20081010reconsideration_order_no_30656.pdf

Office of the Secretary
Service Date
October 10, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF MAYFIELD SPRINGS WATER
COMPANY FOR A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY ORDER NO. 30656
CASE NO. MSW-08-
On August 26, 2008, the Commission issued Order No. 30628 granting Mayfield
Springs Water Company a Certificate of Public Convenience and Necessity and setting rates for
the provision of water service to its customers. On September 15 , 2008, Gerald Corvino (the
only intervenor in the case) filed a one-page Petition for Reconsideration raising four points.
Without elaboration, Mr. Corvino requested that reconsideration be granted by "written briefs
comments and interrogatories." On September 22, 2008, Mayfield Springs filed a timely answer
to the Petition for Reconsideration.In its answer, Mayfield responded to two issues and
requested that the Commission deny reconsideration on all four issues.
On September 16, 2008, Mayfield Springs filed a Petition to Alter or Amend the
Commission s final Order No. 30628. More specifically, the Company requested that the
Commission authorize two reconnection charges that were not addressed in the final Order.
After reviewing the Petitions and the final Order, the Commission grants in part and
denies in part the Petition for Reconsideration. Reconsideration shall be granted by written
comment pursuant to the schedule set out in this Order. The Commission also grants Mayfield
Springs' Petition regarding the reconnection charges.
MAYFIELD'S PETITION TO ALTER OR AMEND
In its Petition, Mayfield Springs requests that the Commission authorize two
reconnection charges: (1) a $35 reconnection fee during normal office hours (8 a.m. to 5 p.
and (2) a $70 reconnection fee after normal business hours. Petition at 2. The Company
explained that the charges were based upon its certified water system operator s hourly rate of
$35 per hour for general labor. The Company maintains that these proposed charges were
included in Exhibit G of its Amended Application filed on April 25, 2008, but the Commission
did not address them in its final Order No. 30628. The Staff and the intervenor did not address
these charges in their comments.
ORDER NO. 30656
Commission Findings: We grant Mayfield's Petition to amend our prior decision in
Order No. 30628 pursuant to Idaho Code ~ 61-624 by authorizing Mayfield Springs to charge a
$35 reconnection fee during normal office hours, and a $70 reconnection fee after normal
business hours. Based upon the record, these charges are reasonable and will be effective on the
service date of this Order. The Company shall file an updated tariff reflecting these approved
charges within seven days of the service date ofthis Order.
ISSUES ON RECONSIDERATION
In his Petition for Reconsideration, Mr. Corvino asserts that the Commission s final
Order "is unreasonable and not in conformity with the law." More specifically he raises four
issues in his Petition:
1. The Order contradicts the requirements of Idaho (Code) 61-701 in that the
Commission takes no action to ensure Idaho statutes are "enforced and
obeyed" as required.
2. The Order authorizes a windfall profit for the Company in the collection
of connection fees that the Commission found to be unreasonable.
3. The Order authorizes the Company to collect interest on late charges the
Commission ruled "excessive" in the cases where customers refused to
pay the "excessive charges.
4. The Order ignores the actions taken by the Company prior to February 5
2008 effectively encouraging the Company and the other 4 000 water
companies (according to PUC spokesman) operating without a CPCN to
continue to do so.
As set out in greater detail below, Mayfield's answer to the Petition for Reconsideration
responds to issue Nos. 2 and 3. Mayfield requests that the Commission specifically deny
reconsideration on these two issues.
attention
A. Standards for Reconsideration
Reconsideration provides an opportunity for a party to bring to the Commission
any question previously determined and thereby affords the Commission with an
opportunity to rectify any mistake or omission.Washington Water Power Co. v. Kootenai
Environmental Alliance 99 Idaho 875 , 879, 591 P.2d 122, 126 (1979); see also Eagle Water
Company v. Idaho PUC 130 Idaho 314, 317, 940 P.2d 1133 , 1136 (1997). The Commission
may grant reconsideration by rehearing if it intends to take additional argument.
ORDER NO. 30656
reconsideration is granted, the Commission must complete its reconsideration within 13 weeks
after the deadline for filing petitions for reconsideration.Idaho Code ~ 61-626(2).
reconsideration is granted, the Commission must issue its order upon reconsideration within 28
days after the matter is finally submitted. Id.
