Case Background
NC Real Estate
Projects, LLC d/b/a Grenelefe Utility (Grenelefe or Utility) is a Class B water
and wastewater utility operating in Polk County. Grenelefe provides service to
approximately 1,359 water and wastewater customers. It is anticipated that the
proposed certificate amendment will result in the addition of approximately
2,064 water and wastewater customers, which includes those outside the utility
service territory who are currently being served (984 ERCs), those anticipated
to be served in the future (1080 ERCs), and a small number of commercial
customers. The Utility is in the St. Johns River Water Management District
(SJRWMD). On September 16, 2024, an affidavit was signed by the Utility that
tariffs and annual reports are on file with the Commission. In its 2023 Annual
Report, Grenelefe reported a net operating loss of $184,215 for water, and
$233,950 for wastewater. The Utility’s last rate case was in 2011.[1]
In 1997, the Commission issued original
water and wastewater Certificate Nos. 589-W and 507-S to Sports Shinko Utility,
Inc. d/b/a Grenelefe Utilities.[2] In 2005, the Commission granted a transfer
of the Utility to Grenelefe Resort Utility, Inc. from the previous owner.[3]
On August 9, 2022, Grenelefe Resort Utility, Inc. and NC Real Estate Projects, LLC
filed a joint application with the Commission for transfer of Certificate Nos.
589-W and 507-S from Grenelefe Resort Utility, Inc. to NC Real Estate Projects,
LLC and Grenelefe Resort Utilities Development, LLC. This initial joint
application would have NC Real Estate Projects, LLC acquire all assets from the
Seller and serve as the Buyer of the utility. NC Real Estate Projects would
then lease all utility assets and real estate to Grenelefe Resort Utilities
Development, LLC for 7 months. After this 7 month period, NC Real Estate
Projects, LLC would transfer both the utility assets and land to Grenelefe
Resort Utilities Development, LLC, who would then serve as the utility owner
and operator going forward.
On October 10,
2023, Grenelefe Resort Utility, Inc.
and NC Real Estate Projects, LLC d/b/a Grenelefe Utility filed an amended joint
application. This amended joint application superseded the initial joint
application, and proposed to transfer the certificates from Grenelefe Resort
Utility, Inc. to NC Real Estate Projects, LLC d/b/a Grenelefe Utility, with no
intervening lease period. The sale of the Utility closed on May 31, 2022. The
Commission approved transfer of the certificates on February 21, 2024.
On September 17,
2024, Grenelefe filed an application with the Commission for an amendment of
Certificate Nos. 589-W and 507-S, water and wastewater service territories in
Polk County. During staff’s review of the application, staff discovered three
deficiencies. Corrections to the deficiencies were filed on November 13, 14,
and 26, 2024, and January 15, 2025. After reviewing this information, staff
determined that the corrections and application were acceptable. The official
filing date for this application was January 15, 2025.
This
recommendation addresses a potential show cause proceeding and the Utility’s
request for an amendment to the certificates of authorization for its water and
wastewater service territories in Polk County. The Commission has jurisdiction
pursuant to Section 367.045, Florida Statutes (F.S.).
Discussion
of Issues
Issue 1:
Should the Commission institute a show cause
proceeding against Grenelefe for an apparent violation of Section 367.045,
F.S.?
Recommendation:
No. A show cause proceeding should not be initiated.
(Stiller)
Staff Analysis:
As stated in the case background, Grenelefe acquired
a utility that was providing service to 984 water and wastewater connections on
581.17 acres outside of its certificated territory. Grenelefe filed the instant
application, in part, to amend its certificates and correct this mistake.
Section 367.045(2), F.S., states that a utility may not
extend its service outside the area described in its certificate of
authorization until the Commission approves an amended certificate of
authorization to include the new area. Section 367.161(1), F.S., authorizes the
Commission to assess a penalty of not more than $5,000 for each offense if a
utility is found to have willfully violated any provision of Chapter 367, F.S.
