20030401Fuss Testimony - Exhibits.pdf

BEFORE THE
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IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF PONDEROSA TERRACE
ESTATES WATER SYSTEM , INC.S FAILURE
TO COMPLY WITH COMMISSION ORDERS.
CASE NO. PTE-03-
DIRECT TESTIMONY OF MICHAEL FUSS
IDAHO PUBLIC UTILITIES COMMISSION
APRIL 2003
. "
Please state your name and business address for
the record.
My name is Michael Fuss.My business address
is 472 West Washington Street, Boise, Idaho.
By whom are you employed and in what capacity?
I am employed by the -Idaho Public Utilities
Commission as a Staff engineer.
What is your educational and professional
background?
I have a Bachelor of Science Degree in Civil
Engineering from Washington State University and a Master
of Busines$ Administration Degree from Boise State
University.I am a licensed Civil Engineer in the states
of Idaho, Oregon, and Washington.I am a past president
of the Southern Idaho Section of the American Society of
Ci vil Engineers and have been a member of various
professional affiliations and service organizations.
I have over 14 years of Civil Engineering
Experience in Municipal , Utility, and Development Civil
Engineering and consulting.
While at the Idaho Public Utilities Commission,
I have attended the National Association of Regulatory
Utility Commissioners (NARUC) Basic Training Program at
New Mexico State University and the Northwest Public
Power Association s course on Unbundled Cost of Service &
PTE - W - 03 - 1
04/01/03
(Di)FUSS, M
STAFF
Rate Design.
What is the purpose of your testimony in this
proceeding?
The purpose of my testimony is to outline
Ponderosa Terrace Estates (PTE) Water System, Inc.' s
(Ponderosai Company) current failure to comply with Idaho
Public Utility Commission (Commission) Orders and to show
a history of Ponderosa s disregard for the Commission
authori ty.
Would you please summarize your testim0ny?
Certainly.My testimony provides a fact~al
record that shows ponderosa Terrace Estates Water System,
Inc. is currently in violation of Commission Orders.
testimony also documents the Company s history of non~
compliance and disregard for the Commission s authority.
Taking this into consideration , I recommend that the
Commission require Ponderosa to comply with previous
Commission Orders and follow proper rules of procedure
for regulated water companies.
If Ponderosa continues to act contrary to
Commission Orders and/or fails to appear at the Show
Cause hearing, I further recommend that the Commission
consider exercising the civil and criminal remedies
available through the judicial system.This may include:
1 )seeking a civil penalty of $2,000 per day for each day
PTE - W - 0 3 - 1
04/01/03
(Di)FUSS, M
STAFF
the utility has failed to comply with Commission Orders
pursuant to Idaho Code S~ 61-706 and 61-707;
petitioning the 1 st Judicial District for an injunction
prohibiting Ponderosa from charging rates different than
those ordered by the Commission; 3) requesting the court
place the Company in receivership; or 4) filing criminal
misdemeanor charges under Idaho Code SS 61-708 and 61-709
for failure to comply with a Commission Order.
Please describe Ponderosa Terrace Estates Water
System , Inc.
PTE Water System , Inc. operates a small water
system that serves approximately 80 lots or parcels of
property primarily within the Ponderosa Terrace Estates
Subdivision south of Sandpoint and east of the community
of Sagle in Bonner County, Idaho.The Company delivers
water through a looped unmetered system from two supply
wells that produce a combined capacity of 25 gallons per
minute.Robaer Cobott and his wife, Zaderea Raphael, own
Ponderosa including its piping, wells and 10 000 gallons
of storage.
How did ponderosa come to be regulated by the
Commission?
The Commission received several complaints from
ponderosa customers who received a May 30, 2001 letter
from the Company announcing a significant rate increase.
PTE - W - 03-
04/01/03 (Di)FUSS , M
STAFF
On July 31, 2001, the Commission found it reasonable to
conduct an investigation to determine whether Ponderosa
Terrace Estates Water System, Inc. was a water
corporation as defined by Idaho Code SS 61-124 and
61-125.Order No. 28803 (Exhibit No.1) .
On September 13 , 2001, the Idaho Public
Utilities Commission issued Order No. 28845 (Exhibit No.
2) in which it found that Ponderosa was operating in such
a manner as to fall within the Commission s jurisdiction.
Reference Idaho Code SS 61-124-Water Systems; 61-125-
Water Corporation and 61-129-Public Utility.The
Commission also found that the Company s customers had no
say regarding the operation and management of the Company
or the prices it charged for water and related services.
Consequently, the Commission ordered Ponderosa to file an
Application for a Certificate of Public Convenience and
Necessi ty and propose rate schedules with supporting
documentation.
How did the Commission set Ponderosa ' s initial
rates for service?
When the Company did not file the required rate
schedules or otherwise respond to Order No. 28845
(Exhibit No.2), on November 28, 2001 the Commission
established a $20 per month flat-rate charge for
residential customer water usage effective December
PTE-W- 03-04/01/03 (Di)FUSS, M
STAFF
2001 in Order No. 28903 (Exhibit No.3) .Reference Idaho
Code SS 61-501; 61-502; 61-503.This $20 per month rate
comported with the state average flat rate for regulated
water companies.The Company was further prohibited from
assessing any other fees or charges without first
providing justification for such charges/fees and
obtaining Commission-approved tariffs.
Did Ponderosa have an opportunity to respond to
the $20 per month rate set in Order No. 28903 (Exhibit
No.3)?
On December 6, 2001, the Commission set aYes.
December 17 , 2001 Show Cause hearing date in Sandpoint,
Idaho to provide the Company and Robaer Cobot t the
opportunity to show cause why:1) the $20 per month
flat-rate residential water rate charge established in
Order No. 28903 (Exhibit No.3) was not reasonable ~nd
should not continue, and 2) why the Company should not be
required to refund/credit customers the difference
billed/received since the date of Commission Order No.
28845 (Exhibit No.2) .Order No. 28911 (Exhibit No.4) .
Despite mailing the Commission Notices and
Orders to the Company s registered office as reflected in
its corporate filing with the Idaho Secretary of State,
the Commission found that Robaer Cobott may have been
out-of-state and personally unaware of the scheduled
PTE - W - 03 - 104/01/03 (Di)FUSS, M
STAFF
hearing.The Commission issued Order No. 28917 (Exhibit
No.5) on December 14, 2001 to vacate the previously
scheduled December 17 , 2001 show cause hearing.
When did Ponderosa next communicate with the
Commission?
After months of no communication from
ponderosa, the Commission received a letter from
Ponderosa dated May 6, 2002 , that stated "Ponderosa
Terrace Estates Water System Inc. i~ going to have to go
out of business because of the water rates imposed on
this company by Idaho Public Utili ties Commission.
(Exhibit No.6) .The Commission had also received
communications from several customers that were concerned
that the Company was not billing them.The customers
indicated that they would not make paYments unless they
receive a bill.Staff verified in a telephone
conversation with Mr. Cobott that ponderosa had not, and
would not, mail bills to customers with the $20 per month
charge approved by the Commission.Mr. Cobott indicated
that he did not agree with that rate and would not send a
bill that made it appear as if he accepted the
Commission s authorized rates.
How did the Commission respond to the May
2002 letter from ponderosa (Exhibit No.6)?
Staff filed a Decision Memorandum on May 10,
PTE-03-04/01/03 (Di)FUS S,
STAFF
2002 that outlined the Company s financial situation and
recommended a rate increase.The Commission issued Order
No. 29024 on May 14 , 2002 that solicited written comments
and gave notice of the proposed increase in rates
(Exhibit No.7) .
After reviewing customer comments and
addi tional analysis , the Commission issued Order No.
29046 (Exhibit No.8) on June 6, 2002 that scheduled both
a Public Hearing and Technical Hearing for June 20, 2002.
The Order also provided an additional opportunity for
parties to intervene , and extended the public comment
deadl ine .
Did the Commission increase Ponderosa s rates
as was proposed in its Notice?
Based on the hearing testimony andYes.
evidence in the record, the Commission established an
annual revenue requirement for Ponderosa Terrace Estates
Water System in the amount of $26 604 on August 8, 2002.
Order No. 29086 (Exhibit No.9) .To collect this amount
the Commission authorized Ponderosa to collect monthly
rates in the amount of $48 for Full-Time and Part-Time
customers and $25 for Active Service customers.
Customers that do not have above ground access to water
were not to be charged for service.
Was Order No. 29086 (Exhibit No.9) the last
PTE - W - 03 - 104/01/03 (Di)FUSS, M
STAFF
Commission Order to address Ponderosa s Rates?
On September 25 , 2002 , the CommissionNo.
denied a petition for Reconsideration filed by Mr. Lyle
Peterson and the Cross-Petition filed by Ponderosa in
Order No. 29123 (Exhibit No. 10).The Order al so
required that PTE Water and Commission Staff to submit a
report to the Commission no later than November 25, 2002,
detailing changes to the number of customers in each
class and the impact these changes would have on
Ponderosa ' s revenues.
Has the Commission further clarified Order No.
29086 (Exhibit No.9)?
Yes.In response to concerns about seasonal
disconnection and after Staff filed the required report
the Commission clarified Order No. 29086 (Exhibit No.
on December 20, 2002.This order authorized Ponderosa to
involuntarily move a customer to the Inactive Service
customer class if the customer remained disconnected from
the system for longer than eight full months.Order No.
29172 (Exhibit No. 11).If the customer later sought to
resume service after the eight months had passed, the
Commission dire~ted Ponderosa to retain the following
information to justify imposition of a $2,500 hook-up
fee:1) its customer paYment and di sconnect ion records,
and 2) proof that notice of Ponderosa s intent to move
PTE - W - 03 - 104/01/03 (Di)FUSS, M
STAFF
the customer to Inactive Service and require a $2,500
hook-up fee upon reconnection was sent via certified
mail.Id.
Did Ponderosa give any indication that it did
not intend to comply with Commission Orders?
Yes, several customers sent Staff a copy of a
Company letter dated January 2 , 2003.The letter
(Exhibit No. 12) advised customers that the "Ponderosa
Terrace Estates Water System Inc. is no longer going to
be involved with the Idaho Public Utilities Commission.
Mr. Robaer Cobott, Ponderosa s owner and author of the
letter , noted that "since P.C. has been involved in my
water system I have lost many customers " who have drilled
wells or withdrawn from the system.He further informed
customers that this had reduced Ponderosa s annual
revenues by $9,200 from the $26,600 Commission-authorized
revenue requirement.As a result of Order No.2 91 72
(Exhibi t No. 11)issued in December 2002, ponderosa
asserted that the Commission s decision to allow Part-
Time and Active Service customers to pay for just a four-
month minimum of water reduced the Company s revenue by
400.Consequently, the Company s annual revenues were
less than $10,000.
Mr. Cobott wrote, "this water system cannot
operate under the current condition that P. U. C. is trying
PTE-03 -04/01/03 (Di)FUSS, M
STAFF
to impose and that he was going to try to save the water
company for those customers needing service.Effecti ve
January 1, 2003, Mr. Cobott informed customers that only
two customer classes - Resident and Non-Resident - would
exist, as he had "before the P. U. C. got involved. Under
his plan, Residents (a customer "who lives on his
property all year pay $48 per month and Non-Residents
part-time use or no use at all/) pay $25 per month.
ponderosa further allowed customers that were not
currently making monthly water paYments 30 days from the
date of the letter to decide whether to be part of the
system or "be withdrawn from any future use from this
system. "
How do these statements differ from Commission
Orders?
Although this rate structure is similar to the
one approved by Commission Order No. 29086 (Exhibit No.
9) issued in August 2002, Mr. Cobott's statements deviate
from the Commission s seasonal disconnection directives
in Order No. 29172 (Exhibit No. 11).The let ter
threatens customers that "if you do not pay a monthly
charge to help maintain this system then you will not be
able to hookup to the system in the future.Thus, Non-
Residents must pay a monthly charge year-round of $25 per
lot to keep water service.The statements also deviate
PTE-W- 03-04/01/03 (Di)FUSS, M
STAFF
from Order No. 29086 (Exhibit No.9) by requiring paYment
from customers that do not have above ground access to
water.
Did the Company take any of the actions
described in the January 2, 2003 letter (Exhibit No. 12)?
Yes, in early February Staff received a copy of
a customer bill (Exhibit No. 13) in which ponderosa
charged a customer that had seasonally disconnected two
Non-Resident lots last fall for water. service purportedly
rendered the month of January 2003.The customer paid
Company employee Larry Fairfax $50 "upfront" to shut off
the valves to these lots several months ago.Because the
customer was seasonally disconnected and did not request
water service during the month of January, the amount
charged was contrary to Order No. 29172 (Exhibit No. 11).
The customer told Staff that he intended to pay the bill
but he expected the Commission to return the paYment to
him if the billing was improper.
Has the Commission Staff tried to address the
issue with the Company by means other than this Show Cause
hearing?
Yes, after receiving calls from customers and a
copy of the letter described above, Staff sent a letter
(Exhibit No. 14) to Mr. Cobott on January 23, 2003.
Although noting that some of the statements in the
PTE-W- 03-04/01/03 (Di)FUSS, M
STAFF
Company s January 2003 letter (Exhibit No. 12) were
contrary to the Commission s Orders, Staff indicated that
Ponderosa s rate alternative may have some merit given
the Company s current financial situation.Staff
requested Mr. Cobott' s assistance in gathering specific
information that Staff could use to file an updated
report with the Commission.This report would examine
the Company s financial status and determine if it had
deteriorated since October 2002.The report would also
evaluate whether Ponderosa s rate proposal might improve
the Company s financial status.Staff requested that Mr.
Cobott provide the requested information no later than
February 18, 2003.
Did Mr. Cobott reply to Staff's letter?
No, although Staff emphasized that continued
communication with the Commission was the best approach
for Mr. Cobott and his customers, as of March 31, 2003,
Mr. Cobott has not responded to Staff's letter and
information request.
Has Mr. Cobott sent other letters in the past
that indicated unwillingness to operate as a regulated
water company?
Yes.On December 30 , 2001 Mr. Cobot t sent a
letter to landowners served by the Company stating that he
planned to convert ponderosa from a privately owned water
PTE-W- 03-04/01/03 (Di)FUSS, M
STAFF
system to a water system association that would be owned
and operated by the landowners (Exhibit No. 15).While
Staff believes an association is an acceptable method of
water system ownership, Staff was unaware of any customers
that desired to become members of the association either
before or after the letter was sent.The association
appeared to be offered only as a way to avoid regulation.
On May 1, 2002 , Mr. Cobott sent another letter
to landowners served by the PTE Water System (Exhibit No.
16), which is not to be confused with the previously
referenced May 6, 2002 letter (Exhibit No.6) sent to the
Commission.The May 1 st letter
(Exhibit Np. 16) indicated
his frustration with the Public Utilities Commission and
further stated II Ponderosa Terrace Estates Water System
Inc., a public water system , will discontinue doing
business as a public water system on May 5, 2002.
noted that revenues received by Ponderosa were down 90%
under the jurisdiction of the PUC.He then stated, "I am
going to start a privately owned water system on May 10
2002.This water system will be called Ponderosa Terrace
Estates Privately Owned Water System Inc.
In a letter dated May 4, 2002 (Exhibit No. 17),
Mr. Cobott also informed customers of the cost to
purchase a share of the proposed privately-held water
system , as well as some proposed rates for water service.
PTE - W - 03 - 104/01/03 (Di)FUSS, M
STAFF
The letter also included an application form for the
landowner to purchase a share of the water system.Mr.
Cobott proposed that ownership of the privately-held
water company would be comprised of 300 shares for Robaer
Cobott and his wife, Zaderea Raphael , and a maximum of
100 shares for the remaining landowners.
How did the Commission reacted to these
letters?
On January 4, 2002 , Scott D. Woodbury, Deputy
At torney General for the State of Idaho, sent Mr. Cobot t a
let ter (Exhibit No. 18) notifying him that the Orders of
the Commission - including those approving rates - are law
until changed by the Commission through subsequent
Commission Orders.Mr. Woodbury s letter further stated
that his continued failure to comply with Commission
Orders would result in a complaint being filed against him
in District Court.As set forth in Chapter 7, Title 61 of
the Idaho Code, each separate failure to comply with
Commission Orders, requirements and directives is subj ect
to a civil penalty of not more than $2 000.Idaho Code
S 61-706.Every violation is a separate and distinct
offense, and in the case of a continuing violation each
day s continuance thereof shall be deemed a separate and
distinct offense.Idaho Code S 61-707.Every officer
agent or employee of any public utility who fails to obey,
PTE - W - 0 3 - 104/01/03 (Di)FUSS, M
STAFF
observe or comply with any Commission order, decision,
rule, direction, demand or requirement or any part or
provision thereof, may be guilty of a misdemeanor
punishable by a fine not exceeding $1,000 or by
imprisonment in a county j ail not exceeding one year, or
by both such fine and imprisonment.Idaho Code S 61-709.
The Commission had no need to act on the May 1
(Exhibit No. 16) and May 4 th (Exhibit No. 17) letters sent
to customers because it initiated a formal rate
proceeding upon receipt of the previously mentioned
May 6th (Exhibit No.6) letter.
Are you confident that the Company is aware of
the Commission s Rules and Orders?
The Company indicated that it was awareYes.
of Commission Orders when it filed a cross-petition on
reconsideration of Order No. 29086 (Exhibit No.9) .
Moreover, the Company s January 2003 letter (Exhibit No.
12) clearly addressed the seasonal disconnection issue
addressed in Order No 29172 (Exhibit No. 11).
Even though the Company had been provided wi
the documents previously, on May 30, 2002 Staff provided
additional copies of the Utility Customer Relation Rules,
the Customer Information Rules, the Policies for Small
Water Companies, the Rules of Procedure, and all Orders
and correspondence in the case up to that point (Exhibit
PTE - W - 03 -04/01/03 (Di)FUSS, M
STAFF
No. 19).Staff also sent the Company copies of
approximately 20 regulated water company annual reports
and the Commission s, 2001 Annual report (Exhibit No.
20) .Mr. Cobot t further acknowledged receipt of these
documents under oath at the technical hearing held on
June 20, 2002. Tr. 171-182 at 180 (Exhibit No. 21).
Therefore, I am confident that the Company is aware of
Commission s Rules and Orders.
How does Staff recommend this show cause
proceeding be resolved?
Staff has attempted to work with ponderosa to
address the Company s concerns about the seasonal
disconnection rates set forth in Order No. 29172 (Exhibit
No. 11) to no avail.The Company is non-responsive to
Staff inquiries and customers are uncertain whether they
should pay the amounts billed by ponderosa or the amounts
authorized by Commission Order.
Staff recommends that the Commission require
Ponderosa to comply with Commission Orders and to follow
the procedural rules required of regulated water
companies.If Ponderosa pre-files testimony that clearly
outlines its concerns and justifies a rate proposal
Staff recommends the Hearing Examiner consider
Ponderosa s rate proposal and Staff's rebuttal testimony
at the Show Cause hearing.
PTE - W - 03 - 104/01/03 (Di)FUSS, M
STAFF
If Ponderosa continues to act contrary to
Commission Orders and/or fails to appear at the Show
Cause hearing, Staff recommends that the Commission
consider exercising the civil and criminal remedies
available through the judicial system.This may include:
1) seeking a civil penalty of $2,000 per day for each day
the utility has failed to comply with Commission Orders
pursuant to Idaho Code ~~ 61-706 and 61-707;
peti tioning the 1 st Judicial District for an inj unction
prohibiting ponderosa from charging rates different than
those ordered by the Commission; 3) requesting the court
place the Company in receivership; or 4) filing criminal
misdemeanor charges under Idaho Code ~~ 61-708 and 61-709
for failure to comply with a Commission ,Order.
Does this conclude your direct testimony in
this proceeding?
Yes, it does.
PTE - W - 03 - 1
04/01/03
FUSS, M
STAFF
(Di)
Office of the Secretary
Service Date
July31 2001
BEFORE THE IDAHO PUBLIC UTll.ITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INC. IS A
PUBLIC UTILITY SUBJECT TO REGULA-
TION BY THE IDAHO PUBILC UTILITIESCOMMISSION.
CASE NO. GNR-OI-
NOTICE OF INVESTIGATION
ORDER NO. 28803
The Idaho Public Utilities Commission (Commission) has received several
complaints in response to a May 30, 2001 letter announcing a significant increase in rates by
Ponderosa Terrace Estates Water System, Inc. (Ponderosa; Company). Ponderosa operates a
water system located south of Sandpoint and east of the community of Sagle in Bonner County.
There are approximately 20 full-time residences connected to the system and a total of
approximately 90 properties within the area served by the water system. This system has been in
place since approximately 1969. The current owner is Robaer Cobott.
Ponderosa Terrace Estates Water System, Inc. is an Idaho for profit corporation
located at 2626 Wrenco Loop Road, Sandpoint, Idaho 83864 (telephone [phone]).
Initial inquiry leads Commission Staff to conclude that the Company s customers
have no say regarding operation and management of the Company or the prices it charges for
water. The Commission notes that Ponderosa Terrace Estates Water System, Inc. does not
possess a Certificate of Public Convenience and Necessity to provide water service and operate
as a public utility. Reference Idaho Code gg 61-526
, -
527
, -
528. We find it reasonable to
conduct an investigation pursuant to our statutory authority and jurisdiction under Title 61 of the
Idaho Code, commonly known as Public Utilities Law, specifically Idaho Code gg 61-612 and
61-501. The purpose of our investigation is to determine whether Ponderosa Terrace Estates
Water System, Inc. is a water corporation as defined by Idaho Code gg 61-124 and 61-125:
61-124 Water System-the term "water system" when used in this act
includes all reservoirs, tunnels, shafts, dams, dikes, headgates, pipesflumes, canals, structures and appliances, and all other real estate, fixturesand personal property, owned, controlled, operated, or. managed in
connection. with or to facilitate the diversion, development, storage
NOTICE OF INVESTIGATION
ORDER NO. 28803
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 4
supply, distribution, sale furnishing, carriage appprtionment or
measurement of water for power, irrigation reclamation or
manufacturing, or for municipal, domestic or other beneficial use for
hire... .
61-125 Water Corporation-the term "water ' corporation " when used in
this act includes every corporation or person, their lessees, trustees
receivers or trustees, appointed by any court whatsoever, owning,controlling, operating or managing any water system for compensationwithin this state.
and a public utility as defined by Idaho Code g 61-129:
61-129 Public Utility-the term "public utility" when used in this act
includes every common carrier, pipeline corporation, gas corporationelectrical corporation, telephone corporation water corporation, andwharfinger, as those terms are defined in this chapter and each thereof is
hereby declared to be a public utility and to be subject to the jurisdiction
control, and regulation of the Commission and to the provisions of this
act: provided, that the term "public utility" as used in this act shall cover
cases both where the service is performed and a commodity delivereddirectly to the public or some portion thereof, and where the service isperformed or the commodity delivered to any corporation or corporations
or any person or persons, who in turn, either directly or indirectly or
mediately or immediately, performs the services or delivers suchcommodity to or for the public or some portion thereof.
In particular, this investigation will seek to establish answers to the following questions:
1. Whether Ponderosa Terrace Estates Water System, Inc. is a public utility and is
engaged in selling water for compensation without having a Certificate of Convenience and
Necessity from the Public Utilities Commission? Reference
Idaho Code gg 61-526
, -
527
, -
528
I.c. g 61-125.
2. Whether Ponderosa Terrace Estates Water System, Inc. is demanding unjust or
unreasonable charges for its water service? Reference
Idaho Code 61-301.
3. Whether Ponderosa Terrace Estates Water System, Inc. furnishes, provides and
maintains service, instrumentalities, equipment and facilities as shall promote the safety and
health of its patrons, employees and the public and as shall be in all respects adequate, efficient
just and reasonable? Reference Idaho Code 61-302.
NOTICE OF INVESTIGATION
ORDER NO. 28803
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 4
4. Whether Ponderosa Terrace Estates Water System, Inc. has failed to file with the
Commission tariff schedules showing all rates, charges and classifications collected or in force
or to be collected or in force, together with all rules, regulations, contracts, privileges and
facilities which in any manner reflect or relate to rates, classifications or service? Reference
Idaho Code ~ 61-305.
We direct the Company to address these questions by formal written answer in this case on or
prior to Wednesday, August 15 2001. If the Company answers (1) and (4) in the affirmative
or if our investigation reveals such, we will direct the Company to file for a Certificate of Public
Convenience and Necessity (Reference IDAPA 31.01.01.111 Application for Certificates-Form
and Contents) and will conduct an investigation into the adequacy of its service and the justness
and reasonableness of its rates.
ORDER
In consideration of the foregoing, IT IS HEREBY ORDERED that Ponderosa Terrace
Estates Water System, Inc. respond to the foregoing questions regarding compliance with Title
61 of the Idaho Code on or prior to August 15, 2001.
The Company is Further Ordered and directed to cooperate with the Corilmission
Staffs investigation of this matter. Commission Staff is directed to issue production requests
written interrogatories or other forms of discovery as well as pursue its statutory right to examine
and audit the records ofPonderosa Terrace Estates Water System, Inc. as they relate or pertain to
the sale of water.
NOTICE OF INVESTIGA nON
ORDER NO. 28803
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 4
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
:;; /
day of July 2001.
O\ad0.-Ll~A
MARSHA H. SMITH, COMMISSIONER
~;1~;S;ONER
ATTEST:
~iJ"","
J .a~ 1). Jevve ~
Commission Secretary
vldlO:GNR-OI-
NOTICE OF INVESTIGA nON
ORDER NO. 28803
Exhibit No, 1
Case No. PTE-03-
M, Fuss, Staff
4/1/03 Page 4 of 4
Office or the Secretar)
Service Date
September 13,2001
BEFORE THE IDAHO PUBLIC UTll.ITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INc. IS A
PUBLIC UTILITY SUBJECT TO REGULA-
TION BY THE IDAHO PUBLIC UTILITIESCOMMISSION.
CASE NO. GNR-01-
, ORDER NO. 28845
The Idaho Public Utilities Commission (Commission) received several complaints
from customers in response to a May 30, 2001 letter announcing a significant increase in rates
and charges by Ponderosa Terrace Estates Water System, Inc. (Ponderosa; Company).
Ponderosa is an Idaho for-profit corporation located at 2626 Wrenco Loop Road, Sandpoint
Idaho 83864 (Telephone [phone]).
Ponderosa operates a water system located south of Sandpoint and east of the
community of Sagle in Bonner County. There are approximately 20 full-time residences
connected to the system and a total of approximately 90 properties within the area served by the
water system. This system has been in place since approximately 1969. The current owner is
Robaer Cobott.
Following initial inquiry into this matter, the Commission Staff concluded that the
Company s customers hqve no say regarding operation and management of the Company or the
prices it charges for water. On July 31 2001 , the Commission issued a Notice ofInvestigation in
Case No. GNR-01-01. In our Notice, we made the following findings:
Ponderosa Terrace Estates Water System, Inc. does not possess a Certificate of
Public Convenience and Necessity to provide water service and operate as a public utility.
Reference Idaho Code 99 61-526
, -
527
, -
528.
' find it reasonable to conduct an investigation pursuant to our statutory
authority and jurisdiction under Title 61 of the Idaho Code commonly known as public
utilities law, specifically Idaho Code 99 61-612 and 61-501.
