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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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May 26, 2016
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TO:
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Office of Commission Clerk (Stauffer)
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FROM:
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Division of Economics (Johnson, Hudson)
Office of the General
Counsel (Leathers)
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RE:
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Docket No. 160104-WS – Application for NSF
and late payment charges in Charlotte, Highlands, Lake, Lee, Marion, Orange, Pasco,
Pinellas, Polk, and Seminole Counties by Utilities Inc. of Florida.
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AGENDA:
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06/09/16 – Regular Agenda – Tariff Filing – Interested Persons May
Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Administrative
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CRITICAL DATES:
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06/20/16 (60-day suspension date)
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SPECIAL INSTRUCTIONS:
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None
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Case Background
Utilities, Inc.
of Florida (UIF or utility) is a Class A water and wastewater utility serving
approximately 33,193 water and 26,450 wastewater utility customers in
Charlotte, Highlands, Lake, Lee, Marion, Orange, Pasco, Pinellas, Polk, and
Seminole Counties.
Following the
consolidation of the utility’s systems in Docket No. 150235-WS, the utility
requested a revision of its non-sufficient funds (NSF) charges and late payment
charges so that the charges would be consistent across all systems. On April
20, 2016, UIF filed an application for approval of NSF charges and late payment
charges for those systems in Charlotte, Highlands, Lake, Lee, Marion, Orange,
Pasco, Pinellas, Polk, and Seminole Counties that do not currently have those
approved charges. UIF currently has only two systems, formerly known as Lake
Placid Utilities, Inc. and Cypress Lakes Utilities, Inc., that have an approved
late payment charge. Additionally, UIF has only three systems, formerly known
as Utilities, Inc. of Sandalhaven, Tierra Verde Utilities, Inc., and Utilities,
Inc. of Eagle Ridge, that do not have an approved NSF charge. This
recommendation addresses UIF’s request for approval of a late payment charge
and NSF charges. The Commission has jurisdiction to consider this matter
pursuant to Section 367.091(6), Florida Statutes (F.S.).
Discussion
of Issues
Issue 1: Should UIF’s current late
payment charge of $5.25 be applied to all of UIF’s systems?
Recommendation:
Yes. UIF’s request to uniformly implement a late
payment charge of $5.25 should be approved. UIF should be required to file a
proposed customer notice to reflect the Commission-approved charge for those
systems where the charge is not currently approved. The approved charge should
be effective for services rendered on or after the stamped approval date on the
tariff sheet pursuant to Rule 25-30.475(1), Florida Administrative Code
(F.A.C.). In addition, the approved charge should not be implemented until
staff has approved the proposed customer notice. The utility should provide
proof of the date notice was given no less than ten days after the date of the
notice. (Johnson)
Staff
Analysis:
Section 367.091(6), F.S., authorizes the Commission
to establish, increase, or change a rate or charge other than monthly rates or
service availability charges. The utility is requesting a $5.25 late payment
charge for those systems that do not currently have an approved late payment
charge to recover the cost of supplies and labor associated with processing
late payment notices. The utility’s request for a late payment charge was
accompanied by its reason for requesting the charge, as well as the cost
justification required by Section 367.091(6), F.S.
Approximately 1.61 percent or 960 (1.61% x 59,642) of UIF’s
bills are delinquent on a monthly basis. The utility’s requested charge is
based on an aggregate of all UIF systems. The utility indicated that it
processes six late payment charges an hour. UIF’s combined employees’ salary is
$44.68 per hour and at six transactions an hour results in a labor cost of
$7.45 ($44.68/6). UIF provided a cost justification for a late payment charge
of $8.14. The cost basis for the late payment charge, including labor, is shown
below.
Table 1-1
Cost Basis for Late Payment Charge
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Labor
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$7.45
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Printing
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0.20
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Postage
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0.49
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Total
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$8.14
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For administrative efficiency, the utility would like to
have a unified late payment charge for all UIF systems. Therefore, the utility is
only requesting a charge of $5.25, which is the previously approved charge for
two UIF systems, formerly known as Lake Placid Utilities, Inc. and Cypress
Lakes Utilities, Inc.
