20211209Final_Order_No_35247.pdf

ORDER NO. 35247 1
Office of the Secretary
Service Date
December 9, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE JOINT
APPLICATION OF SUEZ WATER IDAHO,
INC., TO ACQUIRE EAGLE WATER
COMPANY
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CASE NOS. SUZ-W-18-02
EAG-W-18-01

ORDER NO. 35247

On November 15, 2018, SUEZ Water Idaho Inc. (“SUEZ”) and Eagle Water Company,
Inc. (“Eagle Water”) filed a Joint Application requesting Commission approval of the proposed
acquisition of Eagle Water’s assets by SUEZ (“Joint Application”). On December 7, 2018, the
Commission issued a Notice of Application and Notice of Intervention Deadline. Order No. 34203.
The City of Eagle, Eagle Water Customer Group (“EWCG”), Boise City, Community Action
Partnership Association of Idaho (“CAPAI”)1, and Citizens Allied for Integrity and Accountability
(“CAIA”) were granted intervention. Order No. 34229.
On March 3, 2019, SUEZ filed an unopposed motion for stay citing Case No. CV01-
19-03534 filed by the City of Eagle in the District Court for the Fourth Judicial District of Idaho
(the “District Court Case”) seeking judicial determinations that could affect the outcome of this
case. On March 27, 2019, the Commission granted SUEZ’s motion subject to two conditions: 1)
the Commission retained full jurisdiction over the Joint Application; and 2) SUEZ and Eagle Water
were required to provide the Commission and parties with quarterly reports on the status of the
District Court Case. Order No. 34292.
On June 8, 2021, Eagle Water and SUEZ filed a motion to recommence proceedings in
this docket. The same day, Eagle Water and SUEZ filed an amendment (“Amended Joint
Application”) to its Joint Application requesting approval of the acquisition of Eagle Water assets
by SUEZ and amendment of Certificate of Public Convenience and Necessity No. 143.
On July 14, 2021, the Commission issued a Notice of Amended Application granting
SUEZ and Eagle Water’s motion for authority to recommence this proceeding and approval of the
Amended Joint Application. Order No. 35104.
At the Commission’s August 31, 2021, Decision Meeting, Staff represented that the
parties had met and discussed procedure and scheduling for this case. Staff noted that not all parties

1 On October 4, 2021, CAPAI filed a motion to withdraw form this case. The Commission granted CAPAI’s motion
at its October 26, 2021, Decision Meeting.
ORDER NO. 35247 2
agreed on procedure—with some parties preferring a technical hearing to modified procedure—
but the parties agreed on a general timeline by which to process this case. On September 9, 2021,
the Commission issued a Notice of Scheduling, Notice of Modified Procedure, Notice of Public
Workshop, and Notice of Customer Hearing.2 Order No. 35160. Order No. 35160 established that
a customer hearing would take place at 7:00 PM on November 1, 2021 and included call-in
information for customers who were interested in participating.3
On October 5, 2021, Staff held a telephonic customer workshop. 12 customers attended
and asked questions to Commission Staff and the Company regarding the case and Staff’s
investigation.
On October 8, 2021, Staff, SUEZ, and Eagle Water (collectively “Stipulating Parties”
or individually “Party”) filed a proposed stipulation and settlement (“Settlement”) and a joint
motion of approval of stipulation and settlement. At the Commission’s October 12, 2021, Decision
Meeting, Staff recommended the Commission issue a Notice of Proposed Settlement and Notice
of Amended Schedule.
On October 15, 2021, the Commission issued a Notice of Proposed Settlement and
Notice of Amended Schedule. Order No. 35198.
On November 1, 2021, the Commission held a telephonic customer hearing where 13
customers and interested persons offered testimony.
Staff, Eagle Water, Boise City, EWCG, CAIA, and City of Eagle filed comments. 469
public comments were filed.4 SUEZ filed reply comments.
Now, having reviewed the record, the Commission issues this Order approving the
Settlement filed in this case.
BACKGROUND
During the proceeding, the City of Eagle sued Eagle Water in District Court and
claimed a right of first refusal to buy Eagle Water’s system. Pending resolution of the District
Court Case the Commission stayed this case. See order No. 34292.

2 On October 15, 2021, the Commissions issued an Amended Notice of Customer Hearing modifying the call-in
information for interested customers. Order No. 35196.
3 See Id.
4 284 public comments were filed before the Commission issued Order No. 35104 lifting the stay. 185 comments were
field after the stay was lifted—17 of these were filed after the public comment deadline ended.
ORDER NO. 35247 3
After extended mediation in the District Court, SUEZ, Eagle Water, and the City of
Eagle reached a settlement agreement that included the following terms relevant to this proceeding:
1. The previously filed purchase price of $10,000,000 for Eagle Water’s
system assets was increased to $10,500,000.

2. The parties agreed to support a five-year phase-in of any approved SUEZ
rate increase for current Eagle Water customers instead of the three-year
phase-in proposed in the Joint Application.

3. SUEZ and the City of Eagle entered into a Water Management Agreement
(“WMA”). See Amended Joint Application, Supplemental Attachment 5.

4. SUEZ agreed to use its best efforts to make improvements to the acquired
Eagle Water assets consistent with any improvement schedule approved by
the Commission.

5. The parties agreed the Joint Application originally filed with the
Commission in 2018 might need to be amended to reflect the settlement
agreement’s terms.

