Case Background
Rule 25-30.455, Florida
Administrative Code (F.A.C.), addresses the requirements and procedures for
water and wastewater utilities to petition the Commission for staff assistance
in rate cases. Rule 25-30.456, F.A.C., addresses the requirements and
procedures for water and wastewater utilities to petition the Commission for
staff assistance in alternative rate setting. Rule 25-30.457, F.A.C., addresses
the requirements and procedures for water and wastewater utilities to obtain staff
assistance for a limited alternative rate increase.
These three rules
set forth the upper gross annual revenue limits for determining eligibility for
water and wastewater utilities to receive staff assistance in rate setting. Section
367.0814(1), Florida Statutes (F.S.), requires the Commission to adjust the
gross annual revenue limits every five years, using the most recent cumulative
five years of the price index established by the Commission pursuant to Section
367.081(4), F.S. Pursuant to this section, the amended rules need to be
effective on July 1, 2023.
To comply with
the statutory mandate set forth in Section 367.0814(1), F.S., staff initiated rulemaking
to amend the rules to adjust the gross annual revenue limit for staff-assisted
rate cases. The Notice of Development of Rulemaking for these rules appeared in
the January 20, 2023, edition of the Florida Administrative Register, Volume
49, Number 13. There were no requests for a rule development workshop, and no
workshop was held.
This recommendation
addresses whether the Commission should propose the amendment of Rules
25-30.455, 25-30.456, and 25-30.457, F.A.C.
The Commission has jurisdiction pursuant to Sections 120.54, 350.127(2),
367.0814, and 367.121, F.S.
Discussion
of Issues
Issue 1:
Should the Commission propose the amendment of Rule
25-30.455, F.A.C., Staff Assistance in Rate Cases, Rule 25-30.456, F.A.C.,
Staff Assistance in Alternative Rate Setting, and Rule 25-30.457, F.A.C.,
Limited Alternative Rate Increase?
Recommendation:
Yes. The Commission should propose the amendment of
Rules 25-30.455, 25-30.456, and 25-30.457, F.A.C., as set forth in Attachment
A. The Commission should also certify the rules as minor violation rules.
(Sapoznikoff, Richards, Guffey)
Staff Analysis:
Rule 25-30.455, F.A.C., allows certain water and
wastewater utilities to petition the Commission for staff assistance in rate
applications by submitting an “Application for a Staff-Assisted Rate Case.”
Rule 25-30.456, F.A.C., allows certain water and wastewater utilities to
petition the Commission for staff assistance in alternative rate setting by submitting
an “Application for Staff Assistance in Alternative Rate Setting.” Rule 25-30.457, F.A.C., allows certain water
and wastewater utilities to seek a limited alternative rate increase. Staff
recommends that the Commission propose the amendment of Rules 25-30.455,
25-30.456, and 25-30.457, F.A.C., as set forth in Attachment A. Staff is
recommending the amendment of these rules to comply with the statutory mandate
set forth in Section 367.0814(1), F.S., that the gross annual revenue level to
obtain staff assistance with rate setting be adjusted every five years based on
the most recent cumulative five years of the price index established by the Commission
pursuant to Section 367.081(4)(a), F.S.
Currently, Rules 25-30.455 and 25-30.456, F.A.C., allow
water and wastewater utilities whose total gross annual operating revenues are
$300,000 or less for water service, $300,000 or less for wastewater service, or
$600,000 or less on a combined basis, to be eligible for staff assistance in
rate or alternative rate cases. Rule 25-30.457, F.A.C., currently allows water
and wastewater utilities whose total gross annual operating revenues are
$300,000 or less for water service, or $300,000 or less for wastewater service,
to be eligible for staff assistance for a limited rate increase.
