Discussion
of Issues
Issue 1:
What is the appropriate Phase II revenue requirement for
Beaches?
Recommendation:
The appropriate Phase II revenue requirement is $185,819.
This represents an increase of $33,095, which equates to an increase of 21.67
percent. The increase includes staff’s recommended pro forma plant and
O&M expense additions, as well as the billing determinant change and
corresponding adjustment to test year revenues discussed in Issues 2 and 3. Phase
II rate base is shown on Schedule No. 1-A. The related adjustments are shown on
Schedule No. 1-B. The operating income for Phase II is shown on Schedule No.
2-A. The related adjustments are shown on Schedule No. 2-B. (Wright, T. Brown)
Staff Analysis:
In the PAA Order, the Commission identified several pro
forma O&M expense and plant items to be included in the consideration of Beaches’
Phase II revenue requirement and rates. Due to concerns with the age of some
project bids, a final decision on the amount of the Phase II revenue
requirement and rates was conditioned on completion of the pro forma items and evaluation
of their actual costs. On February 6, 2019, Beaches provided actual cost
documentation for those pro forma items completed on or before the project
completion deadline, December 26, 2018.
Staff recommends that the documentation provided by Beaches should be
considered for establishing Phase II rates.
With the assistance of the FRWA, the Utility recently received disaster assistance for
Hurricane Michael repairs from the DEP. Staff has identified several of Beaches’ pro forma plant items whose
costs were mitigated by disaster assistance grant funding. Staff recommends
the grant funding received by the Utility should be used to reduce costs
associated with their respective pro forma plant items. Table 1-1 lists the pro
forma O&M expense and plant items identified in the PAA Order, their estimated
costs, their actual costs, and staff’s recommended costs as modified by DEP
grant funding.
Table 1-1
Phase II Pro Forma Costs
|
Pro Forma
O&M
|
Estimated
|
Actual*
|
Less:
DEP Grant*
|
Staff Rec.*
|
Notes
|
|
Landscaping
|
$0
|
$0
|
$0
|
$0
|
No invoice(s) provided.
|
|
Clear Ponds of Vegetation
|
4,152
|
3,792
|
0
|
3,792
|
|
|
Sand and Grit Removal
|
19,010
|
23,500
|
0
|
23,500
|
|
|
Total Pro Forma O&M
|
$23,162
|
$27,292
|
$0
|
$27,292
|
|
|
Pro Forma
Plant
|
|
|
|
|
|
|
Purchase of Portable Generator
|
$23,756
|
$1,477
|
$1,477
|
$0
|
Purchased smaller
generators.
|
|
Install Electrical Hookup
for Generator
|
4,000
|
0
|
0
|
0
|
No invoice(s) provided.
|
|
Replace Lift Station Pumps
(Hwy 98)
|
12,200
|
17,846
|
0
|
17,846
|
|
|
Replace Lift Station Pumps
(Americus)
|
14,000
|
15,090
|
14,425
|
665
|
|
|
Replace Control Panel
(Americus)
|
2,581
|
0
|
0
|
0
|
Included with lift station
pump.
|
|
Replace Rail System
(Americus)
|
0
|
0
|
0
|
0
|
Included with lift station
pump.
|
|
Purchase Second Blower
|
2,617
|
2,733
|
0
|
2,733
|
|
|
Replace Piping at
WWTP/Ponds
|
0
|
3,045
|
0
|
3,045
|
Only pond piping replaced.
|
|
Repair Fencing at WWTP
|
7,864
|
10,911
|
10,037
|
875
|
|
|
Repair Clarifier at WWTP
|
0
|
0
|
0
|
0
|
No invoice(s) provided.
|
|
Total Pro Forma Plant
|
$67,018
|
$51,103
|
$25,939
|
$25,164
|
|
|
Total Pro Forma
|
$90,180
|
$78,395
|
$25,939
|
$52,456
|
|
*Values may differ slightly due to
rounding.
Source: PAA Order and Document No. 00644-2019.
