IN THE SUPREME COURT OF FLORIDA FLORIDA INDUSTRIAL POWER USERS GROUP, Appellant, Case No. SC12-1440 v. 1 st DCA Case No. 12-2371 FLORIDA PUBLIC SERVICE COMMISSION AND FLORIDA PSC Docket No. 110309-EI POWER AND LIGHT COMPANY, Appellees. _______________________________/ FLORIDA INDUSTRIAL POWER USERS GROUP’S INITIAL BRIEF Jon C. Moyle, Jr. [email protected]Florida Bar No. 727016 Vicki Gordon Kaufman [email protected]Florida Bar No. 286672 Moyle Law Firm, P.A. The Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Telephone: (850) 681-3828 Facsimile: (850) 681-8788 Attorneys for Appellant, Florida Industrial Power Users Group
Transcript
IN THE SUPREME COURT OF FLORIDA
FLORIDA INDUSTRIAL POWER USERS GROUP, Appellant, Case No. SC12-1440 v. 1st DCA Case No. 12-2371 FLORIDA PUBLIC SERVICE COMMISSION AND FLORIDA PSC Docket No. 110309-EI POWER AND LIGHT COMPANY, Appellees. _______________________________/
FLORIDA INDUSTRIAL POWER USERS GROUP’S INITIAL BRIEF
Page No. PRELIMINARY STATEMENT ................................................................. 1 STATEMENT OF THE CASE AND OF THE FACTS ............................. 2 SUMMARY OF ARGUMENT ................................................................... 7 ARGUMENT ............................................................................................... 10 I. Standard of Review............................................................................ 10 II. Material Errors in Procedure Impaired the Fairness of the
A. The Commission May Not Base Its Findings on Unsworn Testimony and it was Error to Admit and Rely on Unsworn Testimony ................................................................ 11
B. The Commission May Not Preclude Parties from Cross-
Examination of Witnesses on Relevant Issues in Dispute ...... 14 C. The Commission May Not Rely on Hearsay Alone to
Support Any Finding of Fact ................................................... 16 III. The Commission’s Failure to Permit Cross-Examination
Regarding FPL Capacity Needs was Material and Reversible Error ................................................................................................... 23
CONCLUSION ............................................................................................ 30 CERTIFICATE OF SERVICE .................................................................... 31 CERTIFICATE OF COMPLIANCE ........................................................... 31 APPENDIX .................................................................................................. 32
AmSouth Bank v. Florida Department of Insurance, 774 So.2d 747 (Fla. 1st DCA 2000) ..............................................................................................25
BellSouth Advertising and Publishing Corp. v. Unemployment Appeals Commission, 654 So.2d 292 (Fla. 5th DCA 1995) .................................18
City of Titusville v. Florida Public Employees Relations Commission, 330 So.2d 733 (Fla. 1st DCA 1976) .............................................................. 12, 13
Deel Motors, Inc. v. Department of Commerce, 252 So.2d 389 (Fla. 1st DCA 1971) .................................................................................................... 13, 14
Gonzalez v. Department of Insurance, 814 So.2d 1226 (Fla. 3rd DCA 2002) ....................................................................................................................26
R.J.A. v. Foster, 603 So.2d 1167 (Fla. 1992) ...........................................................16
Ryan v. Florida Department of Business and Professional Regulation, 798 So.2d 36 (Fla. 4th DCA 2001) .......................................................................16
School Board of Palm Beach County v. Survivors Charter Schools, Inc., 3 So.3d 1220 (Fla. 2009) .............................................................................10
Sunshine Chevrolet v. Unemployment Appeals Commission, 910 So.2d 948, (Fla. 2nd DCA 2005) ...................................................................................17
The following abbreviations will be used in this brief. The Florida Industrial
Power Users Group will be referred to as FIPUG. Florida Power & Light
Company will be designated as FPL. The Florida Public Service Commission is
called the Commission.
The Record on Appeal is designated as ROA at ___. The transcript of the
hearing below is designated Tr. ___. The Appendix is designated as App. at ___.
2
STATEMENT OF THE CASE AND OF THE FACTS
On November 21, 2011, FPL filed a Petition to Determine Need (DON) for
the construction of a new power plant at the site of its existing Port Everglades
(PEEC) plant. (ROA at 1-30). At the same time, FPL filed the unsworn prefiled
testimony of seven (7) witnesses. (ROA at 31-278).
FPL’s proposed project involves the construction of a combined cycle power
plant with a summer capacity rating of approximately 1,277 megawatts (MW)
scheduled to come into commercial service in June 2016 at a projected cost of
$1.1852 billion dollars. (ROA at 93-94). FPL proposed to replace four dual-fuel
fired steam generating units with essentially a new power plant burning natural gas
as its primary fuel and light oil as a backup fuel. (ROA at 4).