Consistent with the purpose of reconsideration, the Commission s Procedural Rules
require that petitions for reconsideration "set forth specifically the ground or grounds why the
petitioner contends that the order or any issue decided in the order is unreasonable, unlawful
erroneous or not in conformity with the law." IDAP 31.01.01.331.01. Rule 331 further
requires that the petitioner provide a "statement of the nature and quantity of evidence or
argument the petitioner will offer if reconsideration is granted.Id. A petition must state
whether reconsideration should be conducted by "evidentiary hearing, written briefs, comments
interrogatories." IDAPA 31.01.01.331.03 (emphasis added).
B. The Four Reconsideration Issues
1. The Order does not ensure that Idaho statutes are enforced. Mr. Corvino s first
argument on reconsideration is that the Commission s final Order is contrary to Idaho Code
61- 701. In particular, he asserts that the Commission s Order fails to ensure that public utility
statutes are "enforced and obeyed.
Commission Findings: Commission Rule 331 governs petitions for reconsideration.
IDAPA 31.01.01.331. This rule requires that petitions for reconsideration describe "specifically
the ground or grounds why the petitioner contends that the Order or any issue decided in the
Order is unreasonable, unlawful, erroneous or not in conformance with the law and r set forth 1 a
statement of the nature and quantity of evidence or argument the petitioner will offer if
reconsideration is granted " IDAP A 31.01.01.331.01 (emphasis added). We find that the Petition
for Reconsideration fails to meet the requirements of Rule 331 for this issue. In particular, Mr.
Corvino has failed to specify the grounds why he contends that the Order is unlawful.
Idaho Code ~ 61-701 provides that it is the duty of the Commission to see that the
provisions of the Constitution and statutes of this State affecting public utilities "are enforced
and obeyed, and that violations thereof are promptly prosecuted and penalties due the state
therefore recovered and collected. . .." In its Order, the Commission recognized the District
Court's determination that Mayfield had violated Idaho Code ~ 61-526 by beginning the
ORDER NO. 30656
construction of its water system without first having obtained a CPCN from the Commission.
Order No. 30628 at 3.
In Order No. 30628, the Commission observed that Mr. Corvino dedicated most of
his comments to his request that the Commission impose a civil penalty of $1.76 million based
upon a $2 000 per day civil penalty (starting September 29, 2005 through February 3, 2008)
pursuant to Idaho Code ~~ 61-706 and 61-707. Id. at 16. The Commission declined his request
for two reasons. First, the Commission noted that it is an agency of limited jurisdiction and that
the Public Utilities Law does not permit the Commission to impose a civil penalty. Order No.
30628 at 16. Only an Idaho district court can impose a civil penalty. Idaho Code ~ 61-712.
Second, when either a court is determining the amount of a civil penalty or the
Commission is considering whether to compromise a penalty, it is to consider several factors.
These factors include: "the appropriateness of the penalty to the size of the business. . . , the
gravity of the violation, and the good faith of the person charged in attempting to achieve
compliance" once notified. Idaho Code ~ 6l-712B. In this case, the Commission determined
that Mayfield is a small water company and the amount of "the requested civil penalty in this
instance is excessive and not supported by the evidence.Id. at 17. Mayfield submitted its
CPCN Application about a week after the Staff pressed the Company to do so. Reply Comments
at 2. Based upon the facts of this case and the relief provided by the District Court, the
Commission determined that pursuit of a civil penalty was not warranted. In enforcement
proceedings, the Commission s primary focus is to bring the utility into compliance.
Mr. Corvino asserted that the utility was operating without a Certificate and that its
rates were not reviewed and approved by the Commission. The Commission exerted jurisdiction
over Mayfield and set rates. After a public hearing and extensive public participation, the
Commission set the utility's rates and issued a limited Certificate. We fail to see how our prior
Order is inconsistent with our authority to grant Certificates, set rates and enforce the Public
Utilities Law. Idaho Code ~~ 61-502 , 61-507, and 61-526. Accordingly, we deny
reconsideration on this issue.
2. Mayfield received a windfall profit when the Commission declined to order the
Company to refund the connection or hookup fees. Mr. Corvino next seeks reconsideration
because the Order "authorizes a windfall profit for the Company in the collection of connection
fees that the Commission found to be unreasonable." The Company s initial assessment for
ORDER NO. 30656
connection or hookup was $2 500. In comparison, the Commission s Order found that $725 was
the reasonable hookup fee. Order No. 30628 at 14. Although the Commission declined Mr.
Corvino s request for a refund of all charges prior to February 5 , 2008 , the Order did not directly
address a refund of the difference between what was charged and what was found to be
reasonable. Id. at 17-18.
