Case Name: LEE COUNTY ELECTRIC COOPERATIVE, INC., Appellant, v. E. Leon JACOBS, Jr., et al., Appellees
Court: Florida Supreme Court
Jurisdiction: Florida
Decision Date: 2002-05-02
Citations: 820 So. 2d 297
Docket Number: No. SC01-373
Parties: LEE COUNTY ELECTRIC COOPERATIVE, INC., Appellant, v. E. Leon JACOBS, Jr., et al., Appellees.
Judges: HARDING, PARIENTE, and LEWIS, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 820
Pages: 297–308

Head Matter:
LEE COUNTY ELECTRIC COOPERATIVE, INC., Appellant, v. E. Leon JACOBS, Jr., et al., Appellees.
No. SC01-373.
Supreme Court of Florida.
May 2, 2002.
Rehearing Denied June .19, 2002.
Steven 1¡. Brannock of Holland & Knight LLP, Tampa, FL; D. Bruce May and Karen D. Walker of Holland & Knight LLP, Tallahassee, FL; and John A. No-land of Henderson, Franklin, Starnes & Holt, Fort Myers, FL, for Appellant.
Richard D. Melson and Dan R. Stengle of Hopping, Green, Sams & Smith, P.A., Tallahassee, FL’; and Harold McLean, General Counsel, and Mary Anne Helton, Associate General Counsel, Florida Public Service Commission, Tallahassee, FL, for Appellees.

Opinion:
PER CURIAM.
This case is before the Court on appeal from an order of the Florida Public Service Commission (PSC). We have jurisdiction. See art. V, § 3(b)(2), Fla. Const. The issue presented concerns whether the PSC has rate structure jurisdiction over a rural electric cooperative's wholesale rate schedule established pursuant to contract. For the reasons expressed below, we affirm the PSC's order concluding that it does not have such jurisdiction.
Lee County Electric Cooperative (LCEC) is a non-profit electric distribution cooperative organized under chapter 425, Florida Statutes, and engaged in the distribution and sale of electric energy within its approved service territory in southwest Florida. LCEC serves approximately 139,000 customers, most of which are in Lee County. Seminole Electric Cooperative is a non-profit electric generation and transmission cooperative also organized pursuant to chapter 425. Seminole provides electricity at wholesale to its ten owner-members, one of which is LCEC. Each of Seminole's members, like LCEC, is a distribution electric cooperative engaged in the retail sale of electricity to Florida customers. Seminole is governed by a thirty-member board of trustees that consists of two voting members and one alternate from each of its ten member distribution cooperatives.
LCEC purchases all of its power requirements from Seminole pursuant to a wholesale power contract between LCEC and Seminole, originally dated May 22, 1975, and supplemented and amended from time to time. LCEC must purchase all of its power requirements from Seminole during the 45-year term of the contract, which does not expire until 2020. The contract specifies the procedure for determining the rate the members pay Seminole for wholesale service., The rate schedule applies uniformly to all members. The contract provides that the board of trustees will review Seminole's rate schedule at least once a year. In the contract, LCEC agreed to be bound by the rate schedule established by the board. The contract specifically provides that the only regulatory review required is approval from the administrator of the federal Rural Utilities Service (formerly the Rural Electrification Administration).
On October 8, 1998, the Seminole board approved a new rate schedule applicable to all of its members, Rate Schedule SECI-7, effective January 1, 1999. The Rural Utilities Services approved the new schedule on November 20, 1998. LCEC alleges that this new schedule creates a new rate structure that replaces the existing demand charge with two separate charges: a reduced demand charge based on monthly billing demand and a new "Production Fixed Energy Charge" which is allocated to members based on their three-year historical energy usage.
On December 8, 1998, LCEC filed its complaint with the PSC, asking the PSC to conduct a full investigation and evidentiary hearing on Seminole's new rate schedule. LCEC based its complaint on section 366.04(2)(b), Florida Statutes (1997), which gives the PSC power to "prescribe a rate structure for all electric utilities."
Seminole moved to dismiss LCEC's complaint, claiming that the PSC is without jurisdiction to review Seminole's wholesale rate schedule. In response, LCEC claimed that the PSC's exercise of jurisdiction falls squarely within the language and intent of section 366.04 and is consistent with the PSC's duty to encourage conservation and ensure the reliability of the electric grid.
The PSC met and considered the motion to dismiss twice. The first time the motion was denied by virtue of a two-two tie vote. Upon the request of the parties, the PSC later reconsidered the jurisdictional issue and this time a panel of commissioners voted two-to-one to dismiss LCEC's-complaint. The majority held that the statutes do not "expressly indicate that this Commission has jurisdiction to prescribe a wholesale rate structure for a rural electric cooperative." This appeal follows. ' '
The issue in this case is whether section 366.04(2) grants the PSC rate structure jurisdiction over a rural cooperative's wholesale rate schedule established pursuant to contract. Both parties agree that the standard of review is de novo. Based on our interpretation of section 366.04(2), we conclude that the PSC did not err granting the motion to dismiss for lack of jurisdiction.