Amended Joint Application at 3-4.
THE AMENDED JOINT APPLICATION
The settlement agreement between SUEZ, Eagle Water, and the City of Eagle resolved
the issues in Case No. CV01-19-03534. On February 24, 2021, the parties filed the settlement
agreement and a stipulation of dismissal with the District Court. On March 8, 2021, the District
Court dismissed the case.
Eagle Water and SUEZ’s June 8, 2021, motion asked the Commission to recommence
proceedings in this docket and accept the Amended Joint Application and supporting supplemental
written testimony. The Amended Joint Application details the amendments to the 2018 Joint
Application agreed to in the settlement agreement and stipulation of dismissal filed with the
District Court. Most notably, the purchase price for the Eagle Water assets increased by $500,000,
and the phase-in period to bring Eagle Water rates to parity with SUEZ’s rates was changed from
three years to five years.
The Amended Joint Application included several attachments, including a WMA
between the City of Eagle and SUEZ and the asset purchase agreement. Supplemental written
testimony was filed contemporaneously with the Amended Joint Application.

ORDER NO. 35247 4
THE SETTLEMENT
All parties met four times to discuss the possibility of settlement. The Stipulating
Parties were able to agree to terms and entered the Settlement as a reasonable compromise of the
issues raised in the proposed acquisition of Eagle Water’s assets by SUEZ.
The Stipulating Parties agreed that SUEZ will be entitled to an acquisition adjustment
amount of $10,475,000 that will be included for ratemaking treatment in its next rate case. The
acquisition adjustment amount will be amortized over 40 years beginning at the implementation
of rates in SUEZ’s next rate case. The acquisition adjustment amount will be allocated between
the Utility Plant Acquisition regulatory asset and the incurred transaction costs. The gross amount
of utility plant in service as related to Eagle Water’s assets acquired and included in rate base will
be offset with an equal amount in the related accumulated depreciation account. Costs associated
with customer communications will be treated as an operational expense.
The Stipulating Parties agreed that new rates for existing customers of Eagle as of the
date on which the transaction closes (“Existing Eagle Water Customers”) shall be implemented
over seven years. On January 1, 2022, Existing Eagle Water Customers’ rates will be set at 50%
of SUEZ’s approved rates. Each year thereafter on January 1st Existing Eagle Water Customers’
rates will increase approximately 8.33% until Existing Eagle Water Customers’ rates are 100% of
SUEZ’s approved rates. The rate phase-in for Existing Eagle Water Customers to SUEZ approved
rates will follow this progression:5
January 1, 2022—50.00%
January 1, 2023—58.33%
January 1, 2024—66.67%
January 1, 2025—75.00%
January 1, 2026—83.33%
January 1, 2027—91.67%
January 1, 2028—100.00%

The Stipulating Parties agreed that Eagle Water will refund approximately $592,020.00
to Existing Eagle Water Customers. (The Commission required Eagle Water to set aside certain

5 The phase-in schedule for Existing Eagle Water Customers is provided in Exhibit 1 to the Settlement. The percentage
will apply to the current authorized rates at the time the phase-in percentage is effective.
ORDER NO. 35247 5
funds for the benefit of its customers. See Order No. 34265). The proposed refund is intended to
offset the increase in rates Existing Eagle Water Customers will experience beginning January 1,
2022.
The Settlement precludes the Stipulating Parties from asserting contrary positions
during subsequent litigation in this proceeding or related appeals.
The Stipulating Parties agreed that the Settlement should be accepted, without
modification, because it is just, fair, and reasonable, in the public interest, and otherwise in
accordance with law or regulatory policy. The Stipulating Parties further agreed that the rates and
tariffs that SUEZ will charge if the Settlement is accepted are just and reasonable.
The Stipulating Parties agreed to support, and will continue to support, the
Commission’s adoption of the terms of the Settlement and approval of SUEZ’s acquisition of the
assets of Eagle Water upon the terms set forth in the Settlement.
If the Commission rejects any part or all of the Settlement or imposes any additional
conditions on approval of the Settlement, each Party reserves the right, upon written notice to the
Commission and the other Stipulating Parties to this proceeding, within 14 days of the date of such
action by the Commission, to withdraw from the Settlement. In such case, no Party shall be bound
or prejudiced by the terms of the Settlement, and each Party shall be entitled to seek
reconsideration of the Commission’s final order and do all other things necessary to put on such
case as it deems appropriate.
THE COMMENTS
Staff, Eagle Water, Boise City, EWCG, CAIA, and City of Eagle filed comments.
Several members of the public also filed comments. SUEZ filed reply comments.
1. Staff Comments
Staff’s evaluation of the transaction focused on the proposed purchase price SUEZ will
pay for the Eagle Water system, the value received by SUEZ customers from the acquisition, the
value received by Eagle Water customers, and the capital investment necessary to bring the Eagle
Water system into compliance with Idaho Department of Environmental Quality (“IDEQ”)
regulations. Staff recommended the Commission approve the proposed Settlement allowing
SUEZ to acquire Eagle Water’s assets and amend SUEZ’s CPCN to reflect the acquisition. Staff
believed that the Settlement was fair, just, and reasonable, and in the public interest.
ORDER NO. 35247 6
Idaho Code does not address the acquisition of water companies. However, Staff relied
on the standards outlined in Idaho Code § 61-328(3) related to the sale of electric utilities6 for its
review of the proposed acquisition. Those standards require:
a. The transaction is consistent with the public interest;

b. The cost of and rates for supplying service will not be increased by reason
of such transaction; and

c. The applicant for such acquisition or transfer has the bona fide intent and
financial ability to operate and maintain said property in the public service.

