Loading...
HomeMy WebLinkAbout9/18/1986Thursday, September 18, 1986 The Board of County Commissioners of Indian River County, Florida, met in Special Session at the County Commission Chambers, 1840 25th Street, Vero Beach, Florida,_on Thursday, September 18, 1986, at 7:00 o'clock P.M. Present were Don C. Scurlock, Jr., Chairman; Patrick B. Lyons, Vice Chairman; Richard N. Bird; and Margaret C. Bowman. Absent was William C. Wodkte, Jr., who is recuperating from an angino plasti procedure. Also present were Charles P. Balczun, County Administrator; Charles P. Vitunac, Attorney to the Board of Commissioners; Joseph Baird, OMB Director;. Terry Pinto, Utilities Director; Jeffrey Barton, Assistant Utilities Director; and Barbara Bonnah, Deputy Clerk. PUBLIC HEARING - GENERAL DEVELOPMENT UTILITIES REQUEST FOR PASS-THROUGH RATE INCREASE FOR CHARGES OF BUYING COUNTY WATER WHOLESALE The hour of 7:00 o'clock P.M. having passed, the Deputy Clerk read the following Notice with Proof of Publication attached, to -wit: a aanK SEP 18 16 � ma A Y OF OF F BOOK 65P1�E 1� a further says that -the said Vero Beach Press Journal ich, M said Indian River County, and that the sa Hnuously published M said Indian River County, Florida,, class mail matter at the post office in Vero Beach, In 38 lod pf,ow..,yqar next, preceeding the first publication - a{d.afRarit further says that he has neither paid ran xt any discount rebate canmission Or refund for ft,; for publication in the said newspape► :11 -­ 3 and subscribed before me this day, of� - - manr�, Jr bn Datil i NOTICE OF PUBLIC HEARING. :- ly newspaper published A advertisement being Notice is hereby given that •the Board of County Cotmaissioners^ bf hearing in. the Commission ident3al: 5/8 $ - + lies"X/4" . $Z 70/1000ga1 €Indian River County, will hold's public �toom,,Indian River County: Administration Building, 1840 2jth Strget, ^,hCommercial'- l Commercial 1" 1.59 1.70/1000ga1 -Vero Beach, FL'32960 on Thursday,, the 18th day of September, 1986, at the request of General Development Utilities; Multiple Unit All Sizes :35/unit 1.70/10o0ga1.`.' -t00 P.M. to -consider nc. for a water rate pass through ir. Vero Beach Highlands and Vero consider General VERO BEACH PRESS -JOURNAL i Shores. At that hearing, the Commission will Iievelopment Utilities Inc. Is request for the water rate pass through. rr The rate increase will reflect the followingchanges in base. water $ + Published Weekly newspaper published at wapapar has heretofore rates currently paid., ly and has been entered Commercial y 5/8"X3/4'r $ 69 $2.97/1000gal i 5.34/ERU {° lh' INC " ENERAL--DEVELOPMENT' UTILITIES , Vero Beach, Indian River County, Florida ,: u - VERO WATER DIVISION For petermination of Appropriate Equivalent Residential Unit",.r y INDIAN RIVER COUNTY PASS-THROUGH RATE CARE ? :..,kf - a.Yir e :•+. . "r' _ _ •_-; ..PRESENT AND PROPOSED RATES a further says that -the said Vero Beach Press Journal ich, M said Indian River County, and that the sa Hnuously published M said Indian River County, Florida,, class mail matter at the post office in Vero Beach, In 38 lod pf,ow..,yqar next, preceeding the first publication - a{d.afRarit further says that he has neither paid ran xt any discount rebate canmission Or refund for ft,; for publication in the said newspape► :11 -­ 3 and subscribed before me this day, of� )Proposed rat69 shown - are based on 1983 `operating c�turn' n P w {Clerk of the Gromit Court. Iridian River County, Florida) $etf lect full Yeaov®ry o auTxeht operating costs and r N to e o- tirements;4 Ali interested parties will be heard - bated this 5th da of September, 1986 BOARD OF COUNTY COMM"SSIONERS } �' *v`e TN�IAN. RIVER COUNTY,,r ARIDA Don .C: EXHIBIT I the pass through rate increase for charges of buying county water wholesale. Attorney Vitunac swore in all those who would be presenting testimony for the applicant, and asked that when they come up to present testimony, they acknowledge they have been sworn in. Attorney Shandloff introduced Stephen Craig Wheeling, Director of Rate Regulation and Planning for General Development Corporation, and Curtis Morris, Division Director. Stephen Craig Wheeling, business address - 1111 S. Bayshore Dr., Miami, acknowledged that he had been sworn in, and advised that he primarily directs and oversees preparation of rate cases for the utility and monitors and interprets new rate legislation and its impacts. Mr. Wheeling stated that he has a Master's Degree in Business Administration from Vanderbilt University; he worked as a