20190314Comments.pdf

EDWARD JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10446
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE APPLICATION OF
JD RESORT,INC. TO ACQUIRE CDS
STONERIDGE UTILITIES, LLC WATER
COMPANY AND TRANSFER CERTIFICATE
OF PUBLIC CONVENIENCE AND NECESSITY
NO.395
CASE NO. SWS-W-18-01
COMMENTS OF THE
COMMISSION STAFF
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Edward Jewell, Deputy Attorney General, submits the following comments.
BACKGROUND
On June 22,2018, the Commission received an Application from JD Resort, Inc. ("JD
Resort") seeking Commission approval for CDS Stoneridge Utilities, LLC ("CDS") to sell its
water company and transfer existing Certificate of Public Convenience and Necessity No. 395 to
JD Resort. On July 16,2018, the Commission issued a Notice of Application and Notice of
Intervention Deadline. OrderNo. 34107. On August 28,2018, the Commission issued aNotice
of Parties, which listed CDS, JD Resort, and Commission Staff as the only parties to the matter.
STAFF ANALYSIS
Staff recommends that the Commission approve the proposed sale of CDS to Chan
Karupiah, sole proprietor of JD Resort. Staff s recommendation is based on its review of the
ISTAFF COMMENTS MARCH I4,2OI9
Application and its attachments, along with CDS's response to production requests. The
Attachments to the Application identify multiple entities involved in this sale. The Purchase and
Sale Agreement lists Esprit Enterprises, LLC as the buyer of CDS; however, the Application
requests the transfer of the CPCN to JD Resort. Staff confirmed that Esprit Enterprises, LLC and
JD Resort are both wholly owned by Chan Karupiah, and therefore Mr. Karupiah is the buyer of
CDS. Upon closing of the transaction, Mr. Karupiah intends to form a new utility company and
will provide the Commission with the new company name at that time.
Idaho law does not specifically address the acquisition of water companies. As done in
previous water cases, Staff relied on the standards outlined in Idaho Code $61-328 related to the
sale of electric utilities. Those standards dictate that:
(a) The transaction is consistent with the public interest;
(b) The cost of 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 the property in the public service.
Staff believes this sale complies with the standards outlined in Idaho Code $61-328. The
purchaser has already engaged the services of a licensed Drinking Water Distribution Operator,
and is in the process of performing an engineering analysis of the system to determine critical
needs.
Staff believes Mr. Karupiah has the ability to financially operate the water company.
From discovery, Staff has learned that Mr. Karupiah is an experienced investor, familiar with the
commercial real estate markets and investment opportunities in northem Idaho. In addition,
Staff has reviewed the last three years of financial statements from Mr. Karupiah and believes
that Mr. Karupiah has the ability to finance the capital needs of the utility.
In response to Staff Production Request No. 1 1, JD Resort indicated that there are no
plans to change the current rates and charges in the current CDS tariffs. Although rates will not
increase because of the transaction, the engineering analysis will identify only necessary capital
improvements in the system that may be a driver for a future rate case.
In response to Staff Production Request No. 12, JD Resort confirmed that it is aware of
the Commission's rules and regulations, including but not limited to the Utility Customer
Relations Rules (UCRR), IDAPA 31.21.01. However, Staff is aware that a letter and newly-
2STAFF COMMENTS MARCH I4,2OT9
redesigned bill was recently sent to customers advising them of several new non-recurring
charges, including a $10.00 per month fee for sending out paper bill statements. It appears that
JD Resort intends to impose a new policy requiring people to either receive bills via email or pay
for paper statements sent via U.S Mail. Staff recommends that the Commission remind JD
Resort that it cannot impose rates and charges, or terms and conditions of service, that have not
been approved by the Commission and included in CDS's Tariff.
Staff also notes that the new bill does not comply with UCRR requirements. Staff
recommends that the Commission direct JD Resort to work with Staff to revise its new bill
statement to conform to the Commission's requirements. Staff has already initiated this review
process informally.
Staff will work with JD Resort to update its Tariff and all customer-related documents, as
needed. It has been five (5) years since the Commission Staff last reviewed several of CDS's
important documents required by the UCRR. Staff recommends that JD Resort submit its
Explanation of Rates, Rules Summary and collection notices for Staff review within six months
of the Commission's order in this case.
CUSTOMER NOTICE AND PRESS RE,LEASE
No customer notice or press release was filed with the Application. CDS is not required
to provide notice to customers or issue a press release because JD Resort is not proposing any
changes to rates. See Rule 125 of the Commission's Rules of Procedure, IDAPA 31.01.01.
However, in its response to Staff Production Request No. 8, JD Resort indicated that upon
approval of the sale, "Existing customers of the Utility Company shall be notified by e-mail,
Certified Mail, or telephone call."
STAFF RECOMMENDATION
Staff recommends the Commission approve the sale of CDS Stoneridge Utilities to Chan
Karupiah, sole proprietor of JD Resort, Inc.
Staff recommends that the Commission remind JD Resort that it cannot impose rates and
charges, or terms and conditions of service that have not been approved by the Commission and
included in the Company's Tariff.
aJSTAFF COMMENTS MARCH I4,2OI9
Staff also recommends that the Commission direct JD Resort to work with Staff to
immediately revise its new bill statement to conform to the Commission's requirements.
Staff further recommends that JD Resort submit its Explanation of Rates, Rules
Summary, and collection notices for Staff review within six months of the Commission's order
in this case.
Respectfully submitted this l'trl- day of Mar ch2019.
Edward J
Deputy A General
Technical Staff: Joseph Terry
Jolene Bossard
Bentley Erdwurm
Chris Hecht
Michael Morrison
i :umisc/comments/swswl 8. I ejjtjbcwhbemm comments
4STAFF COMMENTS MARCH I4,2OI9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF MARCH 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAF'F, IN
CASE NO. SWS-W.I8-01, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
CHAN KARUPIAH
JD RESORT INC
PO BOX 770
BAYVIEW ID 83803
E-MAIL: [e-mail]
DEAN ALLARA MGR
CDS STONERIDGE UTILITIES
364 STONERIDGE ROAD
BLANCHARD ID 83804
NANCY E NICK
HIGH TRAIL CONSULTING
E-MAIL : nancy(g)hi ghtrailcon s ulting. corn
*f '-
CERTIFICATE OF SERVICE