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Citizens of the State of Florida v. Lila A. Jaber


CHIEF JUSTICE: NEXT CASE ON THE DOCKET IS CITIZENS VERSUS JAHER.

GOOD MORNING. MAY IT PLEASE THE COURT. I AM JOHN ROGER HOWELL, APPEARING ON BEHALF OF THE APPELLANTS. 302-1199 APPROVED MOST ASPECTS OF A PROPOSAL BY FLORIDA'S THREE LARGEST ELECTRIC UTILITIES TO TRANSFER OPERATIONAL CONTROL OF A MAJORITY PORTION OF THE STATE'S ELECTRICAL GRID.

DO YOU AGREE THAT THAT ORDER WAS NOT APPEALED AND THE VALIDITY OF THAT ORDER IS NOT BEFORE US TODAY?

NO, I DO NOT.

WELL, COULD YOU EXPLAIN THE TIME, THE ISSUE ABOUT WHEN THAT ORDER WAS ISSUED ISSUED AND WHEN, VIS-A-VIS THIS PARTICULAR APPEAL.

YES.

AND I GUESS MY CONCERN, LOOKING AT THE POINTS THAT YOU HAVE RAISED ON APPEAL, IT WOULD APPEAR TO ME THAT 02-199 WAS FINAL, AND THEN AS TO THE SECOND ORDER, THERE APPEARS TO BE SEVERAL ASPECTS OF THOSE ORDERS THAT ARE NOT YET, ARE ONLY PROPOSED AGENCY ACTIONS.

THAT'S CORRECT.

SO TRYING TO UNDERSTAND-.

MRS. PARIENTE, IT WAS ORDER 01-249 THAT WAS THE FIRST ORDER. 02-199 IS THAT ORDER THAT CONTAINS MANY FINAL DECISIONS BY THE PSC BUT ALSO INCLUDES CERTAIN PROPOSED AGENCY ACTIONS, SO WHAT WE ARE APPEALING IS THOSE FINAL ACTION PASS IN ORDER 1199 THAT AUTHORIZED THE TRANSFER.

THE PRIOR ORDER IS NOT BEFORE US, CORRECT?

THAT'S CORRECT. BUT PERHAPS TO ILLUSTRATE THE PROBLEMS WITH THIS APPEAL AND WITH THE PSC'S MANNER OF MAKING DECISIONS, IN THE FIRST ORDER, THE UTILITIES RESPONDED TO THE FEDERAL ENERGY REGULATORY COMMISSION'S ORDER NUMBER 2000, BY VOLUNTARILY, AND I EMPHASIZE THE WORD "VOLUNTARILY", PROPOSING TO TURN THEIR TRANSMISSION ASSETS OVER TO A PENINSULA FLORIDA RTO, TO BE KNOWN AS DPRID THAT. -- AS GRAD FLORIDA. THE COMPANIES FILED -- AS GridFLORIDA. THE COMPANIES FILED THAT JUST TWO AND-A-HALF WEEKS AFTER THE COURT DENIED THE CASE OF TAMPA ELECTRIC VERSUS GARCIA, AND IN THAT CASE, THE COURT AGREED WITH COMPANIES THAT IN SPITE OF RECENT FEDERAL LEGISLATION AND FERC INITIATIVES, THE LEGISLATURE IN THE STATE OF FLORIDA HAD NOT CHANGED THE MANNER IN WHICH NEED DETERMINATIONS WERE AWARDED, IN ORDER TO RECOGNIZE THE CHANGE IN THE WAY WHOLESALE POWER IS PROVIDED.

LET ME ASK YOU THIS, NOW, THESE RTO'S ARE REALLY A CREATURE OF THE FEDERAL ENERGY REGULATORY COMMISSION, CORRECT?

THAT'S CORRECT.

AND IN THIS CASE, THE FEDERAL COMMISSION GAVE PROVISIONAL APPROVAL, I GUESS, TO FORM ONE OF THESE RTO'S.

THAEMPBLTH.

HOW DOES A PSC ACTUALLY FIT INTO THAT, SINCE IT IS A FEDERAL REGULATORY SCHEME?

WELL, IT IS NOT A REGULATORY SCHEME, OTHER THAN THE FACT THAT IT WAS AN ORDER ASKING FOR VOLUNTARY PRARTS IT WAS NOT A FEDERAL -- PARTICIPATION. IT WAS NOT A FEDERAL SCHEME, IN THE SENSE THAT IT ORDERED THE COMPANIES TO DO ANYTHING.

RIGHT. BUT AS I UNDERSTAND IT, THERE COULD BE AN ORDER DOWN THE ROAD, IF THESE THINGS ARE NOT ACTUALLY VOLUNTARILY DONE.

IT COULD BE, AND PERHAPS I CAN CLARIFY THAT BY STATING HOW THE COMPANIES FILED WITH THE PSC. IN THEIR PETITIONS FILED WITH THE PSC IN JUNE 2001, THE COMPANIES ASKED THE PSC TO FIND THEIR RESPONSE TO THE FEDERAL COMMISSION, WAS PRUDENT, AND THEY ASKED THAT THE COMMISSION FIND IT PRUDENT, NOT BASED ON FLORIDA LAW BUT, AND I THINK I CAN QUOTE THIS CORRECTLY, GIVEN THE PARAMETERS ESTABLISHED BY THE FERC IN ITS ORDER NUMBER 2000. THE COMPANIES ALSO SAID, IN THEIR PETITIONS, AND BY THE WAY THE PETITIONS WERE VIRTUALLY IDENTICAL, THE COMPANIES SAID, I BELIEVE IT WAS AT PAGE 5 OF THE PETITIONS, THAT A PSC BINDING OF PRUDENCE WAS A NECESSARY PREREQUISITE TO THE COMPANY'S GOING FORWARD IN FLORIDA FORMATION.

DOES THE FEDERAL ORDER ALLOWING THIS SAY THAT THE PSC HAS TO GIVE A PRUDENT APPROVAL OF IT?

IT IS NOT MANDATORY, BUT IN THE VERY NATURE OF THE FERC'S ORDER 2000, THE FACT THAT IT WAS VOLUNTARY WAS STATED BY FERC TO BE THAT WAY, BECAUSE THEY REALIZED THAT THERE WAS THE POSSIBILITY FOR SIGNIFICANT JURISDICTIONAL CONFLICT BETWEEN THE FEDERAL GOVERNMENT AND THE STATES. THE COMPANIES RECOGNIZED THAT THEY HAD TO HAVE THE APPROVAL OF THE PSC, BECAUSE THEY ARE NECESSARILY ASKING THE PSC TO AUTHORIZE THE COLLECTION OF SIGNIFICANTLY INCREASED RATES FROM THE RETAIL JURISDICTION, FOR THE INCREASED COSTS CAUSED BY THE RTO. SO THE PSC, IN ITS FIRST ORDER, ANNOUNCED THE POLICY OF, AND THIS IS THE ORDER 01-2489, ANNOUNCED A POLICY OF THE POLICY IN GENERAL AND IN SUPPORT OF WHOLESALE COMP PHYSICIAN, BUT THE -- COMPETITION, BUT THE PSC SAID IT COULD NOT APPROVE THE GRID PANEL BEFORE, IT BECAUSE IT SAID THAT THAT MIGHT CAUSE A TRANSFER OF JURISDICTION FROM THE FLORIDA PSC TO THE FEDERAL COMMISSION. THE IMPORTANT POINT HERE IS THAT THE PSC RECOGNIZED THAT THE COMPANIES WERE ASKING FOR AN ORDER THAT WOULD HAVE THE EFFECT OF REDUCING THE PSC'S AND BY IMPLICATION, THE FLORIDA LEGISLATURE'S ABILITY TO REGULATE THE COMPANIES IN THE FUTURE. THE COMPANIES DID NOT APPEAL THAT DECISION. THE PSC'S DECISION TO REJECT THE PROPOSAL THEY SUBMITED TO FERC.

