12-000909 East Marion Sanitary Systems, Inc. vs. Public Service Commission Status: Closed Recommended Order on Monday, September 17, 2012.

Summary: Public utility may only charge rates approved by the PSC. Utility is therefore required to install irrigation meters at the approved tariff rate of $70, regardless of the cost of installation.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EAST MARION SANITARY SYSTEMS, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 12 - 0909

)

PUBLIC SERVICE COMMISSION, )

)

Respondent. )

)

RECOMMENDED OR DER

Pursuant to notice, a formal hearing was held in this case

before W. David Watkins, Administrative Law Judge of the

Division of Administrative Hearings, on June 12, 2012 , in Ocala,

Florida.

APPEARANCES

For Petitioner: No appearance

For Res pondent: Martha F. Barrera, Esquire

Lisa Bennett, Esquire

Florida Public Service Commission

2540 Shumard Oak Blvd.

Tallahassee, Fl orida 32399 - 0850

For Intervenor : Millicent Mallon , pro se

1075 Northeast 130th Terrace

Silver Springs, Fl orida 34488

For Intervenor : Terry Will , pro se

1385 Northeast 130th Terrace

Silver Springs, F l orida 34488

STATEMENT OF THE ISSUE

Are Intervenors Mallon and Will each entitled to the

installation of an irrigation meter with a Ðdedicated line

configurationÑ a t the prior tariffed rate of $70.00 ?

PRELIMINARY STATEMENT

On August 19, 2008, East Marion Sanitary Systems, Inc.

(East Marion or Utility) filed an application with the Florida

Public Service Commission ( Commission ) for approval to amend its

tariff sheets . Among the changes requested was an increase in

meter installation charges, and the imposition of a new tap - in

fee. The application was processed and o n April 27, 2009, the

Commission issued Order No. PSC - 09 - 0263 - TRF - WU (2009 Order)

approving a new mete r installation fee of $195 and tap - in fees

of $1,400, $1,800, and $2,600 for the short, long, and extra -

long irrigation service line installation s , respectively.

In the 2009 Order, the Commission ordered that any customer

who requested an irrigation meter from the Utility prior to

April 7, 2009, would only be charged the $70 rate in effect at

the time of their request . On May 15 and 18, 2009, the Utility

timely protested the portion of the CommissionÓs order requiring

the Utility to install irrigation met ers at the prior tariff

rate for customers requesting the meters prior to April 7, 2009.

On September 15, 2010, the Commission granted Terry Will and

Millicent MallonÓs motions to intervene wherein they alleged

they were entitled to the installation of ir rigation meters at

the $70 rate. Several other Utility customers who had requested

meters also intervened in the action.

On September 29, 2011, East Marion, a majority of the

intervenors, and the Office of Public Counsel (on behalf of all

ratepayers ) , fi led a joint motion for Commission approval of a

s ettlement a greement wherein East Marion would install

irrigation meters for the customers signing the agreement at the

prior tariff rate of $70 using an agreed - upon meter

configuration. Intervenors Will and Mallon did not sign the

a greement. On December 12, 2011, the Commission entered an

order (2011 Order) approving the settlement agreement only as to

the customer s /intervenors who signed the a greement .

On December 29, 2011, East Marion protested the

Dece mber 12, 2011 , Order stating Will and Mallon were not

entitled to a meter at the prior tariff rate. On January 11,

2012, Will filed a protest of the 2011 Order. On March 14,

2012, the Commission referred the matter to the Division of

Administrative Heari ngs for the assignment of an administrative

law judge to conduct a formal hearing.

Pursuant to notice, the hearing was convened on June 12,

2012, in Ocala, Florida. East Marion did not appear at the

hearing and did not present any evidence. Mr. Mike Smal lridge

appeared at the hearing and represent ed that the UtilityÓs

owner, Herbert Hein, asked him to state that the Utility had now

agreed to install irrigation meters for Will and Mallon.

Mr. Smallridge stated, howeve r, that Mr. Hein did not indicate

that he would install the meters at the $70 fee.

Mr. Smallridge , who is not an attorney, also stated that he was

not appearing on behalf of the Utility and was not an agent,

employee or representative of East Marion.

The Commission presented the testimony of Bart Fletcher and

James McRoy , and introduced one exhibit into evidence.

Intervenors Will and Mallon each testified on their own behalf.

Mallon submitted five exhibits into evidence and the parties

offer ed 9 joint exhibits , all of which were admitted . T he

CommissionÓs motion to deem th e request for admissions

propounded by the Commission on East Marion was granted.

