Discussion
of Issues
Issue 1:
Is the quality of service provided by Country Walk
Utilities, Inc. satisfactory?
Recommendation:
Yes. Country Walk has been responsive to customer complaints and the quality of the
product is in compliance with the Department of Environmental Protection (DEP) standards;
therefore, staff recommends that the quality of service be considered
satisfactory. (P. Buys)
Staff Analysis:
Pursuant to Section 367.081(2)(a)(1.), F.S., and
Rule 25-30.433(1), Florida Administrative Code (F.A.C.), in water rate cases
the Commission shall determine the overall quality of service provided by the Utility.
This determination is made from an evaluation of the quality of the Utility’s
product and the Utility’s attempt to address customer satisfaction. The Rule
further states that the most recent chemical analyses for the water system,
outstanding citations, violations, and consent orders on file with the DEP and
the county health department, and any DEP and county health department
official’s testimony concerning quality of service shall be considered. In
addition, any customer testimony, comments, or complaints received by the
Commission are also reviewed. The operating condition of the water system is
addressed in Issue 2.
Quality of the Utility’s Product
In
evaluation of Country Walk’s product quality, staff reviewed the Utility’s
compliance with the DEP’s primary and secondary drinking water standards.
Primary standards protect public health while secondary standards regulate
contaminants that may impact the taste, odor, and color of drinking water.
Staff reviewed the DEP’s Safe Drinking Water Program chemical analysis of
samples taken at the point of entry on March 28, 2024, and November 19, 2024,
and all of the contaminants were in compliance with DEP standards. In
addition, staff reviewed the most current Disinfection Byproducts chemical
analysis taken on August 19, 2024, and the results were in compliance with DEP
standards.
The Utility’s Attempt to Address Customer
Satisfaction
Staff
reviewed the Commission’s Consumer Activity Tracking System records, and
discovered that no complaints were recorded during the test year and four years
prior for Country Walk. Staff requested all complaints received by Country Walk
during the test year and four years prior, and the Utility provided 31
complaints it received during this timeframe. Table 1-1 shows the number of
complaints, by subject and year, received by the Utility during the specified
timeframe.
Table 1-1
Number of Utility Complaints
by Subject
|
Subject of Complaint
|
2020
|
2021
|
2022
|
2023
|
2024
|
Total
|
|
Water Service Interruption
|
4
|
0
|
3
|
7
|
2
|
16
|
|
Pressure Issue
|
3
|
1
|
2
|
3
|
1
|
10
|
|
Water Quality
|
2
|
0
|
0
|
2
|
1
|
5
|
|
Total
|
9
|
1
|
5
|
12
|
4
|
31
|
Source: Utility responses to staff data requests.
The water
service interruption complaints were due to an electrical relay at the high service
pump going bad and the compressor at the hydropneumatic storage tank not
running in 2022 and 2023,
and a main break in 2020. Country Walk made repairs and restored the service.
The pressure issue complaints were due to various reasons including clogged
service lines, a transfer pump had tripped, and home filters being clogged. The
Utility unclogged the lines and reset the systems.
The water quality complaints were about the water smell and color. In response,
Country Walk flushed the water at the homes, valves, and the main lines to
resolve the issues.Staff also
requested all complaints received by the DEP during the test year and four
years prior. The DEP responded that it did not receive any complaints during
this timeframe.
A customer
meeting was held on June 24, 2025. No customers spoke at the meeting. In
addition, there were no customer comments filed in the docket file.
Conclusion
Country Walk has
been responsive to customer complaints and the quality of the product is in
compliance with the DEP standards; therefore, staff recommends that the quality
of service be considered satisfactory.
Issue 2:
Is the infrastructure and operating conditions of
Country Walk Utilities, Inc. in compliance with DEP regulations?
Recommendation:
Yes. The Country Walk water system is currently in
compliance with the DEP. (P. Buys)
Staff Analysis:
Rule 25-30.225(2), F.A.C., requires each water
Utility to maintain and operate its plant and facilities by employing qualified
operators in accordance with the rules of the DEP. Rule 25-30.433(2), F.A.C.,
requires consideration of whether the infrastructure and operating conditions
of the plant and facilities are in compliance with Rule 25-30.225, F.A.C. In
making this determination, the Commission must consider testimony of the DEP
and county health department officials, sanitary surveys for water systems,
citations, violations, and consent orders issued to the Utility, customer
testimony, comments, and complaints, and Utility testimony and responses to the
aforementioned items.
