20080222Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL AND KRISTINE SASSER
DEPUTY ATTORNEYS GENERAL
DATE:FEBRUARY 26, 2008
SUBJECT:IDAHO SPRINGS WATER COMPANY'S APPLICATION FOR
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, CASE
NO. ISW-08-
On February 5 , 2008, Idaho Springs Water Company filed an Application for a
Certificate of Public Convenience and Necessity seeking authority to provide water service as a
public utility in Kuna. Because the Company is already serving customers, it seeks authorization
for interim rates and to begin the process of setting rates and charges. The Company also
requests that its Application be processed by Modified Procedure pursuant to IDAP A
31.01.01.201 through .204.
THE APPLICATION
Idaho Springs Water currently serves 38 residential customers, 17 lots for the
construction of residential dwellings and 1 customer taking service to water common areas in
and about the Arrowrock Subdivision in Kuna, Idaho.! The Company anticipates an additional
100 residential customers if the Arrowrock Subdivision is fully built and another 100 residential
customers if the service territory is expanded.
The Application states that its proposed service area is not within the authorized
territory of any other public utility water corporation under the jurisdiction of the Commission.
Therefore, authorizing service to this area will not interfere with the operations of any other
water utility corporation. The closest existing water system is located in Kuna City -
approximately 2 Y2 miles from the Arrowrock Subdivision.
1 The water system in the AlTowrock Subdivision has been completed and is culTently operational.
DECISION MEMORANDUM
The Company is still finalizing its analysis of what it believes will be just and
reasonable charges for water service. Currently, the Company charges a flat fee of $25.00 per
month for lots upon which construction is occurring, $50.00 per month for its residential
customers, and $800 per month for commercial customers watering common areas.The
Company anticipates a proposal that contains a set monthly customer charge and an additional
variable charge, based on monthly consumption.2 The Company believes this will result in
residential monthly charges between $50-$100 per customer. In the interim, the Company
requests authorization to continue charging its current rates until such time as rates and charges
are set by a final Order of the Commission.
The Company submitted various supplemental documents with its Application
including: documents evidencing the incorporation of the Company, a map of the proposed
service area, a letter from the Department of Environmental Quality (DEQ) evidencing approval
of the as-built drawings, a list of customers, a description of rates and charges currently in use
and a copy of the notice that the Company has mailed to its customers regarding this
Application. The Company has committed to filing additional information and attachments
regarding (1) costs for construction of the water system and annual maintenance, (2)
consumptive use, or (3) financial statements of the Company as required by IDAP
31.01.01.111 (Rule 111).
A Second Amended Complaint for Declaratory and Injunctive Relief, Damages, and
Demand for Jury Trial was filed in the Fourth Judicial District on October 31, 2007, by
numerous homeoWfiers of the Arrowrock Subdivision. The Complaint is based on the assertion
that the company providing water services to the Arrowrock Subdivision does not have the
appropriate authorization from the Commission and, thus, has been acting unlawfully by
charging for water and water delivery. The allegations include, but are not limited to, multiple
counts of breach of contract, fraud, breach of duty to disclose, and racketeering. The case is
pending in district court.
2 A variable charge would require individual meters. The Company s Application does not address whether meters
are already in place or whether there is an intent to install meters in the future.
DECISION MEMORANDUM
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and set a
deadline for intervention. Staff recommends that the Company s Application be processed by
Modified Procedure. Staff recommends approval of the proposed interim rates, subject to
refund. Several informal complaints and one formal have been filed with the Commission
against the Company alleging that it has been operating without the proper authorization of the
Commission. Staff recommends that these complaints be joined with this Application. Once the
Commission Secretary issues a Notice of Parties, the parties could meet informally to establish a
schedule for processing this case.
COMMISSION DECISION
1. Does the Commission wish to issue a Notice of Application including a deadline
for intervention?
2. Does the Commission find that the public interest may not require a hearing to
consider the issues presented, and that this proceeding may be processed under Modified
Procedure?
3. Does the Commission wish to authorize the Company to continue to charge its
current/interim rates and charges, subject to refund, until such time as rates and charges are set
by a final Order ofthe Commission?
4. Does the Commission wish to join the customer complaints against the Company
with the processing of its Application?
~~, ~~-
Don Howell and Kristine Sasser
Deputy Attorneys General
M:ISW-O8-01 ks dh
DECISION MEMORANDUM