Grenelefe’s predecessor utility extended service outside
of the area described in its certificates of authorization without Commission
approval. This extension appears to be in violation of Section 367.045(2), F.S.,
and appears to have been “willful” as that term is used in Section 367.161,
F.S. Because Grenelefe must fulfill the commitments,
obligations, and representations of its predecessor utility,
Grenelefe may bear responsibility for any penalty imposed by the Commission
following a show cause proceeding regarding the prior extension of services.
Staff recommends that the Commission not initiate a show
cause proceeding under the present circumstances. The extension of service
outside the certificated service area was undertaken by Grenelefe’s predecessor
utility. Grenelefe filed the instant application to amend the certificates to
include the area promptly after the Commission approved its application for
transfer of the certificates. The amendment area is adjacent to the currently
certificated area and is within the same overall Grenelefe Resort development
that is served by the Utility’s system. Grenelefe has filed annual reports and
paid regulatory assessment fees based on the total number of customers it
serves, including those inadvertently outside of its certificated area. Staff
is not aware of any complaints regarding service in this area.
Conclusion
Staff does not believe that the extra-territorial
extension of services described above warrants the initiation of a show cause
proceeding by the Commission. Grenelefe has undertaken appropriate actions in a
timely manner to amend the certificates to address the territorial issue
created by its predecessor.
Therefore, staff recommends that the Commission not order Grenelefe to show
cause why it should not be fined for the failure to obtain amended certificates
of authorization prior to service being provided outside of the certificated
territory.
Issue 2:
Should the Commission approve Grenelefe’s
application for amendment of Certificate Nos. 589-W and 507-S to extend its
territory from its certificated water and wastewater service territory in
Marion County?
Recommendation:
Yes. The Commission should amend Certificate Nos.
589-W and 507-S to include the territory as described in Attachment A, effective
the date of the Commission’s vote. The resultant
order should serve as Grenelefe’s amended certificates and should be retained
by the Utility. The Utility should charge future customers in the territory
added herein the rates and charges contained in its current tariffs until a
change is authorized by the Commission in a subsequent proceeding. (Davis)
Staff Analysis:
The Utility’s application to amend its authorized
service territory is in compliance with the governing statute, Section 367.045,
F.S., and Rule 25-30.036, Florida Administrative Code (F.A.C.). The appropriate
filing fee as required by Section 367.145, F.S., was received by the Commission
on September 19, 2024. Grenelefe provided notice of the application pursuant to
Section 367.071, F.S., and Rule 25-30.030(5)(b), F.A.C. This notice provided 30
days for customers to file an objection to the transfer. No objections to the
application have been received and the time for filing such has expired.
Grenelefe provided adequate service territory maps and
territory descriptions to Commission staff. A description of the territory
requested to be extended by the Utility, as well as the resulting service
territory description, is appended to this recommendation as Attachment A. The
Utility submitted an affidavit with its September 17, 2024, application
consistent with Rule 25-30.036(2)(q), F.A.C., stating that it has tariffs and
annual reports on file with the Commission.
Grenelefe’s existing water system includes two 1,500 gpm
potable water wells and several additional irrigation wells. The water is
chlorinated for disinfection, and polyphosphate is added for lead and copper
corrosion control. The wells appear adequate to provide service to Grenelefe’s
existing customers both inside and outside of the currently approved FPSC service
territory as well as to the proposed Groves at Lake Marion extension area. Grenelefe
provided a copy of the Utility’s current consumptive use permit from the
SJRWMD.
The wastewater treatment plant is an extended aeration
activated sludge plant with a design capacity of 340,000 gallons per day with
effluent disposal through percolation ponds. The current average annual daily
flow through these treatment facilities is 138,578 gallons per day average
annual daily flow. As such, the Utility has adequate capacity to meet the needs
of both its current customers and the expanded service territory.
Water distribution and wastewater collection facilities
were designed and constructed in order to meet the needs of the current
customers inside and outside the certificated service territory. The Groves at
Lake Marion portion of this extension application will be designed and
constructed to provide service to all facilities in the area.
