Discussion
of Issues
Issue
1:
Should
the transfer of Certificate Nos. 670-W and 572-S in Polk County from Deer Creek
RV Golf & Country Club, Inc., to CSWR-Florida Utility Operating Company,
LLC be approved?
Recommendation:
Yes.
The transfer of the water and wastewater systems and Certificate Nos. 670-W and
572-S is in the public interest and should be approved effective the date of
the Commission vote. The resultant Order should serve as the Buyers certificate
and should be retained by the Buyer. The Buyer should file copies of its permit
transfer application, and a copy of its signed and executed contract for sale
to the Commission within 60 days of the Order approving the transfer, which is
final agency action. If the sale is not finalized within 60 days of the
transfer Order, the Buyer should file a status update in the docket file. The
Utilitys existing rates and charges, as shown on Schedule No. 3-A and 3-B,
should remain in effect until a change is authorized by the Commission in a
subsequent proceeding. The Utility is current with respect to regulatory
assessment fees (RAFs) and annual reports through December 31, 2025. Based on
the application, the Seller should be responsible for RAFs and annual reports
until Commission approval. The Buyer should be responsible for filing annual
reports and paying RAFs for all future years. (Davis, Fisher,
McClelland)
Staff Analysis:
On May 6, 2026, CSWR-Deer Creek filed an application
for the transfer of Water Certificate No. 670-W and Wastewater Certificate No.
572-S from Deer Creek to CSWR-Deer Creek pursuant to Rule 25-30.037, Florida
Administrative Code (F.A.C.). The application is in compliance with Section
367.071, F.S., and Commission rules concerning applications for transfer of
certificates.
Noticing, Territory, and Land Ownership
CSWR-Deer Creek 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 legal description of the service territory which is appended to this
recommendation as Attachment A. As the Utility's water and wastewater systems
are for distribution and collection only, and service is purchased in bulk from
Polk County Utilities, no standalone treatment plants are owned or operated.
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. CSWR-Deer Creek is not acquiring any non-regulated assets
or operations of the Seller and is not assuming any of the Seller's liabilities
or obligations. There are no known guaranteed revenue contracts or customer
advances of Deer Creek that must be disposed of in regard to the transfer. CSWR-Deer
Creek will review all leases and developer agreements and will assume or
renegotiate those agreements on a case-by-case basis prior to closing. Any
customer deposits will be refunded to customers by the Seller prior to the
closing. According to the purchase and sale agreement, the total purchase price
for the water and wastewater assets is $138,696. According to the Buyer, the
closing has not yet taken place and is dependent on Commission approval of the
transfer. The Buyer should submit the closing date to the Commission within 60
days of the Commissions Order approving the transfer becoming final or an
update on the schedule thereof if the closing has not yet occurred.
Facilities Description and Compliance
The Utility purchases both water and wastewater services
in bulk from Polk County Utilities. The water and wastewater infrastructure
consists strictly of underground water distribution lines and wastewater
collection lines designed to route bulk utilities to and from customer
properties. The water distribution network consists of polyvinyl chloride (PVC)
pipe utilizing 5,430 feet of four-inch PVC pipe, and 10,810 feet of six-inch
PVC pipe to connect directly to the Polk County Utilities master delivery
points. The wastewater collection system consists of two lift stations, 110
manholes, 15,841 feet of eight-inch PVC pipe, and 6,011 feet of ten-inch PVC
pipe that connects directly to Polk County Utilities for bulk wastewater
treatment services. The last sanitary survey of the facility was conducted on
July 22, 2021, by the Florida Department of Environmental Protection (DEP).
There were no deficiencies noted.
Technical and Financial Ability
Pursuant to Rule 25-30.037(2)(l) and (m), F.A.C., the
application contains statements describing the technical and financial ability
of the Buyer to provide service to the proposed service area. As referenced in
the transfer application, the Buyer will fulfill the commitments, obligations,
and representations of the Seller with regards to utility matters. CSWR-Deer
Creeks application states that it owns and operates water and wastewater
systems in Florida, Missouri, Arkansas, Kentucky, Texas, Louisiana,
Tennessee, Mississippi, Arizona, South Carolina, and North Carolina that
currently serve more than 190,000 water and 257,500 wastewater customers. The
Commission has also approved CSWR Utility Operating Company, LLCs purchase of eleven
Florida certificated utilities in prior dockets.
