20070730Supplemental reply comments.pdf

Morning View Water Co., Inc.
An Idaho PUC Regulated Company
3996 E. 200 North
o. Box 598
FUgby, Idaho 83442
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Office: 208-745-0029
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Fax: [phone]
July 27 2007
Idaho Public Utilities Commission
Attention Commission Secretary
O. Box 83720-0074
Boise, Idaho 83720
Subject: Supplemental Reply Comments Case No. MNV - W -06-
Enclosed with this cover letter are supplemental reply comments of Morning View Water
Company (Applicant or Company) to the Commission Staff (Staff) Comments filed in
this case. Applicant earlier filed a letter dated June 18, 2007 containing questions and
concerns regarding Staff's comments and requesting clarification of items contained in
those comments. The Commission treated that letter as Reply Comments of Applicant.
Applicant could not get answers from Staff regarding the concerns and questions posed in
its letter and found it necessary to engage an outside consultant to aid the Company in
drafting a response to Staff's comments. The Company and its consultant were unable to
clarify items contained in the Staff's comments until July 24 th when the Staffwas
available to meet with the Company s consultant to discuss the Staff's comments.
Please accept the attached reply comments of the Applicant and consider them in your
deliberations in this case.
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Nolan Gneiting
President
Morning View Water Company.
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NOLAN GNEITING
PRESIDENT
MORNINGVIEW WATER COMPANY
O. BOX 598
3996 E. 200 North RIGBY, IDAHO 83442
(208) 83442
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
MORNINGVIEW WATER COMPANY INC.
FOR AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE IN
THE STATE OF IDAHO.
CASE NO. MNV-O6-
REPLY COMMENTS
OF MORNINGVIEW
WATER COMPANY
TO COMMISSION
STAFF COMMENTS
COMES NOW Morning View Water Co, (Applicant, Company) and in response to the
comments filed by the Staff of the Idaho Public Utilities Commission submits the
following reply comments.
Adjustment to Annual Expenses1. Staff Adjustment No.1 (Page 3) Applicant agrees with Staff's recommendation.
Staff Adjustment No.2 (Page 3) Applicant agrees with Staff's recommendation.
3. Staff Adjustment No.3 (Page 3) Applicant agrees with Staff's adjustment for the
initial purchase of this pump. However, the Company hereby informs the Commission
that this pump was installed and declared functional and in service as the Company
back -up source of supply on July 20, 2007. This pump was installed pursuant to an Idaho
Department of Environmental Quality (DEQ) letter dated July 6, 2007 giving ten (10)
days notice to comply with Idaho Rules For Public Drinking Water Systems. A copy
that letter is attached to these comments as Attachment ". On Monday July 23 2007
an e-mail was sent to the DEQ informing them of the completion of the required
improvements. A Copy of that e-mail is enclosed as Attachment "
The Company has incurred additional costs of$5 013.97 to comply with the DEQ
requirements. Enclosed Attachment "c" is a schedule of the costs incurred. These
expenditures were required for DEQ compliance, do not produce any additional revenues
for the company, have been completed with 8 months of the end of the test year in this
case and were not a known event at the time the Company s Application was filed. The
Company requests, given the emergency nature of these unanticipated costs, that the
Commission consider the effect on the Company in its deliberations in this case.
Staff Adjustment No.4 (Page 4). Applicant agrees with Staff's recommendation.
Staff Adjustment No.5 (Page 4) Applicant agrees with Staff's recommendation.
6. Staff Adjustment No.6 (Page 4) Staff deducted $645.00 from the operating
expense for what Staff characterized as expenses that should have been charged to an
affiliate company. This amount is composed of two checks, one written to the Idaho
Rural Water Association in the amount of $230.00 for dues and one written to the Idaho
Department of Environmental Quality in the amount of$415.00 for annual DEQ fees.
