20200909Order_No_34770.pdf

ORDER NO. 34770 1
Office of the Secretary
Service Date
September 9, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE COMMISSION’S
INVESTIGATION INTO CDS STONERIDGE,
LLC’S HOOK-UP FEE FOR NEW
CUSTOMERS TO CONNECT TO ITS
WATER SYSTEM
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CASE NO. SWS-W-20-02

ORDER NO. 34770

CDS Stoneridge Utilities, LLC, owned by J.D. Resort, Inc. (collectively the
“Company”) is near Blanchard, Idaho, where it provides water service to its customers.
BACKGROUND
J.D. Resort, Inc. took control of and began operating CDS Stoneridge’s water system
in November 2018, before the Commission approved the transfer of the water utility to it. On
August 2, 2019, the Commission approved the sale of the Company and transfer of Certificate of
Public Convenience and Necessity No. 395 to J.D. Resort, Inc. See Order No. 34391. In Order
No. 34391 the Commission stated, “we remind the current operator of the water company that no
rates, charges, terms, or conditions of service can be altered without Commission approval.” Order
No. 34391 at 3. Order No. 34391 required the Company to report quarterly on all non-recurring
charges it collected during the preceding quarter to ensure that the Company was collecting only
Commission-approved charges. Order No. 34391 at 4. Further, the Commission instructed “[the
Company that it] cannot bill customers for rates or charges that are not in [the Company’s] current
Commission-approved Tariffs.” Id. citing Idaho Code § 61-313.
On June 4, 2020, the Company filed a tariff advice seeking to increase the Hook-up
Fee from $1,200 to $9,735. Tariff Advice at 1, Case No. SWS-W-20-01. The Company requested
an effective date of July 27, 2020. At the Commission’s June 16, 2020, Decision Meeting,
Commission Staff (“Staff”) argued that a proposed $8,535 increase in Hook-up Fees was not
appropriate to be processed as a tariff advice. Staff recommended that the Commission process
the Company’s filing through Modified Procedure and suspend the Company’s proposed effective
date. On June 25, 2020, the Commission issued an order converting the Company’s tariff advice
to a docket to be processed through Modified Procedure. Order No. 34702. The Commission also
suspended the Company’s proposed effective date from July 27, 2020 to January 26, 2021.

ORDER NO. 34770 2
At the Commission’s August 18, 2020, Decision Meeting, Staff updated the
Commission on the progress of its underlying inquiry of the Company’s business and bookkeeping
practices.
STAFF AUDIT AND CUSTOMER COMPLAINTS
Staff’s ongoing audit demonstrates that from November of 2018 until the end of 2019,
the Company has charged 16 customers at least $4,000 each to connect to the water system instead
of $1,200. Staff asserted the cumulative overcharges through the end of 2019 amounts to $45,400.1
Staff has also received at least 10 customer complaints that the Company is requiring new
customers to pay more than $1,200 to connect to the water system or service is refused.
In one complaint registered with the Commission on March 25, 2020, a customer
alleged being charged $4,600 to connect to the water system. Staff requested that the Company
respond to this allegation. The Company submitted an untimely response only after Staff made
continued, repeated requests for a response. The Company represented it charged the customer an
additional $2,800 (over the $1,200 in the Company’s Tariff) to connect to the water system because
the Company needed to expand its water system to reach the customer. Further, the Company
asserted the actual cost to connect this customer exceeded $6,000.2 Based on the information
received by Staff, the customer appears to have been within the Company’s service territory.
In a July 22, 2020 customer complaint, the customer submitted a copy of the
Company’s APPLICATION FOR WATER/SEWER CONNECTION (“Application”). The
Application provides that a “WATER HOOK-UP” costs $1,200 and that a “CONTRIBUTION IN
AID OF CONSTRUCTION OF EXPANSION OF SYSTEM” has a $2,800 charge. Id. The
Application states that although the fee for a water connection is $1,200 it requires the customer
to acknowledge that:
I understand that this fee is only for the right to connect unto the Stoneridge Utility
water system and DOES NOT include any costs associated with the purchase of
parts or installation necessary to do the physical connection from one’s home to the
water meter. It also DOES NOT include any costs associated with purchase or
installation of pressure reducing and/or backflow prevention devices that may be
necessary for your particular lot to properly connect to the system.

1 One customer was allegedly charged $4,600 and the remaining 15 customers were charged $4,000 each.
2 Due to the Company’s lack of response it is unclear whether it charged this customer $4,000 or $4,600 to connect to
the water system.

