20071214Settlement stipulation.pdf

ORIGINAL
Scott Woodbury
Deputy Attorney General
IDAHO PUBLIC UTILITIES COMMISSION
POBOX 83720
BOISE, ID 83720-0074
Tel: [phone]
Fax: [phone]
scott. woodbury ~ puc.idaho. gOY
p¡:.ci: i,\._ ¡)k-.~
Lûa? DEC I!,.II: 14
Attorney for Commssion Staff
Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe ~ mcdevitt-miler .com
Attorney for United Water
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION CASE NO. UWI-W-07-05
OF UNITED WATER IDAHO INC., FOR AN
AMNDMENT TO ITS CERTIFICATE OF SETTLEMENT STIPULATION
PUBLIC CONVENIENCE AND NECESSITY
NO. 143 AND FOR AN ACCOUNTING
ORDER.
This Stipulation ("Stipulation") is entered into by and among United Water Idaho Inc.,
("United Water"; "Company"), and the Staff ofthe Idaho Public Utilities Commission ("Staff').
There are no intervening paries in the case.
SETTLEMENT STIPULATION 1
INTRODUCTION
l. The Paries agree the Stipulation represents a fair, just and reasonable
compromise of the issues raised in United Water's Application and the Stipulation is in the
public interest. The Paries believe the Stipulation and its acceptance by the Idaho Public
Utilities Commssion (Commssion) represents a reasonable resolution to the issue identified
below in this matter. The Paries, therefore, recommend that the Commssion, in accordance
with Rule of Procedure (RP) 274, approve the Stipulation and all of its terms and conditions
without material change or condition.
BACKGROUND
2. In this proceeding United Water Idaho Inc., seeks authority to remove the
Danskin and Saddle Ridge Subdivisions ("Subdivisions") from its certificated service area by
transferring the facilities that serve the Subdivisions to the City of Kuna ("City"). United Water
has negotiated a Purchase and Sale Agreement with the City, which is subject to Commission
approval. The Purchase and Sale Agreement is attached to United Water's Application as
Exhibit B. United Water also seeks an accounting order with respect to the distribution of the
sale proceeds.
The Commssion Staff, in Comments filed November 30, 2007, concludes that the
transfer is consistent with the public interest because the City has adequate abilty to serve,
interconnection with the City wil improve the supply capacity for the system, and customers
wil obtain service at rates less than those charged by United Water. (Staff Comments page 4).
United Water concurs in this portion of Staff Comments.
SETTLEMENT STIPULATION 2
With respect, however, to distribution of the sale proceeds, United Water and Staff were
in disagreement. In its Application, United Water asserted that the net sale proceeds, in the
approximate amount of $212,000, are the property of United Water and its shareholders and
ratepayers have no interest therein. (Direct Testimony of Gregory P. Wyatt, Pgs 4-6). Staff
asserted that ratepayers have an equitable interest in the proceeds and are entitled to share in all
or par of the proceeds. (Staff Comments Pgs 4-7).
3. As a compromise of the positions on the issue of distribution of sale proceeds in
this case, and for other consideration as set forth below, the Paries agree to the following terms:
TERMS OF THE STIPULATION
4. The Staff and Company agree that the following accounting treatment of the sale
proceeds is appropriate:
. The actual net proceeds, after elimination of all associated utility plant in service,
associated accumulated depreciation, construction work in progress, advances,
contributions, associated amortization of contributions, closing expenses
including legal expenses, and all associated transaction expenses, to be recorded
as an "other deferred credit" liabilty on the Company's balance sheet in account
253.09, titled "Deferred Regulatory Liability".
. The deferred credit would then be amortized, or written off, over 36 months (3
years) beginning with the month of the sale closing, with the offsetting credit
recorded to income statement account 421.00, "Miscellaneous Non-Utilty
Income."
SETTLEMENT STIPULATION 3
. The unamortized balance remaining in the deferred regulatory liability account
would be recognized as a deduction from rate base in any subsequent general rate
case.
Staff and United Water believe this accounting treatment results in an equitable sharing
between shareholders and ratepayers in the sale proceeds by providing that a portion of the
proceeds wil be recognized as below the line income to United Water and a portion of the
proceeds wil be recognized as a reduction from rate base in United Water's next general rate
case. The accounting treatment set forth above is a refinement of the second option for treatment
of proceeds contained in Staff Comments. (Staff Comments Pg. 5-6).
