HomeMy WebLinkAboutPO 6693: APPROVAL TO I,PLEMENT RATES FOR A NEW FEDERAL TAX CREDIT RIDER P.O. No. 6693
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ORDINANCE NO.
ORDINANCE OF THE CITY OF PORT ARTHUR, TEXAS
APPROVAL TO IMPLEMENT THE RATES FOR A NEW
FEDERAL TAX CREDIT RIDER ("FTCCR") PROPOSED BY
AQUA TEXAS, INC. AQUA UTILITIES, INC. (INCLUDING ITS
SUBSIDIARIES HARPER WATER COMPANY, INC. AND
KERRVILLE SOUTH WATER COMPANY, INC.) AND ACQUA
DEVELOPMENT, INC. d/b/a AQUA TEXAS FILING MADE WITH
THE CITY ON APRIL 4, 2018; FINDING THAT THE MEETING
COMPLIES WITH THE OPEN MEETINGS ACT; MAKING
OTHER FINDINGS AND PROVISIONS RELATED TO THE
SUBJECT,AND DECLARING AN EFFECTIVE DATE
WHEREAS, on or about April 4, 2018, Aqua Texas, Inc. Aqua Utilities, Inc.
(including its subsidiaries Harper Water Company, Inc. and Kerrville South Water
Company, Inc.) and Aqua Development, Inc. d/b/a Aqua Texas ("Aqua Texas") filed a
proposed rate adjustment, Federal Tax Change Credit Rider(FTCCR")for the Aqua Texas
Service Area within the City of Port Arthur("City")to decrease water/sewer utility service
rates in the Port Arthur,Texas Service Area, a similar filing for water/sewer rate reduction
has been filed with the Public Utility Commission of Texas ("Commission") pursuant to
16 Texas Administrative Code Section 24.21(b)(2)(A)(v); and
WHEREAS,the Company proposed an effective date of May 1, 2018, for the rate
increase; and
WHEREAS, City has exclusive original jurisdiction over the rates, operations and
services of a water utility in areas in the municipality pursuant to Texas Water Code Section
13.082; and
WHEREAS, In December 2017 the Tax Cut and Jobs Act was passed lowering
corporate income tax rates from 35%to 21%effective January 1, 2018; and
WHEREAS, Aqua Texas proposes to pass the tax savings through to customers
through a FTCCR and water and sewer customers will receive bill reductions of 6.38%and
6.94% respectively in 2018 with slightly lower bill reductions of 4.58% water and 4.99&
sewer in 2019 and beyond; and
WHEREAS, the City finds that the Aqua proposed FTCCR tariff is necessary to
pass the immediate impacts of the federal income tax reductions to customers.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF PORT ARTHUR, TEXAS, THAT:
Section 1. That the statement and findings set out in the preamble to this
ordinance are hereby in all things approved and adopted.
Section 2. The effective date of the Aqua Texas proposed FTCCR tariff rate
decrease for its water and sewer customers within the City is May 1, 2018.
Section 3. The City finds that the FTCCR rates proposed by Aqua Texas filing
is a minor tariff change,are reasonable, and that the FTCCR rates and requested tariff page
additions included within Exhibit A reflecting same are hereby approved and will become
effective for bills rendered on or after May 1, 2018 to customers within the City.
Section 4. The meeting at which the ordinance was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government
Code, Chapter 551.
Section 5. This Ordinance shall become effective from and after its passage.
READ, ADOPTED AND APPROVED this day of A. D..
2018 at a Regular meeting of the City Council of the City of Port Arthur, Texas by the
following vote: AYES:
Mayor:
Councilmembers:
NOES:
Derrick Ford Freeman,
MAYOR
ATTEST:
Sherri Bellard,
CITY SECRETARY
APPROVED AS TO FORM:
Val Tizeno,
CITY ATTORNEY
APPROVED FOR ADMINISTRATION:
Harvey Robinson,
INTERIM CITY MANAGER
Aqua Texas — FTCCR (Credit Rider)
City of Port Arthur
System: Countryside Estates In-City Customers Impacted: 12
Location: On Viterbo Rd. just Northwest of the airport. See maps included as Attachment 1.
What: This is a credit to the customer's bill as a result of the Tax Cuts and Jobs Act of
2017. Corporate tax rates were changed from 35% to 21%. This tax savings will
go back to the customer as a credit on the customer's bill.
