Discussion
of Issues
Issue 1:
Should Ni Florida's existing wastewater service availability
charges be revised, and if so, what are the appropriate charges?
Recommendation:
Yes. Ni Florida’s existing wastewater service
availability charges should be revised. Staff recommends a main extension
charge of $1,710 per equivalent residential connection (ERC) be approved
because it is reasonable and within the guidelines of Rule 25-30.580, Florida
Administrative Code (F.A.C.). The existing plant capacity charge should be
discontinued. The recommended main extension charge should be based on an
estimated 173 gallons per day per ERC of treated wastewater demand. The
utility should file a revised tariff sheet and a proposed notice to reflect the
Commission-approved main extension charge. Ni Florida should provide notice to
property owners who have requested service beginning 12 months prior to the
establishment of this docket. The approved charge should be effective for
connections made on or after the stamped approval date on the tariff sheet. The
utility should provide proof of noticing within 10 days of rendering the
approved notice. (Bruce)
Staff Analysis:
Pursuant to Section 367.101, F.S., the Commission
shall set just and reasonable charges and conditions for service availability. As
mentioned in the case background, staff discovered an error in the development
of the utility’s existing wastewater service availability charges, which are a
main extension charge of $1,405 and a plant capacity charge of $2,500. Rule
25-30.580, F.A.C., establishes guidelines for designing service availability
charges. Pursuant to the rule, the maximum amount of contributions-in-aid-of
construction (CIAC), net of amortization, should not exceed 75 percent of the
total original cost, net of accumulated depreciation, of the utility’s
facilities and plant when the facilities and plant are at capacity. The minimum
amount of CIAC should not be less than the percentage of such facilities and
plant that is represented by the water transmission and distribution system and
sewage collection systems.
Main
Extension Charge
The main extension charge is designed to allow customers to
pay their pro rata share of the cost of the wastewater collection system, which
is installed by the utility. In order to determine the appropriate main
extension charge, the total cost in the Collection Sewers – Force (360),
Collection Sewers – Gravity (361), and Services to Customers (363) plant
accounts are added and divided by the design capacity of the lines. In
developing the utility’s existing main extension charge, staff inadvertently
did not include the Services to Customers (363) account of $1,156,689 in the
total cost of the wastewater collection system. By correcting the error, the
cost of the wastewater collection system increases from $5,339,566 to
$6,496,255. The lines have a design capacity of 3,800 ERCs. Based on the cost
approved in the last rate case of the existing wastewater collection system,
staff recommends the main extension charge be revised to $1,710 ($6,496,255/3,800)
per ERC for the wastewater system.
Staff’s recommended main extension charge for wastewater
is consistent with the guidelines in Rule 25-30.580, F.A.C., which require
that, at a minimum, the cost of the utility’s lines should be contributed.
Staff’s recommended main extension charge for wastewater will allow the utility
to recover a portion of its investment in the wastewater collection system from
future connections consistent with Rule 25-30.580 (2), F.A.C.
Plant
Capacity Charge
Staff reviewed the contribution level of the utility with
the revised main extension charge at design capacity. Staff determined the
contribution level would be approximately 67.15 percent at design capacity and
within the guidelines of Rule 25-30.580, F.A.C. As a result of correcting the
main extension charge, the existing plant capacity charge would cause the
utility to be over contributed at design capacity. Therefore, staff recommends
that the existing plant capacity charge be discontinued. The utility
represented to staff that it agrees with staff’s revised calculations.
Conclusion
Staff recommends that Ni Florida’s existing wastewater service
availability charges should be revised. Staff recommends a main extension
charge of $1,710 per ERC be approved because it is reasonable and within the
guidelines of Rule 25-30.580, F.A.C. The existing plant capacity charge should
be discontinued. The recommended main extension charge should be based on an
estimated 173 gallons per day per ERC of treated wastewater demand. The utility
should file a revised tariff sheet and a proposed notice to reflect the
Commission-approved main extension charge. Ni Florida should provide the notice
to property owners who have requested service beginning 12 months prior to the
establishment of this docket. The approved charge should be effective for
connections made on or after the stamped approval date on the tariff sheet. The
utility should provide proof of noticing within 10 days of rendering the
approved notice.
