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WQ0014306_Application_20200930
P 0 1 Division of Water Resources State of North Carolina Department of Environmental Quality Division of Water Resources NON -DISCHARGE SYSTEM RENEWAL FORM: NDSR 01-20 This form is for renewal without modification for all non -discharge system permits, except Residuals Management and Single - Family Residence Wastewater Irrigation System permits. h or more information, visit the Water Quality Permitting Section's Non -Discharge Branch Website. 1. PERMITTEE INFORMATION: 1. Permittee: Sandler Utilities at Mill Run 2. Signature authority's name: Raymond Gottlieb per 15A NCAC 02T .0106(b) Title: Managing Partner Primary Telephone number: (757) 463-5000088 Office Secondary number: (2L7) 463-5000x309 Office Email Address: ra mmond(&Imssi.com 3. Permittee's mailing address: 448 Viking Drive, Suite 220 City: Virginia Beach State: Virginia Zip: 23452- 4. Billing address (if different from above): City: State: Zip: 5. Contact person's name (if different from signature authority): Brittney Willis Title: P.F. Primary Telephone number: (757) 463-5000088 Office Secondary number: Email Address: brittnev(a,lmssi.com Il. PERMIT INFORMATION: 1. Existing permit number: W00014306 2. Has the facility been constructed? ® Yes or ❑ No Select If yes, has the facility been constructed in accordance with the permit and the Division -approved plans and specifications? [15A NCAC 02T .0110 ❑ Yes or ❑ No If no, a formal permit modification request shall be submitted to the Division. 3. Has any of the property ownership within the facility and/or disposal area changed from what is indicated in the current permit (Attachment B — disposal field owner/lessee)? ❑ Yes or ® No Has the Permittee had a name change or has the permit changed ownership? ❑ Yes or ® No If yes to either, a permit modification request shall be submitted to the Division. [ 15A NCAC 02T .01051 4. Is this facility a Privately -Owned Public Utility? ® Yes or ❑ No If yes, provide two copies of the Certificate of Public Convenience and Necessity from the North Carolina Utilities Commission demonstrating the Applicant is authorized to hold the utility franchise. [ 15A NCAC 02T .01 l 5(a)(1)1 5. Is the Perm ittee a Home/Property Owners' Associations or Developers of lots to be sold? ❑ Yes or ® No If yes, provide the following: • For Home/Property Owners' Associations — Operational Agreement (FORM: HOA) and a copy of the proposed or approved Articles of Incorporation, Declarations, and By-laws [15A NCAC 02T .0115(c)] • For Developers of lots to be sold — Operational Agreement (FORM: DEV) [15A NCAC 02T .0115(b)] FORM: NDSR 01-20 Page 1 of 4 State of North Carolina DiWR Division of Water Resources 6. Does the facility treat and dispose of industrial wastewater? If yes, complete items below. If no, skip to the next section. Indicate the approximate percentage of wastewater makeup: Industrial: % Domestic: % Stormwater: % Department of Environmental Quality Division of Water Resources NON -DISCHARGE SYSTEM RENEWAL FORM: NDSR 01-20 For all industrial wastewater sources (excluding those permitted under a pretreatment permit), provide a detailed industrial process description including: • An overview of the manufacturing process • An inventory of all materials used for manufacture, including chemicals and biological matter • An overview of cleaning and treatment methodology, including an inventory of treatment materials and compounds Has the nature of wastes (e.g., change in industrial processes, introduction of new materials or chemicals, etc.) described in the approved permit application(s) changed? ❑ Yes or ® No If yes, a permit modification request shall be submitted to the Division. [G.S. 141-215.1(d)l III. SITE MAP: 1. Provide an updated site map in accordance with 15A NCAC 02T .0105(d) that shows the following (if applicable): The site map is not required to be signed or sealed by a Professional Engineer. However, the map must indicate the source of information. For example, parcel lines taken from a county GIS map should reference the GIS website. ❑ Legend, north arrow, and scale ❑ Topographic contours on all disposal sites ❑ Soil mapping units on all disposal sites ❑ All facility -related structures and fences within the treatment, storage, and disposal areas ❑ All habitable residences and places of assembly within 500 feet of all treatment, storage, and irrigations sites ❑ Location of all wells, streams (ephemeral, intermittent, and perennial), springs, lakes, ponds, ditches, and other surface drainage features within 500 feet of all waste treatment, storage, and disposal site(s) ❑ Latitude and longitude coordinates of all monitoring wells (decimal degrees to 6 digits) ❑ Location and identification of major components of the waste disposal system ❑ The wetted perimeter of all irrigation fields with field names (named according to the approved permit) ❑ Location and ownership of property boundaries within 500 feet of the disposal area (including road/rail right-of-ways) ❑ The delineation of compliance and review boundaries ❑ Distance measurements verifying all setbacks are being met ❑ Stormwater drainage controls ❑ 100-year floodplain ❑ For reclaimed water generation hermits, provide a separate map showing all distribution lines and utilization permit locations that are connected to the water generation facility and are permitted by the Non -Discharge Branch (excludes Local Program permitted facilities). Include all reclaimed water distribution line and reclaimed water utilization permit numbers. FORM: NDSR 01-20 Page 2 of 4 DWR Division of Water Resources