2000208_dh.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
TONYA CLARK
STEPHANIE MILLER
TERRI CARLOCK
RANDY LOBB
BOB SMITH
SCOTT WOODBURY
JUDY STOKES
WORKING FILE

FROM: DON HOWELL

DATE: FEBRUARY 8, 2000

RE: UNITED WATER’S APPLICATION FOR A GENERAL RATE INCREASE, CASE NO. UWI-W-00-1

On February 2, 2000, United Water Idaho filed an Application for authority to increase its rates and charges for water service. The Company serves approximately 65,000 customers within Ada and Canyon Counties. The Company has requested that its proposed rate increase become effective on or after March 3, 2000.
THE APPLICATION
The Company requests an overall increase in its annual revenues of $3,057,100, or an increase of 11.57% over current rates. The Company seeks additional revenue to recover increased operating expenses, the costs associated with plant additions, and to produce a fair rate of return. The Company claims that since its last rate increase, the Company has increased its rate base by $18 million.
The Company also requests an increase in its rate of return to 9.15%. The Company’s present authorized rate of return is 9.12% set in the Company’s last general rate case in July 1998. The Company claims that its current rates produce a rate of return of 7.31% based on a test year ending September 30, 1999, adjusted for known and measurable changes.
The Company proposes to recover its requested revenue increase through uniform percentage increase for all customer rates. In other words, the Company is requesting an 11.57% across the board increase in all rates. If approved, the proposed increase would raise rates for a typical residential customer from about $323 per year to approximately $360 (an increase of approximately $37.50 per year or $3.11 per month). The annual average revenue per business customer was approximately $1,134. A uniform increase of 11.57% would increase rates by $131 per year or approximately $11.00 per month. The Company has no special contract customers.
The Company’s Application was accompanied by supporting testimony and exhibits including financial statements and other supporting workpapers. The Company has requested that the Application be heard upon at the earliest possible date. The Company has requested that its proposed rates become effective on or after March 3, 2000.
Because United Water’s cost of service and rate design issues were recently examined in Case No. UWI-W-98-3, the Company contends that it would be unproductive to re-examine those issues in this proceeding. As the Commission may remember, the final Order in that case was issued May 26, 1999. Accordingly, the Company has not filed a cost-of-service study as required by the Commission’s Procedural Rule 121.01(e). IDAPA 31.01.01.121.01(e).

STAFF ANALYSIS
Staff believes that the Application is generally straight-forward. Staff agrees that it is not necessary under the circumstances of this case to require United Water to file a cost-of-service study. Because of the Company’s desire for expedited disposition, Staff recommends that the Commission issue its Notice of Application and include a deadline for intervention. In addition, the Staff recommends that a prehearing conference be convened in this matter on Tuesday, March 14, 2000 at 10:00 a.m. Staff recommends that the Application be suspended.
The Company did supply the Commission Staff with a press release that was distributed to all media outlets. In addition, the Staff has reviewed the customer notice to be included on the customer’s bill over the course of the next 60-day billing cycle. Following the Consumer Staff’s review of the customer notice, customer notices were adjusted on February 7, 2000. Customer’s bills that were prepared and mailed between February 2 and February 7 will be renoticed in 30 days.

COMMISSION DECISION
Does the Commission wish to suspend this matter for a period of 30 days plus 5 months from February 2, 2000? Does the Commission desire to set a deadline for intervention and to convene a prehearing conference?

DONALD L. HOWELL, II

bls/M:uwiw001_dh
DECISION MEMORANDUM 2