20210325Final_Order_No_34969.pdf

ORDER NO. 34969 1

Office of the Secretary
Service Date
March 25, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

APPLICATION OF CDS STONERIDGE
UTILITIES, LLC TO CHANGE RATES FOR
NON-REFUNDABLE HOOK-UP FEE FOR
NEW WATER CONNECTIONS
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CASE NO. SWS-W-20-01

ORDER NO. 34969

On June 4, 2020, CDS Stoneridge Utilities, LLC (“Stoneridge”) applied to increase the
fee for a new customer to physically connect to Stoneridge’s water system from $1,200 to $9,735
(the “Hook-Up Fee” or “Hook-Up Fees”). See Application at 1. Stoneridge requested an effective
date of July 27, 2020. Id. On June 25, 2020, the Commission ordered the Application to be
processed by Modified Procedure and suspended Stoneridge’s proposed effective date to January
26, 2021. See Order No. 34702.
On January 5, 2021, the Commission extended the suspension period and set comment
deadlines. See Order No. 34886.
The Commission Staff (“Staff”) filed comments on January 26, 2021 and was the only
party to do so. Stoneridge replied on February 9, 2021.
Having reviewed the record, the Commission authorizes Stoneridge to increase its
Hook-Up Fee and to implement other charges to be used in specific situations as set forth in our
findings below.
Further, the Commission approves additions and modifications to Stoneridge’s Tariff
as discussed below.
APPLICATION
Stoneridge represented it costs more than the Commission-authorized $1,200 Hook-Up
Fee to connect a new customer to its water system. Id. For example, Stoneridge asserted that the
original design plans Stoneridge received from the water system’s prior owner failed to show that
Stoneridge would have to cut into the paved streets to connect service lines to water mains. Id.
Stoneridge contended a summary of expected costs for a new connection to its water system, which
includes its personnel costs and contingencies, totals $9,735.00. Id.
ORDER NO. 34969 2

COMMENTS
1. Staff Comments
Staff reviewed the Application, Stoneridge’s responses to its Production Requests, and
other documents obtained from Stoneridge. Staff recommended that the Commission approve an
increase in the Hook-Up Fee but not to the amount requested by Stoneridge. Staff Comments at 2.
Staff recommended that the Non-Recurring Charges section of Stoneridge’s Tariff be
modified to allow itemized Hook-Up Fees based on the specific work required for each customer
that wants to establish a new physical connection to Stoneridge’s water system. Id.
Staff’s Recommendation for an Increase in Hook-Up Fees
Staff noted that Stoneridge experiences a variety of circumstances that affect the cost
to connect new customers in its service territory and believed the $1,200 Hook-Up Fee is now
insufficient. Id. For example, Staff stated sometimes a service line and other components have
been installed and Stoneridge only installs a meter and performs an inspection. Id. In other
instances, Stoneridge must excavate, tap the main, run a service line across the road, and install a
meter and pit setter. Id. To reflect the different circumstances Stoneridge encounters, Staff
proposed that new customers pay the following Hook-Up Fees depending on the specific
circumstances involved to connect to Stoneridge’s water system:
For Applicants Requesting a ¾” or 1” Connection:
Complete Installation $3,500
Tap Main and Install service line to curb stop only $1,512
Adder for excavation or horizontal boring across a road $1,800
Pit Setter and meter only $2,296
Install meter and turn-on water only $ 533
For Applicants Requesting a Connection Larger Than 1”:
Customer pays actual construction costs.
Id. at 2-3.1
Staff noted that, with regard to internal costs, Stoneridge represented that its employees
are salaried and it could not break out the cost for any of their work specifically to connect new

1 Staff’s recommended Hook-Up Fees are based on Stoneridge’s costs for new connections obtained through
Stoneridge’s Responses to Production Request Nos. 4, 5, and 6. Id. at 3. Staff included external costs but not internal
administrative, labor, or overhead costs in its estimates. Id.
ORDER NO. 34969 3

