20050217Comments.pdf

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James R. Morris
2922 E. Snowberry Lane
Spokane, W A 99223
imsuepete~comcast.net
509/533-5877 - fax [phone]
Condo: Highland Village #404
February 15, 2005
To:
To:
To:
Idaho Public Utilities Commission
E-mail: secretary~puc.idaho.gov
Dean J. Miller
E-mail: ioe~mcdevitt-miller.com
Tim Elsea
E-mail: telsea~schweitzer.com
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. RES-O4-
On February 3 2005, I made written comments on the above case and then participated in the public
workshop held at Schweitzer on Tuesday, February 8. I now take this opportunity to make an
additional statement for the record as follows:
At the meeting on the 8th we received a handout and on the first page following the cover
sheet is included "Water System Assets" in the amount of $509 331. I questioned this
figure during the meeting and have since been told by several sources that this figure
contains a significant amount of money that relates to future development projects. If this
is the case then I think the asset value should be reduced accordingly and held on the
corporate books for capitalization against the new projects as they go on line.
It was also stated that with the added well and water storage capacity there is now excess
supply to take care of the current 395 ERU and, in fact, an addition of 305 ERU can be
added to future development. The cost of this excess capacity should be split out from the
current rate calculations and be added to only new projects when they are up and running.
In my review of the Jane Doe testimony I questioned on Exhibit 2, Page 1 , examples 002
($222 970.97) and 003 ($216 263.66.) I have no idea what work was done for this amount
of money and find no justification for such a high figure that might apply to the current
water system. Excess funds should not be charged against the current water customers.
There is significant evidence that when the White Pine Lodge was built the actual cost of
construction greatly exceeded budget and in fact went far beyond what the real estate
market would bear. It is said that Harbor passed the excess costs through their books and in
some way burdened the current owners on the mountain.
5. To summarize my thinking I thought it best to put together a series of pro forma statements that
might be considered by all recipients to help solve any lingering doubts. I have had some direct
and indirect feedback from various people who are knowledgeable and either own property on the
mountain or work on the mountain, or were employed by Schweitzer. My interest is to restate
accurately and honestly my thinking based on information gained from others. I have turned up no
basic conflict in the information I have put to use. If there was any conflict of impression I have
not used the information. I have had to make some assumptions and I look forward to being
corrected where significant. I have modeled my statement in line with the handout provided by the
IPUC on February 8. The statements are as follows:
1. Assets Included in Rate Base
Revised Numbers
Original Book Y early Accumulated
Value Amortization DeprecIation
As of 8/31/04
Water System Assets $275 000 016 30,436
(1/2 price allocation)177.500 550 20,412
452 500 566 848
*This line has been revised down as I think $509 331 is way too high. With hoped for additional
information I am sure it can be further reduced. Consider significant overrun at White Pine Lodge
and how it was booked. Look into the dollars spent for added capacity of ERU' s and the expense
vs. capital allocations. We now have a total of700 ERU's. The usage is said to be 395 ERU'
The unused is a difference of305 ERU's. The additions since the beginning of 1999 is estimated
at 78 ERU', including Crystal Springs 18, Chapel Point 4, Cabins 4, Pinnacle Ridge 2, and White
Pine 50. Water storage capacity went from 45 000 gal. to 105 000 gal. for an addition of 60 000
gallons since 1999. To playa numbers game 105 000 gals, divided by 700 ERU's equals 150 gal.
per ERU. If this is correct then in 1999 we had an ERU capacity of about 45 000 gal. divided by
150 gal. per ERU or 300 ERU's. Ifmy prior ERU calculations are about right then in 1999 we had
395 ERU, less the addition of 78 ERU or about 317 ERU's in place. It is clear to me that the
additional 60 000 gallons is to a large extent due to the White Pine Lodge and future development
plans. The total cost of expansion including planning, engineering, and installation should be
calculated and allocated to Harbor s books for later use.
2. Preliminary Numbers
Improvements of water system from 12/8/98 *
Working Cash
Acquisition Adjusted price
$275 000
544
177.800
$469 044
* Adjusted Down - see paragraph
Less:
Accumulated Dep.
Contributions to Capital
Net Rate Base
$ (30,436)
(128.609)
$309 999
Return on Net Rate Base 11 %100
Return including allowance for taxes $ 45 871
3. Calculation of Preliminary Revenue Requirement
Y early operating and maintenance Expenses
Annual Depreciation expense
Return (fY 11 % plus tax allowance
$100 000
$ 10 566
45.871
$156,437
*This looks very high and should be reviewed to make sure that all legitimate capital items for the
current system are not expenses and that all capital for future projects are put on Harbor s books
for later capitalization. Make sure that water, sewage, and cable are property split out.
4. Staff adjustment of ERU calculation. See comments under paragraph
5. Preliminary Flat Rate Calculation
Monthly Rate Required per ERU
Staff Proposal My Proposal
$212 290 $156 437
395 395
537.44 396.
44.33.
33.33.00*
36%
Annual Revenue Requirement
Total Number ofERU'
Annual Revenue Req. per ERU
Existing Resort Water Rate
Rate Increase
*This monthly rate that was calculated is the result of my assumptions and I was surprised at my
final answer.
I think it fair to ask Harbor to share some financial information as requested in the past. There are
those who strongly believe that the company is not following good accounting practices and could
not stand up to a proper audit by a thorough accounting firm. I would hate to justify the book
entries in court.
I thank you for the opportunity to comment and am available to try to answer any questions.
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Jean Jewell
From:
Sent:
To:
Subject:
Ed Howell
Wednesday, February 16 20054:15 PM
Jean Jewell; Ed Howell; Gene Fadness; Tonya Clark
Comment acknowledgement
WWW Form Submission:
Wednesday, February 16, 2005
4:15:24 PM
Case: res-w-04-
Name: catherine reynoldsStreetAddress: 2527 s park road
City: spokane
State: wa
ZIP: 99212
Home Telephone: [phone]
E-Mail: reynoldsinwash~aol. comCompany: /
-=:~~
mailing list _":(es -;- no:( ye
Cormnent descrlptlon: -UNBELIEVABLE! YOU GUYS ARE PROPOSING AN 88% lncrease for all condo
owners at Schweitzer! Some of us can barely afford what we have now! I do not think
harbor is making good choices by pushing the "locals II meaning WA and Idaho residents away.
Schwei t zer is not a Vail or Aspen.
. . .
they should make, it an affordable fun place for the
locals want to come to. Anyone with big bucks is going to fly to Colorado... Harbor needs
to think about the clientle they are catering to. If they did their research, i bet 90%
of the condo owners live in Wa or Idaho! With their prices rising each year, we could
live in Colorado one month a year and ski everyday and save money! don I t let thishapppen!
Transaction ID: 2161615.Referred by: http: / /www. puc. state. id. us/ scripts/polyform. dll/ ipuc
User Address: 205.188.116.203
User Hostname: 205.188.116.203