20191218Comments.pdf

MATT HUNTER
DEPUTY ATTORNEY GtsNERAL
IDAI IO PIJBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE. IDAHO 83720-0074
(208) 334-03 l8
IDAHO BAR NO. I0655
RECEIVED
:ltilic lB PH 3: h?
iir0N
Street Address fbr Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 20I-A
BOISE. ID 837I4
Attorney lor the Commission Staff
BEFORE THE IDAHO PUBLIC UTTLITTES COMMISSION
IN THE MATTER OF MORNING VIEW
WATER COMPANY'S APPLICATION FOR
AUTHORITY TO INCREASE ITS RATES AND
CHARGES FOR WATER SE,RVICE, IN IDAHO
CASE NO. MNV-W-I9-OI
COMMENTS OF THE
COMMISSION STAFF
Staff of the Idaho Public Utilities Commission comments as tbllows on Morning View
Water Company's Application.
BACKGROUND
On Junc 5, 2019, Morning View Water Company ("Morning View" or "Company")
applied to increase its rates and charges fbr water service. The Company proposed a June 30,
2019 effective date. Morning View's Application cited three reasons it needs a rate increase:
I ) dccreased water usage during the summer months. 2) an inadequate rate of retum established
in the Company's previous rate case, and 3) unanticipated expenses-such as water testing and
pipeline repairs-that vl'ere not considered in the previous rate case, Case No. MNV-W-I 6-01.
On June 21,2019, the Commission issued a Notice of Application and set an intenention
deadline. While noting that the Company's Application did not comply with the Commission's
filing requirements, the Commission allowed the case to movc forward. The Commission
directed Staffto audit the Company and access all documents needed to determine the
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STAI,'F COMMEN'|S DECEMBER 18,20I9
r-r lii-!i ! !;r
STAFF REVIEW
Overview
Staff recommends a total revenue requirement of$96,472. This is a revenue increase of
$8,969 above test year revenue, which is a 10.25% increase. Staff also recommends a total
expense allowance of $8 8,91 I and rate base of $433,639 consisting of $478,487 in plant in
service, $52,141 in accumulated depreciation, and $7,293 in working capital.
Rate Case Drivers
In Case No. MNV-W-16-01, the Commission approved a revenue requirement of
$93,727 and a new two-part pricing structure that included volumetric rates. See Order No.
33658. In its Application, the Company said, "The last rate case was insufficient to cover our
expenses and we have operated in the negative every year since." See Application at 1. The
Company has not met its revenue requirement, reporting revenues of$85,972 in 2017 and
$86,040 in 2018, according to its annual reports. During that time, customers also decreased
their water usage, perhaps due to the new volumetric rates. The Company sold 29 million
gallons of water in 2018, down from 49 million gallons in 2016.
2STAFF COMMEN'fS DECI]MBER I8,2019
Company's revenue requirement. The Commission also directed StaII to assist the Company to
prepare a customer notice that complies with the Commission's minimum requirements. Last,
the Commission suspended the proposed effective date for the new rates for five months and 30
days, under 1daft o Code $ 6l -622(4).
On November 19,2019, the Commission suspended the proposed effective date for new
rates for an additional 60 days, until February 28,2020. The Commission also set comment
deadlines, and scheduled a customer workshop and public customer hearing lbr January 8,2020
in Rigby, Idaho.
Related Parties
Moming View is a family-owned and -operated water company. 'l'he owner, Mr. Nolan
Gneiting, also owns Landco Building and Development Co., which devclops properties on the
Moming View system. Similar to other small water utilities. Morning View has related party
transactions. In this case, labor and rent expenses involve related parties. The Idaho Supreme
Court has established that related-party transactions arc subject to a higher level ofscrutiny. S'ee
Boise Water Corp. v. IPUC,97 Idaho 832, 555 P. 2d 163 (1976). Stalf notes that affiliate
transactions are subject to close scrutiny and the regulated utility has an increased burden of
proving the reasonableness of its affiliate transactions. The potential for abuse arises because the
Company management could inflate expenses charged to the regulated utilily, essenlially moving
the profit from the regulated utility to an unregulated affiliate. Staff recommends that using the
lower ofcost incurred or market prices is reasonable for prudency determinations for related-
party transactions.
System Description
The Moming View Water Company service area is located just south of Rigby, Idaho.
The Company provides service to the Moming View Acres Subdivision and the Country Grove
Estates Mobile Home Subdivision encompassing a total of 144 homes or home sites. The
Company currently serves I l6 residential customers. The public water system consists ofthree
wells, two well houses, and a distribution system providing domcstic water to residents at the
design flow of600 gallons per minute with a nominal supply pressure of70 pounds per square
inch. The Company is not expecting any significant growth over the next live years.
Revenues
The Company's 2018 Annual Report states that test year revenue was $85,708 from
metered revenue and $332 from other water sales revenue. The other revenue consists of$247
from late fees, $45 in connection fees, and $40 in returned check f'ees. The other revenues are all
one-time revenues that Staff has removed from rcvenues cxpected to cover the ongoing
incremental revenue requirement calculation as shown on Attachment A, line 3, Column B.
