Case Background
K W Resort
Utilities Corporation (KWRU or Utility) is a Class A Utility providing
wastewater service to approximately 2,061 customers in Monroe County. Water
service is provided by the Florida Keys Aqueduct Authority (FKAA). Rates were
last established for this Utility in its 2007 rate case. According
to the Utility’s 2014 Annual Report, KWRU had operating revenues of $1,479,307
and operating expenses of $1,199,672. On July 1, 2015, the Utility filed its
application for the rate increase at issue. KWRU requested that the application
be processed using the Proposed Agency Action (PAA) procedure. The test year
established for final rates was the 13-month average period ended December 31,
2014.
On February
24, 2016, the Office of Public Counsel (OPC) filed a Notice of Intervention in
this docket, and Order No. PSC-16-0114-FOF-SU acknowledging intervention was
issued on March 18, 2016. Subsequently, by Order No. PSC-16-0123-PAA-SU (PAA
Order), issued March 23, 2016, the Commission approved a two-phased rate
designed to recover a wastewater revenue requirement of $2,238,046 in Phase I
and $2,485,904 in Phase II. On April 13, 2016, OPC and Monroe County (County)
timely filed protests of the PAA Order. By letter dated April 18, 2016, KWRU
gave notice that it elected to put the Phase I rates approved in the PAA Order
into effect during the pendency of the administrative hearing pursuant to
Section 367.081(8), Florida Statutes (F.S.).
On April
18, 2016, Harbor Shores Condominium Unit Owners Association, Inc. (Harbor
Shores) timely filed a cross-petition. On April 21, 2016, KWRU timely filed a
cross-protest. On April 26, 2016, the Harbor Shores’ representative was granted
qualified representative status. A formal evidentiary hearing and service
hearing were held November 7-8, 2016, in Key West. The parties filed briefs on
December 9, 2016.
On February
7, 2017, the Commission voted to approve new rates and charges for the Utility.
Following the Commission’s vote, a computational error was discovered within
Issue 34, regarding the appropriate miscellaneous service charges that may be
charged by the Utility.
This
recommendation addresses the calculation of appropriate miscellaneous service
charges. The Commission has jurisdiction pursuant to Sections 367.081, F.S.
Discussion
of Issues
Issue 1:
Should the Commission reconsider, on its own motion,
its vote on Issue 34 regarding calculation of miscellaneous service charges?
Recommendation:
Yes, the
Commission, on its own motion, should reconsider a limited portion of its vote
on Issue 34 with respect to the calculation of mileage that factors into the
Initial Connection Charge Calculation and the Premises Visit Charge Calculation.
If the Commission approves staff’s recommendation, staff will incorporate this
correction into the final order. Staff should be granted the administrative
authority to make fall-out calculations.
Staff
Analysis:
As a
general rule, administrative agencies have inherent or implied power,
comparable to that possessed by courts, to rehear or reopen a cause and
reconsider its action or determination therein where the proceeding is in
essence a judicial one. This
power, however, must be exercised before an appeal from the original order is
filed or before such an order has become final by the lapse of time to file a
timely notice of appeal. An administrative tribunal has the power,
upon its own motion or by request, to correct or amend any orders still under
its control, provided the parties will not suffer by reason of the correction
or amendment. Since the final order has not yet issued,
staff believes the parties will not be prejudiced by this correction, since they
will still have an opportunity to request reconsideration or appeal once the
final order is issued.
Calculation Error
On February 7,
2017, the Commission voted to approve Issue 34, which pertains to appropriate
miscellaneous service charges. Contained within these miscellaneous charges is
a charge for transportation expenses. There were inadvertent calculation errors
within staff’s breakdown of this charge. The transportation cost for the
Initial Connection Charge Calculation (Table 1) and Premises Visit Charge
Calculation (Table 2) was multiplied by two to represent two trips for each
service, when in fact it should have been calculated for only one trip. This
resulted in a doubling of this expense such that the original calculated cost
of transportation was $3.36 for Normal Hours Cost and $6.72 for After Hours
Costs, when the correct charges should have been $1.68 and $3.36, respectively.
This correction results in lower miscellaneous service charges for both initial
connections and premise visits. The Normal Reconnection Charge Calculation is
still correct, because the calculation properly reflects a round-trip expense
on behalf of the Utility. This is because the Normal Reconnection Charge
involves two trips. A first trip to the residence is needed to shut off the
water, and a second trip is necessary for reconnection. In contrast, the
Initial Connection and Premises Visit Charges both involve only a single trip
to the residence, thus a one-way expense calculation is all that’s required.