These two expenditures are appropriately charged to the water company and should not
be eliminated as proposed by Staff. The DEQ fee is a mandatory state imposed fee. The
Idaho Rural Water Association provides support and representation to small water
systems in the State of Idaho. This association has offered to provide water meters to the
Company free of charge and the Company is currently considering accepting the offer if
it can fmd a way of funding the installation of the meters. Discussions with the Idaho
Department of Water Resources have been initiated to pursue a possible low interest loan
to complete the meter installation program.
7. Staff Adjustment No.7 (Page 4) Staff eliminated a $500.00 payment for vehicle
insurance paid by the water company for a vehicle owned by an affiliated company. This
is the only vehicle expense incurred by the water company. Staff's adjustment assumes
the water company has neither need for a vehicle nor any vehicle expenses. Staff is
correct that the water company does not own any vehicles. However it is inappropriate to
assume there is no need. Numerous trips to deliver water samples to laboratories in Idaho
Falls, pick up materials and supplies, make bank deposits, inspect the service area water
lines, check wells and deliver notices to customers are required. The Company
insurance payment for an affiliate company s vehicle of only $500.00 is a small price to
pay. At the Federal mileage allowance of $0.47 / mile this translates to 1 064 miles per
year. The Commission should reject this Staff adjustment and acknowledge that the
Company cannot possibly function without incurring some transportation expenses.
8. The Staff addressed the Company s office space rent expense and recognized that
the Company did not actually pay any rent during the 2006 test year. The Company
affiliate company has been subsidizing the water company in this regard. To the Staff's
credit it did pro form a rent allowance back into its recommendations for the total revenue
requirement. Staff allowed the rent expense included in the Company s 2002 rate case of
$950.00 and stated "The rent circumstances and expense of $950 included in the 2002
rate case has not changed..." Circumstances certainly have changed. Real Estate values
and therefore rental values have escalated over a period of 5 years. Escalating the 2002
value of $950.00 for a period of 5 years at a very conservative compound rate of three
percent (3%) per year would produce a rental value of$I 123.00. Escalating for an
addition year (when new rates will be in effect) would produce a rental value of
156.00.
9. The Company determined that it needed the assistance of an outside consultant to
properly respond to the Staff's comments. The Company did not seek outside assistance
initially in this case due to cash flow constraints but now believes it needs such
assistance. The Applicant requests that the Commission recognize the value of this
assistance and allow the Company to amortize its costs for this case over a two year
period. Total Costs are expected to be $1 000.00 and when amortized over two years
would increase the Company s revenue requirement by $500.00.
10. Staff accepted the revenues booked by the Company in the test year of $36 256.
in its analysis. While reviewing the Staffs comments it came to the Company s attention
that the booked revenues are not indicative of the revenues generated by the Company
tariff's during the test year. The booked revenues are based upon the receipt of payments
rather than accrued on a billed basis. Numerous factors contribute to a difference
between the revenues due from customers from test year bills and payments received and
deposited. These include payments from prior years from customers who were in arrears
at the beginning of the test year, customers who prepay several months in advance, partial
payments and past due accounts carried forward into the following year.
Enclosed Attachment "D" is a schedule that shows the revenue that would have
been booked on an accrual basis coincident with the mailing of bills for service during
the test year. That attachment indicates that normalized revenues for the test year should
have been $33 258.93 or $2 997.76 less than reflected in the Staff analysis.
11. Enclosed Attachment "E" summarizes the Applicants adjustment to the
Commission Staff's recommendations. With these changes the Staff's incremental
revenue requirement recommendation would increase by $6 116.22 from $3 001.02 to
017.24. Staff proposed an increase in the Company s rates of 8.3%. As demonstrated
by these comments, the Commission should approve an increase of 27.41 % in the
Applicants tariff rates.
Respectfully submitted this day of July, 2007.
Nolan Gneiting
President
Morning View Water Co.