IV. GROUNDWATER MONITORING WELLS State of North Carolina Department of Environmental Quality Division of Water Resources NON -DISCHARGE SYSTEM RENEWAL FORM: NDSR 01-20 1. Does the facility have a proposed or existing groundwater monitoring well network? ® Yes or ❑ No If no, skip to next section. If yes, complete the following table (NOTE — This table may be expanded for additional wells): Well Name Status Latitude 8 Longitude 8 Gradient Location M W I Active 36.488164' -76.167961 ° Cross Inside '1 W2 Active 36.488135 -76.1685360 Cross Inside Select - Select Select Select 0- Select Select Select o- Select Select Select 0- Select Select Select ° - Select Select Select ° - Select Select Select 0- Select Select Select - Select Select a. Coordinates must be in NAD83 and have 6 decimal degrees V. SETBACK WAIVERS, EASEMENTS, AND LEASES: 1. Does the permit have any setback waivers, easements, or leases? ❑ Yes or ® No If yes, provide copies of all documents and complete the table below: Document Type Grantor or Parcel No. Grantee Expiration Date County Registered Deed Book Deed Page Document A Description Select Select Select Select Select Select Select a. The document description shall list any reduced setbacks with distance, etc. 2. For reclaimed water utilization permits: Is reclaimed water utilized on property not controlled by the generator? ❑ Yes or ® No A lease, easement, or agreement must be provided allowing for the utilization of reclaimed water on the property or within the facility. For irrigation of reclaimed water, an easement is required per 15A NCAC 02U .050](6). All documents shall be listed in the table above. FORM: NDSR 01-20 Page 3 of 4 State of North Carolina DWR Division of Water Resources VI. RELATED PERMITS Department of Environmental Quality Division of Water Resources NON -DISCHARGE SYSTEM RENEWAL FORM: NDSR 01-20 1. If this permit has interactions with other wastewater permits (collection systems, NPDES, etc.), complete the table below (provide additional pages if necessary): Permit Type Permit No. Description 2. Does the facility have an approved flow reduction I15A NCAC 02T .0114(f)1? ❑ Yes or ® No If yes, attach the measured monthly average amount of wastewater flow contributed per unit for the 12 months prior to permit renewal. If any of these monthly averages are within 20% of the approved value, the Permittee shall provide a reevaluation of the reduced flow value using the methodology applied to the original flow reduction application. Also, attach a copy of the flow reduction approval letter. APPLICANT'S CERTIFICATION 15A NCAC 02T .0106(b) I, Raymond Gottlieb , attest that this renewal application has been reviewed by me, and is accurate and complete to the best of my knowledge. I understand that any unauthorized discharge of wastewater from this non -discharge system to surface waters or the land may result in an enforcement action that may include civil penalties, injunctive relief, and/or criminal prosecution. I will make no claim against the Division of Water Resources should a condition of this permit be violated. I also understand that if all required parts of this application are not completed, this application may be returned to me as incomplete. I further certify that the Applicant or any parent, subsidiary, or other affiliate of the Applicant has not been convicted of an environmental crime, has not abandoned a wastewater facility without proper closure, does not have an outstanding civil penalty where all appeals have been exhausted or abandoned, are compliant with any active compliance schedule, and does not have any overdue annual fees. NOTE — In accordance with General Statutes 143-215.6A and 143-215.6B, any person who knowingly makes any false statement, representation, or certification in any application package shall be guilty of a Class 2 misdemeanor, which may include a fine not to exceed $10,000 as well as civil penalties up to $25,000 per violation. The Applicant's Certification shall be signed in accordance with 15A NCAC 02T .0106(b). Per JSPA NCAC 02T .0 106c an alternate person maybe designated as the signing official if a delegation letter is provided from a pe who ets the criteria in 15A NCAC 02T .0106(b) Signature: Date: September 25. 2020 Sandler Utilities at Mill Run, LLC Raymond L, Gottlieb, manager THE COMPLETED APPLICATION AND SUPPORTING DOCUMENTATION SHALL BE SUBMITTED TO: NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY DIVISION OF WATER RESOURCES WATER QUALITY PERMITTING SECTION NON -DISCHARGE BRANCH By U.S. Postal Service: By Courier: By Email: Non -Discharge Branch Non -Discharge Branch — Archdale 942W Non-Discharye.Ret)ortsancdenr.gov 1617 Mail Service Center 512 N. 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(Uf1�HAffiUS If�IV(7FI }i/�N EN 1JaJ FJPFlf21N CII A17 Q 4011 2) J 1G.lb v3 171()E. (hnit2 _ A.0 r>00 JC',�db49J _. 2.�11 0.l7 $1 39 OC 56w�3)��OM'. CI.CZ OC.00' '� /E C7 (j HJ 7 I I!;. i) I M1J ' i�i' ; l 71 4 hs" C;LC;:} SEC. Q(i n,� Of; �� 1'�.;a;i. �.i.0 � r h 5;? 11 10 L Ufl 49 �.� _�........_....._......_L�_�,.,.._.._......._�..._. ,.—.__.......,� ( IN iTli'I' ) Snc:�la _�, 200 ft.. �,. O N � � -� G f U r $ CJ GAP r ,c ti K n m°O' V_ c v w y �/ 1 �A'f` IS Air MJ,! AAWR MS<'/ SF �r�T: °. pF �� li!