§ 28-295. Rates and charges.

(a)

Except as provided by subsections (k) and (m) of this section, if implemented by the authority in its sole discretion, a utility may only charge rates and charges that have been approved by the authority, or by the Florida Public Service Commission (FPSC) and/or were pending before the FPSC prior to the effective date of the ordinance from which this article derives.

(b)

Any franchisee may apply to the authority to establish or change rates, fees and charges, rules and regulations or conditions of service. The application shall specify in detail any changes requested, the current tariff, and current tariff modified with the requested changes highlighted. The application shall set forth the relief requested and shall be accompanied by a complete written transcript of any testimony expected to be submitted in support of the pleadings and shall be accompanied by the documentary evidence expected to be offered by the utility. The specific content of such application, including the minimum filing requirements (MFRs), until changed by the rules of the authority are as required or described by Subsections (e), (f), (g) and (h) of this section.

(c)

The authority shall set a date for all hearings necessary to dispose of such applications, including public and evidentiary hearings, and shall require the utility to publish notice of such hearings as specified in the rules of the authority; except that setting evidentiary hearing dates will be within the authority of a hearing officer if one is appointed.

(d)

The Authority shall approve, modify or reject the application based on the criteria prescribed in this article within ninety (90) days after close of the evidentiary hearings and receipt of the final briefs or the recommended order from the applicant.

(e)

Until changed by rules of the authority, all applications for rate adjustments by utilities with a gross annual revenue in excess of one hundred fifty thousand dollars ($150,000.00) for water or wastewater or greater than three hundred thousand dollars ($300,000.00) combined, shall include the following minimum filing requirements (MFRs):

(1)

A statement of financial operations in historical form for the previous three (3) fiscal years and a statement of financial operations for the test year and for the pro forma year at existing and proposed rates;

(2)

A balance sheet for the test year, for the previous three (3) fiscal years, and for the pro forma year;

(3)

A schedule of existing rates, fees and charges, and of actual revenues and number of customers by rates and by class for the test year and pro forma year at existing and proposed rates;

(4)

A statement of the proposed increases or changes which will result in increases. Such statement shall set forth the proposed rate structure with reasonable clarity and with appropriate rate classification where applicable, including bill comparisons between existing and proposed rates;

(5)

A detailed statement of annualized revenues by class of customers by meter size served by rate applicant at the end of the test year, including the number of customers by class;

(6)

A detailed schedule of all fixed assets needed to serve customers during the test year and pro forma year including their original cost, depreciated costs and an explanation of the depreciation. Such depreciation rates are subject to authority review and approval;

(7)

Actual and pro forma expense adjustments with supporting detail set forth by the accounts effected. Such adjustments shall be supported by competent substantial evidence and shall not include estimates based solely on speculation and conjecture;

(8)

A comparative schedule of operation and maintenance expenses in historical form, classified according to the utility's chart of accounts, for the test year and prior three (3) fiscal years;

(9)

A detailed statement of rate case expenses in accordance with subsection (n);

(10)

Rate base and rate of return in historical form for the prior three (3) fiscal years, and for the test year and the pro forma year, at existing and proposed rates;

(11)

A schedule of the cost of capital and rate of return;

(12)

Federal income tax calculation for the utility for the test year and pro forma year computed at the present and proposed rates;

(13)

Calculation of state taxes based on income for the test year and pro forma year, computed at both the existing and proposed rate;

(14)

Detailed schedules showing the computation of the property used and useful in the provision of service to the public to arrive at the percentage in reduction of rate base for existing capacity. Identify in detail the capacity of the utility system by functional component (treatment, transmission, collection, etc.); and the portions thereof that are used and useful in the provision of service to the public;

(15)

Detailed maps showing the service area of the franchise, lines in the grounds and lots served. Lots presently being served and proposed extensions shall be distinguished from lots not presently connected;

(16)

A listing of the utility's connection and extension fees together with a statement of the utility's service extension policy, general rules and regulations, and any proposed changes in any of the foregoing. All such changes are subject to authority review and approval;

(17)

A schedule of connection fees received and other contributions in aid of construction;

(18)

Detailed schedules to determine the percentage for reduction in ad valorem taxes and depreciation expenses due to excess capacity where applicable;

(19)

A detailed schedule of service or commodities supplied to associated companies;

(20)

Any orders or requirements imposed or likely to be imposed by any other regulation or government authority; and

(21)

Any other information which the utility or the authority deem relevant under the particular circumstances.

