|
State of Florida
|
Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
|
|
DATE:
|
August 22, 2019
|
|
TO:
|
Office of Commission Clerk (Teitzman)
|
|
FROM:
|
Division of Accounting and Finance (D.
Andrews, Norris)
Division of Economics (Bruce, Hudson)
Division of Engineering (Knoblauch, Salvador)
Office of the General Counsel (Simmons, Crawford)
|
|
RE:
|
Docket No. 20190118-WU – Application
for increase in water rates in Gulf County by Lighthouse Utilities Company,
Inc.
|
|
AGENDA:
|
9/5/19 – Regular
Agenda – Decision on Suspension of Rates – Interested Persons May
Participate.
|
|
COMMISSIONERS ASSIGNED:
|
All Commissioners
|
|
PREHEARING OFFICER:
|
Clark
|
|
CRITICAL DATES:
|
9/10/19 (60-Day Suspension
Date)
|
|
SPECIAL INSTRUCTIONS:
|
None
|
|
|
|
|
Case Background
Lighthouse
Utilities Company, Inc. (Lighthouse or Utility) is a Class B utility serving
approximately 1,851 customers in Gulf County. Rates were last established for
this Utility in 2011. In 2018, Lighthouse recorded total
operating revenues of $728,696 and operating expenses of $648,650.
On September 26,
2018, Lighthouse filed an application for a limited proceeding rate increase in
Docket No. 20180179-WU to recover the costs of capital projects. On October 10,
2018, Hurricane Michael destroyed or damaged substantial portions of the
Utility’s water distribution system. Lighthouse and the Office of Public Counsel
(OPC) were not able to reach an agreement on whether a limited proceeding was
the appropriate procedure for seeking rate relief under those circumstances. In
a letter dated May 17, 2019, the Utility withdrew its application for a limited
proceeding rate increase and conveyed its desire to file an application for
general rate relief.
On July 12,
2019, Lighthouse filed its application for approval of interim and final water
rate increases. On August 9, 2019, staff sent the Utility a letter indicating deficiencies
in the filing of its minimum filing requirements and the Utility’s response to
staff’s deficiency letter is due on September 9, 2019. In a letter dated August
13, 2019, Lighthouse withdrew its request for interim rate relief.
In its application,
Lighthouse requested a test year ended December 31, 2018, for purposes of final
rates and requested that the application be processed using the Proposed Agency
Action procedure. A substantial portion
of the expenses, costs, and investment that are part of this application for
rate relief are related to capital projects for improved system reliability.
Another substantial portion of the rate relief is related to storm restoration
and repair costs that the Utility has incurred and will continue to incur as a
result of Hurricane Michael.
OPC’s
intervention in this docket was acknowledged by Order No. PSC-2019-0236-PCO-WU,
issued June 18, 2019.
The 60-day
statutory deadline for the Commission to suspend Lighthouse’s requested final
rates is September 10, 2019. This recommendation addresses the suspension of
Lighthouse’s requested final rates. The Commission has jurisdiction pursuant to
Section 367.081, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Utility's proposed final water rates be
suspended?
Recommendation:
Yes. Lighthouse’s proposed final water rates should
be suspended. (D. Andrews)
Staff Analysis:
Section 367.081(6), F.S., provides that the rates
proposed by a utility shall become effective within sixty days after filing
unless the Commission votes, for good cause, to withhold consent of implementation
of the requested rates. Further, Section 367.081(10), F.S., permits the
proposed final rates to go into effect under bond, escrow, or corporate
undertaking five months after the official filing date unless final action has
been taken by the Commission or the Commission’s action is protested by the
Utility.
Staff has reviewed the filing and has considered the
proposed rates, the revenues thereby generated, and the information filed in
support of the rate application. Staff believes that it is reasonable and
necessary to require further amplification and explanation regarding this data,
and to require production of additional and/or corroborative data. To date,
staff has initiated an audit of Lighthouse’s books and records. The audit
report is tentatively due on October 4, 2019. In addition, staff sent a data
request to Lighthouse on August 21, 2019, and the response is due by September
23, 2019. Further, staff believes additional requests will be necessary to
process this case. Based on the foregoing, staff recommends that the Utility’s
proposed final rates be suspended.
Issue 2:
Should this docket be closed?
Recommendation:
This docket should remain open pending the
Commission’s final action on the Utility’s requested rate increase. (Simmons)
Staff Analysis:
This docket should remain open pending the
Commission’s final action on the Utility’s requested rate increase.