00-001117 The Colony Beach And Tennis Club, Ltd. vs. Florida Power And Light Corporation Status: Closed Recommended Order on Wednesday, April 25, 2001.

Summary: Petitioner established no statutory entitlement to refund for eight year period during which it alleged it was erroneously billed at residential rate rather than commercial rate.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THE COLONY BEACH & TENNIS CLUB, )

LTD., )

)

Petitioner, )

)

vs. ) Case No. 00-1117

)

FLORIDA POWER AND LIGHT, )

)

Respondent, )

)

and )

)

FLORIDA PUBLIC SERVICE )

COMMISSION, )

)

Intervenor. )

)

RECOMMENDED ORDER

A formal hearing was held in this case before Lawrence P.

Stevenson, a duly-designated Administrative Law Judge of the

Division of Administrative Hearings, on January 22-23, 2001, in

Sarasota, Florida.

APPEARANCES

For Petitioner : Bernard F. Daley, Esquire

901 North Gadsden Street

Tallahassee, Florida 32303

Marc D. Mazo

Qualified Representative

14252 Puffin Court

Clearwater, Florida 33762

For Respondent : Kenneth A. Hoffman, Esquire

J. Stephen Menton, Esquire

Rutledge, Ecenia, Underwood,

Purnell, & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32302-0551

For Intervenor : Katrina Walker, Esquire

Division of Legal Services

Florida Public Service Commission

2540 Shumard Oak Boulevard, Room 370

Tallahassee, Florida 32399-0850

STATEMENT OF THE ISSUE

At issue in this proceeding is whether Petitioner, the

Colony Beach and Tennis Club, Ltd. ("Colony") is entitled to a

refund from Respondent, Florida Power and Light Company ("FPL"),

pursuant to statutes and rules cited in the Amended Complaint.

PRELIMINARY STATEMENT

On November 4, 1999, Colony filed a formal consumer

complaint with the Florida Public Service Commission ("PSC" or

"Commission") against FPL. The Complaint sought a refund from

FPL, pursuant to Rules 25-6.093(2) and 25-6.049(5)(a)(3),

Florida Administrative Code, and Section 366.03, Florida

Statutes. As amended, the Complaint alleges that FPL failed to

convert the 232 units at Colony from individual meters billed at

residential rates to master meters billed at the lower

commercial service demand rate, following an oral request by

Colony's chief engineer in late 1988 or early 1989. Colony was

converted from individual to master meters in June 1998, and

alleges that it is entitled to a refund for the period between

the oral request and the completion of the conversion.

FPL filed an Answer and Affirmative Defenses ("Answer") to

the Complaint. The Answer denied that Colony was entitled to a

refund and challenged Colony's assertion that it was entitled to

master metering under the PSC rules that were in place at the

time of the oral request. The Answer asserted that FPL properly

charged the individual units at Colony for electric service in

accordance with approved tariffs and existing PSC rules and that

Colony was not eligible for master metering at the time of the

oral request without a waiver of Rule 25-6.049(5)(a), Florida

Administrative Code.

On February 7, 2000, FPL filed a motion to transfer the

Complaint to the Division of Administrative Hearings. By Order

dated March 6, 2000, the PSC granted the motion and forwarded

the Complaint to the Division of Administrative Hearings for

conduct of a formal hearing. On May 10, 2000, the PSC filed a

petition to intervene as a non-aligned party to the proceeding.

By Order issued May 23, 2000, the petition to intervene was

granted.

On October 11, 2000, FPL filed a Motion for Summary

Recommended Order of Dismissal. On October 26, 2000, Colony

filed a Motion for Findings of Fact and Summary Final Order. A

hearing on both motions was conducted on November 17, 2000,

before Administrative Law Judge Mary Clark. On November 21,

2000, Judge Clark issued an Order that found there were too many

disputed issues of fact to warrant the summary disposition

sought by either party. Judge Clark's Order also confirmed an

agreement among the parties that this proceeding would be

bifurcated. The initial phase of the hearing would determine

whether Colony is entitled to a refund. If Colony established

its entitlement to a refund, the second phase of the hearing

would determine the amount of that refund.

The case was transferred to the undersigned, and the

initial phase of the hearing was held on January 22 and 23,

2001, in Sarasota.

At the hearing, the parties pre-marked 48 exhibits as Joint

Exhibits and stipulated to their authenticity. During the

course of the hearing, Joint Exhibits 45-48 were withdrawn.

Joint Exhibits 1 through 12 and 14 through 44 were admitted

without objection.

Colony presented the testimony of Michael Moulton, Colony's

executive vice president; Jerry Sanger, Colony's chief

maintenance engineer; Tom Saxon, a former FPL employee; and Mark

Mazo, president of Power Check Consultants. Colony Exhibits 1

through 5 and 10 were admitted into evidence without objection.

