The state’s Public Service Commission is expected to consider next week in Tallahassee a series of recently-issued recommendations from PSC staff regarding increases in rates for St. George island customers of Water Management Services Inc.
The April 12 PSC staff recommendations come after their several months of review following a protest lodged by the PSC Office of Public Counsel following the PSC’s initial Aug. 2012 rate decisions.
Residents of St. George Island were vocal at a Jan. 2013 hearing on the island where they confronted WMSI owner Gene Brown. The hearing was necessary because the Office of Public Counsel had protested four issues, and WMSI eight issues, arising out of last year’s granting of a rate hike to WMS.
As it stands now, the PSC staff is set tom recommend that WMSI receive a 45.8 percent increase in revenue,, to that test year revenue of $1.3 million be granted a nearly $600,000 increase, to $1.9 million.
In its filing, WMSI requested a revenue requirement to generate annual revenue of $2.02 million, which was based on a a revenue increase of $714,035, or approximately 54.69 percent. The PSC staffers wrote that their recommendation will allow WMSI the opportunity to recover its expenses and earn a 5.61 percent return on its investment in rate base.
If adopted this will mean based facility charges will rise for 5/8" X 3/4" meters to $36.60, less than WMSI’s recommendation of $43.06 but slightly more than the rate adopted on a temporary basis in January. For 3/4" meters, the rate would got to $54.90, also slightly more than the temporary rates now in effect, but less than the $64.59 WMSI sought. . For 1” meters, the rates would got to $91.50, and for larger meters they would got to $183, each less than what WMSI sought, but more than the temporary rates now in effect.
PSC staff also plans to recommend a hike in the plant capacity charges, for residential customers to $3,387 and for all others to $9.68 per gallon per day. The main extension charge for residential customers would be $1,523, and for other $4.35 per gallon per day. The cost of residential meter installation would rise to $400.
In the highly controversial issue of advances made by WMSI to other of Brown’s companies, which he argued were necessary to maintain sound fiscal management, the PSC staff wrote that “By advancing funds to the utility's president and associated companies while it already was in a financially precarious situation, WMSI exacerbated its financial distress and delayed necessary infrastructure improvements. Advancing cash to the president and associated companies in lieu of making required debt service payments and needed capital improvements has degraded the credit profile of the utility and adversely affected the utility and is contrary to operating in the public interest.
“WMSI's failure to replace the water storage tank has threatened utility operations as well as the safety of the ratepayers. Based on the foregoing, staff recommends the president's salary be reduced by 15 percent. Furthermore, absent (PSC) authority to prohibit advances to the president and associated companies for non-utility purposes, the PSC should require WMSI to file quarterly reports delineating all advances, loans, investments, notes receivable and accounts receivable between WMSI and the president and associated companies including the date, amount, and reason for the transaction(s).”