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STATE OF IDAHO
DEPARTMENT OF
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900 North SkYline Drive, Suite B . Idaho Falls, Idaho 83402 . [phone] L. "Butch" Otter, Governor
Toni Hardesty, Director
July 6, 2007 CERTIFIED MAIL
Morning View Acres
Attn: Nolan Gneiting
O. Box 598
Rigby, ID. 83442
RE: 10 DAY NOTICE FOR MORNING VIEW ACRES PWS# 7260063 TO COMPLY
WITH THE PRESSURE AND SECONDARY SOURCE REQUIREMENTS OF THE
IDAHO RULES FOR PUBLIC DRINKING WATER SYSTEMS
Dear. Mr. Gneiting:
This letter is a follow up to Rochelle Mason s (DEQ) site visit on July 5 , 2007 following a
pressure compliant from one of your customers of the Morning View Acres public water system.
Due to a history of non-compliance with the Idaho Rules for Public Drinking Water System DEQ
is considering disapproving the public water system Morning View Acres. The enforcement
action will consist of a Notice of Violation (NOV) and Consent Order between Morning View
and the IDEQ.
The following are significant Health Hazard conditions identified during DEQ's July 5. 2007 site
visit that violate IDAPA rules for drinking water systems that shall be corrected in order to avoid
enforcement actions taken against the Morning View water system:
I. Distribution pressure was measured at five (5) connections within the Morning View water
system that showed the average system pressure at 30 psi. at I :45 p.
IDAPA 58.01.08.552.ii.states: Any public water system shall maintain a minimum pressure
of forty (40) psi. throughout the distribution system , during peak hourly demand conditions.
2. Pictures were taken during the July 5th site visit that shows that the second source
is not hooked to the distribution. Our records indicate during a February 23 , 2007 phone
conversation with Rochelle Mason you verified that a new variable speed pump was being
installed in Well # 2. Another phone conversation, on July 5 , 2007 with Rochelle upon
receiving another pressure compliant, you informed DEQ that the new pump had not yet been
installed due to costs restraints.
IDAP A 58.01.08.513.states: Community water systems served by ground water shall have a
minimum of two (2) source is they are intended to serve more than twenty-five (25) home.
DEQ requests you comply with lDAPA 58.01.08.552.and IDAPA 58.01.08.513.within ten
(10) days of receipt of this letter in accordance with the Idaho Rules for Public Drinking Water
Systems. Failure to comply with the Idaho Rules for Public Drinking Water rules will result in
enforcement actions with civil penalties. This may also include new service connection
moratorium.SCANNED
JUL 0 6 2007
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If you do not agree with Morning View Acres water system non-compliance issues, please
respond in writing to this office within five (5) days.
Please call me if you have any questions regarding this monitoring.
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dreg Eager
Regional Engineering Manager
Rochelle Mason, Drinking Water Analyst
Willie Teuscher, P.E. Water Quality Engineer
Ray Keating, RHS, Eastern Idaho Public Health Department
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MorninQ View Homes
From:
To:
Sent:
Subject:
Morning View Homes" c::morningviewhomes(g!qwest.net=-
Rochelle Mason" c::Rochelle.Mason(g!deq.idaho.gov=-
Monday, July 23, 20078:51 AM
DEQ Mandate
ATTENTION: Rochelle Mason
REGARDING: Morning View Water Co., Inc.
July 23, 2007
Please be adivsed that as of July 20 2007 at 3:30 p., well #2 was fully functional.
The following was done to accomplish this:
1. The old pump and motor has been removed from the well casing.
2. The pump and the motor have been replaced.
3. The system has been con'terted to 'a three phase electrical system.
4. The leaks have been repaired and the well has been chlorinated.
We believe we are in compliance with the DEQ mandate , dated July 6 2007, and inside the time frame allotted.
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)fol~n Gneiting
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Operations Manager
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Morningview Water
Post Test Year Construction Projects
Non-Revenue Producing
Well No.2 Project
Completed July 2007
Itemized for Well & Pump
Name Amount
1 Brian Ader labor 300.
2 Brian Ader labor 164.
3 Jacob Reading labor 15.
4 Sam Reading labor 105.
5 Jacob Reading labor 15.
599.
