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DATE: |
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TO: |
Office of Commission Clerk (Stauffer) |
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FROM: |
Division of Economics (Bruce, Hudson) Office of the General Counsel (Brownless) |
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RE: |
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AGENDA: |
04/05/16 – Regular Agenda – Proposed Stipulation Prior to Hearing – Parties May Participate |
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COMMISSIONERS ASSIGNED: |
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PREHEARING OFFICER: |
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SPECIAL INSTRUCTIONS: |
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On June 4, 2015, Utilities Inc. of Sandalhaven (Sandalhaven) filed its application for the rate increase at issue in the instant docket. A deficiency letter was sent to the utility on July 1, 2015, and corrections to the minimum filing requirements (MFRs) were filed on July 6, 2015, which was established as the official date of filing pursuant to Section 367.083, Florida Statutes (F.S.). 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 period ended December 31, 2014. The utility’s proposed rates were suspended and interim rates were granted subject to refund by Order No. PSC-15-0320-PCO-SU, issued on August 10, 2015.
On January 6, 2016, Order No. PSC-16-0013-PAA-SU was issued granting Sandalhaven’s application for a rate increase and establishing PAA rates subject to protest and request for a hearing. On January 27, 2016, the Office of Public Counsel (OPC) timely filed a petition and request for evidentiary hearing. On February 4, 2016, Sandalhaven timely filed a cross-petition for a formal administrative hearing. On February 10, 2016, Sandalhaven placed the PAA rates into effect subject to refund, with the exception of its Allowance for Funds Prudently Invested (AFPI) charges. The utility maintained the AFPI charges that were in effect when the Commission obtained jurisdiction from Charlotte County. On February 24, 2016, Sandalhaven filed a motion for partial final summary order on the issue of the prudency of constructing an interconnection with the Englewood Water District to serve potential and current customers and its decision to retire its wastewater treatment plant. On March 21, 2016, OPC and Sandalhaven (“Parties”) filed a joint motion requesting Commission approval of a stipulation and settlement agreement entered into between the parties on March 21, 2016. This recommendation addresses the Settlement Agreement, which is included as Attachment A in this recommendation. The Commission has jurisdiction over this subject matter pursuant to Sections 367.011, 367.081, 367.101, and 367.121, F.S.
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 protested issues of the PAA Order should have no precedential effect or value and can be raised in any future rate case. Upon the issuance of the final order approving the Parties’ Settlement Agreement, staff recommends the corporate undertaking amount for interim rates and the implementation of PAA rates be released. Upon approval of the Settlement Agreement by the Commission, the utility should file a proposed customer notice indicating that the Commission has approved a settlement agreement between the Parties and that the PAA rates are final, with the exception of AFPI charges. The utility should continue to collect the AFPI charges in effect when the Commission obtained jurisdiction from Charlotte County. The utility should provide proof of the date notice was given within 10 days of the date of the notice. (Bruce, Brownless)
Staff Analysis:
The issues protested by the Parties are set forth in the petition and cross-petition for a formal administrative hearing. In the Settlement Agreement, the Parties agree that the protested issues of the PAA Order should have no precedential effect or value and can be raised in any future rate case. The Parties agree to the PAA Order and its overall revenue requirement. However, the Parties agree that the utility should continue to collect the AFPI charges in effect when the Commission obtained jurisdiction from Charlotte County, in lieu of the AFPI charges set forth in the PAA Order. The Parties also agree that the utility will not seek an increase based upon the 2016 Price Index. In addition, the Parties agree that the utility will not seek to recover any additional rate case expense incurred as a result of the petition and cross-petition for a formal administrative hearing. OPC’s petition and Sandalhaven’s cross-petition and Sandalhaven’s Motion for partial final summary order and OPC’s response to the Motion, should be deemed moot in accordance with the terms of this Stipulation and Settlement Agreement.
Staff believes that the Parties’ Settlement Agreement is a reasonable resolution because it addresses all protested issues. Staff also 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, staff recommends that the Commission approve the Parties’ Settlement Agreement.
The Joint Motion and Settlement Agreement should be approved. The protested issues of the PAA Order should have no precedential effect or value and can be raised in any future rate case. Upon the issuance of the final order approving the Parties’ Settlement Agreement, staff recommends the corporate undertaking amount for interim rates and the implementation of PAA rates be released. Upon approval of the Settlement Agreement by the Commission, the utility should file a proposed customer notice indicating that the Commission has approved a settlement agreement between the Parties and that the PAA rates are final, with the exception of AFPI charges. The utility should continue to collect the AFPI charges in effect when the Commission obtained jurisdiction from Charlotte County. The utility should provide proof of the date notice was given within 10 days of 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. (Bruce, Brownless)
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.