STAFF COMMENTS DDCEMBER 18,20I9
REVENUE REQUIREMENT
Because the Company did not submit a revenue requirement in its Application, Staff used
information in the Company's 2018 annual report as the starting point for the Company's
revenue requirement. The Company agreed to a historical test year ending December 31,2018,
with pro forma adjustments to revenues and costs. Staffhas made adjustments and updated the
Company's test year data to reflect the results of its analysis. Attachment A shows a summary of
the adjustments Staff recommends in this case. Staff-adjusted results show a net annual
operating loss of$1,408 and a Net Plant in Service ol$426,346.
3
The Company did not bill its ouners, Mr. and Mrs. Gneiting, and the Company oflice lor
water usage. While Staff does not oppose the Company providing those benefits to the owners
and its office, excluding those revenues and expenses in its annual report is improper accounting.
Staffreviewed water usage for the owners and the office, then calculated those revenues as
shown in Attachment B-Owners Revenue. Staff recommends that those revenues be included,
and the $1,164 amount that should have been billed to the Gneitings be expensed as an owner's
benefit under Salaries-O{ficers & Directors and the $631 amount that should have been billed to
the office be expensed as Rental-Propcrty & Equipment. This adjustment has no impact on net
income but increases both revenues and expenses by $1,795, as shown in Attachment A, Column
C.
Expenses
The Company reported Total Expenses from Operations totaling $98,289, before interest.
for the test year as shor.m in Attachment A, Column A, line 37. This total consists of test year
operating expenses equaling $68,292 and, other expenses equaling $29,997 .
Reclassification
The Company reported $791 in utilities expenses as Miscellaneous Expenses. Stalf
reclassified this to Purchased Power & Fuel for Power, as shown in Attachment A, Column D
Labor
All employees of the Company are family members or extended family members of the
ouner, Mr. Gneiting. In the previous rate case, CaseNo. MNV-W-16-01, the Commission
approved the following labor expenses:
o Officers and Directors: $3,060
o Admin and General (A&G): $9,165
o Operation and Maintenance (O&M): $9,180
With exception of officers and directors, Staff recommends increasing these amounts by
the amount ofincrease reported in the Standard Occupational Classification (SOC) codes from
the U.S. Bureau of Labor Statistics that are appropriate for these positions over the same time
period.. See Attachment C-Labor. For OfIicers, the SOC code indicated that wages have
4STAITI.' COMMEN'I'S DECEMBER I8,20I9
decreased. Staffdoes not believe a decrease in labor expense is appropriate and instead
recommends using the Water Operator SOC code of officers, since Mr. Gneiting is also the
Company's primary water operator. Staff recommends a total salary expense of$22,600. Thisis
a reduction of$5,240 in salaries with a corresponding reduction of$504 in payroll tax expense.
In Case No. MNV-W-16-01, the Company commented that the labor expenses approved
were not appropriate for the Company. Staff reiterates that these are related-party transactions
and therefore require additional scrutiny for inclusion in rates. Staff contacted a water
management company for a quote of approximately $18,000 a year to run a similar sized water
company. These services would have included all routine tests, meter reading, billing,
collections, and maintenance. The labor expense for A&G and O&M recommended excludes
the salary for the officers as well as the benelits the owners receive by not being billed for their
water usage. Thercfore, Staff believes the amount rccommended is appropriate.
Mileage
The Company's Annual Report did not include any transportation expenses. The owners
routinely travel to Rigby or Idaho Falls lor Company pulposes, including visiting the bank or
submitting water samples for testing. Stalf reviewed a log kept by the owners for all Company
trips taken in 2018. The Company also regularly drives the length ofthe system to conduct
meter reads and check for any leaks or other issues. Staff determined that driving the length of
the system is approximately tbur miles and that it would be prudent to drive the system two
times per week. Using the actual and assumed data, as well as the 2018 Intemal Revenue
Service standard mileage rate, Staff recommends a Transportation Expense of$897, as shown in
Attachment A, line 19, Column F and Attachment D-Mileage.
Rent
The Company reported $900 in rental expense, which is the amount the Commission
authorized in OrderNo.33698. The Company rents part ofan office building from Landco
Building Co., which is also owned by Mr. Gneiting. The office building has three offices, a
bathroom, and typical of'fice equipment and fumiture. The building has a parking area and is
near the well houses. The building remains serviceable for the Company's use.
Staff recommends a $50 increase to rental expense, based on expected costs incurred to
rent part of the building. Staff determined a $950 rental expense by calculating an annual
)STAFF COMMENTS DECEMBER 18,20I9
depreciation expense for the office building, using the building's assessed value according to the
Jefferson County Assessor, and assigning halfofthat depreciation expense to the Company as
rental expense.
'lhat $950 rental expense is less than market rates for a small office space, Stafl along
with input from the Company, reviewed listings for commercial office space in and around
fugby. To properly compare the market rate and actual cost, Stafl'added expenscs the Company
included in its Annual Repo(, including electricity, natural gas, water, garbage removal, and
lawn maintenance, that would likely be included in renting a commercial office space. See
Attachment E-Rent.