WE ARE STILL BACK AT THE FIRST ORDER.

THE FIRST ORDER. AND THAT COULD HAVE, AND I BELIEVE IT SHOULD HAVE BEEN THE END OF THE MATTER. HOWEVER, THE PSC THEN TOOK THE INITIATIVE AND DIRECTED THE COMPANIES TO COME BACK WITHIN 90 DAYS WITH AN ALTERNATIVE PLAN.

AT THAT POINT, IF YOU BELIEVE THAT THAT SHOULD HAVE BEEN THE END OF THE MATTER, SHOULDN'T YOU HAVE APPEALED THAT PORTION OF THE PSC'S ORDER WHICH TOLD THEM TO COME BACK WITH THE TRANCO TYPES OF RTO'S ARE SOMETHING? ANOTHER FIRST ONE WAS A TRANSCO AND THE SECOND ONE WAS NOTHING. THE ANSWER WAS NOT. IN THE ONLY DECISION THAT THE PSC MADE THAT WAS FINAL, WAS REALLY TO REJECT THE TRANSCO PROPOSAL AND THAT ONLY ADVERSELY ANN AFFECTED THE UTILITIES. THE -- AND THAT ONLY ADVERSELY AFFECTED THE UTILITIES. THE CUSTOMERS WERE NOT AFFECTED BY THE COMPANIES BEING TOLD TO COME BACK. WHETHER OR NOT THE CUSTOMERS WOULD BE ADVERSELY AFFECTED WOULD BE REMOTE AND SPECULATIVE, AND IN FACT IT WOULD STILL BE REMOTE AND SPECULATIVE, IN THE SENSE THAT THE COMPANIES HAVE STILL NOT PROPOSED TO THE COMMISSION'S ORDER. IN 401-209 ORDER, THE COMMISSION TOLD THE COMPANIES TO COME BACK IN 90 DAYS WITH AN ALTERNATIVE PLAN WITH GridFLORIDA STRUCTURE AS A SYSTEM OPERATOR, AN ISO, WITH THE EXPECTATION OF THE ISO SUBJECT TO THE GRID JURISDICTION AND THAT THE PSC WOULD MAINTAIN RATE-MAKING JURISDICTION OVER THE BUN HE WOULD -- OVER THE BUNDLED RETAIL RATES. THE COMPANIES CAME BACK IN 90 DAYS WITH A PROPOSAL THAT DID JUST OPPOSITE. THEY STRUCTURED GridFLORIDA IN SUCH AWAY THAT IT COULD NOT MEET THE DEFINITION OF A UTILITY, UNDER SECTION 366.02 SUB-2, AND COULD NOT, AS UP SUCH, BE SUBJECT TO THE PSC'S JURISDICTION.

HAS THAT PROPOSAL BEEN PROPOSED TO THE PSC?

YES. IN THEIR PROPOSE -- IN THEIR ORDER THEY MAKE A SPECIFIC FINDING THAT GridFLORIDA WILL BE AN ELECTRIC UTILITY, SUBJECT TO THEIR JURISDICTION.

THAT IS THE PART YOU ARE APPEALING.

YES. THAT IS PART OF IT, AND I THINK THAT THE COMMISSION, THE COMPANIES AND MORRANT AND CALPINE CONCEDE THE PSC'S ERROR BY IGNORING THE TOPIC IN THEIR ANSWER BRIEFS FORM THE PSC WILL HAVE NO GRID BUILDING JURISDICTION OVER GridFLORIDA, AS STRUCTURED BY THE COMPANIES. ON THE SUBJECT OF RATES, THE COMMISSION TOLD THEM TO COME BACK WITH A PLAN WHERE THE PSC WOULD HAVE RATE MAKING JURISDICTION.

I GUESS YOU HAVE KIND OF LOST ME, BECAUSE I THOUGHT THAT, WHEN YOU HAVE THE ISO'S OR TRANSCO'S OR WHATEVER KIND OF RTO YOU SET UP, THAT THAT, THEN, IS REGULATED BY THE FEDERAL ENERGY COMMISSION, REGULATORY COMMISSION, AND THAT ONLY THE RETAIL PORTION OF THAT IS REGULATED BY THE PSC, AND JUST KIND OF HELP ME ALONG HERE, WHERE THAT KIND OF BREAKS DOWN.

I WOULD HAVE TO SAY THAT THAT ORDER, FROM THE COMMISSION'S MEETING, WAS ILLOGICAL, FERC, IN ITS ORDER 2000, STATED THE CHARACTERISTICS THE RTO MUST HAVE AND THE FUNCTION IT MUST PERFORM, SO TWO OF THOSE FUNCTION THAT IS FERC SPECIFIED WERE, ONE THAT, THE RTO MUST BE ABLE TO ADMINISTER ITS OWN TARIFF UNDER FERC APPROVED RATES, FOR BOTH WHOLESALE AND RETAIL PURPOSES, AND THE RTO MUST BE RESPONSIBLE FOR PLANNING THE EXPANSION AND SO FORTH OF THE TRANSMISSION GRID, ESSENTIALLY THE GRID BUILDING JURISDICTION, SO WHAT THE PSC DID WAS TELL THE COMPANIES TO COME BACK IN 90 DAYS WITH A PLAN THAT TRANSFERRED THE PSC'S JURISDICTION TO FERC BUT LEFT IT AT THE PSC, SO THAT IS PROBABLY THE REASON WHY THE COMPANIES CAME FORTH WITH A PLAN THAT DID NOT MEET THE SPECIFICATIONS OF ORDER NUMBER 01-2489, AND WHY THEY WERE UNABLE TO SATISFY THE PSC'S ORDER.

BECAUSE IF YOU FOLLOW, LET ME SEE IF I AM FOLLOWING YOU, BECAUSE IF YOU FOLLOW THE ORDER OF THE FEDERAL REGULATORY COMMISSION, THEN YOU ARE AUTOMATICALLY GIVING THE JURISDICTION OF THE PSC TO THE FEDERAL COMMISSION?

YES BUT NOT TO REVIEW ITS ORDER. BY THAT, THE PSC TOLD THE COMPANIES TO FIGURE OUT AWAY TO FORM A RTO THAT LEAVES GRID BUILD JURISDICTION WITH THE PSC AND LEAVES THE PSC WITH RATE MAKING JURISDICTION OVER THE RETAIL COMPONENT OF BUNDLED RATES AND THE COMPANIES HAVE JUST BEEN UNABLE TO DO THAT. WHAT IS VERY UNUSUAL IS, ON ITS FACE, THE COMPANIES CONCEDE THEY HAVE NOT COMPLIED WITH THE COMMISSION'S PRIOR ORDER. ON ITS FACE, ON THE FACE OF THEIR ISO PROPOSAL, THE INDEPENDENT SYSTEM OPERATOR, THE COMPANIES STATE THAT THEY HAVE STRUCTURED GridFLORIDA IN SUCH AWAY THAT IT COULD NOT BE AN ELECTRIC UTILITY. ON THE FACE OF THEIR ISO PLAN, THEY STATE THAT THEY HAVE COMMITTED TO TAKE AND TO PAY FOR, ALL TRANSMISSION SERVICE, BOTH WHOLESALE AND RETAIL, AT FERC APPROVED RATES. WE STATED IN OUR REPLY BRIEF IS ONE OF THE ENDURING MYSTERIES OF THIS CASE IS HOW THE PSC COULD HAVE, IN ITS ORDER 02-1199, APPROVED SO MANY ASPECTS OF ACCOMPANY'S PLANS TO FORM AN ISO, EVEN AS THE PSC, ITSELF, RECOGNIZED THAT THE COMPANIES HAD NOT PROVIDED WHAT THEY WERE ORDERED TO FILE.

