20141205Reply Comments.pdf

McDevitt & Miller LLP REC[l\iF:i:
Lawyers
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Boise, rdaho 83202 uTlllrlE$ coi*il'ti'lutgn-i. b*l"ni,l*
Decembet 5,2014
Yia llaad Delivety
JeanJewell, Seceta4,
Idaho Public Utilities Commission
472W. Washington St.
Boise,Idaho 83720
Re: Case No LM-W-14-01
United Watet Idaho Inc. and Bdan Subdivision Water Usem Association
Deat Ms.Jewell:
Enclosed fot filing is an original aod seven (f copies of United Water Idaho Inc.'s Reply
Comments.
Kindly rcturn a stamped copy.
DJtut/tt,
Very Truly Youts,
ORIGINAL
Dean J. Miller (ISB No. 1968)
Chas. F. McDevitt (ISB No. 835)
Celeste K. Miller (ISB No. 2590)
McDEVITT & MILLER LLP
420 West Bannock Steet
P.O. Box 2564-83701
Boise, D 83702
Tel: [phone]
Fax [phone]
i oe(Dmcdevitt-mi11er. com
chas@mcdevitt-miller. com
ck@mcdevitt-mill er. com
Attorneyfor United Water ldaho Inc.
IN THE MATTER OF THE JOINT
APPLICATION OF UNITED WATER
IDAHO NC, AllD BRrAII SUBDMSTON
WATER USERS ASSOCIATION FOR
APPROVAL OF AN AMENDMENT TO
CERTIFICATE OF PUBLIC
COIYVENIENCE A}[D NECESSITY NO.
143; APPROVAL OF AN AGREEMENT
FOR CONNECTION AND TRANSFER OF
WATER SYSTEMS; APPROYAL OF
RATES AND CIIARGES
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Case No. [IWI-W-14-01
REPLY COMMENTS
COMES NOW United Water Idaho Inc., (United Water) and submits the following Reply
Comments in response to StaffComments dated November 25,2014.
Upon review of Staff Comments, United Water believes that Staff conducted a thorough
analysis of the proposal contained in the Joint Application of United Water and Brian
Subdivision Water Users Association (BSWUA). With small exceptions, explained below,
United Water concurs with Staff s Recommendations which are iternized on pages 10-11 of Staff
Comments.
REPLY COMMENTS- 1
In these Reply Comments, United Water identifies only a few items that would benefit
from clarification or minor revision of the Commission's Final Order. Those items are:
. Accounting treatrnent of investments;
. One-time payment by former BSWUA customers;
' Connection of customers not currentlymembers of BSWUA;
. Applicability of budget billing.
Accounting Treatment
Staff Comments endorse, in general, United Water's proposals that it be permitted to
continue recording an Allowance for Funds Used During Construction (AFUDC) after
completion of the project and that in United Water's next general rate proceeding the investment
be included in rates at its full amount, and not subject to the thirteen month averaging
methodology, if that methodology would otherwise apply. (Application, PB. 5). Staff Comments
describe this accounting treatment as follows (Staff Comments, Pg. 9):
r United Water will capitalize and defer these expenditures, subject to audit, in a separate
subaccount;
o After completion of the project all expenditures not collected by the surcharge will
continue to be subject to AFUDC until included in rates; and
o When this project is included in rates, it will not be subject to the thirteen-month average
methodology but will be included in rates for the full year.
After review of Staff Comments, United Water representatives conferred with Staff
representatives with a view toward more clearly understanding the intended accounting treatment
described in Staffls Comments. Based thereon, Staff and United Water reached corlmon
understanding that the Commission's Final Order describes the authorized accounting treatment
as follows:
REPLY COMMENTS- 2
United Water will record capitalized plant investments subject to audit in a separate
subaccount. To the extent they occur, non-capital related expenses associated with the project
are to be recorded in a separate deferred account for future consideration by the Commission.
All capitalizedproject construction expenditures not supported through revenue collected
from the surcharge will continue to be subject to AFUDC until included in rates. It was agreed
that this portion of the expenditures referred to the 90o/o of the trued up costs of the main line
installation to connect the systems.
When this project is included in rates, it will not be subject to the thirteen-month average
methodologybut will be included in rates for the fullyear.
One-Time Payment
In its Application and Testimony, United Water proposed that BSWUA customers who
wished to avoid monthly surcharge payments could elect a one-time lump sum payment, with the
election to be made within thirty days of connection. StaffComments recommend that customers
be provided the option to pay the present value of the remaining surcharge payments in a lump
sum at any time during the surcharge timeframe. (StaffComments, Pg. 8).
