Chief Justice Muniz Criticizes ‘Black Box’ PSC

• By Jim Saunders
• December 11, 2024

TALLAHASSEE — Florida Supreme Court Chief Justice Carlos Muniz this week sharply criticized utility regulators for not adequately justifying decisions, likening the state Public Service Commission to a “black box.”

Muniz repeatedly raised the issue Tuesday as the Supreme Court heard arguments in an appeal of a 2023 Public Service Commission order approving rates for Florida City Gas, which provides natural-gas service to homes and businesses.

The state Office of Public Counsel, which represents consumers, appealed the approval of the rates to the Supreme Court, with the case involving complicated accounting-related issues. As justices tried to sort out the issues during Tuesday’s hearing, Muniz said the Public Service Commission did not adequately explain why it went along with a Florida City Gas position on the disputed issues and rejected a recommendation from the commission staff.

“It’s kind of like you’re just asking us to take it on faith that even though we can’t really explain why we’re choosing option B, other than just this kind of cosmic, ‘Oh, all the rates are fair.’ I mean, how are we supposed to evaluate that?” Muniz said. “Just because someone from the company said it’s quote-unquote reasonable? That’s basically, at the end of the day, that’s the only thing that’s supporting this is that, in the record, I can point to a human being that spoke the word ‘reasonable’ and attached it to this thing. And that’s quote-unquote competent, substantial evidence, and we’re supposed to say, ‘Ok, great, we’re done.’”

Florida City Gas attorney Lauren Purdy compared the Public Service Commission’s handling of the issues to a judge considering expert-witness testimony in a trial. But that drew a retort from Muniz.

“The PSC is a black box. That is my problem with these cases. It’s a black box. And administrative procedure is not supposed to be (a black box). It’s supposed to be the opposite of a black box. That’s the only justification for this whole mousetrap is to have reasoned explanations for fact-based decisions,” Muniz said. “And, instead, we get a regurgitation of the evidence and then like, ‘Oh, because so-and-so said this, we think that this is appropriate. We’re done.’ That is literally every order that we see from the PSC.”

Muniz made the comments after the Supreme Court in September 2023 ruled that the Public Service Commission did not adequately justify approval of a settlement that increased base electric rates for Florida Power & Light and ordered a new explanation.

That relatively unusual move led to the commission in March issuing a more-extensive order approving the FPL settlement. Opponents appealed the new order to the Supreme Court, where the case remains pending after justices heard arguments in October.

Purdy and Jonathan Rubottom, an attorney for the Public Service Commission, argued Tuesday that regulators complied with standards in approving a four-year rate plan for Florida City Gas. Rubottom also pushed back on questions about the commission disregarding its staff’s recommendation on the disputed issues. Rubottom compared staff members to law clerks making recommendations to judges.

“They’re not the decision-makers. The commission that weighs the evidence, they’re the finder of fact, and they’re tasked to make those decisions,” Rubottom said.

Rubottom noted that the commission issued the Florida City Gas order before the Supreme Court ruling that required more justification for the FPL rate decision. He said the commission “has heard and respectfully understood” the Supreme Court ruling.

But he said the Florida City Gas order was “sufficient. Based on the evidence, based on the issues that are presented, these are findings of facts and judgments of what’s reasonable.”

At the time of the Public Service Commission order, Florida City Gas was a subsidiary of FPL but was later sold to Chesapeake Utilities Corp. The Florida City Gas website said it has more than 116,000 customers in Miami-Dade, Broward, Brevard, Palm Beach, Hendry, Martin, St. Lucie and Indian River counties.

The accounting-related issues in the dispute involve depreciation rates and a related surplus. While the Office of Public Counsel challenged the commission’s order, Florida City Gas contends, in part, that the surplus can be used to address financial issues that might emerge and help keep customer rates stable.

Rubottom said “these are quintessentially the type of complex rate-making decisions the Legislature gave the commission” authority to make.

“You have great authority. The commission has great authority,” Justice John Couriel replied. “It just has to say ‘because’ more than it does. Like, is it so hard to just say, state the conclusion, and then say, ‘This is so, because.’ I don’t think that’s too much to ask.”

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