26898.pdf

Office of the Secretary
Service Date
April 24, 1997
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE CONNECTION FEES)
OF UNITED WATER IDAHO INC. AND OTHER)
RELATED ISSUES INCLUDING RATE DESIGN.
CASE NO. UWI-96-
ORDER NO. 26898 AND
NOTICE OF DEADLINE FOR
INTERVENOR FUNDING
This case was initiated September 17, 1996 pursuant to Idaho Public Utilities
Commission (Commission) Order No. 26611 following a Stipulation\Motion signed by all parties
to United Water s most recent rate case, Case No. UWI-96-3. The subject matter, as reflected
in the case caption above, is the connection fee policy and related tariffs of United Water Idaho Inc.
(United Water; Company). This case provides the Commission and parties with the first
comprehensive opportunity to revisit the connection fee issue following the Idaho Supreme Court'
1996 opinion in Building Contractors Association of Southwestern Idaho Inc. VS. IPUC 128 Idaho
534 916 P. 2d. 1259 (1996).
United Water serves approximately 55 000 residential, commercial, and other classes of
customers in the city of Boise and surrounding areas. The Company s sources of water supply
consist of the Marden Water Treatment Plant and 62 deep wells. The combined 1995 capacity
all wells and the treatment plant is approximately 78 million gallons per day.
Public hearing in Case No UWI-96-4 was held on April 10 , 1997. The following
parties appeared either individually or by and through their respective counsel:
United Water Idaho Inc.
Coalition of United Water Idaho Customers
Building Contractors Association
Sharon Ullman
Commission Staff
Dean J. Miller, Esq.
Peter 1. Richardson, Esq.
Forrest Goodrum, Esq.
Scott Woodbury, Esq.
At the hearing on April 10, 1997, the parties presented a proposed Stipulation and
Settlement Agreement (Reference Order No. 26898 - Attachment A) and asked that the Commission
NOTICE OF DEADLINE FOR
INTERVENOR FUNDING
ORDER NO. 26898
adopt it as the resolution of the case. The general terms of settlement regarding the Company
customer contribution rules are as follows:
.Elimination of guaranteed revenue escrows for residential subdivisions.
. Elimination of connection fees for new customers.
. Implementation of new main extension agreements whereby the developer
or applicant requesting service contributes the actual transmission and
distribution cost of connecting to the Company s water system including off-
site mains, on-site mains and terminal facilities (service and meter).
No allowance or line extension refunds (except vested interest).
. Vested interest refunds relating to contributions for off-site main extensions
and service to completely new pressure zones requiring independent booster
pumps and storage.
. Authorization of labor in lieu of cash for installation of facilities within
residential subdivisions.
Prequalification contractor requirements.
Information disclosure procedure, re.: cost of materials and overheads.
. Provision for good faith renegotiation of Micron Agreement re.: refund
mechanism related to Micron s prior advance of costs for supply,
transmission and storage facilities.
Commission Findings:
The Commission has reviewed and considered the filings of record in Case No. UWI-
96-, the prefiled testimony and the exhibits of the parties, the Idaho Supreme Court's 1996 opinion
in the Building Contractors case and the submitted Stipulation and Settlement Agreement. We
appreciate the parties' efforts in negotiating what we find to be a fair , just and reasonable change in
the Company s customer contribution rules. We find the terms of settlement to be supported by the
filed testimony and exhibits of Commission Staff and Company witness Ben Hepler. We find the
proposed settlement terms to be in the public interest and equitable, both to the Company s existing
customers and to future customers. We also acknowledge and find reasonable and acceptable, the
parties' agreed stipulation not to address rate design issues in this proceeding.
NOTICE OF DEADLINE FOR
INTERVENOR FUNDING
ORDER NO. 26898
To remove any possible confusion, we fmd it reasonable to establish an explicit deadline
for applications for intervenor funding in Case No. UWI- W-96-4. YOU ARE HEREBY NOTIFIED
that all applications for intervenor funding must be filed in this case with the Commission Secretary
within fourteen (14) days from the date of this Order. Reference Idaho Code ~ 61-617 A and
Commission Rules of Procedure, IDAPA 31.01.01.161-164.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and United Water
Idaho Inc., a water utility pursuant to the authority and power granted the Commission under Title
61 ofthe Idaho Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED that the customer contribution rules of United Water Idaho Inc. be changed
in accordance with and pursuant to the terms contained in the Stipulation and Settlement Agreement
attached to this Order. The Company is directed to file revised tariffs to implement and conform to
the provisions of the Stipulation within thirty (30) days of this Order. The effective date of the
revised tariffs will be the date of filing.
