Discussion
of Issues
Issue 1:
Should the transfer of Certificate Nos. 354-W and
310-S from Useppa Island Utilities Company, Inc. to UIP Utilities Company, LLC,
in Lee County be approved?
Recommendation:
Yes. The transfer of the water and wastewater
systems and Certificate Nos. 354-W and 310-S is in the public interest and
should be approved effective the date of the Commissions vote. The resultant
Order should serve as the Buyers certificate and should be retained by the
Buyer. With the exception of miscellaneous service charges and the initial
customer deposit, the Utilitys existing rates and charges should be continued.
The Seller is current, with respect to annual reports and regulatory assessment
fees (RAFs), through December 31, 2025. Based on the application, the Seller
will be responsible for RAFs and annual reports until Commission approval. The
Buyer will be responsible for filing annual reports and paying RAFs for all
future years. (Wooten, Sewards, Chambliss, Bruce, Bloom)
Staff Analysis:
Legal Standard
Transfers of certificates are
governed by Section 367.071, F.S., and by Rule 25-30.037, Florida
Administrative Code (F.A.C.). The statute provides that the Commission may
approve the transfer if it is in the public interest and the transferee will
fulfill the commitments, obligations, and representations of the utility. To
demonstrate that the transferee can do so, the rule requires the transferee to
show the financial and technical ability to operate the utility.
Analysis
On December 18, 2025, Useppa and UIP filed a joint
application for the transfer of Certificate Nos. 354-W and 310-S from Useppa to
UIP. Staff reviewed the application and determined that it is in compliance
with Section 367.071, F.S., and Commission rules concerning applications for
transfer of certificates.
Noticing, Territory, and Land
Ownership
UIP provided notice of the application pursuant to Section
367.071, F.S., and Rule 25-30.030, F.A.C. No objections to the transfer were
filed, and the time for doing so has expired. The application contains a
description of the service territory, which is appended to this recommendation
as Attachment A. In its application, UIP provided a copy of a special warranty
deed as evidence that the Buyer has the rights to long-term use of the land
upon which the treatment facilities are located, pursuant to Rule
25-30.037(2)(s), F.A.C.
Purchase Agreement and Financing
Pursuant to Rule 25-30.037(2)(i) and (j), F.A.C., the
application contains a statement regarding financing and a copy of the purchase
agreement, which includes the purchase price, terms of payment, and a list of
the assets purchased. There are no guaranteed revenue contracts, or customer
advances of Useppa that must be disposed of with regard to the transfer. UIP
has reviewed all leases and agreements and assumed those agreements. Any
customer deposits will be refunded to customers by the Seller prior to the
closing. Staff has reviewed the purchase and sale agreement, which stated that
the total purchase price for the assets is $16,000,000 which includes the
entire island resort and all its business, with $1,752,473.57 allocated to the
purchase of the water and wastewater utility assets associated with the
regulated Utility. Furthermore, staffs review of the purchase and sale
agreement confirmed that the closing took place on September 22, 2025, but the
transfer of assets is dependent on Commission approval of the transfer,
pursuant to Section 367.071(1), F.S.
Facility Description and Compliance
The water system includes a water treatment plant composed
of two wells. The water is treated via chlorination for disinfection, and
reverse osmosis for dissolved solids removal. The two wells have capacities of
90 gallons per minute each. The water distribution system extends throughout
the service area. UIP provided a copy of the Utilitys current consumptive use
permit from the SWFWMD.
The wastewater treatment plant (WWTP) is an extended
aeration activated sludge plant with a design capacity of 45,000 gallons per
day (gpd). The plant is permitted by the Florida Department of Environmental
Protection (DEP) to operate at 20,000 gpd, based on the maximum monthly average
daily flow. The treatment plant consists of four aeration basins, two
clarifiers, three sludge holding tanks, two percolation ponds and two
pre-filter chlorine contact chambers. Additionally, there are two lift stations
throughout the service territory.
Staff reviewed the most recent DEP sanitary survey, issued
on May 8, 2023, which identified nine issues. After the issues were corrected,
the facility was determined to be in compliance with the DEPs rules and
regulations. Staff also reviewed the results from the Utilitys June 20, 2025
water quality tests, including the secondary water quality test. All results
were below the DEPs maximum contaminant levels for each primary or secondary
contaminant.
