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HomeMy WebLinkAbout20050512Wyatt rebuttal.pdf!: F J ,- ,,' ,....,..- Dean J. Miller McDEVITT & MILLER LLP 420 West Bannock Street O. Box 2564-83701 Boise, ill 83702 Tel: 208.343.7500 Fax: 208.336.6912 ioe (g)mcdevitt - miller .com ,(DDS rIP; 'f I PI"; 5: I 5 ' ,; ', '.. ,," ;, ,.. '::- ';1 ;; :,, ' /";:, :C-(-1~:,,) I . L i I ....... L. t) I i L..).) i U (1 Attorneys for Applicant BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF UNITED WATER IDAHO INC. FOR AUTHORITY TO INCREASE ITS RATES AND CHARGES FORW ATER SERVICE IN THE STATE OF IDAHO Case No. UWI- W 04- BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION REBUTTAL TESTIMONY OF GREGORY P. WYATT Please state your name. Gregory P. Wyatt. Are you the same Gregory P. Wyatt who previously filed direct testimony in this case? Yes, I am. What is the purpose of your rebuttal testimony? My rebuttal testimony summarizes the Company s overall objection to the Staff's use of a 13-month averaged rate base in this case. I will also provide an overview summary of the other rebuttal witnesses offered by the Company in this case and I will respond to certain issues expressed by Staff witnesses Lobb, Sterling, English and Idaho River s United witness Wojcik. More specifically, I will: Contrast Staff's recommended revenue requirement in this case with the Company final proposed revenue requirement and summarize the Company s view that adopting a 13-month averaging of rate base denies the Company the opportunity to earn the return the Commission may authorize in this case. Respond to Mr. Sterling s and Mr. Wojcik'discussion and proposal regarding United Water adopting monthly billing. Respond to Mr. Wojcik's recommendations regarding United Water s conservation efforts. Wyatt, Re United Water Idaho Inc. Respond to Mr. English's recommendation to remove payroll and associated costs related to the Company s recently hired Public Affairs Manager. What else is included in your rebuttal testimony? I will comment on the written consumer comments received by the Commission regarding the filing of this case. In addition, I will respond to Staff Witness Cooper s comments regarding the Company s proposed tariff changes and proposed miscellaneous charges. Company Rebuttal Case What is Staff's ultimate recommendation in this case? Staff recommends an overall revenue increase of $570 837 or a 1.8% increase over current rates, (Harms Di. Pg. 3). This contrasts to the Company s final recommendation of a revenue increase of $6 785,523 or a 21.51 % increase over current rates, (Healy Re. Exhibit No.2). What is the Company s view of the Staff's ultimate recommendation? The Company believes Staff's recommendation is seriously flawed and grossly insufficient primarily due to Staff's use of a 13-month average rate base methodology. The Company strongly believes that Staff's recommendation denies the Company the opportunity to earn the return the Commission may authorize in this case. The primary driver of this case is the recovery of investments made by the Company since its last case in utility plant that provides service to the Wyatt, Re United Water Idaho Inc. public. In Case No. UWI-OO-l the Company s approved rate base was $98 862 937. The Company s per books rate base as of July 31 2004 was $113 575 180, an increase of almost 15%. With the post-test year addition of Columbia Water Treatment Plant and other facilities the Company s final recommended rate base in this case is $140 652 083 , an increase of more than 42% over the 2000 rate base. With only a few limited exceptions, Staff does not contend any of this investment is not used and useful in service to the public. In light of this, Staff's recommendation, on its face, is unreasonable and punitive. It is also impossible to contend, and Staff does not suggest, that customer growth since the last case has produced revenue sufficient to cover this investment to the extent that only a 1.8% increase is necessary. How does Staff manage to arrive at this seemingly illogical result? Primarily, by changing the ratemaking rules. In each of United Water s four previous rate cases since 1993 the Commission has employed a year-end rate base methodology adjusted for known and measurable pro-forma additions. In this present case however Staff proposes changing to a 13-month average method for computing rate base. As admitted by witness Harms, solely due a change in methodology, Staff's proposed rate base is approximately $12 million less than the May 31 , 2005 pro-forma rate base filed by the Company Wyatt, Re United Water Idaho Inc. and reduces the revenue requirement by about $2 million (Harms Di. Pg. 7-8). As a result of Staff changing to a 13-month average rate base methodology, what happens to the rate base investments the Company has made that are not included by Staff in this case? These water plant investments that are in service and providing benefits to customers will not be included in the earnings base, for no good reason other than a change in regulatory methodology. Twelve million dollars of investment actually made in plant that is used and useful is