BCC Minutes 05/23/1985 S
,w--
---
,.ur-----............
~-,._-~--...~.,
L
==
l1li
~
Naplas, ~lorldð, ~ov 23, JqR5
LET IT!1E f1.F.':"EMRP.RF.D, U10t an this di'\te Elt 0:('1() 11.11. in "uildinCl
"F" of the Courthouse Complex, ~8~t Maples, ~lorida, a 10int meetinq
was held with reprelil"!ntatlves of the t'luJ.¡lic <':ervlce CommiRRlon ðnd the
follo\~ing County Comm]Rsioncrsl
Fredericl< .J. "osa
.Tohn "'. pi s tor
P-1ax "'1S8e
~nne Goodniqht
Absent: C. C. "Ped" 1'011anci
GENERAL DISCUSSION
Leaðl notice of this ~~etina was nu~liRherl in the NaDles rðily
News on ~ay 16, l~RS as evirl~ncerl by ~ffirlavit of 0ublicatinn filed
\~i th the Clerl<.
r~r. Hayne Schipfelbein, Staff Coun!'!el for the Florida Public
Service Commission, state,j th~t yesterday they met with the County
~taff memhers an~ they w~re v~ry heloful in providing some necessary
information for a smooth tran~j tion ann jl1rlsdiction. ¡.Ie not(!cì that
they also h~d a m~etinq yesterd"y afternoon with representative from
tht! local utilities, both those that come under the pRC jurisdiction
and those that remain pxpmpt from nny stotcwid~ regulation.
11r. Bruce Detcrdinq, Staff F'ngineer for the Florida Public Service
Commission, st.,ted that the same basic criterië\ that the County uses
for regulating utilitles is what the PRC also usea.
Mr. Schiefelb~in st~ted thal a very jmporr~nt criteria Q that
systems that are owned, oper-3teri, managed c·r ¡;,. :'"81' "!d by n(""'~:rnm',"ntùl
agencies orc exempt from the Pc:r:. 1-1e noted thõl the ,,:-,,; >lriopted Ð
resolution on May 21, 10R5, whereby they did ac~nowledoe I'\nd nccept the
tr'lnsfer of. jurisdiction, rf"'troactive to ^r:Jril lh, lqrlC;, when the pec
adopted the resolutio~. He noteri t~at he hopes to ~I'\ve ò large
majority of the local utilltips reqisterRd with the PRC by mid ~uly.
He noted that they h~vP. until July l~ to fjle for a orl'\ndf'lther
Application. He reporterl that the rates that utilities may charge are
frozen as of April 1~, 1985, and any increase is in violation of the
law. He stated that there would be a 2-1/2~ re~ulatory assessment fee
on all intcrest r~venues collected by the utilities in the utility
business.
Mr. John liilU'Ims, Rate Ruper'/Ì.sor for the ~r."ter and SCHer
Department of the Public Rervice Commission, stated that if the r.ounty
wants to buy 3 utility, they are transferrnd ~s ò matter of right to
aODK
087 rAr,c 3"50
Par:¡e 1
~~ .. ." .~
~.I 1"'< ':
;-,.,14;
~2:[':.
~'ÒD(
"Vii'
~~~~t,"
~
....-..-.~ ----
~........"'I~..... ~ ~. ...............-.;_. rt..11
, .. '. :-,~, ',,~~~~~~
....... .
087 rar.t 351 ~11\Y 23,191'15
the County, addinç' thl1t tnern !:Ir~ !Statutory requireMent!!! th1.lt tne
County Must follow to acquire a system. He noted tnat the P5C has to
be a.~.d what tne value of such a utility is for rate ma~inq purposes.
He stated that one area that the 0SC gets involved in, in much greater
detail than the County, is service availability and what the private
utilities charge new customers for service. He noted th.H the PSC has
done a lot of studies as to wh~th~r tn- CUl!ltompr~ hnnAfit hy nayin9 up
front the portion of the cost of the utility service, adding that they
benefit through lower rates througn the lifA of the utility. He stated
that for a private utility thp- owners are allowed to e~rn a rp-turn on
their investment and if the utility charges up front a cartain portion
of the cost of the utility ~ystem it mc~ns lowor rntes, adding that the
PSC rcquirt!s the utility to char~e a minimum impact fee.
