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State of Florida
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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-
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DATE:
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September 25, 2025
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TO:
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Office of Commission Clerk (Teitzman)
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FROM:
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Division of Economics (Bethea, Bruce,
Hudson)
Division of Accounting
and Finance (McClelland, Quigley, Vogel)
Division of Engineering
(P. Buys, Ramos, L. Smith II)
Office of the General
Counsel (Dose, Augspurger, Crawford)
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RE:
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Docket No. 20250052-WS – Application for
increase in water and wastewater rates in Brevard, Citrus, Duval, Highlands,
Marion, and Volusia Counties by CSWR-Florida Utility Operating Company, LLC
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AGENDA:
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10/07/25 – Regular Agenda – Decision on Interim Rates – Participation
is at the Discretion of the Commission
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Clark
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CRITICAL DATES:
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60-Day Interim Waived until 10/7/2025
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SPECIAL INSTRUCTIONS:
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None
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Case Background
CSWR-Florida Utility Operating Company, LLC
(CSWR or utility) is a Class A utility providing water and wastewater service
to 11 systems in the following counties: Brevard, Citrus, Duval, Highlands,
Marion, and Volusia. As the result of recent acquisitions and a grandfather
certificate, CSWR is now a Florida domestic limited liability company that owns
and operates the water and wastewater systems that are the subject of this rate
case application. CSWR is a wholly-owned subsidiary of CSWR-Florida Utility
Holding Company, LLC (CSWR, LLC).
In 2024, the utility recorded consolidated
company operating revenues of $3,853,102 for water and $3,332,319 for
wastewater. CSWR reported a net operating loss of $1,436,909 for water and $136,494
for wastewater. The utility has approximately 144,303 water customers and
87,571 wastewater customers for its combined systems. The following table
reflects the rate proceeding in which rates were last established for each of
CSWR’s systems.
Last
Rate Proceedings Establishing Rates for CSWR Systems
|
Former Utility Name
|
Order
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Issuance Date
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Aquarina
Utilities, Inc.
|
PSC-2020-0158-PAA-WS
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May 15, 2020
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BFF Corp.
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PSC-2002-0487-PAA-SU
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April 8, 2002
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C.F.A.T. H2O,
Inc.
|
PSC-2011-0366-PAA-WS
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August 31, 2011
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Neighborhood
Utilities, Inc.
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PSC-2016-0537-PAA-WU
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November 23, 2016
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North Peninsula
Utilities, Corp.
|
PSC-2019-0461-PAA-SU
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October 25, 2019
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Rolling Oaks
Utilities, Inc.
|
Citrus County
Approved
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February 1, 2022
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Sebring Ridge
Utilities, Inc.
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PSC-1996-0869-FOF-WS
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July 2, 1996
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Sunshine
Utilities, Inc.
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PSC-2012-0357-PAA-WU
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July 10, 2012
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TKCB, Inc.
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PSC-2021-0435-PAA-SU
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November 22, 2021
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Tradewinds
Utilities, Inc.
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PSC-2011-0385-PAA-WS
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September 13, 2011
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Tymber Creek
Utilities, Inc.
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PSC-2011-0345-PAA-WS;
Amendatory Order
PSC-2011-0345A-PAA-WS
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August 16, 2011
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During
the years of 2021-2024, CSWR applied to acquire ten of the systems in this rate
proceeding, and all ten transfer dockets were approved by the Commission. On July
21, 2025, the Commission approved a grandfather certificate for Rolling Oaks
Utilities, Inc., as the eleventh CSWR system.
On May 30, 2025, CSWR filed an application
for approval of interim and final water and wastewater rate increases. By
letter dated June 27, 2025, staff advised the utility that its Minimum Filing
Requirements (MFRs) had several deficiencies. Having reviewed the utility’s
deficiency response, staff sent a second letter to CSWR on August 15, 2025,
advising that the utility’s rate application remains deficient. To date, the
official date of filing has not been established for noticing purposes.
