1 1 BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION 2 3 .................................. 4 In the Matter of : DOCKET NO. 950195-WS 5 Application for a rate increase : and increase in service 6 availability charges by SOUTHERN : STATES UTILITIES, INC. for 7 Orange-Osceola Utilities, Inc. in Osceola County, and in 8 Bradford, Brevard, Charlotte, Citrus, Clay, Collier, Duval, 9 Hernando, Highlands, Hillsborough, Lake, Lee, Marion, : 10 Martin, Nassau, Orange, Osceola, : Pasco, Polk, Putnam, Seminole, 11 St. Johns, St. Lucie, Volusia and: Washington Counties. 12 __-_______________________________ 13 14 PROCEEDINGS: OCA= SERVICE HEARING 15 BEFORE : COMMISSIONER J. TERRY DEASON 16 COMMISSIONER JULIA L. JOHNSON COMMISSIONER DIANE K. KIESLING 17 COMMISSIONER JOE GARCIA 18 DATE : Thursday, January 25, 1996 19 TIME: Commenced at 1O:OO a.m. 20 Concluded at 1:00 p.m. 21 PLACE : Ocala Hilton Ballroom 3600 S. W. 36th Avenue 22 Ocala, Florida 23 REPORTED BY: SYDNEY C. SILVA, CSR, RPR 24 Official Commission Reporter 590 25 DOCUMENT NUMREF ATE FLORIDA PUBLIC SERVICE COMMISSION i 10s JAN 1% FPSC-REGORDS/REPORTING 2 1 APPEARANCES: 2 MATTHEW FEIL, 1000 Color Place, Apopka, 3 Florida, 32703, Telephone No. (407) 880-0058, 4 appearing on behalf of Southern States Utilities, Inc. 5 RALPH JAEGER, Florida Public Service 6 Commission, Division of Legal Services, 2540 Shumard 7 Oak Boulevard, Tallahassee, Florida, 32399-0870, 8 Telephone No. (904) 413-6199, appearing on behalf of 9 the Commission Staff. 10 JACK SHREVE, Public Counsel, and CHARLES J. 11 BECK, Associate Public Counsel, Office of Public 12 Counsel, 111 West Madison Street, Room 812, 13 Tallahassee, Florida 32399-1400, Telephone No. (904) 14 488-9330, appearing on behalf of the Citisens of the 15 State of Florida. 16 17 18 19 20 21 22 23 24 25 FLORIDA PUBLIC SERVICE COMMISSION 590 3 1 INDEX 2 MISCELLANEOUS 3 ITEM PAGE NO. 4 Opening Statement of Mr. Feil 9 5 Opening Statement by Mr. Shreve 14 6 CERTIFICATE OF REPORTER 124 7 8 9 10 WITNESSES 11 NAME PAGE NO. 12 FRANK J. SPARACIA 13 Direct Statement 20 14 WILLIAM GYPERT 15 Direct Statement 29 16 JOE NETTESHEIM 17 Direct Statement 38 18 JOAN DeCARLI 19 Direct Statement 42 20 LARRY BRIDEAU 21 Direct Statement 44 22 Direct Examination By Mr. Shreve 46 23 24 25 FLORIDA PUBLIC SERVICE COMMISSION 590 4 1 WITNESSES (continued) 2 JIM HOLTZ 3 Direct Statement 47 4 MILDRED MUSH0 5 Direct Statement 51 Direct Examination By Mr. Shreve 54 6 RAY REZUTKA 7 Direct Statement 55 a Direct Examination By Mr. Shreve 59 9 KARL NEUFELD io Direct Statement 63 Direct Examination By Mr. Shreve 70 11 EDWIN C. NIEMAN 12 Direct Statement 71 13 DALE DANIELSEN 14 Direct Statement 72 15 JAMES A. ANDREW It Direct statement 79 17 CARL V. PUGLISI le Direct Statement 84 1s JOSEPH GOODWIN 2c Direct statement 90 21 MELVIN OLLMAN 22 Direct Statement 94 22 24 25 FLORIDA PUBLIC SERVICE COMMISSION 5904 5 1 WITNESSES (Continued) 2 3 RICHARD G. WILLIAMS 4 Direct Statement 102 Direct Examination By Mr. Shreve 110 5 ROBERT ALLARD 6 Direct Statement 112 7 FRANK J. SPARACIA 8 Direct Statement 118 9 10 11 12 EXHIBITS 13 NUMBER ID. ADMTD. 14 34 (Company) Proof of Publication 9 and Affidavit of Noticing 15 16 17 18 19 20 21 22 23 24 25 6 1 PROCEEDINGS 2 (Hearing convened at 1O:OO a.m.) 3 COMMISSIONER DEASON: Ladies and gentlemen, 4 il E I could have your attention, please, we'll go ahead 5 aiid call the hearing to order. We'll begin by having 6 tl le notice read. 7 MR. JAEGER: Pursuant to notice, this time a ai nd place has been designated for a customer service 9 hc 3aring in Docket No. 950495-WS, Application for Rate 1c I1 ncrease and Increase in Service Availability Charges 11 b!q Southern States utilities, Incorporated. 12 COMMISSIONER DEASON: Thank you. Take 12 ai ppearances. Mr. Shreve, we'll start with you, 14 P:lease. 1E MR. SHREVE: Jack Shreve and Charlie Beck, 1t 0ffice of Public Counsel, representing the Citizens of 1; t:he state of Florida and the customers of Southern 1t S'tates in opposition to Southern States rate increase. 1: MR. JAEGER: Ralph Jaeger on behalf of the 2( C omission Staff. 2540 Shumard Oak Boulevard, 21 Tallahassee, Florida. 2; MR. FEIL: Matthew Feil, 1000 Color Place, 2: Apopka, Florida 32703, on behalf of the Southern 21 S tates Utilities, Inc. 2! COMMISSIONER DEASON: Ladies and gentlemen, FLORIDA PUBLIC SERVICE COMMISSION 7 1 let me take this opportunity to welcome you to this 2 morning's hearing. In way of introduction, my name is 3 Terry Deason, I will be chairing this hearing today. 