Comm1ss10ner Pilltor ouestioned if the utility wl\nts to ('nlarge the
franchis~ area, who decides on it? ~r. Deterding stated that the
County has the opportunity to object. He noted that the County would
be notified by Certified Mail at the time that a noti':e is f:led to
cnlarqt! an area.
Mr. Schiefelbein stated thl1t if the County Fuhmits a tiMely
ob~ection, the PSC ill r~quirecì to con5i~er that as part of the
proceedin~s on the apnlication, añrling that t~e p~c is not bound by th(~
objection. He stated tha t hath the County obil i ty an~ tnc !Jtil ity
ability would be evaluate~ to provide service for that particular area.
He reportcd that. the surrounding arcl1 would be taken into account all to
who would be able to provide s~rvice for th0 corninq years most
effectively.
Mr. T'1illiams stated that the !Jtilities "'~r~ talc:. ~;·,c.t a "art of
the certific~te arplic~tion is that they cnmplpte ~ tarriff which is
the hook of rules and reoulat]on~ that the utility must ooerate under.
ne stated that Staff is ~oina to recommend to thr Public Servic~
Commissioners that the Utilities ~e allo"'e~ to incre~6e thelr rates by
2-1/2~ to make up for the requl~tory a8SeSgrn~nt fees, addino that under
the County proce~ure they were allowed to add thp 2~ fee that they paið
to the County on tor of their rates. He/stated that th~ PSC rules do
I
not allow the utility to ~~d thnt rerc~At on tor of their ra[~~. so the
rates would have to br rl1ised so th~t the util1ty will not be in ft loss
position. He noted that it will hav~ to be nut on thr Rqen~. ~or
approval and there w1ll pro~~blv be a 3 month lan rcriod whcre the
utility ¡,'ill not be' ahl,.. to Jnclude it in their rates.
Paqe 2
~~.~:':"~".l
,...---; ì
~..·c·1
~
~
--- .-.
. .
~""'~
~~
.-
r:;:;
SMíiJ
11ay 23., 1985
I1r. "arry Davi'3, "'taff .Accountrlnt for tne Put-U.c Servic""
Commisaion, stated that ha was pleasantly surprised under the County
re9ulations that the ntilities have been kecpinq their accounts in the
same n^nn~r as the Puh~ic ~ervlce Commission require3. He noted that
he introduc~d the ntilitieA to the vl'lrio~ls aspt!cts of the f.orml'll ratp.
makino procedure, ~ddln9 that the normal r~te case is called the file
and suspense rate case becaus~ the IJtility files an apPlication witn
the DSC anrl the PRC then has ~n day'3 to susoend the proposed r~tes or
else they 00 into effect. 4e Rt~ted that in the majority of the cases
this is what happens. He Btðted that wnen ðn application for a rate
increase is filed, a comprehensive Jnvesti')l'Ition of the Utility's
élppUr.ation is ~i'\de, a fielr! ~Ilditor is 9p.nt to the {~tiUty's place of
businRss to Rudit th~ir hooks élnd records to v~rify thRt the filinn is
accurRte ~nd complPte, an en~ineer investì~ates th~ Utility's physical
operðtion. anrl then the riélta is comnil€'d and stRff mab~s a
recommendation to the Public Service ~ommiGsioner~. He stated that
this take:lhout 4 months once the appliciJtion is filed. Pe reported
that the Commissioners con~ider the utility application Rnd staff's
recommendation and then presentatiQns from interested pRrties will be
ml\rle. lIe noted th,'t the COD'Missioners then oropose an order which set's
forth a schedule of rates and charoes f.or thp. Ilt.i.lity. ~~e reported if
no one objects to the order, it becomes final in ~hout 70 ~~vs, adding
that the whole proceedinq tùkes between 5 ùnd 6 months. ~e indicat~~
that if 90meOTW oh:\ects to the order, the Commissioners hold <In
administrative hearinq in the utJ..., .,' !ler'lice are'\ ;,!".J ~·;ter the
he~ring all evidenr.p will be consid~r·d hy .~~ "ublic ~ervlce
COM",issioner~ ",nd a final order will be 1s~ued, ad~inq that this is
normally accomplished within R months. H~ noted that t~e statute says
that the suspension of the Utility's requcsted rùtes expire at the end
of 8 months after they have filed.