IT IS FURTHER ORDERED and the Commission does hereby adopt the foregoing
schedule deadline for intervenor funding applications.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
NOTICE OF DEADLINE FOR
INTERVENOR FUNDING
ORDER NO. 26898
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ,;.r3,,&:L
day of April 1997.
~~~
RALPH N LSON, COMMISSIONER
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~/?a rJ JI~
Myrna J. Walters
Commission Secretary
cm\0:uwiw964.5W2
NOTICE OF DEADLINE FOR
INTERVENOR FUNDING
ORDER NO. 26898
Dean J. Miller
Dean J. Miller, P.
877 Main, Suite 610
O. Box 2564-83701
Boise, ID 83702
Attorney for United Water Idaho Inc.
Scott D. Woodbury
Deputy Attorney General
472 W. Washington
Boise, ID 83720
Attorney for Commission Staff
Sharon Ullman
9627 W. Desert Ave.
Boise, ID 83709
Pro Se
Peter J. Richardson
Davis Wright Tremaine LLP
999 Main Street, Suite 911
Boise, ID 83702
Attorney for the Coalition
Of United Water Customers
Forrest Goodrum
Penland & Munther
350 N. 9th, Suite 500
Boise, ID 83701
Attorney for Building
Contractors Association
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE CONNECTION
FEES OF UNITED WATER IDAHO INC.
AND OTHER RELATED ISSUES INCLUDINGRATE DESIGN
CASE NO. UWI-96-
STIPULATION AND SETTLEMENT AGREEMENT
COME NOW the parties identified herein and stipulate and agree as follows to wit:
RECITALS
1. Parties: The parties to this Stipulation and Settlement Agreement are:
A. United Water Idaho Inc (United),
B. The Coalition of United Water Idaho Customers (Coalition),
C. Sharon Ullman (Ullman),
STIPULATION AND SETTLEMENT AGREEMENT
PAGE
Order No. 26898
Attachment A
D. Building Contractors Association (BCA),
E. The Staff of the Idaho Public Utilities Commission (Staff).
There are no other parties to this proceeding other than those above named.
2. Pm:pose of Stipulation: The purpose of this stipulation is to resolve and settle
differences of opinion with respect to certain issues in this proceeding and to recommend to the
Commission for approval various modifications to United Water Idaho Inc.'s (United) customer
contribution rules.
3. Background : The genesis of this case is United's 1993 general rate case in which the
Commission established certain connection and/or hook-up fees (connection fees).
Subsequently, these fees were found to bediscriminatory by the Idaho Supreme Court. At about
the same time, United applied for another general rate increase. At the urging of the parties to
this proceeding, the Commission split that rate case into two separate proceedings--one
addressing the rate increase issues and the instant case addressing hookup fees, rate design and
related issues.
In accordance with deadlines established by the Commission in this proceeding each of
the parties who desired has filed written pre-filed testimony setting forth their views regarding
appropriate polices for customer contribution rules for United.
STIPULATION
1. Recommended changes to customer contribution rules. The parties hereto recommend
that United's customer contribution rules be modified in accordance with the following
STIPULATION AND SETTLEMENT AGREEMENT
PAGE 2
principles:
A. Eliminate the use of the current guaranteed revenue/escrow type agreements;
B. Implement new main extension agreements whereby the developer or
applicant requesting service contributes the entire cost of extending the
distribution system to make service available at the new customer location;
C. Eliminate the collection of connection fees.
2. Reasons for recommended changes
The recommended changes are supported by the pre-file testimony of Staff and concurred
in by United and the Coalition. While BCA does not necessarily concur in the rationale for these
changes, BCA concurs in the adoption of these changes in light of other terms of this Stipulation.
3. Issues withdrawn: The written pre-filed testimony of some parties to this proceeding
contain recommendations with respect to general rate design and the summer/winter differential
that currently is part of United's rate structure. The stipulating parties agree that issues relating
to general rate design will be withdrawn from this proceeding. Withdrawal of rate design issues
from this proceeding is without prejudice to the right of any party to assert any position with
respect to rate design in an appropriate future proceeding.
4. Micron Agreement: United and Micron Technology Inc. previously entered into an
agreement whereby Micron advanced the cost of some source of supply, major transmission lines
and storage. Pursuant to the agreement, United agreed to refund to Micron a percentage of new
connection fees for new customers within a specific geographic region where these facilities
serve (the geographic region). If, pursuant to the recommendations contained herein, connection
STIPULATION AND SETTLEMENT AGREEMENT
PAGE 3
fees are eliminated, United would continue to refund the amount of money anticipated by the
agreement to Micron for new customers in the geographic region as if the connection fees had
not been eliminated, but were still in effect. Payments to Micron hereunder shall be added to
United's rate base.