senior financial analyst for a major chemical company where he analyzed business investments in excess of $100 -million; he has 6 years' experience with General Development Corp., the last 2 years being with GDU; and he has testified on utility rate matters before the Glades, Hendry, Charlotte and Indian River County Commissions. Attorney Shandloff then entered into the record as Exhibit 1 the following charts: CUSTOMER CLASS Residential GENERAL DEVELOPMENT UTILITIES, INC. VERO WATER DIVISION INDIAN RIVER COUNTY PASS-THROUGH RATE CASE PRESENT AND PROPOSED RATES - MONTHLY SEPTEMBER 5, 1986 PRESENT RATES 2.89/1000 gallons FACILITY per ERU METER SIZE CHARGE USAGE CHARGE 5/8" X 3/4" $ .69 $1.70/1000 gallons 1" 1.59 1.70/1000 gallons Commercial 5/8 X 3/4" .69 1.70/1000 gallons 1" 1.59 1.70/1000 gallons Multiple Unit All Sizes .35/unit 1.70/1000 gallons * For Determination of Appropriate Equivalent Residential Unit, please refer to Schedule B of GDU's Main Extension Policy. Total base facility charge is $6.03 for typical residence. 3 PROPOSED RATES NET OF COST SAVINGS PLUS FRANCHISE FEE PASS-THROUGH FACILITY BASE FACILITY CHARGE USAGE CHARGE CHARGE $..69 $2.89/1000 gallons $5.34 per ERU* 1.59 2.89/1000 gallons 5.34 per ERU .69 2.89/1000 gallons 5.34 per ERU 1.59 2.89/1000 gallons 5.34 per ERU .35/unit 2.89/1000 gallons 5.34 per ERU BrJ 5 P,�cE7, p 0 SEP 18 1956 BOOK 65' r,4 83 GENERAL DEVELOPMENT UTILITIES, INC. VERO WATER DIVISION CALCULATION OF WATER PASS-THROUGH RATES ; Volume Usage: 1. GDU Current Volume Usage Charge $1.70 2. Indian River County Water Production Charge $1.72 3. Allowance for Unaccounted/Flushing X1.1 4. Sub -Total $1.89 5. Volume Usage Pass -Through Reduction (See Table below) (70)�_ 6. Incremental Pass -Through Amount $1.19 7. Proposed Volume Usage (Line 6 + Line 1) JZ.89 Pass -Through Base Facility Charge: $5.34 per ERU Current GDU Base Facility Charge: 69C for 5/8" X 3/4" meter. CALCULATION OF VOLUME USAGE REDUCTION GENERAL DEVELOPMENT UTILITIES, INC. VERO WATER DIVISION YEAR ENDED DECEMBER 31, 1982 1982 Test Year Rate Case Non -Treatment Base Facility Charges $5.92 Current GDU Base Facility Charge .69 Variance: Amt. % $5.23 7587 4 CURRENTLY PROJECTED EXPENSE 1985 COST ANNUAL EXPENSE ESTIMATED SAVINGS Power $ 18,704 $1,800 $16,904 Chemicals 36,130 0 36,130 Treatment 8,819 1,200 7,619 Maintenance 7,187 5,000 2,187 Total 70,840 IL000 $62,840 1985 Gallons Consumed 90,234,000 Volume Usage Pass Through Reduction ($62,840 + 90,234,000) 70t,% GENERAL DEVELOPMENT UTILITIES, INC. VERO WATER DIVISION YEAR ENDED DECEMBER 31, 1982 1982 Test Year Rate Case Non -Treatment Base Facility Charges $5.92 Current GDU Base Facility Charge .69 Variance: Amt. % $5.23 7587 4 GENERAL DEVELOPMENT UTILITIES, INC. .VERO WATER DIVISION YEAR ENDED DECEMBER 31, 1982 Transmission, Distribution, General and Administrative Expenses Allocated to Base Facility Charge. Customer Account and Base Facility Charge per ERC as requested June 28, 1983 (1982 Test Year) JZ.86 1. 1982 Test Year Rate Case Customer Accounts and Base Facility Costs Ex Treatment Expenses Transmission & Distribution $ 5,896 Uncollected Accounts (507) 544 Other Customer Accounts 19,706 Administrative and General (507) 9,516 (a) Allocated Lines Depreciation 18,744 (b) Allocated Lines Property Tax 3,089 (c) Other Taxes (507) 2,076 Total Non -Treatment Costs- 59 571 Equivalent Billing Units 10,062 2. Non -Treatment Base Facility Charge per 1982 Test Year Rate Case $5.92 3. Current GDU Base Facility Charge .69 4. Variance - Amount 5.23 7 7587 Source: 1982 Test Year Rate Case, Page 70, Schedule B-43, pg. 1 of 3. (a) Excludes $10,800 for water plant operator. (b) Based on $55,586 of water plant depreciation as per Schedule 3 Purchased Water versus Plant Expansion, versus $185,436 total depreciation. (c)' Allocated based on net water treatment plant Schedule 3, Purchased Water versus Plant Expansion, versus Rate Case Page 5, Schedule A-2. VERO PASSTHROUGH RATES 5 M 4 65 uc,E784 SEP 18 1956 BOOK 65 PAC 785 e� GENERAL DEVELOPMENT UTILITIES, INC. VERO WATER DIVISION WATER PRODUCTION REPORT (Million Gallons) TOTAL PRODUCED FLUSHING UNACCOUNTED 1982 83.2 5.7 8.5 1983 98.1 4.7 9.6 1984 108.4 4.9 6.7 1985 113.4 10.4 10.6 Avg. 1982-1985: Amount 100.8 6.4 8.9 7 100.07 6.37 8.87 Total Flushing/Unaccounted Percentage 1982-1985 15.17 Requested Percentage 10.07 VERO PASSTHROUGH RATES 6 5 r r � Mr. Wheeling reviewed the above charts and pointed out the differences between the present and proposed rates. He noted that the rates for the average