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.
|
|
||
DATE: |
|||
TO: |
Office of Commission Clerk (Cole) |
||
FROM: |
Division of Economic Regulation (Fletcher, Cicchetti, Daniel, Davis, Maurey, Rieger) Office of the General Counsel (Jaeger) |
||
RE: |
Docket No. 100127-WS – Application for increase in water and wastewater rates in Marion County by Tradewinds Utilities, Inc. |
||
AGENDA: |
11/30/10 – Regular Agenda – Decision on Interim Rates – Participation is at the Discretion of the Commission |
||
COMMISSIONERS ASSIGNED: |
|||
PREHEARING OFFICER: |
|||
11/30/10 (60-Day Suspension Date – As Extended by the Utility) |
|||
SPECIAL INSTRUCTIONS: |
|||
FILE NAME AND LOCATION: |
S:\PSC\ECR\WP\100127.RCM.DOC |
||
Tradewinds Utilities, Inc. (Tradewinds or Utility) is a Class B utility providing water and wastewater service to approximately 501 water and 292 wastewater customers in Marion County. Water and wastewater rate base was last established for this Utility in 1994.[1]
On September 28, 2010, Tradewinds filed its application for a rate increase at issue in the instant docket. The Utility had several deficiencies in the Minimum Filing Requirements (MFRs). As of the filing of this recommendation, those deficiencies remain outstanding. Although the MFRs are deficient, the Commission must address Tradewinds’ interim request within 60 days of the date of filing such request by statute. The Utility requested that the application be processed using the Proposed Agency Action (PAA) procedure and requested interim rates. The test year established for interim and final rates is the simple average period ended December 31, 2009.
Tradewinds requested interim rates designed to generate annual water revenues of $204,434 and wastewater revenues of $237,338. This represents a revenue increase on an annual basis of $80,900 (65.49 percent) for water and $32,950 (16.12 percent) for wastewater. The Utility requested final rates designed to generate annual water revenues of $207,284 and wastewater revenues of $240,138. This represents a revenue increase of $83,750 (67.80 percent) for water and $35,750 (17.49 percent) for wastewater.
The original 60-day statutory deadline for the Commission to suspend the Utility’s requested final rates was November 27, 2010. However, by letter dated November 3, 2010, the Utility agreed to extend the statutory time frame through November 30, 2010. This recommendation addresses the suspension of Tradewinds’ requested final rates and the Utility’s requested interim rates. The Commission has jurisdiction pursuant to Sections 367.081 and 367.082, Florida Statutes (F.S.).
Issue 1:
Should the Utility's proposed final water and wastewater rates be suspended?
Recommendation:
Yes. Tradewinds’ proposed final water and wastewater rates should be suspended. (Fletcher)
Staff Analysis:
Section 367.081(6), F.S., provides that the Commission may, for good cause, withhold consent to the implementation of the requested rates within 60 days after the date the rate request is filed. Further, Section 367.081(8), F.S., permits the proposed rates to go into effect (secured and subject to refund) at the expiration of five months from the official date of filing if: (1) the Commission has not acted upon the requested rate increase; or (2) if the Commission’s PAA action is protested by a party other than the Utility.
Staff has reviewed the filing and has considered the information filed in support of the rate application and the proposed final rates. Staff recommends that it is necessary to require further investigation of this information, including on-site investigations by staff accountants and engineers. Based on the foregoing, staff recommends suspension of the Utility’s proposed rate increase.
Issue 2:
Should an interim revenue increase be approved?
Recommendation:
Yes. Tradewinds should be authorized to collect annual water and wastewater revenues as indicated below:
Adjusted Test Year Revenues |
$ Increase |
Revenue Requirement |
% Increase |
|
Water Wastewater |
$123,343 $208,879 |
$75,669 $20,716
|
$199,011 $229,595 |
61.35% 9.92% |
(Fletcher, Rieger)
Staff Analysis:
Tradewinds has filed rate base, cost of capital, and operating statements to support its requested interim increase in water rates. Pursuant to Section 367.082(1), F.S., in order to establish a prima facie entitlement for interim relief, the Utility shall demonstrate that it is earning outside the range of reasonableness on its rate of return. Pursuant to Section 367.081(2)(a), F.S., in a proceeding for an interim increase in rates, the Commission shall authorize, within 60 days of the filing for such relief, the collection of rates sufficient to earn the minimum of the range of rate of return. Based on the Utility’s filing and the recommended adjustments below, staff believes that the Utility has demonstrated a prima facie entitlement in accordance with Section 367.082(1), F.S.
