DATE:	October 11, 2007
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Economic Regulation (Revell, Rendell, Bulecza-Banks) Office of the General Counsel (Fleming)
RE:	Docket No. 060257-WS – Application for increase in water and wastewater rates in Polk County by Cypress Lakes Utilities, Inc.
AGENDA:	10/23/07 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED:		All Commissioners
PREHEARING OFFICER:		Argenziano
CRITICAL DATES:		11/26/07 (8-Month Effective Date)
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\ECR\WP\060257.RCM.DOC

 

 Case Background

Cypress Lakes Utilities, Inc. (Cypress Lakes or Utility) is a Class B utility providing water and wastewater service to approximately 1,287 residential and 43 general service customers in Polk County.  Pursuant to Proposed Agency Action (PAA) Order No. PSC-07-0199-PAA-WS,[1] the Commission approved increased rates and charges, resulting in annual revenue increases of $42,874 for water and $143,167 for wastewater.  On March 26, 2007, Cypress Lakes Associates, Ltd. (CLA), a developer, filed a timely protest of the proposed service availability charges authorized in Order No. PSC-07-0199-PAA-WS.  On April 6, 2007, the Office of Public Counsel (OPC) filed a cross-protest.

 

By Order No. PSC-07-0454-PCO-WS,^[2] the Commission acknowledged Cypress Lakes’ implementation of the PAA rates pursuant to Section 367.081(8), F.S. and required the Utility to obtain either a surety bond or escrow agreement to guarantee the funds collected subject to refund.  By Order No. PSC-07-0607-PCO-WS[3], the Commission modified Order No. PSC-07-0454-PCO-WS to allow the utility to secure its PAA rates subject to refund with a corporate undertaking.

 

On September 24, 2007, CLA, OPC and the Utility (collectively, “Parties”), filed a Motion To Approve Settlement Agreement.  That motion and settlement agreement are included 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.

 

 

 

Discussion of Issues

Issue 1: 

 Should the Commission approve the Motion To Approve Settlement Agreement?

Recommendation: 

 Yes.  The Motion To Approve Settlement Agreement should be approved.  Additionally, the PAA rates previously implemented by Cypress Lakes should be considered final.  The utility should file a proposed customer notice and revised tariff sheets reflecting the appropriate service availability charges which are consistent with the Commission’s decision within 30 days of the Final Order.  The approved plant capacity charges should be effective for connections made on or after the stamped approval date of the tariff pursuant to Rule 25-30.475(1), Florida Administrative Code, if 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.  The customer notice should be mailed to all persons in the service area who have filed a written request for service or who have been provided a written estimate for service within the prior 12 calendar months from the effective date of the Order.  (Revell, Fleming)

Staff Analysis: 

  In the Settlement Agreement, the parties have agreed that the PAA Order should be amended to require plant capacity charges of $750 and $1,275 for water and wastewater, respectively, per residential connection.  Additionally, all water distribution and wastewater collection plant in service needed to serve future customers must be fully contributed to the utility. 

The parties have also agreed that CLA should be credited with having satisfied its obligation to fully contribute the water distribution and wastewater collection plant in service associated with the remaining 93 lots in Cypress Lakes’ existing service territory and the additional 120 lots located in Phase 12.  Also, CLA should be credited with having previously paid $920 per lot of the $1,275 per lot wastewater capacity charge for the 213 lots (120 + 93).  As a result, CLA will be required to pay the $750 per lot water capacity charge and $355 ($1,275-$920) per lot of the wastewater plant capacity charge.

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,[4] staff recommends that the Commission approve the parties’ Joint Motion and Settlement Agreement.

As stated previously, by Order No. PSC-07-0454-PCO-WS,^[5] the Commission acknowledged Cypress Lakes’ implementation of the PAA rates pursuant to Section 367.081(8), F.S.  With the approval of the Parties’ Settlement Agreement, the PAA rates previously implemented by Cypress Lakes should be considered final.

The utility should file a proposed customer notice and revised tariff sheets reflecting the appropriate service availability charges which is consistent with the Commission’s decision within 30 days of the Final Order.  The approved plant capacity charges should be effective for connections made on or after the stamped approval date of the tariff pursuant to Rule 25-30.475(1), Florida Administrative Code, if 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.  The customer notice should be mailed to all persons in the service area who have filed a written request for service or who have been provided a written estimate for service within the prior 12 calendar months from the effective date of the Order.

Issue 2:  Should this  docket be closed?

Recommendation: 

 Yes.  If the Commission approves staff’s recommendation in Issue 1, CLA’s petition and OPC’s cross-petition for hearing shall be deemed withdrawn pursuant to the Settlement Agreement.  Thus, PAA Order No. PSC-07-0199-PAA-WS will become final and the corporate undertaking amounts approved by the Commission for interim and PAA rates should be released.   However, the docket should remain open for staff’s verification that the revised tariff sheets and customer notice have been filed by the utility and approved by staff.  When the the tariff and notice actions are complete, this docket may be closed administratively.  (Fleming, Revell)

Staff Analysis: 

 If the Commission approves staff’s recommendation in Issue 1, CLA’s petition and OPC’s cross-petition for hearing shall be deemed withdrawn pursuant to the Settlement Agreement.  Thus, PAA Order No. PSC-07-0199-PAA-WS will become final and the corporate undertaking amounts approved by the Commission for interim and PAA rates should be released.  However, the docket should remain open for staff’s verification that the revised tariff sheets and customer notice have been filed by the utility and approved by staff.  When the tariff and notice actions are complete, this docket may be closed administratively.