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HomeMy WebLinkAboutCity of Tamarac Resolution R-87-106rl 1 2 3 4 to 7 8 9 10 11 12 13 14 15 16 19 20 21 22 23 24 25 ?fi 27 28 79 31 32 33 34 35 Introduced by: �• R Temp. Reso. #4516 Rev. 4/8/87 CITY OF TAMARAC, FLORIDA RESOLUTION NO. R-87- /a6 A RESOLUTION ESTABLISHING A CUT-OFF PERIOD FOR UNCLAIMED REFUNDS PURSUANT TO P.S.C. ORDER NO. 9076 ISSUED ON SEPTEMBER 27, 1979; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Public Service Commission ordered (P.S.C. Order 9076 issued on September 27, 1979) TUI to refund certain over payments to residents of the City of Tamarac; and WHEREAS, said Order provides that any unclaimed refunds shall be utilized by the City for the benefit of the utilities system as a whole or for such other lawful uses, subject to•applicable requirements of the Florida law; and WHEREAS, P.S.C. Order No. 9076 required the City of Tamarac to establish a period of time to distribute said refunds; and WHEREAS, the City of Tamarac has never established a refund cut-off period and seven and one-half (7-1/2) years has elapsed since the issuance of P.S.C. Order 9076; and WHEREAS, the Utilities and Finance Directors of the City of Tamarac have acknowledged that P.S.C. Order No. 9076 has been complied with to the fullest possible extent. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF TAMARAC, FLORIDA: SECTION 1: That April 24, 1987 shall be the last day to provide for refunds pursuant to P.S.C. Order No. 9076. SECTION 2: That P.S.C. Order No. 9076 is attached hereto and made part hereof as Exhibit "A". -1- r I 1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 7 19 20 21 22 23 24 25 ?6 27 28 129 31 32 33 34 35 SECTION 3: That the Finance Director is hereby directed to take the appropriate action to implement all provisions of P.S.C. Order No. 9076. SECION 4: This Resolution shall become effective immediately upon its passage. p PASSED, ADOPTED AND APPROVED this Q ty of 1987. ATTEST: CAROL E. BARBUTO CITY CLERK I HEREBY CERTIFY that I have approved this RESOLUTION as to form. A. B N PL TE C T T VO R N -2- MAYOR: HART......4&a=..,._ DIST. 1: C/M ROHR _ 2z"e- DIST. 2: C/M STELZER DIST. 3: C/M HOFFMAN DIST. 4: V/M STEIN BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Application of Tamarac Utilities, ) DOCKET NO. 780923-WS(CR) Inc., for authority to Increase its rates ) and charges. ) ORDER NO. 9076 ISSUED: 9-27-79 • The following Commissioners participated in the d' sition of this matter: ,�p311 34S WILLIAM T. MAYO OCT }919 6'CP GERALD L. GUNTER W JOHN R. MARKS, III O R D E R BY THE COMMISSION: By letter dated September 10, 1979, Tamarac Utilities, Inc., (TUI or the utility) has filed a plan of refund which arises from orders issued in this Docket and Docket No. 74173-WS. The latter Docket has been consolidated into'ihis Docket by Order No. 8825-A dated April 20, 1979. By way of background, during the period March 1, 1978 through January 31, 1979, TUI collected certain rates subject to refund which were authorized by Order No. 6461, dated January 15, 1975 in Docket No. 74173-WS. These rates were ultimately found to be unreasonable by this Commission and the utility was thereafter directed to make appropriate refunds for the period of time in which those rates had been collected. By Order No. $861, dated May 4, 1979, we directed the utility "to present to us a viable option as to the plan and method of refund which plan and method must be within the general interests of this company's customers". TUI has subsequently entered into an Agreement of Purchase and Sale dated July 31, 1979, with the City of Tamarac, and subject to public referendum and a successful sale and final closing, has committed to establish a fund of $4 million for the purpose of refunding to its customers those overcharges arising out of Docket No. 74173-WS. The City, as purchaser, has agreed to administer the plan of refund after we have given our approval. Subject to the above conditions, the Agreement provides that the $4 million refund amount will be transferred to the City of Tamarac concurrently with the City's actual cash payment of its portion of the purchase price. The anticipated closing date is October 12, 1979, or three days after the referendum. In its plan, TUI states that is has determined that the amount to be refunded to its customers is $3,995,880. The utility also ,Z states this amount has been calculated to include applicable refunds from.flarch_�_1, 19 through January 31, 1979, and any and all other c�austments applicable to this and preceding "dockets. In verifying the accuracy of this amount of refund, we have directed our staff to independently examine the records of the .utility. Having done so, we find that the amount of refund proposed by TUI is appropriate and reasonable, and represents the Amount of overcharges collected by TUI during the period in question. In approving the proper amount of refund, we have considered a request by the Tamarac