Pursuant to Section 367.082(5)(b)1., F.S., the achieved rate of return for interim purposes must be calculated by applying adjustments consistent with adjustments made in the Utility’s most recent rate proceeding and annualizing any rate changes. Staff has reviewed Tradewinds’ interim request, as well as Order Nos. PSC-94-0701-FOF-WS and PSC-95-0064-S-WS, in which the Commission last established rate base. Staff’s recommended adjustments are discussed below. Staff has attached accounting schedules to illustrate staff's recommended rate base, capital structure, and test year operating income amounts. The water rate base is shown on Schedule No. 1-A, and the wastewater rate base is shown on Schedule No. 1-B. The capital structure is shown on Schedule No. 2. The operating income schedules for water and wastewater are labeled as Schedule Nos. 3-A, and 3-B, respectively. The operating income adjustments are shown on Schedule No. 3-C.
RATE BASE
In the last rate case, the Utility's water treatment plant was found to be 88 percent used and useful (U&U) based on minimum flow requirements along with consideration for fire flow and margin reserve. According to the order, Tradewinds was serving approximately 299 water customers in 1993. The Utility's three wells and pumps had a total capacity of 1,400 gallons per minute (gpm), and the fire flow requirement was 500 gpm for four hours. According to its filing, Tradewinds is currently serving approximately 446 residential customers and 52 general service customers and it appears that the capacity of the wells has not changed since the last rate case.
The Utility's wastewater treatment plant was found to be 71.56 percent U&U in the last rate case based on the highest five consecutive days in the peak month, a margin reserve allowance, and the permitted capacity of the wastewater treatment plants. According to the order, Tradewinds was serving approximately 170 wastewater customers The Utility's two wastewater treatment plants had a combined capacity of 81,000 gallons per day (gpd). According to its filing, Tradewinds is currently serving approximately 253 residential customers and 37 general service customers.
There is insufficient information in the Utility's filing to recalculate the current U&U percentages for the water and wastewater treatment plants and the distribution and collection systems using the methodology used in the last rate case. There does not appear to be a change in the capacity of the water or wastewater treatment plants since the last rate case, although there has been a significant increase in the capacity of the distribution and collection systems and in the total investment in both water and wastewater assets. Therefore, staff recommends that no U&U adjustments be made for the water and wastewater treatment plants and distribution and collection systems in calculating the interim revenue requirement. Staff will address the appropriate U&U calculations in the final recommendation.
In accordance with Rule 25-30.433(2), Florida Administrative Code (F.A.C.), the Utility calculated its working capital allowance based on the formula method, which is one-eighth of operation and maintenance (O&M) expenses. As discussed below, staff is recommending O&M expense reductions of $7,725 for water and $8,236 for wastewater. As such, staff recommends that Tradewinds’ working capital allowance be reduced by $965 and $1,029 for water and wastewater, respectively. Therefore, staff recommends that Tradewinds’ water and wastewater rate bases for purposes of determining interim rates should be $706,291 and $240,891, respectively.
COST OF CAPITAL
For purposes of its interim request, Tradewinds used a return on equity (ROE) of 10.85 percent. This return was determined by using the Commission’s 2010 leverage formula. Pursuant to Section 367.082(2)(a), F.S., the appropriate ROE for purposes of determining an interim rate increase is the minimum authorized ROE from the last rate case. In accordance with Order Nos. PSC-94-0701-FOF-WS and PSC-95-0064-S-WS, the Utility’s last authorized ROE was 10.97 percent with a range of plus or minus 100 basis points. As such, Tradewinds’ authorized minimum ROE is 9.97 percent. Based on the above, staff recommends an overall cost of capital of 5.96 percent for interim purposes.
NET OPERATING INCOME
Pursuant to Section 367.082(5)(b)1., F.S., the only adjustments that should be made to the interim test year are adjustments consistent with the most recent individual rate proceeding or adjustments to annualize rate changes occurring during the interim test year.
