20050204Comment.pdf

James R
Jean Jewell
Page 1 of 4
From:secretary
Sent: Friday, February 04 2005 2:05 To: Barb Barrows; Ed Howell; Janet Bahora; Jean Jewell
Subject: FW: IPUC.doc/CASE #RES-04-
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From: J & S Morris(SMTP:JIMSUEPETE~COMCAST.NET)
Sent: Friday, February 04 2005 2:04:37 To: secretary; joe~mcdevitt-miller.com; Tim Elsea
Subject: IPUC.doc/CASE #RES-04-
Auto forwarded by a Rule
James R. Morris
2922 E. Snowberry Lane
Spokane, VV 1\ 99223
j im suepete~com cast. net
phone [phone]
fax [phone]
Condo: Highland Village #404
February 3, 2005
To:Idaho Public Utilities Commission
P. O. Box 83720
Boise, Idaho 83720-0074
Phone [phone]
Fax [phone]
e-mail: secretary~puc.idaho.gov
To: Dean 1. Miller
McDevitt & Miller, LLP
420 VV. Bannock Street
P. O. Box 2564-83701
Boise, ID 83702
phone: [phone]
fax: [phone]
j oe~mcdevi tt -mill er. com
To:Tim Elsea, P.E. Director
Resort VV ater Co., Inc.
Discovery Center - Selkirk Lodge-Schweitzer Village
Sandpoint, ID 83864
e-mail: telsea~schweitzer.com
BEFORE THE IDJ\HO PUBLIC UTILITIES COMMISSION
IN THE M1\TTER OF THE MPLIC1\TION )
OF RESORT VV 1\TER CO., INC. FOR THE
ISSU1\NCE OF 1\ CERTIFIC1\TE OF PUBLIC
CASE NO. RES-O4-
MPLIC1\TION FOR THE
ISSU1\NCE OF 1\
2/4/2005
James R Page 2 of 4
CONVENIENCE J\ND NECESSITY, FOR
VV J\TER SERVICE, FOR MPROV AlL OF RULES
J\ND REGULJ\TIONS GOVERNING THE
RENDERING OF VV J\TER SERVICE
CERTIFICJ\TE OF PUBLIC
CONVENIENCE J\ND
NECESSITY J\ND
ESTJ\BLISH RJ\TES J\ND
CHMGES FOR VV J\ TER
SERVICE J\ND REQUEST
FOR MODIFIED PROCEDURE.
I wish to thank the I.P.UC. Commissioners and staff for the opportunity to comment on the above
referenced case. My comments are as follows:
Ref. Original application.
1. My data indicates the RVVC serves 307 individual housing units that could be available for rent.
Not included in this total are commercial properties in the day lodge, the Lazier building, the
VVhite Pine Lodge, the Selkirk Lodge and the Mill building. I therefore do not understand the
total of 378 ERU's stated in Section III.
2. Under Section V the required revenue per month could be distorted if an improper number of
ERU's are used.
3. Under section VI the RVVC requested an effective date of September 13 ,2004, which was well
prior to notification to customers. The 11 % requested return should be based on the original
allocation of the total purchase price by Harbor, plus any reasonable capital additions since the
original purchase. Return should be based on cost and not on the ability to generate income.
4. Under Section IX no satisfactory notice was given to the customer base until mid-January when a
November newsletter was finally mailed after much complaining. I have no knowledge of any
news media releases." I could not find a copy of the customer distribution as a part of the
undated notification shown in Exhibit E.
5. Under Section XI was found Exhibit F and as a cover was the rate schedule. The proposed new
rate of $61. 96/month is an increase of about 88% over the prior rate of $33. OO/month and raises
too many questions to discuss in general terms. I would think that initial hook-up charges should
be included in the rate schedule and does the current charge include sewage? Have all properties
paid the hook-up charge in recent years and how much per unit? How are costs of water supply
impacted by sewage effluent treatment? Do all sewage systems have holding tanks to collect
solids? VVho monitors these tanks to make sure they do not fill to over capacity?
