20190603Comments on Amended Application.pdf

EDWARD JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10446
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.39s
RECEIVED
l0l9 JUtl -3 Pll l: l8
IDAI,tO PUELIC
TILITTES COMMISSION
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. SWS-W-18-01
COMMENTS OF THE
COMMISSION STAFF
ON AMENDED APPLICATION
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Edward Jewell, Deputy Attorney General, submits the following comments.
PROCEDURAL 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 its 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.
On April 4,2019, the Commission declined to approve the Company's Application
because of the "uncertain nature of fundamental aspects of the Application[.]" Order No.34297
STAFF COMMENTS JUNE 3,20191
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
at 3. The Commission gave JD Resort sixty days to address the uncertainties. Specifically, the
Commission requested JD Resort: (1) explain which entity will own the water company; (2)
provide documents showing how the water company was or will be transferred to that entity; (3)
align the request for the transfer of the CPCN to the entity that will own the water company's
assets; and (4) provide documents substantiating the transferee entity's financial and operational
abilities to manage a water company in the public service.
STAFF ANALYSIS OF ORIGINAL APPLICATION
The original Application stated, "For consideration by the Idaho PUC we respectfully
request your authorizatron for the transfer of the existing utility company to the Buyer (the Buyer
of the real property is currently JD 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 l. 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 April2,2018, lists
Esprit Enterprises ,LLC ("Esprit Enterprises"), an Idaho limited liability corporation as the
purchaser. The original Application was signed by Mr. Chan Karupiah in his personal capacity,
without indication that he represented any entity.
Commission Staff filed the only comments and recommended the Commission approve
the transfer. Staff confirmed that Esprit Enterprises and JD Resort are owned by Mr. Karupiah.
Staff reviewed Mr. Karupiah's last three years of personal financial statements, which were
submitted in response to a production request for the financial statements of JD Resort. Staff
stated its belief that Mr. Karupiah has the personal financial ability to operate the water
company.
During the comment period, Staff learned that a redesigned bill, with several new non-
recurring charges not approved by the Commission, was sent to customers during the initial
comment period. Staff noted in its comments on the original Application that, besides the new
charges not being Commission approved, the new bill did 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.
2STAFF COMMENTS JLINE 3,2019
Staff also noted that the purchaser had engaged the services of a licensed Drinking Water
Distribution Operator and was performing an engineering analysis of the system to determine
critical needs.
STAFF ANALYSIS OF RESPONSE
Staff has reviewed JD Resort's response and believes the key issues identified in the
Commission's order have been addressed. Those issues are discussed in greater detail below.
Which entity will own the water company?
On page 1 of the May 6, 2019 Amended Application, JD Resort states that both Esprit
Enterprises and JD Resort are under the sole proprietorship of Mr. Chan Karupiah, and that JD
Resort will be the owner and operator of CDS. Therefore, Esprit Enterprises is just a vehicle for
this transfer.
Provide documents showing how the Company was or will be transferred to the entity.
JD Resort provided a letter from DEQ dated November 26,2018. This letter states that
the DEQ loan has been reassigned from CDS to JD Resort. Also, Staff has been informed
though an e-mail from JD Resort's previous water operators that JD Resort has been operating
the Company since November 2018, and that they were employed by Mr. Karupiah, not CDS.
While this is not a complete description of the ownership transfer, Staff is willing to accept that
JD Resort has taken responsibility for the water utility.
Align the transfer of the CPCN to the entity that will own it.
On Page 1 of the Amended Application, JD Resort states that Mr. Karupiah "...wishes
CPCN No. 395 to be held by JD Resort..." This aligns with the Company's answer regarding
who will own the Company and evidence showing that the Company has taken responsibility for
the utility, as stated above.
Provide documents substantiating the transferee entity's financial and operational ability.
Mr. Karupiah provided, as Appendix B to the Amended Application, anotarized personal
guarantee stating that he would use his personal assets to support the capital needs of JD Resort
JSTAFF COMMENTS JUNE 3,2019
in the operation of the water system. Mr. Karupiah included his personal financial statements in
the original application. Staff believes that these financial statements show that Mr. Karupiah
has the financial ability to support the needs of the water system. Staff believes the personal
financial statements and notarized personal guarantee of financial support for the Company, in
combination, adequately demonstrate the financial ability and bona fide intent to operate the
utility in the public interest.
On April 26, Staff received an email from the Company's water system manager stating
that he had resigned. Staff followed up with JD Resort and learned that it has contracted with
two new licensed water system operators who are qualified to provide operational support for the
system.
BILLING AND TARIFF ISSUES
In its comments on the original Application, Staff recommended 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. Staff notes that the
Company has since sent a letter to its customers to retract previously provided erroneous
information regarding its billing policy and certain non-recurring charges not authorized by the
Commission.
Since filing its comments on the original Application, Staff has become concerned that
inadequate attention is being paid to providing customers with accurate and timely bills. Staff
has received complaints from customers about receiving incorrect bills or failure to receive bills.
This may be due in part to personnel changes at the Company, however, in its response to Staff,
the Company has provided inaccurate or insufficient information regarding preparation of
customer bills. Staff recommends the Commission remind the Company of its obligation to
provide accurate and timely bills to its customers and to promptly and thoroughly investigate and
respond to complaints filed with the Commission.
Staff continues to recommend that the Commission direct JD Resort to work with Staff to
revise its billing statement to conform to the Commission's requirements. JD Resorts is currently
developing a new water billing system using new software. Staff also recommends JD Resort be
required to submit its Explanation of Rates, Rules Summary, and collection notices for Staff
4STAFF COMMENTS JUNE 3,2079
review within three months of the Commission's order in this case. See Utility Customer
Relations Rules (IDAPA 31.21.01) Rule 702 (Explanation of Rate Schedule), Rule 701
(Summary of Rules), and Rule 603 (Requirements For and Contents of Notice Before
Termination Of Service).
STAFF RECOMMENDATION
Staff recommends the Commission:
. Approve the sale and transfer of CPCN No. 395 from CDS Stoneridge Utilities, LLC
to JD Resort, Inc.
. 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.
o Remind JD Resort of its obligation to provide accurate and timely bills to its
customers and to promptly and thoroughly investigate and respond to complaints filed
with the Commission.
o Direct JD Resort to work with Staff to immediately revise its billing statement to
conform to the Commission's requirements.
o Require JD Resort to submit its Explanation of Rates, Rules Summary, and collection
notices for Staff review within three months of the Commission's order in this case.
j )
Respectfully submitted this day ofJune 2019
Edward
Deputy General
Technical Staffi Joseph Terry
Jolene Bossard
Bentley Erdwurm
Chris Hecht
Michael Morrison
i:umisc/comments/swswl S.lejjdbcwhbemm comments amended app
STAFF COMMENTS 5 JUNE 3,2019
CBRTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3RD DAY oF JUNE 2019, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF ON AMENDED
APPLICATION, IN CASE NO. SWS-W-18-01, By MAILING A COpy THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
CHAN KARUPIAH
JD RESORT INC
PO BOX 770
BAWIEW 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: nanc,v@:)hi ghtrailconsLrlting.corn
.J., /rA.^sECRErX".f/-
CERTIFICATE OF SERVICE