Findings Of Fact Based upon the evidence presented, the following facts are determined: The UTILITY is owned by Florida Land Company, a Florida corporation, which is a wholly owned subsidiary of The Continental Group, Inc., a New York corporation. In 1975, the UTILITY constructed a water and sewage treatment system to serve a residential and commercial development known as Greenwood Lakes. The UTILITY's water and sewer rates and charges have not changed since the COMMISSION's approval of initial tariffs in 1976. (Testimony of Crosby; P.E. 1.) I. Elements of Ratemaking In fixing the water and sewer rates to be charged by a public utility, the COMMISSION must consider: (1) the value and quality of the service, (2) the utility's rate base, (3) the cost of providing the service, and (4) a fair return on the utility's rate base. Section 367.081(2), Florida Statutes (1979). Each element is addressed separately below. Quality of Service The UTILITY's water supply is provided by two deep wells with a total capacity, based on present pumps, of 2.376 million gallons per day. Treatment is provided by aeration and chlorination. The water system operates under an operating permit issued by the Department of Environmental Regulation. Water samples and reports are made monthly, and the water system presently meets all drinking water standards of the Department. (Testimony of Crosby, Heiker; R.E. 1.) The UTILITY's sewage treatment system consists of a .10 million gallon per day package plant; treatment consists of extended aeration followed by gravity flow to evapo-percolation ponds providing on-site disposal. It operates under an operation permit issued by the Department of Environmental Regulation, and complies with Department's sewage collection and treatment standards. (Testimony of Crosby.) Rate Base Rate base consists of the UTILITY property that is used and useful in providing the service for which rates are charged. In its application, the UTILITY proposed a rate base; after review, the COMMISSION suggested several adjustments, which are not opposed by the UTILITY. Use of a year-end test year is appropriate because of the extraordinary growth experienced by the UTILITY during 1979. For the test year ending December 3l, 1979, the UTILITY's adjusted water rate base is $135,977; the adjusted sewer rate base is $131,764. They are calculated as follows: RATE BASE Test Year Ending December 31, 1979 WATER SEWER Utility Plant in Service $190,969 $225,722 Construction Work in Progress 1,214 4,297 Accumulated Depreciation 18,920 2/ 14,801 2/ Contribution in Aid of Construction (CIAC)-Net of Amortization -48,831 -86,458 Working Capital Allowance 3,030 3,198 Income Tax Lag -0- - 194 RATE BASE $135,977 $131,764 (Testimony of Lowe; P.E. 1, 2, 3, R.E. 3.) Operating Statement The following Operating Statement reflects the UTILITY's revenue earned, costs of operation, and not-operating income during the test year. It shows that the UTILITY suffered a loss of $26,429 in its water operations and a loss of $19,101 in its sewer operations. OPERATING STATEMENT Test Year Ending December WATER 31 , 1979 SEWER Operating Revenues: $10,172 Operating Expenses: Operatic 25,314 $14,365 22,436 Maintenance -0- -0- Depreciation 18,199 10,132 Amortization -0- -0- Taxes Other Than Income 1,088 898 Other Expenses -0- -0- Income Taxes -0- -0- TOTAL OPERATING EXPENSES $44,601 $33,466 Operating Income ($26,429) (Testimony of Lowe; P.E. 1, 2, 3, R.E. 3.) ($19,101) The UTILITY requests an annual water revenue increase of $36,154, and a sewer revenue increase of $31,715, which would produce gross annual revenue of $54,326, and $46,080, respectively. The adjusted Operating Statement, constructed to reflect this additional requested revenue, is as follows: CONSTRUCTED OPERATING STATEMENT Test Year Ending December 31, 1979 WATER SEWER Operating Revenues: Operating Expenses: $54,326 $46,080 Operation 30,634 25,580 Maintenance -0- -0- Depreciation 3,812 2/ 3,436 2/ Amortization -0- -0- Taxes Other Than Income 2,280 1,941 Other Expenses -0- -0- Income Taxes 1,424 968 TOTAL OPERATING EXPENSES $38,150 $31,925 Operating Income $16,176 $14,155 Rate Base $135,977 $131,704 Rate of Return 11.90 percent 10.74 percent (Testimony of Lowe; P.E. 1, 2, 3, R.E. 3.) Rate of Return The capital structure of the UTILITY is as follows: AMOUNT PERCENT TO TOTAL Debt 4/ $1,450,000 60.90 Customer deposits 6,389 .27 Common Equity 924,550 30.83 TOTAL $2,380,947 100.00 The proposed annual gross water revenues of $54,326, and sewer revenues of $46,080 will allow the UTILITY to earn a rate of return of 11.90 percent on its water rate base, and 10.74 percent on its sewer rate base. With debt service costs now in excess of 12.50 percent, the return on equity will be nominal; however, there is no evidence that this will cause the UTILITY's service to suffer. (Testimony of Smith; P.E. 6.) II. Capitalization of Interest on Non-Used and Useful Equipment The UTILITY's plant is larger than necessary to serve its present customers. In its application, the UTILITY seeks COMMISSION approval to capitalize its interest costs on that portion of the UTILITY's plant which is non-used and useful, and excluded from rate base. Capitalization will allow the UTILITY to recover its interest expenses over the useful life of the property involved. The COMMISSION has previously allowed capitalization of interest under similar circumstances, Docket No. 760054-WS, Application of North Orlando Water and Sewer Corporation, Order No. 7455, dated October 4, 1976. Here, the UTILITY's request is reasonable, concurred in by the COMMISSION, and should be granted. (Testimony of NewIon, Cooke, Lowe; P.E. .) III. Rate Structure The UTILITY currently uses a conventional two-tier rate structure. A base facility charge (BFC) rate structure is a more equitable method of distributing costs associated with providing a utility service. Under a BFC structure, customers pay a base charge which covers their pro-rata share of the UTILITY's fixed costs, and a gallonage charge which covers the costs of pumping, treating, and distributing the actual water gallonage used. Such a structure would require the UTILITY to alter its current customer service policy to insure that the base charge is paid during temporary discontinuances of service. (Testimony of Washington.)
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the UTILITY's application for increased sewer rates and charges be granted and that it be authorized to file revised tariff pages containing rates designed in accordance with the base facility charge concept to produce gross annual water revenues of $54,326 and annual sewer revenues of $46,080; That the UTILITY be required to notify each customer of any rate increase authorized, explaining the reasons for such increase. A letter of explanation should be submitted to the COMMISSION for prior approval; That the UTILITY be allowed to retain all interim revenues collected pursuant to COMMISSION Order No. 9416 and cancel the rate refunding bond previously submitted; and That the UTILITY be allowed to capitalize interest on non-used and useful equipment which is excluded from rate base. DONE AND ENTERED this 5th day of December, 1980, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675
The Issue The issues are: (1.) Whether Respondents' request for variance from requirements of Rule Chapter 10D-6, Florida Administrative Code, should be granted. (2.) Whether Respondents are guilty of violation of certain provisions of Chapter 381 and Chapter 403, Florida Statutes, and Rule Chapter 10D-6, Rule Chapter 17-550, and Rule Chapter 17-555, Florida Administrative Code, regulating the operation of onsite sewage disposal systems.