_ „'S'`� � (i t�w�.la Book F Page 397 Sandier Utilities at Mill Run L.L.C. — Eagle Creek (WQ0014306) Figure 1—Groundwater Monitoring Well Location CERTIFICATE OF SERVICE FILED JAN 19 2015 Clark's Office N.C. Utilities CommfsSlon I, Wtttloq n 6a t? d , mailed with sufficient postage or hand delivered to all affected customers the attached Notice to Customers issued by the North Carolina Utilities Commission in Docket No. W-1130, Sub 8, and the Notice was mailed or hand delivered by the date specified in the Order. This the day of G , 2016 By: Signature Name of Utility Company The above named Applicant, Lt , personally appeared before me this day and, being first duly sworn, says that the required Notice to Customers was mailed or hand delivered to all affected customers, as required by the Commission Order dated 2 1' « in Docket No. W-1130, Sub 8. -- - Witness my hand and notarial seal, this the LTday of eee ���i (SEAL) %,My Commission Expires: �yptatV Qub11c Oahe CpuniY 1res= �My C003 ,2112016 Qzr r S t ` Printed Name 03 Z( C 6 Date STATE OF NORTH CAROLINA UTILITIES COMMISSION RALEIGH DOCKET NO. W-1130, SUB 8 BEFORE THE NORTH CAROLINA UTILITIES COMMISSION In the Matter of Application by Sandler Utilities at Mill Run, ) PROPOSED ORDER LLC, 448 Viking Drive, Suite 220, Virginia ) GRANTNG RATE Beach, Virginia 23452, for Authority to ) INCREASE, REQUIRING Increase Rates for Sewer Utility Service in ) REFUND AND Eagle Creek Subdivision in Currituck ) CUSTOMER NOTICE County, North Carolina ) HEARD: 7:00 p.m., Thursday, September 24, 2015, in the Currituck County Courthouse, Courtroom C, 2801 Caratoke Highway, Currituck, North Carolina BEFORE: Ronald D. Brown, Hearing Examiner /_1»2F_1:?1Vus] 26yi For Sandler Utilities at Mill Run, LLC: No attorney For the Using and Consuming Public: William E. Grantmyre, Public Staff -North Carolina Utilities Commission, 4326 Mail Service Center, Raleigh, North Carolina 27699-4300 BY THE COMMISSION: On April 30, 2015, Sandler Utilities at Mill Run, LLC (Sandler), filed an application seeking authority to increase its rates for providing sewer utility service in Eagle Creek Subdivision in Currituck County, North Carolina. By Order issued May 27, 2015, the Commission declared the matter to be a general rate case pursuant to G.S. 62-137, suspended the proposed rates for up to 270 days pursuant to G.S. 62-134, and scheduled the matter for 0 J o uO a a c� Ck public hearing subject to cancellation if no significant protests were received within 45 days of the date of the customer notice. Sandler filed a certificate of service on June 8, 2015, indicating that customer notice had been given as required. On September 4, 2015, the Public Staff filed a Notice of Affidavit and the affidavit of Calvin C. Craig, III, Financial Analyst with the Economic Research Division, the testimony of Iris Morgan, Staff Accountant with the Accounting Division, and the testimony of Babette McKemie, Utilities Engineer with the Water and Sewer Division. The Commission received 15 customer letters protesting the applied for increase with many complaining of service issues, primarily sewer backups, particularly during periods of heavy rainfalls. The public evidentiary hearing was held as scheduled on Thursday, September 24, 2015, in the Currituck County Courthouse, Currituck, North Carolina. Customers testifying at the hearing were Gary Lickfeld, Dixon Dreher, Denise Hawley -President of the Eagle Creek Homeowners' Association, and John Fedele. Bill Freed, the President of Enviro-Tech, the wastewater utility system contract operator, testified on behalf of Sandler. The Sandler verified application was admitted into evidence. Public Staff Engineer Babette McKemie testified. The pre -filed testimony of Public Staff Accountant Iris Morgan and the Affidavit of Public Staff Financial Analyst Calvin C. Craig, III, were admitted into evidence. Based on the verified Application, the testimony of the public witnesses, the testimony of the Sandler witness, the testimony and affidavit of the Public Staff 0 J 2 0 witnesses and exhibits received into evidence at the hearing, and the record as a whole, the Hearing Examiner now makes the following FINDINGS OF FACT 0 1. Sandler is a public utility as defined by G.S. 62-3(23) and is authorized to provide sewer utility service in its service area in Eagle Creek T- C) Subdivision in Currituck County, North Carolina, pursuant to a franchise granted ` T- C) by the Commission by order issued in Docket No. W-1130, Sub 0. Ck 2. Sandler is properly before the Commission pursuant to G.S. 62-133 for a determination of the justness and reasonableness of its proposed rates and charges. 3. The test period appropriate for use in this proceeding is the 12 months ended December 31, 2013. 4. Sandler provides sewer utility service to approximately 420 residential customers, the Mill Run Golf Club and Moyock Middle School using a vacuum type collection system and 350,000 gallon per day (gpd) wastewater treatment plant which is currently limited by the Division of Water Quality (DWQ) of the North Carolina Department of Environment and Natural Resources to 175,000 gpd of flow. The effluent is permitted for disposal into an infiltration pond and by spray irrigation onto the golf course. 5. The overall quality of service provided by Sandler to its customers in Eagle Creek Subdivision is only marginally adequate. 6. Sandler's present and proposed rates for sewer utility service in Eagle Creek area are: 91 Residential monthly flat rate: Commercial monthly flat rate: Golf Club School Present Proposed $ 45.75 $ 60.05 $315.00 $ 413.47 $766.00 $1,005.45 7. Sandler's annual level of service revenues under present and proposed rates is $243,552 and $319,679 respectively. The present rates service revenues are reduced by $6,760 of uncollectibles at the end of the test year after Public Staff adjustments. 