Presidents Council, an intervener herein, to add interest to the principal amount of refund. It is our opinion that the $4 million refund includes an equitable adjustment for interest which when viewed in conjunction with the following facts and circumstances constitutes a fair rate which may be required by Section 367.081(5), Fla. Stat. First, we note that under the refund plan submitted herein a single lump sum payment will be given to customers on an expedited basis rather than over a term of 47 months which is equal to the period during which the overcharges were collected. Second, administrative costs necessarily incurred in the calculation and processing of the refund are being absorbed by the City of 'Tamarac and are consequently not a burden charged to the gross refund amount. These two factors adequately offset or substitute for a specific interest rate being added to the gross interest amount. We also recognize that the voters of the City of CJ ORDER No. 9076 DOCKET NO. 780923-WS (CR) PAGE 2 N'► °� u (�So•51-1 Tamarac (of whom most are customers of the utility) will decide through the ballot box their approval or disapproval of the plan as set forth. Under the reimbursement plan submitted by TUI, it proposes to calculate an average refund for each class of customer, to wit, residential, multiple dwelling, commercial and irrigation. Within classifications, refunds for water and sewer service will be calculated separately. Within the residential classification there will be a further breakdown for water refunds, based upon meter size. Sewer refunds will be identified for all residential customers while refunds for commercial sewer customers will be by rate schedule. Commercial water refunds will be averaged by meter size, as subclassifications. Finally, water refunds foi irrLgation meters will be treated as a separate class. The other alternative method of reimbursement is to recalculate each individual bill rendered by the utility for each of the 47 months when the higher rates were collected. The average refund method is clearly the most practicable, economical, and expedient and saves approximately $300,000 in administrative costs which would otherwise be incurred in calculating individual bills far the 47 month period in question. Accordingly, we find the average refund plan submitted by the utility to be in the best interests of the customers and one which substantially satisfies our intention of returning overcharges to the customers in the most economical and expedient manner. . Other provisions of the refund plan pertain to unclaimed—zefunds, administrative expenses, and release of bond and are set forth in detail --in that_ p an attar prpt end made a part of this Order. Wi�he exception of the request for release of'b__ , we find these conditions to be reasonable and they are hereby approved. However, we shall not enter an order releasing the bond previously posted with the Commission for the purpose of assuring the refund herein until after the referendum and a successful sale and final closing have been held. we also specifically retain jurisdiction in this docket for such action as may be required in the event the sale is not approved or finalized, or for such other purposes as may be appropriate to satisfy the refund requirement. It is, therefore, ORDERED by the Florida Public Service Commission that the plan of refund submitted by Tamarac Utilities, Inc., which is attached hereto and made a part of this Order be and the same is hereby approved except as to that portion thereof which per- tains to the release of bond. it is further ORDERED that jurisdiction is retained in this docket for such purposes as may be required to satisfy the refund requirement, or in the event the sale is not approved or finalized. By Order of the Florida Public Service Commission,this 27th day of September, 1979. (SEAL) DRA WILLIAM B. DEMILLY COMMISSION CLERK By: f Dep ty Clerk ORDER NO. 9076 ,D!?CKET NO. 780923-WS APPENDIX q�sc'. 1�gI,I0� BEFORE TILE FLORIDA PUBLIC SERVICE COMMISSION IN RE: TAMARAC UTILITIES, INC. ) PLAN FOR CUSTOMER REFUND ) DOCKET NO. 780923-WS ) 1. BASIS FOR THE PLAN OF REFUND Tamarac Utilities, Inc. (dUI) has entered into an Agreement of Purchase and Sale dated July 31, 1979 with the City of Tamarac, pursuant to the terms thereof, and subject to public referendum and a successful sale and final closing, has committed -to estab- lish a fund of $4,000,000.00 for the purpose of refunding to con- sumers, certain utility overcharges arising out of this and pre- vious dockets. The City, as Purchaser, has agreed to administer the plan of refund after the same has been approved by the Florida Public Service Commission. Attached hereto as Exhibit No. l is a copy of Section Six of the Purchase and Sale Agreement dealing with refunds to consumers. This section sets forth the City's assumption of administration of the refund plan after Commission approval. 