Mr. reterding stated that the notice reouirements is the most
important fðctor the County Commissionf:!rs need to 1)c concer:1ed with,
adding that this is the time for the County to object. He noted that
every time ~ utility wants to .~x~and their territory, increase their
rates, and tr~nsfer their companies, the ~ounty ~ns to be notified
prior to th~ utility applyinq. He stated th~t most of the utilities
will be Q01n9 through 0randfathering in of their territory which is
just the territory that thpy ar~ presently serving. He stdted that if
there is actuRl construction underway as of April 16, 1985, the
= U8i w.~ 352
P",C?e ::I
'","~'~-"\":;"~"¥I
t
..-- ~
,~.-",_... -
71\.'.
,....-.'.--,-...
~..-
, .',
~--~~
;,
~;..'-"""."~., " :y.~~...;~:~,..~".~:..~.,,,,,..,..,....-.....~~ .
,--"-~.-,"'. ~~~~~"'"
i::t.?tt.,:
'~~r :r
':~. ~;.:}_,"'l'- .
,'(
:~*\fì'I' ,
~..K..
1;~':'!.'
·~.ffX~·
~-_~--..",':,,'N
f$'~~K· 087p~ct3'53 "IllY 2~, lC 8!3
,';:.~';..i' tranaitl0n date, tne Pc;C may incluðt: that area. lie stated thl'lt in the
·r· .~",...t" .
,:,;,;.~.,. grandfather application there is no notice of their action. He .stateð
~:~i:"/' . that the PSC would like to have the County in some type of advisory
·i~;~:;i.· capacity as the PSC haß no way of knowing what the utility is presently
1!:.j aerving. He noted that the utility has the option of taking in areas
that they are not serving if they go through an original ßpplication.
~r. Petc L~ster, Stl'lff Accountant of tne Public Service
Commission, stated that there is a policy for small utilities that earn
less than $50,000 4 year, whereby the PSC works the rate case for the
Utility, adding that there is a benefit to the consumer becùuae the
lawyers tees and accountant fees are kept out of the ratc calculation
and makes tn. fee8 lower than they would have been. He noted that ~
rate change procedure thlJt the PSC has is an index aoplication which is
to keep the utilities up with inflation, nddin~ that the PSC
establishes a price index and the Utility cl'ln increa8e their rates once
a year to keep up with inflation. He noted that another rate change
procedure is a pasß-thru rate increase whic~ allows the Utility to
pass-thru certain cost incre~ses like increases in ad valorem taxes,
electricity, and purchased water and sewer treatment.
Co~missioner Voss questioned when th~ PSC is examining the rate
base, does it lcclude the ð~propriatencss of salaries paid bv the
utilities, to which Mr. Schiefelbein replied affirmatively.
Commission~r Voss stated that some plants hav~ becn expanded in
anticlpation of ~ettinq ð larQer franchise area and if auestioned if
the PSC adðresses only the use èlnd usef"~ fortion of the r"te base, to
which Mr. Davis rcplied affirMatively.
Commissioner Voss aske~ what the percentagc of rcturn is on
investment, to w~ich Mr. Lester stated that thcrc is a formula that is
used, but it is typically betwecn 13 and 15~. 11r. f'avis indJcated that
it is currEntly 14 to 15-1/2~ Ðnd depends on thc de~t ratio of tne
utllJ.ty.
