20131231final_order_no_32958.pdf

Office ofthe Secretary
Service Date
December 3 1st,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF TROY HOFFMAN WATER )CASE NO.TRII-W-13-O1
CORPORATION FOR AUTHORITY TO )
INCREASE ITS RATES AND CHARGES FOR )
WATER SERVICE IN THE STATE OF )ORDER NO.32958
IDAHO )
On July 5,2013,Troy Hoffman Water Corporation applied to the Idaho Public
Utilities Commission for authority to increase its rates for water service.Troy Hoffman provides
water service to 146 residential customers and 1 commercial customer in Coeur d’Alene,Idaho.
On July 26,2013,the Company filed corrected Application pages that reduce the amount of the
proposed increase from 72%to 34%.The Company asks that the new rates take effect on
January 1,2014.
We have thoroughly reviewed the record in this case,including the Application and
comments submitted by Commission Staff and members of the public.Based on that review,we
approve a new,total revenue requirement for the Company of $43.54 1.The Company’s new
rates and charges will take effect on January 1.2014.Our decision is detailed below.
PROCEDURAL BACKGROUND
The Commission issued a Notice of Application on July 31,2013 and a Notice of
Modified Procedure on August 20,2013.See Order Nos.32863 and 32881.The latter Order
scheduled an October 1,2013 public workshop in Coeur d’Alene.Idaho,a November 14,2013
deadline for Commission Staff to file written comments,and a November 25.2013 deadline for
the Company to file a reply,if needed.See Order No.32881.Staff and three members of the
public filed written comments.The Company did not reply,but it subsequently notified the
Commission Secretary that it ‘accepts the staff comments/recommendations.”The Commission
held a public hearing on December 12,2013.No members of the public appeared at the hearing.
See Tr.,Vol.I pp.1-4.
ORDER NO.32958 1
THE APPLICATION
With this Application,the Company applied for a 34%increase in water rates as
____
Current Rates Propsed Rates
Residential $1 1 .80 per month plus $1 .10 per $15.76 per month plus $1.47 per
1,000 gallons for all 1,000 gallons for all consumption
consumption exceeding 5,000 exceeding 5,000 gallons per
gallons per month month
Commercial $15.50 per month plus $1.10 per $20.70 per month plus $1.47 per
1,000 gallons for all 1,000 gallons for all consumption
consumption exceeding 5,000 exceeding 5.000 gallons per
gallons per month month
The Company notes that it did not seek a rate increase between 1996 and 2011 even though its
operating expenses increased during that period.The Company then increased its rates in
January 2011.See Order No.32152.The Company says the January 2011 increase partially
bridged the gap between its operating expense and income,but the Company needs another
increase because operating expenses continue to exceed income.See Application.
THE COMMENTS
The Commission received timely comments from the public and Commission Staff.
The Conipany did not reply,but on December 20,2013.it notified the Commission Secretary
that it “accepts the staff comments/recommendations.”The public and Staff comments are
summarized below.We include in each comment summary our decisions on the issues those
comments raise.
I.Public comments
Three public comments were received.Each commenter opposed the initially
proposed,72%rate increase.Two commenters noted that they were on a fixed income.The
third commenter understood the need for some increase,but not a 72%increase.Each comment
was filed before the Company decreased the amount of the proposed rate increase from 72%to
34%.No public comments were received after that.
We appreciate the time that the Company’s customers took to comment on this case.
We recognize that for some customers any rate increase will result in economic hardship.We
also note that the Commission has an obligation to the Company and its customers to set rates at
ORDER NO.32958
follows:
a level sufficient to allow the Company to recover its reasonable expenses and receive a
reasonable return on its investments.Such rates enable the Company to remain financially sound
and capable of providing adequate,safe water to its customers.
II.Staff Comments
After the Staff submitted its comments,the Company notified us that it wholly
concurs with what Staff said.We appreciate the Company letting us know that it agrees with
Staffs position.Based on our review of the record,including the parties concurrence on the
issues,we find that Staffs recommendations are appropriate and will produce rates,charges,and
practices that are fair,just,reasonable and in the public interest.We adopt Staffs
recommendations and direct the Company to comply with them,and we incorporate “Staffs
Analysis”section of Staff’s comments as the rationale for our decision.Staffs
recommendations are discussed in the following sections.
