Recommendation

Issue 1:

Is the overall quality of service provided by Pluris satisfactory?

Recommendation:

Yes. Pluris is meeting all Department of Environmental Protection (DEP) primary and secondary standards and has been responsive to customer complaints. Therefore, the quality of service provided by Pluris should be considered satisfactory. (Davis)

Staff Analysis:

Pursuant to Section 367.081(2)(a)1, F.S., and Rule 25-30.433(1), Florida Administrative Code (F.A.C.), the Commission, in every rate case, shall make a determination of the quality of service provided by the utility by evaluating the quality of the utility’s product (water) and the utility’s attempt to address customer satisfaction (water and wastewater). The rule requires that the most recent chemical analyses, outstanding citations, violations, and consent orders on file with the DEP and the county health department, along with any DEP and county health department officials’ testimony concerning quality of service shall be considered. In addition, any customer testimony, comments, or complaints shall also be considered. The operating condition of the water and wastewater systems are addressed in Issue 2.

Quality of Utility’s Product

In evaluation of Pluris’ product, staff reviewed the Utility’s compliance with the DEP primary and secondary drinking water standards. Primary standards protect public health while secondary standards regulate contaminants that may impact the taste, odor, and color of drinking water. The most recent comprehensive chemical analyses were performed on May 10, 2023. All results were found to be in compliance with DEP regulations. The most recent Sanitary Survey was performed on August 2, 2021. No deficiencies were noted at the time of the inspection.

The Utility’s Attempt to Address Customer Satisfaction

Staff reviewed the complaints filed in the Commission’s Consumer Activity Tracking System (CATS), complaints filed with the DEP, and complaints received by the Utility from January 1, 2018, through March 7, 2024. During this time period, there were 89 complaints filed in CATS, which were regarding both historic and the current proposed rate increases and quality of service. The quality of service complaints addressed secondary water quality including the taste, color and odor of the water, and service interruptions. Over this same time period, the Utility received a total of 137 complaints. The majority of these complaints were regarding secondary water quality such as odor, color and taste, and water leaks. The Utility responded to the complaints by testing the meters, conducting testing for leaks, and flushing to improve the water quality. As in the last rate case, there was some discussion concerning the number of waterline breaks. As was noted in the prior rate case Order, the legacy asbestos-cement pipes used in the distribution system can be difficult to repair if a leak develops.[8] The Utility is requesting a pro forma project to replace the asbestos-cement pipes to address this concern, as discussed in Issue 5.

There were six complaints received by the DEP, four from customers and two from a former Pluris employee. The customer complaints addressed concerns on water discoloration, potential health effects, and poor wastewater effluent quality. The complaints from the former Pluris employee claimed that records were being falsified for both water and wastewater systems. DEP investigated these claims and determined there was no evidence of falsified records. During a site visit conducted by the DEP on May 26, 2023, at the subject facilities, it was observed that the chart recorder readings were not aligned with the readings produced by the in-line turbidity meters at the wastewater treatment plant. To resolve this concern the utility converted to digital data loggers. DEP determined there was no evidence indicating that this discrepancy was in any way fraudulent.

A customer meeting was held in the service territory on Wednesday, January 24, 2024, where 23 customers spoke. The comments expressed concerns regarding the Utility’s requested rate increase, the relationship between the rate case and a recent lawsuit settlement involving the utility, and poor water quality such as water hardness, staining/damaging of plumbing fixtures and clothing, and water not suitable for drinking. As of March 6, 2024, there were 45 written comments filed as part of the docket. These comments stated the rate increase is unreasonable and that Orange County should take over the facility. Table 1-1 shows the number of complaints and comments, categorized by complaint type and source.

Table 1-1

Customer Complaints/Comments by Source

Subject	CATS	DEP	Utility	Written Comments	Customer Meeting	Total*
Rate Increase	29	-	-	34	21	82
Billing Issues	12	-	12	2	2	27
Customer Service		-	-	4	4	7
Service Interruption	19	-	7	1		27
Water Pressure	1	-	11	2		14
Water Leak	-	-	36	1	4	40
Health Issues	3	1	-	2	4	10
Water Taste	5	-	1	-	2	8
Water Color	12	1	25	2	10	50
Water Odor	8	-	26	1	3	37
Sewage Concerns	-	1	14	-	2	17
Work Place Issues Other	-	3	5	14	14	35
Total	89	6	137	63	66	354

*A single customer complaint may be counted multiple times if it fits into multiple categories, was reported to multiple agencies, or was reported multiple times.

On February 16, 2024, OPC filed a letter outlining concerns regarding the quality of service, including discussion of wastewater effluent quality, the Utility’s historic exceedances of Total Trihalomethanes (TTHM) during 2016 and third party testing showing greater TTHM values than reported by the Utility, the recent legal actions associated with the utility, and the volume of customer complaints during the 2018 through 2022 period and the current docket.[9] In its letter, OPC proposed an unsatisfactory rating and a 100 basis point penalty or a 50 percent reduction in salary to Utility executives. As noted above, the Utility is currently in compliance with DEP for primary and secondary standards, including TTHM. On February 20, 2024, the Utility filed a response stating that the wastewater quality meets the standard of its effluent disposal agreement, the Utility has improved treatment to address TTHM and meets DEP standards for water quality, that the independent water quality testing conducted in 2016 was deemed non-compliant with testing protocols by DEP, and argues the volume of customer complaints have been on the decline since 2018.[10]

Regarding customer complaints, the Utility appears to be responding, in a timely manner, to complaints filed with the Commission and with the Utility. Concerns regarding water quality have been addressed through the implementation of enhanced treatment systems that reduce disinfection byproducts such as TTHM, and the Utility also treats the water to improve the secondary quality characteristics, such as to reduce hardness. Routine issues such as leaks or discolored water, are addressed appropriately through meter testing, leak detection, and flushing in response to customer concerns. Regarding line breaks and service interruptions, as discussed in Issue 5, the Utility is replacing older AC pipe which is more prone to failure and more difficult to repair. Overall, it appears that the Utility has been responsive to its customer complaints. Therefore, staff believes that Pluris has satisfactorily attempted to address its customer’s concerns.

Conclusion

Pluris is meeting all DEP primary and secondary water standards, and has been responsive to customer complaints. Therefore, the quality of service provided by Pluris should be considered satisfactory.

Issue 2:

Are the infrastructure and operating conditions of Pluris' water and wastewater systems in compliance with DEP regulations?

Recommendation:

Yes. Pluris’ water and wastewater systems are currently in compliance with DEP regulations. (Davis)

Staff Analysis:

Rule 25-30.225 F.A.C., requires that each water and wastewater utility shall operate and maintain its plant and facilities by employing qualified operators in accordance with the rules of the DEP in order to provide safe and efficient service up to and including the point of delivery into the piping owned by the customer. During a rate-making proceeding, Rule 25-30.433(2), F.A.C., requires consideration of whether the infrastructure and operating conditions of the plant and facilities are in compliance with Rule 25-30.225, F.A.C. In making this determination, the Commission must consider testimony of the DEP and county health department officials, sanitary surveys for water systems and compliance evaluation inspections for wastewater systems, citations, violations, and consent orders issued to the utility, customer testimony, comments, and complaints, and utility testimony and responses to the aforementioned items.

Water and Wastewater Systems Operating Condition

Pluris’ water system consists of two wells with capacities of 415 gallons per minute (gpm) and 600 gpm, respectively. The Utility also has one ground storage tank with a capacity of 350,000 gallons. Pluris uses chlorine dioxide to treat the raw water. Staff reviewed Pluris’ sanitary surveys conducted by the DEP to determine the Utility’s overall water facility compliance. A Sanitary Survey was conducted on August 2, 2021, indicating that Pluris’ water treatment facility was in compliance with the DEP’s rules and regulations and there were no deficiencies.

Pluris’ wastewater system consists of a permitted 0.330 million gallons per day (MGD) design capacity domestic wastewater treatment plant (WWTP). This plant is operated to provide secondary treatment with basic disinfection. A review of the most recent inspection by DEP conducted on August 5, 2022, indicated that Pluris’ wastewater treatment facility was in compliance with the DEP’s rules and regulations except for two items. The two out-of-compliance items were effluent quality and groundwater quality. These two out-of-compliance items were resolved to the DEP’s satisfaction by January 10, 2023.

Conclusion

Based on the above, Pluris’ water and wastewater systems are currently in compliance with DEP regulations.

Issue 3:

Should the audit adjustments to rate base be made?

Recommendation:

Based on the audit adjustments agreed to by the Utility, as well as further adjustments made by staff, the following adjustments should be made to rate base as set forth in staff’s analysis below.

Table 3-1

	Water	Wastewater
Utility Plant in Service	$36,796	($15,765)
Accumulated Depreciation	$39,740	$68,782
Depreciation Expense	$6,218	($14,964)
Contribution-in-Aid-of-Construction (CIAC)	($8,409)	-
Accum. Amortization of CIAC	($22,924)	($63,138)
Amortization Expense	$273	$285

(Przygocki)

Staff Analysis:

Staff’s audit report was filed on January 23, 2024. In its response to the staff Audit Report, Pluris agreed to the audit adjustments to rate base as set forth in the tables below. However, staff believes further adjustments are necessary to Audit Finding No. 1 and Audit Finding No. 2, as discussed below.

Table 3-2

Audit Finding	Pluris Agreed Upon Audit Adjustments
Audit Finding No. 1	Understatement of water plant and overstatement of wastewater plant.
Audit Finding No. 2	Overstatement of accumulated depreciation for water and wastewater.
Audit Finding No. 3	Understatement of water CIAC without justification.
Audit Finding No. 4	Overstatement of the Accumulated Amortization of CIAC of both the water and wastewater.

Source: Staff Audit Report

Utility Plant in Service (UPIS)

In Audit Finding No. 1, staff auditors determined adjustments were necessary to increase UPIS for the wastewater system by $81,638. However, the audit inadvertently included an adjustment to increase the land balance by $97,402. This balance was already booked correctly and did not require an adjustment. As such, staff recalculated the adjustment to wastewater plant in service to be a decrease of $15,765. Additionally, the audit determined an increase of $36,796 to water plant in service was necessary. Staff has no further adjustment to the UPIS balance for water.

Accumulated Depreciation and Depreciation Expense

In Audit Finding No. 2, staff auditors determined that adjustments to accumulated depreciation for both the water and wastewater systems were necessary. The first set of adjustments were made to properly account for the inclusion of Commission ordered adjustments from the last rate case, as well as accruals and retirements recorded since the last rate proceeding. Audit staff determined that adjustments were necessary to decrease accumulated depreciation by $367,001 and $73,521, for the water and wastewater systems, respectively. An additional adjustment, further discussed below, was made to each system to further decrease the balances by $116,492 and $123,773 for water and wastewater, respectively.

Upon further investigation, staff discovered that $336,155 was incorrectly removed from accumulated depreciation for the water system in audit staff’s calculation of the adjustment. In September of 2017, the Utility reclassified a repair that was booked incorrectly in December 2016, from water plant Account 331 - Transmission & Distribution Mains, to wastewater plant Account 361 - Collection Sewers - Gravity. The audit included a corresponding adjustment to remove the full balance from accumulated depreciation as a retirement to Account 331 instead of only reclassifying the associated accumulated depreciation. As such, staff believes the adjustment to decrease the accumulated depreciation balance for Account 331 should be $5,984 instead of the full retirement amount, resulting in a net adjustment of $36,832 ($367,001 - $336,155 + $5,984) to decrease the balance for water. The same adjustment should be made to increase the accumulated depreciation balance for Account 361, resulting in an adjustment of $67,537 ($73,521 - $5,984) to decrease the balance for wastewater.

The additional adjustments to remove $116,492 and $123,773 from the accumulated depreciation balances for the water and wastewater systems, respectively, were included to recognize an irreconcilable difference between the balances approved in the last rate case and the Utility’s general ledger balances. However, the irreconcilable differences were the result of incorrectly comparing the simple average balances from the last rate case order to the year-end balances recorded in the Utility’s general ledger for purposes of reconciliation. As such, staff believes the first set of adjustments discussed above include all necessary adjustments to the accumulated depreciation balances and does not believe these additional adjustments to remove $116,492 and $123,773 from the accumulated depreciation balances for the water and wastewater systems, respectively, are necessary.

Audit staff determined adjustments to increase water depreciation expense by $12,034 and decrease wastewater depreciation expense by $12,475 were necessary based on its recalculation. On pages 4 and 5 of its letter, OPC addressed concerns with the calculation of depreciation by staff’s auditors. OPC states that staff auditors did not properly factor in the salvage value to the calculation of the depreciation rate for water plant Accounts 341, 345, and 346, and wastewater plant Accounts 391, 395, and 396, as prescribed by Rule 25-30.140, F.A.C. OPC included a recalculation and proposed adjustments to accumulated depreciation and depreciation expense based on its recalculated depreciation rates. In the Utility’s response to OPC’s letter, Pluris stated that it agrees with the audit findings, but does not agree with any further adjustments. Staff reviewed Rule 25-30.140, F.A.C., and the depreciation rates used in audit staff’s recalculation. OPC’s adjustments to recognize the salvage value of these accounts are correct. Based on the recalculation using the corrected rates, staff recommends accumulated depreciation be decreased by $2,908 for water and $1,245 for wastewater. Staff also recommends associated depreciation expense be decreased by $5,816 for water and $2,489 for wastewater.

Based on the audit findings and the adjustments above, staff recommends adjustments to decrease accumulated depreciation by $39,740 ($36,830 + $2,908) and $68,782 ($67,537 + $1,245) for the water and wastewater system, respectively. Staff also recommends associated depreciation expense be increased by $6,218 ($12,034 - $5,816) for water and decreased by $14,964 ($12,475 + $2,489) for wastewater.

Conclusion

Staff’s recommended adjustments to rate base and corresponding adjustments to depreciation expense and CIAC amortization expense are reflected in the tables below.

