20070226Amended reply comments, replacement exhibits.pdf

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BATT:FI,HER
A LIMITED LIABILITY PARTNERSHIP
John R. Hammond Jr.e-mail: jrh(a~battfisher.com
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February/' 2007
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Jean J. Jewell
Commission Secretary
Idaho Public Utilities Commission
O. Box 83720
Boise, ill 83720-0074
Street Address:
472 W Washington 83702
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Re:Spirit I:ake East Water Company Amended Reply Comments and Corrected
Exhibits. Case No. SPL-O6-01.
Dear Jean
On February 23, 2007 I had computer failure on my laptop which caused the loss of our
final, ready to file version of Spirit Lake East Water Company s Reply Comments. Due to this
computer failure I was also not able to access any backup files for this document. Luckily, I had
a draft of the Reply Comments on my local drive which we filed on Friday, February 23 2007.
Unfortunately, this document has a few differences from our completed version. Accordingly, I
am submitting Amended Reply Comments to accurately reflect the Company s position in this
case.
In addition, I have also submitted for filing corrected Exhibits 9, 10 &11 to replace the
previously filed Exhibits 9, 10 & 11. Lastly, I have also submitted for filing an Excel
spreadsheet for Work in Progress items to replace the same document in Exhibit 16 of the
Company s Reply Comments. The rest of the exhibits are unchanged.
T 208331,1000 . F 208331.2400 . P,Box 1308 Boise, Id 83701 . Suite 500, US Bank Plaza 101 S, Capitol Blvd, Boise, Id 83702
February 26, 2007
Page - 2
If you have any questions please contact me.
Sincerely,
JRH
Enclosurescc: Robert Boyle
Weldon Stutzman
:CCF:I'
John R. Hammond, If., ISB No. 5470
BATT & FISHER, LLP
u.S. Bank Plaza, 5th Floor
101 S. Capitol Boulevard
Post Office Box 1308
Boise, ID 83701
Telephone: [phone]
Facsimile: [phone]
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Attorneys for Applicant
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF SPIRIT LAKE EAST
WATER COMPANY, INC., FOR
AUTHORITY TO INCREASE ITS
RATES AND CHARGES FOR WATER
SERVICE IN THE STATE OF IDAHO
Case No. SPL- W -06-
AMENDED REPLY COMMENTS OF
SPIRIT LAKE EAST WATER
COMPANY, INc.
COMES NOW Spirit Lake East Water Company ("Spirit Lake
" "
Applicant" or
Company ) and hereby files these Amended Reply Comments in response to the Idaho
Public Utilities Commission Staff ("Staff') Comments on the Company s Application to
Increase its Rates and Charges for Water Service in the State of Idaho.
First, the Company will address the status of certain repairs/improvements to the
water system that are in progress. Second, the Company will briefly discuss those
matters in Staffs Comments which it does not object to. Third, Spirit Lake will discuss
its request for rate treatment of particular items. The Company recently submitted
additional information on these items to Staff in response to its Comments, which is also
attached hereto. Based on this additional information Staff has indicated that it does not
object to the rate treatment the Company now requests for these items with some
ORiGINAL
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, me. -
adjustments.' Finally, the Company will discuss its position that additional rate recovery
is justified in regard to specified items which it currently disagrees with Staff on.
Based on the foregoing, Spirit Lake respectfully requests that the Commission
issue its Order approving revisions to Applicant's schedules of rates and charges for
water service in the State of Idaho to become effective with service provided on or after
April 15 2006. The Company requests the Commission s approval of an increase in the
rates it charges its customers: 1) from $12.00 to $17.64 dollars for the first 9000 gallons
of water usage by a customer per month; and, 2) from $.10 to $.17 for every 100 gallons
of water used by a customer over 9000 gallons per month. See Exhibits 9, 10 & 11.
Additionally, the Company requests that the Commission approve an increase in the
amount of the hook-up fee for new service connecting to the water system from
200.00 to $2 500.00.
