State of Florida

pscSEAL

 

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:

July 25, 2024

TO:

Office of Commission Clerk (Teitzman)

FROM:

Division of Engineering (Ramirez-Abundez, Ramos, Watts)

Division of Accounting and Finance (Norris, Sewards)

Division of Economics (Bethea, Bruce)

Office of the General Counsel (Sandy, Crawford)

RE:

Docket No. 20240023-WS – Application for certificates to provide water and wastewater service and approval of initial rates and charges in Lake County, by North Lake County Water & Sewer Company LLC.

AGENDA:

08/06/24Regular Agenda – Proposed Agency Action, Except for Issue 1 – Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Graham

CRITICAL DATES:

08/06/24 (Statutory deadline for original certificate pursuant to Section 367.031, Florida Statutes, waived by applicant until 08/06/24)

SPECIAL INSTRUCTIONS:

None

 

 Case Background

On January 23, 2024, North Lake County Water & Sewer Company LLC (North Lake or Utility) filed its application for original water and wastewater certificates in Lake County.[1] The area is in the St. John River Water Management District (SJWMD) and is in a water use caution area. The Utility anticipates providing water and wastewater services to approximately 535 residential and three commercial customers. The Utility intends to begin serving customers in the first quarter of 2025.

The Utility’s initial application was found to be deficient and staff issued a deficiency letter on February 22, 2024.[2] North Lake filed a response to the deficiencies on March 04, 2024.[3] The application was still found to be deficient, and staff issued a second deficiency letter dated March 14, 2024.[4] North Lake filed a response to the second deficiency letter on March 18, 2024.[5] However, the application remained deficient, resulting in a third deficiency letter from staff on March 26, 2024.[6] North Lake cured the deficiencies on April 17, 2024.

Pursuant to Section 367.031, Florida Statutes (F.S.), the Florida Public Service Commission (Commission) shall grant or deny an application for a certificate of authorization within 90 days of the official filing date of the completed application. The application was deemed complete on April 17, 2024, which is considered the official filing date. North Lake waived the 90-day statutory deadline through August 06, 2024.[7] In its application, the Utility proposed miscellaneous service charges; however, on July 23, 2024, the Utility withdrew its request.

This recommendation addresses the application for original water and wastewater certificates and the appropriate rates and charges for the Utility. The Commission has jurisdiction pursuant to Sections 367.031 and 367.045, F.S.


Discussion of Issues

Issue 1: 

 Should the application for water and wastewater certificates by North Lake be approved?

Recommendation: 

 Yes. North Lake should be granted Certificate Nos. 683-W and 583-S to serve the territory described in Attachment A, effective the date of the Commission’s vote. The resultant order should serve as North Lake’s water and wastewater certificates and it should be retained by the Utility. (Ramirez-Abundez, Sewards)

Staff Analysis: 

 On January 23, 2024, North Lake filed an application for original water and wastewater certificates in Lake County. Upon review, staff determined the original filing was deficient and sent three deficiency letters, as well as three data requests to the Utility seeking additional information. North Lake corrected the deficiencies on April 17, 2024, which is considered the official filing date for the application. This Utility’s application is in compliance with the governing statutes, Section 367.031 and Section 367.045, F.S., and other pertinent statutes and administrative rules concerning an application for original certificates.

Pursuant to Section 367.045(1)(b), F.S., the Utility provided a letter from GPK Harris Lake LLC[8], the developer of the community, requesting water and wastewater services from North Lake. In a separate letter, the Utility also stated that no other water or wastewater service providers exist within geographical proximity to the area.[9] This Utility’s application is in compliance with the governing statutes, Section 367.031 and Section 367.045, F.S., and other pertinent statutes and administrative rules concerning an application for original certificates.

Notice

On April 08, 2024, North Lake filed proof of compliance with the noticing provisions set forth in Rule 25-30.030, Florida Administrative Code (F.A.C.). The notice of application for an initial certificate of authorization for water and wastewater certificates was provided to property owners on April 5, 2024, mailed to the entities required on April 08, 2024, and published as required on April 11, 2024. No objections to the notice of application have been received and the time for filing has expired.

Land Ownership and Service Territory

North Lake provided adequate service territory and system maps and a territory description as required by Rule 25-30.033, F.A.C. The legal description of the service territory is appended to this recommendation as Attachment A. The application contains two recorded warranty deeds, executed June 24, 2021, and May 15, 2023, as evidence that the Utility has access to the land upon which the water and wastewater treatment facilities are located pursuant to Rule 25-30.033 (1)(m), F.A.C.

Financial and Technical Ability

Rule 25-30.033(1)(h), F.A.C., requires a statement showing the financial ability of the applicant to provide service, a detailed financial statement, and a list of all entities upon which the applicant is relying to provide funding. Regarding financial ability, North Lake’s ownership is comprised of three entities which also comprise the party developing the subdivision (collectively known as the Developer) in the proposed service area. The Utility stated that the Developer has provided the necessary start-up funding as well as funds sufficient to cover operational shortfalls during the Utility’s initial year of operation. The Commission has traditionally allowed reliance on the parent company's financial ability.[10] The Commission's reasoning has been the logical vested interest of a parent company in the financial stability of its related parties. The application contains North Lake’s recent financial statements and the Utility provided the personal financial statements of Mr. Sen Zhang, a member of the Developer group.[11] Staff has reviewed North Lake’s financial statements as well as the Developer’s financial statements and believes the Utility has shown adequate and stable funding reserves. Therefore, staff recommends that North Lake has demonstrated that it will have access to adequate financial resources to operate the Utility.

 

Rule 25-30.034(1)(i), F.A.C., requires the applicant to demonstrate the technical abilities to provide service. Within its application, the Utility stated that it has the technical ability to provide service. The Utility has retained water and wastewater engineers from Wicks Engineering to design the water and wastewater systems. North Lake further stated that for operations, the Utility retained General Utilities Corporation, along with RCM Utilities, LLC for meter reading and billing. The Utility also retained the law firm of Dean Mead to provide legal regulatory advice to the Utility.