8. Sandler's reasonable original cost rate base at December 31, 2013, after all Public Staff adjustments, is $117,951, consisting of the following items: Plant in service $2,206,202 Accumulated depreciation (177,266) Contributions in aid of construction (CIAC) (1,937,599) Cash working capital 26,614 Average tax accruals -0- Original cost rate base $ 117,951 9. The reasonable level of operating expenses under current rates to include in this proceeding is $212,912, which consist of the following components: Contract labor $ 72,084 Procurement fees 10,986 Labor 13,850 Administrative and office 842 Telemetry 777 Maintenance and repairs 1,650 Materials 3,186 Equipment 526 Electric power 37,996 Testing 6,696 Chemicals 16,281 Sludge removal 16,758 Disposal expense 3,051 Purchased water 2,767 Permit fees and licenses 2,120 Business license fees 327 0 U J LL LL 0 uO V- 0 0 U a) 0 CI Rate case expense 964 Insurance expense 12,243 Overhead expense 9,808 Total operating expenses: $212,912 10. The depreciation, amortization, and taxes under rates approved in this proceeding total $41,870, summarized as follows: Depreciation expense $36,282 CIAC amortization expense -0- Property tax -0- Other taxes 952 Regulatory fee 405 Gross receipts tax -0- State income tax 920 Federal income tax 3,311 Total depreciation, amortization, and taxes 41 870 11. The operating ratio method of setting rates is appropriate for use in this proceeding. A return of 7.5% on operating revenue deductions is just and reasonable for use in this proceeding. The operating revenue deductions requiring a return total $250,146. 12. The total annual service revenues necessary to allow Sandler the opportunity to earn the 7.50% return found just and reasonable are $280,303. The rates approved herein will produce annual service revenues of $280,303, which represents an increase of $36,751 or 15.09% over total annual service revenues produced by existing rates. 13. The following rates will produce the annual level of service revenues approved in this Order: Residential monthly flat rate $ 52.65 Commercial monthly flat rate: Golf Club $365.00 School $885.00 uO a a c� Ck 61 FINDING OF FACTS ON TAX ISSUES 14. It is appropriate to calculate income taxes based on the state corporate income tax rate of 4%, effective January 1, 2016, and the statutory federal corporate income taxes for the level of income after all adjustments. 15. Pursuant to House Bill 41 (HB 41) enacted on April 9, 2015, which required that the Commission adjust rates set for water and wastewater companies to reflect the repeal of the gross receipts tax and the reduction in the state corporate income tax rate, and the Commission's June 30, 2014 Order in Docket No. M-100, Sub 138, Sandler should refund to its customers the portion of rates related to the repeal of the gross receipts tax and reduction in the state corporate income tax. This refund should be made through a bill credit to each customer of 6.19% of the amount billed on and after July 1, 2014, until the new rates approved in this docket go into effect. EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 1-3 The evidence for these findings of fact is contained in the application and the Commission's records. This evidence is uncontroverted. EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 4-5 The evidence for these findings of fact is contained in the application, the Commission's records, the testimony of the customers, the testimony of Sandler witness Bill Freed, and the testimony of Public Staff Engineer McKemie. Gary Lickfeld testified that he has experienced numerous service issues over the past 13 years that he has been a Sandler customer. He testified in 2011 that the Air Vac valve pit package in his yard, serving his and his neighbors 0 J uO a T- c� W Ck 11 residences, was sinking into the ground. This resulted in sewage backups into the toilets and bathtubs in both his and his neighbors residences. Mr. Lickfield testified that sewer backups occur in Eagle Creek during periods of heavy rainfall. Mr. Lickfeld further testified in February 2015 that he experienced more sewage backups through his toilet and under the toilet. He testified that after speaking with an Enviro-Tech employee, he purchased from Air Vac a backflow valve for which materials and labor cost $300 to install. Dixon Dreher testified that he has been a customer for more than 10 years and that having served on the Board of Directors of the Homeowners Association he knows sewage backups have occurred in the Greenview area and the Phase 2 and 3 areas. Denise Hawley, the President of the homeowners association, testified she was contacted in February 2015 by several residents from the Eagleton Circle area when there was a major sewer backup into the ditches near their homes. She testified Bill Freed's Enviro-Tech team did an awesome job correcting the problem. She testified that during the February 2015 service problems, she learned the wastewater collection system including the Air Vac valve pit packages haven't been maintained over a period of time. She expressed the need for Sandler to fix the Air Vac valve pit packages immediately and that there be put in place a thorough maintenance plan. Paul Griffith testified that several years ago he experienced sewage backing up and coming out of the sewer service line valve (Candy Cane) in his yard. 0 J uO a a c� Ck 7 John Fedele testified he has been a customer for more than 10 years and although he has not experienced a sewage backup, he knows other customers that have. Public Staff Engineer McKemie testified describing the components of the wastewater system. She testified the sewer system consists of a vacuum type collection system with approximately 212 Air Vac pit packages located near the property lines with most of