Findings Of Fact Respondent V.M.P. Corporation (VMP) operates a lounge known as Stud's Pub in Jacksonville, Florida. Licensed for 75 seats, the lounge actually contains 50-55 seats and employs five people full time. Additionally, 10-15 independent entrepreneurs known as dancers may be present at times. The dancers are not employees of Respondents. Less than 25 people, other than patrons, are present at the facility at any time. Respondent Vincent M. Paul (Paul) owns the facility and the corporation. The lounge is on lots that were platted prior to 1972. Petitioner is the statutory entity with authority for granting variances for onsite sewage disposal systems regulated by Petitioner pursuant to provisions of Section 381.0065(8)(a), Florida Statutes (1991). The lounge is serviced by a septic tank with a drainfield which is covered by an asphalt parking lot. The portion of the parking lot over the drainfield is bounded to the west by a dirt city street, to the north by other pervious surfaces, to the east by the lounge and to the south by the remainder of the asphalt parking lot. A sign on the premises which advertises the business is protected from automobile traffic by concrete barriers. The septic tank system and drainfield were installed prior to 1972 by a previous owner. Respondent Paul retrofitted the septic tank system after 1972. Respondent Paul was responsible for paving over the drainfield after he purchased the property. Petitioner's representatives inspected the lounge, determined the drainfield to be covered by the asphalt parking lot and requested Respondents to remove the asphalt covering. Respondents requested a variance pursuant to Rule 10D Administrative Code, for the asphalt covered drainfield and other deficiencies of the onsite sewage disposal system. Petitioner's review board recommended denial of the request on the basis that the variance would not constitute a "minor deviation" from rule requirements. Although the term is not defined by Petitioner's rule, Petitioner's usage of this term was the result of the consideration by Petitioner's review board of the application for variance within the context of Section 385.0065(8)(a), Florida Statutes, which authorizes Petitioner to grant variances only where the hardship is not intentionally caused by the applicant, where no reasonable alternatives exist and where no evidence of adverse effect upon public health or ground and surface waters is demonstrated. Respondent has no record of failure of the septic tank or drainfield. Water samples from the onsite potable water well filed with Petitioner tested below detectable limits for nitrates and coliforms, the only parameters Petitioner is required to analyze. Respondents' records of water flow or usage from the well into the lounge show daily flow rates of between 320 and 580 gallons, with an average rate of between 450 and 480 gallons. Respondent Paul is responsible for the installation of an unpermitted chlorinator on the water supply system which provided actual flow information. The only onsite water well has no grout sealant. It is the only well of which the parties are aware that lies within 100 feet of the septic system. The potable water well is located approximately 42 feet from the edge of the covered drainfield. The well head does not extend above line surface and there is no concrete pad around the wellhead. The exact depth of the well is unknown, although the well is located upgradient of the drainfield and a nearby junkyard. Denial of the variance would require that Respondents uncover the drainfield since there is no practically available offsite sewage system currently available. Soil in the area of the drainfield is classified as well- draining sand. Due to the impervious surface covering the drainfield, Petitioner's representative was unable, during his inspection, to discern any symptoms of drainfield failure in the form of "blow field should be totally unobstructed to allow aerobic processes to take place in the drainfield which will permit the breakdown of contaminants. A portion of Respondents' 1200 gallon septic tank is located partially under and immediately adjacent to Respondents' facility. A dousing tank which retains liquid waste and operates as part of the septic system is also totally covered by the asphalt pavement. Although there has been no detectable failure of the system, every eight or nine months Respondents have the septic tank and dousing tank pumped out. The tanks never get full.
Recommendation Based on the foregoing, it is hereby Recommended that a final order be entered by Petitioner denying the variance requested by Respondent with exception of such minimal distance as may be required to relocate the water well as far as possible from the drainfield on the Respondent property, and, Further Recommended that such final order also assess Respondent Paul an administrative penalty of $500 for each of the four violations contained in the Administrative Complaint which were proven in this proceeding for a total of $2000, and a continuing assessment of $500 per day for each violation for a total of up to $2000 per day after first allowing Respondents a 60 day period within which to correct all four violations. DONE AND ENTERED this 3rd day of May, 1993, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 1993.
Findings Of Fact Quality of Service: Twelve customers testified at the hearing in opposition to the proposed rate increase. The major customer objection is the size of the increase sought. Other objections are directed at the utility's rate structure, and the required tie-in to the PWA pipeline. Some customers desire to have separate rates set for the two areas served by J. C. Utilities, Inc., (Timber Oaks and San Clemente East), and one customer objected to the taste and smell of the water being provided. Nevertheless, an engineer from the Florida Public Service Commission presented evidence that the utility is meeting all state standards and is not under citation by the Department of Environmental Regulation. On the basis of the entire record, the evidence supports a finding that the utility's water and sewer service is satisfactory. Used and Useful Plant in Service. The utility contends that 33.72 percent of its sewer plant is not used and useful in the public service, and has deleted this amount from its sewer rate base. The Florida Public Service Commission engineer agrees, based on the actual recorded flows of the sewer plant and the growth of the system. The water plant in service is 100 percent used and useful in the public service. Acquisition Adjustment: The utility calculated an addition to rate base of $17,370 for San Clemente East (net of 1978 amortization) for acquisition costs, and presented evidence to demonstrate that this acquisition is in the public interest. Based on the entire record, the evidence supports a finding that this acquisition benefits the customers of J. C. Utilities, Inc., and is in the public interest. Thus, the adjustment is warranted. Income tax expense: Several questions are raised in the area of income tax expense. These deal with whether to treat the utility as a separate entity or part of a group filing consolidated tax returns, the appropriate computation of state income taxes, and the effect the capital structure of the utility has on taxable income for ratemaking purposes. All of these questions except one address the ultimate dollar amount of tax expense. The exception addresses the appropriateness of the expense. Only if income taxes are determined to be appropriate can the dollar amount of such taxes be considered. When net operating income is equal to or less than interest expense, there is no taxable income. This is