20110928Comments.pdf

Jean Jewell
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satuthill~cableone. net
Monday, September 26, 2011 6:32 AM
Jean Jewell; Beverly Barker; Gene Fadness
PUC Comment Form
A Comment from Scott Tuthill follows:
Case Number: UWI-W-11-02
Name: Scott Tuthill
Address: 4403 Keldoon Ave
City: Boise
State: ID
Zip: 83702
Daytime Telephone: [phone]
Contact E-Mail: satuthill~cableone.net
Name of Utility Company : United Water of Idaho
Acknowledge: acknowledge
Please describe your comment briefly:
Once again I find myself writing to vigorously complain about a proposed United Water rate
increase. Less than two years after their last rate increase application, in a economic
period dubbed i The Great Recession i, I find it both shocking and audacious that they would
even think of applying for a rate increase, no less one for 20%. I would like to address the
two elements of their request. I will offer that I have lightly reviewed the 400+ pages of
testimony filed by United Water. I am not an expert on utility accounting and regulation nor
all the detail but I am very experienced in general business management in for profit
organizations. I know this is long, though relative to the testimony submitted it is not. I
am willing to spend time to talk with and/or attend meetings as needed to further present my
points.
On the first element of their request, what is truly amazing is that 38% of their request is
tied to a reduction in water usage by their customers. Let me address this first in a
rational way and then with an emotional perspective.
Rationally, based on testimony, this trend has been going on since 2003 with a reduction in
Average Consumption per Metered Customer of 22.7% during that period. Based on a review of
the closed case files on the IPUC web site during this same period of time United Water was
granted three rate increases for a compounded rate increase of 39.5%. (UWI-W-04-4 = 7.68%,
UWI-W-06-02 = 17.91%, and UWI-W-09-01=9.9%). The requested 20% increase would mean United
Water rates would increase by a compounded 67% since 2003 against this 22.7% reduction in
usage per customer. Something is not right i f it takes this much price inflation to make
their financials work. Since this trend is both material to their request and seemingly will
continue I would not authorize any consumption based rate increase until United Water
produces a long term plan that convincingly demonstrates how they intend to manage their
business in the face of this consumption trend. This topic has to be addressed and was also
identified by Herbert in his testimony.
Now, on the emotional basis, I don i t know if the United Water team is either incredibly
arrogant or incredibly out of touch with reality to make this request. If you review their
web site, their mailings, and other customer communications they have consistently preached
for more efficient water usage and supported water conservation efforts. Their 2009 Annual
Conversation Guide even states on the title page: i Cut Your Water Bill with Efficient
Landscaping Tips i The IPUC even has i Water Conservation Tips from United Water Idaho i as a
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link on your web site. Now they in effect are saying: 'Well we really didn i t mean that, and
now that you have cut your water usage like we asked and educated we have to raise rates so
we get the same revenue'. To relate to the prior paragraph did this consumption drop catch
United Water by surprise? Why didn't they have it worked into their plans years ago?
Additionally, looking forward, to continue this communication hypocrisy would be tragic. 'The
real truth i needs to be communicated.
Stepping back a bit to look at the big picture, when does United Water actually have to be
responsible for managing a business? This application suggest that they not are in touch with
the economy and financial state of their customers. Where have they done anything to keep
rates and prices down - - like virtually every other business and local government entity in
this country? Wyatt's testimony identifies an efficiency measure - Number of Customers per
employee. On this metric their performance has degraded by 6% since 2007 and they are a level
below 2003. I would expect that given the long term drop in consumption from 2003 that United
Water management would put substantial effort into efficiency improvements. But they are
going in the wrong direction. Additionally, Wyatt i s argument that their absolute level is
'well in excess of the average i is inaccurate and misleading as United Water is only
including local employees in their calculation. For an equivalent comparison to other
regulated companies they need to include a pro- ration of employees within the rest of United
Waterworks, Inc. and Suez Environment.
The second element of their request is once again tied to the argument 'We made all this
investment so now we need to increase rates to generate our return from it'. I understand
from the last time I commented on a rate increase this is in fact the legally arranged model
- - so I will offer comments wi thin that:
* I still claim United Water has no motivation to manage capital projects in an cost
efficient manner. In fact if they spend more, they then earn more based on their guaranteed
return. From what I understand there is no pre-approval of their capital spending nor
independent verification of its need or cost. This model is never going to lead to
responsible behavior from a for- profi t company. Never. For instance why, in the face of the
long term decline consumption per customer do they continue to invest in infrastructure? As
identi fied in Ahern's testimony United Water has $6.50 of capital per $1.00 in revenue which
is 70% higher than the water industry average of $3.83. At a very high level their business
structure appears inefficient in its capital deployment. Until this inefficiency is
convincingly addressed by the Company I would not grant any more rate increases.
* I am aware of the Hill Road project as this is in my area of Boise. Does it really take
three years to put in 1.7 miles of water main? This seems as bad as the 12 months it took to
build one building across the street from my house back in 2008/2009. I am not a construction
expert but in these cases simple observation seems to suggest something is wrong.
* I am not sure if Ahern's testimony also means that another increase in United Water's
Authorized ROE is again being considered from 10.4% to 10.5%. I would again caution granting
this in the face of the current and future economic outlook where everyone agrees low debt
costs will exist well into the future and historic measures of return are likely inaccurate
as the world adjusts to a 'New Normal'. Additionally it is worth noting that United Water's
average ROE for the 5 year period 2006-2010 at 7.72% is higher than the 7.51% in the
comparison proxy group of companies used in Ahern i s work. United Water is already making more
than their comparison peers. And, I did not see in Ahern i s testimony if she also provided a
comparison on Authorized Rates of Return in addition to her other work.
* To me '... replacing water mains, service lines, and meters... i sounds like maintenance and
not an increase in their capital base. Does spending on this also become a basis for a rate
increase? It would seem that wear and tear and maintenance should be paid for out of their
ongoing revenue stream.
* One glaring area of expense issues is relative to the $5. 5M spending on the new customer
information system. As I understand from the Hawthorne and Doherty testimony this is an
initiative across all of United Waterworks and the $5.5M is United Water of Idaho's
allocation. The Hawthorne testimony may be compelling in demonstrating the case for change
but nowhere in his testimony does he address the affordabili ty nor financial benefits and
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return of this system. This examination and study has to be part of any professional IT
planning process. Wyatt i s letter to customers says it will i... improve transactions with
customers and service calls... i but his testimony also states they have very high customer
satisfaction in this area today. They are spending money to fix something that is not broken.
Returning to the financial aspects spending $S. SM on a cis system for a $38M revenue business
is well beyond reason for any IT spending benchmarks I referenced. A Gartner Group 2009 study
indicated total IT spending was 4.1% of company revenue. An earlier PWC study in 2007 across
20 different industries showed total IT spending was 3.1% of company revenue with Utilities
on average lower than that. This cis application development alone is 14% of annual revenue.
As another comparison the City of Boise's overall 2011 budget was for $344M in spending. Of
this budget $6. 2M was for IT in total and of that $2. SM is related to application
development. This corresponds to 1.8% and 0.7% respectively of their total spending. When
looked at relative to these benchmarks United Water's new cis system appears extravagant and
bloated and i don i t feel I should have to pay for it. Spending this amount is ludicrous for
a company of this size.
My question to the IPUC is 'Do you have the processes and authority to perform your role i ? i
understand that by state law you cannot refuse to consider this rate increase request. But my
sense is this is a situation where we have both a utility out of control and where there is
not the proper financial control system in place to get them under control. As the IPUC I see
it as your responsibility to excel and look out after citizens in both areas. If i remember
in 2009 you granted United Water an increase in their authorized rate of return. At the time
this was questionable and in hindsight it was, in my opinion, a mistake to grant them this.
As a question to you, given current and long term forecasted financial conditions of
historically low capital costs, how do we reduce this rate? Certainly United Water is not
going to request it. Also, given the important tie between capital spending, ROE, and rates,
how can you put in place some sort of oversight and approval process to authorize their
capital spending BEFORE it becomes part of their asset base for which they are authorized a
return. This appears to be the single largest process gap.
Finally , with respect to looking out for citizens help me understand the process you go
though. From what i can see United Water filed for their rate increase on August 3rd and
submitted 400+ pages of testimony at that time. i am not sure if this was a transcript of
Ii ve testimony or was based on prepared questions from you or even United Water themselves.
Per IPUC memos and press releases you allowed i Interested Parties' a deadline of September 1
to file as 'intervenor' status. Yet, I like almost all customers, did not find out about the
proposed rate increase until we received our United Water bills well into September. How can
this timeline provide a due process to normal rate paying citizens? I do give the IPUC credit
for delaying the implementation of the rate increase beyond the Sept 2 United Water request,
but there is just something wrong in this whole model. It would seem like the intervenor
filing process has to provide for some meaningful period after customers are notified by
United Water. I will conjecture that some notice might have been placed in local papers and
this is a acceptable notification method. But with the long term drop in newspaper
circulation this method is no longer sufficient and will not create a due process situation.
Changes need to be made to reflect the current electronic methods of i Push i communications.
It is my expectation as well that the IPUC would take leadership in this area.