Staff believed the proposed transaction is in the public interest. According to Staff,
SUEZ intends—and has the ability— to provide reliable service to Eagle Water customers and
enhanced customer experience through various payment platforms, 24-hour customer service, and
online access providing instant consumption data.
Staff noted the current owner of Eagle Water, Robert DeShazo, wants to sell the water
system to a company that will be able to meet the needs of Eagle Water customers and serve the
public interest. Mr. DeShazo has cited the need to comply with water quality regulations, complex
utility regulations, and complex operational and technical requirements as reasons prompting his
decision to sell. Additionally, significant growth and lack of experience in upgrading water
systems is making it difficult for Mr. DeShazo to maintain the current quality of service and obtain
adequate financing for operations, maintenance, and infrastructure upgrades.
Staff opined that the proposed transaction is in the public interest because the benefits
of interconnecting both systems outweigh the costs of maintaining both systems separately. Staff
compared the alternative of operating both systems separately to the alternative of interconnecting
and operating the two systems as a common single system to support its belief.
For customers of SUEZ, Staff stated that the main benefit of interconnection is an
increase in the water supply to the SUEZ system from Eagle Water’s system at an estimated capital
cost avoidance of $11.2 million. By interconnecting the two systems, SUEZ can employ its

6 “No electric public utility or electrical corporation as defined in chapter 1, title 61, Idaho Code, owning, controlling
or operating any property located in this state which is used in the generation, transmission, distribution or supply of
electric power and energy to the public or any portion thereof, shall merge, sell, lease, assign or transfer, directly or
indirectly, in any manner whatsoever, any such property or interest therein, or the operation, management or control
thereof, or any certificate of convenience and necessity or franchise covering the same, except when authorized to do
so by order of the public utilities commission.” Idaho Code § 61-328(1).
ORDER NO. 35247 7
existing storage capacity to utilize Eagle Water’s non-peak excess pumping capacity and water
rights, since Eagle Water does not have significant capacity to store water when its demand is low.
For Eagle Water customers, Staff mentioned several direct benefits that interconnecting
to SUEZ’s water system would provide to help alleviate current inadequacies. The inadequacies
that must be addressed according to Staff, include:
1. Current deficiencies in meeting firewater flow requirements;

2. Insufficient system-peak pumping capacity;

3. Inadequate water rights needed for peak domestic use and firewater flow
requirements without investing in additional water storage capacity;