(f)

Until changed by rules of the authority, all applications for a rate adjustment by utilities with current gross revenues up to and including one hundred fifty thousand dollars ($150,000.00) for water or wastewater or less than three hundred thousand dollars ($300,000.00) combined, shall include the following information:

(1)

A brief description of the system;

(2)

Detailed maps showing the service area of the franchise, lines in the ground, and lots served. Lots presently being served and proposed extensions shall be distinguished from lots not presently connected;

(3)

The rates, fees and charges the utility is presently charging and the proposed rates, fees and charges;

(4)

The number of customers served by the utility, itemized by classes and presented on such seasonal or annual basis as is appropriate;

(5)

A statement of the utility's revenue for the test year at both the existing and proposed rates by customer class;

(6)

An income statement and balance sheet for the test year at existing rates;

(7)

A pro forma income statement showing the estimated results for the test year at the proposed rates;

(8)

A detailed statement of fixed assets as in subsection (e)(6) above;

(9)

The calculation of the rate base and rate of return for the test year and for the pro forma year;

(10)

A copy of the tariff, terms and conditions of service, and service availability policy;

(11)

Detailed schedules showing the computation of the property used and useful in the provision of service to the public to arrive at the percentage in reduction of rate base for existing capacity. Identify in detail the capacity of the utility system by functional component (treatment, transmission, collection, etc.) And the portions thereof that are used and useful in the provision of service to the public;

(12)

Any orders or requirements imposed or likely to be imposed by any other regulation or government authority; and

(13)

Any other information which the utility or the authority may deem relevant under the particular circumstances;

(g)

In addition to the requirements stated in this section, all applications shall include the following information for both the test year and pro forma year:

(1)

A comparison of operating expenses giving reasons for the major changes in excess of five (5) percent;

(2)

A comparison of rate base giving detailed reasons for any changes;

(3)

A comparison of actual cost of capital and pro forma cost of capital.

(h)

In determining rates, the authority:

(1)

Shall consider the value and quality of service and the cost of providing the service;

(2)

Shall include in the cost of providing service, at a minimum, debt interest, working capital, maintenance, depreciation, tax, and operating expenses incurred in the operation of all property used and useful in the public service;

(3)

Shall include a fair return on the utility's investment in all property used and useful in the public service; which return shall be no less than the weighted cost of the capital of the utility; including debt and equity;

(4)

Shall not include contributions-in-aid-of-construction (CIAC) in the rate base of any utility during a rate proceeding;

(5)

Shall not reduce rate base by any accumulated depreciation on CIAC;

(6)

Shall not include depreciation on CIAC as a cost of providing service;

(7)

Shall consider the investment of the utility in land acquired or facilities constructed or to be constructed in the public interest within a reasonable time in the future, not to exceed twenty-four (24) months, unless extended by the authority, from the end of the historical test period used to set final rates;

(8)

Shall reduce rate base by accumulated deferred and unamortized income tax and investment tax credit.

(i)

The authority in establishing initial rates for a utility may project the financial and operational data as set out in this section, to a point in time when the utility is expected to be operating at a reasonable level of capacity.

(j)

In fixing rates, the authority may determine the prudent cost of providing service during the period of time the rates will be in effect following the entry of a final order relating to the rate request of the utility and may use such costs to determine the revenue requirements that will allow the utility to earn a fair rate of return on its rate base.

(k)

Pass through increases and price index adjustments.

