different rate within each service area solely based on the cost of service there, the PSC grouped service areas by cost of service. Rates were then set uniformly within each group. Florida Water did not take issue with this aspect of the rate order, but other parties contended that the capband methodology was impermissible. The appellate court said that the legislature gave the PSC broad authority in determining rates and that Florida law contained no requirement that a utility owning multiple systems must prove that the systems are functionally related in order for the PSC to set uniform rates applicable to some or all of the systems. Although the court upheld the capband methodology, it reversed the PSC's rate‐setting order because the PSC failed to explain the new methodology and because the order excluded from the rate base a portion of the construction costs for reuse facilities.