WELL, IN THE ORDER THAT THE 2002 ORDER, FROM PSC, THEY LEAVE OPEN THE QUESTION OF HAVING A FORMAL HEARING ON, ARE THOSE ISSUES STILL OPEN FOR FORMAL HEARING?

NO, MA'AM. WHAT THE COMMISSION DID IS, FOR MOST OF THE PROVISIONS OF THE COMPANY'S ISO PLAN, THEY APPROVED THOSE AS FINAL AGENCY ACTION. APPROXIMATELY NINE ITEMS, THEY SET AS PROPOSED AGENCY ACTIONS, SUBJECT TO HEARING, AND ONE ITEM, THE MARKET DESIGN PROPOSAL, THEY SET FOR A FUTURE HEARING, SO THOSE ASPECTS OF THIS NONCONFORMING PLAN THAT THE COMPANY SUBMITTED, HAVE BEEN APPROVED BY FINAL AGENCY ACTION IN THE FINAL ORDER, IN 02-289, AND WE DON'T BELIEVE THEY HAVE THE AUTHORITY FOR THE FINAL SAY IN THESE THINGS. THE COMPANY SAID THAT THE PSC FINDING OF PRUDENCE FOR THE UTILITIES, WAS A NECESSARY PREREQUISITE FOR THEM TO GO FORWARD WITH GridFLORIDA DEVELOPMENT, SO THE ISSUE HERE IS WHETHER THE PSC CAN ISSUE AN ORDER APPROVEING THE TRANSFER OF THE STATE'S TRANSMISSION TO AN ENTITY UNDER THE FEDERAL REGULATORY COMMISSION, WITHOUT FIRST RECEIVING GUIDANCE FROM THE FLORIDA LEGISLATURE.

LET'S GO BACK TO THAT FOR JUST ONE MOMENT, IF WE MAY. CERTAINLY YOU PREFACED YOUR ENTIRE REMARKS BY OUR GARCIA DECISION, AND THE RAMIFICATIONS, POSSIBLY FLOWING FROM THAT DECISION. BUT WE, ALSO, SEE THAT THERE HAS BEEN NO LEGISLATIVE ACTION, AND WE HAVE NO STATUTES TO FOLLOW. SO WHAT DOES ONE DO, IN THE TO GET ABSENCE, AND APPARENTLY WILL A LEGISLATIVE BODY EVEN ACT? WHAT HAPPENS TO THOSE THAT NEED TO TAKE THESE STEPS NOW OR ARE APPROACHING A MANDATORY KIND OF SITUATION? HOW IS THAT FACTORED INTO THIS KIND OF EQUATION FOR A RESOLUTION OF THIS PROBLEM, WITH THE EVENTUALITY THAT THERE IS NOT GOING TO BE ANYMORE LEGISLATION?

TO ANSWER THE LAST PART OF YOUR QUESTION FIRST, THE, THERE NEEDS TO BE LEGISLATION. IN THE ABSENCE OF LEGISLATION, THE REASONABLE EXPECTATION IS THAT THE PSC WILL REGULATE FLORIDA'S UTILITIES, AS IT HUSHAAS DONE HISTORICALLY -- AS IT HAS DONE HISTORICALLY,% UNIT TO FLORIDA LAW. THIS COURT SAID THAT EXPRESS STATUTORY CRITERIA ARE NECESSARY, BEFORE THE PSC CAN BE ALLOWED TO CONSIDER THE ADVENT OF THE COMPETITIVE WHOLESALE POWER MARKET BEING PROMOTED BY FEDERAL INITIATIVES.

SO THE PONCE IS THAT WE MUST JUST HOLD A STATUS QUO UNTIL THE LEGISLATION.

THAT'S CORRECT.

AND IF THERE IS NONE, THEN WHAT HAPPENS TO THE RTO CONCEPT AND THE GRIDS THAT MUST BE COMPLETED? WHAT HAPPENS THEN?

I WOULD SUGGEST THAT IT GOES AWAY. JUSTICE LEWIS, TODAY UTILITIES ARE PROVIDING AN ELECTRIC SERVICE AS THEY HAVE DONE FOR MANY YEARS AND AS THEY WILL CONTINUE TO DO IN THE FUTURE. THERE IS ALWAYS THE POSSIBILITY THAT THE CONGRESS OR FERC, THROUGH SOME MECHANISM, COULD ATTEMPT TO PRESENT -- TO ATTEMPT TO PREEMPT THE STATE'S JURISDICTION, BUT THAT HAS NOT HAPPENED. IN THE ABSENCE OF AN EVENT OF THAT TYPE, THE REASONABLE EXPECTATION IS THAT THE PSC WILL REGULATE AS IT HAS ALWAYS DONE.

SO YOU DON'T THINK ANY MONIES SHOULD BE, BASICALLY THE BOTTOM LINE IS YOU THINK THAT THE, BECAUSE PSC DOESN'T REALLY HAVE ANY JURISDICTION OVER THIS, THAT NO MONIES COULD BE AUTHORIZED TO BE SPENT THAT WOULD BE CHARGED BACK TO THE RATE PAYERS, FOR THE DEVELOPMENT OF GridFLORIDA?

THAT'S CORRECT. THE UTILITIES CAN AVOID THAT ADDITIONAL EXPENSE, WHICH IS CURRENTLY ESTIMATED TO BE APPROXIMATELY $1.5 BILLION OVER THE NEXT FIVE YEARS, BY MAINTAINING THE STATUS QUO AND PROVIDING THE ELECTRIC SERVICES AS THEY ALWAYS HAVE.

DOES THE PSC FALL UNDER THE JURISDICTIONAL OR RATES SERVICES BY PROVIDING THAT ELECTRIC SERVICE?

I LOOK -- I BELIEVE IT DOES. BEFORE A PLANT COULD BE BUILT IN FLORIDA, THEY HAD TO GO TO THE PSC, EVEN THOUGH THE PSC HAD NO ALTERNATIVE UNDER THAT STATUTE, BUT TO DENY THE REQUEST. I THINK IN THIS CIRCUMSTANCE, THE COMPANIES' RELIEF WOULD HAVE THE EFFECT OF TERMS AND CONDITIONS OF SERVICE THAT, THE PSC IS THE PROPER BODY TO EVALUATE THE COMPANY'S PROPOSAL. HOWEVER, THE PSC HAS NO JURISDICTION, JUST LIKE IT HAS NO JURISDICTION IN TAMPA ELECTRIC VERSUS GARCIA, TO GIVE THE COMPANIES WHAT THEY ARE ASKING FOR.

THE MARSHAL HAS REMINDED YOU OF YOUR REBUTTAL TIME, SO IF YOU PAUSE AT THIS TIME, YOU CAN SAVE SOME OF THAT. GOOD MORNING.

