20040312Reply Comments.pdf

ORIGINAL
Dean J. Miller
McDEVITT & MILLER LLP
420 W. Bannock
O. Box 2564-83701
Boise, ID 83702
208.343.7500
208.336.6912 (Fax)
i oelgJ,mcdevitt -miller. com
Attorneysfor United Water Idaho Inc.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
UNITED WATER IDAHO INC., TO AMEND
ITS RULES AND REGULATIONS TO
IMPLEMENT A BUDGET BILL OPTION
Case No. UWI-O4-
REPLY TO COMMENTS OF
COMMISSION STAFF
COMES NOW United Water Idaho Inc.
, ("
United " or "the Company ) and in Reply to
the Comments of the Commission Staff dated March 3 , 2004 states as follows:
In General:
United appreciates both Staffs thorough review of the Company s Budget Bill proposal
and Staffs overall support of the proposal. With one exception, discussed below, United
concurs in the Staff Recommendations and in Staffs proposed revisions to United's Rules and
Regulations (Attachment A to Staff Comments).
Deferral of Program Costs:
The Comments of the Commission Staff oppose the Company s request for an accounting
order permitting deferral of program operation costs. (Staff Comments pg 5)
In its original Application United stated:
United desires to implement the Budget Bill program as soon as practicable.
There will, however, be certain costs associated with implementation. United estimates
those costs to be approximately $72 000, assuming that 15% of its residential customer
base enrolls in the program. The $72 000 represents the annual costs of the program and
is composed of additional billing, postage and payment processing expenses associated
with the Budget Bill program.
REPLY TO COMMENTS OF COMMISSION ST AFF-
This paragraph has been the subject of some confusion. The quoted $72 000 in cost is
the annual cost of operating the program assuming 15% of United' s customers participate. It is
not the initial start-up cost. United estimates operating costs between start ofthe program and the
approximate intended effective date of United's revised rates resulting from its next general rate
filing will be approximately $28 000.
As noted above, at the time of filing the Application it was United's position that the
Company would implement the program immediately if the Commission permitted deferral of
start-up costs, but would delay implementation until a time closer to the next general rate filing if
deferral was not permitted.
During the comment period in this proceeding both United and the Commission Staff
have received numerous positive comments from customers who are looking forward to a
prompt implementation of the program. United is hesitant to delay implementation for reasons
not likely to be understandable to customers who are expecting the program to be available in the
near future. Accordingly, United will implement the program promptly after receiving an Order
approving it, regardless of whether the Commission approves the deferral.
United, however, respectfully requests that the Commission permit deferral ofthe
operation costs for the following reasons:
~ As noted in its Application, and not disputed by Staff, the program has several
features that will be beneficial to customers:
. United's customer service representatives routinely and frequently receive
inquiries from residential customers asking about the availability of a budget bill payment
program. United is of the opinion that there is significant customer demand for such an
option.
The single greatest category of calls received from residential customers by
United's customer service representatives is customers requesting to make payment
arrangements. The volume of these requests increases significantly during the irrigation
season with its consequent higher bills. A Budget Bill program would address the need
REPLY TO COMMENTS OF COMMISSION STAFF-
expressed by residential customers of having available the option to, on an annual basis
levelize payments for water service.
For many residential customers, over 60% of the annual bill is comprised of
the two summer period bi-monthly bills. This can lead to customer hardship. A Budget
Bill program will allow customers a significantly less burdensome method to deal with
seasonal fluctuation of their water bill.
. United's rates for water service have, for approximately ten (10) years
contained a summer consumptive rate (from May I through September 30) that is 25%
higher than the winter rate. In United's opinion, the residential customers understand and
react to the price signal inherent in the seasonal rate design. United believes a Budget Bill
program would not significantly dampen such a signal, while providing the residential
customer flexibility to levelize their payments as they are permitted to do with energy
providers. 1
United currently reads meters and renders bills on a bi-monthly basis.
Conversion to actual monthly reading and billing for all customers would ease the burden
of high bi-monthly summer bills; however, the expense is prohibitive. United estimates
monthly reading and billing would involve an increase in operating expense of
approximately $1 100 000 annually. This expense increase is due to additional labor and
labor overhead expense, transportation needs, billing and postage expense, as well as
payment processing expense. A Budget Bill program provides a significantly lower cost
alternative to monthly reading and billing.
. A Budget Bill program allows residential customers to plan and budget water
usage more effectively than the current "pay as you go" basis. Instead of being faced with
a large summer bill that may be extremely burdensome, customers will be able to make
less stressful, longer term decisions about water consumption and how it fits into their
personal budget.
The program will not generate any new revenue for the Company, but the Company
will incur cost, not off-set by new revenue, to operate the program. As a matter of fairness
United should have the opportunity, through a deferral, to recover the accumulated cost of
operating a beneficial program until the costs are included in allowed rates.
As noted above United intends to make its next general rate filing in approximately
eight or nine months. There is little risk to rate payers that the amount of the deferral could
mushroom to worrisome levels before there is an opportunity for review of the costs. In this
1 In fact, Budget Bill may enhance the price signal. As Staff noted in its Comments
, "
... the price signal may
actually be strengthened because customers will be billed monthly during under the Budget Bill program.
REPLY TO COMMENTS OF COMMISSION ST AFF-
regard, United certifies that it will maintain adequate records to permit audit and review ofthe
costs.
Staffs opposition to a deferral appears to be based on the contention that
, "
Among
the expected benefits of a Budget Bill program is that the Company will receive a higher than
usual revenue stream during the winter months when revenue is typically at its lowest." (Staff
Comments pg 5). This, of course, overlooks the fact that in summer months United's cash-flow
will be below current levels. In fact, United anticipates that over the course of a full year Budget
Bill will have no impact from a cash-flow point of view. United does not view the Budget Bill
program as a cash-flow enhancement measure.
Conclusion:
United respectfully requests:
1. That the Commission enter its Order approving the Budget Bill program, as modified
by Staff recommendations;
2. That the Commission enter its Accounting Order approving deferral and recovery of
operating costs, subject to review for reasonableness in the next general rate
proceeding.
Respectfully submitted this
\,"
day of March, 2004.
Dean J. iller
McDevitt & Miller LLP
Attorneys for United Water Idaho Inc.
REPLY TO COMMENTS OF COMMISSION STAFF-4