20040406Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:APRIL 2004
RE:CASE NO. PIC-04-1 (Picabo Water)
On March 25 , 2004, Picabo Livestock Company, Inc. filed an Application for a rate
increase for the Picabo Water System (Picabo; Company). Nick Purdy, Manager of the Picabo
Water System, reports that it has been ten years since Picabo asked for a rate increase (Case No.
PIC-94-, Order No. 25447) and in the meantime expenses for power, maintenance, materials
and water testing have increased dramatically.
To make the system more dependable, Mr. Purdy reports that a well was drilled in
2000 at a cost of over $50 000 and a variable speed booster pump was installed to make the
pressure in town more stable. The added expenses for power and interest on the well investment
has raised the operating expenses several thousand dollars a year. As reflected in the Company
2003 Annual Report, Mr. Purdy reports that income ftom the system was $6 182 and expenses
were $8 283. Expenses do not include any labor to operate the system or any depreciation
replace the equipment at the end of its life.
The Company s survey of a water system similar to Picabo in the town of Carey,
Idaho, revealed that the minimum payment for a hydrant is $50 a month and that an average
monthly bill for a household of four that waters their lawn is $70. Picabo provides water at an
un-metered flat rate. Picabo s rate for a single hydrant is a minimum of $12. Residential rates
for Picabo are $14/month year-round plus an additional $12/mo for sprinkling (April
September 30), for an annual charge/residential customer of $240. Commercial rates are $24/mo
year-round plus an additional $21/mo for ' sprinkling (April I-September 30), for an annual
charge/commercial customer of $456.
DECISION MEMORANDUM
The Picabo Water System has 26 residential customers and 2 commercial customers.
To bring expenses in line with revenues, Mr. Purdy contends that it would take about $6 a month
increase in water rates to make the system break even; however, at that amount there still would
not be any money to cover depreciation or labor. The Company anticipates additional increases
in electric bills and water sampling costs in the next several years. The Company is therefore
requesting an $8 per month increase in its published water rates. This increase would equate to
an annual water charge for residential customers of $336 and for commercial customers of $552.
The Company requests that the proposed increase in rates take effect no later than
July 1 2004.
Commission Decision
Staff recommends that the Commission issue Notices of Application and Modified
Procedure in Case No. PIC-04-1. Staff apprises the Commission of its intent to conduct an
investigation and hold a public workshop for customers.Staff will file a report with the
Commission when its investigation is complete.
recommended procedure?
Does the Commission agree with Staffs
Scott Woodbury
Vld/M:PICWO40l
DECISION MEMORANDUM