Discussion
of Issues
Issue 1:
Should the application for water and wastewater
certificates by RSPI be approved?
Recommendation:
Yes. RSPI should be granted Certificate Nos. 673-W
and 574-S to serve the territory described in Attachment A, effective the date
of the Commission’s vote. The resultant order should serve as RSPI’s water and
wastewater certificates and it should be retained by the Utility. (M. Watts,
Johnson)
Staff Analysis:
On November 20, 2017, RSPI filed its application for
original water and wastewater certificates in Orange County, Florida. Upon
review, staff determined the original filing was deficient and sent a
deficiency letter on December 20, 2017. Staff also sent data requests to the
Utility seeking additional information. RSPI corrected the deficiencies on
September 7, 2018, which is considered the official filing date for the application.
The Utility’s application is in compliance with the governing statutes,
Sections 367.031 and 367.045, F.S.
Notice
On September 7, 2018, RSPI filed proof of compliance with
the noticing provisions set forth in Rule 25-30.030, Florida Administrative
Code (F.A.C.). No entity filed a protest during the protest period and the time
for filing objections has expired.
Land
Ownership and Service Territory
RSPI provided adequate service territory and system maps
and a territory description as required by Rule 25-30.034, F.A.C. The legal
description of the service territory is appended to this recommendation as
Attachment A. The application
contains a copy of a special warranty deed that was executed on February
2, 2005, as evidence that the Utility
owns the land upon which the water and wastewater treatment facilities are
located pursuant to Rule 25-30.037(2)(s), F.A.C.
Financial
and Technical Ability
Pursuant to Rule 25-30.034(1)(i), F.A.C., the Utility provided statements
describing its financial ability to provide service. Staff reviewed the
financial statements of RSPI and believes the current owner has documented
adequate resources to support the Utility’s water and wastewater operations.
Regarding technical ability, the Utility stated in its
application that it has owned and operated the subject water and wastewater
system since purchasing the community in 2005.
RSPI also stated that it has a full-time utility director responsible for the
operation and maintenance of the RSPI water and wastewater treatment systems as
well as other facilities throughout the country. RSPI has no compliance issues
on file with the DEP and is current with its monitoring requirements.
Conclusion
RSPI should be granted Certificate Nos. 673-W and 574-S to
serve the territory described in Attachment A, effective the date of the
Commission’s vote. The resultant order should serve as RSPI’s water and
wastewater certificates and it should be retained by the Utility.
Issue 2:
What are the appropriate rates and charges for RSPI?
Recommendation:
The recommended monthly water and wastewater rates,
on Schedule No. 1, are reasonable and should be approved. The Utility should
file revised tariff sheets and a proposed customer notice to reflect the
Commission-approved rates. The approved rates should be effective for service
rendered on or after the stamped approval date on the tariff sheets pursuant to
Rule 25-30.475(1), F.A.C. The approved rates should not be implemented until
staff has approved the proposed customer notice and the notice has been
received by customers. The Utility should provide proof of the date notice was given
within 10 days of the date of the notice. (Friedrich)
Staff Analysis:
The Utility provides water and
wastewater service to approximately 519 customers within the Palm Isles and
Rock Springs Mobile Home Communities. All of the Utility’s customers are
residential with the exception of a community club house. Additionally, the Utility
indicated that all customers, including the club house have 3/4” meters.
Currently the Utility bills its customers a combined rate for water and
wastewater service which consists of a monthly base facility charge (BFC) of
$14.00 and inclining block rates of $1.50 per 1,000 for 0-4,000 gallons, $3.50
per 1,000 for 4,001-8,000, and $6.50 per 1,000 for all gallons in excess of
8,000. Due to the combined nature of the utility’s current rates, there
is no residential wastewater cap.
It is Commission practice to
establish separate rates for water and wastewater systems. The
Utility allocated its existing rates between its water and wastewater systems
to reflect the approximate costs to serve each system. This resulted in
approximately 35 percent allocated to the Utility’s water system and 65 percent
allocated to the Utility’s wastewater system. Staff believes this is reasonable
because, typically, it is more costly to provide wastewater than water
service. The Utility’s current rates are shown in Table 2-1, as well as
the Utility’s proposed allocation between its water and wastewater systems.