BACKGROUND
The Applicant has been providing service to its customers as a public utility for
nearly 23 years. Currently the Company provides service to 287 active service
connections within Kootenai County and Bonner County, Idaho. The Applicant's service
area is large, with the lots in the Spirit Lake East Subdivision averaging ten (10) acres in
size. The lots in the adjoining Treeport Subdivision are five (5) acres in size. The total
area served by the Company is over 3 300 acres. The Company owns one (1) lot in Spirit
Lake East, where the well, pump house and storage tank are located. More than 80% of
the lots have active connections in the Spirit Lake East and Treeport Subdivisions with
residences and/or improvements located on them.
I The Company wishes also to incorporate by reference into its Reply Comments Exhibits 1-20 submitted
with its rate application,
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INC. - 2
During the 23 years the Company has provided its customers water service, the
rates for said service, as represented by the attached schedules, have not changed since
initially approved by the Commission in Order No. 18466, dated November 23 1983.
During this time period, costs have changed and many improvements have been made to
the water system. Further, since Order No. 18466 was issued, Hanson Industries, Inc.
the parent corporation of the Company, has subsidized its operation. In 2005, Hanson
Industries wrote off (forgave) $370 000.00 of more than $475 000.00 the Company owed
the parent corporation. These liabilities represent the level of subsidy the parent
corporation has provided the water system since its inception. Hanson Industries is
unwilling, and it is unreasonable to expect it, to continue to subsidize the Company.
Based on this background Spirit Lake filed is rate Application with the Commission.
REPLY COMMENTS
In its Comments Staff cited three maintenance items discussed below that it
believes require Company attention and thus affect its rate request.
Finding and Repairing Leaks
Staff asserted that 1 to 1 Y2 gallons for every gallon used by customers is lost
through leakage. Accordingly, Staff recommended that the Company be directed to
prepare a plan to locate and repair system leaks.
Spirit Lake has obtained a bid from American Leak Detection Services
("American ) of Spokane, Washington, which estimates the costs for initial leak
2 Previous to the filing of these Reply Comments on February 8 , 2007 , the Company provided Staff with a
copy of a letter it sent to DEQ addressing system leakage, a standby generator and the repair of the
reservoir roof. See Exhibit 12.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 3
detection service at $3 000.00 to $4 500.00 ("Phase i"See Exhibit 13. This bid is for
work employing specialized equipment to attempt to detect leaks in the Company
system. Spirit Lake has sought approval of the use of this initial service from the Idaho
Department of Environmental Quality ("DEQ"
If this service does not detect leaks or is unable to pinpoint them exactly the
process will significantly narrow the areas which must be investigated. After Phase I is
completed American could be hired to provide additional services to detect leaks. This
second service could involve potholing down to the water system pipe to either install
additional valves or to expose pipe at 20 to 22 foot intervals in order to detect leaks
Phase II"
).
American has estimated that excavation work for potholing is $130.00 an
houf. In addition to the excavation cost, the expense for American s Phase II services to
detect leaks would be $1 500.00 a day. Until the Phase I service is performed, it is
difficult to determine what further work might be necessary or to estimate the overall cost
for such services.
At this time DEQ has chosen not to provide comments or approval on this item
until Spirit Lake enters into an agreement with it to address system leaks among other
issues. Spirit Lake is working on such an agreement with DEQ but believes that DEQ'
decision to not provide its approval or comment on the use of this service in the interim
impedes the progress of the repairs and improvements.
Standby Generator
In the fall of2006 and with DEQ's approval Spirit Lake installed a 55 horsepower
(75 kW) diesel standby generator to supply emergency power to run the distribution
3 American has advised that its bid could increase significantly if the size of the system turns out to be
larger than represented and upon snow levels in the area which could make access a problem.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 4
system in the event of a short term outage of powef. This improvement was approved of
by DEQ. The generator was designed to serve the booster pumps only due to the
reliability of Kootenai Electric Cooperative electrical service which was shown by a 3
year analysis of outages which was shared with DEQ. Unfortunately, in the recent past
there have been two extended power outages that led to system supply shortages due to
the fact that the generator was unable to also operate the Company s well pump. As a
result Staff recommended that the Company investigate the possibility of acquiring a
larger back-up generator capable of operating the entire system.