effectively vaporized in this case, simply by changing the ratemaking rules. Did the Company have any way of knowing that theratemaking rules might change in this case? Please explain. No. The Company first learned of Staff's proposed change upon reading Staff testimony. In several conferences with Staff, both before filing our case and after, this was never suggested. Did the Company understand the Commission s decisions in the recentl y completed Idaho Power Company and A vista rate cases to mandate use of an average year methodology for all utilities? No. In those Orders the Commission expressed concern about possible mismatches of revenue and expenses with investments and the Commission advised Companies that appropriate adjustments should be made to guard against such mismatches. United Water has Wyatt, Re United Water Idaho Inc. attempted to comply with that directive in this case. Neither Order however, expressed the intent to use the average year methodology for all utilities in all cases. Does the Company provide further evidence on this issue in its rebuttal case? Yes. Dr. Dennis Peseau, the Company s expert consultant, provides extensive testimony. Dr. Peseau demonstrates that the change in methodology denies the Company the opportunity to earn a reasonable return on capital actually invested and may actually be confiscatory. He further demonstrates that Staff's attempt to apply the 13-month average methodology while purporting to match revenues and expenses is plagued by inconsistencies and mismatches of investments, revenues and expenses. As a result, he recommends that the Commission not adopt Staff's proposed change in methodology. Please provide an overview of the other issues addressed in the Company s rebuttal case. Mr. Jeremiah Healy addresses adjustments to results of operations proposed by Staff witness English and demonstrates that many of the adjustments proposed by Mr. English are not supported by sound logic or consistent application of ratemaking principles. Mr. Healy also responds to expense and rate base adjustments proposed by witness Sterling. Company witness Scott Rhead further responds to adjustments proposed by Witness Sterling. The Company s expert Wyatt, Re United Water Idaho Inc. consultant Pauline Ahern addresses the cost of capital recommendations of Staff witnesses Carlock and Hall, demonstrating that Staff's recommendation regarding cost of equity is unreasonably low. The Company s consultant Mr. David Degann, an expert in pension accounting, addresses Mr. English's adjustments with respect to pension expense. Monthly Billin2 Please summarize the testimony of Witness Sterling regarding monthly billing. Witness Sterling proposes that before any consideration be given to changing United Water s current rate design, the Commission first decide whether the practice of bi-monthlybilling should be continued (Sterling Di. Pg. 59-60). He goes on to state that monthly billing could relieve at least some of the burden of extremely high summer bills for many customers, (Sterling Di. Pg. 60), and that the more current price signal sent by monthly billing would provide customers with just as strong of a conservation message as with bi-monthly billing, (Sterling Di. Pg. 61). Finally, witness Sterling notes that the Company estimated operating cost of implementing monthly billing would be 086 000 per year, which would require an increase in the Company s annual revenue requirement of approximately 3.4% (Sterling Di. Pg. 61). Wyatt , Re United Water Idaho Inc. Please summarize the testimony of Witnesses Wojcik regarding monthly billing. Witness Wojcik claims that bi-monthly billing cycles can be counter- productive to water conservation efforts (Wojcik Di. Pg. 10), but offers no supporting evidence for this claim. Mr. Wojcik recommends that United Water switch to a monthly billing process because he believes customers need to be able to better track their usage over shorter periods of time than bi-monthly billing allows (Wojcik Di. Pg.ll). Was there any other testimony submitted that touched on the issue of monthly payments of customer bills? Yes. Witness Teri Ottens, of Community Action Partnership Association of Idaho (CAP AI) made a recommendation relating to monthly payments. Witness Ottens stated that , " CAP AI believes that the Commission should consider a level or monthly pay program in the future as another tool to assist low-income seniors , disabled and families with their budgeting on water usage costs , (Ottens Di Pg. 11). What is United Water s position on converting from bi-monthly to monthly billing? The Company agrees with witnesses Sterling, Wojcik, and Ottens that monthly billing would send customers a more current price signal Wyatt, Re United Water Idaho Inc. which may enable them to more effectively manage their water use, and that the corresponding monthly payments would enable customers, especially low income customers, to better budget for their water usage costs. Does United Water have a recommendation for the Commission in this case with regard to converting to monthly billing? Yes. United Water recommends the Commission approve the following: United Water convert from bi-monthly billing to monthly billing for all customers as quickly as possible, but not later than six months, after implementation of new rates in this case. Authorize cost recovery in this case through inclusion in revenue requirement of the anticipated $1 086,000 increased annual operating costs associated with monthly billing. What makes up the $1 086 000 increase in annual operating cost associated with monthly billing? Primarily the costs include increases in personnel for meter reading and customer service, increased billing, postage, and collection costs and other related operating cost increases. Witness Healy explains these costs in more detail in his Rebuttal Testimony. Why should the Commission approve the conversion from bi-monthly to monthly billing? Wyatt, Re United Water Idaho Inc. There are several reasons. First, as other witnesses have testified, a monthly billing regime will provide a timelier price signal to customers than bi-monthly billing, especially during the high water use summer months. A monthly bill, received closer to the consumption period may afford customers the opportunity to adjust their water usage patterns so as to conserve water and lower their bills for water service. Secondly, bi-monthly billing, combined with the current 250/0 higher summer commodity rate, results in customers receiving bills that can be difficult to budget for and pay, especially low-income customers. For example, in 2004 the average residential bi-monthly bill was about $52, and during the summer it can be well over $100. With monthly billing, the customer s average bill would be cut in half to approximately $26, and summer monthly bills would likewise be more manageable. A smaller monthly bill would relieve some of the burden of high summertime water cost for many customers. addition, a smaller monthly bill should enable customers to more adequately budget for their water service needs, and will enable lower income customers to more readily pay for the water service they use. What other ways can customers benefit by the change to monthly meter reading and billing? Monthly meter reading and billing creates a more useful water usage history since there are twelve reading periods instead of six. This history can enable a more accurate estimated monthly bill whenever an Wyatt, Re United Water Idaho Inc. actual meter reading cannot be obtained. In addition, meter readers will find customer leaks, high water usage, stopped meters, etc. more readil y because they will visit customer sites twice as often. This should reduce the number and severity of these kinds of customer billing problems. Lastly, monthly billing provides the company with twice as many opportunities to communicate to customers via bill messages and inserts. On what frequency do the other major utilities in United Water service territory bill their customers? All the major utilities in this area, including Idaho Power Intermountain Gas, and Qwest, bill customers on a monthly basis. Has United Water considered the options of either reading meters bi- monthly and billing monthly or reading meters and billing monthly only during the summer period as an alternate to year-round monthly billing? Yes. Staff's Production Requests No. 38 & 39 inquired about the feasibility of those two options. With regard to the concept of reading and billing monthly only during the summer, United Water strongly opposes this option and believes that, while it might be a somewhat lower cost option than full monthly reading and billing, it creates significant major challenges including the following: Temporary staffing would have to be hired, trained and then dismissed every six months. Wyatt , Re United Water Idaho Inc. Investments in equipment, purchased specifically for this purpose would then be idled for six months of each year. Examples are vehicles, meter reading equipment, communications equipment computer equipment, tools, and etc. Billing protocols would have to be changed seasonally with the associated cost of programming to accommodate monthly billing (i.e. hi/lo parameters in reading and billing, schedules, due dates, past due processing). Vendors would have to accommodate the seasonal fluctuation from approximately 38 500 bills per month to 77 000 bills per month. This option would cause significant customer confusion and would require repeated customer communications regarding the billing frequency and process. United Water is also strongly opposed to the option of reading meters on a bi-monthly basis but billing customers monthly in the summer for example by billing half of the consumption each month or estimating one month then adjusting to an actual read the next month. United Water is not in favor of this scenario for the following reasons: It would require a major change in the billing system software to handle reading and calculating consumption but holding half for later billing. It would require a significant capital investment if at all possible. Wyatt, Re United Water Idaho Inc. Billing, postage, and collections costs would double for half of the year. Temporary staffing would have to be