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:

October 20, 2016

TO:

Office of Commission Clerk (Stauffer)

FROM:

Division of Accounting and Finance (Norris, Frank, Wolmers)

Division of Economics (Bruce, Friedrich, Hudson, Johnson)

Division of Engineering (P. Buys, Ellis, Graves, Knoblauch, Lee, Matthews)

Office of the General Counsel (Trierweiler, Janjic, Taylor)

RE:

Docket No. 160101-WS – Application for increase in water and wastewater rates in Charlotte, Highlands, Lake, Lee, Marion, Orange, Pasco, Pinellas, Polk, and Seminole Counties by Utilities, Inc. of Florida.

AGENDA:

11/01/16Regular Agenda – For Issues 1-4, Decision on Suspension of Rates and Interim Rates – Participation is at the discretion of the Commission. For Issue 5 – Proposed Agency Action –Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Brisé

CRITICAL DATES:

10/30/16 (60-Day Suspension Date Waived by Company to 11/1/16)

1/8/2017 (Petition for Waiver deemed approved if not granted within 90 days of receipt)

SPECIAL INSTRUCTIONS:

None

 

 Case Background

Utilities, Inc. of Florida (UIF or Utility) is a Class A utility providing water and wastewater service to 27 systems in the following counties: Charlotte, Highlands, Lake, Lee, Marion, Orange, Pasco, Pinellas, Polk, and Seminole. As the result of a recent corporate reorganization and name change, UIF is the sole surviving corporation that owns and operates the water and wastewater systems that are the subject of this rate case application. UIF is a wholly-owned subsidiary of Utilities, Inc. (UI).

In 2015, the Utility recorded total company operating revenues of $13,336,372 and $15,094,296 for water and wastewater, respectively. UIF reported net operating income for 2015 of $1,682,158 for water and $3,222,388 for wastewater. In 2015, UIF had 34,022 and 32,524 respective water and wastewater customers for it combined systems. The following table reflects the rate proceeding in which rates were last established for UIF’s systems.

Last Proceedings Establishing Rates for UIF Systems

Former Utility Name

Order

Issuance Date

Lake Placid Utilities, Inc.

PSC-14-0335-PAA-WS

June 30, 2014

Cypress Lakes Utilities, Inc.

PSC-14-0283-PAA-WS

May 30, 2014

Lake Utility Services, Inc.

PSC-11-0514-PAA-WS

November 3, 2011

Utilities, Inc. of Pennbrooke

PSC-12-0667-PAA-WS

December 26, 2012

Utilities, Inc. of Eagle Ridge

PSC-11-0587-PAA-SU

December 21, 2011

Labrador Utilities, Inc.

PSC-15-0208-PAA-WS

May 26, 2015

Mid-County Services, Inc.

PSC-12-0389-PAA-SU

July 27, 2012

Tierra Verde Utilities, Inc.

PSC-09-0372-PAA-SU

May 27, 2009

Utilities, Inc. of Longwood

PSC-10-0407-PAA-SU

June 21, 2010

Sanlando Utilities Corporation

PSC-15-0233-PAA-WS

June 3, 2015

Utilities Inc., of Florida (Marion and Seminole Counties)

PSC-16-0296-PAA-WS

June 27, 2016

Utilities Inc., of Florida (Orange, Pasco and Pinellas County)

PSC-14-0025-PAA-WS

January 10, 2014

 

On November 2, 2015, Cypress Lake Utilities, Inc. (Cypress Lakes), Utilities, Inc. of Eagle Ridge (Eagle Ridge), Utilities, Inc. of Florida (UIF-Marion, UIF-Pinellas, UIF-Orange, UIF-Pasco, and UIF-Seminole), Labrador Utilities, Inc. (Labrador), Lake Placid Utilities, Inc. (Lake Placid), Lake Utility Services, Inc. (LUSI), Utilities, Inc. of Longwood (Longwood), Mid-County Services, Inc. (Mid-County), Utilities, Inc. of Pennbrooke (Pennbrooke), Utilities Inc. of Sandalhaven (Sandalhaven), Sanlando Utilities Corporation (Sanlando), and Tierra Verde Utilities, Inc. (Tierra Verde) filed a joint application for acknowledgement of corporate reorganization and approval of name change. By Order No. PSC-16-0143-FOF-WS, issued April 12, 2016, the Commission acknowledged the corporate reorganization and name change of UI’s 12 subsidiaries in Florida.[1]

On December 30, 2015, the Utility requested a limited proceeding water rate increase for UIF-Marion, UIF-Pasco, and UIF-Seminole. As the request was filed prior to the Commission’s recognition of UIF’s corporate reorganization, the limited proceeding applied only to the former Utilities Inc., of Florida systems and did not include Longwood and Sanlando in Seminole County. Driving the limited proceeding were (1) galvanized service line replacement costs in Marion County, (2) the loss of irrigation customers, plant additions, and purchased water costs in Pasco County, and (3) interconnection plant addition costs in Seminole County. UIF requested to bifurcate its request for UIF-Pasco and ultimately, deferred its requested Phase I increase to be addressed in the instant docket. As a result of the bifurcation, rate increases for UIF-Marion and UIF-Seminole were addressed at the July 7, 2016 Commission Conference and UIF-Pasco was addressed at the October 11, 2016 Commission Conference. At the time of filing this recommendation, the Proposed Agency Action order for UIF-Pasco has not been issued.

On August 31, 2016, UIF filed an application for approval of interim and final water and wastewater rate increases. By letter dated September 29, 2016, staff advised the Utility that its Minimum Filing Requirements (MFRs) had several deficiencies. The deadline to correct those deficiencies is October 31, 2016. 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 December 31, 2015, with requested adjustments for pro forma projects. 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 it belonged to prior to the corporate reorganization.

UIF requested interim rates designed to generate additional revenues of $414,691 for water operations and $803,024 for wastewater operations. The Utility requested annual interim revenue increases for Lake Placid, Tierra Verde, Sandalhaven, UIF-Marion, UIF-Pinellas, UIF-Seminole (Water). However, by letter dated October 18, 2016, the Utility formally withdrew its interim rate request for Sandalhaven due to reasons discussed further in staff’s recommendation.[2]

UIF did not request interim rate relief for Cypress Lakes, LUSI, Labrador, Pennbrooke, Sanlando, Tierra Verde, Longwood, Eagle Ridge, Mid-County, UIF-Orange, and UIF-Seminole (Wastewater). However, as discussed later, staff conducted a review of all systems to identify any systems potentially earning above its maximum return on equity.

In setting final rates, the current rate structure of each system is also used for the collection of the final revenues. UIF requested final rates designed to generate additional revenues of $2,721,001 for water operations and $4,194,453 for wastewater operations.

The intervention of the Office of Public Counsel was acknowledged by Order No. PSC-16-0189-PCO-WS, issued May 10, 2016, in this docket.

