WARNING:
Changes in appearance and in display of formulas, tables, and text may have occurred during translation of this document into an electronic medium. This HTML document may not be an accurate version of the official document and should not be relied on.
For an official paper copy, contact the Florida Public Service Commission at contact@psc.state.fl.us or call (850) 413-6770. There may be a charge for the copy.
State of Florida
Public Service Commission
Capital Circle Office Center 2540 Shumard Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
|
DATE:
|
September 21, 2006
|
|
TO:
|
Director, Division of the Commission Clerk &
Administrative Services (Bayó)
|
|
FROM:
|
Office of the General Counsel (Fleming,
Brubaker)
Division of Economic
Regulation (Clapp, Rieger, Romig)
|
|
RE:
|
Docket No. 030458-WU – Application for
transfer of majority organizational control of Holiday Utility Company, Inc.
in Pasco County to Holiday Waterworks Corporation, and amendment of
Certificate No. 224-W.
|
|
AGENDA:
|
10/03/06
– Regular Agenda – Motion to Dismiss - Oral argument
has not been requested for Issue 1, but may be heard at the Commission’s
discretion.
|
|
COMMISSIONERS
ASSIGNED:
|
Arriaga, Carter, Tew
|
|
PREHEARING
OFFICER:
|
Tew
|
|
CRITICAL DATES:
|
None
|
|
SPECIAL
INSTRUCTIONS:
|
None
|
|
FILE NAME AND LOCATION:
|
S:\PSC\GCL\WP\030458.RCM.DOC
|
|
|
|
|
Case Background
On May
23, 2003, Holiday
Utility Company, Inc. (Holiday or utility) filed an Application for
Transfer of Majority Organizational Control (TMOC). On March 16, 2004, Holiday
filed an Amended and Restated Application for Transfer of Majority
Organizational Control and Amendment of Certificate No. 224-W to add territory
in Pasco County (County).
Pasco County filed a timely objection to Holiday’s restated application for amendment but
did not object to the TMOC transfer. As
a result, the certification process was bifurcated and the TMOC was approved by
Order No. PSC-06-0380-FOF-WU, issued May
8, 2006. The amendment portion of the application is
currently scheduled for an evidentiary hearing on January 17, 2007.
In Order No. 6780, issued July
17, 1975, in
Docket No. 73489-W, In re: Application of Holiday Utility Company for a
Certificate to operate a water system in Pasco County, Florida, the
Commission granted Holiday certificate No. 224-W to serve only the northeast
and southwest parcels of the requested territory. However, when the tariff was approved, the territory
description in the tariff reflected more territory than was granted by the
Commission in the Order. Staff believes
the utility is authorized to serve only that territory described in Order No.
6780, as revised by Order No. PSC-06-0380-FOF-WU,
issued May 8, 2006.
The purpose of Holiday’s amendment is to correct deficiencies in
the territory Holiday believed was part of the service territory
it was authorized to serve.
At issue here is Pasco County’s motion to dismiss Holiday’s application filed August
16, 2006. Holiday
responded in opposition to the motion on August 21, 2006.
For the reasons discussed below, staff recommends that Holiday’s amendment application be dismissed.
The Commission
has jurisdiction over this matter pursuant to Section 367.045, Florida
Statutes, as well as Chapters 120 and 367, Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission grant Pasco
County's Motion to Dismiss Holiday
Utility's Amendment Application?
Recommendation:
Holiday’s application for
amendment should be dismissed without prejudice, with leave for Holiday
to refile its application pursuant to the Chapter 367, Florida Statutes, and
the Commission’s rules. (Fleming,
Brubaker)
Staff Analysis:
Standard of Review
A motion to dismiss raises as a question of law the
sufficiency of the facts alleged in a petition to state a cause of action. See Varnes v. Dawkins, 624 So. 2d 349,
350 (Fla. 1st DCA 1993). The standard to
be applied in disposing of a motion to dismiss is whether, with all factual
allegations in the petition taken as true and construed in the light most
favorable to the petitioner, the petition states a cause of action upon which
relief may be granted. See Id.
at 350. In determining the sufficiency
of the petition, the Commission must confine its consideration to the petition
and documents incorporated therein and the grounds asserted in the motion to
dismiss. See Flye v. Jeffords,
106 So. 2d 229 (Fla. 1st DCA 1958); Rule 1.130, Florida
Rules of Civil Procedure.