Based on its review of MFRs, staff recommends an adjustment to operating revenues. Staff has decreased operating revenues by $191 for water and increased operating revenues by $4,491 for wastewater to reflect the appropriate amount of annualized revenues.
Additionally, staff recommends an adjustment to operating expenses. Tradewinds included adjustments to increase water expenses by $3,526 for salaries, $721 for healthcare costs, and $3,478 for bad debt expense. The Utility also included adjustments to increase wastewater expenses by $3,526 for salaries, $721 for healthcare costs, and $3,989 for bad debt expense. Staff believes the Utility’s proposed adjustments are pro forma in nature because they are outside the interim test year. As such, staff recommends that Tradewinds’ pro forma expense adjustments be removed from the interim net operating income calculation.
Based on the above, staff recommends that the appropriate test year operating loss, before any revenue increase, is $30,182 for water and $5,431 for wastewater.
REVENUE REQUIREMENT
Based on the above adjustments, staff recommends a revenue requirement of $199,011 for water and $229,595 for wastewater. This represents an interim increase in annual revenues of $75,669 or 61.35 percent for water and $20,716 or 9.92 percent for wastewater. This increase will allow the Utility the opportunity to recover its operating expenses and earn a 5.96 percent return on its rate base.
Issue 3:
What are the appropriate interim water and wastewater rates?
Recommendation:
The water and wastewater service rates for Tradewinds in effect as of December 31, 2009, should be increased for water by 62.93 percent and for wastewater by 9.92 percent to generate the recommended revenue increase for the interim period. The approved rates should be effective for service rendered as of the stamped approval date on the tariff sheets pursuant to Rule 25-30.475(1)(a), F.A.C. The rates should not be implemented until staff verifies that the tariff sheets are consistent with the Commission decision, the proposed customer notice is adequate, and the required security has been filed. The Utility should provide proof of the date notice was given within 10 days after the date of notice. (Fletcher)
Staff Analysis:
Staff recommends that interim water and wastewater service rates for Tradewinds be designed to allow the Utility the opportunity to generate annual water revenues of $199,011 and wastewater revenues of $229,595. This reflects an increase of $75,669 (61.35 percent) for water and $20,716 (9.92 percent) for wastewater, before removal of miscellaneous revenues. To determine the appropriate percentage increase to apply to the service rates, miscellaneous service revenues should be removed from the test year revenues. The calculation is as follows:
|
|
Water |
Wastewater |
1 |
Total Test Year Revenues |
$123,343 |
$208,879 |
2 |
Less: Miscellaneous Revenues |
3,095 |
0 |
3 |
Test Year Revenues from Service Rates |
$120,248 |
$208,879 |
4 |
Revenue Increase |
$75,669 |
$20,716 |
5 |
% Service Rate Increase (Line 4/Line3) |
62.93% |
9.92% |
The interim rate increase of 62.93 percent for water and 9.92 percent for wastewater should be applied as an across-the-board increase to the service rates in effect as of December 31, 2009. The approved rates should be effective for service rendered as of the stamped approval date on the tariff sheets pursuant to Rule 25-30.475(1), F.A.C. The rates should not be implemented until staff verifies that the tariff sheets are consistent with the Commission’s decision, the proposed customer notice is adequate, and the required security has been filed. The Utility should provide proof of the date notice was given within 10 days after the date of notice.
The Utility’s current rates, proposed interim and final rates, and staff’s recommended interim rates are shown on Schedule No. 4-A for water and Schedule No. 4-B for wastewater.
Issue 4:
What is the appropriate security to guarantee the interim increase?
