Q & A with Jack Boyer – April 5, 2014

Upcoming Service & Fee Changes

April 5, 2014

LGPOA’s Questions to Jack Boyer of Little Gasparilla Water Utility, Inc. on 4/5/14 regarding future changes in service and fees for water on the island.

Question:

1) Will the Charlotte County Utilities (“CCU”) water completely replace all the water currently produced by your Little Gasparilla Water Utility (“LGWU”) and supplied to current customers (retiring LGWU’s production facilities)?

Answer:

1) Yes on replacing Production. Facilities we will need for a variety of reasons, such as booster pumps, Cl2 injection system, field equipment, repair supplies and more important rest room. We will also for the time being keeping our well system permitted, because it will be impossible to ever permit in the future. As far as the manufacturing equipment, we will most likely dismantle.

Question:

2 ) Will LGWU’s purchase agreement with CCU provide LGWU with the supply capacity to serve all properties on LGI?

Answer:

2) Yes, In our interconnect agreement with CCU, on pg. 4, Rates Fees & Charges; It states “demand at build out of 175,000 GPD” This number is calculated at 225GPD for 777 potential ERC on build out of LGI. This number is a safe conservative number we feel.

Question:

3) {If the answer to #2 is “yes”] Will Charlotte County [“CC] Ordinance 3-8-18 require LGWU to extend lines to serve all LGI properties desiring service [e. g., LGI’s north end]?

Answer:

3) Yes, because I presently have 6 plus requests for service. LGWU has to provide service or give up that service area.

Question:

4) As we understand LGWU’s contract with CC, LGWU will be simply a bulk buyer from CCU, and only LGWU will be a customer of CCU subject to the pricing and other provisions of CCU under the contract. The water customers on LGI will remain customers only of LGWU, subject only to LGWU’s pricing and other policies, and will have no relationship of any kind with CCU. Is that correct?

Answer:

4) This is true, but remember, Charlotte County (not CCU) set the rules that LGWU must abide by.

Question:

5) (If the answer to #3 is “yes”) will that effectively require LGWU to use eminent domain power to lay pipes across the property of uncooperative owners in order to reach all properties desiring service (e.g., LGI’s north end)?

Answer:

5) In 27 years LGWU has NEVER had to resort to this extreme measure and I would like to keep it that way! Please remember “properties desiring service” If a property request service inside our CA them we must provide service. Eminent domain is only as a LAST resort!! This law is Florida Statue F>S> 361

Question:

6) In view of the fact that Lemon Bay is a marine preserve and an “outstanding Florida water” (from Gasparilla Pass to Stump Pass), how do you plan to deal with Florida DEP Rule 18.20.004(1)(10)(j) which states: “The use of state-owned lands for the purpose of providing private or public water supply to islands where such water supply did not previously exist shall be prohibited.”

Answer:

6) Water previously does exist with a public utility. LGWU Just like FPL. DEP, in our sit down meeting had no problems with a Submerged Land Lease. LGWU will shortly have our application complete. I will also bring a set of drawings for this interconnects.

Question:

7) (If the answer to #2 and #3 is “yes”) Will CC Ordinances 3-8-41 and 3-8-42 require that all homes on LGI connect to LGWU’s water lines, pay LGWU’s $4,500 connection fee, pay LGWU’s minimum monthly meter fee (whether any water is used or not), and discontinue the use of any on-site water system even if the homeowner prefers his/her own on-site system in which the owner has a substantial investment and which produces water that would pass any applicable health standards?

Answer:

7) Yes on 3-8-41 but as far as 3-8-42 it would be better for redundancy if cisterns could stay. LGWU will look into CC 3-8-23 waiver.

Question:

8) (If the answer to #7 is “yes”) CC Ordinance 3-8-23 provides that “Utilities may request a waiver of specific portions of these rules . . . .” Are you willing to request that CC waive the application of 3-8-41 and 3-8-42 to those LGI homeowners who have already invested in their own on-site water production and treatment facilities and who do not wish to connect to LGWU?

Answer:

8) No on a waiver for 3-8- 41 & 3-8-42 because of the responsibility to our existing customers. Spread the cost. Something to consider might be the Time Line?

Question:

9) You have stated that any LGI home that connects to LGWU prior to the start of your purchases of CCU water will be charged the current LGWU connection fee of $4,500, but one who connects after LGWU begins purchasing CCU water will be charged the LGWU connection fee plus an additional LGWU connection fee of approximately $1,700. Has that additional LGWU connection fee been approved as “fair and reasonable” by the CC Board after a public hearing as required by CC Ordinance 3-8-18 and subsequent sections?

Answer:

9) This is a MISUNDERSTANDING. LGWU’s present connection fee is $4,500 and has not changed for over 14 years. LGWU is presently going through a SARC (staff assisted rate case) with the FPSC. LGWU has requested the PSC to allow the additional CCU fee of $1,780 be added onto the $4,500. NO action will be taken until the Rate Case is complete in August, if then.

Question:

10) As we understand LGWU’s approved $4,500 connection fee, it is intended in part to cover the costs of expanding LGWU production facilities to serve the additional demand. As we understand it, $1,700 is the amount LGWU has agreed to pay CCU under the contract for each new LGWU customer to cover the capital cost of expanding CCU’s production facilities to serve LGWU. Since adding new customers will no longer require expansion of LGWU’s production facilities, the $1,700 that LGWU will pay CCU for each new LGWU customer is a substitute for investment in LGWU’s production facilities. Thus, the $1,700 facility expansion cost is already included in LGWU’s current $4,500 connection fee. Is our understanding correct?

Answer:

10) LGWU will be spending close to another $1,000,000 in capital improvements and would like to recover this in the future. This is in the FPSC’s hands and truthfully I am still learning. I just need to make sure that LGWU is financially stable. So say there are 100 possible new ERC and everyone decides to jump on board before we interconnect with CCU LGWU will receive $450,000 minus expenses of $50,000 for the installation. So $400,000 net towards debt. After we connect to CCU; CCU will receive $178,000 and LGWU will receive $228,000. So what is the best for LGWU and its Customers? Give CCU $178,000? And still another possibility is the FPSC will adjust LGWU’s impact fee to $6,280.

Jack Boyer
941-626-8294

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