20150601Comment.pdf

WILLIAM S.ALEXANDER
6222 N.PARQUE DRIVE JUfl -!.M ¶E:t
COEUR D ALENE.IDAHO 83815-9139
[phone]
May 28,2015
Chris Hecht and Commissioners
Idaho Public Utilities Commission
P0 Box 83720
Boise,Idaho 83 720-0074
Re:Testimony for Case SCH-W-15-0l Schweitzer Basin Water Company
Dear Mr.Hecht and Commissioners,
I am a former commissioner of the Schweitzer Fire Rescue District (SFRD),serving from
2008 till 1015.I resigned in February as I sold my home and moved from SFRD.I
purchased my home at Schweitzer in 1991 and moved to it fuiltime in 2004.I am also a
founder of and first president of Schweitzer Property Owners,Inc.,serving in that role
from 2006 till 2012.During the period from 2004 till 2015 I participated as a member of
a number of other boards and committees at Schweitzer which served the interests of the
community and its home owners.
From my first meeting as an SFRD commissioner the subject of Schweitzer Basin Water
Company (SBWC)was almost always on the agenda.The concern of SFRD was the
failure of SBWC’s water system to meet the fire flow requirements of the International
Fire Code as adopted by the State of Idaho.The SFRD fire chief told me this concern had
existed since the first days of the F ire District.I was present at a number of SFRD board
meetings which were attended by the owners of SBWC,Melvyn Bailey and Marsha Bell,
to discuss the situation and from SFRD’s viewpoint to find a solution to the fire flow
concern.Nothing was ever accomplished at or as a result of those discussions.At times
the owners denied responsibility,stated they would remove the fire hydrants if pressed by
SFRD,and stated they were a small water company with limited resources despite having
hundreds of customers and revenues well in excess of$150,000/year at the time.The
owners approach to SFRD seemed to me to be one of denial,obstruction and obfuscation.
Finally,in 2014,the frustration of the SFRD board with SBWC led to the initiation of
administrative action by SFRD against SBWC under Idaho Code to force corrective
action on the fire flow issue either by SBWC or,if necessary by SFRD.Needless to say
the response of SBWC was to take legal action in court to stop SFRD’s action.It appears
to me that SBWC simply does not want to fix their system if it might cost them in
anyway.
The current SBWC owners bought the water company from Dr.Jack Fowler in the late
1980’s.The water system purchased included land parcels at Schweitzer.In the 1990’s
one of these parcels was sold for a price reported as in the millions.The parcel is now
The Spires Planned Unit Development and its water system was recently merged into
SBWC.What benefit did the customers/rate payers of SBWC receive from this sale?
The answer seems to be little of nothing.
The revenues of SBWC increased regularly for the ten yars I lived fuiltime at Schweitzer.
In 2009 I had a converstion with the manager of the water company that serves the Big
Mountain Ski Resort in Whitefish,Montana.This is a resort community not that different
from Schweitzer.My interest was fire flows and customer charges for water service.My
memory of the conversation is tha Big Mountain met all fire flow requirements of the fire
code and that their rates were about two thirds of SBWC’s at the time and one-half of
those charged by Schweitzer Mountain Resort’s (SMR)water company.SMR had had a
contentious rate increase process in 2004/05 and has not raised its rates since then.
$BWC’s are now only slightly below SMR’s after numerous small increases over that
time.SBWC’s rate increases were not subject to PUC scrutiny in the past as $BWC was
able to maintain the fiction that it was a small water company until just recently.
An ongoing community issue with SBWC has been the lack of any financial reporting.
financial reports though required of even small water companies were not made
according to report.It was common knowledge in the Schweitzer community that the
owners of SBWC were operating as “Sole Proprietors”for tax purposes and commingling
the revenues and expenses of SBWC with their many other business ventures both on and
off Schweitzer Mountain.These businesses included a Bed and Breakfast at Schweitzer
and numerous real estate rental properties in and around Sandpoint and real estate
investments in western Washington State.
It is my opinion that SBWC does not deserve consideration of a rate incease until it
produces a comprehensive,auditable,historic,and current financial report showing only
SBWC revenue,expenses and investments since the owners acquired the system and its
land assets as well as a detailed plan to correct the deficiencies in its system with respect
to fire flows.This plan should be agreed to by $FRD and the State Fire Marshall and is
critical to the safety and well-being of those home owners and businesses served by
$BWC.
frankly,SBWC has been milking its customers for years to gain maximum revenue with
the least amount of expense or investment and then commingling its SBWC profits with
other business activities to the detriment of its customers.Monopoly water companies
should not be allowed to use unrelated business expenses in any way to misrepresent their
financial performance (such as depreciation,repairs and maintenance,interest,etc.)to
justify their rates.I believe SBWC’s customers should receive a substantial rate decrease
until such time as SBWC reveals its financial history and status and meets its fire flow
responsibilities.
Thank you for your consideration.
Sincerely,
William S.Alexander
Former SFRD Commissioner