The utility's application for increased
final water and wastewater rates is based on the historical 12-month period
ended January 31, 2025, with requested capital recovery for facility improvements
since the time of acquisitions. Additionally, the utility requested a single,
consolidated rate structure. In approving interim rates pursuant to Section
367.082, Florida Statutes (F.S.), it has been Commission practice to use the
utility’s current rate structure at the time of the interim rate request. For
purposes of this recommendation, the analysis for each rate structure will be
referred to by the former utility name prior to the acquisitions.
CSWR requested interim rates for all of its
systems, designed to generate additional revenues of $2,279,365 for water
operations and $225,973 for wastewater operations.
In setting final rates, the current rate
structure of each system is also used for the collection of the final revenues.
CSWR requested final rates designed to generate additional revenues of
$3,223,769 for water operations and $954,881 for wastewater operations. By
Order No. PSC-2025-0318-PCO-WS, issued August 21, 2025, the Commission suspended
CSWR’s final rates request.
The intervention of the Office of Public
Counsel (OPC) was acknowledged by Order No. PSC-2025-0113-PCO-WS, issued April
7, 2025, in this docket.
On September 4, 2025, the Commission approved
CSWR’s interim rates request for nine systems and denied the request for one
system.
CSWR has one remaining system, Aquarina,
where the request for interim rates has not yet been addressed. The utility
extended the statutory time frame to address its interim rates request for for
Aquarina through the October 7, 2025 Commission Conference, as the utility has
multiple services for water, potable and non-potable water requires separate
revenue requirements. This recommendation addresses the utility’s
interim rate request for Aquarina. The Commission has jurisdiction pursuant to
Sections 367.081 and 367.082, F.S.
Discussion
of Issues
Issue 1:
Should any interim revenue increase for Aquarina be
approved?
Recommendation:
Yes. The utility should be authorized to collect
annual water revenues for Aquarina – Non-Potable in the amount of $274,095,
which is an increase of $62,050, or 29.26 percent, over staff’s adjusted test
year revenues of $212,044. The utility also should be authorized to collect
annual water revenues for Aquarina – Potable in the amount of $194,053, which
is an increase of $9,820, or 5.33 percent, over staff’s adjusted test year
revenues of $184,233. Aquarina – Wastewater appears to be earning above its
maximum return on equity (ROE). As such, revenues in the amount of $42,253 should
be collected subject to refund, instead of decreasing rates at this time.
(McClelland, Vogel, P. Buys)
Staff Analysis:
Pursuant to Section 367.082(1), F.S., the Commission
may authorize the collection of interim rates during any proceeding for a
change of rates upon petition from any party or its own motion, and in order to
establish a prima facie entitlement for interim relief, the utility shall
demonstrate that it is earning outside the range of reasonableness on its rate
of return. Pursuant to Section 367.082(2)(a), F.S., in a proceeding for an
interim increase in rates, the Commission shall authorize, within 60 days of
the filing for such relief, the collection of rates sufficient to earn the
minimum of the range of rate of return. CSWR filed rate base, cost of capital
and net operating statements to support its requested interim water and
wastewater increases. However, it had to re-file its request for Aquarina, as
the water revenue requirement required a break out of the potable and
non-potable rates.
Pursuant to Section 367.082(5)(b)1., F.S., the achieved
rate of return for interim purposes must be calculated by applying adjustments
consistent with those used in the utility’s most recent rate proceeding and
annualizing any rate changes. Staff reviewed CSWR’s interim request, as well as
all orders that addressed the utility’s most recent rate proceedings. Staff has
attached accounting schedules for Aquarina’s Potable water, Non-Potable water,
and Wastewater systems to illustrate staff’s recommended rate base, capital
structure, and test year operating income amounts. The rate base schedules are
labeled as Schedule Nos. 1-A, 1-B, and 1-C. The capital structure schedule is
labeled Schedule No. 2. The operating income schedules are labeled as Schedule
Nos. 3-A, 3-B, and 3-C. Staff’s recommended adjustments are discussed below.