Staff reviewed the most recent Department of Environmental
Protection Agency (DEP) Sanitary Survey Report. The May 10, 2023 report
identified several deficiencies, but all were corrected in 30 days.
Also, staff reviewed the most recent DEP compliance
evaluation inspections for the wastewater treatment plant. The December 6, 2022
compliance evaluation inspection also identified several issues, but all
deficiencies were corrected and the facility was determined to be in compliance
by DEP on March 15, 2023.
Conclusion
The Commission should amend Certificate Nos. 589-W and
507-S to include the territory as described in Attachment A, effective the date
of the Commission’s vote. The resultant order should serve as Grenelefe’s
amended certificate and should be retained by the Utility. The Utility should
charge future customers in the territory added herein the rates and charges
contained in its current tariffs until a change is authorized by the Commission
in a subsequent proceeding.
Issue 3:
Should this docket be closed?
Recommendation:
If the Commission approves staff’s recommendation,
no further action will be necessary, and this docket should be closed upon
issuance of the order. (Stiller)
Staff Analysis:
If the Commission approves staff’s recommendation,
no further action will be necessary, and this docket should be closed upon
issuance of the order.
NC REAL ESTATE PROJECTS, LLC d/b/a GRENELEFE UTILITY
WATER AND WASTEWATER SERVICE AREA
LEGAL DESCRIPTION OF TERRITORY TO BE SERVED
A parcel of land being a portion
of Sections 5, 6, 7, 8, 17 and 18, Township 28 South, Range 28 East, Polk
County, Florida, being more particularly described as follows:
Begin at the East ¼ corner of
Section 6, Township 28 South, Range 28 East, Polk County, Florida; thence
N00°12'32"W, along the West line of Section 5, Township 28 South, Range 28
East, Polk County, Florida, a distance of 659.16 feet; thence departing said
West line, run N89°36'57"E, a distance of 1,714.43 feet to a point on the
Westerly Meandering line of Lake Marion; thence the following twelve (12)
courses and distances along said Westerly line: thence S26°12'13"W, a
distance of 738.08 feet; thence N89°39'08"E, a distance of 68.89 feet;
thence S31°14'22"W, a distance of 363.56 feet; thence S06°10'27"W, a
distance of 362.41 feet; thence S23°46'45"E, a distance of 277.86 feet;
thence S07°13'21"E, a distance of 406.55 feet; thence S17°20'02"E, a
distance of 229.68 feet; thence S17°34'19"E, a distance of 229.98 feet;
thence S08°55'18"E, a distance of 222.01 feet; thence S07°38'32"E, a
distance of 221.30 feet; thence S07°09'37"W, a distance of 221.19 feet;
thence S08°57'04"W, a distance of 220.17 feet; thence S89°38'35"W,
along said South line, a distance of 560.36 feet to the West Right of Way line
of West Lake Marion Road; thence the following two (2) courses and distances
along said West Right of Way line: thence S00°00'54"E, a distance of 25.00
feet; thence S00°04'56"W, a distance of 2,611.15 feet; thence departing
said West Right of Way line, run N89°58'12"E, a distance of 74.98 feet to
a point on the East Right of Way line of West Lake Marion Road; thence
N89°51'42"E, a distance of 279.33 feet; thence S00°03'25"W, a
distance of 2,148.34 feet; thence N89°52'19"W, a distance of 273.92 feet
to the East Right of Way line of West Lake Marion Road; thence
S89°19'40"W, a distance of 80.66 feet to a point on the West Right of Way
line of West Lake Marion Road, said point also being a Point on a Non-Tangent
Curve, Concave to the Northeast, having a Radius of 612.96 feet and a Central
Angle of 58°10'16"; thence run Southeasterly along said West Right of Way
line, a distance of 622.32 feet (Chord Bearing = S36°27'13"E, Chord =
