20080626Wyatt Direct, Exhibit.pdf

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Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joeCâmcdevitt-mier .com
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATIOÑ ) CASE NO. UWI-W-08-02
OF UNITED WATER IDAHO INC., FORAN )
AMENDMENT TO ITS CERTIFICATE OF )
PUBLIC CONVENIENCE AN NECESSrr NO. )
143 AN FOR AN ACCOUNING ORDER. )
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DIRECT TESTIMONY OF GREGORY P. WYATT
ORIGINAL
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Q.Please state your name.
A.GregoryP. Wyatt
Q.What is your position?
A.I am the Vice President and General Manager of United Water Idaho.
Q.When did you assume your duties as General Manager of United Water Idaho?
A.Januar of 2000.
Q.What is the purose of your testimony?
A.I wil explai the history of the United Water Idaho's non-contiguous projects in
Canyon County, the details of the proposed sale of those systems to the City of
Nampa and the underlying rationale for the transaction.
Q.Please explain the history of United Water's non-contiguous projects in Canyon
County.
United Water provides service to thee subdivisions in Canyon County: the
Coventr Place Subdivision, the M&M Mountain View Acres Subdivision and
the Belmont Heights Subdivision. In Case No. UWI-W-99-1, Order No. 27976,
(1999) the Commission approved the expansion of United Water's Cerificate of
Public Convenence and Necessity to provide service to the Coventr Place
Subdivision; in Case No. UWI-W-00-03, Order No. 28418, (2000) the
Commission approved expansion of United Water's Cerificate of Public
Convenience and Necessity to provide serce to the M&M Mountain View Acres
Subdivision; in Case No. UWI-W-01-03, Order No. 28885, (2001) the
Commission approved expansion of United Water's Cerificate of Public
Wyatt,Di
United Water
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Convenence and Necessity to provide serice to the Belmont Heights
Subdivision. United Wate Previously provided servce in Canyon County to the
Carage Hil Subdivision, the sale of which to the City of Nampa was approved
by the Commission in Case No. UWI-W-04-03, Order No. 29625 (2004).
Q.Please descrbe the circumstances leading to your discussions with the City of
Nampa regarding the proposed sale of the systems?
A.Beginnng in the last half of 2006, Nampa contacted me expressing interest in
acquiring United Water's Coventr well and water system. Durng initial
discussions, I made it clear to Michael Fuss, Nampa's Public Works Director, that
United Water would be interested in sellng Coventr, but only on the condition
that Nampa consider acquiring all thee Canyon County non-contiguous systems;
Belmont, Coventr, and M&M.
Q.Why did United Water desire the disposition of all three of its Canyon County
non-contiguous systems?
A.Durng earlier negotiations with Nampa regarding the Carage Hil Subdivision
sale it became apparent to me that Nampa believed it was not in the best interests
of its citizens to have multiple water suppliers within, or close, to its boundares.
The City of Nampa had continued to grow in proximity to, and in some cases
around, these non-contiguous systems. Accordingly, growt opportties in the
area for United Water were limited and it was apparent that the City prefered that
United Water exit the area all together.
Wyatt,Di
United Water
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Q.Are there also water quality issues that would have to be addressed if United
Water were to continue serce?
A.Yes, there are. Beginning in 2004, we began sampling for uranium in accordance
with EPA requirements. The quarerly sampling from that point forward
indicated average levels of uranium in the Belmont well to be slightly in excess of
the maximum contaminant level (MCL).
Q What has United Water Idao done in response to the slightly elevated levels of
uranium detected in thedBelmont system well?
Beginning in March 2006, and continuing to the present, United Water has issued
the residents of the Belmont system a public notification informing them that the
average uranium level over the prior four quarters was slightly in excess of the
federal stadard. United Water also actively investigated thee different
alternatives to bring the water system back into compliance. These options
include drllng a new well, installng uranum removal treatment equipment and
connecting to another water system.
Q Please expand on United Water's efforts regarding these thee options.
A United Water drilled a 600 foot test well next to the existing Belmont wells. The
test well produced water free of uranium, but unfortately contained levels of
hydrogen sulfide, amonia, and iron that made the water aesthetically unpleasing,
and would require signficant treatment.
United Water also pilot tested two different uranum removal treatment systems at
the Belmont well site. Both systems were found to be effective at uranum
Wyatt,Di
United Water
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removal; unfortnately, both treatment systems had two negative implications.
First, the capital costs of the systems were signficant and the cost of disposing of
the spent treatment media was both expensive and very complicated to ship.
Second, homeowners in the Belmont Heights system were not eager to have a
system that was concentrating uranum in their neighborhood.
The thd option, connecting the Belmont system to another water system, is the
subject of ths filing. If the Commission approves the Purchase and Sale
Agreement between United Water and the City of Nampa, the City of Nampa
intends to extend a water main to interconnect the Belmont system with the City
water system and provide water serce to the residents of Belmont that meets all
federal requirements.
Q Has the Idaho Deparent of Environmental Quality (IDEQ) recognzed ths
interconnection to another system to be a viable solution to the uranum concer
for the Belmont residents?