Phase II Pro Forma O&M
Beaches requested three pro forma O&M items, with estimated
costs totaling $23,162. Based on documentation provided by Beaches, actual
project costs totaled $27,292. DEP grant funding does not offset any of the
actual pro forma O&M project costs. Accordingly, staff recommends pro forma
O&M costs totaling $27,292.
Landscaping
Due to a lack of bids describing the nature of the work, or
a cost breakdown of materials and labor to justify the expense, Beaches’
request to install landscaping at the wastewater treatment plant (WWTP) and
lift stations was not assigned an estimated cost in the PAA Order. No
additional information related to this project has been provided by the Utility
to date. Accordingly, staff does not recommend inclusion of this project in the
Phase II revenue requirement.
Clear Ponds of Vegetation
Beaches’ DEP permit requires it to rotate the use of its
retention ponds weekly. According to the Utility, that had become increasingly
difficult due to the growth of vegetation in and around its retention ponds. To
address this, Beaches requested for inclusion a project to clear its retention
ponds of vegetation, add sand, and apply a growth inhibitor to prevent unwanted
vegetation in the future. This project was estimated to cost $4,152 in the PAA
Order.
A review of the invoices associated with this project shows
an actual cost of $3,792. Beaches contracted with various firms for the
completion of this project, with labor rates having varied from $25 per hour to
$42 per hour. With one exception, the invoices appear to describe work within
the scope of the project and at costs reasonable for the work performed. The
Utility identified a line item in one of the invoices that was outside the
scope of the project, and staff has modified project costs accordingly. Staff
recommends that this project be included in the Phase II revenue requirement. Staff
believes it is appropriate to amortize this expense over five years, or $758
per year ($3,792/5), as discussed in the PAA Order.
The adjustment is reflected on Schedule No. 2-B.
Sand and Grit Removal
Beaches requested for inclusion a project to remove sand
and grit that had been clogging the air lines of its WWTP. Such maintenance had
not been performed since the current owner took over approximately 19 years
ago. Based on a project proposal that included onsite disposal of removed sand
and grit, dated February 20, 2015, this project was estimated to cost $19,010
in the PAA Order.
A review of an updated project proposal, provided to the
Utility by U.S. Submergent Technologies on May 24, 2018, and the associated
invoice shows an actual cost of $23,500, or $4,490 over the estimated cost. According
to Beaches, the actual work performed deviated from the work outlined in the
updated project proposal. The proposal provided for offsite disposal of removed
sand and grit and, according to Beaches, contemplated a project duration of two
days. Beaches has reported that the removed sand and grit was, in fact,
disposed of onsite and the project required a full week to complete. Actual
work on the project also incurred additional expenses from the purchase of water
from the City of Port St. Joe. Despite changes in the scope and costs of the
project, Beaches and U.S. Submergent Technologies agreed to a final cost of
$23,500. Staff believes that the scope of this project and its cost are
appropriate as Phase II pro forma and, as such, recommends that this project be
included in the Phase II revenue requirement. Staff believes it is appropriate
to amortize this expense over five years, or $4,700 per year ($23,500/5), as
discussed in the PAA Order.
The adjustment is reflected on Schedule No. 2-B.
Additional Part-Time Employee
As part of the discussion of Phase I O&M expenses at
the September 7, 2017 Commission Conference, the Commission asked about the
potential of adding an “as-needed” contractor or maintenance person as part of
Phase II pro forma O&M. Prior to the Commission Conference, the Utility had
not expressed a desire or need to add an additional part-time contractor, nor
had any support documentation been provided to staff. Before filing this
recommendation, staff contacted the Utility to determine whether the Utility
had added an additional employee as a result of the discussion at the
Commission Conference, or whether it had plans to add a part-time employee in
the near future. Based on staff’s discussion with the Utility, the president,
the vice president, and the contract operator remain Beaches’ only employees. An
additional employee has not been added, nor is planned, and no cost support has
been provided by the Utility. As such, staff did not include an additional
part-time employee in its Phase II pro forma O&M calculations.