Colony Exhibit 6 was admitted over FPL's objection to its

relevance.

FPL presented the testimony of Rosemary Morley, a rate

development manager for FPL; Terri Britton, an FPL employee

working in its energy conservation program; and Jim Guzman, an

FPL service planner. FPL also offered the deposition testimony

of Greg Bauer, admitted as Joint Exhibit 43, and of Larry

Valentine, admitted as Joint Exhibit 44. FPL Exhibit 1 was also

admitted into evidence.

The PSC presented no testimony and offered no exhibits.

A transcript of the hearing was ordered. The Transcript

was filed with the Division of Administrative Hearings on

February 22, 2001. All parties filed Proposed Recommended

Orders on or before the thirty-day deadline established by

stipulation at the hearing.

FINDINGS OF FACT

Based on the oral and documentary evidence adduced at the

final hearing, and the entire record of this proceeding, the

following findings of fact are made:

A. The Colony

1. The Colony Beach Resort was originally built in the

1950s on Longboat Key, a coastal island in the Gulf of Mexico

near Bradenton and Sarasota. Dr. Murray J. Klauber purchased

the facility in the 1960s. In the early 1970s, Dr. Klauber had

most of the existing buildings demolished and built the 232

residential units that stand on the property today. The units

were sold pursuant to a unique financing arrangement that

resulted in the establishment of one of the first all-suite

resorts in the United States.

2. Each unit of the Colony was sold as a condominium. The

purchaser acquired fee simple title to the unit and became a

limited partner in a partnership formed to operate a rental pool

for the units. Participation in the rental pool was, and is, a

mandatory incident of purchasing one of the units.

3. The unit owners are members of a condominium

association known as the Colony Beach and Tennis Club

Association (the "Association"). The Association was

incorporated in 1973. The articles of incorporation state, in

relevant part:

The purpose for which the Association is

organized is to provide an entity pursuant

to [former] Section 711.12 of the

Condominium Act, Florida Statutes, for the

operation of Colony Beach & Tennis Club, a

Condominium Resort Hotel, herein referred to

as the "Condominium," located at 1620 Gulf

of Mexico Drive, Longboat Key, Sarasota

County, Florida.

4. The Declaration of Condominium of Colony Beach and

Tennis Club states: "The purpose of this Declaration is to

submit the lands described in this instrument and the

improvements constructed or to be constructed thereon to the

Condominium form of ownership and use in the manner provided by

[former] Chapter 711, Florida Statutes, herein called the

Condominium Act." The Declaration defines a "unit" as "a part

of the condominium property which is to be subject to private

ownership."

5. The cited documents demonstrate that Colony was

established under a condominium form of ownership. However, the

same documents also establish that Colony was never intended to

operate as a typical condominium in which the unit owners may

reside at the facility. A prospectus for the sale of the units,

dated September 8, 1977, explained the anticipated operation of

the facility and the rights of prospective unit owners:

Each purchaser of a Condominium Unit obtains

private ownership of the interior of an

apartment, and an undivided 1/244th interest

in the land submitted to condominium

ownership and in those portions of the

buildings and improvements in the Project

that are not privately owned. . . . In

addition, each such purchaser receives an

interest as a limited partner ("Partnership

Interest") in Colony Beach & Tennis Club,

Ltd. (the "Partnership"), a limited

partnership organized on December 31, 1973

for the purpose of operating the Project as

a resort hotel. . . . The Condominium Unit

and the Partnership Interest will be offered

and sold to the public only in combination.

Neither the Condominium Unit nor the

Partnership Interest may be sold or

transferred separately. . . . Purchasers

will be permitted to occupy each Condominium

Unit owned by them for up to thirty (30)

days in each calendar year without rental

charge. The Condominium Units sold to the

public hereunder will be dedicated to

operation of the Project as a resort hotel.

Because of the required dedication of

Condominium Units to the hotel operation,

the Units are not suitable for permanent

residence.

The prospectus describes Colony as "a Condominium Resort

Hotel."

6. The ownership structure and the right of owners to use

the individual units for specific periods of time less than a

full year during each year met the criteria of a "timesharing

plan" as it was defined in Rule 25-6.049(5)(b )2, Florida

Administrative Code, from the early 1980s until its amendment

effective March 23, 1997. This amendment is more fully

discussed below.

7. Michael Moulton, who has been the executive vice

president of Colony for ten years, testified that Colony is

operated by Resorts Management, Inc., which also controls the

mandatory rental pool as the general partner of the limited

partnership.

8. Mr. Moulton testified that Colony operates as a tennis

resort, including tennis lessons, all-day programs for children,

a spa, and a fitness center. Colony maintains a central

registration area for guests, a central telephone switchboard, a

restaurant, and a laundry. Signage on the property uses the

word "hotel." Colony advertises worldwide for guests.