these pits serving two houses. The wastewater from the houses flows to the Air Vac valve pit package and then through a main vacuum line to the wastewater treatment plant. She further testified the wastewater treatment plant is a 350,000 gallon per day (gpd) extended aeration plant currently limited to 175,000 gpd of flow until certain improvements are made to the wastewater treatment plant. Ms. McKemie testified that the permit also provides that prior to adding any wastewater to the facility from other sources (outside Eagle Creek subdivision) the permittee shall submit an updated or new agreement between Mill Run Golf Club (Golf Club) and the permittee, with clear language specifying the wastewater from new sources is allowed to be sprayed on the Mill Run Golf Club golf course (Golf Course). She testified that the permit allows for spray irrigation of 175,000 gpd of effluent onto the Golf Course and 90,000 gpd into an infiltration pond. The effluent is only sprayed on the golf course when it meets the required limits. Wastewater effluent not meeting the limits is disposed of using only the infiltration pond. 0 J uO a a c� Ck E:3 Ms. McKemie further testified the Golf Club installed an irrigation system with Sandler, as successor in interest to the original developer, to pay for the costs of any upgrades needed because of the effluent disposal requirements. The Golf Club accepts wastewater effluent generated only from the Eagle Creek subdivision and the school. Public Staff witness McKemie further testified that she reviewed the DWQ inspection reports from 09/25/2012, 11/20/2013, and the most recent, dated 04/22/2015. The wastewater treatment plant has had continuous compliance issues concerning the functioning of the disinfection equipment, and the proper operation of the golf course spray system. DWQ continues to work with Sandler to address these issues and bring the system into full compliance. She testified these were also issues noted at the time of Sandler's last rate case. Additionally, there was an incidence of a malfunction of the vacuum sewer collection system which resulted in a sewage overflow into a customer's home on February 11, 2015. Ms. McKemie testified on August 12, 2015, she met on -site with Bill Freed, Operation in Responsible Charge, and David May and Allen Clark from the DWQ Washington Regional Office. It was observed that the second bank of UV disinfection was not operational. Also, she observed that there are some number of Air Vac valve pit packages which are located in low areas. It was explained that these Air Vac valve pit packages may fill with rain water during heavy rains. She testified this results in a system malfunction, loss of vacuum and can even result in sewage backing up in a home, when the sewage cannot drain into the system. 0 J o T_ cv T_ c� Ck W7 Ms. McKemie testified the Public Staff recommends that the Hearing Examiner order that Sandler: (a) within 60 days of the effective date of the order approving rate increase, physically inspect every Air Vac valve pit package and file with the Commission a report on the status of every Air Vac valve pit package as to whether the pit package is subject to rain water intrusion during heaving rains; (b) within 150 days of the effective date of the rate increase order, complete renovations to reduce the rain water intrusion, including but not limited to raising and sealing pit packages subject to rain water intrusion; (c) within 180 days of the effective date of the rate increase order, file a written report with the Commission describing the completed renovations for each of the pit packages where renovations are necessary. Ms. McKemie further stated the continued problems with the second bank of UV lights are unacceptable and must be remedied within six months of the effective date of the rate increase order. Bill Freed, the President of Enviro-Tech, testified he has 30 year's experience operating wastewater treatment systems and is a Grade 4 wastewater treatment plant operator, which is the highest grade in North Carolina. He testified there are 212 Air Vac valve pit packages and four to five miles of collection pipe that has to be maintained under 20 to 22 inches of vacuum 24 hours a day, 7 days a week for the system to operate properly. He testified if water gets in the valve and it sticks open, or the valve wears out and sticks open, or the valve sticks open for any reason, the entire collection system will lose vacuum. 0 J uO a a c� Ck 10 Mr. Freed testified that when a valve starts leaking, the clock starts and if that valve is not discovered and repaired within an hour to an hour and a half, other pit package valves are going to fail the same way. He testified it is urgent that his men hurry to find the leaking valve and get it stopped. The Hearing Examiner concludes that the service provided is only marginally adequate despite the very able and conscientious work by Enviro-Tech, the contract operator. Sandler needs to materially increase its maintenance and repair of the Air Vac valve pit packages and institute a system wide thorough maintenance plan. The Air Vac valve pit package and candy cane service line valve sewage overflows, and the sewage backups into houses are unacceptable. The uncontroverted testimony was that if water gets in the valve of the Air Vac valve pit packages and the valve sticks open, or the valve wears out and sticks open, or the valve sticks open for any reason, the entire collection system will lose vacuum and fail to transport the sewage. The uncontroverted testimony was that when a valve in an Air Vac valve pit package starts leaking, that valve