Direct Testimony of Tim Elsea
6. Page 1 , Lines17-20 - see prior comments on (ERU)
2/4/2005
James R Page 3 of 4
7. Page 2, Lines 13-14 - I question the amount of original investment. See prior comment.
8. Page 2, Line 18 - In November, 2004, the Director ofRVVC told me that the new water rate was
given to him by the IPUC after they reviewed the books of the RVVC. This statement causes
confusion in my mind.
9. Page 2, Line 22 - 23. I question investment and therefore the amount of needed reasonable return.
10. Page 3 , Lines 10-15. There is some question as to the financial strength of Harbor Properties and
the Schweitzer investment in particular. There are too many rumors around that they are in
trouble and a sale of the property is in the works. This should be checked out thoroughly. Harbor
has pulled a lot of money out of Schweitzer, e., sale of Selkirk Lodge condo units. This money
may have gone back into the mountain but who knows.
11. Page 4, lines 9-14. I have a hard time understanding why we need to increase water storage from
105 000 gallons to 605 000 gallons. VVhat do the insurance carriers say about our situation?
VVhat happens if we do not meet the requirements of the 2000 international fire code?
12. Page 4, Line 19 to Page 5 , Line 3. I doubt the added water storage is mandatory and I question
the significant cost in one fell swoop. VVhat might the added monthly cost per unit be over and
above $61. 96?
13. Page 5, Lines 4-6 - The Notice of Rate Case was not sent to "each of our customers" at the time
the application was filed. Notice was finally made in January 2005.
J\dditional information on water storage requirements
VVhile preparing these comments I gave Spencer Newton, the Fire Chief of the Schweitzer Fire
District, a call to discuss his letter dated 9/4/03 to Sewell Engineering. VV e also discussed the Sewell
Engineering letters to Mr. Newton and to Mr. Elsea, both dated September 15, 2003. These can all
be found in Exhibit No.4. Mr. Newton indicated that he was asked on a "what if' basis the water
storage required to meet the 2000 International Fire Code. He provided the fire flows for each of the
three properties listed. The only building that falls under the 2000 International Fire Code is the
VVhite Pine Lodge.
The Copper Ridge condominiums and Highland Village do not come under the code as they were
constructed well before the Schweitzer Fire District was established, and are therefore grand fathered
in under the then existing conditions. This means that a much smaller water supply would be
required and Mr. Newton calculates 60 000 gallons considering existing supply, pumping capacity,
and peak water usage for normal resort needs. This added capacity should take care of the VVhite
Pine Lodge and the capital cost should be carried by VVhite Pine.
Direct Testimony of Jane Doe
2/4/2005
James R Page 4 of 4
14. Page 3 - Lines 14-18 - I am not familiar with this method but am rather used to splitting up the
total purchase price and allocating these pieces to the various assets. The sum of the pieces add
up to the total purchase price. The end result impacts depreciation and P&L, and therefore
monthly rates charged for water.
Exhibit 2, Page 1 - I do not understand some of the projects as shown and how they relate to the current
water distribution requirements. For example 002 totaling $222 970.97 - what was the nature of this
expenditure and how does it impact the system?
Example 003 - Total $216 263.66 - what was done here and what does water source development do for
the current system?
Example 0011 -Total $5,793.57 - what was water source development?
Example 0012 - $10 014.32 - what was done to the water system reservoir?
My final comment is that there seems to be some significant capital investments that may not do
anything for the current water supply needs. They may only relate to some development plan that
relates to Harbor s future development plans and should not burden current property owners. If the new
capital approaches, say $400 000, the annual return might be expected to be reduced by $40 000/year to
the benefit of the current rate payers.
My experience indicates that the cost of planning efforts and engineering studies that relate to and
impact future development should not be capitalized until the primary capital construction has started.
The depreciation can then start on a gradual basis and is in line with incremental capitalization on a per
unit completed basis. Current rate payers should not be charged with any of these costs currently or in
the future. The relocation of the sewage lagoon is not necessary for the current development and should
not be charged at any time to the current rate payers. I am told that the only reason to relocate the
lagoon is to support the Harbor development of a new site on the mountain.
I will be happy to try to answer any questions that arise, and thank you again for the opportunity to
comment.
Very truly yours
James R. Morris
2/4/2005