The purpose of our investigation is to determine whether Ponderosa Ten-ace
Estates Water System, Inc. is a water corporation as defined.by Idaho Code 9961-124 and
61-125 and a public utility as defined by Idaho Code 9 61-129.
ORDER NO. 28845
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 5
In particular ':Ne noted that our investigation would seek to establish answers to
the following questions:
1. Whether Ponderosa Terrace Estates Water System, Inc. is a public utility and is
engaged in selling water for compensation without having a Certificate of Public
Convenience and Necessity from the Public Utilities Commission? Reference
Idaho Code 99 61-125
, -
526
, -
527
, -
528.
2. Whether Ponderosa Terrace Estates Water System, Inc. is demanding unjust or
unreasonable charges for its water service? Reference
Idaho Code 9 61-301.
3. Whether Ponderosa Terrace Estates Water System, Inc. furnishes, provides and
maintains service, instrumentalities, equipment and facilities as shall promote the
safety and health of its patrons, employees and the public and shall be in all
respects adequate, efficient, just and reasonable? Reference Idaho Code 9 61-
302.
4. Whether Ponderosa Terrace Estates Water Sys.tem, Inc. has failed to file with the
Commission tariff schedules showing all rates, charges and classifications
collected or in force, or to be collected or in force, together with all rules
regulations, contracts , privileges and facilities which in any manner reflect or
relate to rates, classifications or service? Reference Idaho Code 961-395.
The Commission directed the Company to address the questions posed by formal written answer
prior to Wednesday, August 15, 2001. Pursuant to .direction, the Commission received a letter
response from Mr. Robaer Cobott, president of PTE Water System, Inc. Mr. Cobott responded
to the Commission s questions as follows:
Question
Ponderosa Terrace Estates Water System is engaged in selling water for
compensation and I don t think there ever was a Certificate of Convenience ever issued. Until I'
got the call from the Idaho Public Utilities Commission during July 2001 , I had never heard of
this Commission. This water system has been operating s-ince 1969 (32 years). All of my
contacts have been with DEQ in Coeur d' Alene. DEQ has controlled and instructed all parts of
this water system.DEQ never once mentioned that there was a Idaho Public Utilities
ORDER NO. 28845
Exhibit No, 2
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 5
Commission. I asked DEQ many times about the rate increase and for their help. Again, they
never mentioned the Commission.
Question
I was told by DEQ that I had the right to increase the rates to get back the monies
spent to bring the system up to the new standards enforced by DEQ. They told me that it was up
to me what I charge.
Question
The system has operated and maintained under the watchful eyes ofDEQ.
Question
Ponderosa Terrace Estates Water System, Inc. has failed to file with the Commission
tariff schedules because until July 2001 it knew nothing of this Commission.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. GNR-OI-
including the Company s response to the questions posed by the Commission in the Company
Notice of Investigation. Based on the Company s response, we find that Ponderosa is operating
in such manner as to fall within this Commission s jurisdiction. Reference Idaho Code ~~ 61-
124-Water Systems; 61-125-Water Corporation and 61-129-Public Utility. Of significance
we find that the Company s customers have no say regarding the operation and management of
the Company or the prices it charges for water and related services.
Although DEQ may have been providing the Company with some informal guidance
through the 32 years of its operation, we must note that this Commission is the State agency with
statutory jurisdiction over the Company s water service, rates and charges.
Based on the filed responses of Ponderosa Terrace Estates Water System, Inc., this
Commission finds it reasonable to direct the Company to file for a Certificate of Public
Convenience and Necessity. Reference Idaho Code ~ 61-526; IDAPA 31.01.01.111. Along with
its Certificate Application, the Company is also directed to file proposed tariffs for customer
rates and charges with supporting documentation justifying the reasonableness of said rates and
charges.
We further find it reasonable that Ponderosa Terrace Estates Water System, Inc. be
required to adopt and implement the Commission s Consumer Relations Rules, the
ORDER NO. 28845
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 5
Commission s Utility Customer Infonnation Rules, and an accounting system consistent with the
infonnation required by the Commission s annual report for small water companies.
There is some indication, as reflected in a customer letter received by the
Commission that the Company s present water system, even with recent capital investment, isinadequate to serve existing customers. Staff investigation into this matter confinns that this is
an issue of concern. The Commission finds it reasonable to require that there be no new
connections to the existing water system until further order of this Commission.
The Commission notes that its records in this case are insufficient to detennine the
reasonableness of the ' rates presently being charged by the Company. We find it reasonable
pending our investigation and detennination regarding the reasonableness of such rates and
charges that there be no shut offs without prior Commission approval and we put the Company
on notice that pending final Order, any rates and charges collected will be subject to refund to the
extent that they may be detennined excessive.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has authority and jurisdiction over Ponderosa
Terrace Estates Water System, Inc., a water utility, and the issues raised in Case
No. GNR-O1-01 pursuant to Title 61 of the Idaho Code and the Commission s Rules of
Procedure IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly
described above, IT IS
HEREBY ORDERED and Ponderosa TeITace Estates Water System, Inc. is hereby directed to
file an Application for a Certificate of Public Convenience ahd Necessity for the water system
operated by the Company, located south of Sandpoint and east of the community of Sagle in
Bonner County, Idaho.
IT IS FURTHER ORDERED and the Company is further directed to file proposed
schedules of rates and charges, with supporting documentation. Any rates and charges collected
from the date of this Order will be subject to refund to the extent that they may be detennined
excessIve.
IT IS FURTHER ORDERED and Ponderosa Terrace Estates Water System
, Inc. is
required to adopt and implement the Commission s Consumer Relations Rules, the
ORDER NO. 28845
Exhibit No.
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 4 of 5
Commission s Utility Customer Information Rules, and an accounting system consistent with the
information required by the Commission s annual report for small water companies.
IT IS FURTHER ORDERED and Ponderosa Terrace Estates Water System, Inc. is
required to make written petition or application to the Commission prior to any proposed change
in ownership of the Ponderosa Terrace Estates Water System, Inc.
THIS IS AN INTERLOCUTORY ORDER. Any person interested in this Order may
file a petition for review within twenty-one (21) days of the service date of this Order with
. ,
regard to any matter decided in this Order.petition to review may request that the
Commission: (1) rescind, clarify, alter, amend; (2) stay; or (3) finalize this Interlocutory Order.
After any person has petitioned for review, any other person may file a cross-petition within
seven (7) days. See Rules 321 322 323.324 325 (IDAPA 31.01.01.321-325.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
I)
-fi'...day of September 2001.
, '( \': '
Vt':,Ju ! --l ")1 it
MARSHA H. SMITH, COMMISSIONER
ATTEST:
vld/O:GNR-OI-5W2
ORDER NO. 28845
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 5 of 5
'0'
Office of the Secretary
Service Date
November 28 2001
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INc. IS A PUBLIC
UTILITY SUBJECT TO REGULATION BY
THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. GNR-01-
ORDER NO. 28903
On September 13 , 2001 , the Idaho Public Utilities Commission (Commission) issued
Order No. 28845 in Case No. GNR-01-1. In its Order the Commission found that Ponderosa
Terrace Estates Water System, Inc. (Ponderosa; Company) was operating in such manner as to
fall within the Commission s jurisdiction. Reference Idaho Code 99 61-124-Water Systems;
61-125-Water Corporation and 61-129-Public Utility. Of significance, the Commission
found that the Company s customers have no say regarding the operation and management of the
Company or the prices it charges for water and related services.
Ponderosa operates a water system located south of Sandpoint and southeast of the
community of Sagle in Bonner County. There are approximately 20 full-time residences
connected to the system and a total of approximately 90 properties within the area served by the
water system. The system has been in place since approximately 1969. The current owner is
Robaer Cobott. Ponderosa is an Idaho for-profit corporation located at 2626 Wrenco Loop Road
Sandpoint, Idaho 83864 (Telephone [phone]).
The Commission in its Order No. 28845 directed Ponderosa Terrace Estates Water
System, Inc. to:
File an Application for a Certificate of Public Convenience and Necessity
for the water system operated by the Company, located south of Sandpoint
and east of the community ofSagle in Bonner County, Idaho.
. File proposed schedules of rates and charges, with supporting
documentation. Any rates and charges collected from the date of the
Commission s Order are subject to refund to the extent that they may be
determined excessive.
Adopt and implement the Consumer Relations Rules, the Commission
Utility Customer Information Rules, and an accounting system consistent
with the information required by the Commission s annual report for small
water companies.
ORDER NO. 28903
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
411/03 Page 1 of 12
To date, the Company has not responded to the Commission s Order.
On September 27 2001 , the Commission Staff, by and through its attorney of record
issued a production request to the Company requesting that documents and information be
provided on or before Thursday, October 18, 2001. See attached. As part of its production.
request, Staff requested that the Company provide the information requested by the Commission
in Order No. 28845. The Company failed to respond to Staffs production request. The
Company has also failed to return telephone calls.
Ponderosa, by notice to customers dated May 30 , 2001 , is charging residential
customers a basic charge of $60 per month. Non-resident lot owners or parcel owners (of vacant
lots) are charged $30 per month. See attached. The Company has provided no supporting
documentation to justify such rates. Staff notes that state average flat rate for Commission.
regulated water companies (for unlimited usage) is $19.43 per month. Staff recommends that the
Commission establish the authorized charge to residential customers for water at $19 .43/mo. and
that the Company be prohibited from assessing any other fees or charges without first providing
justification for such charges/fees and obtaining Commission approved tariffs. Staff
recommends that the Commission direct the Company to comply with its Order No. 28845
requirements within 10 days and to provide an accounting of all charges and fees assessed and
revenue received since the Commission s Order No. 28895. Staff further recomIJ1ends that the
Commission establish a subsequent hearing date for the Company to show cause (if any) why the
$19.43 per month flat rate residential water charge is not reasonable and should not continue and
why the Company should not be required to refund/credit customers the difference
billed/received since the date of the Commission s Order No. 28845.
Commission Findings
The Commission has reviewed the filings of record in Case No. GNR-Ol-1.
note that the Company has yet to respond to our Order No. 28845 issued September 13 , 2001.
We note that this matter was initiated pursuant to a customer inquiry regarding a Company
proposed rate increase. Pursuant to Company notice, Ponderosa was increasing the monthly
ORDER NO. 28903
basic charge for water customers from approximately $18.50 to $60.00. In our Order we.
required the Company to file proposed tariffs with justification for rates and charges. The
Company was put on notice that it would be required to refund rates and charges to the extent
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 12
they were determined to be excessive. The Company has made no filing and provided no
documentation to justify its rates. Similar information was requested in the Staff Production
Request which the Company has failed to respond to. We note that the Company has also failed
to return Staffs telephone calls.
Staff has no information or account records to propose a different schedule of
Company specific rates and charges for Ponderosa Terrace Estates. Staff represents however
that the state average flat rate for Commission regulated water companies is $19.43 per month or
$233.16 per year. We note that this exceeds the rate that preceded the Company s most recent
increase. The Commission finds it reasonable to establish the authorized charge to residential
customers of Ponderosa for water usage at $20.00 per month, effective December 1 , 2001. We
also find it reasonable that the Company be prohibited from assessing any other fees or charges
without Mt providing justification and obtaining Commission approved tariffs.
We further find it reasonable to reql,lire the Company to comply with our Order No.
28845 (application for Certificate; proposed schedule of rates and charges with supporting
documentation, etc.). Supporting documentation is to include at a minimum the information
requested in Staffs September 27 , 2001 Production Request (attached).We also find it
reasonable to require the Company to provide an accounting of all charges and fees assessed and
revenue collected since the Commission s Order No. 28845. The filing deadline for all
information to be provided is Wednesday, December 12 2001.
It is the Commission s intention by separate Order and Notice to establish a
subsequent hearing date in northern Idaho for the Company to show cause why the $19.43 per
month flat rate for residential water usage is not reasonable and should not continue and why the
Company should not be required to refund/credit customers the difference billed/received
since
the date of the Commission s Order No. 28845.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and
Ponderosa Terrace Estates Water System, Inc., an Idaho for-profit corporation located at 2626
Wrenco Loop Road, Sandpoint, Idaho 83864 and over its current owner, Robaer Cobott
pursuant to the authority and power granted under Title 61 of the Idaho Code and the
Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER NO. 28903
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 12
Enforcement Powers and Penalties
The enforcement powers and related penalties of the Commission are set forth in
Chapter 7 Title 61 of the Idaho Code. Any public utility which violates or fails to comply with
any provisions of Title 61 Idaho Code, or which fails, omits or neglects to obey, observe or
comply with any order, decision, decree, rule, direction, demand or requirement or any part or
provision thereof, of the Commission, is subject to a civil penalty of not more than $2 000 for
each and every offense. Reference Idaho Code g 61-706. Every violation is a separate and
distinct offense, and in case of a continuing violation each day s continuance thereof shall be and
be deemed to be a separate and distinct offense. Reference
Idaho Code g 61-707. Every officer
agent or employee M any public utility who fails to obey, observe or comply
with any order
decision, rule, direction, demand or requirement or any part or provision thereof, of the
Commiss+en under the provisions of Idaho Code, Title 61 , may be guilty of a misdemeanor
punishable by a fine not exceeding $1 000 or by imprisonment in a county jail not exceeding one
year, or by both such fine and imprisonment. Reference
Idaho Code g 61-709.
ORDER
HEREBY ORDERED and the Commission does hereby establish for Ponderosa Terrace Estates
Water System, Inc. a monthly flat rate charge for residential customer water usage at $20.00 per
In consideration of the foregoing and as more particularly described above, IT IS
month, effective December 1 2001. Reference Idaho Code gg 61-501; -502; -503.
IT IS FURTHER ORDERED and Ponderosa Terrace Estates Water System, Inc. is
hereby prohibited from assessing any other fees or charges without first providing justification
for such charges/fees and obtaining Commission approved tariffs.
IT IS FURTHER ORDERED and Ponderosa Terrace Estates Water System, Inc. is
hereby directed 1) to comply with the requirements of Order No. 28845 , 2) to provide the
information requested in Staffs September 27, 2001 Production Request (attached), and 3) to
provide an accounting of all charges and fees assessed and revenue collected since the
Commission s Order No. 28845, on or prior to Wednesday, December 12, 2001.
ORDER NO. 28903
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 12
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this :z.r;
day of November 2001.
PAUL KJELL SIDENT
(\)~'
--9-
j j
~h~:t
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:GNRWOl I sw3
ORDER NO. 28903
Exhibit No.
Case No. PTE-03-
M, Fuss, Staff
4/1/03 Page 5 of
Exhibit No.
Case No. PTE-03-
M, Fuss, Staff
4/1/03 Page 6 of 12
SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 1895
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INc. IS A PUBLIC)
UTILITY SUBJECT TO REGULATION BY THE)IDAHO PUBLIC UTILITIES COMMISSION.
CASE NO. GNR-Ol-
FIRST PRODUCTION REQUEST
OF THE COMMISSION STAFF
TO PONDEROSA TERRACE
ESTATES WATER SYSTEM, IN C.
The Staff of the Idaho Public Utilities Commission, by and through its attorney of record
Scott Woodbury, Deputy Attorney General, requests that Ponderosa Terrace Estates Water
System, Inc. (Ponderosa Terrace Estates; Company) provide the following documents and
information on or before THURSDAY, OCTOBER 18, 2001.
Ponderosa Terrace Estates is reminded that responses pursuant to Commission Rules of
Procedure must include the name and phone number of the person preparing the document, and
the name, location and phone number of the record holder. Reference IDAPA 31.01.01.228.
This Production Request is to be considered as continuing, and the Company is requested
to provide, by way of supplementary responses, additional documents that it or any person acting
on its behalf may later obtain that will augment the documents produced.
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE ESTATES
WATER SYSTEM
ATTACHMENT
ORDER NO. 28903
PAGE 1 of 7
SEPTEMBER 27 2001 .
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 7 of 12
Please provide answers to each question; supporting workpapers that provide detail or are
the source of information used in calculations; the name and telephone number of the person
preparing the documents; and the name, location and telephone number of the record holder.
For each item, please indicate the name of the person(s) preparing the answers, along with
the job title of such person(s) and the witness who can sponsor the answer at hearing.
For each year 1998 , 1999 2000 and year-to-date 2001 , please provide detail for all
expenditures made to operate, maintain and improve the water system. Specifically provide the
following:
Request No.1: Please provide a detailed schedule showing each individual asset that
makes up the total depreciable assets of$129 853 reflected on the Balance Sheet (Schedule L) of
the 1998 arrd 1999 Income Tax Returns for the water company. Include the date of the
investment.
Request No.2: Please provide a schedule and detailed support showing each additional
asset added during the years 2000 and 2001 to date including but not limited to the new well
chlorinator, chlorinator building and supply line to the reservoir. Include a description of the
purpose of the investment and the completion date.
Request No.3: Please provide a copy of the most recent detailed depreciation schedule
maintained by the Company s independent tax preparer, Rod Lamphear of the firm Rhodes &
Fullaway, P.
Request No.4: Please provide an explanation and support for each expenditure that
makes up the $476 of Auto Expense reported in the Company s 1998 Income Tax Return and the
$561 shown on the 1999 Income Tax Return.
Request No.5: Please provide an explanation and support for each expenditure that
makes up the $113 of Bank Charges reported in the Company s 1998 Income Tax Return and the
$122 shown on the 1999 Income Tax Return.
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE EST A TES
WATER SYSTEM
ATTACHMENT
ORDER NO. 28903
PAGE 2 of 7'__m_o.,
SEPTEMBER 27, 2001
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 8 of 12
Request No.6: Please provide an explanation and support for each expenditure that
makes up the $1 311 of Office Expense reported in the Company s 1998 Income Tax Return and
the $406 shown on the 1999 Income Tax Return.
Request No.7: Please provide an explanation and support for each expenditure that
makes up the $550 of Professional Fees reported in the Company s 1998 Income Tax Return and
the $31 shown on the 1999 Income Tax Return.
Request No.8: Please provide an explanation and support for each expenditure that
makes up the $576 of Telephone Expense reported in the Company s 1998 Income Tax Return
and the $576 shown on the 1999 Income Tax Return.
Request No.9: Please provide an explanation and support for each expenditure that
makes up the $2 092 of Utility Expense reported in the Company s 1998 Income Tax Return and
the $2 765 shown on the 1999 Income Tax Return.
Request No. 10: Please provide an explanation and support for each expenditure that
makes up the $487 of Survey & Water Testing Expense reported in the Company s 1998 Income
Tax Return and the $2 878 shown on the 1999 Income Tax Return.
Request No. 11: Please provide an explanation and support for each expenditure that
makes up th~ $1 247 of Consulting Expense reported in the Company s 1999 Income Tax Return.
Request No. 12: Please provide an explanation and support for each expenditure that
makes up the $515 of Insurance Expense reported in the Company s 1999 Income Tax Return.
Request No. 13: For each of the years 2000 and 2001 to date provide an explanation and
support for each expense item incurred that is not an asset as identified in item No.2 above.
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE EST A TES
WATER SYSTEM
A TT ACHMENT
ORDER NO. 28903
PAGE 3 of 7
SEPTEMBER 27 2001
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 9 of 12
Request No. 14: Please provide a detailed explanation of how the "Loans From
Shareholders" balance of$157 292 as shown in the 1999 Income Tax Return was incurred. Please
provide detail of any additional amounts for the years 2000 and 2001 to date.
In addition please respond to the following questions:
Request No. 15: How many dwelling units are currently connected to the water system?
Request No. 16: How many vacant building lots have water service connections to the
water system?
Request No. 17: How many dwelling units and/or vacant building lots have multiple
service cormections to the water system? Please provide details for each.
Request No. 18: How many lots do not have water service?
Request No. 19: What is the anticipated schedule for the completion of the development?
Request No. 20: Please provide a plat map of the service area showing the location of all
water lines, wells, pumps, fIre hydrants , valves and reservoirs. Indicate the size of all water lines.
Request No. 21: Please provide any engineering, groundwater hydrology or other reports
or studies that were used for determining the location and depth of the newest well.
Request No. 22: Please provide any engineering report or calculation that has determined
the actual number and class of customers that can be served by the Ponderosa Terrace Estates
Water System.
Request No. 23: Please provide the name, mailing address and telephone numbers of all
customers ofPTE.
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE EST A TES
WATER SYSTEM
ATTACHMENT
ORDER NO. 28903
PAGE 4 of 7
SEPTEMBER 27, 2001
, ::
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 10 of 12
Request No. 24: Please provide all available monthly customer use data for the years
1999 and 2000. Data should be in the following forms:
a) By customer class
b) Total usage
c) Total number of customers and number of customers by class.
Request No. 25: Please provide all available scheduled maintenance infomlation
including, at a minimum, type and frequency of maintenance activity.
Request No. 26: What is the estimated system water loss and how is it determined?
~uest No. 27: When was the $500 charge for failure to protect water pipes in the winter
initiated?
Request No. 28: How many times has the $500 fee for failure to protect water lines in
winter been imposed?
Request No. 29: What is the cost basis for the $500 fee for failure to protect water lines in
winter?
Request No. 30: When was the $500 disconnection fee initiated?
Request No. 31: How many times has the disconnection fee been imposed?
Request No. 32: What is the cost basis for the $500 disconnection fee?
Request No. 33: When was the $500 reconnection fee initiated?
Request No. 34: How many times has the reconnection fee been imposed?
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE EST A TES
WATER SYSTEM
ATTACHMENT
ORDER NO. 28903
PAGE 5 of 7
SEPTEMBER 27 2001
Request No. 35: What is the cost basis for the $500 reconnection fee?
Request No. 36: When is a customer account considered late ~d subject to the $10 late
fee?
Request No. 37: When is a customer account considered past due and subject to the 18%
interest charge?
Request No. 38: What is the amount ofPTE's initial hook-up charge?
Request No. 39: Has the amount of the initial hook-up charge ever been changed?
Request No. 40: If the hook-up charge has ever been changed, provide a history of those
changes.
Request No. 41: What is the purpose of the initial hook-up charge?
Request No. 42: How many hook-up charges have been collected on the system and what
is the total amount that has been collected?
Request No. 43: Please provide a schedule showing the legal description, owner and
mailing address for each property upon which PTE has filed a lien for non-payment of water bills.
Include the date ofthe lien.
Request No. 44: How much does it cost PTE to file a lien? Detail preparation costs and
filing fees.
Exhibit No, 3
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 11 of 12
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE EST A TES
WATER SYSTEM
ATTACHMENT
ORDER NO. 28903
PAGE 6 of 7
SEPTEMBER 27 2001
Request No. 45: The Commission in its Order No. 28845 directed Ponderosa Terrace
Estates Water System, Inc. to adopt and implement the Commission s Utility Customer Relations
Rules (UCRR), Utility Customer Information Rules (UCIR) and an accounting system consistent
with the information required by the Commission s annual report for small water companies,
Please provide a draft of each of the following:
a) A customer bill that meets Utility Customer Relations Rules , UCRR Rule 201
and 202 requirements. (Small water companies, such as PTE, are not required to
provide a comparison of usage).
b) Your notice of disconnection as outlined in UCRR Rule 305. (Examples of
disconnection notices were provided to you on August 11 , 2001.)
c) Your summary of rules as required by UCRR Rule 701. (Examples of a rule
summary were provided to you on August 11 , 2001.
Request No. 46: Order No. 28845 further directed PTE to file an Application for a
certificate of convenience and necessity with supporting documentation regarding service area and
rates. Please provide that Application together with your responses to this request for information.
Dated at Boise, Idaho, this day of September 2001.
Scott Woodbury
Deputy Attorney GeneralTechnical Staff: Bob Smith
Marge Maxwell
Michael Fuss
SW:gdk:i:umisc/prodreq/gnnvO 1.\ swresmjmmfuss
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 12 of 12
FIRST PRODUCTION REQUEST TO
PONDEROSA TERRACE ESTATES
WATER SYSTEM
ATTACHMENT
ORDER NO. 28903
PAGE 7 of 7
SEPTEMBER 27 2001
Office of the Secretar)
Service Date
December 6, 200 I
BEFORE THE IDAHO PUBLIC UTll.ITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
. EST A TES WATER SYSTEM, IN C. IS A PUBLICUTILITY SUBJECT TO REGULATION BY
THE IDAHO PUBLIC UTILITIES COMMISSION.
CASE NO. GNR-Ol-
NOTICE OF SHOW CAUSE
HEARING
ORDER NO. 28911
BACKGROUND
On September 13, 2001 , the Idaho Public Utilities Commission (Commission) issued
Order No. 28845 in Case No. GNR-Ol-l. In its Order the Commission found that Ponderosa
Terrace Estates Water System, Inc. (Ponderosa; Company) was operating in such manner as to
fall within the Commission s jurisdiction. Reference Idaho Code gg 61-124-Water Systems;
61-l25-Water Corporation and 61-129-Public Utility. Of significance, the Commission
found that the Company s customers have no say regarding the operation and management of the
Company or the prices it charges for water and related services.
Ponderosa operates a water system located south of Sandpoint and southeast of the
community of Sagle in Bonner County, Idaho. There are approximately 20 full-time residences
connected to the system and a total of approximately 90 properties within the area served by the
\ '
water system. The system has been in place since approximately 1969. The current owner is
Robaer Cobott. Ponderosa is an Idaho for-profit corporation located at 2626 Wrenco Loop Road
Sandpoint, Idaho 83864.
The Commission in its Order No. 28845 directed Ponderosa Terrace Estates Water
System, Inc. to:
File an Application for a Certificate of Public Convenience and Necessity
for the water system operated by the Company, located south of Sandpoint
and east of the community ofSagle in Bonner County, Idaho.
File proposed schedules of rates and charges, with supportingdocumentation. Any rates and charges collected from the date of theCommissions Order are subject 'to refund to the extent that they may be
determined excessive.
NOTICE OF SHOW CAUSE HEARING
ORDER NO. 28911
Exhibit No.
Case No. PTE-03-
M, Fuss, Staff
4/1/03 Page 1 of 3
Adopt and implement the Consumer Relations Rules, the Commission
Utility Customer Information Rules, and an accounting system consistent
with the information required by the Commission s annual report for small
water companies.
To date, the Company has not responded to the Commission s Order and has made no filing and
provided no documentation to justify its rates.
On November 28, 2001 , the Commission issued Order No. 28903 in Case No. GNR-
W -0 1-1 e~tablishing a $20 per month flat-rate charge for residential customer water usage
effective December 1 2001.1 Reference
Idaho Code 99 61-501; 61-502; 61-503. The Company
was further prohibited from assessing any other fees or charges without first providing
justification for such charges/fees and obtaining Commission approved tariffs.
YOU ARE HEREBY NOTIFIED that a public hearing in Case No. GNR-01-1 is
scheduled for MONDAY. DECEMBER 17.2001. COMMENCING AT 6:00 P.M. AT THE
EDGEWATER RESORT. 56 BRIDGE STREET. SAND POINT. IDAHO (Telephone: (208)
263-3194).The purpose of the hearing is to permit the Company and Robaer Cobott to show
cause (if any) why the $20 per month flat-rate residential water charge established in Order
No. 28903 is not reasonable and should not continue and why the Company should not be .
required to refund/credit customers the difference billed/ received since the date of the
Commission s Order No. 28845. The Commission following the show cause hearing will also
receive public comment from customers regarding Ponderosa Terrace Estates and its water
service operations.
YOU ARE FURTHER NOTIFIED that all hearings in this matter will be held in
facilities meeting the accessibility requirements of the Americans with Disabilities Act (ADA).