In order to accomplish the goal of refunding the percentage of connection fees anticipated
by the agreement, United agrees to negotiate amendment(s) to the agreement in accordance with
its original spirit and in good faith with Micron, and in said negotiations will address increases in
the connection fee level as well as other issues implicated by this settlement. Any such
amendment(s) to the agreement will be subject to the Commission s approval.
5. Off-site main extensions and refunds: At pages 10--12 of his Second Supplemental
Direct Testimony, (Attached) Mr. Hepler outlines United's proposal regarding contributions for
off-site mains and service to completely new pressure zones. The proposal regarding off-site
mains is also illustrated in Exhibit No.7 (Attached). Tariff sheets to implement these proposals
are contained in Exhibit 8 to the Second Supplemental Direct Testimony of Mr. Hepler.
The stipulating parties agree that these proposals are appropriate and fair to all parties
concerned and may be adopted by the Commission.
6. Labor in lieu of Cash: In order to achieve a settlement of this proceeding, United
agrees to a system that makes it possible for developers to exercise a choice in selecting a
contractor to perform facilities installations within residential subdivisions. The stipulating
parties agree that the following procedures should be adopted to implement such a system:
A. In order to be eligible to install water mains and services, a contractor must
STIPULATION AND SETTLEMENT AGREEMENT
PAGE 4
satisfy the "Pre-Qualification Contractor Requirements " as set forth in Exhibit No.6 of the
Second Supplemental Direct Testimony of Benjamin Hepler. If found qualified pursuant thereto
the contractor must thereafter perform all work in accordance with the procedures and
requirements set forth in Exhibit 6.
B. United shall implement such systems and procedures as are necessary to
monitor the implementation of a labor in lieu of cash program to insure that implementation of
the program does not result in increased administrative and inspection costs for United and its
customers generally.
C. Upon request of a developer, United shall disclose information regarding its
cost of materials and overheads, subject to an appropriate confidentiality agreement.
7. Tariffs to be filed. effective date. The stipulating parties agree that the tariff changes
necessary to implement the provisions of this stipulation are contained in Exhibit No.8 to the
Second Supplemental Direct Testimony of Benjamin Hepler and that the same may be approved
by the Commission.
United will file revised tariffs to implement the provisions of this stipulation within thirty
(30) days of the Commission s Final Order to be effective upon filing.
8. Testimony to be Spread on Record. To the extent it is necessary to the Commission
consideration of this Stipulation, the parties agree that the pre-filed testimony of all witnesses
may be spread on the record without the necessity of calling the sponsoring witnesses, and each
party waives the right to cross-examine sponsoring witnesses.
8. Authority to Execute . The persons executing this Stipulation in a representative
STIPULATION AND SETTLEMENT AGREEMENT
PAGE 5
capacity covenant and warrant that they have full power and authority to execute this Stipulation
on behalf of their respective clients.
9. Waiver of Further Proceedings. Upon entry by the Commission ofa Final Order
approving and adopting the terms hereof, each party waives any further proceedings herein
including Petition for Reconsideration or Appeal to the Idaho Supreme Court.
10. Effect of Failure to Approve.If the Commission for any reason does not enter a
Final Order approving and adopting the terms hereof, this Stipulation shall be held for naught
and shall be of no further force and effect. Each party shall thereafter be free to again assert
positions contained in pre-filed testimony previously submitted.
11. Intervenor Funding. Pursuant to the Idaho Public Utility and the Rules of Practice of
the Commission, Intervening parties herein may have a right to petition the Commission for an
award of Intervenor Funding. If said petitions are filed, United will neither support nor oppose
awards of intervenor funding. United requests that the Commission conduct its independent
review to determine financial need and the degree to which the requesting party made a material
contribution to the proceeding.
12. Approval Requested.The stipulating parties agree, and represent to the
Commission, that each of the individual terms hereof are material and essential to the complete
terms hereof. The stipulating parties further agree, and represent to the Commission, that the
overall terms hereof are fair, just, reasonable and consistent with the public interest.
Accordingly, each of the stipulating parties request that the Commission enter its Final Order
approving and adopting the terms hereof without change and in their entirety.
STIPULATION AND SETTLEMENT AGREEMENT
PAGE 6
DATED thisY -day of April, 1997.
~d C~~
Scott D. Woodbury
Attorney for Commission Staff
Peter J. Ric ar son
Attorney for Coalition of United Water Customers
Forrest Goodrum
Attorney for Building Contractors Association
~~ ~
11 Sharon Ullman
\JAl~
Dean J. Miller
Attorney for United Water Idaho Inc.