FPL’s DON petition was filed pursuant to sections 366.04 and 403.519,
Florida Statutes. Section 403.519 makes the Commission the sole forum for a
determination of need. It further requires the Commission to take into account the
following factors when assessing whether a proposed plant is needed:
… the need for electric system reliability and integrity, the need for adequate electricity at a reasonable cost, the need for fuel diversity and supply reliability, whether the proposed plant is the most cost-effective alternative available, and whether renewable energy sources and technologies, as well as conservation measures, are utilized to the extent reasonably available. The commission shall also expressly consider the conservation measures taken by or reasonably available to the applicant or its members which might mitigate the
3
need for the proposed plant and other matters within its jurisdiction which it deems relevant.
Section 403.519(3). On February 14, 2012, FIPUG1
The Commission granted FIPUG’s petition to intervene in Order No. PSC-
12-0070-PCO-EI (ROA at 402-403) over FPL’s objection. The Order Granting
Intervention noted that “FIPUG takes the case as it finds it as set forth in [the
Prehearing Order].” (ROA at 402). On February 20, 2012, FIPUG filed a Notice
of Positions on Issues to Be Decided (ROA at 404-409), since prehearing
statements and the prehearing conference occurred before FIPUG’s intervention.
filed a petition to intervene in the
proceeding, pursuant to rule 25-22.039, Florida Administrative Code. This rule
allows a petition to intervene to be timely filed up to five (5) days before the
hearing. FIPUG complied with that requirement.
Prior to the hearing held on February 20, 2012, the Prehearing Officer
excused all but one of the seven (7) FPL witnesses from the hearing. The
Prehearing Order provided in pertinent part:
V. PREFILED TESTIMONY AND EXHIBITS; WITNESSES Testimony of all witnesses to be sponsored by the parties (and Staff) has been prefiled and will be inserted into the record as though read after the witness has taken the
1 FIPUG is a group of large industrial users, part of the consumers who will pay for the new power plant. See, FIPUG Petition to Intervene. (ROA at 379-383).
4
stand and affirmed the correctness of the testimony and associated exhibits. All testimony remains subject to timely and appropriate objections.... Witnesses are reminded that, on cross-examination, responses to questions calling for a simple yes or no answer shall be so answered first, after which the witness may explain his or her answer. After all parties and Staff have had the opportunity to cross-examine the witness, the exhibit may be moved into the record. All other exhibits may be similarly identified and entered into the record at the appropriate time during the hearing. … The testimony of excused witnesses shall be inserted into the record as though read, and all exhibits submitted with those witnesses' testimony shall be identified as shown in Section IX of this Prehearing Order and admitted into the record. Witness Silva shall provide no live summary of his prefiled direct testimony. However, witness Silva shall be available at the hearing to provide sworn testimony in response to questions by Commissioners regarding FPL's modernization of the Port Everglades Plant; his prefiled direct testimony shall be inserted into the record as though read and his exhibits shall be identified and admitted into the record.
Order No. PSC-12-0063-PHO-EI (Prehearing Order) at 3-4 (ROA at 365-366)
(emphasis supplied). FIPUG did not file a prehearing statement or participate in
the Prehearing Conference which resulted in the Prehearing Order because it was
not yet a party to the case.
The evidentiary hearing before the Commission on FPL’s DON petition was
conducted on February 20, 2012. At the beginning of the hearing, the Commission
accepted into the record the unsworn testimony of the seven (7) FPL witnesses and
5
all their exhibits. (Tr. 16). The Commission took this action over FIPUG’s
objection. FIPUG asserted that when a party’s substantial interests are affected, as
they are in this case, section 120.569(2)(g) requires that the testimony of all
witnesses be made under oath. FIPUG further objected to the prefiled testimony
coming into the record on the grounds that such unsworn prefiled testimony was
hearsay. (Tr. 12-14). FIPUG’s objections were overruled. (Tr. 16).
At the hearing, the only FPL witness to appear was Mr. Silva. FIPUG was
permitted to cross-examine Mr. Silva. However, when FIPUG attempted to cross-
examine Mr. Silva regarding whether FPL needed the power plant for which it
sought a DON relative to FPL’s 20% reserve margin criterion, an important metric
by which the need for a new power plant is measured, such questions were not
permitted by the Commission. (Tr. 233).
Post-hearing briefs were filed on March 5, 2012. A staff recommendation
suggesting that the Commission approve FPL’s request for a DON for PEEC was
filed on March 15, 2012. (ROA at 830-854). On March 27, 2012, the Commission
considered staff’s recommendation at its Agenda Conference and voted to approve
the requested DON, finding that the criteria in section 403.519(3) had been met.
The Commission’s written order granting the determination of need, Order No.
PSC-12-0187-FOF-EI (Final Order), was issued on April 9, 2012.
6
In the Final Order, the Commission acknowledged that “[t]his Order will
reference exhibits and testimony that are contested by FIPUG.” (Final Order at 2;
ROA at 869). Thus, the Commission acknowledged that in reaching its
determination to grant FPL the DON, it relied upon information that FIPUG
objected to for the reasons discussed in this Initial Brief. The Commission went on
to state that: “However, we find that witness Silva’s direct, summary, and
extensive cross examination testimony, even standing alone, provides an adequate
basis for us to determine the need for PEEC.” (Final Order at 2; ROA at 869).