On October 10, 2016, the Utility filed a petition for variance of a specific provision from Rule 25-30.437(3), Florida Administrative Code (F.A.C.). The portion of the rule from which the Utility is requesting waiver addresses the requirement to provide additional detailed billing analyses for each rate change period in the test year. Pursuant to Section 120.542, F.S., notice of the petition for waiver was published in the Florida Administrative Register on October 11, 2016.  No written comments to the notice were received at the time of filing. The time for filing written comments will expire on October 25, 2016. If any written response is filed by October 25, staff will notify the Commissioners immediately and request to modify its recommendation if appropriate. The 90-day statutory deadline for the Commission to address the Utility’s request is January 8, 2017.

The original 60-day statutory deadline for the Commission to suspend the Utility’s requested final rates and address its interim rate request was October 30, 2016. However, by letter dated September 26, 2016, the Utility agreed to extend the statutory time frame by which the Commission is required to address the suspension of UIF’s final rates and its interim rate request. This recommendation addresses the suspension of the Utility’s requested final rates, and requested interim rates, and the petition for variance of a specific provision from Rule 25-30.437(3), F.A.C. The Commission has jurisdiction pursuant to Sections 367.081 and 367.082, F.S.


Discussion of Issues

 

Issue 1: 

 Should the Utility's proposed final water and wastewater rates be suspended?

Recommendation: 

 Yes. The Utility’s proposed final water and wastewater rates should be suspended. (Norris)

Staff Analysis: 

 Section 367.081(6), F.S., provides that the rates proposed by the Utility shall become effective within sixty days after filing unless the Commission votes to withhold consent of implementation of the requested rates. Further, the above referenced statute permits the proposed final rates to go into effect, under bond, escrow, or corporate undertaking eight months after filing unless final action has been taken by the Commission.

Staff has reviewed the filing and has considered the proposed rates, the revenues thereby generated, and the information filed in support of the rate application. Staff believes that it is reasonable and necessary to require further amplification and explanation regarding this data, and to require production of additional and/or corroborative data. This further examination will include on-site inspections by staff accountants and engineers. To date, staff has initiated an audit of UIF’s books and records, as well as an audit of UI, the Utility’s parent, to examine allocated investment and operating expenses. This combined audit is tentatively due on November 30, 2016. In addition, staff sent its first set of discovery on October 20, 2016. Further, staff believes additional discovery requests will be necessary. Therefore, staff recommends suspension of the Utility’s proposed rate increase to allow staff and any intervenors sufficient time to adequately and thoroughly examine the appropriateness of the Utility’s request for final rate relief.


Issue 2: 

 Should any interim revenue increase be approved?

Recommendation: 

 Yes, the Utility should be authorized to collect annual water and wastewater revenues as indicated below.

Water Systems

Adjusted Test Year Revenues

Revenue Increase

% Increase

Revenue Requirement

Lake Placid

 $69,017

 $10,189

14.76%

 $79,206

UIF-Marion

 $161,079

 80,785

50.15%

 241,864

UIF-Pinellas

 $157,855

 14,309

9.06%

 172,164

UIF-Pasco

 $901,930

 56,674

6.28%

 958,604

UIF-Seminole

 $1,014,857

186,352

18.36%

 1,201,209

Total

 

$348,309

 

$2,653,047

 

Wastewater Systems

Adjusted Test Year Revenues

Revenue Increase

% Increase

Revenue Requirement

Lake Placid

$72,314

$638

0.88%

 $72,952

Tierra Verde

$992,530

69,084

6.96%

 1,061,614

UIF-Marion

$47,826

31,438

65.73%

79,264

UIF-Pasco

$505,980

108,280

21.40%

 614,260

Total 

 

$209,440

 

 $1,828,090

 

In addition, seven systems appear to be earning above their maximum return on equity (ROE). As such, revenues should be collected subject to refund with interest, as shown below.

System

Revenue Held

Subject

to Refund

Percentage

UIF-Seminole-Wastewater

($138,594)

(16.61%)

LUSI-Water

 (143,546)

(2.63%)

Labrador-Wastewater

(134,838)

(20.87%)

Pennbrooke-Wastewater

(47,924)

(9.35%)

Longwood-Wastewater

(17,559)

(2.18%)

Eagle Ridge-Wastewater

(24,112)

(2.07%)

Cypress Lakes-Water

(24,335)

(6.87%)

Total

($530,908)

 

 

 (Norris, Hudson, Lee, Matthews)

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 367.081(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.

UIF filed rate base, cost of capital, and operating statements to support its requested interim water and wastewater increases. As mentioned in the Case Background, staff conducted a review of the systems that did not request interim rates in order to identify any systems potentially earning above its maximum ROE. In order to review those systems that did not request an interim increase, staff used the Utility’s supporting schedules in its MFRs.

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 UIF's interim request, as well as all orders that addressed the Utility’s most recent rate proceedings. Staff has attached accounting schedules for each applicable system 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

In the last rate case for many of the systems, the Commission made certain adjustments related to the Phoenix Project, which is the parent company’s accounting and billing software. In its filing, the Utility made adjustments to accumulated depreciation and depreciation expense consistent with the Commission’s vote which increased the average service life to 10 years. Staff believes these adjustments are appropriate for interim purposes in the instant case. However, staff believes additional adjustments to rate base are necessary for interim purposes.

Used & Useful

Pursuant to Section 367.082, F.S., the method for the used and useful (U&U) calculation in a system’s last rate case must be used for interim purposes. Staff reviewed the Utility's interim U&U calculations on a per system basis. The review is based on previous Commission decisions and available data of usage and capacity contained in UIF’s MFR Schedules. Consistent with Commission practices, staff recommends no adjustments for all water treatment and distribution systems as they have been determined to be 100 percent U&U by prior rate case orders, and the MFR Schedules show no customer growth and change in capacity. For the same reason, staff recommends no adjustments for all wastewater collection systems.

Staff recommends the following U&U adjustments for wastewater treatment systems contained in the interim rate base. The Lake Placid wastewater treatment plant should be considered 28.5 percent U&U based on the prior rate case order, which is higher than the 20.8 percent based on usage and capacity contained in MFR Schedule F-6. Similarly, the UIF-Marion wastewater treatment plant should be considered 59 percent U&U based on the prior rate case order.

Based on the above calculations, staff recommends the adjustments indicated on the table below.

                                                                     Table 2-1

Interim – Used & Useful Adjustments

System

Rate Base

Depreciation Expense

Property Tax

Lake Placid-Wastewater

($24,425)

$0

($757)

UIF-Marion-Wastewater

($5,634)

($2,082)

($141)

 

Working Capital Allowance

Although UIF, post-consolidation, is classified a Class A utility, working capital should be calculated for each system using the same basis from the respective prior rate cases. The Utility correctly followed this methodology in its MFRs. Pursuant to Rule 25-30.433(2), Florida Administrative Code (F.A.C.), interim working capital for the former Class B and C utilities was calculated using the formula method which is one-eighth of operation and maintenance (O&M) expenses and Class A utilities used the balance sheet approach.

