20100615Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03 14
IDAHO BAR NO. 6864
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
MURRY WATER WORKS SYSTEMS FOR )
AUTHORITY TO INCREASE ITS RATES AND )
CHARGES FOR WATER SERVICE )
)
)
)
CASE NO. MUR-W-IO-Ol
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilties Commission, by and through its Attorney of Record,
Neil Price, Deputy Attorney General, in response to the Notice of Application and Notice of
Modified Procedure issued on Febru 25,2010, Order No. 31013, submits the following
comments.
BACKGROUND
On Januar 13,2010, Murray Water Works Systems ("Murray" or "Company") fied an
Application requesting authority from the Commission to increase its rates and charges for water
service. The Application included, as attachments, a copy of the Company's 2008 Anual Report
information and copies of water bils from other water companies operating in the nearby area,
including the East Shoshone Water District. The Application did not include an effective date for
the proposed increase in rates and charges.
STAFF COMMENTS 1 JUE 15,2010
The Company's Application states that certain capital improvements (e.g., new water
meters) are needed in order to isolate water leakage and control summer water usage. The
Company claims that a general increase in rates and charges is needed in order to invest in
machinery and maintain the system.
Murray estimates that it has invested $15,000 and 360 hours of labor installng a new water
main through the town of Murray, Idaho (located approximately 72 miles east of Coeur d Alene,
Idaho).
The Applicant made the following requests regarding rate design and structure:
1. Schedule 1 and Schedule 3 - Rates for residential water use to be increased
from $26 per month to $40 per month. Rates for commercial customers to be
increased from $26 per month for all commercial customers to $60 per month
for a 1" service line and to $75 per month for a 2" service line. The
Company is also asking for an increase in hookup fees from $800 to $2,000
plus pars and labor; and a new charge of $5.00 monthly charge for inactive
customers.
2. Schedule 2 - An increase in the turn-on/tum-offfee for March 1 to October 1
from $25 to $50, and an increase in the turn-on/turn-off fee for October 1 to
March 1 from $50 to $75.
The Company curently serves 31 full and par-time residential customers and 5 full and
par-time commercial customers. The proposed rates represent an increase of 54% for residential
customers and an increase of 131 % for commercial customers with a 1" service line and 1 88% for
commercial customers with a 2" service line effective Januar 10,2010.
The last rate case for Murray Water setting the monthly rate of$26.00 per month was
approved by the Commission in 1994 (Commission Order No. 25771, Case No. MUR-W-94-01).
Its latest hook-up fee was adjusted on June 15,2003 (Commission Order No. 29294, Case No.
MUR-W-03-01).
On April 13,2010, Staff conducted a public workshop in Muray, Idaho to discuss the
Company's filing. On March 5, 2010, Staff submitted a total of thirty one (31) separate production
requests to Muray. The deadline for responses to the production requests was March 26,2010.
The Company did not submit responses to the Staffs production requests on the established
deadline. On April 22, 2010, Staff submitted a Motion to Compel Responses to Production
Requests and Extension of Comment Period Deadline. On April 27, 2010, the Commission
extended the deadline for issuing comments until June 15,2010. Order NO.3 1065.
STAFF COMMENTS 2 JUNE 15,2010
On June 9, 2010, the Company submitted a revised Application with the following changes:
a) install meters throughout the system to track water consumption; and b) hire a certified system
operator.
STAFF ANALYSIS
System Condition
As par of the evaluation process, Staff conducted a field tour of the water system on March
27,2010, accompanied by Arlen Lish, owner of Murray Water Works. The tour involved
inspecting the various components of the water supply and distribution system focusing on project
components that were recently completed, and problem areas where leaks are currently occurrng.
The Muray Water Works is curently supplied by a well driled in 1993 to a depth of245
feet. The well was cased with 6-inch steel and sealed to a depth of 34 feet. The well test data
reported on the well log obtained from the Idaho Department of Water Resources is 50 + gpm. The
well is housed in a concrete vaulted pump house approximately four feet below ground surace. A
5-hp submersible pump with a rated capacity of 50 gpm is installed on the welL. A totalizing flow
meter is installed at the discharge line of the welL. The flow meter does not indicate instantaneous
flow rate. During the visit, the pressure gauge immediately downstream of the flow meter was
observed to be operating at a discharge pressure between 59 to 75 psi. The facilty is also equipped
with two hydro-pneumatic tanks to supply water during low demand and reduce frequent pump
cycling.
Prior to 2001, it was not possible to supply the system from the well without
supplementation from surface water due to significant leakage in the older portion of the
distribution system that exceeded the pumping capabilties of the well. Since that time, the mainline
and distribution systems have been replaced and the surface water sources and reservoirs were
disconnected. IDEQ Sanitar Surey Report, June 2008. The new mainline system is mostly
comprised of 4-inch PVC-900 pipe. Approximately, two thirds of the total length of the distribution
system was replaced by the previous owner, Hary Almquist and the remaining third was replaced
by Arlen Lish, curent owner of the Company, in November 2002 shortly after purchasing the water
system from Mr. Almquist. The new mainline system was constructed parallel to and physically
disconnected from the old distribution system which was left undisturbed. According to the
Company, the system is not looped but all dead ends are adequately equipped with 2-inch flush
hydrants. Individual service connections are not metered; however, individual shut-off valves are
STAFF COMMENTS 3 JUNE 15,2010
installed at each service connection. The previous owner of the Company also installed one 2-inch
meter serving a commercial customer as required by IDEQ.
REVENUE REQUIREMENT
The Company has requested a rate increase in its Application; however it failed to provide
any schedules showing the revenue increase necessar to support the requested rates. Staff
reviewed the Company's financial information fied with its Application and performed an onsite
audit. Based upon its review, Staffis recommending a total revenue requirement of$19,767 and an
anual increase in revenue of$9,515. The Company received revenues of $10,252 in the 2009
anual test year. Staffs recommendation increase represents a 92.8% increase in anual revenue
for the Company.
The revenue increase is the result of additional plant in service added to the Company's rate
base since 2002, and an increase in operating expenses needed to operate the Company. The
portion of the revenue requirement attributable to rate base and to operating expenses will be
discussed below:
Rate Base
The Company's rate base was set by the Commission in 2002 at $10,000 as par of the
ownership transfer of the Company to Arlen Lish, the current owner. Case No. MUR-W-02-01,
Order No. 29119. As par of that transfer approval, the Commission adopted Staffs
recommendation that rate base be set in the amount of $10,000; and that depreciation on rate base
accrue at the anual rate of $400. (See Commission Order No. 29119 and Staffs Comments with
Attchments in Case No. MUR-W-02-0L.)
