20050719Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEG AL
FROM:DONOVAN E. WALKER
DATE:JULY 19,2005
SUBJECT:TERRA GRANDE WATER TARIFF SCHEDULE
RECONNECTION FEES, CASE NO. TGW-05-
NO.
On May 24, 2005 , Terra Grande submitted Tariff Schedules No.2 and No.
regarding new service connections and reconnection fees, respectively. Schedule No.2 was
processed as a tariff advice. Comments were sought regarding Schedule No., through
Modified Procedure. Commission Staff filed comments. The Company filed reconnection cost
information and an affidavit of Barbara Child, the owner of Terra Grande Water.
THE COMPANY'S PROPOSED RECONNECTION FEE
Terra Grande proposes a reconnection fee of $65 during the office hours of 8:00 a.
to 5:00 p., Monday through Friday, and $100 for after-hourS reconnections. As support for
the proposed fees, the Company provided a letter from D&D Plumbing stating that connecting or
reconnecting a water service requires a service call, which is billed at a $65 minimum for up to
one hour including travel time. The letter also states that all after-hours work is charged at
$97.50 per hour. The Company also filed additional reconnection cost information including an
affidavit from the Company s owner, Barbara Child, as well as several copies of invoices
showing charges to the Company from D&D Plumbing for reconnections and disconnections to
the system.
The Company states that it simply needs to recover the actual costs of the
reconnection services performed, and if it does not it will suffer financial hardships. The
Company provided evidence that there have been seven disconnections and seven reconnections
to the system from October 2004 to the present time. The licensed plumber that performs this
DECISION MEMORANDUM
service for Terra Grande charges $65 for each service call, which generally means that Terra
Grande will be charged $65 to shut off someone' s water service, as well as $65 to reconnect the
water service. The Company states that disconnection and subsequent reconnection after
payment of a delinquent account is a necessary collection tool that the Company must utilize.
The Company is typically charged $130 for a disconnection and subsequent reconnection if two
service calls are required. The Company states that, as a small water company, the inability to
recover these costs will be detrimental to its financial integrity and hamper its ability to operate
and maintain the water system.
ST AFF COMMENTS
Commission Staff filed comments on July 13 , 2005.Staff states that the
reconnection fees requested by Terra Grande are excessive, and recommends a reconnection fee
of $20 during business hours, and $30 after business hours.
Staff states that a review of the approved reconnection tariffs for other water
companies shows an average reconnection charge of approximately $20 during business hours
and $30 after business hours. Staff also looks at the time, effort, and costs likely to be incurred
by Terra Grande to reconnect a customer, and concludes that a $20 fee is more appropriate. Staff
states that the rates charged by D&D are consistent with hourly rates charged by licensed
plumbers for service to a residential customer. However, from Staff discussions with Ms. Child
and with Terra Grande s plumber, some of the work being done on service calls may include
installing a valve, vault, or other equipment and goes beyond what Staff would normally include
in a reconnection charge. Staff further states that the reconnection work, consisting of accessing
and turning a valve when there is no meter to be removed, does not require an hour of time.
Staff calculates that the travel time from D&D to the Terra Grande service area is 4.5 miles with
a driving time of 10 minutes. Staff estimates a time of 30 minutes to perform a reconnection
including travel time, to be reasonable. Additionally, Staff states that there is no reason that this
work needs to be performed by a licensed plumber, and calculates that a helper or other
employee could be used for this work. Staff calculates that an employee being paid $20 per hour
with a wage multiplier of 2.0 for overheads and profit would result in a cost to Terra Grande of
$20 for the half-hour service.
DECISION MEMORANDUM
Staff also reports that it found an "unusual service condition" where only 50% of the
customers of Terra Grande have a vault with a shut-off valve installed. The Company is
installing new vaults and meter sets on an as needed basis.
COMMISSION DECISION
Based upon the record in this case, does the Commission find the requested
reconnection fee, as stated in Terra Grande s proposed Tariff Schedule 3 , to be reasonable?
Does the Commission find the requested reconnection fee to be excessive? What does the
Commission find to be ajust and reasonable reconnection fee for customers of Terra Grande?
Donovan E. Walker
M:TGWWO502 dw
DECISION MEMORANDUM