Recommendation:
The Utility should be required to open an escrow account or file a surety bond or letter of credit to guarantee any potential refund of revenues collected under interim conditions. If the security provided is an escrow account, the Utility shall deposit 9.92 percent of water revenues into the escrow account each month. Otherwise, the surety bond or letter of credit should be in the amount of $56,265. Pursuant to Rule 25-30.360(6), F.A.C., the Utility should provide a report by the 20th of each month indicating the monthly and total revenue collected subject to refund. Should a refund be required, the refund should be with interest and in accordance with Rule 25-30.360, F.A.C. (Fletcher, Davis)
Staff Analysis:
Pursuant to Section 367.082, F.S., revenues collected under interim rates shall be placed under bond, escrow, letter of credit, or corporate undertaking subject to refund with interest at a rate ordered by the Commission. As recommended in Issue 2, the total annual interim increase is $96,385 for water and wastewater combined. In accordance with Rule 25-30.360, F.A.C., staff has calculated the potential refund of revenues and interest collected under interim conditions to be $56,265. This amount is based on an estimated seven months of revenue being collected from staff’s recommended interim rates over the Utility’s current authorized rates shown on Schedules Nos. 4-A and 4-B.
The criteria for a corporate undertaking include sufficient liquidity, ownership equity, profitability, and interest coverage to guarantee any potential refund. Staff used Tradewinds PSC Annual Reports for 2007, 2008, and 2009 to calculate these ratios. Tradewinds average equity ratio and relative level of liquidity over the most recent three-year period are not within acceptable parameters. In addition , both of these measures have steadily declined over the review period. Furthermore, the Utility reports low interest coverage and net losses over the same period. Net losses have steadily increased and have averaged almost $72,000 per year. For these reasons, staff believes Tradewinds does not have the financial capability to support a corporate undertaking in the amount of $56,265. Based on this analysis, staff recommends that Tradewinds be required to secure a surety bond, letter of credit, or escrow agreement to guarantee any potential refunds of wastewater revenues. This brief financial analysis is only appropriate for deciding if the Utility can support a corporate undertaking in the amount proposed and should not be considered a finding regarding staff's position on other issues in this proceeding.
If the security provided is an escrow account, said account should be established between the Utility and an independent financial institution pursuant to a written escrow agreement. The Commission should be a party to the written escrow agreement and a signatory to the escrow account. The written escrow agreement should state the following: that the account is established at the direction of the Commission for the purpose set forth above; that no withdrawals of funds should occur without the prior approval of the Commission through the Office of Commission Clerk; the account should be interest bearing; information concerning that escrow account should be available from the institution to the Commission or its representative at all times; the amount of revenue subject to refund should be deposited in the escrow account within seven days of receipt; and, pursuant to Cosentino v. Elson, 263 So. 2d 253 (Fla 3d DCA 1972), escrow accounts are not subject to garnishments.
If the security provided is an escrow account, the Utility shall deposit 61.35 percent of water revenues and 9.92 percent of wastewater revenues into the escrow account each month. The escrow agreement should also state that if a refund to the customers is required, all interest earned on the escrow account should be distributed to the customers, and if a refund to the customers is not required, the interest earned on the escrow account should revert to the Utility.
If the security provided is a surety bond or a letter of credit, said instrument should be in the amount of $56,265. If the Utility chooses a surety bond as security, the surety bond should state that it will be released or terminated only upon subsequent order of the Commission. If the Utility chooses to provide a letter of credit as security, the letter of credit should state that it is irrevocable for the period it is in effect and that it will be in effect until a final Commission order is rendered releasing the funds to the Utility or requiring a refund.
Regardless of the type of security provided, the Utility should keep an accurate and detailed account of all monies it receives. Pursuant to Rule 25-30.360(6), F.A.C., the Utility shall provide a report by the 20th day of each month indicating the monthly and total revenue collected subject to refund. Should a refund be required, the refund should be with interest and undertaken in accordance with Rule 25-30.360, F.A.C.
In no instance should maintenance and administrative costs associated with any refund be borne by the customers. Such costs are the responsibility of, and should be borne by, the Utility.
Issue 5:
Should this docket be closed?