Since 2002, the Company has added three capital investments to the water systems plant.
The Company added approximately 1400 feet of water main in 2002, it improved the well and
pump in 2005, and finally it capitalized expenses for locating and repairing leaks in the water
system in 2009. The total expended for these additions was $36,236. Attachment 1 shows plant in
service, accumulated depreciation and depreciation expense.
The Company's financial records show that the expenditures for the well and pump
improvements in 2005 were $3,670. Staff audited the invoices and payments the Company used to
justify this amount and found that the expenditure was reasonable and prudent.
STAFF COMMENTS 4 JUE 15,2010
The Company's financial records show that the expenditures for the leak detection and
repair in 2009 were $6,380. Staff, again audited the invoices and payments the Company used as
the basis for this amount and found that this expenditure was also reasonable and prudent.
Staff is therefore recommending that these two capital expenditures be accepted as additions
to the Company's rate base in the amounts recorded by the Company.
The Company used a useful life of 10 years for depreciation purosed in its tax returns.
Staff, after reviewing the expenditures, agrees that 10 years is a reasonable estimation of the capital
improvements' useful life for depreciation puroses, and has used 10 years as the useful life of these
additions for determining anual depreciation expense. Therefore, the Company should receive
anual depreciation expense of$367 for the well and pump improvements, and $638 for the leak
detection and repairs improvements.
The Company recorded the amount of$58,589 as the cost of the main line addition in the
Company's tax (IRS) schedules. Staff was unable to confirm that amount as the actual cost of the
improvements. The Company was unable to provide actual invoices supporting this amount.
During the course of this case, the Company did provide a document representing a list of
materials used in the project. Mr. Lish used current prices from Consolidated Supply Co. - CDA to
determine that the 2010 cost of the materials was $18,564. Mr. Lish also provided a hand prepared
schedule detailng his estimate of the labor and equipment costs of $32, 141 required to complete the
project. The labor and equipment for the installation of the main line addition was performed by an
excavation company owned by Arlen Lish. This company did not bil Muray Water for its work on
the project. There are no other documents available to support the Company's cost of constructing
the mainline addition. Based on these two documents, the Company represents that the main line
addition should be included in rate base in the amount of$50,705.
It is clear that the main line project was completed and that it is currently serving customers.
In attempting to verify the Company's cost estimate for the water system improvement, Staff
accessed the excavation company's invoices from Familan Nortwestern of Coeur d Alene (FNW),
a pumping and pipe supply company that was the main supplier of material to the project. Staff
reviewed all the invoices provided and found invoices showing that materials likely used to
construct the main line addition were delivered to Murray, Idaho in the fall of2002. Mr. Lish
indicated that his only excavation job in Muray during that time period was the main line addition.
Staff, therefore concluded that the invoices from FNW dated during the time of the main line
construction and showing delivery to Muray, Idaho would reflect some if not all of the cost of
STAFF COMMENTS 5 JUNE 15,2010
material used on the main line job and could therefore be included in the cost of the addition. Staff
totaled those invoices in the amount of$5,372.
Staff additionally reviewed the Company's schedule detailng the labor and equipment used
to construct the project. Staff then contacted an independent excavation contractor to compare the
time, and rate used by the Company. Staff determined that based upon the project and the
information in the Company's schedule of labor and equipment, a reasonable and prudent amount
for these services is $20,814.
The amount that Staff determined is reasonable and prudent for the main line addition is
$26,186. Staff is therefore recommending that the main line addition be included in rate base in the
amount of $26, 1 86. Staff used a useful life of 40 years as a reasonable life for this addition.
Therefore, the annual depreciation expense for the main line addition is $655.
Based upon Staffs recommendations, total plant in service is $46,236. Annual depreciation
expense is $2,060 and accumulated depreciation on plant has accrued in the amount of$10,256 for
a rate base total of$35,980. These calculations are set forth in Attachment 1.
Annual Revenues
The Company recorded revenues during the 2009 test year in the amount of $ 1 0,252. Staff
determined from the Company's 2009 ban statements that this is the amount of revenue received
by the Company and agrees it represents a reasonable level of revenue currently received on an
anual basis under the current rates. Staff used this amount in determining additional revenue
requirement needed.
Annual Operating Expenses
The Company fied a document with its Application entitled "Water Distribution Industry
Operator Statement" which purortedly contained financial information on 2009 operating
expenses. Staff attempted to reconcile the numbers in this Statement to the financial information
received from the Company during its onsite audit review and was not able to reconcile the
Statement numbers with the Company's 2009 ban statements, checks, deposits, and tax return.
Consequently, Staff used the financial information from these Company documents to establish
anual operating expenses.
Based upon Company financial records, Staff identified actual operating expenses of $7,260
in 2009 (Attachment 1, Colum A). To this amount, Staff added additional expenses that it believes
STAFF COMMENTS 6 JUE 15,2010
are necessar for viable operation of the water system (Attachment 2, Column B). Staffs
recommendation for each category of expense is shown in Attachment 2 and described below.
Labor- Operation & Maintenance. The Company paid $4,800 in 2009 for Mr. Lish's time
and efforts in operating and managing the Company. Staff concurs with the Company that this level
of compensation is reasonable for a water company with this number of customers. Staff made an
assumption that Mr. Lish was serving as the certified operator in determining that $400 per month is
reasonable as an on-going cost. On June 9, 2010, the Company filed a document to amend its
original Application. In that document, the Company is asking for additional revenues to cover the
cost of hiring a certified operator of the system. The financial analysis presented in these comments
does not include any operating expenses for an independent certified operator. Although it is a
DEQ requirement that each water system have a certified water operator, Staff assumed in these
comments that Mr. Lish would fulfill that requirement himself. Thus, if Mr. Lish is unable or
unwiling to be the certified operator, then the $4,800 for Labor - Operation & Maintenance would
need to be reduced to reflect the cost of the certified operator's duties being compensated
separately.
Labor - Administrative & General. This category represents expenses for bookkeeping,
preparation of customer bils and collection of receipts. The Company did not record any
expenditures in this expense category. The Company does not have a practice of sending out
monthly customer bilings; however, one of the complaints and comments from the customers was
the lack of a monthly bil. If the Company is to develop the policy of sending out a monthly biling,
sufficient revenues should be reflected in rates to cover the cost. Staff has included the anual
amount of$3,000 or $250 per month for the cost of bookkeeping, preparing monthly customer
bilings and accounting for receipts. If the Commission adopts rates that are other than monthly
rates, then this amount would need to be adjusted to reflect the number of times bilings would be
sent to the customers.