Table 3-3

Staff Recommended Audit Adjustments to Rate Base

Audit Finding	Plant		Accum. Depr.		CIAC		Accum. Amort. Of CIAC
Audit Finding	Water	Sewer	Water	Sewer	Water	Sewer	Water	Sewer
1	$36,796	($15,765)
2			$39,740	$68,782
3					($8,409)
4							($22,924)	($63,138)

Source: Staff Audit Report and Utility response

Table 3-4

Staff Recommended Corresponding Audit Adjustments to NOI

Audit Finding	Depreciation Expense		CIAC Amort. Expense
Audit Finding	Water	Sewer	Water	Sewer
2	$6,218	($14,964)
4			$273	$285

Source: Staff Audit Report and Utility response

Issue 4:

What are the Used and Useful (U&U) percentages of the Utility's water and wastewater systems and what adjustments to rate base are necessary?

Recommendation:

Staff recommends that Pluris’ water treatment plant (WTP), storage, and distribution systems, as well as its wastewater collection system, be considered 100 percent U&U. The WWTP should be treated as 94.3 percent U&U. Additionally, staff recommends no adjustments to purchased power and chemical expenses be made for excessive unaccounted for water (EUW) and infiltration and inflow (I&I). Additionally, the Utility’s wastewater rate base adjustment should be increased by $97. Corresponding adjustments should be made to decrease Pluris’ adjusted net wastewater depreciation expense by $389, and to decrease wastewater property tax by $646. (Davis, Thurmond)

Staff Analysis:

Rule 25-30.4325, F.A.C., provides factors to be considered in determining U&U and EUW calculations. As stated in Issue 2, Pluris’ water system is comprised of two wells with capacities of 415 gpm and 600 gpm, respectively, and one ground storage water tank with a capacity of 350,000 gallons. The WWTP has a DEP permitted capacity of 0.330 MGD. Pluris’ U&U percentages were last determined by the Commission in Order No. PSC-2013-0187-PAA-WS.[11]

Used and Useful Percentages

Water Treatment Plant and Water Storage

Rule 25-30.4325, F.A.C., addresses the method by which the U&U of a WTP and storage systems are determined. In its prior rate case, Pluris’ WTP and water storage were found to be 100 percent U&U.[12] The Utility has not increased the capacity of either the WTP or storage system since rates were last established. Therefore, consistent with the Commission’s prior decision, staff recommends the Utility’s WTP and water storage be considered 100 percent U&U consistent with the prior rate case.

Water Distribution and Wastewater Collection

The Utility calculated U&U values for the water distribution and wastewater collection systems based on an average of single family residences, estimated five years of growth, and maximum equivalent residential connections (max ERCs). The calculated value, based on a maximum system capacity of 1,911 ERCs was 93.4 percent U&U. Instead of the calculated value, the Utility has requested a 100 percent U&U because no part of the system can be removed without adversely impacting the ability to reliably serve the remaining customers. Staff believes that the Utility’s calculations are accurate and agrees with the Utility’s reasoning for a finding of 100 percent U&U. Considering all of the water distribution lines and wastewater collection lines are necessary to adequately serve all of the existing customers, and consistent with prior Commission practice, staff recommends the water distribution and wastewater collection systems be considered 100 percent U&U.

Wastewater Treatment Plant

The Utility calculated the WWTP U&U based on an average annual daily flow (AADF), growth, infiltration and inflow (I&I) and permitted capacity. The calculated value, based on an AADF of 274,700 gpd, a five year growth estimate of 36,600 gpd, no excessive I&I, and a permitted capacity of 330,000 gallons, is 94.3 percent U&U. Staff agrees with the Utility’s calculations and recommends the applicable portion of the wastewater treatment plant be considered 94.3 percent U&U.

Non-Used and Useful Adjustments

In its filing, Pluris made non-U&U adjustments to decrease wastewater rate base by $8,648, and wastewater depreciation expense by $845. Based on staff’s U&U calculations, the total non-U&U adjustment to decrease wastewater rate base is $8,745. Staff calculated corresponding adjustment to decrease net depreciation expense by $456 and property tax by $646. As such, staff recommends that the Utility’s adjustment to wastewater rate base be increased by $97. Corresponding adjustments should be made to decrease the Utility’s adjustments to net wastewater depreciation expense by $389. In its filing, the Utility did not include a non-U&U adjustment to property tax. Staff recommends a corresponding adjustment to decrease property tax by $646 be made.

Excessive Unaccounted for Water (EUW)

Rule 25-30.4325, F.A.C., provides factors to be considered in determining whether adjustments to operating expenses are necessary for EUW. EUW is defined as “unaccounted for water in excess of 10 percent of the amount produced.” Unaccounted for water is all water produced that is not sold, metered, or accounted for in the records of the Utility. Pluris estimated no EUW based on producing 159,977,000 gallons, an estimated total sales of 100,460,000 gallons, and 46,720,000 gallons used for other uses, such as flushing, and water and wastewater systems usage. Staff’s review confirmed the values for water produced and other uses, and based on the Audit Report and staff’s review, made an adjustment to reflect that the actual gallons sold during the test year was 100,401,000 gallons. The resulting adjusted calculation ([water produced – water sold – other utility uses] /water sold) for unaccounted for water is 8.0 percent. As this value is less than 10 percent, the Utility does not have any EUW. Therefore, staff recommends no adjustments should be made to purchased power and chemical expenses for EUW.

Infiltration and Inflow (I&I)

Infiltration typically results from groundwater entering a wastewater collection system through broken or defective pipes and joints whereas inflow results from water entering a wastewater collection system through manholes or lift stations. By convention, the allowance for infiltration is 500 gpd per inch diameter pipe per mile, and an additional 10 percent of residential water billed is allowed for inflow.[13] Rule 25-30.432, F.A.C., provides that in determining the WWTP amount of U&U, the Commission will consider I&I. Pluris estimated no I&I in its calculations.[14]

Since all wastewater collection systems experience I&I, the conventions noted above provide guidance for determining whether the I&I experienced is excessive. Staff calculates the allowable infiltration based on system parameters, and calculates the allowable inflow based on water billed to customers. The sum of these amounts is the allowable I&I. Staff next calculates the estimated amount of wastewater returned from customers. The estimated return is determined by summing 80 percent of the water billed to residential customers with 90 percent of the water billed to non-residential customers. Adding the estimated return to the allowable I&I yields the maximum amount of wastewater that should be treated by the wastewater system without incurring adjustments to operating expenses. If this amount exceeds the actual amount treated, no adjustment is made. If it is less than the gallons treated, then the difference is the excessive amount of I&I.

The allowance calculated for infiltration is 33,900,800 gallons and the allowance calculated for inflow is 8,629,300 gallons; therefore, the total I&I allowance was calculated as 42,530,100 gallons. Based on staff’s audit and review, the total water billed to residential customers was 83,929,000 gallons, and the total water billed to general service customers was 2,364,000 gallons. Therefore, the estimated amount of wastewater returned from customers was calculated as 69,270,800 gallons. Summing the estimated return and the allowable I&I results in a maximum of 111,800,900 gallons of wastewater that could be treated by the wastewater system without incurring adjustments to operating expenses. The Utility treated 100,352,000 gallons of wastewater. The excessive I&I is based on the following equation: [(water treated) – (estimated returns) – (allowable inflow) – (allowable infiltration) which is less than zero. Therefore, staff recommends no adjustments should be made to purchased power and chemical expenses for I&I.

Conclusion

Staff recommends that Pluris’ water treatment, storage, and distribution systems, as well as its wastewater collection system should be considered 100 percent U&U. The WWTP is 94.3 percent U&U. Additionally, the Utility’s wastewater rate base adjustment should be increased by $97. Corresponding adjustments should be made to decrease Pluris’ adjusted net wastewater depreciation expense by $389, and to decrease wastewater property tax by $646. Also, staff recommends no adjustments to purchased power and chemical expenses be made for EUW and I&I.

Issue 5:

Should any adjustments be made the Utility's pro forma plant additions?

Recommendation:

Staff recommends that Pluris’ proposed asbestos-cement pipe replacement is necessary in order to reduce or eliminate water leaks. However, the Utility has not provided an adequate justification for the approximate 602 percent increase in mobilization costs. As such, staff recommends allowing pro forma in the amount of the original bid of $2,515,214. Also, based on the reclassification of the pro forma project to different plant accounts, the associated accumulated depreciation should be decreased by $810 and depreciation expense should be decreased by $5,859 for water. An additional adjustment should be made to increase corresponding property taxes by $30,932. (Davis, Veaughn)

Staff Analysis:

Pluris requested recovery of costs associated with replacing asbestos-cement pipe currently in service in its water system. The Utility stated the asbestos-cement pipes were installed circa 1960 and the expected useful life or design life of an asbestos-cement pipe is 50 years. The pipe replacement project is scheduled to start on October 1, 2024, and to be completed on November 15, 2024. Water leaks were the dominant complaint received by the Utility during the test year and four years prior. By replacing all asbestos-cement pipe at once, the Utility will be avoiding a piece-wise approach that would otherwise allow water leaks to continue until all pipes are replaced.

Three contractors were provided plans and an informal scope of work and asked to submit bids for the pro forma project. Pluris included with its MFRs dated September 22, 2023 the lowest bid, which was $2,515,214 and included a 30 percent contingency of $580,434. In response to staff’s fifth data request regarding the contingency amount, the Utility responded that it has requested final bids from the responsive bidders without a contingency fee.[15] The Utility stated that it had received two responsive bids of $2,776,518 and $3,700,000 without a contingency, and was selecting the lower bidder. The selected bid was from the original lowest cost vendor. The primary difference in the bids was the increase of mobilization cost from $90,000 to $631,738 and the addition of $300,000 to “[p]lug and abandon existing AC pipes in place.” On February 16, 2024, Pluris filed a request to increase is pro forma request from $2,515,214 to $2,776,518.[16]

Staff requested additional information on both the increase in mobilization costs and additional activity. The Utility responded it does not have an explanation regarding the increase in mobilization costs beyond that it was a third party bidder, and the added line item cost for abandoning the AC pipes was inadvertently omitted from the prior bids and reflected a necessary activity.[17]

Based on the analysis above, staff recommends that the asbestos-cement pipe replacement project is necessary to replace infrastructure that is over 50 years old in order to reduce or eliminate water leaks. While the Utility did use a bidding process, staff believes that does not relieve the Utility of the requirement to support the amounts requested to ensure customers are receiving a reasonable cost for the pro forma work. The Utility has not provided an adequate justification for the increase in mobilization costs by approximately 602 percent. As such, staff recommends allowing pro forma in the amount of the original bid of $2,515,214. As the project is anticipated to take place in the fourth quarter of 2024, a step increase does not seem appropriate to encourage rate stability and avoid confusion.

Corresponding Adjustments

Staff recommends no adjustments be made to the scope of the Utility’s pro forma plant project. However, the Utility recorded the entirety of the pro forma project costs to Account 331, transmission and distribution mains. Based on the detailed activities provided in the bid, staff recommends reallocating $626,470 for service connections to Account 333, and $166,400 for fire hydrants to Account 335. Staff has recalculated accumulated depreciation to recognize the reallocation of costs into accounts with different useful lives as prescribed by Rule 25-30.140(2)(a), F.A.C. As such, Staff recommends decreasing accumulated depreciation by $810.

Pluris did not recognize the associated pro forma retirement in its depreciation expense calculations. To recognize the reallocation of costs into accounts with different useful lives, as well as the pro forma retirement, staff has recalculated depreciation expense. Staff recommends decreasing depreciation expense by $5,859. Additionally, the Utility did not include pro forma property tax in its filing. Therefore, pro forma property taxes should be increased by $30,932

Conclusion

Staff recommends that Pluris’ proposed asbestos-cement pipe replacement is necessary in order to reduce or eliminate water leaks. However, the Utility has not provided an adequate justification for the approximate 602 percent increase in mobilization costs. As such, staff recommends allowing pro forma in the amount of the original bid of $2,515,214. In conclusion, based on the reclassification of the pro forma project to the appropriate plant accounts, the associated accumulated depreciation should be decreased by $810 and depreciation expense should be decreased by $5,859 for water. An additional adjustment should be made to increase corresponding property taxes by $30,932.

Issue 6:

Should adjustments be made to Pluris' working capital allowance?

Recommendation:

Yes, Pluris’ working capital allowance (WCA) should be increased by $19,842 and $19,717 for the water and wastewater systems, respectively. (Thurmond, Sewards)

Staff Analysis:

Staff believes further adjustments should be made to rate base for working capital allowance. Rule 25-30.433(3), F.A.C., requires that Class A utilities use the balance sheet method to calculate the WCA. Based on the balance sheet method, WCA is calculated as current assets less current liabilities. In its filing, Pluris included a WCA of $389,416 and $386,942 for the water and wastewater systems, respectively. OPC’s letter included several issues with components of WCA and expressed concern for the overall increase in WCA from the level in Pluris’ last rate case to the amount in the current rate case. OPC’s concern dealing with the treatment of common equity is discussed in Issue 9.

Restricted Cash Accounts

OPC believes two cash accounts totaling $308,403 should be removed from WCA based on two specific concerns. First, OPC contends that the two accounts are restricted cash accounts, meaning the cash is held onto for a specific reason and is, therefore, not available for immediate ordinary business use. As detailed in an excerpt from the Utility’s 2022 External Independent Audit Report highlighted in OPC’s letter, the restricted cash amounts “represent cash amounts required to be set aside in accordance with the Company’s financing arrangements as contractually required by the lender.” While OPC is correct that these are restricted cash accounts, the accounts are contractually required by the lender. Staff believes the restricted cash accounts exist so that the Utility can have access to loans at a favorable rate to be used for utility operations.

Second, OPC contends that the restricted cash accounts should be removed as they are interest bearing accounts. It is Commission practice to either exclude interest bearing accounts from working capital, or to include them provided that the interest income is also included in the above-the-line revenues.[18] Based on the use of these restricted cash accounts as a financial tool to support utility operations as needed, staff believes the cash accounts are required for ongoing utility operations and should remain in working capital allowance. Using Pluris’ 2022 general ledger, staff identified $1,629 in interest income and has made an adjustment to include the balance in the above-the-line revenues, as reflected in Issue 10. As such, staff recommends the two cash accounts totaling $308,403, should remain in WCA.