Based on staff’s adjustments to water and wastewater O&M expenses discussed below, staff made corresponding adjustments to working capital for the systems using the formula method. Additionally, staff made an adjustment for the systems using the balance sheet approach. Consistent with Commission practice, one-half of the total rate case expense should be included in working capital.[3] Although recent legislation has reversed this practice, these amounts were approved by the Commission in dockets prior to this legislation. Thus, these amounts are properly included in working capital. Staff adjusted the interim working capital of the systems using the balance sheet approach to reflect prior rate case expense. The following table shows all working capital adjustments made by staff.

Table 2-2

Interim – Working Capital Adjustments

System

Increase/(Decrease)

Adjustments

Lake Placid-Water

($5,073)

Lake Placid-Wastewater

($5,153)

Tierra Verde-Wastewater

$135

UIF-Marion -Water

$560

UIF-Marion -Wastewater

$78

UIF-Pinellas -Water

$12,046

UIF-Pasco -Water

$73,468

UIF-Pasco -Wastewater

$29,090

UIF-Seminole -Water

$66,199

 

 

Interim Cost of Capital

In its initial filing, the Utility requested separate interim overall cost of capital rates for each water and wastewater system based on each respective rate base. 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. 

Staff’s only recommended adjustments are to the consolidated capital structure shared by UIF-Marion, UIF-Orange, UIF-Pinellas, UIF-Pasco, and UIF-Seminole. As originally filed, the Utility’s interim capital structure was not consolidated across all five counties, and UIF did not reflect any allocation of customer deposits, accumulated deferred income taxes, or investment tax credits (ITCs) associated with UIF-Seminole’s wastewater system. As such, staff consolidated the aforementioned balances for the five county systems and increased customer deposits by $8,038, ITCs by $12,609, and ADITs by $184,622 to account for UIF-Seminole’s wastewater system. Additionally, the capital structure was reconciled to a rate base that did not include the rate base of UIF-Seminole’s wastewater system.

Staff’s final adjustment was to lower the Utility’s cost rate of long-term debt from 6.70 percent to 6.66 percent in order to remain consistent with the Utility’s most recent case that shared the same test year.[4] The Utility’s proposed and staff’s recommended capital structure for each system is reflected on Schedule No. 2 for UIF-Marion, UIF-Orange, UIF-Pinellas, UIF-Pasco, and UIF-Seminole.

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 adjustments 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 Adjustments

The interim filing for UIF-Pasco made a test year adjustment to decrease incorrectly booked chemical expense of $1,242 in its final rate increase. However, the Utility did not include this test year adjustment in its calculation of its interim rate increase. As such, staff decreased chemicals expense by $1,242.

Adjustments Consistent with the Last Rate Case

Several adjustments to O&M expenses and taxes other than income (TOTI) are necessary for interim purposes in order to be consistent with the treatment in the Utility’s last rate case.

First, staff reduced salaries and wages expense for UIF-Marion by $9,037 for water and $1,024 for wastewater to reflect benchmarking consistent with its last rate case. Staff used UIF-Marion’s test year ratio of pensions and benefits to salaries and applied it to the previously mentioned salary adjustment in order to determine the corresponding adjustments for pensions and benefits expense. The resulting adjustment was a decrease of $3,279 for water and $371 for wastewater. A corresponding adjustment was also made to decrease TOTI by $691 for water and $78 for wastewater to reflect payroll taxes consistent with the salary adjustments.

Second, staff increased transportation expense for UIF-Seminole (water) by $2,736 to reflect the 3-year average for transportation expense consistent with its last rate case.

Third, staff adjusted bad debt expense for several systems to reflect the 3-year average for bad debt expense consistent with the treatment in each system’s last rate case. The resulting adjustments are reflected in the following table.

Table 2-3

Interim – 3-Year Averaging Adjustment to Bad Debt

System

Increase/(Decrease)

Adjustments

UIF–Marion -Water

($361)

UIF-Marion -Wastewater

$15

UIF-Pinellas -Water

($141)

UIF-Pasco -Water

$2,043

UIF-Pasco -Wastewater

($2,362)

UIF-Seminole -Water

($9,523)

Amortization of Rate Case Expense

Staff recommends that for interim purposes, O&M expenses should be adjusted by the difference between Commission-approved annual amortization amount of rate case expense and the test year annual amortization. The Commission found in the Utilities, Inc., generic docket “that rate case expense associated with Docket No. 120161-WS shall be allocated to each UI Florida subsidiary based on the ratio of each subsidiary’s ERCs to UI’s total Florida ERCs as of December 31, 2013.”[5] The Order specified that each subsidiary would be allowed to recover its allocated portion of rate case expense over four years, pursuant to Section 367.0816, F.S. Staff’s total amount of authorized rate case expense includes expense associated with Docket No. 120161-WS, and the resulting adjustments are reflected in the following table.

 

 

 

 

 

Table 2-4

Interim – Adjustments to Rate Case Expense

System

Increase/(Decrease)

Adjustments

Lake Placid-Water

($249)

Lake Placid-Wastewater

$115

Tierra Verde-Wastewater

$1,084

UIF-Marion -Water

$235

UIF-Marion -Wastewater

$33

UIF-Pinellas -Water

$5,992

UIF-Pasco -Water

$36,734

UIF-Pasco -Wastewater

$14,545

UIF-Seminole -Water

($35,977)

 

Excessive Unaccounted Water

In Lake Placid’s last rate case, the Commission determined that the system had excessive unaccounted for water (EUW) of 1.9 percent. In its MFRs for the instant case, the figure was calculated at 3.1 percent. Following the same methodology used in the last rate case, staff recommends applying the updated EUW percentage from the MFRs to the actual water treatment expense for 2016. The resulting adjustment is a reduction of $109 to water O&M expense for Lake Placid.

Inflow & Infiltration

In UIF-Pasco’s last rate case, the Commission determined that its Orangewood and Buena Vista systems had no excessive infiltration and inflow (I&I). In its MFRs submitted for the instant case, I&I was calculated at 15.89 percent. Following the same methodology used in the last rate case, staff recommends applying the updated I&I percentage from the MFRs to the actual wastewater treatment expense for 2016. Staff applied the I&I reduction to the proportionate expenses associated with the individual system. The resulting adjustment is a reduction of $4,974 for UIF-Pasco (wastewater).

Earnings Analysis

In addition to the systems reflected in UIF’s interim request, staff also reviewed UIF’s other PSC-regulated systems to determine whether any of the systems were potentially earning above their maximum allowed ROE. Staff reviewed all orders that addressed the Utility’s most recent rate proceeding and made adjustments as discussed below. Based on this methodology, there appears to be seven systems reflecting potential overearnings that warrant additional review. 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.

As part of its U&U analysis, staff reviewed wastewater treatment systems not contained in the interim rate request for potential overearnings evaluation and recommends the following adjustments. Based on staff’s review, Labrador wastewater treatment plant should be considered 79.94 percent U&U based on the prior rate case order because MFR Schedule F-6 contains no usage and capacity data for U&U calculations. As such, staff recommends a net non-U&U adjustment of $302,751 to reduce rate base. Corresponding adjustments should also be made to reduce depreciation expense by $14,899 and property taxes by $2,173.

