ML20039B552
| ML20039B552 | |
| Person / Time | |
|---|---|
| Site: | Saint Lucie  |
| Issue date: | 12/04/1981 |
| From: | FLORIDA, STATE OF |
| To: | |
| Shared Package | |
| ML20039B551 | List: |
| References | |
| 810249-EU, NUDOCS 8112230228 | |
| Download: ML20039B552 (169) | |
Text
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i !' .
,;,4..:;-
BEFORE THE
(. FLORIDA PUBLIC SERVICE COliMISSION 1
IN RE.
PARSONS & WHITTEF. ORE, INC. .
)
200 Park: Avenue )
)
RESOURCES RECOVERY (DADE COUNTY), )
INC.
DOCKET NO. 910249-EU
)
Post Office Box 52405E )
Miami, Florida 33152 ) VOLUME II l ,
)
Y PROCEEDINGS: Hearing
- BEFORE: JOSEPH P. CRESSE, Chairman I
Susan Leisner Katie Nichols
. Gerald Gunter,
- ( * * * *****
I DATE:
Friday, December 4 , 1981 TIVE:
Commenced 9:30 a.m.
Terminated 2:10 p.m.
PLACE: Room 106 Fletcher Building Tallahassee, Florida REPORTLD BY:
KRISTI HVriLUFD DILLARD, RPR, Notary Public in and for the State of Florida at Large.
s
{omia 0 kssociales Registered Professional Reporters P. O. Box 2831 TALLAHASSEE, FLORIDA 32304 8112230228 811218 224-6200 PDR ADOCK 05000389 N-h PDR
y- <163
-e'- e
- w. .
i,' 1 APPEARANCES: DANIEL DEARING, ESOUIRE P. O. Box 1118 2 Tallahassee, Florida 32302 1 MELVIN N. GREENBERG, ESQUIRE -and-3 RONALD R?NIKODF, ESOUIRE DNVID J. BARDIN, ESOUIRE Brickell Concours Federal Bar Building 4 1401 Brickell Avenue 1815 H Street, N.W. .
Miami, Florida 33131 Washington, D.C. 20006 5 Representing Metropolitan Representing Parsons &
Dade County, Florida Whittemore and Resources 6 Recovery (Dade County), Inc.
DARREY A. DAVIS, ESQUIRE 7 MATTHEW CHILDS, ESQUIRE PAUL SEXTON, ESOUIFE 1400 S.E. 1st National Bank 101 East Gaines Street
. s Building Tallahassee, Florida 32301 100 S. Biscayne Boulevard Representing the PSC Staff g Miami, Florida 33131 Representing Florida Power PRENTICE P. PRUITT, ESOUIRE 10 & Light Company 101 East Gaines Street Tallahassee, Florida 32301 11 Representing the PSC Commissioners ,
12 13
( lND{f Opening Statement by Mr. Greenberg 167 15 Opening Statement by Mr. Davis 197 Opening Statement by Mr. Dearing 221 16 DENNIS I. CARTER
- j7 Direct Examination by Mr. Ravikoff 239 5 Prefiled Testimony , 248 1 18 Cross Examination by Mr. Dearing 262 8
Redirect Examination by Mr. Ravikoff 273 4
ig Rccross Examination by Mr. Dearing 274
- COHN R. SEELKE g ,o Direct Examination by Mr. Davis 286 j ; Cross Examination by Mr. Dearing 289 6
l Redirect Examination by Mr. Davis 296 l Recross Examination by Mr. Dearing 297
- ROBERT M. SEAUN 22 Direct Examinaticn by Mr. Dearing 300 g , Cross Exanination by Mr. Sexton 313 Cross Examination by Mr. Greenberg 314 Cross Examination by Mr. Childs 317
( 25 l
l
(G3 s
's : -
d
.. 1 a INDEX (Continued) g 2l EXHIBITS Marked . Received 3
Exhibit Number 12 241 280 Exhibit Number 13 241 280 4
Exhibit Number 14 241 280
- Composite Exhibit Number 15 247 280 5 Exhibit Number 16 273 280 6 Exhibit Number 17 278 284 Exhibit Number 18 278 284 7 Exhibit Number 19 278 284 Exhibit Number 20 279 284
, 8 Exhibit Number 21 -279 284 Exhibit Number 22 279 284 i 9 Exhibit Number 23 279 284 Exhibit Number 24 279 284 10 Exhibit Number 25 279 284 Exhibit Number 26 279 284 11 Exhibit Number 27 279 286 12 Exhibit Number 28 300 300 13 k
14 "
15 16 E
17
, is j 19 a
.. 20 i, 2, 1
22 23 24 25
, 16y l 1
E E S S E E E I_ $$ E E 2
i CHAIRMAN CRESSE: Commission come to order. Take 3 appearances.
4 MR. SEXTON:
Mr. Chairman, I don't think it's
- 5 necessary to take full appearances, because this is a 6 continuation. But we ray want to take additional 7
appearances for counsel that was not present prior.
. B CHAIRMAN CRESSE: I was mainly trying to do that 9
for the benefit of the court reporter so she gets your 10 name right.
33 MR. DEARING: I wasn't present on September 17th.
12 I'm Dan
Dearing,
and I represent the Petitioners. Mr.
13 Bardin is here with me, and he was here on September 17th .
lk y CHAIRMAN CRESSE: You both are attornies?
15 MR. DEARING: Yes, sir.
16 . : y name is Melvin N. Greenberg, attorne g from Dade County, representing Metropolitan Dade County.
2 1
3 18 And this is Ronald Ravikoff, also an attorney, i"
representing Metropolitan Dade County.
i 39 i-20 MR. DAVIS: Darrey Davis, Steel, Hector & Davis, l :
l[
21 counsel with Matt Childs for Florida Power & Iicht
!I Company. '
22 23 CHAIRMAN CRESSE: Yes, sir. 1 think everybody here recognizes Mr. Childs.
( 25 MR. DAVIS: I would hope so.
i
, 165
.. * ' l 1
MR. BROUNT: John T. Blount with Florida Powsr &
2 Light also.
3 MR. SEXTON: For the benefit of the court reporter, 4
, I'm Paul Sexton of the staff. e
. 5 MR. PRUITT: Just in case, Mr. Chairman, I'm 6 Prentice Pruitt, counsel to the' Commission.
7 CHAIRMAN CRESSE: We have a little late-filed 8 information this morning from Dade County. I cuess we 9 can go ahead and accept it, even though it's late. I've 10 read part of it this morning. It brought about 7 33 more issues than we had, what we had earlier.
12 Can we accept it if it's filed late, Mr. Pruitt?
13 MR. PRUITT: If there is no objection to it, there 14 is no question about it.
15 CHAIRMAN CRESSE: All right, sir. Mr. Sexton, do 16 you have a suggested order of proceeding this morning?
==
j 37 MR. SEXTON: Well, my impression from the way the
- 18 case stood at the close of the hearing last time was more 3g or less that Parsons & Whittemore had rested its case,
'd and Florida Power & Light was beginning a responsive d
, 21 case. And I assume, perhaps, Dade County would also be in 2
'r 22 that oosture.
s I don't know whether in fact that has changed since that point, but unless it has changed I would expect
( that except for preliminary motions FPI,and the county i
l
?,
. 166 1
could' proceed with their evidenticry presentation. And I 2 i
( then the Petitioner could respond in any form in terms .
1 l
3 of rebuttal.
4 MR. DAVIS: Mr. Chairman, may I reflect a suggested 5
order to proceed that would permit Metropolitan Dade 6
County to make its presentation, since it was not present 7
and it would be very helpful for us, and I think helpful 8
to the Commission, to start out in chronological order.
9 Unless there is any objection, I would respectfully 10 suggest that, and I believe the county is in accord 11 with that.
12 CHAIRMAN CRESSE: Is there any objections to that 13 procedure?
(
34 MR. DEARING: Not really, Mr. Chairman. The only 15 think that we would ask the Commission to rule on is to 16 consider the fact that both the county and Florida Power i
17 &
Light represent the opposition to our petition. And us that therefore, any cross examination by us of their
- ig witnesses would follow their presentation.
a In other words,
{ 2c that we not be subject to being recrossed after we finished 4
c 21 by one of the other parties.
I 22 CHAIRMAN CRESSE: I think that's abundently fair ~.
I don't think even -- I don't even think the attornies 23 24 w uld object to that. All right sir, what you're
( 25 suggesting then is that we go ahead and allow presentation
'1 61 1
by Dade County, who has filed some prefiled testimony 2
( by one Mr. Dennis Carter, and I assume that is your 3
primary witness.
4 MR. GREENBERG: That's our only witness. '
5 CHAIRkAN CRESSE: All right, sir. I thought you had.
6 another one you were holding back on, counselor. And 7
then you have filed with us also a Statement of Contenticas.
B Both of this came in this inorning.
9 To be very honest with you, I've read Mr. Carter's to testimony. I'm halfway through reading your Statement of 11 Contentions. It might help the Commission if you would 12 kind of open up and kind of tell us what your position R
13 is, briefly, and then bring on Mr. Carter, if that's what
( 14 the precedure would be. All right?
15 MR. GREENBERG: Yes, sir, Mr. Cresse, Commissioner 16 Cresse. I'd first like to apologize to the Commission I!
1 4' 17 for our non-appearance at the last hearing. That was
{!
\.
is i
due to misunderstanding. And for any inconvenience that 19 it caused the Commission.
20 As far as the filing is concerned, I don't understand I 4 li'.l I
21 why it wasn't filed yesterday. We had it air-couriered 22 up yesterday and thought we had an arrangement where it 23 would be filed by five o' clock in the af ternoon with a l
24 1 cal law firm here in town. So I'm surprised that it
( 25 was not filed here yesterday.
I i
168
,, i.
1 CHAIRMAN CRESSE: It may have come in after six o' clock, i
2 something like that. We didn't hold a n' es-ing late last 3 night. Night before last we had a late hearing. .
l 4
, MR. GREEhBERG: I can only tell you that the .
5 Metropolitan Dade County Commission voted only yesterday I
6 by a vote of seven to one to direct their special counsel 7 to oppose this petition; and therefore, until that time a
we received our instructions we were unable to afford 9 those documents to you.
10 What I would like to do, if it's acceptable, is to i
ii j in effect make some of the statements that we would have
' ~
12 made had we been here in September, try to respond to 13 the many questions which were propounded by the Commissio ,,
14 and by that I mean to describe the contractual relation-15 ships. We have, as you know, filed a copy of all of the 16 documents and contracts.
2 17 We'd like to state our perception of those contracts
- is and their relationships, and state as to how we now perceive 4
- ig ;l the dispute which the Commission had a great interest in i
[
3 20 at the September 17th hearing, and to perhaps clarify som e d
of the things that were said at that hearing. Is that a
acceptable to the --
g CHAIRMAN CRESSE: I think that's essentially what ye a've got in this Statement of Contentions. Maybe you want to
( 25 g a e urther than that. You go right ahead, sir - -
,=
'1M 1
MR. DEARING: Mr. Chairman, before Mr. Greenberg
{ 2 proceeds I would like, if I may, to raise an objection 3
to his presentation, his testimony, in so far as it 4 .
opposes interconnection, which is what we are here for, 5
based upon the grounds set out in the prefiled testimony 6
which has bean filed with the Commission. And also in 7
so far as he says it's what they would have said if they' d 8 been here on September 17th.
9 CilAIRMAN CRESSE: I think the point is well made 10 as to what they would have said it they'd been here on 13 September 17th, because I think he just got through sayirig 12 that Dade County Commission didn't decide to do anything 13 until just yesterday, late yesterday afternoon. Se it
( i4 would be hard to know what Dade County would have done 15 on September 17th, had they gotten around to taking a 16 position, if they didn't get around to taking a e
17 position until yesterday. Would you agree with that, i
18 counsel?
4 39 h MR. GREENBERG: Yes. What I meant to say was that r
g a
20 there were certain questions raised by the Commission.
1 0
21 And we were going to attempt to respond to those today, in 22 l terms of clarifying the issues before the Commission.
23 CIIAIRMAN CRESSE: All right, sir. If there is any
, further objection that falls in the line that you just
- ( 25 bjected to, object when he makes the statement, Mr. Dearing i
- L78 1
MR. DEARING: As he goes along?
2
{ CHAIRMAN CRESSE: Sure. I'm trying to find out 3
really what you object to, other than that portion about 4
. what Dade County would have said if they'd been here.on
.5 September 17th, because obviously Dade County apparently 6
didn't have a position then, if the county fathers and 7
mothers didn't take one until yesterday afternoon.
. 8 MR. DEARING: It may well be that they took a positi an 9
yesterday afternoon. But I submit that the record cf 10 September 17th hearing reflects that the chairman spoke 11 with attorney for Dade County, who had indicated their 12 position on September 17th was that they didn't think 13 they'd get past the jurisdictional issue, which was k
14 then before the Commission; that having got past the 15 jurisdictional issue the Commission was not apprised of 16 their position that they had. And I believe that's 2
17 reflected in the transcript. Psr them to come up now after 18 we've put on our presentation and they've had an j 19 opportunity to digest it, work on it a little bit, and 20 ,
then decide yesterday that they want to oppose inter-0 21 connection, we think is highly prejudicial to us in that h
E 22 it gives them an undue opportunity to rebut that which 23 we have put on. That's the procedural purpose of my 24 objection.
( 25 Also, of course, we filed an objection to their i
i I
.. ,. 171 1
etanding to object interconnection in this proceeding.
2 g CHAIRMAN CRESSE: Yeah. And we ruled on that; is 3 that correct?
4 MR. DEARING: .bb , sir.
I don't believe that the:
5 matter has been raised.
6 MR. GREENBERG:
, I believe if one reads the testimony, 7
Commissioner Cresse, of the September 17th hearine, the 8
Commission described us as an intervenor.
And I think 9
it's clear, considered us an important party to this
, 10 proceeding. And as well as that, in addition thereto, 11 l Petitioner has served interrogatories on Dade County, 12 has called us a party in these interrogatories, an'd to 13 now come at this point and say that we are really not
(
14 a party to this proceeding, we have no standing. If they 15 had such a right they certainly wiaved it.
16 CHAIRMAN CRESSE: Let me put it this way. I expressed 5
17 a deep concern to find out, to get to the bottom of the H3 Problem. Because I think the people in Dade County have j 19 a very serious problem.
ME. GREENBERG: Yes, we do.
20
!d 21 CHAIRMAN CRESSE: And I do think in the best inerest
'I::
22 f the Commission to have a clear understanding of what
~
22 the situation is regarding all the issues, that Dade 24 County appears to me to be an indispensable party for'the- l l Commission to understand exactly what all the issues are, 25 i
m 172 1
Mr. Pruitt, . don't let me make a legal mistake with 2
all these distinguished attornies we have here. Can we 3
let Dade County go ahead?
4
. MR. PRUITT: I think you can, Mr. Chairman. I don't 5
believe I would classify them as an indispensable party, 6
but as a necessary party to this proceeding.
7 CHAIRMAN CRESSE: All right. I may have been a bit 8
too strong. It is true that probably Dade County is 9 not indispensable . Thank you, sir.
10 MR. GREENBERG: We filed yesterday, and we believe 11 the Commission should have and understand the various 12 contracts which have created the controversy between 13 Petitioner and Metropolitan Dade County.
i(I -
14 The first contract is classified as a purchase 15 agreement in which Petitioner -- and I'm going to use 16 the word Petitioner to describe the many entities which
- 17 Pass through this various complex legal arrangement for 9
18 clarity or for simplicity as being a party to all these j
a n3 contracts. And that includes Parsons Whittemore, l
z 20 Resource Recovery Construction, Resource Recovery (Dade I
2 21 County), and various other affiliates that may be 2
E 22 relevant.
23 This contract was entered into on September 28th, 24 1976, and has been amended a number of times. And I' 2r, j i
. essentially, what this contract provides is that
-. :- 173 s ,
1 Petitioner was to construct on land owned by Dxde County 2
pursuant to a lease, which was a lease commencing on the 3- commencement date of --
4 MR. DEARING:
Excuse me, Mr. Greenberg. Parden de 5 for interrupting you. But the Chairman has advised me I 6 need to object as you go along.
7 Mr. Chairman, acain, I object on two grounds here.
8 First of all, the contract says what it says, and for Mr.
9 Greenberg to tell this Commission what the contract 10 requires or says requ2res the parties to it. When that 11 contract is in dispute in arbitration, and when it's 12 obvious that there are at least two sides, very probably 33 three sides, and maybe a whole bunch of sides to that
(' 14 issue, that it's somewhat unf air for this Commission to 15 accept Mr. Greenberg's statement of what these contracts 16 mean.
'j 37 CHAIRMAN CRESSE: Yes, sir.
~
But obviously in is abundance of being fair, we would probably -- since we've j 19 asked him to kind of tell us what the Statement of a
')
-5 20 Contentions is, what the issues are and so forth, if he d
21 misstates what they are from son.e other party's I:
22 pr spective, in abundance of fairness we would probably 23 let that other party respond. But we've asked, Commissini 24 has asked for this to kind of get a clear understanding
( 25 and up-date, much of which is in this filed paper which
17(
1 ccm3 in kind of late. We will probably let you respond 2
to that, if you have a different statement of contentions.
3 MR. DEARING: All right, sir. I just would like to, 4
if I may, prevail upon your patience just a little bit.
5 Say I would object to the Commission basing consideration 6
of the issue of interconnection on Mr. Greenberg's 7
statement and explication of these contracts.
8 CHAIRMAN CRESSE: This is not evidence. I totally 9 agree with that. He's attempting to educate us, and we 10 understand that he is not sworn, and that he is kind of n giving us an adversary attorney's view of what he thinks 12 the issue- is about and so forth and so on, and we'll get 13 to the evidentiary portion after we get to averybody's --
(
1 14 let's call it an opening statement, kind of. Whatever 1
l 15 it is, to go ahead and let him get thorugh. It's still 16 legal.
I :
17
! And then if you want to make one, Mr.
Dearing,
that i
i s 18 will be all right. We are just seeking to learn. We 1 3
- 19 know it's not evidence. Go ahead, sir.
l 20 MR. GREENBERG: Under the purchase agreement, it is
!0 R
21 ur understanding that petitioner was required to construct
~
I 22 a resource recovery facility. Let me state that thpre is l i
23 Octually two distinct facilities involved here. One is 24 the plant which processes solid waste, purports to
( 25 m nufacture a fuel which would be burned in t'o boilers
jl75 which would then produce steam. And the steam would be 2
{ then transmitted to two generators. And we think of 3
the generators --
4 CHAIRMAN CRESSE: Yes. The Commission has visit'ed 5
the site. We have seen the site.
6 MR. GREENBERG: Oh, you have seen the site?
7
, CHAIRMAN CRESSE: Yes. We visited the site. We 8
know what it looks like.
9 MR. GREENBERG: The purchase agreement covers only 10 the construction of the solid waste resource recovery 11 4 facility in contrast with those facilities which I would 12 like to refer to as the generating facilitiy, which is 13 covered under a totally different contractual arrangement.
14 So under the purchase agreement, pe itioners were 15 to construct on property owned by Dade County the solid 16 waste resource recovery facility.
17 The right to be on the premises was pursuant to a 18
- lease attached to this acreement, which commenced on 19 construction, and we conte'nt terminated on completion
! 20 when and if such plant was completed.
8 I
21 The purchase price was fixed by a subsequent !
8 \
22 amendment, by the 4th anendment, I believe, was fixed 23 at a specific purchase price. The purchase contract l 24 required the petitioner to finance the construction on I l
25 their own, which they have done. And there are security l
l l
1
1%.
1 interests filed by their various lending institutions 2
which are liens on the resource recovery facility.
3 The second contract was an operation and management 4 agreement, which was entered into on the same date as
.5 the purchase agreement. Dade County's position was, of 6 course, that from the very beginning with petitioner and 7 with other companies who are seeking to build this plant
. 8 that it was interested in a resource recovery facility 9 to ';e constructed on its land, and it was equally interedtet 10 in this plant being operated and managed for 20 years by 11 the petitioner, as it turned out to be, at a price which c
12 was predetermined by this contract, which under the 13 operation and management agreement was to be 25 cents a
(
14 ton escalated by certain cost of living increase indexes is spelled out in the operation and management agreement, 16 which most people feel today would be approximately
! 17 50 cents per ton. And this would go on for a 20 year is period. So we would have a plant built for a fixed price ,
j ig so we knew our debt service requirement for the 20 year a
f 20 peri d, which would be fixed, which approximately now 2
d 21 turned out to be about $12 per ton, or $12 million per 1
22 year -- these are approximate numbers - plus we would 23 have the right to deliver waste up to 3,000 tons a day 24 r 18,000 tons per week with varied low days or higher
( 25 days in terms of volume at 25 cents escaleted, so that our l
w "
- l. .. ..
177 1
totcl cost in the first ysar of operation, if the plant 2
had commenced operation in 1981, would have been 3 approximately $12.50 per ton. That would be the debt 4 ,
service of approximately S12 a ton, which we pay directly 5
to the State of Florida as a repayment of a loan, and 6
50 cents paid for every ton processed by Resource Recovery 7 or the petitioner, a
In addition, under our contractual relationship, 9
under the management and operation agreement, Metropolita n 10 Dade County is entitled to 50 percent of all revenues which 33 it received from -- which petitioner s:as to receive from 12 Florida Power & Light for the sale of steam.
13 You recall this was a steam purchase agreement,
'Y
<a u which I'll describe later, But under the operation and 15 management agreement we were to get 50 percent of all 16 revenues in excess of $6;8 million for the life of the i 37 management and operation agreement. That's an extremely 5
18 important point which k will get to a little later.
) 39 But that is the contractual relationship.
S 20 even though Dade County was paying S12 per ton d
21 debt service, 50 cents a ton escalated for the right to k
22 deliver the waste as a tipping fee, it was to receive 23 back from petitioner 50 percent of these revenues. j g The third agreement was the electrical generating 25 ea p ase agreeme M.
.c_
. 178 1
CHAIRMAN CRESSE: Excuse m3. Lat m2 ask a question !
2 on that last section. I recall reading in Mr. Carter's 3
testimony something about $6.8 million, and then 50 4
. percent after that. Did you read that? ?
5 MR. GREENBERG: That's exactly what I've just 6 described.
7 COMMISSIONER GUNTER: Yec, on Page 7.
. 8 MR. GREENBERG: I believe that the contracts, 9
incidentally, will varify all the statements which I .
to am making. And what I'm attempting to do is exactly, 11 Commissioner, what yca had said, try to simplyfy these 12 and put this whole hearing in prospective if we can.
13 The third agreement is the steam purchase agreement 14 and construction agreement or sales agreement whereby
,. Metropolitan Dade County agreed to construct a 16 generating facility on its land, and to sell that
.I
- 17 facility to Florida _ Power & Light for approximat41y C
18 S21 million. Again, this is an escalated price.
j 19 Florida Power & Light agreed to this agreement to a
5
- 20 purchase the electrical generating facility as distinct -
d R 21 from the solid waste resource recovery plant, and to pay 22 that over installments based on certain conditions, and 23 to buy steam from Dade County pursuant to a formula set 24 f rth in the steam purchase agreement. It is the proceeds ^
- ( 25 fr m this steam purchase which I described as beine the
l I
179 )
1 revenuns which Dade County would share in. ,
l 2
7 It was never the intention of Dade County to 3
construct this itself, obviously, as not being in the 4
construction business, but it was always intended that 5
this plant be constructed by Parsons Whittemore, or the 6
petitioner, and in fact by one year after -- well, the 7
Florida Power & Light agreement or the EGF agreement 8
was entered into approximately one year after the 9
operation and management agreement and the purchase 10 agreement were entered into, and then months later 11 petitioner assumed essentially all of the obligations of 12 Dade County, which it had obligated itself to Florida Power 3 & Light to perform under the construction, sales and i
14 steam purchase agreement. So that once the assumption 15 agreement had been entered into, in fact petitioner had is obligated itself to build the electrical generating if facility, to sell it to Florida Power & Light, and then 3
18 Florida Power & Light had obligated itself to sell --
- 19 purchase steam from the resource recovery facility at a
8 l 20 those prices.
- 21 The fourth agreement is the escrow agreement. Dade I
22 County pursuant to a program permitted by Florida Statutes 23 f r pollution control facilities, uater purification 24 facilities and resource recovery facilities arranged with
(
25 the State of Fliorida for it to sell general obligation
.. . 180 '
I bonds for the proceeds to be loaned to Dade County, 2
_(
and for those proceeds then were pursuant to an escrow 3
agreement escrowed with the State Board of Administration 4
, to provide the ultimate purchase price for the resource
.5 recovery plant.
6 That money is still in escrow and is the subject 7
primarily -- of the primary dispute between petitioner 8 and Dade County. That now approximates $150 million.
9 Now, the idea was that when the plant was completed 10 they were to certify, the petitioner was, to the escrow 11 agent and the escrow agent if the certification was not 12 objected to would pay the moneys to the petiti ner for 13 t.e construction of the plant.
j 14 Now, what occured was that sometime in 1980 it 15 came to the attention of Dade County -- let me say that 16 one of the things that we don't want to happen before g
17 this Commission, and I hope that our position as l
i E
- 18 consistently will be,"that this is not the appropriate l 3*
t ig forum, is to try the arbitration proceeding. And so I'm 1 a IE 3
20 g ing to try -- and we tried in the testimony as submitted t ,.
'D to merely attempt to inform the Commission as to the a 21 t-22 disputes without really getting to the merits of the I 23 disputes.
24 We w uld submit that all of these disputes are in l l
( 25 serious contentions, that the petitioner is not in
- . + ' 1 81 1
agrchment with cny of the positions of Dads County, 2
to the best of my knowledge, with regard to these 3 disputes.
But what we think is important is to merely 4 .
inform the Commission of what the disputes are, and 'what 5
the potential adverse affect a decision by this forum 6 may have on the disputes. And that 's why this testimony 7
was submitted, and for that reason only, not to in B anyway indicate to. this Commission as to whether the 9
merits are -- our contentions are meritorious or not.
