20040901Notice of Application.pdf

Office of the Secretary
Service Date
September 1, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
UNITED WATER IDAHO, INC. FOR AN
AMENDMENT TO ITS CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY NO. )
142 AND FOR AN ACCOUNTING ORDER.
CASE NO. UWI-O4-
NOTICE OF APPLICATION
NOTICE OF MODIFIED
PROCEDURE
NOTICE OF COMMENT/
PROTEST DEADLINE
YOU ARE HEREBY NOTIFIED that on August 9, 2004, United Water Idaho, Inc. (United
Water; Company) filed an Application with the Idaho Public Utilities Commission (Commission)
requesting authority to remove the Carriage Hill Subdivision from the Company s certificated service
area and for an accounting order regarding distribution of proceeds from the sale of the Carriage Hill
domestic water system from United Water to the City of Nampa. On August 25, 2004, the Company
filed supporting testimony for its Application.
Background
On March 29, 1999, the Commission in Order No. 27976 approved an expansion of United
Water s certificated service area to include the Carriage Hill Subdivision in Canyon County, Idaho
near the City of Nampa. The expansion was pursuant to a Non-contiguous Water System Agreement
between the Company and Carriage Hill dated November 20 1998. At the same approximate time, the
Company s corporate parent, United Waterworks, entered into a separate understanding with the
Carriage Hill developers that United Waterworks would loan the developers up to $350 000 to finance
the construction of the Carriage Hill source of supply system only. Reference 1) Design-Build
Promissory Note dated December 7, 1998 and 2) Joint and Several Individuals Guaranty signed by
Carriage Hill developers.
As initially constructed the Carriage Hill development had only one well to serve as the
source of supply. In the spring of 2002, the developer had embarked on Phase 2 of the distribution
system that would add 20 lots to the original 27 in Phase 1. Eventually, 25 lots would be connected
the maximum permitted by the Idaho Department of Environmental Quality (DEQ) for a system with
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
, ,
only one source well. Under DEQ requirements , a second source of supply is required for a water
system serving more than 25 connections.
In early 2003, the Carriage Hill developers informed United Water that they did not have
funds to construct a second source of supply or to continue payments to United Waterworks. Without
a second source of supply Carriage Hill would not be able to expand. Without expansion, Carriage
Hill developers would be unable to generate funds to finance a new well or to pay United Waterworks.
On August 15 , 2003, the City of N amp a indicated its desire to enter into negotiations with
United Water and Carriage Hill in connection with the ownership, operation and maintenance of the
Carriage Hill domestic water system and the connection of the system to Nampa s Municipal Water
System.
On August 25, 2003 , Carriage Hill requested a waiver from the Idaho Department of
Environmental Quality to allow an additional ten lots in the subdivision to be connected to the water
system prior to the installation of a second source of supply, which second source of supply, it was
stated, would take the form of connection to Nampa s Municipal Water System. As of the date of this
Application approximately 30 lots in the Carriage Hill Subdivision have been connected to the
domestic water system.
Purchase Agreement-United Water (Seller)/City of Nampa (Purchaser)
United Water has entered into a Purchase Agreement (Agreement) with the City of Nampa
dated 12 March, 2004. As reflected in the Agreement, the purchase price is $375 000. A small portion
of the purchase price, approximately $36 000, is to be paid to United Water Idaho. The remainder of
the purchase, approximately $338 000, is to be paid to United Waterworks, Inc., owner of a Design-
Build Promissory Note in the original principal amount of $350 000 dated December 7, 1998, said note
being the obligation of Carriage Hill LLC. The purpose of said note was to provide funds to assist
Carriage Hill in the construction of the water system within the Carriage Hill Subdivision.
United Water contends that acquisition of the Carriage Hill domestic water system by the
City of Nampa is consistent with the Public Convenience and Necessity because:
Nampa has adequate source of supply and operational capability to provide safe and
reliable water service to the subdivision;
The connection of N ampa' s distribution system to the Carriage Hill domestic water
system will provide a second source of supply as required by DEQ rules thus
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
insuring reliable water supply to the subdivision and permitting further expansion of
the subdivision; and
The rates charged by N amp a for domestic water service are lower than the rates
charged by United Water, and customers within the subdivision will therefore
experience a decrease in the cost of domestic water service.
Application Exhibit E (revised) sets forth United Water s proposed journal entries to
account for the $36 000 to be received by United Water at closing. Revised Exhibit E reflects
Advanced Plant in Service of $354 905 and Contributed Plant in Service of $190 300. The advanced
plant reflects the source of supply portion of the system and was provided by the developer. The
contributed plant reflects the distribution portion of the system and was fully funded by the developer.
Because advanced plant and contributed plant are not included in the Company s rate base, United
Water states that customers have not, through their rates, paid any return on those investments. The
Company contends that its customers have not acquired any financial or equitable interest for which
they should be compensated upon sale of the Carriage Hill assets. United Water contends that the
Company s accounting proposal is consistent with established regulatory accounting principles and
requests that the Commission approve it.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of record
in Case No. UWI-04-3 including Exhibit A, Design-Build Promissory Note; Exhibit B, Carriage
Hill- Nampa Agreement (LID Agreement); Exhibit C, UWID - Nampa Purchase Agreement; Exhibit
, Nampa City Council Resolution No. 20 - 2004; and Exhibit E, Proposed Journal Entries. The
Commission has preliminarily found that the public interest in this matter may not require a hearing to
consider the issues presented, and that issues raised by the Company s filing may be processed under
Modified Procedure , by written submission rather than by hearing. Reference Commission Rules
of Procedure, IDAP A 31.01.01.201-204.
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or
protests with respect to the United Water s Application in Case No. UWI-04-3 and the use of
Modified Procedure in Case No. UWI-04-3 is Monday, September 27,2004.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received
within the deadline, the Commission may consider the issue on its merits and may enter its Order
without a formal hearing. If comments or protests are filed within the deadline, the Commission will
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
consider them and in its discretion may set the matter for hearing or may decide the matter and issue its
Order based on the written positions before it. Reference ID AP A 31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case No. UWI-
04-3 should be mailed to the Commission and the Company at the addresses reflected below.
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
GREGORY P WYATT
UNITED WATER IDAHO INC
PO BOX 190420
BOISE, ID 83719-0420
Email: greg.wyatt~unitedwater.com
Street Address for Express Mail:
472 WWASHINGTON ST
BOISE, ID 83702-5983
DEAN J MILLER ESQ
McDEVITT & MILLER LLP
PO BOX 2564
BOISE ID 83701
Email: ioe~mcdevitt-miller.com
All comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the Commission
home page located at www.puc.state.id.. Click the "Comments and Questions" icon, and complete
the comment form, using the case number as it appears on the front of this document. These comments
must also be sent to the Applicant at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received
within the time limit set, the Commission will consider this matter and enter its Order without a formal
hearing. If written comments are received, within the time limit set, the Con1mission will consider
them and
..
in its discretion, may set the same for formal hearing.
YOU ARE FURTHER NOTIFIED that the Application in Case No. UWI-04-3 may be
viewed at the Commission s web site www.puc.state.id.by clicking on "File Room" and "Water
Cases" or can be viewed during regular business hours at the Idaho Public Utilities Commission, 472
West Washington Street, Boise, Idaho and at the principal business office of United Water, 8248 West
Victory Road, Boise, Idaho.
DATED at Boise, Idaho this 31 day of August 2004.
VldlN:UWIWO43 sw
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE