Opinion ID: 1846151
Heading Depth: 1
Heading Rank: 4

Heading: Statutory Construction of Section 364.051(4)(b)

Text: The agency's construction of section 364.051(4), as amended in 2005, was a matter of first impression for the PSC. Prior to the 2005 amendment, one of the grounds provided by section 364.051(4) for allowing a price-capped local telecommunications company to request a rate increase was by a compelling showing of changed circumstances. § 364.051(4), Fla. Stat. (2004). The 2005 amendment added subsection (4)(b) specifically for tropical storm damage, and expressly provided that damage resulting from a named tropical system would constitute a compelling showing of changed circumstances sufficient for a company to petition for a temporary rate increase. As enacted, section 364.051(4)(b), provides in pertinent part: (b) For purposes of this section, evidence of damage occurring to the lines, plants, or facilities of a local exchange telecommunications company that is subject to the carrier-of-last-resort obligations, which damage is the result of a tropical system occurring after June 1, 2005, and named by the National Hurricane Center, constitutes a compelling showing of changed circumstances. 1. A company may file a petition to recover its intrastate costs and expenses relating to repairing, restoring, or replacing the lines, plants, or facilities damaged by a named tropical system. 2. The commission shall verify the intrastate costs and expenses submitted by the company in support of its petition. 3. The company must show and the commission shall determine whether the intrastate costs and expenses are reasonable under the circumstances for the named tropical system. 4. A company having a storm-reserve fund may recover tropical-system-related costs and expenses from its customers only in excess of any amount available in the storm-reserve fund. 5. The commission may determine the amount of any increase that the company may charge its customers, but the charge per line item may not exceed 50 cents per month per customer line for a period of not more than 12 months. (Emphasis supplied.) Therefore, under section 364.051(4)(b)(2), the PSC must verify the storm-related intrastate costs and expenses. Further, the company must show and the PSC must determine that the costs and expenses are reasonable under the circumstances for the named tropical system. § 364.051(4)(b)(3), Fla. Stat. Public Counsel and the PSC both rely on the portion of the statute that provides that [t]he company must show and the [PSC] shall determine whether the intrastate costs and expenses are reasonable under the circumstances for the named tropical system. § 364.051(4)(b)(3), Fla. Stat. The PSC views the plain meaning of section 364.051(4)(b)(3) as authority to exercise broad discretion to allow surcharge recovery of only those costs that it finds are reasonable in relation to the storm, meaningin the PSC's viewonly those costs and expenses that are in excess of normal operating costs and normal capital costs, and which are not recovered through some other means. The PSC contends that any other statutory interpretation would be unreasonable because it would allow customers to be billed twice for the same costs. Additionally, the PSC and Public Counsel assert that because the PSC is charged with enforcing this statute, its interpretation as to the meaning of reasonableness for purposes of recovery of hurricane costs is entitled to deference and is not clearly unauthorized or erroneous. GTC, on the other hand, argues that the phrase reasonable under the circumstances for the named tropical system in section 364.051(4)(b)(3) is not authorization for the PSC to engage in a general reasonableness inquiry, but limits its determination of reasonableness only to determining that the costs were expended in repairing damage caused by the named tropical system. GTC further contends that the plain meaning of section 364.051(4)(b)(1), as evidenced by its text, allows surcharge recovery of all intrastate costs and expenses relating to repairing, restoring, or replacing the lines, plants, or facilities damaged by a named tropical system. GTC submits that the only limitations which may be imposed are those stated in subsections (4) through (8), none of which expressly disallow recovery of costs on the basis that they involve in-house labor and engineering, prudent replacement practices, normal capital costs, or offsets for federal subsidy funds. Because the phrase reasonable under the circumstances for the named tropical system is subject to differing interpretations, we conclude that the statute is ambiguous as to the scope of the PSC's authority to disallow expenses and thus statutory interpretation is appropriate. The PSC interprets the statutory provision reasonable under the circumstances for the named tropical system as imposing on it an obligation to scrutinize costs for reasonableness and in a manner that will avoid double recovery, thereby allowing recovery only for costs that exceed