Recommendation:
No. The docket should remain open pending the Commission’s PAA decision on the Utility’s requested rate increase. (Fletcher, Jaeger)
Staff Analysis:
The docket should remain open pending the Commission’s PAA decision on the Utility’s requested rate increase.
|
Tradewinds Utilities, Inc. |
|
|
|
Schedule No. 1-A |
|
|
Schedule of Water Rate Base |
|
|
|
Docket No. 100127-WS |
|
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
Test Year |
Utility |
Adjusted |
Staff |
Staff |
|
|
Per |
Adjust- |
Test Year |
Adjust- |
Adjusted |
|
Description |
Utility |
ments |
Per Utility |
ments |
Test Year |
|
|
|
|
|
|
|
1 |
Plant in Service |
$1,075,251 |
$0 |
$1,075,251 |
$0 |
$1,075,251 |
|
|
|
|
|
|
|
2 |
Land and Land Rights |
182,500 |
0 |
182,500 |
0 |
182,500 |
|
|
|
|
|
|
|
3 |
Non-Used and Useful Component |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
4 |
Accumulated Depreciation |
(483,494) |
0 |
(483,494) |
0 |
(483,494) |
|
|
|
|
|
|
|
5 |
CIAC |
(328,985) |
0 |
(328,985) |
0 |
(328,985) |
|
|
|
|
|
|
|
6 |
Amortization of CIAC |
246,641 |
0 |
246,641 |
0 |
246,641 |
|
|
|
|
|
|
|
7 |
Working Capital Allowance |
0 |
15,343 |
15,343 |
(965) |
14,378 |
|
|
|
|
|
|
|
8 |
Rate Base |
$691,913 |
$15,343 |
$707,256 |
($965) |
$706,291 |
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
|
|
|
Schedule No. 1-B |
||
|
Schedule of Wastewater Rate Base |
|
|
|
Docket No. 100127-WS |
|
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
Test Year |
Utility |
Adjusted |
Staff |
Staff |
|
|
Per |
Adjust- |
Test Year |
Adjust- |
Adjusted |
|
Description |
Utility |
ments |
Per Utility |
ments |
Test Year |
|
|
|
|
|
|
|
1 |
Plant in Service |
$949,207 |
$0 |
$949,207 |
$0 |
$949,207 |
|
|
|
|
|
|
|
2 |
Land and Land Rights |
93,388 |
0 |
93,388 |
0 |
93,388 |
|
|
|
|
|
|
|
3 |
Non-Used and Useful Component |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
4 |
Accumulated Depreciation |
(698,111) |
0 |
(698,111) |
0 |
(698,111) |
|
|
|
|
|
|
|
5 |
CIAC |
(531,404) |
0 |
(531,404) |
0 |
(531,404) |
|
|
|
|
|
|
|
6 |
Amortization of CIAC |
405,694 |
0 |
405,694 |
0 |
405,694 |
|
|
|
|
|
|
|
7 |
Working Capital Allowance |
0 |
23,146 |
23,146 |
(1,029) |
22,117 |
|
|
|
|
|
|
|
8 |
Rate Base |
$218,774 |
$23,146 |
$241,920 |
($1,029) |
$240,891 |
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
|
|
|
|
|
Schedule No. 2 |
|
|||
|
Capital Structure-Simple Average |
|
|
|
|
Docket No. 100127-WS |
|
|||
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
|
|
|
|
|
Specific |
Subtotal |
Prorata |
Capital |
|
|
|
|
|
|
Total |
Adjust- |
Adjusted |
Adjust- |
Reconciled |
|
Cost |
Weighted |
|
|
Description |
Capital |
ments |
Capital |
ments |
to Rate Base |
Ratio |
Rate |
Cost |
|
Per Utility |
|
|
|
|
|
|
|
|
|
|
1 |
Long-term Debt |
$856,725 |
$0 |
$856,725 |
($84,574) |
$772,151 |
81.29% |
5.13% |
4.17% |
|
2 |
Short-term Debt |
0 |
0 |
0 |
0 |
0 |
0.00% |
0.00% |
0.00% |