FIPUG filed its notice of appeal in the First District Court of Appeal on
May 8, 2012. (ROA at 888-908). FPL filed a motion to transfer the appeal to this
Court on June 4, 2012. The Court issued an Order to Show Cause on June 6, 2012
to FIPUG as to why FPL’s motion to transfer should not be granted. FIPUG filed
its response to the motion to show cause on June 18, 2012. After considering the
respective jurisdictional arguments of the parties, the First District Court of Appeal
transferred this appeal to this Court on July 19, 2012.
7
SUMMARY OF ARGUMENT
FIPUG opposed FPL’s efforts to obtain a need determination proceeding for
the PEEC plant on the grounds that the plant was not needed at this time.
However, at hearing, FIPUG’s efforts were materially thwarted. FIPUG was not
provided a fair hearing in accordance with several requirements of chapter 120,
Florida Statutes, the state’s Administrative Procedures Act (APA).
The Commission accepted as evidence the unsworn testimony of all but one
of FPL’s witnesses without providing FIPUG the opportunity to conduct cross-
examination. The Commission’s ruling violated the unambiguous language of
section 120.569(2)(g), Florida Statutes, which provides that “all testimony of
parties and witnesses shall be made under oath.” (emphasis supplied). The
Commission’s ruling also violated the unambiguous language of section
120.569(2)(j), Florida Statutes, which provides that, “A party shall be permitted
to conduct cross-examination when testimony is taken or documents are made
a part of the record.” While FIPUG was permitted to cross-examine one of the
seven FPL witnesses whose testimony was admitted into evidence, the testimony
of this witness largely relied on the unsworn hearsay statements of the other six
FPL witnesses who did not appear at the hearing. A finding of fact cannot be
based on hearsay without supporting, non-hearsay evidence that would be
8
admissible over objection in a civil trial. See section 120.57(1)(c), Florida
Statutes.
FIPUG’s efforts to show that the PEEC plant was not needed were further
sidetracked when FIPUG sought to test by cross-examination whether the proposed
PEEC plant was needed in light of Commission rule 25-6.035, Florida
Administrative Code. This rule requires that an investor-owned utility like FPL
use a minimum reserve margin planning criterion of 15%.2
2 The reserve margin is the difference between FPL’s net system capability to serve its ratepayers and the maximum or peak load placed on FPL’s electric system. In other words, reserve margin is how much capacity a utility must have in reserve to meet peak load placed on its electric system.
Rather than relying on
the Commission rule, FPL opted to use a 20% reserve margin for its utility
planning purposes. FIPUG hoped to show that a reserve margin between the 15%
Commission rule reserve margin and the 20% FPL reserve margin would suffice
for the purposes of FPL reliably serving to its customers without the need for FPL
to spend approximately $1.2 billion dollars on the PEEC project. While the
interplay between a 15% reserve margin and a 20% reserve margin was the subject
of questions asked by staff and reflected in responses to interrogatories entered into
the record, FIPUG was not permitted to question the steps FPL considered, if any,
to operate its system below a 20% reserve margin so that the PEEC project, and its
nearly $1.2 billion dollars in attendant costs, could have been deferred.
9
This ruling violated section 120.57(1)(b) which states in pertinent part that
“All parties shall have an opportunity to respond, to present evidence and argument
on all issues involved, to conduct cross-examination….” To suggest in a need
determination case in which the Commission is charged with determining whether
a new power plant is needed, that questions related to the key criterion that
measures need, the reserve margin (set by Commission rule at 15% and at 20% by
a voluntary FPL agreement) are not relevant, pertinent or an issue in the case is
simply not supportable.
In sum, FIPUG was not provided a fair hearing in accord with the express
requirements of the state’s Administrative Procedures Act, chapter 120, Florida
Statutes. The Commission’s error laden order should be reversed or remanded.
10
ARGUMENT
I. Standard of Review.
FIPUG challenges the Commission’s final agency action granting FPL a
determination of need for the modernization of a power plant. Therefore, the
Court’s standard of review is governed by section 120.68(7), Florida Statutes,
which provides that:
The court shall remand a case to the agency for further proceedings consistent with the court’s decision or set aside agency action, as appropriate, when it finds that:
. . .
(b) The agency’s action depends on any finding of fact that is not supported by competent, substantial evidence in the record of a hearing conducted pursuant to ss. 120.569 and 120.57; however, the court shall not substitute its judgment for that of the agency as to the weight of the evidence on any disputed finding of fact; (c) The fairness of the proceedings or the correctness of the action may have been impaired by a material error in procedure or a failure to follow prescribed procedure.
As explained herein, in this instance the Commission has violated both these
standards and the Court must either remand or reverse the Commission’s decision
granting the DON.
