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Agenda for Commission Conference July 13, 2017 ITEM NO. 12 * *PAA CASE Docket No. 160165 -SU — Application for staff -assisted rate case in Gulf County by ESAD Enterprises, Inc. d/b/a Beaches Sewer Systems, Inc. Critical Date(s): 12/9/2017 (15 -Month Statutory Deadline (SARC)) Commissioners Assigned: All Commissioners Prehearing Officer: Polmann Staff: ENG: Matthews, Ellis AFD: Brown ECO: Friedrich GCL: Murphy (Proposed Agency Action - Except Issue Nos. 17, 18, and 19) Issue 1: Is the quality of service provided by Beaches Sewer Systems, Inc. satisfactory? Recommendation: Yes; the quality of service provided by Beaches Sewer Systems, Inc. should be considered satisfactory. Issue 2: What are the used and useful percentages (U&U) of the Beaches Sewer Systems, Inc. wastewater treatment plant and wastewater collection system? Recommendation: Beaches' WWTP should be considered 64.3 percent U&U. The wastewater collection system should be considered 90.5 percent U&U. There appears to be. no excessive infiltration and inflow (I&I), therefore staff is not recommending an adjustment be made to operating expenses for chemicals and purchased power. Issue 3: What is the appropriate average test year rate base for Beaches Sewer Systems, Inc.? Recommendation: The appropriate average test year wastewater rate base for Beaches is $72,658. Issue 4: What is the appropriate return on equity and overall rate of return for Beaches Sewer Systems, Inc.? Recommendation: The appropriate return on equity (ROE) is 11. 16 percent with a range of 10.16 percent to 12.16 percent. The appropriate overall rate of return is 5.34 percent. Issue 5: What are the appropriate test year revenues for Beaches Sewer Systems, Inc.? Recommendation: The appropriate test year revenues for Beaches are $131,256. Issue 6: What is the appropriate amount of operating expense for Beaches Sewer Systems, Inc.? Recommendation: The appropriate amount of operating expense for Beaches is $155,232. -15- P31