Water System Operating Conditions
Country Walk’s water system has a
permitted capacity of 100,600 gallons per day. The system has one well with a
pumping capacity of 80 gallons per minute (gpm), one hydropneumatic storage
tank with a capacity of 5,000 gallons, and one ground storage tank with a
capacity of 5,000 gallons. Groundwater from the well is treated through
hypochlorination. Staff reviewed Country Walk’s most recent Sanitary Survey Report
(Report) conducted by the DEP to determine the Utility’s overall water facility
compliance. A review of the Report dated December 12, 2024, indicated that Country
Walk’s water treatment facility was out of compliance. The DEP found that the
chlorine residual was over the maximum amount, there was no valve exercising
plan available on site, the bacteriological sampling plan had the wrong number
of service connections, the disinfection byproducts sampling plan needed
updating with the correct sample requirements, and the ammonia container was
not secured. Country Walk corrected all deficiencies, and the DEP found the
Utility to be in compliance on February 25, 2025.
Conclusion
The Country Walk
water system is currently in compliance with the DEP.
Issue 3:
What are the used and useful percentages (U&U)
of Country Walk Utilities, Inc. water treatment plant (WTP) and water
distribution system?
Recommendation:
Country Walk’s WTP, storage, and water distribution
system should be considered 100 percent U&U. No adjustment is recommended for excessive
unaccounted for water (EUW). (P. Buys)
Staff Analysis:
As stated in Issue 2,
Country Walk’s water system has one well with a pumping capacity of 80 gpm, one
hydropneumatic storage tank with a capacity of 5,000 gallons, and one ground
storage tank with a capacity of 5,000 gallons. Country Walk’s water
distribution system is composed of 3,815 feet of 2-inch polyvinyl chloride
(PVC) pipe and 1,802 feet of 4-inch PVC pipe. There are no fire hydrants
throughout the water distribution system.
Used and Useful Percentages
Rule 25-30.4325, F.A.C.,
addresses the method by which the U&U of a water system is determined. In
its last SARC, Country Walk’s WTP, storage, and water distribution system were
found to be 100 percent U&U. The
Utility has not increased the capacity of its WTP since rates were last
established. The Utility’s water distribution system continues to only provide
service to existing customers, the service area remains built out, and there
continues to be no potential for expansion of the service area. Therefore,
consistent with the Commission’s previous decision, staff recommends that the
Utility’s WTP, storage, and water distribution system be considered 100 percent
U&U.
Excessive Unaccounted for Water
Rule
25-30.4325, F.A.C., additionally provides factors to be considered in
determining whether adjustments to operating expenses are necessary for EUW.
EUW is defined as “unaccounted for water in excess of 10 percent of the amount
produced.” Unaccounted for water is all water produced that is not sold,
metered, or accounted for in the records of the Utility.
EUW is calculated by subtracting
both the gallons sold to customers and the gallons used for other services,
such as flushing, from the total gallons pumped and purchased for the test
year, and dividing by the sum of gallons pumped and purchased. The amount in
excess of 10 percent, if any, is the EUW percentage.
Based on monthly operating
reports, Country Walk produced 2,257,700 gallons of water from November 1,
2023, through October 31, 2024. No water was purchased during the test year.
From the audit completed by staff, the Utility sold 1,977,000 gallons of water
to customers. The Utility estimated 351,200 gallons of water usage for line
flushing and main breaks. The calculation ([2,257,700 + 0 – 1,977,000 –
351,200] / [2,257,700 + 0]) results in no unaccounted for water. Therefore,
there is no EUW based on this analysis. Staff recommends that no adjustments be
made to purchased power and chemicals.
Conclusion
Country Walk’s WTP, storage, and water distribution system
should be considered 100 percent U&U. No adjustment is recommended for EUW.
Issue 4:
What is the appropriate average test year rate base
for Country Walk Utilities, Inc.?
Recommendation:
The appropriate average test year rate base for
Country Walk Utilities, Inc. is $138,362. (Folkman, Cohn)
Staff Analysis:
The appropriate components of the Utility’s rate
base include utility plant in service (UPIS), land and land rights, accumulated
depreciation, contributions in aid of construction (CIAC), accumulated
amortization of CIAC, an acquisition adjustment, accumulated amortization of an
acquisition adjustment, and working capital. Staff selected the test year ended
October 31, 2024 for the instant rate case. Commission audit staff determined
that the Utility’s books and records are in compliance with the National
Association of Regulatory Utility Commissioners’ Uniform System of Accounts
(NARUC USOA). A summary of each component and the recommended adjustments are
discussed below.
Utility Plant in Service
The
Utility recorded UPIS of $257,741. Staff reduced this amount by $8,019 to
reflect an averaging adjustment, and therefore recommends a UPIS of $249,723.
Land and Land Rights
The
Utility recorded a test year land and land rights balance of $1,495. Staff did
not make any adjustments to this account, and therefore recommends a land and
land rights balance of $1,495.
Accumulated Depreciation
The
Utility recorded accumulated depreciation of $120,685. The Utility based
depreciation on the date its plant items were placed into service. Audit staff
calculated depreciation expense on a half-year basis for the first year of
service, which increased accumulated depreciation by $366. Additionally, staff
reduced this amount by $4,672 to reflect an averaging adjustment. Staff’s
adjustments to accumulated depreciation result in a decrease of $4,306.