A.Adjustments
1.Plant in Service.Staff notes that the Company put a new,$2,700 roof on its pump
house after its last rate case.Staff recommended a 35-year useful life with a half year
convention for depreciation expense and accumulated depreciation for this new investment.
Staff recommended the Commission remove two of the Company’s proposed,pro
forma adjustments from plant in service.First,Staff says the Commission should remove $2,254
for new valves because the Company won’t start placing those valves in service until spring
2014.Thus,the valves will not be used and useful when the new rates take effect.Second,the
Commission should remove the Company’s proposed,pro forma vehicle adjustment.The
Company requested a $49,327 pro forma adjustment to buy a new vehicle but incorrectly asked
to include just the first year of payments in plant in service.The investment impacts revenue
requirement by $11,200 per year due to depreciation expenses and return on investment,and the
pro forma test year expense is $563.The proposed vehicle expense is not known and measurable
because the Company will not buy the vehicle until after the proposed rates take effect.Further,
there is no evidence supporting the Company’s request to change from the current practice of
reimbursing the Company for miles driven.Further,Staff thus recommended the proposed pro
forma vehicle adjustment also be removed.
Staffs two recommended pro forma adjustments would reduce the Company’s
proposed plant in service by $10,482 and proposed revenue requirement by $964.
ORDER NO.32958 3
2.Depreciation Expense and Accumulated Depreciation.The Company determined
accumulated depreciation and annual depreciation expense based on tax useful lives and annual
depreciation expense from tax returns.Staff says the Company should use the straight line
depreciation methods accepted in its prior rate case.See Case No.TRH-W-l0-0l.Order No.
32152.Using this method,Staff would reduce depreciation expense by $2,996 and accumulated
depreciation by $24,939.
3.Contributions in Aid of Construction (CIAC).When the Company’s present
owners bought it,its books included $12,859 for accumulated amortization of contributions in
aid of construction.Staff says this amount belongs in account 272.Staff recommended that the
CIAC be amortized at the 35-year,meter depreciation rate starting in 2012.The net CIAC would
be $12,492 (i.e.,$12,859 minus $367 for the first year of amortization),which would decrease
rate base by $12,492.The amortization of contributions would also lower depreciation expense
by $367.
4.Materials and Supplies Inventory.The Company maintains a reasonable inventory
of pipes,meters,and couplings for system repairs.Staff thus recommended that rate base
include $697 for materials and supplies.
5.Removing Cost of Living Adjustments.The Company proposed pro forma
inflation adjustments for materials and supplies-operations and maintenance,materials and
supplies-admin and general,and rentals-property and equipment.Pro forma adjustments for
these forecasted,future expense increases are not known and measurable.Staff thus
recommended disallowing these pro forma adjustments and decreasing operating expenses by
$712.
6.Removing Office Rental Expense.In the Company’s last rate case (Case No.
TRH-W-lO-0l,Order No.32152)the Commission said the Company could not recover its office
rental expense in rates.Despite this,the Company again included office rental expense for rate
recovery in this case.The Company only uses a small part of the rented office space,while the
rest is used by related parties.In addition,the rental arrangement involves a related-party
transaction,thus subjecting it to heightened scrutiny under which the Company must prove that
the rental expenses are prudent and necessary.The Company has not carried this burden.Staff
thus recommended the office rental expense be disallowed,resulting in a $2,400 decrease in
operating expenses.
ORDER NO.32958 4
7.Wage Adjustment.The Company included a 10%inflationary increase in labor
operations and maintenance,salaries-officers and directors,and contract services-professional.