Purchased Power. This account represents the anual cost of power to operate the pump and
system. The Company expended $1,180 in 2009 to its power supplier, Avista.
Materials & Supplies - Operation & Maintenance. The $358 recorded in the account
represents 2009 Company expenditues for materials and supplies purchased to maintain the system.
Staff increased this amount by $142 to reflect additional minor repairs that should be made to the
system. Although this is a 40% increase, the amount of increase is reasonable considering the
STAFF COMMENTS 7 JUE 15,2010
curent condition of the system and the need for more minor repairs, such as system leaks, valve
replacements and pump maintenance.
Material & Supplies - Admin & General. The Company spent $ 1 54 in 2009 for office
expenses, copies, mailngs, phone and the other incidentals required to operate a business office.
Staff increased this amount by $96 to a total of $250 anually, or approximately $20 per month to
pay the increase in materials and supply costs for monthly biling. Again, the percentage increase is
large, 62%; but the actual amount is not uneasonable.
Contract Services - ProfessionaL. This expenditure is for the costs paid (attorneys,
accountants, engineers) for professional services obtained by the Company. The Company recorded
$240 in 2009 for accounting services in the preparation of Company's taxes. Staff increased this
amount by $60 to $300 for the future cost of the tax retur preparation based upon Staffs
conversation with the Company's accountat.
Contract Services - Water Testing. The Company is required to test the purity of the water
according to a 9-year testing cycle required by DEQ. Because some tests are not required every
year, but are required in the 9-year cycle, the cost for testing must be normalized to reflect on an
anual basis what the total cost of the testing would be over 9 years. The annual water testing cost
is calculated to be $650.
Rentals - Property & Equipment. The Company did not record the actual cost of any rental
of property or equipment in 2009. Staff does not believe that it is in the best interest of the
customers to neglect the normal and reasonable repairs that the water system wil require.
Therefore, Staff included $500 for the rental of equipment (backhoes, trucks, compressor,
generators) as a reasonable amount for these expenditures anually.
Transportation Expense. Mr. Lish lives approximately 40 miles from the water system.
This expense is to record the cost of transportation for Mr. Lish to perform his responsibilties in
Murray. The Company recorded $302 in 2009 for gasoline cost. Staff has increased this amount to
$400 anual cost based on Mr. Lish's representation that he would make more trips to Muray this
coming year.
Insurance. The Company currently does not have liability insurance on the well lot. The
estimated anual premium for liabilty insurance on the well lot property is $150. Staff believes
liabilty insurce should be obtained by the Company and has included premium expense in
revenue requirement.
STAFF COMMENTS 8 JUNE 15,2010
The total anual operating expenses for the Company when all of Staff s adjustments are
included are $ 11,850 (Attachment 2, Column C).
Income Statement
Staff has prepared Attachment 3 as the Company's anual income statement. With the
adjustments as discussed above, the Company will realize a $3,978 net loss or a $3,978 shortage in
revenues to cover expenses. This shortage includes the non-operating expenses for PUC Regulatory
Fees in the amount of$50; property taxes in the amount of$95, and DEQ fees in the amount of
$175.
Rate of Return on Rate Base
The Commission in several recent small water cases has allowed a 12% rate of return on
equity. Bar Circle S Water Company in Case No. BCS-W-09-02, Order No. 30970; Stoneridge
Water Company in Case No. SWS-W-06-01, Order No. 30342; Falls Water Company in Case No.
FLS-W-05-01, Order No. 30027; Capitol Water Company in Case No. CAP-W-06-01, Order No.
30198; Spirit Lake East in Case No. SPL- W -06-01, Order No. 30279. Staff is recommending that
Murray also receive a 12% retur. A 12% return on $35,980 of rate base results in anual revenue
of $4,3 1 8. Because this amount is subject to taxes on both a federal and state level, this amount
must be increased to reflect what affect the payment of taxes will have on this amount. The process
of increasing this amount for tax effects is called "grossing-up." Staff has prepared the tax
grossing-up factor as shown on the lower portion of Attachment 4. The net to gross multiplier
calculation of 1 28.09% is the percentage that must be applied to the $4,318 to determine the amount
of revenue that must be collected in rates to allow the Company to ear the $4,318 as a return on its
rate base. When the gross-up factor is applied, the amount of additional revenue for retur on
equity that must be collected in new rates is $5,530 (Attachment 4, line 11).
Calculation of Revenue Requirement
Staff has calculated the additional revenue requirement of$9,515 as shown in Attachment 4.
The increased revenue requirement that rates must produce is the combination of the net loss of
$3,978 and the grossed-up amount for the allowed retur on the rate base of $5,530. The total of all
the additional revenue that must be generated by the rates is $9,515.
STAFF COMMENTS 9 JUE 15,2010
Staff therefore recommends that the Commission allow the Company to increase its rate to
allow for an anual revenue increase of$9,515. When this increase is added to the revenue the
Company is curently earning of $ 1 0,252, the total anual revenue requirement for the Company is
$19,767. This represents an increase in rates of92.8%.
RATE DESIGN
The Company curently charges a flat rate of $26.00 per month for all users (residential and
commercial) for domestic and other uses. Company Schedule NO.1 - Flat Rate. Muray Water
Works is proposing to change its rate design as follows:
Schedule NO.1 - Rates for residential water use to be increased from $26.00 per month to
$40.00 per month.
Schedule NO.2 - Rates for commercial customers to be increased from $26.00 per month to:
a) $60 per month for a I-inch service line, and b) $75 per month for a 2-
inch service line.
Schedule NO.3 - Fee for one household if a trailer or cabin on same hook-up to be increased
from $26.00 per month to $40.00 per month.
The Company justifies this increase by comparing the rates charged by other water utilties
operating close to Murray Water Work's service area such as East Shoshone Water District and
Central Shoshone Water District. The Company claims that these water districts charge $45 for a
%-inch service line. Arlen Lish, owner of Muray Water Works who has two rental homes in the
neighboring areas served by the above water utilties, cited his own case where he paid $42.50 for
November 2009 water usage to East Shoshone Water District (Wallace) and paid $45.68 for
December 2009 water usage to Central Shoshone County Water District (Kellogg). Mr. Lish
submitted copies of water invoices supporting his claims. The Company initially proposed a flat
rate design for residential customers (i.e. no differentiation of service line sizes) and a service line
size-based rate design for commercial customers. However, in the revised Application fied on June
9,2010, the Company proposed to have a different rate for residential customer with a one-inch
service line. Staff disagrees with the Company in setting rates solely based on comparison with
other operating water systems. The rates are generally set or approved by the Commission to allow
a water utilty to recover its legitimate and reasonable costs of operation plus a reasonable return on
a case by case basis.