In order to participate in or to understand testimony and argument at a public hearing, persons
needing help of a sign language interpreter or other assistance may ask the Commission to
provide a sign language interpreter or other assistance as required under the ADA. The request
for assistance must be received at least five (5) working days before the hearing by contacting
the Commission Secretary at:
I The $20 per month rate authorized by the Commission comports with the state average flat-rate for
Commissionregulated water companies.
NOTICE OF SHOW CAUSE HEARING
ORDER NO. 28911
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 3
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 85720
BOISE, IDAHO 83720-0074
[phone] (TELEPHONE)
[phone] (FAX)
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and that the
Commission may enter any final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED and the Commission. does hereby adopt the scheduling
set forth above for Show Cause Hearing in Case No. GNR-01-
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this t,fi.-
day of December 2001.
J~~
LJ
MARSHA H. S~TH, COMMISSIONER
ATTEST:
~~AJe D. Jewell
ISSlon Secretary
Vld/O:GNR-Ol-5W4
NOTICE OF SHOW CAUSE HEARlNG
ORDER NO. 28911
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 on
BEFORE THE IDAHO PUBLIC UTll.ITIES COMMISSION
Office of the Secretary
Service Date
December 14 2001
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, IN C. IS A PUBLIC
UTILITY SUBJECT TO REGULATION BY
THE IDAHO PUBLIC UTILITIES COMMISSION.
CASE NO. GNR-Ol-
NOTICE OF VACATED
HEARIN G
ORDER NO. 28917
BACKGROUND
On September 13, 2001 , the Idaho Public Utilities Commission (Commission) issued
Order No. 28845 in Case No. GNR-01-1. In its Ord~r the Commission found that Ponderosa
Terrace Estates Water 'System, Inc. (Ponderosa; Company) was operating in such manner as to fall
within the Commission s jurisdiction. Reference Idaho Code gg 61-124-Water Systems; 61-125-Water Corporation and 61-129-Public Utility. Of significance, the Commission found that
the Company s customers have no say regarding the operation and management of the Company or
the prices it charges for water and related services.
Ponderosa operates a water system located south of Sandpoint and southeast of the
community of Sagle in Bonner County, Idaho. There are approximately 20 full-time residences
connected to the system and a total of approximately 90 properties within the area served by the
water system. The system has been in place since approximately 1969. The current owner is '
Robaer Cobott. Ponderosa is an Idaho for-profit corporation located at 2626 Wrenco Loop Road
, ,
Sandpoint, Idaho 83864.
The Commission in its Order No. 28845 directed Ponderosa Terrace Estates Water
System, Inc. to:
File an Application for a Certificate of Public Convenience and Necessity for
the water system operated by the Company, located south of
Sandpoint and
east of the community of Sagle in Bonner County, Idaho.
File proposed schedules of rates and charges, with supporting documentation.Any rates and charges collected from the date of the Commission s Order aresubject to refund to the extent that they may be determined excessive.
NOTICE OF VACATED HEARING
Adopt and implement the Consumer Relations Rules, the CommissionUtility Customer Information Rules, and an accounting system consistent
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 4
with the infonnation required by the Commission s annual report for smallwater companies.
To date, the Company has not responded to the Commission s Order and has made no filing and
provided no documentation to justify its rates.
On November 28, 2001 , the c:ommission issued Order No. 28903 in Case No. GNR-
01-1 establishing a $20 per month flat-rate charge for residential customer water usage effective
December 1 , 2001.' Reference Idaho Code ~~ 61-501; 61-502; 61-503. The Company was further
prohibited from assessing any other fees or charges without first providing justification for such
charges/fees and obtaining Commission approved tariffs.
, On December 6th the Commission set a December 17, 2001 hearing date in Sandpoint
Idaho to provide the Company and Robaer Cobott the opportunity to show cause (if any) why the
$20 per month flat-rate residential water rate charge established in Order No.28903 is not
reasonable and should not continue and why the Company should not be required to refund/credit
customers the difference billed/received since the date of the Commission s Order No. 28845,
YOU ARE HEREBY NOTIFIED that despite the mailing of Commission Notices and
Orders to the registered office of the corporation as reflected in the Company s corporate filing with
the Idaho Secretary of State, the Commission, based on Staff investigation, has reason to believe
that Robaer Cobott may be out of state and may be personally unaware of the scheduled hearing.The Commission therefore finds it reasonable to vacate the previously scheduled
December 17, 2001 show cause hearing. Mr. Cobott may by written petition to the Commission
request the rescheduling of such a hearing.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. GNR- W -01-01. Our
prior Orders, findings and directions to the Company in this case continue to be effective and
unabated.
Addressing customer concerns regarding the adequacy of the present water system to
serve existing customers, we reiterate that the Company is to make no new connections to the
existing water system until further order of this Commission. Reference Order No.
28845.
NOTICE OF V ACA TED HEARING
I The $20 per month rate authorized by the Commission comports with the state
average flat-rate for Commissionregulated water companies.
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 4
The Company having failed to make formal Application for a CeI1ificate of Public
Convenience and Necessity as directed and required by Order No. 28845 , we find it reasonable
based on the established record in this case to assign Certificate of Public Convenience and
Necessity No. 393 to Ponderosa Terrace Estates Water System, Inc., an Idaho for-profit corporation
located at 2626 Wrenco Loop Road, Sandpoint, Idaho 38364, As reflected in the Company
corporate filings with the Idaho Secretary of State, the identified agent of the corporation for
purpose of service at said address is Robaer Cobott. Reference
Idaho Code gg 61-526; 61-528 and
Commission Rules of Procedure 111 (Certificate-New Utility).
In assigning a certificate number, the Commission finds that Ponderosa is a water
corporation as defined by Idaho Code 99 61-124 and 61-125 and a public utility as defined by Idaho
Code 961-129.
We authorize service by Ponderosa to that water ,system located south of Sandpoint and
southeast of the community of Sagle in Bonner County and serving Ponderosa
TeITace Estates and
any adjacent areas as may be presently served by the existing system-an area more particularly
described as a water system located in the Southwest Quarter of Section 5 , Township 55 North
Range 1 West, Boise-Meridian, Bonner County, Idaho.
We continue to find it reasonable to 'authorize only a $20 per month flat-rate charge for
residential customer water usage. Reference Order No. 28903. Only those customers actually
connected to the system and who have the physical service facilities in place that permit a customer
to open a tap and receive water without a requested turn-on by the Company are to be charged for
water service.
The Company continues to be prohibited from . assessIng any other fees or charges
without first providing justification for such charges/fees and obtaining Commission approved
tariffs. Reference Order No. 28903.
The Commission continues to find it reasonable to prohibit water shutoffs by the
Company or involuntary termination of service without prior Commission approval. Reference
Order No. 28845.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and Ponderosa
TeITace Estates Water System, Inc., an Idaho for-profit corporation located at 2626 Wrenco Loop
Road, Sandpoint, Idaho 83864 and over its CUITent owner, Robaer Cobott, pursuant to the authority
NOTICE OF V ACA TED HEARING
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 4
. ,
and power granted under Title 61 of the Idaho Code and the Commission s Rules of Procedure
IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED alld the Commission does hereby vacate the previously scheduled
December 17 , 2001 show cause hearing in Case No, GNR-01-01.
IT IS FURTHER ORDERED and the Commission does hereby assign Certificate of
Public Convenience and Necessity No. 393 to Ponderosa Terrace Estates Water System
, Inc., an
Idaho for-profit corporation.
IT IS FURTHER ORDERED and the Company is directed to comply with the
requirements and prohIbitions set forth in our findings above and in our prior Orders in this case.
Reference Order Nos. 28845 28903.
DONE - by Order of the Idaho Public Utilities Commission at Boise, Idaho this LIp..
day of December 2001,
Out of the Office on this Date
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~~I
ISSlOn Secretary
vld/O:GNR-OI-5W5
NOTICE OF V ACA TED HEARING
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 4
2626 WIfIRCO Loop Road
Sandpalnt, 'ciano 8:!864
WATERSYSYTEM INC.
Te~phone [phone]
May 6, 2002
Jean Jewell
Commission's Secretary
Idaho Public Utilities Commission
Dear Jean Jewell
Tbisletteris URGENT, URGENT, URGENT
Ponderosa Terrace Estates Water System Ine. is going to have to go out of businessbecause ofthe watc:r rates imposed on this company by Idaho Public Utilities Commission.
The revenu~ ohhis company is down around 90 to 95% because ofthe P. U.C. rulings.This company is not receiving enough revenue to pay the el~tric bills which are about
3-months behind. After tbeP.c. made their ruling on the: water rates in November, 2001the hildowners must feel that they bave the P.c. on their side and the landowners arenow in control because only a few are paying. This company does not want to go out ofbusiness. I gsve the P.C., Robert Smith, the necessary expense information that yourequested on March 30 2002. At this time nothing has been done about my company s situation.I talked to Randy Lawd at P.C. at 8:00 oclock this morning and he was very helpfull withinformation on my situation. Randy told me to write this letter to you in hopes that at the
next meeting of the Commi~sion maybe the Commission conld act on my behalf.
THANK YOU
Exhibit No, 6
Case No. PTE-03-
M. Fuss, Staff
4/1/03
Office of the Secretary
Service Date
May 14, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INc. IS A PUBLIC UTILITY SUBJECT TO
REGULATION BY THE IDAHO PUBLIC UTILITIES COMMISSION
BACKGROUND
CASE NO. GNR-Ol-
NOTICE OF PROPOSED
INCREASE IN RATES
NOTICE OF
MODIFIED PROCEDURE
NOTICE OF
COMMENT/PROTEST DEADLINE
ORDER NO. 29024
On September 13, 2001, the Idaho Public Utilities Commission (Commission) issued
Order No. 28845 in Case No. GNR-Ol-l. In this Order the Commission found that Ponderosa
Terrace Estates Water System, Inc. (Ponderosa; Company) was operating in such manner as to fall
within the Commission s jurisdiction. Reference Idaho Code 99 61-124 - Water Systems; 61-125
- Water Corporation; and 61-129 - Public Utility. Of significance, the Commission found that the
Company s customers have no say regarding the operation and management of the Coj1lpany or
the prices it charges for water and related services.
Ponderosa 0 perates a water system located south 0 f S andpoint and southeast 0 f t he
community of Sagle in Bonner County, Idaho. There are approximately 20 full time residences
connected to the system and a total of approximately 87 lots within the area served by the water
system. The system has been in place since approximately 1969. The current owner is Robaer
Cobott.Ponderosa is an Idaho for-profit corporation located at 2626 Wrenco Loop Road
Sandpoint, Idaho 83864.
On November 28, 2001 , the Commission issued Order No. 28903 establishing a $20
per month interim rate based upon the statewide average rate for small flat-rate water systems. On
December 6, 2001 , the Commission issued Order No. 28911 establishing a Show Cause hearing
for Monday, December 17, 2001 in Sandpoint, Idaho. The purpose of the hearing was to permit
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 12
Mr. Cobott to show cause (if any) why the $20 per month flat month rate established by Order No.
28903 was not reasonable and to take public comment from customers regarding the water service.
The Commission vacated the Show Cause hearing on December 14, 2001 by Order No. 28917
based upon information that Mr. Cobott most likely was out of town and would be unable to
attend the hearing. In its Order vacating the hearing the Commission assigned Certificate of
Convenience and Necessity No. 393 to the Company and reiterated the findings and directives of
its prior Orders.
On January 4, 2002, following receipt of information that Mr. Cobott was attempting
to restructure the water company, Staff counsel sent Mr. Cobott a letter informing him that Orders
of the Commission are law until changed by the Commission and reminding him that the
Company must ". . . make written petition or application to the Commission prior to any proposed
change in ownership of the Ponderosa Terrace Estates Water System, Inc." Reference Order No.
28845.
Subsequently, the Staff has met personally with the owners of the water system on
February 11 and again on March 30, 2002. At the March 30 meeting, Mr. Cobott brought
numerous financial documents with him for Staffs review. A final piece of information, a
depreciation schedule, was supplied to Staff on April 10, 2002. Staff notes that the most recent
entries in the depreciation schedule are for the year 1997.
CURRENT DEVELOPMENTS
Staff has advised the Commission that numerous phone calls and faxes were received
over the weekend of May 4 and 5 , 2002 and the morning of Monday May 6 2002 from customers
and from Bonner County Commissioner Brian Orr.These contacts address a letter sent to
customers dated Saturday, May 4 2002 informing them that the Ponderosa Terrace Water System
Inc. "
. . .
will discontinue doing business as a public water system on May 5, 2002 " and further
This public water system will be shut down on (Sunday) May 5, 2002.Customers have
informed Staff that this language meant that the on-site water system operator, Larry Fairfax, had
been given instructions to physically shut the system pumps off. Apparently, this did not occur.
The May 4 letter goes on to state that Mr. Cobott is "
. . .
going to start a privately
owned water system on May 10 2002 , called 'Ponderosa Terrace Estates Privately-Owned Water
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 12
System Inc.'" Property owners in the subdivision must subscribe and be a shareowner in order to
receive water service.
The Commission is also in receipt of a letter from Mr, Cobott dated May 6, 2002. In
this letter, Mr. Cobott states that the Ponderosa Terrace Estates Water Company is going to have
to go out of business because of the rates set by this Commission. He states that revenues are
down 90 to 95%. Several customers have contacted the Cominission Staff concerned that the
Company was not billing them. They have indicated that they will not make payments unless they
receive a bill. Staff has verified by telephone conversation with Mr. Cobott that this is the case.
He has not and will not mail bills to customers with the $20 per month charge approved by the
Commission. He does not agree with that rate and will not send a bill that makes it appear he
accepts the Commission s authorized rates.
FINANCIAL POSITION
Staff has completed a cursory review of the financial position of the Company based
upon the material submitted by Mr. Cobott and provided the information to the Commission in a
Decision Memorandum dated May 8, 2002. Attachment No.1 to this Order is a one-page
schedule that calculates the revenue requirement for this system. Staff refers to its analysis as
cursory due to the large amount of data that appears to Staff to be somewhat arbitrary. Staff has
adjusted some of the data for what appear to be unreasonable costs charged to the water system.
Staff eliminated a one time non-recurring charge of $1 417.20 for refinancing costs on the owners
home. Staff eliminated $271.70 as a non-recurring charge for computer memory upgrade. . Staff
reduced the Company s proposed $3 600 home office rent allowance to $1 200 based upon
commercial office rental in the Sandpoint area as posted on the web site of "Sandpoint Property
Management." These rental prices include utilities; therefore Staff has eliminated the Company
proposed office heat allowance of $340.55 and Office electricity of $402. Staff notes that the
Company assigned $5 520 as the water compa,ny s share of payments on the owners' home
mortgage. Staff eliminated this item. The water company s share of this cost, Staff states, is
covered by Staffs allowed return at 12%, assuming 100% equity, on the cost of the new well
placed in service with proceeds from the refinance. Staff further reduced the Company s proposed
000 allowance for Mr. Cobott's management fee to $4 160. The proposed Staff allowance is
based upon an average of 4 hours per week at a rate of $20 per hour. Staff contends that this
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
, ORDER NO. 29024
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 12
allowance is quite generous based upon its experience in trying to contact Mr. Cobott and similar
experiences reported to Staff by customers. Staff also eliminated a line item entitled "Monthly
Profit" proposed by the Company in the amount of $3 600. This item, Staff contends, appears to
be completely arbitrary. Profit is covered by Staff s allowed return at 12% on the cost of the new
well placed in service. Staff has added a depreciation expense of $963.87 for the new well that
was not included in the data the Company provided. Staff advanced the Company provided
depreciation schedule for the missing years 1998 through 2001 and detennined that all
investments other. than the new well have been fully depreciated. Staff recornn'lends acceptance of
the Company s proposed $200 per month maintenance reserve fee. Staff cautions the Company
that this needs to be a funded reserve placed in a bank account and not drawn for a purpose other
than maintenance of the water system.
Staff s calculations, after review of the Company data, produce a total annual revenue
requirement for this Company of$25 282.41.
RATE DESIGN
Staff notes the challenge the Company is faced with in attempting to distribute the total
revenue requirement equitably among its customers.Traditional ratemaking procedures and
policies, Staff contends, assume that an individual (household) should not pay for a commodity
they do not receive. When electric service, gas service and telephone service is disconnected
billing stops. The same also holds true for water companies. However, Staff notes the difficulty
of applying this policy to small water systems like Ponderosa Terrace Estates that ",ere
constructed to serve a vacation home development. Designing rates for such a regulated stand-
alone water system to recover the cost of operating and maintaining the system, Staff contends
involves what appear to be two diametrically opposing inequities.
The traditional approach, where a customer does not pay for a commodity during a
period of disconnection, shifts the burden of supporting the entire system onto those customers
who are connected to the system. This is not a problem on a large system with a diverse customer
base. When this occurs on a small customer base system, Staff contends that the cost shift can be
significant and burdensome. Staff reports that Ponderosa Terrace Estates was constructed in the
late 1960's to serve 87 properties. Now, more than 30 years later, only 20 properties are
developed and utilized full time. Some properties are used for a week or a month a year and are
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024 4 '
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 12
not occupied the remainder of the year. Ponderosa Terrace Estates Water Company is somewhat
unique because each lot in the subdivision is equipped with a customer service line and most (if
not all) also have a frost-free water hydrant installed on the property. Any property owner has the
ability to connect a recreational vehicle to the water hydrant and begin consuming water in a
matter of minutes without contacting the Company. Several of the property owners have reported
owning one or more lots purchased years ago either on .speculation or for future use as a retirement
property. Staff presented three possible rate design scenarios. See Attachment 2 to this Order.
Staff Option 3 addresses the water system s inability to provide sufficient water supply
to serve all 87 properties on a full-time basis. Staff states that it has reviewed the Tucker
Engineering Water Disinfection System Report and the supply well logs for the development.
These documents, it states , indicate that current system supply capacity is approximately 25
gallons per minute. Staff calculates that the maximum number of full-time customers that could
be served by the existing system is 37 customers. Staff Option 3 provides rates reflective of the
limited water supply.
Option 3 rates are determined in three steps. First the variable costs associated with
water consumption are distributed to the full-time customers. Second the fixed costs are allocated
to the maximum number of full-time customers (37) that could be connected to the existing water
supplies. Because the existing 20 full-time customers are in this category, steps one and two
establish rates for the full-time customer class of $61.50/month. Staff states that it is unaware if
any of the remaining properties will convert to full-time customers in the near future. Therefore
the third step equally allocates the revenue requirement not collected by the full-time customers to
the remaining,67 properties, which amounts to $13 .OO/month. Staff believes the Option 3 rate
design appropriately allocates system cost to customers based upon the impact the class of
customer has on the system. Since the system will not be able to serve the remaining 67
customers on a full-time basis, they are not fully allocated the fixed costs. This option, Staff
contends, also provides a price signal regarding the system capacity limitations and further
emphasizes the current Commission restriction on new full-time hookups.
Commission Findings
The Commission has reviewed the filings of record in Case No. GNR-01-1. The
Commission apprises Mr. Cobott that as a regulated utility he is bound to comply with Idaho
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 5 of 12
statutes, Commission Orders and Commission Rules and Regulations. It appears as reflected
above, that Mr. Cobott has not mailed bills to customers at the $20 per month charge approved by
the Commission. Reference Order No. 28903. He purportedly does not agree with that rate and
will not send a bill that makes it appear he accepts the Commission s authorized rates. The
Company would be well advised to reconsider its position in this regard. The customers should
not be expected to voluntarily send money to the Company without some foDTI of billing from the
Company. Rendering a bill to customers at the authorized rate does not constitute agreement with
the rate but acknowledges it is the Commission ordered rate and the only rate that legally can be
charged.
Staff identifies an annual revenue requirement for the Company of $25 282.41 based
on infoDTIation provided by Mr. Cobott and recommends Rate Design Option 3 as the Staff
preferred rate design. That option allocates all costs based on the impact the customer has on the
system. Property owners of undeveloped lots will be assessed a charge of $13.00 per month.
Property owners of developed lots will be assessed a charge of $61.50 per month. The
Commission finds it reasonable to adopt these rates for a proposed effective date of June 1 2002
subject to prior adjustment based upon customer comment and further Staff and Commission
analysis.
YOU ARE HEREBY NOTIFIED that the Commission has reviewed the filings of
record in Case No. GNR-Ol-1. The Commission has preliminarily deteDTIined that the public
interest regarding the Commission s intention to increase rates to water customers in the manner
set forth above (Rate Option 3) may not require a hearing to consider the issues presented and that
the issues raised by the proposed increase in rates may be processed under Modified Procedure
, by written submission rather than by hearing. Reference Commission Rules of Procedure
IDAPA 31.01.01.201-204.
YOU ARE FURTHER NOTIFIED that the Commission may not hold a hearing in this
proceeding unless it receives written protests or comments opposing the use of Modified
Procedure and stating why Modified Procedure should not be used.
31.01.01.203.
Reference IDAP A
YOU ARE FURTHER NOTIFIED that the deadline for filing ~ritten comments or
protests with respect to the proposed increase in rates in Case No. GNR-Ol-1 is Thursday,
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024
Exhibit No.
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 6 of 12
May 23, 2002. Persons desiring a hearing must specifically request a hearing in their written
protests or comments.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline, the Commission will consider the matter on its merits and enter its
Order without a formal hearin~. If comments or protests are filed within the deadline, the
Commission will consider them and in its discretion may set the matter for hearing or may decide
the matter and issue its Order based on the written positions before it.Reference IDAPA
31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case No. GNR-
Ol-1 should be mailed to the Commission and to Ponderosa Terrace Estates Water Company at
the addresses reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ill 83720-0074
Robaer Cobott
2626 Wrenco Loop Road
Sandpoint, ill 83864
Street Address for Express Mail:
472 W. Washington Street
Boise, ill 83702-5983
All comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by. accessing the
Commission s home page located at www.puc.state.id.us under the "File Room" icon. Once at the
File Room" page, select "File a Comment " fill in the case number as it appears on the front of
this document, and enter your comments.
YOU ARE FURTHER NOTIFIED that the filings in Case No. GNR-Ol-1 can be
reviewed during regular business hours at the Idaho Public Utilities Commission, 472 W.
Washington Street, Boise, Idaho. In addition, relevant filings may be viewed by accessing the
Commission s website at www.puc.state.id.under the "File Room" icon and selecting the
appropriate topic heading.
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 7 of 12
DATED at Boise, Idaho this
ATTEST:
~~;/o~Commission Secretary
bls/O:GNRWOlOl sw6
6'k
MARSHA H. SMITH, COMMISSIONER
NOTICE OF PROPOSED INCREASE IN RATES
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
ORDER NO. 29024
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 8 of 12
Net Plant Value
Rate of Return
Return Required
Expense Items
Phone Expense
Accounting (Tax Prep)
Elec Power Costs
Postage
Bank Charges
Refinance Charges
System Repcm
Water Tests
Chemicals & supplies
Liab Insurance
Auto Insurance
Auto Expense (Fuel)
Auto Repair
Office Supplies
Computer Supplies
Computer Memory Upgrade
Water Operator Cert Tests/Fees
Travel Exp Water Cert
Travel Exp Water Cert
Home Office Rent
Home Office Heat
Home Office Electricity
Loan Payback-Wash Mutual
R Cobott Mgmnt Fee
Daily Water Testing (Fairfax)
Monthly Maint (Fairfax) ,
Monthly Profit ($300 / Mo.
Maintenance Reserve ($200/Mo.
Sub Total
Depreciation Exp
Return on Investment
Total Revenue Requirement
PONDEROSA TERRACE ESTATES WATER CO.
Revenue Requirement Calculation
067.
12%
008.
Per PUC Staff PUC Staff
Compan ustments Recommendation Comment
420.420.
487.487.
997,997.
193.193.
367.367.
417.(1.417.20)One Time Non-recurring
601.601.
314.314.
367.367.
800.800.
228.228.At $0,345 per mile these three
252.252.items produce 155 Mi./ Mo.
164.164."" "" ,m "" ""
129.129.
62.46 62.46
251.(251.70)
200.200.
88.88.
75.75.
600.400.00)200.100 Sq Ft (Qi $1.00/Mo
340.(340,55)Incl in Rent Allow
402.(402.00)Incl in RentAliow
520.520.00)Incl in Return Allowance
000.840.00)160.Arbitrary 4 Hrs/ Wk at $20
600.3;600.$10 per day
200.200.$100 per month
600,600.00)Incl in Return Allowance
2,400,400.
$40 081.310.43
963.
008.
$40 081.282.41 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1103 Page 9 of 12
Attachment No.
Case No. GNR-01-
Order No. 29024
Rate Design Options (Amended 5/10/02)
IPUC Staff
5/7/2002
Total Fixed Revenue Requirement
Consumption Sensitive Revenue Requirement
Total Revenue Requirement
$ 22 917.
$ 2 365.
$ 25,282.41
Option 1: Historical PUC Rate MethodoloQY - Deliver only to permanent customers.
Revenue Customer Recommended
Requirement Charge Rates
$ 25 282.41Revenue Requirement
Number of Permanent Customers
Annual Water Charge Per Customer
Monthly Water Charge Per Customer
Over (Under) Recovery
Revenue
Recovery
264.
$ 25 281.60 $ 105.34 $$ (0.81)
105.00 $ 25 200.
(82.41)
Option 2: Full Service ResortRate MethodoloQY - All Reported Property Owners Pay a Share of the Costs
Consumptive Sensitive Revenue Requirement
Customers With Consuptive Use
Annual Water Charge Per Consumptive Customer
Monthly Water Charge Per Consumptive Customer
Non-Consumptive Sensitive Revenue Requirement
Total Number of Possible Water Users
Annual Water Charge Per Possible Water User
Monthly Water Charge Per Possible Water User
Total Monthly Charge Per Consumptive Customer
Total Monthly Charger Per Other Possible Water User
Over (Under) Recovery
Revenue Customer Recommended Revenue
Requirement Charge Rates Recovery
365.
118.
364.
$ 22 917.
263.42
$ 22 915.21.
632.31.32.$ 7 680.
$ 17 647.21.22.$17 688.
$ 25 279.$ 25,368.
(2.61)85.
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 10 ofl2
Attachment No.
Page 1 of 3
Case No. GNR-O1-
()rripr Nn ?QO?4
Rate Design Options (Continued) (Amended 5/10/02)
IPUC Staff
5/7/2002
Option 3: Available Service Resort Rate MethodoloGY - WeiGht Rates Based on the Number of Serviceable Customers
Consumptive Sensitive Revenue Requirement
Customers With Consuptive Use
Annual Water Charge Per Consumptive Customer
Monthly Water Charge Per Consumptive Customer
Non-Consumptive Sensitive Revenue Requirement
Total Number of Serviceable Water Users
Annual Water Charge Per Serviceable Water User
Monthly Water Charge Per Serviceable Water User
Total Monthly Charge Per Consumptive Customer
Remaining Revenue Requirement
Total Number of Other Possible Water Users
Annual Water Charge Per Possible Water User
Monthly Water Charge Per Possible Water User
Totql Monthly Charge Per Consumptive Customer
Total Monthly Charge Per Possible Water User
Over (Under) Recovery
Revenue Customer Recommended Revenue
Requirement Charge Rates Recovery
365.
118.
364.
$ 22 917,
37 (Staff Attachment 4, Page 3)
$ 619.
$ 22 919.28 $ 51.
