Case Background
Gulfstream
Utility LLC (Gulfstream or Utility) provides wastewater service to
approximately 976 residential and two general service customers within the
Gulfstream Harbor Mobile Home Park located in Orange County. Water service is
provided by the Utility through a bulk purchase agreement with Orange County. The
Utility applied only for a certificate for wastewater service, as the Utility
acts as a reseller for its water service, and is, therefore, exempt from
Commission regulation pursuant to Section 367.022(8), Florida Statutes (F.S.).
During late 2014
and early 2015, Sun Communities, Inc. (Sun Communities) acquired the Utility
while purchasing several other mobile home and residential vehicle parks
throughout the United States. Sun Communities also owns three other utilities
that are regulated by the Commission: GCP Plantation Landings, LLC, GCP Fairfield
Village, LLC, and Sunlake Estates Utilities, L.L.C. Upon acquiring Gulfstream, in
a purchase along with several other systems, Sun Communities believed
Gulfstream to be exempt from Commission regulation. However, Sun Communities has
now determined that Gulfstream’s wastewater system should be certificated
because the wastewater system does not meet any exemptions pursuant to Section
367.022, F.S. Approximately half of Gulfstream’s wastewater service is treated
using its own wastewater treatment plant and the other half is serviced by a
bulk wastewater treatment agreement with Orange County.
On
December 3, 2021, Gulfstream filed an application for an original certificate and
initial rates and charges for wastewater service pursuant to Rule 25-30.033,
Florida Administrative Code (F.A.C.). However, based on Exhibit K of the
application and after discussions with the Utility, it was determined that
Gulfstream already had existing rates in place that it was charging for
wastewater service. Therefore, the Utility filed an amended application, which
was for an original certificate for an existing utility currently charging for
service pursuant to Rule 25-30.034, F.A.C. Staff found this amended application to be
deficient, and issued a deficiency letter on January 14, 2022. The Utility
cured the deficiencies on January 27, 2022.
On
February 9, 2022, Orange County filed an objection to Gulfstream’s amended
application and request for an evidentiary hearing. Commission staff held two
noticed informal meetings on March 1, 2022, and April 8, 2022, to discuss the
objection with Orange County and the Utility. On March 25, 2022, Gulfstream
filed a Motion to Dismiss Orange County’s objection; Orange County filed its
response in opposition on April 1, 2022. However, on April 7, 2022, Orange
County withdrew its objection and request for hearing, and subsequently,
Gulfstream withdrew its Motion to Dismiss on April 11, 2022.
This
recommendation addresses the application for an original wastewater certificate
and the appropriate rates and charges for the Utility. The Commission has
jurisdiction pursuant to Sections 367.031 and 367.045, F.S.
Discussion
of Issues
Issue 1:
Should the application by Gulfstream Utility LLC for
a wastewater certificate be approved?
Recommendation:
Yes. Gulfstream should be granted Certificate No.
579-S to serve the territory described in Attachment A effective the date of
the Commission’s vote. The resultant order should serve as Gulfstream’s
wastewater certificate and should be retained by the Utility. The Utility
should be required to file a copy of the executed lease within 30 days of the
issuance of the Commission’s order approving the certificate. The existing
rates should remain in effect until a change is authorized by the Commission in
a subsequent proceeding. (Lewis, Bennett, Bethea)
Staff Analysis:
As discussed in the Case Background, Gulfstream filed
its amended application for an original certificate with existing facilities in
Orange County on December 15, 2021. Commission staff determined the original
filing was deficient and the Utility corrected these deficiencies on January
27, 2022, the official filing date for the application. The Utility's
application is in compliance with the governing statutes, Sections 367.031 and
367.045, F.S.
Notice
On January 24, 2018, Gulfstream filed proof of compliance
with the noticing provisions set forth in Rule 25-30.030, F.A.C. As stated
previously, a protest was received from the County Commission of Orange County
which was later withdrawn.
Land
Ownership and Service Territory
In its application, the Utility states that it has entered
into a long-term land lease with the related party land owner for the property
on which the wastewater treatment facility is located. A copy of the lease
agreement will be provided to the Commission upon approval and granting of the
certificate. A copy of the proposed lease was attached to the Utility’s application
as Exhibit I. Staff
recommends that the Utility be required to file a copy of the executed lease
within 30 days of the issuance of the Commission’s order approving the
certificate.
Financial
and Technical Ability
Rule 25-30.033(1)(h), and (i), F.A.C., requires a
statement showing the financial and technical ability of the applicant to
provide service, a detailed financial statement, and a list of all entities
upon which the applicant is relying to provide funding along with those
entities' financial statements. Gulfstream is relying upon the financial
backing of its parent, Sun Communities. The Commission has traditionally
allowed reliance on the parent's financial ability. The Commission's reasoning
has been the logical vested interest of a parent in the financial stability of
its subsidiary. The application contains Sun Communities' most recent financial
statements, as well as a letter of commitment from Sun Communities "to
provide or assist Gulfstream Utility, LLC in securing necessary funding"
for Gulfstream to operate the system in Orange County. Staff believes that Sun
Communities' financial statements and extensive business operations in Florida
show adequate and stable funding reserves for the Utility. Therefore, staff
recommends that Gulfstream has demonstrated that it will have access to
adequate financial resources to operate the Utility.