Phase II Pro Forma Plant
Beaches requested 10 pro forma plant items, with estimated
costs totaling $67,018. Based on documentation provided by Beaches, actual
project costs total $51,103. DEP grant funding offsets actual project costs by
$25,939. Accordingly, staff recommends pro forma plant costs totaling $25,164 ($51,103
- $25,939).
Purchase of Portable Generator
Beaches requested for inclusion the purchase of generators
to provide power to its WWTP or lift station pumps in the event of a power
outage. Based on the lowest bid provided by the Utility at the time, the
purchase of a single generator was estimated to cost $23,756 in the PAA Order.
A review of the invoices associated with this project
shows an actual cost of $1,477. According to Beaches, instead of purchasing the
28 kilowatt (kW) generator associated with the $23,756 bid, the Utility decided
to purchase two, identical 5.5 kW generators, priced at $738 each. The Utility
has reported that it uses these generators to power its Highway 98 and Americus
lift station pumps during power outages. Staff believes that the purchase of
these generators and the invoiced cost are appropriate as Phase II pro forma. Beaches
received $1,477 of DEP grant funding to offset the cost of this pro forma plant
item. Accordingly, staff recommends a pro forma plant cost of $0 ($1,477 -
$1,477) for this project.
Install Electrical Hookup for Generator
Beaches requested for inclusion a project to upgrade the
electrical equipment at its WWTP to accommodate the installation of a portable
generator. This project was estimated to cost $4,000 in the PAA Order.
Beaches has not provided documentation identifying whether
the project has been completed nor, if completed, at what cost. Accordingly,
staff recommends that this project not be included in the Phase II revenue
requirement.
Replace Lift Station Pumps (Highway 98)
According to Beaches, the pumps at its Highway 98 lift
station were in need of replacement due to their excessive age and poor
condition. To address this, Beaches requested for inclusion a project to
replace the lift station’s pumps, which was estimated to cost $12,200 in the
PAA Order. The bid
on which the estimated cost was based was provided to the Utility on October
15, 2014, and included the supply and installation of one pump, its rail
system, and supporting electrical equipment.
A review of the invoices associated with this project
shows an actual cost of $17,846, or $5,646 over the estimated cost. While a
portion of the additional cost can be attributed to the age of the bid used as
a basis for this project, the actual work performed also differs from what was
outlined in the original bid. The invoices show that both pumps at the Highway
98 lift station were replaced, and ancillary electrical and piping hardware was
installed. Beaches has also confirmed that the rail systems for both pumps at
the lift station were replaced. Unskilled labor for this project, provided by
Gulf Coast Property Services, varied in cost from $25 per hour to $33 per hour,
while skilled labor, provided by Roto-Rooter Plumbers, varied from $88 per hour
to $125 per hour. Staff believes that the scope of this project and its
invoiced cost are appropriate as Phase II pro forma. Beaches did not receive
DEP grant funding to offset the cost of this pro forma plant item. Accordingly,
staff recommends a pro forma plant cost of $17,846 for this project.
Replace Lift Station Pumps, Control Panel, and
Rail System (Americus)
Beaches reported that the pumps and control panel at its
Americus lift station were in need of replacement due to their excessive age
and poor condition. Additionally, the rail system used for servicing the pumps
had completely rusted away, rendering it non-functional. To address these
issues, Beaches requested for inclusion projects to replace the lift station’s
pumps, control panel, and rail system. Based on bids provided by the Utility,
the PAA Order estimated costs for two projects: (1) a project which combined
the replacement of the lift station’s pumps and its rail system was estimated
to cost $14,000; and (2) a project to replace the lift station’s control panel
was estimated to cost $2,581, for a combined estimated cost of $16,581.