STAFF COMMENTS 10 JUNE 15,2010
Staff does not oppose using some of the elements of the rate structue proposed by the
Company (i.e. designing a rate schedule based on the size of meters or service lines). Staff believes
it is more appropriate to design the rate structure for customers classes of Muray Water Works
based on service line size for several reasons: 1) there is a variability of service line sizes for
residential and commercial customers. A 3/4-inch service size appears to be a standard for the
Company for residential customers. The Company confirmed only one residential customer with a
1 -inch line; 2) it generally requires a larger portion of system facilties to provide service to
customers with larger service lines, shut-off valves and other service fittings (e.g. %-inch service
versus a 2-inch service); and 3) this is consistent with rate design of small water utilties regulated
by the Commission that employ this approach including Teton Springs Water and Sewer Company,
Mayfield Springs Water Company, Troy Hoffman Water Corporation and others. Staff believes
that rates based on meter size or customer supply line size is appropriate to use in Murray Water
Works. As mentioned earlier, the customers are curently not metered. However, the pipe size of
customer service line is generally known. Consequently, Staff will distinguish customers based on
service size rather than residential and commerciaL.
According to the Company, Muray Water Works has a total of39 customers comprised of
34 residential and 5 commercial customers. Response to Production Request NO.1. Out of 34
residential customers, 24 are full-time and 7 are part-time. The remaining 3 customers are currently
disconnected from the water system; hence, only 31 are active residential customers. Out of the 5
commercial customers, 3 are full-time and 2 are part-time.
After additional investigation, it was determined that the Company supplies irrigation water
to a small community park (City Park) during the summer and is disconnected during winter.
Historically, the use of water for the community park has not been biled by the Company.
However, as part of the Application, the Company is requesting that the park be biled as another
commercial customer. The park lot is believed to be owned by the previous water system owner
who does not live in the area. It is unclear whether the lot owner would continue water service if
biled. Staff believes that all the customers of Murray Water are benefiting from the community
park. During the Staff public workshop for Murray Water Works customers on April 13, 2010,
several customers expressed their opinion that the lot owner should not be biled as a customer. The
Company could not identify and confirm who to send the water bil to for the use of water in park.
Therefore, Staff recommends that the owners of the park lot not be separately biled as a customer.
The other remaining commercial customer proposed by the Company to be included as an active
STAFF COMMENTS 11 JUNE 15,2010
customer is the former County Courhouse now privately owned. Staffs investigation revealed that
the Courthouse is not currently using water; hence, Staff believes it is not appropriate to include it
as an active customer until the Courhouse owner requests connection.
Based on the above discussions, the total number of Muray customers used by Staff in
calculating expected revenues is 34 (31 residential + 3 commercial).
The other challenge in designing a rate structure to distribute the total revenue requirement
equitably among Murray Water customers is the issue of water usage by full-time and part-time or
seasonal customers. Traditional ratemaking procedures and policies assume that an individual
(household) should not pay for a commodity they do not use. When electric service, gas service and
telephone service is disconnected, billng stops. The same generally holds true for water utilty
companies. This traditional approach where a customer does not pay for commodity during the
period of disconnection shifts the burden of supporting the entire system to those customers who are
connected to the system full-time. This is not a problem on a large system with a diverse and large
customer base. However, this will be burdensome in a small water utilty like Muray Water Works
with only 34 customers supporting the water system. Because small water systems lack economies
of scale, customers generally pay higher anual water costs.
The Commission has addressed a similar issue on seasonal disconnects for Ponderosa
Terrace Estates Water System in various cases. Ponderosa Terrace Estates (PTE) currently has 29
customers. IPUC 2009 Anual Report. In Order No. 29172 (Case No. GNR-W-Ol-Ol), the
Commission states:
Since this case's inception, we attempted to provide enough revenue to
support Ponderosa's aging infrastructure while not overwhelming the
pocketbooks of its small customer base. Because Ponderosa serves a "resort"
community in which many of its customers do not permanently reside, some
of its customers disconnect from service when they close up their dwellings
for the winter months. The Commission believes that this is appropriate
practice and one that is often necessar to protect the integrity of the
customer's water service from freezing temperatures. That being said, the
vast majority of Ponderosa's expenses are fixed; these costs are incured
regardless of how many customers actually take water from the system at any
given time. To ensure that a working system is available when part-time and
active service customers visit their lots, the Commission thus finds it
reasonable to require seasonal customers to financially maintain the system
for a significant portion of the year.
STAFF COMMENTS 12 JUNE 15,2010
In Order No. 29276 (Case No. PTE-W-03-01), the Commission authorized the Ponderosa
Terrace Estates Water to charge the following rates:
Customer Class Monthly Flat Rate
Resident Customers $48.00 year round
Non-Resident Customers $25.00 year round
In the above Order, the Commission defined Resident Customers as full-time water system
users who live year-round on the property serviced by PTE, and Non-Resident Customers as all
other property owners who do not live year-round on the property serviced by PTE, residing onsite
part or none of the year. The Non-Resident customer class includes customers who could be served
by the system, even if they are nor physically connected to the PTE system.
In the same Order, the Commission also states:
Ponderosa Terrace Estates is predominantly a par-time sumer home
development of which 25% of the lots have been improved with permanent
structures. Many of these unimproved lots were purchased for future
development. or are used only sporadically by recreational vehicles. Similar
developments are normally owned and operated by a homeowner's
association that assesses fees to all property owners to maintain the water
system, roads, sewers and all other common property in the subdivision.
Although privately-owned, the Ponderosa system is similar in that all
property owners benefit from the water system, whether or not they are
connected and taking service for the entire year. The water infrastructure is
in place for the benefit of all properties and adds to the curent and resale
value of the properties.....
The Commission further finds this rate structure to be appropriate for the
Ponderosa system because it acknowledges that all customers benefit from
the system's existence, even if absent customers do not take advantage of this
service. Full-time customers will continue to pay the larger fee that reflects
the varable expenses that they contribute to. Given that the usage of
Ponderosa's customers is similar to the speculative and seasonal usage
associated with "resort systems," we believe that year-round payment is the
only way to provide the Company with steady cash flow it needs to keep the
system operating smoothly under the present circumstances.