The Credit will be described as:
1. FTCCR Water Credit Rider—Calculated as a percent of water services
that include the following charges and the 1% Regulatory Assessment
Fee (RAF)
a. Current Water Charges
b. Regional Pass-Through Gallonage Charge
2. FTCCR Sewer Credit Rider — Calculated as a percent of water
services that include the following charges and the 1% Regulatory
Assessment Fee (RAF)
a. Current Sewer Charges
These credits will be effective for bills rendered on or after May 1. 2018 until changed
(reduced) on January 1, 2019. Thereafter, the credit riders will remain in effect until we
file the next rate application.
Credit for Services will be according to the schedule below.
May 1, 2018 through Dec 31, 2018 Jan 1, 2019 until changed by rate application
Water Credit: 6.38% Water Credit: 4.58%
Sewer Credit: 6.94% Sewer Credit: 4.99%
The credit rider was calculated based on the Aqua Texas 2018 budget. The letter and
documentation previously sent in a letter from Terrill & Waldrop dated April 4. 2018 explains the
nature of the credit rider in detail. (See Attachment 2).
The calculation was reviewed by the PUC and granted interim approval under Docket# 48197.
(See Attachment 3).
Aqua Texas would like the City of Port Arthur to approve the minor tariff change in order for
Aqua Texas to put this credit on the customer's water and wastewater utility bill.
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TERRILL & WALDROP Attachment
ATTORNEYS and COUNSELORS
810 West 10th Street 2
Austin,Texas 78701
Tel(512)474-9100
Fax(512)474-9888
April 4,2018
Ms. Sherri Ballard
City Secretary
City of Port Arthur, Texas
444 4th Street
Room 430
Port Arthur, Texas 77640
Re: Application to Approve Aqua Texas' Federal Tax Change Credit Rider ithin the
City of Port Arthur
Dear Ms. Ballard:
On March 26, 2018, Aqua Texas, Inc., Aqua Utilities, Inc. (including its subsidiaries
Harper Water Company, Inc. and Kerrville South Water Company, Inc.)and Aqua Development,
Inc. d/b/a Aqua Texas ("Aqua Texas") filed a request for Public Utility Commission of Texas
("PUC" or "Commission") approval to implement a new Federal Tax Change Credit Rider
("FTCCR" or"Credit Rider") to provide a credit to Aqua Texas customers.1 A primary reason
for Aqua Texas' FTCCR request is that the Tax Cuts and Jobs Act of 2017("TCJA")changed the
federal corporate tax rate from 35% to 21%. Aqua Texas hereby seeks the same approval from
the municipalities possessing original ratemaking jurisdiction for Aqua Texas water/sewer utility
service so that the Credit Rider may be similarly extended to customers within those cities.
Aqua Texas requested the Commission approve the Credit Rider as a minor tariff change
to each of its filed tariffs under the Commission's original ratemaking jurisdiction pursuant to
16 Texas Administrative Code § 24.21(b)(2)(A)(v). While this provision is a PUC rule, Texas
Water Code § 13.082 states that, unless a municipality surrenders its regulatory authority to the
Commission, a "municipality shall have, regarding service within its boundaries, the right to
exercise the same regulatory powers under the same standards and rules as the utility commission
or other standards and rules not inconsistent with them." Aqua Texas proposes to implement the
Credit Rider effective for bills rendered on or after an effective date of May 1,2018 with the same
credit continued through December 31, 2018 and lowered slightly for bills rendered on or after
January 1, 2019 ending with Aqua Texas' next rate case. Aqua Texas also proposes to apply the
2018 Credit Rider immediately to all service reflected on bills on or after May 1,2018 as an interim
rate before final approval so that customers may experience resulting lower water and sewer utility
payments without delay. Aqua Texas requested that this application be approved by the PUC
administratively under the Commission's informal disposition rule (16 TEX. ADMIN. CODE
§ 22.35). Aqua Texas hereby requests that the City of Port Arthur ("City") use its equivalent
procedures to approve Aqua Texas' FTCCR in-City water and sewer tariff additions. Without
1 PUC Docket No.48197,Application to Approve Aqua Texas'Federal Tax Change Credit Rider(Mar.26,2018).
City of Port Arthur
April 4, 2018
Page 2
approval of the FTCCR tariff additions, Aqua Texas cannot apply the Credit Rider to in-City
customers.