Interim Rate Base
Simple
Average Adjustment
Consistent with Rule 25-30.433(5), Florida Administrative
Code (F.A.C.), and Aquarina’s previous rate case, the utility’s interim test
year should reflect rate base calculated using the simple beginning and
end-of-year average (simple average) method. CSWR’s interim filing for Aquarina
reflects a rate base calculated using a 13-month average. Staff adjusted the
balances to reflect the simple average method, as shown on Schedule No. 1 for
each system. Staff’s recommended adjustments are reflected in the table below.
Table 1-1
Interim Adjustments to
Reflect Simple Average
|
System
|
Plant
|
Accumulated
Depreciation
|
Accumulated
Amortization of CIAC
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Aquarina – Potable
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$588,548
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($468,392)
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$588
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Aquarina – Non-Potable
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$397,787
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($334,905)
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$0
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Aquarina – Wastewater
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$448,523
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($629,006)
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$847
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Used &
Useful
Staff reviewed the utility’s
interim used and useful (U&U) calculations, previous Commission decisions,
and available usage and capacity data contained in CSWR’s MFR schedules. Staff
recommends the adjustments identified in Table 1-2 for Aquarina, based on
current system conditions and using the methodology approved in the system’s
prior rate case order.
Table 1-2
Interim U&U Adjustments
|
Aquarina
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Last
Rate Case U&U
|
CSWR
Requested U&U
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Staff
Recommended U&U
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Potable WTP
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81%
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81%
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100%
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Non-Potable Water
Plant
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100%
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81%
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100%
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Potable Water
Storage
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47%
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47%
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61%
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Non-Potable Water
Storage
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61%
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47%
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61%
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WWTP
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56%
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56%
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56%
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Potable Water
Distribution System
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63%
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63%
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63%
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Non-Potable Water
Distribution System
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100%
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63%
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100%
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Collection System
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65%
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65%
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65%
|
Sources: Order No.
PSC-2016-0583-PAA-WS, issued December 29, 2016, in Docket No. 20150010-WS, In
re: Application for staff-assisted rate case in Brevard County by
Aquarina Utilities, Inc., Document Nos. 04080-2025, 04993-2025, and
07961-2025, in Docket No. 20250052-WS, In re: Application for increase in
water and wastewater rates in Brevard, Citrus, Duval, Highlands, Marion, and
Volusia Counties by CSWR-Florida Utility Operating Company.
In its interim MFR B-3 schedules, the utility indicated
non-used and useful adjustments to depreciation expense for all three systems.
However, for two systems, Aquarina – Potable and Aquarina – Non-Potable, the
adjustment was not reflected on the MFR B-1 schedules and therefore, not
included in the revenue requirement for either system. As such, staff made
corresponding adjustments to reflect these adjustments.
Based on the above calculations and staff’s corrections to
CSWR’s used and useful percentages, staff recommends the adjustments indicated
on the table below.
Table 1-3
Interim – Used & Useful
Adjustments
|
System
|
Rate Base
|
Depreciation
Expense
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Property Tax
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Aquarina – Potable
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$43,454
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($3,032)
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$457
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Aquarina – Non-Potable
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$61,163
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($90)
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$510
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Aquarina – Wastewater
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$54,220
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$1,250
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$391
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Contributions in Aid of Construction
In its initial and revised MFRs, CSWR listed balances of
$421,159 in Contributions in Aid of Construction (CIAC) and $280,629 in
Accumulated Amortization of CIAC for Aquarina – Potable, with no balance
allotted to either account for Aquarina – Non-Potable. In staff’s
correspondence with CSWR, the utility acknowledged that the amount should have
been allocated between the two systems, and provided the correct allocation.
For Aquarina – Potable, the CIAC balance should be decreased by $47,636 for a
total of $373,523, and the accumulated amortization of CIAC should be reduced
by $34,963 to a total of $245,666. For Aquarina – Non-Potable, the CIAC balance
should be $47,636, and the accumulated amortization of CIAC balance should be
$34,963. Based on the corrections to CSWR’s CIAC balances for both systems,
staff recommends net depreciation expense be increased by $1,584 for Aquarina –
Potable, and decreased by $1,584 for Aquarina – Non-Potable to reflect the
corresponding CIAC amortization expense.