Staff believes the cost justification provided by the utility indicates that
the requested late payment charge of $5.25 for the remaining UIF systems is
reasonable.
Based on staff’s research, since the late 1990s, the
Commission has approved late payment charges ranging from $2.00 to $7.00.[2] The purpose of this charge is not only to
provide an incentive for customers to make timely payment, thereby reducing the
number of delinquent accounts, but also to place the cost burden of processing
delinquent accounts solely upon those who are cost causers.
Based on the above, staff recommends that UIF’s request to
implement a uniform late payment charge of $5.25 be approved. UIF should be
required to file a proposed customer notice to reflect the Commission-approved
charge for those systems where the charge is not currently approved. The
approved charge should be effective for services rendered on or after the
stamped approval date on the tariff sheet, pursuant to Rule 25-30.475(1), F.A.C.
In addition, the approved charge should not be implemented until staff has
approved the proposed customer notice. The utility should provide proof of the
date notice was given no less than ten days after the date of the notice.
Issue
2
: Should UIF’s current NSF
charge be applied to all of UIF’s systems?
Recommendation:
Yes. UIF’s request to uniformly implement a NSF
charge should be approved. Staff recommends that UIF revise its tariffs to
reflect the NSF charges currently set forth in Section 68.065, F.S. UIF should
be required to file a proposed customer notice to reflect the Commission-approved
charge for those systems where the charge is not currently approved. The NSF
charges should be effective on or after the stamped approval date on the tariff
sheets pursuant to Rule 25-30.475(1), F.A.C. Furthermore, the charges should
not be implemented until staff has approved the proposed customer notice. The utility
should provide proof of the date the notice was given within 10 days of the
date of the notice. (Johnson)
Staff Analysis:
Section 367.091, F.S., requires rates, charges, and customer
service policies to be approved by the Commission. The Commission has authority
to establish, increase, or change a rate or charge.
Three of
UIF’s wastewater systems, formerly known as Utilities, Inc. of Sandalhaven,
Tierra Verde Utilities, Inc., and Utilities, Inc. of Eagle Ridge, do not
currently have an approved NSF charge. Staff believes that UIF should be
authorized to collect NSF charges consistent with Section 68.065, F.S., which
allows for the assessment of charges for the collection of worthless checks,
drafts, or orders of payment. As currently set forth in Section 68.065(2),
F.S., the following NSF charges may be assessed:
(1) $25,
if the face value does not exceed $50,
(2) $30, if the face value exceeds
$50 but does not exceed $300,
(3) $40, if the face value exceeds
$300,
(4) or five percent of the face
amount of the check, whichever is greater.
Approval of
NSF charges is consistent with prior Commission decisions.[3]
Furthermore, NSF charges place the cost on the cost-causer, rather than
requiring that the costs associated with the return of the NSF checks be spread
across the general body of ratepayers. As such, UIF should be authorized to
collect NSF charges for all systems. Staff recommends that UIF revise its
tariff sheet to reflect the NSF charges currently set forth in Section 68.065,
F.S. UIF should be required to file a proposed customer notice to reflect the
Commission-approved charge for those systems where the charge is not currently
approved. The NSF charges should be effective on or after the stamped approval
date on the tariff sheet pursuant to Rule 25-30.475(1), F.A.C. Furthermore, the
NSF charges should not be implemented until staff has approved the proposed
customer notice. The utility should provide proof of the date the notice was
given within 10 days of the date of the notice.
Issue
3: Should this docket be closed?
Recommendation: If Issue 1 and 2
are approved, 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. If a protest is filed within 21 days of the issuance date of
the Order, the tariff sheets should remain in effect with all charges held
subject to refund pending resolution of the protest. If no timely protest is
filed, a consummating order should be issued and, once staff verifies that the
notice of the charges has been given to customers, the docket should be
administratively closed. (Johnson, Leathers)
Staff
Analysis: If Issue 1 and 2 are approved, 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. If a protest is filed within
21 days of the issuance date of the Order, the tariff sheets should remain in
effect with all charges held subject to refund pending resolution of the
protest. If no timely protest is filed, a consummating order should be issued
and, once staff verifies that the notice of the charges has been given to
customers, the docket should be administratively closed.