4. Issues in system reliability and operating efficiency;

5. Potential water supply safety issues; and

6. Lack of visibility to customer usage and potential system leaks.

Several of these inadequacies put Eagle Water out of compliance with IDEQ requirements. Staff
believed these inadequacies were caused by a lack of proper investment in the Eagle Water system
during system expansion.
If Eagle Water does not interconnect with SUEZ, Eagle Water would likely need to
drill an additional well, acquire additional water rights, invest in high-capacity water storage, and
add standby power to certain existing wells that are without backup generators. Staff stated that
these issues can all be addressed with the planned near-term interconnection to SUEZ’s Redwood
Creek pipeline.
SUEZ plans $14.6 million of capital improvements for the Eagle Water system during
the next five years. In addition to the interconnection to the Redwood Creek pipeline, SUEZ plans
to construct a new two-million-gallon water storage tank; add a Supervisory Control and Data
Acquisition system to allow 24-hour monitoring of the Eagle Water system to better control
pumping operations resulting in an improved system operating efficiency; address delayed
investment in safety upgrades; security investments; well cleaning; and distribution piping
replacements.
Although rates will increase for Eagle Water customers, Staff noted that the acquisition
of Eagle Water’s assets by SUEZ is the least cost option to continue to provide reliable water
ORDER NO. 35247 8
service to its western service territory. The acquisition by SUEZ also offers a successful succession
plan for Eagle Water customers.
Staff discussed the investments necessary just to make Eagle Water system compliant
with IDEQ requirements for peak flow and fire flow absent interconnecting with SUEZ. These
investments include a storage tank and several safety measures with an estimated cost of $4.152
million. The additional revenue requirement associated with the necessary capital investment is
approximately $658,000 annually, which would lead to a 96% increase over current Eagle Water
rates.
Staff believed that SUEZ has demonstrated its financial ability and bona fide intent to
operate its current system plus Eagle Water’s system. If the Settlement is approved, SUEZ would
operate the Eagle Water system and take additional steps to maintain or improve the water system
until such time the two water systems are interconnected.
Acquisition Adjustment
Staff noted that SUEZ proposes to record the Eagle Water assets to Plant-in-Service
and record an equivalent amount as Accumulated Depreciation, resulting in a zero-book value of
the assets. The acquisition adjustment will then become the final purchase price plus transaction
costs. The Stipulating Parties agreed to an acquisition adjustment of $10.475 million to be
amortized over a 40-year period beginning when new rates are implemented in SUEZ’s next
general rate case proceeding. The stipulated acquisition adjustment removes customer
communications and costs associated with the district court case.
The Stipulating Parties agreed that the acquisition adjustment would be allocated
between the Utility Plant Acquisition Adjustment regulatory asset account and the incurred
transaction cost accounts. The gross amount of utility plant in service of Eagle Water’s acquired
assets will be included in rate base with an offset of an equal amount in a related accumulated
depreciation account.
Surcharge Account and Refund
In Order No. 34295, Case No. EAG-W-15-01, the Commission ordered Eagle Water
to establish a surcharge line-of-credit account (“Surcharge Account”). Staff calculated the
Surcharge Account balance would be $592,020 as of December 31, 2021. The Stipulating Parties
agreed that the balance of the Surcharge Account should be returned to current Eagle Water
customers in the form of a one-time payment upon closing of the transaction. The Surcharge
ORDER NO. 35247 9
Account refund will be paid to any Existing Eagle Water Customers as of the date of the
Commission’s final order according to Staff. Staff noted that the refund would offset the first year
increase fully or partially.
Rate Phase-in
The Stipulating Parties agreed that a seven-year rate phase-in would be appropriate,
thereby reducing any single-year impact to current Eagle Water customers. Staff believed a rate
increase for Eagle Water customers was necessary and inevitable. To mitigate rate shock and
provide a more gradual transition of rates, Staff believed that a seven-year phase-in of rates was
reasonable. Staff believed the immediate refund of the surcharge could be used to help Eagle
Water customers transition to increased rates in year one.
2. City of Eagle Comments
The City of Eagle supported the Settlement, including the seven-year phase-in and the
surcharge refund to Existing Eagle Water Customers. The City of Eagle further supported the
Settlement because the adoption further aids the implementation of the WMA agreed to by SUEZ
and the City of Eagle as part of the settlement in Case No. CV01-19-03534.
3. Boise City Comments
Boise City generally supported the Settlement. The components Boise City supported
include the surcharge refund, seven-year rate phase-in, and reduced acquisition adjustment. Boise
City’s comments described the benefits of SUEZ acquiring Eagle Water and how existing SUEZ
customers would stand to benefit. Boise City also acknowledged the existing deficiencies in Eagle
Water’s system and agreed that interconnection with SUEZ’s system was beneficial, but argued
the testimony and information provided by SUEZ failed to address water supply concerns. Boise
City stated “there is little to no support to show that the acquired water supply portfolio is adequate
to service the existing [Eagle Water] customer demand peaks.” Boise City Comments at 3.
Additionally, Boise City pondered that if the Eagle Water system has excess water rights that
would be used to serve SUEZ’s northwest service area after the acquisition, but Eagle Water’s
system currently does not meet the IDEQ standards for capacity and flow requirements in its
service territory, then what happens to SUEZ’s system and reliability of supply?
Boise City noted that the $11 million in claimed avoided costs is based on acquiring
additional sources of supply at a lower cost instead of obtaining the supply elsewhere. Boise City
ORDER NO. 35247 10
stated that the testimony in the case did not address Eagle Water’s system deficiencies and the
improvements needed related to the claimed cost avoidance.
Boise City was concerned that SUEZ’s expansion would delay the Company’s attention
to existing system deficiencies, including addressing and fixing the discolored water on the Boise
bench. Boise City also expressed concerns about the acquisition of SUEZ SA by Veolia
Environmental SA (“Veolia”) and that transaction’s potential impact on Idaho customers. Boise
City claimed the updated testimony did not address the acquisition by Veolia “and how the
