Motion Denied.

NOTE: This is not an official transcript, but rather a detailed summary of the discussion held at the Conference of the Florida Public Service Commission (FPSC) on Tuesday, January 5, 2021 related to Agenda Item 3, Docket 20200226 – the Application for Certificate to provide wastewater service in Charlotte County, by Environmental Utilities, LLC [EU].

Present from the FPSC were: Commissioner Gary F. Clark (Chairman), Commissioner Julie I. Brown, Commissioner Art Graham, Commissioner Andrew G. Fay, Commissioner Mike LaRosa, Mary Anne Helton (Deputy General Counsel). Jennifer Crawford (Attorney Supervisor) was present on the phone.

On Tuesday, January 5th the Florida Public Service Commission (FPSC) met for a Commission Conference where item 3 on the Agenda was Docket 20200226, the Application for certificate to provide wastewater service in Charlotte County, by Environmental Utilities, LLC [EU}.
 
Before the Commission was a Motion to Bifurcate and Temporary Rule Waiver which would allow the applicant, EU, to separate the rate-making component (project costs, estimated connection fees and maintenance rates) from the certification of the service area.
 
The discussion began with a summary of the item by Mary Anne Helton, Deputy General Counsel for the FPSC.  She indicated that staff recommends the Commissioners approve the temporary rule waiver on the grounds that strict application of the rule would result in financial hardship to the utility.
 
Ms. Helton then noted that about 144 customers sent emails over the weekend, a majority of them objecting, and that more had come in overnight, also objecting to the waiver. She summarized the objections given in the emails as follows:

• If the motion were granted, there would be no information available about rates until 2022.
• The lack of financial strength of EU and the owner/operators Jack and Diane Boyer.
• 6 customer emails claiming the financial hardship needed for the waiver was not demonstrated.

 
Chairman Gary L. Clark then called for registered “interested parties” to speak. Linda Cotherman spoke first, representing both herself as an individual, and as a Board member of the Palm Island Estates Association. Her arguments in front of the commission included:

• Deficiency of notice to residents. Many stakeholders did not receive their notices due to COVID, slow down of USPS and the holiday season.  Also, the very title of the Notice indicated that rates and charges were included for review in the application.
• Financial stability. Because there is no in-depth information known about the owners’ liens or foreclosures, the financial stability of EU needs to be reviewed.
• Misleading cost to property owners. Mr. Boyer has publicly used a cost figure of $20,000.00 including connection fees and removal of old septic systems. He has shown no basis for these numbers.
• Intimidation. Mr. Boyer has stated to elderly residents that any increase in his attorney’s fees caused by customer protest will be added to the customers’ sewer charges.  The customers have more of a hardship in not knowing the estimated rates and charges than Mr. Boyer in his need to provide them.
• Lack of Financing. Why continue to review the project if he does not have the financing nor can he secure a commitment for financing?

None of the Commissioners had questions for Linda Cotherman.
 
Next Barbara Dwyer from Little Gasparilla Island Property Owners Association spoke. “How can you rule to bifurcate from the plan before certificate is issued? You are essentially saying that the certificate will pass before the consumer has had adequate time to review and announce their concerns.”

Chairman Clark then called for questions.
 
Commissioner Fay pointed out the large number of emails on the docket. “Staff had mentioned the correspondence that came in yesterday afternoon and last night, and um, it seems a little bit unusual to me that when I’m looking at the numbers starting from the filings yesterday there’s hundreds of those.” ”Did we receive all of them yesterday or were they just put into the system yesterday? It seems significant that we would need to take these into account.”
 
Deputy General Counsel Helton replied “It’s my understanding from my clerk that they came in over the weekend.”

Martin Friedman, Attorney for Environmental Utilities then spoke. He gave a brief background of the 2017 Sewer Master Plan, which he said was referenced in the Bulk Wastewater Treatment Agreement between Charlotte County and EU). He made the following points:

• the proposed service area scored 4-5 (the worst) on the rating scale so they are high on the list for conversion from septic to sewer within a 3-5 year period
• Commission considers County’s master plan when they consider applications
• today is only about bifurcation, all other issues are for another day
• statute requires that prior to getting a DEP permit, EU needs permits for the engineering needed to provide estimates of rates and charges but he needs the certificate to get those permits. This is why they can’t estimate cost.  Bifurcation allows utility to go ahead with permitting, permitting allows the engineering to find out what the costs are going to be.
• Since 2005 commission has allowed bifurcating rates from the certificate
• A concerted effort has been made against the project by customers in the affected communities because nobody wants to pay the fees to hook up to sewer. “But the County has made the decision that these Islands and Cape Haze have to be sewered because they want to protect the environment.”