Therefore, staff recommends an average accumulated depreciation balance of
$116,380.
Contributions In Aid of
Construction
The
Utility recorded CIAC of $24,200. Staff made no adjustments, and therefore
recommends an average CIAC balance of $24,200.
Accumulated Amortization of CIAC
The
Utility recorded accumulated amortization of CIAC of $24,200. The Utility used
a composite rate for all CIAC-related accounts. However, per Rule
25-30.140(9)(b), F.A.C., the specific depreciation rates of the related plant
accounts should be used, and reserving the use of a composite rate when the
specific associated plant accounts are unknown. As such, audit staff reduced
this amount by $1,641. Staff then increased this amount by $821 to reflect an
averaging adjustment. Therefore, staff recommends an average accumulated
amortization of CIAC balance of $23,380.
Acquisition Adjustment
Country
Walk recorded a negative acquisition adjustment of $20,064, which is consistent
with the amount approved by the Commission in the Utility’s transfer docket.
Therefore, no adjustment is necessary.
Accumulated Amortization of
Acquisition Adjustment
The
Utility recorded an accumulated amortization of acquisition adjustment of
$20,064. Staff recalculated this amount based on the method set forth in Order
No. PSC-14-0495-PAA-WU and beginning with the date of the issuance of the order
approving the transfer.
Staff’s calculation results in a decrease of $618. Therefore, staff recommends
an accumulated amortization of acquisition adjustment balance of $19,446.
Working Capital Allowance
Working
capital is defined as the short-term investor-supplied funds that are necessary
to meet operating expenses. Consistent with Rule 25-30.433(3), F.A.C. and
Commission practice, staff used the one-eighth of O&M expense (less rate
case expense) formula for calculating the working capital allowance.
As such, staff removed the annual rate case amortization expense of $671. This
resulted in an adjusted O&M expense balance of $39,699. Applying this
formula, staff recommends a working capital allowance of $4,962.
Rate Base Summary
Based on the foregoing, staff recommends that
the appropriate average test year rate base is $138,362. Rate base is shown on
Schedule No. 1-A. The related adjustments are shown on Schedule No. 1-B.
Issue 5:
What is the appropriate return on equity and overall
rate of return for Country Walk Utilities, Inc.?
Recommendation:
The appropriate return on equity (ROE) is 8.51
percent with a range of 7.51 percent to 9.51 percent. The appropriate overall
rate of return is 8.43 percent. (Folkman, Cohn)
Staff Analysis:
The Utility’s capital structure consists of common
equity and customer deposits. The Utility’s capital structure has been
reconciled with staff’s recommended rate base. The appropriate ROE is 8.51
percent based on the Commission-approved leverage formula currently in effect.
Staff recommends an ROE of 8.51 percent with a range of
7.51 percent to 9.51 percent, and an overall rate of return of 8.43 percent.
The ROE and overall rate of return are shown on Schedule No. 2.
Issue 6:
What are the appropriate test year operating
revenues for the water system of Country Walk Utilities, Inc.?
Recommendation:
The appropriate test year operating revenues for
Country Walk’s water system are $63,962. (Chambliss)
Staff Analysis:
Country Walk recorded test year revenues of $60,989
for water. The water revenues included $60,013 of service revenues and $977 of
miscellaneous revenues. To determine the appropriate service revenues, staff
applied the number of billing determinants to the Utility’s existing rates. As
a result, staff determined that service revenues for water should be $62,985,
which is an increase of $2,972. Staff has no adjustment to miscellaneous
revenues. Based on the above, staff recommends the appropriate test year
operating revenues for Country Walk’s water system is $63,962.
Issue 7:
What is the appropriate amount of operating expenses
for Country Walk Utilities, Inc.?
Recommendation:
The appropriate amount of operating expense for
Country Walk is $55,599. (Folkman, Cohn, P. Buys)
Staff Analysis:
The
Utility recorded operating expense of $53,987. The test year operating expenses
have been reviewed by staff, including invoices and other supporting
documentation. Staff has made several adjustments to the Utility’s operating
expense as described below.
Pro Forma O&M
Country Walk is requesting
recovery of costs to submit a Lead and Copper Rule Revision (LCRR) inventory to
the DEP. On January 15, 2021, the United States Environmental Protection Agency
(EPA) issued the LCRR that amended the Lead and Copper Rule (40 C.F.R. Sections
141.80–141.93). This amendment requires all water systems to create an
inventory of all its service lines. The LCRR also required the inventory to be
sent to the DEP no later than October 16, 2024. Country Walk contracted with
U.S. Water Service Corporation (U.S. Water) to perform this inventory. This
project was outside of the normal operations the Utility already contracted for
with U.S. Water. The project was completed and the LCRR inventory analysis was
submitted on October 15, 2024. The invoice for this project is $4,257. Country
Walk stated this amount was not included in the O&M expenses filed in this
SARC.[16] Because
this project was required by the EPA, staff believes Country Walk should be
allowed to recover the project’s cost. To that end, Country Walk submitted a
paid invoice and the costs appear to be reasonable. Staff’s proposal for the
associated amortization expense is discussed below in contractual services –
other.