9. Mr. Moulton’s testimony established that most units at

Colony are rented more than three times in a calendar year for

periods of fewer than 30 days. Thus, Colony also meets the

definition of a "resort condominium" as defined in

Subsection 509.242(1)(c), Florida Statutes.

10. Colony has been licensed as a motel with the

Department of Business and Professional Regulation ("DBPR")

since at least February 1, 1985.

11. Colony has been registered as a hotel for occupational

licensing purposes with the Town of Longboat Key since at least

September 1987.

12. Colony has been registered as a hotel for occupational

licensing purposes with Sarasota County since the county's

licensing ordinance took effect on October 1, 1992.

13. In summary, the Colony is a hybrid facility that meets

the definitions of a "timesharing plan," a "resort condominium,"

and in some respects of a transient rental facility such as a

hotel or motel.

14. From at least 1973 until June 1998, the units at

Colony were individually metered for electric service. No

evidence was presented to establish the original reasoning

behind FPL's decision to individually meter each unit in the

early 1970s.

B. Rule 25-6.049(5), Florida Administrative Code

15. Rule 25-6.049(5)(a), Florida Administrative Code, was

originally adopted in November 1980 in response to the federal

Public Utilities Regulatory Policies Act, which required state

regulatory commissions and regulated utilities to implement

measures to conserve electricity. The rule requires individual

metering for each separate occupancy unit of: "new commercial

establishments, residential buildings, condominiums,

cooperatives, marinas, and trailer, mobile home and recreational

vehicle parks for which construction is commenced after

January 1, 1981."

16. As to buildings constructed prior to January 1, 1981,

the PSC has stated that its intent was to allow master metered

buildings constructed before 1981 to remain master metered, but

not to allow individually metered buildings constructed before

1981 to convert to master meters. In re: Petition for

Declaratory Statement Regarding Eligibility of Pre-1981

Buildings for Conversion to Master Metering by Florida Power

Corporation , Order No. PSC-98-0449-FOF-EI (March 30, 1998).

17. The PSC's rationale for adopting the rule was that

individual metering helps to conserve energy by making the

individual unit owner or occupant aware of the amount of

electricity being consumed by the unit, thus providing an

incentive to reduce consumption and the cost of the electric

bill for the unit.

18. The rule exempts a lengthy list of otherwise covered

facilities from the individual metering requirement. Among the

exempted facilities are "hotels, motels, and similar

facilities."

19. From the early 1980s until March 1997,

Rule 25-6.049(5)(a), Florida Administrative Code, included a

statement that the requirement for individual metering applied

to each separate condominium unit and other multi-use facility

"whether or not the facility is engaged in a timesharing plan."

Prior to March 1997, Rule 25-6.049(5)(b )2, Florida

Administrative Code, defined "timesharing plan" to mean:

any arrangement, plan, scheme, or similar

device, whether by membership, agreement,

tenancy in common, sale, lease, deed, rental

agreement, license, or right to use

agreement or by any other means, whereby a

purchaser, in exchange for a consideration,

receives a right to use accommodations or

facilities, or both, for a specific period

of time less than a full year during any

given year, but not necessarily for

consecutive years, and which extends for a

period of more than three years.

20. In 1996, the PSC directed its staff to review the

exemptions from the individual metering requirements to

determine whether to allow master metering for timeshare

facilities. In January 1997, the PSC approved amendments to

Rule 25-6.049(5), Florida Administrative Code, to allow

timeshare facilities to be master metered. The amendments

deleted the language in subparagraph (5)(a) that required

individual metering for a covered facility whether or not it was

subject to a timesharing plan. The amendments deleted the

definition of "timesharing plan" quoted above, and added

language allowing master metering of timeshare facilities and

requiring the customer to reimburse the utility for the costs of

converting from individual to master meters.

C. The Conversion of Colony to Master Meters

21. Marc Mazo is president and owner of Power Check, a

company that consults with commercial clients to find savings in

their electric, water, sewer, and telephone bills. Mr. Mazo was

retained by Colony in early 1997 to review its utility billings.

22. Prior to starting his work for Colony, Mr. Mazo had

been actively involved in the PSC proceedings that led to the

amendments to Rule 25-6.049(5), Florida Administrative Code,

discussed above. Mr. Mazo testified that he believed the

definition of "timesharing plan" in the pre-1997 rule was

"broad," and that his goal in the rule amendment proceeding was

to persuade the PSC to authorize master metering for timeshares

and for resort condominiums. The amendments adopted by the PSC

authorized master metering for timeshares, but not for resort

condominiums.

23. Mr. Mazo testified that his review of Colony's

billings showed that the facility had 232 individual meters. He

testified that Colony appeared to operate as a hotel and, thus,

should be eligible for master metering under the "hotels,

motels, and similar facilities" exemption from the individual

metering requirement of Rule 25-6.049(5)(a )3, Florida

Administrative Code.