The attached Affidavits of Robert L. Laughman (Attachment 1) and Kurt A. Scheibelhut
(Attachment 2)contain supporting details for this Credit Rider request. Aqua Texas' Credit Rider
calculations approximate estimated TCJA savings with rate division-specific tax savings amounts
expressed as a percentage of the monthly service bill. The percentages will be applied to each
customer's monthly base fees and volumetric fees for both water and sewer service, as applicable,
to comprise each bill's total line item Credit Rider amount. Mr. Scheibelhut's affidavit provides
the Credit Rider calculations and information used to derive same for each region and service type.
In support of this FTCCR minor tariff change application to the City, Aqua Texas is
submitting a proposed in-City FTCCR tariff page addition as Attachment 3. Aqua Texas proposes
to send a regional-specific letter about the FTCCR to each of its customers in a region whether
within or outside a municipality. See Attachment 4. Aqua Texas would like in-City customers
to experience the same reduced bills as Aqua Texas customers elsewhere in your City's Aqua
Texas geographic region(i.e.,North, Southeast,or Southwest Region),but Aqua Texas needs City
action to achieve that goal.
The City of Port Arthur is located in Aqua Texas' geographic Southeast Region. Therefore,
Aqua Texas hereby requests the City approve an in-City FTCCR for bills rendered on or after May
1,2018 through December 31,2018 as 6.38%for water and 6.94%for sewer. Further,Aqua Texas
requests that effective for bills rendered on or after January 1,2019 until changed,the FTCCR will
drop slightly to 4.58%for water and 4.99%for sewer because next year,unlike this year,estimated
annual savings will be credited over a full 12-month period. The 2019 FTCCR percentage is then
proposed to remain in place until Aqua Texas' next in-City rate case.
Aqua Texas proposes the in-City Credit Rider remain in effect until Aqua Texas' rates are
adjusted in a future in-City rate proceeding utilizing all cost of service information (not just tax
savings). Aqua Texas conferred with both Commission Staff and the Office of Public Utility
Counsel about its PUC Credit Rider proposal prior to filing it with the Commission and received
favorable feedback from both.
Should any questions arise regarding the enclosed, please do not hesitate to contact me.
Thank you for your time and attention to this matter.
Sincerely.
Geoffrey P. Kirshbaum
TERRILL&WALDROP
Attachment
AFFIDAVIT 1
STATE OF TEXAS §
§
COUNTY OF TRAVIS §
BEFORE me, the undersigned authority, personally appeared Robert L. Laughman, who,
being by me duly sworn, deposed as follows:
1. My name is Robert L. Laughman. I am the President of Aqua Texas, Inc., Aqua
Utilities, Inc. (including its subsidiaries Harper Water Company, Inc. and Kerrville South Water
Company, Inc.), and Aqua Development, Inc. ("Aqua Texas").
2. I swear or affirm that I have personal knowledge of the facts set forth in this
Affidavit, and I am authorized to makes this Affidavit on behalf of Aqua Texas. Each fact set
forth in this Affidavit is true and correct.
3. I am familiar with Project No. 47945, Proceeding to Investigate and Address the
Effects of Tax Cuts and Jobs Act of 2017 ("TCJA") on the Rates of Texas Investor-Owned
Utility Companies, including the Order Related to Changes in Federal Income Tax Rates, dated
January 25, 2018, and Amended Order Related to Changes in Federal Income Tax Rates, dated
February 15, 2018 ("Order"). The Order directed Commission Staff to determine appropriate
mechanisms to adjust the rates of regulated utilities to reflect the changes under the newly
enacted TCJA. The Order also directed investor-owned Class A water and sewer utilities to
record as a regulatory liability: (1) the difference between the revenues collected under existing
rates and the revenues that would have been collected had the existing rates been set using the
recently approved federal income tax rates; and (2) the balance of excess accumulated deferred
federal income taxes (ADFIT) that now exists because of the decrease in the federal income tax
rate from 35% to 21%. The recording of the ordered regulatory liability was to commence
beginning on January 25, 2018.
4. Aqua Texas' cost of service for both water and sewer services was approved and
used to set rates for multiple Aqua Texas regions and rate divisions by the Texas Commission on
Environmental Quality ("TCEQ") in TCEQ Docket Nos. 2004-1671-UCR and 2004-1120-UCR;
and SOAH Docket Nos. 582-05-2770 and 582-05-2771, Application of Aqua Utilities, Inc. and
Aqua Development Company d/b/a Aqua Texas, Inc. to Change Water and Sewer Rates.