STIPULATION AND SETTLEMENT AGREEMENT
PAGE 7
advanced the money for, I would recommend that for new connections in the ar
covered by the contract, the Company continue to refund the same amou of money
to Micron, which would be added to the Company s rate base, as .
fees were still in effect.
Q. Basically, would you say you have fundamental ag
recommendation?
A. Yes, with the exception of labor in Ii of cash we have previously discussed.
Q. What if the Commission doe gree that labor in lieu of cash be allowed? Should
there be specific requi ments for this procedure?
s proposed requirements are shown in Exhibit 6 attached. These
. ements are what are essentially in place at the current time for developers
0 chose the labor in lieu of cash option currently allowed on Commercial
Industrial, or Municipal Projects
Q. You are agreeing with Mr. Lobb that the developer or applicant should contribute the
cost of the mains, services, and meters. Should there be any time when a developer
or an applicant should receive any refunds of the cost of a main line extension?
A. Yes, I believe that if a developer or applicant pays the cost of an offsite main and
another developer or applicant takes service from that line, within a specific time
frame, then the new developer or applicant should pay their proportionate share of
the offsite main.
Q. What is an offsite main?
A. This would be a main that is installed between the Company s existing system and
the nearest boundary of the nearest boundary of the property to be served plus one
Hepler, 2nd Supplemental Di
United Water Idaho
half of the main fronting the property to be served. For example, if an applicant
wants service installed to serve an individual lot or a development but had to install
500 feet of main before it reached his lot, the 500 feet of main plus half of the main
fronting his property would be offsite main. Obviously, the other half of the main
fronting the property to be served and all distribution system facilities within a
development (including mains, service lines and meter installations) would be on
site. See Exhibit 7.
Q. What is your suggestion in regard to the offsite main cost?
A. My suggestion is that if an applicant requests service from aD. offsite main, they
would contribute the cost of the proportionate share of their front footage towards
the cost of the offsite main, which would be refunded to the original party(ies) who
paid for the offsite main.
Q. Are there other circumstances in which you would recommend that a developer
advance any cost and receive a refund vs. contributing dollars?
A. Yes, in an instance where a developer is requesting service to a completely new
pressure zone requiring independent booster pumps and storage, the developer
should contribute the cost of the main, services, and meters, and advance the cost of
the booster pumps and storage. As the customers are added in the area served by
these boosters, pumps and storage, refunds would be made to the developer for these
costs. This would be similar to the Micron projects.
Q. Why should the developer advance the cost of the booster pumps and storage rather
than the company installing these facilities?
Hepler, 2nd Supplemental Di
United Water Idaho
A. Basically because the developer is speculating that there will be a need for the
facilities. Ifhe is correct in his speculation, the company will refund at least a
portion of these dollars and will have made an investment in the backbone plant.
he is not correct in his speculation, the facilities will not be useful, and the company
should not be stuck with an investment that is not used.
Q. How would this refund be calculated?
A. If a developer wanted to develop in an area that required a new storage tank due to
serving a new pressure zone and the tank could ultimately serve only 1000
customers, and if the tank cost $500 000, the average cost would be $500 per
customer. The normal allotted cost for storage per customer is $110 as utilized in
our calculation of the $530 connection fee. Therefore, we would propose to refund
only $110 per customer.
Q. Have you prepared tariff sheets for approval to implement your recommendation for
both the standard main extension agreements and the offsite proposal?
A. Yes, see Exhibit 8.
ve you reviewed Dr. Reading s testimony?
A. Yes.
Dr. Reading s recommendations in regard to "Individual
Customer Hook-up Cost and Cli
A. Yes. I believe his first three recommendatl
guaranteed revenue method; (2) eliminate the free allo ce; and (3) require the
applicant to contribute the cost of the main line extension, servic ateral, and meter.
As in my testimony concerning Mr. Lobb's recommendations, I believe the
Hepler, 2nd Supplemental Di
United Water Idaho
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COST / FT. OF MAIN EXTENSIONX 500 FT. + 1/2 COST / FT. OF
MAIN EXTENSION X 300 FT.
ON SITE COST:
300 FT. X 1/2 COST FT. OF MAIN
EXTENSION PLUS THE COST OF ANY
DISTRIBUTION FACILITIES LOCATED
~ITHIN THE PROPOSED DEVELOPMENT
Exhibit No.
Case No. UWI-96-4
Hepler, 2nd Supplemental Di
United Water Idaho
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