Magnetic Ion Exchange (MIEX) Resin Expense Prepayment

OPC also expresses concern about the amount of prepayments included in working capital allowance. Specifically, an amount of $188,282 related to the prepayment of MIEX Doc Resin for a five-year supply. The Utility recorded pro forma operation and maintenance (O&M) expense associated with 2 units of MIEX resin and a 5-year amortization for 9 units of MIEX resin. MIEX resin is used as part of the water treatment system to address disinfection byproducts and is mostly regenerated as part of the treatment process, with some losses over time. In response to staff’s data request regarding the MIEX resin costs, Pluris explained that the 9 units were purchased as part of a full cleaning and replacement of all resin in the MIEX system, which happens on a five year cycle, and additional purchases were used to maintain appropriate levels.[19] This chemical expense associated with these purchases appears reasonable, and staff agrees with the use of the 5-year amortization period for the 9 unit purchase. As such, staff believes the inclusion of prepayment for the MIEX Doc Resin is appropriate and should remain in working capital allowance.

Other

Additionally, staff has made a corresponding adjustment to increase working capital allowance by $39,558 for the unamortized balance of non-recurring expenses recommended in Issue 14. As such, staff recommends working capital allowance be increased by $19,842 and $19,717 for the water and wastewater systems, respectively. Additionally, as discussed in Issue 10, staff has reclassified $268 from test year operating revenues to CIAC for a meter installation charge.

Conclusion

As discussed above, staff does not believe the adjustments recommended by OPC should be made. While WCA has increased significantly since the last rate case, Pluris was a Class B utility in the last rate case and is now a Class A utility. Staff has reviewed the balance sheet components of working capital and believes Pluris’ current financial situation is representative of ongoing operations for the Utility. As such, staff recommends WCA should be increased by $19,842 and $19,717 for the water and wastewater systems, respectively, resulting in a total working capital balance of $409,258 ($389,416 + $19,842) and $406,659 ($386,942 + $19,717) for water and wastewater, respectively.

Issue 7:

What is the appropriate rate base for the test year ended December 31, 2022?

Recommendation:

Consistent with staff’s recommended adjustments, the appropriate rate base for the test year ended December 31, 2022, is $7,373,975 for water and $1,327,085 for wastewater. (Thurmond)

Staff Analysis:

Consistent with staff’s recommended adjustments, the appropriate 13-month average rate base for the test year ended December 31, 2022, is $7,373,975 for water and $1,327,085 for wastewater. Staff’s recommended rate base for the water and wastewater systems are shown on Schedule Nos. 1-A and 1-B, and the adjustments are shown on Schedule No. 1-C.

Issue 8:

What is the appropriate return on equity?

Recommendation:

Based in the Commission leverage formula currently in effect, the appropriate return on equity (ROE) is 8.79 percent with an allowed range of plus or minus 100 basis points (Sewards)

Staff Analysis:

The Utility requested a ROE of 9.00 percent. Based on the Commission leverage formula currently in effect, the appropriate ROE is 8.79 percent.[20] Staff recommends an allowed range of plus or minus 100 basis points be recognized for ratemaking purposes.

Issue 9:

What is the appropriate weighted average cost of capital including the proper components, amounts, and cost rates associated with the capital structure?

Recommendation:

The appropriate weighted average cost of capital for the test year ended December 31, 2022, is 8.22 percent. (Sewards)

Staff Analysis:

In its filing, the Utility requested a weighted average cost of capital of 8.12 percent. OPC’s Letter detailed its concern with the Utility’s calculation of common equity. Additionally, staff believes an adjustment to Advances from Associated Companies to reclassify the advances as equity and to the cost rate of customer deposits are necessary.

Common Equity

According to MFR Schedule D-2, the Utility’s common equity balance included an adjustment of $6,281,931 to increase common equity from a negative balance of $1,003,979 to a positive balance of $5,277,952. The Utility reclassified amounts from Accounts Payable – Associated Companies and Miscellaneous Current and Accrued Liabilities to Other Equity Capital. In response to staff’s fourth data request, the Utility stated that the amount recorded in Accounts Payable – Associated Companies should have been recorded as Advances from Associated Companies as there was no expectation of repayment. It has been Commission practice to treat loans from associated companies with no interest payments made as common equity.[21] Further, Pluris stated the balance included in Accrued Liabilities was reduced when the settlement was paid in cash, funded by the parent company. Pluris expended the cash and made an adjustment to reduce Accrued Liabilities, and the parent company provided an equity infusion to recapitalize the Utility to the proper amount necessary to support the Utility’s assets.

OPC claims that Pluris’ adjustments to reclassify the amounts recorded in Accounts Payable – Associated Companies and Miscellaneous Current and Accrued Liabilities are inappropriate, as they are related to the legal expenses and settlement of a water quality lawsuit.[22] Further, OPC asserts that none of the money recorded in these accounts is associated with the actual plant investment for the provision of water and/or wastewater services. To support its claim, OPC provided a breakdown of equity infusions and debt issuance from 2009 through 2020. OPC states that the inclusion of these funds in common equity provide the Utility with a de facto return on the legal expenses and settlement of the lawsuit.

Staff disagrees with OPC’s assertions. To ensure the Utility’s assets were supported after payments associated with the lawsuit were made, either an equity infusion or an issuance of debt was necessary. Expenses related to the lawsuit were booked to O&M expense and staff has verified that these expenses have been removed from the determination of the revenue requirement. When determining rates, the costs included for the capital structure include the interest expense on debt and an allowed return on equity, determined by the Commission, to compensate shareholders for exposing their capital to risk. The operating expenses that are allowed are the expenses associated with providing utility service. If there are no expenses associated with the lawsuit included in operating expenses, there is no recovery of such costs from customers. As such, staff believes the recapitalization of Pluris by its parent company is appropriate and should not be adjusted as suggested by OPC.

Staff derived its calculation of common equity from MFR Schedule A-19. The 13-month average balance of Common Equity reflected a negative $1,003,977. Staff reclassified the 13-month average balances of $3,848,517 from Accounts Payable – Associated Companies and $3,049,849 from Miscellaneous Current and Accrued Liabilities to common equity.

Advances from Associated Companies

According to MFR Schedule A-19, Pluris recorded a balance of $250,000 in Advances from Associated Companies. In its last rate case, the Commission ordered that a balance of $252,431 recorded in the same account be reclassified as common equity. In response to staff’s fourth data request, the Utility confirmed the $250,000 recorded in the current rate case was the same balance from its last rate case and should have been treated as equity. As such, staff recommends the Advances from Associated Companies balance of $250,000 be reclassified as common equity.

Pro Forma Project

In response to staff’s informal data request on March 11, Pluris informed staff that the pro forma project discussed in Issue 5 will be funded through an equity infusion.[23] As such, staff recommends $2,515,214 be added to common equity.

In total, staff recommends a common equity balance of $8,659,601 (-$1,003,977 + $3,848,517 + $3,049,849 + $250,000 + $2,515,214).

Customer Deposits

According to MFR Schedule D-1, the Utility recorded a cost rate of 6.00 percent for customer deposits. Pursuant to Rule 25-30.311, F.A.C., staff recommends a cost rate of 2.00 percent.

Conclusion

Based upon the proper components, amounts, and cost rates associates with the capital structure for the test year ended December 31, 2022, staff recommends a weighted average cost of capital of 8.22 percent. Schedule No. 2 details staff’s recommended overall cost of capital.

Issue 10:

Should any adjustments be made to test year operating revenues for Pluris’ water and wastewater systems?

Recommendation:

Yes. Test year operating revenues should be decreased by $27,488 for water and increased by $5,776 for wastewater. (Bethea)

Staff Analysis:

In its MFRs, the Utility reflected total test year operating revenues of $1,627,619 for water and $1,051,949 for wastewater. The water revenues included $1,598,744 of service revenues and $28,875 of miscellaneous revenues. The Utility did not include any miscellaneous revenues for the wastewater system.

Staff made several adjustments to test year service revenues. As discussed further in Issue 21, the Utility incorrectly billed two fire protection customers as general service. The incorrect billing resulted in the private fire protection customers being billed for usage. Pursuant to Rule 25-30.465, F.A.C., private fire protection rates are one-twelfth the current base facility charge of the utility’s meter sizes, unless otherwise supported by the Utility. There is no gallonage rate associated with private protection rates. As a result, staff adjusted the billing determinants to reflect an appropriate billing for the private fire protection customers. During the test year, the Utility had a rate change effective July 17, 2022, as a result of the removal of expired rate case expense amortization granted in 2018.[24] Staff determined test year service revenues by applying the existing rates to the adjusted billing determinants, which resulted in service revenues of $1,570,478 for water, which is a decrease of $28,266 ($1,598,744 - $1,570,478) and $1,056,927 for wastewater, which is an increase of $4,978 ($1,056,927 - $1,051,949).

For the test year, staff made several adjustments to water miscellaneous revenues. Staff reclassified $268 to CIAC to reflect a meter installation charge incorrectly recorded as miscellaneous revenues. Staff reversed a credit of $214 based on the test year miscellaneous occurrences. These adjustments result in miscellaneous revenues for water of $28,821 ($28,875 - $268 + $214). In addition, other revenues were increased by $831 for water and $798 for wastewater to reflect other income earned on interest bearing accounts as discussed in Issue 6. Test year operating revenues are $1,600,131 ($1,570,478 + $28,821 + $831) for water and $1,057,725 ($1,056,927 + $798).

Based on the above, test year operating revenues should be decreased by $27,488 ($1,600,131 - $1,627,619) for water and increased by $5,776 ($1,057,725 - $1,051,949) for wastewater.

Issue 11:

Should the audit adjustments to net operating income be made?

Recommendation:

Based on the audit adjustments agreed to by the Utility, O&M expense should be decreased by $4,964 and $6,059 for the water and wastewater systems, respectively. (Przygocki)

Staff Analysis:

Staff’s audit report was filed on January 23, 2024. Audit Finding No. 8 discusses several transactions in O&M expense accounts that should be removed or reclassified resulting in adjustments to decrease O&M expense by $4,964 and $6,059 for the water and wastewater systems, respectively. In its response to the staff audit report, Pluris agreed to the audit adjustments made to O&M expense. Staff has no further adjustments. As such, staff recommends that O&M expense be decreased by $4,964 and $6,059 for the water and wastewater systems, respectively.

Issue 12:

Should any adjustments be made to Contractual Services - Management Fees?

Recommendation:

Yes, Contractual Services – Management Fees should be reduced by $264,427 and $265,903 for the water and wastewater systems, respectively. Further, the Utility should be responsible for providing information that details the relationship of all parent-level and above related parties, total expenses on all levels, and the allocation of expenses and duties performed by employees associated with each entity. (Sewards)

Staff Analysis:

It is the Utility’s burden to prove that its costs are reasonable. This burden is even greater when the transaction is between related parties for two reasons: (1) affiliate transactions raise the concern of self-dealing where market forces do not necessarily drive prices, and (2) utilities have a natural business incentive to shift costs from non-regulated operations to regulated monopoly operations because recovery is more certain with captive customers. Although a transaction between related parties is not per se unreasonable, related party transactions require closer scrutiny. The legislature has recognized the need to scrutinize affiliate transactions by specifically granting the Commission access to non-regulated affiliate records. Specifically, Section 367.156(1), F.S., states:

The Commission shall continue to have reasonable access to all utility records and records of affiliated companies, including its parent company, regarding transactions or cost allocations among the utility and such affiliated companies, and such records necessary to ensure that a utility’s ratepayers do not subsidize nonutility activities. Upon request of the utility or any other person, any records received by the Commission which are shown and found by the Commission to be proprietary confidential business information shall be kept confidential and shall be exempt from s. 119.07(1).

(Emphasis added). Florida’s Supreme Court has enunciated the standard for which the Commission shall review affiliate transactions stating, “[w]e believe the standard must be whether the transactions exceed the going market rate or are otherwise inherently unfair.” ^{^[25]}

In its filing, the Utility recorded contractual services – management fees of $259,794 in the test year for both the water and wastewater systems. These amounts are comprised of expenses allocated from Pluris’ parent company, Pluris Management Group (PMG). PMG allocates its expenses based on the number of customers in each of its utilities. In the test year, PMG owned and operated six utilities until November 2023, when two utilities were sold. The Utility requested a pro forma increase of $237,010 to both the water and wastewater systems in this docket related to the reallocation of expenses due to the sale of the two utilities. This results in an increase to Pluris’ allocation from 18.26 percent to 37.58 percent.

In the Utility’s last rate case, the Commission approved total Contractual Services – Management Fees of $127,106 split evenly between the water and wastewater systems. This represented Pluris’ allocated portion of $743,214 in total management expenses. In its last rate case, the allocated management fees reflected the salaries of three employees and the management company provided its services to a total of 16,538 customers across all of its systems. Staff notes that in the last rate case, Pluris did not have any in-house employees within the Utility in Florida.

In the current rate case, Pluris has requested a total of $993,608 in management fees, split evenly between the water and wastewater systems. This represents Pluris’ allocated portion of $2,643,959 in total management expenses at the updated allocation percentage. Since Pluris’ last rate case, the number of PMG employees reflected in the allocated management fees has grown considerably from three employees to 19. Additionally, the Utility has added seven in-house employees to handle the operation of Pluris in Florida. According to information provided by the Utility in response to OPC’s Interrogatory No. 1, PMG is currently responsible for managing a total of 9,381 customers after the two utilities were sold. This represents a decrease in management of 7,157, or 43 percent of customers, compared to the customer count in the last rate case. Table 12-1 below shows a comparison of Pluris employees, management company employees, the pre-allocated management company expenses, and the total number of customers the management company serves throughout all of its utilities.

Table 12-1

Utility and Management Company Comparison

	2012 Rate Case	Current Rate Case Request	Change	%
Pluris In-House Employees	0	7	7	700%
Management Group Employees	3	19	16	533%
Total Pre-Allocated Expenses	$743,214	$2,643,959	$1,900,745	256%
Total Customers Served by Management Group	16,538	9,381	(7,157)	(43%)

Source: PSC-2013-0187-PAA-WS, Staff’s 1^st Data Request

Throughout the process of this rate proceeding, staff asked in multiple data requests for additional detail to support the significant increase in expenses and specific positions, especially in light of selling two utilities and experiencing a significant decrease in the number of customers it manages. Staff has also asked in multiple data requests for more supporting detail be provided for the services performed by PMG’s staff, and how it relates to, and reconciles with, the work performed by Pluris’ seven in-house employees.

