STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTHERN STATES UTILITIES, INC. ) (OSCEOLA COUNTY), )

)

Petitioner, )

)

vs. ) DOAH CASE NO. 81-259

) PSC DOCKET NO. 800362-W FLORIDA PUBLIC SERVICE COMMISSION )

)

Respondent, )

and )

)

OFFICE OF PUBLIC COUNSEL, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on March 11, 1981, at the Osceola County Courthouse, Kissimmee, Florida. The broad issue originally raised for determination at the hearing was whether the rates proposed in the petitioner's application for increased rates and charges for water service in Osceola County are just, reasonable, compensatory and not unfairly discriminatory. A Prehearing Stipulation entered into by the petitioner and the respondent, prior to the intervention of the Office of Public Counsel, narrowed the issues for determination at the hearing to certain financial issues and the quality of water service provided by the petitioner to its customers, with certain other financial issues to be reserved for a later hearing.

APPEARANCES

For Petitioner: R. M. C. Rose

Myers, Kaplan, Levinson, Kenin and Richards Suite 103, 1020 Lafayette Street

Tallahassee, Florida 32301

For Respondent: M. Robert Christ

Legal Department

Florida Public Service Commission

101 Fast Gaines Street Tallahassee, Florida 32301

For Intervenor: Jack Shreve

Public Counsel

Room 4, Holland Building Tallahassee, Florida 32301

INTRODUCTION

By application filed with the Florida Public Service Commission on July 23, 1980, petitioner Southern States Utilities, Inc. seeks a rate increase for the water service it provides in Osceola County, Florida. Interim rates were authorized by Florida Public Service Commission Order Number 9546 dated September 16, 1980.

In a Prehearing Stipulation filed prior to the intervention of the Office of Public Counsel, the petitioner and the respondent stipulated to certain financial facts. Other financial facts were disputed and were left for determination at the hearing, as was the issue of the quality of service provided by the petitioner to its customers. A witness presented by respondent Public Service Commission made certain adjustments to the respondent's position on the disputed figures contained in the Prehearing Stipulation, and the petitioner accepted and stipulated to the figures as adjusted by the respondent's witness. Thus, there is presently no dispute between the petitioner utility and the respondent Public Service Commission as to petitioner's rate base and statement of operations as set forth in the Prehearing Stipulation, as amended at the hearing. The issues of petitioner's capital structure, cost of money, rate of return and federal and state income tax treatment were reserved for a later proceeding now pending as Division of Administrative Hearings Case No. 81-973. This reservation of issues was occasioned by the Public Service Commission having remanded another case involving Southern States Utilities (Order No. 9835, PSC Docket Nos. 790760-WS and 790761-WS) for a hearing on the issue of the effect of a loan by petitioner to its parent company. That issue is now pending in consolidated Division of Administrative Hearings Case Nos. 81-970, 81-971, 81-972, 81-973 and 81-974 and is presently scheduled for final hearing on May 26 and 27, 1981. Thus, the only issue remaining for determination in the instant proceeding is the quality of water service provided by petitioner to its customers in Osceola County, Florida.

At the hearing, eleven water service customers testified, and thirty-five other customers adopted the testimony of C. J. Lewis, one of the witnesses who testified. The petitioner presented the testimony of Charles Sweat, petitioner's vice president of operations, and the respondent presented the testimony of Marshall W. Willis, an accounting supervisor in respondent's water and sewer department. Received into evidence at the hearing were Hearing Officer's Exhibit 1, with attachments A through G, and Public Counsel's Exhibit

1. Official notice was taken of Florida Public Service Commission Orders Number 9546 and 9246.

   
   

   At the conclusion of the hearing, it was announced that the parties would have ten days from the date of receipt of the transcript within which to file proposed findings of fact, proposed conclusions of law and a proposed recommendation. The transcript was received by the Division of Administrative Hearings on March 25, 1981. Proposed recommended orders were filed by counsel for the intervenor on April 6, 1981, by counsel for the petitioner on April 7, 1981, and by counsel for the Public Service Commission on April 14, 1981. To the extent that the parties' proposed findings of fact are not incorporated in this Recommended Order, they are rejected as being either irrelevant or immaterial to the issues for determination, not supported by competent, substantial evidence adduced at the hearing, or as constituting conclusions of law as opposed to findings of fact.

   FINDINGS OF FACT

   
   

   Upon consideration of the oral and documentary evidence adduced at the hearing; the following facts relevant to the issue presented for determination are found:

   
   

   1. The prime complaint heard from petitioner's customers who testified at the hearing was the objectionable odor of the water received in their homes. The water was described as smelling like chlorine or like sewer, swamp or sulphur water. Such an objectionable odor affects the water's taste, and several customers testified that they were compelled to use filters to make the water bearable to drink. Another witness testified that the water tasted like quinine.

      
      

   2. Other complaints regarding the quality of water provided by petitioner to its customers included the presence of debris, such as sand, silt or dirt, in the water, the staining of white sinks by the water and inadequate water pressure.

      
      

   3. Complaints with regard to the service provided by petitioner to its customers were also voiced. These complaints included interruptions in water service without prior notice, the presence of air in the water lines and the necessity of making long-distance telephone calls to Orlando when inquiring about their bills. One customer testified that even though he had paid for a temporary disconnection of his water when he was away from his residence, he was still billed a minimum charge for service. Several customers testified that petitioner's office personnel failed to timely or adequately respond to their complaints or inquiries regarding their bills.

