20061201Wyatt direct.pdf

f-IVED
\- -
Dean J. Miller (ISB 1968)
McDEVITT & MILLER LLP
420 West Bannock Street
o. Box 2564-83701
Boise, ID 83702
Tel: [phone]
Fax: [phone]
oe~mcdevitt -miller. com
20QfJ DEC - I PI; \: 02
1("; \)L LI(~
\'-- ..";,.
UTILITiES C(JJ:('i\\v'-' ,-",
Attorneys for Applicant
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF)
UNITED WATER IDAHO INC., FOR
APPROV AL OF ITS WATER
CONSERVATION PLAN AND FOR
APPROVAL OF A WATERCONSERVATION~
SURCHARGE AND REQUEST FOR MODIFIED PROCEDURE.
CASE NO. UWI-O6-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DIRECT TESTIMONY OF GREGORY P. WYATT
December 1 , 2006
ORIGINAL
Q. Please state your name and business address.
A. Gregory P. Wyatt, 8248 West Victory Road, Boise, Idaho.
Q. What is your occupation?
A. I am the General Manager of United Water Idaho Inc.
, ("
United Water" the
Company
Q. What is the purpose of your testimony in this proceeding?
A. I will describe United Water s Application regarding its revised Conservation
Plan ("Plan ) and the Company s request for an appropriate means to fund the
anticipated new costs of the Plan.
Q. Briefly describe the sequence of events leading up to the creation of the
Company s revised Plan and the need for this Application.
A. United Water s initial Conservation Plan was created and subsequently approved
by this Commission in 1993. Since then the Company has actively implemented
that plan. As part of its 2004 rate case outcome, UWI-04-, the Company
was ultimately ordered to develop a revised Conservation Plan and to submit that
Plan to the Commission by December 1 2006; Commission Order Nos. 29871
and 29934.
Q. Please describe the steps the Company took in developing the new Plan.
A. First the Company researched potential consultants who could accomplish the
revision and ultimately sent requests for proposals to eight (8) qualified firms.
April 12, 2006, the firm, Maddaus Water Management ("MWM"), was awarded
the contract for developing the new Plan at a cost not to exceed $80 000.00.
Immediately following, the Company provided MWM with numerous data and
Wyatt, Di
United Water Idaho Inc.
information regarding the Company s historical and current conservation
activities, the water system, historical and projected annual production
consumption, customer growth, and source of supply data, and other information.
As explained in the Conservation Plan, MWM, in consultation with the Company
and interested stakeholders from Idaho Rivers United and the Idaho Public
Utilities Commission, evaluated ninety one (91) potential conservation measures.
Seventeen (17) measures were selected for further study and were evaluated using
MWM's Water Demand Management Least Cost Planning Decision Support
System (DSS Model). The DSS Model was used to both forecast future water
demand and to evaluate the individual water conservation measures water saving
potential, uptake rates and cost effectiveness. This analysis produced a list of
seven (7) conservation measures that were found to be cost effective. These
seven measures form the basis of the new Plan. These measures are listed in the
Application and discussed in greater detail in Sections 5 and 6 of the Plan.
Q. When are the seven conservation measures to be implemented by the Company?
A. As explained in the Plan, four (4) measures are to be implemented in 2007-2008
and three (3) measures are to be implemented in 2008-2009.
Q. Does United Water agree with the seven measures recommended in the Plan and
with the general timeframe for implementation?
A. Yes. The proposed measures appear to be cost effective and aimed at producing
measurable water savings.
Q. Does the Plan provide an estimate of how much the seven conservation measures
will cost to implement?
Wyatt, Di
United Water Idaho Inc.
A. Yes, the Plan estimates that the new measures, when combined with current
conservation efforts, will cost $244 200.00 annually when fully implemented.
This represents an annual increase in cost of $120 000.00 over current
conservation related expenditures.
