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Agenda for <br />Commission Conference <br />August 6, 2019 <br />ITEM NO. CASE <br />5**PAA Docket No. 20180218 -SU — Application for staff -assisted rate case in Brevard County by <br />TKCB, Inc. <br />Critical Date(s): 04/10/20 (15 -Month Effective Date (SARC)) <br />Commissioners Assigned: All Commissioners <br />Prehearing Officer: Polmann <br />Staff: ENG: Knoblauch, Doehling, Salvador, Graves <br />AFD: Bennett, Sewards, Norris <br />ECO: Ramos, Hudson <br />GCL: DuVal, Weisenfeld <br />(Proposed Agency Action - Except for Issue Nos. 10, 11 and 12) <br />Issue 1: Is the quality of service provided by TKCB, Inc. satisfactory? <br />Recommendation: Yes. The Utility is in compliance with DEP's rules and regulations <br />and there have been no customer comments or complaints against the Utility in the <br />previous five-year period. Therefore, staff recommends that the overall quality of service <br />provided by the Utility be considered satisfactory. <br />Issue 2: What are the used and useful (U&U) percentages for the Utility's wastewater <br />treatment plant (WWTP) and collection system? <br />Recommendation: Staff recommends that the WWTP and collection system be <br />considered 100 percent U&U. There is no excessive infiltration and inflow (I&I) and no <br />adjustment to operating expenses is necessary. <br />Issue 3: What is the appropriate average test year rate base for TKCB, Inc.? <br />Recommendation: The appropriate average test year rate base for TKCB for ratemaking <br />purposes is $58,454. <br />Issue 4: What is the appropriate return on equity and overall rate of return for TKCB, <br />Inc.? <br />Recommendation: The appropriate return on equity (ROE) is 7.85 percent with a range <br />of 6.85 percent to 8.85 percent. <br />Issue 5: What are the appropriate test year revenues for TKCB, Inc.? <br />Recommendation: The appropriate test year revenues for TKCB are $83,684. <br />Issue 6: What is the appropriate amount of operating expense for TKCB, Inc.? <br />Recommendation: The appropriate amount of operating expense for TKCB is $85,605. <br />Issue 7: Should the Commission utilize the operating ratio methodology as an alternative <br />method of calculating the wastewater revenue requirement for TKCB, Inc. and, if so, <br />what is the appropriate margin? <br />Recommendation: Yes. The Commission should utilize the operating ratio <br />methodology for calculating the revenue requirement for TKCB. The margin should be <br />12 percent of O&M expense. <br />8 <br />2Z(o <br />