10 So what we are saying is that sometime in 1980 it 11 is the position of Metropolitan Dade County that 12 petitioner by certain statements breached the operation 13 and management agreement by saying that it could not k
14 perform under these agreements.
15 Now, as a result of that, the dispute commenced.
16 Now, it became relevant because under the escrow t
37 agreement even if the plant were completed, there is
- la a provision in the escrow agreement which if this 3
i
. 19 Commission is interested could read that says that all 20 the other agreements must be in good standing.
d
, t
' 21 Dade County's original contention was that because
< 2 22 the petitioner had breached the operation and management 23 agreement by in effect repudiating that agreement, and 24 by having repudiated the assumption agreement by statements
( 25 in which it said it would not perform these agreements,
182 1
it was in a brecch of those agre msnte end therefora
)
2
( the moneys should not be paid by escrow agent. .
3 In addition, at the time -- this would be January 4 ,
9th, 1981, that petitioner certified to the escrow .
5 agent the plant was completed, and completion is a defined I 6
term in the purchase agreement, and that is a contention 7
and -- of Metropolitan Dade County that it was not
. B completed. And I would want to point-out that petitioner I
e' insists equally vigorously that it was completed on 10 January 9th, that issue is being arbitrated in the 11 arbitration proceeding in Metropolitan Dade County.
12 But we had on January 9th objected not oniy to the 13 payment based on the fact that we believed that these
(
14 contracts were in default, but also the plant was not 15 completed, and also that the proper documentation which 16 was required under the escrow agreement uas not submitted.
< E i
j7 to the escrow agent.
s 3
18 So in effect, sometime in Januhry Metropolitan Dade 3 39 County's position was (1) the plant is not completed, 20 (2) even if it were complexed you haven't given us the 21 right documentation, (3) even if it were completed, even 22 if y u did give us the right documentation, you have 23 repudiated-the operation and management agreement, the 24 assumption agreement, therefore you are in default under
( 25 those agreements, therefore we don't have to pay anyway.
,. , 1:
1 All of those contentions are the eubject of the 2
I arbitration.
3 Mow, subsequent to January 9th petitioner has asked 4 .
for several other certifications. They did in FebrWEry, 5
and as recently as three weeks ago they have attempted 6
to recertify the plant by stating that it is now complete, 7
and by redocumenting the tender to Dade County.
B l Dade County's position at this time is they have 9
terminated -- their position is they have terminated to these contracts, they did so in January, and therefore 11 these recertifications can no longer be applicable to thi s 12 proceeding since they themselves should not be in the 13 Position to proceed under contracts which they have in
(
14 effect take the position are now terminated.
35 You may recall that in the September 17th hearing 16 they stated to this Commission that all of these contracts
! 37 have been terminated.
18 So essentially, the posture of the natter now is j
19 that Dade County's position is that we do not have to I 20 Purchase these plants, and do not have to pay for the !
! 21 plants because of these breaches. We also have I
3 positions now befor e the arbitrator and some of these 23 matters were learned after the original breach of the 24 repudiation that the operating expenses of the plant are
( 25 substantially higher than originially represented to Dado
184 1
County. Initially it was repressnted the plant would 2
operate at approximately $5.60 per ton escalated. That 3 may be, say, S8 a ton. When in fact the plant will not 4
, cperate for those costs, but will take 20, $25, perhaes 5
h gher costs per ton to cperate, which may render the 6 plant economically not viable, 7 And since Dade County's position is that part of
. 8 the package which it was acquiring was not only a 9 physical structure but also the operation and manaaement, 10 which involved the processing of solid waste at 25 cents 11 per ton, plus the sharing of the revenues, that unless 12 that were also a consideration for the future relationship 13 between the parties it was no longer -- that Dade County r
14 was no longer required to purchase the plants, and it 15 was buying a plant different than what had been 16 represented, one which was operating at substantially h 17 higher costs. That was not what Metropolitan Dade
- 18 County bargained for.
, ; 19 I must point out that petitioner's position is that 8
20 these are separate contracts, one has nothing to do d
21 with the other, that they are not in default, that we k
22 are still required to purchase this plant for the purchase 23 price, notwithstanding the difference in operating costs, 24 if that is in fact so, the difference, and that these
( 25 are separate and independent relationships, one having i
1 85 1
nothing to do with the other. That essantially, I 2
( believe, is the contentions between the parties on this.
3 In any event, what 's happening in the arbitration 4 ,
proceeding is in effect petitioner is insisting that" 5
Dade County purchase the plant, insisting P. hat we pay 6
for the facility, and that we be the ultimate owner of 7
the plant, and that we do so as soon and as quickly as 8 possible.
9 As I say, our position is of course contrary to that.
10 We believe that, of course, that 11- itself is 33 in conflict with their posture before this tribunal in i
12 as much as here they are claiming to be an owner and 13 asking for this interconnection based on that basic
(
ja premise.
15 Now, the issues that we feel are critically importan t 16 to Metropolitan Dade County and how this hearing reflect!s 37 on our major dispute, which is the arbitration dispute, s
18 is the ultimate disposition of about $128 million of ig tax payers money. That is the purchase price of the
( resource recovery facility.
20 g
And of course claims for f j
, 21 damages, interest and otherwise which petitioner is 2
naking in Metropolitan Dade County's arbitration 7' proceeding.
O So that, needless to say, that proceeding is of
( 25 critical importance to the public and to the county.
?
- I **'
' ' i 1
And ~wa would like to point out what ws believa the 2
jeopardy that Metropolitan Dade County would be placed 3
in by this forum making any kind of adjudication which 4
may in some way either by collatoral estoppel or othErwise 5
effect our proceeding in Dade County.
6 Now, first of all, title and the ultimate passage 7
of title is of critical importance, both in this proceed; _ng
. 8 and in the proceeding in arbitration. It is our 9
understand.ing, and frankly we are not experts or 10 hold ourselves out to be attornies who are knowledgeable 11 of the FERC or PURPA or any of those other things, and
- g think we are limiting ourselves strictly to our position 13 vis a vis our dispute with petitioner in the arbitration
!(
l i
- 4 proceeding. And.that is it is, however, our under-l 15 Etanding that petitioner must be an owner and or
! 16 operator of the facility.
- 17 Now, ve believe that if these contracts are is enforced, and that is what essentially petitioner is
- 19 attempting to do, and that is to require Dade County to 14 20 acquire this facility, that is in direct conflict with f
$ 21 the position here.
i 22 If we are required to purchase these facilities, th 23 we are the beneficial owner of this facility at this 24 time under these contracts, and therefore peltioner is
(- 25 not the owner of the plant as they have alleged.
l l
l18]
1 We as you know own the real omtate, and they are
(
2 there and have been there as a tenant.
3 The second contention of Eade County, and we think 4 , a critical contention --- I'll try to be more specifin 5 in a few moments -- is that their rights to the premises 6 have terminated because under our lease, and that is the 7 right upon which they came on our land, was to construct 8 a plant, that lease was for the sole purpose of 9 constructing the plant and for no other purpose.
10 That lease is terminated if their contention is 11 correct, that the plant is complete. It's terminated 12 anyway because they have defaulted under the ' lease.
13 We have attached a notice of the default, I believe,
( 14 that we sent to them, notice of default, in our 15 contentions.
16 And that basically is because they have been j 37 operating the plant in violation of the lease, and they were not to operate this plant on Dade County , land
) 3g 39 except pursuant to an operation and management agreement a
$ 20 which they now say is terminated. And they have sent a
d 21 ut noti,ces of termination. So that their rights to a
either the ownership or to the operation are certainly 23 in dispute, point being that this tri_bunal would have to determine, it would appear to Metropolitan Dade County,
( to adjudicate that dispute, meaning you would have to
O 1
- i detcImine that they had the right to opercto, and had 2
title to the plant in order to declare this facility 3
a qualified facility.
4 We say that that should not be an issue here, e-5 that until that is finally adjudicated that right is 6
not one which should be heard here now.
7 Now, I suppose that you could hear this and make 8
this determination. We ask you not to. We believe that 9
it would be inappropriate. We have an extensive proceeding to of massive proportion going on now in Metropolitan 11 Dade County covering these very, very points.
12 Now, the contention has been made in the 13 petitioner's filings and my statements and so forth that
( 14 it wouldn't make any difference, and what difference 15 does it make. Why not just interconnect and the Florida 16 Power & Li 9 ht will pay the difference if the price I i
2 17 isn't right and Dade County can't be hurt and so on.
- 18 We take exception to that, in the first place. The j 19 contracts that have been terminated are -- by the T
l 20 ! Petitioner, is the purchase agreement, the assumption I
t 21 agreenent, and the operation and management agreement.
t
.~
22 Unfortunately for Metropolitan Dade County it still 23 has an agreement with Florida Power & Light. It still 1 24 has an obligation under an agreement and neither side
( 25 is in anyway relieved of its obligations under this
l 189 1
cgreemsnt to build end call to Florida Powar & Light an 2 electrical generatin'g facility. That contract is only 3 between Metropolitan Dade County and Florida Power &
4 Light. And we are still required to do that.
, e-5 Now, if this tribunal were to decide that that 6 contract is no longer in force and effect, in a sense 7 by ordering an interconnect, Dade County may well be put in
- 8 a position of being in default under its contractual 9 obligations to Florida Power & Light. I think it's l
l 10 clear that we would be, because we would no longer be i
t 11 able to deliver to them what we had bargained to do. And.
l 12 that is to deliver them a new plant, an electrical 13 generating facility, free and clear of any encumbrances,,
k 14 and for them to then operate -- own and operate it for 15 20 years. That's the first point.
l 16 I think that by determining that they are the 8
lj 37 owners and that they have the right to interconnect, you 1 18 would place Metropolitan Dade County in default under its
_8 j 19 obligation to sell the plant to Florida Power & Light.
20 secondly, it's my understanding that if you do 21 interconnect, that the Federal Regulatory bodies take 11 22 jurisdiction over any subsequent transfers. This is part 23 of the same arguement, but in effect the subsequent l t
24 ability of Dade County assuming Florida Power & Light i
( 25 w uld be willing to purchase this plant after it had beer, l
l
ISC i se.
- I 1
oporcted by Parcons Whittcmoro,whic h was not whet Cur 2
original bargain was, would be that we would then have 3 <
to get approval of the Federal Regulatory Agency.
4 First, they may not approve; second, it's my F 5
understanding that almost by definition Florida Power &
6 Light could not purchase this because they cannot own a 7 qualifying facility. Maybe at that point it could be
. 8 terminated or whatever. But in any event, it's a question 9
which we believe that this tribunal should not decide, 10 but that the parties, their own relationships have to 11 be straightened out first.
12 Third, as I stated, under our original con' tracts 13 Dade County was entitled to 50 percent of the revenues
('
14 in excess of 6.8 million. Now, by ordering an 15 interconnection, and by ordering that petitioner is 16 entitled to all of the revenues from the sale of the e
17 energy, in effect you would be making a determination a
18 that we were no longer entitled to our revsnue sharing
- 19 under our operation and management agreement. We think a
20 that would be a determination that should not be made, f 21 Fourth, we have a right to deliver solid waste to I
22 'this plant, we believe, under our operation and manacemen t 23 agreements for 25 cents per ton. And what is occuring 24 and why Metropolitan Dade County has sent out the notice
( 25 of default is that they are receiving from private haulers
191 1
and come municipalities S10 a ton for solid waste in 2
{ Metropolitan Dade County. They are keeping those 3 proceeds.
And Metropolitan Dade County is paying the 4
. debt service for a plant it's not using.
And as we --
5 stated, I believe, in our contention, at a cost, a fixed 6
i Cost of $6 per ton, which we are continuing to incur 7
because our costs are the same whether or not the solid i
8 waste is delivered to our land fill facilities. So in 9
l effect, Dade County is paying $12 a ton debt service to
- plus its continuing to pay $6 a ton for land fill -- now 11 I understand SB a ton under most recent figures -- and i
l 12 what's occuring is that solid waste is being diverted fro m 13 our facilities and therefore we are losing the revenues
'(
! 14 of $12 a ton which were being paid to Metropolitan Dade 15 County for processing waste. In effect, if this claim I
8 16 was put into service, and if in fact petitioner was
! 17 permitted to collect the revenues or the tipping fees C
3 is plus the revenues from the electrical sales, in effect g 19
~
Dade County would be losing its revenue sharing, number s
20 one; and number two, would be incuring a loss of $12 a 2
ton each ton, 21 which was being delivered to the petitioner' s i
22 plant while still paying the debt service of $12 a ton 73 and still paying the land fill costs which are fixed.
24 costs which it will incur whether or not the waste is
( 25 actually delivered to our land fill site.
1 92 '
1 And a tremandous economic burdsn to M2tropolitan '
2 Dade County as it is, even if the waste is delivered 3
to our sites we are still incurring about a 6 to $8 per 4
ton charge over and above our budget, because Metropolita n 5 Dade County only budgeted $12.50; S12 debt service and 6 50 cent tipping fee for waste this year, when in fact 7 we are having to pay for land fill costs as well as '
8 the $12. So we are running about S6 million short on our 9 budget. And in fact, running out of money, and in fact 10 have asked for the escrow agent to release certain funds 11 in excess of the purchase price in order to enable Dade 12 County to pay its debt service.
13 Lastly, an adjudication by this tribunal that they
(
14 have the right, in effect, to stay on the premises, that 15 they do in fact own the plant, that they do in fact have 16 the right to operate this plant on Dade County land, wil3 i
17 seriously jeapordize our position that we intend to take
. 18 shortly, and that is that they are no longer entitled l
- 19 to the physical possession of this property, that we i
l 20 believe and intend to evict them from the premises, d
21 take over control of the 80 acres, 80 acres being the r
77 land fill site that is part of the overall premises, and i
, 23 begin to land fill on those 80 acres in order to and to 1
24 attempt to eliviate the health hazard that is being I
( 73 p perpetuated on the 58th Street land fill.
i-l l
193 1
1 Now, I must point out that that health hazard is, !
i t
2 although it's been described in very, very strong terms, 3
the fact is that it is the position of Metropolitan Dade 4
, County that it is not the emergency health hazard that.
5 has been caracterized before this tribunal. The lawsuit 6 filed by the Department of Environmental Regulation 7
several months ago has not even had its first hearing. So 8
it is not being treated as an emergency.
9 We recognize that it is a health azard, and that 10 something has to be done. And we intend to do something 11 about it. We have a task force appointed to find alterna me 12 3-and fill sites. But we still believe that the best 13 site and the quickest site is the 80 acres that are
(
14 presently approved as an approved land fill site.
. 15 We must point out that we have asked petitioners to 16 land fill our solid waste on these 80 acres. And that 17 has been denied.
t is l Now, we feel our only course of action is to take
! l
- 19 physical possession, put our own equipment on the 80 acres i
l 20 .and to land fill there. So that an adjudication here 21 that they have the right to the premises, and that we 22 believe is what ycu would have to determine, would 23 seriously prejudice us in that kind of a proceeding.
24 I know this is an extremely conplex legal relation-( ship. I've tried to fairly summarize what the relation-25
.. . 1944 i
chips cro. If pstitioner disagrees with any of these 2
}
a contentions, obviously they are in a position to do so.
3 I think that what we've stated is accurate. As I 4
, said, I would only want to further emphasize that in,-
5 terms of the rights that may be ultimately determined --
6 I'm not trying to make that kind of a statement here.
7 I'm just trying to describe what the differences are 8
and how your determination will reflect on those 9 differences. And I'd be happy to answer any questions 10 that you might have in connection with it.
11 COMMISSIONER GUNTER: I've got --
12 CHAIRF.AN CRESSE: I think he's going to put on a 13 witness.
( 14 COMMISSIONER GUNTER: I've got one he can answer, 15 thought, doesn't have to do with direct testimony.
16 CHAIRMAN CRESSE: All right.
I 17 COMMISSIONER GUNTER:
g I generally understand the g 18 court process. But one thing that's intrigued me since Ij 19 the beginning is you are the first person that maybe can i
f 20 clear up a confusion I have. What part does an arbitrator n
21 play, and what is an arbitrator? Is he a judge? Is he 22 a party, assigned between the parties. Becuase I read the s
23 trial hasn't started yet. I'm familiar with arbitration 24 in labor agreements and these kinds of things, and is
( 25 it binding arbitration on the parties, or is it appealable?
i l
192 1
Kind of lead m2 through cn cducational thing.
2 MR. GREENBERG: The original contracts provided 3
for arbitration in lieu of court proceeding. All of 4
, these contracts. The lease happened not to be one of 5
those that have an arbitration clause, but all of the 6 other agreements do.
7 There is a difference of opinion as to why the e
arbitration clause is there.
There is a difference of 9 opinion in almost everything.
10 The fact is that there is an arbitration. It is ii binding arbitration. An appeal from arbitration, it is 12 our understanding, is very, very limiting. It does not 13 encompass the merits of the arbitrator's findines.
( y COMMISSIONER GUNTER: Does it work in perhaps the 15 same fashion as arbitration in a labor relation --
16 MR. GREENBERG: Exactly.
I g 37 COMMISSIONER GUNTER: Somebody that both parties
- 18 agree'to --
t a
j 19 MR. GREENBERG: No. What occured is that the con-20 tract provided that each party would select its own d
- 21 arbitrator.' The two of them would try to select a third.
Ir 77 If they couldn't agree the Chief Judge of the Southern
, 23 District of Florida would appoint the third arbitrator.
24 That is in fact what has occured. And the neutral
( 25 arbitrator is a former Federal judge who sat in the 1 I
i 1
4
196
. 1 Pantma Ccnol Zone.
2 COMMISSIONER GUNTER: All right. I understand l 3 generally now.
1 4
, CHAIRMAN CRESSE: Xind of like an expert judge. -
5 It's a contractual arrangement.
l 6 MR. GREENBERG: It's a contractual relationship. !
7 The actual mutual arbitrator was appointed by the Chief 8 Judge of the Federal Southern District.
9 CHAIRMAN CRESSE:
i I take it it has been quite some 10 time since you all have been in agreement with the 11 parties, couldn't even agree on an arbitrator.
12 MR. GRECNBERG: That's correct.
13 CHAIRMAN CRESSE: All right. Do yor want to make k
14 an opening statement, Mr. Davis? Mr. Childs?
15 MR. DAVIS: Yes.
j 16 CHAIRMAN CRESSE: Let me inquire and be sure I have
- 17 everything in front of me. Has you alls only filing E
18 subsequent to the last hearing been this document dated j 19 third day of December?
i h 20 MR. DAVIS: Yes, sir.
8 l
lR 21 CHAIRMAN CRESSE: That's been your only filing?
It i# 22 MR. DAVIS: Yes, sir.
i l 23 CHAIRMAM CRESSE: Thank you. Go ahead, sir.
l 24 MR. DAVIS: As indicated, we'd like to make a
(. 75 statement in the nature of an opening statement. We would
.4 191 1
then like to present some evidentiary exhibits, and we 2
g would like to present the testimony of.a witness, John 3
Seelke, which would concern himself and make it known to 4
the Commission our calculations of the steam paymenti-5 requirements as contrasted with the electrical payments, 6
so that that dif ferential would be before the Commission.
7 Florida Power & Light contests petitioner for 8
intervention on the grounds that intervention is requirec; 9
only to a qualified facility. That the generation facility to here is not a qualified facility, because Florida Power 8 11 Light is the beneficial owner with exclusive operating 12 rights, that the petitioner lacks standing to demand 13 interconnection since they do not possess ownership and
(
14 operation and rights to the generating facility. And 15 that that is supported by PURPA and its implementing 16 regulations, .specifically 18 CFR 5292.207, that provides i
17 tha t the application for interconnection has:to be made
- 18 by an owner or operator of the qualified facilities.
19 I think at the outset it's important to understand f.
20 the facilities involved and the contracts since has
' 3 s
21 made these distinguished from the physical observation 22 of the facilities. There is the solid waste processing 23 facilities, and there is the electrical generation s
24 facility. The contract governing the ownership and the
( 25 operation of the generation facility is set forth in i
i
- 19
'l S322 -- 3.22 et Prge 7, daccribing the solid waste 2 processing facility. And it provides.ac follows: "The 3
facility for receiving and processing solid waste, 4
reclaiming and recycling materials included therein r-5 and burning the combustable portion thereof for the 6 production of steam." The solid waste processing facilit/
7 does not include the EGF. That's the contract 8
And definition of the solid waste processing facility.
9 it's treated differently.
10 Now, the definition description of the electric 11 generating facilities, 53.12, Page 5 of the contract 12 governing the ownership and operation describes in 13 detail and attaches the exhibit or plan showing the 14 facilities and all of their accessories. And it's l
15 rather lengthy, but it devides them into two parts, the 16 generation and transmission part.
- 17 So we really have here two separate parts of the g 18 facilities. And I get the impression from reading the y 19 filings by the petitioner that they tend to lump it i
f 20 as a single facility. It is not. It's treated 21 differently.
22 The county's contract with the petitioner, that 23 is Parsons & Whittemore and Resources Recovery, concern 24 themselves with the construction of all of the facilities,
( 25 that is the solid waste processing facility and the
1-4'
1 generation facility, and for the operation of the colid 2-waste processing facility for and on, behalf of the 3 county.
4 The county's contract with FPL provides for the 5
ownership and operation of the generation facility and 6
the purchase of it by Florida Power & Light, and a 7
lease of the land site.
8 Mr. Greenberg pointed out all of this land is 9
owned by Dade County and still is and always will be, 10 under the' contract.
33 There is an as.sumption agreement in which the 12 petitioners assume and guarantee performance of the 13 county's contract.with Florida Power & Light. So 14 to that extent, Florida Power & Light is the third 15 Party beneficiary of the contract that provides that 16 Florida Power & Light is the owner and the exclusive 5
g operator of the electric generating facility.
18 Florida Power b Light has, of course, the E
- ig right of purchase, exclusive right of operation with a
} 20 the obligation to pay for the steam in accordance with a
i.
the formula made a part of the contract, and to also i
21
! i 5 l 22 Pay installments, monthly installments in addition to '
23 the steam pricing, the cost of the construction of.the 24 generating facility, which under the contract apparently
( 25 has been agreed to be in the neighborhood of $21 million.
s
' 2%
1 !
There ic no contractual -- dirtet contractual 2
i arrangement between the petitioners and Florida Power 3 & Light.
Florida Power & Light's contractual arrangeme r,ts are solely with the county, coupled with the third party 5
beneficial right of the petitioners assumption 6
9uaranteeing performance of the county to Florida Power 7 & Light.
8 Florida Power & Light has not been privvy to the 9
contract controversies that have extended over some to period of time between the petitioner and the county.
11 We have not been pr.ivvy to their extensive negotiations 12 seeking to arrive at a settlement agreement. 'I'll 13 come later that we have to some extent participated 14 in that at the request of the county.
15 There is no contention made by any party that 16 there has been any termination of the contract between 37 6 the cour.ty and Florida Power & Light governing 18 c the ownership and operation of the generating facility.
- 39 e There has been no contention that Florida Power &
l 2 20 Light is in default. It appears that Florida Power &
5 a 21 Light has always been ready, willing and able to 2
fully perform its contract.
22 So it's not involved.
23 CHAIRMAN CRESSE: Let me get one thing square in 24 my mind, if I can, sir. You say that Dade, you
( 25 understand Dade has contracted with petitioner for the I
1
201
. 1 assumptions of their obligations to you under that 2
contract?
3 MR. DAVIS: Yes, sir.
4 CHAIRMAN CRESSE: Let me get that straight, noWT 5
Is it for the assumption of all the obligations to 6 you?
7 MR. DAVIS: Yes, sir, all of the obligations.
8 CHAIRMAN CRESSE: Does that mean that as you 9
understand it that then that if it was subsequently --
10 let's assume something. Let's assume that it was 11 determined by a court of competent jurisdiction that 12 Parsons & Whittemore currently had some kind of title 13 to all of it. Is it your position then that they are k
14 obligated to sell electric generating facilities to 15 you all under the same terms and conditions that Dade 16 County was obligated to sell it to you ?
17
- MR. DAVIS: I'm not quite sure I agree with that 18
! statement, because I don't think they ever had any j 19 right to title.
a l 20 CHAIRMAN CRESSE:
8 I understand that.
5.
21 MR. DAVIS:
2
% Let me see if I can make a run at it for 22 clarification.
23 CHAIRMAN CRESSE: All right. I'm asking a question.
24 I'm not making a statement.
(. 25 MR. DAVIS: Yes, sir. Our position is that our onl y
. 202
- t 1
contractupl crrangem:nt is with Dade County. And 2
under that contractual arrangement we are to own and 3
to operate the generating facilities. And we are to 4
, pay for the steam that we purchase ,from the processing 5
one, and also to pay for the construction costs of the 6 generating facility.
7 Now, the only participation by Parsons &
8 Whittemore is that they have agreed with the county and 9 a contract between the county and Parsons & Whittemore to only, that they have assumed and covenanted and agreed 11 the performance of the county's obligation to Florida l .
12 i Power & Light. Therefore, we say we have no contractual --
13 direct contractual arrangements with them. But we are 14 the third party beneficiary of their guarantee of 15 performance by the county.
16 So not only do we have the right to enforce the
- 17 county's obligation to give us ownership and sell us is the generating facility with our right to operate, but j 19 that performance is guaranteed by Parsons & Whittemore.
[
a 20 I think in f airness I should point out that Parsons i 21 & Whittemore has notified the county, nobody has notified 22 us of anything. Parsons & Whittemore has notified the 23 county that they have terminated that assumption 1 l
24 agreement, and that letter is attached to the county's
( 25 filing, letter dated January 23rd, 1981, from Resource l
l
20) 1 Rncovery to Dtdo County, and Resourca R covery cnd 2
Resource Construction.
3 CHAIRMAN CRESSE: Which stack of this paper --
4
, MR. DAVIS: This is an attachment made to the e 5
Dade County Statement of Contention.