generally true whenever a company's capital structure consists largely of debt or of debt only. The capital structure of J. C. Utilities, Inc., is comprised entirely of debt, according to the company's financial statements. The annual report shows capital stock of $10, a deficit in retained earnings of $68,834, and additional paid-in capital of $490. The utility's financial witness verified that J. C. Utilities, Inc. has no externally financed debt and relies for funds on its parent, U.S. Homes Corporation. The application reflects that the company's capital structure consists of customer deposits (debt), and loans and advances from the parent company (debt). This evidence supports a finding that the utility's capital structure is 100 percent debt. Accordingly, there can be no allowance for either state or federal income taxes in making a determination of revenue requirements for this utility. (See Order No. 9256 in Docket No. 790027-W) and all questions relating to the dollar amount of income tax expense are irrelevant. Cost of capital: J. C. Utilities, Inc., is financed totally by its parent company, U.S. Homes Corporation. The application originally requested a rate of return of 11.5 percent. At the hearing, various witnesses for the utility suggested rates ranging from 13.2 percent to 25 percent. However, since the utility has no equity, no return on equity can be provided. In calculating an appropriate rate of return to be granted to the utility, the original cost of debt rate of 11 percent and the recently revised rate of 8 percent on customer deposits can be used. These cost of capital components and rates thereon yield a weighted average cost of capital of 11.32 percent. This rate is supported by the evidence, and should be granted. Depreciation on Contributed Property: Appropriate adjustments have been made to the utility's water rate base and sewer rate base, and operating statements, to reflect the practice of the Florida Public Service Commission to add back accumulated depreciation on contributed property in rate base, and remove these items from operating expense. These adjustments appear on the attached schedules. Rate Base and Operating Statements: The attached schedules 1 through 6 detail the utility's rate base for water, rate base for sewer, and the water and sewer operating statements. Appropriate explanations for the various adjustments also appear in these schedules. Construction water: During the test year, the utility did not bill for construction water in the months of January, February, and March. Starting in April construction water ,and line flushing was metered and billed to the various construction companies connected with the Timber Oaks development. During the final nine months of the year when the construction water was accounted for a total of 28,626,903 gallons were sold which generated $17,590 in water revenue. In order to estimate the unaccounted for construction water, the nine months billing can be annualized. This amounts to an additional 9,542,301 gallons, which increases test year revenue by $5,725. Rate Structure: In order to structure rates that will be fair to all customers, they must not only generate the approved revenue, but should also assure that all classes of customers share in the cost to provide service. The base facility type of rate structure establishes a monthly minimum service charge, which covers fixed costs such as depreciation, property taxes, and allocated portions of billing, collecting, and customer accounting expenses. Meter size is still used to determine the demand factor. After the base charge is established, a charge per 1,000 gallons is determined. This charge recovers costs related to transmission and treatment, and allocated portions of billing, collections, accounting expense, plant labor, etc. Customers then pay a gallonage charge based on use. This allows each customer some control over the amount paid for service. This form of rate structure should be used in setting rates for J. C. Utilities, Inc. Separate rate structures: J. C. Utilities, Inc. provides water service to the separate, unconnected systems serving San Clemente East and Timber Oaks. An appropriate rate structure should be established to provide separate water rates for San Clemente and Timber Oaks, so that the customers of each system pay rates to cover only the costs associated with these systems. P.W.A. surcharge: Because permanent rates are to be established, the utility should no longer be permitted to make a separate surcharge for PWA water purchased. This expense should be incorporated into the other costs of J. C. Utilities, Inc. Connection charges: In its application, the utility requested an increase in water and sewer connection charges. The company used the current number of customers served by the water system to arrive at the customer hydraulic share. The correct way to establish the hydraulic share is to divide the number of customers that can be served by the system into the cost of the water plant. However, there is other information needed in order to accurately and fairly set connection charges, which was not presented by the utility. Rather than deny the request for an increase in water and sewer connection fees, an investigation docket should be opened for the purpose of determining whether increases are warranted.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of J. C. Utilities, Inc., 2001 Ponderosa Avenue, Port Richey, Florida 33568, be granted in part, and that the utility be authorized to receive gross annual water revenues of $28,731 for San Clemente East, and $203,725 for Timber Oaks, and gross annual sewer revenue of $99,473, by rates to be approved by the Florida Public Service Commission. It is further RECOMMENDED that an acquisition adjustment of $17,370 be allowed for San Clemente East. It is further RECOMMENDED that the utility be required to implement a base facility charge in structuring its rates, in the manner set forth above. It is further RECOMMENDED that a separate investigation docket be opened for the purpose of resolving the matter of the utility's request for increased water and sewer connection charges. THIS RECOMMENDED ORDER entered on this 8th day of July, 1980, in Tallahassee, Florida. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Application of J. C. DOCKET NO. 790399-WS (CR) Utilities, Inc. to amend its ORDER NO. 9808 rates and charges. ISSUED: 2-23-81 / DOAH CASE NO. 80-1184 The following Commissioners participated in the disposition of this matter: JOSEPH P. CRESSE, CHAIRMAN GERALD L. GUNTER JOHN R. MARKS, III KATIE NICHOLS Pursuant to Notice, an administrative hearing was held before William B. Thomas, Hearing Examiner with the Florida Public Service Commission, on May 6, 1980, in Port Richey, Florida, on the application of J. C. Utilities, Inc., for increased rates and charges for water and sewer service provided to its customers in Pasco County, pursuant to Section 367.081, Florida Statutes. On July 1, 1980, the matter was transferred to the Division of Administrative Hearings, but continues to be assigned to William B. Thomas, as DOAH Hearing Officer, for a recommended order. APPEARANCES: Jack H. Geller, Esquire, Suite 200, Clearwater professional Center, 600 Bypass Drive, Clearwater, Florida 33156, for J. C. Utilities, Inc., Petitioner. Samuel H Lewis, Esquire, 101 East Gaines Street, Tallahassee, Florida 32301, for the Florida public Service Commission and the public generally. The Hearing Officer's Recommended Order was filed on July 8, 1980. Timely exceptions to the Hearing Officer's recommended order were filed by the petitioner. Now after consideration of all of the evidence in the record, we enter our order.
