Case Background
On April 5,
2016, Oak Springs MHC, LLC (OSMHC, Applicant, or Buyer) filed an application
for the transfer of Certificate No. 623-W from Oak Springs, LLC (Seller) in
Orange and Lake Counties. The service area is located in the St. Johns River
Water Management District (SJRWMD). Water use restrictions have been imposed
district wide to encourage conservation. According to the Utility’s 2016 Annual
Report, it serves approximately 310 residential customers and three general
service customers, and for 2016, experienced an operating loss of $19,004.
The water system
serving the Oak Springs community has been operating as a part of a mobile home
community with no separate charge for water service since 1973. The Seller had
been providing water and wastewater service solely to the mobile home rental
community tenants as a part of the lot rent, and was therefore exempt from
Commission regulation pursuant to Section 367.022(5), Florida Statutes (F.S.) To promote water conservation, in 2004,
the Seller was required by the SJRWMD to form a private utility capable of
charging for water use. On November 9, 2004, the Seller was granted Certificate
No. 623-W to operate a water utility. The rates and charges for utility service
were approved by the Commission in 2004. Wastewater service continues to be
provided as part of the lot rent.
On July 13,
2017, the Commission voted to approve the transfer of assets and Certificate
No. 623-W from Oak Springs, LLC to Oak Springs MHC, LLC and set net book value.
Following the Commission’s vote, an error was discovered within Issue 2 of that
recommendation, regarding the appropriate accumulated depreciation of meters
and meter installations.
This
recommendation addresses corrections to the accumulated depreciation of meters
and meter installations and the resulting correct net book value. The
Commission has jurisdiction pursuant to Sections 367.071, 367.091, and 367.121,
F.S.
Discussion
of Issues
Issue 1:
Should the Commission reconsider, on its own motion,
its vote on Issue 2, regarding calculation of net book value?
Recommendation:
Yes, the Commission, on its own motion, should
reconsider a limited portion of its vote on Issue 2 with respect to accumulated
depreciation of meters and meter installations and the resulting net book
value. If the Commission approves staff’s recommendation, staff will
incorporate this correction into the final order. (Andrews, Mapp)
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 utility will not
be prejudiced by this correction, since it will still have an opportunity to
request reconsideration or appeal once the final order is issued
Calculation Error
On July 13, 2017, the Commission voted to approve Issue 2,
which pertains to the appropriate net book value (NBV). The NBV for the water
system reflects a recalculation of accumulated depreciation. There was an
inadvertent formula error within staff’s calculation of accumulated
depreciation. The accumulated depreciation of meters and meter installations
was listed as $59,718, when in fact it should have been $56,690, resulting in a
$3,028 overstatement of accumulated depreciation. Correction of this error
results in lower accumulated depreciation and a higher NBV of $109,978. Staff
notes that the change in NBV has no effect on the Commission’s vote to not
include an acquisition adjustment. The corrected NBV is shown on Schedule No.
1, with the corrections highlighted.
A similar error also affected the amount that represented
the NBV per the Utility. The summary schedule of NBV in staff’s previous
recommendation, Schedule No. 2, Page 1 of 3, reflects an incorrect total of
$113,607 in the column labeled “Balance Per Utility” due to a formula error.
The balances of the NBV components reflected in that column should total
$109,857 ($444,857 + $3,750 - $338,750), which is consistent with the Utility’s
transfer application. The incorrect figure of $113,607 was also cited in the
analysis of Issue 2. Although this does not affect the calculation of NBV,
staff believes the correction provides clarity. Therefore, staff recommends the
inclusion of this additional correction. This correction is reflected in
Schedule No. 1, Page 1 of 3, with the correction also highlighted.
Conclusion
Based on the above,
the Commission, on its own motion, should reconsider a limited portion of its
vote on Issue 2 with respect to accumulated depreciation of meters and meter
installations and the resulting net book value. If the Commission approves
staff’s recommendation, staff will incorporate this correction into the final
order.
Issue 2:
Should this docket be closed?
Recommendation:
Once all requirements of the Commission’s July 13,
2017, vote have been met, this docket may be closed administratively. (Mapp)
Staff Analysis:
Once all requirements of the Commission’s July 13,
2017, vote have been met, this docket may be closed administratively.