6 CHAIRMAN CRESSE: Thank you.
7 MR. DAVIS: Let me point out, it says in part, 8
"In accordance with 510-b-4 of the assumption agreement, 9
we hereby terminate the assumption agreement effective 10 immediately, provided, however, that we do not terminate 31 the lease dated September 28, 1976, which is Exhibit C 12 to the purchase contract, and the lease remains in 13 effect. We will remain at the site in order to maintair, 14 and protect the facilities. In addition, to perform i 15 any necessary work.
Such actions have no affect on this :
! 16 termination."
- 17 Here is the important part:
i "Our costs under the I
i 18 assumption agreement work completed are not less than i-j 19 $20,500,000, which is now due. You are also notified l 20 that the current interest costs on this account are l s l
$ 21 approximately S12,750 a day."
E 22 So in January 1981, Parsons & Whittemore said to i
23 the county, "We are terminating our assumption agreement, 24 and there is now due $20,500,000 due for the constructicn
(
25 costs." That is completely inconsistent with saying, "he
., ~
{
s'
- 1 20s are- the owner and it balongs to us. " They are saying, 2
"We are entitled to be repaid the construction costs",
3 which fits in exactly with the position taken by the 4
county and Florida Power & Light, that Florida Power 5 &
Light is the beneficial owner of this facility as a 6
matter of law.
7 Let me point out that that's supported and for E
Mr. Pruitt, who I think would agree with me that that 9
as the matter of law is true. Because the court has 10 said in Jasper against Orange Lake Homes, Inc.,
't 151 So.2d 331, Florida Second District Court of Appeals ,
12 1963. Beginning in 1907 and continuing to the present 13 with numerous intervening decisions, the Courts of 14 Florida have held that where the relationship of 15 vendor and vendee has been established by the vendor 8
16 executing a contract to convey the legal title to 17 property upon payment by the vendee of the purchase pri :e, L
- 18 the vendee is regarded as the real beneficial owner.
- 19 The vendor holds as trustee of the legal title as 20 security or as otherwise expressed he has a lien uoon 8
i 21 the vendee's equitable estate as security for the 22 payment of the purchase price according to the terms of 23 the contract.
24 And that is clearly the law of Florida. And as put
( 25 another way, in Florida Juris Prudence where the 1
MSQ
. ;* * . I l
relationship of vendor and vendee has been establiahed j1 2
( - under a contract to convey the legal title to the 3
property on payment of the purchase price, the vendee is 4
regarded as the beneficial owner or equitable owner, He 5
is regarded as the beneficial owner whether or not he 6 is paid the purchase price; from the time of valid 7
- agreement of the purchase of property is entered into a
the vendee bec mes the trustee of the purchase price.
9 Based on that legal principal we say it's 10 controlling in this case. We have a contract by the 33 county that it is going to convey, and that Florida 12 Power & Light is to be the owner and operator of the 13 generating facility. '
14 It's guaranteed by Parsons & Whittemore. And 15 therefore, on the signing of that contract Florida 16 Power & Light is the beneficial, equitable owner of j 37 the generating facility with the exclusive operatina 1 18 right. And Parsons & Whittemore's posture is that they L
- 39 have a security interest only on that facility for the
.u 20 Payment of the purchase price.
d 21 Now that 's confirmed, I say, by the letter in which 22 they say the purchase price of 20,500,000 is due, and 23 we want our money with interest.
24 Now, I don't think in lieu of that it could come to
( 25 this commission a few months later and say, "We want to
204 I**
, 1 interconnect beccuse wa cro the owner 2nd. operator of 2 a qualifying facility." And that can't be done,
(.
3 particularly when the contract with Florida Power &
4 Light han not been terminated.
It hasn't been modified.
5 Nobody suggested that it has been effected. And we 6 are ready to perform.
7 And we think that is perhaps some key to the 8
matter that is before the Commission.
9 Let's take just a minute -- One other thing. If to they terminate their assumption agreement, let's look 11 at what their contract obligation is. The contract 12 governing the ownership and operation of the generating 13 facility, S15.5, Page 32, says this, and I quote: "In
( It the event of termination, Florida Power & Light at its 35 sole discretion shall have the right to purchase and/
16 or retain title to the EGF. If Florida Power & Light 17 elects to purchase or retain title to the EGF, the a
38 price to be paid shall not exceed the direct cost of j 19 the EGF at the time of termination. "
e
! 20 So even if their termination of the assumption a
i 3 agreement is v 21 id, they have agreed by assumption 22 of that that we still have the right to buy it. If we 23 have a valid contract giving us the right to buy, 24 -
as a matter of law we are the beneficial and equitable
( 25 wner with a right of operation. If that is true, then
2 07
- 1 P & W certainly has no standing to interconnsct to 2
i a qualifying facility because it can't give qualifying 3
facility without application by the owner or the oeprator.
4 So we submit that they lack standing. e 5
Now, let's look and see, just compare the result o f 6
the performance of the contract or adherence to the 7
conditions of it. We end up with a solid waste 8
disposal facility, in which the garb ~ age or the solid 9
waste is treated, separated, and onded up combr stable 10 and producing steam.
11 That steam is taken and used to generate electrici ty 12 and becomes part of Florida Power & Light's el'ectric 13 energy sourge of transmission.
14 s
The processing facility is owned by the county.
15 It is operated for the county by Parsons & Whittemore 16 for a period of 20 years. Florida Power & Light owns
', I 17 the generating facility. It operates it. It pays for s
18 it and it pays for the steam.
L
.y 19 We have accomplished the primary objectives of i
f 20 PURPA and its regulations, and the adoption and d
I 21 implementation by the Public Service Commission.
I 22 That objective is accomplished. We are utilizing 23 disposing of solid waste. We are eliminating 24 environmental problems. We are following the concept
'(. 25 of the reduction of dependence upon oil supply.
.A
- - 2(
1 Now, let's cce what Parsons & Whittemore ask you to 2 do. They say, "We want to
( run the whole thing and 3
operate it and sell electricty instead of st eam. " Does 4
that accomplish the objective any better? We still 5
1 have the same solid waste facility. We still have the 6 end prodaction of electricity. The only difference 7
is that Parsons & Whittemore is the owner of the.
! a generating facility and sells electricity rather than
! 9 to sell steam. But the result is exactly the same.
10 There is no improvement in the accomplishment of the i
l 11 ob je ctive .
l l
12 The key to this thing is the fact that there is a 13 hope and expectation and hope and realization that more
( g money will be accumulated by Parsons & Whittemore from 3 the sale of electricity under the avoided cost concept 16 than they contracted and agreed to pay for selling of
.I 37 steam. And that's the key to it.
i -
18 2
0 Parsons & Whittemore relies on PURPA and the PSC
- ig rules and the termination of their contract obligation.
If that 20 is accomplished, or interconnection is required E
19 21 n the basis of PURPA and the regulation, I submit to it i
you that that presents a substantial constitutional question. The retroactive application of PURPA to impair an obligation of a pre-existing contract runs
- (
25 squarely in collision with the constitutional provision
- " l201 l
I '
which says "No law" -- and this in Article 1, S10 2
of the Florida Constitution -- "No law impairing the 3
obligation of contracts shall be passed."
4 This Commission in the past has been scrutinizpd 5 in its activities in relation to that.
E United States Gas Pipeline Company against Bevis, 7 336 So. 2d 560, Supreme Court of Florida in 1976, 8 said, "We have generally prohibited all forms of contract 9 impairment'. The legislature's enactment here is 10 merely designed to offer form of relief which is 11 similar to that historically provided by Courts of 12 Equity for unquestionable contracts. In those situations, 13 i however, courts will invalidate the entire contract
( 14 rather than perform any particular contract term. It 15 follows, therefore, that a legislative exercise let 16 alone delegation of the power to modify ' discriminatory
! 17 or unreasonable contract terms' is doubly defective, g 18 being an invalid intrusion, inpermissible impairment of
- 19 contracts and an invalid intrusion into the powersiof i
5 20 the judiciary."
a e
8 2
21 So we say to you in all deference that in order 8
22 to grant interconnection demand you are going to have l 23 to not only impair the existence of Florida Power &
l 24 Light's contract; you are going to have to abrogate j l
( 25 it and strike it down in following the concept of PURPA
21(l
,'?'fe .'. 1 and c ying the public interest of PURPA ovarrides the i 2 contract.
(
And we submit that raises a very substantial 3
constitutional question, and we submit that the court 4
does not have jurisdiction to make a determination of 5
the validity or invalidity of the contracts.
6 There is no basis for the invalidity of Florida 7 Power & Light's contract. Nobody suggests that it's 8
invalid or unenforceable. The county today conceded 9
that one of their problems is the recognized liability 10 fo; the performance of that contract to Florida Power & ,
33 Light.
12 We are not in default. We are ready to perform.
13 We always have been ready to perform.
( 34 Let me point out, too, the history that brings us 15 here, bearing in mind that we haven't been involved 8
16 in the contract controversy; we haven't been privvy to
- 17 it, haven't been kept advised; we really don't know
- 3g what's going on.
3 L
g 39 We were approached by the county at the outset
~.
E a 20 and said, "We have really got a problem and need your 5 help."
a E
21 We said, "We will do what we can lawfully."
22 It was suggested that there be a trial period of 23 ne year, and that the contracts without prejudice to .
24 -
any ne's right remain intact for that one year period.
25 And that Parsons & Whittemore operate this, the whole 1
l l
t t
4
j 211 1
ching. The only chcnge would ba is that Florida Power 2 & Light would pay in lieu of the steam price, we would
(
3 pay the equivilent of electricity price to avoided cost 4 for that one year period. And at that time everybgdy 5
would re-evaluate the situation and either they would 6 insist on enforcements of the valid contracts or they 7 would modify them. It was unacceptable to Parsons 8 & Whittemore.
9 The county came back and said, "We got to have a 10 solution to this problem in the public interest and 11 the public health. Why don't you consider just adopting 12 or modifying your contracts and accept the PURPA 13 concept and accept the avoided cost concept."
( 14 We spent long hours negotiating on that. Three 15 Parties this time, to see if we were going to modify 16 our contracts to see if there is one way that we 37 could help solve the problem by producing more money
- 18 for Parsons & Wh ittemore .
3 G
j ig We imposed immediately two conditions. One, a a
20 condition before we even put our -- signed a contract 21 that there be a settlement between P & W and the county E
22 as to all of their controversies and their contract 23 disputes, number one, but we are n3t interested in 24 signing it.
( 25 Number two, that under that modificatio!. of the l
l l
'2 1
contreet was signed to produce more money, but did 2 !
I ignor the contracts and modify them and say, "We.'.ll' 3
proceed under PURPA", we required that that first befer o ,
4
. it became effective be submitted to the Public Servjce 5
Commission and merits their approval; unless and until 6
it was approved we were not going to have any effective 7 contract.
8 Those negotiations broke down whenever the county 9
stopped its negotiations and went back to arbitration.
10 We would ask to be permitted to submit a draft of that.
11 Not on the basis that it's binding on anybody.
12 It's not binding on anybody, because while the' county and Florida Power & Light have indicated their approval, 13 P & W hasn't, it's not binding. But to demonstrate 15 that Florida Power & Light has gone the last mile that it can in saying that we want to participate to 16 3
17 whatever extent we lawfully can in trying to solve this problem. .
j 18 j 19 We've still got a contract, but we are willing to E
modify that if we get the appropriate approval. And yot 20
.i settle yo --
l 21 We are not going to settle unless you 3 all work yours out.
22 One final thing.
23 What dif.e4ence does it make to Florida Power & Light whether you interconnect or not?
24 There is a very serious adverse affect on Florida Power
( 25
& Light.
Number one, it requires the rather substantial
I 12 I
increase in the paymnnt for the end result. pay more !
2
[
for electricity on the PURPA concept to avoided costs 3
than we contracted to pay for steam.
4 More seriously, though, if that happens, if they 5
interconnect, they have the right to wheel. We may 6
have a situation and it's been indicated we very 7
possibly may have that situation that where we don't 8
get that electricity, all we do is wh' eel it to 9
somebody else. So it doesn't help solve our local 10 problem of the availability of this new source of 11 non-oil dependence energy, because they can sell it to 12 somebody else.
13 So under the contracts we have a known capacity
( 14 provided it works and we don't suogest it doesn't work, 15 we just don't know.
But if it doesn't work the contracts 16 have all been performed.
i And we have a known capacity 17 and reliable source for the electricity to the extent g 18 c of the some 77 megawatts that it can produce that we j 19 can conform to.
a
! 20 a
. And for those reasons we respectfully submit that
- 21 P&
I W simply lacks standing to demand interconnection.
22 We submit that the Commission most respectfully simply 23 doesn't have jurisdiction to avoid or impair or destroy 3
our contract in order to accomplish P & W's objective
( 25 and getting interconnection.
. 2$
.; ,* 1 We would rarpretfully tuggaat thnt tho PSC chzuld 2
( consider a denial of the petition on the ground that 3 P&
W or the petitioners have failed to establish their i l
4 right to interconnection. ,
5 I would hope that the Commission might exercise 6
its discretion and point out the facts and circumstance s 7
with the result that this constitutes a classic 8
situation contemplated by PURPA that the parties ought 9
to get together and arrive at a mutual, satisfactory 10 contractual arrangement to solve the problem. If it 11 l \ isn't solved, then the regulatory agency will exercise 12 their jurisdiction.
13 CHAIRMAN CRESSE: We did that in September.
14 MR. DAVIS: Yes, sir.
15 CHAIRMAN CRESSE: We said these suckers ought to 16 get together ar.d get --
8 17 MR. DAVIS: I think it needs to be said again, l
- 18 Mr. Chairman.
i I
- ig CHAIRMAN CRESSE
- Maybe we need to make it more 20 clear in the crder. Because it is a tragic thing, all I
21 this work is going so f ar, getting the situation as far r
l 22
! as it can and so forth, beneficial aspects that apparently 23 all parties think that this unit would play, and it's i 24 sitting down there not accomplishing its purpose and the
( 25 trash pile just east of us is getting higher and higher.
l
_ .t
1 2?
i
. i Pretty soon you all won't be able to see nowhere.
( I MR. DAVIS: I'd like to point out that nobody 3
recognizes that any more than Florida Power & Light.
4 Otherwise there would be no incintive than to go t'o 5
the county and say, " Subject to your resolutions of 6
disputes and subject to Public Service's approval, we a re willing to change over and let P & W operate as a small 8
power producer, provided we have the legal authority 9
l and the confirmation to do that." There would be no 10 incintive except the recognition of the problem and a f
desire to cooperate with the county. We have been 12
{
I unsuccessful, and that's where we stand.
13 CHAIRMAN CRESSE: Best I can tell, Florida Power 14 1
Licht has been a good citizen all the way.
i 15
- MR. DAVIS
- I'm sure that the Florida Light people 16 l I would hope that you would say it louder and more often, 17 lg Mr. Chairman. .
I y IB
! C CHAIRMAN CRESSE: I don't want to say it too often, i i 19 I like to keep them on their toes. I don ' t think N.
j 20 anybody in this proposition so far said that Florida M
~
21 Power & Light has acted anyway except a good citizen.
.~
22 The petitioners like for them to nook up, but that's 23 e what the petition is all about.
24 All right, sir. Mr. Dearing?
(
25 MR. DEARING: Yes, sir. Let me again for l
. '.~ .- 21@
clarification request the Commission to explain to 2
(.
me the nature of the arguement you have just heard 3
from both counsel. How is that being accepted?
4 CHAIRMAN CRESSE: Opening statements. '
5 MR. DEARING: Because -- well, an opening statement, 6
sir, normally attracts the evidence that will be 7
submitted to the tribunal during the course of the 8
evidentiary proceeding. '
9 CHAIRMAN CRESSE: Let me say that nothing we have to heard so far from either of the attornies is evidence.
11 I would consider it their view of the manner of 12 education the Commission needs as requested. Is that 13 all right, Mr. Pruitt?
14 i
MR. PRUITT: That's fine, Mr. Chairman, 15 CHAIRMAN CRESSE: It's not evidence, Mr. Dearing.
16 Clearly it's not evidence. It's those two distinguished I
j 17 attornies' view of what the issues are and what their 18 c position on it are, with some background information.
2 19 MR. DEARING: Well, sir, may I ask for clarification i
,5 20 from Mr. Greenberg and ask --
!f 21 CHAIRMAN CRESSE: Certainly you may ask Mr.
22 Greenberg a question.
l l 23 -
MR. DEARING: As I understand what Mr. Greenberg
! 24 says, from his statement, I have a question. And the 25 question is what is Mr. Greenberg's position on what
ssfl
, s' .- -
1 will happen to that facility if we devote the 80 l 2
{ acres to land fill and we close it down? Is the 3
facility just to grow old and crumble and rust and fall !
4 into a hole in the ground? What is to happen to the 5
facility? Is it to operate? And if so, who is to 6 operate it? What is to happen if we close that 7
facility down for 6 months, a year, two years, ten 8 years, to litigate these matters? 'I'd like him to 9 clarify that.
l 10 MR. GREENBERG: Yes. There are a few things I 33 would have like to have described in -- I thought I 12 was drawing out much too long, so I'm glad he asked 13 me that question, because it fits right in with some k
14 of the things I wanted to have said.
l 35 That is in the first place -- and we do set this 16
! : forth in our statement of contentions that has been 37 filed with you all -- and that is that assuming we can work out our differences with Florida Power & Light, 18 j
a 19 if in fact Parsons Whittemore is serious about owning the l 20 facility , if they are really serious, Metropolitan a
' 5 21 Dade County would be willing, subject obviously to i:
22 approval of the County Commission -- but it's our 23 , indication they would be -- to sell them the real 24 estate under their facilities. In consideration for 25 that, as well as the fair market value of the land, we
=
.
- 2R
? 1 would expect the petitioner to drop its claims that 2
it has ,a right to sell us the facility. As a result 3
of that, by the simple acquisition of the real estate, 4
. which is a minor item in the overall picture, they
- 5 can own the facility, subject to no agreements; they 6
can process solid waste at whatever price the market 7
would bear; they would have complete control of these 8
facilities; and then, under those circumstances, since 9
they would then have title and the right te operate, 10 Perhaps this tribunal might decide that it was entitled 31 to interconnection as a qualified facility. That's the 12 first thing. .
13 They can very easily solve their dispute with
(
34 Dade County by simply acquiring our land and releasing 15 us from our obligation to pay dollars to them for the 16 Plant, if they are serious that they really want to i
17 own it.
f 18 CHAIRMAN CRESSE: Does that answer the question?
19 MR. DEARING: No, sir.
That doesn't answer the E question.
20 The question is what following his scenario 0
'I 21 as set forth in his opening statement,happens if this 1 l
22 matter goes through litigation processes that he has 23 described, if this facility is not interconnected?
24 MR. GREENBERG: The reason for trying to acquire
( 25 the 30 acres is simply to have a place where we can now
.) .. l, 21\
1 dispose of solid waste during the interim, which would be
( 2 environmentally acceptable. We have appointed a task l 3
force to acquire land adjacent to this facility, 4
immediately adjacent. It's going to take time, -
5 condemnation proceedings, multiple ownership, time to 6 improve these facilities. This land could be easily 7
substituted as a new land fill site to replace this at 8 some future time.
9 The only reason fc1 the 80 acres is it's to immediately available. Even the 80 acres would take it six months to put into the kind of thing that could take 12 as much raw solid waste as opposed to what comes out of 13 the back end of their boilers.
I.
14 It's the most readily available way, we believe, 15 of solving the health hazard.
16 The answer to the ultimate question is that if we i
37 prevail in the arbitration proceedings, we will not
- is purchase this facility. That's the ultimate answer, I C
g a
39 think, to his question. If our contentions are correct,
! 20 we will not purchase the facility.
a f 21 MR. DEARING: Sir, respectfully, that doesn't 22 answer the question. Maybe it is that Mr. Greenberg 23 .- can't answer the question because it's a difficult 24 ne to answer.
(
25 CHAIRMAN CRESSE: It probably is, and I'm not sure
- ~
28 I
it's relevent to this hearir.g.
2
( MR. DEARING: It may be relevent to the practical 3
effect of what's going on here. What is to happen to 4
that $177 million facility during the course of e 5
litigation, whether it be in coort over the lease, or 6
whether it be in arbitration over the contract?
7 CHAIRMAN CRESSE: Mr.
Dearing,
let me observe that 8
I think that that matter ought to be of great concern 9
to the parties that are sitting here at this table, all 10 of who appear tc have some beneficial interest in the 11 successful operation of that facility. However, I 12 .
would have to respectfully suggest that matter is way 13 beyond what
( I perceive to be in the jurisdiction of 14 this Commission.
15 MR. DEARING: Yes, sir, I agree.
- 16 CHAIRMAN CRESSE: Whether it rusts down, whether it 1
- 17
- is maintained, whether they paint it every week, whether 18
.! they lock up the gate, all of that stuff is beyond the
- 19 jurisdiction of this Commission.
i l 20 Seems to me, though, that people who have the d
i 21 best interest of themselves and the people in Dade 22 County together ought to be talking in some other forum, 23 not here on that subject. -. :
24 I Do you want to make an opening statement about k
25 the issues that are here? I understood the question and,
1
. , .'.~. 22g 1
I understood his answer.
2
( MR. DEARING: Sir, if the Commission is iatisfied 3
that the -- as to the question and to the answer, I 4
have a couple of points I'd like to make, yes, sir.f 5
CHAIRMAN CRESSE: All right. Please proceed.
6 MR. DEARING: It's difficalt for me to respond 7
to the -- to argue the merits of the various questions : .n 8
different forums involving these various contracts 9 here. We have submitted, and we have urged that this 10 Commission does not have jurisdiction over the contract 11 issues.
And I don't believe the Commission has ever 12 indicated that it had. I don't know of any authority 13
(
to decide any of those contract issues, and yet they've 14 been the basis for the opening statements of the counsel ,
15 both counsel here today.
3e And I frankly am somewhat at a loss as to how to i
- 17 proceed, in an area where there is no jurisdiction in '
t L
- 18 this Commission, in an area which we did not know i
e s
19 existed as an issue until last night.
l 2 20 For instance, the question of whether or not we d
- 21 have standing to request interconnection. As late as
-22 yesterday afternoon we did not know that was an issue 23 -.
before this Commission, although we attempted to find ou t 24 what was going to be raised. This comes to us somewhat k as a surprise.
25
28
. 1 This is the reason why we requested earlier a 2
[ Commission Order to let everybody know what the issues 3
were going to be.
We understand that it's true that 4 .-
yesterday Mr. Greenberg's Commission instructed him" 5
to come up and oppose interconnection.
6 The day before yesterday Mr.,Greenberg's Commission 7
instructed him not to oppose interconnection. So he's 8
had somewhat of a problem in knowing' what his Commission 9
wanted.
10 CHAIEMAN CRESSE:
I've dealt with Dade County 11 Commission. ,Go ahead, sir.
12 MR. DEARING:
I think what all of Mr. Greenberg 13 says about the problems he has had, what Mr. Davis says
(
14 about the position of Florida Power & Light, if I could, 15 I will address Mr. Davis' remarks first, and then come 8
16 back to Mr. Greenberg.
37 Our position, of course, is that we are not asking
- 18 4
- this Commission to utilize its rules, its regulations, j 19 in order to impair any contract. We are asking if the 20 Commission assumes a contractual background of this E
I 21 matter to be as set out by Mr. Davis, then it is 22 apparent that Mr. Davis' contract, the one he states between Florida Power & Light and Dade County, would be frustrated if Dade County did not have a facility to
(
turn over to Florida Power & Light, or if Dade County did
1 1
.2 2 '
l 1
not have a facility that would generato etcam for ,
' ]
( 2 production in the two turbines that the electrical 3
generation facility consists of.
4 .-
The Commission may recall that members of the
- 5 Commission were in a control room at the facility durinc 6
the tour of the facility, and they saw the two turbines .
7 l
And that is what we are referring to, the switchyard, 8
the control room and those turbines as the electrical 9 generating facility.
- 10 And that is the subject of the transfer Mr. Davis l
11 has reference to when he discusses the transfer by the 12 county to Florida Power & Light, the transfer of that 13 facility. It is those two turbines, switchyard and 14 control room.
l i
15 Clearly, if the original contracts have been 16 terminated, as their terms provide, and their terms do I 37 in fact provide termination, then there is a real lecal
,' jg l
? 1 question as to whether Florida Power & Light has an g
e 39 enforceable position as to whether the performance I
20 under the contract of Florida Power & I.icht has been 21 frustrated, a
5 i
22 There is a real question as to whether or not this 23 frustrated performance was the responsibility of any party to this suit. Those real questions demand k
, 25 attention, but in the proper forum. And they probably i
':,'. 22c
.' 1 will be datermintd in.the propar forum.
2 The Florida Power & Light-Dade County contract is 3
not before the arbitration at this time. If Florida 4
Power & Light seeks to enforce its rights under that 5
contract, presumably it would do so in a court of 6
competent jurisdiction, or in arbitration. :And of 7
course, it will be subject to the defenses available 8
to the defendant in that suit, such as an unconscionable 9
contract, such as violation of the anti-trust laws, 10 and so forth.
It Now, these are issues properly in some court, but 12 not here.
What we have here and what we ask this 13 Commission to deal with is an existing circumstance, ja an existing reality. Not speculation, not some 15 possibility that a court somewhere may determine 16 status of parties, but the realities as stipulated to g 17 on September 17th by Mr. Hauck and by counsel for
!5 18 Parsons & Whittemore, RRD, who were before the
- 4 i .
