20091030final_order_no_30938.pdf

Office of the Secretary
Service Date
October 30, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF SPIRIT LAKE EAST
WATER COMPANY'S TARIFF ADVICE TO
MODIFY TARIFF SCHEDULE NO.
ORDER NO. 30938
CASE NO. SPL-09-
On August 20, 2009, Spirit Lake East Water Company filed a Tariff Advice to
modify the Company s Tariff Schedule No.1. The Company proposed to add fees for late
payments, returned checks, and reconnecting service, and also proposed to begin billing its
customers on a monthly basis rather than quarterly beginning October 1 2009.
Spirit Lake provides service to approximately 330 customers residing in a six-square-
mile area in Spirit Lake, Idaho. The Company last requested a rate increase in 2006, and the
Commission approved a modest increase, while noting pressing problems with the water delivery
system. The Commission directed Spirit Lake to promptly address leakage and a generator
problem, and assured the Company "the Commission will respond as quickly as possible if the
Company requests recovery of the costs in rates.Order No. 30279, p. 11. Spirit Lake
subsequently provided reports to the Commission indicating the Company made the necessary
improvements, but has not requested recovery of the costs in rates.
The Company originally requested that its proposed tariff changes become effective
within 30 days after filing, but later filed a letter requesting that the effective date be moved to
October 1 2009. On September 30, 2009, the Commission issued a Notice and Order No. 30916
suspending the effective date of the tariff changes "for a period of 60 days from October 1 , 2009
or until such earlier time as the Commission enters an Order accepting, rejecting or modifying
the proposed terms. Order No. 30916, p. 3. The Notice of Modified Procedure established a
period for filing written comments.
The Company proposed the new fees to recover costs caused by customers who make
late payments, pay with insufficient-funds checks, or ask for reconnection after disconnection for
seasonal service. Specifically, the non-recurring charges Spirit Lake proposed are the following:
(1) a late payment charge of one percent (1 %) per month of the unpaid balance not received by
the next statement date; (2) a $20 returned-check fee each time a customer s check for payment
for water service is returned by the bank; (3) a reconnection fee of $32 for reconnection within
ORDER NO. 30938
30 days of disconnection but at times other than normal business hours; and (4) new
reconnection fees for customers disconnected more than 30 days of $52 during nonnal office
hours and $65 for other than normal business hours.
Spirit Lake stated the proposed change to monthly billing will (1) produce a more
consistent revenue stream to support the operations of the Company in supplying adequate and
reliable water to its customers; (2) send better and more timely signals to the Company
customers about their individual water usage; (3) allow the Company to obtain data showing a
more accurate account of water usage or loss; and (4) provide for a more timely discovery of any
leaks on the customer s side of the meter. The Company provided notice of the proposed
changes through a direct mailing to each of its customers dated August 20 2009.
Staff reviewed changes to Schedule 1 requested by Spirit Lake and filed written
comments. No other comments were filed with the Commission.
The Commission finds that the non-recurring charges proposed to be added to Spirit
Lake s tariff are fair, just and reasonable.The seasonal reconnection charge of $52, or
approximately four times the monthly base charge, is consistent with reconnection charges
approved for other small water companies. Seasonal disconnection does not appear to be a
significant service challenge for the Company, as it indicated it currently has 21 customers who
are metered and not taking service out of a total customer base of 330.
The Company proposed after-hours reconnection fees of $32 for accounts closed 30
days or less and $65 for seasonal disconnection accounts closed longer than 30 days. The
Company s normal business hours are 8:00 a.m. to 5:00 p., Monday through Friday. After-
hours reconnection creates additional expense because personnel are dispatched outside of their
normal working hours. The proposed charges will enable the Company to recover a portion of
the extra costs. The Commission finds the after-hours reconnection fees of $32 for accounts
closed 30 days or less and $65 for accounts closed longer than 30 days to be just, fair and
reasonable.
The Company s request for a $20 returned-check charge is appropriate to recover
costs incurred when a check is returned for non-sufficient funds. The charge of $20 is consistent
with charges of other similar companies and meets statutory requirements. The Commission
finds the $20 returned-check charge is just, fair and reasonable.
ORDER NO. 30938
The Company s request of a one-percent late payment fee for all past-due payments
not received by the due date is appropriate to reduce the costs incurred in collecting past-due
amounts and should improve cash flow by encouraging timely payment of bills. The one-percent
late payment fee is consistent with similar charges approved for other small water companies.
Because the Commission does not approve the change to monthly billing in this Order, the due
date will be 30 days after the billing date and the late payment charge of one percent will be
applied to the unpaid balance after that time. The Commission finds the one-percent late
payment fee is just, fair and reasonable.
In its review of the Company s request to change to monthly billing, Staff stated it
did not receive sufficient information from the Company to perform a prudency review of the
costs to implement the proposed change in billing practice.Staff Comments, p. 5. Staff
nonetheless recommended the Company not be prohibited from making the change to monthly
billing, but not be allowed recovery of any associated costs until a prudency review can be
completed.
The Commission finds that a determination on a change to monthly billing should be
made after all costs are known and can be measured against the benefits. It may be, as the
Company asserts, that a change to monthly billing will produce a more consistent revenue
stream, send clearer signals to the Company s customers about their water usage, provide better
data about water usage or loss, and allow for earlier discovery of leaks on a customer s side of
the meter. These benefits do not come without costs. The Company indicated that the existing
billing system, software program and special postcard-sized forms would need to be upgraded as
part of the process to switch from quarterly to monthly billing. In addition, the costs for reading
meters and recording all readings into customer records prior to billing would increase. Without
knowing the significance of the added costs, it is not possible to adequately assess the relative
benefits of monthly billing. In addition, customers should be given the opportunity to provide
input on the benefits of monthly billing as compared to the additional costs they would incur.
The Commission approves the proposed tariff changes to add non-recurring charges.
Specifically, we approve (1) a seasonal reconnection charge of $52 for accounts closed longer
than 30 days; (2) an after-hours reconnection fee of $32 for accounts disconnected less than 30
days and $65 for accounts disconnected longer than 30 days; (3) a $20 returned-check charge;
ORDER NO. 30938
(4) a one-percent (1 %) late payment fee for all past-due payments not received by the due date.
The proposal to change to monthly billing is not approved, but will be reserved for a rate case
when the additional costs and benefits can be adequately evaluated.
ORDER
IT IS HEREBY ORDERED that Spirit Lakes' proposed changes to its Schedule I
tariff to add non-recurring charges, as set forth in this Order, are approved. The Company is
directed to file revisions to its tariff consistent with this Order.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code g 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this .30 tM..
day of October 2009.
~~~
D. KEMPTON, RESIDENT
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ARSHA H. SMITH, COMMISSIONER
~~MISSIONER
ATTEST:
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Commission Secretary
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ORDER NO. 30938