The tables below show the new
figures, with the corrected numbers highlighted.
Table 1
Initial Connection Charge
Calculation
|
Activity
|
Normal Hours
Cost
|
Activity
|
After Hours Cost
|
|
Labor (Administrative)
($22.50/hr x 1 hr)
|
$22.50
|
Labor (Administrative)
($22.50/hr x 1 hr)
|
$22.50
|
|
Labor (Field)
($22.50/hr x 1/3 hr)
|
$7.50
|
Labor (Field)
($33.75/hr x1/3hr)
|
$11.25
|
|
Labor (Supervisor)
($68.00/hr x ¼ hr)
|
$17.00
|
Labor (Supervisor)
($68.00/hr x ¼ hr)
|
$17.00
|
|
Benefits & Insurance (23%)
|
$10.81
|
Benefits & Insurance (23%)
|
$11.67
|
|
Transportation
($.56/mile x 3 miles-to/from)
|
$1.68
|
Transportation
($.56/mile x 6 miles-to/from)
|
$3.36
|
|
Total
|
$59.49
|
Total
|
$65.78
|
Table 2
Premises Visit Charge
Calculation
|
Activity
|
Normal Hours
Cost
|
Activity
|
After Hours Cost
|
|
Labor (Administrative)
($22.50/hr x 1/2 hr)
|
$11.25
|
Labor (Administrative)
($22.50/hr x 1/2 hr)
|
$11.25
|
|
Labor (Field)
($22.50/hr x 1/3 hr)
|
$7.50
|
Labor (Field)
($33.75/hr x1/3hr)
|
$11.25
|
|
Labor (Supervisor)
($68.00/hr x 1/4hr)
|
$17.00
|
Labor (Supervisor)
($68.00/hr x 1/4 hr)
|
$17.00
|
|
Benefits & Insurance (23%)
|
$8.22
|
Benefits & Insurance (23%)
|
$9.09
|
|
Transportation
($.56/mile x 3 miles-to/from)
|
$1.68
|
Transportation
($.56/mile x 6 miles-to/from)
|
$3.36
|
|
Total
|
$45.65
|
Total
|
$ 51.95
|
Table
3
Miscellaneous Service Charges
|
Charge
|
Utility’s Existing Charges
|
Utility’s Proposed Charges
|
Staff’s Recommended Charges
|
|
|
Normal Hours
|
After Hours
|
Normal
Hours
|
After Hours
|
Normal Hours
|
After
Hours
|
|
Initial Connection
|
$15.00
|
N/A
|
$75.00
|
$125.00
|
$59.50
|
$65.80
|
|
Normal Reconnection
|
$15.00
|
N/A
|
$75.00
|
$125.00
|
$65.80
|
$76.10
|
|
Violation Reconnection
|
Actual Cost
|
N/A
|
$150.00
|
$225.00
|
Actual Cost
|
|
Premises Visit
|
$20.00
|
$45.00
|
$65.00
|
$125.00
|
$45.70
|
$52.00
|
|
|
|
|
|
|
|
|
Conclusion
Staff recommends
that the Commission, on its own motion, reconsider a limited portion of its
vote in Issue 34 with respect to the calculation of mileage that factors into
the Initial Connection Charge Calculation and the Premises Visit Charge
Calculation, and approve the charges as shown in the tables above. If the Commission approves staff’s
recommendation, staff will incorporate this correction into the final order.
Staff should be granted the administrative authority to make fall-out
calculations.
Issue 2:
Should this docket be closed?
Recommendation:
No, pursuant to the
Commission’s February 7, vote, this docket should remain open for staff’s
verification that the Utility has completed the recommended refunds, the
revised tariff sheets and customer notice have been filed by the Utility and
approved by staff, and KWRU has notified the Commission in writing that the
adjustments for all applicable NARUC USOA primary accounts have been made. Once
these actions are complete, this docket should be closed administratively
Staff Analysis:
Pursuant to the Commission’s February 7, vote, this
docket should remain open for staff’s verification that the Utility has
completed the recommended refunds, the revised tariff sheets and customer
notice have been filed by the Utility and approved by staff, and KWRU has
notified the Commission in writing that the adjustments for all applicable
NARUC USOA primary accounts have been made. Once these actions are complete,
this docket should be closed administratively
