20091016Comments.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283
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2009 OCT l 6 PM l: 35
UTI
Street Address for Express Mail:
472 W WASHINGTON
BOISE ID 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF SPIRIT LAKE EAST
WATER COMPANY'S TARIFF ADVICE TO
MODIFY TARIFF SCHEDULE NO.1
)
) CASE NO. SPL-W-09-1
)
)
) COMMENTS OF THE
) COMMISSION STAFF
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through
its Attorney of record, Weldon B. Stutzman, Deputy Attorney General, and in response to the
Notice of Application and Notice of Modified Procedure issued in Order No. 30916 on September
30,2009, submits the following comments.
BACKGROUND
On August 20,2009, Spirit Lake East Water Company fied a Tariff Advice to modify the
Company's Tariff Schedule NO.1. The Company proposes to add the following charges to the
existing tariff: a late payment fee, a returned check charge, an after-hours reconnection charge, a
seasonal reconnection charge and an after-hours seasonal reconnection charge. In addition, the
Company proposes to begin biling its customers on a monthly basis rather than quarterly beginning
October 1,2009. Finally, the Company proposes to modify language in tariff Schedule No.1
regarding how it wil bil its customers in the event that it canot read a meter(s). The Company
STAFF COMMENTS 1 OCTOBER 16,2009
originally requested that this filing become effective within 30 days after filing. On September 11,
2009, the Company fied a letter requesting that the effective date be moved to October 1,2009.
Spirit Lake is requesting the change to monthly biling because it will: (1) produce a more
consistent revenue stream to support the operations of the Company and the provision of safe,
adequate and reliable water service to its customers; (2) send better and more timely signals to the
Company's 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 and disclosure of any leaks on the customer's side of the meter.
Spirit Lake also proposes several non-recurring charges not previously contained in the
tariff. The Company wishes to add: (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 ban; (3) a reconnection fee of
$32 for reconnection within 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 normal
office hours and $65 for other than normal business hours. Spirit Lake is requesting these fees and
charges to allow the Company to recover a portion of the costs incurred by the Company for late
payment, returned checks, and reconnecting service directly from those customers causing the cost
to be incured.
The Company has provided notice of these changes through a direct mailng dated
August 20, 2009, to each of its customers.
STAFF REVIEW
Seasonal Reconnection charge
Spirit Lake is requesting a seasonal reconnection charge of $52 or approximately four times
the monthly base charge. The Company indicated it currently has 21 customers that are metered
and not taking service out of a total customer base of 330, which includes 289 active residential
customers and 20 commercial customers. The Company was unable to provide previous seasonal
reconnection numbers due to the recent change of ownership and the inability to secure previous
customer account records.
Staff reviewed recent cases of companies of similar size whose service territories are subject
to seasonal occupancy by their customers. Most recently considered by the Commission was Teton
Springs Sewer and Water (TTS-W-08-01), which also bils on a quarterly basis. Teton Springs was
STAFF COMMENTS 2 OCTOBER 16, 2009
allowed a seasonal reconnection charge of $236, equal to two times the quarterly flat rate of $118
for residential customers, for all disconnections exceeding thirty days. Teton Springs' 2008 Annual
Report indicated the Company served 196 residential customers and 5 commercial customers.
Teton Springs primarily serves second and third homes subject to seasonal occupancy, but historical
records indicating what percentage of customers have seasonal usage are not available.
During the recent general rate case of Stone ridge Water Company (Case No. SWS-W-06-
01), Staff was able to identify the number of accounts that were seasonally reconnected for the
previous four years, from 2003 to 2006. The number of customers seasonally reconnected remains
somewhat constant from year to year, varying from 12 customers in 2003 to 8 customers in 2006,
while the customer base grew from 41 residential customers and 13 commercial customers in 2003
to 366 residential customers and 8 commercial customers in 2006. In this case, the Commission
approved a seasonal reconnection charge of three times the monthly base rate, for all customers
disconnected for more than thirty days. For the smallest (3/4") service, the seasonal reconnection
fee would be $72. Staff recommends the seasonal reconnection charge of $52 for accounts
disconnected longer than thirty days.
After hours reconnection charges
The Company's normal business hours are 8:00 am to 5:00 pm Monday through Friday.
Reconnection for other than normal business hours requires the Company to dispatch personnel
outside of their normal working hours creating additional expense. The proposed charges allow the
Company to recover a portion of these costs. The Company's proposed after hours reconnection
fees of $32 for accounts closed thirty days or less and $65 for seasonal disconnection accounts
closed longer than thirty days is within the amounts recently approved for other companies. Staff
recommends the after hours reconnection fees of $32 for accounts closed thirty days or less and $65
for accounts closed longer than thirt days.
Returned check charges
The Company's request for a $20 returned check charge is recognized by Staff as
appropriate to reduce the costs incured when the check is returned for non-sufficient funds. The
charge of $20 is consistent is with what other companies charge and meets statutory requirements.
Staff recommends approval of the $20 returned check charge as appropriate to reduce the costs
incured when the check is retured for non-suffcient funds.