(1)

The authority may by the authority's sole discretion, authorize or require pass through increases or decreases by rule;

(2)

On or before March 31 of each year, the authority at its sole discretion may by order establish a price increase or decrease index for major categories of operating costs incurred by utilities subject to its jurisdiction reflecting the percentage of increase or decrease in costs from the most recent twelve-month historical data available. The authority may by rule establish the procedure to be used in determining such indices and a procedure by which a Utility, without further action by the authority, or the authority on its own motion, may implement an increase or decrease in its rates based upon the application of the indices to the amount of the major categories of operating costs incurred by the utility during the immediately preceding calendar year, except to the extent of any disallowances or adjustments for those expenses of that utility in its most recent rate proceeding before the authority. The rules, if established, shall provide that, upon a finding of good cause, including for inadequate service, the authority may order a utility to refrain from implementing a rate increase hereunder unless implemented under a bond or corporate undertaking in the same manner as interim rates may be implemented under section 24-296. A utility may not use this procedure, if such a procedure has been established, between the official filing date of the rate proceeding and one year thereafter, unless the case is completed or terminated at an earlier date. A utility may not use this procedure to increase any operating cost for which an adjustment has been made to increase its rates by application of a price index other than the most recent price index, if any, authorized by the authority at the time of filing;

(3)

Before implementing a change in rates under this subsection, the utility shall file an affirmation under oath as to the accuracy of the figures and calculations upon which the change in rates is based, stating that the change will not cause the utility to exceed the range of its last authorized rate of return on equity. Whoever makes a false statement in the affirmation required hereunder, which statement he or she does not believe to be true in regard to any material matter, is guilty of a felony of the third degree, punishable, as provided in F.S. §§ 775.082, 775.083 or 775.084;

(4)

If, within fifteen (15) months after the filing of a utility's annual report, the authority finds that the utility exceeded the range of its last authorized rate of return on equity after an adjustment in rates as authorized by this subsection was implemented within the year for which the report was filed or was implemented in the preceding year, the authority may order the utility to refund, with interest, the difference to the ratepayers and adjust rates accordingly. This provision shall not be construed to require a bond or corporate undertaking not otherwise required;

(5)

Notwithstanding anything herein to the contrary, a utility may not adjust its rates under this subsection more than two (2) times in any twelve-month period. For the purpose of this subsection, a combined application or simultaneously filed applications, that were filed under provisions of subsection (1) and (2) shall be considered one rate adjustment;

(6)

The authority may regularly, establish a leverage formula or formulae that reasonably reflects the range of returns on common equity for an average water or wastewater utility and which, for purposes of this section, shall be used to calculate the last authorized rate of return on equity for any utility which otherwise would have no established rate of return on equity. In any other proceeding in which an authorized rate of return on equity is to be established, a utility, in lieu of presenting evidence on its rate of return on common equity, may move the authority to adopt the range of rates of return on common equity that has been established under this paragraph. The authority in its sole discretion may require the utility to present evidence on its rate of return on common equity and not allow the utility to use the range of rates on common equity that has been established under this paragraph. The authority in its sole discretion may adopt the leverage formula established annually by the state public service commission;

(7)

No utility shall implement any rate change pursuant to this article unless it has filed with the authority its current annual financial report and all other reports required by the authority and is then current in the payment of its fees to the authority.

(l)

An application for rate change must be accompanied by a fee as set by the board, or if not yet set by the board, by the fee that would have been payable to FPSC if the utility had been subject to FPSC regulation, except that no fee shall be required for an application for a rate change made pursuant to subsection (j).

(m)

The authority may withhold consent to the operation of any rate request or any portion thereof by a vote to that effect within sixty (60) days after the date of filing of the rate request, or within a shorter period established by rule of the authority. The order shall state a reason or statement of good cause for the withholding of consent. The authority shall provide a copy of the order to the utility and all interested persons who have requested notice. Such consent shall not be withheld for a period longer than 8 months following the date of filing. The new rates or all or any portion thereof not consented to may be placed into effect by the utility under a bond, escrow, or corporate undertaking subject to refund at the expiration of such period upon notice to the authority and upon filing the appropriate tariffs. The authority shall determine whether the corporate undertaking may be filed in lieu of a bond or escrow.

(1)

The utility shall keep accurate, detailed accounts of all amounts received because of such rates becoming effective under bond, escrow or corporate undertaking subject to refund, specifying by whom and in whose behalf such amounts were paid.