However, Aqua Texas does not have a single statewide water or sewer rate structure reflecting
specific federal income tax amounts. Instead: (1) certain "black box" settlement rate structures
were approved as part of the statewide rate case; (2)the vast majority of Aqua Texas' water rates
in each region have been set since the statewide rate case via later "black box" rate settlements
following subsequent rate filings; (3) municipal action on Aqua Texas' various rate applications
has varied; and (4) Aqua Texas has been compelled by both the TCEQ and Public Utility
Commission of Texas ("PUC") to take Seller rate structures in acquisitions without change to
attain approval; many of those rate structures were set pursuant to "black box" settlements and/or
were based on a Seller's cost of service. In sum, there is no single federal income tax amount,
and certainly no recent federal income tax amount, specifically included within Aqua Texas'
rates which can feasibly be recalculated at the 21% corporate tax rate to arrive at the revenue
difference described in part(1) of the regulatory liability Order.
5. Aqua Texas plans to file its next rate case no later than 2020 using 2019 as the
test year unless circumstances demonstrate that such a filing is not yet reasonable. Aqua Texas
infrastructure capital expenditures in 2017 exceeded $28 million, and its budgeted infrastructure
capital expenditures in 2018 exceed $45 million. Aqua Texas also anticipates infrastructure
capital expenditures of over $35 million in 2019. These budgeted expenditures are at least 4
times the depreciation expense each fiscal year. To avoid a need for multiple rate filings, Aqua
Texas has anticipated filing its next rate case after the completion of these budgeted projects.
The next rate case will incorporate the 21%corporate tax rate if it remains effective.
6. In the meantime, Aqua Texas desires to implement a mechanism to lower its rates
statewide so that customers experience lower water and sewer rates immediately. Upon
implementation, Aqua Texas desires to be relieved from part (1) of the regulatory liability
described in the Order, leaving part (2) regarding ADFIT to be determined in Aqua Texas' next
rate case.
7. The rate mechanism Aqua Texas proposes is a Federal Tax Change Credit Rider
("FTCCR" or "Credit Rider") applied to its tariffs as a minor tariff change pursuant to 16 Texas
Administrative Code ("TAC") § 24.21(b)(2)(A)(v). That provision permits "rate adjustments to
implement . . . downward rate adjustments to reconcile rates with actual costs." Aqua Texas
proposes its FTCCR for the purpose of approximating such a reconciliation for only its new
federal income tax expense costs, but to use its 2018 budget for its regulated water and sewer
business to obtain the basis for its estimated TCJA tax savings so that some amount of savings
may be passed back to its customers now. Aqua Texas proposes to use the budgeted net income
for each rate division to determine an estimated amount of 2018 tax savings and rate division-
specific FTCCR percentages to be applied to each customer's bill.
8. The Credit Rider percentage for each rate division has been determined as
described in the Affidavit of Kurt A. Scheibelhut, Manager, Rates and Planning for Aqua Texas.
Mr. Scheibelhut's affidavit also describes how Aqua Texas proposes to implement the FTCCR
and presents certain documents as part of Aqua Texas' Credit Rider application package.
9. Mr. Scheibelhut prepared the Aqua Texas FTCCR application package for filing
at my direction and under my direct supervision or control. I have personally examined and am
familiar with the information submitted in the application. The FTCCR application information
is true, accurate, and complete.
Affidavit of Robert L. Laughman Page 2
Further affiant sayeth not.
Robert L. l.aug man
President /
Aqua Texas
1 106 Clayton Ln., Suite 400W
Austin, Texts 78723
tf ORN TO and SUBSCRIBED before - b r 'obert I •: on
2018.
Arl ANN&
No r P • an.or the State of Texas
s, CRISTINA ADRIANA FIERRO
j :fg Notary Public,State of Texas
My Commission Expires
\:;;7,r;;;;$
August 13. 2O 8
ti ry„ n
Affidavit of Robert L Lauglonan Page 3
Attachment
2
AFFIDAVIT
STATE OF TEXAS §
COUNTY OF TRAVIS §
BEFORE me, the undersigned authority, personally appeared Kurt A. Scheibelhut, who,
being by me duly sworn, deposed as follows:
1. My name is Kurt A. Scheibelhut. 1 am the Manager, Rates and Planning for Aqua
Texas, Inc., Aqua Utilities, Inc. (including its subsidiaries Harper Water Company, Inc. and
Kerrville South Water Company, Inc.), and Aqua Development, Inc. ("Aqua Texas").