Staff reviewed the most recent DEP compliance evaluation
inspections for the WWTP. The March 20, 2026, evaluation identified that the
Utility had exceeded the effluent quality and flow limits as required by the
wastewater facility permit. The Utility explained the exceedance and completed
corrective actions prior to the inspection. All deficiencies were corrected,
and the WWTP is currently in compliance with the DEP.
Technical and Financial Ability
Pursuant to Rule 25-30.037(2)(m), F.A.C., the application
contains statements describing the technical ability of the Buyer to provide
service to the proposed service area. UIPs application states that while the
companys officer and directors do not have experience operating utilities,
they do possess experience in finance, development, capital planning, and
system investment decisions. Furthermore, the Buyer plans to use the same
contracted operator, U.S. Water Services Corporation, who currently provide
routine operation and maintenance of the systems. Billing and customer service
is currently handled by the Buyer, and it intends to continue to provide those
services. As the operators have experience with the Utilitys facilities, it is
reasonable for the Buyer to retain the contract.
The Buyer stated that the purchasing entity was created
for the purpose of acquiring and operating water and wastewater systems in
Florida as a public utility. In its application, the parent company of UIP,
Useppa Island Partners, provided financial statements, as well as an affidavit
stating its ability and intent to meet all reasonable capital needs arising
from the operation of the Utility. Staff has reviewed the parent companys
financial statements. Based on the above, the Buyer has demonstrated the
technical and financial ability to provide service to the existing service
territory.
Rates, Charges, and Initial Customer Deposits
Useppa Islands rates for both
water and wastewater were approved in 2015 in a SARC.
The rates were amended by a price index in 2019. The miscellaneous service
charges were last approved in 2007.
The Utilitys initial customer deposits were approved in 1983 for its water and
wastewater systems. The
Utilitys service availability charges for water and wastewater were approved
in 1987.
Rule 25-9.044(1), F.A.C., provides that, in the case of a change of ownership
or control of a Utility, the rates, classifications, and regulations of the
former owner must continue unless authorized to change by this Commission.
In regard to the Utilitys
existing miscellaneous service charges, the violation reconnection charge is
appropriate. However, the remaining miscellaneous service charges do not
conform to Rule 25-30.460, F.A.C., and are discussed in Issue 3. The Utilitys
initial customer deposits are not consistent with Commission practice, and are
discussed in Issue 3. Therefore, staff recommends that the Utilitys existing
rates, violation reconnection charge, and service availability charges, shown
on Schedules Nos. 2-A and 2-B, should remain in effect until a change is
authorized by this Commission in a subsequent proceeding. The tariff pages
reflecting the transfer should be effective on or after the stamped approval
date on the tariff sheets pursuant to Rule 25-30.475(1), F.A.C.
Regulatory Assessment Fees and Annual Report
Staff has verified that the Utility is current on the
filing of annual reports and RAFs through December 31, 2025. The Seller will
continue to be responsible for filing the Utilitys annual reports and paying
RAFs, until the closing of the sale has been approved by the Commission. After
the approval, the Buyer will be responsible for all future years.
Conclusion
Based on the foregoing, staff recommends that the transfer
of the water and wastewater systems and Certificate Nos. 354-W and 310-S is in
the public interest and should be approved effective the date of the
Commissions vote. The resultant Order should serve as the Buyers certificate
and should be retained by the Buyer. With the exception of miscellaneous
service charges and the initial customer deposit, the Utilitys existing rates
and charges should be continued. The Seller is current, with respect to annual
reports and RAFs, through December 31, 2025. Based on the application, the
Seller will be responsible for RAFs and annual reports until Commission
approval. The Buyer will be responsible for filing annual reports and paying
RAFs for all future years.
Issue 2:
What is the appropriate net book value for UIP
Utilities Company, LLC water and wastewater systems for transfer purposes?
Recommendation:
The NBV of the water and wastewater system for
transfer purposes is $890,239 for water and $277,327 for wastewater as of
September 22, 2025. Within 90 days of the date of the Final Order, UIP should
be required to notify the Commission in writing that it has adjusted its books
in accordance with the Commissions decision. The adjustments should be
reflected in the Utilitys 2026 Annual Report when filed. The Buyer is not
requesting a positive acquisition adjustment as part of this transfer docket,
but may petition for a for a positive acquisition adjustment within the three
years established in Rule 25-30.0371, F.A.C. (Sewards)
Staff Analysis:
Rate base for the water and wastewater systems were
last established for the Utility as of January 8, 2015, by Order No.
