HomeMy WebLinkAbout20040303Comments.pdf-,,-
h ,-I 1- -.
. -~
v-
,,-
SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0320
IDAHO BAR NO. 1895
lLED
f7l
2au4 NJ\R - 3 PI',! 2:
; ". '. ,
i ~,hU ;- i t~S ccnil.jjSSIOtI
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice of Comment /Protest Deadline issued on
February 10, 2004, submits the following comments.
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 65 000
residential customers who seek levelized monthly payments to meet their annual water bill
obligation. United Water customers currently receive six bi-monthly bills, including two summer
bills that are based on a rate 25 percent higher than the Company s winter rate.
Some customers have asked for a less burdensome way to meet their high summer bill
obligations which create a financial hardship for them. Paying a set amount each month throughout
the year offers relief to those whose budgets do not accommodate wide fluctuations in monthly
expenses. A level pay option also offers those customers who want the convenience of an
STAFF COMMENTS MARCH 3, 2004
automatic payment the security of knowing what amount will be deducted from their bank account
each month.
In order to deal with similar customer concerns with energy bills, the Commission authorized
energy utilities to offer budget or level pay programs. Although United Water is required to enter
into payment arrangements with customers as set forth by the Commission s Utilities Customer
Relations Rules (IDAPA.31.21.01J, Rule 313, the Company was unable to offer a 12-month
levelized payment program previously due to billing system limitations. Staff recommends that
United Water be directed to assist customers with a level-pay program now that its billing system
can accommodate one.
Although meters will continue to be read on a bi-monthly basis, United Water will send
monthly statements to Budget Bill participants. Monthly statements can be used to remind
customers that peak summer rates are in effect and encourage conservation earlier than bi-monthly
statements do. Staffrecognizes that bi-monthly billings fail to provide a timely "price signal" of
the higher summer rate. Statements which include meter readings will continue to provide
customers not only with the summer rate information, but also comparative consumption history as
it currently does. United Water adds a reminder message to its March and April bill statements of
the upcoming higher summer water rate. The Company will continue the bill message through the
summer months as the bill message space allows.
United Water s Budget Bill program proposal is different from the energy utilities in that it
proposes to also offer a Budget Bill program to new residents based upon the premises usage
history, whether or not the current customer resided at the premises the past 12 months. If a new
resident seeks to sign up for the Budget Bill program, United Water will use the consumption
history from the prior resident to calculate the budget bill amount as well as take into account water
usage at similar homes in the subdivision and review multiple years of water history at the premises
before setting a budget bill amount for the current customer. If a new resident requests budget
billing, the customer will be counseled that the budget amount is strictly an estimate. Because the
consumption history applies to the previous customer s account, the new customer s bill will not
contain any comparative usage data. According to United Water, the customer will be informed of
the consumption history used to calculate the budget bill amount and will have the option to receive
the consumption history for the premises at that time. Staff is reluctant to support the Company
plan to set a Budget Bill amount based upon a criteria other than customer s own usage given the
STAFF COMMENTS MARCH 3, 2004
fact that the watering habits of one individual has little to do with anothe!s. Because United Water
cannot provide the new resident on-going historical comparative usage on statements to enable the
customer to determine whether his or her own usage is in line with that of the prior customer
Staff cannot support a budget bill based upon premises usage and therefore does not recommend
Budget Bill" for any customer who has not lived at the current residence for at least 12 months.
Staff recommends the Company s proposed tariff be modified as shown in Attachment A to clarify
that Budget Bill amounts will be based upon a customer s 12-month historical usage at the
premIses.
To be eligible for United Water s Budget Bill Program, the customer s account must not be
in arrears and the Company must have a minimum of 12 months premises usage history (6 bi-
monthly actual historical bills). United Water requires any amount reflected in a past due notice to
be paid before the customer is eligible for the Budget Bill program. The utility believes all
customers will be treated consistently if this criteria is used. Similar programs for Idaho Power and
Utah Power limit participation to customers with no past due balance. Avista Utilities and
Intermountain Gas Company allow customers to have a past due balance subject to some
restrictions. Staff accepts United Water s account eligibility criteria, but again recommends that
actual customer premises consumption be used to establish Budget Bill amounts.
