20161201final_order_no_33658.pdf

Office of the Secretary
Service Date
December I, 2016
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF MORNING VIEW WATER COMPANY ) CASE NO. MNV-W-16-01
FOR AN ORDER AUTHORIZING )
INCREASES IN THE COMPANY'S RATES ) ORDER NO. 33658
_A_N_D_C_H_A_R_G_E_S_F_O_R_W_A_T_E_R_S_E_R_V_I_C_E __ )
On May 2, 2016, Morning View Water Company ("Morning View" or "Company")
applied to the Commission for authority to increase its rates and charges. Morning View
provides water service to more than 100 residential and commercial customers in and around
Rigby, Idaho in Jefferson County. The Company last increased its basic rates and charges in
September 2007. See Order No. 30420. With this Application, Morning View seeks to increase
its revenues by $101,452 to cover $71,387 in annual operating expenses and a 7.41 % rate of
return on a $682,070 rate base. See Application Exh. Nos. 1-4.
We have thoroughly reviewed the record in this case, including written comments and
analysis from the Company, Commission Staff, and the Company's customers, and testimony
from customers given at public hearing. Based on that review, we find it fair, just, and
reasonable to approve a new, total revenue requirement for the Company of $93,727. The
Company's new rates and charges will take effect on December I, 2016. Our decision is
explained in detail below.
PROCEDURAL BACKGROUND
On June 2, 2016, the Commission issued Notices of Application, Modified Procedure,
and Schedule that suspended the Company's proposed effective date, scheduled a July 12, 2016
public workshop, set an August 19, 2016 comment deadline, and a September 2, 2016 reply
deadline. See Order No. 33531. The workshop and customer hearing occurred, Staff and
members of the public filed written comments, and the Company filed written replies.
THE APPLICATION
Morning View's Application seeks to increase its revenues by $101,452 to cover
$71,387 in annual operating expenses and a 7.41 % rate of return on a $682,070 rate base. See
Application Exh. Nos. 1-4. The Company primarily attributes the proposed increase to the cost
of new plant, including a new well house, water mains, and payment on a new loan and inflation.
ORDER NO. 33658 1
Application at 1. These and other expenditures led the Company to apply to raise rates and
increase revenues.
The Company proposed to increase its charges according to the following rate design:
Company
Proposed
Current Minimum Charge Minimum %
Lot Size (Monthly) Charge Change
1A Acre $27.41 + 5.00 contingency $48.61 50%
account surcharge
V2 Acre $35.94 + 5.00 contingency $81.88 100%
account surcharge
1 Acre $44.48 + 5.00 contingency $98.96 100%
account surcharge
First Application Addendum at 1. Although the Company installed meters over a year ago in
anticipation of establishing a volumetric charge, it did not propose one in its Application. Id.
The Company asked Commission Staff to help it develop a volumetric component to its rates.
Staff Comments at 17.
PUBLIC COMMENTS AND TESTIMONY
Numerous customers submitted written comments or testified in this case. Generally
speaking, customers opposed the magnitude of the Company's proposed rate increase to cover
system upgrades that should have occurred over time. Customers noted that the Company
should have gradually updated infrastructure so as not to inflict a sudden, extreme rate hike, and
that the Company should not have spent so much on infrastructure without obtaining prior
permission or input from the Commission and its customer base.
Customers also urged us to scrutinize the Company's management, including whether
the Company was responsible in incurring so much debt and whether the Company could
reasonably manage a dramatic increase in rates, including proper metering, accounting and
collection practices. Relatedly, customers expressed concern about the cleanliness and
organization of the Company's office and whether proper management and recordkeeping can
take place in that space.
Customers further expressed concern that the contingency account surcharges were
not being used responsibly and that proper notice of the Company action was not provided to all
customers, including Spanish speaking customers. Numerous customers complained of more
ORDER NO. 33658 2
general concerns about the water system, including historical water pressure issues and concerns
related to newly installed water meters. Customers were also worried about the effect that a
large rate increase would have on fixed and low-income customers. Several customers testified
that drastic increases in the cost of water might have a detrimental effect on property values and
community aesthetics. Customers were also concerned about our regulatory authority and
jurisdiction and general oversight of small water companies.
We appreciate the time that the Company's customers took to comment and testify in
this case. We recognize that for some customers any rate increase will result in economic
hardship. We also note that the Commission has an obligation to Morning View and its
customers to set rates at a level sufficient to allow the Company to recover its reasonable
expenses and receive a reasonable return on its investments. See Idaho Code § 61-622. Such
rates enable the Company to remain financially sound and capable of providing adequate, safe
water to its customers. The Idaho Supreme Court has held, "It is the duty of the Commission not
only to fix just and reasonable, nondiscriminatory rates, but to see that adequate service is
furnished and in fixing such rates to allow the utility furnishing the service to make a just and
reasonable profit or return on its investment." Application of Pacific Tel. & Tel. Co., 71 Idaho
476,480,233 P.2d 1024, 1026 (1951).
We also understand and appreciate that small water company utilities face a variety of
overlapping regulatory and jurisdictional regimes. We note that Morning View is now in
compliance with Idaho's safe drinking water standards. The Company has worked diligently
with Idaho Department of Environmental Quality to that end. We appreciate this difficulty and
have directed Staff to work closely with Idaho's small, regulated water utilities in order to
improve the framework and ease the burden of this specialized regulatory environment.
We also note that customer notice and participation is of the utmost importance.
Morning View must be available to communicate with its customers at all reasonable hours and
in all reasonable manners. Morning View has pledged to do so. We direct Staff to work with the
Company on policies and procedures that may alleviate its customer service and notice issues.
ORDER NO. 33658 3
COMMENTS, REPLY AND FINDINGS
I. Revenue Requirement
The Company requested a $101,452 increase in revenues. See Application Exh. No.
4. The parties' subsequent comments about the Company's (A) test year; (B) expenses; (C) rate
base; (D) rate of return; and (E) revenue requirement follow.
A. Test Year. The Company proposed a 2015 test year. Id. at 1. Staff accepted the
Company's proposal. Staff Comments at 4.
Commission Finding -Test Year: Our policy is to set a public utility's annual
revenue requirement and rates using a historical test year in which the utility's actual, booked
costs and revenues are verified through auditing. See e.g., Order No. 30342 at 8 (Case No. SWS­
W-06-01). Based on our review of the record we find there is no dispute on the use of 2015 as
the historical test year, and that a 2015 historical test year is reasonable and appropriate for this
case.
