DATE:	November 30, 2004
TO:	Director, Division of the Commission Clerk & Administrative Services (Bayó)
FROM:	Division of Economic Regulation (Redemann, Clapp) Office of the General Counsel (Gervasi)
RE:	Docket No. 981079-SU – Application for amendment of Certificate No. 104-S to extend service territory in Pasco County by Hudson Utilities, Inc., and request for limited proceeding.   Docket No. 041207-SU – Application for amendment of Certificate No. 104-S to delete territory in Pasco County by Hudson Utilities, Inc. County: Pasco
AGENDA:	12/07/04 – Regular Agenda – Interested Persons May Participate
CRITICAL DATES:		None
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\GCL\WP\041207.RCM.DOC

 

Case Background

            Hudson Utilities, Inc. (Hudson or utility) is a Class B utility serving approximately 2,300 residential and 115 commercial customers.  The utility provides wastewater collection service to its customers and purchases wastewater treatment service from Pasco County (County) pursuant to a Bulk Wastewater Treatment Agreement.  The majority of Hudson’s service territory is located in an area federally designated as a flood plain area, which is unsuitable for the efficient use of septic tanks and drain fields.  The County comprehensive land use plan requires that coastal areas, including Hudson’s service territory, shall be provided with sanitary sewer collection and treatment systems.  The Environmental Administrator for the Pasco County Health Department advises that the Health Department favors the abandonment of septic tanks and the connection to central wastewater service when it is available.

 

            On August 26, 1998, Hudson filed an application for amendment of Certificate No. 104-S to extend its service area.  The application included a request to serve a portion of territory known as the Signal Cove subdivision, which was being served by the County, as well as a request to serve an area comprising approximately four to five square miles of unserved territory.  Part of that unserved territory is called Sea Pines.  The Sea Pines area is adjacent to the Sea Pines, Sea Pines (Ironwood), and Viva Villas subdivisions, which are served by the County.  Docket No. 981079-SU was opened to process the application.

 

            By Order No. PSC-99-1916-PAA-SU, issued September 27, 1999, which was made final and effective by Order No. PSC-99-2082-CO-SU, issued on October 21, 1999, the Commission approved Hudson’s application to amend its certificate, including the transfer of the Signal Cove territory from the County to Hudson, and the amendment to include the formerly unserved Sea Pines area.  By that order, Hudson was required to file proof of the transfer of the Signal Cove territory within three months. An Addendum Agreement for Bulk Wastewater Services for the Signal Cove Subdivision by and between Hudson and the County dated April 28, 1998, provided for the transfer of the Signal Cove territory when Hudson connected its force main to the County’s wastewater collection system.  Since that time, Hudson requested and the Commission granted five extensions of time for Hudson to file proof of the transfer of the Signal Cove territory from the County to Hudson.[1]

 

            On March 19, 2002, Hudson filed an application for an increase of service availability charges to increase its system capacity charge from $1,000 to $2,400, in order to recover the costs of extending its collection lines to serve the Signal Cove territory and additional areas north of Signal Cove.[2]  By Order No. PSC-02-1626-PAA-SU, issued November 25, 2002, in Dockets Nos. 981079-SU, 020253-SU[3], and 020254-SU, the Commission approved Hudson’s application for increased service availability charges, which action became final by Order No. PSC-02-1818-CO-SU, issued December 20, 2002. The Commission ordered the utility to complete construction to the Signal Cove area by June 30, 2003, and to submit quarterly progress reports in Docket No. 020254-SU.  Finally, the Commission ordered Hudson to file, in Docket No. 981079-SU, proof of the transfer of territory from the County to Hudson by June 30, 2003.  The Commission put the utility on notice that failure to meet the June 30, 2003, deadline would result in the immediate initiation of show cause proceedings.

 

            By Order No. PSC-03-0889-PCO-SU, upon finding that Hudson had apparently secured the financing necessary to complete the Signal Cove project, the Commission declined to initiate show cause proceedings and granted Hudson’s fifth and last request for extension of time to file proof of the transfer of territory, with the clarification that any potential additional extensions of time would be available to accommodate unavoidable construction delays due to force majeure only.

 

            On April 21, 2004, Hudson filed a Notice of Completion of Signal Cove Service Territory and Proof of the Transfer of Territory from Pasco County to Hudson Utilities, Inc. (Notice). By Order No. PSC-04-0708-PCO-SU, issued July 20, 2004, the Commission acknowledged the Notice and closed Docket No. 020254-SU (the service availability docket).