international asset purchase will affect the capital improvement[] projects, the costs of the SUEZ
system in Idaho and future rates, [and] the customer service in this area. . . .” Id. at 3.
Boise City ultimately requested that SUEZ be required to (1) provide a forward-looking
planning mechanism that considers future risks to water supply and infrastructure, including
weather related events; (2) implement a public outreach process to discuss anticipated projects,
O&M cost increases, regulatory changes, proposed system expansions, and cost of service studies
in addition to other issues that will impact rates; and (3) provide the Commission with an annual
report documenting its groundwater and surface water diversions and points of delivery and
additional demonstrations for how and with what supply SUEZ can serve areas of future expansion
and/or acquisition.
4. Eagle Water Customer Group Comments
EWCG filed comments arguing that the Commission should (1) reject the Settlement
based on the criteria in Idaho Code § 61-328; or (2) modify the structure and length of the phase-
in included in the Settlement to mitigate any rate shock for existing Eagle Water customers.
EWCG contended that Existing Eagle Water residential customers’ bills would
increase by 58% in year 1, and by 231% in year 7 when the phase-in is complete. Rates for Existing
Eagle Water commercial customers would increase by 103% in year 1, and by 327% in year 7
when the phase-in is complete.
EWCG’s analysis of Idaho Code § 61-328 focused on the requirement that the
Commission find “the cost of and rates for supplying [electric] service will not be increased by
reason of such transaction.” See Idaho Code § 61-328(3)(b). EWCG acknowledged that the record
reflects that an increase in rates would be necessary even if SUEZ did not acquire Eagle Water.
However, EWCG stated “the amount of [the] potential increase is less than the rate increase
following the transaction.” EWCG Comment at 3. EWCG cited several recent water company
ORDER NO. 35247 11
acquisitions where the Commission’s final orders noted that rates would not increase because of
the acquisition. EWCG argued that the Settlement would depart from this approach. EWCG stated
that “the acquisition of Eagle Water Company by SUEZ Water Idaho will result in an increase in
the rates of existing customers. This is true even after factoring out the rate increase that would
inevitably occur if the acquisition did not happen.” Id. at 4. Given the Commission’s former
reliance on the factors in Idaho Code § 61-328, EWCG believed the Settlement should be rejected.
EWCG expressed its concerns with the length of the proposed rate phase-in. EWCG
stated that if the Commission was inclined to approve the acquisition, then it should examine the
reasonableness of the phase-in. EWCG cited the Commission’s decision in South County Water
(“South County”)—Case No. UWI-W-98-2— acquisition where the Company proposed a five-
year phase-in, but the Commission found it reasonable to approve a six-year phase-in. EWCG
distinguished the phase-in in South County where rate phase-in began with no increase in year 1
and year 2 represented a 30% increase to South County customers (versus 58% for residential and
103% of commercial customers proposed in year 1 proposed in the Settlement for Existing Eagle
Water Customers). EWCG stated that this is rate shock, and continued that to mitigate rate shock,
the year 1 increase should be a 30% increase. EWCG concluded that the structure and length of
the phase-in should be adjusted to achieve a reasonable rate increase if the Commission did
approve the acquisition of Eagle Water’s assets by SUEZ.
5. Citizens Allied for Integrity and Accountability Comments
CAIA expressed concerns over the proposed rate increases for residential and
commercial customers. CAIA acknowledged that Eagle Water rates have not increased in “some
time,” but stated that it “will be difficult for customers to understand the huge increase in their
water bill, with no discernable increase in water quality or service.” CAIA Comments at 3. CAIA
claimed that not enough had been done to make customers aware of the acquisition or offer any
explanation of the proposed rate increase.
Regarding the phase-in, CAIA stated a longer phase-in was needed because the
proposed increase is approximately 2x-3x the increase approved in South County and Existing
Eagle Water Customers need additional time to absorb the new rates and adjust their usage
accordingly.
CAIA was concerned that the method for determining the surcharge disbursement was
not clearly spelled out in the Settlement. CAIA stated that “if entitlement depends on status as a
ORDER NO. 35247 12
customer on the date the [Settlement] is approved, this is not fair or just and reasonable to those
long-time customers who may have discontinued service the day before approval, and it could
provide an unjust windfall to those new customers the day after approval.” Id. at 5. CAIA believed
that the proposed entitlement and distribution was based on convenience and the chosen method
should require full public disclosure.
CAIA shared its concern that some Eagle Water customers would be “treated unfairly
and that the transaction will be disproportionately burdensome on low income and fixed income
customers.” CAIA cited several statistics about the demographic makeup of Eagle, Idaho to
support its reasoning why this acquisition would affect certain customers more than others.
CAIA’s analysis of the disproportionate impact ultimately rested upon its assumption that since
Eagle Water’s service territory “contains many of the older, more modestly priced homes in Eagle
[CAIA] assume[d] many of these residents live there on fixed or limited incomes. . . .” Id. at 5-6.
CAIA claimed that water quality would decline, and risk would increase with
interconnection of Eagle Water to SUEZ’s water system. CAIA advocated for preservation of the
high-quality, groundwater that has been delivered to Eagle Water customers without mixing
surface water or the “addition of potentially harmful levels of chlorination” SUEZ proposes if it
acquires Eagle Water Company. CAIA’s concern rested on the IDEQ requirement to chlorinate
surface water, which is presently part of SUEZ’s system and would become part of Eagle Water’s
system once interconnected. CAIA argued that if SUEZ expanded by acquiring Eagle Water, then
any error would become a risk for Existing Eagle Water Customers that would have not existed
but for the acquisition and interconnection.
CAIA believed local control of water resources was the best option. CAIA’s reasoning
followed that local control requires a level of accountability to the local community that would be
unavailable if a multinational, for-profit entity controlled the resource.
CAIA stated that the proposed transaction was not conducted transparently for the
public and many details of the transaction have remained obscure or unknown. CAIA stated
customers were unaware of the terms of the settlement with H2O Eagle.7 CAIA implored that the