United Water's proposal for a limited election period was based on a concern that
unlimited election options would open the door to forty-six different customers each choosing a
different payment plan and imposing a burden on United Water in trying to administer multiple
plans.
While the administrative burden of unlimited election remains a concern, after conferring
with Commission Staff and BSWUA representatives, United Water will not object to a
requirement that former BSWUA customers be allowed to make a lump sum payment in the
amount of the present value of the remaining surcharge at any time during the surcharge period.
REPLYCOMMENTS-3
United Water still requests that BSWUA customers make their initial payment option election
(surcharge or present value lump sum) within thirty days of connection to United Water's
system.
Connection of Other Customers
As noted in StaffComments, there are two homes in the Brian Subdivision not connected
to the BSWUA system. In its Application and Testimony United Water proposed that, if in the
future, these customers desired to connect to the system as operated by United Water, the
customers would pay the costs of interconnection (if any) pursuant to United Water's Rules and
Regulations, but not pay the surcharge amount. The rationale for this proposal, in part, is that
when connecting a new customer United Water does not have authority to assess charges that are
not contained in its Rules and Regulations.
Staff Comments, however, recommend that if these customers desire to connect in the
future they should pay the surcharge for the remainder of the surcharge period or a lump sum for
the remaining paynents.
United Water adheres to its view that the surcharge, or some part thereof, should not be
assessed against these potential future customers. The surcharge amount to be assessed against
the existing BSWUA customers will be calculated so as to fully support the portion of costs
allocated to BSWUA customers.
Budget Billing
StaffComments recommend that former BSWUA customers be allowed to enroll in
United Water's Residential Budget Bill Plan. United Water does not object to this
recommendation and would make the Budget Bill Plan available to former BSWUA customers.
REPLY COMMENTS- 4
Staff Comments, however, go on to recommend that the Budget Bill amount be based on
calculations from Brian Water usage records (Staff Comments, Pg. 10). This aspect of StafPs
recommendation is impracticable and unfeasible. First, under United Water's Budget Bill
Program, the amount of budget bill payments is based on previous dollar amount of bills, not
usage. Staff s recommendations would require computing hypothetical bill amounts assuming
previous consumption levels priced at United Water rates. Second, it is possible that a customer's
consumption pattem under BSWUA rates will not be an accurate predictor of consumption
patterns under United Water rates. BSWUA rates, for example, do not include a summer-winter
differential similar to United Water's rate structure, and the summer-winter differential has been
shown to af[ect consumption habits.
Therefore, United Water recommends that former BSWUA customers be permitted to
enroll in the Budget Bill program, on the same terms applicable to all other United Water
customers. Those qualifications are spelled out in United Water's Rule No. 41, which requires a
customer to have a minimum of twelve months consecutive service, and that the budget pay
amount be the twelve-month average of the most current six-month bi-monthly bills.
Summary of United Water Recommendations
As noted, United Water concurs with Staff s general recommendation to approve the
proposed transaction. United Water, however, recommends that the Commission's Final Order
contain the foregoing provisions, which vary slightly from Staff s list of recommendations at
Pgs. 10-11 of Staff Comments.
Attached to StaffComments as Attachment 3, is a revised form of proposed tariff
Schedule 1C. United Water agrees that the Commission may approve the form of the proposed
Schedule, to be filed at the appropriate time.
REPLY COMMENTS- 5
Fully Submitted and BSWIIA Concurrence
The Commission's Notice of Application, Order No. 33154, set a reply deadline for
United Water of December 12,2A14. United Water is submitting these Reply Comments in
advance of that date to allow for prompt deliberation by the Commission. United Water
considers this matter to be fully submitted.
The undersigned is authorized to state that BSWUA concurs with these Reply Comments
and it also agrees the matter may be considered fully submitted.
DATED this \ day of Decemb er,2014.
I]NITED WATER IDAHO INC.
REPLY COMMENTS- 6
CERTIFICATE OX' SERVICE
Jean Jewell, Secretary
Idaho Public Utilities Commission
47 2 W est Washington Steet
P.O. Box 83720
Boise,lD 83720-0074
ij [e-mail]
Karl T. Klein
Deputy Attorney General
Idaho Public Utilities Commission
47 2 W est Washington Sheet
P.O. Box 83720
Boise,ID 83720-0074
[e-mail]. gov
I hereby certiff that on tA" ffAuy of Decenrb er,20l4,I caused to be served, via the
method(s) indicated below, true and correct copies of the foregoing document, upon:
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REPLY COMMENTS. T