The state Office of Public Counsel asked the Florida Supreme Court on Thursday to reject a settlement with Florida Power & Light, arguing the state Public Service Commission improperly abandoned its public hearing process when accepting a rate increase that varied from the original proposal.

Assistant Public Counsel Joseph McGlothlin of Tallahassee told the justices the PSC violated the Constitution when it conducted a hearing on a $350 million rate increase, which the OPC attended under protest.

The arguments took a turn when Justice Barbara Pariente painted the dispute as a beef between big business and little people with the public counsel's office representing the "99 percent" and the settlement accepted by the "1 percent" of FPL's major commercial customers.

"Aren't we talking about the rest of the residential users who are going to be affected by this?" she asked.

FPL submitted its rate request in March 2012. Extensive hearings were conducted in cities across FPL's East Coast territory covering 4.6 million customers.

When hearings were to resume last fall, Public Counsel J.R. Kelly objected because the proposed settlement was outside the scope of issues covered in the pre-hearing order.

McGlothlin said about 200 line-item issues were raised by the public counsel but not addressed. Rather than fully discuss the concerns of the public counsel, the PSC shifted to consideration of the proposed settlement.

"You're saying that they can't do that?" Pariente asked. "That this settlement that only involved 1 percent of FPL users was unfair to the remaining 99 percent of users?"

McGlothlin argued it couldn't be a legal settlement if the public counsel, as the designated consumer advocate in PSC business, was not heard or in agreement.

Comparing the hearing process to a court hearing, Pariente noted it's not unusual for a judge to hear some of the evidence in a voluminous case and avoid wasting time going into duplicative issues. She asked if any of the evidence was heard.

McGlothlin said evidence was presented "but the commission incorporated elements that were foreign to the original proposal."

"They expanded what was in the original adjudication, and that's what you're objecting to?" Pariente asked.

The expansion was a separate ground for objection, McGlothlin said. The public counsel also contends the commission failed to comply with its own rules when it abandoned the hearing and adjudication process.

'Not Sounding Right'

From the first fall hearing Nov. 19 to the last on Dec. 13, the public counsel said the commission improperly heard settlement issues. The PSC's final order Jan. 14 set a $350 million rate increase starting the same month that gives FPL a 10.5 percent return on equity. The public counsel's office contends the rate of return should be no higher than 9 percent.

Justice R. Fred Lewis, questioning PSC senior attorney Rosanne Gervasi of Tallahassee, took issue with the commission changing elements of the proposal.

"Say I want a rate hike for my cup of coffee and, while we're fussing about that, I want an additional rate increase for my microphone," Lewis said as he surveyed his countertop. "I'm trying to understand how you change what's involved in the dispute while the dispute is pending."

Gervasi contended the signatories to the agreement came up with the issues for consideration, and there is no rule barring that.

The public counsel's office is not a signatory.

Lewis expressed doubts about expanding a proposal to include anything along the way, adding, "There's something that's just not sounding right."

FPL attorney Alvin B. Davis of Squire Sanders in Miami argued there was more than sufficient time given to flesh out the issues.

"Those issues were not ignored. There were 10 days of testimony. The record groans with the facts," he said.

Moreover, the public counsel was invited and could have participated much earlier in the process but didn't join the fray until the August hearings.

"The settlement, this was not sprung on public counsel at the last minute," Davis said. "For whatever reason, they chose not to participate."

Pariente was concerned about whether a precedent was being set, asking Davis whether this was the first case where a rate increase was approved through a settlement with commercial users where the citizens were not a party.

Davis could not answer the question.

In addition to FPL, the parties to the settlement include military installations, South Florida hospitals and members of the Florida Industrial Power Users Group. The rate increase was coordinated to start when three new power plants begin operations.

Beyond the immediate protest of the rate hike, McGlothlin said the more damaging consequence of approving a settlement over the public counsel's objections "would be to eviscerate public counsel's right to a hearing itself."

The commission argued it can approve non-unanimous settlements and the public counsel is demanding veto power. Justice James E.C. Perry put that issue directly to McGlothlin.

"Are you saying you should have veto power?" Perry asked.

"No more than the PSC," McGlothlin said.

"You're saying you should have a veto power, yes or no?" Perry said.

"Yes, your honor. We should have equal footing," McGlothlin said.