Acquisition Adjustment
In its filing, the utility requested an acquisition
adjustment for all Aquarina systems. [4] The utility
reflected an acquisition adjustment of $1,145,736 for Aquarina – Potable, $863,567
for Aquarina – Non-Potable, and $306,986 for Aquarina - Wastewater in its
interim request. The acquisition adjustments have been removed from rate base
for the purpose of calculating interim rates, as they have not been approved by
the Commission. It is expected that CSWR’s acquisition adjustment petitions
will be consolidated with the instant rate proceeding, and that the acquisition
adjustment requests will be addressed together with CSWR’s rate request in a
future administrative hearing.
Working Capital Allowance
Although CSWR, post-consolidation, would be classified as
a Class A utility, working capital should be calculated for each system using
the same basis from its respective prior rate cases. Pursuant to Rule
25-30.433(3), F.A.C., working capital allowance for Class B and C utilities are
calculated using the formula method, which is one-eighth of operation and
maintenance (O&M) expenses. CSWR did not calculate working capital allowance
in accordance with the rule in its MFRs, and instead calculated a working
capital allowance of approximately one-eight hundredth of O&M expenses for
each system. Staff adjusted the working capital allowance for each system
pursuant to Rule 25-30.433(3), F.A.C., using the formula method and staff’s
recommended O&M for each system. The following table shows all working
capital adjustments made by staff.
Table 1-4
Interim Working Capital Adjustments
|
System
|
Adjustment
|
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Aquarina – Potable
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$11,882
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|
Aquarina – Non-Potable
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$24,091
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Aquarina – Wastewater
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$26,145
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Interim Cost of Capital
Capital Structure
In its initial filing, Aquarina’s capital structure
included only common equity and short term debt. Staff asked the utility for
clarification on how capital structure was calculated. The utility confirmed
that the cost of capital is imputed from CSWR - LLC., the parent company of
CSWR. The capital structure is calculated based on Aquarina’s actual financial
data. The debt portion consists of notes payable to the parent, which are
available as the result of a debt facility sourced by the parent in 2024 and
transferred in response to the capital needs of the system. The equity consists
of paid-in capital contributed primarily for the acquisition and improvement of
the system and the accumulated retained earnings or deficit.
ROE
Pursuant to the provisions of the interim statute, an
interim decrease should be calculated using the maximum ROE limit, and an
interim increase should be calculated using the minimum ROE limit. CSWR’s
deficient initial interim filing, dated May 30, 2025, included schedules
labeled “Interim Rate – Revenue Deficiency” which indicated the use of the ROEs
from Aquarina’s previous rate case. In its updated interim filing, dated June
27, 2025, the MFR Schedule D-1 reflected a ROE of 8.77 percent. The Excel
workpapers did not provide support calculations for the ROE. The updated filing
also included the “Interim Rate – Revenue Deficiency” schedules with ROEs from
each previous rate case, but the actual calculation of revenue requirement
reflected 8.77 percent. The updated interim Aquarina filing, dated August 5,
2025, maintained the previously indicated 8.77 percent ROE.
Section 367.082(5)(b), F.S., states the required rate of
return shall be calculated using the last authorized rate of return on equity
of the utility or regulated company, which also includes using the leverage
formula as appropriate. However, consistent with Commission practice, the
existing ROE does not transfer when a system assumes a new owner, so it is permissible
to use the leverage formula as the last authorized rate of return.
Staff recommends the interim cost of capital be calculated using the 2025
leverage formula, which results in a ROE of 8.55 percent, as shown on Schedule
No. 2.
Simple Average Adjustment
Consistent with Rule 25-30.433(5), F.A.C., and Aquarina’s
previous rate case, the utility’s interim test year for Class B utilities
should reflect a cost of capital calculated using the simple average method.
CSWR’s interim filing reflects a cost of capital calculated using a 13-month
average. Staff adjusted the balance to reflect the simple average method, as
shown on Schedule No. 2.
