20060503Comments.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283
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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. FOR AN
ACCOUNTING ORDER REGARDING
CONSERVATION PLANNING COSTS.COMMENTS OF THE
COMMISSION STAFF
CASE NO. UWI-O6-
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Weldon B. Stutzman, Deputy Attorney General, in response to the Notice of
Application and Notice of Modified Procedure in Case No. UWI-06-3 issued on April 12, 2006
and submits the following comments.
BACKGROUND
On March 30, 2006, United Water Idaho Inc. filed an Application requesting an
accounting order authorizing the Company to defer and amortize costs associated with its
conservation planning effort. In the final Order issued in the last United Water rate case, the
Commission directed the Company to update its conservation plan. As a result, United Water
retained a consultant to prepare an updated plan, at a cost not to exceed $80 000. The Company
also estimates it will incur additional costs not to exceed $10 000 to complete the plan revision.
Accordingly, United Water asks the Commission to enter an Order authorizing the Company to
defer up to $90 000 in costs associated with the conservation plan to be recovered in rates in a
STAFF COMMENTS MAY 3 , 2006
current or future rate proceeding." The completed plan is to be filed with the Commission by
December 1 , 2006.
ST AFF COMMENTS
A comprehensive water conservation plan is a necessity for any water utility company
serving a growing customer base while dealing with the pressures of limited resources. United
Water s lack of a current plan prompted the Commission in Order No. 29838 to mandate the
Company to prepare and file an updated conservation plan. United Water has contracted with
Maddaus Water Management (MWM) to prepare the revised and updated conservation plan at a
price not-to-exceed $80 000 based on time and materials. Because of the unusual nature of the
expenses, and the recognition that demand-side management programs are an essential part of
any utility s portfolio of resources, it is appropriate to allow the deferral of these costs.
Staffrecommends that United Water be allowed to defer the costs of the conservation
plan in Account No. 186, Regulatory Assets. A separate sub-account should be maintained for
these deferred costs. This will facilitate the audit requirements to separately identify the
additional costs for review. Staff also recommends that the recovery of prudently incurred costs
and the amortization period to recover those costs, should be addressed in the Company s next
General Rate filing. As the Commission has noted on numerous occasions previously, a deferred
accounting order does not constitute automatic Commission approval to collect the costs from
United Water customers.
The Environmental Protection Agency (EP A) began working on its Water Efficiency
Market Enhancement Program in 2002 and is currently evaluating products to include in the
program. This program may provide grants for water conservation. Staff recommends that the
Company seek any reimbursement of expenditures from other programs or entities, such as the
EP A before requesting recovery from customers. Any reimbursement from other programs or
entities would be shown as a reduction to the deferred balance when the reimbursement is
received. The Company could request any un-reimbursed, prudently incurred costs be recovered
from customers and amortized over a period of time to be determined.
United Water has also requested to defer up to an additional $10 000 for completion and
revision to the Conservation Plan. Staff expects United Water to work with MWM while it
prepares the Conservation Plan. When the plan preparation is completed by MWM, it should not
need revision. If revision to the newly prepared plan is needed, then the original costs may not
STAFF COMMENTS MAY 3 , 2006
have been prudently incurred. Further, a Conservation Plan may occasionally require small
updates and revisions, and these types of expenses would be considered routine and not
appropriate for deferral. The Company may include these routine expenditures when they occur
during a test year. For those reasons , Staff believes it is inappropriate for the Company to defer
these additional costs.
United Water does not request and thus does not provide any justification for a carrying
charge on the deferred balance. Staff recommends that a carrying charge not be allowed on these
deferrals.
STAFF RECOMMENDATIONS1. Staff recommends the cost of the preparation of the conservation plan, not to exceed
$80 000 be booked to Account 186, Regulatory Assets, in a separate sub-account.
Staff recommends that the recovery of the costs of the preparation of the
conservation plan be amortized over a period to be determined at a later date when
the Company files its next General Rate case.
Staff recommends that the Company seek reimbursement of expenditures from
any available program or entity before requesting recovery in rates. Any
reimbursement from other programs or entities would be shown as a reduction to
the deferred balance when the Company requests recovery in rates.
Staff recommends that the additional $10 000 requested by the Company for
revision of the plan not be deferred as a regulatory asset, but rather expensed as a
normal operating cost.
Staff recommends that no interest be accrued on the deferred balance.
Respectfully submitted this r-t'day of May 2006.
Weldon B. tutzman
Deputy Attorney General
Technical Staff: Donn English
Terri Carlock
i:uumisc/comments/qwetO5_10wsgs
STAFF COMMENTS MAY 3, 2006
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 3RD DAY OF MAY 2006 SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
NO. UWI-06-, 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 ESQ
McDEVITT & MILLER LLP
PO BOX 2564
BOISE ill 83701
SECRET
CERTIFICATE OF SERVICE