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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 24, 2026
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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 (Sibley, Bruce,
Hudson, McClelland) EJD
Division of Accounting
and Finance (Bardin, Norris, Sewards, Vogel) MC
Division of Engineering
(Brown, King, Ramirez-Abundez, Ramos, Thompson) LVK
Office of the General
Counsel (Imig, Stiller) SPS
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RE:
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Docket No. 20260098-WS – Application for a
limited proceeding to increase wastewater rates and service availability
charges in Polk County, by NC Real Estate Projects, LLC d/b/a Grenelefe
Utility.
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AGENDA:
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10/06/26 – Regular Agenda – Proposed Agency Action – Interested
Persons May Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Ortega
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CRITICAL DATES:
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10/20/26 (90-day statutory deadline to address rule
waiver request)
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SPECIAL INSTRUCTIONS:
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None
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Case Background
On
July 1, 2026, NC Real Estate Projects, LLC d/b/a Grenelefe Utility (Grenelefe
or Utility) filed an Application for limited proceeding to increase wastewater
rates and service availability charges (Application). Grenelefe is a Class B
water and wastewater utility providing service to approximately 1,400 water and
wastewater customers in Polk County. The Utility’s service territory is located
within the Southwest Florida Water Management District (SWFWMD). The Utility
states in its Application that the purpose of the limited proceeding is to
recover the costs associated with the rebuilding of its wastewater treatment
plant (WWTP).
In a staff
assisted rate case (SARC) filed in 2025, the Utility sought over $16 million
dollars in increased rates and charges to pay for the rebuild of the WWTP. The
Commission denied the Utility’s request on the following grounds:
We recognize that the Utility must meet applicable
BMAP [Basin Area Management Plan] guidelines and that the DEP [Department of
Environmental Protection] has established deadlines for compliance. Despite
these requirements, Grenelefe is currently only in the initial bidding phase of
this project, total project cost is still uncertain, and the Utility’s
estimated completion date for the project is beyond the statutory 24-month
timeframe. Based on these facts, we are not approving this project for cost
recovery at this time. We recognize the DEP requirements set forth in the AO [Administrative
Order] and the statutory BMAP requirements.
Based on the Utility’s responses to our
staff’s data requests, it remains unclear what portion of the proposed WWTP
modifications is necessary to achieve compliance with the DEP’s BMAP regulations.
As stated above, DEP is not directly requiring the Utility to increase the
permitted capacity of its WWTP; therefore, not all costs associated with the
proposed project appear to be compliance-driven. Without a clear delineation of
the specific improvements and corresponding costs required to meet the DEP’s
BMAP regulations, we cannot approve the pro forma project at this time. We
cannot consider cost recovery for the project until the Utility provides a more
detailed plan that clearly identifies the compliance-related project components
and associated costs. Our denial is without prejudice to Grenelefe filing a
request for cost recovery of this project at an appropriate time when total
project cost is known, the in-service date is established, and any material,
related uncertainties are resolved.
Grenelefe
represents in its Application that the uncertainties listed in the underscored
sentence above are resolved and its request is now ripe for consideration in a
limited proceeding.
The Commission has broad authority to
conduct limited proceedings under Section 367.0822(1), Florida Statutes (F.S.).
Rule 25-30.445, F.A.C., which the Commission adopted to implement Section
367.0822, F.S., restricts the ability of water and wastewater systems to use
the limited proceeding process. Rule 25-30.445(6), F.A.C., provides that a
limited proceeding will not be allowed if:
(a) The utility’s filing includes more than
six separate projects for which recovery is sought. Corresponding adjustments
for a given project are not subject to the above limitation;
(b) The requested rate increase exceeds 30
percent;
(c) The utility has not had a rate case
within seven years of the date the petition for limited proceeding is filed
with the Commission; or
(d) The limited proceeding is filed as the
result of the complete elimination of either the water or wastewater treatment
process.
Grenelefe
acknowledges that its request would result in a rate increase of greater than
30 percent.