595.94 feet) to a Point on a Non-Tangent Curve, Concave to the North, having a
Radius of 613.27 feet and a Central Angle of 09°24'43"; thence run
Easterly along said West Right of Way
line, a distance of 100.74 feet (Chord Bearing = S70°13'35"E, Chord =
100.63 feet) to a Point of Non Tangency, said point also being a point on the
East line of the West ½ of the Northwest ¼ of Section 17, Township 28 South,
Range 28 East, Polk County, Florida; thence departing said West Right of Way
line, run S01°53'45"E, along said East line, a distance of 2,576.23 feet
to a point on the South line of the West ½ of the Northwest ¼ of said Section 17;
thence departing said East line, run N89°11'18"W, along said South line, a
distance of 1,329.53 feet to a point on the East line of Section 18, Township
28 South, Range 28 East, Polk County, Florida; thence S89°05'29"W, along
the South Line of the Northeast ¼ of said Section 18, a distance of 2,721.89
feet to a point on the West line of the Northeast ¼ of said Section 18; thence
departing said South line, run N00°23'07"W, along said West line, a
distance of 2,596.57 feet to a point on the South line of Section 7, Township
28 South, Range 28 East, Polk County, Florida; thence N00°35'24"W, along
the West line of the Southeast ¼ of said Section 7, a distance of 2,648.33 feet
to a point on the South line of the Northwest ¼ of said Section 7; thence
departing said West line, run S89°42'07"W, along said South line, a
distance of 2,644.17 feet to a point on the West line of said Section 7; thence
departing said South line, run N00°20'31"W, along said West line, a
distance of 2,634.95 feet to the Southwest corner of Section 6, Township 28
South, Range 28 East, Polk County, Florida; thence N00°21'33"W, along the
West line of said Section 6, a distance of 2,635.87 feet to a point on the
North line of the South ½ of said Section 6; thence the following two (2)
courses and distances along said North line: thence N89°38'32"E, a
distance of 2,635.65 feet; thence N89°39'09"E, a distance of 2,638.50 feet
to the Point of Beginning.
Containing 1,277.45 acres, more
or less.
FLORIDA PUBLIC SERVICE COMMISSION
Authorizes
NC Real Estate Projects, LLC d/b/a Grenelefe Utility
pursuant to
Certificate Number 589-W
to provide water service in Polk
County in accordance with the provisions of Chapter 367, Florida Statutes, and
the Rules, 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
PSC-97-1546-FOF-WS 12/09/1997 961006-WS Grandfather
Certificate
PSC-05-0142-PAA-WS 02/07/2005 030123-WS Transfer
of Majority
Organizational Control
PSC-2024-0228-PAA-WS 07/08/2024 20220142-WS Transfer of Certificate
* * 20240140-WS Amendment of Certificate
*Order Number and
date to be provided at time of issuance.
FLORIDA PUBLIC SERVICE COMMISSION
Authorizes
NC Real Estate Projects, LLC d/b/a Grenelefe Utility
pursuant to
Certificate Number 507-S
to provide wastewater service in
Polk County in accordance with the provisions of Chapter 367, Florida Statutes,
and the Rules, 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
PSC-97-1546-FOF-WS 12/09/1997 961006-WS Grandfather
Certificate
PSC-05-0142-PAA-WS 02/07/2005 030123-WS Transfer
of Majority
Organizational Control
PSC-2024-0228-PAA-WS 07/08/2024 20220142-WS Transfer of Certificate
* * 20240140-WS Amendment of Certificate
*Order Number and
date to be provided at time of issuance.
See Order No. PSC-05-0678-FOF-WU, issued June 20, 2005, in Docket No.
050255-WU, In re: Application for a
“Quick Take” Amendment of Certificate No. 339-W in Lake County by Brendenwood
Water System, Inc. (“[W]e find that this apparent
violation does not rise to the level of a show cause action because the utility
has filed the application at issue in order to come into compliance with the
statutory requirement.”).
