Discussion
of Issues
Issue 1:
Should UIF be authorized to collect the proposed AFPI
charges for its Labrador, Lake Placid, Mid-County, and UIF-Marion wastewater systems?
Recommendation:
Yes. UIF should be
authorized to collect the proposed AFPI charges, shown on Attachment A, from
future wastewater customers in its Labrador, Lake Placid, Mid-County, and
UIF-Marion systems. After December 31, 2020, the utility should be allowed to
collect the constant charge until the projected ERCs included in the
calculation of the charge have been added, upon which the charges should be
discontinued. The AFPI charges should apply to future connections of 155 ERCs
for Labrador, 226 ERCs for Lake Placid, 203 ERCs for Mid-County, and 45 ERCs
for the UIF-Marion system.
UIF should provide notice to property owners who have
requested service during the 12
months prior to the month the request for AFPI charges was filed. The approved
charges should be effective for connections made on or after the stamped
approval date on the tariff sheets. The Utility should provide proof of noticing
within 10 days of providing its approved notice. (Bruce)
Staff Analysis:
Pursuant to Rule 25-30.434, Florida Administrative
Code (F.A.C.), an AFPI charge is a mechanism designed to allow a utility the
opportunity to earn a fair rate of return on prudently constructed plant held
for future use from the customers that will be served by that plant. This
one-time charge is assessed based on the date the future customer connects to
the utility’s system.
The utility’s proposed AFPI charges for the Labrador, Lake
Placid, Mid-County, and UIF-Marion wastewater systems (Attachment A) are based
on the non-U&U adjustments associated with those wastewater treatment plants
(WWTP) in Order No. PSC-2017-0361-FOF-WS. The Labrador WWTP was determined to
be 79.94 percent U&U, the Lake Placid WWTP was 29.79 percent U&U, the
Mid-County WWTP was 93.67 percent
U&U, and the UIF-Marion WWTP was 68.65 percent U&U. The U&U adjustments
in that rate case excluded a return on the non U&U portion of the
investments and the associated depreciation, property taxes, and regulatory
assessment fees from the approved revenue requirement. The proposed tariffs
filed on February 8, 12, and 15, 2018, reflect the new corporate federal tax
rate that became effective on January 1, 2018.
Pursuant to Rule 25-30.434(4), F.A.C., the beginning date
for accruing the AFPI charges should agree with the month following the end of
the test year that was used to establish the amount of non-U&U plant. The
test year used in Docket No. 201610101-WS for establishing the amount of
non-U&U plant was the year ended December 31, 2015; therefore, the
beginning date for accruing the AFPI in this case is January 1, 2016. The proposed
AFPI charges were calculated for a five-year period consistent with Rule
25-30.434(5), F.A.C. After December 31, 2020, the utility should be allowed to
collect the constant charge (reflecting the costs accrued through the fifth
year) until the projected equivalent residential connections (ERCs) included in
the calculation of the charge have been added, upon which the charges should be
discontinued. The AFPI charges
should apply to future connections of 155 ERCs for Labrador, 226 ERCs for Lake Placid, 203 ERCs for Mid-County, and 45 ERCs for the UIF-Marion system.
UIF should provide notice to property owners who have
requested service during the 12 months prior to the month the request for AFPI
charges was filed. The approved charges should be effective for connections
made on or after the stamped approval date on the tariff sheets. In accordance
with Rule 25-30.434(4), F.A.C., no charge may be collected for connections made
prior to the effective date of the AFPI charges. The Utility should provide proof
of noticing within 10 days of providing its approved notice. The charges
reflect the costs associated with one ERC based on 280 gallons per day (gpd)
per ERC. If a future customer is expected to place more demand on the system
than one ERC, the charge should be multiplied by the number of ERCs of demand
which are needed to provide service to the customer.
Conclusion
Based on the above, UIF
should be authorized to collect the proposed AFPI charges from future wastewater
customers in its Labrador, Lake Placid, Mid-County, and UIF-Marion systems.