Based on the above, staff recommends that North Lake has demonstrated the financial and technical ability to provide service to the proposed service territory.

Conclusion

Staff recommends that it is in the public interest to grant North Lake Certificate Nos. 683-W and 583-S to serve the territory described in Attachment A, effective the date of the Commission’s vote. The resultant order should serve as North Lake’s water and wastewater certificates and it should be retained by the Utility.


Issue 2: 

 What are the appropriate water and wastewater rates and return on investment for North Lake?

Recommendation: 

 Staff’s recommended water and wastewater rates, shown on Schedule Nos. 4-A and 4-B, are reasonable and should be approved. The overall cost of capital should be set at 8.42 percent. A return on equity (ROE) of 8.66 percent with a range of plus or minus 100 basis points should also be approved. The approved rates should be effective for services rendered as of the stamped approval date on the tariff sheets pursuant to Rule 25-30.475, F.A.C. The Utility should be required to charge the approved rates until authorized to change them by the Commission in a subsequent proceeding. (Sewards, Bethea)

Staff Analysis: 

 

 

Projected Rate Base

Consistent with Commission practice in applications for original certificates, rate base is identified only as a tool to aid in setting initial rates and is not intended to formally establish rate base. Based on North Lake’s growth projections, the Utility anticipates operating at 80 percent of its design capacity in 2029. The Utility’s proposed water and wastewater rate base calculations, as well as staff adjustments, are described below.

 

North Lake proposed utility plant in service balances (UPIS) of $6,597,287 for water and $6,770,776 for wastewater. The Utility’s initial filing did not include meters in the UPIS balance for water as they are being contributed by the developer. Despite being contributed, it is still appropriate to reflect the assets just as the Utility reflected all other contributed assets. In its response to staff’s third data request, the Utility provided its calculation for the contributed meters.[12] Based on the addition of meters, water UPIS should be increased by $356,000, resulting in a balance of $6,953,287. Staff does not have any adjustments to wastewater. As such, staff recommends UPIS balances of $6,953,287 for water and $6,770,776 for wastewater.

 

The Utility proposed land and land rights balances of $425,000 for both water and wastewater. Staff has no adjustments to the Utility’s proposed balances. As such, staff recommends land and land rights balances of $425,000 for both water and wastewater.

 

North Lake proposed an accumulated depreciation balance of $874,656 for water and $1,056,162 for wastewater. Based on the recommended plant balances, staff recalculated accumulated depreciation using the depreciation rates established by Rule 25-30.140, F.A.C. As a result, accumulated depreciation should be increased by $44,353 for water and decreased by $4,118 for wastewater. As such, staff recommends accumulated depreciation balances of $919,009 for water and $1,052,044 for wastewater.

 

In its filing, the Utility proposed contributions in aid of construction (CIAC) balances of $3,431,203 for water and $4,127,925 for wastewater. CIAC balance for water should be increased by $356,000 to reflect the meters discussed above. Additionally the Utility’s work papers supporting the Utility’s filing indicated that $143,750 for lift stations should be reflected in wastewater CIAC, but was not included in the Utility’s balance. In response to staff’s second data request, North Lake stated that lift stations are contributed and should be included in CIAC.[13] As such, staff recommends an adjustment to increase the wastewater CIAC balance by $143,750 to account for the lift stations. Based on the above, staff recommends CIAC balances of $3,787,203 for water and $4,271,675 for wastewater.

 

North Lake proposed accumulated amortization of CIAC balances of $343,815 for water and $466,762 for wastewater. Based on the recommended CIAC balances, staff recalculated accumulated amortization of CIAC using the correct accounts and deprecation rates. As a result, staff recommends that accumulated amortization of CIAC be increased by $44,100 for water and $28,076 for wastewater. As such, staff recommends accumulated amortization of CIAC balances of $387,915 for water and $494,838 for wastewater.

 

North Lake proposed a working capital allowance of $7,368 for water and $7,368 for wastewater based on one-eighth of the estimated operation and maintenance (O&M) expenses for each system. The Commission has previously allowed this methodology in original certificate cases as the O&M expenses are estimated.[14] Based on the adjustments discussed in the O&M expenses section below, staff recommends a reduction of $908 to both water wastewater. As a result, staff recommends a working capital allowance of $6,460 for water and $6,460 for wastewater.

 

In total, the Utility proposed a rate base of $3,067,611 for water and $2,485,819 for wastewater. Based on the adjustments discussed above, staff recommends that the rate base be decreased by $1,161 for water and $112,465 for wastewater. As such, staff recommends an adjusted rate base of $3,066,450 for water and $2,373,355 for wastewater be approved. Rate base calculations for the water and wastewater systems are shown on Schedule Nos. 1-A and 1-B, respectively. Staff’s adjustments are shown on Schedule No. 1-C.

 

Cost of Capital

North Lake proposed an ROE of 8.54 percent, based on the leverage formula in effect at the time of filing.[15] However, it has been Commission practice to use the leverage formula currently in effect to determine a Utility’s ROE.[16] As such, staff recommends the Utility’s ROE be based on the current leverage formula in effect.[17] Using the current leverage formula, staff recommends an ROE of 8.66 percent, with a range of plus or minus 100 basis points, as shown on Schedule No. 2. As such, staff recommends an ROE of 8.66 percent and an overall cost of capital of 8.42 percent.

 

Net Operating Income

The Utility projected net operating income (NOI) for the water and wastewater systems of $252,465 and $204,582, respectively. Based on the adjustments above, staff calculated an NOI of $258,230 for water and $199,863 for wastewater. The calculated NOI for the water and wastewater systems are shown in Schedule Nos. 3-A and 3-B, respectively.

