STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

TWIN PALMS MOBILE HOME COURT, INC.; ) DOWN YONDER MOBILE HOME ESTATES, LTD.; )

)

Petitioner, )

)

vs. ) CASE NO. 91-0330

)

RANCH MOBILE WWTP, INC., )

)

Respondent, )

)

and )

) FLORIDA PUBLIC SERVICE COMMISSION, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a formal hearing in the above- styled case on April 25, 1991, at St. Petersburg, Florida.

APPEARANCES

For Petitioners: Thomas E. Reynolds, Esquire

Suite 300, 100 2nd Avenue North St. Petersburg, Florida 33701

For Respondent: Vernon R. Wagner, Esquire

4508 Central Avenue

St. Petersburg, Florida 33711

For Intervenor: Robert J. Pierson, Esquire

100 E. Gaines Street Tallahassee, Florida 32399-0863

STATEMENT OF THE ISSUES

What is the appropriate rate to charge for providing waste water treatment services to the customers of Ranch Mobile WWTP, Inc.?

PRELIMINARY STATEMENT

On April 3, 1990, Ranch Mobile WWTP, Inc. (Ranch Mobile) applied for a staff assisted rate case pursuant to Section 384.0814, Florida Statutes. Its application was approved and, by Order No. 23807, the Florida Public Service Commission (PSC) issued a proposed agency action approving the increased rates for waste water treatment service. By Petition dated December 17, 1990, Twin Palms Mobile Home Court, Inc. (Twin Palms) and Down Yonder Mobile Home Estates,

Ltd. (Down Yonder) requested a hearing to challenge the proposed agency action, and these proceedings followed.

In its Petition challenging the proposed rate increase, the Petitioners primarily allege that Ranch Mobile had contracted to provide waste water treatment services with their existing plant, and even though Ranch Mobile was forced by the Department of Environmental Regulation to cease and desist operations at the existing treatment facility, Ranch mobile should have constructed a new facility rather than hook up to the City of Largo's waste water treatment facility.

Petitioners herein have filed a civil action against Ranch Mobile alleging Ranch Mobile breached the contract with them and are seeking monetary damages in the Circuit Court in Pinellas County.

At a prehearing conference to limit and define the issues to be considered in these proceedings, this Hearing Officer entered an ore tenus order limiting the evidence in these proceedings to the appropriateness of the PSC's proposed rate increase. This order precluded litigation, in these proceedings, of the contract dispute between the parties.

At the hearing, the PSC called two witnesses, Petitioner called one witness, and 11 exhibits were admitted into evidence. Exhibit 1 is the engineering report used by the PSC analyst in arriving at the appropriate rate for the facility to charge. Exhibit 2 is the staff memorandum establishing the proposed rate and the reasons therefore. Exhibit 3 is the staff audit of Ranch Mobile used in establishing the proposed rates. All other exhibits related to the contractual dispute between the parties and were accepted as proffers of the evidence that would have been introduced if Petitioners had been allowed to litigate the contract dispute in these proceedings.

Proposed findings submitted by Respondent and Intervenor are accepted.

Those not included herein were deemed unnecessary to the conclusions reached.

FINDINGS OF FACT

1. Ranch Mobile WWTP, Inc., is a Class "C" wastewater treatment facility located in the City of Largo, Florida. The original certificate currently held by Ranch Mobile was issued on March 22, 1977 to Midway Service Corporation and was transferred on April 17, 1985 to Ranch Mobile.

   
   

2. Ranch Mobile serves three mobile home parks, Ranch Mobile, Down Yonder and Twin Palms. The utility is owned by its largest customer, Ranch Mobile, a cooperative mobile home park with 488 members. Down Yonder has 229 members, and Twin Palms has 149 members.

   
   

3. After purchasing the utility, Ranch Mobile commenced efforts to bring the utility in compliance with Department of Environmental Regulation's requirements. These efforts included preparing new percolating ponds, which, when completed, did not allow the utility to meet DER requirements. Faced with disciplinary action by DER, Ranch Mobile was offered the option by DER of connecting to the City of Largo's wastewater treatment facility in lieu of much more expensive procedures which were not guaranteed to meet DER requirements. Suffice it to say, Ranch Mobile opted for connecting to the City of Largo system and did so. It is to recover the costs of the services provided by the City of Largo that Ranch Mobile seeks the rate increase here involved.