After December 31, 2020, the utility should be allowed to collect the constant
charge until the projected ERCs included in the calculation of the charge have
been added, upon which the charges should be discontinued. The AFPI charges
should apply to future connections of 155 ERCs for Labrador, 226 ERCs for Lake
Placid, 203 ERCs for Mid-County, and 45 ERCs for the UIF-Marion system.
UIF should provide
notice to property owners who have requested service during the 12 months prior
to the month the request for AFPI charges was filed. The approved charges
should be effective for connections made on or after the stamped approval date
on the tariff sheets. The Utility should provide proof of noticing within 10
days of providing its approved notice.
Issue 2:
Should UIF be authorized to collect the
proposed AFPI charges for its LUSI wastewater system?
Recommendation:
No. UIF’s proposed tariff as filed should be
denied. UIF should be given the option
to file a revised tariff within 10 days of the Commission’s vote, for
administrative approval by staff, that reflects the non U&U costs
associated with the LUSI WWTP, pursuant to Order No. PSC-2017-0361-FOF-WS, and
accrued beginning January 1, 2016.
Upon staff’s administrative approval, UIF should be
authorized to collect the proposed AFPI charges from future wastewater
customers in its LUSI system. After December 31, 2020, the utility should be
allowed to collect the constant charge until the projected ERCs included in the
calculation of the charge have been added, upon which the charges should be
discontinued. The AFPI charges should apply to 1,471 future ERCs.
UIF should provide
notice to property owners who have requested service during the 12 months prior to the month the request for AFPI
charges was filed. The approved charges should be effective for connections
made on or after the stamped approval date on the tariff sheets. The Utility
should provide proof of noticing within 10 days of providing its approved
notice. (Bruce)
Staff Analysis:
The utility’s proposed AFPI charges for the LUSI WWTP
(Attachment B) are based on the non-U&U adjustments determined in Order No.
PSC-2017-0361-FOF-WS. The proposed tariff filed on February 8, 2018, reflects
the new corporate federal tax rate that became effective on January 1, 2018. However,
staff believes that, because the utility’s proposed tariff reflects costs
accrued beginning in 2010, the proposed tariff is inconsistent with Rule
25-30.434(4), F.A.C. As discussed in Issue 1, the rule provides that the
beginning date for accruing the AFPI charges should agree with the month
following the end of the test year that was used to establish the amount of
non-U&U plant which, in this case, is January 1, 2016. The utility contends
that the AFPI charges should not be reset (accrued beginning January 1, 2016),
but should continue from the prior U&U adjustments.
AFPI charges applicable to the LUSI WWTP (formerly known
as Lake Groves) were previously approved in 1991 in the utility’s original
certificate case. At that
time, the capacity of the system was 160,000 gpd and the AFPI charges were
based on the 545 ERCs which the system was originally designed to serve. UIF
purchased the Lake Groves system in 1998 and increased the capacity to 500,000
gpd in 2000. In 2007,
the treatment capacity was expanded to 1,000,000 gpd and in a subsequent rate
case, Docket No. 20070693-WS, the Commission found the wastewater treatment
plant to be approximately 53 percent U&U. The
utility was serving approximately 2,860 wastewater customers at that time. In the
utility’s next rate case, Docket No. 20100426-WS, the Commission again found the
1,000,000 gpd WWTP to be 53 percent U&U based on the U&U percentage
from the prior order.
Pursuant to Order No. PSC-2017-0361-FOF-WS, the utility’s
most recent rate case, the Commission found the LUSI WWTP to be 58.78 percent
U&U (including prepaid commitments). However,
because the LUSI WWTP was serving in excess of the original 545 ERCs the system
was designed to serve, the LUSI WWTP AFPI charges were discontinued and an
investigation was opened to determine whether there was an over collection of
AFPI charges. The
investigation addresses AFPI collections prior to 2018, while the proposed charges
in this docket will be collected from future connections.
Although it was determined that the utility had
non-U&U plant in prior dockets, the AFPI charges were not re-evaluated by
staff and the utility did not request that the LUSI AFPI charges be revised
following the addition of the original 545 ERCs and the plant expansion that
occurred in 2007. Because it is incumbent upon the utility to request
consideration of AFPI charges for non-U&U capacity, staff does not believe it
is appropriate to accrue AFPI charges prior to January 1, 2016. However, the
utility should be given the option to file a revised tariff within 10 days of
the Commission’s vote, for administrative approval by staff, that reflects the
non U&U costs associated with the LUSI WWTP, pursuant to Order No.
