20150410Application.pdf

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McDevitt & Miller LLP
Lawyem
420 West Bannock Steet
P.O. Box 25&-83701
Boise,Idaho 83702
April 10,2015
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, I1iLt'[,efra!. f. ttcOttitt
DeanJ. floe) Millet
Celeste I( Millet
Via l{andDelivety
Jean Jewell, Secretary
Idaho Public Utilities Commission
472W. Washington St.
Boise,Idaho 83720
Re: Case No LI\fl-W-15-02
Dear Ms.Jewell:
Enclosed for filing please find an otigiflal and seven fl) copies of United Watet Idaho Inc.'s and City
of Boise's Application and Request fot Modified Ptocedue.
Also enclosed are the original and nine (9) copies of the Testimony of Gregory P. \(yatt and Neal
Oldemeyer. One copy of each of these Testimonies has been designated as the "Reportet's Copy."
In addition, a disk containing MS rU7ord vetsions of the Testimonies is enclosed fot the Reporter.
If you have any questions, please do not hesitate to contact me.
Kindly returo a stamped copy.
Very Truly Yours,
McDevitt & Miller IIP
DJM/r,l
ORIGINAL
Dean J. Miller (ISB No. 1968)
Chas. F. McDevitt (ISB No. 835)
Celeste K. Miller (ISB No. 2590)
MoDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564-83701
Boise, D 83702
Tel: [phone]
Fax: [phone]
j oe@mcdevitt-miller. com
chas@mcdevitt-miller. com
[e-mail]
Attorneyfor United Water ldaho Inc.
Douglas K. Strickling (ISB No. 3230)
BOISE CITY ATTORNEY'S OFFICE
P.O. Box 500-83701
I50 North Capitol Boulevard
Boise,Idaho 83702
Tel: [phone]
Fax: [phone]
dstricklin g@ cityofboi se. org
Attorneyfor City of Boise
IN THE MATTER OF THE JOINT
APPLICATION OF UNITED WATER
IDAHO [NC., AND THE CITY OF BOISE,
IDAHO FOR APPROVAL OF AN
AGREEMENT FOR REPLACEMENT AND
OPERATION OF FIRE HYDRANTS AND
RELATED RATE MAKING TREATMENT
iir t- I
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
liji,,'i- l.l i
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Case No. UWI-W-15-02
APPLICATION AND REQUEST
FOR MODIFIED PROCEDURE
COME NOW United Water Idaho Inc., ("United Water") and the City of Boise, Idaho
("Boise"), pursuant to RP 52. et. Seq, and apply to the Commission for the issuance of the Orders
requested herein, and in support thereof, respectfully show as follows, to wit:
APPLICATION and REQUEST FOR MODIFIED PROCEDURE - I
PARTIES
1. United Water is a water corporation within the meaning of the Idaho Public
Utility Law and is subject to the jurisdiction of the Commission. For over a hundred years
United Water, and its predecessors, has provided domestic water within the City of Boise and
surrounding areas of Ada County, Idaho. It's Certificate of Public Convenience and Necessity,
on file with the Commission, is 146, as amended.
2. Boise is a municipal corporation organized under the laws of the State of Idaho
with authority to provide the health, safety and welfare of its citizens. Boise has the statutory
authority to franchise and contract with water utility providers operating within the City of
Boise.
FACTUAL BACKGROUND
3. Boise owns, operates and maintains approximately 6,700 fire hydrants within its
municipal boundaries. United Water provides water in sufficient pressures to activate the fire
hydrants in the event of a fire emergency.
4. As explained in the accompanying Direct Testimony of Boise's Director of Public
Works, Mr. Neal Oldemeyer, the arrangement described above is an anomaly in Idaho. In the
normal circumstance, the entity that provides water for fire suppression also owns, operates and
maintains the associated fire hydrants. This anomalous relationship has existed for many years
and neither Boise nor United Water has been able to find historical documents explaining the
origins of the arrangement.
APPLICATION and REQUEST FOR MODIFIED PROCEDURE - 2
THE AGREEMENT
5. Boise and United Water have entered into anAgreementfor Replacement and
Operation of Fire Hydrants ("Agreement") a true and correct copy of which is attached hereto as
Exhibit 1.
6. Pursuant to the Agreement, United Water will, over a period of years, assume
ownership and operation of fire hydrants within the Boise municipal limits. More specifically, in
each calendar year Boise will identifu existing hydrants that are approaching the end of their
useful life. United Water will then install replacement hydrants, thereafter operate, and maintain
the replacement hydrants.
