I'RATT- 18 CHARLOTTE STREET PHONE: 843.727.2200 THOMAS I WALKER CHARLESTON, SC 29403 FAX: 843.727.2238 ATTORNEYS AT LAW PO ORAWER 22247 paoFass(SHAL assoc(ST(oo WWW.P. TW.COM CHARLESTON, SC 29413.2241 February 12, 2016 E-MAIL:gtwep-tw.corn DIRECT DIAL: 843.727.22O8 FAX: 843.727.2231 VIA ELECTRONIC FILING Jocelyn D. Boyd Chief Clerk and Administrator Public Service Commission 101 Executive Center Drive, Suite 100 Columbia, SC 29210 Re: A lication of Kiawah Island Utilit Inc. Our File No.: 5435.002 Dear Ms. Boyd: Enclosed for filing please find the Application of Kiawah Island Utility, Inc. for Approval to Enter into Amended and Restated Utility Service Agreement, for Expedited Consideration and Waiver of Hearing, Certificate of Service, and Docket Cover Sheet. A docket number has not yet been assigned. Thank you for processing this Application at the Commission's earliest convenience. With kind regards, I am, Sincerely, PRATT-THOMAS VVALKER, P.A. G. Trenholm Walker GTVNnjd Enclosures (As noted) c: F. David Butler, Esq. C. Dukes Scott, Esq. Dawn Hipp Shannon Hudson, Esq. Andrew Bateman, Esq. Becky Dennis (By Email) Townsend Clarkson (By Email) E. oouotas FRavTTHOMas ( o. vosouo(M waLKER I w. aooREw oowoER, 38. L. ausvso K. (388 (uuosav sMnuvaocEv (sc, Nc( I THOMas H. Hssss (sc, oa( HIN w. FREEMAN (sc, ca) THoMAO P. SREOOETTE, 3R. KATHLEEN ( (sc, Usvu ( FowLER M08oc I 30HN P. LINTQN, 3R. Jocelyn Boyd RE: KIIJ Water Rate Increase February 12, 2016 Page 2 Patrick Melton (By Email) H. C. "Trey" Howell, III, Esq. (By Email) Charles L. A. Terrini, Esq. (By Email) BEFORE THE PUBLIC SERVICE COMMISSION OF SOUTH CAROLINA IN RE: ) ) Application of Kiawah Island ) APPLICATION FOR APPROVAL Utility, Inc., for Approval to ) TO ENTER INTO AMENDED AND Enter Amended and Restated ) RESTATED UTILITY SERVICE Utility Service Agreement, ) AGREEMENT, FOR EXPEDITED for Expedited Consideration, and ) CONSIDERATION, AND Waiver of Hearing ) WAIVER OF HEARING _____________________________) Kiawah Island Utility, Inc. (“Applicant” or “KIU”) submits this Application for approval of an Amended and Restated Utility Service Agreement with Kiawah Resort Associates, L.P. (“KRA”), the master developer of Kiawah Island, and for expedited disposition of the Application. KIU files this Application pursuant to 10 S.C. Code Regs. R. 103-743 and R. 103-541 (Supp. 2012) and the Commission’s Rules of Practice and Procedure. In support of its request, the Applicant respectfully submits: 1. The Applicant provides water and wastewater services for compensation to customers located in its approved service area on Kiawah Island, Charleston County, South Carolina. The Applicant is a “public utility” under the terms of S.C. Code Ann. §58-5-10(4) (Supp. 2015), and subject to the regulatory jurisdiction of the Commission. 2. The rates and charges of the Applicant are regulated and subject to the approval of the Commission. The current rates and charges for Applicant’s water and wastewater service were approved by the Commission in Docket Number 2011-317-WS by Order Number 2012-098, dated February 8, 1 2012, as most recently modified by Order 2015-864 that adjusted the rates for water to pass through an increase in the bulk water charges by St. Johns Water Company. THE UTILITY SERVICE AGREEMENTS 3. On July 29, 1994, KIU and KRA entered the first Utility Service Agreement. At that time KIU was wholly owned by KRA. The agreement documented the mutually dependent relationship between the developer (KRA) and the utility (KIU) and outlined their respective obligations, including KIU’s commitment to render timely service to KRA and have adequate water and sewer capacity for the projected development on Kiawah Island. 4. On June 6, 1996, KRA and KIU terminated the first Utility Service Agreement. 5. On July 8, 1997, KIU and KRA entered the second Utility Service Agreement for the same purposes as the first Utility Service Agreement with largely the same terms as the first Utility Service Agreement. 6. KRA and KIU entered into the First Amendment to Utility Service Agreement on November 26, 1997, and the Second Amendment to Utility Service Agreement on May 21, 1999. 7. Numerous changes have occurred over the course of the last nineteen years since the second Utility Service Agreement was entered. 8. In 2014, the Commission approved the transfer of stock from KRA to KIU Holdings, LLC in Orders No. 2013-107 and 2014-549. 2 9. KIU and KRA now seek to update their agreement to take into account numerous changes in conditions since 1997 and slightly modify their respective obligations by entering an amended and restated agreement, copy attached as Exhibit 1 hereto. 