20070418final_order_no_30305.pdf

Office of the Secretary
Service Date
April 18 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
APPROVAL OF ITS WATER
CONSERVATION PLAN AND APPROVAL
OF A SURCHARGE
ORDER NO. 30305
CASE NO. UWI-06-
United Water Idaho, Inc. on December 1 , 2006 filed an Application requesting
approval of an updated water conservation plan, and also requesting a surcharge to pay for
implementation of the plan. The Company s Application states that it evaluated 91 potential
conservation measures and selected 17 for further study and evaluation. United Water proposes
to implement seven of the conservation measures at a cost that would nearly double its current
expenditures for conservation measures. The Company currently spends
$124 000 per year; implementation of the additional measures would add
$120 000 to United Water s annual conservation program costs.
The Company requested that its Application be processed by Modified Procedure
and on January 24 2007, the Commission issued a Notice of Application and Notice of Modified
Procedure. The Commission Staff filed comments on February 23 2007, and United Water filed
reply comments on March 28, 2007.
The Water Conservation Plan, page 4, summarizes the programs and annual budgets
United Water proposes to implement. In addition to continuing the "current outreach and
educational programs " the seven conservation measures the Company proposes to add are the
approximately
approximately
following:
1. Additional Xeriscape Demonstration Gardens.United Water currently maintains
a xeriscape garden at its offices. The new conservation plan proposes to increase xeriscape
gardens, including placing some in landscaped areas of public agencies. United Water would
manage the gardens and provide signs and brochures to educate people visiting the gardens.
Annual budget: $17 400.
2. Expand Water Efficient Landscaping Workshops. This program would boost the
Company s current efforts to increase attendance at its water efficient landscaping workshops.
Incentives could include landscape and drip system vouchers. Annual budget: $11 200.
ORDER NO. 30305
3. Residential School Education This component would expand the current
program that provides elementary grades four through six with workbooks, presentations
teaching materials and other educational tools to teach the students the importance of conserving
water. Annual budget: $6 700.
4. Rain Sensor Retrofit.United Water would periodically give rain sensors to
customers, and homeowners would pay for optional installation. Rain sensors delay one or more
water cycles in an automatic sprinkler system in response to rain. The goal is to distribute
approximately 8 000 sensors over five years. Annual budget: $35 600.
5. Trigger Shut Off Valves and Hose Timers. For customers without automatic
sprinkler systems, this program would offer incentives on the purchase of a shut off valve or
timer connected to a yard water hose. Annual budget: $6 900.
6. Award Program for Businesses. United Water would sponsor an annual awards
program for businesses that significantly reduce water use. The business would receive a plaque
presented at a lunch with the mayor. Annual budget: $1 300.
7. Restaurant Low Flow SpravlRinse Nozzles. United Water would provide free
installation of low flow spray/rinse nozzles in restaurants, grocery stores and commercial
kitchens. The goal is to install 1 000 nozzles over five years. Annual budget: $40,900.
Staff in its comments expressed concerns with the programs selected for
implementation, some of which are primarily educational and do not produce readily quantifiable
savIngs. Staff supported implementation of the measures identified in the Company
Application, but not the surcharge proposed by the Company to pay for the new conservation
measures.
Staff noted that the plan does not provide details on how the new programs would be
implemented, nor does it provide for an evaluation of the effectiveness of the programs once
implemented. Staff conceded that determining savings from a conservation program can be
difficult and imprecise, but believes results from the programs selected by United Water are
particularly difficult to assess. Staff recommended the Company conduct surveys of a
representative sample of participants in its programs to determine the actual conservation efforts
of customers.
Staff recommended that the Company continue its existing conservation efforts and
implement the measures identified in the updated plan, and also consider other conservation
ORDER NO. 30305
measures. Staff recommended the Commission not approve the proposed conservation tariff
rider and instead authorize a deferred accounting treatment of the additional costs.
United Water in its reply comments responded to each of the recommendations made
by the Staff. The Company stated it intends to develop a more targeted approach for
implementation of each measure, but that to do so before receiving Commission approval of the
plan is premature and risks wasting Company resources. Noting the difficulty in evaluating the
effectiveness of conservation measures, the Company disagrees with Staffs suggestion that the
Company be required to conduct surveys of participants in each of its programs. The Company
believes the cost of evaluation programs can exceed the amount spent for the program.
Regarding deferral of the costs rather than a conservation rider, United Water
expressed concern with the open-ended nature of Staffs recommendation that costs be deferred
and subject to a "later demonstration of reasonableness." If the Commission does not approve a
conservation surcharge, the Company requested clarification in the Commission s Order of the
proof that will be required to permit amortization of deferred costs.
DISCUSSION
At the conclusion of a recent rate case, the Commission directed United Water to
update its 1993 conservation plan. We appreciate the Company s response in preparing the plan
it submitted with its Application. We decline to approve, however, the Company s request for
authorization to implement all seven new measures, along with a surcharge to pay for them.
Instead, the Commission approves implementation of four of the new measures, and approves
deferral of the additional costs.
As noted in the updated conservation plan, United Water s current conservation
efforts are primarily outreach and educational programs. Some of the proposed new programs
expand education and recognition efforts, and likely would produce little or no tangible
conservation of water. The updated plan filed by United Water does not make a compelling case
for increasing the budget to educate the public generally about water conservation measures.
Accordingly, we direct the Company to continue its existing conservation program, and to
implement four of the new measures identified in its updated conservation plan. Specifically, the
Commission approves implementation of the additional following programs: Xeriscape gardens
(budget $17 400), rain sensor retrofit (budget $35 600), trigger shut-off valves and hose timers
(budget $6 900), and restaurant low flow spray nozzles (budget $40 900). We find the current
ORDER NO. 30305
conservation budget for education and outreach programs to be adequate at this point, and that
the four programs identified for implementation are the most likely of the measures proposed to
result in measurable reductions in water use.
We also decline to approve a conservation surcharge, but authorize deferral of the
new conservation costs for the four additional programs. The projected annual budget for the
four programs is $100 800. The Commission authorizes United Water to defer the actual costs
of the four programs, and reminds the Company that deferral will require a prudency review and
audit of the program costs in a rate case filing where recovery is requested. The Company will
be required to show that the deferred costs are above the amounts already included in base rates.
The Commission does not believe further evaluation of the specific programs is necessary at this
point, as efficiency of implementation and prudency of the program will be evaluated to establish
the recovery level and amortization period when the Company seeks recovery of the new
conservation costs. A cost/benefit analysis for each program should be provided to show the
ongoing benefits to customers.
ORDER
IT IS HEREBY ORDERED that United Water implement four of the seven
conservation measures identified in its November 2006 conservation plan, as set forth in this
Order.
IT IS FURTHER ORDERED that United Water is authorized to defer the actual costs
of the four conservation programs for future review by the Commission.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30305
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this I g t4..
day of April 2007.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
llJ.Je D. JewellCo ission Secretary
bls/O:UWI-O6-O5 ws2
ORDER NO. 30305