24. In approximately February 1997, Mr. Mazo contacted Jim

Guzman, FPL's customer service representative for the Sarasota

area. Mr. Mazo requested the conversion from individual to

master meters for three separate resort facilities that he

represented: Colony, the Veranda, and White Sands.

25. At the time of Mr. Mazo's initial contact, neither

Mr. Guzman nor his supervisor, Greg Bauer, was aware of the

pending amendments to Rule 25-6.049(5) that would allow master

metering of timeshares. They learned of the pending amendments

from Mr. Mazo. Neither Mr. Guzman nor Mr. Bauer had ever been

involved in the conversion of a facility from individual to

master meters.

26. Mr. Guzman and Mr. Bauer confirmed through FPL sources

that the pending amendments were as represented by Mr. Mazo.

Then, they made a phone call to Colony and asked the person who

answered the phone whether Colony was a timeshare. This

unidentified person answered in the affirmative. Based on this

answer, Mr. Guzman and Mr. Bauer decided to move forward with

the conversion.

27. Mr. Guzman testified that his main concern was to

comply with the request of his customer and that this phone call

was sufficient to reassure him that Colony qualified for

conversion under the pending timeshare amendments.

28. FPL did not conduct a detailed analysis to determine

whether Colony qualified for master metering. After the phone

call to Colony, Mr. Guzman moved forward with a cost analysis to

convert Colony to master metering in accordance with amended

Rule 25-6.049(5)(a )5, Florida Administrative Code, which states

in relevant part:

When a time-share plan is converted from

individual metering to master metering, the

customer must reimburse the utility for the

costs incurred by the utility for the

conversion. These costs shall include, but

not be limited to, the undepreciated cost of

any existing distribution equipment which is

removed or transferred to the ownership of

the customer, plus the cost of removal or

relocation of any distribution equipment,

less the salvage value of any removed

equipment.

29. In approximately March 1997, Mr. Bauer and Mr. Guzman

met with Mr. Mazo and Tom Saxon , a consultant called in by

Mr. Mazo. The discussion dealt with technical issues regarding

the conversion of all three resort facilities. There was a

disagreement as to the allocation of costs that could not be

settled at the meeting, due to the inexperience of Mr. Guzman

and Mr. Bauer with conversion issues. Mr. Guzman testified that

it was necessary to seek input from higher in the FPL chain of

command.

30. After the meeting, Mr. Mazo and Mr. Guzman engaged in

extensive negotiations regarding the cost of conversion,

communicating by telephone and written correspondence.

31. The testimonial and documentary evidence indicates

that there was a fundamental misunderstanding between Mr. Mazo

and the FPL representatives as to the nature of Mr. Mazo's

request for conversion of Colony. Mr. Mazo testified that his

intent was that Veranda and White Sands should be converted

pursuant to the timeshare amendments but that Colony should be

converted pursuant to the longstanding "hotels, motels, and

similar facilities" exemption in Rule 25-6.049(5)(a )3, Florida

Administrative Code.

32. Mr. Guzman and Mr. Bauer testified that they

understood Mr. Mazo to be requesting the conversion of all three

facilities pursuant to the timeshare amendments, and that all of

their actions were premised on that understanding.

33. Mr. Mazo testified that the participants at the face-

to-face meeting in March 1997 discussed and agreed with the

premise that Colony was a hotel and should be master metered as

a hotel. Mr. Saxon, the consultant brought to the meeting by

Mr. Mazo, corroborated Mr. Mazo's recollection of the meeting.

34. Neither Mr. Guzman nor Mr. Bauer recalled discussing

with Mr. Mazo whether Colony was a hotel. Mr. Guzman testified

that FPL had already decided to go forward with the master

metering of all three facilities and that it treated all three

facilities as timeshares. Mr. Guzman testified that, once

having decided to grant its customer's request for master

metering, FPL was unconcerned whether Colony was a hotel or a

timeshare.

35. In a memorandum to Mr. Guzman, dated March 19, 1997,

Mr. Mazo wrote:

First of all, based on our numerous

discussions, it is my understanding that

FP&L has agreed that since The Colony has

been and continues to operate as a hotel, it

is allowed under the old rule

25-6.049(5)(a )3 to be master metered.

Therefore, we do have to wait for the

amended version of the rule relating to time

share resorts to take effect to begin the

conversion process. (Emphasis added)

36. Mr. Mazo testified that the emphasized portion of the

memorandum contained a typographical error, and should have

stated that "we do not have to wait for the amended version of

the rule." The context of the statement makes Mr. Mazo's

testimony credible on that point. The remainder of the

memorandum deals exclusively with the scope of the work and

costs for the conversion of Colony.

