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DATE: |
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TO: |
Office of Commission Clerk (Cole) |
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FROM: |
Division of Economic Regulation (Deason, Bulecza-Banks, Fletcher, Bruce, Lingo, Stallcup) Office of the General Counsel (Hartman) |
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RE: |
Docket No. 070601-WU – Application for staff-assisted rate case in Pasco County by Orangeland Water Supply. |
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AGENDA: |
09/4/08 – Regular Agenda – Interested Persons May Participate |
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COMMISSIONERS ASSIGNED: |
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PREHEARING OFFICER: |
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SPECIAL INSTRUCTIONS: |
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FILE NAME AND LOCATION: |
S:\PSC\ECR\WP\070601.RCM.DOC |
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Orangeland Water Supply (Orangeland or Utility) is a Class C water utility located in Pasco County serving approximately 76 water customers. Orangeland is located in the Northern Tampa Bay Water Use Caution Area of the Southwest Florida Water Management District (SWFWMD or District). The entire District has been under a phase II severe water shortage order since January 2007. The Utility’s 2006 annual report reflects operating water revenues of $6,214 and an operating loss of ($3,930).
Orangeland has been under Commission jurisdiction since July 11, 1972, when Pasco County transferred jurisdiction to the Commission.[1] In 1977, the Utility was granted certificate No. 179-W to operate a water utility in Pasco County.[2] On September 17, 2007, Orangeland applied for a staff-assisted rate case (SARC). Prior to applying for a SARC, the Utility had not previously filed for a rate increase with the Commission.
May 13, 2008, the Commission issued Proposed Agency Action Order No. PSC-08-0309-PAA-WU (PAA Order), whereby the Commission approved a $21,023 (or 370.92%) water increase.
On June 3, 2008, the Office of Public Counsel (OPC) filed a timely protest of the Commission’s PAA Order. In its filing, OPC protested the repression adjustment of the PAA Order. As a result of the protest, the Commission scheduled a hearing to be held in the Utility’s service area, and issued an Order Establishing Procedure on July 16, 2008.
Subsequently, on July 31, 2008, Orangeland and OPC (collectively, “Parties”) filed a joint motion, requesting the Commission approve the attached settlement (Settlement Agreement). In the joint motion, the Parties requested that discovery and all events be suspended pending Commission consideration of the Settlement Agreement.
On August 19, 2008, the Parties filed an Amended Settlement Agreement in order to correct minor errors contained in the Settlement Agreement filed July 31, 2008, and to reflect the appropriate rates agreed upon by the Parties. A copy of the Amended Settlement Agreement is attached hereto as Attachment A.
Staff’s recommendation addresses the Amended Settlement Agreement submitted by the Parties. The Commission has jurisdiction pursuant to Section 367.0814, Florida Statues (F.S.).
Issue 1:
Should the Commission approve the Amended Settlement Agreement in its entirety?
Recommendation:
Yes. The Amended 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 (F.A.C.), 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. (Deason, Bruce, Lingo, Stallcup)
Staff Analysis:
As stated in the Case Background, OPC originally protested the repression adjustment and later entered into an Amended Settlement Agreement with Orangeland. In the Amended Settlement Agreement, the Parties agreed to a stipulated repression adjustment which would result in the rates shown on Exhibit A of the Amended Settlement Agreement. The Amended Settlement Agreement, with its Exhibit A, is attached as Attachment A. Below is a summary of Orangeland’s current PAA and proposed stipulated rates:
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UTILITY'S* EXISTING RATES |
PAA RATES |
PROPOSED STIPULATED RATES |
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General and Residential Service |
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Base Facility Charge by Meter Size: |
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5/8"X3/4" |
$5.00* |
$14.36 |
$14.86 |
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3/4" |
$0.00 |
$21.54 |
$22.29 |
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1" |
$0.00 |
$35.90 |
$37.15 |
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1-1/2" |
$0.00 |
$71.80 |
$74.30 |
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2" |
$0.00 |
$114.88 |
$118.88 |
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3” |
$0.00 |
$229.76 |
$237.76 |
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4" |
$0.00 |
$359.00 |
$371.50 |
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6" |
$0.00 |
$718.00 |
$743.00 |
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* Existing rates include 5,000 gallons in the Base Facility Charge for. |
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General and Residential Gallonage Charge |
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Per 0 - 5,000 gallons |
$0.00 |
$4.29 |
$2.14 |
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Per 1,000 gallons over 5,000 |
$0.25 |
$5.36 |
$3.16 |
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Typical Residential 5/8” x 3/4” Meter Bill Comparison |
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3,000 Gallons |
$5.00 |
$27.23 |
$21.28 |
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5,000 Gallons |
$5.00 |
$35.81 |
$25.56 |
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10,000 Gallons |
$6.25 |
$62.61 |
$41.36 |
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Staff has reviewed the rates contained in Exhibit A of the Amended Settlement Agreement. Staff notes that the stipulated base facility charges are greater than the previously- approved PAA base facility charges. However, the stipulated gallonage charges are substantially lower than the previously-approved PAA gallonage charges. On a combined basis, the stipulated rates are well below the previously-approved PAA rates. Because of the five-fold increase in revenue requirements in this case, staff is concerned that that the rates contained in Exhibit A will not allow the Utility a fair opportunity to earn revenues sufficient to recover their revenue requirement. While staff realizes that rates agreed to by the Parties have traditionally been approved by the Commission, staff remains concerned that rates such as those contained in Exhibit A may prove problematic for the Utility. However, the revised rates would not appear to impair the ability of the Utility to provide satisfactory quality of service. Additionally, any further litigation may cause a substantial increase in rate case expense which would further burden customers with higher rates.
In their joint motion the Parties contend, and staff agrees, that the Amended Settlement Agreement is a reasonable resolution because it addresses the protested issue. Further, the Parties and staff believe that it is in the public interest for the Commission to approve the Amended 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’ Amended 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), F.A.C., 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:
No. The docket should remain open until a final order has been issued, staff has approved the revised tariffs sheets and customer notices within 15 days of the Commission vote, the utility has sent the notices to its customers, and staff has received proof that the customers have received notice within 10 days after the date of the notice. Once staff has verified all of the above actions are complete, this docket should be closed administratively. (Hartman, Deason)
Staff Analysis:
The docket should remain open until a final order has been issued, staff has approved the revised tariffs sheets and customer notices within 15 days of the Commission vote, the utility has sent the notices to its customers, and staff has received proof that the customers have received notice within 10 days after the date of the notice. Once staff has verified all of the above actions are complete, this docket should be closed administratively.
Attachment A
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