(2)

In its final order relating to such rate request, the authority shall direct the utility to refund, with interest at a fair rate to be determined by the authority in such manner justified and which are collected during the periods specified. The authority shall provide by rule for the disposition of any funds not refunded, but in no event shall such funds accrue to the benefit of the utility. The authority shall take final action on the docket and enter its final order within twelve (12) months of the official date of filing.

(n)

Rate case expenses.

(1)

The authority shall determine the reasonableness of rate case expenses and shall disallow all rate case expenses determined to be unreasonable. No rate case expense determined to be unreasonable shall be paid by the consumer. In determining the reasonable level of rate case expense the authority shall consider the extent to which a utility has utilized or failed to utilize the provisions of subsection (j)(1) and (2) if authorized by the authority, and such other criteria as it may establish by rule. The utility shall provide detailed expense reports in support of its request for rate case expenses. Such reports shall include the time spent by each person generating that expense and a detailed explanation of the activities performed related specifically to the each phase of the preparation and prosecution of the rate case, to enable a determination of the validity of such expenses. Hourly rates will be based on the marketplace in Florida for like experience and quality. Time will be assessed on the basis of a reasonable number of hours for the tasks performed and the elimination of duplication;

(2)

The amount of rate case expense determined by the authority pursuant to the provisions of this section to be recovered through a utility's rate shall be apportioned for recovery over a period of four (4) years. At the conclusion of the recovery period, the rate of the utility shall be reduced immediately by the amount of the rate case expense previously included in rates.

(o)

A utility may specifically request the authority to process its petition for rate relief using the proposed agency action procedure, as prescribed by authority rule. The authority shall enter its vote on the proposed agency action within five (5) months of the official filing date. If the authority's proposed action is protested, the final decision shall be rendered by the authority within eight (8) months of the date the protest is filed. At the expiration of five (5) months following the official filing date, if the authority has not taken action or, if the authority's action is protested by a party other than the utility, the utility may place its requested rates into effect under bond, escrow, or corporate undertaking subject to refund, upon notice to the authority and upon filing the appropriate tariffs. The utility shall keep accurate records of amounts received as provided by subsection (m).

(p)

Until such time as the authority implements regulations which amplify or modify this subsection, subsections (1) through (5) below shall be utilized in all rate change applications. The utility may also present, as a second example, its rate case using other principles. However, the utility has the burden of proof to show that the principles it utilizes provides a fairer balance of rate payer and utility interests.

(1)

Rate base standards: Absent extraordinary occurrences the utility shall use a thirteen (13) month average rate base;

(2)

The utility must prove its entitlement to a margin reserve by, at a minimum, providing evidence of its planning cycle, historic and planned development of its system including timing of significant investments by the utility, its developer agreement policy, present and historic, and payments to the utility by its parent and/or affiliated companies for providing utility services;

(3)

Economies of scale factor shall not be used;

(4)

The cost of a utility's transmission and distribution system shall be allocated between present and future customers based on the ratio of lots occupied to lots available; and

(5)

The utility's working capital requirements shall be calculated in accordance with FPSC Rule 25-30.433. The calculated working capital shall be added to rate base if it is a positive number and subtracted from rate base if it is a negative number.

(q)

Cost of capital.

(1)

At the discretion of the authority, the utility shall establish the cost of equity either by expert rate of return testimony or by utilizing the authority's leverage formula or, if that formula has not been established, by using the FPSC's leverage formula in effect at the time of the authority's decision;

(2)

The cost of debt shall be the utility's actual cost of long term debt and of short term debt;

(3)

The utility's stand alone capital structure shall be used by the utility in its filing if that structure is appropriate for a regulated utility and accurately reflects the total cost of capital.

(r)

Net operating income. The average number of customers and consumption shall be used to calculate test year revenues and service rates.

(s)

Staff assisted rate cases are intended to provide the small utility with the means to obtain rate relief and management guidance through staff-assistance and thereby try to reduce rate case expenses of the utility and its customers and improve utility operations.