Authorized test year amounts were established in Case No.TRH-W-10-01.These expenses were
incurred by parties affiliated with the Company.Actual hours worked by the affiliated entities
were not available for review;Staff thus used the Idaho Department of Labor Wage data to
determine if these wage-related increases could be justified by an increase in costs of labor in the
Coeur d’Alene area.Staff found that overall wages from 2010 to 2012 in the Coeur d’Alene area
were effectively flat,but bookkeeping wages increased by 4%and water operator wages
increased by 30%.However,management wages decreased by 12%.Staff thus recommended
that the Commission accept the proposed 10%increase to labor-operations and maintenance but
disallow half of the contract services-professional increase and all of the salaries-officers and
directors increase.Staff’s recommended adjustments decrease operating expenses by $873.
8.Purchased Power Expense.The Company claims an annual purchased power cost
of $5,980 during its test year.The Company proposes a 10%adjustment to reflect annual
inflation,or 3.3%for the three years since the Company’s last general rate case.The Company
proposes a pro forma purchased power cost of $6,578.Staff says it would be better to normalize
the test year purchased power expense based on average volume of water pumped.The cost of
purchased power is affected by the volume of water pumped and the power rates during the time
of use.Using the six-year annual average volume of water sold and applying the power cost per
1,000 gallons for 2012,Staff calculates the normalized cost of purchased power to be $6,558 per
year.Staff recommended the test year purchased power cost be reduced by $20 ($6,578-$6,558).
9.Water Testing Expense.The Company proposes annual water testing expenses of
$480.Staff disagrees because the actual test year expense should have been annualized.The
Idaho Department of Environmental Quality (DEQ)requires different testing cycles for various
regulated water contaminants.It is thus necessary to normalize water testing costs over several
years.In consultation with DEQ,Staff developed a list of required tests using a nine-year water
testing cycle.Staff calculated the annualized water testing cost to be $571.Staff recommended
increasing the test year water testing cost by $91 ($57 l-$480).
ORDER NO.32958 5
B.Revenue Requirement
1.Total Test-Year Revenue.Staff investigated the Company’s accounts receivable
and revenues and found that the Company uses proper collection procedures and has very few
delinquent accounts.Staff concurs that the Company collected $37,900 in total revenue during
the test year.
2.Rate Base.Staff recommended the Commission find the Company’s total rate base
to be $42,547.This is an increase of $2,367 from the rate base proposed in the Company’s
Application.
3.Operating and Other Expenses.Staff recommended the Commission find the
Company incurred annual operating expenses of $36,295,and other expenses of $3,332.This is
a decrease of $3,913 and $3,363 from the Company’s Application,respectively.Based on the
adjustments discussed above,Staff calculates the Company has a net loss of $1,727.
4.Rate of Return.Staff recommended the Commission allow the Company a 12%
return on equity (ROE)and an overall rate of return of 8.47%.Staff says the 12%return on
equity (ROE)is consistent with the Commission-authorized ROE for many small water
companies.The cost of debt is the actual rate paid by the Company.
5.Revenue Requirement.Staff recommended the Commission approve a total
revenue requirement of $43,541.Staff calculated the revenues associated with the return on rate
base in the amount of $3,604 ($42,547 x 8.47%).Of this revenue,$2,503 reflects interest on the
debt that is a deduction for tax purposes.The remaining $1,101 is subject to federal and state
taxes.The revenue requirement must be increased or “grossed-up”to account for these tax
effects.The net-to-gross multiplier (128.17%)must be applied to the $1,101 to determine how
much tax the Company must recover through rates to enable it to earn the overall 8.47%rate of
return referenced above.The grossed-up ROE is added to the $1,727 net loss and the $2,503
debt-related portion of the capital calculation.This results in the Staff recommended income
deficiency of $5,641 and a total revenue requirement of $43,541,for an increase of 14.88%.
C.Proposed Capital System Improvements
1.Gate Valves.The Company proposes to replace six gate valves in the water system
at the rate of two gate valves a year.The Company would replace the first two valves during the
first quarter of 2014 for $2,254.The Company adjusted its rate base by this amount.Staff
supports the Company’s plan to replace two valves per year;but the valves are not yet used and
ORDER NO.32958 6
useful because the Company has not yet purchased or installed them.Staff thus recommended
the Commission exclude the valve adjustment from rate base.
