Case Background
On June 20, 2017,
the Board of County Commissioners of Leon County (County) passed and adopted
Resolution No. R17-12 (Resolution), transferring regulation of the privately-owned,
for-profit water and wastewater utilities in Leon County to the Florida Public
Service Commission (Commission). Effective upon the adoption of the Resolution,
all non-exempt water and wastewater systems in the County became subject to the
provisions of Chapter 367, Florida Statutes (F.S.). The Commission acknowledged
the Resolution in Order No. PSC-2017-0357-FOF-WS.[1]
Lake Talquin
Water Company, Inc. (Lake Talquin or Utility) consists of 4 water systems
located within in Leon County. On November 30, 2017, Lake Talquin filed an
application for a certificate under grandfather rights to provide water service
in Leon County (application) pursuant to Section 367.171(2)(b), F.S., and Rule
25-30.035, Florida Administrative Code (F.A.C.). On June 4, 2018, Lake Talquin
filed a petition seeking a variance or waiver of Rule 25-30.120, F.A.C., which
requires water and wastewater utilities under Commission jurisdiction remit an
annual regulatory assessment fee (RAF).
Pursuant to
Section 120.542(6), F.S., notice of this Petition was published in the Florida
Administrative Register on June 8, 2018. In accordance with Rule 28-104.003(1),
F.A.C., interested persons were given 14 days after the publication of the
notice to submit written comments. No written comments were received, and the
time for such has expired.
This
recommendation addresses Lake Talquin’s petition for a variance or waiver of
Rule 25-30.120, F.A.C. Lake Talquin’s application for grandfather certificate
will be addressed in a subsequent recommendation. The Commission has
jurisdiction in this matter pursuant to Sections 120.542, 367.145, and 367.171,
F.S.
Discussion
of Issues
Issue 1:
Should the Commission grant Lake Talquin Water
Company, Inc.'s request for variance or waiver of Rule 25-30.120, F.A.C.?
Recommendation:
Yes, the Utility has demonstrated that the
underlying purpose of the statute will be or has been achieved by other means,
and that strict application of the rule would create a substantial hardship.
Therefore, staff recommends that the Commission grant Lake Talquin’s request
for waiver of Rule 25-30.120, F.A.C., for a period of one year from the date of
the Commission’s vote, or until the Commission grants the Utility’s grandfather
certificate and rates are approved, whichever occurs first. (Mapp)
Staff Analysis:
On June 4, 2018, Lake Talquin filed a petition
seeking a waiver of Rule 25-30.120, F.A.C., which requires that Regulatory Assessment Fees (RAFs) be paid for any
year during which a utility is subject to the Commission’s jurisdiction as of
December 31 of that year. The Utility requests the waiver or variance of Rule
25-30.120, F.A.C., until such time as the Utility is authorized to increase its
rates. Rule 25-30.120(2), F.A.C., provides that “[t]he obligation to remit the
regulatory assessment fees for any year shall apply to any utility that is
subject to this Commission’s jurisdiction on or before December 31 of that year
or for any part of that year.” The effect of this request would be to
permanently waive any RAFs that would have been otherwise due for 2017 up until
the application is considered by the Commission.
Section
120.542(2), F.S., authorizes the Commission to grant waivers or variances from
agency rules where the petitioner subject to the rule has demonstrated that the
purpose of the underlying statute will be or has been achieved by other means,
and that a strict application of the rule would cause the applicant substantial
hardship or would violate the principles of fairness. “Substantial hardship,”
as defined in this section, means demonstrated economic, technological, legal,
or other hardship. A violation of the “principles of fairness” occurs when the
literal application of a rule affects a particular person in a manner
significantly different from the way it affects other similarly situated persons
who are subject to the rule.
As acknowledged in
Order No. PSC-2017-0357-FOF-WS,[2]
issued September 20, 2017, the Board of County Commissioners of Leon County on
June 20, 2017 passed and adopted Resolution No. R17-12, transferring regulation
of the privately-owned, for profit water and wastewater utilities in the County
to the Commission. Effective upon the adoption of the resolution, all
non-exempt water and wastewater systems in the Leon County became subject to
the provisions of Chapter 367, F.S.
On November 30,
2017, Lake Talquin filed its application for a grandfather certificate pursuant
to Section 367.171(2), F.S. and Rule 25-30.035, F.A.C. Subsequently on June
4, 2018, Lake Talquin filed the instant petition seeking a variance or waiver
of Rule 25-30.120, F.A.C. The underlying statutory provision pertaining to RAFs
and Rule 25-30.120, F.A.C., are Sections 367.145(1) and (3), F.S., which state
that:
(1) The commission shall set by rule a
regulatory assessment fee that each utility must pay in accordance with
s. 350.113(3);
. . . .
(3) Fees collected by the commission
pursuant to this section may only be used to cover the cost of regulating water
and wastewater systems. Fees collected by the commission pursuant to chapters
364 and 366 may not be used to pay the cost of regulating water and wastewater
systems.
The Commission’s RAFs are not included in the Utility’s
current rates because Lake Talquin was not regulated by the Commission prior to
June 2017. For that reason, the Utility argues it is placed at an unfair
financial disadvantage due to its inability to collect those regulatory
assessment fees in its rates.
The purpose of assessing RAFs is to defray the cost of
utility regulation. The Utility contends that there have been minimal to no
costs of regulating Lake Talquin under Chapter 367, F.S., absent the review of
its grandfather application. The Utility also notes that it has paid the
applicable filing fee of $200 as required by Section 367.145(2), F.S., and Rule
25-30.020, F.A.C., for the processing of its grandfather filing. Additionally,
the Commission has previously granted a waiver of RAFs for a similarly situated
utility prior to its receipt of a grandfather certificate.
Based on the foregoing analysis and the information
provided within the Utility’s petition, staff believes that Lake Talquin has
met the requirements of Section 120.542, F.S., and has demonstrated that the
purpose of the of the underlying statute will be or has been achieved by other
means, because minimal regulation has been required at this point. Further, the
strict application of Rule 25-30.120, F.A.C., would place a substantial
hardship on the Utility by requiring the Utility to pay regulatory expenses for
which it is not compensated through rates. Therefore, staff recommends that the
Commission approve the Utility’s requested waiver or variance of Rule
25-30.120, F.A.C., for a period of one year from the date of the Commission’s
vote, or until the Commission grants the Utility’s grandfather certificate and
rates are approved, whichever occurs first.
Issue 2:
Should this docket be closed?
Recommendation:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, a consummating order should be issued. This docket
should remain open pending the Commission’s final decision regarding the
Utility’s application for grandfather water certificate and rates are approved.
Staff Analysis:
If no person whose substantial interests are affected
by the proposed agency action files a protest within 21 days of the issuance of
the order, a consummating order should be issued. This docket should remain
open pending the Commission’s final decision regarding the Utility’s
application for grandfather water certificate and rates are approved.