O&M Expenses

North Lake proposed total O&M expenses of $58,947 for water and $58,947 for wastewater.  The Utility calculated contractual services-billing expense of $36,318 for both water and wastewater based on equivalent residential connections (ERCs) at 100 percent buildout. Staff has recalculated the expense based on ERCs at 80 percent buildout. As such, staff recommends decreasing expense by $7,264 for water and wastewater. Based on this adjustment, staff recommends an O&M expense of $51,683 ($58,947 - $7,264) for water and $51,683 ($58,947 - $7,264) for wastewater. 

Net Depreciation Expense

The Utility reflected depreciation expense, net of CIAC amortization, of $107,104 for water and $111,490 for wastewater. Staff does not have any adjustments to water depreciation expense. Based on staff’s adjustments to wastewater rate base, a corresponding adjustment should be made to decrease net depreciation expense by $7,210 for wastewater. As such, staff recommends a net depreciation expense of $107,104 for water and $104,280 ($111,490 - $7,264) for wastewater.

 

Amortization Expense

North Lake reflected amortization expense balances of $255 for water and $255 for wastewater to reflect amortization of organization costs. Staff does not have any adjustments. As such, staff recommends an amortization expense of $255 for both water and wastewater.

 

Taxes Other than Income

In its filing, North Lake included taxes other than income (TOTI) expense of $68,372 for water and $52,497 for wastewater. North Lake’s calculation of proposed property tax expense for each system was based on the Lake County millage rate from 2023. Staff recalculated the property tax expense for each system using the most recent millage rate and recommends an adjustment be made to increase property tax by $7,776 for water and $2,805 for wastewater. As such, staff recommends a total TOTI expense of $76,444 for water and $54,530 for wastewater.

 

Revenue Requirement

The Utility’s projected revenues include O&M expenses, net depreciation expenses, taxes other than income, as well as a return on investment. As a limited liability company, staff notes that North Lake has no income tax expense. The Utility proposed revenue requirements for water and wastewater of $487,143 and $427,771, respectively. Staff recommends adjusted revenue requirements of $493,716 for water and $410,611 for wastewater to be used to set initial rates for service. The calculation of North Lake’s projected water and wastewater revenue requirements are shown on Schedule Nos. 3-A and 3-B, respectively. Staff’s adjustments are shown on Schedule 3-C.

 

Rates and Rate Structure

North Lake’s proposed rates are in accordance with Rule 25-30.033(2), F.A.C., which requires that a base facility charge (BFC) and usage rate structure, as defined in Rule 25-30.437(6), F.A.C., be utilized for metered service. The Utility’s proposed rates were designed to generate the Utility’s requested revenue requirements of $487,143 for its water system and $427,771 for its wastewater system.

 

Staff’s recommended water rates on Schedule No. 4-A reflect staff’s recommended revenue requirement of $493,716 for the water system less projected miscellaneous revenues of $3,375. The Utility projects an average residential consumption of approximately 9,125 gallons per month. The Utility proposed a residential rate structure consisting of a BFC and two-tier inclining blocks with rate blocks of 1) 0-7,000 gallons and 2) all usage in excess of 7,000 gallons per month. The Utility’s proposed rate structure for the general service water customers consists of a BFC and uniform gallonage charge rate structure. The Utility proposed water rates to recover 50 percent of the water revenues through the BFC. It is Commission practice to recover no more than 40 percent of water revenues through the BFC, with the exception of a seasonal customer base. In this case, North Lake’s customer base will be non-seasonal. However, in response to staff’s second data request, the Utility indicated that it had no objection to a different allocation of the revenues through the BFC. Therefore, staff recommends that the water rates recover 40 percent of the water revenues through the BFC. Staff’s recommended rate structure is consistent and reasonable with the Commission’s methodology in determining the water rate structure.

 

Staff’s recommended wastewater rates on Schedule No. 4-B reflect staff’s recommended revenue requirement of $410,611 for the wastewater system less projected miscellaneous revenues of $3,375. The Utility’s proposed wastewater rate structure consists of a BFC and uniform gallonage charge rate structure for its residential and general service customers. The residential wastewater rate includes a gallonage cap of 10,000 gallons. The Utility proposed recovering 50 percent of the revenues through the BFC. Staff believes the Utility’s proposed wastewater rate structure is reasonable and consistent with the Commission’s methodology in determining wastewater rate structures and rates.

 

Based on the above, staff’s recommended water and wastewater rates, shown on Schedule Nos. 4-A and 4-B, are reasonable and should be approved. The approved rates should be effective for services rendered as of the stamped approval date on the tariff sheets, pursuant to Rule 25-30.475, F.A.C. The Utility should be required to charge the approved rates until authorized to change them by the Commission in a subsequent proceeding.

 

Conclusion

Staff’s recommended water and wastewater rates, shown on Schedule Nos. 4-A and 4-B, are reasonable and should be approved. The overall cost of capital should be set at 8.42 percent. An ROE of 8.66 percent with a range of 100 basis points should also be approved. The approved rates should be effective for services rendered as of the stamped approval date on the tariff sheets pursuant to Rule 25-30.475, F.A.C. The Utility should be required to charge the approved rates until authorized to change them by the Commission in a subsequent proceeding.


Issue 3: 

 Should North Lake’s requested initial customer deposits be approved?

Recommendation: 

 No. The appropriate initial customer deposits are $178 for water and $160 for wastewater service for the residential 5/8″ x 3/4″ meter size. 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 customer deposits 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 deposits until authorized to change them by the Commission in a subsequent proceeding. (Bethea)

Staff Analysis: 

 Rule 25-30.311, F.A.C., contains criteria for collecting, administering, and refunding customer deposits. Rule 25-30.311(1), F.A.C., requires that each company’s tariff shall contain its specific criteria for determining the amount of initial deposits. The Utility requested initial customer deposits of $175 for water and $152 for wastewater for the residential 5/8” x 3/4” meter size and two times the average estimated monthly bill for all others. Customer deposits are designed to minimize the exposure of bad debt expense for the Utility and, ultimately, the general body of rate payers. In addition, collection of customer deposits is consistent with one of the fundamental principles of rate making, which ensures that the cost of providing service is recovered from the cost causer.