Operation
and Maintenance Expenses
Salaries and Wages – Officers and Directors (603)
The
Utility recorded salaries and wages – officers and directors expense of $2,750.
Staff increased this account by $250 to reflect an auditing adjustment which
was to record an expense that was not entered into the general ledger. Therefore,
staff recommends a salaries and wages – officers and directors expense of
$3,000.
Purchased
Power (615)
The
Utility recorded purchased power expense of $1,187. Staff made no adjustments
to this amount and therefore recommends a purchased power expense of $1,187.
Chemicals
(618)
The
Utility recorded chemicals expense of $2,329. Staff made no adjustments to this
amount and therefore recommends a chemicals expense of $2,329.
Contractual Services – Accounting (632)
The
Utility recorded contractual services accounting expense of $525. Staff made no
adjustments to this amount and therefore recommends a contractual services -
accounting expense of $525.
Contractual
Services – Legal (633)
The
Utility recorded contractual services legal expense of $300. Staff made no
adjustments to this amount and therefore recommends a contractual services -
legal expense of $300.
Contractual
Services – Testing (635)
The
Utility recorded contractual services testing expense of $905. Staff made no
adjustments to this amount and therefore recommends a contractual services -
testing expense of $905.
Contractual Services – Other (636)
The
Utility recorded contractual services other expense of $28,097. Further, during
the pendency of the case, the Utility requested pro forma contractual service
O&M of $4,257 for the LCRR inventory as discussed above. Pursuant to
Rule 25-30.433(9), F.A.C., Staff amortized this amount over
five years bringing the test year expense to $851. Therefore, staff recommends
a contractual service – other expense of $28,948.
Insurance
Expense – General Liability (657)
The
Utility recorded insurance expense general liability of $1,630. Staff increased
this figure by $145 to reflect an auditing adjustment based on the current
insurance policy received. Therefore, staff recommends a general liability
insurance expense of $1,775.
Regulatory Commission Expense (665)
The Utility
recorded an annual rate case expense of $208. However, the amount that was
authorized in Order No. PSC-2022-0141-PAA-WU was $362.
Thus, audit staff made a test year adjustment increase of $154.
The Utility
is required by Rule 25-22.0407, F.A.C., to mail notices of the rate case
overview, interim rates, final rates, and four-year rate reduction. Staff
calculated noticing costs to be $237. The Utility stated that it does not plan
on attending the Commission Conference; therefore, staff did not include a
travel and lodging expense. Additionally, the Utility paid a filing fee of
$1,000.
Staff
recommends a total rate case expense, consisting of noticing costs and filing
fee of $1,237, which amortized over four years is $309. Therefore, staff
recommends an increase of $463 and a total annual rate case expense of $671.
Bad Debt Expense (670)
Country
Walk recorded a bad debt expense of $226 for the test year. Staff notes
that it is Commission practice to calculate bad debt expense using a three-year
average when the information is available. In its
three most recent Annual Reports (2022, 2023, and 2024), the Utility recorded
bad debt expenses of $1,031, $97, and $311, respectively. Staff calculated the
average bad debt expense for these previous three years to be $480, which
represents an increase of $254. Therefore, staff recommends bad debt expense of
$480.
Miscellaneous
Expenses (675)
The
Utility recorded miscellaneous expense of $250. Staff made no adjustments to
this amount and therefore recommends a miscellaneous expense of $250.
Operation and Maintenance Expense Summary
The
Utility recorded test year O&M expense of $38,407. Based on the above adjustments,
staff recommends O&M expense be increased by $1,963. This results in a
total O&M expense of $40,370. Staff’s recommended adjustments to O&M
are shown on Schedule No. 3-C.
Depreciation Expense
The
Utility recorded depreciation expense of $11,421. Staff increased this amount
by $395 to reflect an auditing adjustment. Therefore, staff recommends
depreciation expense of $11,816.
Amortization of CIAC
The
Utility recorded no amortization of CIAC. Staff increased this figure by $288
to reflect an auditing adjustment, and therefore recommends an amortization of
CIAC of $288.
Amortization of Acquisition Expense
The Utility recorded no
amortization of acquisition expense. Audit staff made an amortization of acquisition
expense adjustment of $904 based on the method set forth in Order
No. PSC-14-0495-PAA-WU. Therefore, staff recommends an amortization of
acquisition expense of $904.