must be discovered and repaired within an hour or an hour and a half, or other pit package valves will fail the same way, causing collection system failure. The Hearing Examiner concludes that the Public Staff recommendations that Sandler physically inspect all 212 Air Vac valve pit packages and complete necessary renovations to reduce rain water intrusion will be helpful to reduce future Air Vac valve pit package valve sticking open failures, but additional renovations are needed in order to minimize the impact on the remainder of the collection system from the one failed valve sticking open. 0 J uO a a c� Ck 11 The Hearing Examiner concludes that in addition to the Public Staff recommended Air Vac valve pit package inspections and renovations, and the Public Staff recommended and DWQ required renovations to the second bank of UV lights, that Sandler must within sixty days of the effective date of this order, file with the Commission a detailed plan for the isolation of sections of the Eagle Creek sewer collection system, including the installation of isolation valves to minimize the system wide impact of Air Vac valve pit package valves sticking open, and also plans for the installation of any other necessary equipment to prevent the collection system losing its vacuum. The Hearing Examiner concludes that Sandler shall complete the necessary installations to achieve the isolation of collection system sections and installation of additional equipment to prevent the loss of collection system vacuum, within 150 days of the effective date of this order. EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 6-7 The evidence for these findings of fact is contained in the Application, the records of the Commission, and the testimony of Public Staff Engineer McKemie and Public Staff Accountant Morgan. This evidence is uncontroverted. The service revenues under present and Sandler proposed rates are stated on page 9 of McKemie's pre -filed testimony, and the uncollectibles are reflected on Morgan Exhibit 1, Schedule 3. EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 8-9 The evidence for these findings of fact is contained in the testimony of Public Staff Accountant Morgan. This evidence is uncontroverted. The original 0 J o uO a a c� Ck 12 cost rate base of $117,951 and the reasonable level of operating expenses of $212,912 are set forth in Morgan Exhibit 1 Schedules 2 and 3. Based on the foregoing, the Hearing Examiner finds and concludes that the Company's reasonable original cost rate base is $117,951. EVIDENCE AND CONCLUSIONS FOR FINDING OF FACT NO. 10 The evidence for this finding of fact is contained in the testimony of Public Staff Accountant Morgan in Morgan Exhibit 1, Schedule 3. This evidence is uncontroverted. EVIDENCE AND CONCLUSIONS FOR FINDING OF FACT NO. 11 The evidence for the operating revenue deductions requiring a return totaling $250,146 is found in the testimony of Public Staff Accountant Morgan, Morgan Exhibit 1, Schedule 1, Line 2, column (c). The evidence for the remainder of this finding of fact is contained in the affidavit of Public Staff witness Craig. In his affidavit, Mr. Craig recommends using the operating ratio method for determining the overall fair rate of return in this proceeding pursuant to G.S. 62- 133.1(a). Sandler did not oppose the use of the operating ratio method for determining the overall fair rate of return in this proceeding pursuant to G.S. 62- 133.1(a). The Hearing Examiner has carefully considered the evidence and concludes that the operating ratio methodology as described in G.S. 62-133.1(a) is reasonable for use in this proceeding. 0 J uO a a c� Ck 13 0 In his affidavit, Mr. Craig recommended that the Company be granted a 7.50% margin on expenses. His recommendation would produce operating ratios of 93.14% (including taxes) and 93.02% (excluding taxes) for the sewer utility 0 service. Mr. Craig stated in his affidavit that he derived a margin on expenses by identifying a risk -free rate of 4.5% and adding a 3.0% risk factor. This method u, a yielded Mr. Craig's recommended margin on expenses of 7.50%. Mr. Craig further ` a stated in his affidavit that his methodology is consistent with the method presented Ck by the Public Staff and adopted by the Commission in Docket No. W-173, Sub 14 for the Montclair Water Company. Based upon all the evidence in the record, the Hearing Examiner concludes that a 7.50% margin on operating expenses requiring a return, as recommended by the Public Staff, is appropriate in this proceeding. EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 12-13 The evidence for these findings of fact is contained in the testimony of Public Staff witnesses Morgan and McKemie. Ms. Morgan's testimony and exhibits support her service revenue requirement of $280,303. Ms. McKemie testified she examined Sandler's customer billing records and recommended rates that will produce the service revenue requirement. Sandler has agreed to accept the recommendation of the Public Staff. The Hearing Examiner concludes that the Public Staff recommended revenue requirement and rates are reasonable and should be approved. 