Spirit Lake has received a quote of $35 000.00 on a 250 kW, John Deere diesel-
powered gen-set from Spokane Diesel. See Exhibit 14. SPLE has also obtained a bid
from RC Worst Company to perform the electrical work to install such a generatof. Id.
The bid for this work is roughly $57 000.00. The Company has requested comment on
these bids from DEQ whose statutes and rules govern the installation of such a generatof.
However, at this time DEQ has chosen not to provide comments on this item until Spirit
Lake enters into an agreement to address this matter along with other issues. Spirit Lake
is working on such an agreement with DEQ but believes that DEQ's decision to not
provide comment on this item in the interim impedes the progress of the repairs and
improvements.
Repair of Reservoir Roof
Staff noted in its comments that the Company s reservoir has a flat roof and
despite the fact that it does not leak it at times has standing water on it due to rain or
snow. Staff believes this standing water presents a potential water quality issue. If the
roof did leak, water could seep into the reservoir causing potential contamination. As
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INC. - 5
such Staff recommended that the Company be directed to repair the roof to prevent
ponding of water on the roofto assure a safe, reliable water supply.
Spirit Lake has obtained bids for repair work on the roof which have been
attached for the Commission s review. See Exhibit 15. The first was provided by an
individual who works in-house with Hanson Industries, Inc. This bid involves the
building of a self-supported, sloped cover over the reservoif. The other bids are from
United Roofing of Mead, Washington and Icon Roofing and provide a variety of methods
for this repaif. These bids have been provided to DEQ for their review and comment so
that the Company could narrow the possible repair methods which an engineer will have
to review and design. At this time DEQ has chosen not to provide comments on this item
until Spirit Lake enters into an agreement to repair the roof and repair or improve other
possible system deficiencies. Spirit Lake is working on such an agreement with DEQ but
believes that DEQ's decision to not provide comment on the roofing bids at this time is
impeding the progress of the repairs and improvements.
Obiect to.
Staffs Comments and Recommendations which the Company does not
The Company has no objection to the following adjustments recommended by
Staff: 1) Staff Adjustment "C" DEQ duplicate fees; 2) Staff Adjustment "E" Annualize
revenue $3 276.00 for outage credit issued; 3) Staff Adjustment "F" Impute revenues
610.00 to annualize customers added; 4) Staff Adjustment "H" Replaced Plant; 5)
Staff Adjustment "I" Restocking Charge $452.00; 6) Staff Adjustment "J" to Working
Capital; 7) Adjustment "K" to State and Federal Income Tax; and, 8) the adjustment to
the costs for chemicals.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 6
Generator and Work in Progress
Staffs Comments at page 11 discuss certain costs that were inadvertently left out
of the Company s Application. Staff noted that the largest item was a used generator that
Spirit Lake purchased and installed for use as standby powef. In its audit Staff noted that
in 2005 the Company recorded a market cost of $12 360.00 for the generatof. Staff
asserted that although this cost was recorded in the Company s books there was a lack of
cost data and as such Spirit Lake s plant in service should not be increased now or in the
future to reflect the cost of the generatof.
Recently, the Company provided additional information to Staff in light of its
comments regarding the generator and other work in progress. As a result of the content
of this information Staff is willing to agree to certain numbers for these items as will be
discussed in more detail below. This additional information has been attached for the
Commission s review as Exhibit 16 which seeks through which the Company seeks the
recovery of an additional $27 709.86.
The additional information includes cost estimates for: 1) obtaining a similar
generator (to also include hook-up costs etc); 2) lease for a similar sized generator; 3)
specific information about the type of the current generator, the date it was purchased, its
age, the hours on its meter and a ownership document(s); and, 4) and costs for other work
in progress items. Id.
Based on this additional information Staff has indicated to the Company that it
would not object to Spirit Lake is seeking recovery and rate basing of $15 244.00 in costs
related to the generator and other work in progress. The Company asserts that this
amount fails to recognize the cost for several other used and useful and improvements
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INC. - 7
which have been made to the system. As such $15 244.00 should be the minimum
amount which should be included in this rate case.
In the Company s contacts with the Staff, the Staff has informed Spirit Lake that
it would not allow the recovery of the following costs the Company has incurred
533.00 in charges from Continental Contractors, Inc.