7. The replacement cycle is based on an assumed useful life of fire hydrants of forty
(40) years. The parties estimate that in each calendar year on average approximately 168 fire
hydrants will be replaced. United Water estimates that its initial annual capital investment in
replacement fire hydrants will be $765,000.
8. The obligation of the parties to perform the terms of the Agreement is contingent
upon approval by the Commission, including approval of United Water's proposal for rate
making treatment of its investment in replacement hydrants, which is set forth below.
RATIONALE FOR THE AGREEMENT
9. The accompanylng direct testimony ofNeal Oldemeyer explains the rationale for
the Agreernent, which is generally to provide operations consistent with other communities in the
state; to create equity among taxpayers and ratepayers; to make available capital funding for fire
protection infrastructure and other essential services; to conform with the intent of the franchise
agreement; and to vest ownership of the hydrants with the entity that owns the infrastructure
connected to the hydrants with the experience and expertise to maintain them.
APPLICATION and REQUEST FOR MODIFIED PROCEDURE - 3
PROPOSED RATE MAKING TREATMENT
10. United Water requests a determination by the Commission that the invesffnents
incurred in conformity with the Agreernent are prudently incurred and that the Commission
provide an assurance that they will be fully included in rate base (not l3-month averaged) and in
rates in United Water's subsequent general rate proceedings over the life of the Agreement.
United Water proposes the Commission allow the Company to continue the calculation and
accrual of post-closing AFUDC on the investments anticipated by the Agreement until such time
as those investments are fully accounted for and included in rates in subsequent general rate case
determinations over the life of the Agreement.
I l. The rationale for these requested treatments is explained in the accompanying
Direct Testimony of Gregory P. Wyatt.
12. United Water estimates that the annual revenue requirement associated with the
initial capital investment in fire hydrants of approximately $765,000, when included in rates, will
equate to approximately $l .45 per customer, or about $0.24 a bill.
REQUEST FOR MODIFIED PROCEDURE
13. Boise and United Water do not believe a hearing is necessary to consider the
matters presented herein and request that this Application be processed by Modified Procedure.
If, however, the Commission determines a hearing is required, Boise and United Water are
prepared for immediate hearing, based on the direct testimonies accompanying this Application.
PRAYER FOR RELIEF
WHEREFORE, United Water and Boise respectfully request that:
The Commission enter its Order approving Modified Procedure;
That the Commission enter its Order approving the Agreernent;
1.
2.
APPLICATION and REQUEST FOR MODIFIED PROCEDURE - 4
That the Commission enter its Order approving the rate making freatment proposed
herein;
That the Commission enter its Order granting such other and further relief as is
appropriate in the circumstance.
DATED this IU day of Apri1,20l5.
UNITED WATER IDAHO INC.
Attorney for Applicant United Water
THE CITY OF BOISE, IDAHO
Attomey for Applicant City
3.
4.
APPLICATION and REQIIEST FORMODIFIED PROCEDITRE - 5
ffiTlffix TO ClrY ffi^ffii(
gt,/-1,/
AGREEMENT FOR REPLACEMENT AND OPERATION OF FIRE IIYDRANTS
BETWEEN
I.'NITED WATER IDAHO INC.
AI{D
THE CITY OF BOISE
EXHIBIT 1
Page 1 of10
TABLE OF CONTENTS
RECITALS ........ I
I. AGREEMENT FOR REPLACEMENT AND OPERATION
2. CONDITION PRECEDENT ........................ 4
3. REPRESENTATIONS, WARRANTIES AIYD COVENAI\ITS OF LINITEI)WATER. ................4
4. REPRESENTATIONS, WARRANTIES AI{D COVENAI{TS OF BOISEWATER. ................5
5. DTSPUTE RESOLUrION............ ................5
6. TERM....
EXHIBIT 1
Page 2 of 10
TABLE OF CONTENT$I
AGREEMENT FOR REPLACEMENT AI{D OPERATION OF FIRE IIYDRANTS
THIS AGREEMENT FOR REPLACEMENT A}.ID OPERATION OF FIRE
HYDRANTS (Agreement) is made by and among UNITED WATER IDAHO INC., an Idaho
corporation (hereinafter referred to as "United Water") and THE CITY OF BOISE, an Idaho
municipal corporation, (hereinafter referred to as "Boise").
RECITALS
A. Boise owns, operates and maintains approximately 6,400 fire hydrants
("Hydrants") with associated valves and pipes within its municipal limits.
B. United Water owns operates, operates and maintains fire hydrants in Ada County
and other Ada County municipalities outside of Boise.