39 Commission at that time.
And I would, if I may, just point out here that
! : 20
,i j 21 it has been stipulated by these counsel that the 22 facility has maximum megawattage of less than 80 megawatts, 23 e that it burns bio-mass fuel, that no utility ownership 24 f 50 percent of the facility is now exists or is
( 25 ntemplated under any of the contracts, that RRD -- the
1 2
- - I facility is in the Florida Pow:r & Light service area, i i
1 2
( that RRD has requested interconnection with Florida 3
Power & Light, that the petitioner RRD has acreed to 4
abide by Florida Power & Light's safety standards fn
-5 its interconnection request, that RRD has agreed to pay 6
interconnection costs, that RRD presently is in 7
possession of the entire facility, that the cost of 8
electrical generation facility approximates $21 million, 9
that the biological or health hazard, environmental 10 health hazard reflected in the DER letter which was 11 admitted into evidence exists, that Florida Power &
12 Light has paid nothing for the electrical transmission 13 facility, and that RRD and Dade County entered into the 14 several contracts that have been discussed here earlier, 15 Finally, it was stipulated that these three 16 contracts, the purchase contracts, management contract 17 and assumptions agreement were originally adopted prior 18 to passage of PURPA, but anended subsequent to the j 19 passage of PURPA.
' a 20 Finally, it was stipulated that Florida Power &
4 9
21 Light and Dade County had entered into an electrical 22 generation facility contract, and that had not been 23 , subsequently entered into.
24 Mr. Hauck stipulated to those 14 points. We submit
( 25 they satisfy requirenents under PURE 1 and under this
226
. 1 Commission rules that would datormine whether or not 2
petitioner here is a qualifying facility. Clearly, 3
under these criteria set out in your rules, we are 4 -
a qualifying facility.
- 5 CHAIRMAN CRESSE: There was some non-agreement 6 items I believe also, which was the legal affect of 7
items 12 and 13 that was agreed to; is that correct?
8 MR. DEARING: Yes, sir.
9 CHAIRMAN CRESSE : That's what my notes show.
10 MR. DEARING: Yes, sir. There were some non-li agreed issues. But our position is they don't go 12 toward our status as a qualifying facility. They do 13 go to whether or not the pre-existing contracts or k ,
14 subsequently existing contracts or the amended contracts in are viable and enforceable. And that of course, that 16 issue must be determined in some proper forum.
g 17 CHAIRMAF CRESSE: Let me ask this question. It t
18 may be a question to all parties. Is the issue before j
a 19 this Commission whether or not it is a qualifying 20 facility and that the applicant or the petitioner is in e 21 fact owners of that facility? Is that the basic issue 2 .
22 before this Commission?
23 , MR. DEARING: No, sir. We submit that ownership 10 24 a legal question and not before the Commission.
( 25 CHAIRMAN CRESSE: Let me ask this question then.
1 l
1
'a '
- 25
. 1 MR. DEARING: Let me just finish my answer, if I l 2
( may, sir.
There has been no contention by either of 3
the counsel in their opening statements that we are 4
not legal owners of this facility. They have said that 5
there is a contention as to beneficial ownership, that 6
they have beneficial ownership. But the legal ownership 7
is in the petitioner here. And it is and remains in 8
accordance with the contracts which have been submitted 9
by Dade County as exhibits to their filing, their 10 papers, it is until the facility has been paid for.
11 Now, if they can demonstrate that they have paid 12 for the facility and are entitled to have title passed 13
( under the contract, then of course we've got a different 14 ball game.
I We submit that they cannot and have not.
15 CHAIRMAN CRESSE:
~
Just for the benefit of the 16
! . Commission, it's my understanding on Page 4, Florida 17 Power &
- Light's filing in accordance with our prior 3 is order,
- under 2-a reads RRD does not own the electrical
) ig a generating facility, have a valid right to operate that y 20 facility or to receive steam produced by tne waste d
=
21 disposal facility.
r 77 That seems to me they are questioning whether or 23 , n t you are the owner.
24 I also recall -- and I didn't get all the way k
through it, 25 counsel -- that on Page 5 of Metropolitan i
. i ' . . ' 228
. 1 Dada's statement of contentions --
2
{ MR. DEARING: I only have four pages.
3 CHAIRMAN CRESSE: Sir?
4 MR. DEARING: I'm sorry.
- 5 CHAIRMAN CRESSE: This is the thick one. TheyJe 6
got one that came in this morning that I couldn't cet 7
through it.
I read it the best I could. It sayr they B
have no standing to assert that the q'ualifying facility --
9 and on Page 6, they are contending that neither PW 10 or RRD have legal title to the facility.
11 They are contending that (1) the petition that's 12 filed is not even the person or the organization that 13 they have contracted.
(
14 MR. GREENBERG: That's correct.
15 CHAIRMAN CRESST: Have I got that right?
16 MR. GREENBERG: That's exactly right. But may I
=
17 point out that on petitioners' statement of contentions, 4
18
- proposed findings of fact that they submitted to the
- 19 Commission --
i
! 20 CHAIRMAN CRESSE:
a Let's don't get to the closing b
21 arguements.
22 MR. GREENBERG: I just want to point out one thing.
23 ,
They apparently believe that these are crutial issues, 24 because they ask this Commission to make findings of
(
25 fact and conclusions of law that RRD always has been and.
l l
229 '
8
. continues to ba in 1swiul possession of the facility.
4 2
(- Of-course, our contention is they are not, And number 3
11, that RRD has title to the facility. Our contention j 4 again to that is that they do not. Therefore, those are ,
5 before the Commission. And the question is whether or
.i 6 not this is the proper forum to make that detarmination.
7 COMMISSIONER LEISNER: May I just ask a legal i
8 question.
. Is there a dif ference between legal ownershit 9
and beneficial ownership? '
10 MR. GREEMBERG: There is a difference. The bare 11 legal title is in a corporation, we believe, which is not.
4 12 before this Commission. I think they have the wrong
- 13 petitioner, because the'barp legal title is in another
)
14 subsidiary who is not the petitioner her. That's the 15 first question.
16 Houever, the real ownership, the beneficial i g g 17 ownership is to the electrical generating facility and
[I 18 FP&L who are the vendees under these arrangements which j
19 we have all ready heard. And in Dade County, if the
' )1
,3 20 arbitrator were to ultimately determine we have to buy
!22-21 it, what they are arguing here is we are the owner, but r
22 Dade County has to buy it. If they are right in the 23- i arDitration proceeding, then we are the owner. That's h 24 the inconsistency there.
25 CHAIRMAN CRESSE: Let's let Mr. Dearing finish his e
1 l
1
, - _ . = _._-. , - -. - _ _ _ . . . _ . , , , . _ . _.--,-.,_i
2 1
opening statement.
( 2 MR. DAVIS: I want to make a statement. I don't 3
agree with Mr. Greenberg on the legal question. We are 4 ..
talking abcut ownership, prerequisite of qualification 6
or qualifying facility and interconnection is based on 6 ownership and operation.
There is a difference between 7
ownership and title.
8 We're talking about ownership. They are talking 9
about title. And the law says that yes, you hold title, 10 but the ownership is really in Florida Power & Light.
11 So there is a difference between ownership and title.
12 They mix them up and say, "We are the owner." We say, 13 "Sure, k you've got title and you hold title as a security 14 interest. But we are the owner."
15 That's my version of the law, and Mr. Prentice Pru:.tt 16 is your advisor.
I g 17
- CliAIRMAN CRESSE: Go ahead, Mr. Dearing. Did you s 18 finish your opening statement?
C j ig MR. DEARING: No, sir. If I may, please, on i
! 20 December 1st, before the County Commission meeting, Mr.
f: 21 Greenberg raised the question of ownership of the 22 facility. And Commissioner Phillips asked, "Well, 23 ,
who does own the plant?" And Melvin Greenberg responded, 24 "Well, they own the plant but it's on Dade County's !
l 25 land." And now they are saying they want to sell.
23 1
Moreover, on October 27th, 1981, as Mr. Greenberg 2
[ advised this Commission, they said, "You've got to 3 vacate. You are burning the garbage from other 4 ..
municipalities, and that's in controvention of a
- 5 lease term, and therefore you have breached the lease 6 and you must vacate the premises." And they directed 7
that letter to Resources Recovery (Dade County), Inc.
8 Now they say, "Well, Resources Recovery (Dade County),
9 Inc., Itally, they are not the ones who have title 10 to the facility. The title is in Resources Recovery 33 Construction Company."
12 Well, technically it may be. But Resources 13 Recovery Construction Company is a wholly-owned
(
34 subsidiary of Parsons & Whit'.emore, and I think that 15 the matter -- if it has any substance at all, it is 8
16 so technical it is one that they just contrisudi since 17 they wrote the letter telling us to vacate the 18 premises.
j 19 I submit to you that it really is a non-issue.
a 20 And our position would certainly be that it is a non-d 21 issue.
R r
7, At the last hearing, I would like to firct give 23 an answer as part-of my opening statement. Admittedly 24 it is not evidence, but an answer. And aftef I Rive k 25 e answer I'd like to read the question.
i l
{
2%
. l*
- . 3
. 1 The Commiscion has heard the testimony of Mr.
2 Greenberg describe in some detail several years of 3
negotiations, problems that arose from time to time 4
between Dade County and Resources Recovery, the ?
5 petitioner here, involving the performance under these 6
contracts that have now been submitted to you, at least 7
in opening-statement form. Mr. Davis has explained B
to you the position of Florida Power & Light relative 9
to those contracts in some detail, and has indicated 10 they were on going negotiations.
33 And I think that those opening statements make thin 12 Commission aware of the fact that there have been 13 on-going,
( good faith negotiations among various parties, 34 as a matter of fact, all the parties to this proceeding, 15 attempting to settle issues outside of a forum involving 16
! the legality of contracts, outside of court, outside of 5 37 arbitration, "Let's settle it", even outside of this
- is Commission.
C
- 39
!w And the Commission must be aware that this has been
- 20 an on going process.
Commission has now been made 21 S
aware by these two counsel that an agreement was in fact r
77 struck between Florida Power & Light and Resources 23 :
Recovery, petitioner here, whereby they would inter-24 connect, and they would purchase power from the facility
( 25 at a rate which was agreed upon, or we agreed upon, l
l l
ss9
,.i.' M 1
avoided cost rate. And the Commission has been 2
advised that this contract was subject to the approval
~
3 of Dade County, and it was taken to Dade County. And 4 .
it was taken to Dade County, and when it was a trads-6 cript was made of the hearing, public hearing, in which 6
that was taken.
7 The agreement between Dade County, for instance, B
and Florida Power & Light -- I'm sorry, Dade County 9
and petitioner, a settlement between them, was moved 10 by Mr. Steerhine (Ph) to the Commission and explained 11 that we've been going through this contracted settle-12
' ment, and here is an opportunity to settle it. This 13 was on October 5th, 1981 -- I'm sorry, October 2d, 1981 14 and it is the workshop tape.
15 -
And at that hearing Mr. Steerhine (ph) said, among 8
16 other things, describing this situation - I'.believe' g 37 2 it was Mr. Steerhine (Ph), let me be absolutely certain --
18 yeah, it was.
3 Mr. Stcerhine said, at Page 4 of the
- 19 transcript, "You must keep in mind what our concern 20 was. Under the purchase contract"
- which has been
- 21 referred to here -- "Under the purchase contract we wou
- .d 5
22 n a turn-key basis give them S90 million" -- them being 23 ,
us, petitioners here -- "when the plant was constructed 24 and completed, even before operation, S90 million. Then l( 25 we would pay the balance of the $38 million over certain
J99
.;.*,c- b 1
performance criteria as they got production up to 2
certain levels, pursuant to the original contract.
Our 3
fear was that if we gave the $90 million and then two 4 .
things could have happened. One, the company at t8e 5
very least would have said to us, 'We cannot operate the 6 plant pursuant to that agreement; we have to re-7 negotiate.' Our negotiating posture under those s conditions, having paid the $90 million, invested $90 9 million in the hardware, would have been a heck of a lot 10 less than they are today. From that standpoint I'm 33 convinced that the recommendations that were made to 12 you by counsel and by your administration were correct 13 and proper, in spite of the frustrations, delays and 34 hardships and palpitations we have been throuch, we did 35 the right thing. We are still in a position of strength 16 ;
legally. We have not paid for that plant. We don't 17 have to pay for that plant. I want to make that quite
- 18 clear. We did the right thing."
j 39 Now, we get rather urgent about this point, because 20 it costs us about a million dollars a week while they d
2 21 decide to play games with these contracts. And they were advised by their legal counsel at that hearing, l
23 ,
at that workshop session, which is a public session, 24 w rds to the ef fect that if they went through with that
( 25 settlement, their position in future litigation with 1
23f jha 1
Parsons & Whittemore six months to a year from now, is 1 2
what they said, would be less tenable than it would 3
be under the old contracts, and therefore they urged 4 -
not to agree to the settlement. As a matter of fact, 5 Mr.
Robert Ginsberg who is the County Attorney admitted 6
that as a practical matter to settle the contract and 7
allow Parsons & Whittemore to go ahead and operate, 8
based upon the settlement agreement'-- as a matter of 9
fact, let me read it to you. He says, this is Mr.
to Ginsberg, "
In my best judgment I believe we are going 13 to be litigating with Parsons & Whittemore whether it be 12 within the next six months or a year. I believe that 13 is going to take place, becadse of that I am concerned
(
14 about the new agreement. I would prefer to litigate 15 the agreements we've got. They put the county in a much 16 stronger legal position.
! The new agreements are perhaps 37 E
somewhat more practical from an operating standpoint, 3
0 is but I don't think that's going to be the end result of all
.s 19 this."
4 20 That is the answer. And now I'm coing to read the d
question.
21 At the september 17th hearing on Page 110
.I 22 f the transcript, Commissioner Cresse asked,- "and I'm 23 ,
trying to figure out what's holding this deal up. Is 24 it lawyers or is it greed?"
I 25 submit to you that this deal has been held up for w
236
- e I
the reasons outlined in these transcripts. Everybody 2
g is trying to get a better position on the other person.
3 The fact that Parsons & Whittemore has put this 4 .
money, S177 million into this facility, the fact thit 5
it's costing them a million dollars a week to keep that l
6 facility where it is today, status as it is today, is 7
l irrelevant. 'If they can get a better deal in some 8
. projected concept by a lawyer that msybe in a half a l 9 year or a year from now we might be in litigation.
10 I submit to you that's no basis or reasonable 1
11 approach to a settlement that is supposed to have been 12 in good faith.
13 Now, that is the sort of thing we're up against.
k
! 14 And if that is material to the issue of cogeneration 15 I'm a turkey, but it is just as material as these 16 opening statements respecting the contract negotiations 17 and the contract problems that you 've heard from other
- 18 counsel.
19 CHAIRMAN CRESSE: Strikes me the answer to my
' .h 2,7 question is both.
4 i: 21 MR. GREENBERG: May I, please --
!I.
l* 77 CHAIRMAN CRESSE: Go ahead.
23 , MR.'GREENBERG: Is that a verbatim transcript of 24 those proceedings, can I ask you that, sir?
( 25 MR. DEARING: I'm advised that it is. I'm not --
l
' 23-
- 1 MR. OPEENBERG: I would first say, I tried during 2
my presentation to be unemotional ar.d without name-3 celling. I hope it doesn't deteriorate. But I do feel 4
at least I would like counsel, as long as he has a =
5 verbatim transcript, to read the remarks of former 6
Governor Askew as to what he thought of this settlement ,
7 Would you please read that to the Commissior..
B COMMISSIONER GUNTER: Opening statements are 9
getting beyond that, Mr. Chairman.
10 CHAIRMAN CRESSE: We got beyond the opening 11 statement process.
I understand tnat you may under-12 stand I have a great deal of admiration for the former 13 Governor Askew, but I would just as soon not let his
(
34 statement go in, unless somebody wants'to proffer it 15 as evidence. Because we are fixing to now start the' 16 evidentiary portion of this hearing.
- 37 MR. DEARING:
f I will make it available for that I. 18 purpose, Mr. C.1ai rman .
- 39 COMMISSIONER GUNTER
- We have a copy.
i 20 CHAIRMAN CRESSE: Unless it's evidence -- maybe 4
3 21 I was too lenient on opening statements, I'm not sure.
.=
22 I thought it was very educational. Commissioners, did 23 , you all find that educational? All right, fine.
24 htat's the appropriate order of witnesses? I'm
( 25 not going to ask the staff if they have an opening
.t .
1238
. 1 statemen:, unless they have one they can get through 2
g with in two minutes.
3 Do you have an opening statement?
1 .
MR. SEXTON: No, sir.
- 5 CHAIRMAN CRESSE: All right, fine.
6 MR. SEXTON: As I indicated earlier before opening 7
statements had begun, it was apparent to me that 8 petitioner had - petitioners had closed their direct 9
case and it was up to Florida Power & Light and the s 10 county to respond at this point with an evidentiary si presentation, and then a response by the petitioner if 12 they so desired.
I'd like to know if that is consistent 13 with the understanding of the parties at this point?
(
14 CHAIRMAN CRESSE: Well, I think we'll let Mr.
15 Greenberg call his witness.
16 MR. GREENBERG: We presented our testimony, unless 1
3 17 there is some reason to cross examine --
is CHAIRMAN CRESSE: The procedure is you bring him 4
39 pp here, sit him down, swear him in, and ask him if 20 that's his testimony and so forth. And then we'd insert d
21 it into the record. At that point in time if there is 22 any cross, all parties have the opportunity to do that.
23 , MR. RAVIKOFF: I call Dennis Carter.
24 CHAIRMAN CRESSE: Let me swear you in, Mr. Carter.
25 Please hold up your right hand.
A$7
. :; r
.* N
. 1 (WEEREUPON, Witness Carter was sworn in by
{ 2 Chairman Cresse.)
3 THEREUPON, the said 4 -
, DENNIS I. CARTER
- 5 was called as a witness, and having been first duly sworn, 6
was examined and testified as follows:
7 DIRECT EXAMINATION B BY MR. RAVIKOFF:
(
9 @ Mr. Carter, do you have before you Metropolitan 10 Dade County's filing entitled " Witness List"?
11 A Yes.
12 O Would you please review the attachments to that 13 filing.
(
14 A All right.
15 O Chn you identify that attachment? Is that a 16 transcript of your testimony?
- 17 A Yes, it is.
. 18 0 C
s Is that an accurate transcript of your testimony?
y 19 A One exception. I've been advised that on Page 2, 4
2 20 en the matter of the construction contract, I was asked d
21 j whether that contract was amended.
2 2
My answer was, "Yes, it 22 was amended four times."
23 ,
CHAIRMAN CRESSE: It's on Line 9, Commissioners.
A Page 2, Line 9, right.
24 I've been advised that that 25 contract has been amended five times. Other than that, I
. * :s * .
- n ', 240 I
believe it is a true statement, yes.
2
(. CHAIRMAN CRESSE: Let me get the am@ndment in 3
the record before we insert it. You said, "Yes, it 4 "
was amended" -- strike out four, insert five?
5 WITNESS CARTER: Yes, sir.
6 CHAIRMAN CRESSE: That would then require an 7
amendment in the next sentence, which says, "Three times; 8
in '78 and once in
'79," if you are'trying to account 9
for all five.
10 WITNESS CARTER: I don't know when the fifth one 11 was. I can't recall.
12 CRAIRMAS CRESSE: Are you suggesting then that you 13 strike the last portion of that sentence?
14 COMMISSIONER GUNTER: That portion that you have 15 "Three times in '78 and once in '79"?
16 WITNESS CARTER: I would suggest you strike, since
- 17 I am not sure what year the fifth one was, yes.
2 18 y MR. RAVIKOFF: Mr. Commissioner, we move that this c
i 19 testimony be inserted into the record, based on his i
l 20 varification, a
j 21 CHAIRMAN CRESSE: All right, sir. Did he ask him 22 the right question prior to doing that? i 23 ,
MR. PRUITT: Mr. Chairman, I'm sorry. I could not I 24 hear what counsel said.
( 25 MR. RAVIKOFF: Based on Mr. Carter's varification 1
1
. . . *' . * ' . 241 1
of his testimony, we ask it be inserted into the 2
( record.
3 CHAIRMAN CRESSE: All right. Do you want to 4 -
identify the attachments to his testimony? What is" 5
the exhibit number?
6 MR. PRUITT: That would be Number 12.
7 CHAIRMAN CRESSE: All right, sir. The letter 8
dated January 23rd, 1981, would be Exhibit Number 12.
9 COMMISSIONER GUNTER: Composite?
10 CHAIRMAN CRESSE: And then the letter -- the next 11 letter dated -- the letter dated January 23, 1981, 12 GFL-81-10 will be Exhibit 12. The next letter dated
(
13 January 23rd, 1981, GFL-81-ll will be Exhibit 13.
14 And the next letter dated January 23, 1981, GFL-81-09 15 will be Exhibit 14.
16 (WHEREUPON, Exhibits 12, 13 and 14 were marked 2
17 for identification.)
18 CHAIRMAN CRESSE: All right, sir. You have sub-0 j 19 mitted the witness for cross?
i 6
3 20 MR. RAVIKOFF: Yes. -
0 2 21 CHAIRMAN CRESSE: Without objection, we 'll enter 22 the prefiled testimony, insert the prefiled testimony 23 into the record.
24 MR. DEARING: Excuse me. I have an objection to 25 the introduction of the testimony, prefiled testimony,
9 92
- S4 I
because it is irrelevant and immaterial to the issues
( 2 respecting interconnection, which petitioner has brought 3
before the Commission. The Commission had indicated 4
. it wanted background. The Commission got plenty of 5 background from counsel.
6 To the extent this is simpiy repetitive background 7
I submit it is unnecessary and immaterial to the issues 8 CHAIRMAN CRESSE: Do you want to respond, counsel?
9 MR. GRLENBERG: No. If the Commission feels it's 10 irrelevant -- we are not going to argue. We simply 11 brought it here to try to educate the Commission, for 12 that purpose only.
13 CHAIRMAN CRESSE: Mr. Pruitt, another one of those 14 legal thickets. Seems to me on Page 2 he addresses 15 the question of ownership of the facility, and your 16 access to it, on the top of Page 3. And it describes 17 the elements of the contract as he understands them.
18 You probably address the question of ownership.
g 19 MR. GREENBERG: Yes, we do.
a f 20 MR. DEARING: To the extent that he gives a -- to d
21 the extent that he is giving legal -- drawing legal 22 conclusions and legal hypothesis throughout, I haven't 23 heard any indication that would give him -- any 24 indication of any background or experience that would 25 give him the right to do so. We would contest his
243 1 I capacity, his competency, to give legal opinion and havel g 2 it come in as evidence.
3 COtiMISSIONER GUNTER: Counselor, one of -- if I 4 -
could, Mr. Chairman.
Mr.
Dearing,
one of the proble'ms 5
I have is that the opening statement -- and I'll use 6
that word very loosely -- on the part of Metropolitan 7
Dade County's attorney is not sworn testimony in the 8
record and not subject to cross examination. I have 9
some questions based on -- that came up, for instance, 10 in the economics of the situation as he began on, I ii believe, Page 7 of his testimony. Maybe Fage 7 is the 12 wrong reference.
Yeah -- no, that's the wrong one. But 13
( where we get back and start talking about the cost of 14 operating land fill and how -- Page 13, 12 and 13.
15 I wanted to question on that.
I did not because of 16 the normal practice of the Commission. I did not question 17 counsel on that matter. There is my confusion, is 18
. assuming we were following the normal process, swearing g 19 a witness, subject to cross examination, and interrogation 20 4
on his testimony by a part of the Commission as well as e 21 a part of the parties, 22 I understand your objection, because I have read 23 ,
his testimony and I heard the testimony being recited 24 by ccunsel.
That's the reason I use a very loose openin]
k 25 statement. But I'm going to reserve the right -- if
. *; ' . 4' 244 1
necessary we'll swear counsel and let's have a little r 2 deal on the opening statements, if you prefer that.
3 MR. DEARING: I understand perfectly the 4
Commissioner's point on that, and certainly --
- 5 CHAIRMAN CRESSE: You can swear at counsel, you 6
can swear at him, but I don't think you can swear him.
7 COMMISSIONER GUNTER: We could subpoena him as our 8 witness. I think that's legal.
9 CHAIRMAN CRESSE:
Let me rule on the objection.
10 Mr. Pruitt, Mr. Carter is the Assistant County Manacer 11 and he's outlined in his testimony, seems to me, some 12 of the terms and conditions of the lease as he under-13 stands it as the Assistant County Manager, and then goes 14 on in his testimony to talk about the economic impact 15 on the county as a result of this lease and so forth.
16 I tend to think that it would be admissible. We'd I
=
17 have to take the expertise for what it's worth, after he 18 gets through cross examination.
j 19 MR. PRUITT: I think Mr. Dearing would reserve the k
I 20 right to make a motion to strike af ter cross examination ,
21 if it turns out that he doesn't have first-hand knowledce 22 about what he's testifying about.
23 CHAIRMAN CRESSE: All right, sir. We'll proceed 24 on that basis then.
k 25 MR. DEARING: All right, sir. The Commission
,
- 246 1
understands my concern is relevancy, but Mr. Pruitt
( 2 points out I would reserve the right to strike.
3 CHAIRMAN CRESSE: Formally we would let the staff 4 -
ask the questions first.
- 5 MR. DEARING: Let me ask another clarification 6 point. Attached to their filing was the lease itself.
7 Do I understand that's not being considered an exhibit?
8 COMMISSIONER NICHOLS: That's not attached to my I 9 Copy.
10 COMMISSIONER GUNTER: Are you talking about this?
11 MR. DEARING: No. That's the contract.
12 CHAIRMAN CRESSE: There is a filing -- seems to ne 13 counselor said he's sponsoring those things that's 14 attached to his testimony. Is he sponsoring these too?
15 MR. RAVIKOFF: The lease is attached -- or a 16 statement of contentions. We would simply ask that they 3
1 2
37 be entered as exhibits, along with the contracts.
is There is a notice of filine on the contracts, which g 39 we have filed and noticed to all parties.
i 2
20 MR. DEARING: Appears right af ter the exhibit, 11 f 21 12 and 13 --
i E
22 COMMISSIONER NICHOLS: Where is says Exhibit C 23 up at the top?
24 MR. DEARING: Yes, ma'am. It says Exhibit B at l
)
25 the bottom, and Exhibit C at the top. That's the one.
l i
, 24M i MR. RAVIKOFF: Mr. Commissioner, the lease
( 2 agreement which we are now discussing is attached to 3 Dade County's statement of contentions. It is 4 .
