HomeMy WebLinkAbout1985-005BOARD OF COUNTY COMMISSIONERS
INDIAN RIVER COUNTY
RESOLUTION NO. 85-5
ORDER
This matter comes before the Board of County Commissioners of
Indian River County following a duly notified and published hearing
where the Commission having heard testimony of all interested parties
and having thoroughly reviewed and analyzed the recommendation of
the county staff; now adopts the findings and conclusions as set
forth in the staff report dated January 2, 1985, and attached
hereto as Exhibit "A".
NOW THEREFORE IT IS ORDERED:
1. That Breezy Village Sewer and Water Company, Inc.,
current application for relief is hereby terminated and marked
closed.
2. That the authorized rate of return or opportunity cost
shall be zero for the first fiscal year and increased to twelve
percent thereafter provided the Board of County Commissioners
deems the Utility is operating under efficient and economical
management.
3. That the authorized rate of return be applied to the
net rate base of $66,302. Net rate base is that rate base
calculated exclusive of accumulated depreciation, contributions
in aid of construction and accumulated depreciation on contri-
butions in aid of construction but inclusive of a working capital
allowance.
4. That Breezy Village Sewer and Water Company, Inc., is
authorized to design tariffs so as to generate $27,504 in
gross water and wastewater revenues for the first fiscal year.
Provided it is determined by the Board of County Commissioners
that the Utility is operating under efficient and economical
management the Utility will be authorized to generate $37,094
in gross water and wastewater revenues thereafter. The gross
revenue test will be based on customers enrolled.
5. That Breezy Village Sewer and Water Company, Inc., shall
be permitted to include in its allowable costs, rate case expense
deferred in the current case amounting to $6,000.
BOARD OF COUNTY.COMMISSIONERS
OF DI N RIVER.COUNTY;`FL"
Pa ick B. Lyona ( h 'rman '
ORDER ADOPTED: January 9, 198
ORDER ENTERED: January 9, 1985
ATTESTED TO:
Approve asto��
and le is s,it'! E�f
// Freda Wright, C&6rk
Attorney
40
40
40
•6
TO: The Honorable Members of DATE: January 2, 198J' FILE:
The Board of County Commissioners
THRU: Terrance G. Pinto SUBJECT: BREEZE VILLAGE FINAL ORDER
Utility Service Director
FROM: Jose hf A. Baird
P REFERENCES: Attachment A - Final Order
Assistant Utility Director
DESCRIPTION AND CONDITIONS:
After considering and analyzing the information at the public hearing
on November 8, 1984, the Utility Department staff recommends the
Final Order attached. The revenue requirements within the order is
based on the scenario below:
Extraordinary repairs amortized over five years; fifty
percent of rate case expense amortized over three years;
thirty-six percent of depreciation expense because of con-
tributions -in -aid -of -construction adjustment; no rate of
return:
Total operating expense $7.7,504
Provision for taxes -0-
Return on rate base -0-
Total Revenue Requirement $27,504 1st year
Provision for taxes 1,634
Return on rate base
(66,302 x 12%) 7,956
Total Revenue Requirement $37,094 after 1st year*
*provided the Board deems that utility is operating under
efficient and economical management.
Major issues addressed at the public hearing were, depreciation, the
amortization of new capital items and the management of the Utility.
Depreciation: There was the question of whether depreciation
should or should not be allowed as an expense. Staff allowed
depreciation for the following reason. Depreciation is the
systematic allocation of the cost of an asset over its estimated
useful life. Without depreciation, a business would have no
means of recapturing the original cost of their capital assets.
Depreciation is not for the purpose ot Renewal and Replacement,
and the two should never be confused.
11
40
40 1
Amortization of Ca ital Costs: There were capital items
t wi c were amortize over dive years instead of being
depreciated. When the capital items were amortized, the cost
®
of the assets were not entered into the rate base calculation.
This means rates would be lower for consumers if you amortized
the capital items rather than depreciate. The utility would
j prefer to amortized and staff has no problem with this.
Management of Utility: There was a great deal of dialogue,
• at the meeting, over the poor managment of the Utility, there-
fore, staff recommends no rate of return the first year
and increased to 12 percent thereafter provided the Board of
County Commissioners deems the Utility is operating under
efficient and economical management.
Utility Service Director Terry Pinto reported that after
reviewing all the testimony given at the recent rate hearings, staff
is recommending that the revenue requirement for Breezy Village be set
at $27,504 for the first year, which will allow the company to receive
only that which is needed for operational purposes, and no rate of
return on their investment. At the end of the year, staff will
request that the Utility's operations be reviewed and if it is
determined that they have operated satisfactorily, then they will
allow them a rate which will provide a 128 return.
Commissioner Bird asked if there was some level of achievement
that they can follow during the first year so that they will know if
they are qualifying, and Director Pinto felt that the Utility was very
aware of what we expect, mainly better record keeping. He advised
that they will bring this back to the Board with their report.
MOTION WAS MADE by Commissioner Scurlock, SECONDED by
Commissioner Bird, that the Board adopt Resolution 85-05,
the Final Order for Breezy Village Sewer and Water
Company, Inc.
12