C. Boise and United Water believe Untied Water has the experience and resources as
the primary water provider to Boise citizens to own, operate and maintain fire
hydrants within Boise.
D. ln order to improve fire hydrant maintenance and utilize United Water's
experience, Boise desires to transfer over a period of years the ownership,
operation and maintenance of the Hydrants to United Water on an "as replaced"
basis.
E. Contingent upon requisite approval by the Idaho Public Utilities Commission
("Commission") United Water desires to assume ownership operation and
maintenance of the Hydrants.
F. Boise has historically followed 40-year Hydrant replacement schedules.
G. On April 11, 1995, Boise adopted Ordinance No. 5623 granting to United Water a
franchise to operate a water utility system within its boundaries (Franchise
Agreement).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and of the terms,
conditions and mutual covenants herein set forth, the parties hereto mutually covenant and agree
as follows:
1. AGREEMENT FOR REPLACEMENT AIVD OPERATION
Boise agrees to transfer and convey the Hydrants, and United Water agrees to assume
ownership and responsibility for the Hydrants subject to and upon each of the terms and
conditions hereinafter set forth:
AGREEMENT FOR RDPLACEMENT AND OPERATION OF FIRE IIYDRANTS.I
EXHIBIT 1
Page 3 of 10
Identification of Hvdrants to be Replaced. ln each calendar year, commencing
with the year this Agreement becomes effective, Boise shall identifu those
Hydrants that are near the end of their useful life and are scheduled for
replacement, which schedule assumes a 4O-year Hydrant life. To the degree it can
be accomplished, the Hydrants identified for replacement shall be located in
common geographical areas. Boise shall provide to United Water all available
fire Hydrant locations and maintenance records appropriate to the identified
Hydrants. This Agreement shall not apply to hydrants located within Boise
municipal limits but in areas not served by United Water.
Replacement of Identifled Existlns Hvdrants.. Thereupon, United Water, at its
cost and expense, shall install replacement Hydrants, which may include isolation
valves and pipe extending from main lines. United Water may accomplish the
Hydrant replacements using its own forces or an outside contractor. All
replacement Hydrants, valves, and pipe, or those valves and pipes remaining in
place if only a hydrant is replaced, shall become the sole property of United
Water. Hydrant replacements shall occur in accordance with an efficient work
plan as established by United Water throughout the calendar year. All old
hydrants along with pipe, pipefittings and valves no longer in use shall remain the
property of Boise and shall be hauled by Boise or the replacement contractor to a
location designated by Boise.
Hvdrant Specificatio.+q, The hydrants to be installed by United Water shall be
Waterous Pacer Model No. WB67-250, red body, yellow nozzle cap, or
equivalent successor model. This specification shall also apply in areas of new
development such as new sub-divisions and infill projects.
Installation of Hvdrants in Areas of New Development. Within Boise City
limits, United Water shall install operate and maintain new Hydrants with
associated valves and lateral pipes in areas ofnew development and as required to
be installed by roadway improvements and fill-in development. United Water will
provide Boise with all new Hydrant locations within 45 days of the Hydrants
becoming operational, sooner if possible. The location information shall be
mapped by United Water using GPS and GIS technologies, and the Hydrants shall
be numbered based on specifications by United Water. Hydrant location
information shall be provided to the Boise GIS Coordinator and the Boise Fire
Logistics Division Chief.
Liabilitv. United Water assumes no responsibility or liability for any Hydrant
that it has not installed.
(a)
(b)
(c)
(d)
(e)
EXHIBIT 1
Page 4 of 10
AGREEMENT FOR REPLACEMENT AI\ID OPERATION OF FIRE HYDRANTS-2
Maintenance of Installed Hvdrants. Thereafter, United Water shall maintain
installed Hydrants in accordance good utility practice and American Water
Wo*s Association Manual Ml7 Installation, Field Testing, and Maintenance of
Fire Hydrants or its successor, and shall include:
(i) Opening fully and closing of the Hydrant one (l) time per year at
approximately equal intervals ;
(ii) Periodic painting as required to minimize rust and maintain a neat, clean
appearance;
(iiD Replacement Hydrants within Boise shall be painted red with yellow caps
for visibility and standardization;
(iv) Lubrication andlor replacement parts as necessary to maintain fire
protection fu nctionality; and
(v) Recording of the required maintenance in United Water's maintenance
tracking system, capable of being reviewed by Boise City as requested;
(vi) After coordinating with United Water, Boise may perform annual
operational checks on up to five percent (5%) of the United Water
hydrants to determine if additional maintenance may be required;
(vii) United Water shall notify the Boise Fire Department if Hydrants will be
out-of-service and again when the Hydrants are placed back into service.