14 0 The following Schedule 1 summarizes the revenues, operating expenses, taxes and depreciation in this proceeding. T- cv T- c� Ck 15 SCHEDULEI Sandler Utilities at Mill Run, LLC Docket No. W-1130, Sub 8 Net Operating Income for a Return For The Twelve Months Ending December 31, 2013 0 After Present Approved Approved Rates Increase Increase Operating Revenues: un Service revenues $243,552 $36,751 $280,303 CD Other revenues 0 0 0 ` Uncollectibles (6,760) 0 (6,760) o Total operating revenues 236,792 36,751 273,543 0 Operating Expenses Salaries and wages 0 0 0 Contract labor 72,084 0 72,084 Procurement fees 10,986 0 10,986 Labor 13,850 0 13,850 Administrative & office 842 0 842 Telemetry 777 0 777 Maintenance & repairs 1,650 0 1,650 Materials 3,186 0 3,186 Equipment 526 0 526 Electric power 37,996 0 37,996 Testing 6,696 0 6,696 Chemicals 16,281 0 16,281 Sludge removal 16,758 0 16,758 Disposal expense 3,051 0 3,051 Purchased water 2,767 0 2,767 Permit fees & licenses 2,120 0 2,120 Business License Fees 327 0 327 Rate case expense 964 0 964 Insurance expense 12,243 0 12,243 Overhead expense 9,808 0 9,808 Total operating expenses 212,912 0 212,912 Depreciation expense 36,282 0 36,282 CIAC Amortization expense 0 0 0 Property taxes 0 0 0 Othertaxes 952 0 952 Regulatory fee 350 55 405 Gross receipts tax 0 0 0 State income tax 0 920 920 Federal income tax 0 3,311 3,311 Total operating revenue deductions 250,496 4,286 254,782 Net operating income for return $ (13,704) $32,465 $18,761 it: EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 14-15 The evidence of these findings of fact is contained in the testimony of Public Staff Accountant Morgan. The Hearing Examiner finds and concludes that, pursuant to HB 41, the refund of the portion of rates related to the repeal of the gross receipts tax and the reduction of the state corporate income tax should be approved, and Sandler should accomplish the refund through a billing credit to each customer of 6.19% of the amount that was billed on and after July 1, 2014, up until the date that the new rates approved herein become effective and final. IT IS, THEREFORE, ORDERED as follows: 1. That Sandler is authorized to increase its rates and charges for sewer utility service so as to produce based on the adjusted test year level of operations, an increase in annual service revenues of $36,751. 2. That the Schedule of Rates attached as Appendix A is approved for sewer utility service rendered by Sandler. These rates shall become effective for service rendered on and after the effective date of this Order. 3. That the Notice to Customers attached as Appendix B shall be mailed with sufficient postage or hand delivered by Sandler to all of its customers in conjunction with the next billing statement after the date of this Order; and that Sandler shall file a copy of the attached Certificate of Service properly signed and notarized, within 10 days after providing customer notice. 4. That Sandler shall: (a) within 60 days of the effective date of this order, physically inspect every Air Vac valve pit package as to whether the pit package is subject to rain water intrusion during heaving rains; (b) within 150 days 0 J LL LL 0 uO a a c� Ck 17 of the effective date of this order, complete renovations to reduce the rain water intrusion, including but not limited to raising and sealing pit packages subject to rain water intrusion; (c) within 180 days of the effective date of this order, file a written report with the Commission describing the completed renovations for each of the pit packages where renovations were necessary. 5. That Sandler shall within 180 days of the effective date of this order, complete renovations to the second bank of UV lights at the wastewater treatment plant to bring the UV system in compliance with North Carolina Department of Environmental Quality, Division of Water Resources regulations. 6. That Sandler shall: (a) within 60 days of the effective date of this order file with the Commission a detailed plan for the isolation of sections of the Eagle Creek sewage collection system, including the installation of isolation valves and also plans for the installation of any other necessary equipment to prevent the collection system losing its vacuum; (b) within 150 days of the effective date of this order, complete the necessary collection system isolation renovations, and installation of isolation valves, and the installation of any other necessary equipment to prevent the collection system losing its vacuum, pursuant to Sandler's detailed plan; (c) within 180 days of the effective date of this rate increase order, file a written report with the Commission describing the completed collection system isolation renovations, including the installation of necessary isolation valves, and the installation of any other necessary equipment to prevent the collection system losing its vacuum, pursuant to the detailed plan. 0 J uO cv T- a U a) Ck M-0 7. That Sandler shall refund the portion of rates related to the repeal of the gross receipts tax and the reduction of the state corporate income tax rate, through a billing credit to each customer of 6.19% of the amount billed on and after July 1, 2014, up until the date that the new rates approved in this docket go into effect. 8. That, within 15 days after issuing the refund credits, Sandler shall file with the Commission a notarized statement confirming that the billing credits have been issued as required in this order. ISSUED BY ORDER OF THE COMMISSION. This the _ day of December, 2015. NORTH CAROLINA UTILITIES COMMISSION Gail L. Mount, Chief Clerk 0 J to a a c� Ck 19 STATE OF NORTH CAROLINA UTILITIES COMMISSION RALEIGH NOTICE TO CUSTOMERS DOCKET NO. W-1130, SUB 8 BEFORE THE NORTH CAROLINA UTILITIES COMMISSION Notice is hereby given that the North Carolina Utilities Commission (Commission) has issued an Order authorizing Sandler Utilities at Mill Run, LLC (Sandler), to increase sewer rates in the Eagle Creek Subdivision in Currituck County, North Carolina, by an overall rate of approximately 15.09%. The new approved rates are as follows: Monthly Sewer Rates: Flat Rate Residential