ORDER NO. 34770 3
See Exhibit A to Staff’s August 12, 2020, Decision Memorandum. The Company’s Application
also discusses a contribution in aid of construction to expand the system and provides:
There is a CAP Ex fee (operating expense) of $2,800.00. I understand that this fee
is only for the right to connect onto the StoneRidge Utility system. This fee DOES
NOT include any costs associated with the purchase of parts or installation
necessary to do the physical connection from one’s home to the system collection
lines.
Id. Staff asserted the additional fees discussed in the Company’s Application are not in the
Company’s Tariff (“Tariff”).
Based on evidence that Staff has collected through its ongoing audit of the Company,
and in light of the numerous customer complaints it has received, Staff recommends that the
Commission investigate whether the Company is violating Idaho Code § 61-313, Commission
Order No. 34391 and the Company’s Commission-approved tariff by charging more than $1,200
(the “Hook-up Fee”) to its water system. See CDS Stoneridge Utilities, LLC’s Tariff Schedule 2.
Staff also recommended that the Commission issue an emergency order directing the
Company to:
1. Immediately cease all billing practices that conflict with the Tariff, including
charging new customers more than the Commission-approved $1,200 Hook-up Fee to connect to
the Company’s water system;
2. Continue serving customers who did not pay amounts that exceed the $1,200 Hook-
up Fee;
3. Connect requesting new customers to the water system who pay the $1,200 Hook-
up Fee, consistent with the Company’s Tariff; and
4. Produce and provide the Commission with copies of all records about new customer
connections to the water system since November of 2018 through the present, including an
itemization and description of the labor performed, equipment and materials installed, and all
charges the customer paid to connect to the Company’s water system.
Staff asserted that if the Commission found that the Company violated these authorities,
the Commission could order the Company to refund any overcharges to affected customers.
Finally, Staff recommended that the Commission consider penalizing the Company for violating
these authorities. See Idaho Code § 61-701 et seq.

ORDER NO. 34770 4
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company and 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. The Commission also has authority to
investigate the billing practices of the Company under Idaho Code §§ 61-503, 61-313 and 61-612.
Based on evidence presented by Staff and the customer complaints, the Commission finds it
necessary and in the public interest to issue this emergency Order directing the Company to: (1)
immediately cease all billing practices that conflict with the Tariff, including charging new
customers more than the Commission-approved $1,200 Hook-up Fee to connect to the Company’s
water system; (2) continue serving, and immediately reconnect, customers who did not pay
amounts that exceed the $1,200 Hook-up Fee; (3) Connect requesting new customers to the water
system who pay the $1,200 Hook-up Fee, consistent with the Company’s Tariff; and, (4) within
twenty-one (21) days of the service date of this Order, produce and provide the Commission true
and correct copies of all records concerning new customer connections to the water system since
November of 2018 through the present, including an itemization and description of the labor
performed, equipment and materials installed and all charges the customer paid to connect to the
Company’s water system.
Failure to comply with the requirements of this Order may lead the Commission to
impose penalties. See Idaho Code § 61-706 (Any public utility that violates the public utilities
laws, Commission orders or rules, or any part of them, is subject to a penalty of up to $2,000 per
day, with each violation constituting a separate offense, and each day’s continuing violation
constituting a separate offense).
The Commission’s investigation will include whether the Company has violated Idaho
Code § 61-313, Commission Order No. 34391 and the Tariff by charging or threatening to charge
its customers more than a $1,200 Hook-up Fee. The Commission directs the Company to file a
written response/answer to the Commission’s initiation of this investigation within twenty-
one (21) days of the service date of this Order. The Company can either confirm or deny the
findings of the Staff and the Commission’s response to those findings. The Commission then will
make further determinations regarding the issues involved in this proceeding and how this case
will be processed to completion.

ORDER NO. 34770 5
The Commission notes the Company has applied to increase the Hook-up Fee. See
Order No. 34702, SWS-W-20-01. Irrespective of what is decided in Case No. SWS-W-20-01, any
change in Hook-up Fee would only apply prospectively.
ORDER
IT IS HEREBY ORDERED that the Company immediately cease all billing practices
that conflict with the Tariff, including charging new customers more than the Commission-
approved $1,200 Hook-up Fee to connect to the Company’s water system.
IT IS FURTHER ORDERED that the Company continue serving, and immediately
reconnect, customers who did not pay amounts that exceed the $1,200 Hook-up Fee.
IT IS FURTHER ORDERED that the Company connect requesting new customers to
the water system who pay the $1,200 Hook-up Fee, consistent with the Company’s Tariff.
IT IS FURTHER ORDERED that, within twenty-one (21) days of the service date of
this Order, the Company produce and provide the Commission true and correct copies of all
records about new customer connections to the water system since November of 2018 through the
present, including an itemization and description of the labor performed, equipment and materials
installed, and all charges the customer paid to connect to the Company’s water system.
IT IS FURTHER ORDERED that the Company file a response to this Order within
twenty-one (21) days from its service date.
THIS IS AN INTERLOCUTORY ORDER. Any person interested in this Order may
file a petition for review within twenty-one (21) days of the service date of this Order with regard
to any matter decided in this Order. A petition to review may request that the Commission: (1)
rescind, clarify, alter, amend; (2) stay; or (3) finalize this Interlocutory Order. After any person
has petitioned for review, any other person may file a cross-petition within seven (7) days. See
Rules 321, 322, 323.03, 324, 325 (IDAPA 31.01.01.321-.325).
IT IS FURTHER ORDERED that parties continue to comply with Order No. 34602,
issued March 17, 2020. All pleadings should be filed with the Commission electronically and shall
be deemed timely filed when received by the Commission Secretary. See Rule 14.02. Service
between parties should also be accomplished electronically. Voluminous discovery-related
documents may be filed and served on CD-ROM or a USB flash drive.

ORDER NO. 34770 6
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 9th
day of September 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\WATER\SWS-W-20-02\orders\SWSW2002_Order_jrh.docx