Table 2-1
RSPI’s Water and Wastewater Rates
|
|
Current
Rates
|
Proposed
Rates
|
|
|
Water
and Wastewater
|
Water
|
Wastewater
|
|
Base Facility Charge
|
$14.00
|
$5.00
|
$9.00
|
|
|
|
|
|
|
Gallonage Charge
|
|
|
|
|
0-4,000
|
$1.50
|
$0.50
|
$1.00
|
|
4,001-8,000
|
$3.50
|
$2.50
|
$1.00
|
|
All Over 8,000
|
$6.50
|
$5.50
|
$1.00
|
|
|
|
|
|
|
Typical Residential 3/4” Meter Bill Comparison
|
|
3,000 Gallons
|
$18.50
|
$6.50
|
$12.00
|
|
5,000 Gallons
|
$23.50
|
$9.50
|
$14.00
|
Based on the above, the recommended monthly water and wastewater
rates, on Schedule No. 1, are reasonable and should be approved. The Utility
should file revised tariff sheets and a proposed customer notice to reflect the
Commission-approved rates. The approved rates should be effective for service
rendered on or after the stamped approval date on the tariff sheets pursuant to
Rule 25-30.475(1), F.A.C. The approved rates should not be implemented until
staff has approved the proposed customer notice and the notice has been
received by customers. The Utility should provide proof of the date notice was
given within 10 days of the date of the notice.
Issue 3:
What are the appropriate miscellaneous service
charges for RSPI?
Recommendation:
The miscellaneous service charges identified in
Table 3-5 are reasonable and should be approved. The Utility should file
revised tariff sheets and a proposed customer notice to reflect the
Commission-approved miscellaneous service charges. The approved charges should
be effective for service rendered or connections made on or after the stamped
approval date on the tariff sheets provided customers have received notice
pursuant to Rule 25-30.475, F.A.C. The Utility should provide proof of noticing
within 10 days of rendering its approved notice. (Friedrich)
Staff Analysis:
RSPI does
not currently have miscellaneous service charges in place. Section 367.091,
F.S., authorizes the Commission to establish miscellaneous service charges. The
Utility requested establishment of miscellaneous charges and staff compiled the
Utility’s cost justification, as required by Section 367.091(6), F.S., through a
series of data requests in order to calculate staff’s recommended miscellaneous
service charges.
The calculations for staff’s
recommended miscellaneous service charges are shown in Tables 3-1
through 3-4 and are rounded up to the nearest tenth. Staff’s recommended
miscellaneous service charges are shown in Table 3-5. Furthermore, staff’s
recommended miscellaneous service charges are applicable for the Utility’s
water and wastewater systems. If both water and wastewater services are
provided, only a single charge is appropriate unless circumstances beyond the
control of the Utility require multiple actions.
Initial Connection
Charge
The initial
connection charge is levied for service initiation for new customers. An RSPI
representative makes one trip when performing the service for an initial
connection. Based on labor and transportation to and from the service
territory, staff recommends initial connection charges for RSPI’s water and
wastewater systems of $11.50 for normal hours and $14.00 for after hours.
Staff’s calculations are shown below in Table 3-1.
Table 3-1
Initial
Connection Charge Calculation
|
Activity
|
Normal Hours Cost
|
Activity
|
After
Hours Cost
|
|
Administrative Labor
($15/hr x1/4hr)
|
$3.75
|
Administrative Labor
($15/hr x1/4hr)
|
$3.75
|
|
Field Labor
($15/hr x 1/3 hr)
|
$5.00
|
Field Labor
($22.50/hr x 1/3 hr)
|
$7.50
|
|
Transportation
($0.535/mile x 5 miles-to/from)
|
$2.68
|
Transportation
($0.535/mile x 5 miles-to/from)
|
$2.68
|
|
Total
|
$11.43
|
Total
|
$13.93
|
Normal
Reconnection Charge
A normal
reconnection charge is levied for the reconnection of service subsequent to a
customer requested disconnection. A normal reconnection requires two trips,
which includes one to turn service off and the other to turn service on. Based
on labor and transportation to and from the service territory, staff recommends
normal reconnection charges of $20.40 for normal hours and $24.20 for after
hours. Staff’s calculations are shown in Table 3-2.