Municinal Code Enforcement. United Water shall have no obligation to enforce
the provisions of Boise's municipal codes and Boise shall be responsible for the
enforcement of its municipal code, particularly sections 508.5.4 and 508.5.5 as the
same now exist or may hereafter be amended.
Ownership Lists and Annual Reconciliation. Boise shall maintain a GIS layer
showing hydrant ownership including privately owned hydrants. Boise and
United Water shall meet arurually to reconcile the ownership lists and review
maintenance records.
Private Hvdrants. United Water shall have no obligation of any kind or nature
to replace, operate, or maintain hydrants that are owned by private persons or
entities.
(0
(g)
(h)
(i)
EXHIBIT I
Page 5 of 10
AGRJEMENT FOR REPLACEMENT AND OPERATION OF FIRE EYDRAI\TS-3
2. CONDITION PRECEDENT
Condition Precedent to United Water's Oblisations. Boise and United Water
agree that consummation of the transaction contemplated by this Agreement is
subject to United Water obtaining an approval and order from the Commission on
terms that are acceptable to United'Water, in its sole and absolute discretion, that,
among other things:
(i) Approves this Agreement;
(ii) Approves United Water's proposal for recovery of costs associated with
ownership, operation and maintenance of the Hydrants;
(iiD Approves the accounting treatrnent of the costs associated with ownership,
operation and maintenance of the Hydrants.
Notwithstanding anything contained in this Agreement to the contrary, the parties
acknowledge and agree that the conditions precedent set forth in Paragraph 2(a)
are paramount. Accordingly, if there is any portion of such ruling by the
Commission that in either United Water's or Boise's discretion, is substantially
inconsistent with this Agreement or with United Water's Application to the
Commission, United Water or Boise may, within ten (10) business days after
receipt of such Commission ruling, provide the other party with written notice
that this Agreement is null and void, and the parties shall have no ftrther
obligations or liabilities hereunder. If such notice is not given in the time
permitted, the parties agree to amend this Agreement, within thiny (30) days of
both parties' receipt of such ruling by the Commission, to the effect that this
Agreement shall be made consistent with the Commission's ruling.
The parties agree to cooperate and will use their best efforts in l) the preparation
of such further documents and instruments as are necessary to complete the
transaction contemplated hereby, 2) the processing and prosecuting of the filing
for approval by the Commission, and 3) in connection therewith, Boise will
support United Water's proposal for cost recovery.
3. REPRESENTATIONS, WARRANTIES AND COVENAI{TS OF UMTED WATER
United Water hereby represents and warrants to Boise that as of the date hereof and/or as
of the Closing Date:
(a) 1!g,1[gf!tr. That United Water is an Idaho corporation that has been duly organized and
is validly existing and in good standing as a corporation under the laws of the State of
AGREEMENT FOR REPLACEMENT AND OPERATION OF'FIRE IIYDRANTS-4
EXHIBIT 1
Page 6 of 10
(a)
(b)
(c)
Idaho, and has full power and authority to: (i) enter into this Agreement; and (ii) carry out
and consummate the transactions contemplated by this Agreement.
(b) Effect of Transactions. That neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in a breach of or a
default under any agreement, document or instrument to which United Water is a party or
by which United Water is bound; or (ii) violate any existing statute, law, regulation,
restriction, order, writ, injunction or decree of any court, administrative agency or
govemmental body to which United Water is subject.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BOISE CITY
Boise City hereby represents, covenants and warrants to United Water that as of the date
hereof and as of the Closing Date:
(a) Authoritv. That Boise is an Idaho municipal corporation which has been duly organized
and is validly existing and in good standing the laws of the State of ldaho, and has full
power and authority to: (i) enter into this Agreement; and (ii) carry out and consummate
the transactions contemplated by this Agreement.
(b) Effect of Transactions. That the execution and delivery of this Agreement by the
signatories hereto on behalf of Boise and the performance of this Agreement by Boise
have been duly authorized by Boise. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in a breach of or a
default under any agreement, document or instrument to which Boise is a party or by
which Boise is bound; or (ii) violate any existing stahrte, resfriction, order, writ,
injunction or decree of any court, administrative agency or governmental body to which
Boise is subject.