Once we determine the historical test year, pro forma adjustments are made to the
actual test year data for all known and measurable changes to the operating results of the test
year. Id. The actual test year data and adjustments are discussed below.
B. Expenses. The Company's Application reports $100,838 in total expenses from
operations, before interest, for the test year. Application Exh. No. 2, Sch. C, 1. 16. This total
consists of test year actual expenses of $55,473, plus pro forma adjustments for known and
measurable expenses equaling $45,365.
Staffs recommendations further adjust the Company's total expenses by $22,688 to
$78,150. Staff Comments; Atch. A. The individual known and measureable changes are as
follows:
Labor Expense -Nolan Gneiting. The Company reported incurring $12,240 in
expenses for Mr. Gneiting's managerial salary. Based on its analysis of local wages and Mr.
Gneiting's duties, Staff did not dispute that the Company's overall expenses for Mr. Gneiting's
services were reasonable. However, Staff recommended that the $12,240 be accounted for on
the Company's books in a different way. Staff noted that 75% of Mr. Gneiting's salary ($9,180)
is attributable to the time he spends operating and maintaining the water system. Therefore, this
amount should be accounted for as an Operations and Maintenance expense. On the other hand,
the remaining 25% of Mr. Gneiting's salary ($3,060) should be accounted for as an
ORDER NO. 33658 4
Administrative and General expense because it is properly attributable to time spent performing
managerial or administrative duties ( e.g., approving payments, overseeing Company finances,
etc.). The Company's reply comments did not address Staff's proposed adjustment.
Commission Findings -Labor Expense -Mr. Gneiting: Based on our review of the
record and services provided by Mr. Gneiting, we find $12,240 in expenses reasonable and just.
We further find it reasonable that the Company's books more accurately apportion the $12,240
in expenses for Mr. Gneiting's labor into categories that better reflect the duties being performed,
with $9,180 being classified as an Operations and Maintenance expense and $3,060 being
classified as an Administrative and General expense.
Labor Expense -Mr. Reading. The Company reported $16,800 in administrative
costs related to 1,040 hours of bookkeeping and accounting labor provided by David Reading.
Id. Based on its audit and a median pay rate for the area of $15.27 for the types of duties Mr.
Reading performs, Staff recommended reducing the claimed hours to 500, which results in an
expense of $7,635 at $15.27 per hour. This adjustment would also decrease payroll taxes by
$1,402. In proposing this adjustment, Staff noted that Mr. Reading is a related party and the
Company failed to meet its burden of providing sufficient data and information to prove the
reasonableness of Mr. Reading's reported hours. Id. at 8. Staff stated that 500 annual hours
should be sufficient, under normal operations, for Mr. Reading's services. Id.
The Company disagreed with Staff's adjustment and stated that Mr. Reading's duties
are more expansive than recognized by Staff. Company Reply at 2. The Company thus
requested Mr. Reading's current hours and pay not be reduced, stating that his responsibilities
are integral to the Company's operation. Id. at 3.
Commission Findings -Labor Expense -Mr. Reading: We acknowledge the
important role that Mr. Reading plays in the current and future success of the Company.
However, Mr. Reading is directly affiliated with the Company's owners and, as such, his
employment represents a related-party transaction subject to a heightened scrutiny in assessing
whether expenses for Mr. Reading's services are reasonable.
In Boise Water Corp. v. !PUC, 97 Idaho 832, 555 P.2d 163 (1976), the Idaho
Supreme Court noted that a utility's burden of proof is different depending on whether its
claimed expenses arise from transactions with non-affiliated or affiliated parties. For non­
affiliates, the pressures of a competitive market and the fact of arm's length bargaining for goods
ORDER NO. 33658 5
and services allow the Commission to assume, in absence of a showing to the contrary, that such
operating expenditures are legitimate. Thus, a utility may establish a prima facie case for the
reasonableness of its operating expenses to non-affiliates by producing evidence showing that the
utility actually incurred the claimed expenses. Boise Water Corp., 97 Idaho at 836 and 838, 555
P.2d at 167 and 169.
On the other hand, a utility claiming affiliate transaction expenses must prove that it
actually incurred those expenses and that they were reasonable. If "there is an absence of data
and information from which the reasonableness and propriety of the services rendered and the
reasonable cost of rendering such services can be ascertained by the commission, allowance is
properly refused." Id.
In this case, we find the Company failed to meet its burden of proof with respect to
Mr. Reading's expenses. It is undisputed that Mr. Reading is a related party, and the Company
did not provide evidence to substantiate Mr. Reading's work and/or wage. It is thus appropriate
and reasonable to adjust the expenses claimed for Mr. Reading. We find Staffs analysis of
annual hours based on normal operations and median pay rate for similarly situated employees
persuasive. Accordingly, we find it reasonable and just to approve $7,635 in Administrative and
General Labor expense for Mr. Reading's bookkeeping and accounting services.
We acknowledge that Mr. Reading is assisting the Company in updating and
improving its water system, accounting systems and procedures, and customer service and
billing. A new meter reading and billing program may alter Mr. Reading's duties and
responsibilities. If, in a future rate case, the Company provides appropriate evidence that Mr.
Reading's continuing labor expenses have been actually and reasonably incurred, we will re­
evaluate the reasonable level of expense recovery through its rates.
Rate Case Expenses. The Company has stated that, like many small water
companies, it lacks sufficient funds to hire outside attorneys, accountants or consultants to help it
prepare and process a rate case. Reply Comments at 3. The Company thus asks to recover its
expenses to prepare this case through the new rates. See Application Addendum 3 at 1.1
Commission Findings -Rate Case Expenses: As noted in footnote 1, the Company
did not ask to recover its rate case expenses in its Application. Rather, it asked to recover those
1 The Company made this request in Application Addendum 3, which it filed on August 26, 2016, which was before
the Company's reply deadline but after the deadline for comments had closed and the public hearing in this case had
occurred.
ORDER NO. 33658 6
expenses after the comment deadline had closed and the public hearing had occurred. No one
has objected to the Company's late request to recover its rate case expenses. Ordinarily, smaller
utilities recover rate case expenses through bookkeeping and accounting wage expenses.
However, we did not allow recovery of all wages in the ongoing revenue requirement.
Moreover, there is reasonable evidence that Mr. Reading and the owners worked many hours on
this case. Although there is not a specific formula due to the variances between small water
utilities, we find it reasonable to allow the Company recovery of $5,000 in rate case expenses.
This amount should be amortized and recovered over a three-year period resulting in $1,667
being added to annual expenses as rate case amortization.