user of 5,000 gallons of water would.increase from $9.19 to $20.48 a month without franchise taxes. He stated that the rates would be higher if GDU based the rate increases on the current facilities with a provision for a fair rate of return. This proposal does not include the $1.2 million of line costs associated with the inter -connect pipe line or a provision for a fair rate of return. He stated that the numbers.they are using tonight are true and accurate to the best of their knowledge and belief. Commissioner Bird asked if there was anything in writing about the County's agreement to sell GDU water at $1.72 for 1000 gallons, and Attorney Shandloff explained that Resolution 83-109 addresses the pass through charges, but does not actually specify the rate charged by the County, since those rates are subject to change. Utilities Director Terry Pinto explained that the specific rate is not spelled out in the water purchase agreement entered into on December 7, 1983, because the County, through a normal rate procedure, can increase that rate at anytime. The agreement is to sell water to GDU at the regular production rate set by the County, and when the time comes for an increase, the County will go through a normal rate increase process. What the agreement provides is the particular steps that must be followed by GDU in order for them to pass through whatever increases the County makes. The governing factor of that rate is the County's rate ordinance, and in that respect, GDU is the same as any other customer on our system. Chairman Scurlock noted that the County Utilities Dept. has not increased its rates since we entered into this agreement. Commissioner Bird asked if the $1.72 is the same rate we sold to other customers, and Director Pinto explained that we 7 BOOK 65' Fr1Gc 786 0 FF,_ SEP 18 1986 BOOK 65 u.1,1787 don't have any other wholesale customers; GDU is being charged $1.72, the County's water production charge. Chairman Scurlock asked if we can justify the $1.72 charge, and Director Pinto said it was based on a rate hearing under an analysis done by Arthur Young 8 Co. Commissioner Bird questioned why the County entered into the agreement to sell water to GDU at production/wholesale rates, and Director Pinto explained that at the time the County entered into the agreement, GDU either had to replace their plant or purchase their water from the County because the quality of their water was deplorable. Mr. Wheeling explained that an extensive economic analysis showed that it would have been significantly more costly to build a new plant than to purchase water from the County. The analysis clearly showed that it was in the best interests of the customers. Chairman Scurlock asked if any credit was given for the salvage value of the plant or the value of the land on which the original plant was located, and Mr. Wheeling stated there was not. Mr. Wheeling stated that Mr. Morris has indicated that salvage value and the removal costs would be very close amounts in terms of dollars, and he intends to continue using the land around the plant for operations. The other reason for not including salvage value for the plant is that the 69� facility charge covers a very small percentage of their non -plant treatment costs. Commissioner Bird asked if the increase that is shown is due to the increase in the base facility charge or the increase in the actual cost per gallon consumed, and Mr. Wheeling said it is a combination of both. Attorney Shandloff stated that the County's base facility charge of $5.34 is being passed through along with the $1.72 water production charge. 8 Jeff Barton, Assistant Utilities Director, reviewed the following staff recommendation dated 9/11/86: TO: BOARD OF COUNTY COMMISSIONERS DATE: SEPTEMBER 11, 1986 THRU: TERRANCE G. PINTO DIRECTOR OF UTILITY SERVIC FROM ,_. e SJEFFREY K. BARTON ASSISTANT DIRECTOR OF UTILITY SERVICES SUBJECT: G.D.U. - RATE HEARING FOR PASS THROUGH CHARGES BACKGROUND Indian River County and General Development Utilities entered into a contract on December 7th, 1983 (known as the Water Purchase Agreement) for the sale of water at a wholesale rate of $1.72/1000 gallons. Paragraph A (4) of the contract calls for a pass through of charges by G.D.U. once adjustments are made by the utility. The utility has been purchasing water from the County since May 2, 1986. G.D.U. has continued to bill their customers at the old rate structure of: Base Facility Charge $1.70/1000gal. Consumption Charge * plus $1.70 Present Approved Rate/1000 