normal operating costs and normal capital costs. This interpretation is a reasonable view of the statute and the PSC's role in administering it. We reject GTC's contention that this interpretation is clearly unauthorized or erroneous. Level 3 Commc'ns, 841 So.2d at 450. As explained by the PSC in its order: We find the phrase reasonable under the circumstances allows us great latitude in determining the methodology and factors that should be taken into consideration when reviewing the petitioner's request. We also find that this statute was enacted to assist the petitioner in defraying additional costs caused by extraordinary circumstances, specifically tropical storms. One of the main goals of this statute is to assist the petitioner financially. Accordingly, the reasonable clause implicitly ensures that storm related cost recovery should be based on expenditures incurred over and above normal operating expenditures. It is highly unlikely that the Legislature intended, through Section 364.051(4), Florida Statutes, to reimburse companies for costs that they would have incurred regardless of whether a storm had occurred or not. Because this is a reasonable construction, we apply the rule of statutory interpretation that requires us to defer to the PSC's expertise and its interpretation of the provision. We do not, however, rely only on the principle of deference. We must also consider the principle of construction that parts of a statute are not read in isolation. It is axiomatic that all parts of a statute must be read together in order to achieve a consistent whole. Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So.2d 452, 455 (Fla.1992). The PSC's interpretation of the scope of its discretion is supported by another provision contained in section 364.051(4)(b). Section 364.051(4)(b)(5) provides that [t]he commission may determine the amount of any increase that the company may charge its customers, but the charge per line item may not exceed 50 cents per month per customer line for a period of not more than 12 months. (Emphasis supplied.) The discretionary nature of the phrase, may determine the amount of any increase, supplies additional support for the interpretation reached by the PSCthat the PSC is invested with discretion to determine what amount of storm recovery costs are reasonable to be charged to the consumer. Support for the PSC's interpretation is also found in a related statutory provision contained in chapter 364. Section 364.01(4)(a), Florida Statutes (2005), requires the PSC to [p]rotect the public health, safety, and welfare by ensuring that basic local telecommunications services are available to all consumers in the state at reasonable and affordable prices. That provision directs the PSC to exercise its jurisdiction in order to protect consumers, in part, by ensuring the availability of telecommunications services at reasonable prices. This Court has previously recognized that the PSC's authority vis-a-vis ILECs derives in part from the legislative mandate contained in section 364.01(4)(a). See Crist v. Jaber, 908 So.2d 426, 430 (Fla.2005); GTC, 791 So.2d at 457-58. GTC's reading of section 364.051(4)(b), in a manner that would divest the PSC of any discretion to determine the reasonableness of costs sought, is contrary to the PSC's authority to ensure the availability of reasonably priced telecommunications services. GTC has also characterized the PSC's determination of what costs are reasonable for recovery under section 364.051(4)(b) as an improper rate base, rate of return analysis that is inapplicable to GTC, a price-capped entity. However, that argument was rejected in GTC when GTC previously challenged the extent of the PSC's authority in matters involving price-capped companies. As we explained in GTC, other provisions in chapter 364 support the conclusion that the Legislature intended for the PSC to retain certain powers with respect to ILECs: For example, section 364.01 still gives the Commission broad regulatory powers with regard to the telecommunications industry. See § 364.01(2), Fla. Stat. (1995) (It is the legislative intent to give exclusive jurisdiction in all matters set forth in this chapter to the Florida Public Service Commission in regulating telecommunications companies, and such preemption shall supersede any local or special act or municipal charter where any conflict of authority may exist.). Additionally, section 364.01(4)(a)-(i) defines the Commission's scope of authority, including the power to protect the public health, safety, and welfare, the power to promote competition, and the power to [e]liminate any rules and/or regulations which will delay or impair the transition to competition. Indeed, the last two jurisdictional provisions (i.e., promoting competition and eliminating anti-competition rules) were added by the 1995 legislature. See ch. 95-403, § 5, Laws of Fla. Importantly, nothing within section 364.051 indicates that price-regulated companies are exempt from the provisions in section 