A review of the invoices associated with these projects
shows combined actual costs totaling $15,090. Beaches primarily engaged M&L
Plumbing Inc. under a flat-rate contract for the replacement of the Americus
lift station’s pumps, control panel, and rail system. Through a separate
contract, M&L Plumbing Inc. provided pump truck service at a combined rent
and labor rate of $250 per hour. Ancillary support was provided by Gulf Coast
Property Services at a labor rate of $35 per hour. Staff believes that the
scope of these projects and their invoiced costs are appropriate as Phase II
pro forma. Beaches received $14,425 of DEP grant funding to offset the costs of
these pro forma plant items. Accordingly, staff recommends a combined pro forma
plant cost of $665 ($15,090 - $14,425) for these projects.
Purchase Second Blower
DEP regulations require Beaches to acquire a backup blower
for its WWTP in case of failure of its primary blower. Beaches, however, only
had a single blower at its WWTP. To remedy this, Beaches requested for
inclusion the purchase of a second blower. This project was estimated to cost $2,617
in the PAA Order.
A review of the invoice associated with this project shows
an actual cost of $2,733. Beaches contracted with AAG Electric Motors &
Pumps, Inc. for the completion of this project, with a labor rate of $45 per
hour. Staff believes that the scope of this project and its invoiced cost are appropriate
as Phase II pro forma. Beaches did not receive DEP grant funding to offset the
cost of this pro forma plant item. Accordingly, staff recommends a pro forma
plant cost of $2,733 for this project.
Replace Piping at WWTP/Ponds
Beaches requested for inclusion a project to replace
and/or repair piping at its WWTP and in its retention ponds in order to meet DEP
requirements for weekly rotation of the use of its retention ponds. However, due
to a lack of bids describing the nature of the work to be performed or a cost
breakdown of materials and labor to justify the expense, Beaches’ request was
not assigned an estimated cost in the PAA Order.
While Beaches has not provided documentation identifying
whether or at what cost piping at its WWTP was replaced and/or repaired, the
Utility did provide, in its February 6, 2019, filing, invoices associated with
the replacement and/or repair of piping in its retention ponds. A review of the
invoices shows an actual cost of $3,045. Gulf Coast Property Services provided
labor at costs varying from $25 per hour to $33 per hour. The invoices appear
to describe work within the scope of the project and at costs reasonable for
the work performed. Given the necessity of this project in meeting DEP
requirements, staff recommends that it be included in the Phase II revenue
requirement. Beaches did not receive DEP grant funding to offset the cost of
this pro forma plant item. Accordingly, staff recommends a pro forma plant cost
of $3,045 for this project.
Repair Fencing at WWTP
Beaches requested for inclusion a project to replace
and/or repair a 300-foot section of fencing surrounding its WWTP. This project
was estimated to cost $7,864 in the PAA Order.
In October 2018, Beaches’ WWTP suffered damages due to
Hurricane Michael, including the complete destruction of its perimeter fencing.
In response, Beaches underwent a project to demolish its existing fencing and
construct a new 1,540-foot fence surrounding its WWTP. A review of the invoices
associated with this project shows an actual cost of $10,911. Beaches
contracted with Breakaway Demo for the demolition portion of this project with
labor rates varying from $38 per hour to $57 per hour. For the construction
portion, Beaches contracted with Gulf Coast Property Services at a labor rate
of approximately $11 per hour. To minimize costs of the project, Beaches
installed chain-link fencing only on the section facing the road and field
fencing for the remainder of the fence’s perimeter. Beaches has informed staff
that the DEP does not have any concerns over this fencing strategy. Staff
believes that the scope of this project and its invoiced cost are appropriate
as Phase II pro forma. Beaches received $10,037 of DEP grant funding to offset
the cost of this pro forma plant item. Accordingly, staff recommends a pro
forma plant cost of $875 ($10,911 - $10,037) for this project.
Repair Clarifier at WWTP
Due to a lack of bids describing the nature of the work, or
a cost breakdown of materials and labor to justify the expense, Beaches’
request to repair the clarifier at its WWTP was not assigned an estimated cost
in the PAA Order. No
additional information related to this project has been provided by the Utility
to date. Accordingly, staff does not recommend inclusion of this project in the
Phase II revenue requirement.