Taxes Other Than Income (TOTI)
The Utility recorded TOTI of $4,159. Staff
increased TOTI by $164 to reflect auditing adjustment to property taxes.
Additionally, staff increased TOTI by $134 to reflect the appropriate
regulatory assessment fees (RAFs) based on the appropriate test year revenues.
As discussed in Issue 9, staff recommends
revenues be increased by $3,303 in order to reflect the change in revenue
required to cover expenses and allow the Utility an opportunity to earn an 8.43
percent return on rate base. As a result, TOTI should be increased by $149 to
reflect a RAF rate of 4.5 percent of the change in revenues. Staff’s
adjustments to TOTI resulted in an increase of $447. Therefore, staff
recommends TOTI of $4,605.
Total Operating Expenses Summary
The
Utility recorded operating expenses of $53,987. The application of staff’s
recommended adjustments to the Utility’s recommended operating expense results
in a total operating expense of $55,599, an increase of $1,613. Operating
expenses are shown on Schedule No. 3-A, and the related adjustments are shown
on Schedule No. 3-B.
Issue 8:
Does Country Walk Utilities, Inc. meet the criteria
for application of the operating ratio methodology?
Recommendation:
No, Country Walk does not meet the requirement for
application of the operating ratio methodology for calculating the revenue
requirement. (Folkman, Cohn)
Staff Analysis:
Rule 25-30.4575(2), F.A.C., indicates that rate
cases processed under Rule 25-30.455, F.A.C., the Commission will use the operating
ratio methodology to establish the Utility’s revenue requirement when its rate
base is not greater than 125 percent of O&M expenses, less regulatory
commission expense, and the use of the operating ratio methodology does not
change the Utility’s eligibility for a SARC.
With respect to Country Walk, staff has recommended a rate
base of $138,362. After removal of rate case expense, staff has calculated an adjusted
O&M expense of $39,699. Based on staff’s recommended amounts, the Utility’s
rate base is 348.53 percent of its adjusted O&M expense. Therefore, the
Utility does not qualify for application of the operating ratio methodology.
Issue 9:
What is the appropriate revenue requirement for
Country Walk Utilities, Inc.?
Recommendation:
The appropriate revenue requirement is $67,265,
resulting in an annual increase of $3,303. (Folkman, Cohn)
Staff Analysis:
Country Walk should be granted an annual increase of
$3,303 (5.16 percent). This should allow the Utility the opportunity to recover
expenses and earn 8.43 percent return on its rate base. The calculations for
revenue requirement are shown on Table 9-1 below.
Table 9-1
Revenue Requirement
|
Water Rate Base
|
$138,362
|
|
Rate of Return
|
× 8.43%
|
|
Return on Rate Base
|
$11,666
|
|
Water O&M Expense
|
$40,370
|
|
Depreciation Expense
|
11,816
|
|
Amortization Expense
|
(1,192)
|
|
Taxes Other Than Income
|
4,605
|
|
Revenue Requirement
|
$67,265
|
|
Less Test Year Revenues
|
$63,962
|
|
Annual Increase
|
$3,303
|
|
Percent Increase
|
5.16%
|
|
|
|
|
|
|
Source: Staff calculations.
Issue 10:
What are the appropriate rate structure and rates
for Country Walk Utilities, Inc.?
Recommendation:
The recommended rate structure and monthly water
rates are shown on Schedule No. 4. The Utility should file revised tariff
sheets and a proposed customer notice to reflect the Commission-approved rates.
The approved rates should be effective for service rendered on or after the
stamped approval date on the tariff sheets pursuant to Rule 25-30.475(1),
F.A.C. In addition, the approved rates should not be implemented until staff
has approved the proposed customer notice and the notice has been received by
the customers. The Utility should provide proof of the date notice was given by
affidavit within 10 days of the date of the notice. (Chambliss)
Staff Analysis:
The Utility
provides water service to 70 residential customers and one general service
customer. A review of the billing data indicates approximately 13 percent of
the residential customer bills during the test year had zero gallons. However,
the billing data at the 1,000 gallon level indicates 38 percent of the
residential customer bills, which is an indication of a seasonal customer base.
The average residential water demand was 2,340 gallons per month during the
test period. The average water demand, excluding zero gallons bills, was 2,689
gallons per month. The Utility’s current rate structure consists of a monthly
base facility charge (BFC) and a two-tier inclining block rate structure. The
rate blocks are: (1) 0–3,000 gallons and (2) all usage in excess of a 3,000
gallons per month discretionary threshold. The general service rate structure
consists of a BFC and uniform gallonage charge.
Staff performed an analysis of
the Utility’s billing in order to evaluate the appropriate rate structure for
the residential water customers. The goal of the evaluation was to select the
rate design parameters that: (1) produce the recommended revenue requirement;
(2) equitably distribute cost recovery among the Utility’s customers; (3)
establish the appropriate discretionary usage threshold for restricting
repression; and (4) implement, where appropriate, water conserving rate
structures consistent with Commission practice.
