20140829Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:MICHAEL W.MORRISON
DATE:AUGUST 27,2014
RE:COMPLIANCE FILING OF SPIRIT LAKE EAST WATER COMPANY
REGARDING EVALUATION OF THE ADDITION OF FIRE
HYDRANTS;CASE NO.SPL-W-13-O1
On October 11,2013,the Commission issued Order No.32904 in Case No.
SPL-W-13-01 directing Spirit Lake East Water Company (Company)to evaluate the addition of
fire hydrants to its water distribution system.On June 23,2014,the Company submitted a
Preliminary Engineering Report for Fire Flow Analysis conducted by Welch,Comer,and
Associates,Inc.(Welch-Comer).
SYSTEM DESCRIPTION AND HISTORY
The Company serves the Spirit Lake East Development in Kootenai County,and the
adjacent Treeport Development in Bonner County.The system provides water to 293 residential
customers and is projected to provide water to 366 residential customers when both
developments are complete.Major system components include a 600 foot well,pumps,a
192,400 gallon storage tank,sodium hypochlorite (chlorine)injection system,back-up generator,
and 126,585 feet of distribution line ranging in size from 1 inch to 12 inches.Most water mains
are either 6 inches or 8 inches in diameter,and laterals vary in size from 1 inch to 6 inches.
REGULATORY REQUIREMENTS
Neither the Idaho Department of Environmental Quality (IDEQ)nor Idaho Fire Code
rules require the Company to provide its customers with water for fire protection;however,the
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IDEQ requires that if installed,hydrant operating pressure be not less than 20 psi,and that
laterals feeding those hydrants be at least 6 inches in diameter (IDAPA 5808.08 sections 550
and 552).The IDEQ also requires that water supplies used for fire protection provide sufficient
storage for 120 minutes of concurrent fire flow and peak customer demand.Idaho Rules for
Public Drinking Water (IDAPA 58.01.08 sections 501 and 513)require that drinking water
systems that are substantially modified after 2002,and that obtain their water from a well,
incorporate a second well and other redundant components.
Appendix C of the Idaho Fire Code requires that hydrants be located so that no frontage
point is more than 250 feet from a fire hydrant,and that each hydrant supply at least 1,750 gpm.
These requirements can be modified by local fire officials,and the Spirit Lake Fire Department
has agreed that spacing can be increased to 1,000 feet and flow reduced to 1,000 gpm.
REVIEW OF THE 2014 WELCH-COMER ENGINEERING REPORT
The 2014 Welch-Comer Engineering report concludes that the existing system is
undersized to meet fire flow requirements specified by the IDEQ and Spirit Lake Fire
Department:Modifications totaling at least $5,833,700 will be necessary to upgrade the system
to provide water for fire protection.The reports analysis includes the costs of installing a new
well system,19 fire hydrants,replacing undersized laterals with 6 inch lines,upgrading mains,
increasing storage volume,and adding booster pumps.The Welch-Corner cost analysis assumes
a 20-year loan with a 3%interest rate.Depending on whether system cost is distributed over the
systems potential 366 customers,or its current 293 customers,the analysis predicts that the
monthly payment per customer will increase by between 589 and SI 12.The report also includes
an option to upgrade the system in 5 phases over 20 years.Under this option,monthly payments
would be $119 per month for the first five years,but fall to $60 per month by year twenty.
STAFF ANALYSTS
Staff generally agrees with Welch-Come?s analysis and conclusions.Staff did not
consider Welch-Comers phasing option because it requires the entire development to subsidize
the system,even though some customers may have to wait 20 years before receiving its benefits.
In its 2013 rate case,the Commission approved an annual revenue requirement of
$143,525,or about $41 per customer per month (Order No.32904).The Commission received
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written comments from 22 Spirit Lake East Water Company customers:Most customers
opposed the Companys requested increase in customer charge from $12.50 to $24.75 per month.
Only one customer supported the proposed increase,and only two customers mentioned the
desirability of a fire protection system.Staff believes it unlikely that the majority of current
customers would support the rate structure necessary to upgrade the system to include fire
protection given its relatively high monthly incremental cost of $89 -Si 12.
STAFF RECOMMENDATION
Although desirable,there is no governmental requirement for the Company to provide a
water system capable of supporting fire flow requirements.Staff recommends that the Welch
Comer report be accepted,and that no further action be required of the Company at this time;
however.if in the future,the Company can provide evidence showing that the majority of
customers are willing to bear the costs of providing fire protection,a specific proposal could be
considered.
COMMISSION DECISION
Does the Commission wish to accept the Company’s Preliminary Engineering Report for
Fire Analysis with no further action to be taken on this matter at this time?
Udmemos/Spiril Lake East flre hydrants dcc memo
DECISION MEMORANDUM -3-AUGUST 27,2014