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HomeMy WebLinkAbout20090903Rhead Direct.pdf.RECEIVED DeanJ. Miller (lSB #1968) McDEVITT & MILLER LLP 2009 SEP -3 PM 3: 54 420 West Banock Stret P.O. Box 2564-83701 Boise, ID 83702 Tel: 208.343.7500 Fax: 208.336.6912 joe~cdevitt-miller.com ,AL',~ t)l ~;~j¡t l.r'Ìt\ D l\¡ i\..l _ t ,.. rJt-.. i, .,~~ _ "" ;I,"", 1;'. UTILITIES COt,~M¡~f;¡Ii.I, Attorneys for Applicant BEFORE TH IDAHO PUBLIC UTILITIES COMMSSION IN TH MATTR OF TH APPLICATION OF UNED WATER IDAHO INC. FOR AUTHORITY TO INCREASE ITS RATES Case No. UW-W-09-01 AN CHAGES FOR WATER SERVICE IN THE STATE OF IDAHO .BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION DIRCT TESTIMONY OF SCOTT RHEAD . OR1G\NAL . 10 11 12.13 14 15 16 17 18 19 20 21 22 . 1 Q. 2 A. 3 Q. 4 A. 5 6 7 8 9 Please state your name. Scott Rhead. By whom are you employed and in what capacity? United Water Idaho ("United Water" or "Company") as Director of Engineering. Q.What are your duties and responsibilties in your capacity as Director of Engineering? A.I manage all activities of the Engineering group. These responsibilties include strategic planng, capital budgeting, engineering design, information technology, water quaity, and constrction management for capita improvements. Q.Please describe your professional traing and experience. A.I received a Bachelor of Science Degree in Civil Engineering from Idaho State University in 1972. I was employed by Forsgren Consulting Engineering from 1975 to 1990 designing and managing a varety of water and waste water muncipal improvement projects. I joined United Water in 1990. Since then I have had diversified responsibilties in both Engineering and Production deparents. I am a registered professional engineer in Idaho, Oregon, Washington, Utah and New Mexico. I am also a certified Idaho Water Treatment Operator Level I and Distribution Operator Level IV. Q.What is the purose of your testimony? A.I will discuss these topics: Rhead, Di 1 United Water Idao Inc. .1 .Pro forma adjustments in the test year to recognize investments in plant in 2 service though December 31, 2009. 3 .Explanation of the purchased water expense adjustment as it relates to 4 drought protection, weather conditions, and salon flow augmentation. 5 Q.Since the last proceeding has the Company continued to invest in utility plant 6 in servce? 7 A.Yes. The Company continues to provide new and replacement utilty plant 8 in all areas of the business including source of supply, water treatment, 9 pumping, transmission and distribution mais, distrbution storage, customer 10 service lines, customer meters, information technology, and general plant. 11 Q.Are the plant in service additions used and useful in providing service to the.12 Company's customers? 13 A.Yes, in my opinion they are. 14 Pro Forma Additions and Retirements 15 Q.Can you now discuss, in general terms, the capital additions planed to be 16 placed in servce from May 31, 2009 though December 31, 2009? 17 A.Yes.The plant additions for this time period are detaled in the attched 18 Exhbit NO.4 page 1 though 2. Examples of these capita additions include 19 customer services, meters, pumping equipment, new and replacement mains, 20 control equipment, facilty improvements, and securty upgrades. 21 Q.Are there some specific clarfications or explanations related to retirements 22 and fixed asset system adjustments on Exhbit NO.4? 23 A.Yes. I will clarfy each below.. Rhead, Di 2 United Water Idao Inc. .1 .C08C301 Auxilar Power at Belmont ($60,087) is being removed from 2 plant in service due to system sale to the City of Nampa. 3 .R09D901 Business Park No. 4 ($94,534) is being retired from plant in 4 service due to developer decision to abandon 925' of 12" PVC and re-instal 5 at a later date. 6 .C08J502 Replacement Laptops ($5,200), C08KI03 Commercial General 7 Plant ($3,022) and C08K702 Replace Securty Equipment ($4,500) are all 8 being retired from plant in service which was missed in 2008. 9 .Fixed asset system adjustments to previously closed projects ($60,232) is 10 being removed from plant in service due to an over allocation in AFUDC 11 charged to several projects in the last few years..12 Q.Wil these plant additions be in service by the end of the pro forma period? 13 A.Yes. These items are ongoing and planed for completion by the end of the 14 pro forma period. 15 Q.Wil the plant additions shown on Exhbit No. 4 be used and useful in 16 providing servce to the Company's customers? 17 A.Yes, in my opinion they will. 18 Purchased Water Expense 19 Q.Please discuss the basis for United Water's purchased water expense in the 20 pro forma amount of $168,854 as shown on Exhibit 11 Sumar of Witness 21 Loy testimony. 22 A.The anual cost for surace water is related to multiple factors.The primar.23 factor in establishing an anua cost is balancing the use of short term renta Rhead, Di 3 United Water Idao Inc. .1 2 3 4 5 6 7 10 11.12 13 14 15 16 17 18 19 20 21 22 23. 