At the conclusion of the hearing the parties requested, and

were granted, leave to submit their proposed recommended orders

30 days after th e transcript was filed. The T ranscript was

filed at the Division on June 19, 2012 , and on July 18, 2012,

the Commission filed its P roposed Recommended O rder . On

August 16, 2012, Petitioner filed a P roposed R ecommended O rder,

which Respondent moved to str ike as untimely. On August 31,

2012, the undersigned entered an order denying the motion to

strike. However, the order also noted that the documents

attached to PetitionerÓs P roposed Recommended O rder , which were

not offered into evidence at the hearing and were not part of

th e record in this case could not form the basis for any

findings of fact. The P roposed Recommended O rders of both

parties have been carefully considered in the preparation of

this recommended order.

All citations are to Florida Statu tes (201 2 ) unless

otherwise indicated.

FINDINGS OF FACTS

1 . Petitioner, East Marion Sanitary Systems Inc. , is a

Class C investor - owned utility providing water and wastewater

service to approximately 96 customers in Marion County , Florida .

2 . Respondent, P ublic Service Commission , is an arm of the

legislative branch of the State of Florida responsible for

regulating investor - owned water and/or wastewater utilities

pursuant to c hapters 350 and 367, Florida Statutes .

3 . Intervenors Terry Will and Millicent Mallon are two

water/wastewater customers of the Utility .

4 . A utilityÓs rates and charges must be contained in a

tariff approved by the Commission. A utility may only charge

rates and charges that are approved by the Commission.

5 . The purpose of an i rrigation meter is to avoid being

charged a sewage rate for any water used to water lawns.

Without a separate irrigation meter, a consumer is charged the

sewage rate based on the amount of potable water that the

consumer uses.

6 . In East MarionÓs tariff , approved by the Commission in

2002, the charge for installation o f a meter was $70. The

tariff contained no provision for tap - in fees.

7 . On February 14, 2007, Ms. Mabelle Gregorio, a customer

of East Marion, filed a complaint with the Commission regar ding

the cost of an irrigation meter. East Marion charged, and

Ms. Gregorio paid, a total of $897 for the installation of the

irrigation meter.

8 . On October 2, 2007, Angela and Dennis Fountain, also

customers of East Marion, filed a complaint with the Commission

regarding the $597 they were required to pay the Utility for the

installation of an irrigation meter.

9 . In response to the complaints, Mr. Hein, the Utility

owner, stated in a letter to the Commission that there was no

way to install an irriga tion meter to the existing piping.

10 . By Commission Order No. PSC - 08 - 0182 - PAA - WU, issued

March 25, 2008 , East Marion was required to refund the sum of

$824 to Ms. Gregorio, and the sum of $527, with interest, to the

Fountains.

11 . In the March 25, 200 8 , Order, the Commission stated:

Ð[w]hile we agree that the actual cost of the meter installation

may have exceeded $70, the utility may only charge the fees

contained in its approved tariff.Ñ

12 . East Marion did not request that the Commission

approve a change to its tariff charges for installation of

irrigation meters until August 2008. On August 19, 2008, East

Marion filed an application for Commission approval to amend its

tariff sheets to reflect, among other items, an increase in

meter installation charges, and the imposition of new tap - in

fees.

13 . Prior to April 27, 2009, a notice was placed on the

locked bulletin board located at the UtilityÓs office stating

that no irrigation meters w ould be put in place until the

requested new rates went into e ffect.

14 . On September 26, 2008, Mr. Herbert Hein, owner and

operator of East Marion, left a voicemail message to Commission

staff member , Shannon Hudson, regarding a customer of the

Utility and the installation of irrigation meters. In the

voicemail m essage, Mr. Hein stated that he was Ðin the middle of

asking for an irrigation meter tariff and until that is

approved , I am not installing irrigation meters.Ñ

1 5 . In order to offer customers a separate irrigation

service, East Marion Ós application reque sted approval to

implement new tap - in fee s with charges depend ent upon whether

the tap - in required a Ð short , Ñ Ð long , Ñ or Ð extra - long Ñ

i nstallation. The short installation tap - in involve d installing

a dedicated service line 20 feet or less where the water main is

on the same side of the road as the meter. The long

installation tap - in involved installing a dedicated service line

40 feet or less where the water main is on the opposite side of

the road. Finally, the extra - long installation tap - in involve d

in stalling the irrigation service line 40 feet or more on the

opposite side of the meter.

1 6 . By Order No. PSC - 09 - 0263 - TRF - WU, issued April 27,

2009, the Commission approved a new meter installation fee of

$195 and tap - in fees of $1,400, $1,800, and $2,600 for the

short, long, and extra - long irrigation service line

installation, respectively. In that same order, the Commission

directed that any customer who requested an irrigation meter

from East Marion prior to April 7, 2009, would only be charged

the $70 rate , which was in effect at the time o f the UtilityÓs

application.