GOOD MORNING. MAY IT PLEASE THE COURT. I AM CHRISTIANA MOORE REPRESENTING THE PUBLIC SERVICE COMMISSION, AND WITH ME IS DAVID SMITH, AND I WILL BE PRESENTING THE ARGUMENT OF THE APPELLEES.

WOULD YOU START WITH WHY THE LAST RESPONSE IN THE SERIES OF QUESTIONS THAT YOUR OPPONENT HAS PRO POUNDED OR HAS PROVIDED US IS INCORRECT ANALYSIS HERE.

YES. I WOULD. THE PUBLIC SERVICE COMMISSION HAS, AS JUSTICE CANTERO MENTIONED, THE BROAD AUTHORITY AND THE DUTY TO REGULATE AND SPECIFIES ANY ACTIVITIES OF THE UTILITIES THAT HAVE AN IMPACT ON RATES AND SERVICE. PUBLIC COUNSEL'S PREMISES IS THAT IT WILL HAVE AN IMPACT ON RATES AND SERVICE, AND THUS THE COMMISSION, OF COURSE, HAS THE AUTHORITY TO LOOK AT THAT. IT, ALSO, HAS THE AUTHORITY TO LOOK AT THE PRUDENCE OF THE UTILITIES ACTION, AND IT HAS THE DISCRETION TO DETERMINE WHEN IT WILL DO THAT. I THINK YOU HAVE TO RECOGNIZE THAT THIS IS THE INITIATIVE OF FERC, AND YOU HAVE TO VIEW THE COMMISSION'S ACTIVITIES IN THAT CONTEXT. FERC HAS ANNOUNCED THIS INITIATIVE AND IT HAS PROCEEDED WITH IT. I THINK IT WOULD BE FOOL HARDEE -- FOOLHARDY FOR THE COMMISSION FOR THE COMMISSION AND COUNTERPRODUCTIVE FOR IT TO IGNORE THAT, THESE ACTIVITIES OF FERC ARE AFFECTING THE YOUTHIMENTS AND HAVE THE POTENTIAL -- THE UTILITIES AND HAVE THE POTENTIAL, YOU HAVE GOT TO REMEMBER THIS IS A PROPOSAL.

IF, IN FACT, THE, YOU DON'T HAVE ANY JURISDICTION OVER GridFLORIDA, ISN'T THIS SOMEWHAT SIMILAR TO THE TAMPA ELECTRIC CASE, AS FAR AS WHY SHOULD THE RATE PAYERS OF 6 FLORIDA -- THE RATE PAYERS OF FLORIDA HAVE THE POTENTIAL FOR THEIR UTILITIES GOING UP FOR SOMETHING THAT MAY BE PROVEN NOT TO EVEN HAVE BEEN NECESSARY TO BE DONE, AND HOW IS THE PSC'S JURISDICTION, EVEN TO APPROVE OR DISAPPROVE THAT?

FIRST, YOUR HONOR, I WOULD NOT CONCEDE AT ALL THAT WE ARE GIVING UP ANY AUTHORITY OVER GridFLORIDA. WHAT THE COMMISSION IS TRYING TO DO IS MAINTAIN ITS AUTHORITY. AND IF IT DOESN'T ATTRIBUTE THE PROPOSAL TO FERC, THEN IT DOESN'T AGREE AT ALL. I THINK THAT IS WHY THE COMMISSION HAS TO BE INVOLVED. AS FAR AS THE DUKE CASE GOES, THAT WAS LIMITED, I THINK YOU EXPLAINED IN THE PANDA CASE FOLLOWING THAT, THAT IS LIMITED TO AN INTERPRETATION OF CHAPTER 403 AND DETERMINING WHETHER AN UNREGULATED ENTITY IS ENTITLED TO DETERMINE THE DETERMINATION OF NEED IN REGARD TO THE PLANT SITING STATUTE.

BUT AS WE LOOK AT THIS ENTIRE SCHEME, DO YOU AGREE THAT WE DON'T EVEN HAVE A DEFINITIONAL PATTERN, A WORKING ARRANGEMENT THAT CONTEMPLATES THIS TYPE OF THING IN IN THE FLORIDA STATUTES?

NO, BUT WHAT WE DO HAVE THE PERMISSION TO SPECIFIES THE RATES AND SERVICE -- TO SUPERVISE THE RATES AND SERVICE AND APPLY THE GRID. I DON'T THINK THERE IS ANYTHING IN THE STATUTE THAT SAYS THE COMMISSION SHOULD NOT SUPERVISE AND REGULATE ACTIVITIES THAT IMPACT RATES AND SERVICE, BECAUSE COMPETITION MAY BENEFIT, OR THAT THE GRID BILL AUTHORITY IS LIMITED TO ACTIVITIES THAT ARE SOLELY NONCOMPETENTTIVES. -- NONCOMPETITIVE.

CAN YOU GIVE US A CHRONOLOGICAL SKETCH AS TO HOW WE ENDED UP HERE, IN THIS COURTROOM TODAY. HOW DID THAUL ALL OF THIS GET START -- HOW DID ALL OF THIS GET STARTED?

IN 1996, IN THE ORDER 888, ORDER OPENING ACCESS TRANSMISSION REQUIREMENT THE PUBLIC UTILITIES, TO MAKE THEIR TRANSMISSION FACILITIES AVAILABLE TO OTHER UTILITIES AND NONUTILITIES. AND THEN, IN 1999, THERE WAS ORDER 2000, ORDERING THE UTILITIES TO EITHER FILE A PLAN, A PROPOSAL FOR A RTO OR TO EXPLAIN WHY THEY WERE HAMPERED AND WHY THEY COULD NOT. FLORIDA'S UTILITIES FORMED A R ON TO THAT WAS THEN AT TRANSCOAND AT LEAST TWO OF -- AT TRANSCO, AND AT LEAST TWO OF THE UTILITIES SUBMITTED THAT PLAN TO FERC AND WERE PROVISIONALLY APPROVED. SUBSEQUENT TO THAT OR ABOUT, DURING, ABOUT THE SAME TIME, I GUESS, THE COMMISSION WAS LOOKING INTO OVEREARNINGS OF FLORIDA POWER CORPS AND FLORIDA POWER & LIGHT, AND AS PART OF THEIR RATE CASE, THEY REALIZED THAT THE RTO ACTIVITIES MIGHT WE WILL HAVE AN IMPACT ON THE RATES AND SERVICES OF THE UTILITY, AND SO THE COMMISSION DECIDED, BASED ON STAFF RECOMMENDATION, TO GET, FOR THE UTILITIES TO BRING THAT IN AND REVIEW THEIR RTO EXPENDITURES AND THEIR MINIMUM FILING REQUIREMENTS, SO THE COMMISSION COULD REVIEW NOT ONLY THE PRUDENCE BUT, ALSO, THE RATE IMPACTS FOR THE FUTURE. SO THAT IS HOW IT STARTED, YOUR HONOR.

THE COMMISSION IS BASICALLY TELLING THE UTILITIES TO TELL US WHAT YOU HAVE DONE.

THAT'S CORRECT.

SO FAR. AND GIVE US HARD INFORMATION AND HARD NUMBERS ABOUT WHAT YOU HAVE DONE.

THAT'S CORRECT. BECAUSE OF ITS CONCERN FOR THE IMPACT ON THE RATE PAYERS.

WHAT OFFICIAL ACTION HAS THE COMMISSION TAKEN, IN TERMS OF PLAYING A ROLE, THEN, IN WHAT STARTED OUT AS A FERC DIRECTIVE HERE?