364.01. Id. at 458 (emphasis supplied). In this case, reading section 364.01(4)(a) (the PSC shall exercise its jurisdiction to ensure telecommunications services are available at reasonable prices) together with section 364.051(4)(b)(3) (the PSC shall determine whether the costs are reasonable under the circumstances of the storm) and section 364.051(4)(b)(5) (the PSC may determine the amount of any increase), further supports the PSC's construction of the statute as providing it with discretion to determine what storm costs may reasonably be passed on to the consumer. The PSC also noted in its order that the Senate Staff Analysis and Economic Impact Statement for the 2005 amendment was in accord with its own interpretation of legislative intent for that provision. The Senate staff analysis for section 364.051(4)(b) stated: The committee substitute requires that the company show, and the commission determine, whether costs and expenses are reasonable under the circumstances. Traditionally, for rate-base-regulated industries, the commission would apply a prudent and reasonable test to ensure, for example, that costs are not double recovered, are booked to the appropriate costs accounts, and are necessary for the restoration process. The proposed language implies a similar type of review. Fla. Senate Commerce & Consumer Services Comm., CS for CS for SB 2232 § 19, Staff Analysis 2 (April 12, 2005). Certainly, while not determinative of final legislative intent, it is one touchstone of the collective legislative will, White v. State, 714 So.2d 440, 443 n. 5 (Fla.1998), on which the PSC relied for confirmation of its own interpretation of the statute. In this case, given an ambiguous statute and our utilization of several principles of statutory construction, the staff analysis serves merely as confirmation of the reasonable interpretation employed by the PSC. [4] GTC contends that the PSC erroneously relied on the staff analysis and then points to section 366.8260(1)(n), Florida Statutes (2005), as support for its argument that the Legislature did not intend for the PSC to apply a reasonableness test under section 364.051(4)(b). Section 366.8260(1)(n) is a storm-recovery cost provision that pertains to investor-owned electric utilities and was enacted during the same 2005 legislative session as was section 364.051(4)(b). See ch. 2005-107, § 1, at 1029, Laws of Fla. Section 366.8260(1)(n) is found within an extensive and detailed regulatory framework and provides for adjustment of storm-recovery costs for rate base, rate of return regulated electric utilities, as follows: (n) Storm-recovery costs means, at the option and request of the electric utility, and as approved by the commission . . . costs incurred or to be incurred by an electric utility in undertaking a storm-recovery activity. Such costs shall be net of applicable insurance proceeds and, where determined appropriate by the commission, shall include adjustments for normal capital replacement and operating costs, lost revenues or other potential offsetting adjustments. (Emphasis supplied.) This provision evidences legislative intent to limit the storm-recovery costs under section 366.8260 for rate base, rate of return regulated electric utilities to those costs and expenses that exceed normal overhead or normal capital replacement. In comparison, the 2005 provision for storm cost recovery procedures for ILECs found in section 364.051(4)(b) contains no similar roadmap for calculating the storm recovery costs for price-capped ILECs such as GTC. GTC argues that because the Legislature included no similar limitations in section 364.051, it intended no limitations on the storm costs that can be recovered under that section, other than the expressly stated limitation concerning a storm-reserve fund, which is not applicable here. The PSC contends, on the other hand, that section 364.051(4)(b) provides the PSC greater discretion in the determination of reasonableness of storm cost recovery than does section 366.8260 because it does not limit the exercise of discretion to enumerated factors. We agree with the PSC that the storm cost recovery provisions contained in section 364.051(4)(b) for price-capped companies do not eliminate the ability of the PSC to exercise discretion to determine the reasonableness of claimed costs under the circumstances for the tropical system. The PSC's construction of the storm cost recovery provisions of section 364.051(4)(b) that prevents consumers from paying twiceonce for all those costs and expenses normally covered by their regular rates and once again for the same costs and expenses in a line-item storm recovery surchargefalls within the overall goal of section 364.01(4)(a). Further, the PSC's construction is founded on the text of section 364.051(4)(b), and is a reasonable interpretation of a statute that is within the PSC's broad regulatory authority. GTC has not carried its burden of showing that the PSC's construction of section 364.051(4)(b) is clearly unauthorized or erroneous.