2. I swear or affirm that I have personal knowledge of the facts set forth in this
Affidavit and that I am authorized to makes this Affidavit on behalf of Aqua Texas. Each fact
set forth in this Affidavit is true and correct.
3. 1 am familiar with Project No. 47945, Proceeding to Investigate and Address the
Effects of Tax Cuts and Jobs Act of 2017 ("TCJA") on the Rates of Texas Investor-Owned
Utility Companies, including the Order Related to Changes in Federal Income Tax Rates, dated
January 25, 2018, and Amended Order Related to Changes in Federal Income Tax Rates, dated
February 15, 2018 ("Order"). The Order directed Commission Staff to determine appropriate
mechanisms to adjust the rates of regulated utilities to reflect the changes under the newly
enacted TCJA. The Order also directed investor-owned Class A water and sewer utilities to
record as a regulatory liability: (1) the difference between the revenues collected under existing
rates and the revenues that would have been collected had the existing rates been set using the
recently approved federal income tax rates; and (2) the balance of excess accumulated deferred
federal income taxes (ADFIT) that now exists because of the decrease in the federal income tax
rate from 35% to 21%. The recording of the ordered regulatory liability was to commence
beginning on January 25, 2018.
4. As discussed in the Affidavit of Robert L. Laughman, President of Aqua Texas, I
have developed a Federal Tax Change Credit Rider ("FTCCR" or "Credit Rider") for Aqua
Texas which it proposes to use for the benefit of its customers until its next base rate case. I
have determined the Credit Rider percentages for each customer rate division and the method for
implementing those percentages in customer bills as follows:
a. I have pulled the net income for each rate division from the 2018 Budget
for Aqua Texas.
b. I added the federal and state taxes to the budgeted net income to arrive at
the budgeted Pre-Tax Book Income(PTBI).
c. I multiplied the PTBI by the tax savings of 14% (35% - 21%). This results
in the tax savings amount.
d. I then "grossed up" the tax savings amount by the current tax effect of
21%. The reason for the gross up factor is that if Aqua only refunded or
credited the tax savings, the resulting net income would be greater than the
original or beginning net income by the tax effect on the credit. The
formula to arrive at the credit using budgeted amounts is as follows.
((Net Income+ Federal and State Taxes) * rate difference)
(1 —current tax rate)
e. After calculating the federal tax rate change amount, I divided that amount
by the budgeted regulated revenue for each operational division. The
result of this is a percent credit for each bill.
f. The percent credit will be implemented by applying it to each customer's
monthly bill for water and/or wastewater services as applicable (using
effective Water and/or Sewer Base Fees and Volumetric Fees). In
addition, the Regulatory Assessment Fee of 1% will be applied to this
credit and reduce the regulatory assessment fee amount on the customer's
bill. Thus,the specific FTCCR amount on each bill will vary by customer,
but the percentage FTCCR will be consistent within each rate division.
g. The percent credit in year one will be higher than in subsequent years. In
2018, the FTCCR will apply to 341 days instead of 365 days due to the
regulatory liability commencement date in the Order, January 25, 2018.
Additionally, the credit rider will be effective May 1, 2018. Because the
FTCCR is applied to a customers' bills a reduced number of days for
2018, the percent credit will be temporarily increased to compensate for
not applying the FTCCR to the customers' bills from January 25th to April
30th Because in 2019 the FTCCR will be applied to the customers' bills
for the entire year, the FTCCR will be reduced beginning January 1, 2019,
and continue until Aqua Texas receives a rate change in the next rate
application filing.
h. Aqua Texas notes that its approach will likely provide more benefit to
customers than a regulatory liability recorded pursuant to the Order as
amended because: (1) the actual tax savings Aqua Texas will experience
Affidavit of Kurt A. ScheibeThut Page 2
for 2018 remains uncertain, as do many aspects of the TCJA, and the
actual tax savings may not be as much as anticipated and reflected in the
FTCCR; and (2) were it feasible for Aqua Texas to somehow recalculate
the tax amounts embedded in its older rate structures to lower those rates,
which it is not, the result would likely be a lower savings amount than that
calculated by Aqua Texas using more current budgeted income
information as proposed.