|
3 |
Preferred Stock |
0 |
0 |
0 |
0 |
0 |
0.00% |
0.00% |
0.00% |
|
4 |
Common Equity |
176,616 |
0 |
176,616 |
(17,435) |
159,181 |
16.76% |
10.85% |
1.82% |
|
5 |
Customer Deposits |
20,544 |
0 |
20,544 |
(2,028) |
18,516 |
1.95% |
6.00% |
0.12% |
|
6 |
Deferred Income Taxes |
0 |
0 |
0 |
0 |
0 |
0.00% |
0.00% |
0.00% |
|
7 |
Total Capital |
$1,053,885 |
$0 |
$1,053,885 |
($104,037) |
$949,848 |
100.00% |
|
6.11% |
|
|
|
|
|
|
|
|
|
|
|
|
Per Staff |
|
|
|
|
|
|
|
|
|
|
8 |
Long-term Debt |
$856,725 |
$0 |
$856,725 |
($86,741) |
$769,984 |
81.29% |
5.13% |
4.17% |
|
9 |
Short-term Debt |
0 |
0 |
0 |
0 |
0 |
0.00% |
0.00% |
0.00% |
|
10 |
Preferred Stock |
0 |
0 |
0 |
0 |
0 |
0.00% |
0.00% |
0.00% |
|
11 |
Common Equity |
176,616 |
0 |
176,616 |
(17,882) |
158,734 |
16.76% |
9.97% |
1.67% |
|
12 |
Customer Deposits |
20,544 |
0 |
20,544 |
(2,080) |
18,464 |
1.95% |
6.00% |
0.12% |
|
13 |
Deferred Income Taxes |
0 |
0 |
0 |
0 |
0 |
0.00% |
0.00% |
0.00% |
|
14 |
Total Capital |
$1,053,885 |
$0 |
$1,053,885 |
($106,703) |
$947,182 |
100.00% |
|
5.96% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOW |
HIGH |
|
|
|
|
|
|
|
RETURN ON EQUITY |
9.97% |
11.97% |
|
|
|
|
|
|
|
OVERALL RATE OF RETURN |
5.96% |
6.29% |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
|
|
|
|
|
Schedule No. 3-A |
|
||
|
Statement of Water Operations |
|
|
|
|
Docket No. 100127-WS |
|
||
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
|
|
|
Test Year |
Utility |
Adjusted |
Staff |
Staff |
|
|
|
|
|
Per |
Adjust- |
Test Year |
Adjust- |
Adjusted |
Revenue |
Revenue |
|
|
Description |
Utility |
ments |
Per Utility |
ments |
Test Year |
Increase |
Requirement |
|
|
|
|
|
|
|
|
|
|
|
1 |
Operating Revenues: |
$123,534 |
$80,900 |
$204,434 |
($81,091) |
$123,343 |
$75,669 |
$199,011 |
|
|
|
|
|
|
|
|
61.35% |
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
2 |
Operation & Maintenance |
$115,021 |
$7,725 |
$122,746 |
($7,725) |
$115,021 |
$0 |
$115,021 |
|
|
|
|
|
|
|
|
|
|
|
3 |
Depreciation |
26,857 |
0 |
26,857 |
0 |
26,857 |
0 |
26,857 |
|
|
|
|
|
|
|
|
|
|
|
4 |
Amortization |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
5 |
Taxes Other Than Income |
8,006 |
3,641 |
11,647 |
0 |
11,647 |
3,405 |
15,052 |
|
|
|
|
|
|
|
|
|
|
|
6 |
Income Taxes |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
7 |
Total Operating Expense |
$149,884 |
$11,366 |
$161,250 |
($7,725) |
$153,525 |
$3,405 |
$156,930 |
|
|
|
|
|
|
|
|
|
|
|
8 |
Operating Income |
($26,350) |
$69,534 |
$43,184 |
($73,366) |
($30,182) |
$72,263 |
$42,081 |
|
|
|
|
|
|
|
|
|
|
|
9 |
Rate Base |
$691,913 |
|
$707,256 |
|
$706,291 |
|
$706,291 |
|
|
|
|
|
|
|
|
|
|
|
10 |
Rate of Return |
(3.81%) |
|
6.11% |
|
(4.27%) |
|
5.96% |
|
|
|
|
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
|
|
|
|
|
Schedule No. 3-B |
|
||
|
Statement of Wastewater Operations |
|
|
|
|
Docket No. 100127-WS |
|
||
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
