20040202Final Order No 29423.pdf

Office of the Secretary
Service Date
February 2, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF UNITED WATER
IDAHO'S TARIFF ADVICE TO INCREASE
CUSTOMER RATES TO RECOVER THE CITY
OF BOISE'S 4% FRANCHISE FEE.
CASE NO. UWI-O3-
ORDER NO. 29423
On December 18, 2003, United Water Idaho filed a Motion to Alter Order No. 29359
issued November 3, 2003 in the above referenced case. The Company requested that the
Commission delete the provision in that Order that requires United Water to seek a court
decision to determine whether the City of Boise s 1995 Ordinance No. 5623 and a recent 1%
increase in the City s franchise fee are legally valid. As explained in the Motion, the City
recently repealed the 1 % increase.
As part of its Motion, United Water proposed to refund approximately $50 000 in
collected franchise fees to customers by issuing billing credits against future franchise fees. This
amount represents the difference between the former 3 franchise fee and the increased
franchise fee of 4% that became effective October 1 2003. Finally, the Company also submitted
a revised Tariff Schedule No.8 reflecting the repeal of the 1 % increase and a return to the 3%
franchise fee effective December 17, 2003. The Company requested the Commission to "accept
for filing" the revised tariff page.
BACKGROUND
The background events concerning this matter are contained in Order No. 29359.
Briefly, the City of Boise enacted franchise Ordinance No. 5623 in April 1995 but made it
retroactive to November 1994. During this interval, the Legislature enacted Idaho Code 9 50-
329A that states in "no case shall (a city s) franchise fee exceed three percent " with exceptions
not pertinent here. The statute became effective in March 1995. The City s 1995 Ordinance
provided that Boise may increase the United Water franchise fee from 3% to 4%, and from 4% to
5% "upon passage of a resolution." In July 2003 , the City increased the United Water franchise
fee to 4% effective October 1 2003. Order No. 29359 at 1-
In Order No. 29359 the Commission examined the United Water tariff that
implemented the collection of the 1% increase in the City s franchise fee. In that Order, the
ORDER NO. 29423
Commission recognized that the Commission Staff raised significant questions regarding the
validity of the City s 1995 franchise fee Ordinance and the recent 1 % increase. Order No. 29359
at 12. However, the Commission declined to initiate an investigation to examine these issues.
Instead, the Commission found that "these questions should be addressed and answered by a
court oflaw.Id. at 13. Consequently, the Commission directed United Water to "initiate a case
in a court of competent jurisdiction to resolve these questions.Id. In addition, the Commission
placed the Company on notice that the 1% increase effective October 2003
, "
is subject to
refund if a court invalidates the (franchise fee) ordinance or franchise fee increase. United Water
shall provide the Commission with the Court's opinion within twelve (12) months from the date
of this Order.Id. There were no petitions for reconsideration.
UNITED WATER'S MOTION
In its Motion, United Water requested that the Commission eliminate that provision
in Order No. 29359 that requires the Company to seek a court determination regarding the
legality of the 1995 Ordinance and the 1 % franchise fee increase. In support of its Motion
United Water disclosed that the City recently adopted Resolution No. 17959 on December 16
2003. In essence, the December 16 Resolution repeals Resolution No. 17692 that authorized the
1 % increase in October 2003. The December Resolution states that the City and United Water
have determined the potential costs associated with continuing to collect the franchise fee
increase warrant the repeal of the fee increase.Resolution No. 17959 (Dec. 16, 2003).
Consequently, the repeal of Resolution No. 17692 returns the franchise fee to 3%.
Given the City s repeal of its 1% increase, United Water asserted that the
Commission s prior directive in Order No. 29359 to seek a court determination is moot. Motion
at 2. "Because the 4% fee has been rescinded a judicial determination as to its validity would
have no practical effect on the outcome.Id. Thus, United Water requested pursuant to Idaho
Code 962-624, that the Commission amend its Order No. 29359 and delete the requirement that
the Company seek a court decision.
As part of its Motion, United Water also sought authority to refund the 1 % franchise
fees that it collected from customers since October 2003. The Company estimated that the 1
fee represents approximately $50 000 in collected fees. It calculated the average refund per
customer would be about 50~ but could be as much as $1.50. Consequently, the Company
ORDER NO. 29423
requested that it be authorized to retum these funds to its customers in the form of a bill credit
against future franchise fees rather than issue refund checks. Id. at 2.
Finally, the Company prepared revisions to its Tariff Schedule No., Sheet lOB
showing that Boise s franchise fee is reduced to 3% effective December 17, 2003.
Company asked that its revised tariffbe accepted for filing.
The
STAFF COMMENTS
Although the Staff believed that rescission of the franchise fee increase does not
address the underlying legality of the City s 1995 Ordinance No. 5623, the Staff did not oppose
the Motion. Staff supported the Company s proposal to refund the collected franchise fee
increase to customers in the form of a credit against future franchise fees. The Staff also
recommended that the Commission "accept for filing" the Company s revised Schedule No.