Commissioner "oss stated that the County has <H'. ordinanc'~ that
reauires that developers d~dicate the liry~s to the County and
I
auettioned if tnis J.E in conflict ,·!ith t11e P~r:, to \~hich r·1r. 1"Uliams
,
stated that to a certain extent it is i~ confllct with the p~r because
the PSC requires that the Utility own and maintain all the utility
¿acilities up to the point of delivery which is defined as the outside
of the wl'lter meter for the wlIter utility and ",hert> the sew~r line ç08a
onto the customer~ prop~rty for the sewer utility. Mr. WilliamR stated
?aCTe 4
om
G'Ie]
~.
rJ.<m"tIKJ
J~ f~'
¡-IIJ..-C _
~..,.....:.,~.-;;,........,--..",
. ~~'~:-;:~~~¡""-r':""
"'.....,.,..... ,1
~'. H .{....~,
f' .:f "
------~."." .--.-,----
· .~_._-- ~-_.__.... ---- .--..-'--'--"
-
E;ii;I
~
I"ay 23.. 11';;:;5
that the p.~C is also conc(!rrted with cjeveloper own~d utilities lind thp.
rules reauire utilitie~ to collect cert~in ðmounts to cover t~e cost a3
a minimu~ of the wat~r and 9ßwer lincs themselvas ~nd at a ~~ximum 75~
of the tot.:11 plant. l1e stated that in cvery rat!:! case tho major
concern beslðes use and usnful is what have the customers paid for,
adding that the utility is required to show the parent co~pany's ta~
return to justify what they collected throuah t~e price of a lot.
Commisli.oner "oss stated that the County has received one or two
requests for rate increases and questioned if those utilities have to
start allover a!Jain, to which I>'.r. Nilliams stated that on the two
cases that the PSC has, the Utilities have ~iled with th~m, ðnd Staff
is recommending an interim rate increase for Marco Island bðse~ on the
day they filed with the County and they arc reouired to update the
financial data by July 1, 1~85. He st~ted that East Naples Utility
fileñ wlth the PRC all the data that had bp.en filed with ~he County and
aSKed the PSC to either recon8i~er the County order or to take the
application on its face and m~ke a recommendation. adding that on that
a~plication the PSC staff is recommendin9 that if East Naples wants a
rate increase they will have to file throuqh the regular channels. He
stated that the Commission is gch~duled to vote on June 4, 1985.
County ~ttorney Saunders "'J~stioned lf the PSC is goina to let
~ast Napl~s imolement the rates that were approved by the County, to
which ~lr. h'illiam rerlied ilffirmëltivp.ly, adding that they have
implcmentp.d the rat~s the County authorizcd as th~y wcre th~ approved
rates as of ~pril 1&, 1985.
In answer to Commissioner VOßS reqarJjn~ drl~.cip~~ed expansion
ar~as being grandfath~red in, Mr. Deterdin~ ßtated that only the area
that the utility was servin'l or was undE'r construction at tre tim~ of
transfer could be grandfathercd in.
Mr. William£ statad that the r~c will work very closely with the
County staff during the transition period b'!!cè\use th~y recoonizL1 the
concerns that the C'ountv has with th(' '3¿rvice areas of these uti1iti.es
and the PSC wants to maKe sure that the utilities ~et in their
grandfather applications only what they were serving as of A9ril 1&,
1985.
Commissioner Pistor stated that the County has heen lool<ing at
treated effluent for golf courses and if the expansion taKes place by
the Utility, he would liKe to thin~ that they would put in secondary
water lines at the same time they put in selVer lincs and questioned if
a;GK 087 w·r 3'54
Pag\! 5
"
~..~-I.~','~ J \>
--
~ ~... ......._,_...~'1'4;¡;.~...--,.____
.,...."..j..;'.
~¡.' ~oJ.~~~~~~~~:'
,lOOK 087 PAr,r 3'55
r-;ay 23, l!'\F5
the Utility could ~:~ ,;;h~ p~c to /I'.'oi-j t:~o!'t r~nld r~mpnt?
Mr. Williams stated that the PSC does not regulate non-potable
water 80 they would not be in ð position to svt th~ rates for what they
could charae for that, addin9 that this would have to be worked out
with ~ER and would be more in the County's realm.
Commissioner Voss ouestioned if the County required the Utility to
put in this line would that linÐ be a part of the rate base?