II. Material Errors in Procedure Impaired the Fairness of the Commission Proceeding.
This proceeding is governed by Chapter 120, Florida Statutes, commonly
known as the Administrative Procedures Act or APA. In School Board of Palm
Beach County v. Survivors Charter Schools, Inc., 3 So.3d 1220, 1231 (Fla. 2009),
the Florida Supreme Court described the purpose of the APA as follows:
The APA “was intended to simplify the administrative process and provide the public with a more certain administrative procedure, thereby insuring that the public would receive due process and significantly improved fairness of treatment.” Machules v. Dep't of Admin., 523 So.2d 1132, 1136-37 (Fla.1988).
By failing to follow the APA’s procedures, as discussed below, the Commission
has compromised the fundamental fairness of the proceedings and violated
FIPUG’s due process rights.
A. The Commission May Not Base Its Findings on Unsworn Testimony and it was Error to Admit and Rely on Unsworn Testimony.
Section 120.68(7)(c), Florida Statutes, requires reversal of agency action
when the fairness or correctness of the proceeding “may have been impaired by a
material error in procedure or a failure to follow prescribed procedure.” In this
case, the Commission made several fundamental, material errors which require
Specifically, it is undisputed that the Commission accepted into the record of
the proceeding the unsworn testimony of six (6) of the seven (7) witnesses3 for
FPL: Morley, Stubblefield, Kosky, Modia, Gnecco and Enjamio.4
The Commission’s acceptance into evidence of, and reliance upon, unsworn
testimony runs directly afoul of the explicit requirements of section 120.569(2)(g),
quoted above. This statutory language, requiring testimony to be provided under
oath, is not permissive or discretionary. Put simply, testimony in a proceeding
affecting a party’s substantial interests must be made under oath.
(Tr. 12). These
witnesses did not appear at hearing. These witnesses were not sworn in or asked to
affirm in any way the truth of their written prefiled testimony. Nor did these
witnesses provide any affidavits to accompany their testimony to affirm the
testimony’s truth. FIPUG’s objections to this impermissible procedure were
overruled. (Tr. 16).
In City of Titusville v. Florida Public Employees Relations Commission, 330
So.2d 733 (Fla. 1st DCA 1976), the Public Employees Relations Commission
(PERC) enlarged the scope of a bargaining unit of employees in a city police 3 FPL witness, Mr. Gnecco, was excused due to illness but his unsworn testimony was still received into the record without his appearance or the adoption of his testimony by another witness. 4 The Commission’s practice is to require witnesses to file written testimony prior to the actual hearing, but to then appear at hearing to be sworn in, affirm and correct their prefiled testimony as warranted and be cross-examined on their prefiled testimony.
13
department. On review, the Court found that PERC had no authority to change and
certify the unit as it did. A PERC hearing was held on the matter but “it was not a
hearing in which sworn testimony and evidence was presented….” Id. at 734. The
Court found that “the hearing afforded to interested parties by PERC and the order
entered thereafter were not in compliance with Chapter 120” and the case was
remanded. Id. at 737.
In Deel Motors, Inc. v. Department of Commerce, 252 So.2d 389 (Fla. 1st
DCA 1971), an order of the Department of Commerce was quashed and the case
remanded for failure to follow the requirements of the APA. Deel Motors sought
review of the Department’s order assessing Deel Motors and other parties monies
for their pro rata share of premiums due for workmen’s compensation coverage.
Deel Motors contended that the proceedings were conducted in a manner contrary
to the APA, depriving it of due process and equal protection. Among other things,
Deel argued that the Department findings were unsupported by sworn testimony or
any other proof. This method of proceeding was challenged at hearing:
Petitioners asserted that the manner in which the hearing was conducted deprived them of due process of law and failed to meet the minimum requirements of the Administrative Procedure Act.
Id. at 393. In describing the requirements of the APA, the Court said:
Such proceeding contemplates that the party to be affected by the outcome of the proceeding will be given reasonable notice of the hearing and an opportunity to
14
appear in person or by attorney and to be heard on the issues presented for determination. It is contemplated that the order to be entered will be based on competent and substantial evidence adduced by the parties consisting of sworn testimony of witnesses and properly authenticated documents bearing the required indicia of credibility. The parties must be accorded the right to confront and cross-examine the witnesses against them, and be reasonably heard on the contentions urged by them with respect to the action to be taken by the agency.
Id. at 394, emphasis supplied. The Court concluded that the Department had not
complied with the APA because the Department failed to follow the APA’s
procedures, including the requirement for sworn testimony.
Similarly, the Commission’s acceptance of and reliance upon unsworn
testimony to support its decision to grant FPL a DON does not comport with the
requirements of the APA and impaired FIPUG’s statutory and due process rights.
The Commission’s decision must be reversed in accordance with section
120.68(7)(c), Florida Statutes.
B. The Commission May Not Preclude Parties from Cross-Examination of Witnesses on Relevant Issues in Dispute.
The Commission’s second material procedural error was its failure to make
the FPL witnesses available for cross-examination by FIPUG – a party with a
substantial interest in the case. As with its failure to require sworn testimony, this
constitutes a material violation of procedure on the part of the Commission which
impacted FIPUG’s due process rights. The Commission’s ruling on this issue
15
impacted FIPUG’s right to a fair hearing and was inconsistent with section
120.569(2)(j), Florida Statutes, which states that, “A party shall be permitted to
conduct cross-examination when testimony is taken or documents are made a part
of the record.”