7 H2O Eagle (a separate legal entity formed to facilitate this transaction) and SUEZ entered into an asset purchase
agreement whereby H2O Eagle agreed to sell, and SUEZ agreed to purchase Eagle Water’s assets that are to be
acquired by H20 Eagle together with all of H2O Eagle’s right to purchase the Eagle Water assets under a separate
asset purchase agreement between H20 Eagle and Eagle Water.
ORDER NO. 35247 13
public has a strong interest in knowing why the transaction needed a middleman “whose financial
interest and profits from the proposed transaction [were] obscure.” Id. at 10.
CAIA also argued that until Veolia is publicly disclosed as the utility operator, the
Amended Joint Application should be denied. CAIA was concerned that Veolia’s acquisition of
SUEZ would reduce transparency surrounding the transaction in this case and would further
complicate the questions customers have about service and quality. CAIA stated “the public should
be allowed to provide informed comments regarding the ultimate owner and operator of their water
system and the impact on local service.” Id. at 11.
6. Customer Comments
The Commission received 452 timely public comments and 17 late filed comments in
this case. On October 15, 2021, Staff held a customer workshop where 12 members of the public
participated by asking questions to Staff and SUEZ about the proposed acquisition. On November
1, 2021, the Commission held a customer hearing where 13 members of the public offered
testimony—the majority expressing concerns about the potential acquisition by SUEZ. The
overwhelming theme of the written comments and customer testimony recommend the
Commission deny SUEZ’s acquisition of Eagle Water.
Reasons commentors requested the Commission deny the Amended Joint
Application/Settlement include:
• The quality of water that Eagle Water customers are accustomed to and the
fear that mixing surface water with groundwater—as proposed by SUEZ—
would diminish the quality;
• The desire for continued local control of Eagle Water;
• The fear that foreign ownership would open the door to water being shipped
out of Idaho;
• Concern about SUEZ’s record for customer service;
• The proposed rate increases that would follow the acquisition;
• Concern about the rate increase for customers with low and fixed incomes;
• Concern about the acquisition of SUEZ by Veolia and Veolia’s track record
in other domestic markets;
• Transparency regarding the transaction with Norm Bangle (H2O Eagle
Acquisitions) and the District Court settlement agreement with City of
Eagle; and
• That the City of Eagle should be given an opportunity to reconsider its
decision to not purchase Eagle Water.
ORDER NO. 35247 14
7. SUEZ Comments
SUEZ filed comments in support of the Settlement and rebutting claims made by
CAIA, EWCG, and the public. SUEZ argued that its acquisition of Eagle Water offers Mr.
DeShazo a way forward and provides several benefits to Eagle Water customers including
continuity of ownership, financial resources, and technical expertise to address the deficiencies in
the system. SUEZ iterated its belief that the Settlement provided the Commission a mechanism to
“permanently resolve issues regarding Eagle Water Company that have plagued the[] parties, and
the Commission, for decades.” SUEZ Reply Comments at 2. SUEZ noted that most of the parties
in this case fully support—or support the main provisions of—the Settlement and that the objecting
parties only cite their issues and concerns without identifying an alternative path forward. If the
Commission followed the objecting parties’ positions, SUEZ argued that Mr. DeShazo would
continue to own and operate Eagle Water and the status quo would persist without addressing any
of the issues or concerns that exist regarding the state of the Eagle Water system.
SUEZ believed the Settlement represented a fair, just, and reasonable resolution of the
issues. SUEZ noted that no party opposed the acquisition adjustment and highlighted the
approximately $11.2 million in avoided costs it would realize from the acquisition of the Eagle
Water system. SUEZ also noted that Eagle Water customers would benefit from SUEZ’s
management, and that Mr. DeShazo had indicated he no longer wants to operate the system. SUEZ
cited South County where the Commission wrote “[t]he regulatory, operation and personal reasons
expressed by South County as prompting the decision to sell by its stockholders cannot be casually
dismissed.” SUEZ Reply Comments at 4 quoting Order No. 27798 at 5.
SUEZ discussed the seven-year rate phase-in and noted it would be the longest
transition period the Commission has ever approved, and the year 1 increase would be partially or
fully offset by the surcharge refund. SUEZ is aware that EWCG, CAIA, and customers oppose
increased rates, but noted the “remarkably low rates” Eagle Water customers have enjoyed. SUEZ
Reply Comments at 5. With the substantial investment that is required to address Eagle Water’s
system deficiencies regardless of which entity owns and operates the system, SUEZ argued a rate
increase was inevitable and a seven-year phase-in was fair, just, and reasonable.
Regarding CAIA’s argument that the proposed surcharge refund was inequitable,
SUEZ argued that CAIA’s reasoning was unpersuasive. SUEZ stated “[u]sing CAIA’s reasoning,
it would be unjust to charge higher rates to a customer that joined the system right before a rate
ORDER NO. 35247 15
increase, since a prior customer received the benefits of the investments without paying higher
rates” and that it “would be inequitable not to charge higher rates to a customer that disconnected
from the system just before the new rates were implemented, since that customer enjoyed the
benefits of the investment but never paid higher rates.” Id. at 6. SUEZ noted that CAIA did not
propose any alternatives but advocated for a convoluted procedure to refund recently disconnected
customers that would inevitably discriminate between customers based on the date they connected.
SUEZ noted Boise City’s support of key components of the Settlement and that Boise
City did not suggest the Commission should reject the Settlement. SUEZ argued that the requests
Boise City asks the Commission to impose on SUEZ regarding planning and reporting obligations
are outside the scope of this case and were recently addressed in a settlement (Case No. SUZ-W-
20-02) that Boise City signed, and the Commission approved. In that settlement, SUEZ agreed to
broaden its public outreach efforts by providing community project updates, holding townhall
sessions, expanding customer notification to include operational initiatives, sending mailers on
water quality regarding key projects and initiatives, and holding annual workshops on resource
planning and conservation. SUEZ stated the parties to Case No. SUZ-W-20-02 are in the process
of implementing these components and the current request of Boise City would replace, duplicate,
or conflict with the process already in place.
Regarding EWCG’s objections to the Settlement, SUEZ argued neither objection was