$ 14 752.80 $61.47
$ 10 529.
$ 157.
$ 10 532.40 $ 13.
$ 14 752.61.47 61.$14 760.
$ 10 532.40 13.13.$10,452.
$ 25 285.$ 25 212.
(70.41)
Exhibit No.
Case No, PTE-03-
M, Fuss, Staff
4/1/03 Page 11 of 12
Attachment No.
Page 2 of
Case No. GNR-O1-
nrrlor t\ln ?on?L1
Ponderosa Terrace Estates Water Co.
Serviceable Customers (Amended 5/10/02)
(PUC Staff
5/7/2002
Customers as Reported by the Company
Total NumbE;)r of Customers That Could Use Water
Number of Permanent Residences
Difference
Based on Enqineerinq Report by Taylor Enqineerinq Consultants (6/25/99)
ChlorinationStudy Staff Review of Well Logs35 20 Gallons Per Minute(gpm)20 20 (Sustainable)
1999 Well Capacity
Curent Customers
(Maximum)
Additional Future Customers
Additional Well Requirements 50 gpm
Total Well Requirement For the Development
Total Number of Customers on the System
85 gpm
127
PUC Staff Calculations Based on Taylor Engineering Report
Average Flow Per Customer
Maximum Serviceable Customers With the Existing Well
6693 6693 gpm/customer
5 gpm
25 gpm
37 Customers
Additional Well Installed in 2000
Total Existing Well Capacity Available
Comment: Even though the Company indicates that up to 87 customers could possibly use the existing water system
the system supply cannot support more than 37 full time customers. In addition the PUC Staff has received reports
that the primary reason the additional source was developed in 2000 was because the system actually ran out of water
in the fall of 2000. Staff therefor believes that the maximum capacity of the system is somewhat less than the
calculated 37 customers. Without additional groundwater evaluations Staff cannot determine exactly what the
maximum number of customers that can truly be served by this system. Staff assumes that the loss of water in the
fall of 2000 was a condition that occured due to a significant drought in the water shed and will base rate calculations
on the maximum number of 37 customers. Staff recommends additional study to determine the actual number of
customers the system can sustainably serve prior to the commission lifting the restriction on permanent connections.
Exhibit No.
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 12 of 12
Attachment No.
Page 3 of 3
. Case No. GNR-O1-
()rrlAr 1\1" ?on?11
Office or me ;:,ecrerary
Service Date
June 6, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
. ESTATES WAtER SYSTEM, IN C. IS A PUBLIC UTILITY SUBJECT TO
REGULATION BY THE IDAHO PUBLICUTILITIES COMMISSION
CASE NO. GNR~W-Ol-
NOTICE OF SCHEDULE AND
TECHNI CAL HEARING
NOTICE OF INTERVENTION
DEADLINE
NOTICE OF PUBLIC HEARING
NOTICE OF EXTENDED PUBLIC
CO MMENT DEADLINE
ORDER NO. 29046
On May 14, 2002, the Commission issued a Notice of Proposed Increase in Rates
Modified Procedure and Comment/Protest Deadline proposing to adopt rates that collect an aIIDual
revenue requirement for Ponderosa Terrace Estates Water System, Inc. (Ponderosa; Company) in
the amount of $25 282.41. Order No. 29024 at 6. If approved, these rates would allocate all costs
based on the impact the customer has on the system. Based upon customer comment and further
analysis, the Commission finds it reasonable in this Order to adopt interim rates effective June 1
2002 pending the results of the technical and public hearings scheduled for June 20, 2002 in
SaI1dpoint.
BACKGROUND
On September 13, 2001, the Commission issued Order No. 28845 finding that
Ponderosa was operating in such manner as to fall within the Commission s jurisdiction. See
Idaho Code ~~ 61-124; 61-125; and 61-129.
Robaer Cobott, owner of Ponderosa, operates a water system located south of
Sandpoint aI1d southeast of the community of Sagle in Bonner County, Idaho. There are
approximately 20 full-time customers connected to the system and a total of approximately 87 lots
within the area served by the water system.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINE
ORDER NO. 29046
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 16
On November 28, 2001 , the Commission issued Order No. 28903 establishing a $20
per month interim rate based upon the statewide average rate for small flat-rate water systems.
That Order also scheduled a Show Cause hearing for December 17, 2001 in Sandpoint. The
purpose of the hearing was to pem1it Mr. Cobott to show cause (if any) why the $20 per month flat
month rate established by Order No. 28903 was not reasonable and to take public comment from
customers regarding the water service. When it became known that Mr. Cobott would likely be
unable to attend the hearing, the Commission vacated the Show Cause hearing. Order No. 28917.
In its Order vacating the hearing the Commission issued Certificate of Convenience and Necessity
No. 393 to the Company and reiterated the findings and directives of its prior Orders.
On May 7, 2002, the Commission received a letter from Mr. Cobott stating that the
Ponderosa Terrace Estates Water Company is going to have to go out of business because the rates
set by this Commission were too low. He stated that revenues are down 90 to 95%. He had not
and would not mail bills to customers with the $20 per month charge approved by the
Commission. He did not agree with that rate and would not send a bill that makes it appear he
accepts the Commission s authorized rates. Because they did not receive bills, we understand that
some customers have not paid for serVice from November 2001 through May 2002.
INTERIM RATES
In response to the Notice of Proposed Increase in Rates (Order No. 29024), the
Commission received comments from the Commission Staff 1 Ponderosa, and several Ponderosa
customers regarding what rates should be implemented for water service. These comments are
discussed in greater detail below.
A. Commission Staff Comments
After reviewing the comments received from both the Company and its customers
Staff stood by its comments contained in its May 10, 2002 Decision Memorandum. However
Staff made minor modifications to the total revenue requirement and offered additional rate design
options based upon updated customer information. Staff Comments at 2.
I The Commission Staff may participate as an independent party in any proceeding. IDAP A 31.01.01.37-38. The
Staff should not be confused. with the Cmmnission. The Commission s duty is to regulate every utility and set rates
that are reasonable to both the utility and customers. Idaho Code gg 61-501 and 61-502.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 16
1. Revenue Requirement: Staff offered two modifications to Ponderosa s revenue
requirement. First, Staff suggested increasing the water testing expense from $314.78 to $1 500
per year to reflectthe nonnalized annual water testing cost, which is estimated at $750 for each of
the two wells. Second, Staff recommended that the labor allowance for Daily Water Testing
performed by Mr. Fairfax be reduced from $3 600 to $1 800 to reflect the free electricity Mr.
Fairfax was receiving from Ponderosa as compensation valued at $150 per month. These two
modifications reduce the total annual revenue requirement by $614.78 from $25 282.41 to
$24 667.63.
2. Definitions:To devise customer classes for the rate design, Staff recommended
based on input from Ponderosa and its customers that the following definitions be used by the
Commission:
Permanent Residence - Staff proposed using the same definition as provided by
Idaho Code for "primary dwelling place.Idaho Code 9 63-701(9)(a). For purposes of this case
the 'primary dwelling place is the single place which the customer has his true, fixed and
permanent home and principal establishment, and to which whenever the individual is absent he
has the intention of returning. The primary dwelling place is where the claimant resides on
January 1 and:
(i)At least six (6) months during the prior year; or
(ii)The majority of the time the customer owned the dwelling if owned by
the customer more than one (1) year; or
(iii) The majority of the time after customer first occupied the dwelling if
occupied by the customer for less than one (1) year.
Full Time Customer - The water service is to the customer s permanent residence.
Part Time Customer - The water service is provided to an improved lot with a
dwelling and the dwelling is not considered the customer s permanent residence. .
Dwelling - Any structure that can provide shelter and is located on a lot or parcel for
more than 15 days per month or 6 months per year.
Inactive Service - Water service is provided to the lot or parcel but is not readily
accessible (the service is underground).
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 16
Active Service - Water service is provided to the lot or parcel and readily accessible
(active service provides above ground access to water).
Fom1er Customer - Water service is not- currently or has never been provided to the
lot or parcel, even though the facilities may have been provided at one time.
Combined Lot - Multiple lots were considered as one when the lots were considered
legally combined by Bonner County.
Rate Desi2:o:Based on the above definitions, Staff performed a customer
inventory, which is summarized below:
Customer Class Number of CustomersFull Time Customers Part Time Customers
Inactive Service Customers
Active Service Customers Former Customers
Total Number of Customers
"-'
Staff continued to believe that rate Option 3 (Available Service Resort Rate Methodology) is the
most appropriate rate option for the Company because it is fairly simple to apply, collects the
suggested revenue requirement ($24 667.63) and sends the appropriate price signal to customers.
Staff preferred this method to Options 1 (Historical PUC Rate Methodology) and 2 (Full Service
Resort Rate Methodology) previously proposed. Staff Comments at 5.
Based on the new infom1ation obtained from the Company and customers, Staff
submitted two additional rate design options for the Commission s consideration. Staff Option 4
...
(Multiple Customer Class Resort Rate Methodology) expanded upon Staffs recommended Option
3 to develop rates reflective of the many different customer classes on the system. Staff found the
calculations to be cumbersome but reflective of the additional information gained by Staffs
continued investigation. Staff/Customer Option 5 (Compromised Customer Class 'Rate
Methodology) was Staffs attempt to provide the Commission with a compromise between the
customers' stated desire for rates and Staffs Option 4. While noting that this option is somewhat
arbitrary, Staff stated that it would collect the revenue requirement and is based fundamentally on
Staffs recommended Option 3 and the expanded Option 4.
NOTICE OF SCHEDULE AND TECHNICAL HEARlNG
NOTICE OF PUBLIC HEARlNG
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No, PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 16
While Staffs five rate design options are discussed in greater detail in its comments
and its May 10, 2002 Decision Memorandum, the following table is a summary of Staffs rate
option calculations and the rates proposed by customer petition.
Ponderosa Terrace Estates Water System
Summary of Monthly Rates
Staff Rate Options Staff/Customer Customer Rate Options
Number of Recommended Compromise Customer Customer
Customer Class Customers Staff #1 Staff #2 Staff #3 Staff #4 Option #5 Option #1 Option #2
Full Time Customer $ 108.00 $28.00 $56.58.49.40.30.
Part Time Customer 11 $28.00 $56.29.29,40.30.
Active Service Customer 33 $21.50 $14.19,20.15.
Inactive Service Customer 18 $21.50 $10.10.10.
Former Customer 6 $21.50 $
Total Revenue $ 24 624 $24,786 $ 24 786 $ 24 612 $ 24 684 480 900
Over (Under) Recovery $ (43.118.$ 118.$ (55.63) $16.37'(187.63)$ (5,767.
4. Consumer Issues.Staff restated the need for the Company to adopt and implement
the Commission s Utility Customer Relations Rules (UCRR), the Commission s Utility Customer
Information Rules (UCIR), and an accounting system consistent with the infoffilation required by
the Commission s annual report for small water companies. Once rates have been set by the
Commission, the Company must file tariffs or schedules of those rates and charges.
indicated its willingness to assistthe Company in preparing the necessary tariffs.
Staff
5. Former Customers. Staff believes that former customers that were either removed
from the system or chose to leave from the system may wish to once again become customers if
Ponderosa is now regulated. Staff recommended that the Company be directed to provide a grace
period for all fonner customers to become members of some customer class.Staff further
recommended that the Company be directed to post and justify the rates for any services that are
offered so that the fonner customers can make educated decisions whether to take service from
Ponderosa.
If a customer who has left the system either by choice or by not choosing to rejoin the
system wishes to reconnect to the system in the future, Staff recommended that the customer be
required to pay a hook-up fee. Because the customer would .not have paid anything to maintain
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 5 of 16
the system, Staff suggested that a hook-up fee for new customers be established in the amount of
500 for any customer wishing to reconnect after the grace period.
6. Disconnecting Customers from the System. Staff believes the Company should
be allowed to terminate ~~i tt~hysically disconnect customers if the following two
conditions are met: 1) the Company has provided proper notice for each billing cycle and an
absolute final notice of removal from the system 60 days prior; and 2) the customer is delinquent
in payment for at least 12 consecutive months. After these two conditions are met, Staff believes
the Company should be allowed to terminate a customer s service by physically disconnecting
them from the system. The customer would then be subject to a new hook-up fee of$2 500 if they
wished to COlmect to the system at any time in the future.
7. Reconnection Fee When a customer voluntarily shuts off service or is temporarily
discolmected for a period not more than twelve (12) months, Staff recommended that a nominal
reconnection fee of $25.00 be established for the Ponderosa Estates Water System.
8. Connection Restrictions.In Order No. 28845 , the Commission restricted all new
connections to the system. Staff previously provided an analysis indicating that system capacity
was limited to 37 customers.However, less than 37 full-time and part-time customers are
currently on the system. Thus, Staff recommended lifting the restriction and allowing a maximum
of 37 . full-time and part-time customers to connect to the system. If the Company wishes to
COlmect more than the 37 full-time and part-time customers, it should provide either an additional
source of water or an analysis by a Registered Engineer indicating that more than 37 full-time and
part-time customers can be adequately served by the system.
B. Ponderosa Comments
On May 21 , 2002 , the Commission received a letter from Robaer Cobott labeled
Protest." While demanding a hearing in front of a Judge that is not affiliated with the
Commission, Mr. Cobott noted his objections to several items discussed in Order No. 29024.
First, he objected to the proposed $80/week salary and stated that he will accept
nothing less than OOO/month. Second, Mr. Cobott did not accept the 12% allowed return on his
investment and wanted "a return of 20% or no deal." More specifically, he wanted his investment
paid back and a $300/month profit on that investment. Third, Mr. Cobott demanded the monthly
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED -PUBLIC COMMENT DEADLINE
ORDER NO. 29046
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 6 of 16
maintenance fee paid to Larry Fairfax be increased to $3 600/year. In his words
, "
allow this or
forget this system.
Mr. Cobott also wants the water test expenses increased from $314.78 to $1 500 per
year. As discussed above, Staff agreed that this is necessary. Because he had to mortgage his
house to get the money to put in a second well as required by DEQ, Mr. Cobott demanded the
520 mOligage expense. Furthermore, Mr. Cobott stated that the excavator located on the
property is owned by him personally but only used for the water system. Thus, he wants
$lOO/month rent for its use and that the utility be responsible for all maintenance and repair costs.
Because Staff believes the Ponderosa system could accommodate 3 7 full time
residents , Mr. Cobott wants the Commission s approval for 37 full time residents. He also noted
that the land on which the ~ater system is located belongs to him personally. Because he has
pay for property taxes and maintenance, Mr. Cobott requests $300/month rent to be paid
Ponderosa to him personally.
Finally, Mr. Cobott's May 21 letter took exception to the manner in which the
Commission "talks about myself and my company" in Order No. 29024. He stated that "you will
adjust your finding in my behalf or you will have to find another option to solve the problems with
this system.Offended by the $80/week salary for an estimated four (4) hours of work, Mr.
Cobott stated that there will be no system operator after the 4 hours per week are expended and
customers will have to go without. In his words
, "
I will not work for nothing and I'm going. to get
mine first, I'm not going without anymore.
Two days later, the Commission received a faxed letter listing a number of questions
posed by Mr. Cobott. He requested information on how to collect back bills owed by customers
prior to the assertion of jurisdiction by the Commission on November 28 , 2001. Mr. Cobott also
wanted to know how he could collect from customers that have not paid since that date.
Furthermore, he wished to know ifhe could turn off their water when the new program starts.
On May 27 , Mr. Cobott on behalf of Ponderosa sent two additional letters by
facsimile. While reiterating his previous concerns, he demanded that "this Case No. GNR-01-
go before a Judge and Jury." He disagreed with the water rates previously ordered and the
different conditions for disconnections and hook-ups. Mr. Cobott also indicated that he would not
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 7 of 16
allow a customer with a past-due bill of over 30 days to receive water service. The second' FAX
informed the Commission that Mr. Larry Fairfax (the maintenance person) had quit and would no
longer maintain the system. To maintain the system in place of Mr. Fairfax, Mr. Cobott stated that
his salary must be increased to $3 000 per month with additional money to pay for car mileage and
insurance since he lives 60 miles round trip from the water system.
C. Customer Comments
1. Joint Letter.On May 20, 2002, the Commission received a letter signed by 23
customers that detailed a proposal for the Commission' s cons~deration. They would like the water
rates divided into four categories that would recover $14 621.30 .in annual operating costs plus
754.56 for a 12% rate of return. The table below summarizes their proposed rates and classes
versus what was proposed by the Commission Staff:
STAFF RESIDENT
CLASS PROPOSED RATES PROPOSED RATES
Full Time Users $40.00/month $30.00/month
Live Hydrant $20.00/month $15. OO/month
No Water Pipe above Ground $10.00/month $lO.OO/month
No Water Service $O.OO/month $O.OO/month
These residents also suggest the Commission decrease allowances for the following
expenses:
Phone : Should be reduced from Staff-proposed $420/annually to $146.
because Mr. Cobott's phone number covers two businesses plus his home
phone.
Power:Should be reduced from Staff-proposed $1 997.58 mIDually to
500.00 because Larry Fairfax s numbers "do not add up.
System Repair:The $2 601.58 suggested by the Staff should be eliminated
entirely since it is a duplication of the $2 400.00 Maintenance Reserve.
Home Office Rent:The $1 200.00 suggested by the Staff should be
reduced to $600.00 since Mr. Cobott is running two businesses out of the
same facility (his home).
NOTICE OF SCHEDULE AND TECHNICAL HEARlNG
NOTICE OF PUBLIC HEARlNG
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 8 of 16
Mr. Cobott's Management Fee:The residents suggest reducing this $4 160
expense to $3 000 because Mr. Cobott has spent little time on the business
except for the current two years and dealing with the IPUC and EP A. They
note that Mr. Cobott has often skipped billing cycles and doesn t return
their phone calls.
Daily Water Testing/Monthly Maintenance:While the Staff suggested
600 and $1 200 for these expenses respectively, the residents
. recommend a combined expense of $2 280. This amount includes Larry
Fairfax s $150.00 monthly retainer and free water equaling approximately
$40.00 per month. The residents question whether water testing is done
daily since a high variance of chlorine exists in the water and Ponderosa
has run out of chlorine at least once.
2. Individual Letters. The Commission also received several individual letters. One
customer agreed with Staff Rate Option No.3 and found it to be "very reasonable." However, she
stressed the need for protection from Mr. Cobott's threatened actions to disconnect customers
place liens on their property and charge $1 500 in reconnection fees. She also wished to know if
customers could pay rates through the court to prevent him from taking their property.
Another customer requested definition words like "full time occupancy" and
developed" before the Commission issues another Order.Moreover, he would like an
explanation for why the maximum number of customers that can be served is only 37. This
customer was also concerned that at least four customers are using the system who are not part of
the platted subdivision. He prefers Rate Option No.2 with full time users having a water use
meter and pay an additional fee if they use more tha,n 200 gallons/day to be put in escrow to fund
an additional well.
Although she had the community water to her residence shut off two years ago when
faced with significant concerns about water quality, availability and customer service, a third
resident supported a 4-tiered rate scale proposed by the residents in their meeting with the Staff.
She also believes that residents there would be best served by creation of a water district/home
owners association that could hire Larry Fairfax to build and maintain the system.. Finally, this
customer requested that the Commission offer Mr. Cobott some specific instruction as to how to
carry out his billing and customer service responsibilities.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 9 of 16
A fourth customer stated that he believed an excellent first improvement to the system
would be the installation of water meters to build water conservation into the fee schedule and
allowed for tiered rates based on season and usage. This customer did not support the tiered
schedule proposed and supported by the customer petition. He found the proposal to be complex
and would benefit high consumptive users at the expense of other users and the owner.
A fifth customer voiced her frustration over being held "hostage" by Ponderosa when
we all would have been satisfied with $45.00" a month. In short, she does not blame some of her
neighbors for putting in their own wells.
D. Commission Findings
Upon revlewmg the record and the comments received thus far from Staff, the
Company and customers, the Commission finds that a techrlical and public hearing are necessary
to fully develop the record. Although the specifics of the hearings are set out below, the
Commission wishes to specifically address two issues: 1) what rates shall be collected pending a
final Order issued after the hearing; and 2) billing and disconnection issues.
1. Interim Rates : The financial infonnation received thus far by the Commission
indicates that Ponderosa should be allowed to collect rates greater than the $20 interim rate
previously set by Order No. 28903. The Commission finds that R~te Design Option No.3 will
appropriately allocate interim costs based on the impact the customer has on the system. Until a
final Order is issued in this case, full-time and part-time customers (as defined above) shall pay a
flat rate of $56.50 per month. Ponderosa shall also charge active service, inactive service and
fonner customers (as defined above) $6.50 per month.The Commission further finds it
reasonable to adopt these interim rates effective June 1 , 2002 pending the results of the technical
and public hearings scheduled for June 20; 2002 in San9point.
2. Billine: and Disconnection for Service Since September 2001.On September 13
2001 , the Commission found that Ponderosa was providing utility service that falls within the
Commission s jurisdiction. Order No. 28845. As such, the Commission s Customer Relations
Rules are applicable to both the Company and customers. IDAP A 31.21.01.
Although Commission Rule 201 states that bills shall be issued on a regular basis, it is
the Commission s understanding that Ponderosa did not bill customers for water service for the 6
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 10 of 16
months between November 2001 and April 2002. IDAPA 31.21.01.201. The Commission
Order No. 28903 established an interim rate of $20 per month and customers may still owe
Ponderosa $20 per month for each of these 6 months. Rule 204.03 provides that customers who
have not been billed shall be given the opportunity,to make payment aInngements over the
telephone, by mail, or in person under Rule 313 on the amount due. At the customer s option, the
tenn of the payment arrangement may extend for the length oftime (six months) that the customer
was not billed. IDAPA 31.21.01.204.03. For example, residential customers who did not pay
Ponderosa for water service for those 6 months shall pay $56.50 for June 2002 water service plus
$20 toward the previously unbilled amount ($120) owed to Ponderosa. Customers may have up to
6 months to repay the full $120.
If the customer fails to pay the current month owed and/or the arrearage portion ($20
per month for each of the next 6 months) then due, Ponderosa may disconnect the customer under
Rule 302 for failure to pay an undisputed delinquent bill. If the utility intends to terminate service
under Rule 302, the utility shall mail a written notice of termination to the customer at least seven
(7) calendar days before the proposeddate oftennination. IDAPA 31.21.01.304.01. Furthermore
tIns written termination notice must contain the information required by Rule 305. At least
twenty-four (24) hours before actual termination, the utility must diligentl~ attempt to contact the
customer affected, either in person or by telephone, to advise the customer of the proposed action
and steps the. customer may take to avoid or delay termination. IDAPA 31.21.01.304.02. This
oral notice must contain the same information required by Rule 305.
The Commission would also note that because regulated utilities like Ponderosa can
use disconnection as a collection tool, regulated utilities are generally prohibited from filing liens
against property to secure the amounts owed.
BilIin~ and Disconnection for Service Prior to September 2001.The
Commission understands that some customers have arrearages for unpaid bills. issued before
September 2001. We encourage the Company and its customers to reach an agreement regarding
charges for water prior to September 2001. To prevent any misunderstanding on the customer
account, any amounts owing prior to September 2001 should not be included in the current bill.
Of course, Ponderosa may seek collec"tion by other means - including small claims court. Because
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 11 of16
the Company has judicial remedies available, Ponderosa shall not discOlmect for non-payment of
amounts owed prior to the Conm1ission asserting jurisdiction over the Company.
NOTICE OF INTERVENTION DEADLINE
YOU ARE HEREBY NOTIFIED that persons desiring to intervene in these matters
for the purpose of presenting evidence or cross-examining witnesses at hearing must file a
Petition to Intervene with the Commission pursuant to this Commission s Rules of Procedure 72
and 73, IDAP A 31.01.01.072 and -073. Persons intending to participate at the hearings must file
. '
a Petition to Intervene on or before June 12, 2002. Persons seeking intervenor status shall also
provide the Commission Secretary with their electronic mail address to facilitate future
communication in these matters.
YOU ARE FURTHER NOTIFIED that persons desiring to present their views without
parties ' rights of participation and cross-examination are not required to intervene and may present
their comments without prior notification to the Commission or the parties.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
YOU ARE FURTHER NOTIFIED that the Commission specifically seeks testimony
that addresses the following issues:
1. Rate designs that recover Ponderosa s reasonable expenses from definedcustomer classes;
2. The dollar amount necessary to appropriately compensate Ponderosa for
the administration, maintenance and operation of its water company;
3. The appropriate rate of return to be earned by Ponderosa;
4. What amount Ponderosa should pay Mr. Cobott for mOligaging his home to
finance a second well as required by the Department of Environmental
Quality;
5. Whether the restriction on new hook-ups should be lifted and how many
future hook-ups should be allowed given limited system capacity;
6. The appropriate dollar amount necessary for water testing;
7. What amount Ponderosa should pay Mr. Cobott for the property taxes and
maintenance expenses he pays for the land on which the water system islocated;
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 12 of16
8. What amount Ponderosa should pay Mr. Cobott for use of his personal
equipment and maintenance thereof; and
9. What fees are appropriate for Ponderosa to charge customers who hook-up
to the system, or who voluntarily disconnect or are disconnected for non-
payment.
YOU ARE FURTHER NOTIFIED that the Commission adopts the following
procedural schedule:
June 7 , 2002 Deadline for COlmnission Staff to prefile
direct testimony. Staff shall serve its
testimony on Ponderosa via overnight
delivery no later than this date.
June 12, 2002 Deadline for filing intervention.
June 17, 2002 Deadline for Ponderosa and intervenors to
prefile direct testimony. The Commission
must receive testimony by standard or
electronic mail, or via overnight delivery on
this date.
June 20, 2002 Technical hearing at 1 :00 p.m. at the
Edgewater Resort, located at 56 Bridge
Street in Sandpoint. Staff may offer "live
rebuttal testimony, if necessary.
The prepared testimony and exhibits must confonn to the requirements of Rules 266 and 267 of
the Commission s Rules of Procedure. IDAPA 31.01.01.266-267.
YOU ARE FURTHER NOTIFIED that all proceedings in these case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and that the
Commission may enter any final Order consistent with its authority under Title 61 and specifically
Idaho Code 99 61-129, 61-301 , 61-305 , 61-501 , 61-1503 and 61-1504.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted
pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO, 29046 Exhibit No.
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 13 of 16
NOTICE OF PUBLIC HEARING
YOU ARE FURTHER NOTIFIED that the Commission has scheduled a public
hearing regarding the issues in Case No. GNR-01-l on THURSDAY, JUNE 20, 2002, 1:00
M. AT THE EDGEWATER RESORT, LOCATED AT 56 BRIDGE STREET IN
SANDPOINT. The public hearing will begin at 6:00 p.
The Commission will hold a public hearing to receive public testimony regarding
customer comments , concerns and recommendations. Customers, local government leaders, and
other interested persons are encouraged to testify.
YOU ARE FURTHER NOTIFIED that all hearings and public workshops in this
matter will be held in facilities meeting, the accessibility requirements of the Americans with
Disabilities Act (ADA).Persons needing the help of a sign language interpreter or other
assistance in order to participate in or to understand testimony and argument at a public hearing
may ask the Commission to provide a sign language interpreter or other assistance at the hearing.
