Case Background
Jumper Creek
Utility Company (Jumper Creek or Utility) is a Class C utility serving
approximately 50 residential water and wastewater customers in Sumter County. Jumper
Creek’s last approved rate increase was in 2015.
On November 26,
2018, Jumper Creek filed an application for a limited alternative rate increase
(LARI) pursuant to Rule 25-30.457, Florida Administrative Code (F.A.C.). On
December 20, 2018, staff notified the Utility that it met the initial
requirements of Rule 25-30.457, F.A.C. Therefore, pursuant to Rule
25-30.457(4), F.A.C., the official date of filing was established as January
22, 2019, and the 90-day time frame for the Commission to render a decision
began on that date.
As
stated above, the Commission last set rates for Jumper Creek in 2015. In that
rate case, the Commission found the Utility’s overall quality of service to be
satisfactory. No complaints concerning water quality were received by the
Commission or the Florida Department of Environmental Protection (DEP) since
the last rate case. The Utility has received three complaints concerning DEP
secondary standards since the last rate case.
Staff
notes that the most recent DEP compliance test results, dated January 11, 2018,
demonstrate that the Utility is currently in compliance with DEP secondary
standards. A customer meeting was held on February 27, 2019, in Webster,
Florida. No customers attended the meeting.
Rule
25-30.457, F.A.C., was adopted on March 15, 2005. The Rule was amended in 2008,
2014, and 2018. Under provisions of this Rule, the Commission previously
approved applications filed by two other utilities under in 2006.
The
Commission has jurisdiction pursuant to Sections 367.0814(9) and 367.121(1),
Florida Statutes.
Discussion
of Issues
Issue 1:
Should the Commission approve Jumper Creek Utility
Company's application for a limited alternative rate increase?
Recommendation:
Yes. The Commission should approve Jumper Creek's
application for a limited alternative rate increase in the amount of 20
percent. This equates to an increase of $4,791 for water and $5,556 for
wastewater.
Pursuant to Rule 25-30.457(12), F.A.C., the Utility is
required to hold any revenue increase granted subject to refund with interest
for a period of 15 months after the filing of its annual report for the year
the adjustment in rates was implemented. If overearnings occur, such
overearnings, up to the amount held subject to refund, with interest, must be
disposed of for the benefit of the customers. After the increased rates are in
effect, pursuant to Rule 25-30.360(6), F.A.C., the Utility must file reports
with the Office of Commission Clerk no later than the 20th of every month
indicating the monthly and total amount of money subject to refund at the end
of the preceding month. The report filed must also indicate the status of the
security being used to guarantee repayment of any potential refund. (Wilson)
Staff Analysis:
Pursuant to Rule 25-30.457, F.A.C., any utility
eligible to file for a staff-assisted rate case may petition the Commission for
a rate increase of up to 20 percent applied to metered or flat recurring rates
as an alternative to a rate case. This Rule was designed to streamline the rate
increase process for qualifying small water or wastewater companies, by
establishing an abbreviated procedure for a limited rate increase that is less
time consuming and thus less costly for utilities, their customers, and the
Commission. This Rule is similar to the rules governing price index and
pass-through increases in that neither an engineering review nor a financial
audit of the utility's books and records is required.
On November 26, 2018, Jumper Creek notified the Commission
of its intent to implement a limited alternative rate increase of 20 percent
pursuant to Rule 25-30.457, F.A.C. The application met the initial requirements
of the rule, and January 22, 2019, was established as the official filing date.
Staff reviewed the Utility pursuant to the criteria listed
in Rule 25-30.457(5), F.A.C., and recommends that Jumper Creek qualifies for
staff assistance pursuant to subsection (1) of this Rule and the Utility’s
books and records appear to be organized consistent with Rule 25-30.110, F.A.C.
Staff also verified that the Utility is current on the filing of regulatory
assessment fees and annual reports. The Utility has been in operation over a
year and filed additional relevant information in support of eligibility. The
Utility’s last rate case was granted more than two years, but less than seven
years, prior to the receipt of the petition currently under review. Jumper Creek
remains in a negative earnings posture based on information provided in the
Utility’s 2017 and 2018 Annual Reports. Based on the information described
above, staff recommends approval of the Utility’s petition.
The data presented in the application was based upon annualized
revenues by customer class and meter size for the period ended September 30,
2018, the most recent 12-month period. Based on annualized revenues of $24,014
for water and $27,839 for wastewater, a 20 percent increase would result in an
annual increase in revenues of $4,791 for water and $5,556 for wastewater. This
produces total annual service revenues of $28,805 for water and $33,395 for
wastewater.
Pursuant to Rule 25-30.457(12), F.A.C., the Utility is
required to hold any revenue increase granted subject to refund with interest
in accordance with Rule 25-30.360, F.A.C., for a period of 15 months after the
filing of its annual report for the year the adjustment in rates was
implemented.
After the increased rates are in effect, pursuant to Rule
25-30.360(6), F.A.C., the Utility must file reports with the Office of
Commission Clerk no later than the 20th of every month indicating the monthly
and total amount of money subject to refund at the end of the preceding month.
The report filed must also indicate the status of the security being used to
guarantee repayment of any potential refund.
Staff reviewed the personal financial statements of the
primary shareholder, which is the company’s president.
The president has provided a personal guarantee of any rate increase approved
in this docket. Based on
the above, staff believes that in this circumstance the company’s president has
demonstrated the financial ability to guarantee the refund, if necessary.