Mayfield Springs urges the Commission to deny reconsideration on this issue "in the
interest of judicial economy and because granting the relief requested could result in retroactive
ratemaking." Answer at 1. Mayfield argues that to grant relief on this matter would "duplicate
the proceedings currently ongoing in the District Court and creates the possibility that the (Court
and the Commission) could reach differing results.Id. at 2. In its August 4, 2008 decision, the
Court granted the plaintiffs motion for summary judgment as to the return of funds collected for
water services and ordered an accounting by the defendants.
Mayfield further asserts that ordering refunds "would amount to retroactive
ratemaking. "Id.The Company maintains that if the Commission decides to reconsider
refunding the difference between $2 500 and the approved $725, then the "refund period should
only date back to the date on which the Company filed its original application " i., February 5
2008. Finally, the Company observed that although it previously stated it would not seek to
recover any deficiency if the Commission-authorized rate exceeded the interim flat rate of $50
per month, Mayfield Springs "must now withdraw its offer, to the extent necessary, on this issue
in order to preserve the defense of set-off." Id. at 3. If the Commission grants reconsideration
on this issue, Mayfield suggests it should:
1. Recognize that many customers were not billed for services for several
months prior to January 2007 and the value for service prior to this date
should be available as a set off against any potential refunds;
2. Allow the Company to recalculate all customer rates back to the date
service was first provided based upon the Commission approved rates for
services; and
3. Recognize the "cost per connection" would likely have been higher than
the Commission approved amount of $725 during the time when
construction and lot sales were booming in the Treasure Valley.
Answer at 3-
ORDER NO. 30656
Commission Findings: As set out in greater detail below, we grant reconsideration
on this issue. In our Notice of Application, the Commission stated "that the Company s existing
rates shall serve as interim rates, until the Commission approves final rates. The interim rates
shall be subject to refund Order No. 30512 at 2 (emphasis added). In our final Order, the
Commission found that the reasonable hookup fee for new service shall be set at $725 for new
homes. Order No. 30628 at 14. On reconsideration, no party has disputed the reasonableness of
the $725 amount. However, the final Order authorized an effective date for Mayfield's "rates
and charges" of August 30, 2008. Id. at 19.
Given the differences in our initial Notice and final Order we grant reconsideration to
more fully examine this issue. Reconsideration is limited to the issue of refunding the difference
between $2 500 and $725 for residential hookup fees! collected prior to August 30, 2008. The
Commission grants reconsideration on this issue by written comment. In granting
reconsideration, we shall require Mr. Corvino to state with greater clarity his argument regarding
this limited issue. We shall also require Mayfield Springs to provide the Commission with a
copy of the certified accounting that Mayfield and its codefendants provided to the District
Court. In addition, Mayfield Springs shall provide a detailed report indentifying: each customer
who paid (or has not paid) the $2 500 hookup fee; each customer who is a plaintiff in the District
Court case; each customer who has separately sought a refund of the hookup fee in any court of
competent jurisdiction; the date each customer paid the hookup fee; and who the customer paid
the hookup fee to (e., water company, developer, builder, etc.). In their comments, the parties
may address reasons why customers or group(s) of customers should not receive refunds for
hookup fees paid prior to August 30, 2008.
The parties shall comply with the following schedule.
Action Deadline
Mayfield provides a copy of the accounting
provided to the District Court and the detailed
report of the hookup fee for all residential
customers.October 24, 2008
Mr. Corvino s Comments on Reconsideration November 3, 2008
Staff Comments on Reconsideration November 14 2008
I The only non-residential customers of the Company were the sewer company and the common area irrigation
customers. Order No. 30628 at 12.
ORDER NO. 30656
Mayfield Reply Comments December 3, 2008
3. The collection of interest on "excessive" late fees. Mr. Corvino next asserts that
the Commission s Order authorizes Mayfield Springs to collect interest on late charges that the
Commission ruled were "excessive." Prior to issuance of the Order, Mayfield had imposed a late
fee of $15 (and previously $30) on delinquent accounts. Order No. 30628 at 14. In its final
Order the Commission found that the $15 late fee was excessive and set a reasonable late fee of
1 % per month on delinquent balances. I d. at 15.
In response to this issue, Mayfield Springs states that it will not assess the
Commission approved 1 % late fee on previously charged $15 and $30 late fees. Answer at 4.
other words, the Company will not apply its 1 % late fee on the previously unreasonable $15 or
$30 late fee but reserves its right to assess the Commission-approved late fee (1 %) on all past-
due accounts.