Issue 2:
Should Ni Florida be required to refund service
availability charges collected in excess of the revised main extension charge?
Recommendation:
Yes. Ni Florida should be required to refund service
availability charges collected in excess of the revised main extension charge
because it would allow customers to pay only their pro rata share of the
wastewater collection system. The refund should be made with interest in
accordance with Rule 25-30.360, F.A.C. The utility should be required to file
monthly reports on the status of the refund by the twentieth of the following
month pursuant to Rule 25-30.311(7), F.A.C. (Bruce)
Staff Analysis:
As discussed in Issue 1, staff discovered an error
in the development of the utility’s existing main extension charge wherein
staff inadvertently did not include the plant account of Services to Customers
(363) in the total cost of the wastewater collection system. Staff also designed
a plant capacity charge based on the contribution level at that time. However, based
on the contribution level with the revised main extension charge at design
capacity, staff is recommending the plant capacity charge be discontinued and a
main extension charge of $1,710. As a result, staff believes the utility should
refund the service availability charges in excess of the revised main extension
charge in order for customers to pay only their pro rata share of the
wastewater collection system.
Although, the utility’s existing service availability
charges are a main extension charge of $1,405 and a plant capacity charge of
$2,500, the utility indicated to staff that it only collected $2,500 per ERC
not including the CIAC gross-up tax. For this reason, the incremental
difference between the $2,500 and the revised main extension charge is $790. Since
January 2, 2017, the effective date of the existing service availability
charges, the utility collected service availability charges from 17 customers
(16 residential customers [16 ERCs] and 1 general service customer [5.3 ERCs]).
Based on staff’s calculation of what was collected from customers for service
availability and staff’s recommended revised main extension charge, the utility
collected a total of $16,827 (residential $12,640 + $4,187 general service). This
amount does not include the approved CIAC gross up tax. Furthermore, the utility should make refunds
to any additional customers who paid excess service availability and have not
been identified herein. Therefore, staff recommends the utility refund those
customers’ service availability charges, including the CIAC gross-up tax,
collected in excess of the revised main extension charge.
Based on the above, Ni Florida should be required to
refund service availability charges collected in excess of the revised service
availability charges. The refund should be made with interest in accordance
with Rule 25-30.360, F.A.C. The utility should be required to file monthly
reports on the status of the refund by the twentieth of the following month
pursuant to Rule 25-30.311(7), F.A.C.
Issue 3:
Should this docket be closed?
Recommendation:
The docket should remain open pending staff’s
verification that the revised tariff sheet and notice have been filed by Ni
Florida and approved by staff. If a protest is filed within 21 days of the
issuance date of the Order, the tariff should remain in effect with the charge
held subject to refund pending resolution of the protest. Also, the docket
should remain open to allow staff to verify that the utility has properly
refunded the service availability charges collected in excess of the revised
service availability charges. If no timely protest is filed, a consummating
order should be issued and, once staff verifies that the notice of the charge
has been given to customers and the completion of the refund, the docket should
be administratively closed. (Crawford)
Staff Analysis:
The docket should remain open pending staff’s
verification that the revised tariff sheet and notice have been filed by Ni
Florida and approved by staff. If a protest is filed within 21 days of the
issuance date of the Order, the tariff should remain in effect with the charge
held subject to refund pending resolution of the protest. Also, the docket
should remain open to allow staff to verify that the utility has properly
refunded the service availability charges collected in excess of the revised
service availability charges. If no timely protest is filed, a consummating
order should be issued and, once staff verifies that the notice of the charge
has been given to customers and the completion of the refund, the docket should
be administratively closed.