Pro Rata Adjustment
In its MFRs, the utility only made an adjustment to common
equity. Aquarina’s capital structure consists of common equity and short term
debt. Consistent with Aquarina’s most recent rate case, staff recommends the
capital structure be prorated across both sources of capital, as shown on
Schedule No. 2.
Interim Net Operating Income
Pursuant to Section 367.082(5)(b)1., F.S., the achieved
rate of return for interim purposes must be calculated by applying adjustments
consistent with those made in the utility’s most recent rate proceeding and
annualized for any rate changes. Based on staff’s review, several adjustments
are necessary for interim purposes as reflected on the respective adjustments
to operating income schedules.
Test Year O&M Adjustments – Annualization
CSWR made several adjustments to O&M expenses for Aquarina
related to new third party contracts that began during the test year. However,
staff believes this set of adjustments is improper for interim purposes. Rule
25-30.437(2)(d), F.A.C., states that for the utility to “demonstrate that it is
earning outside the range of reasonableness” on its rate of return, “the utility
must submit schedules of rate base, cost of capital, and net operating income
on an historical basis.” The adjustments provided in its interim filings were
made to annualize a change in O&M expenses that occurred during the test
year. These adjustments would shift O&M expenses in their entirety from a
historical basis to a pro forma basis. Staff believes these adjustments are
appropriate for consideration in the final rate increase, but violate the
nature of the interim process. As such, staff recommends removal of the
annualization adjustments in amounts of $1,790 for Aquarina – Potable, $7,375
for Aquarina – Non-Potable, and $6,596 for Aquarina – Wastewater.
O&M Adjustments Consistent with the Last
Rate Case
Adjustments
to bad debt expense are necessary for interim purposes in order to be
consistent with the treatment in Aquarina’s last rate case. CSWR applied a
3-year averaging adjustment to bad debt expense for Aquarina. Upon review,
staff determined that consistent with its prior rate case, Aquarina did not
require a bad debt adjustment and recommends removing the requested adjustments.
CSWR and staff’s recommended adjustments are detailed in the table below.
Table 1-5
3-Year Averaging Adjustment
to Bad Debt – Water Systems
|
Utility
|
Utility Adjustment
|
Staff Adjustment
|
|
Aquarina – Potable
|
$299
|
($299)
|
|
Aquarina – Non-Potable
|
$299
|
($299)
|
|
Aquarina – Wastewater
|
$432
|
($432)
|
Excessive
Unaccounted Water
Staff reviewed the utility’s
interim excessive unaccounted water (EUW) calculations, previous Commission
decisions, and available usage data contained in CSWR’s MFR schedules. The
Commission determined that Aquarina did not have any EUW for the potable water
system in its prior rate case.[9] However,
based on the utility’s interim data, staff determined the Aquarina system to
have an EUW of 29 percent. The non-potable well did not have a flow meter
during the test year, so EUW could not be determined. Staff will continue to
investigate this matter during the course of the rate case.[10]
Following the same methodology used in the last rate case, staff
recommends applying the updated EUW percentages to the actual purchased power
and chemicals expenses for Aquarina – Potable, resulting in a total reduction
of $1,481.
Infiltration
& Inflow
Staff
reviewed the utility’s interim excessive infiltration and inflow (I&I)
calculations, previous Commission decisions,[11]
and available usage data contained in CSWR’s MFR schedules. Using the
methodology approved in the prior rate case and current conditions, staff is
not recommending any I&I adjustments for interim purposes. While staff
recommends no adjustment for interim purposes, the I&I for the Aquarina system
will be investigated by staff during the course of this rate case.
