Case Background
East Marion
Utilities, LLC (East Marion or utility) is a Class C water and wastewater
utility that serves approximately 106 water customers and 96 wastewater customers
in Marion County. According to East Marion’s 2019 Annual Report, total gross
revenue was $76,109 and total operating expense was $85,515, resulting in a net
loss of $9,406.
On
September 14, 2020, East Marion filed a petition for approval to defer legal
costs incurred in 2020. The total legal costs associated with this petition are
$6,594. All legal costs were associated with a settlement agreement with the
Florida Department of Environmental Protection (FDEP).
The
Commission has jurisdiction in this case pursuant to Section 367.011, Florida
Statutes.
Discussion
of Issues
Issue
1: Should the Commission approve
East Marion Utilities, LLC’s petition to defer legal expenses?
Recommendation
: Yes. The Commission should approve
the petition by East Marion to defer legal expenses for consideration in the
utility’s next rate proceeding. (Snyder)
Staff Analysis
: On September 14, 2020, East Marion filed a letter seeking
approval to defer legal expenses incurred in 2020. All legal expenses were
associated with a settlement agreement with the FDEP. The total cost to date of
all legal expenses is $6,594.
The concept of deferral accounting allows companies to
defer costs due to events beyond their control and seek recovery through rates
at a later time. The alternative would be for the company to seek a rate case
each time it experiences an exogenous event. The costs in this docket are
related to legal fees incurred by the utility in trying to resolve possible violations
alleged by FDEP and negotiating a settlement agreement to resolve the possible
violations. The Commission has previously allowed legal expenses from defending
fines and violations from FDEP to be recovered by utilities. The
Commission has previously recognized that these types of legal expenses could
serve to avoid or reduce fines, or eliminate or postpone large system
improvements. Therefore,
staff recommends the Commission approve the petition by East Marion to defer
these legal expenses for consideration in the utility’s next rate proceeding.
Issue 2
: Should this docket be closed?
Recommendation:
Yes. If a person
whose substantial interests are affected by the proposed agency action does not
file a protest within 21 days of the issuance of the order, a consummating
order should be issued and this docket should be closed. (Murphy)
Staff Analysis:
If a person whose substantial interests are affected by
the proposed agency action does not file a protest within 21 days of the
issuance of the order, a consummating order should be issued and this docket
should be closed.