The request for assistance must be received at least five (5) working days before the hearing by ,
contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
Mail: i i ewell(Ci),p uc. state.id. us
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINE
YOU ARE FURTHER NOTIFIED that in addition to the public hearing, the
Commission extends the comment deadline to solicit further written comments regarding customer
comments, concerns and recommendations. Any person desiring to state a position on the items at
issue in this case may file a written comment in support' or opposition with the Commission on or
before Friday, June 21 , 2002. The Commission has extended the comment period beyond the
. time previously provided in Order No. 29024 to give the public additional time to provide written
comment. IDAP A 31.01.01.202,02.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARlNG
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 14 of 16
YOU ARE FURTHER NOTIFIED that the comment must contain a statement of
reasons supporting the comment. Written comments concerning the issues in Case No. GNR-
01-1 shall be mailed to the Commission and to Ponderosa Terrace Estates Water Company at the
addresses reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ill 83720-0074
E-mail: iiewel1(Ci)puc.state.id.
Robaer Cobott
2626 Wrenco Loop Road
Sandpoint, ill 83864
Street Address for Express Mail:
472 W. Washington Street
Boise, ill 83702-5983
All comments should contain the case caption and case number shown on the first page
of this document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.state.id.us under the "File Room" icon. Once at the
File Room" page, select "File a Comment " fill in the case number as it appears on the front of
this document, and enter your comments.
YOU ARE FURTHER NOTIFIED that the filings in Case No. GNR-01-1 can be
reviewed during regular business hours at the Idaho Public Utilities Commission,- 472 W.
Washington Street, Boise, Idaho. In addition, relevant -filings may be viewed by accessing the-
Commission s website at www.puc.state.id.under the "File Room" icon and selecting the
appropriate topic heading.
ORDER
IT IS HEREBY ORDERED that until a final Order is issued in this case, full-time and
part-time customers (as defined above) shall pay a flat rate of $56.50 per month. Ponderosa shall
also charge active service, inactive service and fonner customers (as defined above) $6.50 per
month. These interim rates are effective June 1 , 2002.
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 15 of 16
IT IS FURTHER ORDERED that the Commission adopts the scheduling, hearing and
public comment dates set out above. Parties shall adhere to the schedule set out above.
IT IS FURTHER ORDERED that persons desiring to intervene in these cases for the
purpose of presenting evidence or cross-examination at hearing shall file a Petition to Intervene
with the Commission no later than June 12 2002.
IT IS FURTHER ORDERED that the Company comply with the rules for
discollilection of customers with past due bills as set forth above in this Order and in the
Commission s Rules.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
~-p..
day of June 2002.
~A_
MARSHA H. SMITH, COMMISSIONER
ATTEST:
itflJ_J an D. Jewell
C .fumission Secretary
O:GNRWOIOUn
NOTICE OF SCHEDULE AND TECHNICAL HEARING
NOTICE OF PUBLIC HEARING
NOTICE OF INTERVENTION DEADLINE
NOTICE OF EXTENDED PUBLIC COMMENT DEADLINEORDER NO. 29046 Exhibit No.
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 16 of 16
Office of the Secretary
Service Date
August 8, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INC. IS A PUBLIC UTILITY SUBJECT TO
REGULATION BY THE IDAHO PUBLICUTILITIES COMMISSION
CASE NO. GNR-Ol-
ORDER NO. 29086
On June 6, 2002, the Commission adopted interim rates for Ponderosa Terrace
Estates Water System, Inc. effective June 1 2002 pending the results of the technical and public
hearings held June 20, 2002 in Sandpoint. Order No. 29046. Based upon the record created at
these hearings, additional customer comment and further analysis, the Commission now adopts
an annual revenue requirement for Ponderosa in the amount of $26 604. The monthly rates we
approve are $48 for Full- and Part-Time customers and $25 for Active Service customers. These
rates shall become effective for service rendered on or after August 1 , 2002.
I. BACKGROUND
Robaer Cobott, owner of Ponderosa, operates a water system located south of
Sandpoint and southeast of the community of Sag Ie in Bonner County, Idaho. Approximately 29
full- and part-time customers are connected to the system.There are 33 Active Service
customers-those customers with above ground access to water. A total of 87 lots or parcels are
within the area served by the water system. In Order No. 28845 issued on September 13, 2001
the Commission . found that Ponderosa was operating in such manner as to fall within the
Commission's jurisdiction. See Idaho Code ~~ 61-124; 61-125; and 61-129.
On November 28, 2001 , the Commission issued Order No. 28903 establishing a $20
per month interim rate (the fIrst interim rate) based upon the statewide average rate for small, flat
rate water systems. That Order also scheduled a Show Cause hearing for December 17 2001 in
Sandpoint. The purpose of the hearing was to permit Mr. Cobott to show cause (if any) why the
$20 per month flat month rate established by Order No. 28903 was not reasonable and to take
public comment from customers regarding the water service. When it became known that Mr.
Cobott would likely be unable to attend the hearing, the Commission vacated the Show Cause
hearing. Order No. 28917. In its Order vacating the hearing the Commission issued Certificate
ORDER NO. 29086 Exhibit No.
Case No, PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 22
of Convenience and Necessity No. 393 to the Company and reiterated the findings and directives
of its prior Orders.
On May 7, 2002, the Commission received a letter from Mr. Cobott stating that the
Ponderosa Terrace Estates Water Company was going to have to go out of business because the
rates set by the Commission were too low. He claimed that revenues were down 90 to 95%.
stated that he had not and would not mail bills to customers with the $20 per month charge
approved by the Commission. He did not agree with the interim rate and would not send a bill
. that made it appear as though he accepted the Commission s authorized rates. Because they did
not receive bills, some customers did not pay for service from December 2001 through April
2002.
On May 14, 2002, the Commission issued a Notice of Proposed Increase in Rates
Modified Procedure and Comment/Protest Deadline proposing to increase the first interim rates
so that they produce an annual revenue amount for Ponderosa of $25 282.41. Order No. 29024
at 6. Prior to the May 23 comment deadline, the Commission received comments from the
Commission Staff, 1 Ponderosa, and several Ponderosa customers regarding what rates should be
implemented for water service. Those comments were discussed in greater detail in Order No.
29046.
Based upon these comments and further analysis, the Commission found
reasonable to adopt a second set of interim rates - $56.50 for full- and part-time customers and
$6.50 for the remaining customer classes effective June 1, 2002~ Order No. 29046 at 10. The
Commission also scheduled a technical and public hearing in Sandpoint on June 20, 2002 to
gather additional evidence on which to establish fmal rates. Id at 13-14. The Commission did
not receive any petitions requesting intervention. At the conclusion of the public hearing, the
Commission orally extended the public comment deadline to June 27, 2002 to accommodate
customers who wished to submit written statements. Tr. at 317.
II. REVENUE AND EXPENSES
The Commission took considerable evidence at the technical hearing regarding the
total amount of annual revenue necessary to operate the utility. Staff Witness Robert Smith
advocated an annual revenue requirement of$26 992.29. Tr. at 10. Although Ponderosa did not
I The Staff should not be confused with the Commission. The Commission s duty is to regulate every utility and set
rates that are reasonable to both the utility and customers. Idaho Code 99 61-501 and 61-502. The Commission
Staff may participate as an independent party in any proceeding. IDAPA 31.01.01.37-38.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of22
recommend a total revenue ~ount to be collected, it appears from the Company s testimony
that Ponderosa sought a total revenue requirement of approximately $31 600.
Commission Findinf!s:As noted by Mr. Cobott, the water system thus far has not
received enough revenue to keep up with the bills and expenses. Tr. at 177. In reviewing the
record to establish a revenue requirement that will adequately fund Ponderosa s expenses, the
Commission considered a variety of factors that influence the amount of revenue required to
fund the ongoing operation of the Company.
Each small water company is unique in its physical assets and liabilities. The
Ponderosa Terrace Estates Water Company is a small system with two supply wells with a
combined capacity of 25 gallons per minute, 10 000 gallons of storage, and a looped unmetered
distribution system. Tr. at 76. The system is approximately 30 years old. Tr. at 24.
The Commission also considered the limited customer base over which the expenses
can be spread. Ponderosa currently has 81 customers connected to the system, of which 29 are
full- or part-time customers. Tr. at 74. The Commission reviewed the revenue requirements of
similarly situated small water companies to establish a range of reasonable options.Small
northern Idaho water utilities range from nearby Algoma Water Company in Sagle, which has 31
customers and a $6 459 annual revenue requirement, to Spirit Lake East Water Company in
Spirit Lake, which has 237 customers and a $47 828 annual revenue requirement. Staff Exhibit
102.
In establishing a revenue requirement, we consider the financial needs of the
Company and the ability of cu~tomers to pay. Our goal is to maintain Ponderosa s fmancial
viability without setting rates so high that its few customers are forced to seek alternate water
supply sources. With these principles in mind and based on the evidence, the Commission finds
it reasonable to authorize Ponderosa to recover $26 604 in annual revenue from its ratepayers.
This amount will allow Ponderosa to recover its prudent operating costs, fairly compensate the
Company for its labor expenses, and allow Ponderosa to earn a fair rate of return on the capital
invested in the water system.If Ponderosa finds that it is under-collecting the authorized
revenue amount, we encourage the Company to notify the Commission so that we may review
the rate design and/or fees.
It is not the Commission s intent to micro-manage the operating expenditures of
Ponderosa. Although we have not itemized how much revenue should be allocated to each of the
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 22
various expenses incurred by Ponderosa, we expect Ponderosa to use due diligence to insure that
expenditures are made only for appropriate water company activities. As the owner and operator
of Ponderosa, Mr. Cobott shall use his own discretion to prudently allocate the funds generated
by rates in a manner that benefits the ongoing operation of the Company. That said, we strongly
encourage Ponderosa to set aside $2,400 maintenance reserve ($200/month) in a separate
account as recommended by Staff to fund system repair and future upgrades.
A. Rate of Return
One contested revenue requirement issue was the overall rate of return Ponderosa
should receive for its capital investment. Mr. Cobott testified that most small businesses require
a 15% return in order to justify the capital expenditure. Tr. at 160. In contrast, Staff witness
Smith recommended a 12% rate of return. Tr. at 18-19. He further stated that the Commission
has traditionally allowed small water utilities a higher rate of return than larger utilities because
these small companies are inherently more risky. ld. In light of this risk premium, the
Commission has allowed a 12% rate of return on equity in recent years as a fair return for small
water companies. ld.
Commission Findinf!s:The Commission continues to fmd that 12% is a reasonable
rate of return for small water companies in general and Ponderosa in particular - especially given
the low interest rates available during the past few years. This finding, which includes the risk
premium discussed by Staff witness Smith, is consistent with past Commission Orders that
authorized a 12% rate of return for small water companies
Although the Commission generally applies a 12% rate of return for small utilities
we have previously rewarded outstanding customer service by incrementally increasing a
company s rate of return. For example, in 1985 the Commission granted Boise Water Company
a .25% premium on its common equity return in recognition of Boise Water s exemplary
management, customer relations and plant addition practices. Order No. 19902. In contrast, the
Commission allowed General Telephone Company in 1987 to collect only 11.5% of the 12% rate
of return on equity that the Commission found to be otherwise reasonable until General
Telephone satisfactorily resolved problems resulting from confusing monthly billing statements
and inaccuracies in its rural charges. Order No. 21473 at 10-11.
See Case Nos. CAP-99-1 (Capitol Water, D.N. 26247), FLS-97-1 (Falls Water, D.N. 27110), FLS-01-
(Falls Water, D.N. 28907), GNR-96-1 (Valley View, D.N. 27328), MCG-98-1 (McGuire Estates, D.
27658), TRH-95-1 (Troy HOffman, O.N. 28264) and WSM-95-2 (Warm Springs Mesa, D.N. 26081).
ORDER NO. 29086 Exhibit No.
Case No, PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of22
We further find that a return lower than 15% is warranted given the public testimony
that numerous customer telephone calls went unreturned. Tr. at 136, 139, 144 285-, 316, The
Commission hopes that by providing the Company the opportunity to increase its future rate of
return by providing exceptional customer service, such communication problems will cease to
exist.
B. Rentfor Use of Water System s Land
In comments dated May 21 , 2002, Mr. Cobott suggested that Ponderosa should pay
him $300/month rent because he personally owns the six acres on which the system s wells and
pump houses are located. Staff Exhibit 103 at 2. Staffrecommended that this rental expense be
disallowed because the real estate in question was "an integral part of the water system dedicated
to public service since before its purchase." Tr. at 21. Moreover, Staff witness Smith asserted
that the land was jointly conveyed with the water company facilities to Mr. Cobott rather than
separately conveyed. Id. The real estate contract in Staff Exhibit 104 refers to all "well sites.
Tr. at 122. Mr. Cobott indicated that while the well site is 100' by 100', it does not include the
tanks or pipes necessary to operate the system. Id. Furthennore, he stated that the real estate
contract only identified the property as dedicated to the well per the requirements of state or local
government, not dedicated to Ponderosa. Id. Mr. Cobott also indicated that as owner of the
property, he personally pays the property taxes owed on the land - not Ponderosa. Tr. at 123.
Commission Findings:To decide this issue, the Commission reviewed the
underlying real estate contract included in the record as Exhibit 104. This document evidenced
the sale of a water system in 1986 by Mr. Cobott's in-laws, Bernard and Daisy Reynolds, to
Robaer Cobott and Zaderea Raphael in exchange for $100 000. It states that:
the following described real estate, situate in the County of Bonner, State of
Idaho, more particularly described as follows, to wit: . . . a water system
servicing the Ponderosa Terrace Estates. . . with all equipment, deeded well
sites, water tank sites, pipe, hydrants, spigots, electrical components, pumps
water tanks, wells, easements & water rights.
Exhibit 104 at 1. We find the contract unambiguously conveyed the water system to Mr. Cobott
and Zaderea Raphael. The Commission further finds that the contract's reference to "deeded
well sites" indicates the land where the wells are located was transferred with, and as part of, the
Ponderosa water system. Because the plain meaning of these words indicate that real property
was conveyed in the contract, the Commission does not find it appropriate for Ponderosa to pay
ORDER NO. 29086 Exhibit No.
Case No, PTE-03-
M. Fuss, Staff
4/1/03 PageS of22
Mr. Cobott rent for use of land that the contract indicates was included as part of the water
system. The property tax for the well sites, easements, and other real estate is properly an
expense of the utility.
III. RATE DESIGN
A. Monthly Rate Methodologies
During the course of the public comment periods and technical hearing, the
Commission was presented with a variety of rate design options. These rate designs are briefly
described as follows:
Ponderosa:Mr. Cobott testified that rates should cover the expenses that the
Commission determines are appropriate, but that the rate design itself does not matter so long as
the rate covers Ponderosa s expenses. Tr. at 161. He suggested that resident owners and owners
that have a live-in structure on their property should pay the same amount - $65 per month. ld.
All other lot owners should pay approximately $15 per month. ld.
In previously filed comments, Mr. Cobott proposed that full-time customers pay $60
per month and all other customers pay $30 per month. This proposal, which Staff referred to as
Option #8 " also included a water usage charge of $0.01 per gallon.
Commission Staff:Staffs rate design was premised upon five types of customers:
1) "Full-Time" customers that have water service to the customer s permanent residence; 2)
Part-Time" customers that have water service to an improved lot with a dwelling that is not
considered the customer s permanent residence; 3) "Active Service" customers that have above-
ground access to water; 4) "Inactive Service" customers that have underground service extended
to their lot that is not readily accessible; and 5) "Former Customers" that do not currently or have
never had water service provided to the lot, even though facilities may have been provided at one
time. Staff Exhibit 107. Staff performed a customer inventory and determined that the system
has 18 Full-Time, 11 Part-Time, 33 Active Service, 11 Inactive Service, and 6 Former Customers
for a total of 87 system customers. Tr. at 74. Based on the system limitations and customer
usage, Staff witness Fuss recommended "Staff Option #3": Full-Time and Part-Time customers
pay $61.50 per month while Active and Inactive Service customers pay $9.00 per month. ld.
Staff also developed four other rate design alternatives. Staff Option #1 allocated the
revenue requirement only to the 18 Full-Time customers at a rate of $ 125/month. Tr. at 79.
Assessing rates based on the allocation of fixed and variable costs, Staff Option #2 would
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 6 of 22
establish Full-Time and Part-Time customer rates at $32.00 per month while active and inactive
service customers would pay $25.50 per month. Tr. at 80. Taking customer usage into
consideration, Staff Option #4 would require customers to pay the following monthly amounts:
Full-Time $64., Part-Time $33., Active Service $17., and Inactive Service $9.00. ld.
Staff Option #5 attempted to offer a middle ground between Staffs Option #4 and a rate design
created by customers (which Staff referred to as Option #6). Option #5 would require full-time
customers to pay $52 per month, part-time $33 per month, active service $22 per month, and
inactive service $12 per month. ld.
Public Comment:Customers had the option of indicating their rate design
preference through written comment or oral testimony at the June 20 public hearing in
Sandpoint.
1. Joint Letter.On May 20, 2002, the Commission received a letter signed by 23
customers that detailed a rate design proposal for the Commission s consideration. Using the
four categories identified by the customer letter, the joint letter recommended that Staffs
proposed revenue requirement should be collected monthly as follows: $40.00 for Full-Time and
Part:'Time customers , $20.00 for Active Service customers, and $10.00 for Inactive Service
customers. Staffs testimony referred to this proposal as "Option #6." Exhibit No. 113 at
The joint letter also identified a number of adjustments that would reduce the revenue
requirement. If the revenue adjustments proposed in the customer letter were adopted, the
Commission would authorize Ponderosa to collect $14 621.30 in annual operating costs plus
754.56 for a 12% rate of return. ld. at 2-3. Using these numbers, customers wo.uld pay the
following monthly rates: Full-Time residents $30., Part-:Time residents $15., customers
with a "Live Hydrant" $15., customers with "No Water Pipe Above Ground" $10., and
customers with "No Water Service" $0.00. ld. at 1. Staffs testimony referred to this as "Option
2. Individual Letters. The Commission also received several individual letters
concerning rate design issues. These letters generally suggested rates for Full-Time and Part-
Time customers in the range of $20 to $45 per month. One customer agreed with Staff Rate
Option No.3 and found it to be "very reasonable." Another customer preferred Rate Option No.
2 with full-time users having a water use meter and paying an additional fee if they use more
than 200 gallons/day to be put in escrow to fund an additional well. This customer later wrote
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 7 of22
that Full-Time and Part-Time customers should be charged $35.00 a month while all other
customer classes charged $20.00 to recover Ponderosa s reasonable expenses. He felt that this
5% increase would "probably keep the full timers in the system rather than out with the IPUC
rate of $56.50.
Although she had the community water to her residence shut off two years ago when
faced with significant concerns about water quality, availability and customer service, a third
resident supported the 4-tiered rate scale proposed by the residents in their meeting with the Staff
(Option #6). A different customer agreed that the $30 monthly rate advocated in the customers
joint letter was "a good offer" and that $61 per month is unjustifiable. This customer also noted
that "most water charges are $20.00 monthly for these systems around the lake in developments
this size.
A fifth customer stated that he believed an excellent first improvement to the system
would be the installation of water meters to build water conservation into the fee schedule and
allow for tiered rates based on season and usage. This customer did not support the tiered
schedule proposed by the customer petition because he thought it was complex and would
benefit high consumptive users at the expense of other users and the system s owner.
The Commission also received a letter from a resident that proposed the following
rate structure: $40.00 for Full-Time customers, $35.00 for Part-Time customers, $25.00 for
Active Service customers, and $10.00 for Inactive Service customers. Another customer voiced
her frustration over being held "hostage" by Ponderosa when "we all would have been satisfied
with $45.00" a month.
3. Public Hearin2 Testimonv During the public testimony, at least six different
witnesses specifically addressed the issue of customer rate design. One witness suggested a fee
based upon actual usage measured by a water meter even though the customer would be required
to pay the cost of installing the meter. Tr. at 256. Another witness testified that a monthly water
charge between $30.00 and $35.00 would be equitable for everyone.
A third witness stated that he did. a "brief check" with ,some other people in the area
to gauge what they felt was a fair cost. Tr. at 278. This witness found it interesting that the
group consensus was $30 per household, which was the amount the landowners submitted to the
Commission (in the joint letter - Option #7) as being fair. Id. The maximum monthly charge
advocated by the infonnally surveyed group was $35.50. Id.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 8 of 22
Another gentleman testified that he felt a monthly water charge in the range of $40 to
$45 would be reasonable. Tr. at 140. He also hoped that part-time customers and seasonal
people could pay a little more to ease the burden of the full-time customers. ld. This witness
also indicated that if rates stay at $56 to $60 per month, some customers (including him) would
drill their own wells to avoid paying such high rates. Tr. at 142. If this were to occur, the
witness indicated that the water system would collapse because "there wouldn t be anyone left.
ld.
A fifth witness testified that he preferred each lot be charged a flat monthly rate of
approximately $20. Tr. at 200, 203. Part-time and full-time customers would then pay an
additional fee on top of the $20 per lot charge, for a total monthly bill in therange of $33 to $35.
ld.
Mr. Alan Miller also testified at the public hearing on behalf of the Department of
Environmental Quality (DEQ). According to Mr. Miller, DEQ hopes that the Commission will
not set Ponderosa s rates for service so high as to encourage the abandonment of the public water
service in favor of drilling individual wells. Tr. at 262. DEQ is concerned that the drilling of
individual wells may have negative effects on public health given the shallow aquifer and
possible contamination of wells on small lots from neighboring septic systems. Tr.261-62.
Commission Findings:Based upon the record presented in this case and the need to
balance Ponderosa s reasonably incurred costs with affordable customer rates, the Commission
finds it appropriate to authorize the following monthly rates for service on and after August 1
2002:
CUSTOMER GROUP DEFINED AS MONTHL Y RATE
Full-Time Customer An improved lot with a dwelling that is $48.
used as a permanent residence and is the
customer s primary dwelling place.
Part-Time Customer An improved lot with a dwelling that is $48.
not the customer s permanent residence
or primary dwelling place.
Active Service Customer Service is extended to the lot and has $25.
above-ground access to water.
Inactive Service Customer The lot does not have above-ground $0.
access to water.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 9 of 22
For the purpose of determining Ponderosa s customer groups, a "dwelling" is defmed
as any structure that can provide shelter and is located on the lot or parcel for more than 15 days
per month ot 6 months per year. A "primary dwelling place 3 is defined as the single place
which the customer has his or her true, fixed and pennanent home and principal establishment
and to which the individual intends to return whenever he or she is absent. The primary dwelling
place is also where the customer resides on January 1 and: (i) at least six (6) months during the
prior year; or (ii) the majority of the time the customer owned the dwelling if owned by the
customer more than one (1) year; or (iii) the majority of the time after customer flfst occupied
the dwelling if occupied by the customer for less than one (1) year.
The Commission finds this rate structure to be appropriate for the Ponderosa system
because it allocates variable costs to the customers that are likely to be using the system (full-
time and part-time customers) while generally allocating the fIXed costs to all customers who
have above ground access to water. Although some customers testified or commented that part-
time customers use less water and therefore should pay less than full-time customers, we find it
is reasonable to charge both groups the same rate because Ponderosa would otherwise have
difficulty ascertaining which customers were in residence so as to differentiate between full-time
and part-time status. Under this rate design, any Ponderosa customer that frequently has a
dwelling located on an improved lot will be charged the $48.00 rate. The CUlTent customer class
and rate of each Ponderosa customer (identified by block and lot number) is listed as Attachment
I to this Order.
As noted by both Ponderosa and Staff, each small water system is unique. Staff and
several customers testified that the Commission s proposed and interim rates are significantly
higher than nearby small water systems. Ponderosa s rates are higher for several reasons. First
the Ponderosa system has a small customer base from which it can recover its costs. Second
Ponderosa requires substantial amounts for ongoing maintenance and repair due to the age of the
system.The Ponderosa system also has a relatively limited and costly water supply that
necessitates greater investment in well drilling, chlorination equipment and pumping costs.
The Commission also directs the Company to adopt and implement the Commission
Utility Customer Relations Rules (UCRR), the Commission s Utility Customer Infonnation
Rules (UCIR), and an accounting system consistent with the infonnation required by the
3 The definition of "primary dwelling place" is based on Idaho Code ~ 63-701(9)(a).
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 10 of22
Commission s annual report for small water companies. IDAPA 31.21.01; 31.21.02; 31.36.01.
Ponderosa shall file tariffs or schedules of these rates and charges no later than 28 days from the
service date of this Order. We direct the Staff to assist the Company in preparing the necessary
tariffs and we encourage Ponderosa to make use of Staffs expertise in making such filings.
B. Fees and Other Charges
The Commission also took testimony and comment on the fees and charges
Ponderosa should assess. Hook-Up fees, Disconnection Fees, Reconnection fees and Late
PaymentlInterest fees are discussed in greater detail below.
1. Hook-Up Fee:Staff witness Fuss recommended that former customers that wish
to begin taking service be required to pay a $2 500 hook-up fee. Tr. at 82. This $2 500 hook-up
fee is based on Mr. Fuss s analysis of the cost for a new source and the approximate number of
customers that could be served by the new source. Tr. at 82-3. Staff believes the hook-up fee
will provide incentive because any customer that pays the monthly rate would avoid the hook-up
fee should they ever wish to take water service in the future. Tr. at 83. It would also promote
equity by assessing customers that do not currently take service their share of the cost of a new
source when or if they choose to begin taking water service. Id. Ponderosa witness Cobort also
advocated a $2 500 hook-up fee for customers that wished to reconnect to the system and had
been removed from the system for greater than one year. Tr. at 161.
Commission FindinJ!s:We find it is reasonable for all landowners that benefit from
the Ponderosa system by taking water service to contribute to the funding of new water supplies
and maintenance of the system. Based upon Staff witness Fuss s analysis and the agreement of
the Company, the Commission finds it reasonable for Ponderosa to assess a $2 500 hook-up fee
for new customers and inactive service customers4 that wish to begin taking water service,
However, the Commission also finds it appropriate to allow a grace period for inactive service
customers to change their customer class to avoid this sizable fee and begin making monthly
payments. This grace period is discussed in greater detail below.
2. Disconnection Fee: Ponderosa witness Cobort testified that disconnection and
reconnection fees for customers with delinquent bills should be at least $50.00 each. Tr. at 161.
Staff did not propose a disconnection fee and recommended only a reconnection fee.
4 The definition of "Inactive Customers" adopted by the Commission includes those customers that Staff referred to
in its testimony as "Fonner Customers.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 11 of22
Commission Findinf!s:The Commission has traditionally not allowed water
companies to charge a disconnection fee because it is primarily a collection tool that protects the
company from providing future service without receiving just payment. The Commission does
not authorize rates for the purpose of punishing customers that do not pay their bills. Rather, we
approve rates that allow the utility to recover its legitimate and reasonable costs of operation plus
a reasonable return. After properly disconnecting a customer s service according to the
Commission s Rules , the Company need not reconnect a customer until such time as the
customer has paid any amounts previously owed to Ponderosa and the reconnection fee
discussed below.Ponderosa s proposal to charge customers with delinquent bills a $50
disconnection fee is therefore denied.
3. Reconnection Fee: Ponderosa recommended two different reconnection fees.
After a customer s service has been disconnected for non-payment, Ponderosa advocated
imposition of a $50 reconnection fee. Tr. at 161. . When a customer is current in their water bill
but is leaving the premises for a significant period of time, Mr. Cobott recommended that a $10
charge be assessed 'to physically turn the water off or on. Tr. at 183-, 186-190. Staff witness
Fuss recommended a $25 fee for routine reconnection of service after the customer has had their
service turned off for the season, for customer maintenance, or after involuntary disconnection
for non-payment. Tr. at 85.