 

            Also by Order No. PSC-04-0708-PCO-SU, the Commission kept Docket No. 981079-SU open to process a Citizens’ Motion to Initiate a Show Cause Proceeding Against Hudson Utilities, Inc. (Motion), filed by OPC on May 25, 2004.  In the Motion, OPC alleged that Hudson has failed to serve its customers residing in the Sea Pines community within a reasonable time. The Commission ordered Hudson to provide information relative to the Motion within 30 days, and directed that the Motion would be addressed as soon as plausible thereafter.  Hudson timely filed its Response in Opposition to the Motion on August 19, 2004.

 

            A recommendation to grant the Motion was deferred from the September 21, 2004, agenda conference because on that same date, Hudson and OPC entered into a Settlement Agreement whereby Hudson agreed to the Commission’s removal of the Sea Pines area from its service territory and the parties agreed that upon removal of the Sea Pines area from Hudson’s service territory, OPC’s Motion would be resolved, the show cause proceeding would not be opened, and Docket No. 981079-SU would be closed. The Settlement Agreement was filed in Docket No. 981079-SU on November 1, 2004.  On October 13, 2004, Hudson filed an amendment application to delete the Sea Pines area from its certificate of authorization.  Docket No. 041207-SU was established to process the application.  This recommendation addresses the Settlement Agreement and the application for deletion of territory.  The Commission has jurisdiction pursuant to Sections 367.045, Florida Statutes.

           

Discussion of Issues

Issue 1:  Should the Commission approve the Settlement Agreement entered into between the Office of Public Counsel and Hudson Utilities, Inc.?

Recommendation:  Yes, provided the Commission approves Hudson’s application for deletion of the Sea Pines territory from its certificate of authorization, which is the subject of Issue 2 of this recommendation, staff recommends that the Settlement Agreement should be approved in its entirety.  (Gervasi)

Staff Analysis:  In the Settlement Agreement, Hudson and OPC (the parties) state that Hudson has informed OPC that it has determined that it is not economically feasible for Hudson to serve the Sea Pines area at this time.  The parties further state that they want to resolve their differences with regard to OPC’s Motion so as to avoid the time and expense of a show cause proceeding, and any subsequent proceeding that might be established to consider removal of this area from Hudson’s service territory and to enable wastewater service to be provided to this area as quickly as possible.

            The Settlement Agreement provides that Hudson agrees to the Commission’s removal of the Sea Pines area from its service territory, which deletion will include five named streets.  As a result of the removal of these five streets from Hudson’s service territory, they will join the other streets in Sea Pines to be served directly by the County.  Moreover, the Settlement Agreement  provides that upon removal of the Sea Pines area from Hudson’s service territory, OPC’s Motion shall be resolved, the show cause proceeding shall not be opened, and Docket No. 981079-SU shall be closed.  Further, the Settlement Agreement provides that if it is not accepted and approved without modification by Commission order, then it is rejected and shall be considered null and void.  By its terms, the Settlement Agreement will become effective on the date the Commission enters a final order approving it in total. Upon the Commission issuing a final order approving the Settlement Agreement, OPC’s Motion shall be deemed to be resolved.  A copy of the Settlement Agreement is appended to this recommendation as Attachment A.

            On November 19, 2004, Hudson filed, among other things, a copy of a letter from the County to staff counsel, dated November 18, 2004, which states that because the County provides retail wastewater service to adjacent portions of the Sea Pines Subdivision, it would be in the public’s best interest for it to serve the area once Hudson no longer has the authority to serve.  The County further states that should the Commission approve the deletion, the County will work with the community to develop an acceptable solution to complete the project construction, and that any implementation plan for extension of sewers to Sea Pines must be approved by the Board of County Commissioners. A copy of the County’s letter is appended to this recommendation as Attachment B.

            It appears to staff that the Settlement Agreement is a reasonable resolution to this matter and will result in the customers of Sea Pines receiving the wastewater service that they need.  Therefore, provided the Commission approves Hudson’s application for deletion of the Sea Pines territory from its certificate of authorization, which is the subject of Issue 2 of this recommendation, staff recommends that the Settlement Agreement should be approved in its entirety.      
Issue 2:  Should the Commission approve Hudson Utilities, Inc.’s application to amend Certificate No. 104-S to delete the Sea Pines territory?

Recommendation:  Yes, the Commission should approve Hudson Utilities, Inc.’s amendment application to delete the Sea Pines territory.  The proposed territory amendment is described in Attachment C.  (Redemann, Clapp)

Staff Analysis:  On October 13, 2004, Hudson applied for an amendment to Wastewater Certificate No. 104-S in Pasco County, Florida, pursuant to Rule 25-30.036(3), Florida Administrative Code, to delete the Sea Pines territory.