Water Testing
Water testing requirements lbllow a nine-year rotation schedule. Staff believes it is
reasonable to include an annualized amount to allow collection ofthe total amount over the nine-
year schedule. Calculation of total testing costs and the annual adjustment is included in
Attachment F-Water Testing.
The Company reported $720 in water testing expenses. Staff recommends moving $25 of
this expense to rate base because ofsignificant repairs the Company made (see below in Plant
in-Service). Staff calculated water testing expenses for the Company's wells to be $1,840.
Therefore, Staff recommends an increase of$1,145 to the Company's pro forma water testing
expense.
Deferred Expenses
In Case No. MNV-W-I6-02, the Commission approved the Company's rcquest to det'er
expenses related to a well failure in 2016. The Company reported $2,960 in actual expenses and
Staff determined total employee expenses of$2,027 were relaled to the incident. The Company
has not provided any additional repair expenses related to that case. Staff determined that these
expenses could be recovered over a three-year period and included one third ofthese expenses,
$1,663, in Amortization Expense, as shown in Attachment A, Iine 28, Column I. The remaining
$3,324 is assigned to Other Deferred Charges, as shoun in Attachment A. line 42, Column I.
The Company incurred some costs to process this rate case. Staff estimates that betwcen
the labor, postage, and other expenscs related to this case, the Company would incur expenses of
$4,000. Because it has been tkee years between this rate case and the Company's previous rate
6STAFF COMMENTS DECEMBtsR 18,20I9
case, Staff recommends recovering these costs over three years. The amortization of$1,334 is
included in Rate Case Amortization Expense, as seen in Attachment A, line 29, Column I.
Miscellaneous Expense Adjustments
Staff removed $350 in Contract Services-Professional and $ 197 from Payroll taxes
because they were related to the Company tax payments owed for previous years. See
Attachment A, lines l5 and 32, Column J.
Staff removed the $ 179 South Rigby Irrigation expense, because Company owners said
the expense was actually incurred by Landco, not Morning View. See Attachment A, line 35,
Column J.
The Company provided its most recent property tax bill, which showed an annual
expense of$3,348. Staff removed $71 fiom Property Tax expense. See Attachment A, line 31,
Column J.
The Company incurred $332 in legal expenses related to a water rights mitigation issue.
This amount was not included in the Annual Report but Staff verilled it was incurred and
recommends including it as a Miscellaneous Expense. See Attachment A, line 25, Column J.
RATE BASE
Plant in Service
The Company reported Plant in Service ol$630,322 and Accumulated Depreciation of
$119,750 in its Annual Report. In Case No. MNV-W-I6-01, the Commission approved a Plant
in Service of $469,916 and Accumulated Depreciation of S 10,41 I . The Company did not update
its Annual Reports to reflec1 OrdcrNo.33658. Staff adjusted the Company's Plant in Service to
the amounts approved in Order No. 33658 and added accumulated depreciation for 2017 and
2018 in Attachment G-Plant-in-Service Adjustment.
The Company had two major repairs to its system in 2018 that it included in its expenses.
Staffbelieves that because these repairs improve the Company's system, they should be
capitalized and included in Plant in Service. These repairs were a pipe replacement totaling
$3,309.77 and a well repair totaling $5,261.65. As a result, Stai'f recommends adding $8,571 to
Supply Mains in Plant in Service, and removing $8,539 from Contract Services-Other Expense,
$25 from Contract Services-Water Testing Expense and $7 from Materials and Supplies-
7STAFF COMMENTS DECEMBER I8.20I9
Working Capital
Staff recommends using the l/8th rule for determining working capital. This uses l/8th
ofthe annual operating expenses as the amount of working capital to be included in rate base.
This a common practice for small water utilities without the capability of performing a more
complex analysis. With this calculation, Staff recommends a u'orking capital of $7,293. See
Attachment l-Rate Base Calculation.
Rate of Return and Capital Structure
The Company's annual report states the only longterm debt is an Idaho Drinking Water
Revolving Loan, offered by the Idaho Department of Environmental Quality (DEQ), that has a
$510,614 balance with a 1.25o/o interest rate. There are provisions for forgiveness ofpart of this
loan, but until the forgiveness is actually implemented, Staff reoommends including the entire
amount ofthis loan as long-term debt. The remainder of'the capital structure is owner-supplied
capital. Due to repeated net losses, the Company only has $1,222 in owner's equity. Therefore,
Staff recommends a Capital structure of 99.76% debt and 0.247o common equity.
Staff recommends an 11% retum on common cquity (ROE) in this case. This is identical
to the ROE approved in the last case. Staff does not believe that conditions have changed
enough to warrant a change in the ROE. This results in a rate of retum of l.27oh, as shown on
Attachment J-Rate ol Retum.