8 9 pool water when available versus longer term storage contracts between the Bureau of Reclamation (BOR) and the Company. Ths in tu is diectly related to the snow pack or moistue conditions for any given year. Anual purchased water ha ranged from approximately $186,000 to $122,000 durng the period from 2004-2009. The Company believes the most prudent policy is to rent or lease water at a lower cost when available and preserve the more reliable storage space for drought protection when renta water is unavailable or becomes extremely costly due to limited availabilty. It should be noted that the BOR contract payments for 2,100 acre feet must be made even if the water is not used in any given year. These contracts are shown in Exhbit NO.5 identified by a double asterisk (**). Q.Are there other varable factors in predicting purchased water expense? A.Yes, specifically related to the Snake River exchange credit. This credit is shown in Exhbit NO.5 identified by a single asterisk (*). Q.Can you clarfy how ths credit is administered by the Boise River Water Master? A.Yes. The Company owns 2 natual flow surface water rights (Wilson and Initial Butte) in the Snake River. The BOR also own surace water rights in the Snake and Boise Rivers. Durng early sumer each year the BOR uses their rights to augment or increase the natual in-stream flow in both rivers to aid the salmon smolt in their jourey to the Pacific Ocean. The Company obtaned a transfer exchange agreement with Idaho Deparent of Water Resources (IDWR) and BOR that allows the Company to divert surface Rhead, Di 4 United Water Idaho Inc. . 10 11 12.13 14 15 16 17 18 19 20 21 22 . 1 2 3 4 5 6 7 8 A. 9 A. water from the Boise River durng ths flow augmentation period in exchange for not diverting water it owns in the Snake River. Ths exchange provides enough water each day for both the Columbia and Marden Water Treatment Plants to operate completely on natual flow durng ths approximate 60 day augmentation period. The Boise River Water Master records ths exchange for both the Company and the BOR. Q.How does this exchange credit affect anua purchased water expense? Durng ths augmentation period (typically May 20th-June 20th) the Company's two surace water plants operate using natural flow, therefore no purchased water costs are incured. The exchange credit has vared from approximately 2;500 acre feet to 3,500 acre feet depending on lengt of season and up-stream availabilty. This varabilty in anua exchage credit in tu affects how much water must be rented after the salon augmentation period. Q.Please more fully explain what is depicted on Exhibit NO.5. In order to meet potential peak day sumer demands, the Company must acquire between 12,000 to 13,000 acre feet of surace water to operate the Columbia and Marden Water treatment plants. As explaied above, there are a number of options for acquirg that necessar surace water. Each year it is my responsibilty to assemble a least-cost portfolio of surace water resources for operation of the treatment plants. Exhibit No. 5 represents the portfolio of resources that must be available to meet anticipated demand. Rhead, Di 5 United Water Idao Inc. .1 Q.Do you believe $168,854, as depicted on Exhbit No. 5 is a reasonable 2 allowance for purchased water expense for rate makg purses? 3 A.Yes.Based on my experience in acquiring surace water to meet potential 4 demand, I believe it is. 5 Q.Does ths conclude your testimony? 6 A.Yes. . . Rhead, Di 6 United Water Idao Inc. . . Un i t e d W a t e r I d a h o Pr o F o r m a P e r i o d P l a n t A d d i t i o n s a n d R e t i r e m e n t s Ju n e 1 , 2 0 0 9 t o D e c e m b e r 3 1 , 2 0 0 9 In Fo r e c a s t Se r v i c e Fo r e c a s t Fo r e c a s t Co s t o f Fo r e c a s t Pr o j e c t I D Pr o j e c t T i t l e Da t e Ad d i t i o n s Re t i r e m e n t s Re m o v a l Sa l v a g e So u r c e o f S u p p l y C0 9 A O O I 0 6 1 Wa t e r R i g h t s - Ma r - 0 9 94 , 6 0 0 C0 9 A 0 0 6 0 6 0 Or e g o n T r a i l W e l l A q u i f e r S t o r a g e & R e c o v e r y Ma r - 0 9 17 , 4 2 5 C0 9 A 0 0 7 0 6 0 Ma r k e t W e l l A q u i f e r S t o r a g e & R e c o v e r y Ju n - 0 9 56 , 7 0 6 C0 9 A 0 0 8 0 6 0 No r t h A d a W a t e r S u p p l y S t u d y Au g - 0 9 57 , 2 6 2 Su b t o t a l s 22 5 , 9 9 2 0 0 0 Tr e a t m e n t C0 9 B 0 0 2 0 6 0 PE R C S t u d y B e t h e l / F i s k Au g - 0 9 46 , 1 6 3 C0 9 B 5 0 1 0 6 0 Re p l a c e C h l o r i n a t i o n E q u i p m e n t Ju n - 0 9 71 , 0 3 7 11 , 3 7 0 28 0 C0 9 B 5 0 2 0 6 0 Re p l a c e T r e a t m e n t E q u i p m e n t Ju n - 0 9 42 , 6 3 1 30 , 0 0 0 1, 0 0 0 C0 9 B 5 0 3 0 6 0 Ch l o r i n e R e s i d u a l A n a l y z e r s Se p - 0 9 5, 1 0 0 Su b t o t a l s 16 4 , 9 3 1 41 , 3 7 0 1, 2 8 0 0 Pu m p i n g P l a n t C0 7 C 5 0 5 0 6 0 Re p l a c e H i d d e n H o l l o w D i s c h a r g e l i n e No v - 0 9 32 , 1 0 3 C0 8 C O O I 0 6 0 Pu m p S t a t i o n C o o l i n g S y s t e m s Ju n - 0 9 74 , 7 4 4 C0 8 C 3 0 1 0 6 0 Au x . 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