37. Mr. Guzman testified that Mr. Mazo's statement that

FPL agreed that Colony operated as a hotel was incorrect. He

testified that FPL's actions toward Colony and the other two

facilities represented by Mr. Mazo were a response to the

timeshare amendments, and it was FPL's understanding that all

three facilities were the same. He did not contemporaneously

respond to the statement in Mr. Mazo's memorandum because the

issue of Colony's status as a hotel was irrelevant once the

decision had been made to allow the conversion.

38. Mr. Guzman stated that FPL assessed costs as to all

three facilities in accordance with the timeshare amendments.

He noted that there was no basis in the rules to assess costs

for the conversion of a hotel and that a different inquiry would

have been made in the FPL chain of command had he been asked to

convert a hotel.

39. In a memorandum to Mr. Guzman, dated March 27, 1997,

and titled "Master Meter Conversion Projects," Mr. Mazo states:

Also, the owner posed a question that since

the Colony has been operating as a hotel for

many years now, and should have been

converted long ago to master metering, would

it fall under the same "cost of conversion

rule"?

The balance of this memorandum discusses payment of conversion

costs, itemization of the charges, and scheduling of the

conversions.

40. Mr. Guzman testified that he "vaguely" recalled

responding to the quoted portion of the March 27 memorandum as

to how the costs would be assessed on Colony. Again, he stated

that Mr. Mazo's contention that Colony was a hotel had no

significance to FPL and there was no reason to respond to that

contention.

41. In a letter to Mr. Mazo dated November 25, 1997,

Mr. Guzman stated a final cost of $11,152 for the conversion of

Colony and requested payment in full prior to release of a work

order. The first sentence of the letter reads: "Thank you for

your recent inquiry concerning the conversion of your timeshare

resort, from individual residential metered units to single

master commercial meter." Mr. Guzman testified that this was a

form letter, his only independent input being insertion of the

numbers reflecting the amount of payment and time required to

complete the conversion.

42. Shortly after receiving the letter, Mr. Mazo phoned

Mr. Guzman. Mr. Mazo told Mr. Guzman that he wished to proceed

with conversion of Colony and agreed to the stated cost.

However, Mr. Mazo requested that Mr. Guzman rewrite the letter,

substituting the word "hotel" for "timeshare resort." Mr. Mazo

testified that he emphasized to Mr. Guzman that he had never

represented that Colony was a timeshare resort and that the

reference in the letter should be corrected.

43. Mr. Guzman recalled the conversation, but testified

that there was no real discussion as to why Mr. Mazo was

requesting the change in the letter. Mr. Guzman discussed the

matter with his superior, Mr. Bauer, who instructed him to

accede to the request, because it made no difference to the

master metering project whether Colony was called a "hotel" or a

"timeshare resort." Mr. Guzman made the change and reissued the

letter on December 22, 1997.

44. Mr. Mazo sent FPL the payment for the Colony master

metering project on April 10, 1998. The project was completed

in June 1998.

D. The Refund Claim

45. Mr. Mazo testified that at some point in the latter

half of 1997, he was discussing the conversion with Jerry

Sanger, Colony's longtime chief maintenance engineer. During

the conversation, Mr. Sanger mentioned that he was gratified

that Mr. Mazo was able to complete the conversion, because

Mr. Sanger had unsuccessfully attempted to do so several years

earlier.

46. Mr. Sanger testified that one of his duties at Colony

is to monitor energy usage. Some time in 1988 or 1989, he

discovered that the units at Colony were individually metered

and separately billed by FPL and that there was a $6.00 monthly

charge for each of the meters. He knew from his prior

experience in the construction field that it was possible to

service all the units with a single meter and thought that

Colony could save money by reducing the number of meters and

bills.

47. Mr. Sanger contacted FPL, which sent a representative

to Colony. Mr. Sanger could not recall the representative’s

name. FPL had no record of this meeting.

48. Mr. Sanger testified that he asked the FPL

representative whether Colony could move to a smaller number of

meters. The FPL representative said that the company would look

into the matter and requested a copy of Colony’s operating

license, which Mr. Sanger provided.

49. Mr. Sanger testified that a couple of weeks later, FPL

contacted him and stated that Colony did not qualify for master

metering. Mr. Sanger recalled that the FPL representative

stated something to the effect that Colony was licensed as a

condominium, not as a hotel, and therefore did not qualify.

50. Mr. Sanger testified that this was the end of the

matter. He did not pursue the issue further with FPL, though he

subsequently had repeated dealings with company representatives.

Colony made no further efforts to obtain master metering until

Mr. Mazo arrived on the scene in 1997.

51. Mr. Mazo testified that his conversation with

Mr. Sanger gave him the thought that Colony might be entitled to

a refund, because it had always operated as a hotel and FPL

should have granted Mr. Sanger’s request in 1988 or 1989 to

convert to the presumably less expensive master meters.