Country Walk in its application
requested, due to the highly seasonality of its customer base, a rate design
where 60 percent of the revenue requirement is recovered through the BFC. The
Utility stated that in its last SARC, the Commission approved a rate design
where 45 percent of the revenue requirement is recovered through the BFC which
makes it difficult to cover O&M costs through the period where there is low
occupancy.
Staff agrees that due to the
Utility’s seasonal customer base coupled with low average consumption, that it
is reasonable to allow 60 percent of the revenue requirement be recovered
through the BFC in an effort to maintain sufficient revenue stability. The average
number of people per household is two; therefore, based on the number of people
per household, 50 gallons per day, per person, and the number of days per
month, the discretionary threshold should remain at 3,000 gallons per month.
Therefore, staff recommends that the Utility’s current rate structure remain
unchanged. According to the review of the billing analysis, the discretionary
usage represents approximately 14 percent of the bills, which accounts for
approximately 23 percent of the water demand. This is an indication that there
is a modest amount of discretionary usage above 3,000. However, due to the low
revenue requirement increase, there is not enough revenues to send any
additional pricing signals.
For this case, staff recommends a
continuation of the Utility’s current rate structure, which includes separate
gallonage charges for non-discretionary and discretionary usage for water
customers. The rate blocks are: (1) 0-3,000 gallons and (2) all usage in excess
of 3,000 gallons per month. General service customers should continue to be
billed a BFC and a gallonage charge. The recommended rate structure and monthly
water rates are shown on Schedule No. 4.
The Utility should file revised tariff sheets and a proposed
customer notice to reflect the Commission-approved rates. The approved rates
should be effective for service rendered on or after the stamped approval date
on the tariff sheets pursuant to Rule 25-30.475(1), F.A.C. In addition, the
approved rates should not be implemented until staff has approved the proposed
customer notice and the notice has been received by the customers. The Utility
should provide proof of the date notice was given by affidavit within 10 days
of the date of the notice.
Issue 11:
What are the appropriate initial customer deposits
for Country Walk Utilities, Inc.?
Recommendation:
The appropriate initial customer deposit should be
$153 for the 5/8 inch x 3/4 inch meter size. The initial customer deposit for
all other residential meter sizes and all general service meter sizes should be
two times the average estimated bill for water. The approved initial customer
deposits should be effective for connections made on or after the stamped
approval date on the tariff sheets pursuant to Rule 25-30.475, F.A.C. The Utility
should be required to collect the approved deposits until authorized to change
them by the Commission in a subsequent proceeding. (Chambliss)
Staff Analysis:
Rule
25-30.311, F.A.C., provides the criteria for collecting, administering, and
refunding customer deposits. Customer deposits are designed to minimize the
exposure of bad debt expense for the Utility and, ultimately, the general body
of ratepayers. An initial customer deposit ensures that the cost of providing
service is recovered from the cost causer. Historically, the Commission has set
initial customer deposits equal to two times the average estimated bill.[20] Currently,
the Utility has an initial customer deposit of $120 for the 5/8 inch x 3/4 inch
meter size. However, this amount does not cover two months’ average bills based
on staff’s recommended rates. Based on the Utility’s average monthly
residential consumption, the appropriate initial customer deposit should be
$153 to reflect an average residential customer bill for two months. The
monthly average residential bill is $76.39.
Staff recommends that the appropriate initial customer
deposit should be $153 for the 5/8 inch x 3/4 inch meter size. The initial
customer deposit for all other residential meter sizes and all general service
meter sizes should be two times the average estimated bill for water. The
approved initial customer deposits should be effective for connections made on
or after the stamped approval date on the tariff sheets pursuant to Rule
25-30.475, F.A.C. The Utility should be required to collect the approved
deposits until authorized to change them by the Commission in a subsequent
proceeding.
Issue 12:
What are the appropriate miscellaneous service
charges for Country Walk Utilities, Inc.?
Recommendation:
Staff recommends that the initial connection and
normal reconnection charges be removed, and the definition for the premises
visit charge be updated to comply with Rule 25-30.460, F.A.C. The approved
charge should be effective on or after the stamped approval date on the tariff
sheet pursuant to Rule 25-30.475(2), F.A.C. In addition, the approved charge
should not be implemented until staff has approved the proposed customer notice
and the notice has been received by customers. The Utility should provide proof
of the date notice was given by affidavit no less than 10 days after the date
of notice. (Chambliss)
Staff Analysis:
Currently,
Country Walk has an initial connection charge and a normal reconnection charge.
