Opinion ID: 1835478
Heading Depth: 2
Heading Rank: 1

Heading: Territorial Boundaries

Text: Gulf Coast acknowledges this Court's deferential standard of review of PSC orders, but asserts that the PSC's decision not to establish territorial boundaries in light of the undisputed areas of commingled facilities is unsupported by any evidence and is a departure from the essential requirements of law. Gulf Coast maintains that the PSC has a clear obligation to establish territorial boundaries in this case to prevent further uneconomic duplication and to avoid future territorial disputes. Gulf Power argues against drawing territorial lines in the ground under the circumstances of this case, especially in the absence of a present dispute over service to a particular customer. Gulf Power concedes that there is a commingling of facilities in the developed areas. Gulf Power asserts, however, that this duplication of facilities is not necessarily uneconomic, and that mere duplication of facilities does not require the PSC to establish a territorial boundary. Gulf Power further maintains that any decision regarding where to set the territorial boundaries in the undeveloped areas would not be in the public interest at this time because of uncertainty over where future development will occur and which company will be able to provide the most cost-effective service to these areas. We must initially decide whether the PSC was required, as a matter of law, to impose territorial boundaries not agreed to by both parties, where there is no dispute regarding service to current or future identifiable customers. This case differs from others that we have reviewed involving territorial agreements, see, e.g., Ameristeel, 691 So.2d at 473; Fort Pierce Utils. Auth. v. Beard, 626 So.2d 1356 (Fla.1993); Utilities Comm'n of New Smyrna Beach v. Florida Pub. Serv. Comm'n, 469 So.2d 731 (Fla.1985), or territorial disputes regarding service to particular customers where no territorial agreement exists. See, e.g., Clark, 674 So.2d at 120; Lee County Elec. Coop. v. Marks, 501 So.2d 585 (Fla.1987); Gulf Coast Elec. Coop. v. Florida Pub. Serv. Comm'n, 462 So.2d 1092 (Fla. 1985). Here, there is no present dispute as to service to any current or future identifiable customer, no pre-existing territorial agreement, and no agreement on the basic issue of whether a boundary should be imposed, much less where the boundary should be located. In considering this issue, we note that there is no explicit statutory authority for the PSC to impose territorial boundaries. Instead, the PSC's implicit authority to establish boundaries is derived from two separate jurisdictional provisions: its jurisdiction to approve territorial agreements, subsection 366.04(2)(d), Florida Statutes (1997), and its jurisdiction to resolve territorial disputes, subsection 366.04(2)(e). Subsections (2)(d) and (2)(e) provide: (2) In the exercise of its jurisdiction, the commission shall have power over electric utilities for the following purposes: ... (d) To approve territorial agreements between and among rural electric cooperatives, municipal electric utilities, and other electric utilities under its jurisdiction. However, nothing in this chapter shall be construed to alter existing territorial agreements as between the parties to such agreements. (e) To resolve, upon petition of a utility or on its own motion, any territorial dispute involving service areas between and among rural electric cooperatives, municipal electric utilities, and other electric utilities under its jurisdiction. In resolving territorial disputes, the commission may consider, but not be limited to the consideration of, the ability of the utilities to expand services within their own capabilities and the nature of the area involved, including population, the degree of urbanization of the area, its proximity to other urban areas, and the present and reasonably foreseeable future requirements of the area for other utility services. § 366.04(2)(d), (e), Fla. Stat. (1997) (emphasis supplied). [3] Notably, subsection (2)(e) does not require the PSC to set boundaries in order to resolve a territorial dispute between two utilities. Another subsection, 366.04(5), vests the PSC with jurisdiction over the planning, development, and maintenance of the power grid throughout Florida to assure an adequate and reliable source of energy, and to avoid further uneconomic duplication of facilities. This Court has stated that the PSC is to be guided by this statutory mandate to avoid further uneconomic duplication of facilities in its decisions regarding territorial agreements and territorial disputes. See New Smyrna Beach, 469 So.2d at 732; see also Gainesville-Alachua County Reg'l Elec., Water & Sewer Utils. Bd. v. Clay Elec. Coop., 340 So.2d 1159, 1162 (Fla.1976). However, in the final analysis, the public interest is the ultimate measuring stick to guide the PSC in its decisions. See Beard, 600 So.2d at 453; Lee County, 501 So.2d at 587; New Smyrna Beach, 469 So.2d at 732. We conclude that the PSC is not required as a matter of law to establish territorial boundaries in order to resolve a territorial dispute that does not involve service to current or future identifiable customers. As the PSC made clear in its order under review, its position is not that it is never appropriate to establish a territorial boundary to resolve a territorial disputejust that it is not in the public interest in this case. We reject Gulf Coast's argument that the PSC's approval of other territorial agreements establishing territorial boundaries [4] required that the PSC establish territorial boundaries in this case. The PSC's charge in proceedings concerning territorial agreements is to approve those agreements which ensure the reliability of Florida's energy grid and to prevent needless uneconomic duplication of electric facilities so long as the agreement works `no detriment to the public interest.' Ameristeel, 691 So.2d at 478. We have also observed that [t]he legal system favors the settlement of disputes by mutual agreement between the contending parties. New Smyrna Beach, 469 So.2d at 732 (emphasis supplied). This rule applies with equal force in territorial agreements. Id. Thus, the issue of whether the PSC should approve a negotiated settlement agreement setting territorial boundaries that does not work a detriment to the public interest differs from whether the PSC is required to establish boundaries in the absence of a territorial agreement. As to Gulf Coast's argument that the PSC was required to establish territorial boundaries due to the danger of uneconomic duplication, we find that competent substantial evidence supports the PSC's conclusion that even though there is a commingling of facilities in the developed areas, it does not necessarily follow that this duplication is further uneconomic duplication within the meaning of subsection 366.04(5) (emphasis supplied). As the PSC observed, the actions of both parties in constructing duplicative facilities have resulted in their ability to serve the same customers in the areas in question. [5] Either utility could serve the areas equally well. According to testimony presented at the hearing, when service lines are as commingled as they are in these developed areas, the incremental cost to add additional customers is de minimis. One expert testified that it would be nearly impossible for uneconomic duplication to occur in these developed areas in the future because a customer located within that commingled area could be served by either utility without any significant incremental duplication, much less uneconomic duplication. Regarding the undeveloped areas, competent substantial evidence supports the PSC's decision that a territorial boundary should not be established because it is unclear where future growth will occur. According to testimony at the hearing, establishing fixed boundary lines to determine which company will provide service to future customers does not take into account future load needs and line adequacy, and totally ignores the differing types of electric loads that might be associated with as yet unknown future development. As the PSC concluded, establishing a fixed boundary for service in these areas would eliminate the flexibility the utilities need to determine which one is in the most economic position to extend service. The PSC has determined that requiring the parties to establish guidelines for resolving future service disputes is the better solution in this case [6] and has made clear that it will exercise its jurisdiction to resolve future disputes regarding specific customers on a case-by-case basis. Under these circumstances, the PSC should not be placed in a judicial straight-jacket and forced by this Court to establish territorial boundaries in the absence of an existing dispute over service to current or future identifiable customers. We hold that the PSC has not departed from the essential requirements of law and that its order is supported by competent substantial evidence.