2.Flow Meter for Pump No.2.DEQ surveyed the Company’s water system in
January 2012.by reviewing the system’s water source,facilities,equipment,operation and
maintenance to assure that the system provides adequate and safe drinking water.During the
survey,DEQ found that Pump No.2,which is the back-up pump,is not equipped with a flow
meter.DEQ says the Company must install a flow meter on Pump No.2’s discharge line the
next time the Company materially modifies the system.The Company has no definite deadline
by which it must install the flow meter;but it says it will cost $3,140 to install the meter,
whenever that occurs.Staff believes it is necessary for the Company to install the meter,and
recommended the Company install it when capital is available.
3.Relocation of Flow Meter for Pump No.1.The Commission previously directed
the Company to accurately assess water pumped and water sold.Specifically,the Company was
to investigate the placement,and test the accuracy,of the newly installed production flow meter.
See Order No.32152.In this case,the Company explains that the meter is not faulty but was
improperly installed by the pump contractor.The Company acknowledges that the meter does
not meet the recommended installation requirements,and it informs Staff that it will relocate it
during the first quarter of 2014 according to the manufacturer’s placement recommendation.The
Company did not tell Staff how much it would cost to relocate the meter,but Staff believes the
primary cost will be labor cost.Staff believes relocating the meter is necessary to obtain the
accurate volume of water pumped.
D.Rate Design
1.Rate Structure.The Company proposes to maintain a rate structure consisting of a
minimum customer charge with volume allowance and a commodity charge.Staff believes this
rate design remains appropriate because:(a)the total number and type of customers have not
changed significantly since the rate was set by the Commission in 1996;(b)the customers’
service meters do not significantly vary in size (out of 146 residential customers,143 have 3/4-
inch service meters and 3 have 1-inch meters);(c)the rate design is easy to implement and
understand;and (d)the rate design is a common for small metered water utilities.
The Company does not propose to change how it classifies customers (i.e.as
residential or commercial);but Staff recommended the Company eliminate the customer classes
ORDER NO.32958 7
and instead implement a single rate design for all customers.Staff notes that the average total
annual usage for the Company’s sole commercial customer was about 0,473 million gallons,or
1 .9%of the Company’s total volume of water sold,over the last six years.The residential
customers,on the other hand,averaged total annual usage of about 24.444 million gallons,or
98.1%of the total volume of water sold.Staff believes that a single commercial customer with
low water usage does not warrant its own customer class.It would be easier to understand and
implement the tariff if a single rate design applied to all customers.
The Company plans to charge customers a minimum amount to use up to 5,000
gallons of water per month.Staff says the 5,000 volume allowance is appropriate because,over
the past six years,the Company’s customers have used 5,405 gallons per month on average
during the winter.
As noted above,Staff proposes an adjusted revenue requirement of $43,541.Using
this adjusted revenue requirement and the recommended rate design discussed above,Staff
recommended a minimum customer charge of $13.75 with a volume allowance of 5,000 gallons.
This represents about a 16.5%increase in base rates.Staff recommended a commodity charge of
$1.12 per 1,000 gallons for water usage above 5,000 gallons,which is about a 1.8%increase in
the commodity rate.
The Company proposes to apply a uniform rate of the overall increase (34%)to both
the minimum customer charge and the commodity charge for all customer classes.Staff did not
uniformly increase the base charge and commodity charge,as noted above.Staff believes that a
16.5%increase in the base charge and a lower,1.8%increase in the commodity charge is
warranted to bring more balanced revenue collections throughout the billing period.
The Company’s existing and proposed rates,and Staff’s proposed rates,are as
follows:
ORDER NO.32958 8
TYPE OF COMPANY STAFF
CUSTOMERS EXISTING RATES PROPOSAL PROPOSAL*
Residential
Mm.Customer Charge $11.80 $17.76 $13.75
Volume Allowance 5,000 gallons 5,000 gallons 5,000 gallons
Commodity Charge $1 .10 per 1,000 gals $1.47 per 1,000 gals $1.12 per 1,000 gals
Commercial
Mm.Customer Charge $15.50 $20.70 N/A
Volume Allowance 5,000 gallons 5,000 gallons N/A
Commodity Charge $1.10 per 1,000 gals $1.47 per 1,000 gals N/A
*staffproposes a single rate designfor all customers.