Staff also reviewed EUW and I&I for the systems not included in the interim rate request. In UIF-Seminole’s last rate case, the Commission determined that its Ravenna Park system was determined to have 33.0 percent excessive I&I. In its MFRs submitted for the instant case, I&I was calculated at 31.7 percent for this system. Following the same methodology used in the last rate case, staff recommends applying the updated I&I percentage from the MFRs to the actual wastewater treatment expense for 2016. Staff applied the I&I reduction to the proportionate expenses associated with the individual system. The resulting adjustment is a reduction of $29,122 for UIF-Seminole.

Additionally staff made further adjustments to reflect the appropriate working capital, adjustments consistent with the last case, and the appropriate amortization of rate case expense. These adjustments are consistent with staff’s adjustments to the Utility’s interim request, as previously discussed, and are reflected in the following tables.

Table 2-5

Earnings Analysis – Working Capital Adjustments

System

Increase/(Decrease)

Adjustment

UIF-Seminole -Wastewater

$35,160

Labrador-Wastewater

($84,050)

LUSI-Water

$134,551

Pennbrooke-Wastewater

$1,216

Longwood-Wastewater

$48,223

Eagle Ridge-Wastewater

($112,824)

Cypress Lakes-Water

($820)

Table 2-6

Earnings Analysis – Additional Adjustments Consistent with Last Rate Case

System

Methodology Description

Expense Account

Increase/(Decrease) Adjustments

UIF-Seminole -Wastewater

3-yr average

Transportation Expense

$1,373

Labrador-Wastewater

Lease adjusted based on rate of return

Rental Expense

($15,618)

 

 

Table 2-7

Earnings Analysis – Benchmarking Adjustments to Salaries & Wages Additional

System

Salaries & Wages Expense-Employees/Officers

Pensions & Benefits Expense

Payroll Tax

Pennbrooke-Wastewater

$1,166

$403

$89

Longwood-Wastewater

($18,950)

($5,392)

($1,450)

Table 2-8

Earnings Analysis – 3-Year Averaging Adjustment to Bad Debt

System

Increase/(Decrease)

Adjustment

UIF-Seminole -Wastewater

$86

LUSI-Water

$5,245

Pennbrooke-Wastewater

$2

Longwood-Wastewater

($1,534)

Eagle Ridge-Wastewater

($654)

Table 2-9

Earnings Analysis – Adjustments to Rate Case Expense

System

Increase/(Decrease)

Adjustments

UIF-Seminole -Wastewater

($19,983)

LUSI-Water

$67,275

Labrador-Wastewater

($5,836)

Pennbrooke-Wastewater

$625

Longwood-Wastewater

$899

Eagle Ridge-Wastewater

$6,898

Cypress Lakes-Water

($2,972)

Revenue Requirement

Staff has recommended revenue requirements consistent with the calculations required by the interim statute and Commission practice. For those systems that appear to be underearning, the revenue requirements were determined using the minimum ROE limit. Consistent with the interim statute, for those systems that appear to be overearning, staff used the maximum ROE limit. Based on the above adjustments, staff’s recommended interim rate of return resulted in a revenue requirement that exceeded what UIF requested. In such circumstances, it has been Commission practice to limit the revenue requirement to the level requested by a utility.[6] Consistent with Commission practice, staff limited the revenue requirements of Tierra Verde, UIF-Pinellas, and UIF-Pasco (both water and wastewater) to the level requested by the Utility.

Based upon recovery of actual operating expenses for the year ended December 31, 2015, staff recommends that the appropriate combined interim revenue requirements are $2,653,047 and $1,828,090, respectively for the Utility’s water and wastewater systems. This results in interim increase in annual revenues of $348,309 for the water systems and $209,440 for the wastewater systems. For systems that appear to be earning above their maximum ROE, staff recommends that revenues totaling $530,908 should be collected subject to refund with interest and each system should continue collecting current rates. The following tables show the revenue requirement and interim increase in annual revenues for each respective system.

Table 2-10

Interim Revenue Requirement – Water Systems

Water Systems

Adjusted Test Year

Revenues

Revenue Increase

% Increase

Revenue Requirement

Lake Placid

 $69,017

 $10,189

14.76%

 $79,206

UIF-Marion

 $161,079

 80,785

50.15%

 241,864

UIF-Pinellas

 $157,855

 14,309

9.06%

 172,164

UIF-Pasco

 $901,930

 56,674

6.28%

 958,604

UIF-Seminole

 $1,014,857

186,352

18.36%

 1,201,209

         Total

 

$348,309

 

$2,653,047

Table 2-11

Interim Revenue Requirement – Wastewater Systems

Wastewater Systems

Adjusted Test Year

Revenues

Revenue Increase

% Increase

Revenue Requirement

Lake Placid

$72,314

$638

0.88%

 $72,952

Tierra Verde

$992,530

69,084

6.96%

 1,061,614

UIF-Marion

$47,826

31,438

65.73%

79,264

UIF-Pasco

$505,980

108,280

21.40%

 614,260

           Total 

 

$209,440

 

 $1,828,090

 

 

Table 2-12

Earnings Analysis

System

Revenue Held

Subject

to Refund

Percentage

UIF-Seminole-Wastewater

($138,594)

(16.61%)

LUSI-Water

 (143,546)

(2.63%)

Labrador-Wastewater

(134,838)

(20.87%)

Pennbrooke-Wastewater

(47,924)

(9.35%)

Longwood-Wastewater

(17,559)

(2.18%)

Eagle Ridge-Wastewater

(24,112)

(2.07%)

Cypress Lakes-Water

(24,335)

(6.87%)

Total

($530,908)

 


Issue 3: 

 What are the appropriate interim water and wastewater rates?

Recommendation: 

 The service rates for UIF in effect as of December 31, 2015, should be increased as shown below to generate the recommended revenue increase for the interim period.

 

System

% Rate Increase

Lake Placid-Water

14.81%

Tierra Verde-Wastewater

6.96%

UIF-Marion -Water

50.88%

UIF-Marion -Wastewater

66.14%

UIF-Pinellas -Water

9.14%

UIF-Pasco -Water

6.38%

UIF-Pasco -Wastewater

21.49%

UIF-Seminole -Water

18.67%

 

The rates, as shown on Schedule Nos. 4-A and 4-B, 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. (Bruce, Friedrich, Hudson, Johnson)

Staff Analysis: 

 Staff recommends that interim service rates for UIF be designed to allow the Utility the opportunity to generate additional annual operating revenues as shown below.  The test year revenues were adjusted to annualize the rate 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. The calculations are as follows:

Table 3

Percentage Increase Less Miscellaneous Revenues

System                                                                 

Adjusted Test Year Revenues

Miscellaneous Revenues

Revenues – Miscellaneous Revenue

Revenue Increase                                                                                                                                                                                                                                                

% Rate Increase

Lake Placid-Water

$69,017

$231

$68,786

$10,189

14.81%

Lake Placid-Wastewater

$72,314

$210

$72,104

$638

.88%

Tierra Verde-Wastewater

$992,530

$0

$992,530

$69,084

6.96%

UIF-Marion -Water

$161,079

$2,295

$158,784

$80,785

50.88%

UIF-Marion -Wastewater

$47,826

$295

$47,531

$31,438

66.14%

UIF-Pinellas -Water

$157,855

$1,248

$156,607

$14,309

9.14%

UIF-Pasco -Water

$901,930

$14,317

$887,613

$56,674

6.38%

UIF-Pasco -Wastewater

$505,980

$2,166

$503,814

$108,280

21.49%

UIF-Seminole -Water

$1,014,857

$16,487

$998,370

$186,352

18.67%

                                                 

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 December 31, 2015, in each respective county. Due to an increase of less than one percent, staff recommends that Lake Placid’s wastewater rates remain the same for interim purposes.  While staff has identified seven systems that may have exceeded their maximum allowed ROE, staff is not recommending a change in rates at this time. However, as mentioned in Issue 2, staff has recommended amounts to be held subject to refund for these systems. The rates, as shown on Schedule Nos. 4-A and 4-B, 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 4: 

 What is the appropriate security to guarantee the interim increase?

Recommendation: 

 A cumulative corporate undertaking is acceptable contingent upon receipt of the written guarantee of the parent company, Utilities, Inc. (UI or company), and written confirmation that the cumulative outstanding guarantees on behalf of UI-owned utilities in other states will not exceed $2 million (inclusive of all Florida utilities). UI should be required to file a corporate undertaking on behalf of its subsidiaries to guarantee any potential refunds of revenues collected under interim conditions. UI’s guaranteed amount subject to refund should be $759,084. Pursuant to Rule 25-30.360(6), F.A.C., the Utility should provide a report by the 20th 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 in accordance with Rule 25-30.360, F.A.C. (Frank, Norris, Wolmers)

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 2, the total interim increase is $557,749, with an additional $530,908 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 $726,848. This amount is based on an estimated eight months of revenue being collected from staff’s recommended interim rates over the Utility’s current authorized rates shown on Schedule No. 4.

Utilities, Inc. of Florida is a wholly-owned subsidiary of UI, which provides all investor capital to its subsidiaries. Based on the amount subject to refund, the incremental increase in UI’s corporate undertaking is $726,848. A corporate undertaking request for Pasco County, in Docket No. 150269-WS, for the amount of $32,236 is still pending. Including this amount and the current corporate undertaking request of $726,848 the total cumulative outstanding guarantee is $759,084 subject to refund.

The criteria for a corporate undertaking include sufficient liquidity, ownership equity, profitability, and interest coverage to guarantee any potential refund. Staff reviewed UI’s 2013, 2014, and 2015 financial statements to determine if the company can support a corporate undertaking on behalf of its subsidiary. In its 2013 financial statements, UI reported an insufficient working capital amount, an inadequate current ratio, and an inadequate interest coverage ratio. In 2014, UI reported insufficient working capital and an inadequate current ratio. However, the interest coverage ratio was adequate. In 2015, UI working capital, current ratio, and interest coverage ratio were adequate. In addition, UI reported adequate ownership equity and achieved adequate profitability over the 3-year review period.

Based on staff’s review of the financial reports submitted by UI, staff believes UI has adequate resources to support a corporate undertaking in the amount requested. Based on this analysis, staff recommends that a cumulative corporate undertaking of $759,084 is acceptable contingent upon receipt of the written guarantee of UI and written confirmation that the cumulative outstanding guarantees on behalf of UI-owned utilities in other states will not exceed $2 million (inclusive of all Florida utilities).

The brief financial analysis above is only appropriate for deciding if UI 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.

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.

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, the Utility.


Issue 5: 

 Should the Commission grant the Utility's Petition for Waiver or Variance of Schedule E-14, of Commission Form PSC/AFD 19-W (11/93), as incorporated by reference in Rule 25.30-437, F.A.C.?

Recommendation: 

 Yes. The Commission should grant UIF’s Petition for Waiver of the Rule. (Treirweiler)

Staff Analysis: 

 Compliance with Schedule E-14, of Commission Form PSC/AFD 19-W (11/93), as incorporated by reference in Rule 25-30.437, F.A.C., would require the Utility to create billing analyses throughout the test year that capture the data for each class of service by meter size and  reflect all rate changes throughout the test year. Each billing analysis must show the bills, gallons and rates. The goal is to provide the Commission with the data to create an annualized test year. Instead, the Utility provided the rates in effect for each system at the end of the test year period.

UIF asserts that its prior submission of annualized billing analyses from the test year obviates the requirement for the additional documents. UIF estimates that compliance would require an unnecessary creation of an additional 700-900 billing analyses. UIF asserts that it would require extensive time and it would incur inordinate costs to comply. UIF further asserts that it has already produced sufficient data required by staff to fully examine and evaluate UIF’s proposed general rate increase. UIF’s failure to provide separate billing analyses under Schedule E-14 that coincided with each period of rate change during the test year resulted in deficiency number 5(e)1, in the Commission’s September 29, 2016 Deficiency Letter.

UIF is asserting that production of these additional documents would result in a substantial hardship as defined in Section 120.542(2), F.S. In the instant case, these detailed rate change billing analyses would not provide any additional useful data that would facilitate the Commission’s review of UIF’s rate request. The application of this specific MFR requirement would lead to an unreasonable, unfair, and unintended result. The purpose of this specific MFR requirement has already been achieved through the billing analysis schedules already filed by UIF in this docket.

UIF has been authorized by Office of Public Counsel to represent that: “OPC does not oppose UIF’s request for rule waiver as to deficiency 5(e)1 identified on the September 29, 2016 MFR deficiency letter.”

Section 120.542(2), F.S., authorizes the Commission to grant variances or waivers to the requirements of its rules where the person subject to the rules has demonstrated that the underlying purpose of the statute has been or will be achieved by other means, and strict application of the rules would cause the person substantial hardship or would violate principles of fairness. "Substantial hardship" as defined in this section may include a demonstrated economic, technological, legal, or other type of hardship to the person requesting the variance or waiver.

Section 367.081, F. S., provides that the Commission shall fix rates which are just, reasonable, compensatory and not unfairly discriminatory. The underlying purpose for gathering the information required by Rule 25-30.437, F.A.C., is to provide sufficient information for the Commission to set appropriate rates for a utility. The Utility has provided the information in its MFRs that will permit the staff and parties to examine revenues for the test year period. The information the Utility is seeking to waive is not necessary for that determination. Therefore, the underlying purpose of the statute can still be met if the waiver is granted. Further, staff believes the Utility has sufficiently alleged hardship should it be required to comply with the rule.  

Staff therefore recommends that the Commission grant the waiver of the rule. By granting this waiver, UIF will avoid incurring a substantial hardship without adversely impacting the Commission’s ability to determine the annualized adjustment for the test year.


Issue 6: 

 Should this docket be closed?