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 CSWR-Deer
Creek, CSWR LLC, provided financial statements for itself and its subsidiaries
including CSWR-Deer Creek, and states that the parent company has the 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
Deer Creeks water
and wastewater rates were last approved in a 2019 staff-assisted rate
case. Subsequently, the rates have been
amended by three price index rate adjustments with the last increase in 2023.
The Utilitys miscellaneous service charges and customer deposits were last
approved in 2018. 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.
Some of the Utilitys existing
miscellaneous service charges, which consists of the violation
reconnection, late payment, meter tampering charges, and non-sufficient funds
charges are appropriate. However, the remaining miscellaneous service charges
do not conform to Rule 25-30.460, F.A.C., and are discussed in Issue 3.
Therefore, staff recommends that the Utilitys existing rates for water and
wastewater, initial customer deposits, and the appropriate miscellaneous
service charges shown on Schedules Nos. 3-A and 3-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
The transfer of the water and wastewater systems and
Certificate Nos. 670-W and 572-S is in the public interest and should be
approved effective the date of the Commission vote. The resultant Order should
serve as the Buyers certificate and should be retained by the Buyer. The Buyer
should submit copies of its permit transfer application, and a copy of its
signed and executed contract for sale to the Commission within 60 days of the
Order approving the transfer, which is final agency action. If the sale is not
finalized within 60 days of the transfer Order, the Buyer should file a status
update in the docket file. The Utilitys existing rates and charges, as shown
on Schedule No. 3-A and 3-B, should remain in effect until a change is
authorized by the Commission in a subsequent proceeding. The Utility is current
with respect to RAFs and annual reports through December 31, 2025. Based on the
application, the Seller should be responsible for RAFs and annual reports until
Commission approval. The Buyer should be responsible for filing annual reports
and paying RAFs for all future years.
Issue
2:
What
is the appropriate Net Book Value for the Deer Creek RV Golf & Country
Club, Inc.s water and wastewater system for transfer purposes?
Recommendation:
The
NBV of the water and wastewater
system for transfer purposes is $68,388 for water and $55,018 for wastewater as
of March 31, 2026. Within 90 days of the date of the Commissions Order
approving the transfer becoming final, CSWR-Deer Creek 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 three years as established in Rule
25-30.0371(2), F.A.C. (Fisher)
Staff Analysis:
Rate base for the water and
wastewater systems were last established for the Utility
as of December 31, 2018, by Order No. PSC-2020-0118-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, CSWR-Deer Creek does reserve the
right to petition for a positive acquisition adjustment within three years of
the approval of the transfer, as provided in Rule 25-30.0371(2),
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 March 31, 2026.
Utility Plant In Service (UPIS)
The Utilitys general ledger reflected
a plant balance of $91,521 for water and $95,949 for wastewater as of March 31,
2026. Audit staff recalculated the plant balances, reviewed UPIS additions and
retirements, and noted no exceptions. As such, staff recommends that the
Utility's water and wastewater UPIS balances as of March 31, 2026, should be
$91,521 and $95,949, respectively.
Land
In Order No. PSC-2020-0118-PAA-WS, it was established
that Deer Creek does not have its own wells, water treatment facilities, or
wastewater treatment facilities. It provides water and wastewater service to
its customers by purchasing bulk water and wastewater treatment service from
Polk County. The audit staff verified that the Utility has no land deeds and
determined that there have been no changes to land since the Utility was
acquired on December 5, 2013. Accordingly, no adjustments are necessary. Staff recommends
that a $0 balance for the land and land rights for water and wastewater is appropriate.
Accumulated Depreciation
The Utilitys
general ledger reflected an accumulated depreciation balance of $24,039 for
water and $44,092 for wastewater. Audit staff noted that the Utility was
reclassified from a Class C to Class B in November 2021, although the Utility
continued to apply Class C depreciation rates. Audit staff recalculated the
accumulated depreciation using the depreciation rates established by Rule
25-30.140(2), F.A.C., for Class B utilities. Audit staff determined accumulated
depreciation due to the reclass for water to be overstated by $906 and
wastewater to be overstated by $3,161. As such, staff recommends an accumulated
depreciation balance of $23,133 for water and $40,931 for wastewater, as of
March 31, 2026.