While Pluris has responded to staff’s data requests, as well as OPC’s discovery, the responses have not provided clarity on the expenses included in management fees. Staff believes the Utility has not met the burden of proof for the reasonableness of many of the related party costs included in management fees. As such, staff is recommending specific adjustments related to the total parent level expenses allocated, as discussed below.

Salaries and Wages Expense - Management

In response to staff’s first data request, Pluris provided a breakdown of PMG’s expenses and allocation methodology. PMG recorded $1,479,046 in salaries and wages expense. In its last rate case, Commission-approved management fees included salaries for a Managing Member, a Principal Engineer, and an Administrative Assistant. However, since the last rate case, Pluris has hired a regional manager, two in-house managing engineers, and currently has two of four plant operators filled. Based on the addition of in-house staff at the Florida operations, the reduction of the overall customer base managed by PMG, and the lack of support provided by the Utility, staff believes only the salary for one managing member should be included in the calculation of management fees.

According to the position descriptions provided for PMG, Maurice Gallarda is listed as the President/CEO/Principal Engineer. In OPC’s letter dated February 16, 2024, it provided an excerpt from a Sarasota County Resolution concerning management salaries for a sister utility company, Pluris Southgate, LLC. In that case, Raftelis Financial Consultant, Inc. (Raftelis) evaluated Pluris Southgate, LLC’s contractual services – management fees, to determine if the requested rate increase was reasonable and justifiable based on the information presented by the Utility. Raftelis was concerned about the high level of salaries and wages expense for Mr. Gallarda and based on the Compensation Survey – Medium-Sized Utilities published by the American Water Works Association, and recommended limiting his salary to $229,051. Staff believes this is a reasonable comparison and recommends indexing that 2020 salary forward to account for inflation, using the Commission’s approved annual price index for the years 2021 through 2024. As such, staff recommends a management salary of $267,757 be recognized in the allocation of management fees.

In response to staff’s second data request, the Utility detailed a billing and collection group (B&C Group) that is responsible for the billing, collections, and other customer service tasks related to serving all of PMG’s utilities. PMG recorded $363,661 in relation to the B&C group and its wages, payroll tax, employee benefits, postage, telephones, and utilities expenses. In response to staff’s first data request, Pluris stated that it expected savings of $150,239 as a result of the sale of the two utilities due to a decrease in staffing needs. Staff recommends the inclusion of the B&C group as these positions are not duplicative of the duties performed by the Utility’s in-house staff.

Based on the above, staff recommends a reduction to salaries and wages expense of $893,274. Additionally, corresponding adjustments are necessary to reduce payroll expense by $4,404, payroll taxes by $34,851, and employee benefits by $88,960.

Professional Fees – Accounting

PMG recorded $180,038 in professional fees – accounting expense. In response to staff’s eighth data request, the Utility provided PMG’s invoices for allocated costs including professional fees – accounting. In review of the invoices, staff found invoices from placement companies for the hiring of two PMG employees totaling $66,875. As discussed above, staff does not believe the Utility has met its burden of proof as it relates to the increase in size of the management positions. As such, staff believes professional fees – accounting should be reduced by $66,875.

Transportation/Insurance Expense

PMG recorded $91,346 in transportation expense. In response to staff’s eighth data request, the Utility provided PMG’s lease agreements for the vehicles included in its pre-allocated transportation expense. In Pluris’ last rate case, the Commission removed automobile expense associated with company vehicles supplied as a part of compensation packages. In response to staff’s eighth data request, the Utility confirmed transportation expenses in the current case also includes vehicles supplied as a part of compensation packages. As such, staff recommends the same adjustment be made to remove transportation expense associated with vehicles included in compensation packages. Further, based on the addition of in-house staff and seven utility vehicles, the reduction of the overall customer base managed by PMG, and the lack of support provided by the Utility, staff believes transportation expense should be reduced by its full balance of $91,346. Staff also recommends a corresponding adjustment to reduce insurance expense by $19,418 associated with the removal of the transportation expense.

Depreciation Expense

PMG recorded $29,435 in depreciation expense. In response to staff’s eighth data request, the Utility provided a description for this expense stating it was related to improvements made to the B&C Group’s building. Pluris did not provide further explanation and staff was unable to determine the details of this expense. It is the Utility’s burden to prove that its costs are reasonable. Based on the lack of support provided by the Utility, staff believes depreciation expense should be reduced by its full balance of $29,435.

Other Miscellaneous Expenses

PMG included miscellaneous expenses totaling $82,390 involving travel, meals and entertainment, dues and subscriptions, penalties, and gifts in its pre-allocated expenses. In response to staff’s eighth data request, the Utility provided PMG’s invoices for allocated costs including these miscellaneous expenses. In reviewing the invoices, staff noticed that many were only partially allocated to PMG along with multiple other entities. Staff was not given specific information identifying the other entities but assumes these are related parties to PMG. Additionally, there is a lack of detail provided in the invoices for these miscellaneous expenses to determine if they are related to Pluris, PMG, or another party unrelated to the operation of Pluris. As such, staff believes most of these expenses should be removed. The Utility provided documentation related to membership in the National Association of Water Companies totaling $6,697. In OPC’s letter dated February 16, it suggested 20 percent of this amount should be removed to recognize lobbying efforts. OPC cites to a previous Commission Order in which this adjustment was made.[26] However, the percentage identified in that case is specific to the invoices identifying lobbying efforts. Staff reviewed the invoice provided for Pluris and it does not specifically identify lobbying costs. As such, staff does not believe this is an appropriate adjustment to make. As such, staff believes other miscellaneous expenses should be reduced by $75,693.

Administration Fee

PMG included a 5 percent administration fee of $109,236 in its pre-allocated expenses. In response to OPC’s Interrogatory No. 1e, the Utility stated that the fee is designed to compensate the management company for the services provided under the service agreement. Further, in response to OPC’s Interrogatory No. 35, Pluris confirmed that the customers are not receiving an incremental benefit from this additional charge. Given that all of PMG’s expenses are already allocated to Pluris, and that customers are not receiving a direct benefit from the fee, staff does not believe an additional administration fee of 5 percent should be added to the management fee the Utility is already paying to PMG. As such, Staff recommends administration fees should be reduced by its full balance of $109,236.

Conclusion

As noted above, staff believes there is a lack of clarity and justification for the increased expense and the separation of duties for the managing members of PMG and other related parties. Upon further investigation, staff found that managing members of PMG are also listed as managing members of Stockdale Investment Group, Inc. In subsequent rate proceedings, Pluris should provide a clear cost allocation method or manual to support its related party costs.

Given the addition of Pluris’ in-house employees and the reduction to the number of utilities and customers PMG is responsible for, staff believes the recommended adjustments result in a management fee that is representative of the services provided by PMG for the provision of regulated utility service by Pluris.

Based on the adjustments detailed above, staff recommends a total balance of $1,230,466 in management fees be recognized for allocation purposes. Pluris should be responsible for 37.65 percent of PMG’s total costs based on the most recent utility allocation provided by the Utility. As such, the Utility’s allocated portion should be $463,278 ($1,230,466 x 37.65%). Staff has further allocated management fees to the water and wastewater systems based on ERCs and recommends contractual services – management expense be $232,377 and $230,901, for the water and wastewater systems, respectively. This results in overall decreases of $27,417 and $28,893 to the water and wastewater system’s 2022 test year expenses, respectively.

As such, staff recommends Contractual Services – Management Fees be reduced by $264,427 ($496,804 - $232,377) and $265,903 ($496,804 - $230,901) for the water and wastewater systems, respectively. Further, staff recommends that in Pluris’ next rate filing, the Utility should be responsible for providing information that details the relationship of all parent-level and above related parties, total expenses on all levels, and the allocation of expenses and duties performed by employees associated with each entity.

Issue 13:

What is the appropriate amount of rate case expense and over what period should it be amortized?

Recommendation:

The appropriate amount of rate case expense is $93,539. This expense should be recovered over four years for an annual expense of $11,730 for water and $11,655 for wastewater. Therefore, annual rate case expense should be decreased by $3,681 for water and $3,659 for wastewater, from the respective levels of expense included in the MFRs. (Veaughn)

Staff Analysis:

In its MFRs, Pluris requested $122,900 for rate case expense. Staff requested an update of the actual rate case expense incurred, with supporting documentation, as well as the estimated amount to complete the case. On February 16, 2023, the Utility submitted its last revised estimate of rate case expense, through completion of the PAA process, which totaled $72,646. A breakdown of the Utility’s requested rate case expense is as follows:

Table 13-1

Pluris’ Initial and Revised Rate Case Expense Report

Description	MFR Estimated	Actual	Additional Estimated	Revised Total
Legal Fees
Martin Friedman	$39,900	$38,311	$21,585	$59,896
General
Maurice Gallarda	22,000	0	0	0
Accounting
Dan Winters	26,000	0	0	0
Billing
Beverly Yopp	6,000	0	0	0
Notices, Printing, & Miscellaneous
Pluris Wedgefield	25,000	3,800	4,950	8,750
Filling Fee	4,000	4,000	0	4,000
Total	$122,900	$46,111	$26,535	$72,646

Source: MFR Schedule B-10; along with Utility responses to staff data requests

Pursuant to Section 367.081(7), F.S., the Commission shall determine the reasonableness of rate case expense and shall disallow all rate case expense determined to be unreasonable. Staff has examined the requested actual expenses, supporting documentation, and estimated expenses as listed above for the current rate case. Based on its review, staff believes the following adjustments to Pluris’ requested rate case expense are appropriate.

DEAN MEAD P.A.

In its MFRs, Pluris included $39,900 in legal fees to complete the rate case. In response to staff’s first data request, The Utility provided documentation detailing this expense through February 16, 2024. The actual fees and costs totaled $38,311, with an estimated $21,585 to complete the rate case, totaling $59,896.

Staff reviewed supporting documentation and found 2.7 hours, equaling $1,107 in legal fees, related to correcting deficiencies. The Commission has previously disallowed rate case expense associated with correcting MFR deficiencies because of duplicate filing costs.[27] Additionally, staff found that a $4,000 filing fee that Dean Mead paid on behalf of the Utility was included in total legal fees. However, the cost of the Utility's filing fee is accounted for as its own line item on the B-10 Schedule of the Utility's MFRs, and as such should be removed from legal fees. Consequently, staff recommends an adjustment to reduce actual legal fees by $5,107.

The estimate to complete the rate case includes fees for 48.5 hours at $410 an hour, totaling $19,885, plus $1,700 in travel and miscellaneous expense. Staff believes the full amount of the estimate to complete is reasonable. Based on the above, staff recommends that the total legal fees be reduced by $5,107.

Maurice Gallarda, General

In its MFRs, Pluris included $22,000 of rate case expense related to the work performed by Mr. Gallarda. According to the Utility's response to staff’s fourth data request, costs associated with time expended by Mr. Gallarda related to Pluris’ rate case are included in the Utility’s management fees, and as such, no rate case expense should also be included. As discussed in Issue 12, staff has included Mr. Gallarda’s salary in the recommended management fees. Consequently, staff recommends an adjustment reducing the Utility’s rate case expense by $22,000 related to Mr. Gallarda's involvement in the proceeding.

Dan Winters, Accounting

In its MFRs, Pluris included $26,000 of rate case expense related to work provided by Mr. Winters. In its response to staff's ninth data request, the Utility provided a description of Mr. Winters' duties which includes accounting and financial oversight, and the preparation of all regulatory financial filings and rate filings. Mr. Winters is also listed as the preparer of nearly all schedules provided in the Utility’s MFRs.

In the Utility’s response to staff's fourth data request, the Utility stated that time expended by Mr. Winters is included in the management fee, and as a result, there is no rate case expense associated with his work. However, as previously discussed in Issue 12, staff is recommending the disallowance of Mr. Winters' portion of the Utility’s management fees. Additionally, staff has compared this amount to the approved amount of rate case expense for similar work done by the Stockdale Investment Group in the Utility’s 2012 rate case, as well as rate case expense included for similar functions in other rate cases, and recommends the amount to be reasonable.[28] As such, staff recommends that total accounting fees of $26,000 be included for work performed by Mr. Winters.

Beverly Yopp, Billing

In its MFRs, Pluris included $6,000 of rate case expense related to the work performed by Ms. Yopp. According to the Utility’s response to staff’s fourth data request, costs associated with time expended by Ms. Yopp related to Pluris’ rate case are included in the Utility’s management fees, and as such, no rate case expense should be included. Ms. Yopp’s salary is included in the billing and collection expense reflected in staff’s recommended management fees. Consequently, staff recommends an adjustment to reduce the Utility's rate case expense by $6,000 related to Ms. Yopp's involvement in the proceeding.

Noticing, Printing, and Miscellaneous

In its MFRs, the Utility included $25,000 of rate case expense related to notices, printing, envelopes, postage, travel, and miscellaneous expenses for Pluris through the completion of the Utility’s rate case. According to projections provided by the Utility in its response to staff's fourth data request, the total cost of mailing, printing and miscellaneous is projected to be $8,750. Based on the projections discussed above, staff recommends the total rate case expense included for notices, printing, and miscellaneous expense be $8,750, which results in a reduction of $16,250 from Pluris’ original expense.

Filing Fee

On September 22, 2023, the Commission received a payment of $4,000 from Dean Mead on behalf of Pluris’ for filing fees related to the Utility's application. Staff recommends that the cost of the Utility's filing fee be allowed with no adjustment.