The importance of cross-examination is widely recognized. It is fundamental
that “[a]ll witnesses are subject to cross-examination for the purpose of
discrediting them by showing bias, prejudice or interest.” Cox v. State, 441 So.2d
1169 (Fla. 4th DCA 1983); see also, Amato v. Winn Dixie Stores, 810 So.2d 979
(Fla. 1st DCA 2002).
The APA further recognizes the importance of cross-examination in section
120.57(1)(b). This section, emphasis supplied, requires that:
All parties shall have an opportunity to respond, to present evidence and argument on all issues involved, to conduct cross-examination and submit rebuttal evidence, to submit proposed findings of facts and orders, to file exceptions to the presiding officer’s recommended order, and to be represented by counsel or other qualified representative.
Again, this is not a permissive or discretionary statutory provision. The statute’s
use of the word “shall” clearly shows it is mandatory. By accepting FPL
witnesses’ prefiled unsworn testimony into the record without providing FIPUG –
a party in the case – the ability to conduct cross-examination violates the
provisions of Chapter 120 which are intended to protect parties’ rights in
It is important to recognize that the rights enumerated above – the
requirement for sworn testimony and the right to cross-examination – are not
dependent on when a party is granted intervention in a proceeding – 5 days before
the hearing or 50 days before the hearing. These important rights are applicable to
any party with a substantial interest
When agencies fail to follow the key provisions of
the APA, the remedy is reversal. See, i.e., Ryan v. Florida Department of Business
and Professional Regulation, 798 So.2d 36 (Fla. 4th DCA 2001) (agency reversed
for failure to provide adequate notice as required by APA).
6
C. The Commission May Not Rely on Hearsay Alone to Support Any Finding of Fact.
in the proceeding. Nor may these rights be
ignored by the Commission for purposes of expediency. FIPUG’s substantive due
process rights may not be abridged by the agency, something that has clearly
occurred in this case.
FIPUG also objected to the admission of the prefiled unsworn testimony of
FPL’s witnesses on the basis that it is hearsay. (Tr. 14). This objection was
overruled. (Tr. 16). In admitting unsworn testimony and relying upon it to reach
5 The Commission may not use expediency, its own order or a procedural rule to overrule the substantive rights set out in the APA. See, R.J.A. v. Foster, 603 So.2d 1167 (Fla. 1992) (a procedural rule cannot overrule a substantive statute). 6 Clearly, FIPUG has a substantial interest in this matter or it would not be granted intervention. See, sections 120.569, .57, Florida Statutes.
17
its findings in this case, the Commission impermissibly relied upon hearsay which
was not supported by any other evidence.
Hearsay is defined as:
a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.
Section 90.801(c), Florida Statutes.
Section 120.57(1)(c), Florida Statutes, recognizes the unreliable nature of
hearsay. It permits hearsay to support or supplement other evidence but hearsay
may not support a finding unless it would be admissible in court over objection:
Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.
As explained by the Court in Sunshine Chevrolet v. Unemployment Appeals
Generally, in formal administrative proceedings all “evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs [is] admissible, whether or not such evidence would be admissible in a trial in the courts of Florida.” § 120.569 (2)(g), Fla. Stat. (2002). An administrative action will be reversed on appeal if the “action depends on any finding of fact that is not supported by competent, substantial evidence in the record” of the administrative hearing. § 120.68(7)(b). Section 120.57(1)(c) specifically provides that in administrative hearings “[h]earsay evidence may be used for the purpose of supplementing or explaining other evidence,
18
but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.” See CF Chems., Inc. v. Fla. Dep't of Labor & Employment Sec., 400 So.2d 846, 848 (Fla. 2d DCA 1981).
See also, BellSouth Advertising and Publishing Corp. v. Unemployment Appeals
In this case, FPL introduced, and the Commission entered into the record
and relied upon, the unsworn testimony of the following witnesses in the explicit
areas described below in their unsworn testimony. None of these witnesses
appeared at the hearing or provided prefiled testimony under oath.
Joe Gnecco:
The purpose of my direct testimony is two-fold. First, I provide a summary of the generation alternatives that were evaluated in arriving at the decision to pursue the proposed PEEC Project and why the CC technology and modernization process was selected to meet FPL’s need for generation in 2016. Second, I describe the Project in detail, including a description of the site, the applied technology, water usage, air emissions, transmission tie-in, certification and permit plan, construction schedule, and the Project costs and benefits. (Tr. 58).
Rosemary Morley:
The purpose of my testimony is to describe FPL’s load forecasting process, identify the underlying methodologies and assumptions, and review the results of FPL’s most current (September 2011) forecasts. These forecasts include long-term forecasts of customers, peak demands, and net energy for load that were presented in FPL’s 2011 Ten Year Site Plan. The results of these
19
updated forecasts have been utilized the analyses discussed by FPL witnesses Enjamio and Silva in their direct testimonies. (Tr. 79-80).