The Commission does not want to discourage small water utilities from filing
necessary and well-supported rate cases due to a belief that the utility will not be allowed to
recover its rate case expenses. If the Company wishes to retain outside attorneys, accountants,
and other consultants to help it prepare and process future rate cases, the Company should be
sure to include those expenses in its rate case application. So long as those rate case expenses
are actual, known, measurable, and reasonably and prudently incurred, the Commission will
consider allowing recovery through rates.
Purchase Power and Fuel Expense. The Company reported actual purchase power
and fuel expenses for the test year of $15,582, and known changes of $6,000, for a total pro
forma adjusted expense of $21,582. See Staff Comments; Atch. A, col. A, 1. 11. Staff
recommended reducing this amount by $7,303 for a total recommended authorized fuel expense
of$14,279. See id.; Atch. A, col. F & M.
Staffs proposed $7,303 adjustment to the total authorized fuel expense included:
• a $487 increase, reflecting the Company's increased costs to pump water
due to a $0.002903 per kWh increase in the price of electricity sold by
Rocky Mountain Power;
• a $2,046 decrease, reflecting abnormally high electricity use in November
and December of the test year;
• a $255 increase, reflecting the net adjustment for both unnecessarily and
necessarily incurred minimum charges and late fees2; and
2 Staffs proposed adjustments related to minimum charges and late fees included: (1) a $116.11 and $69.12
decrease to reflect the removal of unnecessary minimum charges that the Company incurred on its May and
September electric bills; (2) a $239.75 increase to reflect the addition of minimum charges that the Company
necessarily incurred on its November and December electric bills due to abnormally high electricity use; and (3) a
ORDER NO. 33658 7
• a $6,000 decrease, reflecting the Company's failure to sufficiently justify
its proposed $6,000 adjustment for known changes to purchased power
and fuel expenses.
See id. at 9-10.
In its reply, the Company noted that the abnormally high electricity costs in
November and December of 2015 were due to well programming problems. See Company
Reply at 3. The Company did not otherwise address Staffs points, but nevertheless maintains it
cannot reduce its power costs by $7,303. Id.
Commission Findings -Power and Fuel Expenses: Based on our review of the
record, we find that the Company reasonably incurred $14,279 in power and fuel expense. The
Company could have avoided unnecessary minimum and late charges incurred on electric bills
by strategically using its pumps. Staff noted the Company owns three pumps and receives three
different electric bills. Its newest pump is served under a plan that requires the Company to pay
a minimum charge if the total electric bill falls under a certain amount. It is reasonable and just
for the Company to avoid unnecessary minimum and late charges on electric bills by using the
new pump until the minimum bill threshold is met. "When the minimum threshold has not been
met in a given month, splitting usage between two pumps can cause minimum bill charges that
could have otherwise been avoided." Id. The inclusion of an additional $6,000 for "known
changes" is not supported by the record.
Operations and Maintenance (O&M) Expense -Materials and Supplies. The
Company reported $4,100 in O&M materials and supplies expenses, including accounting
adjustments, payment for incidental labor, a security contract and two related-party transactions.
See Staff Comments at 10.
Staff proposed removing $602 from O&M and capitalizing it as plant-in-service,
Account 304, Structures and Improvements. This amount, rather than representing a regularly
incurred O&M expense, represents the one-time cost of building a concrete pad at a well house.
See id. In addition, Staff proposed removing another $573 from O&M Materials and Supplies
expenses because the expense arose from a related-party transaction for which the Company has
failed to satisfy its burden of proof. Specifically, on March 11, 2015, the Company transferred
$572.95 to an entity called Landco. See id. Staff proposed adjusting this expense downward
$39.00 decrease to reflect the removal of unnecessary late fees that the Company unnecessarily incurred on electric
bills. Id.
ORDER NO. 33658 8
because the Company and Landco share common ownership. Staff believed that the Company
did not provide sufficient evidence to show that its payments to Landco were reasonable. Staff
noted the Company provided one $430 invoice from Landco that evidenced one of the
Company's Landco transactions, but the Company did not otherwise provide sufficient evidence
of actual cost incurred supporting the related-party invoice, or that the payment amount was
reasonably and appropriately incurred. For these reasons, Staff recommended that the
Commission decrease the claimed O&M expenses for Materials and Supplies by $1,175 ($602
for the concrete pad reclassified to plant-in-service, plus $573 in claimed Landco expenses),
from $4,100 to $2,925. See id.; Atch. A & F.
In its reply, the Company maintained it provided all requested invoices to Staff (and
thus provided evidence that the Company actually incurred the claimed Landco expenses). See
Company Reply at 4. The Company asserts that the necessary information related to this
transaction was provided to Staff, and that Staff should re-assess compliance through
documentation already provided. See id.
Commission Findings -O&M Expense for Materials & Supplies: We find it fair,
just, and reasonable to decrease the Company's claimed O&M expenses for Materials and
Supplies by $1,175 ($602 in reclassified concrete pad expenses, plus $573 in disallowed related­
party expenses from Landco), from $4,100 to $2,925. The Company did not provide sufficient
evidence of costs actually incurred or reasonableness of its $573 payment to an affiliated party.
Administrative and General Expense -Materials and Supplies. Staff noted that the
Company booked certain training expenses as Administrative and General (A&G) instead of to
an O&M account for the particular utility operating function that was the subject of the training
for which the expense was incurred. While Staff did not make an adjustment because of this,
Staff recommended that, in the future, the Company book training to the proper expense
category. Staff also committed to making itself available to work with the Company on this
issue. See id. at 11.
Commission Findings -A&G Expense for Materials & Supplies: We observe that
Morning View struggles in keeping its expenses appropriately categorized and maintained. We
direct Morning View to work with Commission Staff to properly identify and categorize
expenses.
ORDER NO. 33658 9
Water Testing Expense. The Company proposed $1,000 in proforma water testing
expenses. Staff recommended increasing water testing expenses by $952, to $1,952, based on a
calculation of water quality testing requirements of the Company's three wells over a nine-year
rotation. Id.; Atch. G.
Commission Findings Water Testing Expense: Based on the requirements of the
Idaho Department of Environmental Quality, we find it fair, just, and reasonable to increase the
Company's water testing expense by $952 to $1,952 to allow the Company to meet its water
quality testing requirements.
Regulatory Fee Expense. The Company claimed $630 in actual costs plus a known
adjustment of $127 for regulatory fee expenses totaling $757. See id. at 14. However, Staff
noted that the Company included $506 of property taxes in the regulatory fee amount. Staff also
calculated the current regulatory fee assessment to be $130, as opposed to the $127 calculated by
the Company. Staff thus, recommended that the Commission reclassify the $506 in taxes from
the Company's claimed regulatory fee operating expenses and adjust for the current assessment
rate. The $506 in taxes would then be properly booked as a property tax expense.