Exhibit C to the contract which you have in that large 5 filing.
6 CHAIRMAN CRESSE: My understanding is that the statement of contentions has not been offered into 8 the record.
9 MR. GREENBERG: That's correct, Mr. Commissioner.
10 The lease that is attached to our statement of 33 contention was something we wanted to highlight. It 12 is, however, an exhibit to-the purchase agreement, and 13 we do submit and offer into evidence all of the
(
14 agreements which we have filed, which is the purchase 15 agreement, the operation and management agreement, the 16 g , assM # on ag eemeM and de escrow g agreement. All of those things, which we have prefiled,
,, we would like to offer into evidence as exhibits to j 19 g CHAIRMAN CRESSE: The notice of filing?
g 20 f 21 MR. GREENBERG: That's correct. And the lease,
[ which is attached to our statement of contentions, is an 22 exhibit to the purchase agreement. So by entering the 23 1 1
l purchase agreement in effect the lease will be in
(* 25 evidence. l
.,_,'.- .. 247; 1
CHAIRMAN CRESSE: Help me a little bit, counselor.
2
( I have the notice of filing, these packets, one, two, 3
three, four, five, six, were attached to it. Do you 4 .
want that identified as an exhibit? "
5 MR. GREENBERG: Yes, sir.
6 CHAIRMAN CRESSE:
l All right, sir. Any objection?
7 MR. DEARING: Just as to relevancy.
8 CHAIRMAN CRESSE:
All right, sir. We'll identify 9 that as a Composite, everything referred to on the to notice of filing, as a Composite Exhibit 15.
l l 11 (WHEREUPON, Composite Exhibit 15 was marked by 12 Chairman Cresse for identification.)
l 13 (At this time, Mr. Dennis Carter's prefiled 14 testimony is inserted into the record.)
15 16
! 17 i
I 2 19
!4 l g 20 i
R 21
\i l 22 23
! l
, 24
( I 2s l
1
I24E Q Please state your name.
I 2 A Dennis I. Carter.
3
~
Q What is your current position?
A. Assistant County Manager for Dade County.
- 4 -
Q How long have you held that position?
5 A Since May 1979.
6 Q How long have you been employed by the County?
7 A
, 22 years.
8 Q Are you familiar with the history of Dade County's 9 decision to contract for a resource recovery facility?
10 A es.
O How did you acquire such familiarity?
11 A Since 1974 I have been on the County's Solid Waste Task 12 ,
j Force.
I i( 13 i O What was the Task Force?
I4 A
i That was the group appointed by the County to study and 15 make recommendations on alternatives to handling Dade County's 16 I colid waste problem.
i 17 Q Did you hold any position on that task force?
,3 g A Yes. In 1975 I was Chairman of the Task Force group negotiating contracts for a resource recovery facility.
20 Q Are you familiar with the contracts Dade County has entered into with Resources Recovery (Dade County), Inc. and FP&L 21 l for the construction and operation of the Resource Recovery Fa-22 cility?
23 A Yes.
24 Q Would you please identify those contracts?
(
25 A There were five contracts -
a purchase contract, a
,. .o e
249 l inanagement contract, an electrical generation facility contract, 7 an assumption agreement, and an escrow agreement, i 2 j t
Q would you please generally describe the terms of the 3 !
purchase contract?
4 l 'A l
This was a contract executed between the County and 5
Resources Recovery (Dade County), Inc. under which Resources 6 Recovery (Dade County), Inc. agreed to design, construct, and sell 7 to the County the Resources Recovery Facility building and g associated equipment.
Q Was that contract ever amended?
9 A Yes, it was amended four times.
10 ,
Three times in 1978 l and once in 1979.
11 l l Q Is Resources Recovery (Dade County), Inc. the party 12 still obligated to Dade County under the contract?
1 13
( l A No.
14 0 Who is?
l A
15 l In January, 1978 Resources Recovery (Dade County), Inc.
assigned its rights and obligations under the purchase contract 17 to Resources Recovery (Dade County) Construction Company.
i Q What are Recources Recovery (Dade County), Inc. and 18 Resources Recovery (Dade County) Construction Company?
A They are two wholly owned subsidiaries of Parsons &
20 Whittemore created for the purpose of building and operating the 21 i Dade County Facility.
22 l Q Who owns the land on which the Resources Recovery Fa-1 23 !
cility'is built?
24 A Dade County.
O What rights does Resources Recovery (Dade County), I r. ; .
2
b50 I
or its assignee, RRDC, have with respect to the land?
( 2 I
A They are there pursuant to a lease which gives them 3 right to be on the land for the sole purpose of constructing the_
4 plant.' Once the plant is constructed, their lease terminates.
3 0 Is this an exclusive lease?
A No, the County r eserved the right to lease a portion of the land to Florida Power & Light to own and operate the elec-7
, trical generation f acility.
8 O Would you please describe the management contract?
A This was a contract that was executed at the same time 10 the purchase contract was executed and it obligated Resources 11 Recovery (Dade County), Inc. to operate the facility equipment 12 and landfill area. The management contract required Resources 13 Recovery (Dade County), Inc. to operate the facility for a period
(
of twenty years with the County paying Resources Recovery (Dade
! County), Inc. $0.25 cents per ton of solid waste as a tipping 15 fee.
16 .
! Q Was this management contract ever amended?
A Yes, it was amended three times, twice in 1978 and once h,
38 in 1979.
}
19 0 Under the management contract did Resources Recovery 20 (Dade County), Inc. have any ownership rights in the land or the 21 ;
facility?
f A No. Under the purchase and management contract, it was i
envisi,oned that the County would own the Resource Recovery facil-23 !
l ity and land on which it was situated and would be operated by 24 )
( Resources Recovery (Dade County), Inc. The electrical generation 25 portion of the facility would be owned and operated by FP&L.
3
i 25I 1 ! ,
j Q Would you please describe the electrical generation
( 2 facility contract?
3 A This was an agreement between Dade County and Flor'ida
= 1 4 l Power '& Light entered into on October 18, 1977. Under this l 3 agreement the County agreed to construct and sell the electrical
, generation facility to FP&L. The electrical generation facility 7
was to be operated on the County's land pursuant to a twenty-year
, lease. The electrical generation facility agreement also pro- j 8
I vided for the terms under which steam would be delivered and sold 9
for use in the electrical generation facility.
10 0 Would you please describe the assumption agreement?
11 I A This agreement was executed between the Cour)ty and 12 Resources Fecovery (Dade County), Inc. and provided that Re-sources Recovery (Dade County) , Inc. agreed to assume the Coun-( 13 34 ty's obligation under the electrical generation facility con-tract.
15 0 Would you please describe the escrow agreement?
16 ,
A This agreement was executed among the County, RRDC, 17 First National Bank of Boston, B'anque de Paris et des Pays-Bas I8 and the State Board of Administration. It provided the terms and 19 conditions for the holding and dispensing of the ' approximately 20 l S129,500,000 purchase price of the Facility under the purchase i'
21 contract. This contract was entered into July, 1978 and amended g in January 1979.
23 l 0; Approximately how much is in the escrow account at the lpresenttime?
24
( A About $150,000,000.
25 0 Under what conditions are the funds from the escrow 4
%.2
..r ..'
35 I
account to be released for payment of the Resource Recovery Fa-2 cility?
3 A
The escrow agreement provides that the County is obli-4 gated to pay RRDC seventy percent of the purchase price of the l
Resource Recovery Facility - approximately $90,000,000 - upon the
, completion of the Facility pursuant to the purchase contract,
{
7 subject however to several conditions. First, RRDC must certify 8
! that the " completion date" has been reached. That is that the l
! plant is-complete. Second, the independent engineer must issue a 9
separate certificate indicating that it is recommending to the 10 County that the facility and landfill area have reached comple-11 tion date.
Third, RRDC must certify to the escrow agent that 12 certain documents have been delivered to the County including 9
[ 13 warranty deed and bill of sale, among others. These documents 34 must also include an Officer's Certificate from Parsons &
I 15 ,Whittemore, Resources Recovery (Dade County), Inc. and RRDC which
. 16 provides that no default exists under either the escrow agree-
}
I 17 ment, the purchase contract, the management contract or the as-l sumption agreement. .
I
{ Q Has this certification process occurred?
- , 19 A
! RRDC has on several occasions attempted to certify that y 20 i .the plant had met the Completion Date defined in the Purchase l
} 21
, Contract, but that the County has objected to each of these cer-t '
22 ltifications.
23 1
A 24 ! There are a number of reasons.
( 0 Can you tell us some of those reasons?
25 A
RRDC attempted certification on January 9, 1981 and 5
t
,. l 253 1
l February 12, 1981. On both of those occasions, the independent I 2 I
engineer recommended to the County that the completion date had 3 not yet been reached.
Q Were there any other reasons?
- A Yes. In the County's opinion RRDC and Resources Recov-5 6
ery (Dade County), Inc., as well as the parent company Parsons &
Whittemore, were in default under the agreements.
O Would you please elaborate?
8 A
Prior to the development and construction of the facil-9 ity for Dade County, Parsons & Whittemore had constructed a sim-10 ilar facility in Hempstead, New York. The Hempstead facility was jj to be a " prototype" for the Dade County facility. In mid-1979 g significant problems began to develop with the Hempstead facil-ity.
These problems centered around odors, emission of chem-
{ 13 icals, and excessive wear on the system. The system actually 14
" ate itself up."
15 As a result of these problems, the Hempstead facility experienced repeated mechanical trouble and operated at 16 5 substantially below capacity. The County also learned later, 17 that the operating costs at Hemps.tead were excessive. Finally, is the County learned the Hempstead facility was shut down because '
39 of these operational problems by Parsons & Whittemore.
O Were these problems discussed with RRDC?
I A Yes. We were told that due to these problems, they had 21 22 experienced approximately $30,000,000 in cost overruns on the '
Hempstead project and had sustained significant operating los-23 i ses. They told us, however, that they had corrected the problems 24
.(
l in Hempstead and had corrected them in the Dade County plant 25 also.
6
, m
25j e
1 :
Q Did that satisfy the County?
(. ! A 2
i It might have, except that beginning in mid-1980, Re-3 sources Recovery (Dade County), Inc. told the County, for the
! first time, that it was unable to perform its obligations under the management contract and assumption agreement without 5 in-6 curring losses so significant that it would bankrupt the company.
0 What revenues are paid to the operator of the Resource 7
. Recovery facility?
8
{ A i
The operator has the right to the first $6.8 million 9
l dollars of revenue derived from the sale of steam to Florida I
! Power & Light and fifty percent of the excess of $6.8 million 10
,, dollars. The other fifty percent goes to the County. The oper-12 ! ator also derives income from the sale of redeemable waste and i
from the $0.25 per ton tipping' fee paid to it by the County. In
( '
14 return, the operator is responsible for the payment of all man-i
! agement, operational and other expenses for the facility.
I8 0
What was the County's reaction to the statements of 16 impending bankruptcy?
I
, 17 j A These statements put the County in an untenable posi-j tion.
18 l The State of Florida was demanding closure of certain I
39 landfills and an immediate solution to the County's solid waste i
20 t
disposal problem was required. As a result, the County went back 21 j to RRDC and Parsons & Whittemore and asked for some sort of as-surance that they would operate the facility under the management 22 i
contract.
'3
^
Q What type of assurances were sought?
24 l A
( l Specifically, the County sought financia'. statements of 25 ' Parsons & M ittemore or in the alternative, a performance bond.
7
. . h.
- 255!
j.
..,s. .
j l' O Were such assurances provided?
[ 2 A No. The only assurance provided was a letter from the bank which funded the construction, 3
stated that Parsons. &
I Whittemore was in the same or better financial position it was in 4 -
prior to entering into the contracts. The County could not ac-I !
5
' cept this because the Bank was not a very impartial source.
6 l
Q Did Parsons & Whittemore tell you why it or its sub-7
! sidiaries could no longer operate the facility without incurring 8 ; substantial losses?
I 9
i l A Yes. The County was told that the cost of operating 10 the plant had gone up so tremendously and the projected revenues 11
! could not offset these increases.
i O What was the magnitude of this increase? .
12 l A Originally, when Parsons & Whittemore made its proposal 13 I
( ! to the County, the County was told that the plant would operate Id at a cost of approximately $5.65 a ton. Of course, the County i
15 realized that this amount would escalate somewhat due to infla-tion.
16 But it was also envisioned that revenues would rise in a 17 like manner.
gg Q Was this important to the County?
A Yes. While the specific figure itself was not impor-tant to the County, the fact that the plant be economically 20 viable was extremely important. In fact, all of the companies 21 I submitting bid proposals to the County were required to submit a 22 1
figure on the expected operating costs per ton, even though the 23 t
County would not be paying those costs. The final two proposers, 24 Parsons & Whittemore and Universal Oil Products, were required to k
25 substantiate their figures on the costs per ton to the County. _
8
256
. , *,; ..' . * - t9 j It was extremely important to the County that it obtained a fi- l
( 2 nancially viable project.
O What did Parsons & Whittemore tell you were the actual l operating costs of the facility? ,
4 -
A We were told that the operating costs of the plant 5
would be well in excess of $20.00 per ton - a 400 to 500 percent 6
increase in operating costs.
I 7
O What is the practical effect of such an increase?
8 A It appears that under the existing contract no one can 9 afford to operate this plant, and perhaps the same is true under 10 any contract.
O What did the County do after requesting assurances?
12 A The County was unsure of what its position was' 'under the contract so it filed a lawsuit in federal court seeking de-13
( claratory relief.
14 Q What did Parsons & Whittemore do when they learned of 15 this lawsuit?
16 ! A They attempted to retract their statements of non-17 ' performance and asserted that they had every intention of per-jg forming under the management and assumption contract.
9 j Q What was the County's reaction to these statements?
i A The County of course rejected them. If you can't per-
- form you can't perform, and any statements to the contrary were 21 ,
j meaningless.
l 0 What happened in the lawsuit?
33 A The Court dismissed the lawsuit for lack of jurisdic-1 24 tion.
25 Q Did Parsons & Whittemore react in any other way to this 9
257 1 lawsuit?
l
( 2 i A Yes, they claimed that the filing of this lawsuit was a i
3 breach of the - contract because it was a violation of " good faith." '
4 l l Q What happened next?
5 A On January 9, 1981 RRDC attempted to present its "com-6 pletion date certificate", acceptance of which by the Escrow i
l Agent would trigger the release of seventy percent of the escrow 8
fund under the escrow agreement.
9 Q How did the County respond?
10 A The independent engineer inspected the plant and deter-3, mined that it could not give its certificate of completion. The County filed its certificate with the escrow agent asserting why 13 the preconditions to release of the escrow funds had not been
{
met.
14 i O What happened next?
II !
A i
On January 23rd, 1981 Resources Recovery (Dade County),
16 Inc. and RRDC terminated the purchase contract, the management
~
17 contract and the assumption agreement.
ig Q Have you reviewed the documents that have been marked 39 fas Metropolitan Dade County's Composite Exhibit No. 1 and that i
20 are attached to this testimony?
! A Yes.
21 i
- Q What is Metropolitan Dade County's Exhibit l?
A Metropolitan Dade County's Exhibit 1 are the termina-23 l
tion letters that I just described above, 24 Q What happend after these termination letters were sent?
25 A RRDC filed a demand for arbitration.
10 t
I a' i*
' 25S l
1 !
O Do you know what the status of the arbitration is?
2 A Yes, it is in its preliminary stages and trial has not 3 yet begun.
Q Do you know generally what the issues in arbitratiori l are?
5 A Generally speaking RRDC is seeking review of the Coun-6 ty's refusal to accept its completions date certification and 7
challenge the adequacy of the documents delivered. It is also 8
I contending that the County breached its duty of cooperation, and 9 ! thereby has breached the contract. I believe RRDC is contending 10 that this justifies the termination on January 23rd, 1981. RRDC gi is also seeking payment for the electrical generation facility "
and in that same context is contending that the County misrep-13 !
l resented to them the economic effect of the electrical generation i facility contract that the County negotiated with FP&L.
14 !
l Q Does the County have any demands in arbitration?
15
! A Yes.
I 16 I Q What are they?
17 i A The County's claims generally are as follows:
18 First, that Resources Recovery (Dade County), Inc, j9 terminated the contract without justification on January 23rd 20 l 1981.
i 21 i Second, that the actions of Parsons & Whittemore and j
j its subsidiaries prior to the termination constituted an antici-22 I patory breach of the contracts.
23 j Third, that Parsons & Whittemore and its subsidiaries 24
! failed to give adequate assurances as to their inabilities to
( l 25 perform under the contracts.
11
259 3 i Fourth, that Parsons & Whittemore and its subsidiaries,
( by failing to build an economically viable plant, breached their
! warranties to the County.
3 )
Finally, that Parsons & Whittemore and its subsidiaries 4 -
l negligently or intentionally misrepresented the operating costs 5
l of the plant both at the time the contracts were entered into and 6 l.
at the time they were amended.
l 7 Q You understand that Resources Recovery (Dade County),
8 Inc. is seeking an interconnection so that the Facility would I
9 become 100% operational, do you not?
A Yes.
10 11 i
l Q Would there be any economic affect to the County if the 12 !
! resource f acility became fully operational without regard'to the contracts?
( 13 l
i A
Not if they took only the County's garbage at $.25 per I4 ton and the County could collect the S12.00 i
per ton from 15 l municipalities.
16 Q What if the facility took garbage from other sources?
I A
g7 In that case the economic impact would be devastating.
Q Why?
19 A At the present time the County takes garbage from the 20 surrounding municipalities at a dump fee of approximately $12.00 per ton. I understand that Resources Recovery has entered into
'l l contracts with some of the surrounding municipalities to take 22 their garbage at $10.00 a ton. Therefore, the County would be 1
23 losing, right of f the top, this $12.00 ton fee.
24 O But wouldn't this be offset by reduced costs because
( 25 l the County would have much less garbage to process?
12
o .' '
'I l- 26l 3 l A No. At the present time the County is geared up to i 2 process some one million tons a year at its 58th Street land fill site. This costs the County approximately $6.00 a ton, or approx.imately six million dollars a year. These are fixed costs 4 -
which the County must incur under any circumstances. Therefore, 5 !
I the County would be paying out $6.00 a ton but not receiving the 6
$12.00 a ton for the garbage from non-county sources diverted to 7 the facility.
8 0 So, in other words, for every ton delivered to the 9 facility rather than to Dade County, the County is incurring a Cost of $18.00 a ton.
A That's correct. $6.00 in costs and $12.00 in lost 11 revenue.
- 12 O Are there any other costs incurred with the running of (i 13 l this facility?
I4 A Yes, the County is continuing to pay $12.00 a ton as 15 i debt service on the bonds which were used to provide money for 16 the construction of the facility.
17 0 Therefore, would it be correct to say that if the fa-cility is operational, and not taking the County's garbage, the I County is paying $12.00 a ton on debt service, $6.00 a ton to 19 I continue to operate the landfill plus losing $12.00 a ton for 20 l every ton of garbage diverted to the f acility?
21
! A That's correct.
I 22 0 Has the County budgeted for this:
23 , A No. The County has budgeted to operate under the con-24 tracts.
( I i
25 0 What does that mean financially? l 13 o
1 i
.. -> . 261 1 'A If the plant were operational, and everybody was work-2 1
ing under the Contracts, we would be able to shut down the land-l 3 i fill, which is costing the County $6.00 a ton and replace it with a $0.25 cents a ton tipping fee for processing solid waste' 4 1, -
,' through the facility. The $12.00 a ton debt service would remain 5
the same.
6 '
i 7 ' (SO ENDS PREPARED TESTIMONY) 8 l
9 10 i 11 l
12 l 13
(
14 ,
l 15 16 17 18 19 ,
1 l
20 t
l' 21 22 ,
23 l
24 4
( ! l 25 !
l 14
j
,.8 * # 262 i
~
1 CHAIRMAN CRESSE: Now, may we proceed, Mr. Sexton?
2 MR. SEXTON: Staff has no questions.
[
3 CHAIRMAN CRESSE: Mr. Dearing?
4 MR. DEARING: Yes, sir. May I follow Florida Power 5 & Light?
6 CHAIRMAN CRESSE: That's right. That's what 7 we said. Mr. Davis, Mr. Childs, do you have any
- 8 questions of Mr. Carter?
9 MR. DAVIS: No, sir.
10 CHAIRMAN CRESSE: It's now again your turn, Mr.
ij Dearing. They have no questions.
12 MR. DEARING: All right. Fine.
13 CEOSS EXAMINATION
(
ja BY MR. DEARING:
15 G Mr. Carter, were you familiar with that lease that 16 you described in your testimony?
17 A Yes, sir, I am.
- ig G Would you explain your familiarity, sir. Did you
- ig personally work that lease out, negotiate the terms of that a
20 ease?
! A Yes. I was part of a task force which worked out
, 2 21
- that lease, yes.
22 G Isn't it true, sir, that the lease states at the 23 top, as Exhibit C, that this Exhibit C is attached to and 24 k made part of that certain purchase contract dated September 25
, '. . i26 1
28th, 1976, by and between Resources Recovery (Dade County),
j 2-Inc., the seller, and Metropolitan Dade County, Florida, the l
i 3 County?
4 A
, Ycu have the lease before you, sir. If that's 5 what it says --
6 I
0 You don't recall that it says that?
7 A I haven't memorized every item in all the contracts 8 that we have. As you know, we have five contracts, which 9
have been amended several times.
10 0 You don't recall that this lease was made part of, 33 as an exhibit to the purchase agreement?
i 12 A. I believe it was, yes.
l
! 13 0 l( As part of that purchase agreement, it became part 14 of the purchase agreement, did it not?
15 A You are asking me a legal question.
16 0 Yes. You are a lawyer, aren't you?
i; c
l t 17 A I have a law degree. I am not a member of the bar,
- is and I have never practiced law.
c g; 39 0 i s You don't have any feeling about it one way or
,! 20 the other?
21 A No, sir, I do not, t
I 22 0 Did I understand your testimony to be, sir, that 23 .the lease was not a matter for arbitration?
24 A I never said that.
25 MR. DEARING: I'm sorry. All right. Thank you.
4
, S *. t' 29 t
No further questions.
2
( CHAIRMAN CRESSE: Commissioners have any questions 3
of Mr. Carter?
4 COMMISSIONER NICHOLS: No. '
-5 COMMISSIONER GUNTER: Mr. Carter, if you could, 6
somehow in your testimony I got lost, When we talked 7
about -- let me refer you, if we could, to Pages 7 and E-8 of your prefiled testimony. As I understand, beginning 9
on your response to a question on -- the question was to on Line 6 and 7, that the response there had to do 11 with the distribution of funds received from the sale 12 of steam to Florida Power & Light. First 6.8 million 13 would go to the operator, 50 percent after 6.8 would 14 go -- and that would remain in perpetuity; is that 15 correct?
16 WITNESS CARTER: That is correct, sir.
I e
17 COMMISSIONER GUNTER: In addition to that, the s
18 operator would receive 25 cents a ton for processing, j -
19 right?
a l 20 WITNESS CARTER: That's 25 cents a ton escalated.
f= 21 COMMISSIONER GUNTER: That's cost of living and 22 the rest of these kinds of things?
23 WITNESS CARTER: Today would be somewhere in the l l
24 neighborhood of 50 cents.
25 COMMISSIONER GUNTER: And then I follow through 1
265
,
- d . 7' 1
, and I'm reading through, and I go on to Page 8, and I
.( 2 I find that county was notified by Parsons Whittemore 3
that it would take at least $5.65 a ton as referred on 4
1 your response on Lines 12 through 17 on Page 8. '
5 WITNESS CARTER: .Yes, sir.
6 COMMISSIONER GUNTER: How many tons a year was 7 contracted for between Dade County and'the operator, 8 Parsons Whittemore?
9 WITNESS CARTER: 936,000 tons a year.
10 COMMISSIONER GUNTER: So if I were looking for a it shortfall as versus the original to what they told
~
12 you at the time period referenced on Page 8, that's 13 just a simple math computation of what their shortfall 14 and revenue would be?
15 WITNESS CARTER: That's basically correct, yes, si::.
, 16 COMMISSIONER GUNTER: Let me proceed on here a j
37 little bit. I want to skip all this lawsuit kind of
- ig stuff.
g 39 How about running through with me your logic on a
- 20 Page 13, where we talked about the economic impact to i z
d 21 the county, of where we talk about that the county had r
77 operated a landfill, million tons a year, cost you 23 appr xinately $6 million or $6 a ton to operate that t
3g landfill. And you talt, about the S12 a ton that you k
25 received from municipalaties I suppose within l
l
i 266l 1
\
Matropoliten Dado cron for hcndling their garbage. l l
2
( How much of that garbage was Dade County's and how much 3 of that million tons, how much of it came from the 4 '
city, do you know?
5 WITNESS CARTER: Yes, sir. Let me explain that.
6 CO?iMISSIONER GUNTER: I got kind of lost in ycur 7 computation as you went down.
8 WITNESS CARTER: All right. First of all, as you 9 know, we have state pollution control bonds which are 10 sold for and on behalf of Dade County, for which Dade 11 County is responsible for the annual debt service. That 12 amounts to approximately $12 million a year, and if you 13 just round out the total tonnage, a million tons a year 14 that's $12 a ton. So everybody in Dade County, whether 15 it be municipalities, private haulers or even Dade 16 County itself, we pay $12 a ton into a special fund to i
17 repay the state on the debt service. So for every ton g 18 of garbage or trash delivered to a county facility, c
j 19 whether it be landfill or resource recovery facility, i
l 20 we collect $12 a ton from the private hauler for d.
21 the municipality and from the Dade County solid waste 22 collection department, which coes into a separate fund 73 to pay that debt service.