The Company's Rate ofRetum Calculation, bascd on its Annual Report, includes a
negative total common equity. 'fhis is due to repeated net losses as well as the Company treating
payments by its owners as notes payable . Idaho Code $ 61, Chapter 9, requires loans to be
approved by the Commission. These loans will not likely be paid back with the l2 months
required to be considered short-term loans, and the payback time frame is too flexible to be
8STAFF COMMENTS DECEMBER I8.2019
Administrativc and General Expense. These adjustments iue shown in Attachment A, Column L
and Attachmenl H Plant Addition.
considered loans in most circumstanccs. '['herelbre, Stafl recommends treating these loans from
owners as investments that constitute part oftheir equity in thc Clompany.
Calculation of Revenue Requirement
Staff recommends a total rate base of $433,639 as stated in Attachment l-Rate Base
Calculation. This is $85,469 less than the Company's Annual Report. Staffs recommended rate
base includes Net Plant in Service of$426,346, and a working capital amount of $7,293.
Attachment K-Revenue Requirement shows Staff recommended revenue requirement
increase. Staff calculated the revenues associated with the retum on rate base (line 3) to be
$5,521 ($433,63 9 x 1 .27%). This amount is subject to federal income laxes, state income taxes,
and the Idaho Public Utilities Commission (IPUC) fees. Staffcalculated net loss of $1,408 must
be recovered and is also subject to IPUC fees. The process of increasing the revenue
requirement for taxes and IPUC fees is referred to as the "gross-up." The gross-up I'actor is
136.942Vo when the amount is subject to income taxes and 100.6925%o when not subject to
income taxes. The process of calculating the gross-up is detailed on Attachment K-Revenue
Requirement, lines l9 to 26. These grossed up amounts result in a total deficiency of $8,969
(line l3). Staff s recommended revenue requirement percentage increase is l0.25Yo over curent
billed rates.
RATE DESIGN
Staff recommends that the Commission approve the following rates for the Company
Table 1 - Staff Proposed Rates
A separate rate structure is developed Ibr three customer groups, which are ditferentialed
by lot size (l/4,1/2 and 1 Acre). Thc two-part pricing structure (minimum chargcs and two-
I
Lot Size Proposed
Minimurn Charge
Size of I st Tier
(in 1,000 gallons)
1st Tier Charge
($/1,000 gallons)
l/4 Acre $s5.00 t0 $0.r7 $0.53
I /2 Acre $65.00 40 $0.17 $0.5 3
I Acre $70.50 45 $0.17 $0. s3
STAFF COMMENTS DITCITMIIIR 18.2019
| 2nd Ticr Charge
|
($/l.ooo callons)
I
tiered volumetric rates) approved in the last general rate case, Case No. MNV-W-16-01, is
maintained; however, each price component is increased from its current level by approximately
10.2Voto allow the Company an opportunity to rccover StalI's proposed revenue requirement
target of$96,472. Stafls proposal results in approximately uniform percentage bill impacts
across all usage levels and lot sizes, as shown in Table 2 below.
Table 2 shows rate changes (dollar and percentage) for various usage levcls for the three
lot sizes.
Table 2 - Monthly Bill Impacts
l/4 Acre
l/4 Acre
l/4 Acre
Gallons
pcr
Month
5,000
8,490
50,000
Percentile
4gth
Toth
ggth
Current
Biil
$s0.00
$51.27
$71.10
Staff
Proposed
BiII
$ss.00
$56.44
$77.90
$65.00
$68.20
$77.10
$70.s0
$76.18
$80.80
Increase
inS
$s.00
$5.17
$6,80
$6.00
$6.38
$7.20
$6.s0
$7. l7
$7.60
Incrcasc
in oL'
10.0%
10.1%
9.6%
10.2%
10.4%
10.4%
ll2 Acre
ll2 Acre
ll2 Acre
5,000
r 8,800
50,000
45m
7znd
gTth
$59.00
Average $61 .82
$69.90
$64.00
Average $69.01
$73.20
l Acre
I Acre
I Acre
5,000
33,410
50,000
26th
70th
76,h
The table has three sections based on lot size. Three usage-based monthly bill
comparisons (current vs. Staff-proposed) are presented for each of the three sections: 5,000
gallons, average monthly usage for the lot size, and 50,000 gallons. As expected, customers with
larger lots use more water on average.
Prior to the implementation ofcurrent rates, the Company's rates did not include
volumetric charges. There were only fixed minimum charges. Consequently, customers paid the
same bill regardless of water use. Some customers' water usage substantially cxceeded average
usage levels. In the last rate case, StafT expressed concern that the relatively high consumption
STAFF COMMENTS 10 I)tiCItMIlt-tR I 8. 20 I 9
Lot
Sizc
Notes
Average
t0.2%
10.3%
103%
of some customers was contributing to water prcssure problems on the system. Staff
recommended implementing volumetric charges to encourage customers to reduce usage to
levels that would help mitigate water pressure problems and to recognize the direct relationship
between the cost to provide service and the level of water use. Staff s proposal in this case
maintains the objective that rates should reflect volumetrically driven costs. Implementation of
volumetric charges three years ago may be encouraging reductions in usage. Since the last rate
case, average water usage has fallen by 58%,51%. and 49Yo for l/4 Acre Lot customers, l/2
Acre Lot customers and 1 Acre Lot customers, respectively.