Conclusion

Based upon the adjustments discussed above, staff recommends that Pluris’ revised rate case expense of $72,646 be increased by $20,893. A breakdown of staff’s recommended rate case expense of $93,539 is as follows:

Table 13-2

Recommended Rate Case Expense

Description	MFR Estimated	Utility Revised Actual & Est.	Staff Adj.	Recom. Total
Legal Fees	$39,900	$59,896	($5,107)	$54,789
General	22,000	0	0	0
Accounting	26,000	0	26,000	26,000
Billing	6,000	0	0	0
Notices, Printing & Miscellaneous	25,000	8,750	0	8,750
Filling Fee	4,000	4,000	0	4,000
Total	$122,900	$72,646	$20,893	$93,539

Source: MFR Schedule B-10, along with Utility responses to staff data requests

In its MFRs, the Utility requested total rate case expense of $122,900. When amortized over four years, this represents an annual expense of $30,725, or $15,411 for water and $15,314 for wastewater. The recommended total rate case expense of $93,539 should be amortized over four years, pursuant to Section 367.081(8), F.S., as the Utility did not request or justify a longer amortization period. This represents an annual expense of $23,385, or $11,730 for water and $11,655 for wastewater. As such, staff recommends that annual rate case expense be decreased by $3,681 ($15,411 - $11,730) for water and $3,659 ($15,314 - $11,655) for wastewater, from the respective levels of expense included in the MFRs.

Issue 14:

Should further adjustments be made to the Utility's O&M expense?

Recommendation:

Yes, O&M expenses should be further reduced by $45,314 and $56,640, for the water and wastewater systems, respectively. (Thurmond)

Staff Analysis:

Based on its review of test year O&M expenses, staff recommends several additional adjustments to the Utility’s O&M expenses as summarized below.

Salaries and Wages - Employees

In its filing, the Utility recorded Salaries and Wages – Employees expense of $204,193 for water and $239,751 for wastewater. Staff reviewed the wages for each of the five current employees, as well as the 2023 American Water Works Association (AWWA) compensation survey for small water and wastewater utilities. Staff believes that the total salaries and wages expense included in the test year is excessive for the five current employees. However, the Utility currently has two vacant positions. Using the AWWA compensation survey, staff estimated the annual salary for two entry level plant operators. The total test year amount is an appropriate amount for a fully staffed utility of seven full-time employees. As these positions are necessary to the Utility’s operation and will eventually be filled, staff does not believe an adjustment to remove Salary and Wages expense related to these two vacancies is necessary.

In response to staff audit’s Document Request No. 30, the Utility stated that the general manager (Joe Kuhns) devotes 25 percent of his time to other systems and the field manager (Garth Armstrong) devotes 50 percent of his time to other systems. However, in response to staff’s ninth data request, the Utility stated that the general manager devotes only 5 percent of his time to other systems. Given the conflicting responses, staff is recommending reductions to Salaries and Wages expense using the 25 and 50 percent allocations originally provided by the Utility to ensure non-utility expenses are not included in rates. Thus, staff recommends reductions to Salaries and Wages – Employees of $27,588 and $27,412 for water and wastewater, respectively. Staff is also recommending corresponding adjustments to reduce Employee Pensions and Benefits expense by $2,332 and $2,317 for water and wastewater, respectively. Further, staff is recommending corresponding adjustments to reduce Payroll Tax expense by $2,110 and $2,097 for water and wastewater, respectively.

Non-Recurring Expenses

Rule 25-30.433(9), F.A.C., states “Non-recurring expenses shall be amortized over a 5-year period unless a shorter or longer period of time can be justified.” In response to staff’s first data request, the Utility noted specific items included in O&M expense that were non-recurring in nature. Account 636 Contractual Services – Other included non-recurring expenses of $9,626 to fix a waterline and $3,101 for compliance fire hydrant flow testing, totaling $12,727. Accounts 659 and 759 Insurance Expense – Other included non-recurring expenses to true up excess liability insurance for $3,496 and $708 for the water and wastewater systems, respectively. To recognize the amortization of these expenses, staff recommends decreases of $12,978 ([$12,727 + $3,496] x 4/5) and $566 ($708 x 4/5) to the water and wastewater systems, respectively.

In its letter dated February 16, 2024, OPC identified additional non-recurring hurricane expenses recorded to the wastewater system. This included amounts of $3,989 for hurricane damage repair recorded in Account 775, $23,226 for hurricane preparation in Account 736, and $5,302 for hurricane pumps in Account 742, for a total of $32,517 in hurricane related expenses. Based on its review of OPC’s assertion, staff agrees that adjustments are necessary to recognize the amortization of these non-recurring expenses. As such, staff recommends a decrease of $26,014 ($32,517 x 4/5) to the wastewater system. Staff also recommends a corresponding adjustment to increase working capital allowance by $39,558 ($12,978 + $566 + $26,014) to reflect the total unamortized balance of the non-recurring expense adjustments.

Fuel for Power Production

In its letter dated February 16, 2024, OPC asserted than an adjustment to Fuel for Power Production expense is necessary, as the test year is not representative of a normal full year of operation. The test year included a Fuel for Power Production expense of $4,288 and $1,038 for water and wastewater, respectively. As part of staff’s review of fuel expenses, staff noted that consumption of fuel for power generation was increased during the test year and coincided with an abnormal event, Hurricane Ian. Staff agrees with OPC that a normalization adjustment is necessary. OPC has proposed the use of a 4-year average consistent with a 2009 order for Palm Valley Utilities where the Commission used a 4-year average to normalize Fuel for Power Production expense.[29] Staff believes this is a reasonable averaging adjustment. As such, staff recommends Fuel for Power Production expense be reduced by $2,417 and $331 for the water and wastewater systems, respectively.

Conclusion

Based on the discussion above, staff recommends O&M expenses be further reduced by $45,314 ($27,588 + $2,332 + $12,978 + $2,417) and $56,640 ($27,412 + $2,317 + $26,580 + $331), for the water and wastewater systems, respectively.

Issue 15:

What is the appropriate amount of income tax expense?

Recommendation:

The appropriate amount of income tax expense is $0 for water and $0 for wastewater. Income tax expense should be reduced by $163,539 and $29,748 for the water and wastewater systems, respectively. (Thurmond)

Staff Analysis:

In its filing, the Utility requested income tax expense of $163,539 and $29,478 for water and wastewater, respectively. The Internal Revenue Service defines a partnership as “the relationship between two or more people to do trade or business” and adds that a partnership “does not pay income tax, instead, it ‘passes through’ profits or losses to its partners. Each partner reports their share of the partnership’s income or loss on their tax return.”[30] In its last rate case, Pluris was a registered corporation and thus had to pay income taxes directly. However, according to its annual report, the Utility is now a limited liability corporation, classified as a partnership. Commission practice has been to remove income tax expense for partnerships as they do not pay income taxes directly.[31] Therefore, staff recommends decreases to income tax expense of $163,539 and $29,478 for the water and wastewater systems, respectively, resulting in a $0 balance in both accounts.

Issue 16:

Should adjustments be made to Taxes Other Than Income?

Recommendation:

Yes, Taxes Other Than Income (TOTI) should be decreased by $21,266 for the water system and should be decreased by $27,508 for the wastewater system. (Thurmond)

Staff Analysis:

The Utility recorded TOTI of $190,223 for water, and $166,829 for wastewater. Staff recommends decreasing wastewater TOTI by $646 as a result of the non-U&U adjustment discussed in Issue 4. Staff recommends increasing water TOTI by $30,932 to reflect the increase in property taxes due to the pro forma adjustment discussed in Issue 5. Staff recommends further decreasing TOTI by $50,088 and $24,765 for water and wastewater, respectively, to reflect the proper test year revenues, as discussed in Issue 10. Staff also recommends decreasing TOTI by $2,110 and $2,097 for water and wastewater, respectively, to reflect the fallout of the salary adjustment discussed in Issue 13. Based on the adjustments discussed above, staff recommends a decrease in TOTI of $21,266 ($30,932 - $50,088 - $2,110) for the water system, and a decrease of $27,508 ($646 + $24,765 + $2,097) for the wastewater system.

Issue 17:

What is the appropriate revenue requirement for the test year ended December 31, 2022?

Recommendation:

Consistent with staff’s recommendation on rate base, cost of capital, and net operating income, the following revenue requirement should be approved:

System	Test Year Revenues	$ Increase	Revenue Requirement	% Increase
Water	$1,600,131	$652,164	$2,252,295	40.76%
Wastewater	$1,057,726	$155,864	$1,213,590	14.74%

(Thurmond)

Staff Analysis:

In its filing, the Utility requested a revenue requirement to generate annual revenue of $2,713,189 for water and $1,608,064 for wastewater. The requested revenue requirement represents a revenue increase of $1,085,570 or approximately 66.70 percent for the water system and $556,115 or approximately 52.87 percent for the wastewater system.

Consistent with staff’s recommended adjustments to rate base, cost of capital, and operating income, staff recommends approval of rates designed to generate a revenue requirement of $2,252,295 for the water system and $1,213,590 for the wastewater system. This results in an increase of 40.76 percent for the water system and 14.74 percent for the wastewater system. Staff’s recommended revenue requirement will allow the Utility the opportunity to recover its expenses and earn an 8.22 percent return on its investment in rate base. The revenue requirement for each system is reflected in Schedule Nos. 3-A and 3-B, and the adjustments are shown on Schedule 3-C.

Issue 18:

What are the appropriate rates and rate structure for the Pluris water and wastewater systems?

Recommendation:

The recommended rate structures and monthly water and wastewater rates are shown on Schedule Nos. 4-A and 4-B. The Utility should file revised 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 approved rates 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. (Bethea)

Staff Analysis:

Water Rates

Pluris is located in Orange County, within the South Johns River Water Management District. The Utility provides water service to 1,711 residential customers with eight customers having a separate meter for irrigation, 30 general service customers, and two private fire protection customers. Approximately 4 percent of the residential customer bills during the test year had zero gallons, indicating a non-seasonal customer base. The average residential water demand is 4,395 gallons per month. The average water demand excluding zero gallon bills is 4,573 gallons per month. Currently, the rate structure for the water system consists of a base facility charge (BFC) and a three-tier inclining block gallonage charge for the residential class. For the general service class, the rate structure is a BFC and uniform gallonage charge. As discussed in Issue 20, the Utility also has two private fire protection customers that were incorrectly billed under the general service rate structure.

Staff performed an analysis of the Utility’s billing data in order to evaluate the appropriate rate structure for the residential water customers. The goal of the evaluation was to select the rate design parameters that: (1) produce the recommended revenue requirement; (2) equitably distribute cost recovery among the Utility’s customers; (3) establish the appropriate non-discretionary usage threshold for restricting repression; and (4) implement, where appropriate, water conserving rate structures consistent with Commission practice.

For this case, staff recommends that 35 percent of the water revenues be generated from the BFC, which will provide sufficient revenues to design gallonage charges that send pricing signals to customers using above the non-discretionary level. The average people per household served by the water system is 2.83[32]; therefore, based on the number of people per household, 50 gallons per day per person, and the number of days per month, the non-discretionary usage threshold should be 5,000 gallons per month. Staff’s review of the billing data indicates that discretionary usage above 5,000 gallons represents approximately 26 percent of the bills, which accounts for approximately 20 percent of water demand. This indicates that there is moderate amount of discretionary usage above 5,000 gallons.

In its MFRs, the Utility proposed a continuation of its existing rate structure, which includes a BFC and a three-tier inclining block gallonage charge for residential water rates. The rate blocks are: 1) 0-5,000 gallons, 2) 5,000 – 10,000 gallons, 3) Over 10,000 per month. Due to the moderate usage above 5,000 gallons per month, staff recommends a rate factor of 1.25 in the second tier and a rate factor of 2.00 in the third tier because it will target those customers with higher levels of consumption. General service customers should continue to be billed a BFC and uniform gallonage charge. Based on Rule 25-30.465, F.A.C., private fire protection customers should be billed one-twelfth of the BFC for the respective meter size.

Based on staff’s recommended revenue increase of 41.50 percent, which excludes miscellaneous revenues, the residential consumption can be expected to decline by 3,460,000 gallons resulting in anticipated average residential demand of 4,228 gallons per month. Staff recommends a 3.8 percent reduction in test year residential gallons for rate setting purposes. As a result, the corresponding reductions are $1,639 for purchased power expense, $12,565 for chemicals expense, and $669 for Regulatory Assessment Fees (RAFs) to reflect the anticipated repression, which results in a post repression revenue requirement of $2,194,978.

Wastewater Rates

Pluris provides wastewater service to approximately 1,701 residential customers and 10 general service customer. Currently, the wastewater rate structure for residential customers consists of a monthly uniform BFC for all meter sizes and gallonage charge with an 8,000 gallonage cap. The general service rate structure consists of BFCs by meter size and a gallonage charge that is 1.2 times higher than the residential gallonage charge.

Staff performed an analysis of the Utility’s billing data in order to evaluate various BFC cost recovery percentages and gallonage caps for the residential wastewater customers. The goal of the evaluation was to select the rate design parameters that: 1) produce the recommended revenue requirement; 2) equitably distribute cost recovery among the Utility’s customers; and 3) implement a gallonage cap, where appropriate, that considers approximately the amount of water that may return to the wastewater system.

Consistent with Commission practice, staff allocated 50 percent of the wastewater revenue to the BFC due to the capital intensive nature of wastewater plants. The Utility’s current wastewater gallonage cap is set at 8,000 gallons per month. The wastewater gallonage cap recognizes that not all water used by the residential customers is returned to the wastewater system. It is Commission practice to set the wastewater cap at approximately 80 percent of residential water sold, which typically results in gallonage caps of 6,000, 8,000, or 10,000. Based on staff’s review of the billing analysis, 86 percent of the gallons are captured at the 6,000 gallon consumption level. Therefore, staff recommends that the gallonage cap for residential customers be reduced to 6,000 gallons. Staff also recommends that the general service gallonage charge continue to be 1.2 times greater than the residential gallonage charge, which is consistent with Commission practice.

In addition, wastewater rates are calculated on customers’ water demand; if those customers’ water demand is expected to decline due to repression, then the billing determinants used to calculate wastewater rates should be adjusted accordingly. In determining the number of wastewater gallons subject to repression, staff uses the gallons between the non-discretionary threshold and the wastewater gallonage cap and applies the percentage reduction in water gallons. In this case, it results in a 0.26 percent reduction to the wastewater gallons for ratesetting purposes, which is de minimis. Therefore, a repression adjustment for wastewater is unnecessary.

Conclusion

Issue 19:

What are the appropriate miscellaneous service charges?

