20020301Comments.pdf

SCOTT WOODBURY '
DEPUTY ATTORNEY GENERAL ,-i a:s 9 9i
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
BAR NO.1895
Street Address for Express Mail:
472 W.WASHINGTON
BOISE,IDAHO 83702-5983
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AN APPLICATION )
REGARDING THE SALE OF THE STONE-)CASE NO.SWS-W-01-1
RIDGE WATER SYSTEM (CERTIFICATEOF )
PUBLIC CONVENIENCE AND NECESSITY NO.)
365)BY KEITH GARNER AND ISSUANCE OF A)COMMENTS OF THE
NEW CERTIFICATE FOR THE SERVICE )COMMISSION STAFF
AREA TO CDS STONERIDGE ASSOCIATES-)LAND,LLC AND A REQUESTFOR A )RECONNECTION/STAND-BY FEE.
COMES NOW the Staff of the Idaho Public Utilities Commission,by and through its
Attorneyof record,Scott Woodbury,Deputy Attorney General,and in response to the Notice of
Application,Notice of Modified Procedure,Notice of Comment/Protest Deadline and Notice of
Comment/Protest Deadline issued on February 8,2002,submits the followingcomments.
The Commission received an Application on December 21,2001 requesting that
Certificate of Convenience and Necessity No.365 issued to Keith Garner dba Stoneridge Water
Company be cancelled and a new certificate be issued to CDS StoneridgeAssociates-Land,LLC
(CDS).CDS is a Utah Limited LiabilityCompany qualified to do business in Idaho dba
Stoneridge Water Company.By letter dated February 1,2002,the Company requested a change
to the Company's existing rule l 1.1 for disconnection and reconnection of service to provide for
a written two-day advance notice of a customers request to discontinue service.The Company
STAFF COMMENTS 1 MARCH 1,2002
also requested a proposed reconnection fee of $50 or at the customer's option,to pay a monthly
minimum charge of $14 during the period of disconnection.
Attached to the Application were copies of:
1.A purchase and sale agreement between Keith Garner and Cully W.Davis or
related assigns dated November 8,2000 together with an addendum dated
December 22,2000.
2.A bill of sale dated March 29,2001.
3.A Special Warranty Deed dated March 29,2001 bearing the stamp of the Bonner
CountyRecorder indicating it was filed as Instrument No.579483 on April 2,
2001.
4.An inventoryof Real property transferred in the sale.
5.An inventoryof personal property transferred in the sale.
6.A set of Financial Statements for purchaser for October 2001.
7.A Certificate of Existence for CDS Stoneridge Associates-Golf,LLC from the
State of Utah.
8.An Application for Registration of Foreign Limited LiabilityCompany bearing
the stamp of the Idaho Secretary of State.
Staff Analysis
Staff has reviewed each of the above documents.Althoughitem number seven above
bears the name of an affiliated Limited LiabilityCompany (CDS Stoneridge Associates -Golf
rather than Land),Staff has verified through the Utah Commerce Commission that CDS
Stoneridge Associates-Land is a valid registered company in that state and is qualified to do
business in Idaho.
The financial statements and property inventories (real and personal)are consolidated for
several business activities.Inventories include vacant land for real estate development activities,
improved golfcourse land,commercial and residential buildings,restaurant equipment,
household furniture and electronics,office equipment,golfing equipment and grounds
maintenance equipment.The inventories do not include any separately identified personal
property (wells,pumps,pipes etc)associated specifically with the water system.
Staff notes that the buyer has been operating this water system since January 1,2001 and
that the buyer has retained the employee responsible for the operation and maintenance of the
system.Staff further notes that the sale was consummated without the prior approval of this
STAFF COMMENTS 2 MARCH 1,2002
Commission as required in Order No.28206 granting the initial certificate to Keith Garner.Staff
believes the buyer has demonstrated both the financial and technical ability to operate and
maintain the water system.The buyer should however be directed to segregate the water system
operation from the other business activities of the buyer.All water system assets must be
separately identified and an accounting system consistent with the Commission's Annual Report
Form should be established.
It appears to Staff that through this purchase,the buyer is taking over all of the
development and business activities of the original developer.The Commission's Rule 103 for
small water companies presumes that all of the costs of installinga water system by a land
developerare recovered through the sale of the developedreal estate.The buyer,therefore,
stands in the shoes of the land developer and has no capital investment in the water system for
ratemaking purposes.
The Application,as amended,also includes a change to the rules and rates regarding
reconnection charges.The proposed rate is nearly double any comparable rate for a water
company in Idaho.The amended schedule requires a customer who wishes to discontinue
service to "...give written notice to the Utility Company no less than two (2)days in advance..."
and gives the customer the option to pay either a $50 reconnection fee or pay the minimum
monthly charge of $14 during the period of disconnection.
Staff researched Commission Case files and discovered that a reconnection rate was
approvedby Commission Order No.28376 in Case No.SWS-W-00-01.That Order approved
reconnection fees of $14 during office hours and $28 for after office hours.The owner,Keith
Garner,was directed to file tariff sheets consistent with the Order.Mr.Garner never filed the
tariff nor did he provide the information to the buyer.Staff has discussed these rates with the
Applicant's representative,Mr.Roger Sanders,who has agreed that the rates approved by Order
No.28376 are acceptable for the time being.
STAFF RECOMMENDATION
1.Certificate No.365 issued to Keith Garner should be cancelled.
2.A new Certificate should be issued to CDS Stoneridge Associates-Land,LLC dba
Stoneridge Water Company.
3.The Applicant should be directed to establish an accounting system for the water
system separate and distinct from all other business activities.
STAFF COMMENTS 3 MARCH 1,2002
4.The Applicant should be informed that pursuant to Commission Rule 103 for
small water companies,no value will be placed on the water system assets for
ratemaking purposes.
5.The proposed rate schedule for disconnection and reconnection charges should not be
approved.The Commission should reaffirm the existing reconnectionrates ($14 and
$28).The two-day advance notice for a customer to request disconnection is
reasonable,but a written request should not be required.
6.The Applicant should be directed to file new tariff sheets,signed by an authorized
representative,reflecting the name of the new owner.
7.The Applicant should be required to adopt the Commission's Utility Customer
Relations Rules (IDAPA 31.21.01,Customer Information Rules (IDAPA
31.21.02)and Small Water Company Policies (IDAPA 31.36.01).
Respectfullysubmitted this day of March 2002.
Deputy Attorney General
Technical Staff:Bob Smith
Michael Fuss
Marge Maxwell
SW:jo:i:umisc/comments/sws w0 1.I swmfussmmres
STAFF COMMENTS 4 MARCH 1,2002
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 1ST DAY OF MARCH 2002,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.SWS-W-01-01,BY MAILING A COPY THEREOF,POSTAGE PREPAID,
TO THE FOLLOWING:
KEITH E GARNER CDS STONERIDGE ASSOCIATES-LAND,
STONERIDGE UTILITIES CO LLC
1204 EAST SOUTH TEMPLE 4885 SOUTH 900 EAST,SUITE 100
SALT LAKE CITY UT 84102 SALT LAKE CITY UT 84117
CDS STONERIDGE ASSOICATES-LAND CULLY W DAVIS
LLC 1350 E DRAPER PARKWAY
C/O THOMAS W CLARK DRAPER UT 84020
PO BOX 991
POCATELLO ID 83204-0991
ROGER SANDERS
PROJECT MANAGER
CDS STONERIDGE ASSOC.
PO BOX 280
BLANCHARD ID 83804
SECRETARY
CERTIFICATE OF SERVICE