Commission Findinf!s:As Staff witness Fuss noted, the Commission typically
authorizes reconnection fees in the range of $25 to $35 for small water companies. Tr. at 85.
Given the nature of the Ponderosa system, the Commission finds it reasonable for Ponderosa to
collect a $35 reconnection fee for customers seeking to resume service after an involuntary
disconnection for non-payment, or a voluntary disconnection for maintenance or an extended
customer absence from the property.
4. Late Payment and Interest Fees: Mr. Cobott testified that Ponderosa would like
to charge customers who are more than 30 days late in paying their bill a $10.00 late fee per lot
plus 18% interest on the delinquent amounts. Tr. at 161. Staff witness Fuss did not propose
such charges and testified that generally . . . late fees, billing service charges , or interest charges
are not allowed at this time." Tr. at 86.
Commission Findinf!s:The Commission has historically rejected implementing late
payment charges and interest on past due bills for non-energy services. Energy utilities are
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M, fuss, Staff
4/1/03 Page 12 of22
sometimes allowed to collect interest because Commission Rules restrict energy utilities ' ability
to terminate service to customers in the winter months. Because no such restrictions are in effect
for water utilities, the Commission has not yet authorized water utilities to use late payment
charges or charge interest.Because Ponderosa is not subject to a winter disconnection
moratorium, the Company s proposal to implement a $10 late fee per lot plus charge 18%
interest on unpaid bills is denied. However, Ponderosa may wish to explore payment plans that
make it more convenient for customers to pay their bills (i., pre-payment or lump sum payment
for part-time customers).
C. Grace Period to Change Customer Classes
If a customer wishes to connect to the system in the future that: 1) had never
previously connected to the system or 2) was connected but left the system by choice, Staff
recommended that the customer be required to pay a hook-up fee. Tr. at 83-84. Because the
customer would not have paid anything to maintain the system, Staff suggested that a hook-up
fee be established in the amount of $2 500 for new customers and any customer wishing
reconnect after a 60-day grace period. Id. This grace period would allow customers the
opportunity to change customer classes and begin making monthly payments. Once the grace
period has expired, all new connections or new service to those not paying a monthly rate would
require payment of this $2 500 hook-up fee. Ponderosa did not indicate a preference for or
against such a grace period.
Commission Findin2s:The Commission believes it is possible that former
customers that were either removed from the system or chose to leave the system may wish to
reconnect now that Ponderosa is regulated with established service rates.Conversely, a
customer may now wish to leave the Ponderosa system and switch to the Inactive Service
customer class. While a customer can now discontinue service at any time regardless of whether
a grace period is in effect, this customer now does so with the knowledge that a future
reconnection could be expensive. To this end, the Commission finds it reasonable to allow
customers to change customer classes, particularly from Inactive to Active Service, without
being subject to the $2 500 hook-up fee authorized above until October 15, 2002. The $2 500
hook-up fee for new customers and those previously in the Inactive Service customer class will
go into effect as of that date. Customers that wish to change customer classes shall notify
Ponderosa of their intent no later than October 15 2002.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 13 of 22
To provide proper notice to individuals who are or potentially could be Ponderosa
customers, the Commission directs the Commission Secretary to send a copy of this Order to all
lot and parcel owners on the Ponderosa system by August 20, 2002. This Order shall act as
notice of the rates and the grace period authorized in this Order so that potential and current
customers can make educated decisions whether to take service from Ponderosa and under which
customer class.
D. New Connections
In Order No. 28845, the Commission restricted all new connections to the system in
light of concerns that Ponderosa may have inadequate water supply to serve existing customers.
Staff witness Fuss testified that the Commission s restrictions on new hook-ups should be
modified to allow up to a maximum of 37 full-time or part-time connections (eight more
customers). Tr. at 78-79. Moreover, Staff believes this number could be increased if additional
supply is developed or Ponderosa can provide an engineering analysis by a registered engineer
indicating that the system can serve more customers. Tr. at 79.
Testifying on behalf of Ponderosa, Mr. Cobott stated that the system should only be
allowed the number of hook-ups that the system can handle. Tr. at 160, While he agreed with
the 37 hook-ups at present, Mr.Cobott testified that only full-time users (not part-time) should
be considered. Tr. at 160, 168.
At the public hearing, Mr. Alan Miller testified on behalf of DEQ that the
Commission should consider limiting water service to the current number of customers. Tr. at
262. Because Ponderosa has a demonstrated history of seasonally inadequate water supply, DEQ
recommends that the Commission pennit no additional connections until the water system can
accurately document that the current water supply is adequate on a year-round basis. ld. Mr.
Miller also recognized that the water system "does not have enough connections to be aviable
entity." Tr. at 263.
Commission Findinl!s:As we have previously indicated, the Commission does not
regulate the drilling of private wells. However, the Commission is quite aware that this Order
will impact private well drilling to the extent that the rates we set and the number of customers
we allow affect the economic viability of Ponderosa.
We find it appropriate to allow the maximum number of customers the Ponderosa
system can safely serve. According to' Alan Miller of DEQ, the system has not run out of water
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 14 of22
smce the second well was drilled with some limited short-duration exceptions at higher
elevations. TI. at 264. This was true even though a drought effectively occurred last year in
northern Idaho due to rapid run-off of a near-normal snowpack. TI. at 265. The best information
currently available on the quantity of water provided by Ponderosa s two wells is the 1999
Taylor Engineering Consultants report upon which Staff made its recommendation. Until such
time as Ponderosa acquires additional water supplies or can provide an engineering analysis
indicating that the system can serve more customers, the Commission finds it in the public
interest to limit the number of customers connected to the Ponderosa system to 37 full-time and
part-time customers.
E. Water and Service Quality
During the public hearing, the Commission took considerable testimony from
customers who were concerned about the system s water quality. Although DEQ is the state
agency that fonnally regulates water quality, we direct Ponderosa to maintain satisfactory water
quality as required by DEQ. See Idaho Code 9 61-302.
Witnesses at the public hearing also expressed concern about the ability of Ponderosa
to promptly address maintenance issues and emergency situations. We also direct Ponderosa to
ensure that an on-site troubleshooter is always available to handle such concerns. The
Commission was also pleased to note Mr. Costello s experience in these matters and his offer to
assist the system. TI. at 292.
IV. BILLING AND DISCONNECTION
During the technical hearing, Mr. Cobott reiterated his need to know how to handle
past-due amounts owed to Ponderosa by its customers - particularly amounts incurred prior to
the Commission exerting jurisdiction over Ponderosa in September 2001. II. at 165-66. To
minimize any potential confusion on the part of Ponderosa or its customers, we believe it is
appropriate to reiterate the billing and disconnection procedures previously set forth in Order No
29046 and contained in our Utility Customer Relations Rules, IDAPA 31.21.01.
A. Billing and Disconnection for Service Since September 2001
On September 13 , 2001 , the Commission found that Ponderosa was providing utility
servIce that falls within the Commission s jurisdiction. Order No. 28845. As such, the
Commission s Customer Relations Rules are applicable to both the Company and customers.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 15 of22
Although Utility Rule 201 states that bills shall be issued on a regular basis, it is the
Commission s understanding that Ponderosa did not bill customers for water service for the five
months between December 2001 and April 2002. IDAPA 31.21.01.201. The Commission
Order No. 28903 established an interim rate of $20 per month and customers may still owe
Ponderosa $20 per month for each of these five months. Rule 204.03 provides that customers
who have not been billed shall be given the opportunity to make payment arrangements over the
telephone, by mail, or in person under Rule 313 on the amount due. At the customer s option
the teTIll of the payment arrangement may extend for the length of time (five months) that the
customer was not billed. IDAPA 31.21.01.204.03. For example, residential customers who did
not pay Ponderosa for water service for those five months shall pay $56.50 for June 2002 water
service plus $20 toward the previously unbilled amount ($100) owed to Ponderosa. Customers
may have up to five months to repay the full $100.
Because water service is not free of charge, we presume that customers promptly pay
their water bills. If the customer fails to pay the current month owed and/or the arrearage portion
($20 per month for each of the next five months) when due, Ponderosa may disconnect the
customer under Rule 302 for failure to pay an undisputed delinquent bill. Rule 202(1) states that
a bill may be considered delinquent if not paid fifteen (15) days after the billing date or twelve
(12) days after mailing or delivery, if bills are mailed or delivered more than three (3) days after
the billing date. IDAPA 31.21.01.202.01.
If the utility intends to teTIllinate service under Rule 302, the utility shall mail a
written notice of termination to the customer at least seven (7) calendar days before the proposed
date of teTIllination. IDAP A 31.21.01.304.01. FurtheTIllore, this written teTIllination notice must
contain the infoTIllation required by Rule 305. At least twenty-four (24) hours before actual
termination, the utility must diligently attempt to contact the customer affected, either in person
or by telephone, to advise the customer of the proposed action and steps the customer may take
to avoid or delay termination. IDAPA 31.21.01.304.02. This oral notice must contain the same
infoTIllation required by Rule 305. The Commission understands that Ponderosa has out-of-state
customers that are difficult to contact in person or by telephone for the purpose of providing 24-
hour notice.In those instances, a "diligent attempt" to contact the customer may mean mailing
the 24-hour notice to the customer s primary address but allowing several days for the customer
to receive the notice and respond prior to disconnection.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 16 of22
These disconnection procedures still apply once the previously unbilled five months
have been paid in full. The Commission would also note that because regulated utilities like
Ponderosa can use disconnection as a collection tool, regulated utilities are generally prohibited
from filing liens against property to secure the amounts owed.
In summary, the Commission recognizes that this case presents difficult issues
regarding the creation of rates and designation of customer classes. To assist both the Company
and its customers in understanding their responsibilities, we now summarize the various rates
that have been in existence since September 2001. For services provided in September, October
and November 2001 , the monthly rate was $60.00 per month for resident customers and $30.
for non-resident customers. Order No. 28845. For service rendered during the months of
December 2001 through May 2002, all customers receiving service owe $20.00 per month.
Order No. 28903. For June and July 2002, the rate for monthly service for Full and Part-Time
customers was $56.50; all other customer classes owe $6.50 per month. Order No. 29046 at 10.
Finally, the rates on a going forward basis for service rendered on or after August I , 2002, shall
be $48.00 per month for Full and Part-Time customers, and $25.00 per month for Active Service
customers.
B. Billing and Disconnection for Service Prior to September 2001
The Commission understands that some customers have arrearages for unpaid bills
extending before September 2001. We encourage the Company and its customers to reach an
agreement regarding charges for water prior to September 200 I. Because the Commission did
not set the rates prior to September 2001 , we believe that our utility collection methods should
not be used to collect the arrearages. To prevent any misunderstanding on the customer
account, any amounts owing prior to September 200 I should not be included in the current bill.
Of course, Ponderosa may seek collection by other means - including small claims court.
Because the Company has judicial remedies available, Ponderosa shall not use the Commission
disconnect procedures for non-payment of amounts owed prior to the Commission asserting
jurisdiction over the Company.
V. MEMBER OWNERSHIP
Several customers indicated that residents would be best served by creation of a
water district or homeowners' association that could hire Larry Fairfax to maintain the system.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 17 of 22
As was noted in a 1980 rulemaking for Class D5 Water Companies
, ". .
. the Commission may
find it in the public interest because of service considerations to promote conversion of
ownership of a small water company to public ownership or its merger with a more viable
entity." Order No. 21208; see also IDAPA 31.36.01.101. In most cases, it is more beneficial to
all parties involved if a homeowner s association or a water district is fonned. Fonnation of a
member-owned or non-profit entity may allow customers greater control over the water system
management and reduce rates by eliminating return on equity. This arrangement would also
reduce Mr. Cobott's regulatory burden, eliminate considerable legal liability as owner of the
system, and allow him to devote his attention to business endeavors that have a greater profit
potential than this barely viable part-time business.
The Commission is particularly concerned that Ponderosa is on the brink of a "death
spiral" in which customers leave the system, further increasing rates to remaining customers and
reducing Company profit until such time as the Company ceases operating and the owner loses
his investment. See Order No. 21292. Thus, we strongly encourage Mr. Cobott and the residents
of the Ponderosa Terrace Estates Subdivision to further explore the possibility of fonning a
homeowner s association, water district, or another consumer-owned not-for-profit organization.
ORDER
IT IS HEREBY ORDERED that Ponderosa Terrace Estates Water System, Inc. is
authorized to collect an annual revenue requirement of $26 604. Full-Time and Part-Time
customers (as defined above) shall pay a flat rate of $48 per month. Ponderosa shall also charge
Active Service customers (as deEmed above) $25 per month. These rates are effective for service
rendered on and after August 1 2002.
IT IS FURTHER ORDERED that the Commission Secretary send a copy of this
Order to all lot and parcel owners on the Ponderosa system by August 20, 2002 to notify them of
the rates and grace period discussed above.
IT IS FURTHER ORDERED that the Company comply with the rules for
disconnection of customers with past-due bills as set forth above in this Order and in the
Commission s Rules. The Company shall also adopt and implement the Commission s Utility
Customer Relations Rules (UCRR), the Commission s Utility Customer Infonnation Rules
5 Companies with less than $50 000 annual gross water revenues from water operations.
ORDER NO. 29086 Exhibit No.
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 18 of 22
(UCIR), and an accounting system consistent with the information required by the Commission
annual report for small water companies,
IT IS FURTHER ORDERED that the Company shall file tariffs in conformance with
the rates and charges set forth in this Order no later than 28 days from the service date of this
Order.
IT IS FURTHER ORDERED that Ponderosa not exceed 37 full-time and part-time
customers connected to the Ponderosa system at any given time.
IT IS FURTHER ORDERED that Ponderosa maintain satisfactory water quality as
required by DEQ. Ponderosa shall also ensure that an on-site troubleshooter is always available
to address maintenance, repair and service quality matters.
THIS IS A FINAL ORDER. Any person interested in issues finally decided by this
Order or in interlocutory Orders previously issued in Case No. GNR-O1-1 may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter finally decided in this Order or in interlocutory Orders previously issued in Case No.
GNR-01-1. For purposes of filing a petition for reconsideration, this order shall become
effective as of the service date. Idaho Code 9 61-626. Within seven (7) days after any person
has petitioned for reconsideration, any other person may cross-petition for reconsideration. See
Idaho Code 9 61-626.
ORDER NO. 29086 Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 19 of22
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~th.
day of August 2002.
11
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
O:GNRWOIOUn2Jmal
ORDER NO. 29086
Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 20 of 22
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SUMIVlARY OF RATES FOR PONDEROSA "VATER SINCE IPUC
ASSERTED JURISDICTION IN SEPTEMBER 2001
SERVICE PERIOD CUSTOMER CLASS AUTHORIZED
IVI 0 NTHL Y RATE
September - November 2001 . Resident Customers . $60.
. Non-Resident Customers . $30.
December 2001 - May 2002 . All classes taking service . $20.
. .
June - July 2002 . Full-Time Customers . $56.
. Part-Time Customers . $56.
. Active Service Customers . $ 6.
. Inactive Service Customers . $ 6.
. Former Customers . $ 6.
August 2002 - future . Full-Time Customers . $48.
. Part-Time Customers . $48.
. Active Service Customers . $25.
. Inactive Service Customers . $ 0.
Definitions
Full-Time Customer: An improved lot with a dwelling that is used as a permanent residence
and is the customer s primary dwelling place.
Part-Time Customer: An improved lot with a dwelling that is not the customer s permanent
residence or primary dwelling place.
. Active Service Customer: Service is extended to the lot and has above-ground access to water.
. Inactive Service Customer: The lot does not have above-ground access to water.
Former Customer: Water service is not currently or has never been provided to the lot or
parcel, even though the facilities may have been provided at one time. Exhibit No.
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 22 of22
Office of the Secretary
Service Date
September 25 , 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, INc. IS A
PUBLIC UTILITY SUBJECT TO
REGULATION BY THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. GNR-Ol-
ORDER NO. 29123
In final Order No. 29086 issued on August 8 , 2002, the Commission established an
annual revenue requirement for Ponderosa Terrace Estates Water System in the amount of
$26 604. Order No. 29086. To collect this amount, the Commission authorized Ponderosa to
collect monthly rates in the amount of $48 for Full-Time and Part-Time customers and $25 for .
Active Service customers.! These rates became effective for service rendered on or after August
, 2002. Following issuance of Order No. 29086, the Commission received a Petition for
Reconsideration filed by Mr. Lyle Peterson, to which Ponderosa filed a Cross-Petition. Having
fully reviewed the Petitions and the record in this matter, the Commission denies the Petitions as
set out in greater detail below.
PETITIONS FOR RECONSIDERATION
A. Petition from Lyle Peterson
1. Excessive Rates : On August 28 and 29, 2002, Mr. Lyle Peterson submitted
several e-mails 'that were intended to collectively constitute a Petition for Reconsideration. Mr.
Peterson requested that the Commission reconsider the flat monthly rates it set for Ponderosa.
According to his Petition, Mr. Peterson believes that a rate in excess of $40.00 per month for
Full- and Part-Time customers "will cause the customer to either move to another location or put
in a well." Mo~eover, he stated his belief that "the $25.00 rate for active customers will also
cause customer dilution." Mr. Peterson stated that he would like Ponderosa "to survive " but
setting "excessive rates that owners cannot afford to pay" will "hurt the utility and cause
customers to leave the system." In short, Ponderosa "needs to be more cost effective and show
water servi?e stability.
1 "Active Service" customers have service extended to the lot and have above-ground access to water.
ORDER NO. 29123 Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 8
On the issue of rates, Mr. Peterson further stated that the Full-Time and Part-Time
rates have "already caused at least 5 lots to go to wells & by the 151 of 2003 , another 5 & maybe
another 3 by early 2003." He argued that it is "not in the interest of the citizens ofIdaho to have
the IPUC provide excessive customer rates' for a questionable utility operation.
2. Lot Classification: Mr. Peterson also took issue with the classification of 14 lots
owned by Ponderosa owner Robaer Cobott and his family. His Petition advocated adding these
14 inactive lots to the ratebase for active service customers. Since these lots are controlled by
the utility, Mr. Peterson argued that they should be treated as active service customers rather than
inactive. According to the Petition, the cost to change these lots from inactive to active service
would be approximately $100 or less for the cost of 4 feet of pipe, a spigot, and an hour of
. excavation work.
3. Hook-up Fee : The Petition also found fault with the $2 500 hook-up fee
authorized in Order No. 29086. Mr. Peterson argued the $2 500 fee is unreasonable because the
Commission made no provision for this money to go into an account for ~ture water sources.
Furthennore, Mr. Peterson questioned whether this fee would ever be a factor on the inactive lots
when Robaer Cobott and his family own half of them. He believes that the fee to hook-up an
inactive customer should be the actual cost - approximately $100 - unless the fee is ordered to
be placed in a future water source account because Mr. Cobott controls most of the inactive lots.
Mr. Peterson does not believe that hook-ups will occur with "excessive rates" and high hook-up
fees that
' "
will not keep customers in the system.
In regards to the method of Reconsideration he seeks, Mr. Peterson stated that
Reconsideration by "comments or any other method would be fine.
B. Ponderosa s Cross-Petition
On September 6 , 2002 , Ponderosa responded to Mr. Peterson Petition for
Reconsideration by filing a Cross-Petition.
1. Lot Classification: Mr. Cobott stated that he and his family own 11 inactive lots
not 14 lots as alleged by Mr. Peterson. In any event, Mr. Cobott argued that his lots fall under
the same rules as any other landowner with regard to the hook-up fee. While stating that it is his
right to keep his lots inactive like any other inactive landowner, Mr. Cobott recognized that he
will also have to pay the $2 500 hook-up fee per lot when $ervice is needed in the future.
ORDER NO. 29123
Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 8
Hook-up Fee Ponderosa s Cross-Petition took issue with Mr. Peterson
assessment that a new connection would require only one hour of labor. The Company estimated
that the minimum amount of time to escavate, shut off the water, make repairs , acquire parts, and
monitor the system for leaks once the water was turned on was four hours. This estimate did not
include the. cost of the parts, the time necessary to go to town to purchase them, or any
unforeseen difficulties. Ponderosa stated that the $2 500 hook-up fee is necessary to enable "the
water system to make future well sites and whatever else it needs to provide water to Ponderosa
customers. "
3. Inadequate Revenues : . Mr. Cobott also requested that the Commission reconsider
the rate schedule because the number of customers on the Ponderosa system has changed greatly
since the Commission established the revenue requirement. His Cross-Petition indicated that
eight dwellings and three active service customers are no longer connected to the Ponderosa
system because of wells being put in. Mr. Cobott stated "this amounts to a loss of revenue of
$459.00 per month or $5 508.00 per year.
COMMISSION DISCUSSION AND FINDINGS
The Commission has reviewed and considered final Order No. 29086 , the Petitions
filed by Mr. Peterson and Ponderosa, and the record in this case.
A. Standards for Reconsideration
Reconsideration provides an opportunity for a party to bring to the Commission
attention any issue previously determined and thereby provides the Commission with an
opportunity to rectify any mistake or omission.Washington Water Power Co. v. Kootenai
Environmental Alliance 99 Idaho 875, 591 P.2d 122 (1979).In those instances where an
. aggrieved party asks the Commission to reconsider its decision based upon the record, it may
simply do so. The Commission may also grant reconsideration by rehearing if it intends to take
additional evidence or argument. If reconsideration is granted, the Commission must complete
its reconsideration within 13 weeks after the date for filing petitions for reconsideration. Idaho
Code 9 61-626(2).If the Commission grants reconsideration, it "must issue its order upon
reconsideration within twenty-eight (28) days after the matter is finally submitted for
reconsideration.Id.
The Commission s Rules of Procedure set out the requirements to which petitions for
reconsideration must conform. To allow parties to timely respond to reconsideration filings
ORDER NO. 29123
Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 8
Rule 63 provides that all documents must be served upon ,the representatives of every party of
record. IDAP A 31.01.01.063. Rule 331 requires petitions and cross-petitions for
reconsideration to "set forth specifically the ground 'or grounds why the (cross':) petitioner
contends that the order or any issue decided in the order is unreasonable, unlawful, erroneous or
not in confom1ity with the , law, and a statement of the nature and quantity of evidence or
argument the (cross-) petitioner will offer if reconsideration is granted.IDAP A
31.01.01.331.01. To allow the Commission to consider the relief requested by the petitioner
Rule 331.03 requires that a petition or cross-petition for reconsideration "must state whether the
(cross-) petitioner. . .requests reconsideration by evidentiary hearing, written briefs, comments
or interrogatories...." IDAPA 31.01.01.331.03.
Although Idaho Code ~ 61-626(1) and Commission Procedural Rule 331 allow a
party to cross-petition for reconsideration in response to any issues raised in a petition for
reconsideration within seven days, they also state that a petition for reconsideration must be filed
within 21 days after the date of the Order from which reconsideration is sought. Idaho Code
61-626(1) also provides:
Cross-petitions for reconsideration may be granted if any petition for
reconsideration to which they respond is granted on the issues to which the
cross-petition is directed, but cross-petitions for reconsideration will be
denied when the petitions for reconsideration to which they are directed are
denied.
Because a cross-petition for reconsideration will be granted only as to those issues
that respond to an issue initially raised in a petition for reconsideration, the scope of as cross-
petition for reconsideration is limited to those issues raised in a petition for reconsideration.
Eagle Water Company, Inc. v. Idaho Public Utilities Commission 130 Idaho 314, 940 P.2d 1133
(1997). Thus, new reconsideration issues cannot be raised outside of the 21 day reconsideration
period.
While Mr. Peterson requested reconsideration by "comments or any other method
Ponderosa s reconsideration request did not specify the method of reconsideration the Company
sought. Furthermore, neither Petition specified "the nature and quantity of evidence or argument
the petitioner will offer if reconsideration is granted." IDAP 31.01.01.331.01.We took
extensive testimony during the evidentiary public hearings (totaling 318 pages) held in Sandpoint
on June 20, 2002. Thus, the Commission finds that another comment period is not required. Mr.
ORDER NO. 29123
Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 8
Peterson s Petition for Reconsideration offers to produce no new evidence of a nature relevant to
the issues raised in Order No. 29086. For these reasons plus those identified below, we find it
reasonable to deny Mr. Peterson s Petition for Reconsideration and consequently the Company
Cross-Petition as well. Idaho Code 9 61-626(2).
B. Disputed Issues
1. Excessive Rates : As we recognized in Order No. 29086, the Ponderosa Terrace
. Estates Water Company is a small system with limited resources. It has approximately 29
customers, 2 supply wells with a combined capacity of only 25 gallons per minute, and a 30-year .
old infrastructure. While we understand that customers would like less costly water service, the
Commission cannot alter these physical system characteristics when setting rates.
In establishing a revenue requirement and the rates required to recover this amount
we considered the financial needs of the Company and the ability of customers to pay. As we
stated in Order No. 29086, our goal is to maintain Ponderosa s financial viability without setting
rates so high that customers are forced to seek alternate water supply sources. After conducting
evidentiary and public hearings on these issues, the Commission determined that Ponderosa
needed to recover $26 604 ' in annual revenue from its ratepayers to meet its prudent and
reasonable operating costs, fairly compensate the Company for its labor expenses, and allow
Ponderosa to earn a fair rate of return on the capital investedin the water system.
Mr. Peterson s Petition identifies, the need for lower rates. However, he does not
offer any cost evidence justifying a reduced revenue requirement and lower rates. Although we
understand Mr. Peterson s argument, we are compelled to set rates that are reasonable to both the
Company and the customers. Idaho C;ode 99 61-502 61-623. We also note that the $48 monthly
rate for Full- and Part-Time customers approved in Order No. 29086 is significantly less than the
$60 rate being charged by the Company last autumn. Based upon the evidence before us, we
affirm the revenue requirement and monthly rates established in Order No. 29086.
2. Lot Classification: Mr. Peterson s Petition advocated that the inactive lots owned
by Mr. Cobott be included as active service customers. This would result in additional monthly
income to the Company. While it is true that classifying the lots owned by Mr. Cobott and his
family as "active service" rather than "inactive" would allow rates to be spread over a greater
number of customers, neither Ponderosa nor the Commission can force a potential customer to
take service. Idaho Code 9 61-315 states: "No public utility shall, as to rates, charges , service
ORDER NO. 29123
Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 5 of 8
facilities or in any other respect. . . subject any corporation or person to any prejudice or
disadvantage.This statute also empowers the Commission to determine any question of fact
arising under this section. If Ponderosa or the Commission were to require the Cobott family
lots to change classification merely because of their relationship to the Company s owner, the
owners of the lots would clearly be disadvantaged or penalized in a manner that unrelated
customers are not. Moreover, these inactive lots will be subject to the $2 500 hook-up fee when
service is connected at a future date - just as would any other Ponderosa customer.
3. Hook-up Fee: Next, Mr. Peterson asserted that the hook-up fee is too high. The
500 hook-up fee is designed to cover not only the physical installation costs of extending
service above the ground, but also to fund ongoing maintenance and new supply sources for the
aging Ponderosa system. Absent such a fee, the Commission does not believe it is fair for long-
term customers to fund a system from which new customers could acquire service without a
similar investment. The $2 500 hook-up fee is an attempt to quantify the long-term investment
made by existing Ponderosa customers in addition to the actual cost to hook-up a new customer.