Earnings Analysis
Aquarina - Wastewater
Based on the adjustments outlined above, Aquarina –
Wastewater reflected overearnings in the interim test year. Pursuant to Section
367.082(2)(b), F.S., in a proceeding for an interim decrease in rates, the
Commission shall authorize the continued collection of the previously
authorized rates; however, revenues collected under those rates that are
sufficient to reduce the achieved rate of return to the maximum of the rate of
return should be held subject to refund with interest. Although Aquarina –
Wastewater’s rates indicate overearning, staff recommends the utility continue
to collect its current rates, and hold subject to refund revenues collected
under those rates that are sufficient to reduce the achieved rate of return to
the maximum of the current rate of return, with interest. Over the full course
of the rate case and potential rate consolidation, staff will evaluate the
potential refund. As such, staff recommends that $42,253 be held subject to
refund for Aquarina – Wastewater.
Revenue Requirement
Staff is recommending revenue requirements consistent with
the calculations required by Section 367.082, F.S. For those systems that
appear to be underearning, the revenue requirements were determined using the
minimum ROE limit. Consistent with the interim statute, staff used the maximum
ROE limit for Aquarina – Wastewater, which appears to be overearning.
Based upon recovery of actual operating expenses for the
year ended January 31, 2025, staff recommends that the utility be authorized to
collect annual water revenues for Aquarina – Non-Potable in the amount of $274,095,
which is an increase of $62,050, or 29.26 percent, over staff’s adjusted test
year revenues of $212,044. The utility also should be authorized to collect
annual water revenues for Aquarina – Potable in the amount of $194,053, which
is an increase of $9,820, or 5.33 percent, over staff’s adjusted test year
revenues of $184,233. Staff recommends no change to rates for Aquarina –
Wastewater, with a total of $42,253 held subject to refund.
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. Staff will evaluate each system’s post-consolidation revenue
requirement to determine if any refunds should be made.
Issue 2:
What are the appropriate interim water and
wastewater rates?
Recommendation:
The
service rates for CSWR in effect as of January 31, 2025, should be increased as
shown below to generate the recommended revenue increase for the interim
period.
|
System
|
% Rate Increase
|
|
Aquarina – Potable
|
5.38%
|
|
Aquarina –
Non-Potable
|
29.26%
|
The rates,
as shown on Schedule No. 4, 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. The utility should file revised tariff sheets and a
proposed customer notice to reflect the Commission-approved rates. In addition,
the approved rates should not be implemented until the required security has
been filed, staff has approved the proposed customer notice, and the notice has
been received by the customers. The utility should provide proof of the date
the notice was given within 10 days of the date of the notice. (Bethea)
Staff Analysis:
Staff
recommends that interim service rates for CSWR be designed to allow the utility
the opportunity to generate additional annual operating revenues as shown below
for potable and non-potable water. The test year revenues were adjusted
to annualize the rates in effect at the end of the test year. To determine the
appropriate increase to apply to the service rates, miscellaneous revenues
should be removed from the adjusted test year revenues for potable. The utility
recorded miscellaneous services revenues of $1,588 for its potable system. There
were no miscellaneous revenues recorded for the non-potable system. The calculations are as follows:
Table 2-1
Potable Percentage
Service Rate Increase
|
|
|
|
|
1
|
Total Test Year Revenues
|
$184,233
|
|
2
|
Less: Miscellaneous
Revenues
|
$1,588
|
|
3
|
Test Year Revenues from Service Rates
|
$182,645
|
|
4
|
Revenue Increase
|
$9,820
|
|
5
|
Percentage Service Rate Increase (Line 4/Line 3)
|
5.38%
|
Source: Staff’s
Interim Recommended Revenue Requirement
Table 2-2
Non-Potable Percentage
Service Rate Increase
|
|
|
|
|
1
|
Total Test Year Revenues
|
$212,044
|
|
2
|
Less: Miscellaneous
Revenues
|
$0
|
|
3
|
Test Year Revenues from Service Rates
|
$212,044
|
|
4
|
Revenue Increase
|
$62,050
|
|
5
|
Percentage Service Rate Increase (Line 4/Line 3)
|
29.26%
|
Source: Staff’s
Interim Recommended Revenue Requirement
Consistent
with Commission practice for interim rates, the above percentage increases
should be applied as an across-the-board increase to the service rates in
effect as of January 31, 2025. Due to a decrease in
percentage, staff recommends that CSWR’s Aquarina wastewater rates remain the
same for interim purposes. However, as discussed in Issue 1, staff has
recommended amounts to be held subject to refund for that system. Table 2-3
reflects the typical residential bill at the 5,000 gallon consumption level for
the utility’s current rates, proposed interim rates, and staff recommended
interim rates.