Staffs rate design will yield the total revenue of $43,563,or about $22 more than
what the Company needs to recover Staffs recommended revenue requirement.This rate design
is reasonable and appropriate.The total revenue contributed by the minimum customer charge is
56%,and the revenue contributed by the commodity charge is 44%.With the current rates,
about 52%is contributed by the minimum customer charge and 48%by the commodity charge.
As discussed above the change in percent contribution of the minimum customer charge from
52%to 56%is warranted to bring more balanced revenue collections throughout the billing
period.In addition,Staff generally predicates revenue derived from the base rate on a 50/50 split
of fixed and variable expenses.In the case of Troy Hoffman,current operation expenses consist
of about 78.8%fixed costs and 20.2%variable costs.The Commission has allowed a small
water utility to recover up to 72%of its revenue from the minimum customer charge.See Order
No.30027,Case No.FLS-W-05..01.
2.Monthly Bill and Rate Impacts.Staffs proposed rate structure would produce an
average monthly customer bill of about $32.23,an increase of $2.28 or 7.6%above current rates.
Under Staffs proposal,which we adopt,average customer bills are expected to be:
Average Monthly Bill -All Customers
Average Current Proposed Amount of Percent
Usage Monthly Monthly increase in Increase
Season (gallons)Bill Bill ($)(%)
Winter 5,000 $11.80 $13.75 $1.95 16.5%
Summer 38,000 $48.10 $50.71 $2.61 5.4%
Average increase (S &%)$29.95 $32.23 $2.28 7.6%
ORDER NO.32958 9
3.Other Water System Operational Issues.In the Company’s last rate case,it was
discovered that in 2006 and 2010 the Company pumped less water than it sold.This anomaly
could have occurred due to a faulty production flow meter,faulty customer service meters,
different dates of reading the production meter and the service meters.or meter-reading errors.
Staff thus asked the Company for flow meter data as part of the current case.The meter reading
data appeared erratic.Specifically,half of the monthly flow records show that the Company
pumped less water than it sold in 2011,2012 and 2013.Staff thus recommended the Company
complete its plans to relocate the flow meter on Pump No.1 (as discussed above)to potentially
correct the inaccurate readings.Staff also recommended the Commission delay its directive in
Order No.32152,and not require the Company to randomly test 10%of its customer service
meters until the flow meter is relocated and measuring accurately.
E.Recurring Charges
Rule 201 of the Commission’s Utility Customer Relations Rules (UCRR)(IDAPA
3 1.21.01.201)states that “[b]ills shall be issued on a regular basis.”It also describes what the
bills must contain,including without limitation:(a)the time period covered by the bill;(b)the
beginning and ending meter readings,where the bill is based on actual readings,or a clearly
marked statement that the bill is estimated,if the meter was not actually read,and the quantity of
service provided when applicable;and (c)an itemization of all charges,both recurring and non
recurring.See UCCR 201.02,.03,and .06.The Company’s bills do not comply with this rule.
The Company bills customers at the end of February,April,June,August,October
and December.But it only reads meters four times a year;it does not read meters in December
or February because snow limits meter access.The Company’s bills for the monthly charge
times the number of months in the billing period (e.g.,$11.80/month x 2 months =$23.60 at
current rates).In preparing the April billing statement,the Company aggregates the 5,000 gallon
monthly allowance for the six months from November through April (5,000 gallons x 6 =30,000
gallons),and the customer is billed for usage exceeding 30,000 gallons based on the April meter
reading.The bi-monthly billing periods and the aggregation of usage over the winter months
result in billing statements that do not comply with Rule 201.Specifically,the billing statements
do not itemize each monthly charge or identify the number of months for which the usage is
aggregated or the water usage allowance included in the base monthly rate.See UCCR 201.03
and .06.