5. Attachment A shows Aqua Texas' calculations which produce the requested
FTCCR percentage for each rate division. The 2018 Budget information included in
Attachment A is a forward-looking statement and is made based upon, among other things, our
current assumptions, expectations,plans and beliefs concerning future events and their potential
effect on us. Because forward-looking statements involve risks and uncertainties, there are many
important factors that could cause actual results to differ materially from those expressed or
implied by the forward-looking statement.
6. There is no specific statutory or regulatory notice requirement for the type of
minor tariff change Aqua Texas is proposing with its requested FTCCR additions. Nor is there
any specific process that applies to such a request other than 16 TAC § 24.21(b)(2)(A)(v). While
this provision is a PUC rule, Texas Water Code § 13.082 states that, unless a municipality
surrenders its regulatory authority to the Commission, a "municipality shall have, regarding
service within its boundaries, the right to exercise the same regulatory powers under the same
standards and rules as the utility commission or other standards and rules not inconsistent with
them." Aqua Texas is voluntarily making this FTCCR proposal to its municipal regulatory
authorities to benefit its in-city customers after receiving favorable input from both Commission
Staff and the Office of Public Utility Counsel prior to its Commission filing on March 26, 2018.
Aqua Texas respectfully requests that this application be administratively approved pursuant to
whichever city procedure is most similar to the PUC's informal disposition process found at 16
TAC § 22.35 as no contested case hearing should be required for Aqua Texas to expeditiously
lower customer rates through its proposed FTCCR implementation. Nevertheless, if a city
council meeting is determined necessary to grant our requested FTCCR minor tariff change
approval for Aqua Texas,we will work with the city to participate in same.
Affidavit of Kurt A. Scheibelhut Page 3
Further affiant sayeth not.
41-4
Kurt A. Scheibelhut
Manager,Rates and Planning
Aqua Texas
1106 Clayton Ln., Suite 400W
Austin, Texas 78723
SWORNQ TO and SUBSCRIBED before me by Kurt A. Scheibelhut, on
/i /� 7 ,2018.
,;�`'••"•'.. GLEN E. LEWIS •:*:*14, Notary Pu01k,Slats of Texas '
=�'• &per DECEMBER 17,2020 ; Notary Public in and for the State of Texas
_47:g1:4";' W.*760253-3
Affidavit ofKurtA.Scheibelhut Page 4
Aqua Texas Federal Tax Change Credit Rider-FTCCR(Percent Calculation)
Note: The 2018 Budget information set forth in this document is a forward-looking statement and is made based upon,among other things,our current assumptions,expectations,
plans and beliefs concerning future events and their potential effect on us. Because forward-looking statements involve risks and uncertainties,there are many important factors
that could cause actual results to differ materially from those expressed or implied by this forward looking statement.
Impact of Effects of Tax Reform(Aqua Texas 2018 Budget)
Attachment I iTax Cale Prior To Tax Reform I
AA eB
C D E F G H
Differencence in
Lawson PTBI Tax Rates (A'B)/(1-0) New Tax Rate (A C)'(1-O1 Col A Prior Tax Rate Col F'(1-01
Proposed
2018 Budgeted Credit to 2018 Budgeted Estimated Net
Income Before Customers due 2018 Tax Rate Estimated Net Income Before Income After Difference in
Taxes to Pass Thru of under Tax Income-Tax Taxes Tax(Prior Tax Net Income
State Region (Regulated) Rate Difference Tax Savings Reform Reform (Regulated) Prior Tax Rate Rate) After Tax
TX SW-Water 5.059.393 14.00% (896601) 21.00% 3,288,605 5,059,393 35.00% 3.288605 -
TX SW-Sewer 1.279.933 14 00% (226.824) 21.00% 831,956 1.279.933 35.00% 831.956 -
Tx SE-Water 6.123.227 14.00% (1.085,129) 21.00% 3,980,098 6,123.227 35.00% 3.980.098 -
Tx SE-Sewer 3,084.882 14.00% (546.688) 21.00% 2,005,173 3.084.882 35.00% 2.005.173 -
TX North-Water 5,161 725 14.00% (914,736) 21.00% 3,355,121 5,161,725 35.00% 3.355.121 -
TX North-Sewer 315,578 14.00% (55,925) 21.00% 205,126 315,578 35.00% 205.126 -
TX Aqua Texas 21,024.738 14.00% (3.725,903) 21 00% 13.666.080 21.024.738 35.00% 13.666,080 -
2018 Budget Regulated Texas
Lstimated Net nrorve 13.392,748 2018 Budget(Regulated)
Add:Estimated Federal Income Tax 7,211,500 (3,725,903)Estimated Credit Rider based on 2018 budget calculation.