Table 3-2
Normal
Reconnection Charge Calculation
|
Activity
|
Normal Hours Cost
|
Activity
|
After
Hours Cost
|
|
Administrative Labor
($15/hr x1/4hr x 2)
|
$7.50
|
Administrative Labor
($15/hr x1/4hr)
|
$7.50
|
|
Field Labor
($15/hr x 1/4 hr x 2)
|
$7.50
|
Field Labor
($22.50/hr x 1/4hr x 2)
|
$11.25
|
|
Transportation
($0.535/mile x 5 miles-to/from x 2)
|
$5.36
|
Transportation
($0.535/mile x 5 miles-to/from x 2)
|
$5.36
|
|
Total
|
$20.36
|
Total
|
$24.11
|
Violation
Reconnection Charge
The violation
reconnection charge is levied prior to reconnection of an existing customer
after discontinuance of service for cause. The service performed for violation
reconnection requires two trips, which includes one trip to turn off service
and a subsequent trip to turn on service once the violation has been remedied.
Based on labor and transportation to and from the service territory, staff
recommends violation reconnection charges for RSPI’s water system of $20.40 for
normal hours and $24.20 for after hours. However, for RSPI’s wastewater system,
this charge should be set at actual cost pursuant to Rule 25-30.460(1)(c),
F.A.C., and should only be levied if service is discontinued for a wastewater
only customer. Staff’s calculations are shown in Table 3-3.
Table 3-3
Violation
Reconnection Charge Calculation
|
Activity
|
Normal
Hours Cost
|
Activity
|
After
Hours Cost
|
|
Administrative Labor
($15/hr x1/4hr x 2)
|
$7.50
|
Administrative Labor
($15/hr x1/4hr x 2)
|
$7.50
|
|
Field Labor
($15/hr x 1/4 hr x 2)
|
$7.50
|
Field Labor
($22.50/hr x 1/4 hr x 2)
|
$11.25
|
|
Transportation
($0.535/mile x 5 miles-to/from x 2)
|
$5.36
|
Transportation
($0.535/mile x 5 miles-to/from x 2)
|
$5.36
|
|
Total
|
$20.36
|
Total
|
$24.11
|
Premises
Visit Charge
The premises visit
charge is levied when a service representative visits a premises at the
customer’s request for complaint resolution and the problem is found to be the
customer’s responsibility. In addition, the premises visit charge can be levied
when a service representative visits a premises for the purpose of
discontinuing service for nonpayment of a due and collectible bill, and does
not discontinue service because the customer pays the service representative or
otherwise makes satisfactory arrangements to pay the bill. A premises visit
requires one trip.
Based on labor and
transportation to and from the service territory, staff recommends a premises
visit charge of $11.50 for normal hours and $14.00 for after hours. Staff’s
calculations are shown in Table 3-4.
Table 3-4
Premises
Visit Charge Calculation
|
Activity
|
Normal
Hours Cost
|
Activity
|
After
Hours Cost
|
|
Administrative Labor
($15/hr x1/4hr)
|
$3.75
|
Administrative Labor
($15/hr x1/4hr)
|
$3.75
|
|
Field Labor
($15/hr x 1/3 hr)
|
$5.00
|
Field Labor
($22.50/hr x 1/3 hr)
|
$7.50
|
|
Transportation
($0.535/mile x 5 miles-to/from)
|
$2.68
|
Transportation
($0.535/mile x 5 miles-to/from)
|
$2.68
|
|
Total
|
$11.43
|
Total
|
$13.93
|
Table 3-5
|
|
Staff
Recommended
|
|
Normal Hours
|
After Hours
|
|
Initial Connection Charge
|
$11.50
|
$14.00
|
|
Normal Reconnection Charge
|
$20.40
|
$24.20
|
|
Violation Reconnection Charge (Water Only)
|
$20.40
|
$24.20
|
|
Violation Reconnection Charge (Wastewater Only)
|
Actual Cost
|
|
Premises Visit
Charge
|
$11.50
|
$14.00
|
Recommended
Miscellaneous Service Charges
Conclusion
Based on the above, the
miscellaneous service charges identified in Table 3-5 are reasonable and should
be approved. The Utility should file revised tariff sheets and a proposed
customer notice to reflect the Commission-approved miscellaneous service
charges. The approved charges should be effective for service rendered or connections
made on or after the stamped approval date on the tariff sheets provided
customers have received notice pursuant to Rule 25-30.475, F.A.C. The Utility
should provide proof of noticing within 10 days of rendering its approved
notice.