Commission Findings -Regulatory Fee Expense: Based on the evidence, we find it
fair, just, and reasonable to approve a regulatory fee expense of $130. Property taxes of $506
will be removed from the Company's regulatory fee expenses and reclassified as a property tax
expense.
Miscellaneous Expenses. Staff opined that the Company accurately accounted for
miscellaneous expenses except as follows:
Bank Charges: Charges on the Company's Wells Fargo Bank account escalate along
with transactions in the account. Staff noted that other banks do not charge this graduated fee,
and it should not be placed in rates for recovery from customers. Staff recommended a reduction
of $281. See id. at 12; Atch. H, 1. 1.
Commission Findings -Bank Charges: Based on our review of the record, it
appears that the Company actually incurred the graduated charges. However, we find that the
graduated charges are not typically charged by other banks, and that the Company could have
avoided them by switching to another bank. Accordingly, we find the Company did not
prudently incur those charges. Charges that are not prudently incurred should not be passed on
ORDER NO. 33658 10
to customers. Therefore, we decline to authorize recovery of the graduated bank fees of $281 in
rates.
Legal Fees: The Company requested that an additional $700 in annual legal fees,
which are unrelated to rate case preparation, but instead stem from the Company's need to
protect its water rights, be added to its allowed expenses. See Application Addendum 2. Staff
stated that $700 is prudent and should be placed in rates because the Company needs to defend
and protect the water rights it uses to serve customers. See Staff Comments at 12; Atch. H, 1 .8.
Commission Findings -Legal Fees: We find it fair, just, and reasonable to include
an additional $700 in legal fees for a total of $800 in rates. The Company is a water utility, and
prudence dictates that it be allowed to pass on to customers the reasonable legal expenses it
incurs to protect the water rights it uses to serve customers.
Software Support: Staff adjusted the Company's reported total software support by
$1,500 because, Staff asserts, these expenses relate to additional bill printing software that is not
in use. See id. at 12. In discovery, Staff requested that the Company demonstrate the software's
ability to print monthly invoices. Instead, the Company provided a sample water bill created
using Excel. See id. However, the Company, in its reply comments, asserted that the additional
$1,500 attached to software expenses is for the purpose of obtaining the bill printing portion of
the software suite. See Company Reply at 3. The Company explained that "the sample invoices
were not created by the billing software purchased in the construction loan, because the company
did not have $1,500 to purchase support and completely set up the billing software .... " Id.
The Company maintained that it must have an additional $1,500 to obtain the software, which
"would show beginning and ending readings that show how the monthly usage was calculated."
Id.
Commission Findings -Software Support: Based on our review of the record, it is
reasonable and appropriate to include the additional $1,500 software expense so Morning View
can upgrade its software and print bills. It is important for the Company to have an adequate
system in place to meter and bill customers. We expect that having this software in place will
reduce, and enable the Company to more quickly address, customer complaints related to meter
reading, and will decrease the Company's costs related to accounting, billing and collections.
Mileage: Staff asserted that the Company did not document mileage for 2015 or
explain how it estimated future mileage. See Staff Comments at 13. Therefore, there is no
ORDER NO. 33658 11
evidence suggesting the Company's requested mileage expense of $2,368 reflects a known and
measurable change to test year mileage expense. Staff admitted, however, that some mileage is
reasonable, given the nature of the Company's business and location. Staff recommended
removing $2,000 from the claimed mileage expense, and placing $368 of mileage expense in
rates. See Id.; Atch. H, 1. 9.
Commission Findings -Mileage: Based on our review of the evidence, we find it
reasonable to include $368 of mileage expenses in rates. Because the Company failed to
document its test year mileage and substantiate known and measurable changes to that mileage,
the Commission cannot make a finding that the expenses were prudently incurred. Accordingly,
it is appropriate to disallow $2,000 in claimed but unsubstantiated expenses, while leaving $368
in rates as a reasonable mileage expense.
Rent: Although an affiliated transaction, Staff and the Company agree that the
Company's $900 rent adjustment (see id. Atch. H, 1. 10) is reasonable. As noted above, some
customers have complained about the appearance and cleanliness of the office. However, while
Staff noted that the building is aged and the exterior is rough, the location is significant because
suitable small offices are not common in the area. See id. at 13.
Commission Findings Rent: Based on our review, including availability of office
space and the lack of dispute on the amount of the proposed rent adjustment, we find the
Company's proposed $900 rent expense to be reasonable and appropriate. Although we are
allowing this expense, we note that a customer described the Company's office as being in
"shambles." The Company has a duty to provide safe and reliable water service to its customers.
Ensuring its customers have a reasonable space to interact with the Company to pay bills, discuss
Company-related matters, and make any complaints, is part of that duty.
Repairs and Maintenance: The Company claimed $1,000 m Repairs and
Maintenance expenses. After separately analyzing "Repair Expenses" and "Maintenance
Expenses," Staff recommended decreasing the Repairs and Maintenance expense to $150 to
avoid misclassifying and double counting $850 in expenses that are accounted for elsewhere.
See Id.; Atch. H, 1. 11.
Commission Findings -Repairs and Maintenance: In regulatory terms,
maintenance expenses are regular and predictable and usually include the cost of labor and
materials. Repairs are generally unpredictable. Labor for repairs is usually performed by
ORDER NO. 33658 12
employees whose wages are reported in other accounts. Evidence provided through production
requests and included in Staff's comments reveals that the Company included some expenses as
both a "repair" and a "maintenance" expense. Labor costs were also inappropriately included.
Proper documentation was not provided to determine the Company's average repair expenses.
Consequently, we cannot find that $1,000 in repairs and maintenance expenses was prudently
incurred. Based on its experience with other small water companies, Staff recommended
inclusion of $150 as an appropriate annual allocation for repairs and maintenance. Without
evidence to substantiate anything more, we find that $150 in annual repair and maintenance
expenses is just and reasonable.
Rate Case Transcript: Staff believes that it is important that the Company purchase a
physical copy of the hearing transcript in this case so the Company can properly address
customer concerns. Therefore, Staff recommended increasing the Company's proposed
miscellaneous expenses by $188 to cover the cost of the transcript. See id.; Atch. H, l. 13.
Commission Findings -Rate Case Transcript: Based on our personal observations
of interaction between the Company and its customers and the parties' agreement on this issue,
we find it reasonable and appropriate to include $188 in hearing transcript expense in rates.