persuasive. SUEZ stated that EWCG, like CAIA, objected to the Settlement without proposing an
alternate path forward. SUEZ noted that Idaho Code § 61-328 applied to the transfer of certain
electric utility property and that the Commission has relied on it in some water utility acquisitions
and in others the Commission has relied on Idaho Code § 61-528. SUEZ submitted that approval
of the Settlement was in the public interest and neither Idaho Code § 61-328, nor past decisions
that have applied these elements to water utility acquisitions, prevent approval of this Settlement
by the Commission.
SUEZ argued that South County has many “obvious and compelling” similarities to its
proposed acquisition of Eagle Water wherein South County’s customers were generally satisfied
with their service and enjoyed continuity of ownership, but the owners were concerned with the
increased safety and regulatory burden of owning a water system going forward and wished to sell.
SUEZ noted that the transaction provided benefits to both South County and United Water
customers—like those proposed in the acquisition of Eagle Water. Id. at 11. In South County, the
ORDER NO. 35247 16
Commission addressed the concerns customers had and the benefits they would receive. In its final
Order, the Commission stated “the mere difference in rates is insufficient to deny the transaction”
noting that customers were likely to pay increased rates for future improvements. SUEZ Reply
Comments at 11-12 quoting Order No. 27798 at 3.
Regarding EWCG’s position that new rates for Eagle Water customer should be
implemented differently, SUEZ argued that EWCG failed to provide a persuasive legal or policy-
based basis for altering the seven-year phase-in. SUEZ stated that EWCG ignored the surcharge
refund amount when arguing that the year-1 phase-in increase is too extreme and would cause rate
shock. SUEZ offered that South County customers did not receive a refund and that the proposed
surcharge refund in this case would offset all or part of the proposed year-1 increase. Additionally,
SUEZ did not believe EWCG’s suggestion for a modest reduction in year-1 phase-in rates is a
sufficient basis to jeopardize the Settlement.
CAIA argued that the acquisition might lead to reduced water quality for Eagle Water
customers which SUEZ disagreed. SUEZ noted that IDEQ regulates water quality and SUEZ is
compliant with those standards. Regarding CAIA and public concerns about chlorine use, SUEZ
argued chlorine is a “well-recognized method of complying with IDEQ water quality regulations”
(emphasis omitted). Id. at 13.
In response to concerns brought by CAIA and members of the public about SUEZ (or
Veolia) being a foreign owned entity, SUEZ noted that SUEZ Water Idaho is an Idaho company
with Idaho based employees. Additionally, it is regulated by the PUC, IDEQ, and Idaho
Department of Water Resources (“IDWR”). SUEZ stated that the “Commission will instead be
allowing one highly regulated, for-profit utility to assume operation of a water system when the
current owner of the highly regulated, for-profit utility states that he no longer has the desire or
ability to do so.” Id. at 14.
Regarding issues about transparency, SUEZ notes that CAIA has been a part of this
transaction for nearly three years and has utilized its rights as a party to conduct discovery that is
not readily available to the public. SUEZ noted that the transaction was conducted in accordance
with the Commission’s rules of procedures and pursuant to its orders and any concerns therefore
relate to the Commission and its procedural rules rather than this proceeding.
CAIA’s argument that the proposed acquisition of SUEZ by Veolia makes this a “four-
party transaction or a dual, dual transfer” SUEZ Reply Comments at 15 quoting CAIA’s
ORDER NO. 35247 17
Comments at 10. SUEZ argued the Veolia transaction is not before the Commission and therefore
CAIA’s concerns are not relevant. SUEZ also argued that the Commission has previously
recognized that the modern marketplace is increasingly international. SUEZ stated that CAIA did
not dispute the benefits of the Settlement, rather it invited the Commission to reject it because of
“unsubstantiated fears or ‘concerns’ about the future, related to the proposed transaction that are
outside the Commission’s jurisdiction.” SUEZ Reply Comments at 16.
COMMISSION DISCUSSION AND FINDINGS
The Commission has jurisdiction over this matter and the issues in this case under Title
61 of the Idaho Code. Specifically, the Commission regulates "public utilities," including "water
corporations" that serve the public or some portion thereof for compensation. See Idaho Code §§
61-125, -129, and -501. The Commission has an established practice of evaluating the transfer of
water systems under the criteria found in Idaho Code § 61-328 but is not required by statute to
evaluate the acquisition of a water system under these criteria. Eagle Water Company is a privately
held water company and public utility as defined in these laws and therefore subject to the
Commission’s jurisdiction. Having reviewed the record, we approve the Settlement and hereby
approve the acquisition of Eagle Water by SUEZ and authorize SUEZ to amend CPCN No. 143 to
reflect the acquisition.
The Commission is responsible for ensuring that rates and charges received by a public
utility and its rules and regulations pertaining to its rates and charges are “just and reasonable.”
Idaho Code §§ 61-301 and -303. The Commission is authorized to investigate the rates of any
public utility and to establish new rates. Idaho Code § 61-503. The Commission must ensure that
every public utility furnishes service that promotes the “safety, health, comfort, and convenience
of its patrons.” Idaho Code § 61-302.
The Commission considers settlements under Rules 271-277. IDAPA 31.01.01.271-
277. When a settlement is presented to the Commission, the Commission will prescribe the
procedures appropriate to the nature of the settlement to consider it. IDAPA 31.01.01.274. Further,
proponents of a settlement must show that the settlement is reasonable, in the public interest, or
otherwise in accordance with law or regulatory policy. IDAPA 31.01.01.275. Finally, the
Commission is not bound by settlements. Instead, the Commission “will independently review
any settlement proposed to it to determine whether the settlement is just, fair and reasonable, in
ORDER NO. 35247 18
the public interest, or otherwise in accordance with law or regulatory policy.” IDAPA
31.01.01.276.
We find this transaction and Settlement are in the public interest. Customers of both
utilities will benefit from this acquisition. For SUEZ customers, the acquisition allows SUEZ to
prospectively avoid about $11.2 million in future water supply and other expenses. For Eagle
Water customers, SUEZ represents a capable system operator with access to capital that can be
invested in the much-needed system upgrades. We note that if Mr. DeShazo were to continue
operating the system then the inadequacies discussed in this Order would likely go unaddressed,
or take longer to address than SUEZ proposes, presenting ongoing health and safety risks to