1 7 . Intervenor Will requested the Utility to install an

irrigation meter by letter to the Utility dated March 16, 2008.

Will also verbally requested the installation of the irrigation

me ter.

18 . Mallon requested East Marion to install an irrigation

meter at the $70 tariff rate in a lette r written by her late

husband dated January 11, 2008.

19 . On May 18, 2009, the Utility protested the portion of

the CommissionÓs order addressing prev ious applications for

irrigation meters. Specifically, East Marion protested the

CommissionÓs requirement that the Utility install irrigation

meters at its prior tariff rate for some customers who requested

the meter s prior to April 7, 2009.

2 0 . On Apri l 19, 2010, Terry Will and Millicent Mallon

filed testimony in Docket 080562 - WU , alleging they were entitled

to the installation of irrigation meters at the $70 rate.

Several other Utility customers who had requested meters also

intervened in the action.

2 1 . On September 29, 2011, East Marion, a majority of the

intervenors, and FloridaÓs Office of Public Counsel, on behalf

of all ratepayers , entered into a s ettlement a greement , and

filed a j oint m otion with the Commission for approval of the

s ettlement .

2 2 . The Commission approved the s ettlement a greement by

Commission Order No. PSC - 11 - 0566 - AS - WU, issued December 12,

2011.

2 3 . At p aragraph 1 of the s ettlement a greement, East

Marion agreed to provide each settling Intervenor with an

irrigation meter, ins talled as prescribed by the June 16, 2010 ,

m emorandum titled Ð Settlement of Docket No. 080562 - WU

("grandfather installation") Ñ . The m emorandum , dated June 16,

2010 , was attached as a ttachment "A" to the agreement and o rder.

2 4 . The June 16, 2010 , Memoran dum stated that the meter

installation would use Ðthe less costly configuration which uses

the existing 1Ñ line that serves two houses, rather than the

more expensive dedicated line that goes directly to the main.Ñ

The configuration for the agreed - upon me ter installation,

pictured in a ttachment ÐA , Ñ did not include a separate dedicated

line leading from the UtilityÓs main li ne to the irrigation

meter.

2 5 . Will and Mallon declined to enter into the s ettlement

a greement. The Commission o rder i ssued Decembe r 12, 2011,

expressly held that the s ettlement a greement was binding only as

to the customer/intervenors who signed t he a greement.

2 6 . Will and Mallon did not agree that the installation of

an irrigation meter in the configuration agreed to by the

parties and intervenors, depicted in the June 16 , 2010,

m emorandum, was an appropriate installation. This is because a n

irrigation meter installation that serves two houses, without a

separate dedicated line, may impact one neighborÓs water

pressure if the other neighbor is running the irrigation system.

CONCLUSIONS OF LAW

27 . The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

proceeding pursuant to s ecti ons 120.569, and 120.57(1), Florida

Statutes.

28 . Petitio ner, East Marion, has the burden of proving, by

a preponderance of the evidence, that Mallon and Will were not

entitled to an irrigation meter installed at the prior tariff

rate of $70. In this case, East Marion failed to meet its

burden , as it did not ap pear at the final hearing and did not

present any evidence that Mallon and Will were not entitled to

irrigation meters installed at the prior tariff rate of $70.

Fla. Dep't of Transp. v. J.W.C. Co., Inc. 396 So. 2d 778 (Fla.

1 st DCA 1981).

29 . Section 367 .081(2)(a)1., Florida Statutes , provides

that the Commission shall, either upon request or upon its own

motion, fix rates for water and wastewater utilities which are

just, reasonable, compensatory, and not unfairly dis criminatory.

Section 367.081(1) prov ides that a utility may only charge rates

and charges that have been approved by the Commission.

3 0 . In Aloha Utilities, Inc. v. Florida Public Service

Com mission , 281 So. 2d 357 (Fla. 1973), the Supreme Court found

that where a utility company's rate inc rease was not authorized

by the Commission, all rates and charges were to be refunded or

reduced to pre - rate hike status.