Phase II Pro Forma Adjustments
Staff’s recommended pro forma plant additions are shown in
Table 1-2, as are staff’s adjustments to UPIS, accumulated depreciation, and
depreciation expense. There is also a corresponding increase to property taxes
of $117 associated with staff’s recommended pro forma plant. Adjustments to
UPIS and accumulated depreciation are reflected in Schedule No. 1-B, while
adjustments to depreciation expense and property taxes are reflected on
Schedule No. 2-B.
Table 1-2
Pro Forma Adjustments
|
Description
|
UPIS
|
Accum. Depr.
|
Depr. Exp.
|
|
|
|
Replace Lift Station Pumps
(Hwy 98)
|
$17,846
|
($446)
|
$446
|
|
|
Retirement
|
(13,385)
|
13,385
|
(335)
|
|
|
Replace Lift Station Pumps
(Americus)
|
665
|
(17)
|
17
|
|
|
Retirement
|
(499)
|
499
|
(12)
|
|
|
Purchase Second Blower
|
2,733
|
(182)
|
182
|
|
|
Retirement
|
0
|
0
|
0
|
|
|
Replace Piping at
WWTP/Ponds
|
3,045
|
(203)
|
203
|
|
|
Retirement
|
(2,284)
|
2,284
|
(152)
|
|
|
Repair Fencing at WWTP
|
875
|
(32)
|
32
|
|
|
Retirement
|
(656)
|
656
|
(24)
|
|
|
Total
|
$8,341
|
($15,943)
|
$357
|
|
Source: Utility responses to staff data requests,
staff calculations.
In the PAA Order, the Commission found that the Utility’s
wastewater treatment plant should be considered 64.3 percent used and useful (U&U).
Beaches’ wastewater collection systems were determined to be 90.5 percent
U&U. As
such, the Commission made an adjustment for non-U&U plant in Phase I. Staff
believes that a similar adjustment is necessary in Phase II. Application of the
U&U percentages to plant balances and associated accumulated depreciation
balances results in a net increase of $304 for wastewater non-U&U
components. Corresponding adjustments should also be made to remove the non-U&U
portion from depreciation expense and property taxes. Accordingly, staff
decreased depreciation expense by $95 and property taxes by $24 to reflect the
non-U&U portion of each expense.
Additional O&M Adjustments
In Phase I, the
Commission approved O&M expense of $138,009. As discussed earlier in this
issue, staff recommended pro forma O&M of $27,292 amortized over five
years, or $5,458 per year, be included in Phase II O&M expense. In
addition, staff also believes that adjustments to several O&M expense
accounts should be made to reflect the 20.31 percent reduction in customers the
Utility has experienced since Hurricane Michael.
Staff believes that the reduction in customers will likely impact Sludge
Removal (Acct. No. 711), Purchased Power (Acct. No. 715), and Chemicals (Acct.
No. 718). These expenses are variable in nature, and staff expects that the
lower number of customers would represent reduced wastewater flows being sent
through the Utility’s lift stations and plant. As a result, less power would be
used, fewer chemicals would be needed for treatment, and sludge removal
intervals might be prolonged. Staff’s recommended adjustments to these O&M
expense accounts are reflected in Table 1-3.
Table
1-3
Additional
O&M Adjustments
|
Expense
Account
|
Approved –
Phase I
|
20.31%
Reduction
|
Recommended
– Phase II
|
|
Sludge Removal
(711)
|
$2,600
|
($528)
|
$2,072
|
|
Purchased Power
(715)
|
$8,595
|
($1,746)
|
$6,849
|
|
Chemicals (718)
|
$2,752
|
($559)
|
$2,193
|
Source: PAA Order and staff calculations.