4. On April 3, 1990, Ranch Mobile filed for a staff-assisted rate case and paid the filing fee. On May 22, 1990, the PSC staff engineer conducted a field investigation resulting in memorandum dated June 4, 1990. (Exhibit 1) The PSC Division of Audit and Finances reviewed the utilities operation expense, files, and rate application to establish reasonableness of the original cost, utility plant retirements, and quality of service, resulting in the memorandum dated August 21, 1990. (Exhibit 3) On September 27, 1990, a customer meeting was held to allow customers to provide testimony regarding the qualify of service being provided by the utility. No adverse testimony to quality of service was offered.

   
   

5. Although Petitioners' witness questioned some minor costs allowed by the PSC staff report, this witness was not qualified as an expert in utility rate proceedings, and his opinion is given little, if any, credence.

   
   

6. The rates proposed in Exhibit 2 are just, reasonable, compensatory, and not unfairly discriminatory, and conform to the requirements of Section 367.081 and 367.0814, Florida Statutes.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

   
   

8. Section 367.081(2)(a), Florida Statutes, provides in pertinent part:

   
   

   The Commission shall, either upon request or upon its own motion, fix rates which are just, reasonable, compensatory and are not unfairly discriminatory. In every such proceeding,

   the Commission shall consider the value and quality of the service and the cost of providing the service, which shall include, but not be limited to, debt interest; the requirements of the utility for working capital; maintenance, depreciation, tax, and operating expenses incurred in the operation of all property used and useful in the public service; and a fair return on the investment of the utility in property used and useful in the public service.

   
   

9. In these proceedings, Ranch Mobile as the applicant has the burden of proof to demonstrate its entitlement to the proposed rate increase. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

   
   

10. The rates proposed in these proceedings are basically the rates charged by the City of Largo for the wastewater treatment provided the customers of Ranch Mobile.

    
    

11. Petitioner's contention that Ranch Mobile is required to honor the contract entered into with Down Yonder and Twin Palms, when Ranch Mobile acquired the utility, is not well founded. In a factual situation very similar to the instant case, Cohee v. Crestridge Utilities Corp., 324 So.2d 155 (Fla. 2nd DCA 1975), the court held that the PSC had the authority to raise as well as

    lower rates established by preexisting contracts when deemed necessary in the public interest. As stated by the court in Cohee at p. 158:

    
    

    . . . it would appear that the Commission would not even be authorized to take into consideration the preexisting contract in its determination of reasonable rates.

    
    

12. Similarly, in H. Miller & Sons, Inc. v. Hawkins, 373 So.2d 913 (Fla. 1979), the Florida Supreme Court held that the PSC could modify a private contract between a developer and a utility as a valid exercise of the police power. Accordingly, the contract entered into between Ranch Mobile, Down Yonder and Twin Palms is not controlling or relevant in these proceedings.

    
    

13. Since the rates recommended by the PSC's staff are just, reasonable, compensatory, and not unfairly discriminatory, they should be approved.

RECOMMENDATION

It is recommended that a Final Order be entered approving and establishing rates for Ranch Mobile to charge its customers as set forth in the Final Order granting temporary rates in Event of Protest and Notice of Proposed Agency Action, Order Approving Increased Rates and Charges.

ENTERED this 29th day of May, 1991, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Desoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 29th day of May, 1991.

COPIES FURNISHED:

Thomas E. Reynolds, Esquire Suite 300, 100 2nd Avenue North St. Petersburg, FL 33701

Vernon R. Wagner, Esquire 4508 Central Avenue

St. Petersburg, FL 33711

Robert J. Pierson, Esquire

1. E. Gaines Street Tallahassee, FL 32399-0863

   Steve Tribble

   Director of Records and Recording

2. East Gaines Street Tallahassee, FL 32399-0850

Susan Clark General Counsel

Public Service Commission

101 East Gaines Street Room 212

Tallahassee, FL 32399-0850

David Swafford Executive Director

Public Service Commission

101 East Gaines Street Room 116

Tallahassee, FL 32399-0850

Docket for Case No: 91-000330

Orders for Case No: 91-000330