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PSC to vote on penalty for utility

Published Sep. 16, 2005

Florida's biggest water and sewer utility may lose $1-million in annual revenues as punishment for soliciting letters of support from elected officials _ including the lieutenant governor _ weeks before a key vote on raising rates.

In a report to the Public Service Commission, staff regulators accuse Southern States Utilities of "mismanagement" and call the company's behavior "improper and misleading."

The report's main target: a December 1995 letter from Lt. Gov. Buddy MacKay to PSC Chairwoman Susan Clark expressing concern for SSU's financial well-being. MacKay later said the company manipulated him into signing it by not telling him about the rate case.

Two weeks after the letter, the PSC approved an interim rate increase.

"This was improper," the report said, "as the letter has the appearance of intimidation."

The PSC is scheduled to vote today on the penalty _ a rare occurrence for utilities. Commissioners also will decide the amount of revenues the company would gain from the rate increase.

SSU had asked for $18.1-million. But PSC staff analysts recommended in the report it get much less than that, either about $9-million or $12-million, depending on how you interpret PSC documents.

The Apopka-based utility has customers in Pasco, Hernando, Citrus and Hillsborough counties, although only those in Citrus and Pasco are affected by the current rate case.

Next month, the commission is scheduled to vote on whether SSU can apply uniform rates to all its customers. Doing so could be a sweet deal for customers of its more expensive systems while forcing those who pay cheaper rates to pay more.

Today's meeting comes after months of hearings and testimony from company officials and a cadre of people fighting the utility. It is the largest utility rate case ever to come before the PSC.

As for the issue of misconduct, the report said SSU should have told MacKay about the pending rate case before a lobbyist convinced his office to send the letter.

"The utility ought to have made it perfectly clear to those whom it solicited that the commission had pending before it the utility's application for a rate increase," the report said. "The utility's failure to disclose that information is improper and misleading."

But SSU government relations manager Tracy L. Smith said none of the letters cited in the PSC report, including the MacKay letter, discussed the specific rate case.

"Nowhere in the letter does it make any reference to this rate case," Smith said. PSC staff "stretched logic to say that because it mentioned rates, it has to do with this rate case."

The report said Smith unsuccessfully solicited support letters from legislators, although Smith said Tuesday all that was unrelated to the rate case. It also calls inappropriate an earlier letter from the head of SSU's parent company, Minnesota Power, to Gov. Lawton Chiles complaining about the PSC.

But SSU opponents, who have pushed for a $10-million rate decrease, thought the report was not enough. They said the letter controversy should have gotten the case thrown out.

"I'm certainly happy the staff saw fit to make a recommendation that there should be punishment," said Public Counsel Jack Shreve, who represents consumers in rate cases. "I'm not sure it's enough. . . . This had to do directly with influence on this case."

Mike Twomey, an attorney representing SSU customers, agreed.

"Arguably the entire case should be dismissed as a result of SSU's reprehensible behavior," he said. "But a million dollars would be a good start."