Staff recommends a decrease of $2,833 ($528 +
$1,746 + $559) in Phase II to reflect adjustments related to the loss of
customers. This results in a net addition to O&M in Phase II of $2,625
($5,458 - $2,833). Staff’s adjustments are reflected on Schedule No. 2-B. With
the additional adjustments, staff recommends Phase II O&M expense of
$140,634 ($138,009 + $2,625).
Operating Ratio Methodology
In the PAA Order,
the Commission approved an operating margin of 7.25 percent for Beaches. Using a 10 percent margin
in Phase I produced an operating margin of $13,801, which was above the
suggested cap of $10,000. The Commission found that a 7.25 percent margin was
appropriate in Phase I because it resulted in a $10,000 operating margin. As noted above, staff is recommending Phase II O&M expense of
$140,634.
Since the PAA
Order in this docket, the operating ratio methodology has transitioned from
“Commission practice” to a formalized rule, which now includes a 12 percent
margin and a $15,000 cap.
This rule went into effect on March 28, 2019. As outlined in the rule, staff
verified that the Utility’s rate base is not greater than 125 percent of
O&M expenses, and that the use of the operating ratio methodology does not
change the Utility’s qualification for a staff-assisted rate case. Accordingly,
staff applied the methodology established in the rule to calculate the
Utility’s Phase II revenue requirement. A margin of 12 percent of the Utility’s
O&M expenses is $16,876 ($140,634 x 12 percent), which is above the $15,000
cap. As such, staff recommends that a 10.67 percent margin is
appropriate in Phase II because it results in a $15,000 operating margin.
Conclusion
Based on staff’s review of documentation provided by
Beaches, the appropriate Phase II revenue requirement is $185,819. This
represents an increase of $33,095, which equates to an increase of 21.67
percent. The increase includes staff’s recommended pro forma plant and
O&M expense additions discussed above, as well as the billing determinant
change and corresponding adjustment to test year revenues discussed in Issues 2
and 3. Phase II rate base is shown on Schedule No. 1-A. The related
adjustments are shown on Schedule No. 1-B. The operating income for Phase II is
shown on Schedule No. 2-A. The related adjustments are shown on Schedule No.
2-B.
Issue 2:
What are the appropriate test year revenues for Phase II?
Recommendation: The
appropriate test year revenues for Beaches’ Phase II rates are $152,724.
(Ramos)
Staff
Analysis: In Phase I of the instant docket, the Commission
approved a Phase I revenue requirement of $176,348.[22]
The Utility’s Phase I test year revenues and Phase I rates were calculated
based on the Utility’s billing determinants at the time: 320 wastewater
customers and 45 prepaid connections. However, as discussed in Issue 3, the Utility
is currently under earning due to the impact of Hurricane Michael on Beaches’
service territory, which significantly reduced the Utility’s customer base.
As discussed
in Issue 3, staff is recommending the rates be redesigned due to the
significant reduction in the Utility’s customer base. In order to reflect the
appropriate percentage increase as a result of the Phase II increase and the
impact from redesigning rates, staff believes it is appropriate to adjust test
year revenues by utilizing the Utility’s 2018/2019 index rates[23] and the Utility’s
current customer count. This results in test year revenues of $152,724.
Therefore, test year revenues should be decreased by $23,624 ($176,348 -
$152,724 = $23,624). Based on the above, the appropriate test year revenues for
Beaches’ Phase II rates are $152,724, which consists of $148,877 of service
revenues and $3,847 of miscellaneous revenues.
Issue 3:
What are the appropriate rates for Phase II?
Recommendation:
The recommended rates and charges are shown on Schedule
No. 3. The Utility should file revised tariff sheets and a proposed customer
notice to reflect the Commission-approved rates and charges. The approved rates
and charges should be effective for service rendered on or after the stamped
approval date on the tariff sheets pursuant to Rule 25-30.475(1), Florida
Administrative Code (F.A.C.). In addition, the approved rates and charges
should not be implemented until staff has approved the proposed customer notice
and the notice has been received by the customers. The Utility should provide
proof of the date notice was given within 10 days of the date of the notice.
