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DATE: |
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TO: |
Office of Commission Clerk (Cole) |
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FROM: |
Division of Economic Regulation (Fletcher, Bulecza-Banks, Rendell) Office of the General Counsel (Fleming) |
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RE: |
Docket No. 060260-WS – Application for increase in water and wastewater rates in Highlands County by Lake Placid Utilities, Inc. |
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AGENDA: |
06/05/07 – Regular Agenda –Parties May Participate |
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COMMISSIONERS ASSIGNED: |
All Commissioners |
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PREHEARING OFFICER: |
Administrative |
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12/24/07 (8-Month Effective Date) |
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SPECIAL INSTRUCTIONS: |
Place next to Dockets Nos. 060256-SU, 060258-WS, and 060261-WS |
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FILE NAME AND LOCATION: |
S:\PSC\ECR\WP\060260.RCM.DOC |
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Lake Placid Utilities, Inc. (Lake Placid or utility), is a Class C utility providing water and wastewater service to approximately 125 water and 194 wastewater customers in Highlands County. According to its 2005 annual report, Lake Placid reported revenues of $45,173 and $70,362 for water and wastewater, respectively. Lake Placid reported a net operating income of $29,387 for water and a net operating loss of $14,944 for wastewater. Water and wastewater rates were last established for this utility in its 1995 rate proceeding.[1]
On May 15, 2006, Lake Placid filed its application for approval of a final and interim rate increase in this docket and requested that the application be processed using the Proposed Agency Action (PAA) procedure. In its filing, the utility requested an annual interim revenue increase of $49,376 or 70.12% for wastewater only. By Order No. PSC-06-0662-FOF-WS, issued August 7, 2006, the Commission denied Lake Placid’s request for a wastewater interim revenue increase.
By Order No. PSC-07-0287-PAA-WS (“PAA Order”), issued April 3, 2007, the Commission approved rates that were designed to generate a water revenue requirement of $56,579 and a wastewater revenue requirement of $90,637.
On April 24, 2007, the Office of Public Counsel (OPC) timely filed a protest of the PAA Order. On May 4, 2007, Lake Placid and OPC (collectively, “Parties”) filed a Joint Motion Requesting Commission Approval of Settlement Agreement (Joint Motion). That motion and settlement agreement are incorporated in this recommendation as Attachment A.
This recommendation addresses the Parties’ Settlement Agreement. The Commission has jurisdiction pursuant to Section 367.081 and 367.121, Florida Statutes.
Issue 1:
Should the Commission approve the Joint Motion Requesting Commission Approval of Settlement Agreement?
Recommendation:
Yes. The Joint Motion and Settlement Agreement should be approved. The utility should file a proposed customer notice and revised tariff sheets within 15 days of the Commission vote, which is consistent with the Commission’s decision. The approved rates should be effective for service rendered on or after the stamped approval date of the tariff pursuant to Rule 25-30.475(1), Florida Administrative Code, after staff has verified that the proposed customer notice is adequate and the notice has been provided to the customers. The utility should provide proof that the customers have received notice within 10 days after the date of the notice. (Fletcher, Fleming)
Staff Analysis:
In the Settlement Agreement, the Parties have agreed that the PAA Order should be amended to eliminate the language relating to the determination of the used and usefulness of Lake Placid’s water treatment plant, in order for the PAA Order to have no precedential value as to determining the used and usefulness of the water treatment plant. The Commission has previously approved a proposed settlement where the language regarding a used and useful calculation was stricken from a proposed agency action order.[2] Staff agrees that the language of the PAA Order which the Parties seek to strike can be stricken because each rate case is decided on its own merits.
Notwithstanding the above amendment, the Parties have stipulated to the water and wastewater revenue requirements set forth in the PAA Order. Further, the Parties agree that the stipulated revenue requirement shall in no way limit or estop either party from espousing whatever positions either deems appropriate for each and every issue in any subsequent proceeding.
Staff believes that the Parties’ Settlement Agreement is a reasonable resolution because it addresses all protested issues. Further, staff believes that it is in the public interest for the Commission to approve the Settlement Agreement because it promotes administrative efficiency and avoids the time and expense of a hearing. In keeping with the Commission’s long-standing practice of encouraging parties to settle contested proceedings whenever possible,[3] staff recommends that the Commission approve the Parties’ Settlement Agreement.
The utility should file a proposed customer notice and revised tariff sheets within 15 days of the Commission vote, which is consistent with the Commission’s decision. The approved rates should be effective for service rendered on or after the stamped approval date of the tariff pursuant to Rule 25-30.475(1), Florida Administrative Code, after staff has verified that the proposed customer notice is adequate and the notice has been provided to the customers. The utility should provide proof that the customers have received notice within 10 days after the date of the notice.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If the Commission approves staff’s recommendation in Issue 1, this docket should be closed upon the issuance of the final order approving the Parties’ Settlement Agreement. (Fletcher, Fleming)
Staff Analysis:
If the Commission approves staff’s recommendation in Issue 1, this docket should be closed upon the issuance of the final order approving the Parties’ Settlement Agreement.
ATTACHMENT A, PAGE 1 OF 5
ATTACHMENT A, PAGE 2 OF 5
ATTACHMENT A, PAGE 3 OF 5
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ATTACHMENT A, PAGE 5 OF 5