C. Rate Base. The Company proposed a $682,070 rate base. Staff, on the other
hand, recommended decreasing this amount to $465,874. Staff's recommended rate base
includes $469,916 in plant-in-service, $10,411 in accumulated depreciation, and $6,369 in
working capital. See id. at 15; Atch. L. Staff's recommended adjustments to rate base are
discussed below.
a) Plant-in-Service
The Company proposed net plant-in-service of $608,265 be included in rate base.
However, the Company lost most of its historical records in 2013, including those it would have
used to establish plant-in-service. As a result, Staff recommended that the Company set its
plant-in-service to an amount approved by the Commission through this case.
In considering how to establish the Company's plant-in-service, Staff recommended
addressing several factors. To begin, three of the four items from the plant-in-service established
in the Company's most recent rate case (Case No. MNV-W-06-01) are fully depreciated.
Consequently, Staff recommended their removal from the plant-in-service schedule along with
the applicable accumulated depreciation. The fourth item has an undepreciated value of $255.
ORDER NO. 33658 13
Staff recommended that the remaining undepreciated value be removed from plant-in-service
along with the applicable accumulated depreciation as an offset to contingency funds that were
improperly utilized by the Company.
Staff further recommended that several expense items that should have been
capitalized be added to the Company's plant-in-service. The remainder of existing plant-in­
service items were installed in 2015 with funds obtained through the Idaho Drinking Water
Revolving Loan program. Based on these adjustments and inclusions, Staff recommended gross
plant-in-service of $532,104.
Staff recommended reducing the gross plant-in-service of $532,104 by the $62,188
remaining balance of the Company's contingency fund ($62,443 balance minus $255 offset in
otherwise undepreciated value). Because of differing depreciation schedules, Staff
recommended that the $62,188 be allocated to the various plant-in-service accounts based on
percentage of the total. The result of these adjustments is a plant-in-service calculation of
$469,916.
Based on $469,916 of plant-in-service, Staff recommended a depreciation expense of
$20,822. Because all Staff-recommended plant-in-service items were placed in service in 2015,
Staff recommended a half-year convention for the first year depreciation, which results in an
accumulated depreciation of $10,411. Ultimately, Staff recommended net plant-in-service of
$459,505. The Company did not reply to Staffs proposed adjustments to plant-in-service.
b) Working Capital
The Company equated working capital to its operating expenses in its Application.
Staff disregarded this method as improper and recommended instead that working capital be
calculated using the 118th rule, in which the appropriate amount of working capital equates to
118th (45 days' worth) of a utility's annual operating expenses.3 Using this method, Staff
recommended the Commission include $6,369 of working capital in rate base. Id. at 15. The
Company did not reply to Staffs proposed adjustments to working capital.
Commission Findings -Rate Base: Based on our review of the record and our
findings that increased allowable operating expenses to include the cost of billing software, we
find it reasonable and appropriate to approve a working capital of $6,556. This results in a
3 Staff states that the 118th rule is "common practice for small water utilities without the capability of performing a
more complex analysis." Id.
ORDER NO. 33658 14
Company rate base of $466,061 (which includes $459,505 m adjusted plant-in-service and
$6,556 in working capital).
D. Rate of Return. The Company requested an overall rate of return of 7.41%. See
Application Exh. No. 3. Staff, on the other hand, recommended an 11 % return on equity (ROE),
with a resulting overall rate of return of 2.15%. See Staff Comments at 16.
In its Application, the Company reported $550,654 in long-term debt at 8% interest.
However, Staff noted that the only long-term debt outstanding is the Idaho Drinking Water
Revolving Loan, which has a current balance of $531,502 at 1.25% interest.
The Company also reported $19,152 in short-term debt, consisting of loans to the
Company from its owners. Id. Staff noted that Idaho Code§ 61-901 requires loans be approved
by the Commission. Id. Further, Staff noted that these "loans" are not likely to be paid back
within 12 months and the payback period is too flexible to be considered loans under regular
circumstances. Id. Staff therefore recommended that the Commission characterize these loans
as equity investments. Id. As a result, Staff recommended a capital structure consisting of
90.77% long-term debt and 9.23% common equity. See id. at 16; Atch. M.
Staff noted the Company has expressed doubt about covering its debt payments. Staff
estimated the payments on long-term debt at $22,000 per year and recommended a return on
investment plus depreciation totaling $30,837. Therefore, Staff maintained that the loan
payments will be covered. Id. The Company did not reply to Staff's comments on rate ofreturn.
Commission Findings -Rate of Return: We find it just and reasonable to authorize
the Company the opportunity to earn an 11 % ROE with a corresponding overall rate of return of
2.15%. An 11 % ROE reflects current market conditions. The Company's return on investment
plus depreciation should adequately cover the Company's loan payments.
E. Revenue Requirement Amount. The Company requested an increase of
revenues of $101,452 consisting of total annual expenses of $100,838 plus a return on a total rate
base of $682,070 at an overall rate of return of 7.41 %. See Application Exh. Nos. 2 & 4.
Staff, on the other hand, recommended that the Commission authorize the Company
to recover a gross revenue requirement of $91,061. Staff's recommended revenue requirement
reflects Staff's proposed adjustments (i.e., recommended total annual expense amount of
$78,150; recommended rate base of $465,874; and recommended rate of return of 2.15%), along
with the following changes:
ORDER NO. 33658 15
1. Other Revenues: Staff recommended that "other revenues" (which include $125
in disconnection and $12 in returned check fees) be removed from the incremental revenue
requirement calculation. See Staff Comments at 5; Atch. A, col. B.
2. Contingency Account Surcharge: The Company has been collecting $5 per
month from customers in surcharge fees. Staff recommended reclassifying that amount from
unmetered revenue to Commission-approved surcharges collected. See id.; Atch. A, col. C.
Staff noted that the Commission attached four requirements to the surcharge authorization in
Order No. 29104. However, the Company has failed to abide by the Commission's requirements
in that Order and its last case (see Case No. MNV-W-06-01). See id. at 6. Staff audited the
contingency reserve account. Between June 2006 and September 2016, $63,460 should have
been deposited. Staff recommended that the Company account for $62,443 as contributed
capital and use those funds to reduce plant-in-service. See id.; Atch. B, I. 17.
The Company has admitted, and Staffs audit verified, that the Company used
surcharge funds to pay for day-to-day operations rather than for "extraordinary and unforeseen
major repairs and replacements" as contemplated in Order No. 29104. See id. at 6. Staff thus
recommended that the Commission discontinue the surcharge. In its reply comments, the
Company did not dispute this recommendation. See generally Company Reply. Also, as already
noted, customers expressed a great deal of dissatisfaction with the surcharge. Customers
complained that the Company improperly used the surcharge to fund daily operations and that
the surcharge is not tied to any concluding event or cap.