FOR NOW IT IS IN THE RECORD. THE PUBLIC SERVICE COMMISSION IS A PARTY AT FERC AND IS FILING COMMENTS AND IS INVOLVED IN THE RATE MAKING OR EXCUSE ME, THE RULE-MAKING THERE. AND THE FERC HAS NOT DECIDED FINALLY, WHAT IT IS GOING TO DO. IT IS STILL PROMULGATING RUSE, SO IT IS VERY MUCH AN UNSETTLED SITUATION. AND THERE IS, ALSO, FEDERAL LEGISLATION. IN THE WORKS TOO, SO NO ONE IS QUITE SURE HOW THIS WILL ALL COME OUT, AND I DO REALLY WANT TO EMPHASIZE, THOUGH, THAT AT THIS POINT, IT IS ONLY A PROPOSAL. A PROPOSAL BY THE UTILITIES TO A FEDERAL AGENCY, AND IT WILL NOT TAKE EFFECT, AND THERE WILL BE NO RTO, UNTIL --

IS THE PSC, I JUST WANT TO MAKE SURE, ARE YOU ASKING US TO DISMISS THIS APPEAL OR TO APPROVE WHAT? THERE WAS LANGUAGE TO DISMISS BUT THERE WAS NEVER A DISMISS FILED. WHAT IS THE REQUEST OF THE PSC?

THAT YOU DISMISS THE APPEAL. WE DIDN'T FILE A MOTION TO DISMISS, BECAUSE WE DIDN'T KNOW PRECISELY WHAT ISSUES PUBLIC COUNSEL WOULD RAISE, BUT THERE ARE SOME ACTIONS TAKEN BY THE COMMISSION IN THIS ORDER THAT ARE FINAL. I DON'T THINK THERE IS ANY ACTIONS THAT PUBLIC COUNSEL IS CHALLENGING, BUT EVEN SO, I DON'T THINK THOSE ACTIONS WILL ADVERSELY AFFECT THE CUSTOMERS.

NORMALLY, WHEN YOU HAVE A TRIAL COURT'S ORDER THAT THERE IS FINAL PORTIONS AND NONFINAL PORTIONS, YOU WAIT UNTIL EVERYTHING IS FINAL, TO APPEAL IT. YOU DON'T DO IT PIECEMEAL. IS THE PSC SUGGESTING THAT CERTAIN PORTIONS OF WHAT IT DID IS FINAL THAT, THIS COURT SHOULD JUST LOOK AT EACH, ASSUMING THAT THE PUBLIC COUNSEL IS REPRESENTING THAT THERE IS, YOU KNOW, ADVERSELY AFFECTED BY IT, THAT WE SHOULD LOOK AND PROVE TWO PARAGRAPHS OF THE ORDER AND JUST SAY THE OTHER ONES ARE STILL NONFINAL. IS THAT, HAVE WE EVER ADDRESSED THAT ISSUE ABOUT HOW WE, YOU KNOW, LOOK ADOREDERS TO THE PSC?

NOT THAT I AM AWARE OF. TYPICALLY, THE COURT DOESN'T ENGAGE IN PIECEMEAL REVIEW. I CAN THIS IS -- I THINK THIS IS SOMEWHAT DIFFERENT, BECAUSE IT IS A PROPOSAL IN PRAGUE DEGREES THAT, AND I DON'T THINK AT ANY POINT THAT IT CAN ADVERSELY AFFECT,, BUT AT LEAST I THINK THE COURT SHOULD WAIT.

IF THE COURT DECIDES, ARE YOU SAYING THAT THE ISSUE OF THE EXPENDITURE OF, YOU KNOW, BILLIONS OF DOLLARS HAS NOT HAPPENED OR IS NOT GOING TO HAPPEN FOR THE FORESEEABLE FUTURE, IN TERMS OF THE FORMATION OF GridFLORIDA?

THERE --

BY THE UTILITIES. THE EXPENDITURE OF MONEY TO FORM THIS --.

THERE WAS THE $8 MILLION IN THE FIRST ORDER, AND THAT WAS START UP EXPENDITURES TO FORM. THE ONGOING COSTS, I THINK ONE THING THAT PUBLIC COUNSEL CHALLENGES AND CLAIMS TAKE THERE HAS BEEN -- AND CLAIMS THAT THERE HAS BEEN $1.1 BILLION APPROVED, IN TERMS OF THE ADDITIONAL COSTS OF HAVING A RTO, AND THE COMMISSION HAS NOT APPROVED THAT. IN FACT, IT ONLY APPROVED THE COST RECOVERY METHODOLOGY. IT IS HOW THE UTILITIES CAN COME IN AND SEEK RECOVERY, THROUGH, AND THE CHOICE BASICALLY IS THROUGH A RATE CASE OR A COST RECOVERY CLAUSE. THAT WAS PROPOSED ACTION.

WHEN, EXACTLY, WOULD THESE THINGS BE RIPE FOR REVIEW? WHEN WOULD ALL OF THE AGENCY ACTION BE FINAL? DO WE HAVE TO WAIT FOR FURTHER APPROVAL OF, BY THE FERC, OR, IF YOU SAY THAT THIS IS SUBJECT TO DISMISSAL, WHEN DOES PUBLIC COUNSEL EVER GET THE OPPORTUNITY, THEN, TO CHALLENGE WHAT THE PSC HAS DONE?

I THINK WHEN THE COMMISSION HAS FINISHED WITH ITS REVIEW, THEN WE WILL KNOW WHAT THE COMMISSION HAS DONE, AND IF PUBLIC COUNSEL IS ADVERSELY AFFECTED, THEN, YES, THAT WOULD BE THE TIME TO APPEAL WHAT THE COMMISSION HAS DONE.

BUT THEN --

I THOUGHT YOU HAD ALREADY TAKEN THE POSITION THAT THEY ARE ALREADY BARRED BY SOME OF THE DECISIONS MADE DURING THIS PROCESS. YOU ARE NOT TAKING THAT POSITION?

I AM, AS FAR AS THE FIRST ORDER, THE DECEMBER '01 ORDER, YES, THEY ARE BOUND BY THAT AND THEY DID APPEAL. AS FAR AS THE SOME OF THE ACTIONS IN HERE, THE COMMISSION --

IS THAT NOT PART OF THE ENTIRE DECISION-MAKING PROCESS IS THAT NOT PART OF IT? WOULD YOUR REASONING NOT APPLY TO THE DETERMINATION THAT THEY CAN DO THE RTO AND USE THE ISO METHODOLOGY HERE?

THAT DECISION WAS MADE AFTER AN EVIDENTIARY HEARING, AND IT WAS FINAL, THE DECISION THAT IT WAS PRUDENT FOR THE UTILITIES TO DO THIS, TO PROPOSE A RTO. BEYOND THAT --

IF THAT IS REVIEWABLE HERE?

NO. THAT DECISION WAS FINAL WITH THE DECEMBER '1ORDER THAT THE COMMISSION --

-- WITH THE DECEMBER '01 ORDER THAT THE COMMISSION --

A DECISION WAS MADE IN THIS PROCESS. SOME ARE FINAL AND SOME ARE NOT, SO HOW DOES THE COURT DETERMINE WHICH ONES ARE FINAL AND WHICH ARE NOT. USUALLY WE HAVE SOMETHING THAT IS A FINAL DETERMINATION. WE DON'T HAVE TO PICK AND CHOOSE AND THE PARTIES CAN DETERMINE WHAT IS A FINAL DETERMINATION.