Q. Does the Plan propose any methods for funding those costs?
A. Yes, the Plan proposes four potential means for funding the costs related to the
new conservation measures; (1) implement a "water conservation surcharge , (2)
develop additional partnerships with various like-minded conservation groups, (3)
seek grant funding, and ( 4) include the costs in base rates.
Q. What is United Water s position with regard to the four proposed funding
alternatives?
A. The Plan proposes that a "water conservation surcharge" could be added to the
water bill to raise the money required to carry out the recommended activities in
the Plan. Of the four funding options listed, this approach is preferred by the
Company because it enables funding to be generated at the same time the
implementation costs are being incurred. A separate, auditable account could be
set up to track the surcharge funds and to ensure that they are used only for
conservation expenditures. Along with a surcharge, the Plan recognizes, and the
Company agrees that a change from bi-monthly to monthly billing would be
beneficial.
While United Water agrees that there are opportunities to form partnerships with
different groups, including those cited in the Plan, to enhance water conservation
outreach and messaging, and United Water will seek to strengthen current
Wyatt, Di
United Water Idaho Inc.
relationships and will seek new ones as appropriate, United Water, however, does
not agree that such partnering will necessarily reduce the Company s costs for
implementing the recommended seven conservation measures. For example
during the summer of 2006 United Water partnered with Idaho Rivers United in
placing conservation advertising in the local newspaper and television. This
partnership certainly increased conservation messaging over that which United
Water had been accomplishing on its own, but it also cost United Water additional
money to participate with Idaho Rivers United in this effort.
Grant funding is not an area of familiarity for United Water and the Company has
no experience with grant writing or the process of obtaining grants. United Water
is not opposed to grants per se, but believes that its conservation plan measures
should be funded by the customers who benefit by the implementation of the
measures.
Q. How have conservation efforts for United Water been funded in the past?
A. Historically, including conservation program costs in base rates has been the way
United Water has received funding for its current programs. This method,
however, assures that the Company alone will bear the costs for new programs
until prospective rates are set using a history of conservation expenses included in
the new rates. On its face, this approach seems most unfair for expenditures that
are made with the intention of saving customers money on their water bills.
Q. If a "water conservation surcharge" were to be implemented, how much affect
would the surcharge have on the average residential customers' annual bill?
Wyatt, Di
United Water Idaho Inc.
A. Using information from United Water s most recent rate increase shows that the
annual costs for implementing the new conservations measures would amount to
0.33% of revenues. The 0.33% was calculated by taking test year adjusted
revenues from Case No. UWI-06-02 of$33 059 527 (see F. Gradilone Exhibit
, Schedule 1, Page 1 of 2), and adding the rate award of$3 633 000 for an
adjusted revenue of $36 692 527, and then dividing it into the projected additional
annual Plan cost of$120 000, resulting in 0.33%. At that level, the surcharge
would amount to an additional $1.20 annually, or ten cents a month, on the
average residential customer s annual bill at new rates of $363.12.
Q. Is there precedent for funding conservation efforts through a surcharge?
A. Yes, I believe the Commission has approved a conservation surcharge for Idaho
Power Company.
Q. Does the Company have any other thoughts regarding funding the new
conservation measures that are not included in the Plan?
A. Yes. Should the Commission determine that a water conservation surcharge is
not advisable, and that recovery should be through the historical inclusion in base
rates approach, The Company would suggest that it be allowed to accumulate the
costs for implementing the new Plan measures in a deferred account. Since the
Plan recommends implementing the measures in a phased approach, it would
likely take two to three years before the costs reach a stable annual level. The
Company believes that a deferral of these "start-up" costs and subsequent
allowance of a reasonable amortization period, in conjunction with inclusion of
annual Plan costs in base rates, is an appropriate means to protect customers while
Wyatt, Di
United Water Idaho Inc.
not requiring the Company to subsidize the Conservation Plan implementation
between general rate cases.
Q. Does that conclude your testimony?
A. Yes it does.
Wyatt, Di
United Water Idaho Inc.