Rule 25-30.311(7), F.A.C., authorizes utilities to collect new or additional deposits from existing customers, not to exceed an amount equal to the average actual charge for water and/or wastewater service for two billing periods for the 12-month period immediately prior to the date of notice. The two billing periods reflect the lag time between the customer’s usage and the Utility’s collection of the revenues associated with that usage. Commission practice has been to set initial customer deposits equal to two months bills based on the average consumption for a 12-month period for each class of customers. Based on the billing determinants and average residential bill provided in the application, staff determined that the anticipated average residential usage will be approximately 9,125 gallons per month for both water and wastewater. Consequently, the average residential monthly bill will be approximately $89.40 for water and $79.74 for wastewater service, based on staff’s recommended rates.

Based on the above, the appropriate initial customer deposits are $178 for water and $160 for wastewater service for the residential 5/8″ x 3/4″ meter size. The initial customer deposit 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 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 deposits until authorized to change them by the Commission in a subsequent proceeding.


Issue 4: 

 What are the appropriate service availability charges for North Lake?

Recommendation: 

 The appropriate service availability charges are the Utility’s requested plant capacity charge of $2,000 per ERC for the water system and $3,000 per ERC for the wastewater system. The recommended plant capacity charges should be based on 300 gallons per day (gpd) for water and 250 gpd for wastewater. The approved charges should be effective for connections made 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 charge the approved charges until authorized to change them by the Commission in a subsequent proceeding. (Bethea)

Staff Analysis: 

 North Lake requested a plant capacity charge of $2,000 per ERC for the Utility’s water system and $3,000 per ERC for the wastewater system. The Utility’s proposed ERC is 300 gpd for water and 250 gpd for wastewater. The Utility’s requested charges are in compliance with Rule 25-30.580, F.A.C., in that at design capacity the contribution in aid of construction (CIAC) will not be in excess of 75 percent, and will not be less than the percentage of facilities and plant represented by the distribution and collection systems.

 

Rule 25-30.580(1)(a), F.A.C., provides that 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 design capacity. The maximum guideline is designed to ensure that the Utility retains an investment in the system. Rule 25-30.580(1)(b), F.A.C., provides that the minimum amount of CIAC should not be less than the percentage of such facilities and plant that is represented by the distribution and collection systems.

 

The Utility’s proposed service availability policy states that the developer will install all infrastructure and the developer/customer will pay the applicable service availability charges. The Utility did not propose a main extension charge because the water distribution and wastewater collection lines are being donated by the developer. The service availability charges are discussed below.  

 

Plant Capacity Charges

A plant capacity charge allows the Utility to recover each customer’s pro rata share of the cost of treatment facilities and stay within the guidelines prescribed in Rule 25-30.580, F.A.C., which provides minimum and maximum guidelines for designing service availability charges. The Utility proposed plant capacity charges of $2,000 for water and $3,000 for wastewater result in contribution levels of 54 percent for water and 66 percent for wastewater. The contribution levels are within the guideline provided in the rule mentioned above and will allow North Lake to maintain an appropriate level of investment in its system.

Based on the above, the appropriate service availability charges are the Utility’s proposed plant capacity charges of $2,000 per ERC for the water system and $3,000 per ERC for the wastewater system. The recommended plant capacity charges per ERC should be based on 300 gpd for water and 250 gpd for wastewater. The approved charges should be effective for connections made 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 charge the approved charges until authorized to change them by the Commission in a subsequent proceeding.


Issue 5: 

 Should the temporary meter deposit requested by North Lake be approved?

Recommendation: 

 Yes. The Utility’s requested temporary meter deposit for general service customers at actual cost pursuant to Rules 25-30.315 and 25-30.345, F.A.C., is reasonable and should be approved. The approved temporary meter deposit should be effective for service rendered on or after the stamped approval date on the tariff sheet pursuant to Rule 25-30.475, F.A.C. North Lake 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: 

 North Lake requested a temporary meter deposit for general service customers 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. This deposit would be collected from commercial entities requesting a temporary meter for construction activities. Once the temporary meter service is terminated, North Lake will credit the customer with the reasonable salvage value of the service facilities and materials consistent with Rules 25-30.315 and 25-30.345, F.A.C.

 

Based on the above, the Utility’s requested temporary meter deposit for general service customers at actual cost pursuant to Rules 25-30.315 and 25-30.345, F.A.C., is reasonable and should be approved. The approved 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. North Lake 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 6: 

 Should North Lake’s request to implement a backflow prevention assembly testing charge be approved?

Recommendation: 

 Yes. The Utility’s requested backflow prevention assembly testing charge for general service customers at actual cost should be approved. The approved charge should be effective for service rendered or connections made on or after the stamped approval date on the tariff pursuant to Rule 25-30.475, F.A.C. North Lake should be required to charge the approved charge until authorized to change it by the Commission in a subsequent proceeding. (Bethea)

Staff Analysis: 

 The Utility requested a backflow prevention assembly testing charge to recover the costs the Utility would incur for performing annual testing on behalf of non-compliant commercial customers. The basis for the Utility’s request for a backflow prevention assembly testing charge is an agreement through a third party vendor. It is the responsibility of the customer to annually test their backflow prevention assembly. The Utility would only administer this charge if a general service customer fails to test their backflow prevention device in accordance with the Florida Department of Environmental Protection requirements. This charge would be imposed after a 30 day notice to the customer and would include an estimate of the amount that will be charged. This noticing period will provide the customer a final opportunity to come into compliance before North Lake performs the necessary testing on the customer’s behalf. The Utility is requesting this charge at actual cost in order to pass on the amount it will incur from a contractor performing the necessary testing. Staff believes the Utility’s requested charge is reasonable.