hired, trained and dismissed seasonall y. With all bills being estimated one month and actually read the next, large numbers of accounts would require review and the number of adjusted bills would likely skyrocket resulting in a huge increase in customer calls and billing adjustments. This option would likely cause significant customer confusion and would require repeated customer communications regarding the billing process. If the Commission decides United Water should convert to monthly billing what does United Water recommend be done about the proposed bi-monthly 3ccf residential summer rate block proposed in the low-income help program Stipulation dated March 23 2005 between United Water and CAP AI? If the Commission orders United Water to convert to monthly billing the 3ccf residential summer rate block cannot readily be divided in half for billing purposes. United Water therefore recommends that the first block be set at 2ccf on a monthly billing basis. Since the 2ccf on a monthly basis is greater than 3ccf on a bi-monthly basis, it is expected that CAP AI would embrace the increased volume to be priced at the lower first tier rate as proposed in the Stipulation. Wyatt, Re United Water Idaho Inc. Conservation Please summarize the testimony and recommendations of Witnesses Wojcik regarding United Water s conservation programs. Witness Wojcik states that an effective conservation program must include four components: water pricing incentives (via an increasing rate block), rebate and retrofit incentives , regulations (e., plumbing, landscaping, and water-waste code), and education (Wojcik Di Pg 11). Although he considers the education component of United Water conservation program to be commendable and acceptable in terms of its comprehensiveness, he does not believe the balance of the Company s program and efforts are adequate in the remaining three areas he cites (Wojcik Di Pg. 12-13). He offers eleven (11) examples of other programs and policies that United Water could implement (Wojcik Di Pg. 14), however he recognizes there are barriers to implementation, including the fact that United Water, as an investor- owned utility, can only advocate for regulation changes, such as landscaping codes, and that the Company cannot establish municipal regulatory controls on land use and development. He also acknowledges that United Water does not have a dedicated source of funds for conservation programs, such as a tariff rider (Wojcik Di Pg. 15). Witness Wojcik goes on to posit that the conservation programs he outlines are cost effective (Wojcik Di Pg. 15), but beyond a review Wyatt, Re United Water Idaho Inc. of Albuquerque s efforts (Pg 15-16), he does not offer significant data to substantiate that claim. In fact he states: Unfortunately, a lack of conservation program monitoring and a relatively short history of water conservation implementations, has yielded a significant "data gap" in the water supply industry. Unlike with traditional supply options, accurate and reliable cost- effectiveness data for water conservation options is rather limited. (Wojcik Di Pg. 16, Lines 12-15). Witness Wojcik ultimately recommends that United Water develop and submit for Commission approval an updated and comprehensive conservation plan that includes a cost comparison between supply versus demand resources, and that analyzes a means of funding additional conservation costs. In addition, Wojcik recommends that United Water implement the new plan, and work with the City of Boise to consider a water-wise landscaping ordinance for new development and establish a higher level of water efficiency in the Boise plumbing code, (Wojcik Di Pg.18). Do you agree with Mr. Wojcik's contention that United Water conservation plan and efforts do not offer a reasonable range of opportunities for customers to lower their usage, and therefore maintain or lower their bills? Please explain. No. As outlined in my Direct Testimony (Wyatt Di Pgs. 13-15), United Water offers a variety of educational, product, and service oriented water conservation programs to its customers. Although I agree that recent customer response to certain portions of the Wyatt, Re United Water Idaho Inc. Company s program has not been as high as we would like, i.e. conservation'kits and water audits, it is true that average residential summer water usage has continued to decline over the years. shown by Company witness Gradilone s direct Testimony, Exhibit 6 Schedule 3 , Page 6 of 25, average residential summer consumption has declined from an historical high of 146 000 gallons in 1986-87 to the current level of 115 000 gallons, or a decrease of more than 21 Certainly a portion of this decline may be weather related and some can be attributed to the implementation of dual irrigation systems in new development areas , but a portion must also be attributable to water conservation efforts which were not actively promoted prior to the late 1980' Of the eleven (11) examples of other programs and policies that United Water could implement proposed by Witness Wojcik, has United Water reviewed any of these for implementation in the past? Please explain. Yes, at