Discussion
of Issues
Issue 1:
Should the Commission approve Raintree Waterworks,
Inc.’s application for a LARI?
Recommendation:
Yes. The Commission should approve Raintree’s
application for a LARI in the amount of 20 percent. This equates to an increase
of $9,651. 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 2019 Annual Report as it is the year the
adjustment in rates will be implemented. To ensure overearnings will not occur
due to the implementation of this rate increase, the Commission will conduct an
earnings review of Raintree’s 2019 Annual Report. 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. (Thurmond)
Staff Analysis:
Pursuant to Rule 25-30.457, F.A.C., any utility
eligible to file for a staff assisted rate case (SARC) 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 June 6, 2019, Raintree notified the Commission of its
intent to implement a LARI of 20 percent pursuant to Rule 25-30.457, F.A.C. The
application met the initial requirements of the rule, and July 31, 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 Raintree 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 ago, but less than
seven years ago, prior to the receipt of the petition currently under review.
Raintree is under earning based on information provided in the Utility's 2018
Annual Report. 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
December 31, 2018, the most recent 12-month period. However, the Utility also
included miscellaneous service revenues which should not be included in the
calculation. Based on annualized service revenues of $48,254, a 20 percent
increase would result in an annual increase in revenues of $9,651. This
produces total annual service revenues of $57,905.
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 2019 Annual Report as it is the year the adjustment in rates will
be 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, who is the Utility’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 Utility'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 Raintree’s 2019 Annual Report as it is the year the adjustment in
rates will be 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
Raintree Waterworks, Inc.?
Recommendation:
The existing service rates for Raintree 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 more than 10 days after the date of the notice.
(Bruce)
Staff Analysis:
Based on staff’s recommended approval of the
Utility’s LARI in Issue 1, the existing service rates for Raintree 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
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 more than 10 days after the date
of the notice.
Issue 3:
Should the recommended rates be approved for
Raintree Waterworks, Inc., 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, Raintree 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 SARC 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
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 SARC application within 21 days in the event there
is a protest, the application for a LARI will be
deemed withdrawn. (Thurmond) (Final Agency Action)
Staff Analysis:
This recommendation proposes an increase in water
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, Raintree 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 SARC 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 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 SARC application within 21 days
in the event there is a protest, the application
for a LARI will be deemed withdrawn.
Issue 4:
Should this docket be closed?
Recommendation:
No. In the event of a protest, Raintree 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 SARC application within 21 days of the date of the protest. If Raintree fails to file a SARC within
21 days, the Utility’s
petition for a LARI 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 Raintree 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)
Staff Analysis:
In the event of a
protest, Raintree 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 SARC application within 21 days of the date of the
protest. If Raintree fails
to file a SARC within 21 days, the
Utility’s petition for a LARI 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 Raintree 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.