Thanks for the opportunity to comment and if there is anything else I can provide I would be
glad to.
Scott Tuthill
satuthill~cableone. net
4403 Keldoon Ave, Boise, ID 83702
The form submitted on http://www. puc. idaho.gov/forms/ipuc1/ipuc. html
IP address is 24.119.36.72
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Jean Jewell
From:
Sent:
To:
Subject:
rlesslee~hotmail.com
Friday, September 23, 2011 11 :34 AM
Jean Jewell; Beverly Barker; Gene Fadness
PUC Comment Form
A Comment from Rod Leslie follows:
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Case Number: llLJ-w-II-O~
Name: Rod Leslie
Address: 11108 Powderhorn St.
City: Boise
State: ID
Zip: 83713
Daytime Telephone:
Contact E-Mail: rlessleeehotmail.com
Name of Utility Company : United Water
Acknowledge: acknowledge
Please describe your comment briefly:
I am opposed to the requested rate increase. To ask for higher rates because people are
being more conservative with water use is a slap in the face to all the users who complied
wi th your request.
Also in this economy I don't think it's right to increase rates that will affect the poor
and those on fixed incomes the most.
Thank You!
Rod Leslie
The form submitted on http://www . puc. idaho .gov/forms/ipuc1/ipuc. html
IP address is 71.37.164.6
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Jean Jewell
From:
Sent:
To:
Subject:
posborn~cableone. net
Friday, September 23, 2011 7:49 AM
Jean Jewell; Beverly Barker; Gene Fadness
PUC Comment Form
A Comment from P A Osborn follows:
Case Number: UWI-11-02
Name: P A Osborn
Address: 3362 N Gawaine Place
City: Boise
State: Idaho
Zip: 83704
Daytime Telephone:
Contact E-Mail: posbornecableone.net
Name of Utility Company: United Water
Acknowledge: acknowledge
Please describe your comment briefly:
This comment is to oppose the request by United Water for a general rate increase. As they
have stated in the letter sent with the billing, they received a two phase increase last
year.
United Water has a monopoly on the water supply, so IPUC
annual 20% increase. As they are continually advertising,
can to decrease consumption and keep our water costs down.
should be penalized to keep their profit margin from going
hardship for those on a fixed or low income.
Please do not grant this price increase.
Thank you for the opportunity to comment.
is our only recourse to oppose an
most of us are doing everything we
I don i t think the general public
down - price increases cause a
The form submitted on http://www.puc.idaho.gov/forms/ipuc1/ipuc.html
IP address is 96.18.192.4
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Jean Jewell
From:
Sent:
To:
Subject:
kimtpinkerton~gmail.com
Monday, September 26, 2011 5:02 AM
Jean Jewell; Beverly Barker; Gene Fadness
PUC Comment Form
A Comment from Kim Pinkerton follows:
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Case Number: UWI-W-11-02
Name: Kim Pinkerton
Address:
City: Boise
State: ID
Zip:
Daytime Telephone:
Contact E-Mail: kimtpinkertonegmail.com
Name of Utility Company : United Water Idaho
Acknowledge: acknowledge
Please describe your comment briefly:
As a customer of United Water Idaho and a believer in conservative water consumption, I am
disturbed by the fact that our rates may increase in large part because of the reduction in
the company's revenue due to the decrease in volume. We should be rewarded for finding ways
to conserve water within our properties and not penalized by having our rates increased
because we have. This is wrong.
The form submitted on http://www . puc. idaho. gov /forms/ipuc1/ipuc. html
IP address is 96.18.106.139
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Jean Jewell
From:
Sent:
To:
Subject:
Snowbunny~sunvalley. net
Tuesday, September 27, 2011 4: 1 0 AM
Jean Jewell; Beverly Barker; Gene Fadness
PUC Comment Form
A Comment from Brent Nelson follows:
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Case Number: UWI.-w/II~o;)
Name: Brent Nelson
Address:
City: Boise
State: ID
Zip: 83702
Daytime Telephone:
Contact E-Mail: Snowbunnyesunvalley.net
Name of Utility Company: United Water
Acknowledge: acknowledge
Please describe your comment briefly:
I feel the requested rate increase should be denied.
As a customer we are asked to conserve water and when we do you want to raise our rates to
make up for lost revenue. This is just one of the problems with a private company running our
water system. United Water already receives a customer fee that seems high. Maybe the company
should have maintained the system better over the years and all this work would not be
necessary all at once. We have become more efficient with our water use now United water
needs to be more efficient with resources they are paid.
The form submitted on http://www . puc. idaho. gov /forms/ipuc1/ipuc. html
IP address is 216.201.66.237
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