24 What I'n saying here is that since about September
( 25 Parsons & 'v.'hittemore has been intermittently operating
.: t
' 1 26)
I that plant off and on, 500 tons a day, 1,000 tons a 2
day, and then they stopped. We don't know what day 3
they are going to operate. We don't know what days.the y are going to stop.
5 In the meantime, we have to maintain our landfill 6
because that particular area receives approximately 7
3,000 tons of garbage and trash a day. So our cost of 8
landfill in that respect is a fixed cost, because we 9
have to have the same number of personnel, the same to amount of equipment on hand each day not knowing which 11 day they are going to operate and what day they are not, 12 And for every ton of garbage and trash that 13 Parsons & Whittemore has been collecting during the 14 intermittent periods that they have been operating since 15 September, that's $12 a ton that we have not received, 16 I and that's $12 a ton we have been relying upon to pay
- 17 2
the debt service to the state of Florida.
18 s
1 COMMISSIONER GUNTER: Okay.
i 19
,h CHAIRMAN CRESSE: Let me ask a question on that, f 20 Fight now, because of escrow agreement, debt service o
, 21
~
is covered by the interest earned on the amount of 22 money still held in escrow and invested by SBA, isn't 23 it?
24 WITN5SS CARTER: No, sir. We have to pay k
25 approximately $1,000 a month into a separate escrow fund
.. * . .*
- 268 1 I l
from the revenues collected from the solid waste fund l i
2 g to the State of Florida. We have been paying that :
3 since April 1st of this year.
4 l CHAIRMAN CRESSE: $1,000 a month? '
5 j WITNESS CARTER: Sl million a month. Did I say 6 S1,000? S1 million a month.
7 CHAIRMAN CRESSE: I don't know that this is 8
relevant, but it's something how everybody gets them-9 selves messed.up in all these kinds of deals. The fact to is the State of Florida still has all the money from 11 the bond proceeds?
12 WITNESS CARTER: That's correct.
13 CHAIREAN CRESSE: And that interest and being
(
14 prudent, which I know the state is --
l 15 WITNESS CARTER:
i l That's correct.
l 16 CHAIRMAN CRESSE: -- they don't let that money lay 8
17 around. They've got it invested.
- 18 WITNESS CARTER:
E That's correct.
19 CHAIRMAN CRESSE: Is the interest off that invest-II y 20 ment accruing to Dade County, or is it accruing to the 4
.R 9;
state?
[
22 WITNESS CARTER: It is accruing to the escrow fund.
23 CHAIRMAN CRESSE: But you can't get at it because-i 24 the terms and conditions of which you can get at that i
k money have not yet been met?
25 l
269l 1 WITNESS CARTER: Right.
l 2 CHAIRMAN CRESSE: But you are still obligated to 1
I 3 send them $1 million a month?
l 4 WITNESS CARTER: That's correct. r l 5 CHAIRMAN CRESSE: I see. So it's not awash because i
6 probably that much money would earn interest, $1 millior 7 a month. It is earning that interest, but the problem
- 8 is --
9 WITNESS CARTER: -- we can't get at it.
l 10 CHAIRMAN CRESSE: -- you have a cash flow problem.
l 33 You are not suffering any loss; it's a cash flow 12 problem?
l 13 WITNESS CARTER: It's a big cash flow problem, g because in the meantime the funds have to come out of 15 the pocket of the citizens of Dade County.
A es, sh.
16 t
! 17 COMMISSIONER GUNTER: That's where I was going. I g
18 don 't have any furthe'r -- that 's where I was going, e
';. 19 and the Chairman, as usual, preceeded me.
l .
ll l2 20 CHAIRMAN CRESSE: Has there been any amendments d to the lease, that you are aware of, Mr. Carter, the
, 21 1
i lease agreement that's attached with the county? '
22 WITNESS CARTER: I don't believe so, no, sir.
23 CHAIRMAN CRESSE: Is it your understanding that
( essentially that lease requires payment of a dollar l
l I
J10 li !
1 a year?
{ 2 WITNESS CARTER: Yes, sir.
3 I CHAIRMAN CRESSE: And Section 4 says " Lessee shall 4
use the site solely for the purpose of constructinb 5
a facility described in the purchase contract"?
6 WITNESS CARTER: That's correct.
7 CEAIREAN CRESSE: It says on Page 6, Item 9,
. 8 "If the purchase contract is terminated by the lessor, 9 in accordance with the terms thereof, this lease and 10 the lease terms shall thereupon terminate, and subject 11 to the terms of the purchase contract, lessor shall ther 12 quit and surrender the site to the lessor. And the 13 lessor may immediately enter the site." Are you 14 familiar with that portion?
15 WITNESS CARTER: I haven't read that in years, sir.
16 I'm sorry.
! 17 MR. GREENBERG: I think it's a typographical error, t
- 18 Mr. Commissioner, t
E j 19 COMMISSIONER NICHOLS: It's interesting.
20 MR. GREENBERG: Yes, it is. First of all, it only 0
21 implies if the lessor termina tes the purchase agreement, 22 One must point that out. The person terminating the 23 purchase agreer.ent was the lessee in this case.
24 CHAIRMAN CRESSE: I guess from our prospective 25 and standpoint, whc is the owner is the relevant issue
l
- .. .., j271!
1 that was originclly identified. And I swear I don't 2
( know what that says.
3 MR. GREENBERG: Would you care for me to comment or t 4
it?
5 CHAIRMAN CRESSE: No , sir.
6 COMMISSIONER GUNTER: Again, one of the things that 7
kind of strikes me, and I have to put things in simple 8
terms. It's like if I've got a car, Prentice Pruitt 9
under some, whatever, and I go and rent -- cut a deal 10 to rent that to somebody else for some kind of period, 11 then I can't do that. If Prentice loans it to me for I .
12 my use, whatever, I've got some kind of deal, changing 13 the fender on it or something and I've got it for awhile ,
14 and I want to rent it. I don't have title to it. I 15 don't own it. I've got possession of it.
16 CHAIRMAN CRESSE: Mr. Carter, on Page 7 of your i
g 17 testimony, bottom of Page 6, you are referring to y 18 cost overruns --
l 19 WITNESS CARTER: That refers to --
i E. 20 CHAIRMAN CRESSE: That refers to the Hemstead,
,j 21 New York, situation?
22 WITNESS CARTER: That's correct.
23 CHAIRMAN CRESSE: You said beginning in mid-1980 24 Resources Recovery, Inc., told the county for the first k
25 time that it was unable to perform its obligations under
l
. s
' 272, I
the management contract and assurption agreement
{
2 without incurring loss that was so significant that it 3
would bankrupt the company. Was that told to you in 4
writing? Do you have any documentation, or is that-5 conversation?
6 WITNESS CARTER: That was conversation before 7
several witnesses.
8 CHAIRMAN CRESSE:
Has there been any contract 9
amendments since summer of 1980 that you are aware of?
10 WITNESS CARTER: No, sir.
11 CHAIRMAN CRESSE: Let me ask your counsel a 12 question. Are all the amendments to the contracts 13 included here?
14 MR. GREENBERG: Yes, Mr. Commissioner.
15 CHAIRMAN CRESSE: I have no further questions.
16 Thank you, Mr. Carter.
17 MR. GREENBERG: May we in an attempt to clarify
. 18 one -- ask the witness --
~!
j 19 CHAIRMAN CRESSE: Sure, go ahead. Chance for i
l 20 redirect.
21 MR. RAVIKOFF: Prior to that,'Mr. Commissioner, I i
22 would like to ask that we have one more exhibit, and 23 that is the, assignment of contract which is attached 24 to Dade County's statement of contentions. It's a two-25 page document.
273 I
1 CHAIRMAN CRESSE: Lnt me ces which one.you cra 2 talking about.
(~ Are you talking about the assignment 3 of contract?
4 MR. RAVIKOFF: Dated January 15th, 1978.
5 CHAIRMAN CRESSE: You want that identified?
6 MR. RAVIKOFF: Please.
7 CHAIRMAN CRESSE: Is this witness going to sponsor 8 it? -
9 MR. RAVIKOFF: It is attached to Dade County's 10 statement of contentions. Unless anybody has any ji objections to it, we ask it be identified and offered 12 in evidence, similar to the contract.
13 CHAIRMAN CRESSE: Any objections?
, k ja MR. DEARING: Only the objection of materiality i
15 raised previously to these exhibits.
16 CHAIRMAN CRESSE: All right, sir.
} 37 COMMISSIONER NICHOLS: Would that make that 16?
3g CHAIRMAN CRESSE: Exhibit 16.
t c
y 39 ; (WHE REUPON, Exhibit 16 was marked for identification
?
g by Chairman Cresse.)
21 MR. RAVIKOFF: One cmher point of clarification.
22 CHAIRMAN CRESSE: Do you want to redirect? Go l 23 a ead.
1 24 REDIRECT EXAMINATION '
1 k BY MR. RAVIKOFF:
6.i
l
,., l 274 j
1 O Mr. Carter, do you know if the petitioners in 2'
( this case have made any claims on the escrow account as to 3
the accrued interest?
4 A They have in negotiations, yes.
5 MR. RAVIKOFF: Thank you. I have no further 6 questions.
7 CHAIRMAN CRESSE: Would you ask that question
. 8 again, counselor. I was reading'this late-filed exhibit .
9 O '
Mr. Carter, are you aware if petitioners in this 10 case have made any claims on the interest accruing in the 11 escrow account?
12 A They have made requests for that, yes, in our 13 negotiations, 14 i
CHAIRMAN CRESSE: All right, sir. Witness is 15 excused.
l 16 MR. DEARING: Excuse me, sir. Can we cross examine?
g 17 CHAIRMAN CRESSE: I'm sorry. I thought you had, i- ,
t
- 18 RECROSS EXAMINATION lj 19 BY MR. DEARING:
,i l 20 0 Mr. Carter, you said that you were told sometime f 21 in 1980 that the petitioner would not perform its obligations i
f 22 under the nanagement contract?
23 A' That's correct.
24 O And you were told that orally?
( 25 A Yes, sir.
I
,. .., 1 1
275} \
O In front of witnesses?
2
( A. Yes, sir.
3 0 And then you filed suit?
4 A We. filed suit about six months later, yes.
5 4 Declaratory judgment?
6 A Yes, correct.
7 0 And you also sought recision of the contract, 8
didn't you?
9 A. Yes, we did.
10 0 After you filed suit, I believe you said that the Il petitioner in this case sought to withdraw its orevious 12 statements. Was that before you filed suit or after you filed 13 suit?
14 A That was on the same day. It was on December 4th, 15 1981, which happens to be a year ago today. Mr. George 16 8
Landecker (Ph), President of Parsons Whittemore, was before 17 the County Commission. He sought to withdraw that statement 18 i
c by saying that even though the resource recovery plant under d 19 a the existing contracts would in his estimation incur a loss l 20 in excess of S400 million with a 20 yoTr life of that contract,
\4
'; 21 01at Parsons & Whittemore would still live up to the 22 contract. Nobody would buy it.
i 23 O As a matter of fact, he gave you a letter to that 24- effect?
(
25 A I believe he also put it in writing.
1 4
2 7' '
- c. .=
- I O He gsvc you that letter prior to your filing suit, 2
( didn't he?
3 L I believe he did too, yes. l l
4 MR. DEARING: Thank you. No further questions.
5 CHAIRMAN CRESSE: All right. Witness is excused.
6 WITNESS CARTER: Thank you, sir.
7 CHAIBMAN CRESSE: Next witness? You had a witness '
. 8 MR. CHILDS: Mr. Chairman, we do. But first I'd 9
like to have marked for identification various documents 10 to put in as exhibits.
11 CHAIRMAN CRESSE: Do you want to distribute those?
12 MR. CHILDS: Yes, I will. Mr. Chairman, first of 13 all, filing has been made on the third. We have a list
.(
14 of exhibits, and I have xeroxed excerpts that we would 15 like to put in and attached them together with a sheet 8
16 showing the points as they relate to, and I would g 17 distribute them and ask they be marked for identification.
18 l g CHAIRMAN CRESSE: All right, sir. Let's hold up on i :
!j 19 the distribution of those. The only person really I [
'l .
20 working hard is the court reporter. She's not had a 8
I*
21 break. Why don't we -- I thought we'd get through 22 before lunch. Looks like we won't. Why don't we take 23 about 45 minutes for lunch. Will that be all right 24 with you? Tkae about 45 minutes f r lunch and reconvene k 25 at 12:45.
J77 1
1 (WHEREUPON, n 45 minute lunch break was taken; l
{ 2 recommencing at 12:50 p.m.) !
3 CHAIRMAN CRESSE: Mr. Childs?
4 -
COMMISSIONER GUNTER: Mr. Seelke, I believe.
5 CHAIRMAN CRESSE: I believe you were in the proces s 6 of distributing something to us.
7 MR. CHILDS: Mr. Chairman, in our filina of 8 December 3rd, second paragraph we identify this as 9 exhibits, where it should be identified as excerpts from 10 various contracts and other documents. I put the other 11 package containing those together with an identificatio n 12 sheet as the points they relate to. And I'd like to have 13 that marked for identification.
14 CHAIRMAN CRESSE: All right. Now, let me get it 15 straight so I can mark this. You have the list of 16 exhibits included in your petition, numbering one, two, l: 37 three, four, five, six, seven, eight, nine and ten; is
? -
- is that correct?
C j ig MR. CHILDS: That's correct.
a CHAIRMAN CRESSE: All right, sir.
f 20
- { 21 MR ,CHILDS: Mr. Chairman, what I've done on these, i
22 they are stationed separately. They are patterns of 23 various documents have been included. In the lower 24 right-hand corner of the page we put on the identificat:.on 25 f the -- if it c,omes from a contract, so you can tell h
- * .- '.I 278 I
which documents if it's an excerpt from.
2
( CHAIRMAN CRESSE: Would you want us then to 3
number these separately for identification?
4 -
MR. CHILDS: That might be helpful.
5 CHAIRMAN CRESSE: All right. The first one is the 6
excerpts from the purchase contract between Metro Dade, 7
Florida, and Resources Recovery, referred to as the 8 SWF Purchase Contract. That will be Exhibit Pumber 17.
9 The second one, in the right-hand corner is 10 identified in the package.as SWF. Site Lease.
11 Counselor, if I might suggest, I think that's 12 all ready been identified in this record. As a matter 13 of fact, one that's even signed has been identified.
(
14 I believe that was offered by Metro Dade, and there was 15 some cross of Mr. Carter on that.
16 MR. CHILDS: Mr. Chairman, I believe this may i
I 37 have been what I had tried to do, is rather than giving 3
is you the entire stack of documents, just to give you L
- ig excerpts as related to the points we thought were --
a f 20 CHAIRMAN CRESSE: Exhibit 18 -- I guess there is
{ 21 no rule against having it in there twice. Certainly I
22 ne is signed and one is not.
23 Next one is SWF Management Contract. That would 24 be Exhibit 19.
25 And then the Restated Assumption Contract will'be
. r; . . .
.. j23 1
Exhibit 20.
2
( And EGF Purchase Contract -- excerpts from the 3
. purchase contract -- counselor, I got a problem. On 4
your letter, on what you filed with us you said EGF 5
purchase Contract. What I have is Purchase Agreement --
6 what I have before me is titled EGF Purchase Contract.
7 Is that the same thing, just substituted " contract" for 8 " agreement" between them?
9 MR. CHILDS: Yes.
10 CHAIRMAN CRESSE: All right. Exhibit 21. .EGF 11 Site Lease will be Exhibit 22.
12 You filed with us a portion of the Federal Registe:
13 as referred to in the petition that is marked at
, k 14 18 CrR Part 292 will be Exhibit 23; is that right?
15 And then there is another portion of the Federal 16 Register; it will be Exhibit Number 24.
I 17 Exhibit 25, outstanding piece of work, I guess, 18 by the Florida Public Service Commission.
j 19 a And Number 26 is the memorandum of intent.
20 MR. CHILDS: I might also ask that the document U
1 2
R 21 which was the first one attached to this packet, I
22 headed "Arguements Concerning FPL Ownership of EGF" also 1
23 be marked for identification. I 24 CHAIRMAN CRESSE: All right, sir. That will be 25 Exhibit 27. Mr. Greenberg, did you move Mr. Carter's l
l l
280 I
exhibits inco evidence?
2 MR. GREENBERG:
{ The exhibits?
3 CHAIRMAN CRESSE: Yes, sir.
We went through and 4 . identified them. We have a peculiar procedure up here.
5 You identified your exhibits, and then you have to also 6 move them into the record. So far I think we've 7 identified them. Do you want them moved into the 8 record?
9 MR. GREENBERG: We want to move them into the 10 record, if we have not done so.
11 CHAIRMAN CRESSE: Any objections?
12 MR. DEARING: Yes, sir. The objections stated i 13 Previously. I don't want to take up the time of the k
14 Commission.
15 CHAIRMAN CRESSE: All right. So ordered, that they 16 .are moved into the record.
g 17 (WHEREUPON, Exhibits 12, 13, 14, 15 and 16 were I .
- 18 ordered into the record by Chairman Cresse.)
19 MR. CHILDS: Mr. Chairman, I would move Florida e
20 Power & Light Company's Exhibits 17 through 27 into d evidence.
21 E
22 CHAIRMAM CRESSE: Is there any --
23 MR. DEARING: Yes, sir. Mr. Chairman, we would 24 bject to moving the Arguements Concerning FPL i 25 Ownership of EGF into evidence. We think it's arguement
, . . ., s : .; . ~ _
, 281 1_ 1 and not evidence. 1 Wa would not object to Exhibit 25,
{ 2 and we would object to all of the others. i Some of these 3 are incomplet'e. There are signed copies. These are 4
unsigned copies. ,
5 They are certainly not authenicated. We would 6
object to them being moved into evidence, except for 7 Exhibit 25.
8 COMMISSIONER GUNTER: How about'the two in the 9 Federal Register?
10 MR. DEARING: I don't object to the Federal 11 Register.
12 CHAIRMAN CRESSE: Let me see where I'm at, now.
13 COMMISSIONER GUNTER: 23 and 24.
k 14 CHAIRMAN CRESSE: Normally, Mr. Pruitt, kind of help me.
15
.Normally we have to have a witness sponsor 16 an exhibit, don't we?
9 MR. PRUITT: Yes, sir. We can't receive them 2
s 33 into evidence at this time if there is an objection, j 19 until they put on some testimony and they've had an i
! 20 opportunity to cross examine, t
3 2 21 MR. CHILDS: Mr. Chairman, let me explain what we f
't 22 were trying to do. I believe the county put in the 23 basic countract documents. In your rules as I have 24 learned them over the years, you encourage parties where
( 25 there are voluminous documents to make excerpts of those l
l l
l
. . . 282 1
that are considered appropriate and not burden the
.{
2 record with page after page that's not related.
3 CHAIRMAN CRESSE: You've got that right.
4 .
MR. CHILDS: That's what we are trying to do.
5 The underlying documents, if there is an objection, the 6 underlying documents are in. I. believe you ruled 7 they were admissible. And we would ask for ease of 8
addressing the issues that these excerpts we offered 9 be admitted also.
10 CHAIRMAN CRESSE: The Arguement excerpts is your 11 comments related to Exhibits 17 through 26?
12 MR. CHILDS: As to that point, if there is an 13 objection to it being an exhibit, and I would point out k
14 that this is our arguement and that's why it's 15 titled that. It's not supposed to show the oroof of it.
16 .That's a decision you have to make.
- 17 If the objection would still stand with that
- 18 qualification, I'd ask them that the Arguements G
j 19 Concerning FPL Ownership of EGF which has been marked i
! 20 as Exhibit 27, at least for purposes of identification, s
j 7i be made a supA.! ment to our December 3, 1981, filing i
I 22 with you, so that at least;before you is the arguement 23 that we are making. l 24 CHAIRMAN CRESSE: Let me cover these points one k at a time.
25 Mr. Pruitt, my understanding of Exhibit 17 1
283
,. '.. I 1 through 26, which was referenced in the filing, hcVe l l
2 been identified and they must be subject to cross '
3 prior to them being inserted into the record, therefore 4 . , I would --
n i
5 MR. PRUITT: -- sustain the objection to it --
6 CHAIRMAN CRESSE: -- until such time we've the 1
7 opportunity to cross examine the witness on it.
8 MR. PRUITT: I don't have copies of what you're 9 looking at, so I'm not certain of what I'm advising jo them on.
ji CHAIRMAN CRESSE: Certainly an oversight that the 12 legal advisor didn't get a copy, which Mr. Childs is 13 fixing to cure.
k 34 The Arguements Concerning FPL Ownership of EGF 15 has just been identified pursuant to counsel's request.
16 MR. DEARING: May I ask a clarification, Mr.
[
' 37 Chairman? Are you sustaining the objection of
- 18 i uthenticity, Mr. Pruitt?
a 4 ,g MR. PRUITT: If I understand it, these are f, 20 excerpts from exhibits that are all ready into evidence,
, f 21 I was not at the September 17th hearing, so I don't 1
- have all that. But if they are excerpts, all you've got 22 23
~ to do is out a witness on the stand and let him say they are under oath, and you can get them in.
( MR. DEARING: If the Commission Chairman is keepinq
. 284 I
those exhibits out of evidence because of authenticity
(
2 of exhibits, as being something that must be introduced 3 by someone from the witness stand, that is what I mean 4 by that.
My objection is not as to authenticity. And 5
if I said that I withdraw it. i l
6 My objection is to materiality of these documents.
7 MR. PRUITT: The materiality will go to the weight 8 and not to the admissibility, Mr. Chairman. I'd overrule 9 the objection.
l 10 CHAIRMAN CRESSE: All right. So done, on the 11 materiality issue. I assume, now, after that there 12 are in the record; is that correct?
13 MR. PRUITT: That's right.
k 14 CHAIRMAN CRESSE: 17 through 26. Proceed, Mr.
15 Childs.
16 (WHEREUPON, Exhibits 17 through 26 were ordered
$ 17 into the record by Chairman Cresse.)
- 18 MR. CHILDS: Mr. Chairman, is it agreeable then S
j ig that 27 will not be admitted into evidence, that it be 20 treated as a supplement to the December 3rd filing t
21 by the company in the pleadings?
22 CHAIRMAN CRESSE: That would be hard for me to 23 understand why that would be a supplement to the 24 pleadings. Seems to me it's an index as to what. you 25 just filed.
.- nSS 1
MR. CHILDS: That's correct. But there was an 2
-( objection to it as an exhibit, and I tried to qualify 3 it was by title an arguement to index the documents that 4 . we ask to be admitted separately.
5 CHAIRMAN CRESSE: There is absolutely no evidence; 6 this is just an index here?
7 MR. CHILDS: That's correct.
8 CHAIRMAN CRESSE: To assist the Commission in 9 finding that as opposed to hav!ng to pursue all of to it in diligent detail?
11 MR. CHILDS: Correct.
4 12 CHAIRMAN CRESSE: You don't object to that 13 assistance being provided to the Commission,- do you, 14 Mr. Dearing?
15 tiR . DEARING: I object to the arguement being 16 admitted as evidence. If it's simply being introduced h 17 as an index, I have no objection to it.
- 18 , CHAIRMAN CRESSE: All right, sir. Strike "Arguement
? I i
j 19 Concern.ng FPL Ownership of EGF", that would be all 20 right? Do you have any objection to striking that?
' d MR. CHILDS: That's fine.
21 t
I 22 CHAIRMAN CRESSE: Now, do you have any objection 23 to us using it?
24 MR. DEARING: No, sir.
25 CHAIRMAN CRESSE: Thank you, sir. We finally got l l 1
281 1
there. Mr. Childs?
( 2 (WHEREUPON, Exhibit 27 was ordered into the 3
record by Chairman Cresse.)
4
{ .
MR. DAVIS: Mr. Chairman, we'd like to call on 5
behalf of Florida Power & Light John R. Seelke and 6 ask he be sworn.
I 7
(WHEREUPON, Witness Seelke was sworn in by 8
Chairman Cresse.)
9 CHAIRMAN CRESSE: Sir, did you prefile any 10 testimony with the Commission?
33 WITNESS SEELKE: No, sir.
12 CHAIRMAN CRESSE: All right. Ithoughtkmissed 13 something, and I was getting desperate.
ja COMMISSIONER GUNTER: That's what I was doina 15 shuffling the papers.
16 CHAIRMAN CRESSE: Go ahead, Mr. Davis.
=
17 THEREUPON, the said 18 JOHN R. SEELKE 4
39 S
was called as a witness, and having been first duly sworn, {
a 20 exadned ad tesWed as follows:
g 21 DIRECT EXAMINATION
! BY MR. DAVIS:
23 State your name, please.
1 24 A. My name is J hn Seelke.
k 0 25 What is your occupation?
,, . 2e) 1 A l'm Manager of the Energy Management Research g 2 Department at Florida Power & Light.
3 O What are the scope of your duties and responsibilities 4 .in that position?
5 A I'm responsible for our Consumer & Load Reasearch 6 Program, our Load & Management Program, and our Cogeneration 7 Program.
s 0 Would you, Mr. Seelke, briefly ' state your 9 educational background and experience?
10 A Yes, sir. My educational background is as follows ij I have a Bachelor's Degree in Electrical Engineering f~ rom 12 the University of South Carolina in 1970; Master's Degree 13 in Electrical Englneering from the University of Pittsburg k
y in 1972; and a Master's Degree in Finance from Florida 15 International University in 1979.
16 .Upon graduation from college in 1970 I worked for 3
- 37 Westinghouse Electric Corporation for four years in
- 18 Pittsburg, and then came to work for Florida Power & Light
- 39 Company. I was in the Generation Planning area supervising a
20 the Generation Planning Section, System Planning Department, 5
R 21 and then moved on into Load Management, and finally to my
- present position.
22 23 0 As part of your present responsibilities, were you 1
24 assigned the task of analyzing the payment provisions under l 1
k 25 the contract between Dade County and Florida Power & Light?
l
- t__- --
288 .
a'*.