To comply with the statutory mandate of Section 367.0814(1),
F.S., staff recommends increasing the gross annual operating revenue
eligibility from $300,000 or less to $335,000 or less, per system type, or from
$600,000 or less to $670,000 or less, when a combined basis is allowed. Staff derived the adjustment amounts based on
the application of the five-year cumulative index (12.15 percent) established
by the Commission pursuant to Section 367.081(4), F.S. When applied, the
five-year cumulative index increases the estimated gross annual revenue
threshold level by $35,000.
Minor Violation
Rules Certification
Pursuant to Section 120.695, F.S., for each rule filed for
adoption, the agency head shall certify whether any part of the rule is
designated as a rule the violation of which would be a minor violation. Rules
25-30.455, 25-30.456, and 25-30.457, F.A.C., are currently listed as minor
violation rules by the Commission. These rules are minor violation rules
because the violation of these rules would not result in economic or physical
harm to a person, cause an adverse effect on the public health, safety, or
welfare, or create a significant threat of such harm. Violations of Rules
25-30.455, 25-30.456, and 25-30.457, F.A.C., with the proposed amendments would
continue to be minor violations.
Therefore, for the purposes of filing the proposed amended rules for
adoption with the Department of State, staff recommends that the Commission
certify Rules 25-30.455, 25-30.456, and 25-30.457, F.A.C., as minor violation rules.
Statement of Estimated
Regulatory Costs
Subsection 120.54(3)(b)1., F.S., encourages agencies to
prepare a Statement of Estimated Regulatory Costs (SERC) before the adoption,
amendment, or repeal of any rule. A SERC was prepared for this rulemaking and
is appended as Attachment B. As required by Section 120.541(2)(a)1., F.S., the
SERC analysis includes whether the rule amendments are likely to have an
adverse impact on economic growth, private sector job creation or employment,
or private sector investment in excess of $1 million in the aggregate within
five years after implementation. None of the impact/cost criteria will be
exceeded as a result of the recommended amendments.
The SERC concludes that the amendments to the rules will
likely not directly or indirectly increase regulatory costs in excess of
$200,000 in the aggregate in Florida within one year after implementation.
Further, the SERC concludes that the proposed rule amendments will not likely
increase regulatory costs, including any transactional costs, or have an adverse
impact on business competitiveness, productivity, or innovation, in excess of
$1 million in the aggregate within five years of implementation. Thus, pursuant
to Section 120.541(3), F.S., the proposed amendments to the rules do not
require legislative ratification.
In addition, the SERC states that the proposed amendments
to the rules would have no adverse impact on small businesses, would have no
implementation or enforcement costs on the Commission or any other state or
local government entity, and would have no impact on small cities or small
counties. The SERC states that there will be no transactional costs likely to
be incurred by individuals and entities required to comply with the
requirements.
Conclusion
The Commission should propose the amendment of Rules
25-30.455, 25-30.456, and 25-30.457, F.A.C., as set forth in Attachment A.
Staff recommends that the Commission certify the rules as minor violation rules.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no requests for hearing or comments are
filed, the rules should be filed for adoption with the Department of State, and
the docket should be closed. (Sapoznikoff)
Staff Analysis:
If no requests for hearing or comments are filed,
the rules should be filed for adoption with the Department of State, and the
docket should be closed.
25-30.455 Staff Assistance in Rate Cases.
(1) Water and wastewater utilities whose total gross annual
operating revenues are $335,000 $300,000 or less for water
service or $335,000 $300,000 or less for wastewater service, or $670,000
$600,000 or less on a combined basis, may file with the Office of
Commission Clerk an application for staff assistance in rate applications by
submitting a completed staff assisted rate case application. Reasonable and
prudent rate case expense is eligible for recovery through the rates developed
by staff. Recovery of attorney fees and outside consultant fees related to the
rate case is determined based on the requirements set forth in Section
367.0814(3), F.S. To be eligible for staff assistance under this rule:
(a) The applicant or utility owner must have at least one year of
experience operating the utility for which the rate increase is being
requested;
(b) The utility must be in compliance with its annual report
filing in accordance with subsection 25-30.110(3), F.A.C.; and
(c) The utility must have paid all required regulatory assessment
fees or must be current on any approved regulatory assessment fee payment plan.