Table 2-3
Typical Residential 5/8" x
3/4" Meter Bill Comparison
At 5,000 Gallons
|
System
|
Utility
Current
Rates
|
Utility
Proposed
Interim Rates
|
Staff
Recommended
Interim Rates
|
|
Aquarina – Potable
|
$66.79
|
$99.68
|
$70.37
|
|
Aquarina – Non-Potable
|
$19.97
|
$29.82
|
$25.81
|
The rates, as shown on Schedule No. 4, 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. The utility should file revised tariff sheets
and a proposed customer notice to reflect the Commission-approved rates. In
addition, the approved rates should not be implemented until the required
security has been filed, 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.
Issue 3:
What is the appropriate security to guarantee the interim
increase?
Recommendation:
The appropriate security to guarantee the funds
collected subject to refund is a corporate undertaking by CSWR, LLC, on behalf
of its subsidiary, CSWR. CSWR, LLC should be required to provide a written
guarantee that it will support a cumulative corporate undertaking on behalf of CSWR
in the amount of $2,429,866. (Quigley)
Staff Analysis:
Pursuant to Section 367.082, F.S., revenues
collected under interim rates shall be placed under bond, escrow, letter of
credit, or corporate undertaking subject to refund with interest at a rate
ordered by the Commission. As recommended in Issue 1, the total interim
increase for Aquarina is $71,871, with an additional $42,253 being held subject
to refund due to potential overearnings. In accordance with Rule 25-30.360,
F.A.C., staff calculated the potential refund of revenues and interest
collected under interim conditions to be $96,830. This amount is based on an
estimated 10-month collection period of interim rates. A corporate undertaking
request for the interim request associated with its other systems, as approved
by the Commission at the September Agenda Conference in the amount of $2,333,036
is still pending. Including this amount and the current corporate undertaking
request of $96,830, the total cumulative outstanding guarantee is $2,429,866, subject
to refund.
The criteria for a corporate undertaking includes
sufficient liquidity, equity ownership, and profitability to guarantee any
potential refund. Staff reviewed CSWR, LLC’s 2022, 2023, and 2024 confidential
financial statements filed with the Commission to determine if CSWR can support
a corporate undertaking for the requested amount.
Staff’s analysis indicated that over the three-year period ending December 31,
2024, the utility’s parent, CSWR, LLC, has insufficient profitability over the
period, but has sufficient liquidity and equity ownership. The parent company
has a substantial amount of cash available which is sufficient to support a
cumulative corporate undertaking in the amount of $2,429,866. Additionally,
CSWR, LLC has positive working capital and its equity capital significantly
exceeds the requested amount and is supported by an equity ratio that is
greater than 50 percent.
Based on the analysis of CSWR, LLC’s financial position,
staff recommends that CSWR can support a cumulative corporate undertaking in
the amount of $2,429,866. Staff’s recommendation is contingent upon CSWR, LLC
providing a signed letter by a corporate officer that it will support CSWR in
its corporate undertaking endeavor. Staff also received confirmation from the
utility that it had no other outstanding guarantees on behalf of CSWR-owned
utilities in other jurisdictions.
This brief financial analysis is only appropriate for
determining if CSWR, through its parent, can support a corporate undertaking in
the amount proposed and should not be considered a finding regarding staff’s
position on other issues in this proceeding. In no instance should maintenance
and administrative costs associated with any refund be borne by the customers.
Such costs are the responsibility of, and should be borne by CSWR.
Pursuant to Rule 25-30.360(6), F.A.C., the utility should
provide a report by the 20th day of each month indicating the monthly and total
revenue collected subject to refund. Should a refund be required, the refund
should be with interest and undertaken in accordance with Rule 25-30.360,
F.A.C.