The Company has not specified how it will monitor participating customers' usage to
determine whether actual usage differs substantially from estimated usage. Staff recommends that
usage be tracked throughout the summer months. If actual usage changes significantly from
historical usage, the Company may need to adjust the monthly Budget Bill amount. Energy utilities
monitor level pay customers' usage and revise level pay amounts if necessary so that large positive
or negative balances do not accumulate over the course of the level pay plan year. Depending on
the utility, variation in usage of 10-50% of normal triggers review of the customers' accounts , with
the customers' level pay amount adjusted if appropriate. For United Water , leaks or unintentional
diversion of water into a dual irrigation system are likely to result in unusually high bills. At a
minimum, Staff recommends that usage in excess of25% of historical usage during the summer
months be reviewed by the Company. The Company can determine, after consulting with the
customer if necessary, whether the level pay amount should be adjusted. Staff suggests this change
in order to clarify that Budget Bill amounts should be revised due to significant changes in rates or
usage. This will prevent the customer s usage from significantly increasing without notice and it
STAFF COMMENTS MARCH 3 , 2004
will avoid the shock of a much larger adjustment later. Staff also recommends that the Company
proposed tariff be modified as shown in Attachment A.
United Water will reconcile all Budget Bill accounts annually at the customer s anniversary
date. As long as a negative balance is less than 25% of the estimated annual bill for the next
12-month period, it will be rolled forward into the calculation of the new Budget Bill amount. The
Company may request that a large negative balance be paid in full. If customers have a large
negative balance at the annual review, usage has increased substantially from historical patterns.
United Water does not want the Budget Bill program to be perceived as a mechanism that
encourages customers to increase usage. Thus, customers with large negative balances should
true-up" to zero before being eligible for continuation in the program. This requirement would add
to a conservation message and Staff does not object to it. Staff also believes that if the Company
monitors usage and adjusts the level pay amount if necessary, there will be relatively few instances
where large negative balances accrue.
The Company s proposal includes provisions for removal from the program for failure to
timely pay the agreed budget bill amount. The trigger point for removal will be when the customer
fails to pay the budget bill amount by the third month. The customer will be dropped from the
Budget Bill program and the normal collection cycle will begin on the amount owed. This is
consistent with how other utilities handle collections when a customer is dropped from level pay for
failure to pay a level pay amount over time.
The Commission, a decade ago, set summer water rates 25% higher than winter rates in
order to send customers a strong conservation price signal to encourage water conservation during
the summer months when the peak water demand has to be met. Outside watering is the main
driving force causing additional plant to be built in order to meet the summer peak demand.
Building additional plant places upward pressure on rates. Having a budget bill option has the
potential to mute the conservation price signal because customers pay a set amount for each of the
12 months regardless of water consumption. Although a level pay program can mute the price
signal sent to customers, Staff believes, in this instance, the price signal may actually be
strengthened because customers will be billed monthly during the summer under the Budget Bill
program. While each monthly bill will be less than a bi-monthly bill, summer consumption
information will still be provided on a bi-monthly basis and the company can remind customers
monthly that rates are higher during the summer.
STAFF COMMENTS MARCH 3 , 2004
The implementation of a Budget Bill plan provides an opportunity to gather information
about how being on a level pay plan may affect water consumption. Staff recommends that United
Water be required to track water consumption for those on a Budget Bill program in order to
compare current usage with the customer s usage prior to participating in the program. This data
will allow us to determine whether the conservation price signal is lost when monthly billing
amounts remain constant for 12 months.
The Budget Bill program s annual cost projection is estimated to be in the range of $72 000
assuming 15% of customers participate in the program. The estimate is based on additional costs
associated with bill preparation and processing payments. United Water requests an accounting
order permitting deferral of the estimated cost associated with implementation of the program.