Heather Stubblefield:
The purpose of my testimony is to present and explain: (1) the fossil fuel price forecast used in the evaluation of FPL’s Port Everglades Next Generation Clean Energy Center (“PEEC”); and (2) the proposed fuel and fuel transportation plan for PEEC. (Tr. 102).
Kennard Kosky:
The purpose of my testimony is to provide the Commission an overview of the key environmental aspects of PECC. Because electric power constructed in Florida must comply with environmental regulations, the costs of compliance are part of the overall project costs that the Commission considers in its need determination. (Tr. 110).
Pedro Modia:
My testimony presents three aspects related to FPL’s transmission system and the PEEC Project. First, I present a general overview of the FPL transmission system, the Southeast Florida area, and in particular the Miami-Dade and Broward County service area. Second, I describe the overall transmission evaluation process and the results of the transmission system-related cost studies for the PEEC Project and its alternatives. Finally, I discuss the reliability benefits of the PEEC Project. (Tr. 126).
Juan Enjamio:
My testimony addresses eight major areas. First, I discuss FPL’s integrated resource planning process. Second, I describe the major assumptions used in the
20
analyses described in my testimony. Third, I identify FPL’s projected resource needs beginning in the year 2016 and explain how this need was determined. Fourth, I discuss the evaluation of various potential options to meet the 2016 need. Fifth, I discuss the economic analysis used to reach the conclusion that the modernization of the Port Everglades Plant is the most cost-effective option for FPL customers with which to meet the 2016 need. Sixth, I present the results of the economic analysis performed. Seventh, I present the results of the non-economic analysis performed. Finally, I present my conclusion from these analyses. (Tr. 148).
Mr. Silva, the only witness to appear at the hearing and give sworn
testimony, is at best described as an overview witness. He summarized FPL’s case
for the Commission. In fact, in his testimony, Mr. Silva introduces the six (6)
other FPL witnesses and summarizes the subjects of their testimony. (Tr. 33-35).
For example, as to witness Enjamio, Mr. Silva states:
FPL witness Juan Enjamio describes FPL’s IRP process, presents the need for new resources to meet customers’ demand for electricity in 2016 through 2012, and explains the economic analyses FPL performed to evaluate the PEEC Project compared to other self-build alternatives. Mr. Enjamio also presents the results of FPL’s analysis, and explains his conclusion that based on FPL’s evaluation, the PEEC Project constitutes the best, most cost-effective choice for FPL’s customers. In addition, Mr. Enjamio presents the environmental compliance costs forecasts for SO2, NOx, and CO2 developed consistent with information provided by ICF International and utilized by FPL in its analysis of the PEEC Project and available generation alternatives.
(Tr. 33-34, emphasis supplied).
21
It is clear just from reading the witnesses’ own summaries of the areas
covered in their unsworn prefiled testimony quoted above that these areas are
complex and are certainly not covered by or explained by Mr. Silva, the overview
witness. In Mr. Silva’s own testimony, he relies on the testimony of other FPL
witnesses who provided unsworn testimony and who were not present at the
hearing. Mr. Silva’s testimony is replete with recitations of what other witnesses
believe or have found.
For example, Mr. Silva testifies that “based on information presented in the
testimonies of FPL witnesses Modia and Gnecco,” the cost of a new third-party
generator would exceed that of the PEEC project. (Tr. 24). He testifies that FPL’s
current peak load electricity forecast is presented in the testimony of witness
Morley and has no firsthand information to independently affirm the peak load
forecast. (Tr. 35). Mr. Silva relies on Mr. Enjamio’s testimony for a reliability
assessment. (Tr. 36). Mr. Silva quotes Mr. Kosky and relies on his unsworn
This recitation of what other non-sworn, non-present witnesses have found
or believe is nothing but rank hearsay. Mr. Silva, who was not tendered as an
expert, relies on it for the truth of the matter asserted and the Commission
inappropriately uses it in reaching a decision.
22
The Commission, apparently recognizing the problems with the unsworn
hearsay testimony pointed out by FIPUG through its objections and post-hearing
brief (and other infirmities described above), attempts to avoid these fatal flaws
when it states:
This [Final] Order will reference exhibits and testimony that are contested by FIPUG. However, we find that witness Silva’s direct, summary, and extensive cross examination testimony, even when standing alone, provides an adequate basis for us to determine the need for PEEC.
(Final Order at 2; ROA at 869). However, while convenient and the legal
equivalent of wishful thinking, this statement alone cannot cure the infirmities
described herein. Even a brief review of Mr. Silva’s testimony shows that he is not
an expert7
The Commission accepted and relied on Mr. Silva’s unsubstantiated and
unsupported hearsay for its findings that the PEEC project was needed and was the
most cost-effective alternative for ratepayers. Reliance on unsupported hearsay
in the many areas covered by the other six FPL witnesses’ testimony,
such as load forecasting, transmission planning, or environmental issues. If he
were competent to cover all these issues, there would have been no need for FPL to
file the testimony of six (6) additional witnesses.