least four of the eleven were reviewed in the 1993 Water Conservation Plan analysis prepared for United Water by Montgomery Watson. They include the toilet rebate program, landscape retrofit program, large landscape water audits (large water user audit program), and low water use landscape ordinance. Did the 1993 Plan recommend implementation of these four programs and If not, why not? Wyatt , Re United Water Idaho Inc. . ' , they were determined not to be feasible for United Water and the Boise market based on the cost/benefit analysis conducted at the time and United Water s limited ability to influence local land use ordinances. In his testimony Mr. Wojcik also refers to a rebate program for in- home water usage monitors recently offered by the City of Aurora Colorado, (Wojcik Di Pg. 11, Lines 5-9), and then lists a water use monitoring meter rebate program as one of the eleven (11) conservation program options. Is it currently possible for United Water to implement such a meter-monitoring device and rebate program similar to the one in Aurora, Colorado? Please explain. No. In response to United Water s First Production Request to Idaho Rivers United, Request No., which asked if the Aurora device was compatible with the United Water system at the same cost, Mr. Wojcik replied , " The type of in-home usage monitoring device implemented in Aurora, Colorado, would not be compatible with UWI's system unless and until automated meter reading systems were implemented. Do you agree with Mr. Wojcik's suggestion that the initial summer block be increased by approximately three times the proposed 3ccf bi- monthly quantity, (Wojcik, Pg. 7, Lines 16-17)? Please explain. No. The initial summer block, as agreed to in the Stipulation with CAP AI, was not intended to equate to an average household use level as offered by Witness Wojcik. On the contrary, the 3ccf bi-monthly Wyatt , Re United Water Idaho Inc. quantity was proposed as a "life line" or "subsistence" level of consumption in order to help primarily low income users, and was never intended to accommodate all or average household usage. In addition, if the Commission agrees that United Water should move to monthly meter reading and billing, I have already stated in my rebuttal testimony that the Company would accept a 2ccf quantity on a monthly basis which is 33% higher than the amount stipulated to with CAP AI on a bi-monthly basis. Did Mr. Wojcik, or anyone else from Idaho Rivers United, participate in the Commission sponsored "low-income assistance" workshop held on February 23, 2005 out of which the came the Stipulation referred to in Mr. Wojcik's testimony, (Wojcik, Pg. 6, Line 27)? No. Although the workshop was adequately noticed by the Commission and also reported ahead of time in the Idaho Statesman neither Mr. Wojcik nor anyone else from Idaho Rivers United attended the ~orkshop. What is United Water s position regarding Mr. Wojcik' recommendation that the Company develop and submit for Commission approval an updated and comprehensive conservation plan as soon as possible following this case, and that the plan should include a cost comparison between supply versus demand resources and also analyze means of funding additional further conservation program costs, (Wojcik Di Pg. 18, Lines 3-6)? Wyatt, Re United Water Idaho Inc. Basically United Water is in agreement with the recommendation. The Company believes it should undertake the task of procuring an outside consulting firm to assist in developing a new comprehensive conservation plan, with the final plan and recommendations being submitted to the Commission for review. It is unclear whether the various conservation options identified by witness Wojcik are the most appropriate, and the Company would like to see an analysis of the viability and cost vs. benefits related to a wide range of conservation options for its customers. The Company is, however, unsure how long the consultant procurement process will take and is similarly unsure how long such a comprehensive study will take. Therefore, the Company recommends the Commission allow it the opportunity to identify and interview potential consulting firms to determine timing before establishing a deadline for the study completion. What is United Water s position regarding establishing a means of funding for its conservation study and eventual programs. United Water believes the cost of obtaining an updated and comprehensive conservation plan will be substantial and requests that the Commission allow deferral for consideration of recovery in a future rate case of all costs associated with the updated plan. addition, United Water believes it is very likely that implementation of new conservation measures and programs will result in significant increases in ongoing operating costs. Therefore, the Company Wyatt, Re United Water Idaho Inc. recommends that the study assess the likely costs associated with its conservation programs and efforts and assess how best to cover conservation program costs. Is United Water aware of any other utilities that have an authorized means of cost recovery related to conservation programs? Please identify. Yes. Idaho