(1)

The authority may establish rules by which a water or wastewater utility whose gross revenues are one hundred fifty thousand dollars ($150,000.00) or less, or a combined total of three hundred thousand dollars ($300,000.00), may request and obtain staff assistance for the purpose of changing its rates and charges. A utility may request staff assistance by filing an application with the authority;

(2)

The official date of filing is established as thirty (30) days after official acceptance by the authority of the application. If a utility does not remit a fee, as provided by the board, or if a fee has not been provided by the board as would be payable to the FPSC if the utility was regulated by the FPSC, within thirty (30) days after acceptance, the authority may deny the application. The authority has fifteen (15) months after the official date of filing within which to issue a final order;

(3)

The provisions of subsections (a), (h), and (j) shall apply in determining the utility's rates and charges. However, the authority by rule may establish standards and procedure whereby rates and charges for small utilities maybe set using criteria other than those set forth in subsections (a), (h), and (j);

(4)

The utility, in requesting staff assistance, shall agree to accept the final rates and charges approved by the authority unless the final rates and charges produce less revenue than the existing rates and charges;

(5)

In the event of a protest or appeal by a party other than the utility, the authority may provide for temporary rates subject to refund with interest;

(6)

The utility, in requesting staff assistance, shall agree to a management audit of the utility, and agree where practical to follow the recommendations of the audit. The utility's actions taken in response to the management audit shall be considered in its future rate cases.

(t)

Rate investigations. On its own motion or on a written complaint signed by a person applying for or receiving utility services, or by request of the utility itself, the authority may investigate to determine if the rates charged or collected by a utility, or if the utility's practices affecting the rates, are unjust, unreasonable, discriminatory, or non-compensatory, or are in violation of this article, or rule of the board or the authority. If it appears that any change may be appropriate, the authority shall hold a public hearing to determine just and reasonable rates, fees, or practices to be changed thereafter. Public notice of the public hearing shall be published one time in a newspaper of general circulation in the county at least ten (10) days before the hearing. Notice of the hearing shall be given to the utility and to the complainant, if any, at least thirty (30) days before the date of the hearing.

(u)

The authority may require a utility to provide service for resale. However, before requiring the provision of service, the authority shall first find that the utility is financially able to make such additional investment as is required without impairing its capacity to serve its existing customers. Any utility which provides service for resale shall provide such service upon such terms and conditions established by the authority, and no utility shall discontinue such service without the approval of the authority. In the event a governmental authority exempted from this article pursuant to section 28-293(b) hereof voluntarily enters into an agreement for resale, such agreement shall provide that the service will not be discontinued without ninety (90) days notice being given to the purchaser prior to discontinuing such service. Nothing contained herein shall be construed to prohibit the governmental authority from requiring adequate security being given to such authority to ensure payment required in the agreement.

(v)

If the furnishing of service by a utility requires the extension of or addition to its existing facilities, the utility may require the applicant for such service to pay reasonable sums of service availability or reasonable deposits guaranteeing compensatory revenues from the service territory to be served, or reasonable CIAC to help defray the costs of facilities which will be used and useful in furnishing that service, or reasonable construction or other advances evidenced by refundable or non-refundable written agreement(s) or combination thereof, as a condition precedent to furnishing that utility service. The authority upon request or upon its own motion, may investigate service agreements or proposals for charges and conditions to service availability. Each franchisee must provide a copy of any such agreement to the authority at no cost.

(w)

Each utility shall provide to each person reasonably entitled thereto such safe, efficient, and sufficient utility service as is prescribed by the Florida Safe Drinking Water Act and the Florida Air and Water Pollution Control Act and/or rules adopted pursuant thereto, or the applicable chapters of the Florida Administrative Code, or the successor in function to each; also such service shall not be less safe, less efficient or less sufficient than is consistent with the approved engineering design of the particular system and reasonable and proper operation of the utility in the public interest. If the authority finds that utility has failed to provide its customers with water or wastewater that meets the standards promulgated by the department of environmental protection or the appropriate water management district, the authority may issue a final order to reduce the utility's return on equity until such time as the standards are met.

(Ord. No. 2002-20, § 5, 10-8-02)