Pasco
County’s Motion to
Dismiss (Motion)
In its motion, Pasco
County contends that Holiday’s
amendment application should be dismissed because Holiday
failed to prosecute its case, delayed progress towards a final hearing, and
failed to promote the just, speedy, and inexpensive determination of all
aspects of this case.
Pasco County
also argues that the prefiled direct testimony Holiday
filed in April of 2006 failed to meet the petitioner’s burden of proof. For this reason, the prehearing officer
adjusted the prehearing schedule to afford Holiday more
time to file direct testimony to replace the testimony that it had filed in
April, and rescheduled the hearing. In addition, Holiday
failed to meet the revised testimony filing deadline of August 14, 2006, and thus, according
to Pasco County,
Holiday failed to comply with the procedural orders of
this case. Finally, Pasco
County states that Holiday
did not timely respond to the County’s discovery requests served on May 19, 2006, and that Holiday
responded on August 15,
2006, only after the prehearing office granted the County’s motion
to compel and required Holiday to respond by August 15, 2006. According to Pasco
County, Holiday’s
delay in filing testimony and responding to discovery requests has prejudiced the
County and impaired its ability to fully and timely prepare its testimony.
Holiday’s
Response
Holiday denies that it has failed
to prosecute this matter or has delayed this proceeding. Holiday contends that
it has complied with all applicable deadlines and has in no way prejudiced Pasco
County or impaired the County’s
ability to fully and timely prepare its testimony. Holiday claims that
because of the bifurcation of the certificate issues in this docket, staff
believed that the utility’s testimony should be expanded, and for this reason
the testimony filed in April, 2006, was not sufficient. Holiday acknowledges
that its testimony was due on August 14, 2006 pursuant to the Order Modifying Procedural
Order. According to Holiday,
its replacement direct testimony and exhibits were ready for filing on the August
14 due date, but the person delivering the documents arrived at the Commission
Clerk’s office at 5:05 p.m., after
the clerk’s office had closed. Holiday
states that it informed staff and Pasco
County of the delay. Holiday further
states that it provided responses to Pasco
County’s discovery on August 15, 2006, as
required by the prehearing officer.
Analysis and Conclusions
For the reasons discussed below, staff recommends that Holiday’s
application be dismissed without prejudice to file another amendment
application.
On May 23, 2003, Holiday filed its
application for transfer of majority organizational control. When the utility provided notice to its
customers of the TMOC, staff advised the utility that the territory description
in the notice included more territory than the utility was authorized to
serve. Holiday
filed an amended and restated application for TMOC and amendment of certificate
on March 16, 2004, in which
the utility sought to amend its certificate to add the territory that the utility
believed was part of the service territory it was authorized to serve. Pasco
County filed an objection with the
Commission on June 15, 2004,
after which Holiday asked for time to negotiate a
settlement with the County. Over a year after
the objection was filed, on July
19, 2005, staff sent Holiday a letter
requesting a status report on the negotiations.
Staff also requested Holiday to file a second amended
application by August 22, 2005
because of deficiencies in the first amended application, if no settlement had
been reached. Holiday
failed to meet the deadline established by staff. Instead, on September 15, 2005, Holiday
filed a letter advising the Commission that Holiday and Pasco
County were unable to reach an
agreement concerning the service areas.
The letter also included a modified legal description of the amended service
area sought by Holiday, including the area to be deleted
from the utility’s approved service territory.
After Holiday’s second amended application was
filed, numerous discussions ensued, including bifurcation of the TMOC portion
of this proceeding since the County did not object to the TMOC transfer. On December 15, 2005, staff confirmed with both parties that
neither would object to bifurcation and an evidentiary hearing was set for the
amendment portion on July 26-27, 2006,
with the utility’s direct testimony due on April 10, 2006.