660.00 in charges from Don s Custom Woodworking;
$268.38 in charges on a Citi Card for Auto Electric Products; and
348.09 in charges related to the repair ofthe reservoir tank wall and
cleaning of the interior of the reservoif.
The Company incurred $1 533.00 in costs as a result of using Continental
Contractors to remove and dispose of the failed well pump motor in October of 2004.
This was a necessary expense and action so that a new well pump motor could be
installed. Accordingly, this amount should be included for recovery and in rate base.
The Company incurred $1 660.00 on or around October of 2006 when this
Company performed repairs and improvements on its well house which houses the
generatof. These improvements are still used and useful and will house any new
generator the Company purchases and as such should be included for recovery in rates
and included in rate base.
The Company also incurred $268.38 in charges from Auto Electric Parts for a
starter for the generatof. Again this was a necessary expense and should be included for
recovery and in rate base.
4 The Company does not object to the Staffs recommended disallowance of costs for a sign and a metal
detector.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMP ANY, INe. - 8
The Company also incurred $1 348.09 in costs related to the repair ofthe
reservoir tank wall and cleaning of the interior of the tank. As noted by the We1ch Comer
Engineering Report I the Company s reservoir had a storage capacity of 192 000 gallons
with the current useable capacity at the time of 112 000.00 gallons. Report I at p. 23.
The diminished useable capacity occurred because the reservoir had crack at a level of
approximately 5.5 feet below overflow and if filled beyond this level would leak. Id.
Based on Report I's findings DEQ required the Company to repair this crack and to
inspect the interior of the tank using a diving service. The Company repaired the crack
in the tank which repair was approved of by DEQ. See Exhibit 17 at p. 2. As a result of
this repair the Company is now able to use the full storage capacity of its reservoir of
192 000 gallons. Based on these facts it is clear that the system and its customers have
received a used and useful benefit from this repaif. In addition, as required by DEQ the
Company hired a firm to inspect and clean the interior of the reservoif. The tank was
cleaned and the inspection noted no leaks in the roof of tank. Again this service provided
a clear benefit to the system and its customers and is the assurance that the reservoir was
capable of providing safe and reliable service to the customers of Spirit Lake. Based on
the foregoing, Spirit respectfully requests that $1 348.09 be added for recovery and into
the Company s rate base.
The Company also requests the recovery of the full amount of the generator
which is currently in use. The value ofthis item is demonstrated by Exhibit 16.
Based on these adjustments the Company requests that it be allowed to recover
and rate base these additional costs.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 9
Engineering Expenses
In Adjustment B to engineering expenses in the Staffs Comments it
recommended the disallowance of$2 946.00 of these costs because they related to the
potential sale or transfer of the system or to duplicate repairs of the reservoif.
Recently, the Company has provided additional information to Staff in light of its
comments regarding the engineering expenses it has incurred. As a result of the content
of this information Staff is willing to agree to certain numbers for these items. As the
evidence supporting the Company s position is voluminous it requests that the
Commission authorize the admission of certain correspondence contained in the
Company s response to Staffs First Production Requests No.1 and its entire response to
Production Request No.3 into the record of this case for the sake of efficiency and cost
reduction.5 If this is not acceptable the Company will produce additional copies of these
responses for introduction into the record.
In submitting additional information to Staffthe Company contended that it
should recover the vast majority of the total engineering expenses which Staff initially
recommended be disallowed. The Company asserts that these costs are recoverable
the record demonstrates that these engineering reports and service the Company received
were used by DEQ as the basis for all actions, repairs and improvements which it has
required of Spirit Lake as is shown below.
On October 28 , 2007 Welch Comer provided an engineering report ("Report I"
to the Company and its customers. The Company paid $2 500.00 for its portion of the
5 The Company requests that following DEQ, Spirit Lake and Batt & Fisher, LLP correspondence be
admitted into the record which are dated as: October 19 25 & 28 2004; December 1 & 9 , 2004; January
2005; February 18, 2005; April 5 & 22 2005; June 13 2005; and November 5 2005.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 10
preparation of Report I. Report I was completed just after the pump failure and system
outage occurring between October 4 and 10, 2004. DEQ received Report I on November
2004, as indicated by correspondence from DEQ Engineer Gary Gaffney. The Staff
requested a copy of Report I which it received in December as indicated by
correspondence from Batt & Fisher, LLP to Michael Fuss on December 9 2004.