Issue 4:
What is the appropriate late payment charge for RSPI?
Recommendation:
The appropriate late payment charge for RSPI is
$4.50. The Utility should file revised tariff sheets and a proposed customer
notice to reflect the Commission-approved charge. The approved charge should be
effective for services rendered on or after the stamped approval date on the
tariff sheet provided customers have received notice pursuant to Rule 25-30.475(1),
F.A.C. The Utility should provide proof of noticing within 10 days of rendering
the approved notice. (Friedrich)
Staff Analysis:
RSPI does not currently
have a late payment charge in place. The Utility requested a late payment
charge and staff compiled the Utility’s cost justification, as required by
Section 367.091(6), F.S., through a series of data requests in order to
calculate staff’s recommended late payment charge.
The goal of allowing late payment
charges is two fold: first, it encourages customers to pay their bills on time,
and second, if payments are not made on time, it ensures that the cost
associated with collecting late payments are not passed on to the customers who
do pay on time.[5] The Utility
has a total of 519 customer accounts and approximately 4 percent of the
customers do not pay by the due date each month. Because the Utility does not
currently have an approved late payment charge, the Utility’s only recourse is
to discontinue service.
The Utility included $3.75 for
labor associated with processing late payments. The late payment notices are
processed by an RSPI employee who is paid $15 per hour. The billing employee
spends approximately 5 hours per month processing an average of 20 delinquent
accounts. This equates to approximately 15 minutes to process a single late
payment notice. The Commission has found that 10 to 15 minutes is an
appropriate amount of time for a billing employee to process a single late
payment.[6]
The Commission has previously approved
late payment charges ranging from $4.90 to $7.15.[7]
Based on the salary and time spent per notice, the labor cost of $3.75 is reasonable.
The Utility is also requesting recovery of $0.20 for supplies and $0.49 for
postage. The Utility’s cost justification for its requested late payment charge
is shown on Table 4-1. Staff recommends rounding the calculated late payment
charge up to the nearest tenth. Therefore, staff recommends the appropriate
late payment charge for RSPI is $4.50.
Table 4-1
Late Payment Charge Cost Justification
|
Activity
|
Cost
|
|
Labor
|
$3.75
|
|
Supplies
|
0.20
|
|
Postage
|
0.49
|
|
Total Cost
|
$4.44
|
Source:
Utility’s cost justification documentation
Based on the above, the appropriate late payment charge
for RSPI is $4.50. The Utility should file the revised tariff sheet and a
proposed customer notice to reflect the Commission-approved charge. The
approved charge should be effective for services rendered on or after the
stamped approval date on the tariff sheet provided customers have received
notice pursuant to Rule 25-30.475(1), F.A.C. The Utility should provide proof
of noticing within 10 days of rendering the approved notice.
`
Issue 5:
Should RSPI be authorized to collect Non-Sufficient
Funds Charges (NSF)?