STAFF COMMENTS 3 OCTOBER 16, 2009
Late payment charges
The Company's request ofa one percent (1%) late payment fee for all past due payments not
received by the due date is appropriate to reduce the costs incured in the collection of past due debt
and should improve cash flow by encouraging timely payment of bils. The one percent late
payment fee is consistent is with what other companies charge. The revised tariff as submitted by
the Company applies the charge to the unpaid balance at the time of the next monthly biling date
and is based on the Company's request to switch from quarterly to monthly biling. If the Company
continues to bil quarerly Staff recommends that the due date be set at thirty days after the biling
date and a late payment charge of one percent be applied to the unpaid balance at that time to allow
the Company to improve collections.
Quarterly to monthly biling
Staff agrees with the Company's assertions that the change to monthly biling wil produce a
more consistent revenue stream to support the operations of the Company, send better and more
timely signals to the Company's customers about their individual water usage, allow the Company
to obtain data showing a more accurate account of water usage or loss, and provide for a more
timely discovery and disclosure of any leaks on the customer's side of the meter.
In response to Staffs original request for information upon receipt of the Tariff Advice, the
Company indicated that the existing biling system, software program and special postcard-sized
forms would need to be upgraded as part of the process of switching from quarerly to monthly
biling. In addition to the expense of equipment there would be the cost of reading the meters
monthly and recording all readings into customer records prior to biling.
Staff asked for but did not receive sufficient information from the Company to perform a
prudency review of the costs to implement the proposed change in biling practices. Ultimately the
Company must be able to provide a cost benefit analysis of its proposed biling change. The costs
and benefits to be quantified and documented by the Company include but are not limited to:
. The current costs associated with meter reading as evidenced by positive time
keeping (time cards, for example) and the calculation of the additional costs
associated with the increased meter reading proposed by the Company;
STAFF COMMENTS 4 OCTOBER 16, 2009
· The costs associated with the current biling software and the costs for upgrading the
Company's computer software as evidenced by a bid and/or other contract document
that delineates the costs for the necessary software changes as a result of the biling
change;
· A calculation of the historical cost of customer accounts that have been uncollected
and written off by the Company and the anticipated reduction in uncollectibles;
· The curent costs (postage, forms, personnel time) for the Company's quarterly
biling and the expected additional costs associated with the increased number of
bils sent to customers as proposed and evidenced by the cost documentation for the
billng costs (cost per biling form, postage per customer billng, and additional
personnel time to process these billngs); and
· The Company's proposed increase in customer rates as a result of the costs to
implement monthly biling as derived from its detailed and documented cost and
benefit analysis.
Management may determine that it is in its best interests to bil customers on a monthly
basis due to the economies and efficiencies it wil obtain. Staff does not recommend that the
Company be prohibited from biling on a monthly basis if it chooses to do so. However, due to the
lack of cost-benefit information to enable Staffs prudency review of the associated costs, Staff
recommends that the Company not receive recovery for its costs to bil on a monthly basis until the
prudence review is completed. Staff recommends the Commission postpone any prudence review
and recovery of monthly biling costs until such time that the Company presents sufficient detailed
documentation to demonstrate that the costs to bil customers on a monthly basis do not exceed the
benefits to customers and the Company. Customers should be given the opportunity to provide
input on the benefits of monthly biling and the additional costs they would incur as would be
allowed in a general rate case.
SUMMARY OF PUBLIC COMMENTS
No public comments have been received by the Commission regarding this case.
STAFF COMMENTS 5 OCTOBER 16, 2009
STAFF RECOMMENDATION
Staff recommends the Commission approve the proposed tariff changes. Specifically,
(1) Staff recommends the seasonal reconnection charge of$52 for accounts closed longer
than thirty days.
(2) Staff recommends the after hours reconnection fees of $32 for accounts disconnected
less than 30 days and $65 for accounts disconnect longer than thirty days.
(3) Staff recommends approval of the $20 returned check charge.
(4) Staff recommends approval of the one percent (1 %) late payment fee for all past due
payments not received by the due date.
(5) Staff recommends the Commission allow the Company to implement monthly billng at
its own risk if the Company sees benefits. However, Staff recommends the Commission
postpone any prudence review and approval of monthly biling cost recovery until such
time that the Company presents sufficient detailed documentation. Accordingly, the
change to monthly biling may not currently increase customer rates. Future rates wil
only increase due to the switch if the Commission determines the associated costs to be
prudent.
Respectfully submitted this \ ~,LL day of October 2009.
A~
Weldon B. Stutzman
Deputy Attorney General
Technical Staff: Chris Hecht
Patricia Hars
Terri Carlock
i:umisc:commentssplw09. I .wscwhphtc comments. doc
STAFF COMMENTS 6 OCTOBER 16, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF OCTOBER 2009,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. SPL-W-09-01, BY MAILING A COpy THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
SPIRIT LAKE EAST WATER COMPANY
PO BOX 3388
COEUR D'ALENE, ID 83816
JOHN R. HAMMOND, JR.
FISHER PUSCH & ALDERMAN LLP
PO BOX 1308
BOISE,ID 83701
E-MAIL: jrh(ffpa-Iaw.com
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SECRETARYY,l
CERTIFICATE OF SERVICE