52. Neither Mr. Guzman nor Mr. Bauer of FPL recalled

Mr. Mazo ever mentioning a refund request during their 1997

negotiations about the conversion. Mr. Mazo admitted that he

could not recall mentioning his intention to seek a refund

during those negotiations. Mr. Mazo contended that he did not

formulate the intention to seek a refund until the conversion

was complete.

53. Mr. Mazo’s testimony on this point cannot be credited.

As found above, Mr. Mazo’s correspondence throughout the

negotiations repeatedly asserted that Colony is a hotel, not a

timeshare. These assertions would have been irrelevant if

Mr. Mazo were seeking only the conversion of the meters, because

FPL had already decided to go forward with the conversion. It

is reasonable to infer that Mr. Mazo was purposefully creating a

record to support his anticipated refund request, and attempting

to obtain FPL’s acquiescence in terming Colony a “hotel” by not

signaling his ultimate intent to seek a refund.

54. Mr. Sanger’s testimony is credited as a truthful

recollection. However, his recollection is insufficient to

support a finding that FPL incorrectly denied his request.

Mr. Sanger could not recall precisely when the request was made.

There was no written documentation of either the request or of

the FPL inquiry into the matter.

55. No evidence was presented to establish that FPL or any

of its employees employ a strategy to force customers who may be

eligible for master metering to take service on individual

meters. To the contrary, the evidence established that when the

PSC adopted the timeshare amendments, FPL launched an outreach

program to locate those facilities that might qualify for

conversion and actively solicited them to convert to master

metering.

E. PSC Interpretations of the Rule

56. Rule 25-6.049(5), Florida Administrative Code, has

never authorized master metering for a resort condominium. On

several occasions, the PSC has been called upon to address

hybrid facilities such as Colony, which is a resort condominium

possessing characteristics of timeshare facilities and transient

rental facilities such as hotels and motels.

57. The evidence presented at the hearing establishes that

the PSC’s practice in dealing with such hybrid facilities has

been through the mechanism of rule waiver proceedings under

Section 120.542, Florida Statutes. In Petition by Holiday

Villas II Condominium Association for variance from or waiver of

Rule 25-6.049(5)(a), F.A.C., Regarding Electric Metering , Docket

No. 980667-EU, the PSC was presented with a factual scenario

similar to that of the instant proceeding. Holiday Villas II

was registered as a condominium and therefore presumptively

subject to the individual metering requirements of

Rule 25-6.049(5)(a), Florida Administrative Code. However,

Holiday Villas II also had many of the characteristics of a

hotel: only two of its 72 units were used for permanent

occupancy; the other 70 units were treated by their owners as

investments and were let on a daily or weekly basis to

vacationers; Holiday Villas II maintained a registration desk

and lobby where guests were checked in and out; Holiday Villas

II maintained a central telephone switchboard; and the facility

was in direct competition with hotels and motels in its area.

58. Holiday Villas II had requested master metering from

Florida Power Corporation, which declined the request because of

the individual metering requirement for condominiums in

Rule 25-6.049(5)(a), Florida Administrative Code. Holiday

Villas II then petitioned for a waiver of the rule, which was

granted by the PSC in Order No. 98-1193-FOF-EU (September 8,

1998).

59. The PSC has refrained from making a blanket statement

regarding the application of Rule 25-6.049(5), Florida

Administrative Code, to hybrid facilities such as Colony. PSC

staff has taken the position that the rule requires individual

metering of all condominiums and that a waiver or variance is

required when a condominium also possesses characteristics

similar to those of a timeshare or a hotel. In essence, the PSC

has recognized that Rule 25-6.049(5), Florida Administrative

Code, provides exemptions from the individual metering

requirement and has employed the waiver mechanism as a means of

ensuring that facilities claiming such exemptions are in fact

entitled to them in those instances where the utility has

declined an initial request for conversion.

60. The evidence produced at the hearing established that

Mr. Mazo was aware of the waiver process employed by the PSC to

allow master metering of hybrid facilities. On October 9, 2000,

Mr. Mazo filed a petition for variance or waiver from

Rule 25-6.049(5)(a), Florida Administrative Code, on behalf of a

resort condominium operating under the name of The Dunes of

Panama. On October 12, 2000, Mr. Mazo filed such a petition on

behalf of Sundestin International Homeowners Association, Inc.,

a beachfront condominium providing transient accommodations in

the manner of a hotel.

61. No petition for variance or waiver was ever filed on

behalf of Colony.

CONCLUSIONS OF LAW

62. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

proceeding. Section 120.569 and Subsection 120.57(1), Florida

Statutes.