In 1974, the Legislature passed the Grid Bill, codified at sections 366.04(2) and 366.05(7)-(8), Florida. Statutes (2001). Pri- or to that time, the PSC had no jurisdiction over cooperatives. The Grid Bill gives the PSC limited jurisdiction over municipal electric utilities and electric cooperatives:
(2) In the exercise of its jurisdiction, the commission shall have power over electric utilities' for the following purposes:
(b) To prescribe a rate structure for all electric utilities.
§ 366.04(2), Fla. Stat. (2001). Section 366.02, Florida Statutes (2001), provides the following definition for an electric utility:
(2) "Electric utility" means any municipal electric utility, investor-owned electric utility, or rural electric cooperative which owns, maintains, or operates an electric generation, transmission, or distribution system within the state.
In its order, the PSC acknowledges that Seminole is an electric utility. However, the PSC notes that the term."rate structure" is not defined in chapter 366. At a hearing below, Commissioner Deason offered the following definition of "rate structure":
When I read this language, and I think I've indicated this earlier, to me, rate structure — and I don't think rate structure is defined anywhere in the statute. But to me, rate structure means the structure of rates as they relate to different rate classes, and a classic example is residential, commercial, industrial, classifications of those types. And that rate structure connotes to me an offering by a utility that says these are the terms and conditions that we will provide service to you, and if you meet those terms and conditions, you will be provided the service on a nondiserimina-tory basis, and it doesn't really apply to a situation where you have entities who have voluntarily entered into a negotiated contract. And if there are provisions within that contract which allow for the rates to change over time, I still don't think that meets the definition of a rate structure as I think it's contemplated.
For this reason, the PSC concluded that it did not have jurisdiction to prescribe a wholesale rate structure for a rural electric cooperative. To support this conclusion, the PSC contends that any reasonable doubt regarding its regulatory^ power compels the PSC to resolve-that doubt against the exercise of jurisdiction. See City of Cape Coral v. GAC Utilities, 281 So.2d 498, 496 (Fla.1973). We agree.
Further,- as the PSC emphasized in its order, Seminole's rate schedule was established by Seminole's board of trustees, pursuant to the terms of Seminole's contract with LCEC. LCEC voluntarily entered into this contract. We find, therefore, that any contention that LCEC has with Seminole's current rate schedule is more appropriately raised in an action filed in the circuit court.
Finally, we address LCEC's "regulatory gap" argument. All of the parties agree that under the current state of the law, the wholesale rate structures of rural electric cooperatives in Florida are essentially unregulated. As stated in LCEC's brief, there is no federal bar to a particular state's public service commission exercising jurisdiction over the wholesale rate structures of rural electric cooperatives. See Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm'n 461 U.S. 375, 103 S.Ct. 1905, 76 L.Ed.2d 1 (1983) (holding that the Rural Electrification Act does not preempt state' rate regulation of rural electric cooperatives). Regardless of this view of federal law, it does not answer the question of whether the Legislature of this state intended for the rate schedules of cooperatives such as Seminole to be regulated by the PSC or whether these cooperatives were intended to be self-governing. Based on our review of the record, we find that they were intended to be self-governing.
Accordingly, we affirm the PSC's order determining that it does not have rate structure jurisdiction over a rural cooperative's wholesale rate schedule established pursuant to contract.
It is so ordered.
HARDING, PARIENTE, and LEWIS, JJ., concur.
WELLS, C.J., concurs with an opinion.
ANSTEAD, J., dissents with an opinion, in which SHAW and QUINCE, JJ., concur.
. ' Seminole points out that there have been a number of rate schedule amendments over the lifetime of the Seminole contract, yet LCEC has never previously attempted to submit these amendments to the PSC for review.
. Prior to its amendment in 1989, this subsection provided:
(2) In the exercise of its jurisdiction, the commission shall have power over rural electric cooperatives and municipal electric utilities for the following purposes:
(b) To prescribe a rate structure for all electric utilities.
§ 366.04(2), Fla. Stat. (1987). In 1989, the words "rural electric cooperatives and municipal'' were taken out. See ch. 89-292, § 2, at 1798, Laws of Fla.
. The Seminole contract provides that amendments to rate schedules are subject to review by the administrator of the federal Rural Utilities Service (RUS). LCEC, however, discounts the importance of RUS review. LCEC claims that the RUS's role is more of a lender than a regulator and that it only reviews Sem-mole's rate structure for the purpose of determining whether it will generate sufficient revenue to retire the debt. LCEC asserts that the RUS has no interest in whether Seminole's rate structure is fair and reasonable or designed to promote conservation.