7 Robertsons parts 10.
8 Standard Plumbing parts 63.
9 HD Supply parts 62.
102M Company parts 87.
224.
12 Forman Pump Set Pump 421.
13 Allstar Excavating Excavation 482.
14 NuLite Electric Elec Controls 487.
390.
16 Total 213.
Well Number One
To be Completed July 2007
Estimated Cost
17 larson Pump Pull & Replace 800.
18 Total 2007 Capital Improvements 013.
19 Depreciation Expense 10 Yr Life 501.
ATTACHMENT "
MORNINGVIEW WATER COMPANY
Revenue Comparison (Billed VS Collected)
Difference
Rate! Lot No. Customers Total Total Collected Collected
January Billed Amount Billed Billed Cash Basis Over (Under)
22.17 $374.
22.48 $096.
35.24 $856.327.3,451.123.
February
22.17 $374.
28.48 $384.
35.25 $892.651.090.438.
March
22.17 $374.
28.48 $384.
35.26 $928.687.409.(277.17)
April
22.17 $374.
28.48.5 $399.
35.24 $856.630.2,433.(196.78)
May
22.17 $374.
28.50 $442.
35.29 $035.851.988.136.
June
22.16 $352.
28.51 $471.
35.27 $963.787.877.90.
July
22.19 $418.
28.51 $1,471.
35.28 $999.888.186.297.
August
22.18 $396.
28.50 $1,428.
35.30 $071.895.808.913.
September
22.19 $418.
28.48 $384.
35.30 $071.873.014.(859.43)
October
22.20 $440.
28.49 $413.
35.30 $071.924.924.000.
November
22.20 $440.
28.49 $1,413.
35.29 $035.888.175.286.
December
22.20 $440.
28.47 $341.
35.30 $071.852.897.44.
Total Billed 2006 $258.$ 33 258.256.997.
ATTACHMENT "
MORNINGVIEW WATER COMPANY
Staff Adjusted Revenue Requirement
1 Revenue Requirement Per PUC Staff
2 Add Back Staff Adjustment No.
Idaho Rural Water Association Dues
DEQ Fees
Total No.
6 Add Back Staff Adjustment No.
Vehicle Expense
8 Adjust Staff Adjustment No.
Proposed Rent Allowance10 Staff Proposed Allowance11 Adjustment to Revenue
12 Rate Case Expense Amortization13 Total Cost14 Amortization Period15 Adjustment to Revenue
16 Adjust For Emergency Project per DEQ
17 Well #2 Costs Incurred18 Brian Ader19 Brian Ader20 Jacob Reading21 Sam Reading22 Jacob Reading23 Robertsons24 Standard Plumbing25 HD Supply26 2M Company27 Forman Pump28 Allstar Excavating29 NuLite Electric30 Total
31 Well #1 Cost Incurred32 Larson Pump33 Total34 Return35 Income Requirement36 Gross-up Factor37 Revenue Requirement38 Depreciation Exp 10 Yr life
39 Normalize Test Yr Revenue40 Revenue Per Staff41 NormalizedRevenue
Labor
Labor
Labor
Labor
Labor
parts
parts
parts
parts
Set Pump
Excavation
Elec Power
Pull & Replace
Additional Revenue Required
Rate
Revenue Cumulative Increase
Requirement Amount Percent
301.02 $001.
230
415
645 $646.10.
500 $146.11.4%
1156
950
206 $352.12.
1000
2Yrs
500 $852.13.4%
Amount
300.
164.
15.
105.
15.
10.
63.
62.
87.48
421.
482.
487.
213.
800.
$ 5 013.
12%
601.6764
273237
766.08 $ 5 618.
501.40 $ 6 119.49
15.
16.
256.
258.
997.75 $ 9 117.25.
Percent increase required based upon Normalized Revenue 27.41%
ATTACHMENT "