customers. Without this acquisition and SUEZ’s proposed investment, Eagle Water does not meet
requirements for firewater flow—among many requirements it fails to meet—creating significant
and continuing public safety risks in Eagle Water’s service territory. SUEZ has proven itself a
capable water utility operator and we do not question that it will operate the Eagle Water system
capably and expeditiously address the existing system deficiencies.
SUEZ Water Idaho is operated as a local utility with local offices, local management,
and the ability to operate the Eagle Water system to the regulatory standards imposed by the State
of Idaho. SUEZ is regulated by this Commission in addition to IDEQ and IDWR and will be
required to operate the Eagle Water system in accordance with the rules and regulations established
by the State. SUEZ has consistently complied with the regulations imposed upon it by its various
state regulators. SUEZ has been present and operated in the Treasure Valley since 2015 when it
acquired United Water. SUEZ has continuously maintained and improved its water system,
improving the service its customers receive. We direct SUEZ to concentrate on correcting the
critical deficiencies that pose health or safety risks in both systems. We expect that the acquisition
of Eagle Water will not impact the prioritization that we recently addressed with SUEZ regarding
investments needed for its existing system including the discolored water on the Boise Bench.
We acknowledge that rates will increase because of this transaction but see no other
option for Eagle Water customers. It is undisputed that a rate increase is inevitable for Existing
Eagle Water Customers no matter who operates the Eagle Water system. Here, we find, it would
be unreasonable to deny the transaction since rates must increase. The Eagle Water system has
suffered from lack of investment for many years and, as a result, is out of compliance with
regulatory rules and regulations. The lack of investment is reflected by the unrealistically low rates
ORDER NO. 35247 19
Eagle Water customers are paying today. We believe the acquisition by SUEZ gives the customers
of Eagle Water an opportunity to receive water service from a well-run and capable utility operator
that can make the necessary investments and deliver quality water service to customers.
We approve the proposed phase-in of rates. The transition in rates for Eagle Water
customers to SUEZ’s approved rates will occur over seven years pursuant to the terms of the
Settlement. We note that the transition to SUEZ’s approved rates for current Eagle Water
customers is longer than any rate phase-in this Commission has ever approved. We feel the
timeline gives Eagle Water customers adequate time to plan for and adjust to their new rates. It is
also important to understand that, while the rates of the Existing Eagle Water Customers are
increasing, we still find the rates across the seven-year schedule to be just and reasonable and in
the public interest. Because of the transaction, Eagle Water customers will receive water service
that meets the standards set by state regulatory agencies and enhanced customer service.
The seven-year phase-in is only available to Existing Eagle Water Customers. Any new
customers starting service or connecting to service in the present Eagle Water service territory will
pay SUEZ rates when beginning service.
We find the proposed surcharge refund to Eagle Water customers to be just and
reasonable and, consequently, approve the refund. We find the equal distribution of the surcharge
account to existing customers on the service date of this Order as proposed in the Settlement is
reasonable. We note that the funds to be distributed were not accrued volumetrically through
consumption, but from developers connecting to the system. The funds were set aside to be used
for system improvement and therefore belong to all customers. Since the surcharge funds were not
collected based on consumption there is no discrimination in the proposed refund, which is
prohibited by statute. See Idaho Code § 61-315. We are encouraged that the surcharge rebate will
help eliminate or offset the first-year rate increase for Existing Eagle Water Customers.
We understand some Eagle Water customers’ desire to have the City of Eagle purchase
and operate the Eagle Water system. However, this Commission does not dictate who a utility
owner contracts with to complete a sale or acquisition. In this case, Mr. DeShazo has elected to
sell to SUEZ after prolonged litigation that involved the City of Eagle and SUEZ in which the City
of Eagle ultimately decided not to pursue the purchase of Eagle Water’s assets. We were not
involved in that litigation but are now tasked with determining whether to approve the proposed
acquisition of Eagle Water’s assets by SUEZ as contemplated in the District Court settlement that
ORDER NO. 35247 20
resulted in the civil litigation being dismissed. It would be erroneous for this Commission to reject
a proposed sale simply because of who the proposed buyer was so long as the buyer can operate
the system according to the rules and regulations prescribed by the State of Idaho and this
Commission.
As discussed above, SUEZ is a capable water system operator, and we are confident it
will improve the Eagle Water system in which it has indicated it will invest $14.6 million over five
years. We are optimistic this investment will address the current inadequacies of the Eagle Water
system. We note that we will determine the prudency of any investments when SUEZ seeks
recovery in a future general rate case.
We decline to impose additional planning and reporting requirements advocated for in
Boise City’s comments. We find these concerns were addressed in Case No. SUZ-W-20-02 and
SUEZ is working in furtherance of those Commission directives.
The Commission will consider two timely petitions for intervenor funding later.
O R D E R
IT IS HEREBY ORDERED that the acquisition of Eagle Water Company’s assets by
SUEZ Water Idaho is approved as described in the Settlement, effective January 1, 2022. SUEZ’s
CPCN No. 143 shall be amended to reflect the acquisition of Eagle Water’s service territory and
customers. SUEZ shall file a conforming amendment with the Commission. Eagle Water’s CPCN
No. 278 and tariffs shall be cancelled.
IT IS FURTHER ORDERED that Existing Eagle Water Customers’ rates will be
phased-in to SUEZ’s approved rates over seven years according to the schedule in the Settlement.
IT IS FURTHER ORDERED that Eagle Water shall issue a refund of its surcharge
funds as described in the Settlement to all current Eagle Water customers on the service date of
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 with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any person may cross-petition for reconsideration. See Idaho Code § 61-626.
///

ORDER NO. 35247 21
DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 9th day
of December 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\WATER\EAGW1801_SUZW1802\orders\SUZW1802_EAGW1801_final_dh.docx