The Utility did not request to revise its existing miscellaneous service
charges. However, Section 367.091, F.S., authorizes the Commission to
establish, increase, or change a rate or charge other than monthly rates or
service availability charges. Rule 25-30.460, F.A.C., does not allow for
initial connection and normal reconnection charges. The Utility’s initial
connection and normal reconnection charges are thus obsolete and inconsistent
with the Rule. The definitions for initial connection charges and normal
reconnection charges were subsumed into the definition of the “premises visit
charge”. Therefore, the premises visit charge should be $60.62 for normal
business hours and $68.68 for after-hours calls.
Based on the above, staff recommends that the initial
connection and normal reconnection charges be removed, and the Utility’s definition
for the premises visit charge be updated to comply with Rule 25-30.460(2)(a),
F.A.C. The Utility should be required to file a proposed customer notice to
reflect the Commission approved charges. The approved charges should be
effective on or after the stamped approval date on the tariff sheet pursuant to
Rule 25-30.475(2), F.A.C. In addition, the approved charge should not be
implemented until staff has approved the proposed customer notice and the
notice has been received by customers. The Utility should provide proof of the
date notice was given by affidavit no less than 10 days after the date of
notice.
Issue 13:
What is the appropriate amount by which rates should
be reduced four years after the published effective date to reflect the removal
of the amortized rate case expense?
Recommendation:
The rates should be reduced as shown on Schedule No.
4, to remove rate case expense grossed-up for RAFs and amortized over a
four-year period. Pursuant to Section 367.081(8), F.S., the decrease in rates
should become effective immediately following the expiration of the rate case
expense recovery period. Country Walk should be required to file revised
tariffs and a proposed customer notice setting forth the lower rates and
rationale no later than one month prior to the effective date of the new rates.
If the Utility files revised tariffs reflecting this reduction in conjunction
with a price index or pass-through rate adjustment, separate data should be
filed for the price index and/or pass-through increase and the reduction in the
rates due to the amortized rate case expense. (Folkman, Cohn)
Staff Analysis:
Section 367.081(8), F.S., requires that the rates be
reduced immediately following the expiration of the 4-year period by the amount
of the rate case expense previously included in rates. The reduction will
reflect the removal of revenue associated with the amortization of rate case
expense and the gross-up for RAFs. This results in a reduction of $324.
Staff recommends that the rates should be reduced as shown
on Schedule No. 4, to remove rate case expense grossed-up for RAFs and
amortized over a four-year period. Pursuant to Section 367.081(8), F.S., the
decrease in rates should become effective immediately following the expiration
of the rate case expense recovery period. Country Walk should be required to
file revised tariffs and a proposed customer notice setting forth the lower
rates and rationale no later than one month prior to the effective date of the
new rates. If the Utility files revised tariffs reflecting this reduction in
conjunction with a price index, or pass-through rate adjustment, separate data
should be filed for the price index and/or pass-through increase and the
reduction in the rates due to the amortized rate case expense.
Issue 14:
Should the recommended rates be approved for Country
Walk Utilities, Inc. on a temporary basis, subject to refund with interest, in
the event of a protest filed by a party other than the Utility?
Recommendation:
Yes. Pursuant to Section 367.0814(7), F.S., the
recommended rates should be approved for the Utility on a temporary basis,
subject to refund with interest, in the event of a protest filed by a party
other than the Utility. Country Walk should file revised tariff sheets and a
proposed customer notice to reflect the Commission-approved rates. The approved
rates should be effective for service rendered on or after the stamped approval
date on the tariff sheet, pursuant to Rule 25-30.475(1), F.A.C. In addition,
the temporary rates should not be implemented until staff has approved the
proposed notice, and the notice has been received by the customers. Prior to
implementation of any temporary rates, the Utility should provide appropriate financial
security.
If the recommended rates are approved on a temporary
basis, the rates collected by the Utility should be subject to the refund
provisions discussed below in the staff analysis. In addition, after the
increased rates are in effect, pursuant to Rule 25-30.360(6), F.A.C., the
Utility should file reports with the Commission’s Office of Commission Clerk no
later than the 20th of each month indicating the monthly and total amount of
money subject to refund at the end of the preceding month. The report filed
should also indicate the status of the security being used to guarantee
repayment of any potential refund. (Folkman, Cohn)
Staff Analysis:
This recommendation proposes an increase in rates. A
timely protest might delay a rate increase resulting in an unrecoverable loss
of revenue to the Utility. Therefore, pursuant to Section 367.0814(7), F.S., in
the event of a protest filed by a party other than the Utility, staff
recommends that the recommended rates be approved as temporary rates. Country
Walk should file revised tariff sheets and a proposed customer notice to
reflect the Commission-approved rates. The approved rates should be effective
for service rendered on or after the stamped approval date on the tariff sheet,
pursuant to Rule 25-30.475(1), F.A.C. In addition, the temporary rates should
not be implemented until staff has approved the proposed notice, and the notice
has been received by the customers. The recommended rates collected by the
Utility should be subject to the refund provisions discussed below.