gal. .70 Adjustment to operating expenses $1.00 Adjusted approved rate/1000 1.89 Pass Through Rate/1000** $2.89 Proposed Rate/1000 $5.34 * $2.89/1000gal. ** Pass Through Rate $1.72 County Wholesale Charge x 1.1 Allowance for unaccounted $1.89 for water BOOK 65 FA; ,r788 0 FACILITY USAGE CUSTOMER CLASS METER SIZE CHARGE CHARGE Residential 5/811x 3/4" $ 69 $1.70/1000gal. 101 1.59 1.70/1000gal. Commercial 5/8"x 3/4" $ .69 $1.70/1000gal. 1" .1.59 1.70/1000gal. Multiple Unit All sizes $ .35/unit $1.70/1000gal. This public charged by G.D.U. hearing -is to A consider the pass through rate to be summary, the proposal copy of the G.D.U. is as follows: proposal is attached. In Present Rate Proposed Rate $ .69 Use Charge $ .69 Base Facility Charge $1.70/1000gal. Consumption Charge * plus $1.70 Present Approved Rate/1000 gal. .70 Adjustment to operating expenses $1.00 Adjusted approved rate/1000 1.89 Pass Through Rate/1000** $2.89 Proposed Rate/1000 $5.34 * $2.89/1000gal. ** Pass Through Rate $1.72 County Wholesale Charge x 1.1 Allowance for unaccounted $1.89 for water BOOK 65 FA; ,r788 0 JEEP 18 1986 BOOK RECOMMENDATION County Utility staff has reviewed the proposed adjustments to the current consumption charges of $.70 per 1000 gallons and the adjustment is justified. Staff has reviewed the proposed consumption charge adjustment of $1.89 for the pass through consumption charge and disagrees with G.D.U.'s theory about the factor of adding the 10% to the wholesale rate of $1.72 to arrive at the $1.89. At the present time, G.D.U. doesn't have such a factor as part of its approved rate and should not be allowed to impose such a charge at this time. The pass through is to recognize only the increases of water cost charged by the County versus approved costs of G.D.U.'s operation as part of current rate structure. Any oar costs or charges should be a part of a new rate case filed. It is Staff's position that the consumption charge of $1.72/1000 gallons be the only pass through on the consumption, making the proposed consumption charge as follows: $1.70 Present approved rate .70 Adjustment of operating costs $1.00 Adjusted approved rate plus 1.72 Pass through $2.72 Proposed Rate/1000 gallons Staff recommends to the Commission that they take under advisement all evidence and testimony given in evidence at this public hearing and an order of finding be issued by the Commission within 60 days. Assistant Director Barton emphasized that staff's recommendation does not include any consideration for the old plant which was taken out of service, or the $1.2 million for the cost of the transmission line from our plant to GDU. He explained that if these type of items were to be considered, GDU would have to file a complete new rate case. Chairman Scurlock asked what the County charges the average residential user of 5000 gallons of water per month, and Assistant Director Barton presented the following rate structure: $1.82 billing charge 5.34 base facility charge —T .16 monthly charge for zero consumption Assistant Director Barton stated that their current approved rate structure on the 1983 test year does not include a rate of return. He explained that staff's recommendation is different than what the applicant has requested because he took the approach on their 1983 test year of making adjustments to those operating accounts, taking out those goods and services because 10 _ M the abandoned plant would not longer be a part of their cost structure. He continued that he added the County's current $1.72 wholesale/production cost to that rate and the County's base facili.ty charge. Any other considerations were not taken into account. In his opinion, GDU asked for some things that were not a part of the 1983 test year or the approved rate for 1983. Therefore, he did not include them or disallow them. Chairman Scurlock asked why we are not considering a full blown rate increase tonight, and Mr. Wheeling explained that when they came in last May, he stated that they would not be back this year for a full blown rate increase and would be coming back for a pass through charge only; however, they will be looking for a rate increase in the first quarter of 1987. Chairman Scurlock noted that when the full blown rate hearing comes in, he would be looking very closely at the effective- ness of the GDU operation. Commissioner Bird understood that in a pass through hearing, we don't get involved in all of their costs, and Assistant Director Barton confirmed that and explained that staff just considered the pass