Reduced sales impeded the ability ofthe Company to reach revenue requirement targets
fiom the last general rate case, Case No. MNV-W- I 6-01 . In comments filed in the last case,
StafT anticipated the effect of reduced sales and of'lbred to work with the Company to determine
if a rate adjustment was necessary.l
Revenue was also slightly reduced due to a billing enor Staffdiscovered while auditing
this case. The Company appears to be billing second-tier water usage at 48 cents per 1,000
gallons instead of the authorized 49 cents per 1,000 gallons. This error resulted in an under-
collection ofapproximately $130peryear. Staffbelieves that the error may have been
discovered if the Company had filed compliance tariffs reflecting rates approved in Order No.
33658.
Staff recommends maintaining the cunent two-part pricing structure and does not expect
that price-induced reductions in usage will impede the Company's ability to reach its revenue
requirement target. Staff anticipates sufficient revenue stability to allow the Company to meet
its financial obligations, assuming prudent operations and management. Under Staffls rate
proposal, a 1070 usage reduction would result in less than a 1.50% reduction in revenue.
Cash Flow and DEQ Loan Rcpayment
The Company expressed concems in the previous case (Case No. MNV-W-I6-01) and
continues to express concerns that rates are inadequate to repay the Company's DEQ loan. The
Company has not always paid its loans on time. When a debt is used to build plant, depreciation
expense is used to pay the principle of the loan, whilc the return on investmenl is used to pay the
interest. Staff is recommending an annual depreciation expense of $20,992 and a return of
r.lee Staff Comments at 20. MNV-W-16-01
1lSI'AF'F' COMMENTS DECDMBER 18,2OI9
$5,521 totaling $26,513. This exceeds the Company's annual loan payments of$18,556. In
addition, Staff is recommending other non-expense related items that will help buffer the
Company to meet its loan obligations. These are the rate case amo(ization of $1,334, and the
deferal amortization of $1,663. In total, Stafl'is recommending $29,510 in revenue requirement
for the Company to use to help it meet its loan obligation. Staffbelieves these rates should be
adequate for the Company to meet its obligation to pay its dcbt.
In addition, Staffhas made an analysis ofthe annual revenue change should water usage
continue to decrease. Table 3 shows the effects offurther reduclion in usage.
Table 3 - Revenue eflects of water reduction
Water
Usage
Reduction
Revenue
Reduction
0%$o
5%$687
t0%$1,374
150 $2.061
20%$2,748
25%$3,435
30%s4, 122
If the water usage decreased by 30%, which Staff predicts is unlikely, this would reduce
tlre amount of revenue available to servicc the DEQ loan by $4,122, which would still leave
$25,388 to service the loan.
Customer Rclations
The Company asked Staff for assislancc in drafting a customer notice and press releasc
fbr this case. Stalf sent a draft ofthe customer notice to the Company, and the Company sent a
customer notice to all customers on November 22, 2019. Staff acknowledges thal the customer
notice fails to meel the requirements of Commission Procedural Rule 125. IDAPA 3l.01.01,
because it does not mention the average price inorease fbr a customer. '['he Company did not
include a specific price increase in its Application, so the draft notice included a percentage
increase based on Stall's initial review ofthe Company's 2018 Annual Report. The Company
stated that it sent a copy of the Customer Nolise to the Jeff'erson Star in Rigby as a press release
on Wednesday, December 11,2019.
t2 DECEMBER I8, 20I9
I
I
S'I'AI.'F' COMMLNTS
Customer Comments
Because of the delay in the customer notice, customer comments will be allowed until
January, 8,2020, which is when customers can submit comments during the public workshop
and public hearing. Asof December 13,2019,no comments have been submitted.
Customer Complaints and Inquiries to Commission
The Commission did not receive any complaints in 2016 afier Order No. 33658, which
was not effective until December 1, 2016. Therc were no complaints or inquiries received in
2017 or 2019. There were six complaints and inquiries in 2018, including an inquiry from the
Company. Historically, most complaints had focused on water quality, low water pressure, and
service disruptions. The Company has improved its responsiveness to customer complaints, and
outage or low pressure problems were quickly resolved. The Company has shown that it is
willing to make payment arrangements acceptable to both the Company and customers.
COMPANY TARIFF
Staff assisted the Company in drafting its Company Tariff-including Rate Schedules,
Rules and Regulations and the Main Extension Rules-after Order No. 33658. Despitc
numerous requests, the Company did not rctum a signed copy ofthe Company Tariff to the
Commission. Staff is witling to assist the Company in revising its Tariff and recommends thal
the Company submit a signed copy of its Tariff within l5 days of the effective date of the Order.