Commission Findings -Revenue Requirement Amount: Based on our findings
regarding expenses, rate base and rate of return, we find it reasonable and appropriate to
authorize the Company to recover $93,727 in revenue requirement. We direct the Company to
immediately discontinue collection of the $5 Contingency Account Surcharge. The Company
has consistently failed to properly maintain and utilize the Contingency Account funds. We
cannot allow the Company to collect money for an emergency fund when, in reality, it is using
the fund to subsidize normal operating expenses. Day-to-day needs of the Company must be met
with revenues collected through rates.
II. Rate Design
The Company's current and proposed rate designs are summarized on page 2. Staff
maintained that the Company's current rate design unfairly subsidizes high water users based on
ORDER NO. 33658 16
lot size. See Staff Comments at 17. The Company has, however, installed water meters for all of
its current customers, and it desires to implement a new rate design that includes a volumetric
(usage) charge. See Company Reply at 2. The Company asked Staff to help it add a volumetric
element to its rates. 4
Staff recommended that, if volumetric usage becomes part of the Company's rates,
the Company should establish a meter reading and billing policy that complies with the Utility
Customer Relations Rules (UCRR), specifically Rule 201.03. IDAPA 31.21.01.201.03. See
Staff Comments at 23. Staff expressed a commitment to ensure that the Company's meter
reading and billing practices comply with UCRR requirements.
In its proposal, Staff took into account the variable costs of providing volumetric
water service to certain higher volume use customers and the corresponding increased costs to
the Company based on this delivery. Staff thus proposed to minimize subsidization of high-use
customers by low-use customers by implementing the following two-part rate structure that
includes (a) minimum charges and (b) a two-tier volumetric charge:
Size of 1st Tier 1st Tier charge 2"d Tier charge
Proposed (in 1,000 ($1,000 ($/1,000
Lot Size Minimum Charge gallons) gallons) gallons
Yi Acre $49.00 10 $0.15 $0.45
Yz Acre $58.00 40 $0.15 $0.45
1 Acre $63.00 45 $0.15 $0.45
In summary, Staff proposed an inclining block volumetric charge structure. The
lower-priced first tier covers basic indoor needs and the higher-priced second tier would cover
more discretionary water use. See Staff Comments at 18. Tier sizes were determined based on
customer classes buying about 39% of water (based on historical use) within the lower-priced
first tier. Id. The inclining block structure, Staff maintained, would allow mitigation of the rate
increase through conservation. Id. Reducing consumption may also help the Company and its
customers avoid future pressure problems. Id.
4 While customers expressed some doubt as to metering because of potential costs set by the Company and a lack of
trust related to the Company's ability to properly monitor and operate the meters, at least one customer commented
that a sole flat monthly rate, as the Company proposed, is unreasonable, but a minimum monthly amount, after
which a usage rate kicks in, seems more fair because people will pay for what they use. See generally Comments of
Martin Newton Sr., September 16, 2016. Other customers noted, and the Company acknowledged, that in the past
customers have used excessive and unnecessary amounts of water and metering would help to prevent waste.
ORDER NO. 33658 17
Finally, Staff indicated that its proposed rate design impacts each customer group in a
substantially similar fashion (about a 72% increase), and allows for a 20% volumetric cost
recovery. Id. Staff maintained its proposed rates would generate revenues approximating the
revenue requirement target of $93,727. See id.; Atch. R. Because of the inherent uncertainty in
future usage under this model, Staff also recommended that the Company include water sales, by
rate group and customer, with its annual report so the Commission can monitor its financial
condition and determine rate adjustments. See id. at 20.
In its reply, the Company stated: "[part of rates based on usage] of course is
reasonable, based on the fact that new meters were installed, and that this would help curb
excessing usage and usage aided by illegal booster pumps installed by at least one customer. We
also recognized that the PUC would have a better idea of how to set up a rate structure based on
usage." See Company Reply at 2. While the Company disagreed that a rate increase of 74% is
sufficient, it does not dispute Stafrs proposed volumetric rate structure.
Commission Findings -Rate Design: Based on our review of the record, we find it
just and reasonable to approve a volumetric rate structure. Allowing a 20% recovery through the
use of volumetric pricing allows the Company to transition to metered rates while attempting to
mitigate the impact of rate shock on customers. As a result of this added complexity, we also
order the Company to establish a meter-reading and billing policy that complies with the Utility
Customer Relations Rules (IDAPA 31.21.01.000) and work with Staff to implement the policy.
Finally, we direct the Company to include water sales, by rate group and customer, with its
annual report so that we can stay apprised of its financial condition and possible future need for
rate adjustments.
In summary, based on our above findings and pursuant to our authority granted under
Idaho Code § 61-622, we find that the Company's existing rates are no longer reasonable, and
we approve as just and reasonable the following rates:
Size of 1st Tier 1st Tier charge 2nd Tier charge
Proposed (in 1,000 ($1,000 ($11,000
Lot Size Minimum Charge gallons) gallons) gallons
\/4 Acre $50.00 10 $0.15 $0.49
Yz Acre $59.00 40 $0.15 $0.49
1 Acre $64.00 45 $0.15 $0.49
ORDER NO. 33658 18
III. Other Issues
A. Accounting and Internal Controls. Staff stated, and the Company
acknowledged, that the Company is family-owned and the owners are closely affiliated with
other business ventures that overlap with the Company's business. Id. at 3. Staff noted that
since the Company's last rate case, the Company has created new accounting structures and
hired a qualified bookkeeper. However, given the closely-related nature of the Company's
business dealings, Staff strongly recommended that the Company institute further internal
controls over accounting and finances. Id.
Staff noted the importance of creating a policy driven system of checks and balances
m order to adequately ensure control over Company accounting and finances. Id. Staff
recommended that the Company move further toward separation of duties and adequate controls
by adopting a records retention and data backup policy. Id. Finally, Staff recommended that the
Company work with Staffs auditors for further information and training on regulatory accounts
classification. Id.
In its reply, the Company disputed Staffs characterizations, stating that the computer
is accessible by remote network to all Company employees, all accounting files are reviewed
weekly, and that on-line banking accounts are accessible to the owners. See Company Reply at
2; 5. However, the Company generally agreed with Staffs comments, and agreed to work with
Staff in order to "tighten up our oversight and develop necessary policy and procedure." See id.