Although Report I was initially prepared for the possible transfer of the system to
another party its recommendations were used by DEQ as the basis for the actions, repairs
and improvements it required of Spirit Lake and which are germane to this rate case.
This is demonstrated clearly by a review of the correspondence referenced in footnote 4
above. The Report I recommendations DEQ followed and demand action on are as
follows: 1) the installation of a second well (Company negotiations with DEQ result in
removal of this item but leads to other required repairs and improvements); 2) repair of
cold joint in reservoir tank; 3) installation of a standby generator; 4) electrical system
upgrades; 5) installation of exhaust fan and thermostat in the well-house possible
reconfiguration of chlorination equipment to help prevent an existing corrosion problem;
6) installation of an auto-dialer system; 7) the placement of operation and maintenance
manuals in the well-house; and, 8) repair of water meter on discharge of well to track
system production and consumption.
The Company was provided further engineering services by Welch Comer which
also related to matters contained within Report I and the improvement and repair of the
system. For example, Welch Comer s January 6 2005 assessment ("Report II"
specifically refers the reader to review Report I for a detailed description of the water
system and to provide for the context of the repairs recommended by Report II which
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. -
include: 1) the installation of an autodialer; 2) the inclusion of a spare pump in the
Company s inventory; and 3) the installation of standby generation.
Finally, in March of 2005 Welch Comer provided Spirit Lake with a document
entitled "Maintenance and Repairs Report, dated March 2005" ("Report III") which also
discusses proposed repairs which all originated from Report I including the repair of the
reservoir wall and roof and the installation of a vent in the well-house for chlorine off-
gases.
Based on this additional information and argument, Spirit Lake is seeking
recovery of the $2 946.00 in engineering expenses which Staff initially recommended be
disallowed. As stated previously, in light ofthe additional information submitted to Staff
it has indicated to the Company that it is willing to agree to this number for this item as
long as this amount is amortized over a three (3) year period. The Company has no
objection to a three (3) year amortization period for this item.
Legal Expenses
In Adjustment B in Staffs Comments it recommended disallowance of$5 413.
in legal expenses the Company has sought recovery of in this rate case. The Company
asserts that $800.00 of the Staff recommended disallowance be included for recovery
based upon the fact that this amount of legal services recommended for disallowance
were actually related to establishing timelines with DEQ for repairs and improvements
and work related to the repairs and improvements themselves.6 Based on the Company
discussions with Staff in light of its Comments Staff has indicated a willingness to agree
that recovery of this $800.00 in legal expenses is reasonable. The Company also agrees
with Staffs three (3) year amortization of these expenses.
6 The Company under separate cover is submitting confidential information regarding these expenses.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 12
Water Testing Expenses
In Adjustment D in Staffs Comments it recommended the reduction of test year
operating expenses for water testing by $577.00. Staff made this recommendation based
on the fact that during 2005 until 2007 DEQ waived certain tests that Spirit Lake
included costs for in its Application.
Recently, the Company provided additional information to Staff in light of its
comments regarding its water testing expenses. As a result of the content of this
information Staff is willing to agree to a certain number for this item as discussed below.
The additional information submitted to Staff and now attached to these Reply
Comments demonstrates that the Company s DEQ waiver expires in 2007. See Exhibit
18. Spirit Lake believes these waivers will not be renewed due the numerous repairs and
improvements DEQ has required of the Company. This information also shows that the
Company had incurred costs for these same tests prior to waivers being granted by DEQ.
Id.
Based on the foregoing information and Staffs non-objection based on the same
the Company is requesting that $577.00 be included for recovery in its rate case for water
testing expenses.