PSC-15-0029-PAA-WS. The
purpose of establishing NBV for transfers is to determine whether an
acquisition adjustment should be approved. The Buyer has not requested an
acquisition adjustment at this time, however, UIP may petition for a for a
positive acquisition adjustment within the three years established in Rule
25-30.0371, F.A.C. The NBV does not include normal ratemaking adjustments for
used and useful plant or working capital. The Utilitys NBV has been updated to
reflect balances as of September 22, 2025. In its audit report, audit staff
noted that due to a series of issues the Utility was unable to provide the
general ledgers from 2011 through 2021. As a result, audit staff relied on the
annual report filed with the Commission as the primary source of financial
information for those years.
Utility Plant In Service (UPIS)
The Utilitys trial balance reflected a plant balance of
$1,082,866 for water and $847,716 for wastewater as of September 22, 2025.
Audit staff recalculated the plant balances and determined the correct balances
are $1,653,668 for water and $945,028 for wastewater. As a result, water plant
should be increased by $570,802, and wastewater plant should be increased by
$97,312. As such, staff recommends a water plant balance of $1,653,668 and a
wastewater plant balance of $945,028.
Land
In Order No. PSC-15-00029-PAA-WS, the land balances for
water and wastewater were $10,463 and $3,487, respectively. Audit staff
determined that there have been no additions to land. As such, staff recommends
a land balance of $10,463 for water and a land balance of $3,487 for
wastewater.
Accumulated Depreciation
The Utilitys trial balance reflected an accumulated
depreciation balance of $698,515 for water and $529,172 for wastewater. Audit
staff recalculated accumulated depreciation using the audited UPIS plant
balances and the depreciation rates established by Rule 25-30.140(2), F.A.C.
Audit staff determined accumulated depreciation was understated by $75,377 for
water and $142,016 for wastewater. As a result, accumulated depreciation should
be increased by $75,377 for water and $142,016 for wastewater. As such, staff
recommends an accumulated depreciation balance of $773,892 for water and
$671,188 for wastewater, as of September 22, 2025.
Contributions-in-Aid-of-Construction (CIAC) and
Accumulated Amortization of CIAC
In Order No. PSC-15-00029-PAA-WS, the CIAC balances for
water and wastewater were fully amortized at $225,670 and $230,187,
respectively. Staff determined that there have been no additions to CIAC. As
such, staff recommends a CIAC and accumulated amortization of CIAC balance of
$225,670 for water and $230,187 for wastewater.
Net Book Value
The Utility reflected an NBV of $394,814 for water and
$322,031 for wastewater, as of September 22, 2025. Based on the adjustments
above, staff recommends an NBV for the Utility of $890,239 for water and
$277,327 for wastewater, as of September 22, 2025.
Conclusion
Based on the above, staff recommends that, for transfer
purposes, the NBV of the Utilitys water system is $890,239, and the NBV of the
wastewater system is $277,327, as of September 22, 2025. Within 90 days of the
date of the final order, the Buyer should be required to notify the Commission
in writing that it has adjusted its books in accordance with the Commissions decision.
The adjustments should be reflected in the Utilitys 2026 Annual Report when
filed. The Buyer is not requesting a positive acquisition adjustment as part of
this transfer docket, but may petition for a for a positive acquisition
adjustment within the three years established in Rule 25-30.0371, F.A.C.
Issue 3:
What are the appropriate revisions to miscellaneous
service charges for UIP Utilities Company, LLC?
Recommendation:
The appropriate revisions to miscellaneous service
charges shown on Table 3-2 should be approved. The tariff should be revised to
reflect the removal of initial connection and normal reconnection charges. UIP
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(1), F.A.C. UIP should be required to charge the approved
miscellaneous services charges until authorized to change them by the
Commission in a subsequent proceeding. (Chambliss)
Staff Analysis:
The
Utility did not request to revise its existing miscellaneous service charges.
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. The Utilitys miscellaneous service charges consist of initial
connection and normal reconnection charges. Rule 25-30.460, F.A.C., does not
allow for initial connection and normal reconnection charges. The definitions
for initial connection charges and normal reconnection charges were subsumed in
the definition of the premises visit charge. Therefore, 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. Since the dollar amount did not change, the Utility does not
need to send a notice to the customers. The existing charges for water and
wastewater needing to be revised are shown below in Table 3-1.