7 In fact, a review of the transcript demonstrates that Mr. Silva was not qualified as an expert witness in any area, nor was he offered as an expert.
23
violates the provisions of the APA cited above and the Commission’s decision
must be reversed.
III. The Commission’s Failure to Permit Cross-Examination Regarding FPL Capacity Needs was Material and Reversible Error.
The title of the proceeding below is “Petition to Determine Need for
Modernization of Port Everglades Plant.” The main purpose of this proceeding as
detailed in section 403.519, Florida Statutes, is to determine whether the PEEC
modernization project is needed to serve retail consumers. As discussed above,
section 120.57(1)(b) provides that:
“[a]ll parties shall have an opportunity to … conduct cross-examination ….”
Section 120.569(2)(j) provides that:
“A party shall be permitted to conduct cross-examination when testimony is taken or documents are made a part of the record.”
Part and parcel of any such need analysis is inquiry into what reserve margin
a utility must maintain to provide safe and reliable service to consumers. The
Commission itself recognized in its Final Order that “FPL evaluates the adequacy
of its resources to meet the needs of its customers considering peak demand and a
20 percent reserve margin.”8
8 Order No. PSC-12-0187-FOF-EI at 3, emphasis supplied.
It was FIPUG’s position that the major expenditure
for PEEC, for which ratepayers will pick up the tab, could be avoided if FPL
24
simply operated for a relatively short period of time below the 20% reserve
margin. (Tr. 177).
Nonetheless, when FIPUG attempted to cross-examine Mr. Silva regarding
the reserve margin as it related to FPL’s alleged capacity needs – the subject of the
case – the Commission Chairman did not allow such questioning. FIPUG asked
FPL witness Silva:
[I]sn’t it true that Florida Power and Light for many, many, many years safely and effectively served its customers with a 15 percent reserve margin?
(Tr. 231). The Chairman sustained FPL’s objection to this question because
“[c]onsidering that the reserve margin is really not one of the issues that’s taken up
per the prehearing order, I’m going to sustain the objection on this issue.” (Tr.
233). The Final Order states: “the Chairman determined that reliance on the 20
percent reserve margin criterion is ‘not one of the issues that’s taken up in the
Prehearing Order,’ and is therefore beyond the scope of this proceeding.” (Final
Order at 4; ROA at 871).9
9 It also appears that the Chairman may have been concerned with concluding the DON proceeding due to another proceeding that was to take place at 1 pm: “And I’m going to take the latitude to remind all parties that we intend to begin at 1:00 o’clock, and that we certainly hope that everyone understands the scope of what we are dealing with at this point.” (Tr. 233).
FIPUG had explained in its opening statement why the
interplay between the 15% reserve and 20% reserve margin was important,
25
relevant and at issue, and again made a proffer to the same point when the
The Commission’s failure to allow cross-examination regarding the issue of
FPL’s reserve margin is particularly ironic in light of the fact that the
Commission’s Final Order is replete with discussion of the reserve margin issue.
(See, Final Order at 3, 4 (including a reserve margin chart), 5, 6, 13, 14, 15, and 16;
ROA at 870-873 and 880-883). Additionally, the Commission accepted into
evidence an analysis comparing a 15% and 20% reserve margin for FPL. (Exh.
No. 40, bates #00233-00239; ROA at 738-744). FPL witness Silva was asked in
direct questioning by FPL, “Is the 20% reserve margin planning criterion
appropriate for use in FPL’s IPP process?” (Tr. 39). At the same time, the
Commission refused to allow FIPUG to conduct cross-examination on the very
same topic. See, Poland v. Zaccheo, 82 So.3rd 133, 136-137 (Fla. 4th DCA 2012)
(“while a trial judge may impose reasonable limits on cross-examination, the trial
judge must nonetheless permit full and fair cross-examination on matters testified
to on direct examination.”); AmSouth Bank v. Florida Department of Insurance,
774 So.2d 747, 750 (Fla. 1st DCA 2000) (court erred in not permitting cross-
examination on relevant issues).
Further, the Final Order sets out FIPUG’s position on the reserve margin
question: “FIPUG asserts that FPL did not explore whether it could avoid the need
26
to build PEEC simply by operating for a brief period of time below a 20 percent
reserve margin.” (Final Order at 3; ROA 870). The Commission recites FIPUG’s
position that use of a slightly lower reserve margin for a short period of time would
reduce ratepayer costs by about $29 million. The Commission then states:
“[h]owever, based on the information referenced by FIPUG in its brief, we are
unable to determine the genesis of FIPUG’s claim.” (Final Order at 14; ROA at
881). The Commission’s refusal to allow FIPUG to conduct cross-examination on
this issue surely contributed to a lack of information related to possible cost
savings if a reserve margin figure of less than 20% was utilized.