(2) The appropriate application form, Commission Form PSC/AFD 2-W
(11/86) (Rev. 06/14), entitled “Application for a Staff Assisted Rate Case,” is
incorporated into this rule by reference and is available at: http://www.flrules.org/Gateway/reference.asp?No=Ref-04415.
The form is also available on the Commission’s website, www.floridapsc.com.
(3) Upon completion of the form, the applicant shall file it with
the Office of Commission Clerk, Florida Public Service Commission, 2540 Shumard
Oak Boulevard, Tallahassee, Florida 32399-0870.
(4)(a) Within 30 days of receipt of the completed application,
the Commission will evaluate the application and determine the applicant’s
eligibility for staff assistance.
(b) If the Commission has received four or more applications in
the previous 30 days; or, if the Commission has 20 or more docketed staff
assisted rate cases in active status on the date the application is received,
the Commission will deny initial evaluation of an application for staff
assistance and close the docket. When an application is denied under the
provisions of this paragraph, the Commission staff will notify the applicant of
the date on which the application may be resubmitted.
(c) Initially, determinations of eligibility will be conditional,
pending an examination of the condition of the applicant’s books and records.
(5) Upon making its final determination of eligibility, the
Commission staff will notify the applicant in writing as to whether the
application is officially accepted or denied. If the application is accepted, a
staff assisted rate case will be initiated. If the application is denied, the
notification of application denial will state the deficiencies in the
application.
(6) The date of Commission staff’s written notification to the
utility that the utility is eligible for staff assistance under this rule will
be considered the date of official acceptance of the application by the
Commission. The official date of filing is 30 days after the official
acceptance of the application by the Commission staff.
(7) The application is deemed denied if the utility does not
remit the filing fee, as provided by paragraph 25-30.020(2)(f), F.A.C., within
30 days after official acceptance.
(8) An applicant may request reconsideration of the application
denial within 15 days of receipt of notification that the application is
denied. The request will be decided by the full Commission.
(9) A substantially affected person may file a petition to
protest the Commission’s proposed agency action in a staff assisted rate case
within 21 days of issuance of the Notice of Proposed Agency Action Order, as
set forth in Rule 28-106.111, F.A.C.
(10) A petition to protest the Commission’s proposed agency
action must conform to Rule 28-106.201, F.A.C.
(11) In the event of a protest of the Commission’s Notice of
Proposed Agency Action Order in a staff assisted rate case, the utility must:
(a) Provide prefiled direct testimony in accordance with the
Order Establishing Procedure issued in the case. At a minimum, that testimony
must adopt the Commission’s Proposed Agency Action Order;
(b) Sponsor a witness to support source documentation provided to
the Commission staff in its preparation of the staff audit, the staff
engineering and accounting report and the staff proposed agency action recommendation
in the case;
(c) Include in its testimony the necessary factual information to
support its position on any issue that it chooses to take a position different
than that contained in the Commission’s Proposed Agency Action Order; and,
(d) Meet all other requirements of the Order Establishing
Procedure.
(12) Failure to comply with the dates established in the Order
Establishing Procedure, or to timely file a request for extension of time for
good cause shown, may result in dismissal of the staff assisted rate case and
closure of the docket.
(13) In the event of a protest of the Commission’s Proposed
Agency Action Order in a staff assisted rate case, the Commission staff will:
(a) File prefiled direct testimony to explain its analysis in the
staff proposed agency action recommendation. In the event the staff wishes to
alter its position on any issue, it will provide factual testimony to support
its changed position;
(b) Meet all other requirements of the Order Establishing
Procedure; and,
(c) Provide to the utility materials to assist the utility in the
preparation of its testimony and exhibits. This material will consist of an
example of testimony filed by a utility in another case, an example of
testimony that would support the Proposed Agency Action Order in this case, an
example of an exhibit filed in another case, and examples of prehearing
statements and briefs filed in other cases.