While the Commission understands Mr. Peterson s concern that the $2 500 fee could
get lost in the financial books absent placement ina separate account, we are confident that such
funds will be properly booked. Prior to approving any rate increase or authorizing additional
debt for new capital investment, the C?mmission and Staff reviews the financial records of the
utility. After reconciling the previous customer inventory with the current number of customers
in each class , the Commission will be able to determine how much money Ponderosa has
received in hook-up fees. The Commission expects Ponderosa to utilize hook-up fees to provide
system improvements and to account for any maintenance expenditures.
4. Ponderosa Cross-Petition: Having denied the Petition for Reconsideration, the
responding Cross-Petition is deemed denied. However, one issue in the Cross-Petition should be
addressed.
In opposition to Mr. Peterson s contention, the Cross-Petition argued that the rates.
should be reconsidered because they were too low. For this argument to be properly considered
by the Commission, the Company would have had to file within the 21-day reconsideration
period, not during the 7-day cross-petition period that followed. Because Ponderosa s Cross-
Petition for Reconsideration was not filed within 21 days of Order No. 29086, it was not timely
ORDER NO.' 29123
Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 6 of 8
as a petition for reconsideration. "(CJross-petitions for reconsideration will be denied when the
petitions for reconsideration to which they are directed are denied.Idaho Code 961-626(1).
Although the Idaho Code and case law does not permit us to grant Ponderosa
requested reconsideration of its declining revenues in this context, the Commission continues to
be concerned about the financial viability of Ponderosa. In Order No. 29086, we set a grace
period for customers to change customer classes without being subject to the $2 500 hook-up fee
until October 15 , 2002. To allow the Commission to monitor Ponderosa s changing customer
base, we direct Ponderosa Terrace Estates Water System and Commission Staff to submit a
report to the Commission no later than Nov~mber 25 , 2002 detailing changes to the number of
customers in each class and the impact these changes will have on Ponderosa s revenues. .
In sum, we deny Mr.. Peterson s Petition for Reconsideration.Consequently,
Ponderosa s Cross-Petition is denied because the Commission has denied Mr. Peterson
Petition. As to the additional issue of inadequate revenues raised by Ponderosa, we deny
reconsideration because it was not timely filed within the 21-day reconsideration period.
course, Ponderosa may choose to file a formal Application in a separate proceeding to modify
customer rates at any time.
ORDER
IT IS HEREBY ORDERED that the Petition for Reconsideration filed by Lyle
Peterson is denied. Having denied Mr. Peterson s Petition, Ponderosa Terrace Estates Water
System s Cross-Petition is consequently also denied.
IT IS FURTHER ORDERED that Ponderosa Terrace Estates Water System and
Colmnission Staff submit a rep0l1 to the Commission no later than November 25 2002 detailing
changes to the number of customers in each class and the impact these changes will have on
Ponderosa s revenues.
THIS IS A FINAL ORDER ON RECONSIDERATION. Any party aggrieved by this
Order or other final or interlocutory Orders previously issued in Case No. GNR-01-1 may
appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code 9 61-627.
ORDER NO. 29123
Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 7 of 8
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this J. 'I~
day of September 2002.
PAUL KJELL , PRESIDENT
------~ .
~~L
MARSHA H. SMITH, COMMISSIONER
ATTEST:
J a D. Jewe
Commission Secretary
0:GNRWOIOl ln3 recon
ORDER NO. 29123 Exhibit No. 10
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 8 of 8
Office ofthe Secretary
Service Date
December 20, 2002
BEFORE THE IDAHO ~pBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES WATER SYSTEM, 1Nc. IS A PUBLIC UTILITY SUBJECT TO
REGULATION BY THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. GNR-Ol-
ORDER NO. 29172
On August 8, 2002, the Commission authorized Ponderosa Terrace Estates Water
System (Ponderosa) to collect monthly rates in the amount of $48 for Full-Time and Part-Time
customers and $25 for Active Service customers! for service rendered on or after August 1
2002. Order No. 29086. In its Order on Reconsideration the Commission directed Ponderosa
and Commission Staff to submit a report detailing customer class inventory (membership)
changes once the grace period expired on October 15 2002, and the impact these changes may
have on Ponderosa s revenues. Order No. 29123.
Staffs Report (Report) indicated that even though Ponderosa is currently under-
collecting its revenue requirement, neither Staff nor Ponderosa recommends a change in rates at
this time. Report at 2. Based on a number of inquiries received by the Commission ' it
apparent that some confusion exists regarding the implementation of the Commission s Orders
and the Company s treatment of seasonal disconnections. Because Staff and the Company do
not agree on the treatment of seasonally disconnected customers, Staff requested clarification of
Order No. 29086 in that regard so that it could properly advise customers and the Company. Jd.
Having fully reviewed Staffs Report and the record in this matter, the Commission
clarifies its prior Orders and imposes new seasonal disconnection requirements as set forth in
greater detail below.
SEASONAL DISCONNECTIONS
According to Staff, Ponderosa believes that all full-time, part-time or active service
customers connected to the system must pay the monthly rate year-round whether they use water
or not. Jd. Ponderosa further believes that if a customer is not paying the monthly charge, the
Company can disconnect the customer if it follows the appropriate disconnection procedures.
ORDER NO. 29172
1 "Active Service" c~stomers have service extended to the lot and have above-ground access to water.
Exhibit No. 11
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 6
. .
Once disconnected, either by choice or for failure to pay monthly bills, Ponderosa considers the
customer to be a member of the inactive customer class'!d. To receive service in the future, the
Company would then require the customer to pay the $2 500 hook-up fee plus the $35.
reconnection charge. !d. at 3.
Staff agrees .that the Company should be able to disconnect customers for non-
payment. However, Staff believes that a customer will retain their customer class status while
disconnected and must pay only the $35 reconnection fee to reactivate the service rather than the
one-time $2 500 hook-up fee, which is a one-time fee targeted for well improvements. !d.
light of these different interpretations, Staff requested clarification of Order No. 29086 in regard
to seasonal disconnections.
COMMISSION DISCUSSION AND FINDINGS
The Commission has reviewed and considered Order Nos. 29086 and 29123 , Staffs
Report, and the record in this case. Since this case s inception, we have 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 an appropriate practice and one that is often necessary 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 incurred 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.
As of January 1 , 2003 , Ponderosa full time, part-time and active service customers
shall pay for service a minimum of four months of each calendar year. In other words, each
customer may disconnect from the system for up to eight months of a calendar year but remains
obligated to pay for water service at least four months out of the calendar year to maintain active
customer status. A customer who has been voluntarily or involuntarily disconnected from the
Ponderosa system for more than eight full months shall be moved to an "Inactive Service" class.
ORDER NO. 29172
Exhibit No. 11
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 6
Once in the Inactive Service customer class, this customer will be required to apply as a "new
applicant" and thus subject to the $2 500 hook-up fee.
Voluntary Disconnections for Extended Customer Absence.
Customers who disconnect during the winter or for an extended absence not
exceeding eight months are not required to make payments while disconnected. To avoid
confusion and pro-rating disputes, the Commission finds that Ponderosa may charge customers
who disconnect mid-month for a full month of service. However, seasonal customers must pay
for service at least four months out of the calendar year to avoid assessment of the $2 500 hook-
up fee at the time of reconnection. When reconnecting to the system, Ponderosa may charge a
$35 reconnection fee. Order No. 29086 at 12.
During the requisite four months each customer pays for water service, the customer
will not be required to actually take service if they do not wish to receive it (e., the customer
will not be in residence during those months). Ponderosa.shall not charge a $35 reconnection fee
to those customers who pay for service to meet the four-month minimum but are not physically
reconnected to the system. In other words, Ponderosa may assess a $35 reconnection fee only
when a Company employee must physically reconnect water service to the customer s lot or
dwelling.
After a customer has been voluntarily disconnected for seven months, Ponderosa
must .send a notice to the customer by certified mail. The notice must inform the customer that
the Company intends to move them to the Inactive Service class, which would subject the
customer to a $2 500 hook-up fee if the customer seeks to resume service in the future, if the
customer has not reconnected within 30 days of the letter s receipt or before the end of eight full
months of disconnection - whichever is later. The Commission will only allow the $2 500 hook-
up fee to be collected if Ponderosa properly retains: 1) customer payment and disconnection
records and 2) proof that notice of Ponder os a s intent to move the customer to inactive service
and require a $2 500 hook-up fee upon reconnection was sent via certified mail.
Once moved to the Inactive Service class, a customer seeking to resume service. must
pay Ponderosa the $2 500 hook-up fee in order to resume service. Ponderosa shall not charge a
$35 reconnection fee to a customer who voluntarily disconnects from the water system for more
than eight months because the customer will resume service as a "new applicant" who must
instead pay the $2 500 hook-up fee. Although not financially prudent, it is conceivable that a
ORDER NO. 29172
Exhibit No. 11
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 3 of 6
customer who repeatedly disconnects and fails to pay for water for periods greater than eight
months could be charged the $2 500 hook-up fee more than once. .
Involuntary Disconnections for Non-Payment.
As we explained in Order No. 29086, the Commission presumes that customers
promptly pay their water bills. If a customer fails to pay the CUITent month owed when due
Ponderosa may disconnect the customer under Customer Relations Rule 302 for failure to pay an
undisputed delinquent bill. Rule 202(1) states that a bill may be considered delinquent if not
paid fifteen (15) days after the billing date or twelve (12) days after mailing or delivery, if bills
. are mailed or delivered more than three (3) days after the billing date. IDAPA 31.21.01.202.01.
Ponderosa must follow the procedural disconnection requirements found in the Comniission
Customer Relations Rules.
Customers who wish to reconnect to the system within eight months of being
invoh.:mtarily disconnected are required to pay the Company the delinquent amount owed plus a
$35 reconnection fee. After a customer has been involuntarily disconnected for non-payment for
seven months, Ponderosa must send a notice to the customer by certified mail. The notice must
infonn the customer that the Company intends to move them to the Inactive Service class, which
would subject the customer to a $2 500 hook-up fee if the customer seeks to resume service in
the future, if the customer has not reconnected within 30 days of the letter s receipt or by the end
of eight full months of disconnection - whichever is later. The Commission will only allow the
500 hook-up fee to be collected if Ponderosa properly retains: 1) customer payment and
disconnection records and 2) proof that notice of Ponderosa s intent to move the customer to
Inactive Service and require a $2 500 hook-up fee upon reconnection was 'sent via certified mail.
Once moved to the Inactive Service class, a customer seeking to resume service must
pay Ponderosa the delinquent amount owed and a $2 500 hook-up fee in order to receive service.
Ponderosa shall not charge a $35 reconnection fee to a customer who has been involuntarily
discOlmected from the water system for more than eight months because the customer will
resume service as a "new applicant" who must instead pay the $2 500 hook-up fee. Again, it is
conceivable that a customer who repeatedly fails to pay, for water for periods greater than eight
months could be charged the $2 500 hook-up fee more than once.
ORDER NO. 29172
Exhibit No. 11
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 6
ORDER
IT IS HEREBY ORDERED that as of January 1 , 2003 , Ponderosa Terrace Estates
Water System is authorized as set forth above to involuntarily move a customer to the Inactive
Service customer class if the customer remains discorinected from the system for longer than
eight full months. To impose a $2 500 hook-up fee when the customer seeks to resume service
after the eight months have passed, Ponderosa must retain for Commission review: 1) its
customer payment and disconnection records and 2) proof that notice of Ponderosa s intent to
move the customer to Inactive Service and require a $2 500 hook-up fee upon reconnection was
sent via certified mail. Seasonal customers must pay for service at least four months out of the
calendar year to avoid assessment of the $2 500 hook-up fee at th~ time of reconnect ion.
IT IS FURTHER ORDERED that Ponderosa is authorized to charge customers who
disconnect mid-month for a full month of service.
THIS IS A FINAL ORDER. Any person interested in issues finally decided by this
Order in Case No.GNR-01-1 may petition for reconsideration within twenty-one (21) days of
the service date ofthis Order with regard to any issue finally decided in this Order. For purposes
of filing a petition for reconsideration, this Order shall become effective as of the service date.
Idaho Code 9 61-626. Within seven (7) days after any person has petitioned for reconsideration
any other person may cross-petition for reconsideration. See Idaho Code 9 61-626.
ORDER NO. 29172
Exhibit No. 11
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 5 of 6
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this :LCJtn
day of December 2002.
ATTEST:~l),~Je D. Jewell
, Commission Secretary
O:GNR WO 1 0 1 ln4 - seasonaldisconnect
ORDER NO. 29172
~ENT
MARSHA H. SMITH, COMMISSIONER
Exhibit No. 11
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 6 of 6
~ ' .
. f
E. WATER SYSTEM INC.
2626 11 Loop Road
~an~p'a , _aha 63664
TelephOne [phone]
*ear u.ndown
This Ie is to serve notice to landowners that the Ponderosa Terrace Estates Wa~er
Yste~ Ine. is ' longer going to be involv~d with the Idaho Public ~tilities c~mm~ssion.
he P. U.C. has ade me conform to all their demands including taking all my mYOlCeS on
e operation 0 e water system to Boise so they could come up with a yearly operatiJ1g
~. ~~ .
..._u...
st to operate water system. I disagreeded with their finding so there was a formal
aring in JUD 002 in Sandpoint Idaho to try an resolve the problems. Befo~e the h~nD.g .
e P.'U:c. sajd at the operating expense was S24s000 plus aDd after the bearmg the
xpenses were ermined to be S26 OOO plus. The P.c. put all landowners in dif!~rent
asses deterrni by their water hookup on their lot. This gave the P.C. the ability to
arge tbe dire nt landowner based on bow they had classed them. The P.C did this
nd 1 was told. at to charge the different classes so that the revenue received would
ke care oUh :xpense!. Since P.c. bas been involved in my water system I have lost
any costome . Some have put in their own well and others have just withdrawn froID: t~e
stems. Did y , know that if a landowner puts in a well and your lot is ne..",t to J1is that y~ur
twill probab be considered worthless. This information,I received from the Panha~dle
: . e.alth Dept. , ch states that a septic system can not be put in any closer than 100 feet
all direction On October.30, 2002 Michael Fuss came up to the water system and took
. customer cIa 'nventory and came up with oyer a. S6oo0.00 loss in revenue which reduced
1he annual rev ue to less than S20 000.00. Since October I have loss more cust~mers which
iotals S32oo.. loss revenue. Then the P.C. changes their mind and states that all .
part time dwel : g~ and active service customers only have to pay for water payment 4-months
tf the year. T reduces the revenue another $6400.00 a year. At this time the revenue to
, .perate the sy has been reduced to less than $10,000.00 per year. Because of the above
. 1 have decided handle this problem myselve. There will be 2 classes of customers like I
~ad befo re P. .. got involved. Resident and Non-Resident Resident customers will be charged
~48.00 per mo . and Non-~esident customers will be charged. $25.00 per month. ReSident is
. customer tha . ives on his property all year. Non-Resident is part time use or no use at alL
~oD-Resident , not be used for resident use. Uyou as landowners, resident or non-resident
~o not pay am . thly charge to help maintain this system then you will not be able to hookup to the
~ystem in the. f ., reo "It's not fair for a few to pay for all the upkeep and the rest can come and
, $.5 ~hey please. . his water system can not operate under the current condition that P.C. is trying~ Impose. I'm ing to try to save this water company for all of you my customers that need
.his service. If . u want to put in 'your own well please check first on all the different cos~ and
~hat your mo ly electric charge will be to operate the well. You will be surprised. La~downers
!!bat are not m ng monthly water payments at present have 30 days from the date of this letter
~ decid~ to be rt on the system or not. In don t here from you by letter or phone during this
.me period th ou will be withdrawn from any future water use froJ!! this system.
Exhibit No, 12
Case No, PTE-03-
M. Fuss, Staff
4/1/03 Page of
January 2,2003
' "
. here is one th
!tem. I will
ays I still-will
ow IfI can
lose more th
, eir decusion
er year hade
e landowner
rvice to you r
r aU Non-
om the wate
uuary 1, 200
that everybody forget! about and that is I Robaer Cobon own this water
ke this system survive for you my customers and for myselve. If everbody
operating S10 000.00 a year under what the P.t1.c. said I needed. I don't
e this work but I'm going to try. Last year P .c. caused the water system
S20 000.00 and they don t care. P.c. lied to me. they told me that when
s make it was final. P.c. are the ones that said that the operating cost
e S26 600.00. What gives them. the right to destroy this 'company and put
0 a situation that might eliminate their water service. In order to keep water
t or lots you are going to have to pay a monthly charge of $25.00 per lot
ent owners. If payments are not mad~ you win be eUminated perD1Jlnenttr
stem. These new conditions described in this letter will go into .effect on
THANK YOU
- .
Exhibit No. 12
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of2
-- - --
. To Eo WATER SYSTEM, me.
2626 Wrenco Loop
Sandpoint, ill 83864
208-263-2720
ta t,emen t
~~~~~ ,
2(3/'03
~~~""..-.;.. ,
Non-Resident
BIle.' LotS-
, .'--, ., ,...-.
AMOUNT' DOE l'l'.OUNT E NC,
50.
AMOUNT BALANCE
73.73.
, -
73.
50.50.
"-", -
DATE: TRANSACTION
112/'
1/3/'
1/13/'
2/3/'
Balance forward
INV
PMT rNV~
THIS STATEMENT
IS FOR THE PREV10US
MONTH'S WATEF~ BILL
CUP.REN'l'1-30 DJI.
~ST DUE
31~60 DAY~
EAST DUE
'-'
DAYS OVER 90 DAYS 'lHOON-DUE
DUE PAST' DUE
50.
.-----
50.
..,-.., "".-..--.-....-.,...".. """ ,
,,0, ---..
Exhibit No, 13
Case No, PTE-O3-
M, Fuss, Staff
IDAHO
PUBLIC UTILITIES
com miSSiOn
Dirk Kempthome, Govemor
o. Box 83720, Boise, Idaho 83720-0074
January 23 , 2003
Paul Kjellander, President
Marsha H. Smith, Commissioner
Dennis S. Hansen, Commissioner
Robaer Cobott
Ponderosa Terrace Estates Water System
2626 Wrenco Loop Lane
Sandpoint, Idaho 83864
RE: Clistomer Letter Dated January 2, 2003
Dear Mr. Cobott:
The C9mmission has received inquiries from several customers regarding yoUr
January 2, 2003 letter. I understand yoUr frustrations and can sympathize with your sitUation.
As more customers continue to drill wells and other customers refuse to pay their bills, it appe~rs
likely that Ponderosa will be unable to collect its $26 600 revenue requirement. This factual
situation is usually referred to as a "death spir3J." - as rates go up to meet the revenue needs of
the utility, more and more customers leave the system, thereby causing a revenue shortfall.
If this occurs, the Ponderosa system may not be financially viable as a public water
system. The expenses are too high, the revenue from too few customers is too low, and the
infi:-astructure is too strained.. Even though some of the statements in your January 2 letter are
cqntrary to the Commission s Order, Staff believes your rate alternative may have merit given
the current financial situation. Consequently, with your assistance we would like to file an
updated report with the Commission describing how much the financial status of the system has
deteriorated since October and how your rate proposal might improve the financial situation.
In order for us to accurately and persuasively present this information to the Commission
we will need detailed information from you. We need to know, to the best of your knowledge:
'Which customers have drilled their own wells and what lots are likely to leave the
system as a result of the well drillmg. We ve heard different estimates from a
number of customers, but as the owner of the system you are in the best position to
assess how many lots have left the water system.
How many customers remain in each rate classification. Please 'provide a summary
of the water payments that were made for each month ITom August to December of
2002. We need this information to demonstrate to the Commission in concrete
numbers the declining status of your system.
Please provide the amount of monthly revenue you expect to receive from your
proposed rate alternative.
Located at 472 West Washington Street, Boise; Idaho 83702
Telephone: [phone] Facsimile: [phone]
Exhibit No. 14
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of2
Robaer Cobott
January 23 , 2003
Page 2 .
Once the information detailing Ponderosa s current financial situation is provided and
described in a Staff report, the Commission will have an opportunity to review the current
conditions, consider your rate proposal and perhaps modify its prior Order. Absent a request by
you and/or the Staffto modify the Order based on new information, the only alternatives are to
comply with the existing Commission Order or consider alternatives to regulation. In any case
the Commission needs to have a clear understanding of Ponderosa' s current fmancial situation.
We believe that continued communication with the Commission is the best approach for you and
your customers.
Please provide the above requested information and any other financial information that
you think might help your case at your earliest convenience or not later than February 18, 2003.
We will then promptly complete the report and submit it to the Cornmission~ If you have any
questions regarding these tasks, please do not hesitate to contact me directly at [phone].
It is my hope that we can work together to improve Ponderosa s fmancial situation.
Sincerely,
~chael
u:rnfuss:PTE water/Oll.OO3
,'"'
.. Exhibit No. 14
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of2
Exhibit No. 15
Case No. PTE-03-
M. Fuss, Staff
4/1/03
, '
2626 Wrenc:a Loop Road
Sand aint. Idaha 93854
Wat r System Inc.
Telephone [phone]
December 0 2001
Landowners
I will be converting Ponderosa Terrace Estates Water System
Ine. fro a private heldwater system to a Water System Association that will be owned by and run b
the landowners.This water association will be named Ponderosa Terrace Estates Water Asso jation. Thisassociation will go into effect on January 1, 2002. The first water billing for he associationwill be in Febuary 2002 and it will be for the month of January 2002. All bal nee! owned afterthe December 2001 billing will go to the previous corporation.
The associatio will start offwith Wafer billing begainillg January 1,2002. The management of this water association winremain with Robaer Cobott untilI the first meeting oflandowners 00 April 7
, 002. At thismeeting we win have discussion on water system expenses, water rates, late c arge!, intereston late payments, time aUoted before water is turned off
Cor lack of payment, isconnect fe~re-connect fee, water system abuse by landowner
, water testing daily, water t ting monthly,special water testing during the year, maintenance personnel,
mangement pe onnel, bookkeepingpersonnel and all other qUe!tionsthat come up. Being that this water system 'n be a WaterSystem Association it will be free to organize and run this system as it
sees fit. This Associationwill consist of three landowner! that are residents in good standing, meaning hat all of theirwater bills and fees are paid up to date.These first three landowners will be v ted on and installedat this fil"!t meeting aDd there job will be to oversee the operations and make
ny decision neededin the daily or overall operations of the water system. These three landowner
- will be calledDirectors of the water systelU and their term will be for one year
, except for t e first year, oruatiJ they resign or are voted ouL There will be a vote every year in Novemb r for newofficers. Only residents and non...residenu in good standing, current payment p to date, will beallowed to vote. Landowners will be allowed one vote for every lot or parcel
t ey own that isaD the system. These are the b~ic rules to start with. These rules can be ajus ed or changedafter the association has been in operation and
finds that rules need to be cl1an cd.
All landownen will be required to make the current payments
as set force in t e Water Rates andFees Affective July 1, 2001. .q'these payments are not paid in full they will be
arried over intothe Water Association tor collection. Payments will remain the same until the
Irst meeting ofthe Water . anI be changed if they elect to do so.
e statement you are receiving with this letter will be for the month of
NoveI will be out oftowa and unable to send out a statement in January for DecemYou know the amount of the monthly charge so just send in a double payment
I Febuary and send in the paYJDent for December 2001.
..e . ,;:
2525 Wrenea Loop R lad .
~~dp~l.' lda."~, aJ~~4
, '
E.WATER SYSTEM INC.
Telephone 20~.25J-Z72Q
May 01 , 2002Dear Landowners
The Idaho Public Utilities Commission has set IRe rates that P.E Water System lnc.can charge for water. This rate was set on November 28, 2001. The amount of rt:venue thatthe Water System receives from this new rate will not pay the electric bill much
less aoy andall other e~rl!lJse~. I met with thi:,Ctimmission 011 Fehruary 1/,2002 and many things werediscussed. The main items they requested was all the expenses in detail for the
p:1st two yearsand a copy of the depreciation schedule. I delivered all the expense records to the
Commission onMarch 30 2002 aad faxed the depreciation schedule on April 10, 2001. The Commission wasmade 3ware on February 1.1,2002 that the rate they imposed that the 'Yater System couldcharge would nor pay the expenses. My question to the Commission was if the 'Vater
Systemgoes out of business do to lack of revenue directly resulting from their
imposed water ratesthe Water System can charge, then what happens to the landowners? They said that thelandowners would ha',-e to put in their own wells. I told the Commi"ion that most of the lotsare too small to a well because of the sewer system. The Commission s answer is you aslandowners will ha",-e to make other arrangements for your water. r made a call to RobertSmith, at the Commission in Boise, on April 26, 2002 to find out what the Commission s decisionis on the water rales afrer rhe review of all the information they requested. I was told byRobert Smith that nothing had been done and that he was busy and I would have
to wait tillmy business worked its way up the pile of work and got to the top of the pile. I asked Robert
Smith if! should call back in a ~'eek or two and he indicated 1 could call back but ir woult.! bebetter for him to call me when, he works on the case again. The Water System docs not haveany revenue to continue in business. Ponderosa Terrace Estates \Vater System Inc.,
public water system, will discontinue doing business as a public water system on May 05, 2002.The 'Vater System closing is a result of not enougb re~'enue to operate caused by th.: waterrates imposed un the '\oYater Company by Idaho Public l1tilites Commission. I'm sorry but I'not going to subsidize this water system. The revenue received is down 90%. You as landowners
wantedthe water system improved but you didn t )vant to pay for it. Under the jurisdiction ofthe Idaho Public Utilities Commission and their set of rule3 this water system could never survive.
This public water system will be shut down on May OS, 2002.
I'm going to start a Privatel)' owned water system on May 10 2002. This water system will hecalled Ponderosa Terrace Estates Privately Owned Water System Inc.. The Main
purPose of' this business is to provide water ser;ice ooly to the lots in Ponderosa Terrace Estates and the
surrounding properties owned by Robaer Cobalt aod Zaderea
:&lphael. This business willentertain selling Water Share Ownerships ooly if their is enough purchaser to make this ideawork. This private water system will not be put into the same position as the Public Water System.There will be a small purchase price to become a Water Share Owner and the maintenance feeswill be less thaa the last w:J,ter fees set by P.Water S)'stem Inc. II any laodowners orinvestors are interested in this please contact Robaer Cobott at 208-263-
2720
~YOU
cYf -v-;-
, -
Exhibit No, 16
Case No. PTE-03-
M, Fuss, Staff
4/1/03
:/'-----~--------
Ft-CNE ~'-o. ;J1.::"~,j :e32 \~'::-lEP:'
Privately Owned Water System Inc.