STAFF RECOMMENDATIONS
Staff recommends:
1 . A 201 8 test year with known and measurable changes
2. A rale base of $433.639.
STAFF COMMENTS DL,CtrMBER 1tt,20I9
Public Workshop and Public Hearing
The Commission issued a Notice of Public Workshop and Public Flearing on November
19,2019. The workshop will be hcld on Wednesday, January 8,2020,at 5:30 pm. The Public
Hearing will be held fbllowing the Public Workshop on Wednesday, January 8, 2020, at7:00
pm.
13
3. An 1l% retum on equity.
4. An overall rate of retum of L27%.
5. An annual revenue requirement of$96,472.
6. A metered rate design as proposed by Staff.
7. The Company submit a signed copy of its Tariff within l5 days ofthe effective date
ofthe Order.
t
Respectfully submitted this I g day of December 20 | 9.
Hunter
Deputy Attomey General
Technical Staff: Brad Iverson-Long
Bentley Erdwurm
Chris Hecht
Rick Keller
Joseph Terry
i:umisc/comments/mnvw I 9. I mhblcwhbejtrk commcnts
STAFF COMMENTS l4 DECEMBER I8,2OI9
.?
.,*i;
6:AzO
Attachment A
Clase No. MNV-W-19-01
Staff Comments
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Morning View Water Co,
Owner Revenue
MNV-W-19-01
Office
1,010 s
620 5
22,730 s
L8,240 s
L6,460 5
L4,7L0 s
t2,300 s
12,470 s
8,030 s
9,080 5
r,920 s
8,740 5
Volumetric Total
Jan
Feb
Mar
Apr
May
Jun
Jul
AUB
Sep
Oct
Nov
Dec
50
50
50
50
50
50
50
50
50
50
50
50
5
5
s
s
s
s
5
s
s
5
s
s
0.15
0.09
7.6L
5.46
4.60
3.76
2.60
2.69
7.20
1.36
0.29
1.31
s
s
s
5
S
s
s
s
s
s
s
5
50.15
50.09
57.6t
55.46
54.60
53.76
52.60
52.69
51.20
51.36
50.29
51.31
Total Office Revenue (rounded to dollars)S orr
Attachmcnt B
Case No. MNV-W-19-01
staff comments
t2/18/19
Owner Residence Base Charge Volumetric Total
Jan 4,t1O s 64 s 0.62 s 64.62
Feb 3,230 s 64 s O.aS 5 64.48
Mar 4,100 S 64 S 0.62 S 64.62
Apr 46,380 s 64 s 10.71 5 74.71.
May 1oo,1o0 S 64 S a6.so S 100.50
Jun 157,s00 S 64 S 6+.os S 128.0s
Jul 242,000 s 64 s 104.61 s 168.61
Aug 268,690 s 64 $ 7L7.42 s 181.42
sep 14s,990 s 64 s s8.s3 5 722.s3
oct 4,480 s 64 s O.ez s Aq.at
Nov 4,420 S 64 S 0.66 S 64.66
Dec 4J00 s 64 s 0.71 5 64.7r
Total Residence Revenue (rounded to dollars) 5 7,164
Lane No
soc
151-8031 Water Operator
2 43-3031 Bookkeeper
3 11-1021 General manager
4 43-3011 Account Clerk
Officer and Directors
MNV-E-16-01 Staff
Approved % lncrease Position
s 3,060 3.92% 5 3,180
7.80% $ 9,880
3.92% s \340
s 19,420
5
SOC code
11-1021
6 Operation Compensation
7 Admin & General
I Operations & Maintenance
9 Total Operation Compensation
10 TotalSalary Expense
10 genefits provided
11 Water Benefits
12 Compensation in AnnualRepon
13 Labor-Operation & Maintenance
f4 Labor-Administrative & General
15 Salaries-Officers & Directors
16 Total Compensation in AnnualReport
17 Compensation Adjustment
18 PayrollTax %9.6
19 Payroll Tax Adjustment
20 TotalAdjustment
43-3031
51-803r
9,155
9,180
5
$
s 22,500
s 1,164
s
s
5
9,180
18,660
s 27,840
s (s,240)
s s04)
5 1s,744)
201s (MNV-E-16-01)
Median Mean
s 18.72 s 19.20
S 14.71 Ss 37,79 ss 14.71 5
75.67
44.55
15.67
2018
Median Mean
5 t9.27 S 20.14
s 1s.ss 5S 33.32 SS 1s.ss 5
17.22
39.87
11.22
% lncrease
Median Mean
2..94yo 4.90%
5.77%
-11.83%
5.7|yo
9.A9%
-10,7 r%
9.89%
Staff
Position
3.92%
7.ao%
3.92%
7 .80%
Attachment C
Case No. MNV-W-19-01
StaffComments
t2/18/l9
Mornint View Water Co.
Labor
MNV-W-19-01
Morning View Water Co.