Although the utility filed its testimony on the due date, the testimony
was deficient because, among other things, it failed to provide the territory
description of the additional territory it sought to serve. Because of the deficiency, the parties agreed
to reschedule the hearing and establish new controlling dates.
By Order No. PSC-06-0483-PCO-WU,
issued on May 25, 2006,
a new hearing date was set for January
17-18, 2007, and Holiday was required to prefile
its direct testimony and exhibits by August 14, 2006. Holiday
argues that it missed the revised testimony deadline by only five minutes. In actuality, however, Holiday
attempted to file its testimony at 5:05 p.m.
one day later, on August 15, and thus the testimony was not deemed filed with
the clerk until August 16,
2006, two days after the due date.
Further, Holiday did not request that it be
allowed to file its testimony late, as required by Rule 28-106.204(5), Florida
Administrative Code. Thus, Holiday
failed to timely file its prefiled testimony due on August 14, 2006.
Holiday also failed to timely
respond to the discovery requests propounded by Pasco
County. Holiday states that it
provided responses to Pasco County’s
interrogatories and document requests on August 15, 2006. However, these responses should have been
served by June 23, 2006. Holiday was nonresponsive
to the County’s requests to obtain discovery until the Prehearing Officer
granted the County’s motion to compel and stated: “Holiday is cautioned
that it is expected to familiarize itself and comply with the requirements of
Order No. PSC-06-0198-PCO-WU, and this
Commission’s rules and statutes. To the
extent Holiday needs assistance with the Commission’s
procedures, it should avail itself of the opportunity to contact the Commission
staff attorney assigned to this docket.”
In addition to its failure to timely file testimony or
discovery responses, the utility failed to make a prima facie showing in its
prefiled direct testimony that it is entitled to an amendment of territory. The utility has not met its burden of proof. Holiday failed to
specify with particularity the additional territory it seeks to serve through
its amendment application. The legal
description includes no new territory – it contains only that territory the
utility is currently authorized to serve.
Section 367.045(5)(a), Florida Statutes, provides that the Commission
“may not grant authority greater than that requested in the application or
amendment thereto.” Also, the prefiled
testimony is irrelevant and misleading. For
example, Holiday’s witness Deremer described land
owners’ agreements to receive water service in his prefiled testimony, and
included them in his Exhibit GD-3. Exhibit
GD-3 is made of up two agreements: one
for the Estate of Bartley L. Mickler (Mickler) and one for Gulfwinds, LLP
(Gulfwinds). The portion of territory designated
for Gulfwinds, however, was deleted from Holiday’s
service area by Order No. PSC-06-0380-FOF-WU,
issued on May 8, 2006,
and is now being served by Pasco County. Since Gulfwinds no longer exists as a
potential customer for Holiday, this portion of exhibit
GD-3 is irrelevant and misleading.
Finally, staff is not able to determine with specificity the territory Holiday
is seeking to amend because the prefiled testimony identifies exhibits that were
not filed, contains duplicative information, or information relating to the
transfer application that was previously approved by Order No. PSC-06-0380-FOF-WU.
Pursuant to the Order Establishing Procedure issued in
this docket, “[f]ailure of a party to timely prefile exhibits and testimony
from any witness . . . may bar admission of such exhibits and testimony.” Even though the utility has had ample
opportunity to timely prefile relevant and accurate testimony, it has failed to
do so. Further, the utility has a
history in this docket of not meeting required deadlines and failing to file
accurate or sufficient information. Staff
believes that Holiday’s conduct throughout this
proceeding, especially its failure to timely file relevant and accurate direct
testimony cannot be described as mere neglect or inadvertence. Staff took a number of extraordinary steps to
give the utility, who is represented by counsel, the necessary information and
additional opportunities to rectify the deficiencies in its prefiled direct
testimony. Holiday
was cautioned that it was expected to familiarize itself and comply with the
requirements of the Order Establishing Procedure along with Chapter 367,
Florida Statutes, and the Commission’s rules.