2. ESTABLISHMENT OF FUND - CONTINGENCIES For the purpose of this plan, a successful final closing of the sale of the utility system must occur in order that TUI will ob- tain the monies necessary to establish the refund. Certain con- tingencies must, therefore, be noted. Closing cannot occur un- less a favorable referendum on the matter by the citizens of Tama- rac has been certified. Such referendum will be held on October 9, 1979. It is anticipated that the results will be known and certi- fied approximately two days thereafter. If the referendum is un- favorable to the proposition, the City is prohibited from conclud- ing the acquisition. A final closing is further contingent upon the City completing financing arrangements in order to raise the acquisition price and ancillary costs. The Agreement further provides that the $4,000,000.00 refund account will be transferred to the City con- currently with the City's actual cash payment of its portion of the purchase price. Under favorable conditions, this may be ac- complished as soon as three days following the certification on a successful referendum. - 3. GROSS REFUND AMOUNT Subject to the approval of this Commission, TUI has determined that the amount to be refunded to customers is $3,995,880.00. This amount has been calculated to include applicable refunds from March 1, 1975 through January 31, 1979, and accordingly, includes the brief period subsequent to December 12, 1979. The refund amount is further inclusive of any and all other revenue collections or adjustments applicable to the subject matter of 40 this and preceding dockets. The refund amount does not include any computation of interest and the submission of this plan requests that no interest, or an interest rate of Ot, be applied to the refund. In support of this theory, TUI anticipates that the refund will be paid to con- sumers in one lump sum, as opposed to the method originally sug- gested by previous Commission Order that the refund be paid over a term of months equal to the period during which the overcharges were collected (47 months). The fund will not be charged for the costs of administration of this plant except that the difference between the refund of $3,995#880 and the fund.of $4,000,000 may be used for adminis- trative costs. PAGE TWO 4. COMPUTATION OF CUSTOMERS REFUND An average refund will be calculated by class of consumer, i.e. residential, multi -family, commercial and irrigation. Within classifications, refunds for water service and sewer service . will be calculated separately. Within the residential classifi- cation, there will be a further breakdown for water refunds, based upon meter size. Sewer refunds will be identified for all resi- dential consumers. Sewer refunds for commercial customers will follow the water refund, in accordance with the rate schedules. Commercial water •refunds will be averaged by meter size, as sub- ass� 8lTS'. --7rr -" e'r, w3te�..re_'funds for irrigation `_meters will�e treated as a separate class. -� Viers within the same classification, or sub -classification, will be treated equally, `r`esuH n in an average: n _fie .und times then ber of 'n on s __ a refund period which that customer was present in the s stem. The average water and sewer refund will then be applied to each consumer present in the system during the refund period, whether currently a consumer or not. The rationale supporting average refunds rests largely with a recognition that of the total refund amount, $774,080 rep..Fesents water overcharges, and lents sewer overcharges.' Since sewer rates (except in the case of co-m—ii Clal) did not vary with water consumption, this method is highly accurate in deter- mining individual refunds. In order to individually compute water refunds on a customer -by -customer basis, monthly, varying with ac- tual consumption,.TUI estimates that in excess of 600,000 indi- vidual bills would have to be analyzed and recomputed, resulting in an estimated cost in excess of $300,000, the bulk of which would be for computer time. An expenditure of this magnitude, in order to accomplish the water refund, is grossly excessive, in light of the amount to be refunded. TUI believes that average water refunds, accounting for the differences in size of water meter (and logically water usage), results in a method which is reasonably accurate, and which will best accomplish the purpose of making the refund at the lowest practical administrative cost. Pursuant to this plan, water customers with meters of varying sizes will receive refundsin ''clifferent emou� 5. METHOD OF REIMBURSEMENT. The method of reimbursement described herein will actually be ac- complished and administered by the City of Tamarac, in accordance with the provisions of Exhibit No. 1 attache ereto. Neverthe- es , 7101 RUBMIEsreimbursement fox Com- mission approval, as required y the Purchase and Sale Agreement and previous Orders of this Commission. A physical review of each customer's billing records will be con- ducted in order to identify both