Discussion
of Issues
Issue 1:
Should the application for transfer of majority
organizational control of Sunny Shores Water Company, Inc. in Manatee County
from Jack E. Mason to Jack E. Mason, II and Debbie A. Mason be approved?
Recommendation:
Yes. The transfer of majority organizational control
from Jack E. Mason to Jack E. Mason, II and Debbie A. Mason, is in the public
interest and should be approved effective the date of the Commission vote. The
resultant order should serve as the water certificate, with the territory
described in Attachment A. The existing rates and charges should remain in
effect until a change is authorized by the Commission in a subsequent
proceeding. The tariffs reflecting the transfer should be effective for
services rendered or connections made on or after the stamped approval date on
the tariffs pursuant to Rule 25-30.475,
Florida Administrative Code (F.A.C.). (M.
Watts, Sewards, Johnson)
Staff Analysis:
This application is for the transfer of majority
organizational control of Sunny Shores Water Company, Inc. in Manatee County
from Jack E. Mason to Jack E. Mason, II and Debbie A. Mason. Based on staff’s
review, the application is in compliance with the governing statute, Section
367.071, F.S., and Rule 25-30.037(4), F.A.C., concerning applications for
transfer of majority organizational control.
Noticing
and Territory
Sunny Shores provided notice of its application pursuant
to Section 367.071, F.S., and Rule 25-30.030, F.A.C. No objections to the
transfer were filed with the Commission, and the time for doing so has expired.
The notice contains a description of the territory for Sunny Shores, which is
appended to this recommendation as Attachment A.
Technical
and Financial Ability
Pursuant
to Rules 25-30.037(2)(l) and (m), F.A.C., the application contains statements
describing the technical and financial ability of the buyers to provide
service. The transfer application states that the buyers have sufficient
financial assets to ensure the continuing operation of the Utility. Staff
reviewed the financial statements of the buyers[4] and believes they have the
financial capability to provide any necessary funding. According to the application, the
public interest is served by the continuity of management in the Utility as the
shares of the majority owner are purchased by buyers who have been the managers
of the Utility since 2008. Based on the
information above, staff believes the buyers have the technical and financial
capability to provide service to the existing service territory.
Rates
and Charges
The Utility’s rates and charges were last approved in a grandfather certificate
docket in 1996. In 2010,
the Commission approved a backflow maintenance charge.[6]
The Utility also applied for and received approval of numerous price indexes
and pass-through rate adjustments. The Utility’s existing rates and charges are
shown on Schedule No. 1, which is attached to this recommendation. Rule
25-9.044(1), F.A.C., provides that, in the case of a change of ownership or
control of a utility, the rates, classifications, and regulations of the former
owner must continue unless authorized to change by this Commission. Therefore,
staff recommends that the Utility’s existing rates and charges remain in effect
until a change is authorized by this Commission in a subsequent proceeding.
Conclusion
Based on the above, staff recommends that the transfer of
majority organizational control from Jack E. Mason to Jack E. Mason, II and
Debbie A. Mason, is in the public interest and should be approved effective the
date of the Commission vote. The resultant order should serve as the water
certificate, with the territory described in Attachment A. The existing rates
and charges should remain in effect until a change is authorized by the
Commission in a subsequent proceeding. The tariffs reflecting the transfer
should be effective for services rendered or connections made on or after the
stamped approval date on the tariffs pursuant to Rule 25-30.475, F.A.C.
Issue 2:
Should Sunny Shores’ request for a late payment
charge of five percent of the total customer’s bill be approved?
Recommendation:
No. Sunny Shores’ request to implement a late
payment charge of five percent of the total customer’s bill should not be
approved. However, staff’s recommended late payment charge of $5 should be
approved. The charge should be effective for services rendered on or after the
stamped approval date on the tariff pursuant to Rule 25-30.475, F.A.C. In
addition, the approved charge should not be implemented until staff has
approved the proposed customer notice and the notice has been received by the
customers. Sunny Shores should provide proof of the date that the notice was
given within 10 days of 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 requested
a late payment charge of five percent of the total customer bill to
recover the cost of supplies and labor associated with processing late payment
notices. Although the Utility prefers the percentage based late payment charge,
it also proposed a cost-based late payment charge of $8.55. 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, F.S.
As mentioned above, the Utility
provided cost justification for a late payment charge of $8.55. The Utility stated
that it believed a flat charge would be too high for customers with low bills.
Instead, the Utility believes a late payment charge should be based on a
percentage of a customer’s bill. The Utility’s approved service rates consists
of a $69.85 base facility charge, which includes usage up to 10,800 gallons.
Based on the cost of a standard bill of $69.85, a late payment charge of five
percent would result in a charge of $3.49. With a pending wastewater
certificate[7] and with
20 percent to 30 percent of customers using more than 10,800 gallons of water,
staff believes a late payment charge of five percent of the total bill could
potentially lead to an excessively high late payment charge. In addition, past
Commission practice indicates that water and wastewater utilities’ late payment
charges are to be cost-based.
The cost of preparing and sending the late payment notice does not vary based
on the amount of the bill. Therefore, staff believes the Utility’s late payment
charge should be cost-based and not percentage-based.
Based on historical data, the
Utility anticipates it will prepare late payment notices for approximately 40
accounts per billing cycle. In the past, the Commission has allowed 10-15
minutes per account per month for clerical and administrative labor to research,
review, and prepare the notice.[9] The
Utility indicated it will spend approximately 10 hours per billing cycle
processing late payment notices, which results in an average of approximately
15 minutes per account (600 minutes/40 accounts) and is consistent with past
Commission decisions. The Utility suggested a labor rate of $7.50 (10 hours x
$30.00 labor cost / 40), but also initially included labor costs for activities
not involved in preparing and sending out late payment notices. In response to
a staff email inquiry, the Utility indicated that the appropriate labor cost is
$15.00 per hour. This results in a labor rate of $3.75 (10 hours x $15.00 labor
cost/40) per late payment notice. Both the Utility’s and staff’s cost
justification for the late payment charge are shown below in Table 2-1.
Table 2-1
Late Payment Charge Cost Justification
|
Activity
|
Utility
Proposed
|
Activity
|
Staff
Recommended
|
|
Labor
|
$7.50
|
Labor
|
$3.75
|
|
Printing
|
0.45
|
Printing
|
0.45
|
|
Postage
|
0.60
|
Postage
|
0.60
|
|
Total Cost
|
$8.55
|
Total Cost
|
$4.80
|
Source: Utility correspondence
Based on staff’s research, since
the late 1990s, the Commission has approved late payment charges ranging from
$2.00 to $7.00.[10] 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, Sunny Shores’ request to implement a late
payment charge of five percent of the total customer’s bill should not be
approved. However, staff’s recommended late payment charge of $5 should be
approved. The charge should be effective for services rendered on or after the
stamped approval date on the tariff pursuant to Rule 25-30.475, F.A.C. In
addition, the approved charge should not be implemented until staff has
approved the proposed customer notice and the notice has been received by the
customers. Sunny Shores should provide proof of the date that the notice was
given within 10 days of the date of the notice.
Issue 3:
Should this docket be closed?
Recommendation: No.
The docket should remain
open pending staff’s verification that the revised tariff sheets and customer
notice have been filed by Sunny Shores 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 the 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 charge has
been given to customers, the docket should be administratively closed.
(Leathers)
Staff
Analysis:
The
docket should remain open pending staff’s verification that the revised tariff
sheets and customer notice have been filed by Sunny Shores 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 the 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.
FLORIDA PUBLIC SERVICE COMMISSION
Authorizes
Sunny Shores Water Company, Inc.
Pursuant to
Certificate Number 578-W
to provide wastewater service in
Manatee County in accordance with the provisions of Chapter 367, Florida
Statutes, and the Rules, Regulations, and Orders of this Commission in the
territory described by the Orders of this Commission. This authorization shall
remain in force and effect until superseded, suspended, cancelled or revoked by
Order of this Commission.
Order Number Date Issued Docket Number Filing Type
PSC-96-0599-FOF-WS 05/07/1996 960028-WS Original
Certificate
* * 160023-WU Transfer Majority
Organizational Control
*Order Number and
date to be provided at time of issuance