Findings Of Fact The property upon which Petitioner seeks a variance from the normal requirements for attaining a permit to install an on-site sewage disposal system is found in Leon County, Florida. Specifically, it is located at Lot 4, Block A, Killearn Lakes Unit I. The relative position of this lot in the subdivision is depicted within Petitioner's Exhibit 1 and Respondent's Exhibit 2 admitted into evidence. Respondent's Exhibits 3 through 5 are photographs of the site. Petitioner intends to construct a 1,200 square foot residence. As the photographs depict, some preparation has commenced to the extent of lot clearing and other site work where the home would be constructed. Killearn Lakes Unit I is a pre-1972 subdivision. When the development commenced, it was anticipated that a community sewer system would be utilized, as contemplated by the plans submitted in April, 1971. Subsequently, some lots within the Killearn Lakes Unit I were allowed to be developed with the use of on-site sewage disposal systems, namely septic tanks. There are 150 lots in that category. In 1979, with the advent of certain rules under Chapter 10D-6, Florida Administrative Code, the development was allowed to proceed on the basis of four septic tanks per acre. Over time, Killearn Lakes Unit I experienced a history of failures with on-site sewage disposal systems. The failures were promoted by problems with the "sheet flow" drainage system and its patterns of dispersion of storm water runoff, problems of soil permeability and abnormally high wet season water tables, referred to as perched water tables. This resulted in sewage backing up into homes and flowing out onto the ground in the yards of the residences, into streets and onto adjacent neighbors' lots. The problems experienced were widespread within the Killearn Lakes Unit I. This seepage of raw sewage presented a health hazard, as it would on any occasion. Among the residences confronted with this dilemma was Lot 5, Block X, adjacent to the subject lot. Persons residing in that home had to undertake alternative means of on-site sewage disposal to have that system function properly. This included relocation of the apparatus, mounding, use of an aerobic system, and use of pumps to insure that the waste being disposed did not back up into the conveniences within the home. Witnesses who appeared at the hearing described the series of corrections in some detail. Those witnesses included a former owner of that residence and others who had a technical understanding of the problems in that system. The problems in Killearn Lakes Unit I related to on-site sewage disposal systems became so extreme that the Leon County Commission declared a moratorium on the installation of on-site septic tanks in that development. This occurred in 1987. In order to better understand the problems in the Killearn Lakes subdivision, to include Killearn Lakes Unit I, a study was commissioned. That report is referred to as Killearn Lake Waste Water Disposal Study of June, 1987. A copy of the report is found as Respondent's Exhibit 6 admitted into evidence. It was prepared for the Leon County Board of County Commissioners and prepared by the Leon County Public Health Unit with the assistance of the Leon County Department of Public Works, Leon County Building Department, Ochlockonee River Soil and Water Conservation District, Northwest Florida Water Management District, Tallahassee-Leon County Planning Department, Florida Department of Health and Rehabilitative Services, and Florida Department of Environmental Regulation. Some of the highlights of that report concerned the observation that the septic tank systems do not work adequately and that the more systems that are placed the greater the problems. It noted that the nature of the drainage system in this area is a contributing factor to the failures. The soil's poor permeability, relating to the Dothan series of soils in the area which have slow permeability, contributed to the problem. Perched water tables were found above the expected levels for the wet season water tables. They also presented a problem, as did excessive slopes in some areas. In particular, it was noted that 80% of the lots sampled in Killearn Lakes Unit I had severe limitations on the use of on-site sewage disposal systems. Ninety-three per cent of the lots sampled in Block X received excess runoff from other lots and roads at higher elevations. It was noted that French or curtain drains alone would not significantly reduce perched water table complications because of the low permeability of the soils. It was reported that the overall housing density of Killearn Lakes is not particularly high, but the individual lots are small, approximately 1/4 acre in size. This, taken together with the fact that the "sheet flow" concept of storm water management contemplates that the runoff will cascade across the terrain conforming to its contours, means that some small lots will be inundated. This uncontrolled runoff contributes to septic tank problems in that the tanks fail when the soils around them become saturated. The report notes that if there was a different designed drainage system, the impact on septic tanks would be less. The report notes that if something is not done to modify storm water runoff, drainage problems will persist. Consequently, septic tank failures will continue to occur. Concerning the water tables, the soil testing, which was done in Killearn Lakes Unit I, in which the predominant soil is Dothan type, demonstrated that the borings which located mottling of the soils at the expected level of the wet season water table were inaccurate. These indicators did not correspond to reality in that the true water tables were found 12-20 inches above the expected level of the average high water, as seen in the mottling. This phenomenon was revealed in 42% of the lots evaluated which had Dothan soils. The report recommended, among other measures, that no new sewage disposal system permits be issued in Killearn Lakes Unit I until a storm water system had been constructed and demonstration made that the system would collect storm water and thereby lower the perched water table on specific lots under review. The ultimate response to the question of permits for on-site sewage disposal systems in Killearn Lakes Unit I was spoken to in a Resolution of July 14, 1987 entered by the Leon County Board of County Commissioners. A copy of the resolution may be found as Respondent's Exhibit 1 admitted into evidence. It was resolved that the permits for on-site septic disposal systems be reviewed by the Leon County Public Health Unit on a case-by-case basis in accordance with criteria announced at Chapter 10D-6, Florida Administrative Code. This effectively lifted the moratorium. The subject request for installation of an on-site sewage disposal system was reviewed in keeping with the policy decision set forth in the resolution. Respondent's Exhibit 6 admitted into evidence includes a copy of a survey made by the Homeowners' Association for Killearn Lakes, also admitted as Petitioner's Exhibit 1. As part of the study commissioned by the Leon County Board of County Commissioners, it has some relevance in portraying the dimensions of the problem. Those dimensions are better understood by resort to the color scheme which is found in Petitioner's Exhibit 1. It depicts the problem lots in red color, those lots without problems in green color, and the lots upon which no report was made in orange color, as well as vacant lots, to include the subject lot, which have no color scheme. This latter category indicates no participation in the survey. The door-to-door personal survey conducted by Rod Moeller and testified about at hearing does not diminish the impression of the seriousness of the problem with on-site sewage disposal system failures in Killearn Lakes Unit I, which the 1987 study by the Leon County Board of County Commissioners identified. This survey by Mr. Moeller was in a limited area, more specifically related to the portion of Killearn Lakes Unit I nearby the subject lot. The findings of the 1987 study commissioned by the Leon County Board of County Commissioners are accepted as accurate. Eanix Poole, Administrator of Environmental Health for the State Health Office testified at the hearing. He pointed out that the failure rate in the subdivision under question for on-site sewage disposal systems is 25%, as contrasted with the statewide rate of less than 1/2%. He identified the fact that those failures relate to backups within the home and seepage onto the ground. He verified that these events constitute health problems, especially given the number of failures. He sees the lot in question here as being particularly vulnerable to problems given the drainage patterns and its location at the bottom of two hills. The lot in