present and prior customers at each service location within the system, and the number of months during the refund period which each customer was present in the system. To each customer's account, the average refund (applica- ble to his class) will be applied for each such month of occupancy and the total applicable refund will be entered and a refund roll will thereby be prepared. When the refund roll is completed, a one lump sum check in the amount of the full applicable refund will be mailed to each custo- mer presently connected to the system. APPENDIX, PAGE 3 �� So PAGE THREE For all prior customers entitled to a portion of the refund, but not now customers of the system, a notice will be prepared and mailed to the last known address of such customer, with instruc- tions to forward the same to a current address, if known. Such notice will be further supported by advertisements in newspapers of general circulation in the area, calling attention to all prior residents of the City of Tamarac during the period March 1, 1975 • to January 1, 1979 that they may be due a refund. Similar notices will be posted at all clubhouses, association buildings and recrea- tional facilities within the City of Tamarac. It is anticipated that this procedure will result in present residents assisting in contacting prior residents not now in the area. In this manner, a reasonable effort will have been made to identify and contact prior customers. UNCLAIMED REFUNDS Unclaimed refunds, after following the foregoing procedures, will remain available on deposit with the City of Tamarac so that the same maybe claimed at a later date. O�p Ar. If refunds remain unclaimed after an extended period of time (es- tablished at the discretion of the City of Tamarac), the unclaimed fund may be utilized by the City for the benefit of the utility system as a whole, or for such other lawful uses, subject to appli- cable requirements of Florida law. 7. ADMINISTRATIVE EXPENSES In accordance with the method of refund anticipated by this plan, estimated administrative costs in computing and processing the re- fund should not exceed $40,000. Accordingly, administrative costs will not be deducted from the fund, thereby leaving the fund fully • available for refund. Administrative expenses incurred by the City in processing the re- fund will be advanced by the City and will be reimbursed from in- terest earned on deposited funds for the period prior to distri- bution, and for the period following initial distribution on any unclaimed funds. 8. RELEASE OF BOND After TUI shall notify the Commission that it has transferred to the City of Tamarac the fuupd of $4,000,000.00, TUI requests of this Commission that an Order be entered closing any open dockets pertaining to the refund, including, but not limited to, instruc- tions for the release of that certain $300,000 bond previously posted with the Commission to assure the refund. 9. REQUEST FOR APPROVAL Subject to the contingencies set forth herein, TUI requests that this Conanission approve this refund plan, both as to amount and method; and further to the administration of the plan by the City of Tamarac, all by appropriate Order of this Commission. Respectfully submitted, TAMARAC UTILITIES, INC. K17a� 43.CJ Richard B. Shapiro Vice President s General Manager . 'DOCKET NO. yT80%23-WS %PPENDIX, PAGE 4 11 "�Y SaEXHIBIT NO. 6. REFUNDS TO CUSTOMERS Seller has advised City that, pursuant to certain orders of the Public Service Commission. it 1s required to . refund previously collected revenues. City has advised Seller that the provision for said refunds must be satisfactorily made concurrently with the closing on bonds. with the and that said revenues will be refunded in an orderly fashion consistent with a plan approved by the Florida Public Service Commission. Seller agrees to set aside in escrow, an amount from its purchase price to be set by the Public Service Commission not to exceed $4,000,000.00 to include administra- tive costs, and any interest and any other revenue corrections for the purpose of accomplishing such refund. In the event that Seller is required to purchase the BAN at closing. then said refund escrow shall only be established when validated 40 1979 water and Sewer Revenue Bonds are issued and sold and said BAN is funded and retired. City agrees to act as disburs- ing agent for the refunds after closing to those determined to be entitled to same. Seller has advised City that subsequent to the signing of this Agreement, Seller intends to appear before the Florida Public Service Commission and seek acknowledgment of a refund plan and acknowledgment of the City's agreement to assume such liability as the full and complete discharge of Seller's obligation to such claims of refund from those entitled to same. if the cost of refund as determined by the Public Service Commission exceeds $4,000.000.00. Seller reserves and insists upon the absolute total right to declare this Agreement null and void. 20.