63. The burden of proof, absent a statutory directive to

the contrary, is on the party asserting the affirmative of the

issue in any proceeding before the Division of Administrative

Hearings. Department of Banking and Finance v. Osborne Stern and

Co. , 670 So. 2d 932 (Fla. 1996) ; Young v. Department of

Community Affairs , 625 So. 2d 831 (Fla. 1993) ; Antel v.

Department of Professional Regulation , 522 So. 2d 1056 (Fla. 5th

DCA 1988); and Department of Transportation v. J.W.C. Co., Inc. ,

396 So. 2d 778 (Fla. 1st DCA 1981). In this proceeding, that

burden falls on Colony.

64. Colony must demonstrate by a preponderance of the

evidence that FPL has violated the rule provisions stipulated to

be at issue. Subsection 120.57(1)(j), Florida Statutes. A

"preponderance" of the evidence is defined as "the greater

weight of the evidence," or evidence that "more likely than not"

tends to prove a certain proposition. Gross v. Lyons , 763 So.

2d 276, 280 n.1 (Fla. 2000).

65. Until its amendment in 1997, Rule 25-6.049(5)(a),

Florida Administrative Code, required individual metering of

condominium units. While Colony possesses characteristics of a

hotel and of a timeshare, it is registered with DBPR as a

condominium and the individual units of the facility are

separately owned in accordance with the Condominium Act, Chapter

718, Florida Statutes. Colony has been so registered at all

times relevant to this proceeding.

66. Even if it is accepted that Mr. Sanger requested a

conversion to master meters in 1988 or 1989, FPL was justified

in declining the request because of the rule's requirement that

condominium units be individually metered. FPL's reading of the

rule was at least colorable, and consistent with the PSC's own

interpretation as subsequently set forth in Holiday Villas II .

After FPL's rejection, Colony did not petition the PSC or take

any other steps to pursue the matter further until 1997.

67. FPL argues that it had no authority unilaterally to

make the decision to master meter a registered condominium prior

to the rule amendments in 1997. FPL argues that it was not

until 1997, when the PSC "relaxed" its individual metering

requirements to allow master metering for timeshare facilities

that there was even a colorable basis for FPL to master meter

Colony. While the undersigned is not entirely persuaded that

the evidence and cited authorities clearly establish that FPL

had no authority to master meter Colony before 1997, the record

does establish that the rule provided FPL with a reasonable

basis for declining Colony's request.

68. Colony correctly points out that individual meters are

not required under Rule 25-6.049(5)(a), Florida Administrative

Code, for certain types of buildings and facilities specifically

listed in subparagraph 3 of the rule, including "motels, hotels,

and similar facilities." As discussed above, the application of

the rule to hybrid facilities has proven problematic. The PSC

has interpreted the rule to require individual metering of

multi-unit buildings or facilities that fall within the scope of

Rule 25-6.049(5)(a), Florida Administrative Code, but that might

also qualify for a master meter exception, unless the customer

successfully applies for a variance or waiver pursuant to

Section 120.542, Florida Statutes. This interpretation may not

be the sole permissible reading of Rule 25-6.049(5)(a) ,Florida

Administrative Code, but it cannot be called irrational or

arbitrary in terms of serving the underlying goal of the rule,

which is to encourage energy conservation.

69. The PSC has demonstrated a willingness to consider

expanding the exceptions from the individual metering

requirement, where a facility can demonstrate that the purpose

of the underlying statute will be or has been achieved by other

means, and when application of the rule would create a

substantial hardship or violate principles of fairness. The PSC

applied these fairness principles in granting a waiver in

Holiday Villas II . While the manner in which Colony operates

might have provided a basis for the PSC to exempt Colony from

the individual metering requirements of the rule, Colony never

made application for a variance or waiver from the strict

application of the rule.

70. Colony's claim for a refund must also be denied

because it has cited no statutory or rule authority for the

relief requested. Colony cited Rule 25-6.106(2), Florida

Administrative Code, as authority for the requested refund.

Rule 25-6.106(2), Florida Administrative Code, provides:

In the event of other overbillings not

provided for in Rule 25 -6.103 [applying to

meter errors], the utility shall refund the

overcharge to the customer for the period

during which the overcharge occurred based

on available records. If commencement of

the overcharging cannot be fixed, then a

reasonable estimate of the overcharge shall

be made and refunded to the customer. The

amount and period of the adjustment shall be

based on the available records. The refund

shall not include any part of a minimum

charge.

71. Overbilling is not an issue in this case. Colony has

neither alleged nor proved that FPL billed Colony in excess of

the rates that were applicable to the individual meters at the

time the bills were distributed. Colony has cited no precedent

for expanding the concept of "overbilling" to encompass a

situation in which a customer alleges that it should have been

converted to another type of meter that arguably would have led

to billings at a lower rate.