question receives runoff from the two adjacent lots as well. Mr. Poole sees the subject lot as more vulnerable in the wet season and does not believe that any alternatives that are available for placement of the system on the site would sufficiently alleviate the potential failure of the system to make it a successful arrangement. What he sees is a lot in the path of a natural drainage of tremendous quantities of storm water runoff, coupled with poor soil conditions related to soil absorption or permeability in an area where on-site sewage disposal systems have failed. He remarks that dry soils are needed to treat the sewage and that treatment cannot take place in a saturated soil environment. The effects of seepage of the sewage, according to Mr. Poole, is one which can degrade ground water. Mr. Poole is also concerned that the installation of the proposed on-site sewage disposal system above ground will have an adverse impact on the adjacent lots, one of which has already experienced problems. That refers to Lot 5, Block X. These observations by Mr. Poole, as reported, are accepted. Raymond Collins, an environmental administrator with the Respondent's health program office, also testified at the hearing. He is intimately aware of the problems in Killearn Lakes Unit I. Those problems began to occur in the winter of 1986 and continued into 1987. This related to problems with toilets and the seepage of effluent which was running onto people's property and into the streets. He notes a similar failure rate in Killearn Lakes Unit I to that observed by Mr. Peel when contrasted with the experience statewide. In the aforementioned period he received calls and reports from homeowners concerning system failures. In effect what was happening was that the on-site drain fields in Killearn Lakes Unit I would not accept more input and the raw sewage would bubble up and leach out onto the ground. He personally observed a dozen sites which had failures. He was responsible for the coordination of the July, 1987 study which has been mentioned. As a result of that study one of the steps which he took was to advise that staff investigating the permit application requests should elevate the estimation of the wet season water table by 12-20 inches. Mr. Collins agrees with the recommendation of the individual who was assigned to evaluate the application for permission to install an on-site sewage disposal system at the subject lot, who recommended that the application be turned down. Mr. Collins' description of the experience at Lot 5, Block X, related to his knowledge that the initial system had been replaced with an aerobic system, which also proved to be an inadequate on-site sewage disposal system. In 1988, he went to the home of the person living on that lot, and the aerobic system was not working. There was a light rain on that day, and there were problems in the drain-field area. When a soil boring was made to a depth of two feet effluent poured out. The perched water table had risen to a point in the bottom of the drain field, such that when a hole was punched, it provided a conduit for pressure to be relieved. The drain field that was experiencing this problem was not the original drain field. It was a replacement drain field. The drain field being observed was in the front of the lot, right below the ground. The suggestion to alleviate the problem was to move the drain field to the side of the yard and elevate it and install a series of small-diameter pipes. A pump was also needed to move effluent into the drain field, thus, avoiding a backup of the system into the home. He is unaware of any recent failures in the system at Lot 5, Block X. Mr. Collins emphasized the need for soil to remain unsaturated to provide effective treatment and that 24 inches of unsaturated soil is the minimum amount which would be acceptable. Mr. Collins commented about the nature of the subject lot and the fact that other lots drain through it. Mr. Collins commented that the design of the proposed septic tank does not assure success in the treatment of the waste disposed. Unlike the expert of the Petitioner, Mr. Peel, the problem is not that solids are blocking up the system. It is the failure of the soils to accept the volume of water which is being released from the chambers of the septic tank into the drain field. Mr. Collins does not believe that the use of water-saving appliances in addition to the limited size of the home to be built on the subject lot, installation of an aerobic system, and installation of an above-ground system, as proposed, would be successful and not pose a health risk from system failure. The problems would continue to be drainage patterns and poor soils. His remarks, as reported, are accepted as accurate. Terese A. Hegg, Environmental Specialist I with the Respondent's Leon County Public Health Unit, reviewed the application for variance to install the on-site sewage disposal system. She was familiar with the history of problems in Killearn Lakes Unit I before undertaking this assignment and has made more than 50 evaluations in that development. She observed that the "sheet flow" drainage of storm water does not provide reasonable management because it does not drain normally. She is aware that the wet season water table is as much as 20 inches above the normal indicators, as seen through mottling. Her analysis of this site is under the auspices of those requirements announced in Chapter 10D-6.044, Florida Administrative Code, having in mind that the subdivision plat was made before 1972. This includes an examination of the soil characteristics, history of flooding, and water table evaluations. At this site, she noted the poor permeability of the soil. She did soil borings to confirm the nature of the soils and to identify the water table. She took into account the abnormal perched water table that is above what the mottling would indicate as being the wet season water table. Ms. Hegg is concerned that the system on the adjacent lot, which is now functioning adequately, would not function adequately if the subject system was installed. She noted that the drainage pattern from the neighboring lots was toward the subject lot and that water would come from the left and the right lots adjacent to this lot, corresponding to Lots 5 and 3 as you face them. The drainage pattern would then proceed beyond Lot 4 and into a green area. In making her assessment of this application, she was aware of the problems with the on-site sewage disposal system at Lot 5, Block X. The appearance of saturated soil in the entire length of the boring and standing water on the lot is an indication of problems with percolation. The effluent will flow out and onto the ground if these soils are saturated. From her observations and based upon the history of Killearn Lakes Unit I and its failures regarding on-site sewage disposal systems, Ms. Hegg does not believe that the proposed system would successfully address sewage treatment and would promote a risk of on-site sewage disposal system failures for adjacent lots. Ms. Hegg acknowledged that the storm water flows could be diverted; however, she points out that the subsurface water cannot be diverted. Her account of this site and the acceptability of the request for variance as reported is accepted as accurate. Given the soil conditions and the wet season water table expected at this site, the proposed system will not present an adequate unsaturated soil depth for treatment of the sewage and untreated sewage may be expected to seep or leach out onto the ground. On May 22, 1990, Mr. Collins had written to Dr. Richard G. Hunter, Assistant Health Officer for Environmental Health, recommending the denial of the variance request. A copy of that correspondence may be found as Respondent's Exhibit 7 admitted into evidence. It details reasons which are similar to those described in this Recommended Order. As a consequence, even though the Advisory Review Variance Board had looked with favor upon the request for variance, that variance was denied by action of Dr. Hunter on May 30, 1990, which relied upon the insights of Mr. Collins, as described in his May 22, 1990 correspondence. A copy of the letter of denial may be found as Respondent's Exhibit 8 admitted into evidence. The purpose of this hearing was not to examine whether Respondent had abused its discretion in denying the variance. The reason for the hearing was to allow the parties to present their points in an adversarial setting, which allowed each party to explain its viewpoint anew. That was done, and the analysis provided by this recommended order ensued. In deciding the facts, these representations have been made with due regard to the remarks of James Earl Peel, an expert in the design of on-site sewage disposal systems, who had on his staff, Gary L. Wood, P.E. His methods