,8*
1 A Yes, sir, I was.
(
2 O Have you.made a calculation of the annual cost 3 of steam payments for the provision of that contract?
4 . A Yes, sir, I have. Those payments amount to 5
approximately $16.5 million a year, excluding any consideratio n 6 of FPL's ownership costs and operation and maintenance costs 7 of the electric generating facility.
e O Does that figure also exclude any payments on 9 account of the purchase price of the generation facility?
10 A Yes, sir. They exclude those.
11 O Have you made a calculation of the estimated 12 avoided costs for the payment of electricity generat d by the 13 generation facility?
k 14 A Yes, sir. If an equivilent amount of generation we re 15 Purchased by Florida Power & Light at avoided cost the price 16 would be approximately $21 million, a difference of about j 37 $4.5 million between that price and the contract price.
E I 18 O That's on an annual bas 3?
j 10 A. Yes, sir.
a i
3 20 MR. DAVIS: You may inquire.
d 21 CHAIRMAN CRESSE: Mr. Sexton?
h 22 MR. SEXTON: Staff has no questions.
23 CHAIRMAN CRESSE: Mr. Dearing?
24 MR. DEARING: Is Dade County going to --
(- ,, MR. CHILDS: we have no questions.
1
289 I
CROSS EXAMINATION 2
BY MR. DEARING:
3 0 Mr. Seelke, did I understand you to say that you 4
are responsible for the Florida Power & Light Cogeneration 5
Program?
6 A Yes, sir.
7
% In that position, are you familiar with Public 8
Service Commission Order Number 10331 -- Interim Tariff?
9 A Yes, sir, I am.
10 G It's true, is it not, that the facility is not i
11 interconnected with Florida Power & Light today? .
12 A That's true.
13 O And it's also true, is it not, that Florida Power 14 & Light is not receiving steam from the facilities today?
15 A That's true, l 16 O And further true, sir,' that Florida Power & Light i
g 17 is not receiving electricity from the --
4 18 A That's correct.
J 19 0 If the facility were interconnected tomorrow, 20 Mr. Seelke, at decremental fuel costs set out in Order Number
'5 j 21 10331, it is true, is it not, that this would not lead to 22 any increase whatscaver in rates paid by the rate payers of 23 Florida Power & Light?
24 A It would not lead to an increase in rates, but it k
25 would result in a lost opportunity for Florida Power & Light
293 I
to receive benefits from existing contract, which would 2
(
decrease rates in force.
3 MR. DEARING: No further questions.
4 -
CHAIRMAN CRESSE: Sir, you were reading from a 6
sheet of paper that I thought I had somewhere that 6
I got earlier. Do we have that?
7 MR. DAVIS: I think it was filed in an exhibit.
8 CHAIRMAN CRESSE: In that first hearing, didn't we 9 l go over what he talked about? There was something that to was passed out --
11 MR. DAVIS: The record will show there was a 1 12 document prepared offered for identification, and then 13 discussion ensued and it was withdrawn .
14 CHAIRMAN CRESSE: I either have got to have a 15 document to have those figures you gave us on it or a
16 he's going to have to repeat them again so I can write lI e 17
,t them down. Either way, it doesn't make any difference.
18 Run through that again.
j 19 MR. DAVIS:
i If I understand the Chairman, you'd l 20 like to have available to the Commission whatever he had.
i j 21 at the prior meeting in the way of a document?
2 22 CHAIRMAN CRESSE: Yes, sir. Summarizing what you --
23 MR. DAVIS: Do you have that with you?
24 WITNESS SEELKE: I have a copy of it, yes, sir, k
25 I only have one copy.
i
. .. , 291
' 1 CHAIRMAN CRESSE: Could I borrow that copy for j 2 purposes of cross? i
( Let me ask a few questions. What i 3
he said is in the record. That's probably good enough.
4 -
Mr. Seelke, if I understand the existing contract, 5
is it correct that you would pay average fuel costs for 6 steam?
1 l
7 WITNESS SEELKE: There are three components to 8 i 1
the total rate for the steam payment', excluding the 9 ownership and operation and maintenance cost of the 10N EGF, which in the formula that you see on the second 11 page there, that's a subtraction from the steam payment ,
~
12 I've not included that because it's -- we're paying 13 that in another -- we're incurring operation and 14 maintenance costs and ownership costs, and just 15 subtracting from the steam payment. So they are really 16 .not relevant when just looking at the steam price.
17 But there are three components, Commissioner Cresse.
- is There is an average fuel cost component, which is the c I j 19 "F" term. The "OM-1" term is the average operation and i
.f 20 maintenance cost on Florida Power & Light production d
21 plant. And there is a "CC-1" term which is the c
I 22 carrying charge on Florida Power & Light's production 23 plant, which relates to depreciation, return on g investment, taxes, and those kinds cf things. So there k re actually three components.
25 The average fuel cost
+'.**
292 1
is the largest component. It's about 3.5 csnts out i
g 2
of a tc'.al of 4.5 cents.
3 CdAlaMAN CRESSE: Let me just ask my cuestion the 4 way I understand it.
3.461 cents would go to somebody 5
for the steam provided by the steam boilers; is that 6 correct?
?
WITNESS SEELKE: Yes, sir.
8 CHAIRMAN CRESSE: That's steam cost. The 3.35 9
cents per kilowatt-hour is your O & M and maintenance ---
to your personnel and maintenance costs of the facility?
31 WITNESS SEELKE: No , sir. That's not correct.
12 That's the -- that would go to the person for the 13 payment of steam cost as well.
14 CHAIRMAN CRESSE: That would go to the payment of 15 steam cost too?
16 WITNESS SEELKE: Yes, sir. As would the .797 cents 17 would also go for steam. Our cost of ownership are the C
3 38 terms "OM-2" and "CC-2" which directly relate to the
- is operation and maintenance of the facility itself, and 20 the carrying charges for the facility.
.d 21 CHAIRMAN CRESSE: Let me get an idea of how it's E
22 g ing to operate. Are you going to provide personnel 23 to operate it?
24 WITNESS SEELKE: Yes, sir, we are.
k 25 CHAIRMAN CRESSE: Where is that cost?
wmv
29 1
WITNESS SEELKE: That cost would be "OM-2" in
\' ):
( 2 the equation. .I have not taken that cost into account '
3 here, because what I'm trying to compare is the 4 .
contract excluding -- as if Florida Power & Light were 5 not operating it. That's a cost that someone is going 6 to have to incur to operate that facility. And someone 7 is going to have to pay for the ownership cost of the ---
8 CHAIRMAN CRESSE: Yes, sir. But what I'm trying 9 to get at on this little worksheet, PURPA pricing is 10 for electricity; isn't it?
11 WITNESS SEELKE: Yes, sir.
12 CHAIRMAN CRESSE: Existing contract; is hat 13 electricity?
k 14 WITNESS SEELKE: It's for steam. There is a 15 term in that contract which converts -- the term "A sub 16 N" is the pounds of steam that are produced. And the 17 term "K" is a factor representing kilowatt-hours per is pound. So when you multiply those two together you j ig wind up with kilowatt-hours times these various "F",
a l 20 "OM-2" and "CC-1", cents per kilowatt-hour.
d$ CHAIRMAN CRESSE: Let me run through the formula.
. 21 I:
22 Y u say "SP", that's the existing contract?
23 WITNESS SEELKE: That's the steam payment.
24 CHAIRMAN CRESSE: Steam payment equals "F", which k is fuel --
25 I
..'*i.
294 <
1 WITNESS SEELKE: Average fuel cost.
2
( CHAIRMAN CRESSE: -- plus "OM-1 " , plu s "CC- 1 "
, .3 times "A" over "N". What does that mean?
4 . WITNESS SEELKE: It should be "Sub N".
5 CHAIRMAN CRESSE: What is' times "A Sub N"?
6 WITNESS SEELKE: "A Sub N" is the pounds per 7 steam for a particular period "N", which might be a 9 month or a year or something like that.
9 CHAIRMAN CRESSE: Okay.
10 WITNESS SEELKE: And the term "K" there, which r
11 follows that, is a constant, which is kilowatt-hours 12 per pound. So when you multiply kilowatt-hours per 13 pound times pounds you get kilowatt-hours.
(
q 14 CHAIRMAN CRESSE: I see. Then you are going to 15 subtract your operating costs?
l I
16 WITNESS SEELKE: Then we subtract from that steam-3 3 17 payment the operating and maintenance cost we incurred r
18 in operating the EGF, and the carrying charge, the j 19 ownership cost of owning the EGF, and the term "U" is
,a 20 a term in the contract. It's a little difficult to
., g 21 eXPl ain. It's a term that allows us to subtract any jI 22 unrecovered cost that the -- between the county and
)
23 Florida Power & Light. That's based on the ability of l
24 the EGF to produce power. And basically it's going 25 to -- t should be zero, sir.
, +, , , - , y - - - -
i
,295 1 '
CHAIRMAN CRESSE: If everything works out l
2
( according to plan, it will be zero --
3 WITNESS SEELKE: Should be zero.
4 -
CHAIRMAN CRESSE: Recover some of the cost that you 5
would have paid them under "CC-1"?
6 WITNESS SEELKE: Yes, sir.
7 CHAIRMAN CRESSE: Okay. That's "CC-1" performance?
8 WITNESS SEELKE: It's a perform'ance type of criter:.a ,
9 yes, sir.
10 CHAIRMAN CRESSE: All right, sir. I don't know
. 11 if utilities and county governments make things 12 dif ficult to understand deliberately or just works out.
13 WITNESS SEELKE: This originally started out as 14 a working paper for me, and it's been entered in~as an 15 exhibit.
16 CHAIRMAN CRESSE: It's not entered in as an g
17 exhibit.
WITNESS SEELKE: It's been entered into here.
- 18 j 19 CHAIRMAN CRESSE: It's your testimony here that the i
l 20 difference then on the bottom line basis, $4 million E
2 21 per year based on 360,000 mega wa tt-hours , correct?
2 E
22 WITNESS SEELKE: Yes, sir. That's correct.
23 CHAIRMAN CRESSE: You think based on consumption 24 of 18,000 tons a week they can generate an average of k 60 megawatt-hours?
25
.- +
29t.
1 WITNESS SEELKE: The figures here were provided 2
( to me from our people who had worked on the plant.
3 And I believe they came from Dade County. That's really 4 .
an assumption, sir, and I'm not sure exactly what 5 they'll be able to produce. That's a question I really i
6 don't know the answer to.
7 CHAIRMAE CRESSE: So you don't know who could 8 produce 60 or -- you just took that as an assumption?
9 WITNESS SEELKE: That's what I used here was 10 assumed a 60 megawatt, really, capacity, and the ii 360,000 megawatt-hours translates into a capacity factor 12 of about 68.5 percent on an annual basis. I think 13 that might be reasonable.
k 14 CHAIRMAN CRESSE: All right, sir. I have no 15 further questions. Commissioners?
16 COMMISSIONER LEISNER: No.
- 17 CHAIRMAN CRESSE: Redirect?
?
a 18 MR. DAVIS: Mr. Chairman, could I ask one more j 19 question on direct?
20 REDIRECT EXAMINATION 21 BY tiR. DAVIS:
E 22 Mr. Seelke, I want to be sure on the record that 23 y ur calculation of steam payments does not include any 24 payments whatsoever for the ownership of the generating k facility.
25
297 1
A That's correct.
2 MR. DEARING:
{ Mr. Chairman, may I ask a couple 3 of questions?
4 -
CHAIRMAN CRESSE: Yes, sir.
5 RECROSS EXAMINATION 6 BY MR. DEARING:
[
7 O- In arriving at the 21 million, Mr. Seelke, I may 8 have copied this down wrong. What was the ' avoided cost per 9 kilowatt-hour that you used?
10 A. The avoided cost per kilowatt-hour would have l
11 been -- or was about 5.8 cents.
12 O If the cost per kilowatt-hour were 5.4 cents, 13 would that affect your outcome?-
k 14 l A If the avoided ccst were 5.4 cents?
- 15 0 Yes, sir.
t l
16 A. Yes, sir, it would.
'?
- 17 0 How would it affect it, sir?
lt
\ i -
i' is !
i A It would lower it by an amount that's readily
'i
!= 19 calculateable.
a
[ 20 0 S instead of $4 million a year it would be 21 something less than that; is that correct?
i I
22 A Yes, sir.
i 23 0 What was the total number of kilowatt-hours that 1
24 y u used?
25 A 360,000 megawatt hours, or 360 million kilowatt-hours.
1 i :
..* 293 >
1 MR. DEARING: Thank you very much, Mr. Seelke.
2 CHAIRMAN CRESSE: No further questions, the witness 3 is excused.
4 , MR. DAVIS: Mr. Chairman, that concludes Florida 5 Power & Light's presentation.
6 CHAIRMAN CRESSE: All right. Thank you, sir.
7 I believe Dade County is through,, Mr. Dearing?
8 MR. DEARING: -Yes, sir. We do have a witness, 9 but before I put him on, sir, as I understand it the 10 procedures are to follow the Florida Rules of Civil 11 Procedure, and I would at this time ask the Commission 12 to rule in f avor of our petition, in asmuchas none of 13 the petitioners, which are now the respondents, and
(
14 the hard evidence related to the material facts in 15 the petition indicate any reason wny enterconnection ~
16 should not be ordered by the Commission.
3 CHAIRMAN CRESSE: That requires five minutes on k
17 I* 18 each side for closing arguements, permits five minutes 4 39 for c1csing arguements, or something like that.
J 20 MR. PRUITT: That ought to be enough.
d CHAIRMAN CRESSE:
21 I'm trying to limit it. I think 2
r 77 under the Florida Rules of Civil Procedure they might 23 he entitled to that. I think these people get to 24 respond to that motion.
k MR. DEARING: I would assume they get to respond 25 i
l I
l l
l
_ -~
l 1
1 l299 to it, and if the Commission denies the motion then 2
/ I have a witness to put on.
3 CHAIRMAN CRESSE: I understand. Do you all --
4 MR. PRUITT: You can take the motion under G
advisement and let him go ahead and put his witness 6 on.
7 CHAIRMAN CRESSE: That's what I was going to do 8 anyway, take it under advisement. Does the Commission 9 want to do that? We'll take that motion under 10 advisement. Put your witness on.
11 MR. DEARING: Thank you, sir. At this time, sir, 12 we'll call Mr. Robert M. Spann, Dr. Robert M. Spann, 13 and ask that he be sworn as our witness.
k 14 CHAIRMAN CRESSE: All right, sir.
15 MR. DEARING: I believe an attachment to our paper 16 was the resume of Dr. Spann, and I don't know if 17 counsel received copies of that with the materials 1 .
that were delivered to them yesterday or not.
18 j 19 COMMISSIONER GUNTER: That was on your petition a
b 20 for interconnection order?
E 21 MR. DEARING: Yes.
l 22 CHAIRMAN CRESSE: Let me swear him in, and then 23 I'll find my papers.
24 (WHEREUPON, Witness Spann was sworn in by 25 Chairman Cresse.)
i 1
3 0@.
1 MR. DEARING: Mr. Chairman, I could go through
., 2 his resume at this time, but -I would move it into 3
evidence and ask the Commission consider it and conside r 4 -
him to be an expert in the area of the Economics of 5 Cogeneration. -
6 CHAIRMAN CRESSE: Without objection, so ordered.
7-We'll go ahead and mark his resume as an exhibit, B
Exhibit 28. And it 's been moved inw' ithout objection.
9 Go ahead, sir, t
to (WHEREUPON, Exhibit 28 was marked and ordered 11 into the record by Chairman Cresse. )
12 THEREUPON, the said 13 ROBERT M SPANN k
14 was called as a witness, and having been first duly sworn, 15 was examined and testified as follows:
n; DIRECT EXAMINATIOP
- 17 BY MR. DEARING:
a 18 0 Would you state your name and address, please, sir, n
- 19 A. My name is Robert M. Spann. My business 20 address is 1850 K Street Northwest, Washington D.C.
t 0
3 21 Q By whom and in what capacity are you employed, 2
E 22 Dr. Spann?
23 A I am a principal and a member of the Board of 24 Directors of ICF Incorporated, a Washington D.C. Consulting k
25 Firm. I direct most of our firm's projects in the areas of
30) 1 electric demand forecasting, rate design, alternative 2 technology, cost of service and financial forecasting.
3 O Dr. Spann, have you testified before other 4 regulatory commissions?
5 A Yes, I have. Included in my resume, which has 6 been marked for identification as Exhibit RMS-1 is a list 7 of other commissions I have testified before.
8 O And by whom and for what purpose were you retained 9 in this proceeding?
10 A I was retained by the Arent, Fox, Kintner, Plotkin 11 & Kahn law firm to represent Persons & Whittemore and its 12 subsidiary Resources Recovery (Dade County), Incorporated, 13 known as RRD in this proceeding. I was asked to examine the
(
14 impact on Florida Power & Light Company rate payers of 15 interconnecting the resource recovery facility in Dade County 16 at the avoided cost rate established by Order Number 10331.
17 I was also asked to caltalate cash flows and profits
- 18 or losses for the facility considering the fact that Parsons
, 5
- 19 & Whittemore is now carrying the facilities entire 20 construction cost.
$ 21 O Are you generally familiar, Dr. Spann, with the i
22 filings that have been made by the parties in this case?
23 A Yes, I am.
24 0 Are you generally f amiliar with the resource k recovery plant itself?
25 l
i
30; f 1 A Yes. I have toured the plant, and I have reviewed 2 the charts, Exhibits Number 2 and 3, that were evidence in this 3 proceeding during the September 17th, 1981 hearing.
4 O Dr. Spann, in your opinion will interconnection 5 of the plant and sales of electricity to the Florida Power &
6 Light system lead to higher rates to FP&L rate payers or T adversely affect them otherwise?
8 A No. Rate payers will be better off, or at least 9 no worse off, with the resource recovery plant being inter-10 connected. Interconnection would reduce Florida's dependence 11 on imported oil and increase the amount of available 12 generating capacity in Southern Florida.
13 If the resource recovery plant is interconnected with
(
14 the FP&L system, the rates paid by rate payers will be no 15 higher than they otherwise would be, so long as RRD is paid 16 at FP&L's decremental or avoided cost but no more than FP&L's i
2 17 decremental or avoided cost.
- 18 0 When you use the term decremental or avoided cost,
- 19 what are you referring to?
'i 20 A I am referring to all*the costs FP&L avoid as a f
21 result of having energy and capacity from a cogenerator or i
22 small power producer instead of having to produce that energy 23 with its own capacity.
24 0 Would interconnection of RRD's resource recovery 25 facility to the FP&L systen for the purpose of wheeling
'l
. n 1
303l, electricity to buyers other than FP&L lead to higher rates !
2
[ .for FP&L's rate payers?
3 A No. If FP&L wheels electricity produced by RRD, 4
.FP&L rate. payers would pay no higher rates than if the 5
facility were not interconnected. I presume that the 6
resource recovery plant would pay FP&L the appropriate 7
wheeling charge.
8 0 How would the resource recovery plant benefit 9
from interconnection at rates established in Interim Tarif f 10 Order Number 10331, which for purposes of the question we 11 would define as being avoided cost for PURPA rates?'
12 A If interconnected and paid avoided cost rates, the 13 resource recovery plant would receive revenues for the 14 production of electricity.
15 The resource recovery facility cannot operate at other 16 than minimal levels without interconnection, as it cannot
<g 17 get rid of the steam produced without running it through the 3
18 turbine generating electricity.
- g. 19 O Are you aware of the avoided cost rate FP&L would' 20 Pay RRD for cogenerated power?
! 21 A Yes. In Order 10331 the Commission designated an I
22 interim tariff indicating an average rate per KWH of 23 54.43 mills.
This of course may change in future hearings.
24 I understand that a hearing on FP&L's tariff is scheduled for k
25 February 11, 1982.
304 1
0 Have you analyzed the impacts of interconnection 2
{ on the revenues and costs incurred by the resource recovery 3 plant?
4 A Yes, I have. I analyzed the resource recovery 5
plant revenues and costs with interconnection, assuming that 6
RRD continues to finance the entire facility investment.
7 0 What information did you rely upon in your analysis ?
8 A I used information contained in the most recent 9
third-party economic analysis prepared by consultants to 10 Dade County, data provided by Parsons & Whittemore, and 11 publically available, general economic data.
12 ,! I understand that the consultants' report, which was 13 dated September 15th, 1981, was submitted to the Dade County k
14 Commissioners at a public meeting held on October 2d.
i 15 The Dade County consultant concluded that in both the
) 16 shortrun and over 20 years, even assuming partial financino
=
f 17 by Dade County, the plant will lose money in the majority of
' the cases or at best make a meager profit in the late years.
s 18 3
j 19 At this point I would add that Parsons & Whittemore has s
20 informed me in their opinion that Dade County's consultants' 2 2
.s 4
21 conclusions that the plant would lose money throughout its J'
22 existence are unduly pessimestic for the later years, even 23 though they -- Parsons & Whittemore -- expect to lose money 24 in the early years of operation.
25 0 How did you estimate the revenues the facility would
I , 3 0f \
I '
receive?
2 A There are three sources of revenues to the facility:
(
3 tipping fees; recoveries of metals, glass, et cetera; and 4
. payment for electricity. I utilized the tipping fee of $10 5 per ton. This is approximately the tipping fee the facility 6 is receiving at the present time.
7 The value used for revenues for metal, glass, et cetera 8 recovery is $5.55 per ton of waste processed. I would note 9 that the prices of scrap metal are volatile, and the actual to revenues received by the facility could be higher or lower.
, 11 Revenues from sales of electricity were estimated 12 using 54.43 mills per KWH, the average interim tariff rate 13 for FP&L purchases from large trueouts in the Commission 14 Order Number 10331.
15 0 What values did you use for the annual cost to 16 the facility?
- 17 A. The three largest components of the annual cost
- 18 are financing cost, depreciation and operations and maintenance
- ig costs, i
i 20 The solid waste processing facility was completed on 4 -
E time within budget for a cost of S128.4 million.
21 The EGF 22 was conpleted, again on time, within budget, for 20.3 million ,
4 23 Capatalized interest and capatalized start-up and 24 holding cost bring the total cost to the facility to over 25 177 million.
l
3 06 ,
1 Currently RRD'is carrying short term construction 2 loans and interest rates averaging prime plus 2 percent, for
(
3 a rate of approximately 18 percent. However, corporate bonds 4 now yield approximately 15 percent.
5 The cost of equity for Parsons & Whittemore must be 6 at least 15 percent. I have conservatively used an overall 7 cost of capital of 15 percent to arrive at the current annual 8 carrying charges on the plant of $27 million.
9 Operation and maintenance costs ner ton depend in part to on the level of output. I used estimates of operation and 11 maintenance costs in the Dade County consultants' report.
12 I would note that the largest item of these operation and 13 maintenance costs, almost $7 million, is salaries, fringe 14 benefits and overtime. Annual depreciation expense is 15 $15 million.
16 G Did you reach a conclusion? What was the result 17 of your analysis?
?
1 is A. Assuming first year throughput of 702,000 tons, a
E
! which is 75 percent of planned throughput, revenues would be g 19 20 almost 15 million from electricity sales, 4 million from the f
3 21 sale of metals, and 7 million for tipping fees, for a total 22 revenue of almost 26 million.
Total cost would be 60 million, consisting of 27 millior 23 24 in carrying. cost, 15 million in depreciation, and almost 18 25 milli n in operation and maintenance costs.
... $k 1 30 l 1
Total revenues would fall short of total costs by about-2 i 34 million in the first year of operation. The cash shortfal: ,
3 would be less, of course.
4 O
How would the first-year result change, if you 5
assumed operation at 100 percent of the planned throughput?
6 A At that throughput, 936,000 tons per year, 7
electricity revenues would increase by almost 5 million, 8
metal revenues by over 1 million, and tipping fees by over 9 2 million.
Total revenues would be 34 million.
10 Capital carrying cost and depreciation would not change.
11 Operation and maintenance costs would increase by over 2 12 million.
13 Total costs would be 62 million, reducing the revenue 14 shortfall by 6 million, bringing it down to 28 million below 15 the total revenue requirement.
16 O Would RRD make extraordinary profits as a result E
17 of being interconnected and selling electricity at PUP.PA I
18 rates?
a
- 19 A No, it will not. In fact, the facility will 20 experience shortfalls in its first years of operation, although 21 there is the likelihood of this result, shortfalls, changing 22 in later years of the facility's useful life.
23 0 What would be the results of your analysis if Dade 24 County finances the f acility in an amount equal to the contrac t k
25 price of $128 million?
l
p_.__.__._. ..
308 1 A If S128 million of county -supplied funds were 2 applied towards covering the investment, it would lower RRD's
(-
3 financing cost by about 19 nillion per year and reduce RRD's 4 depreciation expenses by about 11 million.
5 I would assume it would also lower the tipping fee
! 6 received by RRD to 50 cents per ton. As such, tipping fee l
I 7 revenues would be reduced by almost 7 million at 75 percent 8 of planned throughput, and S9 million at 100 percent of the 9 planned throughput.
L to This situation would reduce the first year shortfalls l
l ti below full revenue requirements to $11 million at 702,000 tons i
12 Per year, or S7 million per year at 936,000 tons per year.
13 0 Would RRD make extraordinary profits as a result 14 of being interconnected and selling electricity at avoided i5 costs, if the county finances the $128 million?
16 A No, it would not. It would still be several years
$ 17 before RRD could realize the full revenue requirement under
[t .
- 18 these assumptions.
3
- 19 0 Would your answer be different if the avoided cost i
rate were increased, for example, to 70 mills?
l 20 A Such a tariff rate would increase first year revenues f 23 i i lr 77 and cash flow, however that improvement would not eliminate l
23 the shortfall if RRD continues to finance the facility.
24 If Dade County supplied $128 million towards financing the l l( 25 facility, the first year shortfall would still not be eliminated.
I l
l l
,. .309 t
1 0 Does that conclude your direct testimony? .
I 2 A Yes, it does.