Recommendation:

The appropriate miscellaneous service charges are shown on Table 19-5 and should be approved. The Utility should be required to file a proposed customer notice to reflect the Commission-approved charges. The approved charges should be effective on or after the stamped approval date on the tariff sheet pursuant to Rule 25-30.475(1), F.A.C. In addition, the approved charge should not be implemented until staff has approved the proposed customer notice and the notice has been received by customers. The Utility should provide proof of the date notice was given no less than 10 days after the date of the notice. (Bethea)

Staff Analysis:

Pluris is requesting to revise its existing miscellaneous service charges. The Utility’s existing miscellaneous service charges for water were established in Docket No. 070694-WS.[33] Subsequently, the miscellaneous service charges for wastewater were established in Docket No. 100381-WS.[34] Section 367.091, F.S., authorizes the Commission to change miscellaneous service charges. The Utility’s requested miscellaneous charges were accompanied by its reason for requesting the charges, as well as the cost justification required by Section 367.091(6), F.S. The Utility’s existing and requested miscellaneous service charges are shown below in Tables 19-1 and 19-2.

Table 19-1

Pluris’ Existing Miscellaneous Service Charges

Water and Wastewater

	Normal Hours	After Hours
Initial Connection Charge	$21.00	$42.00
Normal Reconnection Charge	$21.00	$42.00
Violation Reconnection Charge	$21.00	$42.00
Premises Visit Charge (in lieu of disconnection)	$21.00	$42.00

Source: Utility’s Current Tariffs and MFRs.

Table 19-2

Pluris’ Requested Miscellaneous Service Charges

Water and Wastewater

	Normal Hours	After Hours
Initial Connection Charge	$37.50	$75.00
Normal Reconnection Charge	$37.50	$75.00
Violation Reconnection Charge	$75.00	$150.00
Premises Visit Charge (in lieu of disconnection)	$37.50	$75.00
Meter Tampering Charge	$60.00

Source: Utility’s Current Tariffs and MFRs.

Premises Visit and Violation Reconnection Charge

As shown on Table 19-2, the Utility’s request consists of several miscellaneous service charges. Rule 25-30.460, F.A.C., does not allow for initial connection and normal reconnection charges.^{^[35]} The Utility’s requested initial connection and normal reconnection charges are obsolete and inconsistent with the rule.

The Utility’s calculation for the premises visit charge and violation reconnection are shown below in Table 19-3. The Utility provided cost justification of $38.98; however, the utility requested a charge of $37.50 for both the premises visit and violation reconnection charges which represents the cost of a trip to perform a specified service. The violation reconnection charge of $75 ($37.50 x 2) accounts for two trips which are the discontinuance of service and the subsequent reconnection of service. Staff believes the cost justification is reasonable and impose the cost on cost causer. Based on the rule, staff recommends that the initial connection and normal reconnection charges be removed. The premises visit charge should be $37.50 for normal hours and $75.00 for after hours for both water and wastewater. The violation reconnection for water should be $75.00 for normal hours and $150 for after hours and at actual cost for wastewater. This recommended change to miscellaneous service charges results in an increase in miscellaneous revenues of $12,790 for water on a prospective basis, which results in total miscellaneous revenues of $42,442.

Table 19-3

Calculation for Proposed Premises Visit and Violation Reconnection Charge

Activity	Cost
Mileage ($0.67 per mile x 3)	$2.01
Labor – Tech – Round Trip Drive ($39.43 x .10)	$3.94
Labor – Tech – Location Labor Time ($39.43 x .50)	$19.72
Labor – Tech – Processing of Work Order ($39.43 x .15)	$5.92
Fuel – Fuel and Maintenance ($3.00 x .10)	$0.30
Insurance – Workers Comp Insurance ($0.70 x .75)	$0.53
Labor – CCR – Customer Care Representatives ($13.14 x .50)	$6.57
Total	$38.99

Source: Utility’s cost justification.

Investigation of Meter Tampering Charge and Meter Tampering Charges

In its MFRs, Pluris requested a meter tampering charge of $200.00 as well as actual cost for repairs. Subsequently, the Utility revised its request and provided cost justification of a meter tampering charge of $60.00. The Utility’s cost justification is shown below on Table 19-4 and includes mileage, administrative labor, field labor, and insurance costs. Rule 25-30.320(2)(i), F.A.C., provides that a customer’s service may be discontinued without notice in the event of tampering with the meter or other facilities furnished or owned by the Utility. In addition, Rule 25-30.320(2)(j), F.A.C., provides that a customer’s service may be discontinued in the event of an unauthorized or fraudulent use of service. The rule allows the Utility to require the customer to reimburse the Utility for all changes in piping or equipment necessary to eliminate the illegal use and to pay an amount reasonably estimated as the deficiency in revenue resulting from the customer’s fraudulent use before restoring service.

The Utility’s cost justification supports a charge of $57 and should be considered as cost recovery for an investigation of meter tampering. The charge should only be assessed where an investigation reveals evidence of meter tampering. The Utility’s requested charge is similar to other investigation of meter tampering charges previously approved by the Commission.[36] If meter tampering is revealed, Rule 25-30.320, F.A.C., allows the Utility to assess actual cost of any damages incurred. Therefore, staff recommends an investigation of meter tampering charge of $57 and a meter tampering charge at actual cost. The staff’s recommended miscellaneous service charges are shown in Table 19-5.

Table 19-4

Investigation of Meter Tampering Charge Cost Justification

Field Labor	$39.43
Administrative Labor	$13.14
Mileage	$3.00
Insurance Costs	$0.70
Total	$56.27

Source: Utility’s Cost Justification.

Table 19-5

Staff Recommended Miscellaneous Service Charges

	Normal Hours	After Hours
Violation Reconnection Charge – Water	$75.00	150.00
Violation Reconnection Charge –Wastewater	Actual Cost	Actual Cost
Premises Visit Charge	$37.50	$75.00
Investigation of Meter Tampering Charge	$57.00
Meter Tampering Charge	Actual Cost

Source: Staff’s Recommendation.

Conclusion

Issue 20:

What are the appropriate initial customer deposits for Pluris’ water and wastewater systems?

Recommendation:

The appropriate initial customer deposits for the residential 5/8 inch x 3/4 inch meter size should be $188 for water and $114 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. The approved initial customer deposits should be effective for services rendered or 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., provides the criteria for collecting, administering, and refunding customer deposits. Customer deposits are designed to minimize the exposure of bad debt expense for the Utility and, ultimately, the general body of ratepayers. An initial customer deposit ensures that the cost of providing service is recovered from the cost causer. Historically, the Commission has set initial customer deposits equal to two times the average estimated bill. Currently, the Utility’s water and wastewater initial customer deposit for the 5/8 inch x 3/4 inch meter size is $20 for water and $60 for general service. However, these amounts do not cover two months’ average bills based on staff’s recommended rates. The Utility’s anticipated post-repression average monthly residential usage is 4,228 gallons per customer. Therefore, the average residential monthly bill is approximately $94 for water and $57 for wastewater service based on staff’s recommended rates.

Conclusion

Staff recommends the appropriate initial customer deposits for the residential 5/8 inch x 3/4 inch meter size should be $188 ($94 x 2) for water and $114 ($57 x 2) 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. The approved initial customer deposits should be effective for services rendered or 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 21:

Should Pluris’ two private fire protection customers be granted a refund?

Recommendation:

Yes, Pluris’ two private fire protection customers should be granted a refund. The Utility should be required to refund the difference between the total revenues collected and the appropriate revenues calculated based on one-twelfth of the BFC that is relative to the size of the line since the fire protection customers began receiving service. Staff should be given administrative authority to approve the refund amount based on the aforementioned calculation. The refund amount should be provided to staff for approval within 14 days of the Commission Order. The refunds should be made with interest in accordance with Rule 25-30.360(4), F.A.C. Pursuant to Rule 25-30.360(7), F.A.C., the refund should be made within 90 days of the Commission’s order. During the processing of the refund, monthly reports on the status of the refund should be made by the 20th of the following month. (Bethea)

Staff Analysis:

In its MFRs, Pluris indicated that there were two fire protection customers. Since the Utility does not have an approved tariff for private fire protection, staff asked information from the Utility in regard to the customers. Staff was informed that the customers were the Villas of Wedgefield Homeowner’s Association, Inc. (HOA), which is being served by a 5/8-inch line, and the Orange County School Board (school board), which is being served by an 8-inch line. The Utility bills both customers a BFC by meter size and a gallonage charge per 1,000 gallons under the general service tariff.

In accordance with Rule 25-30.465, F.A.C., private fire protection shall be a charge based on the size of the connection rather than the number of fixtures connected. According to the rule, the rate shall be one-twelfth the current BFC of the Utility’s meter sizes, unless otherwise supported by the Utility. In its third data request, staff referenced the rule that governs private fire protection rates.[37] In response, the Utility indicated that any implication that it improperly charged the private fire protection customers was erroneous and asserted that the rule does not automatically establish private fire protection rates.[38]

Staff disagrees with the Utility’s assertion. The rules govern the manner in which a private fire protection customer can be billed. It is incumbent on the Utility to be knowledgeable of the statutes and rules that govern it as a regulated utility. The HOA became a private fire protection customer in February of 2014. Since Pluris did not have a private fire protection tariff, providing the private fire protection service was a new class of service. Pursuant to Section 367.091(5), F.S., if any request for service of a utility shall be for a new class of service not previously approved, the utility may furnish the new class of service and fix and charge just, reasonable, and compensatory rates or charges therefor. A schedule of rates or charges so fixed shall be filed with the Commission within 10 days after the service is furnished. Pursuant to Rule 25-30.465, F.A.C., the just, reasonable, and compensatory rate for a private fire protection customer is one-twelfth of the respective BFC, which would have been one-twelfth of its 5/8-inch general service BFC.

Pluris started serving the school board as a private fire protection customer in August of 2016. The school board has an 8-inch line. At the time, the Utility’s tariff rates only went up to the 6-inch meter size. Therefore, Pluris billed the school board the general service rate for a 6-inch meter size. In December of 2017, the Utility started billing an 8-inch turbine meter size BFC which was not authorized under its general service tariff. In 2019, the Utility requested and was approved for an eight inch turbine meter size BFC.[39] In the petition, Pluris indicated it had added a general service customer with an 8-inch turbine meter and it wanted a BFC for that meter size based on the meter equivalency factors in Rule 25-30.055, F.A.C. Further, the petition emphasized it was not a request for a new class of service.

The school board is the only customer of Pluris with 8-inch service. When Pluris petitioned for approval of the 8-inch BFC, the BFC was for the school board. Staff was unaware that the general service customer was a private fire protection customer. However, the Utility was aware, yet it requested just the full 8-inch meter size BFC and not one-twelfth of the 8-inch meter size, which is appropriate for the private fire protection customer. The Utility filed a petition when it did not have an approved rate for a particular meter size, but chose to use the general service rates for private fire protection when it did not have approved private fire protection rates.

The Utility has billed the two private fire protection customers inappropriately. The customers were billed for a full BFC rather than one-twelfth and also for usage, which is not typical for private fire protection. Pursuant to Rule 25-30.350 (2), F.A.C., in the event of an overbilling, the utility shall refund the overcharge to the customer based on available records. The Utility provided records indicating how much the two private fire protection customers have been billed since service started being provided. To determine the appropriate refund, staff calculated the difference in Utility’s recorded revenues for the two private fire protection customers and staff’s corrected calculation of the appropriate private fire protection based on one-twelfth of the base facility charge for each meter size. As of the February 2024 billing, staff determined that the Villas of Wedgefield HOA should receive a refund in the amount of $3,174 plus interest and the School Board of Orange County should receive a refund in the amount of $213,386 plus interest. Pursuant to Rule 25-30.350(3), F.A.C., in the event of overbilling, the customer may elect to receive as a one-time disbursement, if the refund is in excess of $20, or as a credit to future billings. The Utility should provide a calculation for approval by staff which includes billing periods beyond February 2024 up to the implementation of the Commission-approved private fire protection rates.

Staff recommends that Pluris’ two private fire protection customers should be granted a refund. The Utility should be required to refund the difference between the total revenues collected and the appropriate revenues calculated based on one-twelfth of the BFC that is relative to the size of the line since the fire protection customers began receiving service. Staff should be given administrative authority to approve the refund amount based on the aforementioned calculation. The refund amount should be provided to staff for approval within 14 days of the Commission Order. The refunds should be made with interest in accordance with Rule 25-30.360(4), F.A.C. Pursuant to Rule 25-30.360(7), F.A.C., the refund should be made within 90 days of the Commission’s order. During the processing of the refund, monthly reports on the status of the refund should be made by the 20th of the following month.

Issue 22:

Should the temporary hydrant meter deposit requested by Pluris be approved?

Recommendation:

Yes. Pluris’ requested temporary hydrant meter deposit should be approved. Once the temporary meter service is terminated, staff recommends that the Utility credit the customer with the reasonable salvage value of the service facilities and materials pursuant to Rule 25-30.315(2), F.A.C. The approved temporary meter deposit should be effective for services rendered or 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 deposit, which covers the anticipated costs of installing and removing facilities and materials for temporary service, until authorized to change it by the Commission in a subsequent proceeding. (Bethea)

Staff Analysis:

In its application, Pluris requested to establish a temporary hydrant meter deposit. The requested deposit of $1,500 is consistent with Rules 25-30.315 and 25-30.345, F.A.C., which allows the Utility to charge an applicant a reasonable charge to defray the costs of installing and removing facilities and materials for temporary service. The Utility’s request for a temporary hydrant meter deposit charge was supported by documentation. The Utility’s requested deposit is shown below in Table 22-1. The deposit would be collected from commercial entities requesting a temporary meter for construction activities. The temporary meter is a 2-inch portable meter hooked to the fire hydrant, which is used for temporary water at the commercial work site. Based on the cost justification, staff believes the deposit is reasonable and should be approved. Once the temporary meter service is terminated, staff recommends that the Utility credit the customer with the reasonable salvage value of the service facilities and materials consistent with Rules 25-30.315(2), F.A.C.

Table 22-1

Utility’s Cost Justification For Temporary Hydrant Meter

Materials	Cost
2” Turbo Meter/Meter Flange Set	$951.25
NL Pressure Backflow/Brass Nipple	$442.39
Saddle Pipe Support	$102.36
Total	$1,496.00

Source: Utility’s Cost Justification.