|
|
|
Test Year |
Utility |
Adjusted |
Staff |
Staff |
|
|
|
|
|
Per |
Adjust- |
Test Year |
Adjust- |
Adjusted |
Revenue |
Revenue |
|
|
Description |
Utility |
ments |
Per Utility |
ments |
Test Year |
Increase |
Requirement |
|
|
|
|
|
|
|
|
|
|
|
1 |
Operating Revenues: |
$204,388 |
$32,950 |
$237,338 |
($28,459) |
$208,879 |
$20,716 |
$229,595 |
|
|
|
|
|
|
|
|
9.92% |
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
2 |
Operation & Maintenance |
$239,436 |
($54,264) |
$185,172 |
($8,236) |
$176,936 |
|
$176,936 |
|
|
|
|
|
|
|
|
|
|
|
3 |
Depreciation |
11,143 |
0 |
11,143 |
0 |
11,143 |
|
11,143 |
|
|
|
|
|
|
|
|
|
|
|
4 |
Amortization |
0 |
0 |
0 |
0 |
0 |
|
0 |
|
|
|
|
|
|
|
|
|
|
|
5 |
Taxes Other Than Income |
24,748 |
1,483 |
26,231 |
0 |
26,231 |
932 |
27,163 |
|
|
|
|
|
|
|
|
|
|
|
6 |
Income Taxes |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
7 |
Total Operating Expense |
$275,327 |
($52,781) |
$222,546 |
($8,236) |
$214,310 |
$932 |
$215,242 |
|
|
|
|
|
|
|
|
|
|
|
8 |
Operating Income |
($70,939) |
$85,731 |
$14,792 |
($20,223) |
($5,431) |
$19,784 |
$14,352 |
|
|
|
|
|
|
|
|
|
|
|
9 |
Rate Base |
$218,774 |
|
$241,920 |
|
$240,891 |
|
$240,891 |
|
|
|
|
|
|
|
|
|
|
|
10 |
Rate of Return |
(32.43%) |
|
6.11% |
|
(2.25%) |
|
5.96% |
|
|
|
|
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
Schedule No. 3-C |
|
||
|
Adjustment to Operating Income |
Docket No. 100127-WS |
|
|
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
|
|
Explanation |
Water |
Wastewater |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues |
|
|
|
1 |
Remove requested final revenue increase. |
($80,900) |
($32,950) |
|
2 |
To reflect the appropriate amount of annualized revenues. |
(191) |
4,491 |
|
3 |
Total |
($81,091) |
($28,459) |
|
|
|
|
|
|
|
Operation and Maintenance Expense |
|
|
|
1 |
Remove pro forma salaries. |
($3,526) |
($3,526) |
|
2 |
Remove pro forma healthcare costs. |
(721) |
(721) |
|
3 |
Remove pro forma bad debt expense. |
(3,478) |
(3,989) |
|
4 |
Total |
($7,725) |
($8,236) |
|
|
|
|
|
|
|
Taxes Other Than Income |
|
|
|
|
RAFs on revenue adjustments above. |
($3,649) |
($1,281) |
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
|
|
|
Schedule No. 4-A |
|
|
|
Water Monthly Service Rates |
|
|
|
Docket No. 100127-WS |
|
|
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
|
|
Test |
Utility |
Utility |
Staff |
|
|
|
|
Year |
Requested |
Requested |
Recomm. |
|
|
|
|
Rates |
Interim (1) |
Final (2) |
Interim |
|
|
Residential |
|
|
|
|
|
|
|
Base Facility Charge by Meter Size: |
|
|
|
|
|
|
|
All Meter Sizes |
|
$9.39 |
$15.70 |
$15.52 |
$15.30 |
|
|
|
|
|
|
|
|
|
|
Gallonage Charge, per 1,000 Gallons |
|
$1.55 |
$2.59 |
$2.57 |
$2.53 |
|
|
|
|
|
|
|
|
|
|
General Service |
|
|
|
|
|
|
|
Base Facility Charge by Meter Size: |
|
|
|
|
|
|
|
5/8" x 3/4" |
|
$9.39 |
$15.70 |
$15.52 |
$15.30 |
|
|
1" |
|
$23.45 |
$39.20 |
$38.74 |
$38.21 |