Contributions-in-Aid-of-Construction (CIAC) and
Accumulated Amortization of CIAC
The Utility does not have any recorded CIAC
or any accumulated amortization of CIAC for water or wastewater. Staff recommends
CIAC and accumulated amortization of CIAC balances of $0 for water and
wastewater, as of March 31, 2026.
Net Book Value
The Utilitys general ledger reflected NBV of $67,482 for
water and $51,857 for wastewater. Based on the adjustments above, staff
recommends that the NBV for the Utilitys water and wastewater systems as of
March 31, 2026, are $68,388 and $55,018, respectively, for a total NBV of
$123,406. Staffs recommended NBV and the National Association of Regulatory
Utility Commissioners, Uniform System of Accounts (NARUC USOA) balances for
UPIS and accumulated depreciation are shown on Schedule Nos. 1 and 2, as of
March 31, 2026.
Acquisition Adjustment
An acquisition adjustment results when the purchase price differs from
the NBV at the time of the acquisition. The Utility and its assets were
purchased for $138,696. As discussed above, staff has determined the
appropriate NBV total to be $123,406 ($68,388 for water and $55,018 for
wastewater). Pursuant to Rule 25-30.0371, F.A.C., a positive acquisition
adjustment may be appropriate when the purchase price is greater than the NBV. The
Buyer is not requesting a positive acquisition adjustment as part of this
transfer docket, but may petition for a positive acquisition adjustment within
the three years as established in Rule 25-30.0371(2), F.A.C. As such, staff
recommends that no positive acquisition adjustment be included at this time.
Conclusion
Based on the above, staff recommends that, for transfer
purposes, the NBV of the Utilitys water system is $68,388, and the NBV of the
wastewater system is $55,018, as of March 31, 2026.
Within 90 days of the date of the Commissions Order approving the transfer becoming
final, 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 positive acquisition adjustment within
the three years as established in Rule 25-30.0371(2), F.A.C.
Issue
3:
What
are the appropriate revisions to miscellaneous service charges for Deer Creek?
Recommendation:
The
appropriate revisions to miscellaneous service charges shown in Table 3-2
should be approved. The tariff should be revised to reflect the removal of
initial connection and normal reconnection charges. CSWR-Deer Creek 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. 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. CSWR-Deer Creek should provide proof of the date notice was given no
less than 10 days after the date of the notice. CSWR-Deer Creek should be
required to charge the approved miscellaneous services charges until authorized
to change them by the Commission in a subsequent proceeding. (Rashawn)
Staff Analysis:
The
Utility did not request to revise its existing miscellaneous service charges. However,
Section 367.121, F.S., authorizes the Commission on its own volition to
establish, increase, or change a rate or charge. As reflected in Table 3-1, the
Utilitys existing miscellaneous service charges consist of initial connection
and normal reconnection charges. However, 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. The normal
reconnection charge is more than the premises visit charge. Since the premises
visit entails a broader range of tasks, staff believes the premises visit
charge should reflect the amount of the normal reconnection charge of $20.50.
Therefore, as reflected in Table 3-2, staff recommends that the initial
connection and normal reconnection charges be removed, the premises visit
charge should be revised to $20.50, and the definition for the premises visit
charge should be updated to comply with Rule 25-30.460, F.A.C.
Table 3-1
Existing Utility Charges
|
|
Water
|
Wastewater
|
|
Initial Connection Charge
|
$11.70
|
$11.70
|
|
Normal Reconnection Charge
|
$20.50
|
$20.50
|
|
Premises Visit Charge
|
$11.70
|
$11.70
|
Table 3-2
Staffs Recommended Charges
|
|
Water
|
Wastewater
|
|
Initial Connection Charge
|
N/A
|
N/A
|
|
Normal Reconnection Charge
|
N/A
|
N/A
|
|
Premises Visit Charge
|
$20.50
|
$20.50
|
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. CSWR-Deer Creek 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. CSWR-Deer Creek 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
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 signed and executed
copy of its contract for sale within 60 days of the Commissions Order
approving the transfer. (Augspurger)
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 signed and
executed copy of its contract for sale within 60 days of the Commissions Order
approving the transfer.
