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State of Florida
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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-
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DATE:
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May 28, 2020
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TO:
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Office of Commission Clerk (Teitzman)
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FROM:
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Office of the General Counsel (Trierweiler,
J. Crawford)
Division of Accounting
and Finance (Fletcher, Norris)
Division of Economics (Hudson)
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RE:
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Docket No. 20200139-WS – Application for
increase in water and wastewater rates in Charlotte, Highlands, Lake, Lee,
Marion, Orange, Pasco, Pinellas, Polk, and Seminole Counties, by Utilities,
Inc. of Florida.
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AGENDA:
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06/09/2020 – Regular Agenda –Proposed
Agency Action - Interested Persons May Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Fay
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CRITICAL DATES:
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July 20, 2020 – 90-day deadline to address petition for
rule waiver pursuant to Section 120.542(8), F.S.
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SPECIAL INSTRUCTIONS:
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None
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Case Background
On April 20,
2020, Utilities, Inc. of Florida (UIF or Utility), a Class A utility providing
water and wastewater service to systems located in Charlotte, Highlands, Lake,
Lee, Marion, Orange, Pasco, Pinellas, Polk, and Seminole Counties, Florida,
filed a notice of its intent to submit an application for general rate relief for
these systems to the Florida Public Service Commission. The Utility intends to
submit the minimum filing requirements (MFRs) on or before July 31, 2020. On
May 7, 2020, the Chairman approved the Utility’s historic test year ended
December 31, 2019, and requested the filing of the complete petition, MFRs, and
full filing fee no later than July 31, 2020.
The Utility’s
last rate proceeding occurred in Docket No. 20160101-WS utilizing a historic
December 31, 2015, test year. That proceeding culminated in Order No.
PSC-2017-0361-FOF-WS, issued September 25, 2017, as amended by Order No.
PSC-2017-0361A-FOF-WS, issued October 4, 2017. On remand from the First
District Court of Appeal, Order No. PSC-2019-0363-PAA-WS was issued on August
27, 2019.
Upon its request,
the Office of Public Counsel (OPC) was added as an interested person to this
docket on April 20, 2020.
On April 21,
2020, UIF filed a Petition for Variance or Waiver of a specific provision from
Rule 25-30.437(3), Florida Administrative Code (F.A.C.). The portion of the
rule from which the Utility is requesting waiver addresses the requirement to
provide additional detailed billing analyses for each rate change period in the
test year. Pursuant to Section 120.542, Florida Statutes (F.S.), notice of the
petition for waiver was published in the Florida Administrative Register on
April 24, 2020. No written comments to the notice were received, and the time
for filing written comments expired on May 8, 2020. The 90-day statutory
deadline for the Commission to address the Utility’s request pursuant to
Section 120.542(8), F.S., is July 20, 2020.
This
recommendation addresses UIF’s petition for variance or wavier of a specific
provision from Rule 25-30.437(3), F.A.C. The Commission has jurisdiction
pursuant to Sections 367.081 and 120.542, F.S..
Discussion
of Issues
Issue 1:
Should the Commission grant the Utility's Petition
for Waiver or Variance of Schedule E-14, of Commission Form PSC/AFD 19-W
(11/93), as incorporated by reference in Rule 25.30-437, F.A.C.?
Recommendation:
Yes. The Commission should grant UIF’s Petition for
Waiver of the Rule. (Trierweiler, Hudson)
Staff Analysis:
Section
120.542(2), F.S., authorizes the Commission to grant variances or waivers from the
requirements of its rules where the person subject to the rules has
demonstrated that the underlying purpose of the statute has been or will be
achieved by other means, and strict application of the rules would cause the
person substantial hardship or would violate principles of fairness. "Substantial
hardship" as defined in this section may include a demonstrated economic,
technological, legal, or other type of hardship to the person requesting the
variance or waiver.
On April 21,
2020, UIF filed a Petition for Variance or Waiver of one specific requirement
of Commission Form PSC/AFD 19-W (11/93), which is incorporated by reference in
Rule 25-30.437, F.A.C. The rule requires the Utility to create billing analyses
throughout the test year that capture the data for each class of service by meter
size and reflect all rate changes throughout the test year. Each billing
analysis must show the bills, gallons, and rates. One of the goals is to
provide the Commission with the data necessary to annualize test year revenue
if there was a rate change during the test year.
UIF asserts that the requested
waiver or variance is needed because providing the detailed billing analyses
with billing changes would result in a substantial hardship as defined in
Section 120.542(2), F.S. The Utility had three rate changes during the test
year, which by rule would require a billing analysis for each of the three rate
periods. UIF would incur an inordinate amount of time to prepare these detailed
billing analysis schedules which would result in an additional 700 to 900
individual billing schedules due to the size of its customer base. Commission staff
agrees that these detailed rate change billing analyses do not provide any
meaningful information which would facilitate the Commission’s review of UIF’s
rate request. Commission staff needs the billing analysis, which reflects the
total number billing determinants for purposes of annualizing revenues, if
necessary, and designing rates. UIF
intends to provide the billing analysis (which by nature are the total test year
billing determinants); it does not intend to provide separate billing analyses
which coincide with each period of rate change during the test year. UIF
contends that the application of this specific MFR requirement in this docket
would lead to an unreasonable, unfair and unintended result, and that the
purpose of this specific MFR requirement will be achieved through the billing
analysis schedules to be filed by UIF.
The Commission evaluated a similar
motion by UIF in its prior rate case in Docket No. 20160101-WS and issued Order
No. PSC-2016-0530-PAA-WS, granting the Petition. There has been no change in
the rate case requirements since that time. Finally, UIF represents that OPC
takes no position on UIF’s Petition for Rule Waiver.
Section 367.081, F.S., provides that the Commission shall
fix rates which are just, reasonable, compensatory and not unfairly
discriminatory. The underlying purpose for gathering the information required
by Rule 25-30.437, F.A.C., is to provide sufficient information for the
Commission to set appropriate rates for a utility. The Utility will provide the
information in its MFRs that will permit the staff, parties, and Commission to
examine revenues for the test year period. The information the Utility is
seeking to waive is not necessary for that determination. Therefore, the
underlying purpose of the statute can still be met if the waiver is granted.
Staff also believes the Utility has sufficiently alleged that compliance with
the rule would result in substantial hardship. Preparing an additional 700 to
900 billing schedules, which would not materially assist the parties, staff, or
Commission in processing the case, would result in the expenditure of not only
an inordinate amount of time and resources on the part of the Utility, but
would also generate additional - and unnecessary - rate case expense.
Staff therefore recommends that the Commission grant the
waiver of the rule. By granting this waiver, UIF will avoid incurring a
substantial hardship without adversely impacting the Commission’s ability to
determine annualized test year revenues.
Issue 2:
Should this docket be closed?
Recommendation:
The docket should remain open pending the
Commission’s final action on the Utility’s requested rate increase. If no
timely protest is filed, this matter becomes final upon the issuance of a
consummating order. (Trierweiler)
Staff Analysis:
The docket should remain open pending the
Commission’s final action on the Utility’s requested rate increase. With
respect to Issue 1, a Consummating Order should be issued unless a person whose
substantial interests are affected by the Commission’s decision files a protest
within 21 days of the issuance of the proposed agency action portion of the
order.