Staff believes that the issues concerning full-time and par-time or seasonal users of water in
the Ponderosa Terrace Water as discussed in the above cases are not significantly different than
those in Muray Water's case. Given the Commission's clear position on this matter, Staff,
STAFF COMMENTS 13 JUNE 15,2010
recommends that a similar approach be applied to Murray's case in addressing full-time and par-
time water users.
As discussed earlier there are 27 full-time customers and 7 par-time customers, one of
which consistently has his water service connected for eight months with disconnection in
November and reconnection in ApriL. Similarly, there are 4 par-time customers who regularly use
water for six months in spring and summer and then disconnect in the fall. The other 2 par-time
customers use water less than a month during the year generally in sumer. The par-time
customers in most cases disconnect and reconnect their water service without paying any seasonal
disconnect or reconnection charges. The Company does not charge tur-on/tur-off fees when the
customers disconnect themselves although the curent Company tariff allows charging tur-on and
tur-off fees. Schedule NO.2. The par-time customers only pay for the number of months they are
using water from the system. With the above information, Staff recommends that customers served
by Murray Water are divided into two major customer classes as defined below:
Full-Time Customer - Water system users with continuous water service by Murray Water
Works for more than eight (8) months during the year.
Part-Time Customer - Water system users with water service by Muray Water Works for
eight (8) months or less during the year.
The selection of an 8 month cut-off for part-time users is recommended by Staff for two
reasons: 1) the Company's biling records indicate that 8-month duration is the longest water
service for customers with seasonal disconnect; and 2) non-usage related expenditures (fixed) in
relation to the total cost of operating the system is quite high. This necessitates that par-time users
share in the cost of system facilities; otherwise, the remaining full-time users wil cary an unfair
financial burden.
Because the system is unmetered, Staff proposes to spread the $19,767 anual revenue
requirement to all water users based on the class of customers and the size of service line. In order
to simplify the taiff design, minimize confusion, provide ease of implementation, and for the
reasons mentioned above, all seasonal or part-time users with the same size of service lines wil be
charged eight months or equivalent to 8/12 for full-time customers. To fuher simplify tariff
design, Staff recommends that customers with % and I-inch service lines be grouped in one.
category and the equivalent meter size/pipe size ratios published by the American Water Works
Association's Manual of Water Supply Practice as presented in Attachment 5 be used to establish
STAFF COMMENTS 14 JUNE 15,2010
rates for customers with larger services. The 2-inch service size results in a ratio that is
approximately 2 times the ratio for 1 -inch service.
In response to Staff Request No.4, the Company provided the following breakdown of the
number of customers using various service line sizes:
Type of Service Line Number of
Customers Size Customers
Full-Time Customers 3/4 & 1- inch 26
2 - inch 1
Part-Time Customers 3/4 & 1- inch 7
Total 34
U sing the Staff s rate design proposal as discussed above, the various expected revenues
were calculated for various customer classes as presented in Attachment NO.6. The Staffs
recommended anual and monthly charges for various customer classes are as follows:
Customer Class Size of Service Annual Charges Monthly Charges
Full-time Customer 3/4 & 1- inch $607 $50.60
2-inch $1,164 $97.00
Part-time Customer 3/4 & 1- inch $404 $33.70
With the Staffs proposed rate structure, the anual bil for a full-time residential customer
served with the Company's standard service line size of% and I-inch is approximately $607 as
shown in the above table. This is equivalent to approximately $50.60 per month or an increase of
94.6% from curent rate of$26.00 per month. The last rate case for Muray Water setting the
monthly rate of $26.00 was approved by the Commission in 1994 (Commission Order No. 25771,
Case No. MUR-W-94-01). The total increase of94.6% is equivalent to an anual increase of5.9%
since 1994. The anual water charges could be paid by the full-time or part-time customers on an
anual or on a monthly basis. Additional discussions concerning customer payments are presented
under the Customer Biling Section of Staff Comments.
The Company proposes to charge customers who are not using water $5.00 per month to
help maintain the system. Staff believes that with the recommended rate design, it already attempts
to allocate equitably the total revenue requirements to varous users, whether they are full-time or
seasonal users. Repairs and maintenance costs are par of the non-usage related expenditures and
all users are charged with these costs. Under the Company's proposal of charging $5.00 per month,
it also proposes that if the customer does not pay the minimum payment for three (3) months, the
STAFF COMMENTS 15 JUNE 15,2010
customer will lose his/her hook-up. This proposal wil no longer apply if the Staffs proposed rate
design is approved by the Commission. Service disconnection for non-payment or for other reasons
is governed by the Company's Rules and Regulations approved by the Commission.
The Company is also proposing to change the rate for Schedule 3 to be increased from
$26.00 per month to $40 per month. Schedule 3 specifies that an additional fee is charged for one
household if a trailer or cabin is connected on the same hook-up. Staff does not oppose maintaining
the Company's Schedule 3 because there may be a separate household with a trailer or cabin taking
water from another customer's service line. It would not be fair to the other customers of Muray
Water if such households take water free of charge. Staff believes it is reasonable for the Company
to charge an additional customer on the same hook-up a rate similar to that applicable to the primar
customer. For example, if the primary customer is a full-time customer with a 3/4-inch service line
and is paying $607 per year or $50.60 per month as shown in the above table, then the other
household wil also be charged with the same rate at $607 per year or $50.60 per month.
OTHER WATER SYSTEM OPERATIONAL ISSUES
Water Production Data
As par of its investigation, Staff requested monthly water production and consumption data
for calendar years 2006,2007 and 2008. In response to Staff Production Request No.8, the
Company indicated that no water production records are available. Staff believes the Company
should be required to record production data to monitor overall system consumption. This
information wil aid in evaluating future capacity expansion or the need for customer meters.
Water Quality
As par of its review of the water system, Staff also looked at the water quality and related
issues to assure that the Company can adequately and reliably provide safe drinking water to
customers. A Sanitar Survey of the Murray Water System was conducted by the Idaho
Department of Environmental Quality (IDEQ) on June 18, 2008. A Sanitar Survey is an onsite
review of the water source, facilties, equipment, operation and maintenance to assure a public
water system provides an adequate source of water supply, and in distributing safe drinking water.