in analyzing the issue of the suitability of the installation of an on-site sewage disposal system at the subject site do not coincide with the methods contemplated in Chapter 10D-6, Florida Administrative Code, which controls. This is especially significant in his approaches to soil characteristics and location of the wet season water table. As noted above, his belief that the problem is one of distribution of solids from the septic tank into the drain field overlooks the more significant problem of water volume discharge from the septic tank into the drain field. In fact, Mr. Peel indicated that he is unfamiliar with the requirements of septic tank design, as described in Chapter 10D-6, Florida Administrative Code. On balance, Mr. Peel's reports, in Petitioner's Exhibits 3 and 4 admitted into evidence and his in-hearing testimony, do not persuade that the system he recommends can be successfully operated at the subject site. His presentation and the overall presentation of Petitioner do not create a reasonable expectation that the system will not fail and create health hazards for the residents of Lot 4, Block X, and others in the vicinity. It is recognized that this lot owner faces a hardship that was not caused by Petitioner. It is also recognized that, pursuant to the stipulation of the parties, there is no intention by any entity to install a community system of sewage disposal. It is further recognized that there are no alternative methods that would seem to be successful in addressing the problem of the treatment of the sewage, as related in the previous findings. On the other hand, the discharge that could be expected from this subject system would bring about a condition in which the effluent presented a health risk to this applicant and other members of the public and has the potential to significantly degrade the ground or surface waters, although this latter circumstance has not been documented on other occasions and was not found to exist in the July, 1987 study commissioned by the Leon County Board of County Commissioners. In that report, it was specifically found that the surface water had not been compromised by the on-site sewage disposal system failures described in the overall report.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that a Final Order be entered denying Petitioner's request for variance from permit requirements and permission to install an on-site sewage disposal system at Lot 4, Block X, Killearn Lakes Unit I. DONE AND ENTERED this 20th day of November, 1990, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS, 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 20th day of November, 1990. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-4456 The following discussion is given concerning the proposed facts of the parties: In the discussion of the testimony of Mr. Poole, the relevant portions of that testimony are reflected in the facts found in this recommended order. Under the heading of testimony said to be attributable to Ms. Hegg, at paragraph 1, while it is recognized that a system might be installed that might not call for diversion of storm water onto adjacent neighbors' properties, the problem on site would remain and would be sufficient reason to reject the application. Moreover, it is not clear that it is the intention to install a system that would divert storm water from adjacent properties. Paragraph 2 under this heading is rejected in its notion that storm water would not have an influence on the proposed system. Paragraph 3 is rejected. Paragraphs 4 and 5 do not lead to the conclusion that sufficient unsaturated soils would be available for the treatment of disposed sewage during the wet season, nor does the representation at paragraph 6. Paragraph 7 under that heading is contrary to facts found. The paragraphs under the reference to James Earl Peel, in those five paragraphs, while accurately portraying the opinion of Mr. Peel and Mr. Wood, does not lead to the conclusion that the application should be granted. Under the heading "Rod Moeller" in the first paragraph, the information provided at hearing and under weather reports does not satisfactorily establish what the rainfall circumstance may have been at the subject property 72 hours before January 24, 1990, as referred to in paragraph 1, nor can it be said that the rain experienced in the overall area contemplated by the attached weather report to the argument by Petitioner was a 25-year storm event. The comment at paragraph 3 under this category that the on-site sewage disposal systems in neighboring lots are functioning fine since modifications in the advent of hurricane "Kate" is contrary to facts found. Under the heading "Ray Collins" in paragraph 1, this proposed fact has no relevance in that the question is the appropriate function within Killearn Lakes Unit I, not at an undisclosed site away from that area. Respondent's Facts These facts are subordinate to facts found. Copies furnished to: Sam Power, Department Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda K. Harris, Esquire General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Rod Moeller, Authorized Representative Mallard Cove Construction 14261 Buckhorn Road Tallahassee, FL 32312 John L. Pearce, Esquire HRS District 2 Legal Office 2639 North Monroe Street Suite 125-A Tallahassee, FL 32399-2949
Findings Of Fact The Petitioner is a water and sewer utility subject to the jurisdiction of the FPSC. The utility's water and sewer service is in compliance with governmental requirements. During the test year ending December 31, 1977, the utility operated at a less and additional revenues were required to insure continued compliance with service standards. The test year rate base was $83,472 for water and $83,818 for sewer. The interim rates authorized by Order 9188 produce less than the established 10 percent rate of return on rate base, however, service will not suffer from the deficiency. A base facility charge rate structure is appropriate since it encourages conservation, tends to eleminate discrimination between classes of customers and establishes an acceptable rate for vacation service. This rate structure provides for a base charge that covers fixed costs (property taxes and insurance, depreciation, etc.) and a consumption charge that covers costs directly related to usage. Sixty percent of the residential customers use less than 3000 gallons of water a month, and nearly 69 percent use less than 4000 gallons. Should Respondent's proposed base facility charge rate structure be placed into effect to achieve the water revenue sought, the customers using less than 4000 gallons of water would be required to pay 25 percent mere than the interim rates. A similar situation exists for these same residential sewer customers. Respondent's proposed base facility charge rate structure is supposed to approximate a typical "bell" curve, however, in this instance the curve is "skewed" or "downright crooked" (tr. 104).
The Issue The issue to be resolved in this proceeding concerns whether the Petitioner violated the provisions of Chapter 381, Florida Statutes, and Chapter 64E-6, Florida Administrative Code, referenced herein, by allegedly illegally connecting a second dwelling to an existing, approved septic system.
Findings Of Fact On January 17, 2002, the Petitioner was given a written Notice of Violation and advised that an illegal sewer connection from a new or second mobile home on her property to her existing sewer system, serving her primary residence would have to be disconnected. It was an illegal second connection on a single, permitted sanitary sewer system. The second home was not occupied and could not be legally occupied until the proper sewer connection and relevant permitting was obtained. On January 30, 2002, the inspector again visited the premises and determined the illegal connection to still exist and the Petitioner was then advised that the illegal connection would have to be disconnected. On February 28, 2002, the inspector returned and found that the illegal connection had been restored to the existing system. He observed a person hurriedly disconnect the system as he approached. The relevant pipe joint had been left un-glued so that it could be readily connected or disconnected. He again notified the Petitioner, in person, that the illegal connection would have to be disconnected. The Respondent cited the Petitioner for the illegally connected sewer system and seeks to impose a $500.00 fine. The Petitioner elected to formally dispute the position of the Respondent agency and pursued a formal hearing to contest the allegations. The Petitioner failed to actually appear at hearing and contest the evidence adduced by the Respondent agency. That evidence is credible and is accepted as unrefuted and supportive of the above Findings of Fact.