YES, YOUR HONOR DECIDED THE AUTHORITIES WERE PRUDENT IN APPROVING A RTO, THAT WAS FINAL SEVERAL MONTHS AFTER THE FINAL ORDER WAS ISSUED. THAT IS NOT VALID ANY LONGER. RECEIPT MANDER OF THE DECISIONS -- THE REMAINDER OF THE DECISION THAT IS ARE NOW BEFORE YOU, SOME WERE PROPOSED AS FINAL AND SOME AS PROPOSED AGENCY ACTION. THE PROPOSED AGENCY ACTION ITEMS WERE LISTED ON PAGE 5 OF THE COMMISSION'S '02 ORDER, THAT ORDER THAT IS BEFORE YOU FOR REVIEW, SO WE HAVE THE PRELIMINARY ACTIONS THAT ARE SUBJECT TO PRO TUESDAY TESS AND A HEARING. THOSE -- TO PROTEST AND A HEARING. THOSE ACTIONS, THERE WAS THE COST METHODOLOGY STRUCTURE AND THE PROTEST OF A HEARING THAT COUNSEL DID, IN FACT, ASK FOR A PROTEST HEARING ON. THERE ARE SIX OTHER PROTESTS, ALSO. ALL OF THOSE ARE SCHEDULED FOR HEARING. THEY WON'T BE FINAL, OF COURSE, UNTIL AFTER THE COMMISSION MAKES A DECISION FOLLOWING THE EVIDENTIARY HEARING.

THE QUESTION I HAVE IS BACK TO THIS. IS THIS 80-SOME-ODD PAGE ORDER THAT SAYS ORDER DETERMINING COMPLIANCE AND NOTICE OF PROPOSED AGENCY ACTION. IS IT YOUR POSITION THAT, IF WE DISMISS THIS APPEAL OF THIS ORDER, THAT, ONCE THE PROPOSED AGENCY ACTION BECOMES FINAL THAT, THE PUBLIC COUNSEL WILL, THEN, BE IN A POSITION TO BE ABLE TO APPEAL ALL ASPECTS OF THIS ORDER. SO WE UNDERSTAND, IN OTHER WORDS, NOT THAT THEY WILL SAY THAT THEY SHOULD, ONE THAT WAS FINAL SHOULD HAVE BEEN APPEALED, BUT IS THAT THE PSC'S POSITION?

NO. I DON'T BELIEVE SO, YOUR HONOR. THERE ARE SOME DECISIONS IN THERE THAT THE COMMISSION SAID WERE FINAL. THEY ARE NOT THE ONES THAT PUBLIC COUNSEL IS SEEKING REVIEW OF.

THE ONES THAT ARE NOT PROPOSED AGENCY ACTION.

RIGHT.

THOSE ARE FINAL.

WHAT IS FINAL IS THE PROPOSED AGENCY ACTION OR THE PUBLIC COUNSEL DID NOT COME BACK.

SO PROPOSED AGENCY ACTION?

OR NOT TO BE MODIFIED.

AS FINAL AGENCY,, ONCE YOU HAVE THE FINAL HEARING AND THERE IS AN ORDER ON THAT, WOULD PUBLIC COUNSEL THEN BE ABLE TO APPEAL THAT ORDER?

CERTAINLY. CERTAINLY. THERE IS STILL A NEED TO BE A DETERMINATION OF WHETHER IT COULD ADVERSELY AFFECT THE CUSTOMER.

WHETHER IT WOULD HAVE STANDING, RIGHT?

THAT'S CORRECT. BECAUSE IT SULTLY A PROPOSAL THAT HAS TO BE FINISHED AT THE -- BECAUSE IT IS ULTIMATELY A PROPOSAL THAT HAS TO BE FINISHED AT THE COMMISSION OR AT LEAST UTILITIES SUPPLIED TO FERC AND THEN FERC WILL HAVE APPROVAL OR FERC WILL DECIDE JURISDICTION.

AND THE ORDER AND CONTEMPLATED HEARINGS --

THAT'S CORRECT.

-- AND I THINK THE OFFICE OF PUBLIC COUNSEL FILED SOMETHING, AND THEN FILED A NOTE I OF APPEAL, SO IT ABANDONED WHATEVER IT HAD DONE?

THAT'S CORRECT. THE COMMISSION ALSO SCHEDULED A HEARING ON THOSE ITEMS AND ALSO SCHEDULED A HEARING IN CONJUNCTION WITH THAT, ON SOME OF THE ISSUES THAT IT IS NOT YET ADDRESSED.

AND BECAUSE THE OFFICE OF PUBLIC COUNSEL FILED A NOTICE OF APPEAL, THE THOSE HEARINGS WERE CANCELLED?

YES. THE COMMISSION ANN ABATED THE HEARINGS, PENDING OUTCOME -- THE COMMISSION ABATED THE HEARINGS, PENDING OUTCOME OF THIS APPEAL.

LET ME ASK THE RATIONALE EITHER FROM THE PSC'S POINT OF VIEW OR FROM FERC'S POINT OF VIEW. THE IDEA AS I UNDERSTAND IT WAS THAT THE FEDERAL GOVERNMENT WANTED TO DO SOMETHING THAT WOULD BENEFIT ALL CON SUMMERS -- CONSUMERS, BY MAKING SURE THAT WHOLESALE ENERGY WAS AVAILABLE, WITHOUT THEIR BEING DISCRIMINATION, BASED ON WHO, IF YOU OWNED ALL OF THE POWER AND YOU WERE, THEN, GOING TO SELL IT TO YOURSELF FOR LESS THAN YOU MIGHT SELL IT TO TO OTHER USERS. IS THAT, I MEAN, IS THAT -- IT WAS SUPPOSED TO -- AND I GUESS THE QUESTION I HAVE IS IN GETTING, IN FORMING THESE THINGS, WHY IS IT THAT THIS IS COSTING BILLIONS OF DOLLARS, IN ORDER TO FORM SOMETHING WHICH SOUNDS, TO ME SAY, MORE LIKE SOMETHING THAT WAS TO POOL RESOURCES AND TO COME UP WITH SOME COOPERATIVE SCHEME? IS IT ACTUALLY BUILDING MORE, BUILDING THINGS, OR IS IT JUST FORMING --

NEW YORK CITY YOUR HONOR, AND THAT WAS AN ESTIMATE THAT UTILITIES MADE. IT WASN'T EXAMINED, AND IT, OF COURSE, NOT APPROVED. THERE WILL BE SOME ADDITIONAL COSTS, AND PRESUMABLY BILLINGS NOT TRANSMISSION LINES OR ANYTHING ELSE, BUT ORGANIZATIONAL AND PUTTING TOGETHER THE RTO MANAGEMENT. THE --

IT IS FOR ADMINISTRATIVE-TYPE COSTS, NOT FOR UTILITIES?

THERE WERE CHARGES FOR MANAGEMENT, BUT, YOUR HONOR, THAT, ALTHOUGH THEY ARE CALLED INCREMENTAL COSTS, THEY ARE NOT AT ALL SUBJECT TO RECOVERY UNTIL THEY COME IN, AND WE HAVE NOT WEIGHED OR COMPLETED FIGURING OUT, AND WE WON'T BE ABLE TO FOR A WHILE, WHAT OFFSETTING BENEFITS THERE WILL BE, WHAT REDUCTION AND REDUNDANT MANAGEMENT ACTIVITIES OR OTHER OPERATIONAL COSTS. IT IS ESTIMATED, AND, OF COURSE, ALL OF THIS IS STILL UP IN THE AIR, AND, OF COURSE, THE COMMISSION HASN'T APPROVED THOSE COSTS AND THEY HAVEN'T BEEN INCURRED, EN, THAT THERE WILL BE -- EVEN, THAT THERE WILL BE IMPROVED EFFICIENCYIES AND ECONOMIES.