Mr. Nilliams stated that in settina the sewer rates any revenue
that would be generated would be considered from the sewer efflucnt.
He stl.'\ted that some \It iU Ues that are requlated IIre srrllY irriaatinq
golf courses and for rate rnakinq purposes that is not in the sewer
utility rllte base, IIddinn that it is somethino that the PSC would
expect the golf course to pay for.
In "'newer to Commissioner ristor, Mr. Pchiefelhein staterl that the
PSC has to work within the statute and that says thftt if an objection
is filed by the County to I.'\ny expansion, it must be considcred and the
local comprehensive plan ~U9t be considered, but the PSC will not be
bound bv the local comprehensive plan. He 5tate~ that it is feasible
that a utility mav be in ò better Positlon to provide service to an
area t}llit the County intenò!; to serve, addinCl that tht:: ahility to serve
would be wdiqhcd hetween the two parties. He noted thnt the burd~n
would be on the County and the Ut~¡ity to make a case before the pqC
and then the PRe would decide.
Mr. Williams IItatE::d that when there 19 a case, the PSC will come
to Naples and hold a hearino and the CourÞv 3nd [!tility will hoth
present their case. He noted that the t·::,'~ , ",:' jl?rs eVí:¡:ythinr" that is
brounht b~fore them.
!·1r. Oeterding st.1tecl t1V1t Ivhen any utility wants to E'xl'and d.
service, they hllve to estë'blish a neet', ëlddino that they cùnnot simply
take raw land and rescrve it for future u~c.
~'r. 'Hllianfl inc~ic¡.'\ted thllt tn(' utility ð15, has to show the
finllncial wherpwithal to Drovid~ the ser~ice.
Commissioner Pistor stated that there is an urea that the County
I
plans on putt in~ SEwer 11nes into "¡hi cr lis no'v servi cecl hy sent i, tanks
ðnd the County an~ D~P feei that the buildout i~ to ð deareE' that the
s~ptic tanks mPy start causina problems. He notea that 1n the sewer
district that is set up now, it has be~n overlooked. He ~ucstioned if
in thß future, the Countv wants to run additional lincs throunh the
riatrict, can they or arc they bound by the Aoril 16, lqp~, date?
Pace 6
{~'::;'~"I'~:J
L''''~~ '}
'1~1~''',:.''
,', ,,--,~ ~ ';I~~I
h~~~
- -. ~ '~--"",\-"~ . "'.~., ....,.J...." ,., . ..,'... ". ~¡;;;¡¡-.7i>o';·:''''7~"" :\ñ.l.Ù;!: '''-~' '
......-u.'~~·,:..f..~~¡.~_.·.., "~11'.'~..-'''_'\' .".' ,,·,'I~"':"":; ""_t.".,,,,~:,,,,,,, ~~¡"":""-~"".!"i~'t~iltf,.,~1{.~*,~· . ·~~,~1:4I...~(~~.'.."..~~ti'i'"TÞo~lt.~~
~...,....._, _.....~, ~...,.." ,.. o\,''',r·.r·''.' _,.._." ',~._,_._.. '_', _".
f
:\.... .
~¡,f. .
~,
";,\¡;,~.
~.~: ~~~:,~:' ';r
It'~~ .
,..,~. ....
.~:, ~I
·'7"·,
\to',·¡ ,
~'#f"
. ...
..
r¡¡¡¡¡;¡
t·lay 23, lQAS
Mr. Williams stated that if it i~ not in a utility existinq
service area, this would be available to thB County.
Commissioner Hasse stated that the regulatory assessment fee is
1/2~ more than at the present time, and <luest:!.oned if this means that
there would be an immediate increase?
Mr. ~eterdinÇ1 stated that it ml'!ans nn immerUatc increase in 'J/'h1!\t
the Iltilitv owes, hut it rlot!s not me~n an i~mediate increaae in what
the cU8tomer wi 11 be pavinl? He at.,ted that the PSC sta ff
recommendation is that there be an interim or p.mergency rðte relief
approved to 0ive the Utility the eytra 2-1/~~ and the cURto~er would
aee a 1/2% increase in their total bill. Pe noted thðt it has not been
dpproved by the PSC yet, addinq that it will not be retro~ctive to
April 16, 19~5.
