Court Opinion

ID: 4883404
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:17:38.503062+00
Date Added: 2024-06-11T08:04:04.985461
License: Public Domain

Chairman HAWKINS
specially concurs as follows —
The issuance of this order marks a great day for Florida’s ratepayers.
In virtually every decision granting a rate increase that has been issued by this commission since I was first elected, I have been forced to dissent from the decision of the majority. One ground for my dissents has been the continued insistence of the majority to ignore the clear mandates of the Florida Supreme Court regarding the use of the year-end rate base.
The year-end rate base is an accounting gimmick, the use of which ultimately means higher rates for the ratepayers. Under certain limited circumstances, as defined by the Florida Supreme Court, the use of a year-end rate base is required. But in most of the cases I have been called upon to vote on, the use of the year-end rate base was clearly inconsistent with the Supreme Court’s dictates. Nevertheless, the year-end rate base was approved by the majority, with only one exception, in every case decided by this commission since 1968. Each such decision has meant a rate increase millions of dollars higher than it otherwise would have been.
The Supreme Court’s decision in this case upholds the position I have consistently voiced in my dissents and should mean an end to the continued “rubber stamp” use of the year-end rate base.
In its language suggesting the utilization of a separate “attrition allowance,” however, I fear the court’s decision may create future problems.
Attrition, or the erosion of a company’s profits over time is not easily predicted. In fact, it is virtually impossible to predict not just the rate or amount of attrition that might occur in the future, but even whether attrition will occur at all. For that reason, I share Commissioner Mayo’s concern over the use of an attrition adjustment like that proposed by the public counsel. The factors that cause attrition are many. Some causes of attrition are not easily manipulated or controlled by the utility, for example, inflation. But corporate inefficiency, overspending, and many other factors strictly within management control can also cause attrition.
*162It is my opinion, therefore, that a separate attrition adjustment in the absence of compelling evidence to the contrary is unwarranted. Rather, when because of attrition a company’s profits erode to a level management feels is unacceptable, the company can file a rate increase request. Our continued use of a historical test year, coupled with a thorough and comprehensive examination of every facet of a company’s operations during the process of a rate case, is the best protection for ratepayers and for utilities.
In times of high inflation, rate cases may come much more frequently than we would like, but frequent rate cases are, I believe, less undesirable than granting huge rate increases based on speculative information.