Add:Estimated Stale Income Tax 420,490 (73,980,382)2018 regulated revenue.
2018 Est.PTBI(Prr•I,,a li:z, lr,,rn,' 2'07'1 738 5.04%%reduction in revenue.
Example:Credit Rider Allocation by Region-Year 2 and beyond
SW-Water SW-Sewer SE-Water SE-Sewer North-Water North-Sewer Texas
Revenue 17,033,862.00 3,252,262.00 23.667,784.00 10,959,377.00 17.607,361.00 1,459,736.00 73,980,382
Estimated Annual Credit Rider 896,601 226,824 1,085,129 546,688 914,736 55,925 3,725,903
Estimated%credit 5.26% 6.97% 4.58% 4.99% 5.20% 3.83% 5.04%
Estimated Average Bill S 69.79 S 87.97 $ 79.76 S 63.80 S 63.17 $ 73.30
Estimated Average Monthly Credit S 3.67 S 6.14 $ 3.66 S 3.18 S 3.28 $ 2.81
Estimaged Average Annual Credit $ 44.08 0 73.62 $ 43.88 $ 38.19 S 39.38 $ 33.70
Adjusted Credit Percentage by 24 days(Dale of Order-1/25/2018)-(341) days
(365-24)/365 days•Estimated%Credit 4.92% 6.52% 4.28% 4.66% 4.85% 3.58% 4.71%
Apply annualized FTCCR%over 245 days(April 30th)
Adjusted Credit Percentage from above'365/245 days effective Year 1. 7.33% 9.71% 6.38% 6.94% 7.23% 5.33% 7.01%
FTCCR%would be applied on May 1st and go through December 31st,2018.
FTCCR%would then apply the calculated annual rate above from January 1,2019 and
remain until rates are changed in the next rate filing.(See above-Estimated%credit)
Aqua Texas, Inc.,Aqua Utilities, Inc., and Water Utility Tariff Page No. 2a
Aqua Development, Inc., dba Aqua Texas
Southeast Region— City of Port Arthur
Section Lola- Rates
Federal Tax Change Credit Rider(FTCCR) 6.38%
Effective May 1, 2018 through December 31, 2018.
Federal Tax Change Credit Rider (FTCCR) 4.58%
Effective January 1, 2019 until changed.
Applied as a percentage to the following charges:
All monthly minimum charges
Gallonage Charges
Regional Pass-Through Gallonage Charges (if applicable)
Attachment
3
Aqua Texas, Inc., Aqua Utilities, Inc., and Sewer Utility Tariff Page No. 2a
Aqua Development, Inc., dba Aqua Texas
Southeast Region — City of Port Arthur
Section 1.oia - Rates
Federal Tax Change Credit Rider (FTCCR) 6.94%
Effective May 1, 2018 through December 31, 2018.
Federal Tax Change Credit Rider (FTCCR) 4.99%
Effective January 1, 2019 until changed.
Applied as a percentage to the following charges:
All monthly minimum charges
Gallonage Charges
Regional Pass-Through Gallonage Charges (if applicable)
41,
Attachment
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AQUA .
April 4, 2018
Dear Aqua Texas Customer:
Aqua Texas(Aqua) is pleased to notify you that it has sought approval from the Public
Utility Commission of Texas (PUC)and in municipalites with original ratemaking
jurisdiction over Aqua to implement a Federal Tax Change Credit Rider(FTCCR)effective
for bills rendered on after May 1,2018. The FTCCR will immediately lower your monthly
bills and show up as a new line item until further notice.
Aqua has developed the FTCCR as a means to immediately pass estimated savings resulting
from the federal Tax Cuts and Jobs Act of 2017 (TCJA) corporate income tax rate reduction
to customers as fast as possible without a rate case. While the FTCCR remains subject to
final regulatory authority approval,Aqua's proposal includes implementation of the FTCCR
as an interim rate immediately to benefit our customers without delay. Aqua does not
anticipate filing a rate case until at least 2020 at which time the actual effects of the TCJA on
Aqua will be more fully known and considered.But the FTCCR will provide customers with
rate relief now.