10. Regulations 103-541 and 103-743 of the South Carolina Code of Regulations provide that an Applicant must seek the Commission’s approval of contracts or agreements which “impact, pertain to, or effect …” its “ability to provide water service [sewer service], including but not limited to treatment of said water . .” 10 S.C. Code Regs. R. 103-743 (Supp. 2012). 11. The proposed new Utility Service Agreement is mutually beneficial to KIU and KRA as well as the customers and future customers of KIU by assuring that KIU will have adequate water and sewer capacity as residential and other construction occurs within the KIU service area. 12. KIU and KRA believe that the terms of the proposed Amended and Restated Utility Service Agreement are reasonable and fair. The terms contain safeguards for both KIU and KRA and do not impose obligations on either that are radically different from the Utility Service Agreements between them that have been in effect since 1994. 13. KIU’s proposed replacement Amended and Restated Utility Service Agreement is for lawful purposes within its corporate purpose, is reasonably necessary and appropriate for and consistent with the proper performance 3 of its services to KRA and the public, and will not impair KIU’s ability to perform those services. 14. Based upon the foregoing, KIU submits it is in the best interests of the customers of the Applicant and the public that this Commission approve the Amended and Restated Utility Service Agreement. Accordingly, the Applicant submits that the public convenience and necessity will be served by the Commission’s approval of this request. REQUEST FOR EXPEDITED CONSIDERATION AND WAIVER OF HEARING 15. Time is of the essence with respect to the Amended and Restated Utility Service Agreement, and KIU requests that the Commission waive a hearing and grant expedited consideration of this matter. 16. The South Carolina Office of Regulatory Staff is being served with a copy of this Application. WHEREFORE, having fully set forth its Application, KIU prays that review of the within Application be expedited, that the Commission issue its directive and order approving the Amended and Restated Utility Service Agreement to replace the one that has been in place since 1997, and that KIU be granted such other and further relief as the Commission may deem just and proper. Respectfully submitted. s/ G.Trenholm Walker G. Trenholm Walker PRATT-THOMAS WALKER, P.A. 16 Charlotte Street 4 Charleston, SC 29403 (843) 727-2208 [email protected] ATTORNEYS FOR KIAWAH ISLAND UTILITY, INC. February 12, 2016 Charleston, South Carolina 5 EXHIBIT 1 STATE OF SOUTH CAROLINA ) AMENDED AND RESTATED ) UTILITY SERVICE AGREEMENT COUNTY OF CHARLESTON ) This Amended and Restated Utility Service Agreement (this "Agreement") is made and entered into this _____ day of February, 2016, to be effective as of the Effective Date (as defined herein), by and between Kiawah Resort Associates, L.P., a Delaware limited partnership, and Kiawah Island Utility, Inc., a South Carolina corporation. W I T N E S S E T H Kiawah Resort Associates, L.P. ("KRA"), a Delaware limited partnership, and Kiawah Island Utility, Inc. ("KIU"), a South Carolina corporation, entered into that certain Utility Service Agreement (as heretofore amended, the “1997 Agreement”) on or about June 5, 1997, on their separate behalves and on behalf of their successors and assigns, and recorded a Memorandum of the 1997 Agreement in the RMC Office for Charleston County at Book U 286, Page 740. KRA and KIU entered into that certain First Amendment to Utility Service Agreement on November 26, 1997, and that certain Second Amendment to Utility Service Agreement on May 21, 1999. KRA and its Affiliates own the unsold remainder of that certain real property comprising approximately 2,000 acres of undeveloped real property more particularly described in Exhibit A attached hereto (the "Property") located on Kiawah Island, South Carolina (references in this Agreement to KRA shall be deemed to include those Affiliates of KRA that own any portion of the Property). For purposes of this Agreement, “Affiliate” means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of another Person or any subsidiary or any corporation of which such other Person and its subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in the definition of “Affiliate”, (i) 2105-1009 / 449329.2 “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and (ii) “Person” means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, and a government or agency or political subdivision thereof.