Section 120.569(2)(g) provides that “[i]rrelevant, immaterial, or unduly
repetitious evidence shall be excluded….” Section 120.57(1)(b) states in pertinent
part that “All parties shall have an opportunity to respond, to present evidence and
argument on all issues involved, to conduct cross-examination….” Clearly,
evidence on FPL’s need and the mitigation of such need due to a lower reserve
margin is not “irrelevant, immaterial, or unduly repetitious material,” and was
directed to an “issue involved” in the case. To exclude such reserve margin
inquiry was a material error that affected the fairness of the proceeding. The
Commission may not exclude relevant evidence. See, i.e., Gonzalez v. Department
of Insurance, 814 So.2d 1226 (Fla. 3rd DCA 2002) (agency erred in when it
sustained an objection to cross-examination on a relevant document).
27
Finally and importantly, the Chairman based his ruling on the fact that the
20% reserve margin had been set in Order No. PSC-99-2507-S-EU (Reserve
Margin Order) (ROA at 819-829; App. at 2), and was not appropriate for
discussion in this matter. This is simply incorrect and ignored the Commission’s
own rule that authorized a minimum reserve margin of 15%.
The Commission has in place rule 25-6.035, Florida Administrative Code,
which requires Peninsular Florida utilities, including FPL, to maintain a 15% (not
20%) reserve margin. (App. at 1). Specifically, the rule, states in pertinent part:
Each electric utility shall maintain sufficient generating capacity, supplemented by regularly available generating and non-generating resources, in order to meet all reasonable demands for service and provide a reasonable reserve for emergencies. Each electric utility shall also coordinate the sharing of energy reserves with other electric utilities in Peninsular Florida. To achieve an equitable sharing of energy reserves, Peninsular Florida utilities shall be required to maintain, at a minimum, a 15% planned reserve margin. (emphasis supplied).
Section 120.52(16) defines a “rule” as “each agency statement of general
applicability that implements, interprets, or prescribes law or policy or describes
the procedure or practice requirements of an agency and includes any form which
imposes any requirement or solicits any information not specifically required by
statute or by an existing rule.” Section 120.54(1)(a) provides that:
28
… rulemaking is not a matter of agency discretion. Each agency statement defined as a rule by s. 120.52 shall be adopted by the rulemaking procedure provided by this section as soon as feasible and practicable.
In sum, the APA requires that a policy of general applicability be set forth in a
rule, which the Commission has done. The Commission approved a voluntary
agreement among FPL and two other utilities in which these utilities agreed to
voluntarily adopt a 20% reserve margin. However, questions that delved into the
relevant subject of whether FPL could safely and effectively operate its electric
system at less than a 20% reserve margin, but consistent with the Commission’s
rule that establishes a 15% reserve margin, should have been allowed.
Moreover, the Reserve Margin Order itself provides in pertinent part that,
“The Commission shall retain the ability and discretion to consider all facts and
circumstances applicable to a given utility and/or peninsular Florida.” Reserve
Margin Order at page 4; App. at 5. The Order further provides in pertinent part
that, “each IOU (investor-owned utility) must reserve the prerogative individually
to modify its planning criteria to adapt to relevant circumstances.” Reserve Margin
Order at page 9; App. at 10. Thus, the Commission had expressly reserved its
ability to consider relevant facts in a need determination proceeding, facts that
FIPUG sought to establish through cross-examination to wit: FPL could safely and
effectively operate its utility system slightly below a 20% reserve margin without
29
burdening ratepayers with approximately $1.2 billion dollars in additional capital
costs for the new PEEC project.10
The Commission’s failure to permit FIPUG to conduct cross-examination on
the appropriate reserve margin criteria for use in the PEEC need determination
case was reversible error, materially impacted the fairness of the proceedings and
violated FIPUG’s due process rights as a party. The Final Order should be
reversed.
10 FPL had further expressly reserved the ability to deviate from its voluntary agreement to use a 20% reserve margin criteria. Reserve Margin Order at page 9; App. at 10.
30
CONCLUSION
The Commission made material errors in procedure in the conduct of the
administrative hearing below. Such errors include accepting unsworn testimony
into the record, relying on unsupported hearsay to support its findings, and
prohibiting relevant cross-examination. These errors materially and prejudicially
affected FIPUG, whose material interests were determined in this docket. Thus,
the Court should reverse the Commission’s Final Order granting FPL a
I HEREBY CERTIFY that a true and correct copy of Florida Industrial Power Users Group’s Initial Brief has been furnished to the parties below by electronic mail and U.S. Mail this 18th day of September, 2012:
John T. Butler, Esq. Florida Power and Light Company 700 Universe Boulevard Juno Beach, Florida 33408-0420 Alvin Davis, Esq. Squire Sanders Law Firm 200 South Biscayne Boulevard, Suite 4100 Miami, Florida 33131-2362 Pamela Page, Esq. Samantha Cibula, Esq. Florida Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-7019
____________________________ Jon C. Moyle, Jr.
CERTIFICATE OF COMPLIANCE
Undersigned counsel certifies that the type used in this brief is Times New
reserve margin ................................................................................... 1 2. Order PSC-99-2507-S-EU approving FPL’s voluntary use of a