Table 3-1
Existing Utility Charges
|
|
Water Existing
|
Wastewater Existing
|
|
|
Normal
Hours
|
After
Hours
|
Normal
Hours
|
After
Hours
|
|
Initial Connection Charge
|
$22.00
|
N/A
|
$22.00
|
N/A
|
|
Normal Reconnection Charge
|
$22.00
|
$44.00
|
$22.00
|
$44.00
|
|
Premises Visit Charge
|
$22.00
|
$44.00
|
$22.00
|
$44.00
|
Table 3-2
Staffs Recommended Charges
|
|
Water
Staff Recommended
|
Wastewater
Staff Recommended
|
|
|
Normal
Hours
|
After
Hours
|
Normal
Hours
|
After
Hours
|
|
Initial Connection Charge
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Normal Reconnection Charge
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Premises Visit Charge
|
$22.00
|
$44.00
|
$22.00
|
$44.00
|
Conclusion
Based on the above, staff recommends the miscellaneous
service charges be revised to conform with Rule 25-30.460, F.A.C. The tariff
should be revised to reflect the removal of initial connection and normal
reconnection charges. UIP 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(1), F.A.C. UIP should be required to charge the approved
miscellaneous services charges until authorized to change them by the
Commission in a subsequent proceeding.
Issue 4:
Should Useppa Islands initial customer deposits be
revised?
Recommendation:
Yes. The appropriate initial customer deposits are $150
for the residential 5/8 inch x 3/4 inch meter size for water, and $228 for
wastewater. The initial customer deposits for all other residential meter sizes
and all general service meter sizes for water and wastewater should be two
times the average estimated bill. The approved initial customer deposits should
be effective for service rendered on or after the stamped approval date on the
tariff pursuant to Rule 25-30.475, F.A.C. UIP should be required to collect the
approved deposits until authorized to change them by the Commission in a
subsequent proceeding. (Chambliss)
Staff Analysis:
The Utility currently charges initial customer deposits of $100 for
the 5/8 inch x 3/4 inch meter size, and a specific dollar amount for all other
residential and general services meter sizes, which are not equal to two times
an average monthly bill. Rule 25-30.311, F.A.C., contains criteria for
collecting, administering, and refunding customer deposits. Rule 25-30.311(1),
F.A.C., requires that each companys tariff shall contain its specific criteria
for determining the amount of initial deposits.
Rule 25-30.311(7), F.A.C., authorizes utilities to collect
new or additional deposits from existing customers not to exceed an amount
equal to the average actual charge for water and/or wastewater service for two
billing periods for the 12-month period immediately prior to the date of
notice. The two billing periods reflect the lag time between the customers
usage and the Utilitys collection of the revenues associated with that usage.
Commission practice has been to set initial customer deposits equal to two
months bills based on the average consumption for a 12-month period for each
class of customers. The Utility provided average consumption of 5,180 gallons
for residential water. Based on average residential usage, staff determined the
average residential monthly bill is approximately $75 for water service and
$114 for wastewater service.
Based on the above,
the appropriate initial customer deposits are $150 for the residential
5/8 inch x 3/4 inch meter size for water and $228 for wastewater. The initial
customer deposit for all other residential meter sizes and all general service
meter sizes for water and wastewater should be two times the average estimated
bill. The approved initial customer deposits should be effective for service
rendered on or after the stamped approval date on the tariff pursuant to Rule
25-30.475, F.A.C. UIP should be required to collect the approved deposits until
authorized to change them by the Commission in a subsequent proceeding.
Issue 5:
Should this docket be closed?
Recommendation:
Yes. If no protest to the proposed agency action is
filed by a substantially affected person within 21 days of the date of the
issuance of the Order, a Consummating Order should be issued and the docket
should be closed administratively upon Commission staffs verification that the
revised tariff sheets have been filed, that proof has been provided that
appropriate noticing has been done pursuant to Rule 25-30.475, F.A.C., the
Buyer has notified the Commission in writing that it has adjusted its books in
accordance with the Commissions decision, and that the Buyer has submitted a
copy of its application for permit transfer to the DEP. (Bloom)
Staff Analysis:
If no protest to the proposed agency action is filed
by a substantially affected person within 21 days of the date of the issuance
of the Order, a Consummating Order should be issued and the docket should be
closed administratively upon Commission staffs verification that the revised
tariff sheets have been filed, that proof has been provided that appropriate
noticing has been done pursuant to Rule 25-30.475, F.A.C., the Buyer has
notified the Commission in writing that it has adjusted its books in accordance
with the Commissions decision, and that the Buyer has submitted a copy of its
application for permit transfer to the DEP.