Based on the results of the IDEQ's 2008 Sanitar Surey the Muray Water Works system is mostly
in compliance with the Idaho Rules for Public Drinking Water Systems (IRPDWS). However, one
deficiency identified in the surey was the failure of the Company to provide minimum separation
STAFF COMMENTS 16 JUE 15,2010
of 100 feet between a contaminated water source and the system water supply well. The
contaminated source could potentially affect the quality of the Company's groundwater. In
addition, the well lot does not provide a 50-foot separation between the well and the nearest
property line. IDEQ required Muray to submit a plan of correction for these deficiencies. IDEQ
letter to Arlen Lish, July 9, 2008. According to IDEQ, no plan of corrections has been submitted by
the Company to date. Staff recommends that the Company continue to work with IDEQ on any
identified system deficiencies and notify the Commission of the cost for corrective measures.
Water Rights
During Staffs review of the Murray's water rights, it was found that while Muray Water
filed a permit to dril the well which was completed on July 28, 1993, it has not fied an application
for permit to appropriate ground water. Staff recommends that the Company makes such a filing to
protect the Company's water source and establish a priority date.
Service Meters
During the Staff workshop held on April 13, 2010, there appeared to be an understading by
the customers that the Company is proposing to install service meters. In the Company's initial
Application, however, it did not propose the installation of meters for all customers but states the
Company needs to install water meters in the system to isolate water leakage as well as water usage
in the summer. Shortly after that meeting, follow-up discussions with the Company indicated that it
was not modifying the Application to propose metering the whole system. However, on June 9,
2010, the Company filed a revised Application with the Commission indicating that Murray
proposes to install meters throughout the system so it can determine where the water is going. The
Company claims that customers fail to notify the Company of water leaks that create pressure
problems for other people in the system.
Staff generally supports the concept of installng meters to encourage water conservation
and better rate design. However, in Murray's case at this time, Staff does not support the idea of
installng meters throughout the system for two reasons: 1) it will be another major capital
investment for the Company to pursue. The Company did not submit an estimate of the cost but
preliminary figures obtained by Staff indicated that it may cost the Company approximately
$49,500 ($1,500/service meter installation x 33 customers). Staff notes that one commercial
customer is already metered. If this capital investment is added to the Company's rate base, it will
STAFF COMMENTS 17 JUE 15,2010
put additional financial strain on the customers; 2) there are other options that can be pursued by the
Company to identify suspected leaks occurring on the customer side of the water system. Staff,
however, does not oppose the Company's initial plan to install service meters in a case by case basis
where it suspects a specific customer may have a leak in his/her property service line or may be
abusing the use of water.
Back-up Power
One major concern voiced by the customers durng the Staff workshop and from wrtten
comments to the Commission relates to availabilty of back-up power. The customers are
concerned that if there are power outages in the area, they are left without water supply. One
customer indicated that in the past, the customers did not have water for 1 to 6 days when they
experienced power outages in the area. Staff contacted the ID EQ in Coeur d' Alene concerning
requirements for back-up power and DEQ indicated that there is no requirement for the Murray
Water Works system to install back-up power for the present system. DEQ has not received any
report from the Company or complaints from the customers that they are out of water for extended
periods of time.
One customer commented that there was another customer offering a back-up power
generator and all the Company needs to do is install it. The Company also provided Staff a copy of
a bid to install an auxilar power system with a total cost of $22,449. Another cost with a different
building option would cost about $9,362.
Staff does not necessarily oppose the idea of installng back-up power to provide additional
system reliabilty. However, given the curent costs of operating and maintaining the water system
and the small number of customer base to support additional capital investments which will
correspondingly increase customers' water rates, Staff does not recommend pursuing this project at
this time. Instead, Staff recommends that the Company work with the electric utilty to restore
power as quickly as possible when it goes out.
Fire Hydrants
Another major concern raised by the customers is that the Muray Water system does not
have any fire hydrants to use in case there is a fire in the Murray area. Murray is currently covered
by the Prichard/urray Volunteer Fire Deparment. According to Steve Coyle, Fire Chief of the
Prichard/uray Fire Deparment, the curent fire protection for Muray includes a 1,000-gal
STAFF COMMENTS 18 JUNE 15,2010
capacity fire truck parked in Murray. It is assisted by another fire tender with a 2,600-gal capacity
based in Prichard. It has a refillng station at Prichard Creek about two miles south of Murray but
the Fire Department has plans to build another refillng station in Prichard Creek closer to Muray.
According to Mr. Coyle he does not believe there is a requirement for the Fire Department to have
fire hydrants installed in Murray Water Works system. IDEQ has also indicated that Murray Water
Works is not required under the Idaho Rules for Public Drinking Water System (lRPDWS) to
provide fire hydrants in its water system. It may not be cost-effective to install fire hydrants in
Murray's water system compared to other alternatives given the existing minimum mainline sizes.
HOOK-UP FEE
The Company proposes to increase the hook-up fee or connection fee for new service from
$800 to $2,000 plus pars and labor to instalL. The Company believes that the new customers should
contribute to system investment. The Company also justifies its proposed cost by comparing other
water utilty companies in the neighboring areas such as Central Shoshone Water District which
charges $6,700 for a 5/8-inch or a %-inch new connection. For small water utilties regulated by the
Commission, the connection fee or hook-up fee is generally defined as a non-recurring charge paid
by a customer requesting service for parial or full recovery of\the Company's cost of providing a
new service connection. It usually includes the cost of materials and labor to install the materials to
provide the necessar connections. Sometimes it includes the cost of unusual circumstaces such as
a service line crossing a road.
Staff does not oppose charging a new customer with a hook up fee to recover the actual cost
of pars and installation. Staff believes the cost of labor proposed by the Company of $720 was
reasonable based on similar rates charged by contractors in the area. For the materials component,
Staff used the unit cost of materials provided by a vendor in Dalton Gardens, Idaho. The total cost
for the materials was approximately $415. Allowing a minor amount for contingencies, Staff
recommends a total amount of $ 1,200 for the cost of new hook-up.
Staff notes that there are two potential scenarios for hooking-up new customers of Murray
Water Works. It would be a relatively straightforward task to provide service connection tapping
the mainline and extending service line up to a new customer's property line if such customer's lot
is on the same side of the road where the mainline is located. If the customer's lot is located on the
other side of the road, there wil be an extra cost of installng the service line such as boring a hole
STAFF COMMENTS 19 JUNE 15,2010
underneath the road. To recover this cost, Staff recommends the inclusion of the following
language in its Company's hook-up fee taiff for new connections:
When the installation of a new service line requires the Company to bore a
line under a road, all additional costs wil be charged to the customer on a
time and material basis. The new customer may, at their option, hire Muray
Water Works approved independent contractor to perform the road bore and
connection. The Company wil require such contractor to show proof of
bonding, licensing and insurance and have at least five (5) years of
experience at hot-tapping water lines. Muray Water Works wil inspect and
approve all the work being performed to insure compliance with the
Company's installation requirements.