Power has an Energy Efficiency Rider, Schedule 91 which is applicable to all retail customers. According to Schedule 91 the energy efficiency rider is designed to fund Idaho Power expenditures for the analysis and implementation of energy conservation programs. What is United Water s position regarding Witness Wojcik' recommendation that the Company work with the City of Boise to consider a water-wise landscaping ordinance for new development and establish a higher level of water-efficiency in the Boise plumbing code. Although the Company can discuss land use issues with the City of Boise, it is unsure what influence it may have in this area. The Company believes that these two components along with others should be considered inside the proposed comprehensive conservation plan study that has already been recommended. Wyatt, Re United Water Idaho Inc. Public Affairs Mana2er On what basis does Mr. English recommend eliminating the salary of the Company s recently hired Public Affairs Manager? First, Mr. English claimed in his direct testimony (Page 11 line 19 through Page 12, line 1) that at the time of filing his direct testimony the position was vacant and that Staff did not know with certainty the position would be filled, nor did Staff know, the exact salary to be paid. In fairness to Mr. English, he did acknowledge in response to the Company s First Production ~equest No., that the Company response to Staff Production Request Number 198, 1 8t update indicating the position had a committed candidate and a known and measurable salary of $56 500, was received late in their testimony preparation but not included. However, the successful candidate did in fact start his employ at United Water on Monday, April 18, 2005. This leaves the second reason for the elimination of the expense, Mr. English states , " Staff believes the duties of the position would include that associated with corporate image and lobbying , (English Di , pg 12). Mr. English incorrectly concluded from Company witness Healy direct testimony and job advertisements in local newspapers that the duties of the Public Affairs Manager are concerned exclusively with lobbying and corporate image and thus should be eliminated. Neither Mr. Healy s testimony nor the newspaper ads mentioned lobbying. Wyatt, Re United Water Idaho Inc. Neither did Mr. English ever request a copy of the position description for the Public Affairs Manager from the Company. What are the primary responsibilities of the recently hired Public Affairs Manager? The responsibilities and duties cover three broad areas: media and public relations, community relations and governmental relations. The Public Affairs Manager is also responsible to supervise and direct the Outreach and Education Coordinator, whose job includes all of United Water s water conservation programs and educational activities. Since you stated that governmental relations is one of the areas of responsibility for the Public Affairs Manager, is Mr. English correct in stating that , " a major portion of this position s responsibility will be lobbying." (English Di Pg. 12, Lines 20-21)? Please explain. No. The major portion of the position s responsibilities will be media public, and community relations, with only a small portion associated with governmental relations. However, it must be recognized that within the term "governmental relations" we mean relations with local city and county officials as well as governmental regulatory entities such as Idaho Department of Environmental Quality and Idaho Department of Water Resources. All of these governmental entities have both direct and indirect impacts on United Water s production transmission and distribution of water to its customers, and the Public Affairs Manager s responsibilities in communicating and maintaining Wyatt, Re United Water Idaho Inc. effective relations with these kinds of governmental entities is integral to those same activities. What other activities will the Public Affairs Manager be involved with that will directly affect customers? Additional duties will include creating and managing the Company communications with customers via bill messages, bill inserts consumer confidence reports, paid media advertising regarding company operational activities such as system flushing and water conservation, any customer surveys the Company may perform, and the like. Can you cite an example of the type of local city and community relations work the Public Affairs Manager position might be involved with in the direct testimony of any party to this case? Yes. In response to the question if there are any barriers to United Water instituting some of the conservation programs he recommends Witness Wojcik on behalf of Idaho River s United states , " The most obvious barrier is that UWI (as an investor-owned utility) can only lobby for regulatory changes, such as landscaping codes" (Wojcik Di. Pg 15 ). United Water believes that the Public Affairs Manager position will provide the Company with a resource to work with local city officials and other community groups for changes that will benefit our customers such as changes to landscaping