Recommendation: 

 The docket should remain open pending the Commission’s final action on the Utility’s requested rate increase. (Trierweiler)

Staff Analysis: 

 The docket should remain open pending the Commission’s final action on the Utility’s requested rate increase. With respect to Issue 5, a Consummating Order should be issued unless a person whose substantial interests are affected by the Commission’s decision files a protest within 21 days of the issuance of the proposed agency action portion of the order.


Lake Placid

 

 

 Schedule No. 1-A

Schedule of Water Rate Base

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

Description

Test Year

Utility

Adjusted

Staff

Staff

 

Per

Adjust-

Test Year

Adjust-

Adjusted

 

Utility

ments

Per Utility

ments

Test Year

 

 

 

 

 

 

 

1

Plant in Service

$531,442

($21,785)

$509,657

$0

$509,657

 

 

2

Land and Land Rights

2,799

0

2,799

0

2,799

 

 

3

Non-used and Useful Components

0

0

0

0

0

 

 

 

 

 

 

 

4

Accumulated Depreciation

(252,869)

20,013

(232,856)

0

(232,856)

 

 

5

CIAC

(235,199)

0

(235,199)

0

(235,199)

 

 

6

Accumulated Amortization of CIAC

92,146

0

92,146

0

92,146

 

 

7

CWIP

2

(2)

0

0

0

 

 

8

Working Capital Allowance

0

10,582

10,582

(5,073)

5,509

 

 

9

Rate Base

$138,321

$8,808

$147,129

($5,073)

$142,056

 

 

 

 

 

 

 

 


Lake Placid

 

 

 

Schedule No. 1-B

Schedule of Wastewater Rate Base

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

Description

Test Year

Utility

Adjusted

Staff

Staff

 

Per

Adjust-

Test Year

Adjust-

Adjusted

 

Utility

ments

Per Utility

ments

Test Year

 

 

 

 

 

 

 

1

Plant in Service

$804,592

$21,785

$826,377

$0

$826,377

 

 

2

Land and Land Rights

21,665

0

21,665

0

21,665

 

 

3

Non-used and Useful Components

0

(51,168)

(51,168)

(24,425)

(75,593)

 

 

 

 

 

 

 

4

Accumulated Depreciation

(526,988)

(16,778)

(543,766)

0

(543,766)

 

 

5

CIAC

(335,881)

0

(335,881)

0

(335,881)

 

 

6

Accumulated Amortization of CIAC

180,809

0

180,809

0

180,809

 

 

7

Working Capital Allowance

0

11,154

11,154

(5,153)

6,001

 

 

8

Rate Base

$144,197

($35,007)

$109,190

($29,578)

$79,612

 

 

 

 

 

 

 


Lake Placid

 

Schedule No. 1-C

Adjustments to Rate Base

 

Docket No. 160101-WS

Test Year Ended 12/31/2015

 

 

 

 

 

 

 

 

Explanation

Water

Wastewater

 

 

 

 

 

 

 

 

 

 

Non-used and Useful

 

 

 

 

To reflect net non-used and useful adjustment.

$0

($24,425)

 

 

 

 

 

 

 

Working Capital

 

 

 

 

 To reflect appropriate working capital.

($5,073)

($5,153)

 

 

 

 

 


Lake Placid

 

 

 

 

 

Schedule No. 2

Capital Structure-13-Month Average

 

 

 

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

 

 

Description

Total           Capital

Specific

Subtotal

Prorata

Capital

Ratio

Cost Rate

Weighted Cost

 

 

Adjust-

Adjusted

Adjust-

Reconciled

 

 

ments

Capital

ments

to Rate Base

 

 

 

Per Utility

 

 

 

 

 

 

 

 

 

1

Long-term Debt

$180,000,000

$0

$180,000,000

($179,882,857)

$117,143

49.92%

6.70%

3.34%

 

2

Short-term Debt

9,315,385

0

9,315,385

(9,309,325)

6,060

2.58%

2.32%

0.06%

 

3

Preferred Stock

0

0

0

0

0

0.00%

0.00%

0.00%

 

4

Common Equity

170,208,617

0

170,208,617

(170,097,861)

110,756

47.20%

9.45%

4.46%

 

5

Customer Deposits

696

0

696

0

696

0.30%

6.00%

0.02%

 

6

Deferred Income Taxes

(10,355)

0

(10,355)

10,355

0

0.00%

0.00%

0.00%

 

7

Total Capital

$359,514,343

$0

$359,514,343

($359,279,688)

$234,655

100.00%

7.88%

 

 

 

Per Staff

 

8

Long-term Debt

$180,000,000

$0

$180,000,000

($179,889,368)

$110,632

49.91%

6.66%

3.32%

 

9

Short-term Debt

9,315,385

0

9,315,385

(9,309,660)

5,725

2.58%

2.32%

0.06%

 

10

Preferred Stock

0

0

0

0

0

0.00%

0.00%

0.00%

 

11

Common Equity

170,208,617

0

170,208,617

(170,104,003)

104,614

47.19%

9.45%

4.46%

 

12

Customer Deposits

696

0

696

0

696

0.31%

6.00%

0.02%

 

13

Deferred Income Taxes

0

0

0

0

0

0.00%

0.00%

0.00%

 

14

Total Capital

$359,524,698

$0

$359,524,698

($359,303,030)

$221,668

100.00%

7.86%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOW

HIGH

 

 

 

 

 

 

    RETURN ON EQUITY

9.45%

11.45%

 

 

 

 

 

    OVERALL RATE OF RETURN

7.86%

8.81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Lake Placid

 

 

 

 

 

Schedule No. 3-A

Statement of Water Operations 

 

 

 

 

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

 

 

 

Description

Test Year            Per             Utility

Utility      Adjust-      ments

Adjusted       Test Year      Per Utility

Staff      Adjust-    ments

Staff  Adjusted  Test Year

Revenue Increase

Revenue Requirement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Operating Revenues:

$71,165

$9,005

$80,170

($11,153)

$69,017

$10,189

$79,206

 

 

 

 

 

 

14.76%

 

 

Operating Expenses

 

 

 

 

 

 

 

 

2

    Operation & Maintenance

$45,039

($611)

$44,428

($358)

$44,070

 $0

$44,070

 

 

 

 

 

 

 

 

 

 

3

    Depreciation

14,697

(3,107)

11,590

0

11,590

 0

11,590

 

 

 

 

 

 

 

 

 

 

4

    Amortization

(217)

217

0

0

0

 0

0

 

 

 

 

 

 

 

 

 

 

5

    Taxes Other Than Income

8,196

401

8,597

(502)

8,095

458

8,554

 

 

 

 

 

 

 

 

 

 

6

    Income Taxes

(595)

4,556

3,961

(3,800)

161

3,661

3,822

 

 

 

 

 

 

 

 

 

7

Total Operating Expense

67,120

1,456

68,576

(4,659)

63,917

4,120

68,036

 

 

 

 

 

 

 

 

 

8

Operating Income

$4,045

$7,549

$11,594

($6,494)

$5,100

$6,069

$11,169

 

 

 

 

 

 

 

 

 

9

Rate Base

$138,321

 

$147,129

 