5. DISPUTE RESOLUTION
ln the event either Party has a dispute, or asserts a claim, that arises out of or in
connection with this Agreement or its performance, such Party shall provide the other Party with
written notice of the dispute or claim ("Notice of Dispute"). Such dispute or claim shall be
referred to a designated senior representative of each Party for resolution on an informal basis as
promptly as practicable after receipt of the Notice of Dispute by the other Party. ln the event the
designated representatives are unable to resolve the claim or dispute through unassisted or
assisted negotiations within thirty (30) Calendar Days of the other Party's receipt of the Notice of
Dispute, such claim or dispute may, upon mutual agreement of the Parties, be submitted to
arbitration. In the event the Parties do not agree to submit such claim or dispute to arbitration,
each Party may exercise whatever rights and remedies it may have in equity or at law consistent
with the terms of this Agreement.
EXHIBIT 1
Page 7 of 10
AGREEMENT F'OR REPLACEMENT AI\ID OPERATION OF FIRE HYDRANTS.S
6. TERM
This Agreement shall become effective thirty (30) days after a final non-appealable Order
of the Commission approving the Agreement, subject to Section 2(b) of this Agreement, and
shall remain in force and effect until the Franchise Agreement is re-negotiated and renewed at
which time the terms of this Agreement shall be incorporated into the Franchise Agreement..
7. NOTICES
All notices required or desired to be given under this Agreement shall be in writing and
delivered personally or sent by facsimile or by first class United States mail, postage prepaid,
addressed as follows:
If to United Water: General Manager
Gregory P. Wyatt
United Water Idaho lnc.
P.O. Box 190420
Boise ID 83719-042A
TeL [phone]
Fax. [phone]
With copies to:
And United Water Management & Services lnc.
200 Old Hook Road
Hanington Park, New Jersey 07640
Attention: Legal Department
Tel. [phone]
Fax. [phone]
City of Boise
Attrr: Public Works Director
150 North Capitol Blvd.
Boise,ID 83602
or to such other address as either party may from time to time designate by written notice given
to the other party in the manner provided herein. Any notice given in accordance with the
foregoing shall be deemed to have been given (i) on the date upon which it shall have been
delivered or (ii) three (3) days after being deposited in the United States mail, whichever is first.
If sent by facsimile transmission, such notice shall be deemed to have been given when received
prior to 5:00 p.m. on a business day; othenvise, at 9:00 a.m. on the next business day.
8. NIISCELLAI\IEOUS
If to Boise:
EXHIBIT 1
Page 8 of 10
AGREEMENT FOR REPLACEMENT AND OPERATION OF FIRE HYDRANTS.6
(a) This Agreement may not be assigned by any party without the consent of the other party
hereto. This Agreement shall be binding upon and inure to the benefit of the successors
and permitted assigns of the parties hereto.
(b) Wherever under the terms and provisions of this Agreement the time for performance
falls upon a Saturday, Sunday or Legal Holiday, such time for performance shall be
extended to the next business day.
(c) This Agreement may be executed in counterparts, each of which shall constitute an
original, but all together shall constitute one and the same agreement.
(d) The terms, provisions, covenants (to the extent applicable) and indemnities shall remain
binding upon and for the parties hereto until fully observed, kept or performed.
(e) This Agreement embodies the entire agreement between the parties hereto with respect to
the subject matter hereof.
(f) Boise and United Water shall each pay any attorney fees they have respectively incurred
for the preparation, negotiation and review of this Agreement.
(g) The captions at the beginning ofthe several paragraphs, respectively, are for the
convenience in locating the context, but are not part ofthe text.
(h) In the event any term or provision of this Agreement shall be held illegal, invalid or
unenforceable or inoperative as a matter of law, the remaining terms and provisions of
this Agreement shall not be affected thereby, but each such term and provision shall be
valid and shall remain in full force and effect.
This Agreement shall be governed by the laws of the State of Idaho.
By virtue of this Agreement, Boise does not, in any way or for any pu{pose, become a
partner of United Water in the conduct of its business, or otherwise, or become a joint
venture or a member of a joint enterprise with United Water.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
respective dates set forth below, effective as of Julv 15, 2O14
UNITED WATER IDAHO INC.
AGREEMENT FOR REPLACEMENT AI\[D OPERATION OT FIRE IIYDRANTS.T
(i)
0)
EXHIBIT 1
Page 9 of 10
CITY OF BOISE
A Municipqlfo
oarc: a:J,)-//
title: Dovfd U. lfe$Br, llryor
Date:...7/I1/14 - *
EXHIBIT 1
Page 10 of 10
7ltsl14
AGREBrIIENT FOR REPLACEIIIENT AND OPBRATION OT FIRII IIYDNANTS.8