United Water expects to seek recovery of the deferral in its next general rate case, subject to audit
and review for reasonableness. In the absence of deferral, United claims it will likely defer
implementation of the Budget Bill program to coincide with the next general rate case.
The estimated $72 000 cost is not a one-time expense for implementation of the program.
Rather, it represents the estimated annual cost of running the program, assuming a 15%
participation level. The projected cost of the program is less than $1.00 per customer annually. The
actual cost of the Budget Bill Program is not known and measurable at this time. It is unlikely in
the first year of the program that 15% of customers will participate. Staff believes it is reasonable
for the Company to expect this level of participation, but it will take time for customers to become
aware of the program. If United Water files a general rate case within the year as has been
suggested, costs associated with the program will be one of many expenses considered in setting
rates. In Staffs opinion, the estimated annual expenditures for this program are not appropriate for
deferral. The Company should implement the program with the expenses booked as such. All the
associated costs and benefits will need to be explored and reflected in the annual rate case expense
review. 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.
CUSTOMER COMMENTS
As of February 27 2004, sixteen customers had filed written comments. Those comments
are a part of the official case record for the Commission s review and consideration prior to
rendering a decision. Briefly, five customers supported United Water s plan. Three commented
STAFF COMMENTS MARCH 3, 2004
about issues outside ofthe Company s proposal. The majority of those commenting expressed
concern and/or objection to the $72 000 cost for implementing the program.
Staff recommends that the Commission:
I) Authorize United Water to offer a Budget Bill program to customers who have had service
at their current location for at least 12 months and do not have a past due balance on their
account;
2) Deny the Company s request to allow the use of a prior customer s consumption history at a
premises in order to establish a Budget Bill amount for the current resident;
3) Require United Water to track program participants' consumption in order to identify
changes in water consumption;
4) Require United Water to monitor participating customers usage throughout the summer.
usage is significantly different from historical consumption (plus or minus 25%), Budget
Bill amounts should be reviewed with the customer and adjusted as necessary;
5) Deny United Water s request for an accounting order permitting deferral of $72 000
program implementation costs; and
6) Approve the Company s proposed tariff with Staffs modifications as reflected in
Attachment A.
Respectively submitted this yJ2 day of March 2004.
Scott oodbury
Deputy Attorney General
Technical Staff: Marge Maxwell
Rick Sterling
SW:/umisc/comments/uwiwO4.1swrnrmps
STAFF COMMENTS MARCH 3 , 2004
UNITED WATER IDAHO
BUDGET BILL PROGRAM
STAFF PROPOSED REVISION-LEGISLATIVE VERSION
41. Residential Budget Bill Program: A Budget Bill Program is available to Residential
Customers, as defined in paragraph 51 of these Rules, desiring to levelize payments for water
service. A residential customer may enroll in the Budget Bill Program at any time during the
year. To be eligible for the Budget Bill Program, the customer a888unt HUlst l18t Be ill aFf8afS
and the Ct'Jmpany must have a minimum of 12 consecutive months of usag8 Ris16ry service
the premises current location and have no past due balance owing at the time of
enrollment.. .
Customers with a negative (underpaid) balance in their Budget Bill Program account at the
time of recalculation will have new monthly Budget Bill Program charges equal to the
recalculated Budget Bill amount plus one-twelfth of the negative balance. At the customer
option, a negative balance may be paid in full and disregarded for purposes of calculating the
next period's Budget Bill amount. If the negative balance exceeds 25% ofthe estimated
annual bill for the ensuing annual period, the Company may request that the negative balance
be paid in full. Customers with a positive balance exceeding $25 in their Budget Bill
Program account at the time of recalculation may be refunded at the customer s request. If
no request for refund is made, the monthly Budget Bill Program charge will be equal to the
recalculated Budget Bill Program amount reduced by one-twelfth of the positive balance.