The Utility should be authorized to collect the temporary
rates upon staff’s approval of an appropriate security for the potential refund
and the proposed customer notice. Security should be in the form of a bond or
letter of credit in the amount of $2,265. Alternatively, the Utility could
establish an escrow agreement with an independent financial institution.
If the
Utility chooses a bond for securing the potential refund, the bond should
contain wording to the effect that it will be terminated only under the
following conditions:
1. The Commission approves the rate
increase; or,
2. If the Commission denies the increase,
the Utility shall refund the amount collected that is attributable to the
increase.
If the
Utility chooses a letter of credit for securing the potential refund, the
letter of credit should contain the following conditions:
1. The letter of credit is irrevocable for
the period it is in effect.
2. The letter of credit will be in effect
until a final Commission order is rendered, either approving or denying the
rate increase.
If
security is provided through an escrow agreement, the following conditions
should be part of the agreement:
1. The Commission Clerk, or his or her
designee, must be a signatory to the escrow agreement.
2. No monies in the escrow account may be
withdrawn by the Utility without the prior written authorization of the
Commission Clerk, or his or her designee.
3. The escrow account shall be an interest
bearing account.
4. If a refund to the customers is
required, all interest earned by the escrow account shall be distributed to the
customers.
5. If a refund to the customers is not
required, the interest earned by the escrow account shall revert to the
Utility.
6. All information on the escrow account
shall be available from the holder of the escrow account to a Commission
representative at all times.
7. The amount of revenue subject to refund
shall be deposited in the escrow account within seven days of receipt.
8. This escrow account is established by
the direction of the Florida Public Service Commission for the purpose(s) set
forth in its order requiring such account. Pursuant to Cosentino v. Elson, 263 So. 2d 253 (Fla. 3d DCA 1972), escrow
accounts are not subject to garnishments.
9. The account must specify by whom and on
whose behalf such monies were paid.
In no
instance should the maintenance and administrative costs associated with the
refund be borne by the customers. These costs are the responsibility of, and
should be borne by, the Utility. Irrespective of the form of security chosen by
the Utility, an account of all monies received as a result of the rate increase
should be maintained by the Utility. If a refund is ultimately required, it
should be paid with interest calculated pursuant to Rule 25-30.360(4), F.A.C.
The Utility should maintain a record of the amount of the
bond, and the amount of revenues that are subject to refund. In addition, after
the increased rates are in effect, pursuant to Rule 25-30.360(6), F.A.C., the
Utility should file reports with the Commission Clerk’s office no later than
the 20th of every month indicating the monthly and total amount of money
subject to refund at the end of the preceding month. The report filed should
also indicate the status of the security being used to guarantee repayment of
any potential refund.
Issue 15:
Should Country Walk Utilities, Inc. be required to
notify the Commission within 90 days of an effective order finalizing this docket,
that it has adjusted its books for all the applicable NARUC USOA primary
accounts?
Recommendation:
Yes. Country Walk should be required to notify the
Commission, in writing, that it has adjusted its books in accordance with the
Commission’s decision. The Utility should submit a letter within 90 days of the
Commission’s final order in this docket, confirming that the adjustments to all
applicable NARUC USOA primary accounts have been made to the Utility’s books
and records. In the event the Utility needs additional time to complete the
adjustments, a notice providing good cause should be filed not less than seven
days prior to the deadline requesting an extension. Upon providing a notice of
good cause, staff should be given administrative authority to grant an
extension of up to 60 days. (Folkman, Cohn)
Staff Analysis:
Country Walk should be required to notify the
Commission, in writing, that it has adjusted its books in accordance with the
Commission’s decision. The Utility should submit a letter within 90 days of the
Commission’s final order in this docket, confirming that the adjustments to all
applicable NARUC USOA primary accounts have been made to the Utility’s books
and records. In the event the Utility needs additional time to complete the adjustments,
a notice providing good cause should be filed not less than seven days prior to
the deadline requesting an extension. Upon providing a notice of good cause,
staff should be given administrative authority to grant an extension of up to
60 days.
Issue 16:
Should this docket be closed?
Recommendation:
No. If
no person whose substantial interests are affected by the proposed agency
action files a protest within 21 days of the issuance of the proposed agency
action order, a consummating order should be issued. The docket should remain
open for staff’s verification that the revised tariff sheets and customer
notice have been filed by the Utility and approved by staff. Once these actions
are complete, this docket should be closed administratively. (Marquez,
Farooqi)
Staff Analysis:
If no person whose
substantial interests are affected by the proposed agency action files a
protest within 21 days of the issuance of the proposed agency action order, a
consummating order should be issued. The docket should remain open for staff’s
verification that the revised tariff sheets and customer notice have been filed
by the Utility and approved by staff.
Once these actions are complete, this docket should be
closed administratively.