To ensure overearnings will not occur due to the implementation
of this rate increase, the Commission will conduct an earnings review of Jumper
Creek’s annual report for the year the adjustment in rates was implemented. If
overearnings occur, such overearnings, up to the amount held subject to refund,
with interest, will be disposed of for the benefit of the customers.
Issue 2:
What are the appropriate monthly service rates for
Jumper Creek?
Recommendation:
The existing service rates for Jumper Creek should
be increased by 20 percent in accordance with Rule 25-30.457, F.A.C. The recommended
service rates are shown on Schedule No. 1. The Utility should file 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. In addition, the rates should not be implemented until staff has
approved the proposed customer notice. The Utility should provide proof of the
date notice was given no less than 10 days after the date of the notice.
(Bethea)
Staff Analysis:
Based on staff’s recommended approval of the
Utility’s limited alternative rate increase in Issue 1, the existing service
rates for Jumper Creek should be increased by 20 percent in accordance with
Rule 25-30.457, F.A.C. Therefore, staff calculated rates by applying the 20
percent increase across-the-board to the existing base facility and gallonage
charges. The Utility’s existing water and wastewater rates and the staff
recommended rates are shown on Schedule No. 1. The Utility should file 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. In addition, the rates should not be implemented until staff has
approved the proposed customer notice. The Utility should provide proof of the
date notice was given no less than 10 days after the date of the notice.
Issue 3:
Should the recommended rates be approved for Jumper
Creek on a temporary basis,
subject to refund, in the event of a protest filed by a party other than
the utility?
Recommendation:
Yes. Pursuant to Rule 25-30.457(15), F.A.C., in the
event of a protest of the Proposed Agency Action (PAA) Order by a substantially
affected person other than the Utility, Jumper Creek should be authorized to
implement the rates established in the LARI PAA Order on a temporary basis subject
to refund upon the Utility filing a staff-assisted rate case application within
21 days of the date the protest is filed.
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 sheet, pursuant to Rule 25-30.475(1), F.A.C. In addition,
the temporary rates should not be implemented until staff has approved the
proposed notice, and the notice has been received by the customers. If the
recommended rates are approved on a temporary basis, the incremental increase
collected by the Utility will be subject to the refund provisions outlined in
Rule 25-30.360, F.A.C. Pursuant to Rule 25-30.457(17), F.A.C., if the Utility
fails to file a staff-assisted rate case application within 21 days in the
event there is a protest, the application for a limited alternative rate
increase will be deemed withdrawn. (Wilson) (Final Agency Action)
Staff Analysis:
This recommendation proposes an increase in
water and wastewater rates. A timely protest might delay what may be a
justified rate increase resulting in an unrecoverable loss of revenue to the
Utility. Therefore, pursuant to Rule 25-30.457(15), F.A.C., in the event of a
protest of the PAA Order by a substantially affected person other than the
Utility, Jumper Creek should be authorized to implement the rates established
in the LARI PAA Order on a temporary basis subject to refund upon the Utility
filing a staff-assisted rate case application within 21 days of the date the
protest is filed.
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 sheet, pursuant to Rule 25-30.475(1), F.A.C. In addition,
the temporary rates should not be implemented until staff has approved the
proposed notice, and the notice has been received by the customers. If the
recommended rates are approved on a temporary basis, the incremental increase
collected by the Utility will be subject to the refund provisions outlined in
Rule 25-30.360, F.A.C. Pursuant to Rule 25-30.457(17), F.A.C., if the Utility
fails to file a staff-assisted rate case application within 21 days in the
event there is a protest, the application for a limited alternative rate
increase will be deemed withdrawn.
Issue 4:
Should this docket be closed?
Recommendation:
No. In the event of a
protest, Jumper Creek may
implement the rates established in the PAA Order on a temporary basis, subject
to refund with interest, upon the
Utility’s filing of a staff-assisted rate case application within 21
days of the date of the protest. If Jumper Creek fails to file a staff-assisted rate case within 21
days, the Utility’s
petition for a limited alternative rate increase will be deemed withdrawn
pursuant to Rule 25-30.457(17), F.A.C. 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,
which reflect the Commission-approved rates, and customer notice have been
filed by Jumper Creek and
approved by staff, and so that staff may conduct an earnings review of the Utility pursuant to Rule
25-30.457(12), F.A.C. Upon staff’s approval of the tariff and completion of the
earnings review process as set forth in Rule 25-30.457(12)-(14), F.A.C., this
docket should be closed administratively. (DuVal, Weisenfeld)
Staff Analysis:
In the event of a protest, Jumper Creek may implement the
rates established in the PAA Order on a temporary basis, subject to refund with
interest, upon the Utility’s
filing of a staff-assisted rate case application within 21 days of the date of
the protest. If Jumper Creek fails
to file a staff-assisted rate case within 21 days, the Utility’s petition for a limited alternative rate increase
will be deemed withdrawn pursuant to Rule 25-30.457(17), F.A.C. 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, which reflect the Commission-approved rates, and
customer notice have been filed by Jumper
Creek and approved by staff, and so that staff may conduct an
earnings review of the
Utility pursuant to Rule 25-30.457(12), F.A.C. Upon staff’s
approval of the tariff and completion of the earnings review process as set
forth in Rule 25-30.457(12)-(14), F.A.C., this docket should be closed
administratively.
