Fla. Admin. Code Ann. R. 25-30.433 - Rate Case Proceedings
In a rate case proceeding, the following provisions shall apply.
(1) The Commission in every
rate case shall make a determination of the quality of service provided by the
utility by evaluating the quality of utility's product (water) and the
utility's attempt to address customer satisfaction (water and wastewater). In
making this determination, the Commission shall consider:
(a) The most recent chemical analyses for
each water system as described in rule
25-30.440(3),
F.A.C.;
(b) Any Department of
Environmental Protection (DEP) and county health department citations,
violations and provisions of consent orders that relate to quality of
service;
(c) Any DEP and county
health department officials' testimony concerning quality of service;
(d) Any testimony, complaints and comments of
the utility's customers and others with knowledge of the utility's quality of
service; and
(e) Any utility
testimony and responses to the information provided in paragraphs (1)(a)-(d),
above.
(2) In order to
ensure safe, efficient, and sufficient service to utility customers, the
Commission shall consider whether the infrastructure and operational conditions
of the plant and facilities are in compliance with rule
25-30.225,
F.A.C. In making this determination, the Commission shall consider:
(a) Any testimony of DEP and county health
department officials;
(b)
Inspections, including sanitary surveys for water systems and compliance
evaluation inspections for wastewater systems; citations, violations and
consent orders issued to the utility;
(c) Any testimony, complaints and comments of
the utility's customers and others with knowledge of the infrastructure and
operational conditions of the utility's plant and facilities; and,
(d) Any utility testimony and responses to
the information provided in paragraphs (2)(a)-(c), above.
(3) Working capital for Class A utilities
shall be calculated using the balance sheet approach. Working capital for Class
B and C utilities shall be calculated using the formula method (one-eighth of
operation and maintenance expenses).
(4) Used and useful debit deferred taxes
shall be offset against used and useful credit deferred taxes in the capital
structure. Any resulting net debit deferred taxes shall be included as a
separate line item in the rate base calculation. Any resulting net credit
deferred taxes shall be included in the capital structure calculation. No other
deferred debits shall be considered in rate base when the formula method of
working capital is used.
(5) The
averaging method used by the Commission to calculate rate base and cost of
capital shall be a 13-month average for Class A utilities and the simple
beginning and end-of-year average for Class B and C utilities.
(6) Non-used and useful adjustments shall be
applied to the applicable depreciation expense. Property tax expense on
non-used and useful plant shall not be allowed.
(7) Charitable contributions shall not be
recovered through rates.
(8) Income
tax expense shall not be allowed for subchapter S corporations, partnerships or
sole proprietorships.
(9)
Non-recurring expenses shall be amortized over a 5-year period unless a shorter
or longer period of time can be justified.
(10) The amortization period for forced
abandonment or the prudent retirement, in accordance with the National
Association of Regulatory Utility Commissioners Uniform System of Accounts, of
plant assets prior to the end of their depreciable life shall be calculated by
taking the ratio of the net loss (original cost less accumulated depreciation
and contributions-in-aid-of-construction (CIAC) plus accumulated amortization
of CIAC plus any costs incurred to remove the asset less any salvage value) to
the sum of the annual depreciation expense, net of amortization of CIAC, plus
an amount equal to the rate of return that would have been allowed on the net
invested plant that would have been included in rate base before the
abandonment or retirement. This formula shall be used unless the specific
circumstances surrounding the abandonment or retirement demonstrate a more
appropriate amortization period.
(11) A utility is required to have the right
of access and continued use of the land upon which the utility treatment
facilities are located. Documentation of continued use shall be in the form of
a recorded warranty deed, recorded quit claim deed accompanied by title
insurance, recorded lease such as a 99-year lease, or recorded
easement.
(12) In establishing an
authorized rate of return on common equity, a utility, in lieu of presenting
evidence, may use the current leverage formula adopted by Commission order. The
equity return established shall be based on the equity leverage order in effect
at the time the Commission decides the case.
(13) Nonutility investment should be removed
directly from equity when reconciling the capital structure to rate base unless
the utility can show, through competent evidence, that to do otherwise would
result in a more equitable determination of the cost of capital for regulatory
purposes.
(14) Interest expense to
be included in the calculation of income tax expense shall be the amount
derived by multiplying the amount of the debt components of the reconciled
capital structure times the average weighted cost of the respective debt
components. Interest expense shall include an amount for the parent debt
adjustment in those cases covered by rule
25-14.004,
F.A.C. Interest shall also be imputed on deferred investment tax credits in
those cases covered by 26 CFR Part 1, s. 1.46-6(b)(2)(i), (3) and (4)(ii)
issued May 22, 1986 and effective for property constructed or acquired on or
after August 15, 1971.
Notes
Rulemaking Authority 350.127(2),367.0812(5), 367.0814,367.121, 367.1213 FS. Law Implemented 367.081,367.0812(1), 367.0814, 367.0822, 367.1213FS.
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