News Analysis — Of all the questions the Florida Supreme Court justices asked last week during 48 minutes of oral arguments in the appeal of a decision placing Vero electric’s territorial rights above Indian River County’s property rights, the most important was never raised.
That question would have been “Why is this issue before us?” and the fact that it was not asked could be a good thing for the county, and potentially for the town of Indian River Shores.
In short, the judges “got it,” their questions revealing they understood the challenge placed before them to hand down an opinion on the merits of the legal arguments, and not sidestep the issue by letting stand the earlier Public Service Commission ruling in favor of Vero electric’s “permanent” territory.
Vero’s attorney Robert Scheffel “Schef” Wright elaborately tried to mystify the panel of justices with how “complex” it all is. But to put it simply, Florida law grants powers to different bodies and agencies.
In this case, those powers are on a collision course as 30-year franchise agreements with Vero electric are now set to expire for Indian River County in March 2017, and even sooner for the Town of Indian River Shores in November 2016.
In this case, the Indian River Board of County Commissioners, under Florida Law, has the right to negotiate franchise agreements with utility providers, and by and through those agreements grant access to publicly owned and maintained rights of ways. The County also has a right to benefit from a “franchise fee” collected by the utility provider to help offset the cost of owning and maintaining the public lands used to support utility lines, pipes, poles and equipment.
The Florida PSC, a body of appointed state officials in Tallahassee, has authority under Florida law to regulate the state’s utilities, to grant and amend territories, in certain cases to regulate rates, and to settle territorial disputes.
Several years ago, after losing patience with soaring electric rates that in 2009 were 58 percent higher than neighboring Florida Power & Light, both the County and the Shores gave the City of Vero Beach formal notice that its franchise to provide electricity would not be renewed.
The goal at the time was to sell Vero electric to FPL, so all of Vero’s 34,000 customers inside and outside the city limits would pay low FPL rates. That effort has failed, but the County and the Shores still do not intend to renew their franchise agreements with Vero.
The County’s legal team saw that state law is very murky when it comes to what happens when a government gets to the end of its franchise agreement with a utility provider and declines to renew the agreement. So the County petitioned the PSC for some answers.
The answers the PSC chose to provide vehemently defended the PSC’s own powers over designating territories, but the PSC’s rulings in two matters did not satisfy the County’s desire for answers related to the question of conflicting powers, and what happens when the franchise agreement expires and the County wants to negotiate with a different service provider.
Of the seven justices, three of them – Justice Peggy Quince, Justice R. Fred Lewis and Justice Barbara Pariente – made the most pertinent comments on the plight of the electric customer living outside the City of Vero Beach.
Quince, through her questioning, seemed very interested in the property-rights aspect of the issue, and the limitations the County is feeling on its exercise of property rights, an argument that is currently being pursued by the Town of Indian River Shores in its own court case locally.
Pariente had obviously done her homework and knew how much more Vero electric customers were paying than their neighbors. To her, the issue of affordable rates came through loud and clear.
“If I’m the citizens there, it seems like that’s all I’d care about,” Pariente said, also commenting that Vero is using County property to operate its utility business “to fund their government,” referring to the more than $7 million Vero skims off electric revenues in direct and indirect transfers into its general fund to keep property taxes for city residents artificially low.
Lewis took a somewhat different approach, asking attorneys “how do these (powers) work together?” and inquiring repeatedly whether or not the conflicting powers issue prevents the County from exercising its power to negotiate a franchise for the best interest of its constituents.
The response from the County’s outside utility legal counsel Floyd Self was a resounding “yes.”
“The Public Service Commission orders take away all of our ability to negotiate with a successor utility,” Self said.
Self seemed relieved that Lewis was able to grasp the importance of this case as it relates to the home rule powers of Florida’s counties and cities.
Lewis also recognized the “big picture” at play here – that the Indian River County case is only the first of many of these legal conflicts to arise as dozens, maybe hundreds of electric franchise agreements are set to expire over the next few years.
“This is a process that just begs for a fight and there’s no process for getting this settled,” Lewis said.
The issue, therefore, may be “ripe” for a clarification by the Court that can guide other communities facing the same situation.
Lewis, a former Chief Justice, commended the County for planning ahead and trying to get clarification on how to handle the situation, so the government could ensure a seamless transmission once the franchise agreement expires, to make sure residents have access to reliable electric power. Unfortunately, Lewis noted that the law as it currently stands seems to require a government to come to the end of its franchise and then it’s a toss-up as to what’s supposed to happen.
Indian River County has 15 months to get – and then act on – the court’s answer. Indian River Shores, on the other hand, is staring down an 11-month deadline, while the Town pursues its own path to an answer, taking its case to the Circuit Court, and contemplates its own day before the Tallahassee regulators at the PSC. Due to a caseload re-assignment, Judge Paul Kanarek is scheduled to take over the Shores case from Judge Cynthia Cox in January.