Recommendation:
Yes. RSPI should be authorized to collect NSF
charges. The Utility should file revised tariff sheets and a proposed customer
notice to reflect the Commission-approved NSF charges. The approved charges
should be effective for service rendered on or after the stamped approval date
on the tariff sheets provided customers have received notice pursuant to Rule
25-30.475, F.A.C. The Utility should provide proof of noticing within 10 days
of rendering its approved notice. (Friedrich)
Staff Analysis:
Section 367.091, F.S., authorizes the Commission to establish
miscellaneous service charges. Staff believes that RSPI should be authorized to
collect NSF charges consistent with Section 68.065, F.S., which allows for the
assessment of charges for the collection of worthless checks, drafts, or orders
of payment. As currently set forth in Section 68.065(2), F.S., the following
NSF charges may be assessed:
(1) $25,
if the face value does not exceed $50,
(2) $30, if the face value exceeds
$50 but does not exceed $300,
(3) $40, if the face value exceeds
$300,
(4) or 5 percent of the face
amount of the payment instrument, whichever is greater.
Approval of NSF charges is consistent with prior
Commission decisions.[8]
Furthermore, NSF charges place the cost on the cost-causer, rather than
requiring that the costs associated with the return of the NSF checks be spread
across the general body of ratepayers. As such, RSPI should be authorized to
collect NSF charges. The Utility should file revised tariff sheets and a
proposed customer notice to reflect the Commission-approved NSF charges. The
approved charges should be effective for service rendered on or after the
stamped approval date on the tariff sheets provided customers have received
notice pursuant to Rule 25-30.475, F.A.C. The Utility should provide proof of
noticing within 10 days of rendering its approved notice.
Issue 6:
What are the appropriate initial customer deposits
for RSPI?
Recommendation:
The appropriate initial customer deposits are $19.00
for water and $28.00 for wastewater for the residential 3/4" meter size.
The initial customer deposit for all other residential meter sizes and all
general service meter sizes should be two times the average estimated bill. The
approved customer deposits should be effective for connections made on or after
the stamped approval date on the tariff sheets pursuant to Rule 25-30.475,
F.A.C. The Utility should be required to collect the approved initial customer
deposits until authorized to change them by the Commission in a subsequent proceeding.
(Friedrich)
Staff Analysis:
Rule 25-30.311, F.A.C.,
contains criteria for collecting, administering, and refunding customer
deposits. Rule 25-30.311(1), F.A.C., requires that each company’s tariff
contain its specific criteria for determining the amount of initial deposits.
RSPI currently does not have approved initial customer deposits for its water
and wastewater systems. Customer deposits are designed to minimize the exposure
of bad debt expense for the utility and, ultimately, the general body of
ratepayers. In addition, collection of customer deposits is consistent with one
of the fundamental principles of ratemaking—ensuring that the cost of providing
service is recovered from the cost causer.
Rule
25-30.311(7), F.A.C., authorizes utilities to collect new or additional
deposits from existing customers not to exceed an amount equal to the average
actual charge for water and/or wastewater service for two billing periods for
the 12-month period immediately prior to the date of notice. The two billing
periods reflect the lag time between the customer’s usage and the utility’s
collection of the revenues associated with that usage. Commission practice has
been to set initial customer deposits equal to two months bills based on the
average consumption for a 12-month period for each class of customers.[9]
The Utility indicated that the average monthly residential usage is 5,000
gallons per customer. Therefore, the average residential monthly bill is
approximately $9.50 for water and $14.00 wastewater service.
Based on the above, the appropriate
initial customer deposits are $19.00 for water and $28.00 wastewater for the
residential 3/4" meter size. The initial customer deposit for all other
residential meter sizes and all general service meter sizes should be two times
the average estimated bill. The approved customer deposits should be effective
for connections made on or after the stamped approval date on the tariff sheets
pursuant to Rule 25-30.475, F.A.C. The Utility should be required to collect
the approved initial customer deposits until authorized to change them by the
Commission in a subsequent proceeding.
Issue 7:
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. The docket should
remain open for staff’s verification that the revised tariff sheets and
customer notice have been filed by the Utility and approved by staff. Once
these actions are complete, this docket should be closed administratively. (Nieves)
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. The docket should
remain open for staff’s verification that the revised tariff sheets and
customer notice have been filed by the Utility and approved by staff. Once
these actions are complete, this docket should be closed administratively.