Yes. United Water Idah has entered into a "Consent Agreement" (attched as
Exhbit A) with the IDEQ J;ßgRrding a uranium mitigation plan for the Belmont
system which identifies interconnection with another public water system as a key
component of the mitigation strategy.
Q.What is the agreed purchase price and how was it deterned?
A.The purchase price is $245,000 and it was arved at through ars lengt
negotiations. The City hired its own engieering consultant to evaluate the
Wyatt,Di
United Water
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systems and the City made an independent judgment as to the amount it was
wiling to pay.
Q.What is the Company's proposal for distrbution and accounting of the sale
proceeds?
A.United Water recommends that the proceeds be distrbuted and accounted for in
the same maner as sale proceeds were recently treated in the sale of the Danskin-
Saddle Ridge Subdivisions.
Q.Please descrbe the Danski11Saddle Ridge methodology and its background.
A.United Water recently sold its non-contiguous system serng the Danskin and
Saddle Ridge Subdivisions to the City of Kuna. Initially, there was disagreement
between the Company and Commission Staff regarding the proper allocation of
the net proceeds between the Company's shareholder and the Company's
ratepayers. After negotiations, the Company and Commission Staff reached a
Stipulation which was presented to the Commission. In Order No. 30481, Case
No. UWI-W-07-05, the Commission approved the Stipulation and described the
distrbution method as follows:
.The actul net proceeds, after elimination of all associated utilty plant in serce,
associated accumulated depreciation, constrction work in progress, advances,
contrbutions, associated amortization of contrbutions, closing expenses
including legal expenses, and all associated transaction expenses, to be recorded
as an "other defered credit" liabilty on the Company's balance sheet in account
253.09, titled "Deferred Regulatory Liabilty".
Wyatt,Di
United Water
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1 .The defered credit would then be amortized, or written off, over 36 months (3
2 years) beginnng with the month of the sale closing, with the offsetting credit
3 recorded to income statement account 421.00, "Miscellaneous Non-Utilty
4 Income."
5 .The unamortized balance remaining in the deferred regulatory liability account
6 would be recognzed as a deduction from rate base in any subsequent general rate
7 case.
8 As was the case in Dankîn..Sadle Ridge, this method results in an equitable
9 sharng between ratepayer an shareholders by providing that a porton wil be
10 recognzed as below the line income to United Water and a porton wil be a
11 reduction to rate base in the Company's next general rate cae. Whle United
12 Water believes there are mertorious legal arguents for allocating the net
13 procees exclusively to shareholders, the Company recommends ths sharng
14 method as a reasonable compromise in ths case.
15 Q.Does that conclude your testimony?
16 A.Yes it does.
Wyatt,Di
United Water
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STATE OF IDAHO
DEPARTMENT OF
ENVIRONMENTAL QUALlTYZûU8
FILE COpy
RECEIVED
MAY 1 5 2007
i1:50 UNITED WATER
"" .
1410 North Hilton - Boise, 1083706-1255- [phone] i ~j',; . ... i ..
o IILli IL~::J ~~: C; ,.; ,,¡,;~:,C.L. "Butch" Oter, Governor
Toni Hardesty, Director
May 14,2008
CERTIFIED MAIL:
RETURN RECEIPT REQUESTED
Mr. Gregory Wyatt
United Water Idaho
P.O. Box 190420
Boise, il 83719
Subject: Executed Consent Order for Belmont Heights community public water system, PWS #ID40 1 0252
Dear Mr. Wyatt:
Enclosed is a fully executed copy of the Consent Order (CO) signed by Idaho Deparment of Environmental
Quality's Director, Toni Hardesty. The staff at the Boise Regional Office wil be trcking compliance with the
deadlines set forth in the CO. Please send required communications to:
Tiffany Floyd, Regional Drinking Water Manager
Deparment of Environmental Quality
Boise Regional Office
1445 N. Orchard
Boise, Idaho 83706
Thank you for working with the Deparment to resolve these issues.
Sincerely,
/3~1ti~
Bar N. Burnell
Water Quality Division Administrator
BNB:jt
Enclosure
c: Courtney E. Beebe, Deputy Attorney General
Tiffany Floyd, Boise Regional Office
Steve Staufer, Boise Regional Office
Brandon Lowder, Boise Regional Office
Enforcement File
COF
EXHIBIT i PAGE i OF 4
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IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY
In the matter of:)
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)
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CONSENT ORDER
Idaho Code § 39-108Belmont Heights Water System
1. Pursuant to the Idaho Environmental Protection and Health Act, Idaho Code §§ 39-
101 through 39-130, the Idaho Department of Environmental Quality (Department) enters
into this Consent Order with Belmont Heights Water System (Belmont Heights), owned and
operated by United Water Idaho. Belmont Heights is a community public water system(System), PWS 4010252, which serves 76 connections and approximately 190 persons on
a daily basis in Canyon County, Idaho.
2. Quarterly samples taken from Belmont Heights' System in 2006 and 2007
consistently exceeded the uranium maximum contaminant level (MCl) of 30 JJg/l,
specified in 40 CFR 141.66, incorporated by reference in the Idaho Rules for Public
Drinking Water Systems, IDAPA 58.01.08.050.