ORDER NO.32958 10
Rather than requiring the Company to itemize monthly base charges on bills,Staff
recommended the Company prepare a bi-monthly rate schedule (based on two times the monthly
rate and allowance)to provide the necessary consistency between the Company’s rates and its
established billing practices.In addition,Staff recommended the Company revise its bills to
indicate the usage allowance included in the base charge,the amount of water actually used
during billing periods where actual meter readings are taken,and the net amount of usage to
which the water usage charge is applied.
F.Non-Recurring Charges
1.Account Initiation Fee and Reconnection Charges.Rule 121 of the Commission’s
Rules of Procedure (RP)(IDAPA 31.01.01.121)requires that application exhibits show “in full
each proposed change in rates,tolls,rentals,charges,rules or regulation by striking over
proposed deletions to existing tariffs and underlining proposed additions or amendments to
existing tariffs...“See RP 121 .01 .a.Here,the Company did not include a marked up copy of
its rate schedule for non-recurring charges (Rate Schedule No.2)to show the proposed changes.
It did include a clean copy of a revised schedule that doubled the Account Initiation Fee from
$10 to $20,and increased Reconnection Charges from $20 to $40 for reconnections requested
business hours and from $40 to $80 for reconnections outside normal business hours.
The Company does not discuss these changes in its Application or otherwise try to
justify the increased fees and charges.The amount of the revised fees and charges are also
higher than the amounts the Commission allows for similar charges at other water companies.
Staff thus recommended the Commission deny the proposed increase in non-recurring fees and
charges.
2.Late Payment Charges.The Company’s tariff describes the Late Payment Fee as
1%per month of the unpaid balance at the time of the billing statement.Because the Company
only bills bi-monthly,the wording of the tariff might be misinterpreted to allow monthly
compounding of the late payment charges.Staff recommended for clarification,the tariff
wording on Rate Schedule No.2 —Non-Recurring Charges be changed as shown in Attachment
Q to Staffs comments.
3.Summary of Rules and Explanation of Rates.The UCRR requires that the
Company provide customers a copy of its Summary of Rules (UCCR 701)and an Explanation of
Rates (UCCR 702)upon initiation of service and annually thereafter.The Company combines
ORDER NO.32958 11
its summary and explanation in one document.The Company has been mailing the Summary of
Rules and Explanation of Rates to existing customers annually.But because most new
customers initiate service through a phone call rather than stopping by the office,the Company
discusses the rates with the customer if asked,but it does not send new customers the required
information.Staff recommended the Company provide each new customer a copy of the
Summary of Rules and Explanation of Rates upon initiation of service and annually thereafter.
Staff recommended the Company revise the Summary of Rules and Explanation of
Rates to show the metered rate charges as bi-monthly charges to be consistent with the tariff
The Company’s billing statements and its Rate Schedule No.1 —Metered Water
Rates both describe the due date as 20 days from the bill date,which is consistent with the
Company’s actual billing practice.The Summary of Rules says that a bill may be considered
past due 15 days after the bill date,which is the minimum requirement of the UCRR (Rule 202)
but does not reflect the Company’s actual practice.Staff recommended the Company revise its
Summary of Rules and Explanation of Rates to consistently reference that a bill is due and
payable within 20 days.See Attachment Q to Staffs comments.
4.General Rules and Regulations Section of Company’s Tariff Section 6 of the
Company’s General Rules and Regulations discusses Billing and Payment.Staff recommended
the Company change Section 6 as reflected in Attachment Q to Staffs comments.In summary,
Section 6.1 ambiguously says that the Company bills “on a regular basis.”Staff recommended
the Company change Section 6.1 it to say that the Company bills “bi-monthly.”Section 6.2
discusses meter reading and estimated usage.The Company bills bi-monthly but only reads
meters four times a year.Staff recommended the Company revise Section 6.2 to more accurately
reflect the circumstances under which the Company reads meters,aggregates usage,and
estimates usage.Section 6.3 discusses payment due date and mentions a 15-day time period.
Staff recommended the Company revise its Section 6.3 to reflect its actual business practice of
having bills due within 20 days.