Rulemaking Authority
350.127(2), 367.0814, 367.121 FS. Law Implemented 367.0814 FS. History–New
12-8-80, Formerly 25-10.180, Amended 11-10-86, 8-26-91, 11-30-93, 1-31-00,
12-16-08, 8-10-14, 2-19-17, 7-1-18, 12-8-21, ________.
25-30.456 Staff Assistance in Alternative Rate
Setting.
(1) As an alternative to a staff assisted rate case as described
in Rule 25-30.455, F.A.C., water and wastewater utilities whose total gross
annual operating revenues are $335,000 $300,000 or less for water
service or $335,000 $300,000 or less for wastewater service, or $670,000
$600,000 or less on a combined basis, may file with the Office of
Commission Clerk an application for staff assistance in alternative rate
setting by submitting a completed staff assisted application for alternative
rate setting. To be eligible for staff assistance under this rule:
(a) The applicant or utility owner must have at least one year of
experience operating the utility for which the rate increase is being
requested;
(b) The utility must be in compliance with its annual report
filing in accordance with subsection 25-30.110(3), F.A.C.; and
(c) The utility must have paid all required regulatory assessment
fees or must be current on any approved regulatory assessment fee payment plan.
(2) The application form, Commission Form PSC/AFD 25 (11/93)
(Rev. 06/14), entitled “Application for Staff Assistance for Alternative Rate
Setting,” is incorporated into this rule by reference and is available at: http://www.flrules.org/Gateway/reference.asp?No=Ref-04414.
The form is also available on the Commission’s website, www.floridapsc.com.
(3) Upon completion of the form, the applicant must file it with
the Office of Commission Clerk, Florida Public Service Commission, 2540 Shumard
Oak Boulevard, Tallahassee, Florida 32399-0870.
(4)(a) Within 30 days of receipt of the completed application,
the Commission will evaluate the application and determine the applicant’s
eligibility for staff assistance.
(b) If the Commission has received four or more alternative rate
setting applications in the previous 30 days; or, if the Commission has 20 or
more docketed staff assisted rate cases in active status on the date the
application is received, the Commission will deny initial evaluation of an
application for staff assistance and close the docket. When an application is
denied under the provisions of this paragraph, the Commission staff will notify
the applicant of the date on which the application may be resubmitted.
(c) Determinations of eligibility will be conditional, pending an
examination of the condition of the applicant’s books and records.
(5) Upon making its final determination of eligibility, the
Commission staff will notify the applicant in writing as to whether the
application is officially accepted or denied. If the application is accepted,
staff assistance in alternative rate setting will be initiated. If the
application is denied, the notification of application denial will state the
deficiencies in the application.
(6) The date of Commission staff’s written notification to the
utility that the utility is eligible for staff assistance under this rule will
be considered the date of official acceptance of the application by the
Commission. The official date of filing is 30 days after the date of official
acceptance of the application.
(7) The application is deemed denied if the utility does not
remit the filing fee, as provided by paragraph 25-30.020(2)(f), F.A.C., within
30 days after official acceptance.
(8) An applicant may request reconsideration of the application
denial within 15 days of receipt of notification that the application is
denied. The request will be decided by the full Commission.
(9) The Commission will, for the purposes of determining the
amount of rate increase, if any, compare the operation and maintenance expenses
(O & M) of the utility to test year operating revenues. The Commission will
consider an allowance for return on working capital using the one-eighth of O
& M formula approach.
(10) The Commission will limit the maximum increase in operating
revenues to 50 percent of test year operating revenues.
(11) The Commission will vote on a proposed agency action
recommendation establishing rates no later than 90 days from the official
filing date as established in subsection (6) of this rule.
(12) A substantially affected person may file a petition to
protest the Commission’s Proposed Agency Action Order regarding a staff
assisted alternative rate setting application within 21 days of issuance of the
Notice of Proposed Agency Action Order as set forth in Rule 28-106.111, F.A.C.