      
      

   4. Charles Sweat, the vice president of operations for petitioner's fifty- one systems in eight counties, visits each of the systems at least once a month. At the time that petitioner took over the operation of the Intercession City water system in 1977, the system was under citation by the Department of Environmental Regulation for inadequate chlorination of the water. The Department of Environmental Regulation does have a minimum requirement as to the amount of chlorine which must be added to the water. Petitioner corrected this deficiency and the citation was removed.

      
      

   5. Neither of the two water systems involved in this proceeding - Intercession City and Tropical Park - are presently under citation by any state or local regulatory agency. Analyses of monthly laboratory samples of water from the Intercession City and the Tropical Park systems indicate that the water quality will meet the Department of Environmental Regulation's secondary drinking water standards which went into effect on January 13, 1981.

      
      

   6. Petitioner now provides a toll-free telephone number which Osceola County customers may use to call Orlando. Notice of this toll-free number was included in the water bills sent to customers in September or October of 1980.

      
      

   7. A log is maintained by petitioner of all interruptions of water service. On one occasion occurring on March 3, 1980, there was a water outage. The outage was caused by low temperatures freezing the pressure switch at a time when it was at a high pressure level. When there was no pressure, the switch, being frozen, was incapable of sending an on-signal to the pump. It was necessary for petitioner to use torches to thaw out the pipes to make the system work properly. Cold weather sufficient to cause such an effect rarely occurs in Florida. On January 16, 1981, there was an interruption in service caused by

      the county cutting a water line. Another interruption of service occurred on January 18, 1981. This was caused by the malfunction of an air release valve which releases excess air from the pressure tank. Air was eventually caused to go into the distribution system and consequently into the homes of the customers. Petitioner's personnel have been instructed to watch this type of situation more carefully and more often. Petitioner's vice president of operations was not aware of recent complaints from customers concerning air problems, but testified that he would immediately and personally follow up on the problem.

      
      

      CONCLUSIONS OF LAW

      
      

   8. Disputed financial and attendant legal issues having either been resolved or reserved by the parties for a future hearing, the only issue presently before the Hearing Officer concerns the quality of the water services which the petitioner provides to its customers in Osceola County, Florida, specifically through its Intercession City and Tropical Park operations.

      
      

   9. Among the considerations which the Florida Public Service Commission must take into account when it fixes water and sewer rates which are just, reasonable, compensatory and not unfairly discriminatory are the value and the quality of the service provided. Florida Statutes, Section 367.081(2). While "value" and "quality" of service have not been specifically defined by the Legislature or by the Public Service Commission in its rules, it must be concluded that these terms would include the quality of the water delivered to the customer. Section 367.111(2), Fla. Stats. (1980 Supp.), provides as follows:

      
      

      "Each utility shall provide to each person reasonably entitled thereto such safe, efficient, and sufficient service as is prescribed by the Florida Safe Drinking Water Act and the Florida Air and Water Pollution Control Act, or rules adopted pursuant thereto, or, if applicable, chapter 17-22, Florida Administrative Code; but such service shall

      not be less safe, less efficient, or less sufficient than is consistent with the approved engineering design of the system and the reasonable and proper operation of the utility in the public interest."

      
      

   10. Here, the evidence adduced at the hearing illustrates that petitioner's two water systems in Osceola County are not presently under citation by any local or state agency. It must therefore be presumed that petitioner's water systems are in compliance with local and state regulatory standards with regard to quality.

       
       

   11. While the odor of the water was a common complaint of those customers who testified at the hearing, there was no evidence that the odor is being caused by the manner in which petitioner operates its water system. Petitioner does add chlorine to the water supplied to its customers as required by the Department of Environmental Regulation. If it is the chlorine which causes the objectionable odor, the customer's complaints must be directed to the agency responsible for enforcing water quality standards. Insufficient evidence was presented as to the existence of debris in the water supplied by petitioner to its customers.

   12. The customer testimony regarding interruptions in service without prior notice was not specific as to the frequency or the causes of such an occurrence. The petitioner's witness consulted a log maintained for the purpose of recording such occurrences. Three interruptions in service were noted. One was the result of freezing weather, one was the result of the County accidentally cutting a water line and one was the result of equipment malfunction. In each instance, advance notice to customers of an interruption of water service was impossible. The problem of air existing in water lines is presently being investigated by the petitioner. The remaining dissatisfactions of the customers relating to possible billing errors and inadequate and/or untimely responses to their billing questions were not supported by competent, substantial evidence.

       
       

   13. Taken as a whole, the evidence adduced at the hearing merely establishes that many customers of the petitioner's Intercession City and Tropical Park water systems find the odor of the water to be objectionable. The cause of the objectionable odor was not established, and evidence was adduced that petitioner's two water systems in Osceola County currently meet applicable state and local quality standards. In summary, there was not competent, substantial evidence adduced at the hearing to base a conclusion that the water service provided by petitioner to its customers is unsatisfactory.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the quality of water service provided by petitioner to its customers in Osceola County be found to be satisfactory and that no adverse consequences be imposed upon the petitioner in its application for a rate increase as a result of the quality of its service.

Respectfully submitted and entered this 22nd day of April, 1981, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1981.

COPIES FURNISHED:

R.M.C. Rose

Myers, Kaplan, Levinson, Kenin and Richards

Suite 103, 1020 Lafayette Street

Tallahassee, Florida 32301

Jack Shreve Public Counsel

Room 4 - Holland Building Tallahassee, Florida 32301

M. Robert Christ Legal Department

Florida Public Service Commission

101 East Gaines Street Tallahassee, Florida 32301

Steve Tribble, Clerk Public Service Commission

101 East Gaines Street Tallahassee, Florida 32301

Docket for Case No: 81-000259

Orders for Case No: 81-000259