5. United Water currently owns three other non-contiguous water systems serving
the Belmont, Coventry and M&M subdivisions in Canyon County, Idaho. United Water is
currently negotiating to sell those systems to the City of Nampa. If a definitive purchase and sale
agreement with the City of Nampa is executed and submitted to the Commssion for approval,
United Water consents that the net proceeds of that sale may be treated in the same general
manner as set forth above.
6. Accordingly, the Paries stipulate and agree that the Commssion enter its order:
1. Approving the modification of United Water's Certificate of Public
Convenience and Necessity by eliminating the Danskin and Saddle Ridge Subdivisions
there from;
2. Confirmng that after the date of closing of the purchase and sale transaction,
United Water wil have no further obligation to provide domestic water service to the
Subdivisions;
SETTLEMENT STIPULATION 4
3. Confirmng that following the assumption by Kuna of the Non-Contiguous
Agreement and the Main Line Extension Agreements, United Water wil have no further
obligations there under;
4. Determning that the accounting treatment of sale proceeds set forth above is
fair, just and reasonable.
7. The Paries agree that the Stipulation represents a compromise of the positions of
the Paries in this case. As provided in RP 272, other than any testimony fied in support of the
approval of this Stipulation, and except to the extent necessary for a Pary to explain before the
Commssion its own statements and positions with respect to the Stipulation, all statements made
and positions taken in negotiations relating to this Stipulation shall be confidential and wil not
be admissible in evidence in this or any other proceeding.
8. The Paries submit this Stipulation to the Commssion and recommend approval
in its entirety pursuant to RP 274. The Paries shall support this Stipulation before the
Commssion, and no Pary shall appeal a Commssion Order approving the Stipulation or an
issue resolved by the Stipulation. If this Stipulation is challenged by any person not a pary to
the Stipulation, the Paries to this Stipulation reserve the right to fie testimony, cross-examne
witnesses and put on such case as they deem appropriate to respond fully to the issues presented,
including the right to raise issues that are incorporated in the settlements embodied in this
Stipulation. Notwithstanding this reservation of rights, the Paries to this Stipulation agree that
they wil continue to support the Commssion's adoption of the terms of this Stipulation.
9. If the Commssion rejects any par or all of this Stipulation, or imposes any
additional material conditions on approval of this Stipulation, each Pary reserves the right, upon
written notice to the Commission and the other Paries to this proceeding, within 7 days of the
SETTLEMENT STIPULATION 5
.
date of such action by the Commssion, to withdraw from this Stipulation, and each Pary shall
be entitled to seek reconsideration of the Commssion's Order, fie testimony as it chooses,
cross-examne witnesses, and do all other things necessary to put on such case as it deems
appropriate. In such case, the Paries immediately wil request the prompt reconvening of a pre-
hearng conference for purposes of establishing a procedural schedule for the completion of the
case. The Paries agree to cooperate in development of a schedule that concludes the proceeding
on the earliest possible date, takng into account the needs of the Paries in paricipating in
hearings and preparng briefs.
10. The Paries agree that this Stipulation is in the public interest and that all of its
terms and conditions are fair, just and reasonable.
1 l. No Pary shall be bound, benefited or prejudiced by any position asserted in the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Pary unless such rights are expressly
waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgement by any Pary of the validity or invalidity of any paricular method, theory or
principle of regulation or cost recovery. Except as set forth in paragraph 5 above, no Pary shall
be deemed to have agreed that any method, theory or principle of regulation or cost recovery
employed in ariving at this Stipulation is appropriate for resolving any issues in any other
proceeding in the future. No findings of fact or conclusion of law other than those stated herein
shall be deemed to be implicit in this Stipulation.
SETTLEMENT STIPULATION 6
"
..
12. The obligations of the Paries under this Stipulation are subject to the
Commission's approval ofthis Stipulation in accordance with its terms and conditions.
13. This Stipulation may be executed in counterpars and each signed counterpar shall
constitute an original document.
Respectfully submitted this 11/\,
Idaho Public Utilties Commission Staff
B
Scott Wood ury
Deputy Attorney General
for Commssion Staff
SETTLEMENT STIPULATION
day of December 2007.
:~r¡Dean J. Miller
Attorneys for United Water Idaho Inc.
7