Case Background
Little Gasparilla
Water Utility, Inc., (Little Gasparilla or utility) is a Class B water utility
serving approximately 371 customers on Little Gasparilla Island in Charlotte
County. The utility’s service area is on a private island, which consists
primarily of vacation homes. Little Gasparilla’s service territory is located
in the Southern Water Use Caution Area (SWUCA) within the Southwest Florida
Water Management District (SWFWMD).
By Order No. PSC-14-0626-PAA-WU,
issued October 29, 2014, in this docket, the utility was given until December
3, 2015, to complete the Phase II pro forma construction of a new building and
meter replacements. However, the utility encountered financing issues and
requested an extension of time to complete the Phase II pro forma. By Order No.
PSC-16-0023-FOF-WU, issued January 12, 2016, the Commission approved the
utility’s request for an extension of time to complete the required Phase II pro
forma by June 3, 2016.
On May 19, 2016,
the utility notified staff that it would not be able to meet the June 3, 2016 deadline
for completing the Phase II pro forma plant items. Little Gasparilla requested
that it be granted a second extension of approximately six months to complete
the Phase II pro forma plant items. This recommendation addresses the utility’s
request for a second extension to complete its Phase II pro forma plant items. The
Commission has jurisdiction pursuant to Section 367.121, Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission approve Little Gasparilla's second
request for extension of time to complete its Phase II pro forma plant items
consisting of the construction of a new building and meter replacements?
Recommendation:
Yes. The Commission should approve Little
Gasparilla’s second request for an extension of time to complete its Phase II
pro forma construction of a new building and meter replacements. The pro forma
plant items should be completed before December 15, 2016. The utility is
required to submit a copy of the final invoices and cancelled checks for the
Phase II pro forma plant items. The
utility should provide proof that a simplified employee pension plan has been
established and that contributions to the fund have begun prior to Commission
approval of Phase II rates. (Bruce)
Staff Analysis:
As mentioned in the case background, pursuant to
Order No. PSC-16-0023-FOF-WU, the utility was granted an extension until June
3, 2016, to complete Phase II pro forma construction of a new building and
meter replacements. The utility indicated that the reason for the delay in
completing the Phase II pro forma plant items was Charlotte County’s potential
action to repeal its mandatory water connection ordinance and the effect that
it would have on the utility’s ability to borrow funds to finance the pro forma
plant items.
The Charlotte County ordinance required connections to a
centralized water system within one year of availability. Charlotte County did
not repeal the mandatory water connection ordinance, but added a five-year
grace period for residents who applied for the exception to the mandatory
connection. The exception to the mandatory connection requirement expires on
January 1, 2021. According to the Charlotte County ordinance, the existing
residents who did not apply or were not approved for the exception to the
mandatory connection requirement are expected to connect to the utility. The
additional connections would pay Little Gasparilla’s approved service
availability charges, which would potentially increase the financial ability of
the utility to pay its existing and any additional loans. However, due to the
length of time it took Charlotte County to make its decision, the utility was
required to revise projections that had been previously submitted, as loans are
approved based on projections and Small Business Administration’s (SBA)
guaranty. The utility has submitted all of its required updated information.
On May 26, 2016, the utility indicated Stonegate Bank had
approved the loan. However, the approval and guaranty from the SBA is still
pending. Since the utility is still awaiting financing to get the construction
underway, staff recommends that the Commission should approve Little
Gasparilla’s second request for an extension of time to complete its pro forma
construction of a new building and meter replacements. The pro forma plant
items should be completed by December 15, 2016. The utility is required to
submit a copy of the final invoices and cancelled checks for the Phase II pro
forma plant items. Furthermore, in this docket, the utility is required to
provide proof that a simplified employee pension plan has been established and
that contributions to the fund have begun prior to Commission approval of Phase
II rates.
Issue 2:
Should this docket be closed?
Recommendation:
No. The docket should remain open for a final
decision by the Commission on the appropriate Phase II revenue requirement and
rates. (Murphy)
Staff Analysis:
The docket should remain open for a final decision
by the Commission on the appropriate Phase II revenue requirement and rates.