Gulfstream is a subsidiary of Sun Communities which owns
and operates the Gulfstream Harbor Mobile Home Park. The Florida Department of
Environmental Protection reissued a permit to operate the wastewater treatment
facility to Sun Communities, Inc. on June 2, 2020, which is due to expire on
September 14, 2025. Gulfstream has contracted US Water Services Corporation to
operate and maintain the Utility’s wastewater treatment facilities. US Water
Services Corporation is a national company which operates several water and
wastewater systems in Florida. Based on the above, Gulfstream has demonstrated
the financial and technical ability to provide service to the existing service
territory.
Continuing Existing
Rates
The Utility provides wastewater service to approximately
976 residential customers and two general service customers. Wastewater service
is provided through a combination of bulk service provided by Orange County and
the treatment plant operated by Gulfstream. The Utility proposes to continue
billing its existing rates for residential and general service customers, which
consists of a base facility charge of $2.10 and gallonage charge per 1,000
gallons of $4.26. Staff
recommends that Gulfstream’s existing
rates, as shown on Schedule No. 1, should remain in effect until a change is
authorized by the Commission in a subsequent proceeding.
Conclusion
Based on the foregoing, staff recommends that it is in the
public interest to approve Gulfstream’s application. Gulfstream should be
granted Certificate No. 579-S to serve the territory described in Attachment A,
effective the date of the Commission's vote. The resultant order should serve
as Gulfstream’s wastewater certificate and it should be retained by the
Utility.
Issue 2:
What are the appropriate miscellaneous service charges
for Gulfstream Utility LLC?
Recommendation:
The appropriate miscellaneous service charges are shown on
Schedule No. 1 and should be approved. The Utility should file revised tariff
sheets and a proposed customer notice to reflect the Commission-approved charges.
The approved 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 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. Gulfstream should be required to
charge the approved miscellaneous service charges until authorized to change
them by the Commission in a subsequent proceeding. (Bethea)
Staff Analysis:
Miscellaneous Service Charges
Gulfstream requested
miscellaneous service charges. Section 367.091, F.S., authorizes the Commission
to establish miscellaneous service charges. Gulfstream’s request was
accompanied by its cost justification as required by Section 367.091(6), F.S. The
purpose of these charges is to place the burden for requesting or causing these
services on the cost causer rather than the general body of ratepayers. The
Utility’s requested charges are based on the cost of the Utility to administer
and perform miscellaneous services.
The Utility
requested an $8 late payment charge to recover administrative and supply cost
for processing late payment notices. The Utility’s cost justification for its
requested late payment charge is shown below on Table 2-1.
Table 2-1
Late Payment Cost Justification
|
Administrative Labor
($31.48/hr x 1/4 hr)
|
$7.87
|
|
Supplies/Postage
|
$0.60
|
|
Calculated Total
|
$8.47
|
|
|
|
|
Requested Charge
|
$8.00
|
Source: Utility’s Cost Justification
The Utility requested a premises visit charge of $16 for normal hours and
$20 for after hours. In addition, Gulfstream requested initial connection,
normal reconnection, and violation reconnection charges at actual cost.
Gulfstream will perform the administrative labor, operational field labor, and
transportation cost associated with the miscellaneous services. It should be
noted that Gulfstream’s request for initial connection and normal reconnection
charges do not conform with the miscellaneous service charges rule. Effective
June 24, 2021, Rule 25-30.460, F.A.C., was amended to remove initial connection
and normal reconnection charges.[5] The
definitions for initial connection charges and normal reconnection charges were
subsumed in the definition of the premises visit charge. Therefore,
Gulfstream’s proposed initial connection and normal reconnection charges are
obsolete based on the revised rule.
The Utility’s cost justification for its requested premises visit charge is
shown below in Table 2-2. Staff believes the premises visit and violation
reconnection charges are reasonable and should be approved pursuant to Rule
25-30.460, F.A.C.
Table
2-2
Premises Visit Cost Justification
|
|
Normal Hours
|
After Hours
|
|
Administrative Labor
($31.48/hr x 1/4 hr)
|
$7.87
|
$7.87
|
|
Field Labor
(21.24/hr x 1/3 hr)
|
$7.08
|
N/A
|
|
Field Labor
(31.86/hr x 1/3 hr)
|
N/A
|
$10.62
|
|
Transportation
|
$1.10
|
$1.10
|
|
Calculated Total
|
$16.05
|
$19.59
|
|
|
|
|
|
Requested Charge
|
$16.00
|
$20.00
|
Source:
Utility’s Cost Justification
In addition,
the Utility requested nonsufficient funds charges (NSF) pursuant to Section
68.065, F.S. Staff believes that Gulfstream should be authorized to collect NSF
charges consistent with Section 68.065, F.S., which allows for the assessment
of charges for the collection of worthless checks, drafts, or orders of payment.