Commission Findings -Internal Controls: Based on past precedent and the parties'
agreement on this issue, we direct the Company to work with Staff to create and implement
accounting and internal controls policies in order to create a series of checks and balances that
will ultimately benefit the Company and its customers.
The Company also struggles with liquidity problems. Staff noted that although the
Company follows procedures related to, among other things, the filing of liens, termination of
service and collections, it struggles with accounts receivable delinquency. Id. The Company
routinely carries accounts receivable more than 90 days past due. It is in the Company's best
interest to improve its handling of accounts receivable. We, therefore, direct the Company to
work with Commission Staff to correct identified deficiencies in its policies.
B. Infrastructure. Morning View stated that it expects to add up to 20 customers to
its water system over the next three to five years. According to Staff, while the refurbished
ORDER NO. 33658 19
system should be able to accommodate this growth, new customers may affect future rate design
and the Company's underlying financial condition. See Staff Comments at 2. Some customer
complaints were also directed toward the Company's infrastructure and how it handles new
customers and increases in residential development served by the water system and new user
effects on water pressure.
Commission Findings -Infrastructure: We find concerns about the Company's
infrastructure and ability to add new customers reasonable. We direct the Company to identify
new customers in its annual report and identify the date each customer was added to the system.
This will facilitate the Commission's ability to monitor the impact of new customers on the
system.
C. Miscellaneous Issues.
1. Water Pressure. The Company and Staff agree that historical water pressure
problems have been substantially resolved and that some outside issues related to pressure, such
as illegal pumping, have been curtailed. Staff commented that current water pressure issues are
those normally found in radial water distribution systems. See Staff Comments at 2-3.
The Company replied to the various customer comments and complaints by stating
that water pressure should no longer be an issue and that Company representatives are available
during all waking hours (and off-hours for emergencies) to aid customers in determining the root
cause of pressure issues. The Company cited one example where a customer's pressure issues
were not a result of system pressure, but of calcification of water pipes within the home and,
therefore, communication and cooperation related to diagnosis is of the utmost importance. See
Company Reply at 6.
Commission Findings -Pressure: We sympathize with Morning View's customers,
for whom water pressure issues have historically been a frustrating recurrence. However, as it is
now configured, the Company's water system is providing more than adequate water pressure to
serve the needs of its customers. Water pressure tests revealed pressure readings well above the
minimum required by DEQ. We encourage the Company to continue to be proactive in
addressing water pressure complaints according to system factors within its control.
2. Meter Reading. As part of implementing the use of the new meters, the Company
attempted to quantify metered usage on a bill for informational purposes for each customer, as
requested by Staff. Although customers were not being charged for usage at the time the sample
ORDER NO. 33658 20
meter information was provided, the monthly volumetric breakout triggered complaints that
meter readings were wildly inconsistent between months and that readings could not have
existed for certain months because the meters had not been installed or had been manipulated.
The Company countered that it can show through receipts, records and validation by the meter
installation contractor that customers are misremembering. However, customers are concerned
that future readings will be inaccurate if the Company cannot accurately meter water during a
test period.
Staff has expressed a commitment to work with the Company to establish a meter
reading and billing policy along with a written explanation of said policy for distribution to
customers. See Staff Comments at 23.
Commission Findings -Meter Reading: We direct the Company to adopt and
implement a meter-related policy. Customers must be able to trust and analyze metered rate
information in a system where charges are based partly on metered volume. Inaccurate or
undependable information breeds distrust and misunderstanding. As a corollary, we find that the
development of policies and procedures related to water metering and billing also provides
opportunity to educate customers on water conservation.
3. Workshop and Hearing Notice. Customers commented that notice was not
sufficient in the case. However, based on its audit, Staff asserted that all notice requirements
related to the case were sufficiently met. See Staff Comments at 20-21.
Commission Findings -Notice: It is critical that all customers are sufficiently
notified of actions undertaken by the Company that may affect customer rates. The Company
must make all reasonable attempts to notify all of its customers, regardless of language barriers
or communicated interest in ratemaking, on matters affecting the water system.
4. Company Tariff The Company's current tariff, including its Rate Schedules and
the General Rules and Regulations for Small Water Utilities, was last updated in 2007 in Case
No. MNV-W-06-01. Staff recommended that the Company update its tariff to reflect the
UCRR's current requirements, and to incorporate the Uniform Main Extension Rule for Water
Utilities based on Order No. 7830 (Case No. U-1500-22). Staff has expressed its willingness to
work directly with the Company on these issues. Id
ORDER NO. 33658 21
Commission Findings Tariffs: We order the Company to update its tariff to reflect
changes as a result of this rate case as well as compliance with applicable UCRR and incorporate
the Uniform Main Extension Rule for Water Utilities based on our Order No. 7830.
5. Non-Recurring Charges.
a) Reconnection Fee Staff recommended that the Company revise its
reconnection fee so that it is clear to customers and not applied to disconnections by Company
employees. Id.
b) Late Payment Charge The Company struggles with delinquent payments.
Staff supports adoption of a late charge according to the UCRR (minimum of 15 days after the
bill date before a payment becomes past due). Staff recommended that the Company be allowed
to charge 1 % on past due amounts at the time of the next billing statement. Id. at 24-25.
c) Insufficient Funds Charge While the Company has incurred costs related to
dishonored payments, it has not sought an insufficient funds charge. Staff recommended that the
Company adopt $20 per dishonored check. See Idaho Code § 28-22-105. The Commission has
allowed utility tariffs to include this charge in the past and Staff finds it to be a fair and
reasonable way of avoiding a scenario where the Company ( and therefore its customers
generally) must bear the financial burden of returned checks. Id. at 25.
Commission Findings Non-recurring Charges: We find the adoption of non­
recurring charges to be reasonable. The Company is ordered to file its tariffs to: (a) revise its
reconnection fee to make it clear to customers that disconnections do not trigger a fee; (b)
include in its tariff a 1 % charge on past due accounts at the time of the subsequent billing
statement; and ( c) adopt an insufficient funds fee of $20 in order to put financial burden more
directly on customers with returned checks.
ULTIMATE FINDINGS OF FACT AND CONCLUSIONS OF LAW
Morning View is a water corporation. The Commission has jurisdiction and authority
over Morning View and the issues raised in this case, pursuant to Title 61 of the Idaho Code and
the Commission's Rules of Procedure, IDAPA 31.01.01.000, et seq. Based on our review of the
record, we find that Morning View's existing rates, charges, and practices are unreasonable to
the extent described in the body of this Order, and that the rates do not afford sufficient revenue
to the Company. See Idaho Code§§ 61-501 and -502. We also find it fair, just, and reasonable
for the Company to change its rates, charges, and practices as described in this Order.
