20191108Decision Memo.pdf

DECISION NIENIORANDUN'T
COMMISSIONER KJELLANDI'R
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMNIISSION SECRB,TARY
COlIINIISSION STAFF
LEGAL
F'RONI:NIA'I"I' HIJNTF]R
DEPUTY ATTORI$Y GEn-liRAL
DATE: NOYI,IN.IIIFI,R7,20I9
ST]IUF]CT:IN TIIE MATTER OI.' N,IORNING YIEW Il'A'I'I.]R CONIPANY'S
APPLICATION T'OR ATITHORITY TO INCRI.]ASE ITS RATES AND
CHAR(;FIS F'OR WATER SERVICE IN IDAHO: CASE NO. NINV-\1'-19-01.
On June 5, 2019, Morning View Water Company ("Morning View" or "the Company")
applied to the Commission for a rate increasc. Commission Staff has workcd closely with Morning
View during the past five months to collect adequate information to determine whether and to what
extcnt a rate increase is necessary. Staff now recommends the Commission suspend the proposed
ratc increase for an additional 60 days as perrnitted under ldaho Code * 6l-622(4), order the
Company to send a customer notice to each of its cr.lstomers, and schedule a workshop and public
hearing.
BACKGROUND
Morning View's Application cited thnee reasons it needs a rate increase: l) decreased
water usage during the summer months, 2) an inadequate rate of return established in the
Company's previous rate case, and 3)unanticipated expenses-such as u,ater testing and pipeline
repairs-that were not considered in the previous rate casc.
Even though Morning View's one-page Application did not comply with most of the
ratc case filing requirements established in Commission procedural rules, Staff informed the
Commission it was "prepared to u,ork with the Company's representatives to obtain all records
and information necessary to develop just and reasonable rates for the Company and its
customers." Staft-s June 20,2019 Decision Memorandum at 2. Noting that the "Company is
small," the Commission allowed the case to proceed. Order No. 34361 . The Commission directed
DECISION MEMORANDUM
TO:
Staff to "assist the Company to prepare a Customer Notice and press release that will comply with
thc Commission's minimum requirements." /d.
As noted above, Staff has worked closely with Morning View to collect information
with which to determine the Company's revenue requirement. It has filed multiple production
requests, analyzed the responses, and visited the Company's sen'ice area in Rigby for an onsite
audit. Staff now belicves it has sufllcient information about Moming View to determine its revenue
requirement. Based on the Company's unaudited annual report, which shows increased expenses
and declining water usage, Staff estimates customers' rates would increase about l7%. This
potential increase is subject to Staff rcview.
STAI.'F RECOMMENDATION
u. Additional 60-day suspension of effetlive date lbr new rcrtes
Under ldaho Cotle 5 6l-622, the Commission may suspend the effective date of ncw
rates for five months and 30 days. The Commission may extend the suspension for an additional
60 days "after a showing of good cause on the record." Idaho Code $ 6l-622(4). Good causc is
established where the record shows additional time is necessary. See Washittgtort Wter Povver
Co. v. Idaln P ub. Utiliries Comnin, l0l Idaho 567, 57 I ( 1980) (finding good cause to suspend the
eff'ective date of nei.'"' rates when the proposed rate increase was large, the Company's situation
complcx, and Commission Staff workload onerous).
Staff rccommends the Commission suspend the effective date of new rates for an
additional 60 days. ln its June 71,2019 order, the Comniission suspended the Company's June 30,
2019 proposed effectivc date for f-rve months and 30 days-tbr an effective date of December 30,
2019. Order No. 34361 . lf the Commission finds there is good cause to suspend the effective date
for an additional 60 days, the new eff'ective date would be February 28.,2020. Staff believes a
February 28. 2020 effective date will give Staff and the Company adequate time to notify
customers of the proposed change, allow customcrs to file conrments, and would give the
Commission additional time to deliberate on the proposed rate change. The recommendations
below are premised on the Commission suspending the effective date for an additional 60 days.
b. Cusktmer notice
Staff is concerned that customer notice be sent to Morning View's customers quickly.
Under Commission Procedural Rule 125, a utility requesting a ral.e increase must scnd out a
customer notice to its customers detailing the proposed rate increase and describing how customers
DECISION MEMORANDUM 2
can cornment on the proposal. IDAPA 31.01.01.125. Customer notices are to be distributed by the
Lrtility "when the utility files its application lto increase rates] or as soon as possible thereafter."
IDAPA 3l.01.01 .125.03; see ldaho Code $ 6l-307. To date, Morning View has not issued notice
to its customers of the proposed rate increase.
Staff has drafted a proposed customer notice and will discuss its components with
Morning View. In the Company's last rate case, Case No. MNV-W-16-01, Staff prepared for
Morning View a customer notice that complied with Commission rules and provided it to the
Company to send to its customers. However, Staff later leamed from customers that the Company
niodificd the customer notice before sending it to make it less clear to customers how much rates
would increase. While the Company had understandable concerns about how its customers would
react to a rate increase, Staff believes that clarity best serves ratepayers.
Staff is also concerned the Company will not send out customer notices in a timely
manner, or will tail to send it to all of its customers. Customers claim both issues arose during the
Company's last rate case. Commission Procedural Rute 125.03, IDAPA 31.01.01.125.03,
envisions customcrs having nearly 3O-days' notice before a rate change. Delayed or incomplete
distribution ofthe customcr notice would hinder the ability customers to comment on the proposed
rate change, whether in writing or at a public hearing.
Staff recommends the Commission order Moming View to mail the customer notice
by n-ovember 22,2019, giving customers notice of the filing and any hearings or workshops the
Commission may schedule. Staff will also work with the Company to prcpare and issue a press
release, as authorized in Order No. 34361. To date, the Company has not issued a press release.
t. Cornments, cuslomer +t'orkshop, afid heurinc
Staff recommends the Commission proceed under Modified Procedure and set a
December 18, 2019 comment deadline for StatT and any parties, and a January 3, 2020 reply
comment deadline. Staff also recommends the Commission direct its Staff to schedule and hold an
informational workshop tbr customers near Righy during the week of January 6, 2020. Last, Staff
recommends the Commission schedule a hcaring for customers at a date and time to be determined,
and that the Commission note it will accept written comments from customers through the hearing
date.
lDECISION MEMORANDUM
1,.
Matt Hunter
Deputy Attorncy General
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4DECISION MEMORANDL]M
COMMISSION DECISION
Does the Commission wish to:
l. Suspend the eft'ective date of Morning View's new rates an additional 60 days,
consistent wirh ldttlut Code i 6l-622?
2. Order Morning View to mail a customer notice to each of Moming View's
customers by November 22,2019?
3. Proceed under Modified Procedure and set a December 18, 2019 comments
deadline for Staff and any parties, and a January 3, 2020 reply comments
deadline?
4. Direct Staff to schedule and hold a customer workshop?
5. Schedule a customer hearing at a to-be-determined date and time'J
)4,