Based on the above, the Utility’s requested temporary hydrant meter deposit should be approved. Once the temporary meter service is terminated, staff recommends that the Utility credit the customer with the reasonable salvage value of the service facilities and materials pursuant to Rule 25-30.315(2), F.A.C. The approved temporary meter deposit should be effective for service rendered on or after the stamped approval date on the tariff pursuant to Rule 25-30.475, F.A.C. The Utility should be required to collect the approved deposit, which covers the anticipated costs of installing and removing facilities and materials for temporary service, until authorized to change it by the Commission in a subsequent proceeding.

Issue 23:

Should Pluris’ existing service availability charges be revised, and if so, what are the appropriate charges?

Recommendation:

Yes. Pluris’ existing service availability charges should be revised. The Utility’s requested meter installation charge of $674 should be approved. The water system capacity charge of $640 should be reclassified as the main extension charge. The wastewater system capacity charge should be discontinued. There are no other service availability charges applicable. The Utility should file a revised tariff sheet and a proposed notice to reflect the Commission-approved meter installation and main extension charges. Pluris should provide notice to property owners who have requested service beginning 12 months prior to the establishment of this docket. The approved charge should be effective for connections made on or after the stamped approval date on the tariff sheet. The utility should provide proof of noticing within 10 days of rendering the approved notice. (Bethea)

Staff Analysis:

In its filing, the Utility only proposed to change its meter installation charge. However, the Commission may adjust service availability charges as it deems to be appropriate. Pluris’ existing service availability charges for water consist of a meter installation charge of $268 for the 5/8 inch x 3/4 inch meter size with all other meter sizes at actual cost and a system capacity charge of $640. For wastewater, the Utility’s existing service availability charges consist of a $2,250 system capacity charge.

A system capacity charge is a single service availability charge that includes the cost of both plant and lines. For a Utility that receives donated lines from a developer, an individual customer connecting to those lines should only be responsible for a service availability charge that reflects plant costs. Therefore, separate charges are typically developed to reflect the customer’s share of plant costs (plant capacity charges) and the cost of lines in lieu of donated lines (main extension charges).

Rule 25-30.580, F.A.C., establishes guidelines for designing service availability charges. Pursuant to the rule, the maximum amount of CIAC, net of amortization, should not exceed 75 percent of the total original cost, net of accumulated depreciation, of the Utility’s facilities and plant when the facilities and plant are at their designed capacity. The minimum amount of CIAC should not be less than the percentage of such facilities and plant that is represented by the water transmission and distribution system and sewage collection systems. The current contribution levels are 19.09 percent and 57.46 percent for water and wastewater, respectively. The percentage of the water transmission and distribution system to total plant results is a minimum contribution of 28.55 percent for the water system. For the wastewater system, the percentage of the wastewater collection system to plant results is a minimum contribution level of 30.32 percent. Below is the discussion in regard to the appropriate service availability charges.

Meter Installation Charge

A meter installation charge is designed to recover the cost of the meter and the installation. The Utility’s current meter installation charge is $268 for the 5/8 inch x 3/4 inch meter size. Based on the cost justification provided, staff believes it is appropriate to update the Utility’s existing meter installation charge.[40] Staff believes the requested meter installation charge of $674 for the 5/8 inch x 3/4 inch meter size is reasonable and all other meter sizes should continue at actual cost.

Main Extension Charge

Water

Staff’s recommended cost of the water distribution system is $4,063,347. The water distribution system has a design capacity of 1,911 ERCs, which results in a main extension charge of $2,126 per ERC ($4,063,347/1,911 ERCs). Currently, at a 19.09 percent contribution level, the water system is below its minimum contribution level of 28.55 percent. In order to bring the water system up to a minimum contribution level at least by build out, it would take a charge in excess of the calculated $2,126 main extension charge. The service territory is approximately 91 percent built out. Historically, customers have paid a $640 system capacity charge, which includes cost for both plant and lines. Staff does not believe it is appropriate to impose an exorbitant charge on the remaining nine percent of future customers in order to compensate for the below minimum contribution level. As a result, staff recommends the existing charge of $640 remain in place; however, it should be reclassified as the main extension charge.

Wastewater

Staff’s recommended cost of the collection system is $2,799,538. The wastewater collection system has a design capacity of 1,911 ERCs, which results in a main extension charge of $1,465 per ERC ($2,799,538/1,911 ERCs). Currently, at a 57.46 percent contribution level, the wastewater system is meeting its minimum contribution level of 30.32 percent. However, due to the past $2,250 system capacity charge, the rate of depreciation on plant, and the rate of amortization of CIAC, the wastewater system will become over contributed in three years and the over contribution will continue to escalate. As a result, staff recommends that no main extension charge by implemented and the system capacity charge be discontinued.

Conclusion

Based on the above, Pluris’ existing service availability charges should be revised. The Utility’s requested meter installation charge of $674 should be approved. The water system capacity charge of $640 should be reclassified as the main extension charge. The wastewater system capacity charge should be discontinued. There are no other service availability charges applicable. The Utility should file a revised tariff sheet and a proposed notice to reflect the Commission-approved meter installation and main extension charges. Pluris should provide notice to property owners who have requested service beginning 12 months prior to the establishment of this docket. The approved charge should be effective for connections made on or after the stamped approval date on the tariff sheet. The Utility should provide proof of noticing within 10 days of rendering the approved notice.

Issue 24:

Should any portion of the interim revenue increase granted be refunded?

Recommendation:

Yes. The appropriate refund amounts should be calculated by using the same data used to establish final rates, excluding rate case expense and other items not in effect during the interim period. The revised revenue requirements for the interim collection period should be compared to the amount of interim revenues granted. Based on these calculations, staff recommends interim refunds of 3.31 percent and 7.67 percent for the water and wastewater systems, respectively. The refunds should be made with interest in accordance with Rule 25-30.360(4), F.A.C. The Utility should be required to submit proper refund reports pursuant to Rule 25-30.360(7), F.A.C. The Utility should treat any unclaimed refunds as CIAC pursuant to Rule 25-30.360(8), F.A.C. Once the appropriate amounts of interim revenues are refunded and the refund amounts are verified by staff, the corporate undertaking should be released. (Thurmond)

Staff Analysis:

By Order No. PSC-2023-0387-PCO-WS, issued December 27, 2023, the Commission authorized the collection of interim water and wastewater rates, subject to refund, pursuant to Section 367.082, F.S. An interim revenue requirement of $2,040,748 and $1,301,113 was granted for the water and wastewater systems, respectively.

According to Section 367.082, F.S., any refund should be calculated to reduce the rate of return of the utility during the pendency of the proceeding to the same level within the range of the newly authorized rate of return. Adjustments made in the rate case test period that do not relate to the period interim rates are in effect should be removed.

In this rate case, the test period for establishment of interim and final rates is the 12-month period ended December 31, 2022. Pluris’ approved interim rates did not include any provisions for pro forma plant or projected operating expenses. The interim increase was designed to allow recovery at the lower limit of the last authorized range of return on equity.

To establish the proper refund amount, staff calculated a revised interim revenue requirement utilizing the same data used to establish final rates. Pro forma plant and rate case expense were excluded because these items are prospective in nature and did not occur during the interim collection period. Staff’s revised interim revenue requirement is $1,973,162 and $1,201,295, for the water and wastewater systems, respectively. These revised amounts reflect a difference of $67,586 ($2,040,748 - $1,973,162) for water and $99,818 ($1,301,113 - $1,201,295) for wastewater.

Based on the above, staff recommends refunds of 3.31 percent ($67,586 / $2,040,748) and 7.67 percent ($99,818 / $1,301,113) for the water and wastewater systems, respectively. The refunds should be made with interest in accordance with Rule 25-30.360(4), F.A.C. The Utility should be required to submit proper refund reports pursuant to Rule 25-30.360(7), F.A.C. The Utility should treat any unclaimed refunds as CIAC pursuant to Rule 25-30.360(8), F.A.C. Once the appropriate amounts of interim revenues are refunded and the refund amounts are verified by staff, the corporate undertaking should be released.

Issue 25:

What is the appropriate amount by which rates should be reduced to reflect the removal of amortized rate case expense for water and wastewater, as required by Section 367.081(8), F.S.?

Recommendation:

The water and wastewater rates should be reduced, as shown in Schedule Nos. 4-A and 4-B, respectively, to remove the annual amortization of rate case expense grossed-up for RAFs. The decrease in rates should become effective immediately following the expiration of the rate case expense recovery period. Pluris should be required to file revised tariffs and a proposed customer notice setting forth the lower rates and the reason for the reduction no later than one month prior to the actual date of the required rate reduction. If the Utility files this reduction in conjunction with a price index or pass-through rate adjustment, separate data should be filed for the price index and/or pass through increase or decrease and the reduction in the rates due to the amortized rate case expense. (Bethea, Veaughn)

Staff Analysis:

Issue 26:

Should the Utility be required to notify, within 90 days of an effective order finalizing this docket, that it has adjusted its books for all the applicable National Association of Regulatory Utility Commissioners (NARUC) Uniform System of Accounts (USOA) associated with the Commission approved adjustments?

Recommendation:

Yes. The Utility should be required to notify the Commission, in writing, that it has adjusted its books in accordance with the Commission’s decision. Pluris should submit a letter within 90 days of the final order in this docket, confirming that the adjustments to all the applicable NARUC USOA accounts have been made to the Utility’s books and records. In the event the Utility needs additional time to complete the adjustments, notice should be provided within seven days prior to deadline. Upon providing good cause, staff should be given administrative authority to grant an extension of up to 60 days. (Thurmond)

Staff Analysis:

The Utility should be required to notify the Commission, in writing, that it has adjusted its books in accordance with the Commission’s decision. Pluris should submit a letter within 90 days of the final order in this docket, confirming that the adjustments to all the applicable NARUC USOA accounts have been made to the Utility’s books and records. In the event the Utility needs additional time to complete the adjustments, notice should be provided within seven days prior to deadline. Upon providing good cause, staff should be given administrative authority to grant an extension of up to 60 days.

Issue 27:

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, the Utility has notified staff that the adjustments for all the applicable NARUC USOA primary accounts have been made, and the interim refund report has been filed. Once these actions are complete, this docket should be closed administratively. (Dose)

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, the Utility has notified staff that the adjustments for all the applicable NARUC USOA primary accounts have been made, and the interim refund report has been filed. Once these actions are complete, this docket should be closed administratively.

[1]Order No. PSC-2018-0311-PAA-WS, issued June 13, 2018, in Docket No. 20170166-WS, In re: Application for limited proceeding rate increase in Orange County by Pluris Wedgefield, Inc.

[2]Order No. PSC-2013-0187-PAA-WS, issued May 2, 2013, in Docket No. 20120152-WS, In re: Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, Inc.

[4]Order No. PSC-2023-0340-PCO-WS, issued November 15, 2023, in Docket No. 20230083-WS, In re: Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, LLC.

[5]Order No. PSC-2023-0387-PCO-WS, issued December 27, 2023, in Docket No. 20230083-WS, In re: Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, LLC.

[8] Order No. PSC-13-0187-PAA-WS, issued May 2, 2013, in Docket No. 120152-WS, In re: Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, Inc.

[9]See Document No. 00740-2024, filed February 16, 2024.

[10]See Document No. 00790-2024, filed February 20, 2024.

[11]Order No. PSC-2013-0187-PAA-WS, issued May 2, 2013, in Docket No. 120152-WS, In re: Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, Inc.

[13]See Order No. PSC-2016-0525-PAA-WS issued November 21, 2016 in Docket No. 20160030-WS, In re: Application for increase in water rates in Lee County and wastewater rates in Pasco County by Ni. Florida, LLC. and Order No. PSC-2015-0208-PAA-WS issued May 26, 2015 in Docket No. 20140135-WS, In re: Application for increase in water/wastewater rates in Pasco County by Labrador Utilities, Inc.

[14]See Document No. 00684-2024, filed February 12, 2024.

[15]See Document No. 00684-2024, filed February 12, 2024.

[16]See Document No. 00739-2024, filed February 16, 2024.

[17]See Document No. 00739-2024, filed February 16, 2024.

[18]Order No. PSC-2001-0326-FOF-SU, issued February 6, 2001, in Docket No. 19991643-SU, In re: Application for increase in wastewater rates in Seven Springs System in Pasco County by Aloha Utilities, Inc.; Order No. PSC-2000-1416-PCO-GU, issued August 3, 2000, in Docket No. 20000108-GU, In re: Request for rate increase by Florida Division of Chesapeake Utilities Corporation.

[19]See Document No. 00661-2024, filed February 9, 2024.

[20]Order No. PSC-2023-0189-PAA-WS, issued June 28, 2023, in Docket No. 20230006-WS, In re: Water and wastewater industry annual reestablishment of authorized range of return on common equity for water and wastewater utilities pursuant to Section 367.081(4)(f), F.S.

[21]Order Nos. PSC-2000-1165-PAA-WS, issued June 27, 2000, in Docket No. 19990243-WS, In re: Application for limited proceeding increase and restructuring of water rates by Sun Communities Finance Limited Partnership in Lake County, and overearnings investigation; PSC-2002-1449-PAA-WS, issued October 21, 2002, in Docket No. 20011451-WS, In re: Investigation of water and wastewater rates for possible overearnings by Plantation Bay Utility Co. in Volusia County; PSC-2014-1095-PAA-WS, issued May 1, 2014, in Docket No. 20130211-WS, In re: Application for staff-assisted rate case in Polk County by S.V. Utilities, Ltd.; PSC-2013-0646-PAA-WU, issued December 5, 2013, in Docket No. 20130025-WU, In re: Application for increase in water rates in Highlands County by Placid Lakes Utilities, Inc.; and PSC-2011-0366-PAA-WU, issued August 31, 2011, in Docket No. 20100126-WU, In re: Application for increase in water rates in Marion County by C.F.A.T. H2O, Inc.

[22]Kohl et al., v. Pluris Wedgefield, LLC, et al., No. 2020-CA-004390 (Fla. 9th Cir. Ct. 2023)

[23]See Document No. 01110-2024, filed on March 11, 2024.