through justification. GDU is requesting a pass through of $2.89 per 1000 gallons and staff's recommendation is to allow them a passthrough of $2.72. Attorney Shandloff emphasized that Resolution 83-109 clarifies the procedures for the processing of general rate increase applications and simplifies the procedures for the "pass-through" to its customers of rate changes imposed on it by the County under an agreement to purchase wholesale water utility service from the County. That resolution gives them the option to be here tonight. Commissioner Bird assumed that GDU has filed their request for a pass through in accordance with the provisions in Resolution 83-109 and that they are entitled to whatever the difference is I between what it actually cost them to produce and BOOK►� �' - rSEP 18 1986 BOOK 6 5 Pvl'E 701 deliver water under their old system and what it costs them to buy and deliver water under the County's system. He understood that GDU is saying that they have proven that and our staff is saying that they disagree with the figures or the methodology used, and Chairman Scurlock said that was right, to the tune of 104 a 1000 gallons. Mr. Wheeling went on to explain GDU's history in flushing and unaccounted for water on Page 5 of Exhibit 1. Chairman Scurlock opened the Public Hearing and asked if anyone wished to be heard in this matter. • Attorney Vitunac asked everyone who wished to testify to stand and be sworn in at once, and then acknowledge that they have been sworn in when they come up to the dais. William Davenport, Sr., 463 SE 21st Place, representing the Vero Shores Home Owners Association, acknowledged that he had been sworn in, and requested that tonight's public hearing be postponed because of the following reasons: Commissioner Wodtke, who represents their district, is in the hospital; they feel there has been inadequate notice of tonight's public hearing even though the notice was published in the Press Journal; tonight's bad weather was not good for attendance; and a majority of the residents of Vero Shores are still up north. Mr. Davenport asked for a ruling from the Board on the postponement. Commissioner Lyons did not feel there was much to be gained by a postponement as he believed there were a sufficient number of people present tonight to ask questions and receive answers. Mr. Davenport then asked if the application for the pass through was properly submitted, and Attorney Vitunac confirmed that it had been. He explained that Resolution 83-109 establishes the notice provisions for the public hearing and also discusses the purchase and the pass through. Pursuant to the authority of the resolution, there was an agreement entered into called a Water Purchase Agreement. Paragraph 4 of that agreement talks about changes in rates and the pass through procedure when GDU 12 9 began to purchase all of their water from the County water system, which happened in May, 1986. Mr. Davenport felt that if the County agreed to pass through the charges way back then, the residents in attendance tonight are here on a futile mission. Commissioner Lyons did not feel that was quite the case, and Attorney Vitunac explained that we are here to make sure that the numbers that GDU is presenting are accurate and true, and if the residents have any evidence that they are not, the Board is ready to hear that evidence. Mr. Davenport felt that it is a double whammy, no matter which way you look at it. He felt the County should do this properly by going through a full blown rate increase hearing. Director Pinto explained that after reviewing the testimony given by GDU and staff, the Board will issue an order within 60 days. The Board has the ability to accept it or not. Chairman Scurlock felt that one of the problems we have had in the past is that developers have adopted artificially low rate structures for their utilities because in the early stages they are trying to sell units and low utility bills is a good selling point. Unfortunately, later on they get to a point where they have to adopt an adequate rate structure to support the activity, and then it is time to pay the piper. In his opinion, he felt this is a prime example of where the rate structure was set so low that there was no way in the world it could cover expenses, let alone any rate of return. Mr. Davenport again requested a postponement and asked for the Commission's decision on the matter. The Commissioners voted not to postpone tonight's public hearing, their reasons being that the public hearing was