\M-on::. t.oap
~... '
~....I.,.,..a~!j6.0
-----..-----
r"",,h"". 2C4.~1..7%,j
, MJlY ().4. ~OO2
Pvl1derO6iIt Terrace Estate:ll'rl'Yitely Owned Water SYSte'31 Inc. ""ill tollimel1CI: doing
bu.i- 01\ Marlo..:z002. The mai~ Jl'Crpo:se of this boslDeS) IJ to Jtro-.-ide water se!"\-ii:e
to the Job iJ: PoDderon Tcrra\:,: Est1ltes md the surroulIdiojl propem~ !JW1J.etI by
Robacr Cooott and l.3del'\:a '~phacL
, f'ondcros.ll Terr~cc Eltates l'rlvlltcly OwnOJd WSiter Systcm me. .".iII al...., ,\cU y,a:er Sl1a:e
O"'ncnalpt. Water 5h~ro Ownemip, part OlVccr In the w3ter system. all I:-e purchue(/
by uJ' perllJlIl wutiJ\i: to hold I part ownership hi ,~ W1'Itcr tl1mpany. W.stcr Sbar~ O~~enl1ip
1JI~t!.S tbd far ..vuy, Witllr Shue the owner aD have ...~ter ~MC~ to one: lot or it can be
11101 for iovll:ltm=t PUrpo.,C8. WIller Stulre Ow!:,.", win he chal"led :A Jurlr lI11iuteuaJ:Ic~
fee. Thia mI\lD"..:ance fee C1II. be' paid \0 :adV3m:i:' ye;jll"!:,; or It;:an bel paid monthly, quart~J"I)'
oJ" C'ltlf"Y alx mol1tJu. The lIumlkr ofWltw Sh:!re\; t~ I)e 1O1d ~t tIth 1ime wil1111Jt ~);ce;:d
100 u,u.:s. Tlt,s.ntmaiDing .300 of t!u~ 400 s~r~ wi!! be O'IVl1t:t1 by R~baO!: c,batt andbderu R:.rpanl. Rot-lier Cooon wU! I)pe'nii:~ the P.E. Privatdy 0-...131:1(1 Wfrter Sy,\tell1 1:111:.
Sh2re O\4uf:n wiJt receive De'on kUen )'e2Irly ud yearly fln:tllcial rep.;;rt.\. Malni:':U':1~e .,ill ~ dl:teJ"llliinod Yl:llrly ba:!ed on the ctpellS~ to oper:ate Ua t\'atc:r ~)"Sti:m. TJ:t!!ff: will be
two typt!( oc mabten&.llcc ,feu. Rl'8ldtllttal, filii time tJil.'~ ".3ntlllo.a-rC5iJc:nt, ~:ln time uieor !a.. innutmol1: P"1'))Oks.. If _tar wil8~e be.:om= cut uc' C\Jntool then W:l::"1D~t~n ....iIJhave tI: h~ iun.Ued. Toe Wirer IJItters will only b:- netded on the l"CIIic;hmt Iharta"Dcn.The J"CiidO-tlt s.bal"*)wDer 'Will bltYc to pay for the mt:te:- aud the instan;etloa th~ m,eter. '
Tl1b I:'JSt C".111 be ~Id IJVcr It Gnc lea.. perIod. If a ,bareown~r, aft~r tile mtter:: In iIutailcd
lISe:! uc~:i.' water comp.red to the other !.bare6WUeI'\i Il1l1t sh:il.n:uwner ,;111 h1lV~ theil'l11aintuu~ r- Incre,ued. The purchase price for onr; Wat?r sluice owoenidp will ill'
S5-')O.OO dill: lit thD~ ~ plu'd1a!!e. S560.0IJ ",,'10 be the pUt'Ch"s~ pri~ to be paid BY!:,' !\
r..'~J\"It alontb ~rh.~ "'Ifith payments tl4:lni JlWdc lOO1Ithly.
y~,.!y
m.a11:~a:u:.aa: f~ forI'1'iklel1t UR will be $50:.0.00 ~r' yell' or So4~.OO pu )zJoi!tb. ~Qn-nsi\Jent and for in'i'l!sltncnt
pilrpodtlll t=:te maintenance fCC3 1'1'111 be: ,S27lJ.OO per ~'CI" or nz.~o peT mo'lh. rl;:\:S;: m\.l;'n;cnam:c: 'r~ are b!UlCd ad the u:lllmed upelUes tar the y~r. Th~ m:slAtf'.nance fn:lO will be adJlUtdever:' y(;-~r at needed.. up or do,,"!i. Mlliot.eul!cl::ees weu abl~ to be redto':~ btQQso: of thepur-caut p:rkc amGw:t th;Jt.,.W help pay CGr "'UIe or Uit iIllprv"':Jnel.1t il1 the ;IUC two:. y;n.rs.Larry Fairfax. OA s.he o~~tor,ls the o~ly peNna allowed ta tUrn ""~ti'i' 04 'ill' ail lit the p."pcrty.
LArry wiIll:harge tur dab 3oC".i~. )'la:1nu:t&lIn.:e f~es unr J-m"!1th3 bch,hu! wl!1 lIove ct\e:r W2.tcrnu'oed arT and torfett of theIr owncnblp. ~bjn'annc~ fees th;u ...,,(dun: tuliU 36 day,~ h.te~i11 W cua.rgcd SIn.GO lat8 feo: per lot per mouth ~IU3 IS'Y. in~rest. TIlL, ol1en.x& ttO ~U:"~'!:;;D~Wuer Sharf". OwDcoblp bt Gilly iood 'IUItil JUAC I~, 2l\O1. L;wduwu\\n. do not ILavo(: fll be!;-;)M;:Wsur ShoIl'tI O~n .:IlIty it you 1I'iUlt wa'~t=r tc. your propc:rty. Wliier to your property ..ill
k.ccp ~bc pr:l~rty value bii,b'et' th.au ...ithontwl.cc:r. Wllter Saare Owcl:nhip pl1rcha:.e,talter .JUII': j 2001 'will co.t 52300.00 ror' ,1~1! Wde,' Siulre Owccnhl;;. .. THA."'lC YOU
Exhibit No, 17
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of2
Tile foUowi1l; forlJl l1t:U\s to be lI1kd Ollt C:O/la~etJy if YO:1 want to pllrch:iSe \I Water Sha~Ownership. part OWnc:r' in the "l'"ater l)I1tem. in Pouderau Terr,.cc !:Jutes Privat.ely O...-ned WaterSY!' t.om hi
f' II n:b.a:ie r NlilDbet o(Shares
-----.-
Addraa
City aad Sial!! u_-Phone No,
RaIde:lt
Noli-Resident
In''cster
Purcb.SU\! price S!IiOO.OO !Mid in taU ., time ofpurchue
PurI:hue prke $360.00 paid in malltlal)' paymeuu tor oae year
Paymenb of $46.67 pet' moDth
ODe "'"ater Share Owncrdip i, ror Wllter llerVicc to 000: lot or pa~L A d~lullcull'l'ill ~Scn! to r-u1 Water Share Owner 3l1li11'181: tAe Dllmht:r oiWlter Shuf: O",ncollip-s e.\chOW'ller awns, The jN1!'Chaaer abo to aU the f..a!ormatioli CO'fet'OO 1D the letter dlltedM.y 04, 2002 Ihr.t . attackd to tAil pqn:hii~ form..
Si~dur~ 01 Ow1ael'
Date
SilUlatun of Owner
J)Q tc
~ture of Owa.er
Date
Exhibit No. 17
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 2
STATE OF IDAHO
January 4, 2002
OFFICE OF THE AlTORNEY GENERAL
ALAN G. LANCE
Mr. Robaer Cobott
PTE Water Systems Inc.
2626 Wrenco Loop Rd.
Sandpoint, Idaho 83864
Dear Mr. Cobott:
This Cotnmis,sion is in receipt of the letter dated December 30, 2001 that you mailed to your customers
regarding the formation of a water system association. Be informed that the Orders of this Commission
including approved rates are law until changed by the Commission through subsequent Commission
Orders.
Your failure to respond to prior Commission coITespondence and Orders resulted in the issuance of
Certificate of Convenience and Necessity No. 393 and the establishment of a $20 per month flat rate for
water service. Commission Order No. 28917 directed the Company to comply with all prior Commission
Orders. Commission Order No. 28845 at page 5 ordered Ponderosa Terrace Estates Water System Inc.
. . . to make written petition or application to the Commission prior to any proposed change in ownership of
the Ponderosa TeITace Estates Water System Inc.
Your continued failure to comply with Commission Orders will result in a complaint being filed against
you in District Court. As set forth in Chapter 7, Title 61 ofIdaho Code each separate offense (for failure to
comply with Commission Orders, requirements and directives) is subject to a civil penalty of not more than
000. Reference Idaho Code 9 61-706. Every violation is a separate and distinct offense, and in case of
a continuing violation each day s continuance thereof shall be deemed to be a separate and distinct offense.
Reference Idaho Code 9 61-707. Every officer, agent or employee of any public utility who fails to obey,
observe or comply with any order, decision, rule, direction, demand or requirement or any provision
thereof, of the Commission under the provisions of Idaho Code, Title 61 , may be guilty of a misdemeanor
punishable by a fine not exceeaing $1 000 or by imprisonment in a county jail not exceeding one year
by both such fine and imprisonment. Reference Idaho Code 961-709.
Please respond no later than February 4, 2002 to avoid the commencement of further legal proceedings.
Enclosed please find copies of the referenced Commission Order Nos. 28845 and 28917.
Sincerely,
~~~~~
Deputy Attorney General
Enclosures
Exhibit No. 18
Case No. PTE-03-
M. Fuss, Staff
4/1/03
L:Cobott sw _res
Contracts & Administrative Law Division, Idaho Public Utilities Commission0(""\ c~~ 0"7"" c~;~~ I,",~"'~ 0"7"" ""7A "~I~~"'~~~. ""'0\ ""A """n r::AV. ""'CI ""A "7"'" r:: ~~;I. ;~..~
""~..~ ~.~.~ ".,.."
STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
ALAN G. LANCE
May 30, 2002
Mr. Robaer Cobott
Ponderosa Terrace Estates Water System, Inc.
2626 Wrenco Loop Rd.
Sandpoint, ID 83864
Dear Mr. Cobott:
After you mentioned during the May 28 Decision Meeting that you had discarded some of the
PUC documents previously sent to you, the Commission was concerned that you may need
replacement copies to help you prepare for the upcoming hearing. Please find enclosed the
following documents:
1. Notice of Investigation, Order No. 28803 , issued July 31 2001;
2. Order No. 28845 issued September 13 , 2001;
3. Order No. 28903 issued November 28 2001;
4. Notice of Show Cause Hearing, Order No. 28911 , issued December 6 2001;
5. Notice of Vacated Hearing, Order No. 28917, issued December 14, 2001;
6. Letter dated January 4 2002 from Scott Woodbury, DAG;
7. Notice of Proposed Increase in Rates, Notice of Modified Procedure, Notice
of CommentlProtest Deadline, Order No. 29024, issued May 14, 2002;
8. Comments of Commission Staff filed May 23 2002;
9. The Utility Customer Relations Rules (IDAP A 31.21.01);
10. Customer Infonnation Rules (IDAPA 31.21.02);Exhibit No. 19
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of2
Contracts & Administrative Law Division, Idaho Public Utilities Commission
P.O. Box 83720, Boise, Idaho 83720-0074, Telephone: [phone], FAX: [phone], E-mail: ipuc~puc,state.id.
Located at 472 West Washington St., Boise, Idaho 83702
Mr. Robaer Cobott
May 30, 2002
Page 2
11. Polices for Small Water Companies (IDAP A 31.36.01); and
12. Rules of Procedure (IDAP A 31.01.01).
If you need any further information please contact me at [phone].
Sincerely,
Jl, ad.~
Lisa D. Nordstrom
Deputy Attorney General
Enclosures
cc:Jean Jewell
bls/L:GNRWOIOUn
Exhibit No, 19
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 2
IDAHO
PUBLIC UTiliTIES
commiSSion
Dirk Kempthome, Govemor
o. Box 83720, Boist!, Idaho 83720-0074
May 31 2002
Paul Kjellander, President
Marsha H. Smith, Commissioner
Dennis S. Hansen, Commissioner
Mr. Robaer Cobott
Ponderosa Terrace Estates Water System, Inc.
2626 Wrenco Loop Rd.
. Sandpoint, ill 83684
RE: May 27, 2002 letter requesting information
Mr. Robaer Cobott:
In your letter dated May 27 2002 you request several pieces of information. The
following is a response to that request.
Request No.1: I want a list of all the Public Utilities in the State of Idaho.
Response No.1: The Public Utilities Commission does not compile a complete list of all Public
Utilities in the State ofIdaho. However, every year the Commission provides an annual report
on all regulated utilities. Enclosed is a copy of the Idaho Public Utilities Commission s 2001
Annual Report.
Request No.2: I want a separate list showing the Public Utilities that you are currently
handling.
Response No.2: Enclosed as part of Response No. 1.
Request No.3: I want all the names of the contact persons, addresses, phone numbers, number
of hookups of each, and what the water rates are.
Response No.3: Pages 46 & 47 of the 2001 PUC annual report includes a list of all regulated
water companies, the number of customers, hook-up fees, monthly residential rates, and the date
rates were last revised. Additionally, enclosed are current copies of the arumal reports provided
by the regulated water companies. The annual report information is not audited, however, it does
represent what each utility believes to be accurate infonnation.
Exhibit No. 20
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 2
Located at 472 West Washington Street , Boise , Idaho 83702
Telephone: [phone] Facsimile: [phone]
. "
R1)baer Cobott
May 31 2002
Page 2
The following annual reports are enclosed:
Company Name
Bar Circle "S" Water Inc.
Bitterroot Water Co.
Brian Water Co.
Capitol Water Corp.
Country Club Hills Utilities
Eagle Water Co., Inc.
East Moreland Water Co; (now Humpy
Evergreen Water Co.
Falls Water Co., Inc.
ESI, Inc.
Grouse Point Water Co.
Happy Valley Water System
Island Park Water Co.
Morning View Water Co., Inc.
Murray Water Works
Packsaddle Estates Water Co.
Picabo Livestock Co.
Rickel Water Co.
Spirit Lake East Water Co.
Stoneridge Water Co.
Sunbeam Water Co.
Troy Hoffman Water Co.
United Water Idaho
Date of Re ort
2000
2001
2001
2001
2001
2000
2001
2000
2001
2001
2000
2000
2001
1991
2000
2001
2001
2001
2001
2000
1997
2001
2001
We hope the enclosed infonnation meets to your satisfaction. If you have any questio!1s
regarding this infonnation please feel free to contact Michael Fuss at [phone].
mfuss/Cobott request No.
Sincerely,
~MBA
~~ff Engineer
Exhibit No. 20
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 2 of 2
1',
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO WHETHER PONDEROSA TERRACE
ESTATES W~TER SYSTEM, INC., IS A
PUBLIC UTILITY SUBJECT TO
REGULATION BY THE IDAHO PUBLIC
UTILITIES COMMISSION
\ '
HEARING BEFORE
Case No.
GNR - W - 0 1 - 1
) TECHNI CAL and
) PUBLIC HEARING
COMMISSIONER PAUL KJELLANDER (Presiding)
COMMISSIONER DENNIS S. HANSEN
COMMISSIONER MARSHA H. SMITH
PLACE: 'Edgewater Resort56 Bridge Street
Sandpoint, Idaho
June 20, 2002DATE:
VOLUME I ~ ?ages 1 - 236
:=";,
HEDRICK
COURT REPORTING
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POST OFFICE BOX 578
BOISE, IDAHO 83701
208-336-9208
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 1 of 13
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landowners want water but most don I t think they
should have to pay much for it.The realization
with all the controls on water these days water is
not cheap anymore.
That I S all I have to say at this
moment.
COMMI SS IONER KJELLANDER:Thank you,
Mr. Cobott.And at this point then, we will open up
for cross-examination from the deputy attorney
general.
MS. NORDSTROM:Thank you.
CROS S - EXAMINA T ION
BY MS. NORDSTROM:
Just as a couple preliminary
questions,although the water system is located in
the subdivision, your principal place of business is
in Sandpoint.Is that correct?
It I s outside of Sandpoint.
Okay.Is that the address 2626 Wren
Loop Road in Sandpoint?
Yes.
Okay.And the name on your
- -
the
documents you sent us is PTE Water System
171
Inc.
Exhibit No. 21
Case No. PTE-03-1 .
M. Fuss, Staff
4/1/03 Page 2 of 13
COBOTT (X)Ponderosa
HEDRICK COURT REPORTING
O. BOX 578, BOISE , ID
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take it from the " Inc." that you I re incor~orated?
Yes.
So you filed something with the
Secretary of State?
Every year.
Okay.ve gathered thus far that
there are only two employees of the Company:
Yourself and Mr.Fairfax.Is that correct?
Yes.
Okay.Staff's testimony has indicated
tha t, you know depending on - - well,Mr.Smith'
direct testimony talked about labor costs totaling
about $9,000 and then he gave a different option
his rebuttal testimony which was about $10,000.
If I understand you correctly, you
would like $12,000.That's $1 000 a month for
twelve months.Is that correct?
Yes.
Okay.So we're not too far apart if
m understanding this correctly.
In your testimony, you listed all the
tasks that were required to operate and manage the
Company.Now , was that just the th~ngs that you
do?Does that include Larry or the stuff that he
does,or is that not accounted for in your list?
Exhibit No. 21
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 3 of 13
COBOTT (X) Ponderosa
172
HEDRICK COURT REPORTING
O. BOX 578, BOISE , ID
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That's not accounted -- Larry's is not
accounted for.
And getting back to your previous
question,Wha t are youmaybe I mi sunderstood tha t
talking about eight or 10,000 and going to 12 000
what do you mean by that?
Well, when I initially read your
testimony I thought that these were all your
and since Larry -- or, Mr.Fairfax -- hadexpenses,
qui t and wasn I t working for you anymore,tha t you
were going to do everything,and if so,wha t you
were asking for was $1 000 a month.Is that right
or am I misunderstanding something?
No,that's not right.
Okay.
You I re coming up wi th a total yearly
expenses of 12,000.Was that what you said just a
momen t ago?
For abor,yes.
How can it be 12,000 if you've got
eight or 10,000 in other related expenses,abor
expenses,and you haven't even figured in my wages
yet?
Well that's what I was trying
determine, because I didn I t know --because
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 4 of 13
CO~OTT (X)Ponderosa
173
HEDRI CK COURT REPORTING
O. BOX 578, BOISE , ID
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that'
- -
when I understood that you filed your
t est i mony,I thought that Mr.Fairfax wasn't working
for you.Is he working for you now?
The only thing he's doing and only
because the electric is still hooked up,we haven I
got it changed yet,he I S taking the daily testing
the only thing he I s doing.There I S no water repairs
being done which need to be done,and that's all
he I s doing at this time and compensation for
--
his
compensation for doing that is his electric bill.
Okay.So what is the total labor
expense that you I re recommending that the Commission
adopt --
It
-- for both of you?
--
appears that my wages are showing
$320 a month:$80 a week times four.I m saying
000.So you re talking about $680 difference per
month over a year,12 months.
Well,I was wondering if we focused on
the total labor costs and not just the salaries
individual people but the overall labor costs.
might be the differences would help- resolve
themselves, because as there s been previous
testimony, the costs don I t have to be allocated
Exhibit No, 21
Case No, PTE-03-
M. Fuss, Staff
4/1/03 Page 5 of 13
COBOTT (X)Ponderosa
174
HEDRICK COURT REPORTING
O. BOX 578 , BOISE , ID
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specifically for the various experiences so long as
they I re expended on behal f of the Company.
So what is the total amount of labor
costs that Ponderosa is recommending for the
services that you provide and Mr.Fairfax provide to
the Company?
You're showing - - you're showing,what
was it,000 or 10,000 before we are talking about.
In that range,nine to $10,000.
But then there was -- we also
identified a couple of line items,line item 10 and
line item 33 that were about another $5,000 for
major repairs and emergencies?
So you I re probably looking at
somewhere around 20 , OOO?That I S a ballpark but I 1
not sure about all these little figures you I re
talking about.
Well --
I stated I wanted $1 000 a month.
Right npw it I S $320 a month based on four weeks.
Okay.So the 17 items that are listed
on pages 1 and 2 of your testimony include all the
management,operation and maintenance activities
except for those that Mr.Fairfax does.Correct?
Well,there's no maintenance on there.
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 6 of 13
COBOTT (X)Ponderosa
175
HEDRICK COURT REPORTING
O. BOX 578, BOISE,
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I don I t have anything listed that I I m going out and
digging up pipe or any of that type of thing,
working on the chlorinator or anything like that,
taking water test s .I did not state any of that in
this.
Okay.
stated there that wanted
that keep records the flow meter the
different things that I need to keep records of the
free chlorine tests daily,the flow meter records
daily,this type of thing.
So what dollar amount of labor
expenses for things like water testing and things
that Larry used to do are not accounted for?What
dollar amount should the Commission pay for?
We 11 the thi~g there is if I have to
physically go out there every day,drive from my
home and go out there and take the water tests and
do these things every day,it's going to be pret
costly.I don't want that to happen.It's about an
houri s drive each 'way from my house.
That I s why Larry sent me a application
permit
--
application for a permit
--
to get his
electric separated from Ponderosa.Tha t has not
been done yet for the simple reason Larry doesn I
ExhibitNo~ 21
Case No, PTE-O3-
M. Fuss, Staff
4/1/03 Page 7 of 13
COBOTT (X)Ponderosa
176
HEDRICK COURT REPORTING
O. BOX 578, BOISE,
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have the money get done and don'have the
money get done.Wha t 'invol ved have
have another meter installed and have call the
power company out to swi tch.It's still going to be
under Ponderosa I s name,but it's going to be
Ponderosa well site and
- -
what did I put down
Ponderosa house or something like that
- -
Ponderosa
house.That's the way we're going to get two
different bills from the power,and that's the way
it was going to be broke down.That has not been
done yet.
The water system has not received
revenue to keep up with all the bills and expenses,
it just hasn'100 to
--
to 180 a month doesn't do
it,not even close.And I did pay two months of the
electric bill.I owe another month.There I s
probably another month coming due now.Bu t
- -
and I
paid the testing company,Acura Testing in
Coeur d' Alene.Outside of that everything else has
just been kind of carrying forward.
Do you anticipate that you will be
able to contract with Mr.Fairfax or some other
individual to help do your on-site daily testing of
water?
That's why Fairfax
--
Mr.
177
Fairfax --
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 8 of 13
COBOTT (X)
Ponde ro s a
HEDRICK COURT REPORTING
O. BOX 578, BOISE , ID
.,.
is here today.He wants this to work and I want
to work.Mr.Fairfax has been doing the work on
this system for many years now.He knows where
every pipe is, where every valve is.
He's personally gone up to the
--
went
up to the tanks drained the tanks.He actually got
ins ide the tanks and cleaned them all wi th chlorine
resurfaced.What they do is they have a tank and
another tank sits on top and there I s a seal.
redid the seals,cleaned them all up.He knows
everything about the system , where everything goes.
He I S experienced as far as all of a
sudden you see water.He knows where to dig to find
that leak.
I was told that from I think it was
Randy Low (sic)is it or something that you will
Lodd (sic)or something like that
--
that most water
systems have about a 30-year life as far as pipes
and stuff go.Well these pipes have been in the
ground now for 32 years.There's going to be
repairs and there has been repairs, but overall I
think the system is sound.
A lot of people have accused the
system of having water leaks,that's why we run out
of water.Well that I s why we take the flow meter
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 9 of 13
COBOTT (X)Ponderosa
178
HEDRICK COURT REPORTING
O. BOX 578 , BOISE, ID
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readings.then theIf we have serious leaks,
serious leaks should be there 12 months a year.
question is how come I can use 30 000 gallons a day
in the summertime and eight or 9,000 in the winter
and it's the same amouTht of resident use.Something
is
--
somebody here is
--
well,I m going to use the
word --abusing"the system.
Okay.
Tha t 's where meters come in.You put
a meter on a system you can tell instantly if that
house has a leak.You make sure all the water
inside the house is turned off and you look at the
meter.If that meter is running,then there's an
underground leak on the property.I can't go on the
property and fix underground problems but I can
sure inform the landowner that they better fix that
leak or you're going to get your water turned off.
Speaking of equipment and meters and
such,I had a question.On your page 3 the question
is do you own any equipment that is used by the
Water Company,and I took that to mean construction
equipment as opposed to
Well,I have an excavator.
Right,construction equipment like
excavators as opposed to pumps and pipes and other
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 10 of 13
COBOTT (X)Ponderosa
179
HEDRICK COURT REPORTING
O. BOX 578, BOISE , ID
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things that are part of the company?
You I re correct.
Is that correct?
That's correct.
Other than the incident you mentioned
and back in the late 90s when your address was
being changed on Wrenco Loop Road,have you had any
trouble receiving your mail recently,like within
the last six months or a year?
No,as long as the address is
correct.The problem there was when I had the 1600
Wrenco Loop,there was another address the same
vicinity just up the road a ways called Wrenco
Heights 1600.They were getting a lot of my mail.
When the County came out and changed the addresses
for emergency vehicles,there I s still 1600 away from
me now.m 2626,which means I'm 2.6 miles in.
And so that I s where some of the confusion comes.
And a lot of these people were
reluctant to accept their new addresses.In fact,
the Post Office told me when I went in and told them
I wanted to change the address and the guy said
Well,I wouldn I t do that.I d keep them both.
Just shows you how people I don I t
know.
180
Exhibit No. 21
Case No. PTE-O3-
M. Fuss, Staff
4/1/03 Page 11 of 13
COBOTT (X)Ponderosa
HEDRICK COURT REPORTING
O. BOX 578, BOISE , ID
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Okay.Well I just wanted to make
sure that you were receiving correspondence from the
Commission.
Yes as far as I know.
Did you receive a big packet of Orders
and Rules and things?
Yes.
Okay.Tha t 's good.
Michael Fuss had already given me a
packet of Rules too when he met with me.
We just want to make sure you have
those.
I know we've talked abo~t different
turnoff and turnon fees for water.I n your
testimony you mentioned $50 apiece,but then you
discussed a few minutes ago,you mentioned $10
apiece?
that was
Are we referring to different fees?
That was -- let's say that you are a
landowner and you're current everything is fine
but you I re going to leave for two,three months
maybe the wintertime,so then you want your water to
protect anything breaking in your house and causing
havoc,then you want your water turned on at --
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 12 of 13
COBOTT (X)Ponderosa
181
HEDRI CK COURT REPORTING
O. BOX 578 , BOISE , ID
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turned off at the road.Then ei ther Larry - - in the
past it's been Larry -- would go out and he would
turn the water off for you.And then when you come
back, you contact him and he would turn it on for
you.
So the $10 fee is more to protect the
resident while they I re gone,rather than to protect
the system once someone stops paying their bills?
It I S nothing to do with stop paying
the bill.
That I s what the $50 fee --
Just like Mr.Peterson over here.
was coming up and he called.Larry just happened
be - - I was wi th Larry.This was a couple weeks ago
or week and a hal f something like that,and he
stopped by and he turned his water on because he
knew he was coming up.That I S a very smart way for
these landowners to do it, but not everybody does
it.
I see.Thank you for clarifying
that.I think that I s all the questions I have.
Thank you.
COMMISSIONER KJELLANDER:Are there
questions from the Commission?
182
Exhibit No. 21
Case No. PTE-03-
M. Fuss, Staff
4/1/03 Page 13 of 13
COBOTT (X)Ponderosa
HEDRICK COURT REPORTING
O. BOX 578, BOISE , ID
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 1ST DAY OF APRIL 2003
SERVED THE FOREGOING DIRECT TESTIMONY OF MICHAEL FUSS, IN CASE
NO. PTE-03-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
ROAER COBOTT
PONDEROSA TERRACE ESTATES
WATER SYSTEM
2626 WRENCO LOOP ROAD
SANDPOINT ill 83864
Jo S CRET Y
CERTIFICATE OF SERVICE