Accordingly, on
July 20, 2026, Grenelefe filed a petition for variance and waiver (Petition) of
Rule 25-30.455(6)(b), F.A.C.
Florida law allows
agencies to waive or provide other relief (variances) to persons subject to regulation
where the strict application of uniformly applicable rule requirements leads to
“unreasonable, unfair, and unintended results in particular instances.” Section
120.542(1), F.S. Variances and waivers shall be granted when the person
subject to the rule demonstrates that the purpose of the underlying
statute will be or has been achieved by other means by the person and
when application of a rule would create a substantial hardship or would violate
principles of fairness. Section 120.542(2), F.S.
On July 29,
2026, the Commission filed a Florida Administrative Register notice acknowledging
receipt of Grenelefe’s Petition. The
time for filing comments, provided by Rule 28-104.003, F.A.C., expired on
August 12, 2026. No comments as to Grenelefe’s Petition were received.
This
recommendation addresses Grenelefe’s Petition only. If the Commission approves Grenelefe’s
request for rule waiver, a subsequent recommendation addressing the merits of Grenelefe’s
Application for a limited proceeding to increase wastewater rates and service
availability charges will be presented at a subsequent Agenda Conference.
The Commission
has jurisdiction under Sections 120.542, 367.0822, and 367.121, F.S.
Discussion of Issues
Issue 1:
Should
the Commission grant Grenelefe’s petition for a waiver of Rule 25-30.445(6),
F.A.C.?
Recommendation:
Yes.
Grenelefe has demonstrated that the purpose of the underlying statute will be
achieved by other means and that the application of the rule would create a
substantial hardship or would violate the principles of fairness. (Imig)
Staff
Analysis:
Grenelefe’s
Petition
In its Application,
Grenelefe states that this proceeding is being requested to recover the costs
associated with the rebuilding of its wastewater treatment plant by increases
in wastewater rates and in service availability charges. Grenelefe asserts that
the rebuild is being required by the Florida Department of Environmental
Protection (DEP). Grenelefe further states that because this request is being
made in order to recover costs required by a governmental or regulatory agency,
these costs represent “Environmental Compliance Costs” as defined in Section
367.081(2)(a)2c, F.S.
Grenelefe
argues that the intent of Rule 25-30.445(6)(b), F.A.C., is to prevent substantial
increases in rates without a thorough review of all aspects of utility
operations. Grenelefe states that the purpose of the Rule has already been met
because all aspects of utility operations were thoroughly reviewed in a
staff-assisted rate case earlier this year. Therefore, enforcing
that requirement and mandating that the Utility file a full rate case under
Section 367.081, F.S., serves no useful additional purpose.
Further,
Grenelefe argues that denial of this limited proceeding would result in:
(a)
Substantial additional cost and hardship to the utility
and its customers by requiring the preparation and submittal of detailed MFRs
and a full rate case for no useful purpose.
(b)
Substantial delay in the Utility being able to comply
with DEP mandated improvements to its wastewater system that are already
nearing their required implementation date, thereby adding additional hardship
to the Utility.
Requirements of Section 120.542, F.S.
Section
120.542(2), F.S., provides a two-pronged test for determining when waivers of
and variances from agency rules shall be granted:
. . .
when the person subject to the rule demonstrates that the purpose of the
underlying statute will be or has been achieved by other means by the person and
when application of the rule would create a substantial hardship or would
violate principles of fairness. For
purposes of this section, “substantial hardship” means demonstrated economic,
technological, legal or other type of hardship to the person requesting the
variance or waiver. For purposes of this section, “principles of fairness” are
violated when the literal application of a rule affects a particular person in
a manner significantly different from the way it affects other similarly
situated persons who are subject to the rule.
