20190404order_no_34297.pdf

Office of the Secretary
Service Date
April 4,2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.SWS-W-18-01
OF JD RESORT TO ACQUIRECDS )
STONERIDGE UTILITIES,LLC WATER )
COMPANY AND TRANSFER CERTIFICATE )ORDER NO.34297
OF PUBLIC CONVENIENCE AND )
NECESSITY NO.395 )
On June 22,2018,the Commission received an Application from JD Resort,Inc.("JD
Resort")seeking Commission approval for CDS Stoneridge Utilities,LLC ("CDS Stoneridge
Utilities")to sell its water company and transfer existing Certificate of Public Convenience and
Necessity ("CPCN")No.395 to JD Resort.On July 16,2018,the Commission issued a Notice of
Application and Notice of Intervention Deadline.Order No.34107.On August 28,2018,the
Commission issued a Notice of Parties,which listed CDS,JD Resort,and Commission Staff as the
only parties to the matter.
THE APPLICATION
CDS Utilities serves the StoneRidge Golf and Residential Community as well as Happy
Valley Rancho Water customers.The Application states,"For consideration by the Idaho PUC
we respectfullyrequest your authorization for the transfer of the existing utility company to the
Buyer (the Buyer of the real property is currentlyJD Resort,Inc.;and,upon closing intends to
form a new utility company and will provide the same company name to you at that time)."
Application at 1.The Application,dated June 14,2018,lists JD Resort as the buyer (with the
caveat just stated),yet the Purchase and Sale Agreement submitted with the Application,dated
April 2,2018,lists Esprit Enterprises,LLC ("Esprit Enterprises"),an Idaho limited liability
corporation as the purchaser.
COMMENTS
Commission Staff filed the only comments and recommended the Commission approve
the transfer.Staff confirmed that Esprit Enterprises and JD Resort are owned by the same person.
Staff reviewed the last three years of personal financial statements of the owner of JD Resort and
Esprit Enterprises,which were submitted in response to a production request for the financial
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statements of JD Resort,and stated its belief that the owner has the personal financial ability to
operate the water company.
Staff learned a redesigned bill,with several new non-recurring charges not approved
by the Commission,was sent to customers during the comment period.Staff noted that,besides
the new charges not being Commission approved,the new bill does not conform to the Utility
Customer Relations Rules ("UCRR"),IDAPA 31.21.01.Staff noted that JD Resort cannot impose
rates and charges,or terms and conditions of service,without prior approval of the Commission.
Staff recommended the company submit its Explanation of Rates,Rules Summary,and collection
notices for Staff review within six months of the Commission's order in this case.
Staff notes that the purchaser has engaged the services of a licensed Drinking Water
Distribution Operator and is performing an engineering analysis of the system to determine critical
needs.
COMMISSION FINDINGS AND DECISION
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.CDS Stoneridge Utilities is a privately held water company and public
utility as defined in these laws.It has been issued CPCN No.395 and serves the public within its
certificated service area.
An Idaho public utility is obligated to serve customers in its service area unless the
Commission relieves it of that obligation.Idaho statutes do not specifically address the acquisition
of water utilities.However,the Commission is guided by the standards outlined in Idaho Code §
61-328 related to the sale of electric utilities.Those standards are that:(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.
Here,the Purchase and Sale Agreement lists Esprit Enterprises as the purchaser.The
Application is submitted by JD Resort,but states that another company will be formed upon
closing,presumably to own and operate the water company.In a request for the financials of JD
Resort,the personal finances of the owner were submitted.Before we can evaluate whether the
transaction will be in the public interest and whether the transferee has the bona fide intent and
ORDER NO.34297 2
financial ability to operate and maintain the property in the public service,we need to know which
entity will own and operate the water company.We also remind JD Resort that each transfer of a
water company's assets must be approvedby this Commission.We therefore encourage the owner
of JD Resort to solidify ownership details of the water company among the different entities in his
control before submitting anything else to this Commission for approval.
Given the unresolved uncertainties in the Application regarding the corporate form of
the purchaser,we cannot presently determine whether the purchase would be in the public interest.
We are uncertain how the water company will be transferred between Esprit Enterprises,JD
Resort,and the third as of yet unnamed company referenced in the Application as the ultimate
owner and operator of the utility.Further,the personal financials of the owner of these companies
is not sufficient to show that the transferee entity is financially sound.Given the confused status
of the Application,we are not even certain to whom we would transfer the CPCN at this juncture
if we were inclined to do so.The billing changes made without Commission approval only add to
our concerns about the transaction.
Because the transfer of this water company is part of a larger deal with considerable
time,money,and effort behind it,we do not reject the Application outright.However,the
uncertain nature of fundamental aspects of the Application make it impossible for us to approve
the Application as submitted.Rather than reject the Application outright,we will provide JD
Resort sixty days to file an amended Application:(1)explaining which entity will own the water
company;(2)providing documents showing how the water company was or will be transferred to
that entity;(3)aligning the request for the transfer of the CPCN to the entity that will own the
water company's assets;and (4)providing documents substantiating the transferee entity's
financial and operational abilities to manage a water company in the public service.Staff will then
have twenty-eightdays after the amended Application is filed to comment on JD Resort's amended
Application.JD Resort will then have seven days to reply to Staff's comments.At the close of
this period,the matter will again be deemed fully submitted.The Commission will deliberate and
issue a final order.
Further,we remind the current operator of the water company that no rates,charges,
terms,or conditions of service can be altered without Commission approval.The ability and
willingness to follow Idaho statute and Commission Rules is certainly relevant to our public
interest analysis in determining whether to approve the amended Application.
ORDER NO.34297 3
ORDER
IT IS HEREBY ORDERED that JD Resort file an amended Application within 60 days
of the service date of this order setting forth the information requested above.Commission Staff
will then have 28 days to comment on the amended Application,from the date of the submittal.
JD Resort will then have seven days to reply to Staff's comments,if it desires.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 9
day of April 2019.
PAUL KJELLA DER,SIDENT
K TINE RAPER,O SIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
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