STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
Harbor Ridge Utilities, Inc. :
Petition pursuant to Section 9-220.2 of :
the Illinois Public Utilities Act and 83 : 11-0256
Illinois Administrative Code 200 for the :
Approval of the Annual Reconciliation :
for and the resulting change in the :
surcharge for purchased sewer. :
By the Commission:
On March 15, 2011, Harbor Ridge Utilities, Inc. (“Petitioner”) filed a petition pursuant to Section 9-220.2 of the Public Utilities Act (220 ILCS 5/9-220.2) (the “Act”), requesting Illinois Commerce Commission (“Commission”) approval of the annual reconciliation of revenues collected and costs incurred through Petitioner's surcharge for purchased sewage treatment.
Pursuant to notice given in accordance with the rules and regulations of the Commission, a pre-hearing conference was held on April 18, 2011 before a duly authorized Administrative Law Judge (“ALJ”) at the Commission’s offices in Chicago, Illinois. An evidentiary hearing was held on August 30, 2011. Petitioner appeared by counsel and presented the testimony of Dhwani Mehta, Regulatory Accountant for Utilities, Inc. (Petitioner Ex. 1.0). Staff presented the testimony of Mary H. Everson of the Financial Analysis Division. (Staff Ex. 1.0). At the conclusion of the hearing on August 30, 2011, the ALJ admitted the testimony into evidence and marked this matter “Heard and Taken”.
There were no petitions for leave to intervene in this Docket and there are no contested issues.
Section 9-220.2(a) of the Act provides in relevant part that the Commission may authorize a sewer utility to file a surcharge that adjusts rates and charges to provide for recovery of the cost of purchased sewage treatment. Section 9-220.2(c) states:
On a periodic basis, the Commission shall initiate hearings to reconcile amounts collected under each surcharge authorized pursuant to this Section with the actual prudently incurred costs 11-0256
recoverable for each annual period during which the surcharge was in effect.
Section 9-220.2 is implemented in 83 Ill. Adm. Code 655, “Purchased Water and Sewer Treatment Surcharges”. Part 655.40 contains formulas to be used in calculating the amount of the surcharge to be assessed. Provisions for an annual reconciliation are set out in Part 655.50.
Petitioner provides sewer service to approximately 300 customers in Lake County, Illinois. Petitioner purchases its sewer service from Lake County Public Works (“Lake County”) and passes this cost on to its customers through a purchased sewer surcharge authorized under Part 655. The current surcharge for purchased sewage treatment was established in an information sheet filed with the Commission with an effective date of April 1, 2011.
Consistent with 83 Ill. Adm. Code 655.50(d), the reconciliation period began January 1, 2010 and ended December 31, 2010. The reconciliation compares actual costs of purchased sewage treatment to revenue collected through the surcharge. Any difference between these amounts is used as a reconciliation component in a revised surcharge calculation, and is recovered or refunded in a subsequent reconciliation period.
I. Position of the Parties
Ms. Mehta described the schedules that are required by Section 655.50(b) and are attached to the petition. (Petitioner Ex. 1.0 at 3). These schedules include a calculation of the “R” component necessary to adjust actual revenue collected under the purchased sewage treatment surcharge to the actual level of prudently-incurred purchased sewage treatment costs for the reconciliation year. According to Petitioner’s schedules, the total cost of the sewage treatment purchased from Lake County in the reconciliation period was $50,647, derived from monthly invoices received from Lake County. Petitioner’s schedules list the total revenue received from the surcharge in the reconciliation period as $59,322, resulting in an over-collection amount equal to $8,675 for the 2010 reconciliation year. The prior year’s reconciliation component was added to the cummulative over-recovered reconciliation component of $3,496, resulting in a cumulative Factor R over-collection amount equal to $12,171, to be refunded to customers.
As noted above, under Section 9-220.2(c) of the Act, only prudently incurred costs are recoverable through a surcharge under Part 655. Ms. Mehta testified that there are no other systems in the area that could provide sewer treatment service to Petitioner on a more cost-effective basis than that provided by the Lake County system. She also said it would be capital-intensive, and uneconomical, for Petitioner to build its own waste water treatment plant. In the witness’ opinion, the purchase of sewage 11-0256
treatment from Lake County, by means of the existing interconnection and infrastructure, represents the most cost-effective means of supplying the Petitioner customers. (Petitioner Ex. 1.0 at 5).
Ms. Everson reviewed Petitioner’s filing and proposed no adjustment to any of Petitioner’s 2010 purchased sewer treatment costs or recoveries. (Staff Ex. 1.0 at 3). Schedule 1.2 shows the reconciliation activity of the purchased sewer surcharge from its inception through the end of the 2010 reconciliation year. Schedule 1.1 identifies the components of Petitioner’s annual reconciliation for 2010 calculated by Staff and compares those components against the same elements calculated by Petitioner. As shown in Schedule 1.1 and in the Appendix filed on the Commission’s e-docket system, Petitioner over-collected its purchased sewage treatment surcharge for 2010. Staff testified that Petitioner has properly reflected its cumulative over-collection in its 2011 sewage treatment surcharge rate.
II. Commission Analysis and Conclusions
The Commission’s review of the record in this matter discloses that Petitioner’s expenditures for the purchase of sewage treatment during the reconciliation period ending December 31, 2010 were reasonable and prudent. For the reasons explained by Staff, the purchased sewage treatment surcharge reconciliation calculations, as well as the refund of the net over-recovery amount shown in the Appendix filed on the Commission’s e-docket system and proposed by Petitioner, are reasonable and should be approved.
III. Findings and Ordering Paragraphs
Having reviewed the entire record herein and being fully advised in the premises, the Commission is of the opinion and finds that:
(1) Petitioner is an Illinois corporation engaged in the provision of sewer service to the public in Illinois, and as such, is a public utility within the meaning of Section 3-105 of the Act (220 ILCS 5/3-105);
(2) the Commission has jurisdiction over Petitioner and over the subject matter of this proceeding;
(3) the facts recited and conclusions reached in the prefatory portion of this Order are supported by the evidence and are hereby adopted as findings of fact;
(4) for calendar year 2010, Petitioner’s purchased sewage treatment surcharge reconciliation shall be approved as shown in the Appendix attached hereto; prudently purchased sewage treatment costs were $50,467, and collections were $59,322, producing an over-recovery of 11-0256
$8,675; when this amount is combined with the cumulative over-recovery balance from prior periods of $3,496, the resulting 2010 cumulative Factor R to be refunded to customers equals $12,171;
(5) Petitioner refunded the over-recovery balance in its 2011 purchased sewer surcharge to its customers in accordance with the provisions of 83 Ill. Adm. Code 655.
IT IS THEREFORE ORDERED that the reconciliation of purchased sewage treatment costs and revenues submitted by Harbor Ridge Utilities, Inc. for the reconciliation period January 1, 2010 through December 31, 2010, is hereby approved and reflected in the Appendix filed on the Commission’s e-docket system.
IT IS FURTHER ORDERED that any objections or motions not otherwise specifically ruled upon are hereby disposed of in a manner consistent with the ultimate conclusions contained herein.
IT IS FURTHER ORDERED that, subject to the provisions of Section 10-113 of the Act and 83 Ill. Adm. Code 200.880, this Order is final; it is not subject to the Administrative Review Law.
By order of the Commission this 22nd day of November, 2011.
(SIGNED) DOUGLAS P. SCOTT
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