Mr. Williams stated that the Utility has actually had a 2~
r~duction ~nd they will have thðt until the PSC approv~s the increase.
Commissioner '~ss nuestioned if the customers werc opoosinq the
rate increaae and had leqnl ~xpenges, would they be rcimbursed for
thcm?
t!r. \~ilUa!T1s stated that the leoislature ~et up the office of the
Public Couns~l which is a staff ~f attorneys and accountants that acts
solely on behalf of the customers in PRC rroceerl:!ngs. pe stated that
basically the customers ~ave access to the ?ubllC Counsel, and there-
fore, they do not need t~ejr own attorn3Ys as there ~re state paid
attorneys representin~ them.
~Ir. Wil1.L'Ima ':'tl'lted th.:¡t he arprf.'cia'~"<:\ ~;\.. oope'."ðtJon that he
has received from Staff and the County with rcgards to the transition.
He noted that a lot of dependcnce will still be on County stßff to
int~rvene in the PSC cases to indic~te where th~ utilities Dhould be or
should not be.
Assistanc County Attorney Anderson questioned if someone complains
about water pressure from a private utility is that witl.in the
jurisdiction of the PSC?
Mr. Williams stated that this would be in their jurisdiction as
the PSC does handle quality of service complaints, which is their
secondary responsibility. ~e stated that they basicallY work with r~n
in regards to this type of concern.
County Attorney r.aunders questioned if there is an application for
a rate increAse before the PSC, do they look at comclaints reg~rdinq
quality. of service orior to approving an application, to which ~r.
aDDK (]~~PA~r~'~f)
Paqe 7
".1
,.:..,
i "".~"
.. _~Jri
t:~~"_:;';:"'.r..."'~.._..""...
.~~._..:~, ~ ~. ~,'
___._,_.,""..__,_....""....."'_..._,..."""'.,-~,,......,"'-...,.......,...>~".._.,,''''",'"'''''''_'''_'"',~''''.""M....,.....''_..~_'.'..'._ ......."".~_._.~"..^.."~,,__~._'_~...M"_
L.:l'¡--t ,:~..
"_....._.....'~..." -' ,,"-" ,.,....~
~:'"
-" . v
. ; ."" ')''''.~'''''h
,--,~:.~;~~;.~;"
..'~?>"
10-"
I~~~ I'
~. ..
.....~.". ,
;~¡'''''j".,
"~i~{'~::; .: . . .'
~(~~~~~:~I.,·'f " . .
·.':::.U~.7·PA~è357
~~~~~~~+etordin9 replied affirmativ~ly,
~t:'Þ':~";' Mr,·\lill1ams stated that the PSC has a staff of epproximnte.ly 4.0
r"t~''Jtv;,¡~'~ .
~~~>' profeaaionala, accountants, engineers end rate people that specialize
,~~~þ' just in watMr and aewer, adcting that th~re are attorney~ and auditors
~l"',·· ,',
;i:,;·;;"." in Miami and Tampa that come in to audit the utilities books. He
~~,'t..·.'''.tat.d that there is a large staff of traineð people and ~ust about
~~¡.very at range aituation that comes up, the PSC has seen.
'Commis.ioner PiAtor questioned if the P~C can actually find out
who paid for the wat~r and sewer lir.as, to which ~1r. Williams stat.d
that the Utility has to show their tax returns and if they do not want
to show them, the Pf,C just assumeR that the customer has paid throu~h
the price of the lot and it is then determined that there is no
investment unless it can he proved, adding that the hurden is on the
. ,~...,
'ley 23, 19r;s
Utility.
There being no further discussions by the County Commissioners or
the Stnff of the Public Service Commission, the meetin~ adjourned at
10100 A.H.
/
/
PaCle ~
.','
~~
~
iEij
.. . ~~~rmoo~'...:.:....",.,.. :.~,.; ,..,:...."~~-..:.._ -,~-.,~:':""-""
,.~r ;;¡.
û
--