3. The Department requested that Belmont Heights meet with the Department in a
compliance conference to enter into a Consent Order. A compliance conference was held
on March 6, 2008.
4. Belmont Heights hereby agrees to perform the following actions in the time periods
set forth in order to achieve compliance with Idaho Rules for Public Drinking Water
Systems, IDAPA 58.01.08:
a. Public Notice. Belmont Heights shall continue to provide quarterly public
notices concerning the exceedances of the MCl for uranium and the health effects
related to these exceedances, in accordance with IDAPA 58.01.08.150, to eachresidence on the System by mail or hand delivery.
i. Belmont Heights shall continue to provide quarterly public notices until
such time as the Department notifies Belmont Heights in writing that
quarterly notices are no longer required.
ii. Belmont Heights shall provide the Department with proof of
each quarterly notification via the Department's supplied
notification form and a copy of each quarterly notification within ten
(10) days of completion in accordance with IDAPA 58.01.08.150.
b. Sampling. Belmont Heights shall continue to submit water samples from the
System on a quarterly basis for uranium analysis by a certified laboratory. All sample
analysis results shall be submitted to the Department. Belmont Heights shallcontinue quarterly sampling until such time as the Department notifies Belmont
Heights in writing that quarterly sampling is no longer required.
Belmont Heights
Consent Order
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E:KHIBIT 1 PAGE 2 OF 4
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c. Uranium Mitigation Option. No later than July 1, 2008, Belmont Heights shall
complete the following mitigation strategy:
i. Enter into an agreement with an existing public water system for
interconnection and service, with a signed letter of agreement between
Belmont Heights and an existing public water system for interconnection
and service in accordance with IDAPA 58.01.08.542.d.
ii. Belmont Heights shall submit to the Department a letter from that
public water system stating that they wil be able to provide services to
Belmont Heights and the proposed date of interconnection.
ii. Interconnection and service shall be completed no later than
December 1, 2009.
5. Department Submittal Review Process. Unless otherwise set forth specifically
herein, the following document submittal and review process (Submittal Review
Process) shall be followed regarding submittals required by this Consent Order. This
process shall be followed until the Department approves the document or the document
review time frame has expired.
a. Within thirt (30) calendar days of receipt of Belmont Heights' submittal, the
Department shall 1) notify Belmont Heights in writing the document is approved; 2)
notify Belmont Heights in writing of any deficiencies in the document; or, 3) notif
Belmont Heights of the Depártment's extension of the Department's review and
comment period. If the Department notifies Belmont Heights of deficiencies in the
document, Belmont Heights shall submit a revised document to resolve those
deficiencies within thirty (30) calendar days of receipt of the Department's notice.
b. The Submittal Review Process shall be repeated until the Department
notifies Belmont Heights the document is approved. However, the submittal must
meet the Department's approval within sixty (60) days from the due date for the first
submittal of the document, unless the Department provides Belmont Heights with a
written extension of the sixt (60) day time frame. Belmont Heights' failure to obtain
Department approval of a submittal within such time frames shall constitute a
violation of this Consent Order.
c. Once the Department approves documents, they shall be incorporated herein
. and enforceable as a part of this Consent Order.
6. All communications required of Belmont Heights by this Consent Order shall be
addressed to:
Tiffany Floyd
Regional Drinking Water Manager
Department of Environmental Quality
Boise Regional Offce
1445 N. Orchard
Boise, Idaho 83706
Belmont Heights
Consent Order
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EXHIBIT i PAGE 3 OF 4
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7. All notices, reports and submittals required of the Department by this Consent
Order shall be addressed to:
Camile Cegnar
United Water Idaho
8248 West Victory Road
PO Box 190420
Boise, ID 83719-0420
8. This Consent Order shall not in any way relieve Belmont Heights from any obligation
to comply with any provision of the Idaho Rules for Public Drinking Water Systems, or any
applicable local, state, or federal laws.
9. Belmont Heights recognizes that failure to comply with the terms in this Consent
Order may result in district court action seeking specific penormance of this Consent
Order; assessment of costs and expenses; available penalties under Idaho Code §39-
108; restraining orders; injunctions; attorney fees; and other relief available by st~tute or
rule as the court considers to be just and reasonable under the circumstances.
10. This Consent Order shall remain in full force and effect until the Department
acknowledges in writing that the Consent Order is terminated and that Belmont Heights has
fulfilled all requirements of this Consent Order.
11. This Consent Order shall bind Belmont Heights, its successors and assigns, until
terminated in writing by the Department.
12. Each undersigned representative to this Consent Order certifies that he or she is
fully authorized to enter into the terms and conditions of this Consent Order, and to
execute and legally bind such part to this document.
13. The effective date of this Consent Order shall be the date of signature by the
Director of the Idaho Department of Environmental Quality.
DATED this S £! day of /J-AY7 ,2008.
.' fh
DATED this /? day of If''' ,:-~ "f
I
,2008.
ï//( ..By: / \ -'ì-.( "- ..
Toni Hardesty, Director
Department of Environmental Quality
Belmont Heights
Consent Order
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