 

Based on the above, the Utility’s requested backflow prevention assembly testing charge for general service customers at actual cost should be approved. The approved charge should be effective for service rendered or connections made on or after the stamped approval date on the tariff pursuant to Rule 25-30.475, F.A.C. North Lake should be required to charge the approved charge until authorized to change it by the Commission in a subsequent proceeding.


Issue 7: 

 Should this docket be closed?

Recommendation: 

 Yes. 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 have been filed by the utility and approved by staff. Once these actions are complete, this docket should be closed administratively. (Sandy)

Staff Analysis: 

 If no person whose substantial interests are affected by the proposed agency action files a protest within 21 days of the issuance of the order, a consummating order should be issued. The docket should remain open for staff’s verification that the revised tariff sheets have been filed by the utility and approved by staff. Once these actions are complete, this docket should be closed administratively.


North Lake County Water & Sewer Company LLC

Lake County

Water and Wastewater Service Area

 

LEGAL DESCRIPTION:

 

(WATER AND SEWER UTILITY SERVICES)

 

A PARCEL OF LAND LYING IN SECTIONS 15 AND 22, TOWNSHIP 20 SOUTH, RANGE 25 EAST, LAKE COUNTY, FLORIDA;

 

BEING DESCRIBED AS FOLLOWS:

 

COMMENCE AT NORTH QUARTER CORNER OF SAID SECTION 22 FOR A POINT OF REFERENCE; THENCE RUN NORTH 89°14'57" WEST ALONG THE SOUTH LINE OF THAT CERTAIN QUIT CLAIM DEED, RECORDED IN OFFICIAL RECORDS BOOK 5263, PAGE 681, OF THE PUBLIC RECORDS OF LAKE COUNTY, FLORIDA, 670.22 FEET TO THE EASTERLY RIGHT-OF-WAY LINE OF COUNTY ROAD 48 AND THE POINT OF BEGINNING; THENCE RUN THE FOLLOWING 3 COURSES ALONG SAID EASTERLY RIGHT-OF-WAY LINE: NORTH 23°24'43" WEST, 1,531.02 FEET; SOUTH 66°37'55" WEST, 16.97 FEET, NORTH 20°18'28" WEST, 226.54 FEET; THENCE DEPARTING SAID EAST RIGHT-OF-WAY LINE OF COUNTY ROAD 48, RUN THE FOLLOWNG 3 COURSES ALONG THE EAST RIGHT-OF-WAY LINE OF LIME AVENUE: NORTH 20°34'23" WEST, 201.94 FEET; NORTH 20°00'00" WEST, 317.00 FEET; NORTH 19°50'21" WEST, 405.83 FEET TO THE NORTH LINE OF QUIT CLAIM DEED RECORDED IN OFFICIAL RECORDS BOOK 4470, PAGE 2292, OF SAID PUBLIC RECORDS; THENCE RUN NORTH 69°59'13" EAST ALONG SAID NORTH LINE, 210.05 FEET TO THE EAST LINE OF SAID QUIT CLAIM DEED; THENCE RUN SOUTH 19°51'32" EAST, ALONG SAID EAST LINE, 406.34 FEET TO THE SOUTHWEST CORNER OF LOT 3, A.J. PHARES YALAHA SUBDIVISION AS REFERENCED ON THE MAP OF DRAKE POINT PARK, ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT BOOK 1, PAGE 19 OF SAID PUBLIC RECORDS; THENCE RUN NORTH 70°07'30" EAST ALONG THE SOUTH LINE OF SAID LOT 3, A DISTANCE OF 622.19 FEET TO THE WEST LINE OF THE CERTAIN WARRANTY DEED RECORDED IN OFFICIAL RECORDS BOOK 4452, PAGE 673, OF SAID PUBLIC RECORDS; THENCE RUN NORTH 02°08'18" EAST ALONG SAID WEST LINE, 961.62 FEET TO A POINT ON THE 62.5 FOOT CONTOUR LINE, BEING THE FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION SAFE UPLAND LINE OF THE WATERS OF LAKE HARRIS; THENCE RUN ALONG SAID “SAFE UPLAND” LINE CONTOUR BEING APPROXIMATED BY THE FOLLOWING COURSES: SOUTH 48°13'31" EAST, 171.61 FEET; SOUTH 30°28'21" EAST, 198.50 FEET; SOUTH 89°28'36" EAST, 214.54 FEET; SOUTH 75°33'09" EAST, 163.02 FEET; SOUTH 64°37'20" EAST, 195.83 FEET; SOUTH 81°24'01" EAST, 185.82 FEET; SOUTH 83°21'55" EAST, 150.78 FEET; NORTH 82°35'47" EAST, 145.75 FEET; NORTH 88°37'02" EAST, 289.27 FEET; NORTH 82°48'31" EAST, 99.43 FEET; SOUTH 72°51'05" EAST, 124.28 FEET; SOUTH 49°04'35" EAST, 589.31 FEET; SOUTH 68°28'09" EAST, 696.95 FEET; SOUTH 83°52'42" EAST, 390.31 FEET; NORTH 79°30'03" EAST, 312.29 FEET; SOUTH 77°09'39" EAST, 405.31 FEET; SOUTH 64°24'04" EAST, 290.41 FEET; SOUTH 18°43'07" EAST, 72.17 FEET; SOUTH 32°23'54" WEST, 158.54 FEET; SOUTH 47°59'25" WEST, 306.08 FEET; SOUTH 34°28'28" WEST, 160.69 FEET; SOUTH 22°19'42" WEST, 170.42 FEET; SOUTH 02°47'59" EAST, 173.67 FEET; SOUTH 24°39'51" WEST, 379.39 FEET; SOUTH 20°53'09" WEST, 129.67 FEET; SOUTH 10°47'41" WEST, 262.36 FEET; SOUTH 04°51'48" WEST, 356.75 FEET; SOUTH 06°43'37" WEST, 125.96 FEET, POINT BEING 100.00 FEET EASTERLY OF THE NORTHEAST CORNER OF THE AFORESAID SECTION 22; THENCE RUN NORTH 89°32'11" WEST, 100.00 FEET TO THE NORTHEAST CORNER OF THE AFORESAID SECTION 22; THENCE RUN NORTH 89°32'11" WEST ALONG THE NORTH LINE OF THE NORTHEAST QUARTER OF SAID SECTION 22, A DISTANCE OF 1,350.44 FEET; THENCE DEPARTING SAID NORTH LINE, RUN SOUTH 40°37'42" WEST, 987.97 FEET TO THE EAST LINE OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SAID SECTION 22; THENCE RUN SOUTH 01°02'44" WEST ALONG SAID EAST LINE, 578.78 FEET TO THE SOUTHEAST CORNER OF SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SAID SECTION 22; THENCE RUN NORTH 89°13'56" WEST ALONG THE SOUTH LINE OF SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SAID SECTION 22, A DISTANCE OF 47.47 FEET TO THE CENTERLINE OF A DITCH; THENCE RUN THE FOLLOWING 7 COURSES ALONG THE CENTERLINE OF SAID DITCH: SOUTH 31°25'16" WEST, 1.75 FEET; SOUTH 62°36'34" WEST, 98.66 FEET; SOUTH 34°07'05" WEST, 113.15 FEET; SOUTH 67°31'03" WEST, 41.43 FEET; SOUTH 72°42'59" WEST, 159.42 FEET; SOUTH 65°14'08" WEST, 143.37 FEET; SOUTH 76°24'55" WEST, 72.29 FEET TO A POINT ON THE AFORESAID EAST RIGHT-OF-WAY OF COUNTY ROAD 48, SAID POINT IS LYING ON A NON-TANGENT CURVE CONCAVE NORTHEASTERLY; THENCE RUN NORTHWESTERLY ALONG SAID NON-TANGENT CURVE HAVING A RADIUS OF 5,679.57 FEET, A CENTRAL ANGLE OF 03°34'40", AN ARC LENGTH OF 354.66 FEET, A CHORD LENGTH OF 354.60 FEET AND A CHORD BEARING OF NORTH 24°58'35" WEST TO A POINT; THENCE RUN NORTH 23°24'43" WEST NON-TANGENT TO SAID CURVE, 1,423.66 FEET TO THE POINT OF BEGINNING.