The FTCCR that will apply within Aqua's Southeast Region (including your service area) for
bills rendered on or after May 1,2018 through December 31,2018 is 6.38%for water and
6.94%for sewer. Then,effective for bills rendered on or after January 1,2019,the FTCCR
will drop slightly to 4.58%for water and 4.99%for sewer because next year,unlike this
year,estimated annual savings will be credited over a full 12-month period. The 2019
FTCCR percentage will remain in place until Aqua's next rate case.
Please call Aqua at 877.WTR.AQUA(877.987.2782) if you have any questions about the
Federal Tax Change Credit Rider. Thank you for the opportunity to serve you.
Sincerely,
Robert L.Laughman
1106 Clayton Lane,Suite 400W,Austin,TX,78723 • 512.990.4400 • AquaAmerica.com
1)eAnn T. Walker �1, Op Greg Abbott
Chairman ,AE
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John Paul Urban Public Utility Commission of Texas
Executive Director
Attachment
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To: Geoffrey P. Kirshbaum
Terrill &Waldrop
810 West 10th Street
Austin, Texas 78701
Commission Staff—Water Utility Regulation Division
Commission Staff—Legal Division
Re: Tariff Control No. 48197 —Application of Aqua Texas, Inc., Aqua Utilities, Inc., and
Aqua Development, Inc. dba Aqua Texas for a Minor Tariff Change(Federal Tax Credit
Rider)
NOTICE APPROVING INTERIM RATE AND
ESTABLISHING PROCEDURAL SCHEDULE
This Notice addresses Commission Staff's recommendation filed on April 25,2018. Aqua
Texas developed a new Federal Tax Change Credit Rider(FTCCR) as a means to pass estimated
savings resulting from the federal Tax Cuts and Jobs Act of 2017 corporate income tax rate
reduction to customers as fast as possible without a rate case.
Commission Staff recommended the application be found administratively complete and
that notice be amended to add a paragraph regarding intervention and Commission contact
information. Commission Staff recommended that the applicant send out the revised notice
promptly in its next billing cycle. Commission Staff recommended that Aqua's request for an
interim rate be approved, effective May 1,2018. Lastly, Commission Staff proposed a procedural
schedule.
Aqua's application is deemed administratively complete. Commission Staffs and Aqua's
revisions to the text of the notice are approved. Aqua shall amend its proposed notice to add
intervention and Commission contact information as recommended by Commission Staff and add
the revisions proposed in Aqua's response filed on April 26,2018.
® Printed on recycled paper An Equal Opportunity Employer
1701 N.Congress Avenue PO Box 13326 Austin,TX 78711 512/936-7000 Fax: 512/936-7003 web site:www.puc.texas.gov (0
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Tariff Control No.48197 Page 2 of 2
The text of the notice shall be revised as follows:
Persons who wish to intervene in the PUC proceeding(PUC Docket No. 48197)or
comment upon PUC action sought should contact the Public Utility Commission,
P.O. Box 13326, Austin,Texas 78711-3326,or call the Public Utility Commission
at (512) 936-7120 or (888) 782-8477. Hearing and speech impaired individuals
with text telephones (TTY) may contact the commission at (512) 936-7136. The
deadline for intervention in the PUC proceeding is June 29, 2018. You must send
a letter requesting intervention to the commission which shall be received by June
29, 2018. If directed by a municipal regulatory authority, Aqua may provide
customers located within municipalities alternative directions applicable to
municipal proceedings concerning the FTCCR request.
The amended notice shall be sent to affected parties promptly in its next billing cycle.
Aqua's request for approval of the interim rates effective May 1, 2018, is granted. The
proposed procedural schedule is approved as follows:
Deadline for intervention June 29, 2018
Deadline for Commission Staff to request a hearing or, July 6,2018
if qualified for informal disposition, file a final
recommendation
Deadline for parties to file an agreed proposed order, if July 13,2018
qualified for informal disposition
Signed at Austin,Texas the day of May 2018.
PUBLIC UTILITY COMMISSION OF TEXAS
IREN MO ONGO
DI• CTOR,DOCKET MANAGEMENT
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