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the acquirer which must assume People's obligation to make FEECA
expenditures.
The amounts billed to People's customers for the FEECA
programs are not payments for the goods and services a customer
consumes. In designing the rates that People's may charge its
customers, the PSC does not consider FEECA receipts as part of
People's revenue from goods and services. It does not consider
FEECA expenses as part of People's "prudently incurred" expenses
of providing goods and services. It does not include excess
FEECA receipts as part of People's capital investment on which it
is entitled to earn a return.
The State of Florida and its citizens are the intended
beneficiaries of the FEECA statute and the FEECA programs. No
direct benefit to People's is intended. People's customer base,
rate base, and natural gas sales have increased as a result of
FEECA expenditures.
OPINION
Petitioners, relying on Seven-Up Co. v. Commissioner, 14
T.C. 965 (1950), and its progeny, contend that the FEECA receipts
are excludable from People's gross income. Petitioners argue
that People's was a conduit for the receipts in that it received
them subject to an obligation to account for them separately and
to expend them for a set purpose under the control and
supervision of the PSC. Petitioners contend that People's
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Last modified: May 25, 2011