G.Summary of Decision on Staffs Recommendations
In summary,we find that the Company concurs in Staffs recommendations,and we
adopt those recommendations and direct the Company to comply with them.In summary,we:
1.Approve the use of a 2012 test year;
2.Approve a 12%ROE and an overall ROR of 8.47%;
ORDER NO.32958 12
3.Approve a rate base of $42,547;
4.Approve an annual revenue requirement of S43.541 (for an increase of
14.88%);
5 Direct the Company to eliminate customer classes and implement a single
rate design for all customers;
6.Direct the Company to maintain the 5,000 gallon volume allowance for
the minimum customer charge for all customers;
7.Approve Staff’s recommended rate design;
8.Direct the Company to relocate the flow meter at Pump No.1 as planned
during the first quarter of 2014;
9.Delay our prior directive and direct the Company not to randomly check
10%of its customer meters until after the Company has assured Staff that
the flow meter in Pump No.I is accurately measuring flow;
10.Direct the Company to prepare a bi-monthly rate schedule (Rate Schedule
No.1 at twice the monthly customer charge and allowance)to be
consistent with the Company’s existing bi-monthly billing schedule;
11.Deny the Company’s proposed increases of the account initiation fee and
reconnection charges;
12.Direct the Company to revise its Rate Schedule No.2,General Rules and
Regulations —Section 6.1 and 6.2,billing statements and combined
Summary of Rules and Explanation of Rates to be consistent with the
Company bi-monthly billing schedule;and
13.Direct the Company to revise its billing statements to indicate the usage
allowance included in the base charge,the amount of water actually used
during the billing period(s),and the net amount of usage to which the
water usage charge is applied.
ULTIMATE FINDINGS OF FACT AND CONCLUSIONS OF LAW
Troy Hoffman is a water corporation.The Commission has jurisdiction and authority
over Troy Hoffman and the issues raised in this case,pursuant to Title 61 of the Idaho Code and
the Commission’s Rules of Procedure,IDAPA 3 1.01.01.000,et seq.Based on our review of the
record,we find that Troy Hoffman’s existing rates,charges,and practices are unreasonable to the
ORDER NO.32958 13
extent described in the body of this Order,and that the rates do not afford sufficient revenue to
the Company.See Idaho Code §61-501 and 502.We also find it fair,just,and reasonable for
the Company to change its rates,charges,and practices as described in this Order,Accordingly,
we approve a 12%return on equity (ROE)and an overall rate of return of 8.47%on a total rate
base of $42,547,and we authorize the Company to increase its annual revenues by $5,641 to
satisfy a total revenue requirement of $43,541.See the Attachment 1 to this Order,further
detailing this decision.
ORDER
IT IS HEREBY ORDERED that Troy Hoffman Water Corporation shall have an
annual revenue requirement of $43,541 with expenses,rate base,rate of return,capital structure,
and rate design as detailed in the body of this Order and its Attachment.The Company shall
promptly submit tariffs in compliance with the rates and charges identified in this Order,with the
rates and charges to take effect for service rendered on and after January 1,2014.The Company
shall take such further actions as are directed in the body 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.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
ORDER NO.32958 14
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this E /
day of December 2013.
PAUL KJELL N ,PRESIDENT
r
MACK A.REDFORD,COMMISSIONER
5ta/jf_&
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Jq’n D.JewePJ
Cmmission Secretary
O:TRH-W-I 3-01 kk4
ORDERNO.32958 15
Troy Hoffman Water Company
Revenue Requirement
FYE 2012
1 Rate Base $42,547
2 Required Rate of Return 8.47%
3 Return on Investment $3,604
4 Net Operating Income Realized $(1,727)
5 Net Operating Income Deficiency $5,331
6 Revenue Requirement to
Overcome Loss $1,727
Revenue Requirement Increase
9 Subject to Income Tax $1,101
10 Tax Gross Up Factor 0.00%
11 Not Subject to Income Tax $2,503
Revenue Requirement Increase $2,503
12 Total Revenue Increase Required $4,230
13 Total Revenue Collected in Test year $37,900
14 Revenue Increase %11.16%
15 Total Gross Revenue Requirement $42,130
Attachment 1
Order No.32958
Case No.TRH-W-13-O1