BUT HOW?

AND ULTIMATELY IT SHOULD BENEFIT.

I GUESS I AM REALLY BASIC HERE, TOO. HOW DO YOU, IF YOU ARE NOT BUILDING ANY KIND OF NEW FACILITIES, NO NEW TRANSMISSION LINES, HOW, HOW DOES THIS HELP ANYTHING? I AM REAL CONFUSED ABOUT HOW IN THE WORLD POOLING THESE PEOPLE TOGETHER AND NOTHING NEW IS BEING ADDED, REALLY, HELPS THE CUSTOMERS AND HELPS TO REDUCE RATES.

WELL, IT IS SUPPOSED TO IMPROVE THE EFFICIENCY AND THE ORGANIZATION, THE COORDINATION THAT SORT OF THING.

BUT CHANGING THE ORGANIZATION IS GOING TO COST THE CONSUMERS THE $1.2 BILLION.

NO. WE HOPE NOT. AND ONCE AGAIN, THAT, THE COMMISSION HASN'T GONT THAT FAR. BUT THAT -- HASN'T GOTTEN THAT FAR. THAT IS MERELY AN ESTIMATE OF COSTS THAT COULD RESULT, LATER, WITHOUT YET MEASURING WHETHER THOSE WILL BE, THOSE COSTS WILL BE OFFSET BY ELIMINATING OTHER FUNCTIONS, THE UTILITIES PRESUMABLY WON'T HAVE TO BE, THEY WON'T BE THE DUPLICATION.

MY UNDERSTANDING IS THAT THIS IS SOMETHING THAT IS COMING FROM ON HIGH, FROM FERC, AND THEY ARE SAYING, LOOK, YOU CAN DO THIS VOLUNTARILY NOW OR YOU CAN DO IT MANDATORY LATER, AND THE COMPANIES WENT TO THE PSC AND SAID, LOOK, WE WOULD RATHER START DOING IT NOW WHEN IT IS VOLUNTARY AND START SETTING THIS UP, AS TO WHAT TO DO AND HOW IT TO DO IT, AND THE PSC DETERMINED THAT, WELL, I THINK IT IS MORE EFFICIENT FOR FLORIDA NOW TO ESTABLISH THIS ON A VOLUNTARY BASIS, WHERE WE CAN DETERMINE TO KEEP THINGS IN PENINSULAR FLORIDA RATHER THAN TO HAVE TO DO IT ON A REGIONAL SOUTHEAST REGION BASIS, AND KEEP MORE OF THE JURISDICTION IN FLORIDA, THEREFORE, SO IT KIND OF APPROVED IN CONCEPT, SOMETHING ON A VOLUNTARY BASIS, WHERE ULTIMATELY IT IS GOING TO HAVE TO DO IT ANYWAY AND MAY BE DICTATED FROM FERC HOW TO DO IT. IS THAT WHAT HAPPENED?

THAT IS PRECISELY THE COMMISSION'S REASONING MUCH. I THINK. AND -- REASONING, I THINK, AND THAT IS MUCH PREFERABLE FOR THE FLORIDA'S PUBLIC SERVICE COMMISSION TO DETERMINE THE PARAMETERS OF THIS, GIVEN THE DECISION THAT IT MADE IN THE FIRST ORDER THAT, IT WAS PRUDENT FOR THE UTILITIES TO DO THIS. AND IN LIGHT OF THE FACTS AND CIRCUMSTANCES, WHAT FERC IS DOING AND WHAT IS BEING DONE ON THE FEDERAL LEVEL, THAT IF WE DON'T WEIGH IN NOW, THEN WE WILL LOSE, WE STAND TO LOSE MORE CONTROL. IF WE WEIGH IN NOW AND SHAPE IT, WE CAN PROTECT, BETTER PROTECT THE INTERESTS OF FLORIDA'S RATE PAYERS, AND THAT IS WHY THE COMMISSION MADE THIS DECISION AND WHY IT CONTINUES. YOUR HONORS, I THINK MY TIME IS UP, BUT I WOULD LIKE TO ASK YOU THAT I THINK IT SHOULD BE DISMISSED. I DON'T THINK AT THIS POINT YOU CAN TELL WHAT HAS BEEN FINISHED AND WHAT THE PROPOSAL WILL LOOK LIKE WHEN IT IS DONE. IN NEITHER CASE DOES IT ADVERSELY AFFECT THE CUSTOMERS AND WE ASK YOU TO CONFIRM IT.

CHIEF JUSTICE: THANK YOU.

JUSTICE CANTERO, TO ANSWER A QUESTION YOU HAD ASKED VERY BRIEFLY, QUICKLY, WE HAVE APPEALED ONLY THOSE FINAL PARTS OF THE COMMISSION'S ORDER. THAT IS ALL THAT WE HAVE APPEALED. MEMBERS OF THE COURT, AT ITS MOST BASIC, THIS CASE IS REALLY VERY SIMPLE. THE PSC IS VOLLEYLY A CREATE YOUR OF -- IS SOLELY A CREATE YOUR OF STATUTE. IT HAS DUTY -- A CREATURE OF STATUTE. THERE ARE CERTAINLY NO STATUTES ON THE BOOKS THAT ALLOW THE FLORIDA PSC TO TELL THESE UTILITIES WHAT KIND OF ISO TO FILE AND THERE ARE NO STATUTES ON THE BOOKS THAT AUTHORIZE THE PSC TO APPROVE AN INDEPENDENT SYSTEM OPERATOR AS A RTO, UNDER FERC'S JURISDICTION.

DOES THAT MEAN, THEN THAT, THEY WOULD JUST GO AHEAD AND DO IT WITHOUT PSC APPROVAL?

NO, JUST DIS -- NO, JUSTICE PARIENTE. AS I STATED EARLIER, THE COMPANIES TOOK THE STANDPOINT FROM THE VERY BEGINNING. THEY ASKED THE PSC TO FIND THAT THEY WERE PRUDENT, GIVEN THE EXPLICIT PARAMETERS OF FERC'S ORDER 2000, AND THEY SAID THEY WOULD NOT GO FORWARD WITHOUT A PSC FINDING OF PRUDENCE.

BUT ONCE THAT ORDER, WITH THAT ORDER, WHICH FOUND IT WAS PRUDENT, AND WAS NOT, IS NOT, WAS NOT APPEALED. I MEAN, THAT IS THE IDEA THAT THEY, THAT THE PSC HAS JURISDICTION TO DO THAT. NOBODY APPEALED AND SAID THEY DIDN'T HAVE JURISDICTION TO TAKE THAT STEP.

OKAY. I HAVE TO ADDRESS THAT IN CONTEST. -- IN CONTEXT. WHAT THE PSC SAID WAS, WE THINK RTO'S ARE A GOOD IDEA, BUT THE ONLY ONE YOU HAVE SHOWN US, WE CANNOT APPROVE, SO YOU HAVE TO VIEW THE PSC'S POLICY PRONOUNCEMENT, IN CONTEXT. THEY REJECTED THE ONLY RTO THEN BEFORE IT, IN ORDER NUMBER 01-2489, BUT AGAIN, AS THIS COURT HAS SAID IN OTHER CASES, LAUDIBLE GOALS, ATTEMPTS TO FACILITATE FEDERAL POLICIES, JURISDICTION BY CONTRACT, NONE OF THEM APPLY.