|
|
1-1/2" |
|
$46.93 |
$78.45 |
$77.53 |
$76.46 |
|
|
2" |
|
$75.02 |
$125.41 |
$123.94 |
$122.23 |
|
|
3" |
|
$150.08 |
$250.89 |
$247.95 |
$244.52 |
|
|
4" |
|
$234.58 |
$392.15 |
$387.55 |
$382.19 |
|
|
|
|
|
|
|
|
|
|
Gallonage Charge, per 1,000 Gallons |
|
$1.55 |
$2.59 |
$2.57 |
$2.53 |
|
|
|
|
|
|
|
|
|
|
|
|
Typical Residential Bills 5/8" x 3/4" Meter |
|
|||
|
3,000 Gallons |
|
$14.04 |
$23.47 |
$23.23 |
$22.89 |
|
|
5,000 Gallons |
|
$17.14 |
$28.65 |
$28.37 |
$27.95 |
|
|
10,000 Gallons |
|
$24.89 |
$41.61 |
$41.22 |
$40.60 |
|
|
|
|
|
|
|
|
|
Notes: |
|
|
|
|
|
|
|
(1) Tradewinds' interim rates contained a calculation error resulting in an understatement. The Utility's |
|
||||||
stated interim rates equated to an across-the-board increase of 62.93 percent; however, its requested |
|
||||||
interim revenue requirement should have resulted in an across-the-board increase of 67.17 percent. |
|
||||||
Thus, staff has corrected the calculation error in the Utility's requested interim rates. |
|
|
|||||
(2) It appears that the requested final rates contain a calculation error as well because they are less than the Utility’s corrected interim rates. |
|||||||
|
|
|
|
|
|
|
|
|
Tradewinds Utilities, Inc. |
|
|
|
Schedule No. 4-B |
|
|
|
Wastewater Monthly Service Rates |
|
|
|
Docket No. 100127-WS |
|
|
|
Test Year Ended 12/31/09 |
|
|
|
|
|
|
|
|
|
Test |
Utility |
Utility |
Staff |
|
|
|
|
Year |
Requested |
Requested |
Recomm. |
|
|
|
|
Rates |
Interim |
Final |
Interim |
|
|
Residential |
|
|
|
|
|
|
|
Base Facility Charge All Meter Sizes: |
|
$19.16 |
$21.87 |
$22.15 |
$21.06 |
|
|
|
|
|
|
|
|
|
|
Gallonage Charge - Per 1,000 |
|
|
|
|
|
|
|
gallons (10,000 gallon cap) |
|
$5.90 |
$6.76 |
$6.85 |
$6.49 |
|
|
|
|
|
|
|
|
|
|
General Service |
|
|
|
|
|
|
|
Base Facility Charge by Meter Size: |
|
|
|
|
|
|
|
5/8" x 3/4" |
|
$20.98 |
$23.94 |
$24.23 |
$23.06 |
|
|
1" |
|
$52.51 |
$59.93 |
$60.64 |
$57.72 |
|
|
1-1/2" |
|
$104.95 |
$119.78 |
$121.20 |
$115.36 |
|
|
2" |
|
$167.92 |
$191.66 |
$193.92 |
$184.57 |
|
|
3" |
|
$335.84 |
$383.31 |
$387.83 |
$369.15 |
|
|
4" |
|
$524.76 |
$598.93 |
$606.00 |
$576.80 |
|
|
6" |
|
$1,049.63 |
$1,198.00 |
$0.00 |
$1,153.73 |
|
|
|
|
|
|
|
|
|
|
Gallonage Charge, per 1,000 Gallons |
|
$7.09 |
$8.12 |
$8.19 |
$7.79 |
|
|
|
|
|
|
|
|
|
|
|
|
Typical Residential Bills 5/8" x 3/4" Meter |
|
|||
|
3,000 Gallons |
|
$36.86 |
$42.15 |
$42.70 |
$40.53 |
|
|
5,000 Gallons |
|
$48.66 |
$55.67 |
$56.40 |
$53.51 |
|
|
10,000 Gallons |
|
$78.16 |
$89.47 |
$90.65 |
$85.96 |
|
|
(Wastewater Gallonage Cap - 10,000 Gallons) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[1] See Order No. PSC-94-0245-FOF-WS, issued March 4, 1994, in Docket No. 930524-WS, In re: Application for a staff-assisted rate case in Marion County by Tradewinds Utilities, Inc. This order was effectuated through a stipulation approved by Order No. PSC-95-0064-S-WS, issued January 12, 1995.