customers. Id. Staff recommended that internal costs continue to be included in base rates and
not included in any Hook-Up Fees. Id.
Using Stoneridge-supplied bids, Staff estimated a Complete Installation costs $3,808;
however, invoices provided by Stoneridge in Case No. SWS-W-20-02 showed that Stoneridge
pays only $3,500 for a Complete Installation. Id. Staff thus recommended the Commission
authorize Stoneridge to charge a new customer $3,500 for a Complete Installation. Id.
Staff believed most residential lots in Stoneridge’s service area only require a 3/4-inch
meter. Id. Stoneridge has represented that material costs for a 1-inch meter installation are less
than for a 3/4-inch installation. Id. Staff believed it would be prudent for Stoneridge to install the
1-inch meter so long as the cost to install the 1-inch meter is less than the cost to install a 3/4-inch
meter. Id. Currently, Stoneridge is authorized to charge customers a Minimum Monthly Customer
Charge of $24.00 for customers with a “0.75” inch meter and $42.67 for customers with a “1.00”
inch meter. Id. a 4; citing CDS Stoneridge Utilities, LLC Tariff (“Tariff”). Staff advocated that a
customer requesting a 3/4-inch meter should be charged only the Minimum Monthly Customer
Charge for a 3/4-inch meter even if a 1-inch meter was installed by Stoneridge to reduce material
costs. Id. Staff also recommended that in Stoneridge’s next general rate case it consider whether
the Minimum Monthly Customer Charge should differ for 3/4 and 1-inch meters. Id.
Other Recommended Changes to the Tariff
For clarity, Staff recommended that new definitions be included in Section 2 of
Stoneridge’s Tariff for: “Applicant”; “Complete Installation”; “Customer”; “Pit Setter and Meter”;
“Tap Main and Install service line to Curb Stop”; “Corp Stop”; “Curb Stop”; and “Extraordinary
Circumstances.” Id. at 4.
Staff also proposed that the current definitions for “Connection or Hook-Up Fee” and
“Customer” be updated. Id. at 5. Finally, Staff recommended that the term “out-of-the-ordinary”
(used in Section 9.4 of Stoneridge’s Tariff) be replaced with “extraordinary.” Id.
Accounting Treatment and Recovery of Excess Costs
Staff stated Stoneridge does not properly record Hook-Up Fees collected or additional
costs incurred to connect customers to its water system. Id. Staff stated costs incurred to connect
a customer to the water system, regardless of who pays for those costs, should be posted in the
proper Plant in Service account. Id. at 6.
Staff asserted that Stoneridge should book the Hook-Up Fees it collects in Account No.
271, Contributions in Aid of Construction (“CIAC”). Id. The balance of this account is used to
ORDER NO. 34969 4

reduce Plant in Service and decrease Stoneridge’s rate base. Id. at 5. The CIAC balance is
amortized at the same rate as the assets they were used to purchase. Id. The annual amortization
will be posted as a reduction to Account No. 403 Depreciation Expense. Id. The accumulated
amortization should be recorded under Account No. 272 Accum. Amort. of Contrib. in Aid of
Const. Id. Staff also recommended that annual depreciation expense should be recorded in
Account No. 403 Depreciation Expense, and the accumulated depreciation should be posted to
Account No. 108.1 Sub Account 333 Services and Sub Account No. 334 Meters and Meter
Installations. Id.
Prudent capital costs incurred by Stoneridge should be included in rate base when it
files its next general rate case. At that time, Stoneridge will be able to seek recovery from all
customers of net depreciation expense and a reasonable rate of return on its net rate base.
Customer Notice and Press Release
Staff stated the Commission’s notice and press release rules did not require Stoneridge
to issue a customer notice or press release.
Staff ultimately recommended the Commission approve its suggested changes to the
Tariff, including the new Hook-Up Fees, new and revised definitions, and changes to Sections
2.4.1, 2.6 and 9.4; and remind Stoneridge that failing to comply with the Commission-approved
Tariff could expose it to penalties under Idaho Code § 61-706.
2. Stoneridge Reply Comments
Stoneridge states it hired an engineer to determine what a new connection to the water
system should cost. Stoneridge Reply Comments at 1. Stoneridge asserted the engineer determined
this service would cost it $9,132.94. Id. Stoneridge alleged that the engineer also determined that
a “Complete Installation” would cost $7,087.10, and not $3,500 as Staff recommended. Id.
Stoneridge also disagreed with Staff’s recommendation that the Hook-Up Fee should not account
for its internal costs. Id. Stoneridge stated that some new connections have cost nearly $12,000
without including its internal costs. Id. Stoneridge asserted it will suffer financially if the Hook-
Up Fee is set too low. Id. Further, Stoneridge asserted that existing customers should not be
penalized or be required to subsidize new connections that exceed a Commission-authorized
Hook-Up Fee. Id. Stoneridge also alleged that Staff’s estimates omit profit or its overhead. Id.
Stoneridge also argued that the new Hook-Up Fee should be based on its historical average costs
and not on the lowest cost as used by Staff. Id. at 2. Based on its engineer’s estimates and bids it
has received from contractors, Stoneridge asserted that Hook-Up Fees should be:
ORDER NO. 34969 5