Purpose
of the Underlying Statute
Rule
25-30.445, F.A.C., primarily implements Section 367.0822, F.S., which authorizes the Commission to
“conduct limited proceedings to consider, and act upon, any matter within its
jurisdiction . . . .” Rule 25-30.445(6), F.A.C., serves to limit the matters
that the Commission may take up via a limited proceeding. The Commission has
previously opined as to the underlying purpose of Section 367.0822, F.S.:
We
believe that the purpose of the Legislature in enacting Section 367.0822,
Florida Statutes (1985), was to provide a narrow exception to Section 367.081,
Florida Statutes (1985), which requires the Commission to consider a broad
range of ratemaking components. The purpose of a limited proceeding is to
permit review of generally singular topics, or a few well-defined issues, to
the exclusion of all others. The limited applicability of such a proceeding
mandates that the burden must rest on the utility to prove that Section
367.0822, Florida Statutes (1985) should, in fact, be utilized with regard to a
specific case.
In the
instant case, Grenelefe argues that the purpose of the underlying statute is achieved
by reviewing the singular topic – the WWTP rebuild – the Commission denied without prejudice in
the previous SARC. Staff agrees that the purpose of the underlying statute will
be achieved and that this limited proceeding is to address just the additional wastewater
rates and charges that would be incurred because of the DEP requirement. The DEP
mandate was raised during the utility’s last SARC, but was denied due to lack
of information to make a proper determination. The other issues that would be
addressed in a full rate case under 367.081, F.S., were addressed in the SARC. The
limited proceeding will allow for finality on the WWTP improvements.
Substantial
Hardship or Principles of Fairness
The second
prong of the rule waiver test is met if strict application of the rule either
(1) creates a substantial hardship or (2) would violate the principles of
fundamental fairness. The utility may meet the second prong through either path
and is not required to show both.
Grenelefe
argues that denial of this limited proceeding based on the application of Rule
25-30.445(6)(b), F.A.C., would result in substantial hardship because there
would be added cost to the Utility and its customers if Grenelefe were required
to prepare and submit detailed MFRs, that a substantial delay in the
improvements to the WWTP would result, and the Utility would then be in violation
of requirements imposed by DEP. Staff agrees that requiring Grenelefe to
prepare and submit detailed MFRs for the entirety of its utility would create a
substantial hardship on the utility and its customers and is unnecessary this
quickly after the SARC. On Grenelefe’s second point, staff agrees that DEP has
mandated that Grenelefe bring its WWTP into compliance and that delay in
pursuing improvements may result in a substantial hardship. The scope of DEP’s requirements,
the cost of potential upgrades, and appropriate recovery are all factual issues
to be addressed by the Commission when staff brings a full recommendation
forward on the Utility’s Application. Denial of this waiver and the opportunity
for Grenelefe to pursue a limited proceeding would create a substantial
hardship for the Utility. Therefore, staff believes that Grenelefe’s request satisfies
the second prong of Section 120.542, F.S.
Conclusion
Section 120.542(1), F.S., acknowledges
that strict application of uniformly applicable rule requirements can lead to
unreasonable, unfair, and unintended results in particular instances. The
Commission must waive a rule if the utility can show both that the purpose of
the underlying statute is achieved by other means, and that the principles of
fairness are violated if the rule is strictly applied. Grenelefe has
demonstrated that the purpose of the underlying statute will be achieved by
other means and that the application of the rule would create a substantial
hardship or would violate the principles of fairness. Therefore, staff
recommends the Commission grant the petition for waiver of Rule 25-30.445(6),
F.A.C
Issue 2:
Should
this docket be closed?
Recommendation:
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. If the utility’s petition for a rule waiver is granted,
then the docket should remain open pending the Commission’s decision regarding
Grenelefe’s application for a limited proceeding. However, if the utility’s petition for a rule
waiver is denied, then the docket should be closed upon the issuance of the
consummating order. (Imig)
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. If the utility’s petition for
a rule waiver is granted, then the docket should remain open pending the
Commission’s decision regarding Grenelefe’s application for a limited
proceeding. However, if the utility’s
petition for a rule waiver is denied, then the docket should be closed upon the
issuance of the consummating order.