(13) A petition to protest the Commission’s proposed agency
action must conform to Rule 28-106.201, F.A.C.
(14) In the event of protest of the Proposed Agency Action Order
by a substantially affected person, the rates established in the Proposed
Agency Action Order may be implemented on a temporary basis, subject to refund
with interest in accordance with Rule 25-30.360, F.A.C. At that time, the
utility may elect to pursue rates set pursuant to the rate base determination
provisions of Rule 25-30.455, F.A.C.
(15) In the event of a protest, the maximum increase established
in subsection (10) of this rule no longer applies.
(16) In the event of a protest of the Commission’s Proposed
Agency Action Order in a staff assisted alternative rate setting application,
the utility must:
(a) Provide prefiled direct testimony in accordance with the
Order Establishing Procedure issued in the case. At a minimum, that testimony
must adopt the Commission’s Proposed Agency Action Order;
(b) Sponsor a witness to support source documentation provided to
the Commission staff in its preparation of the staff engineering and accounting
analysis and the staff proposed agency action recommendation in the case;
(c) Include in its testimony the necessary factual information to
support its position on any issue that it chooses to take a position different
than that contained in the Commission’s Proposed Agency Action Order; and,
(d) Meet all other requirements of the Order Establishing
Procedure.
(17) Failure to comply with the dates established in the Order
Establishing Procedure, or to timely file a request for extension of time for
good cause shown, may result in dismissal of the staff assisted alternative
rate setting application and closure of the docket.
(18) In the event of protest of the Commission’s Proposed Agency
Action Order in a staff assisted alternative rate setting application, the
Commission staff will:
(a) File prefiled direct testimony to explain its analysis in the
proposed agency action recommendation. In the event the staff wishes to alter
its position on any issue, it will provide factual testimony to support its
changed position;
(b) Meet all other requirements of the Order Establishing
Procedure; and,
(c) Provide to the utility materials to assist the utility in the
preparation of its testimony and exhibits. This material will consist of an
example of testimony filed by a utility in another case, a sample of testimony
that would support the Proposed Agency Action Order in this case, an example of
an exhibit filed in another case, and examples of prehearing statements and
briefs filed in other cases.
Rulemaking Authority
350.127(2), 367.0814, 367.121 FS. Law Implemented 367.0814 FS. History–New
11-30-93, Amended 1-31-00, 12-16-08, 8-10-14, 7-1-18, 12-8-21, ________.
25-30.457 Limited
Alternative Rate Increase.
(1) As an alternative to a staff assisted rate case as described
in Rule 25-30.455, F.A.C., or to staff assistance in alternative rate setting
as described in Rule 25-30.456, F.A.C., water utilities whose total gross
annual operating revenues are $335,000 $300,000 or less for water
service and wastewater utilities whose total gross annual operating revenues
are $335,000 $300,000 or less for wastewater service may file
with the Office of Commission Clerk an application for a limited alternative
rate increase of up to 20 percent applied to metered or flat recurring rates of
all classes of service.
(2) The application for
limited alternative rate increase must contain the following information:
(a) The name of the utility as it appears on the utility’s
certificate and the address of the utility’s principal place of business;
(b) The type of business organization under which the utility’s
operations are conducted;
(c) If the utility is a corporation, the date of incorporation
and the names and addresses of all persons who own five percent or more of the
utility’s stock;
(d) If the utility is not a corporation, the names and addresses
of the owners of the business;
(e) A schedule showing the annualized revenues by customer class
and meter size for the most recent 12-month period using the rates in effect at
the time the utility files its application;
(f) A schedule showing the current and proposed rates for all
classes of customers;
(g) A statement providing the specific basis or bases for the
requested rate increase;
(h) If the requested rate increase is based upon the utility’s
underearning or the utility’s expectation to underearn, a statement explaining
why the utility is, or is expected to, underearn its authorized rate of return;
(i) A statement that the figures and calculations upon which the
change in rates is based are accurate and that the change will not cause the
utility to exceed its last authorized rate of return on equity;
(j) A statement that the utility is currently in compliance with
its annual report filing in accordance with subsection 25-30.110(3), F.A.C.;
(k) A statement that the utility has paid all required regulatory
assessment fees or is current on any approved regulatory assessment fee payment
plan;
(l) A statement that an order in a rate proceeding that
established the utility’s rate base, capital structure, annual operating
expenses and revenues has been issued for the utility within the 7-year period
prior to the official date of filing of the application; and
(m) Any additional relevant information in support of the
application and reasons why the information should be considered.