3 MR. DEARING: We tender the witness.
4 , CHAIRMAN CRESSE: If I might just preceed you all, 1
1 5 I got.onesquestion. What is the estimated life of 6 this f acility, the estimated useful life of it?
i 7 WITNESS SPANN: The estimated useful life that 8 was supplied to me was 20 years for'the facility. The 9 depreciation is higher than one-twentieth of the 10 177 million, because certain machinerv within the plant f
11 would be depreciated at a higher rate, have a. shorter L 12 useful life, but basically 20 years.
13 CHAIRMAN CRESSE: Are you saying then that the k
14 overall useful life of this f acility, effective useful l
15 life is 12 years?
16 WITNESS SPANN: 02, 20 years, Mr. Chairman.
h 17 CHAIRMAN re J .E Let me just get it square in my
- is mind. Twenty years for parts of it, but the overall 1
l 19 average from the depreciation standpoint is 12; is that l
,h 20 correct?
d WITNESS SPANN:
21 I didn't compute it quite that way, 3
22 CHAIRMAN CRESSE: Let me ask you this, then: You 23 gt $15 million in depreciation in your figures; is 24 that correct?
k 25 WITNESS SPANN: Yes.
310 1
CHAIRMAN CRESSE: Would that not impute a 12-2 year average life overall based on the overall
{
3 investment?
4 WITNESS SPANN: That is correct, sir.
5 CHAIRMAN CRESSE: All right. Now, did you attempt 6 to validate any of the figures, or did you just jot 7 down the figures as were given to you?
8 WITNESS SPANN: Well, what I did is -- let me go 9 through each of the figures and --
10 CHAIRMAN CRESSE: Let me just get you to answer 11 first. Did you accept the figures as given to you, or 12 did you attempt to compute them and varify them?
13 WITNESS SPANN: I did not attempt to varifv them 14 from either an audit standpoint or ground-zero. I did 15 make checks and raise questions to determine that I
{
l 16 was working with reasonable figures. )
=
h 17 CHAIRMAN CRESSE: You were satisfied then as a
- 18 professional that these figures are reasonable; is that a
s y 19 correct? l i
20 WITNESS SPANN: Yes.
f d
21 CHAIRMAN CRESSE: You mentioned the O & M cost of 2
2 22 $18 million a year.
23 WITNESS SPANN: Yes.
24 CHAIRMAN CRESSE: Is that correct? That's for 25 a full year of operation?
I
, 3 11 :
1 WITNESS SPANN: That's one year of operation, yes.;
( 2 CHAIRMAN CRESSE: Does that include all personnel 3
and the expenses of personnel of operation, and the 4
, maintenance cost of the facility, property taxes?
5 WITNESS SPANN: Yes, it does.
6 CHAIRMAN CRESSE: How much Federal Income Tax 7 does that figure include?
8 WITNESS SPANN: I caluculated all the numbers 9 pre-Federal Income Taxes. Excuse me. Property taxes 10 I don't believe were included in the 18 million.
11 CHAIRMAN CRESSE: You calculated all the figures 12 pre-Federal Income Tax?
13 WITNESS SPANN: Yes, sir.
(
14 CHAIRMAN CRESSE: So that figure then does not d
15 include any Federal Income Tax; is that correct?
16 WITNESS SPANN: No, sir.
- 17 CHAIRMAN CRESSE: $60 million figure does not t .
8 18 include any Federal Income Tax; is that correct?
0
- 19 WITNESS SPANN
- It's all pre-tax, yes, sir, i
,! 20 CHAIRMAN CRESSE: I assume that your $27 million 8
21 cost of capital is understated; is that correct?
t t
E 22 WITNESS SPANN: I don't know why that would be 23 true .
24 CHAIRMAN CRESSE: How can you get a 15 percent 25 return on equity without having -- on half of that money
Jr/A t
K 1
without having a Federal Income Tax expense as you 2 stated in your testimony?
3 WITNESS SPANN: Okay. It's conservative to 4
begin with. There are two things that happen when 5 you' include income taxes. You would take account of 6 the taxes on the equity portion raising the pre-tax 7 cost of equity, but you also would take account the
[ 8 fact that you're able to deduct interest on your i
9 income taxes, and the tax provisions for depreciation.
10 I did not include taxes in the analysis, because 11 since the facility was showing losses in the early yeart 12 it's not clear whether those tax losses would ever 13 be realized in terms of real changes in a corporate k 14 income tax payment.
15 CHAIRMAN CRESSE: Then you did not really intend tr er 16 to provide the 15 percent return on equity capital; '
=
17 is that correct?
? .
- 18 WITNESS SPANN: It's 15 percent on total capital s .
j 19 pre-tax, yes, sir, a
l
! 20 CHAIRMAN CRESSE: Pre-tax?
E i
j 21 WITNESS SPANN: Yes.
22 CHAIRMAN CRESSE: But you can't get -- your cost 23 of capital of S27 million is understated if you intend 24 to get 15 percent to equity holders; is that correct?
k WITNESS SPANN: Yes, sir.
25 I understand. I was
JR3
.' , 5L 1
just trying to make the point that if you include i 2 taxes, it would change some other calculations as well.
3 But I agree, the 15 percent on equity is a post-tax 4- equity number that I used pre-tax, so it has that 5 effect, yes, sir.
6 CHAIRMAN CRESSE: Excuse me. I didn't_have any 7 prefiled testimony. I just wanted to get that point 8 cleared up. Staff have any questions of this witness?
9 MR. SEXTON: I believe so.
l 10 CHAIRMAN CRESSE: While he's looking for a question, is did you make a determination of whether or not this is
> 12 a qualifying facility under PURPA, or is tha any of i
13 your area of expertise?
14 WITNESS SPANN: That would be beyond the scope of 15 my expertise, sir.
16 CROSS EXAMINATION 2
17 BY MR. SEXTON:
I .
ig 0 Dr. Spann, when you performed your economic
)
- ig analysis, did you familiarize yourself with what tax liabilities a
a
! 20 Resources Recovery and Parsons & Whittemore had incorred by i
5 21 becoming involved with the project?
I C I : A. Not in great detail, other than to determine 22 23 if some f the initial year tax losses might be utilized. And 24 I was informed that at least this year they would not be k
25 utilizeable.
i
Jid
}(-
1 4 That's in reference to Federal?
/ 2 A That's in reference to Federal Taxes, Federal i
3 Corporate Income Taxes, yes, sir.
4, O Do you know whether Parsons & Whittemore, Resources.
5 Recovery (Dade County) or Resources Recovery (Dade County) 6 Construction Corporation -- I believe that's the name --
7 have paid any ad velorem taxes on the facility?
8 A. I do not know.
9 MR. SEXTON: Thank you. I have nothing further.
10 CHAIRMAN CRESSE: Any questions?
33 MR. GREENBERG : Yes, sir, just a few questions.
s 12 CROSS EXAMINATION 13 BY MR. GREENBERG:
k 14 O Dr. Spann, did you investigate whether or not the 15 company which will own the facility under this set of facts 16 is part of a consolidated group within the income tax laws?
- A j7 My understanding is that they would file Corporate ig Income Tax on a consolidated basis, yes.
G
- ig 0 Have you investigated whether that consolidated a
20 gr up has present income?
E s 21 A I did not ask whether the consolidated group has
- Present income, no.
22 23 0 Have you inquired as to whether the consolidated 24 gr up w uld have income in the future?
25 A I have not inquired, although I presume they would.
t I
315 I
1 O In your calculations, from what I understcnd, i l'
2 you gave no benefit for any energy tax credit, investment
. 3 tax credit, depreciation deduction or interest deduction; 4
is that correct?
5 A. That is correct. Because in looking at the 6
facility as a company as itself, if it's showing losses in 7 the early years, it could not use them. As to whether they 8
could be used by other parts of the corporation later on, I 9 don't know. You'd have to work through the revenues and costs 10 of every subsidiary.
11 I did inquire whether the tax benefits available this year could have been utilized by the corporation, and was 12 13 informed that, no.
14 O Let me ask you several other questions in that 15 connection. Were you told that they could not be used 16 because the other members of the affiliated group or E
17 consolidated group did not have income, or whether or not
- 18 they were not in the present position to take the deduction j 19 because of some Federal Income Tax rule?
i 20 A. It was not because other members of the group f
~
21 did not have income. Rather, it was because of the tax 22 position of the company in light of the fact that it has had 23 heavy construction programs in the past, and all of the other 24 things that go into the computation of taxes for the k
25 consolidation entity.
316 i O If the consolidated entity has income, would 2 this not substantially reduce their carrying cost?
3 A No, it would not. Because the consolidated entity 4 could have income yet the amount of tax deductions generated 5 in one subsidiary be so large that the consolidated group 6 could not use them. Even with the carry-forwards they could 7 not use the investment tax credit, accelerated depreciation, 8 et cetera.
9 0 I understand that. The point I'm trying to make is to that if there was an income tax benefit because of the other 33 companies involved in the consolidated group, this would 12 substantially change your assumption?
13 A It would change the assumptions. It would not necessarily change the end result, in that the effect of
( g taking into account -- the effect is as follows: It would 6
tend to reduce the losses, but not change the sign if a
j g the benefits could be used elsewhere. That's an assumption.
2 '
,g By the same token, in later years if there are gains, i
,g you have to take into account the taxes on those gains, i 20 so that once you bring in taxes, one, you have to make a lot 3
d more assumptions; two, you have to do it consistently on
. 21 i
- all sides of the equation.
22 O You have stated to the Commission certain bottom line numbers that were presented by the Metropolitan Dade 24 ,
County Esenberg; is that not so?
l
- 3 10
'I , \
A In terms of the shortfalls I stated, those are 2
as a result of my calculation.
I used and I summarized the 3
conclusion of the Dade County consultant. I did use some 4
of his input numbers as inputs in my analysis.
5 0 You noticed under those assumptions that he gave 6
credit, substantial tax benefits for the ownership of the 7
EGF facility?
8 A Yes, he did, in his study.
9 G As an off set against other income?
10 A Yes.
He assumed that all of the tax benefits 11 could be utilized, yes.
12 O And that it's my understanding thet petitioner 13 as part of an affiliated group did not believe that that k 14 was an error or incorrect. Do you know that?
15 A I have no knowledge of whether they believe that 16 was correct or not, no.
I g .17 MR. GREENBERG:
I have no further questions.
18 s CHAIR!iAN CRESSE: Mr. Childs?
E j 19 a
CROSS EXAMINATION k 20 BY MR. CHILDS:
8 f 21 0 Dr.
Spann, you calculated a revenue shortfall, s
2 22 I believe, as you described it under various scenarios; is tha.t 23 correct?
24 A That is correct, sir.
( 25 0 And in doing that you familiarized yourself with
- . . '318 1 a contract that would establish the price to be paid by 2 Florida Power & Light Company 'o t buy steam produced by the 3 . waste disposal facility?
4 A I have read the contract and looked at the pricing 5 formulas. I hold back a little unfamiliar because there is 6 a lot of legal terminology in there that is beyond my field 7 of expertise.
8 0 You did come up with a number, however, as to what 9 would be paid for the purchase of steam, did you not, in to your calculations?
11 A I did not calculate that, no.
12 Q. Do you know whether the -- you used the rm 13 avoided cost. Are you familiar with how avoided cost is 14 determined under the rules of this Commission or under the 15 rules of the Federal Energy Regulatory Commission?
16
.A. I am familiar with the proceeding that is going 17 on in terms of setting avoided cost rates in Florida. I'm
.. is familiar in general with the rules which were issued by the s
3
- ig Federal Energy Regulatory Commission pursuant to Section 210 h 20 f PURPA.
a d
21 0 Do you know then ba sed upon that analysis whether s
r the price to be paid by Florid.: Power & Light Company for 77 23 ele tricity, purchased electri:ity, would be higher or lower than the price it would pay fer the same amount of steam 24
( 25 that would be used to produce that electricity?
I I
l t
, *. 3E i
1 A 1 The price under avoided cost would be higher ;
2 for electricity than if it purchased the same amount of i
( 3 steam, although other things would change as well, because 4
under the contract, the way costs were passed through the 5
rate payers would have differed as well. I agree with --
6 Yes, it's higher, but some other things would have changed 7
as well.
8 0 What is different about how the cost, whether it 9
was for electricity or steam, would be passed on to the 10 customer differently?
11 A.
I wanted to clarify the answer in terms of the 12 fact that one, that is not the only thing that would happen:
13 and two, if you were then comparing the impacts on rate payer s k 14 i
as opposed to the impact on RRD of payment under the old 15 i contract with FP&L paying for the facility and owning it 16 versus paying avoided cost rates, you need to take those 17 other things into consideration.
. 18 G Did you do that?
I.
- 19 A i
I did not conduct an analysis of the old contract, f 20 because my understanding is they are in dispute.
d 21 O t
t But you would agree, I take it, that the price 22 to be paid by FPL would be higher if it were purchasing 23 electricity under some avoided cost methodology?
24 A The price paid to RRD would be higher if you
( 25 compare the two situations, the situation that's all ready
. .. - '. 320 1
interconnected. If the plant were interconnected and we 2
were just talking about what price for that electricity, it
( '
3 would be higher under the old contract versus -- excuse me, ;
i 4
it would be lower under the old contract versus avoided cost 5 rates.
6 The plant's not interconnected today, so I compared 7 the situation of the plant not being interconnected, nobody 8 getting the electricity versus the electricity going to 9 the company.
10 0 You reached a conclusion and you told this 11 Commission that there would be no adverse im,act o on rate 12 Payers and no higher rates paid by rate payers if inter-13 connection occured. In reaching that conclusion did you not k 14 consider the possibility that Florida Power & Light Company 15 could go back and actually purchase steam under its contract, 16 at a lower price?
t
$ 17 A Again, we are comparing a different situation.
- 18 But no, I did not analyze the impacts of the old contract.
E j 19 O And similarly with your assertion about the a
f 20 impact on FPL's rate payer, if the petitioner wheeled power, 21 did not do that analysis either, did you?
- A 22 I don't think the old contract had anything about 23 wheeling in it.
24 0 No. But it did have something about the power
( 25 being purchased by Florida Power & Light Company according to
3_ 3251 I a formulc, did it not?
j 2 A
( That is correct.
3 0 And the-formula could compute the price, correct?
4 A That is correct.
5 0 And if the power was wheeled by Resources Recovery 6 to someone else, then that would not be available to Florida 7
Power & Light Company nor to its customers, would it?
8 A That is correct.
9 0 And if it had to replace that --
10 A. Provided it's interconnected.
11 G And if it had to replace that power, it would have 12 to purchase it elsewhere or generate it, isn't that correct?
13 A. Yes, much as if it doesn't have the power now, it 14 has to generate or purchase power it otherwise would not 15 have to.
16 G Are you familiar with the three purposes of g
e 17 the Public Utility Regulatory Policies Act?
. 18 A. Yes.
19 0 Can you tell me how the ownership of the EGF, k 20 electric generation facility, by Resources Recovery would E
21 further those three purposes greater than if the situation 22 under the current contractual relationships was allowed 23 to continue.
24 A. I really haven't done such an analysis, no.
25 MR. CHILDS: That's all we have.
321 1
CHIIRMAN CRESSE: Any redirect?
2 MR. DEARING: No thank you, Mr. Chairman.
3 CHAIRMAN CRESSE: All right. Any further witnesses ?
4 MR. DEARING:
No thank you, Mr. Chairman. We 5 have no further witnesses. Petitioner rests.
c CHAIRMAN CRESSE: Thank you, sir. The deeper I 7 get involved in this thing-the more complicated it gets.
8 Mr. Pruitt, Mr. Sexton, do you all have a recommended --
9 not Mr. Pruitt, Mr. Sexton, representing the staff, 10 do you have a recommendation? Let me tell you what 11 my impressions are, and I don't want to implement 12 your recommendation.
13 MR. SEXTON: Certainly, f 34 CHAIRMAN CRESSE: My impressions are that as I 15 went through this thing this morning, that the Miami 16 Dade County r- Metropolitan Dade ;ounty, excuse me, I s
- 37 get those terms mixed up -- is (1) alleging that there
- ig is a defect in the petition itself since clearly they j 39 are alleging the petitioner cot the wrong name on the 20 petition, RRD instead of RRDC, I think. One is a f 73 construction company and the other is the other I
g company.
23 And then, they are also allecing that even if they had the name right, they still don't own title to it.
( 25 And I believe they are alleging that you have to own
I JM\ l j?R I ! .
title to it to be - you have to be an owner to be a --i '
2 COMMISSIONER LEISNER: I believe they said they 3
held legal title, but that didn't mean they owned it.
4
, CHAIRMAN CRESSE: I think the question was of 5
legal title. The facility itself, and ther. they say 6
they own the land and they are on the land illegally 7
because they don't have a lease to get on the land in 8
order to construct the facility, and they couldn't 9
use the land for any other purpose other than constructi ng 10 the facility.
11 That issue has been raised. I'm just trying to 12 summarize whether or not I understand what you all are 13 saying.
14 MR. DAVIS: Mr. Chairman, on that --
15 CHAIRMAN CRESSE: I'm just getting through. I 16 haven't got to you yet, Florida Power & Light yet.
17 MR. DAVIS: Beg your pardon.
18 CHAIRMAN CRESSE:
8 e
Is that about where we are with j 19 yours?
d.
[ 20 MR. GREENBERG: That's right.
A j
21 CHAIRMAN CRESSE: Now, Florida Power & Light is 22 saying that while they are not -- they may not hold 23 legal title, they are the beneficial owner of the i
! 24 electric generating facility. And that the petitioner -- ;
I {- l 25 if I can find that a minute -- essentially that the ;
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1 1-petitioner is inproper applicant because they don't 2
own the facility since you all own it. You have a
( 3 beneficial interest in it.
4 Looks like all those people on that thing down 5
there are just not operating. We ought to be able 6
to find somebody who is guilty of negligence.
7 COMMISSIONER GUNTER: Maybe all three of them will 8 give it to somebody.
9 CHAIRMAN CRESSE: There is one other issue raised, 10 Mr. Davis, that I am trying to find Florida Power &
11 Light's petition.
12 MR. DAVIS: PURPA can't operate, implementing 13 rules can't cperate retroactively to bear the obligation
( 14 of the contract that was made before they came into 15 ef fect under the constitution.
16 CHAIRMAN CRESSE: That's correct. Is the essence 8
17 of your arguement also that for us to order a E
Is connection, that we would either directly or indirectly
- 19 reach a conclusion that RRD, or RRDC, whichever one it 20 it, does own the electri7 generation facility, and d
2 21 therefore that would impair your -- what it is, you say 3
8 22 you have the beneficial inter?st, ownership interest 23 in it.
24 Now, are there any issues beyond that that are
- k. 25 relevant to the Commission's dec ision?
9 JJS
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1 MR. GREENBERG: Just one other, if I might. That '
2 is that this Commission would be making a determination f 3 on matters that are being litigated elsewhere in 4
the arbitration proceeding.
5 CHAIRMAN CRESSE: That doesn't bother us. .What 6 issues would we be making a determination on that 7 are being litigated?
8 MR. GREENBERG: Well, the very issues you just 9 mentioned, among others.
to CHAIR?iAN CRESSE: I see. Is that about it? Is 33 that it, Mr. Dearing?
12 MR. DEARING: No, sir. There is one aspect to 13 this that's been overlooked. And I respectfully request 34 the Commission to consider that it is owner or operator.
15 There has been no evidence whatsoever that petitioner 16 is not the operator of that facility. And either the j 37 owner or operator can apply for interconnection of
- 18 the facility. Need not be titled owner. That was sort E
i 19 of overlooked here before the Commission today, but a
" "'" " Y Y 20
- d 21 of the counsel here that that distinction --
I E MR. GREENBERG: There would be a lot of question l
about it. l 23 1 24 MR. DAVIS: That's incorrect. I believe PURPA said owner or operator. Let's be sure. I want to
4.,. 32<
I clearly crticulcto our position. Secms to m2 very I 2 briefly the fundamental issue is whether the petitioner, iC
! 3 P&W, RRD, are the owners and operators of the 4 generating facility. This goes as to whether the 5 EGF is a qualifying facility. They have to be an owner 6
or operator, and whether petitioners have standing 7 to prosecute this procedure or any right to interconnect ,
g depends on whether this is a qualifying facility. So l
l' 9
it has to be determined whether or not they are the 10 owners or the operators.
11 Now, our contract is unquestionable that we 12 have the ownership rights and exclusive operating 13 rights of the EGF. So possession is immaterial.
14 Possession has absolutely no meaning. You can be in 15 1 wful Possession.
I think it's -- they are on there for the purpose 16 i
t j of construction only, it's been shown. Also the letter 37
( , jg that's in evidence says, "We want our 20,500,000 payment for construction, and we're staying in there to keep
} 39 I a No claim of ownersh:.p
- f. the plant together and operating."
arising under that.
d
, 21
$ CHAIRMAN CRESSE: I understand.
22 MR. DAVIS: I think the example that's been pointed l out, if I'm going to build a house under a lot, get it
!( built and you say it isn't built and isn't worth a darn, 25 i
SY
, 34 \
I say I own the house, I'm the owner. You simply owe ,
i 2
me money. I've got a right to enforce my lien against
(
3 it, but I have no incidence of ownership of that house, d
, .I think it's just that simple. I don't want the 5
constitutional question overlooked, because 1 think 6 it's a substantial question.
7 CHAIRMAN CRESSE: I know our legal advisor won't 8 overlook anything. I was trying to' summarize in my 9 mind. I didn't overlook, Mr. Davis, either that Mr.
10 Greenberg was summarizing Dade County's position. It 11 seems to me he felt he had an obligation to get you 12 a facility, even if you didn't get this one. So the
(
13 question is whether or not you are getting this facility 14 or another one that Dade County might get for you may 15 be another question. Because I noticed a conflict 16 between you alls statements. I'm going to let our a
17 legal advisor look at that.
5 .
18 Is the question of the owner or operator, is that g 19 in the PURPA law?
h 20 l MR. SEXTON: PURPA provides for the owner or d
a 21 Operator, but that is for purposes of obtaining a E
22 certification from FERC, and that's not the 23 definition of what is qualified facility or -- we don't 24 use the owner or operator qualification. It's not 25 explicitly stated in our rule. Our rule provides "When
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I the utility refuses to interconnect with a qualifying 2 facility, the qualifying facility may petition the
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3 Commission."
4- Now, that's not particularly clear as to whether 5 the owner or the operator may petition. At least it 6 provides that the owner may petition. It's up to the 7 Commission to decide whether it wants to consider that as also involving an operator within the meaning of
~
8 9 the scope of a petition for FERC certification purposes.
10 MR. GREENBERG: Let me say something along those 11 lines.
12 CHAIRMAN CRESSE: Just a minute. I'm sorry. I 13 think what we will do is, Commissioners, I think it would 14 be appropriate for us to take this matter under 15 advisement and let Mr. Pruitt and the staff review this, 16 and you folks have ten days to file a brief.
17 I had hoped we could rule this afternoon. I thought g ,
it was -- well, I guess it's like everything else. Some-
- 18
- 19 times you get more information than you thought you i
b 20 had, and that gives you a little time to study it.
3 21 MR. DEARING: Is the Commission going to hear i
22 arguements?
23 CHAIRMAN CRESSE: Oral arguements?
24 MR. DEARING: Yes.
25 CHAIRMAN CRESSE: That's the reason I was going to l
k i ;
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give you ten days to file a brief. I though I'd ;
2 spare the Commission that pain. ',
3 Would you do just as well, or would you like to do !
4 oral arguements?
5 MR. DEARING: We would as petitioner hope the 6
Commission could rule today on the basis of what it's 7
heard and oral arguements.
8 CHAIRMAN CRESSE: Let me see if there is an 9
inclination on the Commission to rule today, based upon to oral arguements, which is a summary of what you had 11 so far.
12 COMMISSIONER NICHOLS: I think we've had a lot of 13 oral arguements here.
14 CHAIRMAN CRESSE: There was some sneaked in the 15 opening statements, one or two.
16 COMMISSIONER NICHOLS: One or two I cought.
E
- 17 CHAIRMAN CRESSE: Would it be your desire to review I
. 18 briefs?
j 19 COMMISSIONER NICHOLS: I'd like legal advice, i
l :
20 CHAIRMAN CRESSE: Legal advice on what I consider 2
t 21 to be a very thorny legal question which I wish was not, 22 I wish it was clear in my mind. I really wish it was 23 clear in my mind who owns it, but it's not. I still 24 think -- you know, Florida Power & Light has gone the
(
25 last mile. And I'll commend you again. You've gone the 1
i I
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last mile, sir. And I think you are to be commended.
2
(
I think we now have a dispute between Metropolitan 3
Miami, a private corporation, and I hope if we get thosa 4
briefs in in ten days you'll get it solved.
5 Otherwise, have briefs in in ten days. Meeting 6 ! is adjourned.
7 (WHEREUPON, the hearing was terminated at l
8 2:10 p.m.)
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CERTIFICATE OF REPORTER ,
2 STRTE OF FLORIDA
( .
3 COUNTY OF LEON 4
I, KRISTI HNGGLUND DILEARD, Registered Professional 5 Reporter, Notary Public in and for the State of Florida g 6 at Large:
7 DO HEREBY CERTIFY that the foregoing proceedings 8 were taken before me at the time and place designated therein; 9 that before testimony was given the witnesses were first 10 duly sworn; that my shorthand notes were thereafter reduced 11 to typewriting, and the foregoing pages, numbered 161 12 through 331, are a true and correct record of the aforesaid 13 proceedings.
14 WITNESS MY HAND AND SEAL THIS THE 7th DAY OF 15 DECEMBER, A.D., 1981, IN THE CITY OF TALLAHASSEE, COUPTY OF 16 LEON, STATE OF FLOIRDA.
- 17
. 18 .. .\.s t 's -
>s '-
! I Suite 305, Exchange IdI didg
- 19 Tallahassee, Florida
- a j 20 ;
) 21 MY CO?'SISSION EXPIRES:
i 22 May 7, 1984 23 1
24
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