properly advertised and a fair number of residents are in attendance. Commissioner Bird asked how long GDU has been eating the ? $5.34 base facility charge, and Director Pinto advised that GDU has been paying the $5.34 to the County since May, because they 13 BOOK 5 PAG -L792 SEP 18 1986 Hex 79� .0 eb had to first construct the main transmission line from GDU down Oslo Road to a point of connection at the County's water plant. Mr. Davenport asked if that represents the $120,000 that they are losing, and Mr. Wheeling said that it does not. They are losing an additional $15,000 a month since May, plus the carrying costs on $1.2 million. Mr. Davenport deferred to anyone else who wished to speak, but reserved the right to speak again at the end of the public hearing portion of this meeting. Vicky Clark, 1924 S.E. 5th Ave., acknowledged that she has been sworn in, and objected to the outrageous costs for utilities in that area. She felt the residents are being held hostage by this company, and noted that there is a possibility that GDU may be selling out soon to another company and then they would be blackmailed by them. Mrs. Clark also felt that the County Commissioners were very unsympathetic because they don't live in Vero Shores, and would like to see this public hearing postponed also. Commissioner Lyons believed that if GDU is denied this pass through after presenting legitimate reasons for the request, they would appeal it immediately and the court would rule in their favor. Mrs. Clark pointed out how difficult it was becoming for mothers not to take a job outside the home what with the increasing costs of everything, especially utilities. Commissioner Bird pointed out that the County could have chosen to have franchise rate increase applications heard by the State, but opted instead to keep these rate hearings on a local level in order to have better control. Assistant Director Barton explained that under the County's billing system, a resident using 5,000 gallons of water would pay $17.11 for water and $17.67 for sewer for a combined total of $34.78. Under the GDU rates, the resident would pay $20.48 in 14 water and $17.86 in sewer charges, bringing the total bill to $38.34. Director Pinto noted that the County has not changed its water rate for four years. Kenneth Henry, 1075 SW 24th Placer acknowledged that he had been sworn in, and asked for clarification on the statement made in the flyer that he received with hisjwater bill that GDU expects to lose in excess of $120,000 In 1986. Mr. Wheeling explained that the loss is coming from the difference in their current revenues versus expenses for transmission and distribution mains, general administrative costs, billing, and all'the other associated costs in running the system. He pointed out that even if they receive this pass through, this loss will be carried into 1987 and will actually increase, because the 1986 amount did not include any carrying costs on the $1.2 million that they used to construct the pipeline and pay certain associated costs to connect to:the County system. Mr. Henry also asked the capacity'of the original plant. Curtis Morris, Division Director or General Development Utilities in their Port St. Lucie, Vera Shores, Vero Highlands and Silver Spring Shores Division in Ocala, acknowledged that he had been sworn in, and noted that his rlesponsibilities are to manage the day-to-day activities of the water and sewer facilities in those divisions. Mr. Morris cited his qualifications of approximately 20 years experience in the water and wastewater field for which he is licensed by the State of Florida. In answer to Mr. Henry's question about the capacity of the original plant, he stated that it was not designed for build out. Mr. Henry objected to the low rates for water and sewer that were charged at the beginning of the development and would have preferred to have it up front. 