20040409Final Order No 29455.pdf

Office of the Secretary
Service Date
April 9, 2004
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-
ORDER NO. 29455
On February 3 , 2004, United Water Idaho Inc. (United Water; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting authority to
amend its Rules and Regulations to establish a "Budget Bill" payment program for its residential
customers. The Commission in this Order reaffirms its support for a rate design that encourages
summer conservation and responsible use of water and denies the Company s Application for a
budget bill payment program because it detracts from that goal and because of its cost.
Proposal
The proposed Budget Bill program essentially takes a customer s 12 months' history,
six bi-monthly meter readings, of water consumption and spreads that over 12 monthly Budget
Bills. An annual reconciliation of negative or positive balances was proposed to occur within
limits and be rolled forward into the next Budget Bill period.
United Water estimates the costs of program implementation to be approximately
$72 000, assuming that 15% of its residential customer base enrolls in the "Budget Bill"
program. The $72 000 represents the annual costs of the program and is comprised of additional
billing, postage and payment processing expenses. The Company requests an accounting order
permitting the deferral of these additional costs for recovery in the Company s next general rate
case, subject to audit and review for reasonableness.
On February 10, 2004, the Commission issued Notices of Application and Modified
Procedure in Case No. UWI-04-1. The deadline for filing written comments was March 3
2004. Timely comments were filed by Commission Staff and a number of the Company
customers. Customer support ranges from enthusiastic to support if only participants bear the
program costs. Customer opposition ranges from those who are satisfied with the current billing
ORDER NO. 29455
system to a belief that implementation of a level pay will dampen the conservation message and
encourage customers to waste water on unneeded landscaping.
Staff Comments
The Commission Staff supports the general concept of Budget Bill but proposes
limiting the program to customers with 12 months consumption history at the premises. Staff is
reluctant to support the Company s plan to set a Budget Bill amount based upon a criteria other
than the customer s own water usage given the fact that the watering habits of one individual
have little to do with another s. Because United Water cannot provide the new resident ongoing
historical comparative usage on statements to enable the customer to determine whether his or
her own usage is in line with that ofthe prior customer, Staff cannot support a Budget Bill based
upon premises usage and therefore recommends that Budget Bills be limited to customers who
have lived at the current residence for at least 12 months.
Staff also opposes United Water s request for an accounting Order permitting deferral
of the estimated costs associated with implementation of the Budget Bill program.
Company Reply
On March 12, 2004, United Water filed a Reply to Staff Comments. The Company
concurs in Staff's recommendations and proposed revisions to the Company s Budget Bill
program. The Company takes exception to Staff's comments regarding deferral of program
costs.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. UWI-O4-
including the comments of customers, the comments and recommendations of the Commission
Staff, and the reply comments of United Water.
Although we appreciate the Company s attempt to ease the payment burden of some
of its customers through the proposed Budget Bill payment program, we find that the program is
costly and will detract from our rate structure to promote summer conservation. Sixty percent of
most United Water customers ' annual usage occurs in the four months of summer (May-August).
The Commission, a decade ago, set summer water rates 25% higher than winter rates in order to
send customers a strong price signal to encourage water conservation during the summer months
when the peak water demand has to be met.
ORDER NO. 29455
Drinking water is different from natural gas and electricity where we have approved
level pay programs. Water is dependent on local supply. For United Water s service territory
that supply is aquifer and surface water. We must encourage good stewardship of the potable
waters United Water customers rely on and use for discretionary summer irrigation and
sprinklers.In pricing water to reflect the higher cost of summer water service, we send
appropriate pricing signals to customers and encourage responsible water use. The Company
proposed Budget Bill Proposal would diminish that water pricing signal and conservation
message by levelizing annual costs over 12 months. This Commission continues to support a
billing method for United Water that encourages conservation in summer months. The present
billing method with seasonal rates (albeit with bi-monthly billing) conveys this conservation
message.That is not to say, however, that other rate designs could not also encourage
conservation.
In its opposition to the Company s proposal to defer program costs for later recovery,
Staff notes that the estimated $72 000 cost is not a one-time expense for implementation of the
Budget Bill program, but represents the estimated annual cost of running the program, assuming
a 15% participation level. The actual cost of the program is not known and measurable at this
time. Also unknown is the level of customer participation. In addition to all that uncertainty, we
find the estimated program costs to be too costly.
In denying this Application, we note that customers with economic emergencies are
encouraged to contact the Company and work out payment arrangements.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over United Water Idaho
Inc., a water utility, pursuant to the authority granted in Idaho Code, Title 61 and pursuant to the
Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby deny United Water s Application to
implement a Budget Bill option payment program for its residential customers.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) 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. Within seven (7) days
ORDER NO. 29455
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
q-f1...
day of April 2004.
MARSHA H. SMITH, COMMISSIONER
, OMMISSIONER
ATTEST:
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ORDER NO. 29455