$142,056

 

$142,056

 

 

 

 

 

 

 

 

 

10

Rate of Return

2.92%

 

7.88%

 

3.59%

 

7.86%

 

 

 

 

 

 

 

 

 

 


Lake Placid

 

 

 

 

 

Schedule No. 3-B

Statement of Wastewater Operations

 

 

 

 

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

 

 

 

Description

Test Year            Per             Utility

Utility      Adjust-      ments

Adjusted       Test Year      Per Utility

Staff      Adjust-    ments

Staff    Adjusted    Test Year

Revenue Increase

Revenue Requirement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Operating Revenues:

$75,147

($636)

$74,511

($2,197)

$72,314

$638

$72,952

 

 

 

 

 

 

 

0.88%

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

2

    Operation & Maintenance

$47,400

$491

$47,891

$115

$48,006

 $0

$48,006

 

 

 

 

 

 

 

 

 

 

 

3

    Depreciation

14,786

(5,538)

9,248

0

9,248

 0

9,248

 

 

 

 

 

 

 

 

 

 

 

4

    Amortization

0

0

0

0

0

 0

0

 

 

 

 

 

 

 

 

 

 

 

5

    Taxes Other Than Income

7,984

140

8,124

(856)

7,268

29

7,296

 

 

 

 

 

 

 

 

 

 

 

6

    Income Taxes

2,037

316

2,353

(440)

1,913

229

2,142

 

 

 

 

 

 

 

 

 

 

7

Total Operating Expense

72,207

(4,591)

67,616

(1,182)

66,434

258

66,692

 

 

 

 

 

 

 

 

 

 

8

Operating Income

$2,940

$3,955

$6,895

($1,015)

$5,880

$380

$6,260

 

 

 

 

 

 

 

 

 

 

9

Rate Base

$144,197

 

$109,190

 

$79,612

 

$79,612

 

 

 

 

 

 

 

 

 

 

10

Rate of Return

2.04%

 

6.31%

 

7.39%

 

7.86%

 

 

 

 

 

 

 

 

 

 

 


Lake Placid

Schedule No. 3-C

Adjustments to Operating Income

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

 

 

 

Explanation

Water

Wastewater

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

1

Remove requested interim revenue increase.

($11,239)

($1,661)

 

2

To reflect the appropriate amount of annualized revenues.

86

(536)

 

 

    Total

($11,153)

($2,197)

 

 

 

 

 

 

 

Operation and Maintenance Expense

 

 

 

1

To reflect appropriate rate case expense amortization.

($249)

$115

 

2

To reflect 3.1 percent EUW adjustment.

(109)

0

 

 

    Total

($358)

$115

 

 

 

 

 

 

 

Taxes Other Than Income

 

 

 

1

To reflect RAFs on revenue adjustment.

($502)

($99)

 

2

To remove property taxes on non-used and useful adjustment.

0

(757)

 

 

    Total

($502)

($856)

 

 

 

 

 

 


Lake Placid

 

 

 

 Schedule No. 4-A

Test Year Ended 12/31/15

Docket No. 160101-WS

Monthly Water Rates

 

 

 

Test Year

Utility

Utility

Utility

Staff

 

Rates

Current

Requested

Requested

Recommended

 

12/31/15

Rates

Interim

Final

Interim

 

 

Residential and General Service

 

Base Facility Charge by Meter Size

 

5/8"X 3/4"

$15.83

$15.94

$18.41

$19.10

$18.17

3/4"

$22.75

$23.92

$27.62

$28.66

$27.26

1"

$39.56

$39.84

$46.01

$47.73

$45.43

1-1/2"

$79.12

$79.68

$92.02

$95.46

$90.85

2"

$126.59

$127.49

$147.23

$152.75

$145.36

3"

$253.19

$254.98

$294.47

$305.49

$290.72

4"

$395.60

$398.40

$460.10

$477.32

$454.25

6"

$791.20

$796.80

$920.20

$954.65

$908.50

 

 

Charge per 1,000 gallons  - Residential and General Service

$6.72

$6.77

$7.82

$8.11

$7.72

 

 

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

 

3,000 Gallons

$35.99

$36.25

$41.87

$43.43

$41.33

5,000 Gallons

$49.43

$49.79

$57.51

$59.65

$56.77

10,000 Gallons

$83.03

$83.64

$96.61

$100.20

$95.37

 

 

 

 

 

 

 


Lake Placid

 

 

 

 Schedule No. 4-B

Test Year Ended 12/31/15

Docket No. 160101-WS

Monthly Wastewater Rates

 

 

 

Test Year

Utility

Utility

Utility

Staff

 

Rates

Current

Requested

Requested

Recommended

 

12/31/15

Rates

Interim

Final

Interim

Residential Service

 

Base Facility Charge - All Meter Sizes

$12.01

$12.09

$12.28

$15.24

$12.12

 

 

Charge per 1,000 Gallons- Residential

$5.53

$5.57

$5.66

$7.02

$5.58

6,000 gallon cap

 

 

 

Flat Rate

$21.88

$22.03

$22.38

$27.77

$22.07

 

 

General Service

 

Base Facility Charge by Meter Size

 

5/8" X 3/4"

$12.01

$12.09

$12.28

$15.24

$12.12

3/4"

$18.02

$18.15

$18.43

$22.88

$18.18

1"

$30.03

$30.24

$30.71

$38.11

$30.30

1-1/2"

$60.05

$60.47

$61.42

$76.22

$60.60

2"

$96.09

$96.76

$98.28

$121.96

$96.96

3"

$192.15

$193.54

$196.57

$243.94

$193.92

4"

$300.29

$302.40

$307.14

$381.14

$303.00

6"

$600.58

$604.80

$614.28

$762.29

$606.00

 

 

Charge per 1,000 gallons  - General Service

$6.63

$6.68

$6.78

$8.42

$6.69

 

 

Bulk Service

 

Base Facility Charge - All Meter Sizes

$403.01

$405.84

$412.20

$511.52

$406.56

 

 

Charge per 1,000 gallons  - Bulk Service

$5.31

$5.35

$5.43

$6.74

$5.40

 

 

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

 

3,000 Gallons

$28.60

$28.80

$29.26

$36.30

$28.86

5,000 Gallons

$39.66

$39.94

$40.58

$50.34

$40.02

10,000 Gallons

$67.31

$67.79

$68.88

$85.44

$67.92

 

 

 

 

 

 

 

 


Tierra Verde

 

 

 

Schedule No. 1-A

Schedule of Wastewater Rate Base

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

Description

Test Year

Utility

Adjusted

Staff

Staff

 

Per

Adjust-

Test Year

Adjust-

Adjusted

 

Utility

ments

Per Utility

ments

Test Year

 

 

 

 

 

 

 

1

Plant in Service

$4,599,437

$0

$4,599,437

$0

$4,599,437

 

 

2

Land and Land Rights

727

0

727

0

727

 

 

3

Non-used and Useful Components

0

0

0

0

0

 

 

 

 

 

 

 

4

Accumulated Depreciation

(3,329,766)

25,394

(3,304,372)

0

(3,304,372)

 

 

5

CIAC

(1,821,202)

0

(1,821,202)

0

(1,821,202)

 

 

6

Accumulated Amortization of CIAC

1,566,010

0

1,566,010

0

1,566,010

 

 

7

CWIP

18

(18)

0

0

0

 

 

8

Acquisition Adjustment

351,207

(351,207)

0

0

0

 

 

9

Accumulated Amort. of Acq. Adj.