 

THE ABOVE DESCRIBED PARCEL OF LAND LIES IN LAKE COUNTY, FLORIDA, AND CONTAINS 294.311 ACRES MORE OR LESS.

FLORIDA PUBLIC SERVICE COMMISSION

 

Authorizes

 

North Lake County Water & Sewer Company LLC

 

pursuant to

 

Certificate Number 683-W

 

to provide water service in Lake County in accordance with the provisions of Chapter 367, Florida Statutes, and the Rule, regulations, and Orders of this Commission in the territory described by the Orders of this Commission. This authorization shall remain in force and effect until superseded, suspended, cancelled or revoked by Order of this Commission.

 

Order Number                         Date Issued     Docket Number          Filing Type

*                                              *                      20240023-WS             Original Certificate

 

 

* Order Number and date to be provided at time of issuance.

 


 

FLORIDA PUBLIC SERVICE COMMISSION

 

Authorizes

 

North Lake County Water & Sewer Company LLC

 

pursuant to

 

Certificate Number 583-S

 

to provide wastewater service in Lake County in accordance with the provisions of Chapter 367, Florida Statutes, and the Rule, regulations, and Orders of this Commission in the territory described by the Orders of this Commission. This authorization shall remain in force and effect until superseded, suspended, cancelled or revoked by Order of this Commission.

 

Order Number                         Date Issued     Docket Number          Filing Type

*                                              *                      20240023-WS             Original Certificate

 

* Order Number and date to be provided at time of issuance.


 

North Lake County Water & Sewer Company LLC

Schedule No. 1-A

Schedule of Water Rate Base

 

20240023-WS

80% Design Capacity

 

 

 

 

Description

Test Year

Staff

Staff

 

Per

Adjust-

Adjusted

 

Utility

ments

Test Year

 

 

 

 

 

1

Plant in Service

$6,597,287

$356,000

$6,953,287

 

 

 

 

 

2

Land and Land Rights

425,000

0

425,000

 

 

 

 

 

3

Accumulated Depreciation

(874,656)

(44,353)

(919,009)

 

 

 

 

 

4

CIAC

(3,431,203)

(356,000)

(3,787,203)

 

 

 

 

 

5

Amortization of CIAC

343,815

44,100

387,915

 

 

 

 

 

6

Working Capital Allowance

7,368

(908)

6,460

 

 

 

 

 

7

Rate Base

$3,067,611

($1,161)

$3,066,450


 

North Lake County Water & Sewer Company LLC

Schedule No. 1-B

Schedule of Wastewater Rate Base

20240023-WS

80% Design Capacity

 

 

 

Description

Test Year

Staff

Staff

 

Per

Adjust-

Adjusted

 

Utility

ments

Test Year

 

 

 

 

 

1

Plant in Service

$6,770,776

$0

$6,770,776

 

 

 

 

 

2

Land and Land Rights

425,000

0

425,000

 

 

 

 

 

3

Accumulated Depreciation

(1,056,162)

4,118

(1,052,044)

 

 

 

 

 

4

CIAC

(4,127,925)

(143,750)

(4,271,675)

 

 

 

 

 

5

Amortization of CIAC

466,762

28,076

494,838

 

 

 

 

 

6

Working Capital Allowance

7,368

(908)

6,460

 

 

 

 

 

7

Rate Base

$2,485,819

($112,465)

$2,373,355

 

 

 

 

 


 

North Lake County Water & Sewer Company LLC

Schedule No. 1-C

Adjustments to Rate Base

20240023-WS

80% Design Capacity

 

 

 

 

 

 

 

 

 

Explanation

Water

Wastewater

 

 

 

 

 

 

 

 

 

 

 

 

Plant In Service

 

 

 

 

To reflect appropriate amount for meters.