(Ramos)
Staff Analysis:
Pursuant to Order No.
PSC-2017-0383-PAA-SU, issued October 4, 2017, in the instant docket, Beaches
was granted a Phase I rate increase. The PAA order also indicated that the
Commission would consider a Phase II rate increase once the Phase II projects
were completed and project costs were evaluated. As discussed in Issue 1, the Utility
completed the Phase II projects. Typically, the Phase II rate increase would be
an incremental increase to the Phase I revenue requirement, resulting in an
across-the-board increase to the Phase I rates. However, subsequent to the
implementation of Phase I rates, Beaches was substantially impacted by
Hurricane Michael in October 2018, resulting in a significant decrease to the Utility’s
customer base. In order to maintain a stable revenue stream and sustain the
system at a safe and reliable level, the Commission approved the Utility’s
requested standby charge, which is a monthly reoccurring charge intended
specifically for customers unable to receive wastewater service due to
extensive storm damage.[24] The standby
charge is similar to the Utility’s guaranteed revenue charge[25] because
both charges represent an approximation of the fixed costs the Utility incurs
to have service ready and available upon demand.
When the Utility’s Phase I rates
were designed, Beaches was serving approximately 320 wastewater customers and
billing 45 property owners its monthly guaranteed revenue charge. However, due
to the impacts of Hurricane Michael, the Utility currently serves 255 wastewater
customers. In addition, the Utility bills 43 customers the standby charge and
36 property owners the guaranteed revenue charge. Although the standby charge
was approved after Phase I rates were set, the existing Phase I rates, standby
charge, and guaranteed revenue charge along with the post Hurricane Michael
billing determinants would generate approximately $30,000 less than the Utility’s
Commission-approved Phase I revenue requirement of $176,348. Due to the
significant reduction to Beaches’ customer base and in order to prevent the Utility
from significantly under earning, staff believes it is appropriate to
restructure the Utility’s rates, standby charge and guaranteed revenue charge
based on the existing billing determinants in order for the Utility to achieve
its authorized revenues from Phase I, incremental Phase II, and the index
adjustments. In the past, the Commission has approved the restructuring of
rates to recover a previously authorized revenue requirement and index
increases due to a significant decrease in billing determinants.[26]
To determine the appropriate
revenues for designing Phase II rates and charges, miscellaneous revenues of
$3,847 should be removed from the Phase II revenue requirement of $185,819
resulting in $181,972 for designing Phase II rates and charges. The Phase II
rates and charges are shown on Schedule No. 3.
Staff notes that the Commission
ordered staff to revaluate the continuance of the Utility’s standby charge in
January 2020, at which time staff intends to analyze the Utility’s customer
base and the corresponding revenues. As customers that are currently billed the
standby charge rebuild and re-establish service with the Utility, the customers
would transition from paying the standby charge to the flat rate for service,
which could potentially increase the Utility’s earnings. In January 2020, staff
will review the continuance of the standby charge; the Utility’s revenues will also
be reviewed to ensure the Utility is within range of its overall rate of
return. At which time, staff will determine if the Utility’s rates need further
restructuring.
Staff’s recommended rates and charges are shown on
Schedule No. 3. The Utility should file revised tariff sheets and a proposed
customer notice to reflect the Commission-approved rates and charges. The
approved rates and charges 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 approved rates and charges should not be implemented
until staff has approved the proposed customer notice and the notice has been received
by the customers. The Utility should provide proof of the date notice was given
within 10 days of the date of the notice.
Issue 4:
Should this docket be closed?
Recommendation:
No. 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 will be issued. The docket should remain open
for staff’s verification that the revised tariff sheets and the customer notice
have been filed by the Utility and approved by staff. When the tariff and
notice actions are complete, this docket may be closed administratively.
(Murphy)
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 will be issued. The docket should remain open
for staff’s verification that the revised tariff sheets and the customer notice
have been filed by the Utility and approved by staff. When the tariff and
notice actions are complete, this docket may be closed administratively.