PSC-2017-0361-FOF-WS, and accrued beginning January 1, 2016.
Upon staff’s administrative approval, UIF should be
authorized to collect the proposed AFPI charges from future wastewater
customers in its LUSI system. After December 31, 2020, the utility should be
allowed to collect the constant charge until the projected ERCs included in the
calculation of the charge have been added, upon which the charges should be discontinued.
The AFPI charges should apply to 1,471 future ERCs.
UIF should provide
notice to property owners who have requested service during the 12 months prior to the month the request for AFPI
charges was filed. The approved charges should be effective for connections
made on or after the stamped approval date on the tariff sheets. The Utility
should provide proof of noticing within 10 days of providing its approved
notice.
Issue 3:
Should this docket be closed?
Recommendation:
If the Commission approves
staff’s recommendation in Issue 1, the docket should remain open pending
staff’s verification that the revised tariff sheets and 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 approved tariff should remain in effect
with the charge held subject to refund pending resolution of the protest. If no
timely protest is filed, a consummating order should be issued.
If the Commission approves staff’s
recommendation in Issue 2, UIF timely files a revised AFPI tariff for its LUSI
wastewater system, and a protest is filed within 21 days of the issuance of the
order, the revised tariffs should remain in effect, with any revenues held
subject to refund, pending staff’s verification that the revised tariff sheets
and notice have been filed by the utility and approved by staff; the docket
should remain open pending resolution of the protest. If UIF timely files a revised AFPI tariff for
its LUSI wastewater system and no timely protest is filed with respect to that
issue, the docket should remain open pending staff’s verification that the
revised tariff sheets and notice have been filed by the utility and approved by
staff, a consummating order should be issued, and the docket should be closed
administratively.
If the Commission approves staff’s recommendation in Issue
2, UIF does not timely file a revised AFPI tariff meeting the conditions of the
order, and a protest is filed within 21 days of the issuance of the order, the
tariffed charges originally requested by UIF could be placed into effect, with
any revenues held subject to refund, pending staff’s verification that the
revised tariff sheets and notice have been filed by the utility and approved by
staff; the docket should remain open pending resolution of the protest. If UIF does
not timely file a revised AFPI tariff with respect to its LUSI wastewater
system and no timely protest is filed, a consummating order should be issued,
and the docket closed administratively. (Crawford)
Staff Analysis:
If the Commission approves
staff’s recommendation in Issue 1, the docket should remain open pending
staff’s verification that the revised tariff sheets and 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 approved tariff should remain in effect
with the charge held subject to refund pending resolution of the protest. If no
timely protest is filed, a consummating order should be issued.
If the Commission approves staff’s
recommendation in Issue 2, UIF timely files a revised AFPI tariff for its LUSI
wastewater system, and a protest is filed within 21 days of the issuance of the
order, the revised tariffs should remain in effect, with any revenues held
subject to refund, pending staff’s verification that the revised tariff sheets
and notice have been filed by the utility and approved by staff; the docket
should remain open pending resolution of the protest. If UIF timely files a revised AFPI tariff for
its LUSI wastewater system and no timely protest is filed with respect to that
issue, the docket should remain open pending staff’s verification that the
revised tariff sheets and notice have been filed by the utility and approved by
staff, a consummating order should be issued, and the docket should be closed administratively.
If the Commission approves staff’s recommendation in Issue
2, UIF does not timely file a revised AFPI tariff meeting the conditions of the
order, and a protest is filed within 21 days of the issuance of the order, the
tariffed charges originally requested by UIF could be placed into effect, with
any revenues held subject to refund, pending staff’s verification that the
revised tariff sheets and notice have been filed by the utility and approved by
staff; the docket should remain open pending resolution of the protest. If UIF does
not timely file a revised AFPI tariff with respect to its LUSI wastewater
system and no timely protest is filed, a consummating order should be issued,
and the docket closed administratively.