  $356,000

$0

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

To reflect appropriate amount for meters.

($44,100)

$0

 

 

To reflect appropriate calculation of accumulated depreciation.

(253)

4,118

 

 

    Total

($44,353)

$4,118

 

 

 

 

 

 

 

CIAC

 

 

 

 

To reflect appropriate level of CIAC.

($356,000)

($143,750)

 

 

 

 

 

 

 

Accumulated Amortization of CIAC

 

 

 

 

To reflect appropriate level of accumulated amortization of CIAC.

$44,100

$28,076

 

 

 

 

 

 

 

Working Capital

($908)

($908)

 

 

 

 

 


 

North Lake County Water & Sewer Company LLC

Capital Structure-13-Month Average

80% Design Capacity

 

 

 

 

Schedule No. 2

 

 

 

 

20240023-WS

 

 

 

 

 

 

 

 

 

 

Description

Total           Capital

Specific

Subtotal

Pro rata

Capital

Ratio

Cost Rate

Weighted Cost

 

Adjustments

Adjusted

Adjust-

Reconciled

 

 

Capital

ments

to Rate Base

Per Staff

 

 

 

 

 

 

 

 

 

1

Long-term Debt

$0

$0

$0

$0

$0

0.00%

0.00%

0.00%

 

2

Short-term Debt

0

0

0

0

0

0.00%

0.00%

0.00%

 

3

Preferred Stock

0

0

0

0

0

0.00%

0.00%

0.00%

 

4

Common Equity

5,281,481

0

5,281,481

(36,196)

5,245,285

96.42%

8.66%

8.35%

 

5

Customer Deposits

271,950

(77,430)

194,520

0

194,520

3.58%

2.01%

0.07%

 

6

Tax Credits-Zero Cost

0

0

0

0

0

0.00%

0.00%

0.00%

 

7

Deferred Income Taxes

0

0

0

0

0

0.00%

0.00%

0.00%

 

8

Total Capital

$5,553,431

($77,430)

$5,476,001

($36,196)

$5,439,805

100.00%

8.42%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOW

HIGH

 

 

 

 

 

 

 

 

RETURN ON EQUITY

 

7.66%

9.66%

 

 

 

 

 

 

 

          OVERALL RATE OF RETURN

 

7.46%

9.39%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

North Lake County Water & Sewer Company LLC 

Schedule No. 3-A

Statement of Water Operations

20240023-WS 

80% of Design Capacity

 

Description

Proposed      Per Utility

Staff      Adjust-    ments

Staff  Adjusted

Revenue Increase

Revenue Requirement

 

 

 

 

 

 

 

 

1

Operating Revenues:

$487,143

$0

$487,143

$6,573

$493,716

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

2

    Operation & Maintenance

$58,947

(7,264)

$51,683

 

$51,683

 

 

 

 

 

 

 

 

 

3

    Depreciation

107,104

0

107,104

 

107,104

 

 

 

 

 

 

 

 

 

4

    Amortization

255

0

255

 

255

 

 

 

 

 

 

 

 

 

5

    Taxes Other Than Income

68,372

7,776

76,148

296

76,444

 

 

 

 

 

 

 

 

 

6

    Income Taxes

0

0

0

0

0

 

 

 

 

 

 

 

 

7

Total Operating Expense

234,678

512

235,190

296

235,486

 

 

 

 

 

 

 

 

8

Operating Income

$252,465

($512)

$251,953

$6,277

$258,230

 

 

 

 

 

 

 

 

9

Rate Base

$3,067,611

 

$3,066,450

 

$3,066,450

 

 

 

 

 

 

 

 

10

Rate of Return

8.23%

 

8.22%

 

8.42%

 

 

 

 

 

 

 

 

 


 

North Lake County Water & Sewer Company LLC

Schedule No. 3-B

Statement of Wastewater Operations

20240023-WS

80% of Design Capacity

 

 

 

 

 

 

Description

Adjusted       Test Year      Per Utility

Staff      Adjust-    ments

Staff    Adjusted    Test Year

Revenue Increase

Revenue Requirement

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Operating Revenues:

$427,771

$0

$427,771

($17,160)

$410,611

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

2

    Operation & Maintenance

$58,947

($7,264)

$51,683

 

$51,683

 

 

 

 

 

 

 

 

 

3

    Depreciation

111,490

(7,210)

104,280

 

104,280

 

 

 

 

 

 

 

 

 

4

    Amortization

255

0

255

 

255

 

 

 

 

 

 

 

 

 

5

    Taxes Other Than Income

52,497

2,805

55,302

(772)

54,530

 

 

 

 

 

 

 

 

 

6

Total Operating Expense

223,189

(11,669)

211,520

(772)

210,748

 

 

 

 

 

 

 

 

7

Operating Income

$204,582

$11,669

$216,251

($16,388)

$199,863

 

 

 

 

 

 

 

 

8

Rate Base

$2,485,819

 

$2,373,355

 

$2,373,355

 

 

 

 

 

 

 

 

9

Rate of Return

8.23%

 

9.11%

 

8.42%

 

 

 

 

 

 

 

 


 

North Lake County Water & Sewer Company LLC

Schedule No. 3-C

 

Adjustments to Operating Income

20240023-WS

 

80% Design Capacity

 

 

 

 

 

 

 

 

 

 

Explanation

Water

Wastewater

 

 

 

 

 

 

 

 

Operation and Maintenance Expense

 

 

 

 

 To reflect correct amount of contractual Services - Billing expense.