Sheet lOB.
While the Staff agreed with the proposed credit methodology, it expressed concem
that former customers who are no longer served by United Water may not receive their refunds.
The Company was unable to provide the Staff with the exact number of customers who have
departed between October 1 and December 17 , 2003. The Company indicated that it would have
to develop a special program to generate this information. However, United Water estimated
that 2 600 "final" bills were rendered during this period - with some of those customers leaving
the system and others moving to a new location within the Company s service territory. The
Company maintained that many final accounts do routinely relocate within the system. Thus, the
credit would be issued to these relocated customers.
In instances where United Water has information about the whereabouts of former
customers, Staff suggested the Company refund the credit accordingly. If the Company is unable
to issue a refund credit, Staff offered two altematives. First, it may be appropriate to treat such
un-refunded amounts as unclaimed property per Idaho Code 99 14-501 et seq. Second, the
Company could follow the refund procedures set out in Idaho Code 961-628 (Accounting on
Appeal). In cases where a utility has collected rates that are the subject to refund on appeal, any
overcharges are to be promptly retumed to customers. After publishing a list of customers that
have not received their refund, all monies not claimed within three months of the notice shall be
paid into the State s General Fund.Under either altemative, Staff concluded that it was
ORDER NO. 29423
umeasonable for United Water to retain funds that were designated by the Commission as
subject to refund.
THE STIPULATION
On January 21 , 2004, United Water and Staff filed a Stipulation addressing refunds
for former customers who are no longer served by the Company. In their Stipulation, the parties
agreed that United Water will publish a newspaper notice advising former customers that they
may be eligible for a refund of the Boise City franchise fee. For a period of 60 days after the
newspaper publication, United Water will make refunds to former customers. After the 60-day
period, United Water "shall calculate the un-refunded amount of franchise fee collections in
excess of 3% and report that amount to the Staff. United Water will then credit that amount to
Account No. 904000, Bad Debt Expense.Stipulation at 2. The parties estimate that the total
amount owing to former eligible customers would be less than $2 000. Id.
DISCUSSION AND FINDINGS
Idaho Code 961-624 provides that the Commission may rescind, alter or amend any
prior Order or decision issued by the Commission. This section also provides that the affected
utility must be notified and provided an opportunity "to be heard" before amending a prior
Order. In this case, it is the utility requesting that the Commission rescind a provision in a prior
Order.
After reviewing the Company s Motion and the Stipulation, we find it is reasonable
to rescind the provision in Order No. 29359 requiring United Water to seek a Court
determination regarding the legality of the franchise fee Ordinance and the 1 % increase.
Although the City s 1995 Ordinance was not been amended and still contains the provisions for
increasing the franchise fee above 3%, the net effect of repealing Ordinance No. 17692 is to
return United Water s franchise fee to the maximum authorized by Idaho Code 9 50-329A. In
addition, United Water has moved to refund the 1% fee increase (approximately $50 000) to
customers in the form of a credit against future franchise fees. Consistent with our prior Order
that the 1% fee is subject to refund, we find it appropriate to refund the 1% franchise fee
collected from United Water customers between October 1 , 2003 and December 16, 2003.
Turning the parties' Stipulation, we accept it in part. IDAPA 31.01.01.276. We
agree with the parties that it is reasonable to apply any un-refunded franchise credit to Account
ORDER NO. 29423
No. 904000. However, we find that it is unnecessary to publish the refund notice and to issue
checks when the average amount of the refund is estimated to be $.50. We find that applying
any un-refunded amount to the bad debt account is an appropriate disposition of the remaining
refund balance. Accordingly, we accept for filing the Company s revised Schedule No., Sheet
No. lOB effective December 17 2003.
ORDER
IT IS HEREBY ORDERED that United Water s Motion to Alter Order No. 29359 is
granted as set out in greater detail above. United Water shall refund the 1 % franchise fee
collected between October 1 2003 and December 16, 2003 to customers in the form of a billing
credit against future franchise fees.
IT IS FURTHER ORDERED that no later than April 2, 2004, United Water shall
inform the Commission Staff of the number of accounts or former customers that did not receive
a refund and the remaining un-refunded credit amount. United Water shall credit this un-
refunded amount to Account No. 904000 (Bad Debt Expense).
IT IS FURTHER ORDERED that the Company s revised Schedule No., Sheet No.
lOB is accepted for filing effective December 17, 2003.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case
No. UWI-03-1 may petition for reconsideration within twenty-one (21) days of the service
date of this Order with regard to any matter decided in this Order or in interlocutory Orders
previously issued in this Case No. UWI- W -03-1. Within seven (7) days after any person has
petitioned for reconsideration, any other person may cross-petition for reconsideration. See
Idaho Code 9 61-626.
ORDER NO. 29423
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~t\.d
Fdor~..... .1.
day of J anllary""2004.
ATTEST:
~E.l
Commission Secretary
bls/O:UWIW0301 dh2
ORDER NO. 29423
cJ\ol
MARSHA H. SMITH, COMMISSIONER