Similar language in the tarff has been approved by the Commission in previous small water
utility cases addressing the same issue such as Order No. 30455 (Case No. DIA-W-07-0l) and
Order NO.3 1 002 (Case No. BCS- W -09-02).
CUSTOMER NOTICES AND PRESS RELEASES
The Company's Application did not include a copy of the customer notice or the press
release as required under Rule 125 of the Commission's Rules of Procedure. To assist the
Company, Staff forwarded a draft customer notice to the Company, to be dated, printed and sent to
the customers and to the local newspapers, to meet the rule requirements. However, the Company
has indicated it did not send the notice out to customers.
The Commission issued a Press Release regarding the public workshop on April 2, 2010.
Also on April 2, 2010, the Commission sent a Notice of Public Workshop to all the interested
paries in the case and to customers on the Company's mailing list. The workshop was held in
Murray on Tuesday April 13, 2010. There were 25 attendees.
CUSTOMER RELATIONS
As of May 19, 2010, the Commission has received five (5) written comments from four (4)
customers regarding this case. The majority of comments reflect concern about the large increase
for residential customers, which includes senior citizens and low income familes. Other issues
raised are the lack of water due to power outages and the lack of fire hydrants for the purose of fire
protection.
Since January 1, 2007, the Commission has received two (2) informal complaints, both as a
result of the curent rate case. The customers expressed concern about the failure of the Company
STAFF COMMENTS 20 JUE 15,2010
to send biling statements, the lack of back-up power source and fire protection and the delay in
providing new service connections. These customer issues have been previously addressed in Staff
Comments.
NON-RECURRNG CHARGES
Turn-on/Turn-off Fee
Schedule 2 of the existing Company Tariff covers a Tur-on/Turn-offFee which applies in
situations where a new customer requests service or a customer leaves without requesting a
disconnection of service. Conflcting or overlapping time periods, March 1 to October 1 and
October 1 to March 1 are specified with a higher charge for the winter months from October to
March. The Company has requested an increase to the fee for the summer period from $25.00 to
$50.00, and an increase to the fee for the winter period from $50.00 to $75.00. The Company has
presented no cost justification for the increased fees requested. The schedule does not address
situations typically encountered by utilities, such as reconnection of service after an account has
been disconnected for non-payment. While the Commission has allowed a higher fee to be charged
for work requested or performed after normal business hours, it has not recently allowed a
differential based on the time of year the service is provided to the customer. Schedule 2 also holds
the property owner accountable for a turn-off fee if the customer leaves and does not request a tur-
off. The idea of a property owner being held responsible for the inaction of a tenant is not allowed
under Rule 206 of the UCRR. The Company has indicated that it does not apply the fee to the
seven (7) par-time customers who tur their water on and off themselves as they come and go.
Staff is concerned that these customers are allowed to connect and disconnect their service because
of the risk to the system due to a problem on the customer's side of the connection which goes
undetected.
Staff suggests that Schedule 2 as it stands be eliminated and in its place a new Non-
Recuring Charges Schedule be implemented to include a Service Establishment Charge and a
Reconnection Charge. The Service Establishment Charge will be charged to new customers at a
service address where service connections already exist. This charge will replace the turn-on fee
previously approved by the Commission and allow the Company to recover a portion of the costs
incurred in establishing a new account. The Reconnection Charge wil be charged to customers
who request reconnection following a disconnection for nonpayment, or a volunta disconnection.
While no cost study has been done in this paricular case or recent cases where a reconnection
STAFF COMMENTS 21 JUE 15,2010
charge has been requested, the Commission has allowed Companies a charge to customers to allow
the Company to recover a portion of the time and labor costs to reconnect service after either a
voluntar disconnection or after an involuntary disconnection for nonpayment. The Commission
has also previously allowed a higher charge when a reconnection is completed outside of normal
business hours.
However, since the Company has no Company offce and does not maintain normal business
hours, Staff does not recommend a higher after-hours charge or a higher seasonal charge. Staff
recommends that the Reconnection Charge is to be only allowed when the Company has made the
physical disconnection and reconnection and not when the customer disconnects and reconnects
themselves. Staff recommends that the Company revise its Schedule 2 as a Non-Recurring Charges
Schedule and recommends a Service Establishment Charge of $20.00 and a Reconnection Charge of
$35.00.
COMPANY DOCUMENTATION
Company Tariff
The three sections of a small water utilty Tariff - the Commission approved rate schedules,
the General Rules and Regulations for Small Water Utilties and the Uniform Main Extension Rules
- describe the relationship between the customers and the Company and establish the basic rules for
providing service. The Company's existing taiff on fie with the Commission predates the Model
Tariff for small water utilties implemented in 2008. It also does not include the Uniform Main
Extension Rules. The Company needs to update its tariff to conform to the curent Model Tariff
and include the Uniform Main Extension Rules.
Staff is willing to provide a copy of the Uniform Main Extension Rules in electronic format
to the Company. Staff recommends that the Company revise its Tariff to include its Rate
Schedules, the General Rules and Regulations for Small Water Utilties, and the Uniform Main
Extension Rule in a format consistent with the Model Tariff.
Biling
The Commission's requirements for biling documentation are contained in Rule 201 of the
Utilties Customer Relations Rules (UCRR), which states that bils shall be issued on a regular
basis, and describes the content requirements for the bils. The Company has submitted samples of
STAFF COMMENTS 22 JUE 15,2010
its monthly biling statements. The statements do not allow space for the itemization of non-
recuring charges and do not meet the requirements of Rule 201.
Even though the Company's Rate Schedules are set at a monthly rate, the Company does not
send monthly biling statements. The Company's records indicate it does not send any type of
notice to customers until the account is more than sixty days past due. Staff is concerned about the
lack of regular biling.
As discussed earlier under rate design, Staff has recommended that customers who are not
full-time residents be biled an anual charge equal to eight months service. This annual charge is
applicable to all curent customers who do not live year-round at the service address and can be
biled monthly on a pro-rated charge. Staff recommends that the Company revise its statements to
comply with UCRR requirements and begin mailng monthly statements to all customers.
Termination Notification
The Company submitted copies of its Initial Notice of Intent to Terminate Service and its
Final Water Shut-Off Notices. The termination notices meet the requirements of Rule 305 of the
UCRR. The notices include the owner's phone number to call and make arrangements to pay past
due bils. Because the Company does not have a business office, the notices include only the post
office box where payments can be sent. The Company's termination procedure as described in
response to production requests appears to fulfill the requirements of Rule 31 1 of the UCRR. Staff
recommends that the Company notify all customers of the curent rules regarding termination
through an anual rules summary.