0 15 BOOS C S E P 18 1986 SEP 18 1986 -7 BOOK 65 'm' 195 Mr. Shandloff explained that the Board of County Commissioners t would not allow an increase in water rates because the quality of the water was not good. John Ehrmantrout, 1934 5th Court, S.E., acknowledged that he* had been sworn in, and explained that at the time of the sewer rate increase he wrote back to his old home town in Maryland and asked for comparison costs, which showed that GDU is charging Vero Shores double the costs of the Maryland system. He felt that there is something wrong with the efficiency of this firm. Commissioner Bird emphasized that the County is producing the water and doing it in the most cost effective way. He believed that the northern plants are probably 30 years old and without any debt service. Mr. Henry offered the cost comparison material to Director Pinto, who said he would be very interested in reviewing it. Allen Reynolds, 473 22nd Place, S.E., Vero Shores, acknowledged that he was under oath. He could not understand why the County does not get GDU out of the picture, because if they are losing money, he felt they should be selling the system, period. He also could not understand why their rates have increased at this pace since there has been little inflation in the last 3 years. Mr.,Reynolds understood that the water plant has been taken out of operation completely and questioned the quality of the County water with respect to hardness, and Director Pinto said that there is absolutely no reason for anyone on County water to use a salt softener system. Mr. Reynolds also mentioned the problem of having their meters read out in Vero Shores. He did not believe his meter had been read for a very long time, because he had to scrape away the dirt from the meter. He wondered if GDU made any money by "guestimating" the water consumption. Chairman Scurlock believed that GDU would be very interested in that since they are paying for the meters to be read. 16 0 Elinor Carson, 408 21st St., S.E., Vero Shores, acknowledged that she had been sworn in, and asked exactly how the County's cost for water compared to GDU's cost yvith respect to the average residential user of 5,000 gallons a mo th. Assistant Director Barton explained that the County charges $17.11 for 5,000 gallons compared to $0.48 by GDU The $5.34 base facility charge is included in the $20.48. Mrs. Carson emphasized that the residents are paying high sewer rates already, but Assistant Director Barton pointed out that the difference between the County',s charges for water and sewer for the typical user only amounts to approximately $3.00. Ferdinand Rankel, 2044 5th Court,IS.E., Vero Shores, I acknowledged that he had been sworn in and asked for an explanation of the GDU utility escrow fund. Mr. Wheeling explained that it is,a fund to pay mainly for line extensions in areas that were sold in certain tracts in certain communities throughout the state. He was not certain what areas of Vero Shores or Vero Highlands had escrow agreements. To his knowledge, there has not been any withdrawals, because they have not proceeded with the construction; therefore, there has not been any reduction in contributions or rate base because of this. Mr. Wheeling stated that thelescrowed funds must be used, through a very complex formula that is an agreement with th`�e State of New York and the State of Florida, for the benefit of customers who paid it upon certain Fine or plant expansions being made. Mr. Rankel understood that the escrowed money was supposed to be used for transmission mains and things of that sort, and Chairman Scurlock understood that Mr. Wheeling is saying that none of those situations exist and they, have not expended any funds from escrow. Mr. Wheeling stated that they have not. To his knowledge there have not been material amounts where it would pay to withdraw from the escrow account. 17 BOOK 6 5 Ft {, 796 S E P 18 1986 i SEP 18 1986 -7 BOOK 65 Mr. Rankel pointed out that at the present time that escrow account holds more than $25 -million, and asked if some of that money could be spent on the $1.2 million transmission line. Mr. Wheeling stated that it could not have come out of the escrowed account, because the $25 -million is a state-wide figure and most of that money comes from Port Malabar, Charlotte County and LaBelle. He believed that one of the legal requirements is that the money be expended in platted areas where the escrow funds have been collected. He believed that very little of the escrow account has come from Vero Highlands or Vero Shores, but he did not have that data with him tonight. Mr. Rankel estimated that GDU owns about 10 different utilities, and pointed out that when they put out their report, they make them out in one lump sum so that there is no way for the residents to know whether they are making money or losing money on the utility in their area. Director Pinto advised that when GDU comes in with a rate increase request, they will bring in material and figures on this utility only, and Commissioner Lyons asked if those figures would include any escrowed funds associated with this county. Director Pinto explained that