(3) Within 30 days of the application’s filing date, Commission
staff will notify the utility in writing that the application requirements of
subsection (2) of this rule have been met or that the requirements of
subsection (2) have not been met with an explanation of the application’s
deficiencies.
(4) The date of Commission staff’s written notification to the
utility that the requirements of subsection (2) of this rule have been met will
be considered the date of official acceptance by the Commission of the
application. The official date of filing is established as 30 days after the
official acceptance by the Commission of the application. The application is
deemed denied if the utility does not remit the filing fee as required by
paragraph 25-30.020(2)(f), F.A.C., within 30 days after the official acceptance
of the application.
(5) A financial or engineering audit of the utility’s financial
or engineering books and records will not be required in determining whether to
approve or deny the application.
(6) Based upon the criteria contained in subsection (2), the
Commission will approve, deny, or approve the application with modifications
that may include a reduction or an increase in the requested rate increase,
within 90 days from the official filing date as established in subsection (4)
of this rule.
(7) Any revenue increase granted under the provisions of this
rule shall be held subject to refund with interest in accordance with
subsection 25-30.360(4), F.A.C. Subsection 25-30.360(6), F.A.C., does not apply
to any money collected subject to refund under this subsection.
(8) The Commission staff will conduct an earnings review of the
twelve-month period following the implementation of the revenue increase.
(a) At the end of the twelve-month period, the utility has 90
days to complete and file Form PSC 1025 (03/20), entitled “Limited Alternative
Rate Increase Earnings Review,” which is incorporated into this rule by
reference and is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-11955.
(b) In the event the utility needs additional time to complete
the form, the utility may request an extension of time supported by a statement
of good cause that must be filed with Commission staff within seven days prior
to the 90-day deadline. “Good cause”
means a showing of financial hardship, unforeseen events, or other events
outside the control of the utility, but does not include reasons such as
management oversight.
(c) If the Commission staff’s earnings review demonstrates that
the utility exceeded the range of its last authorized rate of return on equity,
such overearnings, up to the amount held subject to refund, with interest,
shall be disposed of for the benefit of the customers. If the Commission staff
determines that the utility did not exceed the range of its last authorized
return on equity, the revenue increase will no longer be held subject to
refund.
(9) In the event the proposed agency action order is protested
pursuant to Rule 28-106.111, F.A.C., by a substantially affected person other
than the utility, the utility must file a staff assisted rate case application
pursuant to Rule 25-30.455, F.A.C., within 21 days from the date the protest is
filed or the utility’s application for a limited alternative rate increase will
be deemed withdrawn.
(10) Upon the utility filing a staff assisted rate case
application pursuant to subsection (9) of this rule:
(a) The utility may implement the rates established in the
proposed agency action order on a temporary basis subject to refund with
interest in accordance with Rule 25-30.360, F.A.C.:
(b) The limit on the maximum increase provided in subsection (1)
of this rule will no longer apply; and
(c) The application will be processed under Rule 25-30.455,
F.A.C.
Rulemaking Authority 350.127(2), 367.0814, 367.121 FS. Law Implemented
367.0814 FS. History–New 3-15-05, Amended 12-16-08, 8-10-14, 7-1-18, 6-2-20,
__________.