Sewer Service $ 52.65 Mill Creek Golf Club $365.00 Moyock Middle School $885.00 Gross Receipts Tax Repeal and Corporate Income Tax Reduction Refunds The Commission ordered Sandler to refund the portion of rates related to the repeal of the gross receipts tax and the reduction of the state corporate income tax rate, through a billing credit to each customer 6.19% of the amount that was billed on and after July 1, 2014, up until the new approved rates became effective and final. Commission Ordered Sewer System Upgrades The Commission ordered Sandler to make the following sewer system upgrades: Air Vac Valve Pit Packa Sandler shall: (a) within 60 days of the effective date of this order, physically inspect every Air Vac valve pit package as to whether the pit package is subject to rain water intrusion during heaving rains; (b) within 150 days of the effective date of this order, complete renovations to reduce the rain water intrusion, including but not limited to raising and sealing pit packages subject to rain water intrusion; (c) within 180 days of the effective date of this order, file a written report with the Commission describing the completed renovations for each of the pit packages where renovations were necessary. uO a a c� Ck Wastewater Treatment Plant Disinfection S Sandler shall within 180 days of the effective date of this order, complete renovations to the second bank of UV lights at the wastewater treatment plant to bring the UV system in compliance with North Carolina Department of Environmental Quality, Division of Water Resources regulations. Collection System Isolations and Equipment to Prevent Loss of Vacuum Sandler shall: (a) within 60 days of the effective date of this order file with the Commission a detailed plan for the isolation of sections of the Eagle Creek sewage collection system, including the installation of isolation valves and also plans for the installation of any other necessary equipment to prevent the collection system losing its vacuum; (b) within 150 days of the effective date of this order, complete the necessary collection system isolation renovations, and installation of isolation valves, and the installation of any other necessary equipment to prevent the collection system losing its vacuum, pursuant to Sandler's detailed plan; (c) within 180 days of the effective date of this rate increase order, file a written report with the Commission describing the completed necessary collection system isolation renovations, including the installation of isolation valves, and the installation of any other necessary equipment to prevent the collection system losing its vacuum, pursuant to the detailed plan. This the day of December, 2015. NORTH CAROLINA UTILITIES COMMISSION Gail L. Mount, Chief Clerk 0 J uO a T- c� Ck 2 APPENDIX A PAGE 1 OF 2 SCHEDULE OF RATES for SANDLER UTILITIES AT MILL RUN, LLC for providing sewer utility service in EAGLE CREEK SUBDIVISION, MILL CREEK GOLF CLUB, AND MOYOCK MIDDLE SCHOOL Currituck County, North Carolina Monthly Sewer Rates: Flat Rate Residential Sewer Service $ 52.65 Mill Creek Golf Club $365.00 Moyock Middle School $885.00 Connection Charge: Residential Commercial Reconnection Charge: $3,000 per residence $3,000 per REU (360gpd) If sewer service cut off by utility for good cause: Actual Cost 1/ Neglect or failure to pay amounts due or otherwise comply with provisions of this tariff shall be deemed to be sufficient cause for discontinuance of service. If such discontinuance of service becomes necessary, Sandler Utilities at Mill Run, LLC, will install a valve or other device to cut off and block the sewer line. The customer will be charged the actual cost of installing the valve or device including parts and labor. Prior to disconnection, Sandler Utilities at Mill Run, LLC, will diligently try to induce the customer to pay or otherwise comply with its tariff. After such effort, Sandler Utilities at Mill Run, LLC, will give the customers written notice at least five days (excluding Sundays and holidays) prior to disconnection. Such notice will contain at a minimum a copy of this provision, the procedures to be used by Sandler. 0 C� J 0 to V- 0 T- 0 0 0 APPENDIX A PAGE 2OF2 Reconnection Charge: (continued) Utilities at Mill Run, LLC, to install the valve or device, the estimated cost, and the procedures the customer can use to avoid the discontinuance of service. In the event an emergency or dangerous condition is found to exist or fraudulent use of service is detected, sewer service may be cut off without notice. In such an event, notice as described will be given as soon as possible. Bills Due: On billing date Bills Past Due: 15 days after billing date Billing Frequency: Shall be quarterly for service in arrears Finance Charge for Late Payment: 1 % per month will be applied to the unpaid balance of all bills still past due 25 days after the billing date. Issued in Accordance with Authority Granted by Commission in Docket No. W-1130, Sub 8, on this the 2015. the North Carolina Utilities day of , 0 J i� LL LL 0 uO a a c� Ck 2 The National Map Advanced Viewer f � \ ff /•y r l � � r r t M .�. r x . ... ....... ... ... .... . ... ... .._ .... .:_ .._ ... ... ..._ ..._ i_.. ... .._ ... .. .... .... ... .... tt ... ... ... ... .._ „ r � � If t ici # # r Y v r 1 ■ 1 r J { n 1 } 1 �� ■ r t 1 7 .. UORTH 7, J CAROLINA 9/22/2020, 12:41:05 PM 1:9,028 Index of Available Maps 0 0.07 0.15 0.3 mi p Published 2019 Normal Intermediate Contours �._, , Published 2017 or earlier 0 0.13 0.25 0.5 km Published 2020 Normal Index Contours Published 2018 USGS TNM — US Topo. 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