Up81l the ~m8t6m8r s r8€Ju88t, a p8siti'8Balanee f€Jr eme Budget Bill PHi)gram ';;ater ser;iee
a888tmt may Be trallsferred 16 the Balan€H~ 8f an8th€r Budg8t Bill Pr8gram ':;a1er s€F;i88
a888tmt.Upon termination of the Budget Bill Program agreement, after all charges for
services are paid, positive balances will be refunded at the customer s option.
Estimates of future costs based on historical charges furnished by the Company with such
Budget Bill Program should not be construed by the customer as a guarantee that the total
actual charges will not exceed the estimates. In the event of a significant chan2:e in rates for
water service or substantial deviation from the customer s historical water consumption. t~
Company, Be8aMse 8fra1e 8Rallges
, '
!eather eKtremes 6r €JtRer signifi8ant 8ir€lllRstall€eSmay
at any time submit a revised estimate to the customer and require that the customer pay the
revised monthly Budget Bill installment amount as a condition of continuation in the Budget
Bill Program.
The Budget Bill amount will be billed monthly. Once established, the Budget Bill Program
will remain in effect from year to year until the customer notifies the Company not less than
30 days prior to the desired date of cancellation or unless the customer fails to pay the agreed
upon amounts in a timely manner.
Attachment A
Case No. UWI-04-
Staff Comments
3/3/04 Page 1 of 2
STAFF PROPOSED REVISION-CLEAN COpy
41. Residential Budget Bill Program: A Budget Bill Program is available to Residential
Customers, as defined in paragraph 51 of these Rules, desiring to levelize payments for water
service. A residential customer may enroll in the Budget Bill Program at any time during the
year. To be eligible for the Budget Bill Program, the customer must have a minimum of 12
consecutive months of service at the current location and have no past due balance owing at
the time of enrollment.. .
Customers with a negative (underpaid) balance in their Budget Bill Program account at the
time ofrecalculation will have new monthly Budget Bill Program charges equal to the
recalculated Budget Bill amount plus one-twelfth of the negative balance. At the customer
option, a negative balance may be paid in full and disregarded for purposes of calculating the
next period's Budget Bill amount. Ifthe negative balance exceeds 25% ofthe estimated
annual bill for the ensuing annual period, the Company may request that the negative balance
be paid in full. Customers with a positive balance exceeding $25 in their Budget Bill
Program account at the time of recalculation may be refunded at the customer s request. If
no request for refund is made, the monthly Budget Bill Program charge will be equal to the
recalculated Budget Bill Program amount reduced by one-twelfth of the positive balance.
Upon termination of the Budget Bill Program agreement, after all charges for services are
paid, positive balances will be refunded at the customer s option.
Estimates of future costs based on historical charges furnished by the Company with such
Budget Bill Program should not be construed by the customer as a guarantee that the total
actual charges will not exceed the estimates. In the event of a significant change in rates for
water service or substantial deviation from the customer s historical water consumption, the
Company may at any time submit a revised estimate to the customer and require that the
customer pay the revised monthly Budget Bill installment amount as a condition of
continuation in the Budget Bill Program.
The Budget Bill amount will be billed monthly. Once established, the Budget Bill Program
will remain in effect from year to year until the customer notifies the Company not less than
30 days prior to the desired date of cancellation or unless the customer fails to pay the agreed
upon amounts in a timely manner.
Attachment A
Case No. UWI-04-
Staff Comments
3/3/04 Page 2 of 2
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3RD DAY OF MARCH 2004
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. UWI-04-, BY MAILING A COpy THEREOF, POSTAGE PREPAID
TO THE FOLLOWING:
GREGORYP WYATT
UNITED WATER IDAHO INC
PO BOX 190420
BOISE ID 83719-0420
DEAN J MILLER
McDEVITT & MILLER LLP
PO BOX 2564
BOISE ID 83701-2564
SEC
CERTIFICATE OF SERVICE