($7,264)

($7,264)

 

 

 

 

 

 

 

Depreciation Expense - Net

 

 

 

 

 To reflect correct calculation of depreciate expense.

$0

($971)

 

 

 To reflect appropriate depreciate expense for meters.

              16,000

$0

 

 

 To reflect appropriate accumulated amortization for meters & lift stations.

(16,000)

(6,239)

 

 

    Total

($0)

($7,210)

 

 

 

 

 

 

 

Amortization-Other Expense

 

 

 

 

To reclassify amortization expense to depreciation expense.

$0

$0

 

 

 

 

 

 

Taxes Other Than Income

 

 

 

To reflect the most current millage rate for property tax calculation

$7,776

$2,805

 

 

 

 

 

 


 

NORTH LAKE COUNTY WATER & SEWER COMPANY, LLC

 

SCHEDULE NO. 4-A

MONTHLY WATER RATES

DOCKET NO. 20240023-WS

UTILITY

STAFF

REQUESTED

RECOMMENDED

RATES

RATES

 

 

 

Residential Service and General Service

 

 

Base Facility Charge by Meter Size

 

 

5/8" x 3/4"

$43.82

$35.36

3/4"

$65.73

$53.04

1"

$109.55

$88.40

1-1/2"

$219.10

$176.80

2"

$350.56

$282.88

3" Turbine

$766.85

$618.80

 

 

 

Charge per 1,000 gallons - Residential Service

 

 

0- 7,000 gallons

$4.59

$5.59

Over 7,000 gallons

$5.74

$6.99

 

 

 

Charge per 1,000 gallons - General Service

$4.77

$5.81

 

 

 

Typical Residential 5/8" x 3/4" Meter Bill Comparison

 

3,000 Gallons

$57.59

$52.13

6,000 Gallons

$71.36

$68.90

9,000 Gallons

$87.43

$88.47

 

 

 


 

NORTH LAKE COUNTY WATER & SEWER COMPANY, LLC

 

SCHEDULE NO. 4-B

MONTHLY WASTEWATER RATES

DOCKET NO. 20240023-WS

UTILITY

STAFF

REQUESTED

RECOMMENDED

RATES

RATES

 

 

Residential Service

 

Base Facility Charge- All Meter Sizes

$38.44

$36.77

 

 

Charge per 1,000 gallons- Residential

$4.91

$4.71

10,000 gallon cap

 

 

 

General Service

 

Base Facility Charge by Meter Size

 

5/8" x 3/4"

$38.44

$36.77

3/4"

$57.66

$55.15

1"

$96.10

$91.93

1-1/2" Turbine

$192.21

$183.85

2" Turbine

$307.53

$294.16

3" Turbine

$672.73

$643.48

 

 

Charge per 1,000 gallons - General Service

$5.89

$5.65

 

 

 

 

 

Typical Residential 5/8" x 3/4" Meter Bill Comparison

 

3,000 Gallons

$56.11

$50.90

6,000 Gallons

$73.78

$65.03

10,000 Gallons

$91.45

$83.87

 

 

 

 



[1]Document No. 00293-2024, filed January 23, 2024, in Docket No. 20240023-WS.

[2]Document No. 00847-2024, filed February 22, 2024, in Docket No. 20240023-WS.

[3]Document No. 01010-2024, filed March 04, 2024, in Docket No. 20240023-WS.

[4]Document No. 01162-2024, filed March 14, 2024, in Docket No. 20240023-WS.

[5]Document No. 01206-2024, filed March 18, 2024, in Docket No. 20240023-WS.

[6]Document No. 01322-2024, filed March 26, 2024, in Docket No. 20240023-WS.

[7]Document No. 02512-2024, filed April 29, 2024, in Docket No. 20240023-WS.

[8]Document No. 01010-2024, filed March 4, 2024, in Docket No. 20240023-WS.

[9]Document No. 07721-2024, filed July 22, 2024, in Docket No. 20240023-WS.

[10]Order No. PSC-2022-0437-PAA-WS, issued December 27, 2022, in Docket No. 20220088-WS, In re: Application for certificates to provide water and wastewater service and approval of initial rates and charges in Sumter County, by Middleton Utility Company, LLC; Order Nos. PSC-17-0059-PAA-WS, issued February 24, 2017, in Docket No. 20160220-WS, In re: Application for original water and wastewater certificates in Sumter County, by South Sumter Utility Company, LLC.; PSC-13-0484-FOF-WS, issued October 15, 2013, in Docket No. 20130105-WS, In re: Application for certificates to provide water and wastewater service in Hendry and Collier Counties, by Consolidated Services of Hendry & Collier, LLC; and PSC-12-0224-PAA-WS, issued April 30, 2012, in Docket No. 20090445-WS, In re: Application for original certificates for proposed water and wastewater system and request for initial rates and charges in Indian River, Okeechobee, and St. Lucie counties by Grove Land Utilities, LLC.

[11]Document No. 07141-2024.

[12]Document No. 03836-2024.

[13]Document No. 03014-2024.

[14]Order No. PSC-2022-0437-PAA-WS, issued December 27, 2022, in Docket No. 20220088-WS, In re: Application for certificates to provide water and wastewater service and approval of initial rates and charges in Sumter County, by Middleton Utility Company, LLC. p. 6.

[15]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.

[16]Order No. PSC-2022-0404-PAA-WS, issued November 21, 2022, in Docket No. 20200185-WS, In re: Application for certificated to provide water and wastewater services in Lake and Sumter Counties, by Gibson Place Utility Company, LLC.; Order No. PSC-2022-0437-PAA-WS, issued December 27, 2022, in Docket No. 20220088-WS, In re: Application for certificated to provide water and wastewater services and approval of initial rates and changes in Sumter County, by Middleton Utility Company, LLC.

[17]Order No. PSC-2024-0189-PAA-WS, issued May, 22, 2024, in Docket No. 20240006-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. p. 5.