ORDER NO. 33658 22
Accordingly, we approve an 11 % ROE and an overall rate ofreturn of 2.15% on a total rate base
of $466,061, and we authorize the Company to increase its annual revenues by $41,509 to satisfy
a total revenue requirement of $93,727. See Exhibit A and B to this Order, further detailing this
decision.
ORDER
IT IS HEREBY ORDERED and the Commission in Case No. MNV-W-16-01 does
hereby approve as just and reasonable a total revenue requirement of $93,727. We also approve
as just and reasonable the detailed changes in revenue requirement, capital structure, return on
rate base, and rate design, as more fully set out in the body of this Order.
IT IS FURTHER ORDERED that the Company submit tariffs in compliance with the
rates and charges identified in this Order no later than 14 days from the service date of this
Order. The rates and charges authorized by this Order shall become effective for services
rendered on and after December 1, 2016.
IT IS FURTHER ORDERED that tariffs must conform with applicable Utility
Customer Relations Rules, specifically Rule 201.03, IDAPA 31.21.01.201.03, and incorporate
the Uniform Main Extension Rules for Water Utilities based on our Order No. 7830.
IT IS FURTHER ORDERED that the Company establish a 1 % past due charge and a
$20 returned check charge, as more fully set out in the body of this Order.
IT IS FURTHER ORDERED that the Company develop and implement policies,
procedures and reports as more fully set out in the body of this Order.
ORDER NO. 33658 23
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of November 2016.
ERIC ANDERSON, COMMISSIONER
ATTEST:
O:MNV-W-16-01 SC
ORDER NO. 33658 24
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Morning View Water Co. >< z > Adjustments Summary ~~~ MNV-W-16-01
Company
Case Order 0 0
A B C D E F G H I J K L M z
Transfer Labor-Materials & <l)
U'1 Remove One Contingency Reclassify Admin& Electricity Supplies-Op& Water Plant Rate Case ('j
Time Revenue Surcharge Salaries Gen Expense Mtnce Testing Misc Expenses PUC Fees Adjustment Amortization u
Revenues
1 Unmetered Sales 52,219 (6,310) 45,909
2 Commission-approved Surcharges collected 6,310 6,310
3 Other Revenue 137 (137)
4 Total Revenue 52,356 (137) 52,219
Operating Expenses
5 Labor-Operation & Maintenance 9,180 9,180
6 Labor-Customer Accounts
7 Labor-Administrative & General 16,800 (9,165) 7,635
8 Salaries-Officers & Directors 12,240 (9,180) 3,060
9 Employee Pensions & Benefits
10 Purchased Water
11 Purchased Power & Fuel for Power 21,582 (7,303) 14,279
12 Chemicals
13 Materials & Supplies-Operation & Maintenance 4,100 (1,175) 2,925
14 Materials & Supplies-Admin & General 1,600 1,600
15 Contract Services-Professional 1,890 1,890
16 Contract Services-Water Testing 1,000 952 1,952
17 Contract Services-Other
18 Rentals-Property & Equipment
19 Transportation Expense
20 Insurance 126 126
21 Advertising
23 Regulatory Comm. Exp. (Other Except Taxes)
24 Bad Debt Expense
25 Miscellaneous Expenses
26 Total Operating Expense 52,452
27 Depreciation Expense 22,057 (1,235) 20,822
28 Rate Case Amortization 1,667 1,667
29 Regulatory Fees 758 (628) 130
30 Property Taxes 510 506 1,016
31 Payroll Taxes 5,596 (1,402) 4,194
32 DEQ Fees
33 Total Expenses 1,667 80,811
34 Net Income
35 Plant in Service 630,322 602 (161,008) 469,916
36 Accumulated Depreciation
37 Net Plant in Service 459,505
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Revenue Requirement ~Z>
Case No. MNV-W-16-01 ~~
0 0 Company Case Staff Case Order z
1 Rate Base $ 682,070 $ 465,874 $ 466,061 V VJ
2 Required Rate of Return 7.41% 2.15% 2.15% ro
3 Return on Investment $ S0,551 10,017 10,021 u
4 Net Operating Income Realized $ (50,901) $ (25,932) $ {28,593)
5 Net Operating Income Deficiency $ 101,452 $ 35,949 $ 38,614
Revenue Requirement Increase
9 Subject to Income Tax $ 50,551 $ 10,017 $ 10,021
10 Tax Gross Up Factor 128.0631% 128.8884% 128.8884%
Tax Grossed Up Amount $ 64,738 $ 12,911 $ 12,916
11 Not Subject to Income Tax $ 50,901 $ 25,932 $ 28,593
12 Gross Up Factor not Subject to Income Taxes 100.1881% 100.6925% 100.6925%
Not Subject to Income Taxes Amount $ 50,996 $ 26,112 $ 28,791
Revenue Requirement Increase $ 115,734 $ 38,843 $ 41,509
13 Revenue Increase Required $ 115,734 $ 38,843 $ 41,509
15 Total Revenue Increase Required $ 115,734 $ 38,843 $ 41,509
16 Total Revenue Collected in Test year $ 52,356 $ 52,219 $ 52,219
17 Revenue Increase% 221.05% 74.39% 79.49%
18 Total Gross Revenue Requirement $ 168,090 91,061 $ 93,727
Subject to Excluding Subject to Income Excluding Income Subject to Income Excluding Income
Gross-up Factor Calculation Income Taxes Income Taxes Taxes Taxes Taxes Taxes
19 Net Deficiency 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
20 PUC Fees 0.1877% 0.1877% 0.1877% 0.1877% 0.1877% 0.1877%
21 Bad Debts 0.0000% 0.0000% 0.5000% 0.5000% 0.5000% 0.5000%
99.8123% 99.8123% 99.3123% 99.3123% 99.3123% 99.3123%
22 State Tax@ 8% 7.9601% 0.0000% 7.9601% 0.0000% 7.9601% 0.0000%
23 Federal Taxable 91.8522% 99.8123% 91.3522% 99.3123% 91.3522% 99.3123%
24 Federal Tax@ 15% 13.76570% 0.00000% 13.76570% 0.00000% 13.76570% 0.00000%
25 Net After Tax 78.08650% 99.81230% 77.58650% 99.31230% 77.58650% 99.31230%
26 Net to Gross Multiplier 128.06311% 100.18805% 128.88840% 100.69246% 128.88840% 100.69246%