 
Commissioner Julie Brown questioned Mr. Friedman, asking “I’m assuming you have to have some kind of construction documents, right?”

Mr. Friedman responded “We do have a preliminary engineering study that sets forth several alternatives, but whatever we build has got to be consistent with County standards.” 
 
Commissioner Brown returned, “But you have to have some type of preliminary budget in support of your preliminary construction?”
 
Mr. Friedman replied “No. Not necessarily.”  He went on to say “not anything near what you’d be required to complete the financial documentation for the commission to grant rates & charges.  "That’s why the numbers out there, 10-20 thousand dollars, are just guesses until it’s permitted.” He continued by saying EU believes they can put together a plan to sewer these areas that is financially feasible. And they don’t want to make a substantial investment in something that doesn’t happen.
 
Commissioner Brown cut him off, noting “So no cost estimates until 2022?” Brown also said that Environmental Utilities had the burden to prove substantial financial hardship.
 
Commissioner Brown then asked Staffer Mary Anne Helton if bifurcation is the norm. Miss Helton deferred to Jennifer Crawford (on the phone), who said she has not done a rigorous search for “true originals” where there is no pre-existing utility and no plant-on-the-ground. Bifurcation is usually done for existing plants. She explained some preexisting companies ask for bifurcation, and said she was guessing that a ballpark of 30% of true originals (completely new start-ups) have been given bifurcation.
   
Commissioner Brown noted she was worried about the “volume of concern” from potential customers, and asked Ms. Crawford “What is the recourse of the customers who have genuine concerns?”  She replied that with the certificate, the customer has opportunity to protest the certificate and request an administrative hearing.  If bifurcation is allowed, when rates are set later customers will have the opportunity to protest the rates.
 
Commissioner Brown replied “I hope the customers are hearing that.  I don’t think waivers should be the norm, and I think the burden of a substantial hardship … is on the utility.   If we continue, this will be the standard going forward.”

Commission Chair Gary Clark asked “What is our obligation from that point on in regards to approving the new rates? What latitude do we have?” He was concerned about the rates being too burdensome when they are finally supplied. For example, if the rates provided were $20,000 or more for the connection fees, how do they grapple with the cost of the project vs. what is fair, just and reasonable rates for the utility? Ms. Helton suggested that if the customer takes issue with the rates provided by EU based on their costs, then they or the Office of Public Counsel can request a hearing to challenge the rates.

“If we see a legitimate cost-based rate that is not fair and reasonable, we begin to have an issue there” Commission Chair Gary Clark said. “I don’t want there to be any misconception that this is a green light to proceed and you’re coming back with $20,000.00 in connection charges, this commission will set you back on your heels.” He was assured by Ms. Helton that allowing the waiver was not a green light for the project to go forward. More discussion followed about the responsibility of the PSC to set rates that are based on cost but are also fair and reasonable.

Commissioner Fay turned the discussion back to the legal components required by the waiver and if granted, does it become the norm. Commissioner Fay concluded with “Legally applying the waiver requires substantial hardship to be demonstrated and I’m not sure this is done here.” More discussion followed about setting precedent with this waiver. Ms. Crawford was asked if it was probable that they would be seeing similarly situated utilities in the future.  She responded that “for true originals, yes, I would expect that we would see more of these in the future.  We don’t get but so many true originals from year to year” indicating that is a fairly novel issue.

It was mentioned that if the waiver wasn’t granted it would essentially delay the process. Mr. Friedman was asked how long it might take to begin service. “Hopefully we would begin providing as early as 2022” he responded.

The attorney from the Office of Public Counsel (OPC) was asked if they have been contacted by many of these customers. OPC said that they had. She thanked them for their involvement and comments at the hearing but had no comment with respect to the bifurcation.

Chairman Clark called for a motion, and it was moved to accept the staff recommendation and vote yes for the waiver. At that point, the Chairman called for a second. No one would second and the motion to grant the waiver died for lack of a second.

It was then suggested that a deferral would be appropriate. It nearly ended there but Deputy General Counsel Helton reminded the commissioners there was a deadline to generate a vote. According to the staff recommendation, the Commission has a limited window of 90 days to either grant or deny the waiver. The 90-day period expires on January 12, 2021 so the Commission could not defer the matter but instead had to make a final ruling on the request for a waiver.

A motion was then made to deny the request, and there was a second. The motion carried with 4 commissioners assenting and 1 dissenting. The bifurcation waiver would not be granted.

[CLICK HERE to view PSC DOCUMENT_Motion Denied]

END

DONATE NOW to the PIE LEGAL FUND