the only time a rate base can be reduced is if the money from the corporation is transferred into the utility. That would be a contribution and aid to construction just like an impact fee, and the rate base is reduced by that, but there is very little or none. Chairman Scurlock and Commissioner Lyons felt that we should be tracking this to see if there is any escrowed funds associated with Vero Shores or Vero Highlands. Director Pinto repeated that when the utility files, they submit to the County any contribution of any shape or form, no matter if it is from the escrow fund or a private builder paying into it. That is a contribution and that has to reduce the cost to the customer. 18 Chairman Scurlock emphasized thatl,the point we are trying to make is if for example they have $100,900 escrowed for the expansion of the Vero system, are we tracking it to see if, in fact,.when that area is developed thatllthey are going in and invading those escrowed monies to makel,the improvements which would make it a contribution in aid of',construction? Attorney Shandloff pointed out that the escrowed funds do not have any real bearing on the pass through request, but confirmed that it would apply when they come back for a rate case. The County Utility Dept. would be investigating GDU to see whether or not funds that have been escrowed for Vero go to Vero. Mr. Wheeling explained that the money is held in escrow in a New York money center bank for the benefit of the customers as construction is completed. To the best of his knowledge, he did not believe it is GDC's money or included in their balance sheet; it is GDU's money until the construction occurs and is withdrawn. Then it becomes a contribution in aid of construction, and shown as a reduction in rate base on the annual report filed with Indian River County. Mr. Rankel wished there was some way to get GDU to put out a separate report for each utility, because in their total report, they are making money. .They must be making money some place. They just went to a rate increase up in Sebastian because they are losing money there; they are losing money in Vero; they are losing money every place on the east coast, but some place they are making money. Mr. Wheeling admitted that they were making money on their more mature systems. He pointed out that they do file on an individual basis with the County, and believed their annual report would break out the Vero operat1ons. Chairman Scurlock advised that the County Utilities Dept. would have that information if Mr. Rankel wished to review it. Apparently, it is not something that GOU mails directly to individual customers. 19 BOOK 65' P,nE 7.98 I SEP 16 1966 Bou 6 5 P,aGE ?99 Mr. Davenport returned to the dais and thanked the Board for 4 their diligence and patience in hearing the residents' testimony. He felt that if the pass through is granted, people are going to be hurting, and they are already hurting from the increased sewer* rates. He hoped that the Board would not allow the pass through, and emphasized that they are not going to rest easy until the Board turns this down. ON MOTION by Commissioner Lyons, SECONDED by Commissioner Bowman, the Board unanimously closed the Public Hearing. Director Pinto asked those in the audience if there were any specific complaints in regard to the quality of water since the change over took place in May, and Mr. Davenport noted that for the last 6 weeks there had been a torrent of flushing. Commissioner Bird asked for an explanation of "unaccounted for water", and Director Pinto explained that there is water that does not get to the customers, i.e. some leakage, water for flushing the lines and fire hydrants, etc. Normally there is an allowance in a rate structure for that, but staff feels that was already built into their $1.70 rate structure and did not count it again. ON MOTION by Commissioner Lyons, SECONDED by Commissioner Bowman, the Board unanimously accepted all testimony and evidence given here tonight, and announced that an order of finding will be issued within 60 days. Commissioner Bird felt that the residents should be notified in some way of the date of the meeting when the final order will 20 be issued, and the Commission announced that the final order would be issued at the Regular Meeting of October 21, 1986 sometime between 9:00 o'clock A.M. and 12:00 noon. There being no further business, on Motion duly made, seconded and carried, the Board adjourned at 8:45 o'clock P.M. ATTEST: Clerk SEP 18 1986 21 Chairman BOOK 6'J PAGE 80®