Recommendation RECOMMENDED that a final order be entered by the State of Florida Department of Health denying the Petition of Shirley Davis in its entirety and that a final order be entered imposing a $500.00, fine for the violations described in the above Findings of Fact and Conclusions of Law. DONE AND ENTERED this 16th day of September, 2002, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 16th day of September, 2002. COPIES FURNISHED: Shirley Davis 140 West Putnam Grove Road Oak Hill, Florida 32759 John D. Lacko, Esquire Department of Health 420 Fentress Boulevard Daytona Beach, Florida 32114 R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 William W. Large, General Counsel Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701
Findings Of Fact Petitioner provides electric, gas and water utility service at various Florida locations. During the 1979 test year, its Fernandina Beach Water Division served an average of 2,500 residential customers, 523 general service customers and nine private fire line customers. In addition, it maintained 210 fire hydrants for the City of Fernandina Beach. Service The Utility is providing satisfactory water service. There were no service complaints presented at the public hearing, nor were there any citations or corrective orders outstanding. Rate Base The Utility seeks recognition of a $1,332,178 rate base. This amount includes $82,128 for an office building completed in the last month of the test year, a $7,600 chlorinator building completed after the test year (March, 1980) , and a pumphouse still under construction at an estimated completed cost of $106,000. Neither the amounts nor their completion dates are in dispute. However, the Commission seeks to utilize a 13-month average year rate base which would result in the exclusion of all the above facilities except for the office building investment during the final month of the test year. Both parties cite Citizens of Florida v. Hawkins, 356 So.2d 254 (Fla. 1978) in support of their positions. Although the Court discusses the various methods of computing a utility rate base, it concludes that unusual or extraordinary growth is a prerequisite to use of a year end rate base. The Utility did not demonstrate unusual or extraordinary growth. Rather, customer growth during the test year was only about two percent, mandating use of an average rate base. The Utility suggests that construction of the chlorinator was required by the federal government under the provisions of the Safe Drinking Water Act. If so, the Utility would be permitted to include this Investment in its rate base. 1/ However, the Utility was in compliance with the Safe Drinking Water Act prior to construction of the pumphouse and made no showing that it was required to undertake this project by government authority. Capitalization of interest on the funds used in construction of new facilities should be authorized. However, this amount will not be subject to inclusion in the rate base until the facility itself is included. The Utility plant was shown to be 100 percent used and useful in the public service. In view of this, and the adjustments discussed above, the Utility's average rate base for the test year is $1,103,201. See Schedule 1 for detail. Operating Revenues The Utility seeks a test year revenue authorization of $581,037 based on expenses of $456,184 and a 9.39 percent return on its proposed rate base. It seeks to include an expense item of $2,400 for tank maintenance, basing this amount on the five-year amortization of a projected $12,000 expenditure. Although this procedure is proper, since tank maintenance is periodically required, the $12,000 is the anticipated cost of future maintenance rather than an actual cost. Therefore, this figure must be adjusted to one-fifth of the last actual maintenance cost, or $1,105. Prior to December, 1979, when its office building was completed, the Utility rented the required space. Since the new building was not recognized for rate making purposes until the final month of the test year, it is proper to include the rent expense actually involved during the preceding 11 months. Therefore, an upward adjustment in expenses of $1,524 is required. Authorized expenses should also include $45,281 proposed by the Utility to meet known increases in the cost of purchased electrical power. The limitation on test year expenses is not the same as that on test year investment. Rather, Chapter 367, Florida Statutes, specifically provides for recognition of outside test year increases in electrical power costs. See Section 367.081(4)(b), Florida Statutes (1980). The Utility supported its proposed rate case expense of $5,100 by late filed exhibit. Neither the amount nor the proposed three-year amortization period were opposed by the Commission and are appropriately included herein. In view of the above findings and a 9.10 percent return on investment (discussed below) , the Utility is entitled to revise its rates to produce annual revenue of $536,970. See Schedule 2 for detail. Cost of Capital The parties agreed that 15 percent is an appropriate return on equity investment. This amount, when weighed against the current cost of debt, supports an overall 9.10 percent rate of return. Rate Structure The parties propose adoption of a base facility charge rate structure. This rate design includes a fixed charge to each customer served based on that customer's share of fixed operating costs. The second element of the base facility charge represents -- the variable cost of water actually used. This rate structure provides an equitable method of allocating service costs and is consistent with statutory requirements that rates be just and nondiscriminatory. See Section 307.081(2), Florida Statutes (1980). The Utility proposes to increase its fire hydrant charge from $8 to $12 monthly and to include this amount in its regular service rates to all customers rather than as a separate charge to the City of Fernandina Beach. The amount of the increase is consistent with overall revenue needs and was not opposed by the Commission. The procedure to include fire hydrant charges in customer charges was requested by the City Commission of Fernandina Beach and would not discriminate against any customer or group of customers, since all benefit from the fire protection represented by these charges.
Recommendation Based on the foregoing Findings of Fact and Conclusions A, of Law, it is RECOMMENDED that Florida Public Utilities Company be authorized to file revised rates structured on the base facility charge concept, designed to generate annual gross revenue of $536,970 based on the average number of customers served during the test year. DONE and ENTERED this 18th day of December, 1980, in Tallahassee, Leon County, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675
The Issue Whether the Petitioner's request for variance should be granted.
Findings Of Fact Petitioner owns a parcel of land in Palm Beach, County on which is housed Petitioner's paving and landscapping business and which is zoned for industrial use. Petitioner intends to install a manufactured building for use as an office. To provide sewage treatment for the bathroom of the office, Petitioner had a septic tank designed and applied for a septic tank permit which was denied as was its variance request. As a result of a complaint, Petitioner was inspected in August, 1988, by the Palm Beach County Department of Environmental Resources Management and by the Florida Department of Environmental Regulation. Both inspections yielded citiations for soil contamination by oil and other hazardous waste. Petitioner represented that most of the infractions had been rectified by the date of the hearing in this matter and pledged full cooperation with the County and State rules. To oversee the operation of the business and assure that no further problems arose, Petitioner decided to establish its office on site. The closest sewage treatment plant is at full capacity and does not intend to provide service to the parcel in the near future. The adjoining properties are serviced by septic tanks. As such, the proof did not demonstrate that alternative methods of waste disposal were available to the site However, as part of its business operation, Petitioner does minor repair of its equipment on site and may include oil changes and other such services. Although Petitioner does not intend to pollute the groundwater and intends to use the proposed septic tank for office use only, the proof demonstrated that waste disposal into a septic tank from the maintenance and repair of its equipment could result in the disposition of prohibited hazardous waste into the groundwater. Further, the proof failed to demonstrate that the septic tank would be protected from use by those who handled the hazardous waste. Although the hardship, if any, caused by the denial of the variance was not caused by Petitioner and the proof failed to demonstrate reasonable alternatives of waste disposal, the potential for an adverse affect of the operation to the groundwater is great. Additionally, the proof failed to establish the ameliorating conditions of soil, water table or setback conditions or whether the property was platted prior to 1972. Accordingly, the denial of the variance was proper.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered denying the variance. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 6th day of July 1989. JANE C. HAYMAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of July 1989. COPIES FURNISHED: Hattie Parker 160 Toneypenna Drive Jupiter, Florida 33468 Peggy G. Miller, Esquire Department of Health and Rehabilitative Services 111 Georgia Avenue Third Floor West Palm Beach, Florida 33401 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact The Petitioner is a utility regulated by the Commission that is in the business of acquiring and operating water and sewer systems in Florida, principally in Central Florida. It now operates 39 systems, of which at least 30 water systems and 5 sewer systems are located in Orange, Lake and Seminole counties. In this case, the Central Florida Division has one water system in Lake County (Picciola Island) , two water systems in Orange County (Daetwyler Shores and Lake Conway), three water systems and one sewer system in Seminole County (Bretton Woods/Druid Hills, Dol Ray Manor, and both water and sewer in Chuluota; these systems serve 949 water customers and 98 sewer customers. Southern commenced operating these systems in the spring of 1978, purchased them from Central Florida Utilities, Inc. in October, 1978 and applied to the Commission for a transfer, which application is still pending. (Docket 780278- WS; Hearing Examiner's Recommended Order approving the transfer was filed January 29, 1979) Notwithstanding customer complaints of the quality of the water service (low or fluctuating pressure, excess chlorine, sediment, no noticed interruptions and lack of fire protection capabilities) and Southern's admission of the general disrepair of the systems at the time of the purchase, the systems are in compliance with governmental standards. The utility has spent $52,000 since the test year on repair and upgrading with another $87,000 necessary to complete the required projects, of which $25,000 is for governmentally mandated improvements to the Chuluota wastewater system. The Petitioner's use of the purchase price of $215,800 for the facilities involved in the seven systems as the amount of plant in service as of June 30, 1978, rather than Respondent's use of the 1977 annual reports of the prior owner, is appropriate because: it follows past FPSC decisions on this subject with respect to this utility; the purchase price was considerably less than FPSC's estimated replacement cost of over $800,000; the purchase was an arms-length transaction; the books of the prior owner were considered unreliable; and, following complete integration of operations with Petitioner's other systems in Lake, Orange and Seminole counties, the customers should obtain the best possible service at the lowest rates obtainable. Alternatively, the Utility is entitled to an acquisition adjustment that achieves the same rate base as using the purchase price. Petitioner's rate bases using a 12-month average, rather than the preferred 13-month average, are as follows: Water Sewer Average test year plant $178,305 $ 62,242 Mandated additions 25,000 Accumulated depreciation (1,833) (623) CIAC (net of amortization) (6,703) Working Capital 11,241 1,801 Income tax lag (776) (370) $180,234 $ 89,050 The capital structure and rate of return is as stipulated by the parties as follows: WEIGHTED TYPE AMOUNT RATIO COST COST Common Stock $1,882,055 60.44 14.0 percent 8.46 Long Term Debt 1,037,372 33.31 8.89 2.96 Cost Free 194,768 6.25 0 0 TOTAL $3,114,195 100.00 11.42 perc. Rate of Return The above rate bases and rate of return provide an authorized constructed net operating income from water service of $20,583 and from sewer service of $10,170. This results in the following constructed statement of operations for year ended June 30, 1979: Water Sewer Operating Revenue $122,993 $29,085 Operating Expense Operation 84,760 12,346 Maintenance 4,103 2,065 Depreciation 3,531 1,245 Taxes, other than income 6,138 1,409 Income taxes 3,878 1,850 Total $102,410 $18,915 Net Operating Income $ 20,583 $10,170 It is noted that the above revenue requirement is more than the interim authorized revenue of $97,184 for water and $17,640 for sewer. The staff proposed that the rate structure should be changed from the present block structure far water and flat rate for sewer to a base facility charge for both water and sewer. This concept is appropriate since it serves to conserve water and insures that each customer pays his fair share of the costs of providing service. No evidence opposing this type rate structure was presented.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Southern States Utilities, Inc., Central Florida Division, be granted and that the utility be authorized to file new tariffs to be approved by the Florida Public Service Commission that would have provided for the test year ending June 30, 1979 annual gross revenues of $122,993 for water service and $29,085 far sewer service. It is further RECOMMENDED that the utility be required to implement rates for fire protection service in Belle Isle and a base facility charge in structuring water and sewer rates. It is further RECOMMENDED that the refund bond be returned to utility. DONE and ORDERED this 24th day of October, 1980, in Tallahassee, Florida. H. E. SMITHERS Hearing Officer Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of October, 1980. COPIES FURNISHED: Kenneth H. Myers, Esquire 1428 Brickell Avenue Miami, Florida 33131 William H. Harrold, Esquire 101 E. Gaines Street Tallahassee, Florida 32301 Sam Owens, Esquire 101 E. Washington Street Orlando, Florida 32801 Steve Tribble, Clerk Florida Public Service Commission 101 E. Gaines Street Tallahassee, Florida 32301 Robert T. Mann, Chairman Public Service Commission 101 E. Gaines Street Tallahassee, Florida 32301
Findings Of Fact V.M.P. Corporation operates a facility known as Stud's Pub in Jacksonville, Florida. Vincent M. Paul owns the facility and the corporation. The facility is on lots that were platted prior to 1972. Respondent is the statutory entity with authority for granting variances for onsite sewage disposal systems regulated by Respondent pursuant to provisions of Chapter 381, Florida Statutes. Section 381.0065(8)(a), Florida Statutes (1991) specifically provides: The department may grant variances in hardship cases which may be less restrictive than the provisions specified in this section. A variance may not be granted pursuant to this section until the department is satisfied that: The hardship was not caused intentionally by the action of the applicant; No reasonable alternative exists for the treatment of the sewage; and The discharge from the individual sewage disposal system will not adversely affect the health of the applicant or other members of the public or significantly degrade the ground or surface waters. Where soil conditions, water table elevation, and setback provisions are determined by the department to be satisfactory, special consideration shall be given to those lots platted prior to 1972. Rule 10D-6.045(3), Florida Administrative Code, is the portion of the rule which is the subject of this proceeding and, in pertinent part, reads as follows: Upon consideration of the merits of each application and the recommendations of the review board, the Deputy Secretary for Health or his designee has discretionary authority to either grant a variance as requested, grant a provisional variance or deny the variance request. A variance may be granted to relieve or prevent excessive hardship only in cases involving minor deviation from established standards when it is clearly shown that the hardship was not caused intentionally by the action of the applicant, where no reasonable alternative exists for the treatment of sewage and where proper use of the onsite sewage disposal system will not adversely affect the health of the applicant, any persons using or living on the property, or other members of the public. An applicant must also show that the granting of a variance will not significantly degrade ground or surface waters. Variances shall only be granted to the permit applicant and are not transferable to other persons unless specifically authorized by the department as a stipulation of the variance approval. . . . (emphasis added). The rule also tracks the language of Section 381.0065(8)(a), Florida Statutes (1991), and requires that "special consideration" be given to those lots platted prior to 1972 in those instances where soil conditions, water table elevation and setback provisions are deemed by Respondent to be "satisfactory." While minor amendments to the rule were made March 17, 1992, the substantive content of Rule 10D-6.045(3), Florida Administrative Code, has remained virtually unchanged since February 5, 1985. Two adjective modifiers in the rule, the terms "minor" and "excessive" which respectively modify the terms "deviation" and "hardship", have not been formally defined by Respondent in the rule. Respondent's rationale for this failure, as professed in the testimony of Respondent's policy representative at the final hearing, was to permit Respondent's review board maximum freedom to evaluate and consider the merit of each application for variance on an individual basis within the statutory authority of Section 385.0065(8)(a), Florida Statutes, i.e., variances may be recommended by the board where the hardship is not intentionally caused by the applicant, where no reasonable alternatives exist and where no evidence of adverse effect upon public health or ground and surface waters is demonstrated.