New Connections
On June 7, 2004, the Commission issued Order No. 29513 in Case No. SPL-
04-, approving an increase in the Company s connection fees from $650.00 to
200., effective June 9, 2004. The Company initially requested an increase in the fee
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMP ANY , INe. - 13
to $2 500.00. The Company and the Staff ultimately agreed on the $1 200.00 fee based
upon Staff assisting the Company with finding a licensed, qualified contractor to perform
the work. Shortly after the Order was issued, this contractor performed one connection at
the $1 200.00 rate and then withdrew from the agreement, leaving the Company back in
its pre-Order dilemma of finding a qualified contractof. The Company did locate a new
qualified contractor, which again charged $2 500.00 for performing each main tap and
service line to the property line. This cost is mainly due to the very large size of lots in
the subdivisions and the distances to bring service lines to the lots. This cost does not
include any administrative costs or direct labor by the Company. The Company is
therefore requesting that the new service connection fee be increased by an amount equal
to the actual cost paid to the outside contractof.
Staff in its comments recommended that the hook-up fee be set at $1 600.00. In
light of Staffs Comments the Company has provided to Staff and now attaches to these
Reply Comments invoices and bids which justify the Applicant's request to increase its
hook-up charge to $2 500.00. See Exhibit 19. The Company will recover only its direct
costs if the hook-up charge is raised to this level. Based on the submission of this
additional information Staff has indicated to the Company that it is willing to agree that
Spirit Lake s hook-up fee for new connections should be set at $2 500.00.
10.Increased Cost for Power
The Company has submitted additional information to Staff in light of its
comments which has been attached to the Company s Reply Comments as Exhibit 20
which demonstrates that its costs for receiving service from Kootenai have increased by
16% due to a rate increase Kootenai imposed in September of 2006, subsequent to the
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMP ANY, INe. - 14
date this case was filed. Due to the .submission of this additional information Staff has
indicated to the Company that it is willing to agree that the increased costs for power be
included for recovery in this case.
11.Staff Recommendations and Comments which the Company Objects to
a. Staff Adjustment "A" Power and Chemical Costs
The Company does not disagree with the Staffs position in general that a portion
of electric power costs be reduced due to leakage. However, the Company does not
believe that electric power cost should be reduced by $9 114.00.
Staffs applied its adjustment for this cost to the total power bills for the yeaf.
The Company does not agree with this approach as it is generally accepted that volume of
water pumped is more a function of energy consumption (Kwh) than it is of power
demand (KW). Consistent with this the Company has recalculated Staffs adjustment to
apply the adjustment to energy charges only. In addition, with the addition of increased
power costs as discussed above in Section 10 would add back $1 095 to the electric
power costs proposed by Staff for recovery.
Rate Case Expenses
The Company submits that it should be allowed to amortize $22 279.56 in rate
case expenses over a three (3) year period. These expenses consist of$8 746.12 in legal
expenses incurred through January 31 2007, an additional $5 325.00 in estimated legal
expenses (35.5 hours * attorney s rate of$150.00 an hour); $6 110.00 in consultant fees;
7 Counsel for the Company estimates these legal expenses as follows: 1) 9 hours for drafting status of
improvements letters sent to DEQ and the Staff, preparation for meeting with Staff to discuss the
Company s Application, attendance at meeting with Staff regarding the same, review of recent Commission
Orders in this case, review of consultants spreadsheets and draft memorandum on Company s position on
Staffs Comments 2) 15 hours for the preparation of Reply Comments; 3) 8 hours for preparation for public
hearing and workshop, travel to Spirit Lake and attendance and participation in public hearing and
workshop; 4) .5 hours for attendance at Commission Decision Meetings on rate application; and 5) 3 hours
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INC. - 15
an additional $1 360.00 in estimated consultant fees related to the preparation of reply
comments (16 hours * consultant rate of$85.00 an hour); and $200.00 for attorney
travel expenses to Spirit Lake to allow Company s attorney s attendance at public hearing
and workshop on February 28 , 2007 in Spirit Lake.
Based on the foregoing, the Company requests that it be allowed to amortize these
rate case expenses over a total of three (3) years consistent with Staff s recommendation.
12.Future Repairs and Improvements
Although not included in the Company s rate application Spirit Lake is providing
notice by these Reply Comments that it will seek further rate relief, the imposition of a
surcharge or other appropriate cost recovery mechanism in the future in order to recoup
the costs the Company will incur for the leak detection services, repair of system leaks
installation of a new standby generator and repair of the Company s reservoir roof.