LET ME ASK, YOU ARE SEEKING AN ORDER FROM THIS COURT, A PROHIBITION, SAYING THAT THE PSC HAS ABSOLUTELY NO ROLE IN THIS PROCESS AND THAT IT HAS ABSOLUTELY NO STATUTORY AUTHORIZATION TO PARTICIPATE IN THIS PROCESS. IS THAT?

I WOULD DISAGREE WITH PART OF THAT.

TELL US WHAT PART OF IT YOU DO AGREE WITH.

MY POSITION IS THAT THE PSC HAS NO JURISDICTION TO AUTHORIZE OR TO ORDER THE COMPANIES TO FORM A RTO. THEY HAVE THE JURISDICTION TO EVALUATE IT. JUST AS THE PSC HAD NO JURISDICTION WHATSOEVER, TO AUTHORIZE THE DUKE ENERGY TO BUILD A MERCHANT PLANT IN FLORIDA.

ASIDE FROM DUKE ENERGY, TELL US IN YOUR VIEW, WHAT JURISDICTION PSC DOES HAVE, ONCE FERC HAS ACTED IN THE WAY THEY HAVE, AND NOW ONCE THE COMPANIES ARE RESPONDING TO THAT, IS IT YOUR POSITION THAT THE PSC HAS ABSOLUTELY NO ROLE IN THAT PROCESS?

I GUESS I WOULD SUGGEST, YES, THAT THE PSC --

LET'S -- IN OTHER WORDS --

YES.

IT IS YOUR POSITION THAT, BECAUSE THERE IS NO STATUTORY AUTHORIZATION, FOR THIS WAY OF DOING BUSINESS IN THE STATE OF FLORIDA, BY THESE UTILITIES, THAT THE PSC HAS ABSOLUTELY NO BUSINESS PLAYING A ROLE IN THIS.

I BELIEVE THEY HAVE A BUSINESS PLAYING A ROLE, AND AGAIN, I MUST REFER YOU BACK TO THE DUKE DECISION. IT WAS PROPER FOR DUKE TO COME TO THE PSC, TO ASK FOR A NEED DETERMINATION. IT IS THE ONLY PLACE THEY COULD GET IT. THE ONLY PLACE THESE UTILITIES CAN GET THE AUTHORITY TO PARTICIPATE IN A RTO IS BY COMING TO THE FLORIDA COMMISSION. BUT THE FLORIDA COMMISSION HAS NO STATUTORY AUTHORITY TO ORDER THE COMPANIES TO FILE A RTO OR TO APPROVE, BY FINAL AGENCY ACTION, A RTO SUBMITTAL THAT ON ITS FACE, DOES NOT COMPLY WITH THE PSC'S PRIOR ORDER! THAT IS WHERE WE ARE HERE TODAY.

WHAT IS THE PRESENT IMPACT OF ANY CUSTOMER OF FLORIDA THAT YOU REPRESENT IN YOUR OFFICE? BY THE ACTIONS OF THE PSC TODAY? ARE STATED --, OR STATED ANOTHER WAY, IF THE APPEAL WAS DISMISSED AS THEY RECOMMEND, WHAT IMPACT, PRACTICALLY, DOES THAT HAVE UPON YOUR CLIENTS?

THE IMPACT WOULD BE TWOFOLD. AN ESTIMATEED $1.1 BILLION INCREASED COSTS BECAUSE THE CUSTOMERS IN FLORIDA WOULD THEN BE SUBJECT TO FERC-APPROVED RATES AS OPPOSED TO PSC-APPROVED RATES. ALSO THE CUSTOMERS WOULD BE SEVERELY ADVERSELY AFFECTED, BECAUSE THE REGULATION OF ELECTRIC UTILITIES IS AN EXERCISE OF THE POLICE POWER FOR THE PROTECTION OF THE PUBLIC HEALTH, SAFETY, AND WELFARE. THE CUSTOMERS HAVE A REASONABLE EXPECTATION OF THE PSC NOT TAKING ANY ACTION, WHICH LESSENS THEIR ABILITY TO REGULATE THESE UTILITIES IN THE PUBLIC INTEREST IN THE FUTURE, SO THE ADVERSE AFFECT IS IMMEDIATE, AND IT COULD PREVENT THE UTILITY FROM PROTECTING THE CUSTOMERS AS AN EXERCISE IN THE POLICE POWER.

BUT THE PSC HASN'T AUTHORIZED A RECOVERY OF THOSE COSTS. THOSE COSTS HAVEN'T EVEN BEEN AUTHORIZED YET, HAVE THEY?

CHIEF JUSTICE ANSTEAD, WE ARE PLAYING A LITTLE BIT OF A WORD GAME, I THINK. WHAT HAS HAPPENED IS THE PSC HAS SAID THEY HAVE NOT APPROVED A METHOD OF COST RECOVERY, SO THE ONLY THING THEY ARE GOING TO HAVE A HEARING ON IS WHAT TYPE OF MECHANISM THE COMPANIES WOULD HAVE TO RECOVER.

SO THEY HAVE APPROVED THE $1., IS IT $1.2 BILLION?

THEY HAVE NOT ADDRESSED IT DIRECTLY. THEY ONLY ADDRESSED --

YOU JUST SAID THAT THE PUBLIC OF FLORIDA WOULD HAVE TO INCUR THIS COST OF $1.2 BILLION.

YES. IT IS AN ESTIMATE, A CURRENT ESTIMATE BY THE COMPANIES OF WHAT THE INCREASED COST TO THE RETAIL JURISDICTION WOULD BE, FOR IMPLEMENTING GridFLORIDA. THE COMMISSION HAS NOT ADDRESSED THE DOLLAR AMOUNT DIRECTLY. WHAT THEY HAVE SAID IS THEY WILL HAVE A HEARING ON THE TYPE OF COST RECOVERY METHOD, BUT THEY ARE NOT HOLDING OUT THE OPPORTUNITY FOR ANYBODY WHO CAN TEST IT, ACTUAL DOLLAR AMOUNT.

IF FERC APPROVED ALL OF THIS, AND IT COST $1.2 BILLION OR WHATEVER, WOULD THE COMPANIES ULTIMATELY BE ABLE TO RECOVER THOSE COSTS, AND WHO WOULD DECIDE WHETHER THEY GOT TO RECOVER THOSE COSTS?

THE PSC. THE PSC WOULD DECIDE. IF FERC APPROVED THE COST, IF THERE WAS SUCH A COST, ON UNDER A FILED RATE DOCTRINE, BUT IN THIS PARTICULAR CIRCUMSTANCE, THOSE COSTS WILL NEVER BE IMPOSED UPON THE CUSTOMER, IF THE PSC DOES NOT APPROVE THE RTO PROPOSED BY THE COMPANIES.

CHIEF JUSTICE: OKAY. WE HAVE GONE WAY OVER THE TIME. WE APPRECIATE YOU ALL RESPONDING TO OUR QUESTIONS AND CONCERNS. THANK YOU ALL VERY MUCH. WE WILL NOW STAND IN RECESS FOR THE COURT'S 15-MINUTE MORNING RECESS.

MARSHAL: PLEASE RISE.