codes. Wyatt, Re United Water Idaho Inc. It would appear obvious that with the very real possibilities of United Water moving to monthly billing and undertaking new and expanded conservation efforts the Company s obligation and need to communicate effectively with customers, the media, and governmental entities will increase. The newly hired Public Affairs Manager will be integral to filling this need. What do you recommend the Commission do regarding Mr. English' disallowance of salary and other costs related to the Company recentl y hired Public Affairs Manager? I recommend the Commission reject Mr. English's adjustment and allow full recovery in revenue requirement of the Public Affairs Manager position annual salary of $56 500 and all associated payroll and benefits costs. Customer Comments Have you reviewed the comments submitted by customers regarding the filing of this case? Yes, I have read each of the written comments submitted by customers. Do you agree with Staff witness Carol J. Cooper s summarization of those written comments? Generally yes, and I'd like to point out one additional issue. Although customers did express their concern with issues including the amount of the increase and their ability to afford it, new growth, summer rates Wyatt, Re United Water Idaho Inc. and the customer charge, there was virtually no dissatisfaction expressed regarding the quality of water or service received from United Water. In fact only 2 customers even noted anYthing about water quality: one concerning "brown water" and another who disliked the chlorine added for disinfection purposes. As evidenced by the lack of comments, it is clear United Water s customers are satisfied with the quality of water and service provided by the Company. Revised Tariff Please address Staff Witness Cooper s comment that no Company witness sponsored the proposed tariff changes and her recommendation that the changes made to the Water Main Extension Agreement regarding "Umbrella Excess Liability" coverage be denied because this substantive change to the Company s Rules and Regulations was not explained. Staff Witness Cooper is correct that no Company Witness sponsored the proposed tariff revisions. This was an administrative error and the Company now designates Witness Wyatt as the sponsor of all proposed tariff changes. With regard to the change from $2 000 000 to 000 000 made to the Water Main Extension Agreement provision regarding "Umbrella Excess Liability" coverage, the Company regrets this was not highlighted in testimony. In fact, Company Water Main Extension Agreements in use since late 1999 specify the higher coverage be in place and the Company requires proof from contractors Wyatt, Re United Water Idaho Inc. that is in place as was our practice with the Company s contractor for main extension installations, Owyhee Construction, prior to the change to labor and materials in lieu of cash as a result of Commission Order No. 26898 where the Company was directed to permit subdivision developers to provide labor and materials in lieu of cash. Upon reviewing Company files , I have found that the Company sought to revise this provision in August of 1999 when updating its Water Main Extension Agreement to comply with Commission Order No. 26898. have also found in Company files Rules and Regulations pages that refer to the higher insurance limit signed by the Company President at the time, William C. Linam. Apparently the Company began implementing the higher limit in 1999 even though the Commission never authorized it. This is regrettable. Have developers or contractors complained about the higher policy limits or notice period? , upon internal inquiry I have not found a single instance in which developers or contractors have complained about the higher insurance limit. In addition, the higher insurance limit serves to provide an increased level of protection to both customers and the Company from contractor and developer fault. Similarly, the Company s proposal to change the provision requiring a sixty-day (60-day) notice for cancellation or material change in coverage to thirty days (30 days) Wyatt, Re United Water Idaho Inc. merely adds to the protection of the Company and customers. Finally, no developers or contractors have objected to the changes in this case. What do you propose the Commission do regarding these two changes to the Company s tariff? I recommend the Commission approve these two changes because they serve to provide added protection to both the Company and customers. Miscellaneous Service Char2es What is your position with regard to Witness Cooper recommendations regarding the Company s proposed changes to Miscellaneous Service Charges, (Cooper, Pg. 7, Line 1 to Pg. 8, line 17)? The Company agrees with Witness Cooper s recommendation to increase the returned check charge from $15 to $20. At this time, the Company accepts Witness Cooper s other recommendations that the charges for reconnection of service, after hours reconnection fee, and premise visits to collect payment of bills remain at their current levels. Does this conclude your testimony? Yes. Wyatt, Re United Water Idaho Inc.