Opinion ID: 1846151
Heading Depth: 1
Heading Rank: 8

Heading: Universal Service Fund Set-off

Text: The last area of contention is the PSC's set-off of $40,209 in projected Universal Service Fund reimbursement payments against GTC's 2005 storm costs. As a rural company, GTC is eligible to receive a High-Cost Loop Support payment from the Federal Universal Service Fund (USF), in differing percentages to the extent that its overall cost per loop (line from company to end user customer location) exceeds 115% to 150%, or exceeds 150%, of the national average cost per loop. These payments are administered by the Universal Service Administration Company and approved by the Federal Communications Commission. The support payment is calculated on an after-the-fact basis and is paid over time beginning in 2007 for the year 2005. The evidence established that GTC has received USF subsidy payments since 1986 and would receive a USF subsidy payment for the year 2005 in an additional amount based on increased costs due to storm repairs. Based on this history, the PSC in this case applied a portion of those projected support payments as an offset against GTC's intrastate storm recovery costs. The PSC interpreted that part of section 364.051(4)(b)(1), Florida Statutes (2005), which provides that a company may file a petition to recover its intrastate costs and expenses, as providing it with discretion to disallow recovery of any cost that has been or will be recouped through other means. GTC argues, however, that the amount of future USF support payments, to be commenced in 2007 for the year 2005, is too speculative to serve as the basis for offsetting any hurricane costs. Mr. Ellmer testified that assuming there is no change in the national average cost per loop, GTC is expected to receive $141,449 in additional USF support payments on account of its 2005 hurricane costs. He qualified that testimony by stating that based on possible changes in cost per loop GTC might only receive $121,317. Mr. Ellmer further testified that GTC had received USF reimbursements since at least 1986. Public Counsel's expert witness testified that because of the increased cost resulting from items being capitalized and items being expensed as a result of the storm, GTC will receive additional high-cost loop support payments, which should be taken into consideration in approval of storm recovery costs. The PSC found that because GTC's average loop costs have exceeded the national average in excess of 150% for the past five years and GTC has received reimbursements since at least 1986, GTC should once again qualify for the maximum level of funding. The PSC further determined that, because the Universal Service Fund is funded through consumer payments in the first instance, increased support payments attributable to 2005 hurricane costs should be offset against those costs and not paid for a second time by the consumer through storm cost surcharge. The PSC did not, however, reduce GTC's claim by the full $141,449 projected reimbursement. Instead, the PSC concluded that because there was a downward adjustment in GTC's allowable storm cost expense, there should be a corresponding downward adjustment in the amount of the USF reimbursement to be applied as an offset. In accord with the adjustments made to GTC's total claim, the PSC adjusted the total support payment, for purposes of offsetting storm costs, to $40,209. The record further established that GTC will begin receiving USF funds based on its 2005 costs, including storm costs, in January 2007. The PSC took the two-year delay in receipt of the USF payments into account and approved recovery by GTC of carrying costs of $3,886, which were calculated at the commercial paper rate. It is not clearly erroneous for the PSC to consider and give weight to evidence of a long record of increasing subsidy payments and documentary evidence showing projected support payments. Moreover, we agree that in considering recoverable costs, it is not clearly erroneous for the PSC to disallow double recovery. Because the PSC had before it competent, substantial evidence to support its determination that GTC will receive additional USF funds on account of costs related to Hurricane Dennis, the PSC's permissible construction of the statute and decision to set off USF funds in the amount of $40,209 against storm costs will not be disturbed.