CONCLUSION
Based on the foregoing, Spirit Lake respectfully requests that the Commission
find that the Applicant's existing rates are unjust , unreasonable and insufficient to
provide the Applicant with a fair rate of return, and that the revised rates and charges
proposed in Exhibits No.II of these Reply Comments are just and reasonable, and that
Applicant be permitted to charge said rates to its customers not later than April 15, 2006.
The Company also respectfully requests that the Commission allow the Company
to recover its rate case expenses resulting from the preparation, filing and prosecution of
its Application through an amortization schedule over a 3 year period.
Finally, the Company respectfully requests that the Commission grant such
for review of Commission Final Order on rate application and correspondence to Company containing
analysis of said Final Order.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMP ANY, INe. - 16
other and further relief as it may determine proper in the circumstances. .
DATED THIS 26th day of February, 2006.
SPIRIT LAKE EAST WATER COMPANY
By:
J 0 R. Hammond, J f.
t rney for Applicant
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 17
CERTIFICATE OF SERVICE
I HEREBY CERTIFY That I have, this 26th day of February, 2007 , caused to
mailed a true and correct copy of the foregoing document to the following by U. S. Mail
Postage Prepaid thereon, in the following indicated manner:
Weldon B. Stutzman
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
u. S. Mail
,.,....-
Hand Delivery
Facsimile
1..
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMP ANY, INe. - 18
EXHIBITS 1-
The Company wishes to incorporate by reference into its Amended Reply Comments
Exhibits 1-20 submitted with its rate application and Reply Comments dated February 23
2007.
AMENDED REPLY COMMENTS OF SPIRIT LAKE EAST WATER COMPANY, INe. - 19
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C
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s
1 Rate Base
2 Return on Rate Base
3 Income Requirement
4 Income Realized (Proforma)
5 Income Deficiency
6 Gross-up
7 Revenue Deficiency
8 Revenue Realized
10 Gross Revenue Requirement
9 Increase Percentage R.equired
Spirit lake East Water Co.
Reply Comments
Calculation of Revenue Requirement
$184 772.
12%
$ 22 172.
470.
$ 21 702.
128.8417%
$ 27 961.
$ 52 789.48
$ 80 750.
52.97%
Exhibit No.1 0
Reply Comments
Spirit lake East Water Co.
Reply Comments
Calculation of Rate Design
Per Staff Comments
1 Adjusted Test year Revenue at Current Rates from Minimum Charges
2 Adjusted Test Year Revenue at current rates from Excess Charges
3 Per Staff Worksheets re rate design
4 Check to Staff Comments Attachment "C" Pg 3
5 Error
Distribution of Rates At Staff Proposed Ratios
6 Revenue Requirement Per Ex No.1 0
7 Staff Proposed Minimum Charge Ratio ~ 70.51 %
8 Staff Proposed Excess Commodity Charge Ratio ~ 29.49%
10 Percent Increase in Minimum Charge (line 7/line1-
11 Percent Increase in Excess Commodity Charge (line 8/line 2-
12 Current Minimum Charge
13 Current Excess Commodity Charge
14 Resulting Minimum Charge (line 12 *(line 10 +1))
15 Resulting Commodity Charge (line 13 *( line 11 +1))
Varify Proposed Rates
16 customer months billed (Line 1 / $12 per Mo.
17 Revenue ~ New Rate (line 14 *Iine 16)
18 Excess Commodity Billed (Line 2/.10)
19 Commodity Charges ~ New Rate (line 18 * line 15)
Test Year
Revenue
Current RatesAdjusted Percent
Per Staff of Total
Workpapers
$ 38 736.
$ 14 016.
$ 52 752.
$ 52 789.
0689% Not Significant
73%
27%
100%
$ 80 750.
+--
937.70.51%
$ 23 813.29.49%
roof 750.100.00%
46.99%
69.89%
12.
17.
228
$ 56 937.
140 166.4
$ 23 813.
Exhnibit No. 11
Reply Comments
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