 

            The application is in compliance with the governing statute, Section 367.045, Florida Statutes, and other pertinent statutes and administrative rules concerning an application for amendment of certificate.  The application contained a check in the amount of $500, which is the correct filing fee pursuant to Rule 25-30.020, Florida Administrative Code.  Hudson obtains bulk wastewater service from Pasco County and does not own any land.

            Adequate service territory and system maps and a territory description have been provided as prescribed by Rule 25-30.036(3) (e), (f) and (i), Florida Administrative Code.  A description of the territory requested by the utility is appended to this recommendation as Attachment C.  The utility has submitted an affidavit consistent with Section 367.045(2)(d), Florida Statutes, that it has tariffs and annual reports on file with the Commission. 

            In addition, the application contains proof of compliance with the noticing provisions set forth in Rule 25-30.030, Florida Administrative Code.  No objections to the application have been received and the time for filing such has expired.  The local planning agency was provided notice of the application and did not file a protest to the amendment.  The Department of Community Affairs does not object to the proposed deletion of wastewater service to the affected service area.  The utility states that the provision of service will be consistent with the utility section of the local comprehensive plan.

            Staff has contacted the Department of Environmental Protection and learned that there are no outstanding notices of violation issued for Hudson’s wastewater system.  The utility has filed revised tariff sheets removing the deleted territory from its tariff and returned its certificate for entry reflecting the deleted territory.  Pasco County intends to serve the area.

 

            Regarding financial impact, the deletion is not expected to impact Hudson’s monthly rates and service availability charges.

            Based on the above information, staff recommends that Hudson Utilities, Inc.’s amendment application to delete the Sea Pines territory should be granted.  The proposed territory amendment is described in Attachment C.

Issue 3:  Should Docket Nos. 981079-SU and 041207-SU be closed?

Recommendation:  Yes, because no further action is necessary, the dockets should be closed.  (Gervasi)

Staff Analysis:  Because no further action is necessary, the dockets should be closed.

Attachment C

Hudson Utilities, Inc.

Pasco County Wastewater Service Area

The Sea Pines Subdivision

Wastewater Territory to be Deleted:

 

Township 24 South, Range 16 East

 

Section 14

 

LESS the following described portion thereof:  Commence at the southwest corner of said Section 14; Thence run north, along the west line of said Section 14, 30 feet to the center line of Old Dixie Highway; Thence run North 40 degrees east along the center line of Old Dixie Highway 670 feet; Thence run North 32 degrees East along the center line of Old Dixie Highway 780 feet to the POINT OF BEGINNING; Thence continue North 32 degrees East along the centerline of Old Dixie Highway 380 feet; Thence run East 1,638 feet; Thence run South, 1,520 feet to the South line of Section 14; Thence run West along the south line of Section 14, 790 feet; Thence run North 120 feet; Thence run East 500 feet; Thence run North, 1,075 feet; Thence run West 1,566 feet to the POINT OF BEGINNING.

 

Section 22

 

LESS the following described portions thereof:  Commence at the Northeast corner of said Section 22; Thence run South along the East Section line, 945 feet the POINT OF BEGINNING; Thence continue South along East line of said Section, 300 feet;  Thence run West 970 feet; Thence run South 47 degrees West Parallel to centerline of Old Dixie Highway, 530 feet; Thence run West 2,460 feet; Thence run North, 600 feet to a point in the Canal; Thence run East along centerline of Canal, 2,850 feet to the centerline of Old Dixie Highway; Thence run North 47 degrees along the centerline of Old Dixie Highway, 80 feet; Thence run East 949 feet to the POINT OF BEGINNING.

 

Section 23

 

LESS the following described portion thereof:  Commence at the Northwest corner of said Section 23; Thence run East along the North line of said Section 23, 1,910 feet to the POINT OF BEGINNING; Thence run East along North line of said Section 23, 790 feet; Thence run south, 1,640 feet; Thence run South 28 degrees East, 60 feet to the West Right-of-Way line of U.S. Hwy. 19; Thence run Southwest along West Right-of-Way line of U.S. Hwy 19, 325 feet; Thence run North 28 degrees West, 250 feet; Thence run North, 375 feet; Thence run West, 165 feet; Thence run North 64 degrees West, 280 feet; Thence run West 1,960 feet to a point on West line of said Section; Thence run North, 300 feet; Thence run East, 1,910 feet; Then run North 945 feet to the POINT OF BEGINNING.