(81,247)

81,247

0

0

0

 

 

10

Working Capital Allowance

0

95,329

95,329

135

95,464

 

 

11

Rate Base

$1,285,184

($149,255)

$1,135,929

$135

$1,136,064

 

 

 

 

 

 

 


Tierra Verde

Schedule No. 1-B

Adjustments to Rate Base

Docket No. 160101-WS

Test Year Ended 12/31/2015

 

 

 

 

 

 

Explanation

Wastewater

 

 

 

 

 

 

 

 

Working Capital

 

 

 

 To reflect appropriate working capital.

$135

 

 

 

 


Tierra Verde

 

 

 

 

 

Schedule No. 2

Capital Structure-13-Month Average

 

 

 

 

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

 

 

 

 

Description

Total           Capital

Specific

Subtotal

Prorata

Capital

Ratio

Cost Rate

Weighted Cost

 

 

Adjust-

Adjusted

Adjust-

Reconciled

 

 

ments

Capital

ments

to Rate Base

 

 

 

Per Utility

 

 

 

 

 

 

 

 

 

1

Long-term Debt

$180,000,000

$0

$180,000,000

($179,531,136)

$468,864

41.28%

6.70%

2.77%

 

2

Short-term Debt

17,100,000

0

17,100,000

(17,055,472)

44,528

3.92%

2.32%

0.09%

 

3

Preferred Stock

0

0

0

0

0

0.00%

0.00%

0.00%

 

4

Common Equity

191,433,000

0

191,433,000

(190,934,383)

498,617

43.90%

11.34%

4.98%

 

5

Customer Deposits

0

0

0

0

0

0.00%

2.00%

0.00%

 

6

Deferred Income Taxes

123,919

0

123,919

0

123,919

10.91%

0.00%

0.00%

 

7

Total Capital

$388,656,919

$0

$388,656,919

($387,520,991)

$1,135,928

100.00%

7.83%

 

 

 

Per Staff

 

8

Long-term Debt

$180,000,000

$0

$180,000,000

($179,531,092)

$468,908

41.27%

6.66%

2.75%

 

9

Short-term Debt

17,100,000

0

17,100,000

(17,055,454)

44,546

3.92%

2.32%

0.09%

 

10

Preferred Stock

0

0

0

0

0

0.00%

0.00%

0.00%

 

11

Common Equity

191,433,000

0

191,433,000

(190,934,309)

498,691

43.90%

11.34%

4.98%

 

12

Customer Deposits

0

0

0

0

0

0.00%

2.00%

0.00%

 

13

Deferred Income Taxes

123,919

0

123,919

0

123,919

10.91%

0.00%

0.00%

 

14

Total Capital

$388,656,919

$0

$388,656,919

($387,520,855)

$1,136,064

100.00%

7.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOW

HIGH

 

 

 

 

 

 

 

   RETURN ON EQUITY

11.34%

13.34%

 

 

 

 

 

    OVERALL RATE OF RETURN

7.82%

8.70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Tierra Verde

 

 

 

 

 

Schedule No. 3-A

Statement of Wastewater Operations

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

 

 

 

Description

Test Year            Per             Utility

Utility      Adjust-      ments

Adjusted       Test Year      Per Utility

Staff      Adjust-    ments

Staff    Adjusted    Test Year

Revenue Increase

Revenue Requirement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Operating Revenues:

$983,657

$77,957

$1,061,614

($69,084)

$992,530

$69,084

$1,061,614

 

6.96%

 

 

Operating Expenses

 

2

    Operation & Maintenance

$762,629

$0

$762,629

$1,084

$763,713

$0

$763,713

 

 

 

3

    Depreciation

120,386

(4,292)

116,094

0

116,094

0

116,094

 

 

 

4

    Amortization

0

0

0

0

0

0

0

 

 

 

5

    Taxes Other Than Income

55,865

3,987

59,852

(3,109)

56,743

3,109

59,852

 

 

 

6

    Income Taxes

(1,870)

35,967

34,097

(25,172)

8,925

24,826

33,751

 

 

7

Total Operating Expense

937,010

35,662

972,672

(27,197)

945,475

27,935

973,410

 

 

8

Operating Income

$46,647

$42,295

$88,942

($41,887)

$47,055

$41,149

$88,204

 

 

9

Rate Base

$1,285,184

$1,135,929

$1,136,064

$1,136,064

 

 

10

Rate of Return

3.63%

7.83%

4.14%

7.76%

 

 

 

 

 

 

 

 

 

 


Tierra Verde

Schedule No. 3-B

Adjustments to Operating Income

Docket No. 160101-WS

Test Year Ended 12/31/15

 

 

 

 

 

 

Explanation

Wastewater

 

 

 

 

 

 

 

 

Operating Revenues

 

 

To reflect the appropriate amount of annualized revenues.

($69,084)

 

 

 

 

 

Operation and Maintenance Expense

 

To reflect appropriate rate case expense amortization.

$1,084

 

 

 

 

 

Taxes Other Than Income

 

 To reflect RAFs on revenue adjustment.

($3,109)

 

 

 

 

 


Tierra Verde

 

 

 

 Schedule No. 4-A

Test Year Ended 12/31/15

Docket No. 160101-WS

Bi-Monthly Wastewater Rates

 

 

Test Year

Utility

Utility

Utility

Staff

Rates

Current

Requested

Requested

Recommended

12/31/15

Rates

Interim

Final

Interim

 

 

Residential Service

 

Flat Rate (Bi-monthly)

$96.91

$97.29

$103.65

$107.82

$104.06

 

 

General Service

 

Base Facility Charge by Meter Size (Bi-monthly)

 

5/8 x 3/4"

$61.10

$62.06

$65.35

$68.77

$66.38

1"

$154.52

$155.13

$165.27

$171.93

$165.95

1-1/2"

$309.05

$310.28

$330.56

$343.85

$331.90

2"

$494.48

$496.44

$528.90

$550.16

$531.04

3"

$988.96

$992.89

$1,057.79

$1,031.55

$1,062.08

4"

$1,545.22

$1,551.36

$1,652.77

$1,719.25

$1,659.50

6"

$3,090.46

$3,102.73

$3,305.56

$3,438.50

$3,319.00

 

 

Charge per 1,000 Gallons - General Service

$3.57

$3.58

$3.82

$3.97

$3.83

 

 

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

 

3,000 Gallons

$96.91

$97.29

$103.65

$107.82

$104.06

5,000 Gallons

$96.91

$97.29

$103.65

$107.82

$104.06

10,000 Gallons

$96.91

$97.29

$103.65

$107.82

$104.06