20180302final_order_no_34000.pdf

Office of the Secretary
Service Date
March 2,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )OF TETON WATER &SEWER COMPANY )CASE NO.TTS-W-17-02
FOR AUTHORITY TO ACCESS THE )
COMPANY'S EMERGENCY RESERVE )ORDER NO.34000
ACCOUNT )
On October 10,2017,Teton Water &Sewer ("Teton")submitted an Application
requesting the Commission to approve access to a reserve fund to pay for two valve repairs-
Cluff Lane,$3,328.12,and Teton Springs Lodge,$5,351.22.On December 6,2017,the
Commission issued a Notice of Modified Procedure and set a comment deadline of January 9,
2018,and a Company reply deadline of January 23,2018.Staff filed timely comments
supporting the request and making additional recommendations.No other comments were
received.
BACKGROUND
In 2008,Teton applied to the Commission for a Certificate of Public Convenience
and Necessity,and approval of rates and charges.The Commission granted the CPCN and
authorized certain changes in rates.Order Nos.30571,30718.In January 2009,the Commission
also found that the Company did not have sufficient earnings should it experience a financial
emergency.Order No.30718.The Commission thus established an emergency reserve fund,and
parameters for access to it.The Commission stated,"[t]he reserve fund is to be used only for
emergencies and major unplanned capital expenditures (plant repair,maintenance and
replacement).It is not intended to ...fund capital expenditures that should have been planned."
Id.at 12.The account balance at the end of 2016 was $15,543.
The Commission allowed for immediate access to these funds,but outlined
requirements for approval of the expenditures,including that the Company file notice when
money from the fund is used;provide an audit trail for the use of the funds;and only use the
funds for unplannedrepair costs exceeding 10%of the Company's annual revenue requirement.
THE APPLICATION
With its Application,the Company asked the Commission to let it use the reserve
fund to pay for two valve repairs.The Company stated that it completed the repairs in September
ORDER NO.34000 1
2016 and June 2017.The Company claimed that the total cost for the repairs was $8,679.34,
including $3,328.12 for a repair at Cluff Lane,and $5,351.22 for a repair at Teton Springs
Lodge.The Company provided invoices and pictures to support its request.
STAFF COMMENTS
Commission Staff filed the only comments.Staff recommended the Commission
authorize the Company to use the reserve fund for the repairs,and that changes be made to the
fund's access requirements.
Staff believed the Application provided adequate notice to the Commission.Staff's
analysis showed the valve repairs were necessary,unplanned,and the type of repair the fund was
intended to pay for.Staff further stated that the Company provided an auditable paper trail
adequate to support the request.However,Staff determined that neither repair exceeded 10%of
the Company's revenue requirement,a requirement imposed by the Commission when the fund
was created.
Staff explained that the Company's annual revenue requirement is $146,309.This
makes the minimum allowed project amount $14,631.Even when combined,the repairs do not
meet the 10%requirement.Staff explained that,as a small water company,Teton lacks access to
capital markets,and that the 10%requirement has proven too burdensome.Staff recommended
the Commission eliminate the 10%requirement.Ultimately,Staff felt that use of the funds on
the repairs were appropriate and should be approved.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over the Company and the issues in this case under
Title 61 of the Idaho Code,including Idaho Code §§61-124,-125,-129,and -501.The issue
before the Commission is simply if access to the plant reserve fund is in the public interest.
When determining whether a course of action is in the public interest,the Commission considers
all relevant factors,including cost,to determine if the Application is consistent with the public
mterest:
In general,where the Commission is required to consider the "public interest,"
it must look to "the interest of the public,their needs and necessities and
location and,in fact,all the surrounding facts and circumstances to the end
that the people be adequatelyserved."
Browningn Wood,99 Idaho 174,579 P.2d 120 (1978);see also,Commission Order No.28213,
Case No.PAC-E-99-1.Additionally,utilities must maintain service that is "adequate,efñcient,
ORDER NO.34000 2
just and reasonable."Idaho Code §61-302.This concept takes into account broad concepts of
safety,health,comfort,convenience of patrons,employees,and the public.
After a thorough analysis of the proposal,Commission Staff recommended that the
Commission approve the Application and eliminate the 10%requirement.The Company does
not oppose Staff's recommendation.
We find that the Company's request is reasonable and generally adheres to our prior
Order regarding the method to be used for access to the reserve fund.While the projects do not
meet the 10%requirement,we find that use of the fund was nonetheless justified.Further,we
find that that the 10%condition is too onerous,and we believe it should be eliminated.With
regard to the accounting treatment of funds used from the reserve fund,they shall be treated as
contributions-in-aid of construction.
Accordingly,the Commission approves the Company's Application to access the
reserve fund to pay for two valve repairs amounting to a total of $8,679.34.We find further that
elimination of the 10%requirement imposed in Order No.30718 is fair,just and reasonable.
However,we reiterate the requirement that the fund only be used for emergencies and major
unplanned capital expenditures.The Commission appreciates the Company's willingness to
work closely with Staff in resolving this matter.
ORDER
IT IS HEREBY ORDERED that the Company's Application is approved.The
Company is authorized to utilize $8,679.34in plant reserve funds.
IT IS FURTHER ORDERED that the condition that a repair must exceed 10%of the
Company's revenue requirement before the Company may use the reserve fund to pay for it,is
eliminated.
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 §61-626.
ORDER NO.34000 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of March 2018.
P L KJE A Ei,PRESIDENT
KRI NE RAPER,CdMMISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
I:\Legal\LORDERS\TTSW1702bkl Final.doc
ORDER NO.34000 4