Holiday’s persistent inability to meet the Commission’s
requirement to amend its territory can only be ascribed as a complete disregard
of Chapter 367, Florida Statutes, and the Commission’s rules.
Accordingly, staff recommends that Holiday’s
amendment application be dismissed without prejudice because of the utility's
failure to meet its prima facie burden of proof and its inability to comply
with the amendment requirements, with leave for the utility to refile its
application pursuant to Chapter 367 and the Commission’s rules. Staff’s recommendation is consistent with
other proceedings dismissed by the Commission due to a party’s failure to meet
its burden of proof and comply with the Commission’s requirements.
Issue 2:
Should the Commission require Holiday
to file an amendment application to include an area currently being served
outside of its existing certificated territory?
Recommendation:
Yes. Holiday
should be required to file in a separate docket, within thirty days of the date
of the Commission vote, an amendment application pursuant to Rule 25-30.036,
Florida Administrative Code, for the uncertificated territory it is currently
serving. The current docket should
remain open until the amendment application has been filed and a new docket
established. (Fleming, Brubaker, Rieger)
Staff Analysis:
In August 1973, Holiday filed
an application to provide water service in Pasco
County. In Order No. 6780, the Commission granted Holiday
certificate No. 224-W to serve only the northeast and southwest parcels of the
requested territory. However, when the
tariff was approved, the territory description in the tariff reflected more
territory than was granted by the Commission in Order No. 6780. On May
23, 2003, Holiday
filed an application for transfer of majority organizational control. When the application was noticed, staff
advised the utility that the territory noticed in the transfer included more
territory than the utility was authorized to serve. At that time, Holiday informed
staff that it was not aware that the Commission had not approved all of the
territory requested in 1973 and that it was currently serving a Pasco
County public school that was
outside its certificated area.
When it approved the TMOC transfer, the Commission
recognized that the utility failed to obtain Commission approval for serving a
school located outside its certificated service area. Although it was in apparent violation of
Section 367.045(2), Florida Statutes, the Commission found that circumstances
mitigated the utility’s apparent violation:
. . . The customer that Holiday
is serving outside of its territory is adjacent to Holiday’s
service area. When the school was
connected 15 years ago, Holiday believed the school was
within its service area due to the school’s location and Holiday’s
tariff; however, based on Commission Order No. 6780, that area is not part of Holiday’s
certificated service area. Believing
that the school was located within its service area, Holiday
has paid all the necessary regulatory assessment fees for the additional
area. Furthermore, upon becoming aware
that the school was not located within its certificated territory, Holiday
filed an application for amendment of its certificate to include the additional
area.
Order No. PSC-06-0380-FOF-WU,
issued on May 8, 2006,
at p. 3. The Commission found that a
show cause proceeding against Holiday for failing to
obtain an amended certificate of authorization prior to serving outside of its
certificated territory was not warranted.
At the time Order No. PSC-06-0380-FOF-WU
was issued, it appeared that the problem of the utility serving outside its
territory would be resolved through the amendment portion of this bifurcated
docket.
If Issue 1 to this recommendation is approved, there is no
guarantee that the utility will voluntarily file an amendment application to
address the school it is currently serving outside its authorized
territory. Therefore, staff recommends
that Holiday be required to file in a separate docket, within
thirty days of the date of the Commission vote, an amendment application pursuant
to Rule 25-30.036, Florida Administrative Code, for the uncertificated
territory it is currently serving. The
current docket should remain open until the amendment application has been
filed and a new docket established.
Issue 3:
Should this docket be closed?
Recommendation:
No. This
docket should remain open until the amendment application referred to in Issue
2 has been filed and a new docket established.
After the amendment application has been filed, this docket may be
closed administratively. (Fleming,
Brubaker)
Staff Analysis:
This docket should remain open until the amendment
application referred to in Issue 2 has been filed and a new docket
established. After the amendment
application has been filed, this docket may be closed administratively.