Mileage
MNV-W-19-01
Trip taken to Total
1-10
tL-20
21-30
31-40
41-50
51-53
Total trips:
Roundtrip distance
MNV System Bank/Post
(deemed prudent) office
20 39
?o 52
20 48
20 4L
20 37
48
Water
testing Supplies
32
40zo
10
30
00
104
4
225
3.5
2
2a
Total miles: 476 810
Combined total miles:
2018 federal mileage expense rate:
Total transportation expense (rounded to nearest dollar):
364 56
L,646
S 0.545 /per mile
s 897
Attachment D
Case No. MNV-W-19-01
Staff Comments
t2!t8/19
Weeks
Morning View Water Co.
Rent
MNV-W-19-01
Actual cost of current office space
Buidling assessed value
Annual depreciation expense
Morningview 50% share
s
s
56,959
1,899s 9so
2018 actual office expenses
Electricity
Natural Gas
Water
Garbage removal
Lawn maintenance
Lock
Total actual office expenses
Morningview share+office expenses
S
s
s
s
)
s
166
351
631
69
)E
20
5 7,277
S
s
2,227
Market-rate office rent (a nn ua l)5,304
Market rent sample:
Location Sq Ft Montly Rent
Rexburg NA
ldaho Falls LzO
Pocatello 800
Pocatello 300
ldaho Falls 350
ldaho Falls 900
Rigby 360
ldaho Falls 600
ldaho Fa lls 500
Rigby 400
Average Rent:
S
$
s
)
5
S
5
s
s
)
375
400
500
425
?20
750
550
300
500
400
5447
Attachment E
Case No. MNV-W-19-01
Staff Comments
t2lt8/19
Mornint View W.ter Co.
Water Testing Adiustment
MNV-W-19-01
Wells #1-2
Source Analyte Frequency No. of Test'Total Cost Annual Cost
Each Well Nitrate Annual I s 40.00 5 360.00 S 4o.oo
Each Well Nrtrite 1 in I Years T S 4o.oo 5 40.00 s 4.44
Each Well SOCS - Group I in 3 Years 3 S 1,350.00 s 4,050.00 5 450.00
Each Well 1 in 3 Years S 3s.oo s 105.00 5 11.67
Each Well VOCS - Group 1 in 3 Years 3 s 210.00 s 630.00 s 70.00
Each Well Arsenic 1 in 3 Years s 40.00 s 120.00 5 13.33
Each Well IOC - Flouride 1 in 3 Years 3 s 2s.00 s 75.00 5 8.33
Each Well IOCS - Phase 2 and 5 'l in 3 Years 3 s 166.67 s 500.00 5 ss.s6
Subtotal Per Well 5 6s3.33
subtotal Per Well
Times 3 Wells
s 5s3.33
$ r,306.67
Wells #3
Source Analyto Frequency No. of Test'Cost/Test Total Cost Annual Cost
Each Well Nrtrate Annual I s 40.00 s 360.00 s 40.00
Each Well Nikite 1 in I Years 1 S 4o.oo s 40.00 s 4.44
Each Well Alpha 1 in 6 Years 15 s 9s.00 s 742.50 s 1s.83
Each Well Radium 226 1 n g Years 1 s 130.00 s 130.00 5 14.44
Each Well Radium 228 1 in g Years 1 s 30.00 s 30.00 5 3.33
Each Well Ura ni! m 1 in 6 Years s 100.00 S 150.00 s 16.67
Each Well VOCS - Group 1 in 3 Years 3 $ 21o.oo S 630.00 5 70.00
Each Well Sodium 3 s 3s.00 5 105.00 s 11.67
Subtotal Per Well s 176.39
Subtotal Per Well
Times l Wells
s 176.39
$ 176.39
Distribution
Source Analyte Frequency No. of Test*CosUTest Total Cost AnnualCost
Distribution Lead & Copper 5 samples/3 years s 70.00 s 2,100.00 s 233.33
TotalColiform Monthly 108 s 2s.00 s 2,100.o0 S 3oo.oo
Subtotal oistribution $ 533.33
* Total numbe. of tests in g-year cycle.** IOC = lnorganic Contaminants
VOC = Volatile Organic Contaminants
DBP = Distribution By-Products
s
5
695
1,840
S 1,145
Attachmcnt F
Case No. MNV-W-19-01
Staff Comments
t2/18lt9
Grand Total - Normalized Annual Water Testing Costs Ire
staff Adjustment to Water TestinB
CosuTest
IOC - Sodium 3
3
1 in 3 Years
30
Distrabution
Company Pro Forma Water Te5ting
Staff Normalized Annual Water Testing Costs
..i
ol
oio
o
,,E
o,(Jo
!
s
e,
Attachment C
Case No. MNV-W-I9-01
Statf Comments
t2ll8lt9
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oi
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d
e QQ -i 3H - 'yi..-!96!-E
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I
o
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oOE ''l'-c
o.^
o5
:
yola
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L99;iS<
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.=.45
6 E2
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Attachment H
Case No. MNV-W-19-01
Staff Comments
l2l8/19
oo'
.E'
o
'6i>
.9o
';6 g*t-.9c P tso
=3;6
I
i.r.
I
\
o
./i
(!
oo(,':d x
FPEr6;EFZ i i;a
E;;,; -g b b "r! P
oti;EorEE P g; EE
.s b 5 r 9:o-(J(Jaud
o
E
ir v'
o
o4
o.r iRE.!