Commission Findings: Based upon Mayfield's assertion that it will not assess
interest on the Company s initial late fees that the Commission found unreasonable, we find that
this issue is moot. More specifically, the Company stated that it will not apply the Commission-
approved 1 % late fee on the previous $15 or $30 late fees that the Commission found
unreasonable. Based upon Mayfield's position, we find that there is no need for the Commission
to reconsider this issue. A case becomes moot when the issue presented is "no longer live or the
parties lack a legal cognizant interest in the outcome.Idaho Sch. for Equal Educ. Opportunity
V. Idaho State Bd. of Education 128 Idaho 276, 281 , 912 P.2d 644, 649 (1996) quoting
Bradshaw v. State 120 Idaho 429, 432 816 P.2d 898 (1991).
4. The Order encourages Mayfield and 4,000 other water companies to operate
without a Certificate. Finally, Mr. Corvino argues that by not addressing the Company s actions
before February 5, 2008, the Commission s Order is "effectively encouraging the Company and
the other 4 000 water companies2 (according to PUC spokesperson) operating without a CPCN to
continue to do so." (Footnote added.
2 The reference to the 4
000 water companies is apparently based upon a newspaper article in the Idaho Statesman
dated April 18, 2008, which quotes the Commission s public information officer as saying there is no way the
Commission can regulate "4500 separate water companies.
ORDER NO. 30656
Commission Findings: We deny reconsideration on this issue for several reasons.
First, Mr. Corvino s reliance on the 4 000 water companies is misplaced. According to the
Commission s 2007 Annual Report, there are approximately 2 100 drinking "water systems
throughout the State. The Annual Report notes that most of these water systems are not subject
to the Commission s jurisdiction because they are "operated by homeowners associations, water
districts, co-ops, and cities.www.puc.idaho.gov/ar2007/water.pdf.Out of this total number of
water systems, the Commission regulates only about 27 water companies. Pursuant to Idaho
Code ~ 61-104, the Commission s jurisdiction is limited to water corporations that operate for
profit. See also Idaho Code ~ 61-125.
Second, we reject his assertion that the Commission s Order ignores actions taken by
the utility prior to February 5, 2008. The Commission recognized in the Order that Mayfield'
action prior to February 5 is a matter currently before the District Court. The District Court
found "a clear basis under the law for it to award the Plaintiffs any amounts paid for water
service before the Defendants filed their Application for Convenience & Necessity.
Memorandum Decision at 8. The Court ordered that defendants provide a certified, complete
accounting of all charges and amounts paid for service and hookup fees by the plaintiffs.
Third, this case serves as an example of the perils of a utility operating without a
CPCN. Here, the plaintiff customers obtained a judicial determination for the refund of all
monies paid prior to certification. We also find that this issue lacks the specificity required by
Rule 331 and fails to state a position upon which relief could be granted. IDAPA 31.01.01.331.
Accordingly, the Commission denies reconsideration on this issue.
ORDER
IT IS HEREBY ORDERED that Mr. Corvino s Petition for Reconsideration
granted in part and denied in part. More specifically, reconsideration is granted on issue No.2 as
restated in this Order and denied on all remaining issues. Reconsideration shall be considered by
written comments.
IT IS FURTHER ORDERED that the parties shall conform to the reconsideration
schedule set out in the body ofthis Order.
IT IS FURTHER ORDERED that Mayfield Springs Water Company s Petition to
Alter or Amend Final Order No. 30628 is granted. Within seven days of the service date of this
Order, the Company shall file updated tariffs reflecting the two reconnection charges authorized
ORDER NO. 30656
in this Order. The Company s two reconnection fees shall be effective on the service date of this
Order.
THIS IS A FINAL ORDER ON RECONSIDERATION EXCEPT FOR THE
RESTATED ISSUE NO.2. Any party aggrieved by this Order or other final or interlocutory
Orders previously issued in this Case No. MSW-08-0l may appeal to the Supreme Court of
Idaho pursuant to the Public Utilities Law and the Idaho Appellate Rules. See Idaho Code ~ 61-
627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this IO.f1--:'
day of October 2008.
~~\
MACK A. REDF P S ' ENT
Ji~
MARSHA H. SMITH, COMMISSIONER
JI . KEMPTON, COM ISSIONER
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ATTEST:
O:MSW-08-01 ks dh4
ORDER NO. 30656