3 1 . In 2007 and 2008, East Marion charged two customers

amounts in excess of the $70 fee for the installation of

irrigation meters. East Marion objected on the basis that the

installation of the irrigation meters had required the

installation of additional separate lines connected from the

main line to the meter. East Marion argued that the

installation of the additional lines would c ost more than the

existing $70 rate. The Commission, noting that the UtilityÓs

existing tariff only provided a $70 fee for meter insta llation,

ordered refunds of all amounts collected in excess of the $70

stating: Ð[w]hile we agree that the actual cost of the meter

installation may have exceeded $70, the utility may only charge

the fees contained in its approved tariff.Ñ

3 2 . Section 367.111 requires each utility to provide

service to customers in its service territory within a

reasonable time. Pursuant t o Florida Administrative Code Rule

25 - 30.520, East Marion could not refuse to provide service

within its certificated areas in accordance with the terms and

conditions on file with the Commission. The terms and

conditions on file with the Commission were those in East

MarionÓs tariff, which included the installation of a meter at

the rate of $70. It is clear from the evidence presented in

this case that Will and Mallon requested the irrigation meter

installation prior to the April 7, 2009 , date provided i n the

CommissionÓs 2009 Order. It is also clear that East Marion

improperly delayed providing the service to its customers when

it refused customersÓ requests to install meters until its

application to increase the UtilityÓs tariff was approved by the

Com mission.

3 3 . Section 367.081(3), provides that in fixing rates for

a water/wastewater utility, the Commission may determine the

prudent cost of providing service during the period of time the

rates will be in effect following the entry of a final order

re lating to the rate request of the utility , and may use such

costs to determine the revenue requirements that will allow the

utility to earn a fair rate of return on its rate base.

3 4 . In this case, the costs of providing the meters to

Will and Mallon will exceed the $70 tariff rate. In its

December 12, 2011 , Order, the Commission cautioned East Marion

that if it failed to prove that Mallon and Will did not request

a meter, Ðthe Utility will be required to connect the two

customers at the $70 fee and any additional costs it incurs will

likely not be considered a prudent expenditure.Ñ

3 5 . East Marion has failed to prove, by a p reponderance of

the evidence, that Will and Ma ll on did not request the meter

installation prior to the April 7, 2009 , deadline established in

the CommissionÓs 2009 Order. Rather, the unrebutted evidence of

record established that Will and Mallon timely requested the

meter installation while the approved rate was $70 and that East

Marion refused to install the meters.

3 6 . Moreov er, Will and Mallon are not bound by the

stipulated meter installation configuration set forth in the

s ettlement a greement approved by the Commission since they

refused to join in the agreement .

37 . The unrebutted evidence also established that an

irrigat ion meter installation with a separate ded icated line is

a superior configuration. Indeed, this was the approach u sed by

the Utility to install the GregorioÓs and FountainÓs irrigation

meters , believing it could recoup the full cost of the

installation .

3 8 . Section 367.091(1), (3), and (4), provide that each

utility's rates, charges, and customer service policies must be

contained in a tariff approved by and on file with the

Commission. Further, a utility may only impose and collect

those rates and charg es approved by the Commission for the

particular class of service involved. A change in a utilityÓs

rate schedule may not be made without Commission approval.

39 . Since the Utility did not have an additional fee in

its approved tariff for the installatio n of an irrigation meter

with a dedicated line at the time Will and Mallon requested

installation, East Marion can only charge $70 for the

installation with the dedicated line.

4 0 . As Will and Mallon requested the meter installation

prior to the April 7 , 2009 , deadline, they are entitled to the

installation of an irrigation meter with a separate dedicated

line at the prior tariff rate of $70.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is hereby

RECOMMENDED that t he Public Service Commission enter a

Final Order dismissing PetitionerÓs protest and ordering the

Utility to install i rrigation meters with a d edicated line for

Intervenors Will and Mallon at the prior tariff rate of $70.

DONE AND ENTERED this 1 7 th day of September , 2012 , in

Tallahassee, Leon County, Florida.

S

W. DAVID WATKINS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1 7 th day of September , 2012 .

COPIES FURNISHED :

Lisa C. Bennett, Esquire

Office of the General Counsel

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399 - 0850

[e-mail]

Herbert Hein

East Marion Sanitary Systems, Inc.

Suite 190

G - 4225 Miller Road

Flint, Michigan 48507

Millicent Mallon

1075 Northeast 130th Terrace

Silver Springs, Florida 34488

Terry Will

1385 N ortheast 130th Terrace

Silver Springs, Florida 34488

Mike Smallridge

15827 Cedar Elm Terrace

Land O Lakes, Florida 34638

Martha F. Barrera, Esquire

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399

[e-mail] ate.fl.us

Ann Cole, Commission Clerk

Office of the Commission Clerk

Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399 - 0850

S. Curtis Kiser, General Counsel

Office of the Commission Clerk

Public Service Commission

2540 Shuma rd Oak Boulevard

Tallahassee, Florida 32399 - 0850

Timothy J. Devlin, Executive Director

Office of the Commission Clerk

Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399 - 0850

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All par ties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.