CL
o
e3
l
OF.E"1
ruO.g (\
aoz -6O:
o,
ItEE;
49('r\
(Yi
o
o,
3;EE
-E<56i2
=trE
Morning View Water Co.
Rate Base Calculation
MNV-W-19-01
1 Plant ln Service
2 Accumulated Depreciation
3 Net Plant in Service
4lnventory
5 Working Ca pital
6 Total Rate Base
7
9 Working Capital Calculation
10 Total Operating Expense
11 Working Capita I
Annual
Repo rt
630,322
779,750
Staff
Recommendation
478,487
52,\4L
Differe nce
(1s 1,83 s )
(67,609)
5ro,57 2 426,346 (84,226)
8,536 7 ,293 (1.,243)
519,108 43 3,6 39 (8s,469)
68,292 58,349 (e,s421
8,5 36 7 ,293 17,2431
Attachment t
Case No. MNV-W-19-01
StaffComments
t2lt8ll9
+
:
sss
qqq
OOr
(o- @-
NO)N
c{oN@ 'rt;C.l C!" E'-<=o
NOLO
oci;
3 o <-l
-d,O 5:
=86
-t0.8 r -*
"o
; 9t 6
og6(!S:o6
B o<)
-d)o 5:ts F3
-o0,q E -*
"O
;E.9
-; E * .sP()6
<=o
sssoo ra,qqq
sss!to @qc\OO CD
sssQOLOooc.J
sss@o co@o@NciN,o
.9
E
E
{a6
d:
+
=)oo
o,
E
(J
(o-o (.)-
t-
oro)@
o- N_ N-rO C{ t-
N
C
+o)
odcc)e1rp.g\loaxtlon
8:sal -:atoo(l)^(o
!+>.*
^'-JO
- or.ii - \:
EFFAE Es(s-:"6XLIJLII=FC="
= e E b E &E
Ei.Es,.e,666ts bEe(Jv.t-u)Jt,
rN(O$lr)(Ol'-
.i .9(Ji
$CI
a5q568
.E:=E -.1orzzez Attachment J
Case No, MNV-W-t9-01
StaffComments
t2/18/19
Morning View Water Co,
Revenue Requirement
MNV-W-19-01
1 Rate Base
2 Required Rate of Return
3 Return on lnvestment
4 Net Operating lncome Realized
5 Net Operating lncome Deficiency
Revenue Requirement lncrease
9 Subject to lncome Tax
10 Tax Gross Up Factor
Tax Grossed Up Amount
11 Not Subject to lncome Tax
12 Gross Up Factor not Subject to lncome Taxes
Not Subject to lncome Taxes Amount
Revenue Requirement lncrease
13 Revenue lncrease Required
14 Amortize Rate Case Expenses
15 Total Revenue lncrease Required
16 Total Revenue Collected in Test year
17 Revenue lncrease %
18 TotalGross Revenue Requirement
Gross-up Factor Calculation
19 Net 0eficiency
20 PUC Fees
21 8ad Debts
22 State Tax @ 6.925%
23 FederalTaxable
24 tederclTax @ 27%
25 Net After Tax
26 Net to Gross Multiplier
Company Annual Report
s 519,108
o.48%
2,500
172,249)
Staff Case
s 433,639
7.27%
s
$
5
s
s 2,soo
736.3457%
s 3,409
I 72,249
100.2535%
s 72,280
Subject to
lncome Taxes
100.00%
o.2s29%
o.0000%
5 1s,689
s15,689
s1s,689
s86,04o
t4.23%
5101,729
Excluding
lncome Taxes
100.00%
o.2529%
0.0000%
s s,s21
136.9420%
5 7,s61
s 1,408
700.6925%
s 1,418
Subject to
lncome Taxes
100.00%
0.18170
0.5000%
s 6,930
s 8,969
s8,969
8,969
5 14,749
s
87,503
1o.25%
s 96,472
Excluding
lncome Taxes
700.00%
0.7871%
0.s000%
99.7477%
6.9015%
99.7477%
0.0000%
99.3123%
6.8774%
99.3723%
0,0000%
92.8396%
L9.4963?%
99.74'11%
0.00000%
92.4349%
79.4tt33%
99.3721%
0.00000%
73.34329%
716.145120/.
99.147tO%
1o0.25354%
73.O23s9%
t16.94205%
99.3t230%
100.69246%
Attachment K
Case No. MNV-W-19-01
StaffComments
t2lt8/19
5,521
(1,408)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE TFIIS I8'I'H DAY OF DECEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. MNV.W.Ig.OI, BY MAILING A COPY THEREOF-, POSTAGE PREPAID,
TO THE FOLLOWING:
NOLAN GNEITING PRESIDENT
MORNING VIEW WATER CO
PO BOX 598
RIGBY ID 83442
Email: morringvier.vlvaleri2l gnrai l.col'n
J, /L2,"<
SECRETART_Z
CERTIFICATE OF S F,RVICE