4 Seated on my near left is Commissioner Julia Johnson. 5 Seated on my far left is Commissioner Joe Garcia. And 6 seated to my right is Commissioner Diane Kiesling. 7 We also have a number of Staff persons here 8 today. I would like to introduce those, as well. 9 Mr. Jaeger, our Staff attorney, just introduced 10 himself when he made his appearance. Seated to his 11 left is Mr. Troy Rendell; seated to his right is 12 Mr. Marshall Willis; and seated behind him is Mr. Ted 13 Davis. They're with the Professional Staff of the 14 Public Service Commission. 15 I would invite you if you have any questions 16 that if you can come up and ask them at some 17 convenient time, they would be more than glad to take 18 a moment and help you with any question or problem 19 that you may have. 20 The purpose of the hearing today is to hear 21 from you, the customers, concerning Southern States 22 Utilities' rate increase request which is currently 23 pending before the Florida Public Service Commission. 24 As you entered the room today, you were given a blue 25 information sheet. This should provide with you some FLORIDA PUBLIC SERVICE COMMISSION' 59Q 8 1 background information on the nature of the case that 2 is pending and the purpose of today's hearing. 3 The procedure that we're going to follow 4 today is that when we dispose of the preliminaries, -E I'm going to allow Mr. Shreve and the Company to make c a brief opening statement. Following the brief 7 opening statement, I will ask all those persons from E the public who wish to testify to stand and be sworn 5 in. 1C This is necessary so your testimony will 11 become a part of the official proceedings. This case 1; is being is reported by our Official Court Reporter 1: and the information which we gather here today will be 1r part of the record and will be evidence upon which the l! Commission can rely in making its ultimate decision in 1( this case. 1: When your name is called -- and Mr. Shreve 18 will be calling the persons' names to come forward. 15 when your name is called, will you please come forward 2( to the podium in front and begin by giving us your 2: name and address and the system, the Southern States 2: system, from which you receive service. 2: If you believe it would be helpful to the 21 court reporter, you may wish to spell your name so 2! that it is accurate in the record. FLORIDA PUBLIC SERVICE COMMISSION 9 1 After you complete your statement, wait for 2 just a moment, there may be a few clarifying questions 3 concerning your statement. 4 With that, I'm going to ask that we go ahead 5 and begin with opening statements unless there are any 6 preliminary matters we need to address. Any of the 7 parties have any preliminary matters? 8 MR. FEIL: Commissioners, we do have the 9 Proof of Publication and Affidavit of Noticing: if you 10 would like to have that identified now, we can do 11 that. 12 COMMISSIONER DEASON: That would be fine. 13 That will be identified as Exhibit No. 34. Do you 14 have a copy of that to provide to the court reporter? 15 MR. FEIL: Yes, sir, I do. 16 (Exhibit No. 34 marked for identification.) 17 COMMISSIONER DEASON: Thank you. 18 We will begin with the Company's opening 19 statement followed by Mr. Shreve's opening statement. 20 MR. FEIL: Thank you, Commissioner. 21 My name is Matthew Feil: I'm here on behalf 22 of Southern States Utilities. Southern States filed 23 this rate case because it has not been able to earn a 24 fair rate of return on the investment made in the 25 utility plant from the rates that it is currently FLORIDA PUBLIC SERVICE COMMISSION 10 1 collecting. 2 Are you able to hear me? 3 Since SSU's last consolidated rate case, SSU 4 has invested and will invest an additional $100 5 million in utility plant. The rates set in SSU's last 6 consolidated rate case were based on 1991 information, 7 so SSU's additional investments since that time, 8 roughly $20 million a year through 1996, were not 9 considered. 10 SSU submitted information to the Commission 11 showing that in 1994 SSU earned less than a 3% return 12 on its investment through 1994. Because of the plant 13 additions I just mentioned, roughly $20 million a 14 year, that rate of return will disappear in 1995 and 15 in 1996 and SSU will lose money. 1C You could ask why in light of these poor li returns SSU has continued to make plant additions? 1E The answer in large part is that SSU did not have a 15 choice.