72. Colony also cites Rule 25-6.093(2), Florida

Administrative Code, which provides:

Upon request of any customer, the utility is

required to provide to the customer a copy

and/or explanation of the utility's rates

and provisions applicable to the type or

types of service furnished or to be

furnished such customer, and to assist the

customer in obtaining the rate schedule

which is most advantageous to the customer's

requirements.

73. The cited rule requires the utility to "assist the

customer" in obtaining the most advantageous rate schedule.

However, the rule does not require the utility to provide legal

advice to a customer regarding the proper interpretation of the

PSC's rules governing individual metering nor does it require

the utility to assist the customer in obtaining a variance or

waiver of an existing rule.

74. Under the facts of this case, the reading of

Rule 25-6.093(2), Florida Administrative Code, urged by Colony

would require the utility to guarantee that its customers obtain

the most advantageous rate schedule, to affirmatively canvass

its customers to make good on that guarantee, and to provide a

refund to any customer who is ultimately found not to have

received the most advantageous rate, regardless of whether that

customer ever made more than a cursory effort to obtain the

desired rate. The PSC may or may not have the authority to

promulgate such a rule, but it has not done so with

Rule 25-6.093(2), Florida Administrative Code.

75. Finally, Colony contends that its claimed refund is

authorized by Section 366.03, Florida Statutes, which provides:

Each public utility shall furnish to each

person applying therefor reasonably

sufficient, adequate, and efficient service

upon terms as required by the commission.

No public utility shall be required to

furnish electricity or gas for resale except

that a public utility may be required to

furnish gas for containerized resale. All

rates and charges made, demanded, or

received by any public utility for any

service rendered, or to be rendered by it,

and each rule and regulation of such public

utility, shall be fair and reasonable. No

public utility shall make or give any undue

or unreasonable preference or advantage to

any person or locality, or subject the same

to any undue or unreasonable prejudice or

disadvantage in any respect. (Emphasis

added)

76. Colony contends that it has been subjected to a

competitive disadvantage because of the electric rates it paid

in comparison to those paid by the area hotels with which it

competes. The bifurcation of this case prevented Colony from

actually demonstrating this alleged cost differential in this

phase of the proceeding. It is assumed arguendo that Colony

would be able to establish the cost differential in the second

phase of the proceeding.

77. In arguing that Section 366.03, Florida Statutes,

prohibits the competitive disadvantage it presumably suffered,

Colony cites Corporation de Gestion Ste-Foy, Inc., v. Florida

Power and Light Company , 385 So. 2d 124 (Fla. 3d DCA 1980),

wherein the court held that, under Section 366.03, Florida

Statutes, " a public utility or common carrier is not only

permitted but is required to collect undercharges from

established rates, whether they result from its own negligence

or even from a specific contractual undertaking to charge a

lower amount." 385 So. 2d at 126. Colony argues that the

converse must also be true: the utility should be required to

pay overcharges from established rates, to avoid providing

either a preference or a disadvantage to a given customer.

78. It is concluded that the rationale of Corporation de

Gestion is inapplicable, because any "overcharges" paid by

Colony were not deviations from "established rates."

Corporation de Gestion involved a situation in which an employee

of the utility had negligently misread the plaintiff's electric

meter for a period in excess of three years, resulting in

underbillings of $99,000 to the customer. The court found that

those underpayments must be collected to avoid granting this

customer a preference by paying less for the same service than

those customers who received accurate bills .

79. In the instant case, Colony has made no allegation

that it paid more for its individually metered service than did

other customers who received the same service. Rather, Colony

contends that it received the wrong type of service as compared

to similar customers. As discussed at length above, PSC rules

have established a mechanism whereby a utility customer in

Colony's situation may petition for relief by requesting a

variance or waiver from the individual metering requirement.

Colony never availed itself of this mechanism, and should not be

allowed to use its own inaction as the basis to claim a refund.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that Colony's complaint and request for refund

against FPL regarding rates charged for service between January

1988 and July 1998 be DENIED.

DONE AND ENTERED this 25th day of April, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488- 9675 SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 25th day of April, 2001.

COPIES FURNISHED :

Blanca Bayo, Director of Records

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-0850

Bernard F. Daley, Esquire

901 North Gadsden Street

Tallahassee, Florida 32303

Robert V. Elias, Esquire

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-0850

Kenneth A. Hoffman, Esquire

J. Stephen Menton, Esquire

Rutledge, Ecenia, Underwood,

Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32302-0551

Marc D. Mazo

14252 Puffin Court

Clearwater, Florida 33762

Katrina Walker, Esquire

Division of Legal Services

Florida Public Service Commission

2540 Shumard Oak Boulevard, Room 370

Tallahassee, Florida 32399-0850

Catherine Bell, General Counsel

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-0850

William D. Talbott, Executive Director

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-0850

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the final order in this case.