As currently set forth in Section 68.065(2), F.S., the following NSF charges
may be assessed:
1)
$25,
if the face value does not exceed $50,
2)
$30,
if the face value exceeds $50 but does not exceed $300,
3)
$40,
if the face value exceeds $300,
4)
or
5 percent of the face amount of the check, whichever is greater.
The Utility’s
proposed and staff’s recommended miscellaneous service charges are shown below
in Tables 2-3 and 2-4.
Table
2-3
Utility Proposed Miscellaneous Service Charges
|
|
Normal
Hours
|
After
Hours
|
|
Initial Connection Charge
|
Actual
Cost
|
Actual
Cost
|
|
Normal Reconnection Charge
|
Actual
Cost
|
Actual
Cost
|
|
Violation Reconnection Charge
|
Actual
Cost
|
Actual
Cost
|
|
Premises Visit Charge
|
$16.00
|
$20.00
|
|
(in lieu of disconnection)
|
|
|
|
Late Payment Charge
|
$8.00
|
|
NSF Charges
|
Pursuant
to Section 68.065, F.S.
|
Table
2-4
Staff Recommended Miscellaneous Service Charges
|
|
Normal
Hours
|
After
Hours
|
|
Violation Reconnection Charge
|
Actual
Cost
|
Actual
Cost
|
|
Premises Visit Charge
|
$16.00
|
$20.00
|
|
Late Payment Charge
|
$8.00
|
|
NSF Charges
|
Pursuant
to Section 68.065, F.S.
|
Based on the above, the appropriate miscellaneous service
charges are shown on Schedule No.1 and should be approved. The Utility should
file revised tariff sheets and a proposed customer notice to reflect the
Commission-approved charges. The approved 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 miscellaneous
service 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. Gulfstream should be required to charge the approved charges until
authorized to change them by the Commission in a subsequent proceeding.
Issue 3:
What are the appropriate initial customer deposits
for Gulfstream?
Recommendation:
As shown on Schedule No. 1, the appropriate initial
customer deposit should be $28 for the residential 5/8 inch x 3/4 inch meter
size for wastewater. The initial customer deposits for all other residential
meter sizes and all general service meter sizes should be two times the average
estimated bill for wastewater. The approved initial customer deposits should be
effective for connections made on or after the stamped approval date on the
tariff sheets pursuant to Rule 25-30.475, F.A.C. The Utility should be required
to collect the approved deposits until authorized to change them by the
Commission in a subsequent proceeding. (Bethea)
Staff Analysis:
Rule 25-30.311, F.A.C., contains criteria for collecting,
administering, and refunding customer deposits. Rule 25-30.311(1), F.A.C.,
requires that each company’s tariff shall contain its specific criteria for
determining the amount of initial deposits. Customer deposits are designed to
minimize the exposure of bad debt expense for the Utility and, ultimately, the
general body of rate payers. In addition, collection of customer deposits is
consistent with one of the fundamental principles of rate making ensuring that
the cost of providing service is recovered from the cost causer.
Rule 25-30.311(7), F.A.C., authorizes utilities to collect new or additional
deposits from existing customers not to exceed an amount equal to the average
actual charge for water and/or wastewater service for two billing periods for
the 12-month period immediately prior to the date of notice. The two billing
periods reflect the lag time between the customer’s usage and the Utility’s
collection of the revenues associated with that usage. Commission practice has
been to set initial customer deposits equal to two months bills based on the
average consumption for a 12-month period for each class of customers. Based on
the average residential usage of 2,777 gallons per month, the average
residential monthly bill is $13.93 for wastewater service.
Based on the above,
as shown on Schedule No. 1, the
appropriate initial customer deposit should be $28 for the residential 5/8 inch
x 3/4 inch meter size for wastewater. The initial customer deposits for all
other residential meter sizes and all general service meter sizes should be two
times the average estimated bill for wastewater. The approved initial customer
deposits should be effective for connections made on or after the stamped
approval date on the tariff sheets pursuant to Rule 25-30.475, F.A.C. The
Utility should be required to collect the approved deposits until authorized to
change them by the Commission in a subsequent proceeding.
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 should be issued. The docket should
remain open for staff’s verification that the revised tariff sheets and
customer notice have been filed by the Utility and approved by staff, and a
copy of the executed long-term lease has been provided. Once these actions are
complete, this docket should be closed administratively. (Sandy)
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 should be issued. The docket should
remain open for staff’s verification that the revised tariff sheets and
customer notice have been filed by the Utility and approved by staff, and a
copy of the executed long-term lease has been provided. Once these actions are
complete, this docket should be closed administratively.