[24] Order No. PSC-2018-0311-PAA-WS, issued June 13, 2018, in Docket No. 20170166-WS, In re: Application for limited proceeding rate increase in Orange County by Pluris Wedgefield, Inc.

[25]GTE v. Deason, 642 So. 2d 545, 548 (Fla. 1994).

[26]Order No. PSC-1999-0513-FOF-WS, issued March 12, 1999, in Docket No. 19980214-WS, In re: Application for rate increase in Duval, St. Johns and Nassau Counties by United Water Florida Inc.

[27]Order Nos. PSC-2013-0187-PAA-WS, issued May 2, 2013, in Docket No. 120152-WS, In re: Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, Inc.; PSC-05-0624-PAA-WS, issued June 7, 2005, in Docket No. 040450-WS, In re: Application for rate increase in Martin County by Indiantown Company, Inc.; and PSC-01-0326-FOF-SU, issued February 6, 2001, in Docket No. 991643-SU, In re: Application for increase in wastewater rates in Seven Springs System in Pasco County by Aloha Utilities, Inc.

[28]Order Nos. PSC-2013-0187-PAA-WS; PSC-2020-0167-PAA-WU, issued May, 2022, in Docket No. 20190118-WU In re: Application for increase in water rates in Gulf County by Lighthouse Utilities Company, Inc. and PSC-16-0552-PAA-WS, issued November, 21 2016, in Docket No. 20160030-WS, In re: Application for increase in water rates in Lee County and wastewater rates in Pasco County by Ni Florida, LLC.

[29]Order No. PSC-2010-0606-PAA-WS, issued October 4, 2010, in Docket No. 20090447-WS, In re: Application for staff-assisted rate case in Seminole County by CWS Communities d/b/a Palm Valley Utilities.

[30]https://www.irs.gov/businesses/partnerships.

[31]Order Nos. PSC-2004-1270-PAA-WS, issued December 22, 2004, in Docket No. 20041141-WS, In re: Application for certificates to provide water and wastewater service in Lake County by Hidden Valley SPE LLC d/b/a Orange Lake; PSC-2007-0068-PAA-WS, issued August 20, 2007, in Docket No. 20060747-WS, In re: Application for staff-assisted rate case in Highlands County by Mink Associated II, LLC d/b/a Crystal Lake Club Utilities; and PSC-2008-0262-PAA-WS, issued April 28, 2008, in Docket No. 20070414-WS, In re: Application for staff-assisted rate case in Polk County by Hidden Cove, Ltd.

[32] Average person per household was obtained from website: www.census.gov/quickfacts/Orangecountyflorida.

[33]Order No. PSC-08-0827-PAA-WS, issued December 22, 2008, in Docket No. 070694-WS, In re: Application for increase in water and wastewater rates in Orange County by Wedgefield Utilities, Inc.

[34]Order No. PSC-10-0735-TRF-WS, issued December 20, 2010, in Docket No. 100381-WS, In re: Request for approval of tariff amendment to include a late payment fee of $5.25 and establish miscellaneous service charges associated with connection, reconnection, and premises visits for its wastewater operation in Orange County by Pluris Wedgefield, Inc.

[35]Order No. PSC-2021-0201-FOF-WS, issued June 4, 2021, in Docket No. 20200240-WS, In re: Proposed amendment of Rule 25-30.460, F.A.C., Application for Miscellaneous Service Charges.

[36] Order PSC-13-0177-PAA-WU, issued April 29, 2013, in Docket No. 20130052-WU, In re: Application for grandfather certificate to operate water utility in Charlotte County by Little Gasparilla Water Utility, Inc.

[37]See Document No. 06615-2023, filed December 15, 2023.

[38]See Document No. 00190-2024, filed January 16, 2024.

[39]Order No. PSC-2019-0358-TRF-WS, issued August 26, 2019, in Docket No. 20190133-WS, In Re: Application for approval of an 8" general service meter rate by Pluris Wedgefield, LLC.

[40] Document No. 01090-2024, filed March 8, 2024.

State of Florida		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-
DATE:	March 21, 2024
TO:	Office of Commission Clerk (Teitzman)
FROM:	Division of Accounting and Finance (Thurmond, Norris, Przygocki, Sewards, Veaughn) Division of Economics (Bethea, Bruce) Division of Engineering (Davis, Ellis, King) Office of the General Counsel (Dose, Crawford)
RE:	Docket No. 20230083-WS – Application for increase in water and wastewater rates in Orange County by Pluris Wedgefield, LLC.
AGENDA:	04/02/24 – Regular Agenda – Proposed Agency Action All Issues, Except for Issues 24, 25, and 26 – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			La Rosa
CRITICAL DATES:			04/02/24 (5-Month Effective Date Waived)
SPECIAL INSTRUCTIONS:			None

Pluris Wedgefield, LLC.					Schedule No. 1-A
Schedule of Water Rate Base				Docket No. 20230083-WS
Test Year Ended 12/31/22

		Test Year	Utility	Adjusted	Staff	Staff
	Description	Per	Adjust-	Test Year	Adjust-	Adjusted
		Utility	ments	Per Utility	ments	Test Year


1	Plant in Service	$11,966,333	$2,228,429	$14,194,762	$37,064	$14,231,826

2	Land and Land Rights	1,443	0	1,443	0	1,443

3	Non-used and Useful Components	0	0	0	0	0

4	Accumulated Depreciation	(5,893,414)	228,181	(5,665,233)	38,930	(5,626,303)

5	CIAC	(3,001,852)	0	(3,001,852)	(8,677)	(3,010,529)

6	Amortization of CIAC	1,391,204	0	1,391,204	(22,924)	1,368,280

7	Working Capital Allowance	(3,039,636)	3,427,052	389,416	19,842	409,258

8	Rate Base	$1,426,078	$5,883,662	$7,309,740	$64,235	$7,373,975

Pluris Wedgefield, LLC.					Schedule No. 1-B
Schedule of Wastewater Rate Base				Docket No. 20230083-WS
Test Year Ended 12/31/22

		Test Year	Utility	Adjusted	Staff	Staff
	Description	Per	Adjust-	Test Year	Adjust-	Adjusted
		Utility	ments	Per Utility	ments	Test Year


1	Plant in Service	$9,152,109	$0	$9,152,109	($15,765)	$9,136,344

2	Land and Land Rights	97,402	0	97,402	0	97,402

3	Non-used and Useful Components	0	(8,648)	(8,648)	(97)	(8,745)

4	Accumulated Depreciation	(7,119,861)	0	(7,119,861)	68,782	(7,051,079)

5	CIAC	(4,344,556)	0	(4,344,556)	0	(4,344,556)

6	Amortization of CIAC	3,154,198	0	3,154,198	(63,138)	3,091,060

7	Working Capital Allowance	(3,018,344)	3,405,286	386,942	19,717	406,659

8	Rate Base	($2,079,052)	$3,396,638	$1,317,586	$9,499	$1,327,085

Pluris Wedgefield, LLC.							Schedule No. 2
Capital Structure 13-Mo. Average							Docket No. 20230083-WS
Test Year Ended 12/31/22
			Specific	Subtotal	Pro-rata	Capital
		Total	Adjust-	Adjusted	Adjust-	Reconciled		Cost	Weighted
	Description	Capital	ments	Capital	ments	to Rate Base	Ratio	Rate	Cost
Per Utility
1	Debt	$1,911,528	$0	$1,911,528	$376,318	$2,287,846	26.52%	5.70%	1.51%
2	Common Equity	(1,003,979)	6,281,931	5,277,952	1,038,361	6,316,313	73.21%	9.00%	6.59%
3	Customer Deposits	23,168	0	23,168	0	23,168	0.27%	6.00%	0.02%
	Total Capital	$930,717	$6,281,931	$7,212,648	$1,414,679	$8,627,327	100.00%		8.12%

		Adjusted	Pro Forma	Subtotal	Pro-rata	Capital
		Test Year	Adjust-	Adjusted	Adjust-	Reconciled		Cost	Weighted
	Description	Total Capital	ments	Capital	ments	to Rate Base	Ratio	Rate	Cost
Per Staff
4	Debt	$1,911,528	$0	$1,911,528	($342,345)	$1,569,183	18.03%	5.70%	1.03%
5	Common Equity	6,144,387	2,515,214	8,659,601	(1,550,892)	7,108,709	81.70%	8.79%	7.18%
6	Customer Deposits	23,168	0	23,168	0	23,168	0.27%	2.00%	0.01%
	Total Capital	$8,079,083	$2,515,214	$10,594,297	($1,893,237)	$8,701,060	100.00%		8.22%

							LOW	HIGH
					RETURN ON EQUITY		7.79%	9.79%
				OVERALL RATE OF RETURN			7.40%	9.03%

Pluris Wedgefield, LLC.								Schedule No. 3-A
Statement of Water Operations						Docket No. 20230083-WS
Test Year Ended 12/31/22

		Test Year	Utility	Adjusted	Staff	Staff
	Description	Per	Adjust-	Test Year	Adjust-	Adjusted	Revenue		Revenue
		Utility	ments	Per Utility	ments	Test Year	Increase		Requirement


1	Operating Revenues:	$1,627,619	$1,085,570	$2,713,189	($1,113,058)	$1,600,131	$652,164		$2,252,295
							40.76%
	Operating Expenses
2	Operation & Maintenance	$1,749,162	($404,919)	$1,344,243	($318,387)	$1,025,856	$0		$1,025,856

3	Depreciation	363,029	58,604	421,633	359	421,992	0		421,992

4	Amortization	0	0	0	273	273	0		273

5	Taxes Other Than Income	141,262	48,961	190,223	(21,266)	168,957	29,347		198,304

6	Income Taxes	0	163,539	163,539	(163,539)	0	0		0

7	Total Operating Expense	2,253,453	(133,815)	2,119,638	(502,560)	1,617,078	29,347		1,646,425

8	Operating Income	($625,834)	$1,219,385	$593,551	($610,498)	($16,947)	$622,817		$605,870

9	Rate Base	$1,426,078		$7,309,740		$7,373,975			$7,373,975

10	Rate of Return	(43.88%)		8.12%		(0.23%)			8.22%

Pluris Wedgefield, LLC.			Schedule No. 1-C
Adjustments to Rate Base		Docket No. 20230083-WS
Test Year Ended 12/31/22

	Explanation		Water	Wastewater


	Plant In Service
1	Staff-Adjusted Audit Finding No. 1		$36,796	($15,765)
2	To reflect the reclassification of a meter installation charge.		268	0
	Total		$37,064	($15,765)

	Accumulated Depreciation
1	Staff-Adjusted Audit Finding No. 2		$39,740	$68,782
2	To reflect the appropriate pro-forma accumulated depreciation.		(810)	0
	Total		$38,930	$68,782

	CIAC
1	Audit Finding No. 3		($8,409)	$0
2	To reflect the reclassification of a meter installation charge.		(268)	0
	Total		($8,677)	$0

	Accumulated Amortization of CIAC
	Audit Finding No. 4		($22,924)	($63,138)

	Working Capital
	To reflect the unamortized balance of non-recurring expenses.		$19,842	$19,717

Pluris Wedgefield, LLC.								Schedule No. 3-B
Statement of Wastewater Operations						Docket No. 20230083-WS
Test Year Ended 12/31/22

		Test Year	Utility	Adjusted	Staff	Staff
	Description	Per	Adjust-	Test Year	Adjust-	Adjusted	Revenue		Revenue
		Utility	ments	Per Utility	ments	Test Year	Increase		Requirement


1	Operating Revenues:	$1,051,949	$556,115	$1,608,064	($550,338)	$1,057,726	$155,864		$1,213,590
							14.74%
	Operating Expenses
2	Operation & Maintenance	$924,958	$250,836	$1,175,794	($332,260)	$843,533	$0		$843,533

3	Depreciation	129,820	(845)	128,975	(14,575)	114,400	0		114,400

4	Amortization	0	0	0	285	285	0		285

5	Taxes Other Than Income	141,804	25,025	166,829	(27,508)	139,321	7,014		146,335

6	Income Taxes	0	29,478	29,478	(29,478)	0	0		0

7	Total Operating Expense	1,196,582	304,494	1,501,076	(403,538)	1,097,538	7,014		1,104,552

8	Operating Income	($144,633)	$251,621	$106,988	($146,800)	($39,812)	$148,850		$109,038

9	Rate Base	($2,079,052)		$1,317,586		$1,327,085			$1,327,085

10	Rate of Return	6.96%		8.12%		(3.00%)			8.22%

Pluris Wedgefield, LLC.			Schedule No. 3-C
Adjustments to Net Operating Income		Docket No. 20230083-WS
Test Year Ended 12/31/22

	Explanation			Water	Wastewater


	Operating Revenues
1	To remove the requested final revenue increase.			($1,085,570)	($556,115)
2	To reflect the appropriate amount of test year revenues.			(27,488)	5,777
	Total			($1,113,058)	($550,338)

	Operation and Maintenance Expense
1	Audit Finding No. 8			($4,964)	($6,059)
2	To reflect the appropriate amount of test year salaries.			(27,588)	(27,412)
3	To reflect the appropriate amount of pensions and benefits.			(2,332)	(2,317)
4	To reflect the appropriate amount of management fees.			(264,427)	(265,903)
5	To reflect the appropriate amount of rate case expense.			(3,681)	(3,659)
6	To reflect non-recurring expenses.			(12,978)	(26,580)
7	To reflect a fuel for power production normalization adjustment.			(2,417)	(331)
	Total			($318,387)	($332,260)

	Depreciation Expense
1	Staff-Adjusted Audit Finding No 2			$6,218	($14,964)
2	To reflect the appropriate pro forma depreciation expense.			(5,859)	0
3	To reflect the net depreciation on non-U&U adjustment.			0	389
	Total			$359	($14,575)

	Amortization
	Audit Finding No. 4			$273	$285

	Taxes Other Than Income
1	RAFs on revenue adjustment above.			($50,088)	($24,765)
2	To remove the property taxes on non-U&U adjustment.			0	(646)
3	To reflect the fallout of salary adjustment.			(2,110)	(2,097)
4	To reflect the pro forma property tax.			30,932	0
	Total			($21,266)	($27,508)

	Income Taxes
	To remove the income tax provision.			($163,539)	($29,478)