1. Complete Install $9,500

2. Pit Setter and Meter only $6,000

3. Install Meter and Turn on Water only $2,000

4. Traffic Control $ 945
Id. at 3.
Stoneridge agreed with Staff’s recommendation to add new definitions and changes to
Sections 2.4.1, 2.6 and 9.4 of its Tariff. Id. Stoneridge also asserted it charges a $24.00 Minimum
Monthly Charge to any customer that requests or requested a ¾-inch meter even if a 1-inch meter
was installed. Id. Last, Stoneridge represented it will comply with any Commission-approved
Tariff. Id.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over Stoneridge 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, upon finding that the rates charged by a public utility
are “unjust, unreasonable, discriminatory, or in any wise in violation of any provision of law, or
that such rates . . . are insufficient . . . shall determine the just, reasonable or sufficient rates . . . to
be thereafter observed and in force and shall fix the same by order . . . .” Idaho Code § 61-502;
see also Idaho Code § 61-503.
Based on our review of the record, the Commission finds it is fair, just and reasonable
to authorize Stoneridge to implement the following Hook-Up Fees when a new customer
establishes a new connection to its water system:
For Applicants Requesting a ¾” or 1” Connection:
Complete Installation $3,500
Tap Main and Install service line to curb stop only $1,512
Adder for excavation or horizontal boring across a road $1,800
Pit Setter and meter only $2,296
Install meter and turn-on water only $ 533
For Applicants Requesting a Connection Larger Than 1”:
Customer pays actual construction costs.
The Commission finds that any new customer since J.D. Resort began to operate
Stoneridge, at least as early as June of 2018, that requested a 3/4-inch meter but had a 1-inch meter
ORDER NO. 34969 6

installed by it should not be charged the higher Minimum Monthly Customer charge for a 1-inch
meter. For a customer establishing a new connection to the water system that needs a 3/4-inch
meter or 1-inch meter, the Commission finds it reasonable that Stoneridge charge the customer the
Minimum Monthly Customer Charge for a 3/4-inch meter. Stoneridge shall modify page 1 of its
Tariff to reflect this change. And since these customers now will pay the same Minimum Monthly
Customer Charge regardless of meter size, the Commission finds it reasonable to direct Stoneridge
to modify page 2 of its Tariff to reflect that Stoneridge will charge the same reconnect fee, $65.00,
if the customer is disconnected from the water system for over 31 days, whether or not they have
a 3/4-inch meter or a 1-inch meter.
Stoneridge has argued that these amounts are too low. Unfortunately, Stoneridge’s
evidence lacks the detail necessary to support its claim for a larger increase. The record reveals
that Stoneridge’s position is based largely on estimates and not on actual costs it has incurred.
Further, Stoneridge’s internal costs are not itemized in a way that would allow us to determine
what work was in furtherance of establishing a new customer connection.
The Commission also finds it reasonable to approve the new and modified definitions
to the Tariff as proposed by Staff, and agreed to by Stoneridge. These changes will further clarify
what Stoneridge may charge to connect a new customer to its water system.
The Commission also finds that Staff’s recommended accounting treatment is
reasonable and directs Stoneridge to modify its accounting accordingly. Should Stoneridge have
questions about any accounting treatment, it can raise them with Staff informally as they arise.
The Commission reminds Stoneridge that, consistent with the “filed-rate doctrine,” it
may only bill its customers the rates contained in its Commission-approved Tariff. See Idaho
Code § 61-313 (no public utility may charge a greater or different compensation for any service
rendered or to be rendered than the rates and charges for such services as specified in the utility’s
tariff schedule on file with the Commission and in effect at the time). As discussed in Order No.
34974, Case No. SWS-W-20-02, Stoneridge violated the “filed-rate doctrine” repeatedly by
overcharging new customers to establish a new connection. Failure to comply with this statute
may lead to the imposition of penalties. The new rates contained in this Order are effective upon
issuance of the Order. Such rates are not retroactive.
ORDER
IT IS HEREBY ORDERED that Stoneridge is authorized to charge the Hook-Up Fees
as set forth more specifically in the above Order, effective upon issuance of this Order.
ORDER NO. 34969 7

IT IS FURTHER ORDERED that customers who have connected to the water system
with either a 3/4-inch meter or 1-inch meter since J.D. Resort began operating Stoneridge shall be
charged only the Minimum Monthly Customer Charge for a 3/4-inch meter. Stoneridge shall
modify its Tariff to reflect this change. Additionally, Stoneridge shall modify its Tariff to reflect
a single reconnect fee of $65.00 for customers disconnected from the water system for over 31
days, regardless of whether they have a 3/4-inch meter or 1-inch meter.
IT IS FURTHER ORDERED that the proposed modifications to the definitions section
of Stoneridge’s Tariff are approved. Stoneridge shall file conforming Tariffs within 10 days of
issuance 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 about any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
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ORDER NO. 34969 8

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 25th day
of March 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary
I:\Legal\WATER\SWS-W-20-01\orders\SWSW2001_order_jh.docx