Annual Rules and Rates Summary
The Company states that it does not send out an annual rules summary as required under
Rule 701 of the UCRR or the anual rules summar as required under Rule 702. Sample
summaries are available and Staff is willng to work with the Company to create a summar of rules
and rates. Staff recommends that the Company generate an annual rules summary and mail it on an
anual basis.
Complaint Records
The Company has stated that it has received no complaints from customers. Recent
customer comments and complaints to the Commission suggest that customers have contacted the
STAFF COMMENTS 23 JUE 15,2010
Company regarding outages and biling. Staff recommends that the Company create and maintain a
system to record and maintain customer complaints and requests for a conference as required by
Rule 401 of the UCRR.
RECOMMENDATIONS
1. Staff recommends that the rate base of$35,900 be approved.
2. Staff recommends that the Company's anual revenue requirement to be increased by an
additional $9,515 and that the new revenue requirement of$19,767, or an increase of92.8%,
be approved.
3. Staff recommends that the Commission approve the new rates proposed by Staff based on full-
time and par-time customers, and the size of service lines.
4. Staff recommends that a hook-up fee of$I,200 be assessed for new customers.
5. Staff recommends that additional costs for time and labor wil be charged to new customers
when the installation of new service line requires the Company to bore a line under the road.
6. Staff recommends that the Commission deny the Company's request to charge $5 per month
when Muray Water customers are not using the water.
7. Staff recommends that the Commission approve the Staff proposed rates for the Company's
Schedule 3.
8. Staff recommends that the Company's owner Arlen Lish obtain recertification as a Licensed
Water Distribution System Operator or hire one to operate the water system.
9. Staff recommends that the Commission deny the request of the Company to install meters
throughout the system at this time but allow the Company to install service meters on a case
by case basis in connection with major leak detection.
10. Staff recommends that the Commission direct Muray Water to continue to work with IDEQ
on any identified system deficiencies and notify the Commission of the cost for corrective
measures.
11. Staff recommends that the Commission direct Muray Water to fie an application for permit
to appropriate ground water for protection of the Company's water source and establishment
of priority date.
12. Staff recommends that the Commission direct Murray Water to read and record monthly well
flow data.
STAFF COMMENTS 24 JUE 15,2010
13. Staff recommends that the Company review and update all notices, bils and other documents
to be consistent with Commission's Rules and Regulations, including the Company Tariff
with all Schedules, General Rules and Regulations and Main Line Extension Rules, monthly
biling statements, initial notice of termination, final notice of termination, and annual rules
summar.
14. Staff recommends that the Company send out monthly billng statements to all customers.
15. Staff recommends that the Company send out an anual rates and rules summar.
16. Staff recommends that the Company create and maintain a log for customer complaints and
requests for a conference.
17. Staff recommends a Service Establishment Charge to be applied to new customers at an
existing service address.
18. Staff recommends a Reconnection Charge to be applied when the Company reconnects service
at the customer's request after an involuntar disconnection for nonpayment or a voluntar
disconnection.
Respectfly submittd ths L fr day of June 2010.
A~~NeÌfPrice
Deputy Attorney General
Technical Staff: Joe Leckie
Gerr Galinato
Chris Hecht
i:umisc:commentsimurwI 0.1 npjlggcwh comments
STAFF COMMENTS 25 JUE 15,2010
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2
MURRAY WATER WORKS
MUR-W-10-Ol Rate Case
Operating Results
Test Year 2009
(A)(8)(C)
Test Year Staffs Staffs
Actual Changes Amount
Revenue $10,252 $10,252
2 Operating Expenses $7,260 $4,590 $11,850 See Attachment 2
3 Depreciation Expense $5,711 $(3,651) $2,060 See Attachment 1
4 Regulatory Fees (PUC)$50 $$50
5 Property Taxes $95 $$95
6 DEQ Fees $75 $100 $175
7 Total Expenses $13,191 $1,039 $14,230
8 Net Income/(Loss)$(2,939) $(1,039)$(3,978)
Attachment 3
Attchment 3
Case No. MUR-W-lO-Ol
Staff Comments
06/15/10
Murray Water Works
MUR-W-10-Ol Rate Case
Calculation of Revenue Requirement
1 Rate Base $35,980
2 Rate of Return 12.00%
3 Net Operating Income Requirement $4,318
4 Net Operating Income Realized $3,978
5 Net Operating Income Deficiency $340
Revenue Requirement Increase to
6 Overcome Loss $3,978
7 Incremental PUC Fees (§0.1662%$7
8 Gross Revenue Requirement to Overcome Loss $3,985
Revenue Requirement Increase
9 Subject to Income Tax $4,318
10 Tax Gross-up Factor 128.09%
11 Required Revenue Increase $5,530
12 Revenue Increase Required $9,515
13 Amortize Rate Case Expenses $0
14 Total Revenue Increase Required $9,515
15 Total Revenue Collected in Test Year $ 10,252
16 Total Annual Revenue Requirement $ 19,767
17 Revenue Increase %92.81%
Tax Gross-up Factor Calculation
Gross-up Factor Calculation
Net Deficiency
PUC Fees
Bad Debts
Taxable Amount
State Tax (§ 8%
Federal Taxable
Federal Tax (§ 15%
Net After Tax
Net to Gross Multiplier
100%
0.1662%
0.0000%
99.8338%
7.9867%
91.8471%
13.7771%
78.0700%
128.09%
Attachment 4
Attachment 4
Case No. MUR-W-I0-0l
Staff Comments
06/15/10
MURAYWATER WORK
MUR-W-10-01
TYPICAL CUSTOMER METER-AND-SERVICE EQUIVALENT RATIOS 1/
Meter Size (inches)Equivalent Meter-and-Service Ratio
5/8 1.0
3/4 1.1
1 1.4
1 ~1.8
2 2.9
3 11.0
4 14.0
6 21.0
8 29.0
11 From American Water Works Association's Manual of Water Supply Practices
Attachment 5
Attachment 5
Case No. MUR-W-IO-Ol
Staff Comments
06/15/10
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Attachment 6
Case NO.MUR-W-lO-Ol
Staff Comments
06/15/10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15TH DAY OF JUE 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. MUR-W-I0-0l, BY MAILING A COpy THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
ARLENLISH
OWNER
MURR Y WATER WORKS
PO BOX 117
KINGSTON ID 83839
~b~SECRETÃ '"
CERTIFICATE OF SERVICE