uwiw992.swg.doc

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0
IDAHO BAR NO. 1895

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE JOINT APPLICATION OF UNITED WATER IDAHO INC. AND BARBER WATER CORPORATION FOR AN ORDER APPROVING THE PURCHASE BY UNITED WATER IDAHO INC. OF WATER SERVICE PROPERTIES OWNED BY BARBER WATER CORPORATION; FOR AUTHORITY TO EXPAND UNITED WATER IDAHO’S CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY NO. 143
AND FOR APPROVAL OF RATES AND CHARGES.
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CASE NO. UWI-W-99-2

COMMENTS OF THE COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of Application and Scheduling issued on April 28, 1999 in Case No. UWI-W-99-2, submits the following comments.

INTRODUCTION
A Joint Application was filed by United Water Idaho Inc. (UWI) and Barber Water Corporation (Barber Water) on April 5, 1999. In the Application the two companies request that
the Commission approve the sale and transfer of the Barber Water domestic water system to UWI. The proposed purchase price is $105,000 with UWI estimating an additional $55,000 in capital expenditures to upgrade and repair the system and $10,000 in legal fees to complete the sale.
UWI proposes to set the Barber Water residential customer’s rates at a flat, unmetered rate of $36 bimonthly. Residential customers currently pay $10.90 per month in the summer and $8.90 per month in the winter. Consequently, the Barber Water customers will incur a $97.20 or 82% increase in their annual bills ($118.80 to $216.00 per year). UWI proposes to set the Idaho Shakespeare Festival rates at current tariffed meter rates.

In summary, the two companies request the following in the Application:
1. Approval of the sale of Barber Water’s assets to UWI.
2. Confirmation of UWI’s request to include in rate base the $105,000 purchase price of the Barber Water system assets, up to $55,000 in capital improvements, and $10,000 in attorney fees.
3. Confirmation of UWI’s right to provide water service to the area now served by Barber Water.
Approval of the amendment to UWI’s Certificate of Convenience and Necessity No. 143.
5. Cancellation of Barber Water’s Certificate of Convenience and Necessity No. 277.
6. Cancellation of Barber Water ‘s current tariffs for water service.
Approval of UWI’s proposed tariff rates.

BACKGROUND
Barber Water provides water service to approximately 241 residential customers located in the Barberton and Golden Dawn Estates subdivisions. The subdivisions are located east of Boise in Ada County along the old State Highway 21. In addition, Barber Water provides water service to the Idaho Shakespeare Festival (Shakespeare) facility, which is a non-contiguous site, located across old State Highway 21 approximately 1/4 mile east of Barberton and Golden Dawn Estates. Pumping capacity of the Barber Water system is reported to be approximately 550,000 gallons per day, given two wells with pumping capacities of 180 gallons per minute and 200 gallons per minute. The Barber Water system includes a 200,000 gallon reservoir located on a hill above and to the north of the subdivisions. Staff notes that the water system (i.e., wells) is located in an area of limited groundwater; therefore, potential for development of groundwater wells is also limited.
The current owners of Barber Water have expressed a desire to retire from operation of the system and feel they can no longer provide sufficient service to the customers. They also feel they would not be able to obtain the necessary financing to initiate needed repairs to the system, perform system improvements, and meet government guidelines for certification and testing. Additionally, they cite the problem of dealing with customer complaints and late payments as reasons for retiring.
UWI provides water service to approximately 60,000 customers within Ada and Canyon Counties. Included in UWI’s service area are the Warm Springs Mesa and Surprise Valley subdivisions located to the northwest and south, respectively, of the Barber Water service area. In addition, it is speculated that UWI will apply for certification to provide domestic water service to the proposed Harris Ranch development, which would be immediately adjacent to the Barber Water service area. It is Staff’s understanding that UWI has not committed any services or equipment to the proposed Harris Ranch development at this time, however, it is understood that the Barber Water system would be tied into UWI’s system at some point in the future.
UWI has stated they have the technical and financial resources to implement the system repairs and modifications. UWI expects these repairs will ensure good, reliable and safe water service for the Barber Water customers. Furthermore, UWI will employ telemetering equipment and round-the-clock customer service contacts that will allow a quick response to water service problems.

STAFF ANALYSIS
Given the desire of the current owners to sell the system and uncertainty about their ability to finance system repairs and modifications, Staff believes acquisition by UWI would be in the public interest. This is a position not arrived at easily as customers in the Barber Water service area will experience a significant increase in rates as a result of being absorbed into the higher cost UWI system. Staff believes the sale of the system is in the best interest of both UWI and Barber Water customers. It is important to note that the Barber Water system is aging, as evidenced by the repairs to the reservoir and wells UWI intends to make, and that UWI is not only proposing to acquire the assets but the future liability to repair and replace the aging system. It is this future liability and UWI’s financial ability to meet these future needs that prompts Staff not to oppose the acquisition of the system by UWI.
UWI is expected to provide the Barber Water customers with a higher level of customer service, and the system assets are expected to be a benefit to UWI’s planned expansion of service into the area.
Although the impact on Barber Water customers’ rates is independent of the price paid for the system by UWI, the price to be received by Barber Water represents a significant premium over the book value of the system. Because Barber Water customers have over the past 23 years compensated the Company for the cost of the plant now being sold to UWI at a profit, Staff recommends that one-half of the premium to be received by Barber Water pursuant to the purchase agreement be used for the public benefit.
Staff does not dispute the UWI claim that the proposed transaction would not present a present burden to existing UWI customers. However, UWI in its Application does not propose to meter the currently unmetered Barber Water customers. If the cost of metering Barber Water customers is considered in determining the impact on existing customers, the acquisition will clearly have a revenue requirement impact on existing customers. Staff, therefore, recommends that a portion of Barber Water’s premium to be used for the public benefit be earmarked to defray the cost of metering and that UWI rate base treatment of its acquisition adjustment including costs of metering be limited.
Barber Water customers should be metered. Although lot sizes do not differ significantly among customers on the Barber Water system, customer usage apparently does. It seems a number of customers travel during part of the year and have landscaped their yards to require minimal irrigation, while others remain on the system year round and have planted lawns and gardens. The conservation incentive inherent in metering will also become increasingly important as the two systems are interconnected and UWI system-wide supply considerations apply to Barber Water customers.
Because the $36 bimonthly flat rate proposed by UWI may not be representative of Barber Water customers’ individual usage and the proposed rate increase is large, Staff recommends that current Barber Water rates should be maintained for a two-year period while meters are installed. UWI should submit a plan as soon as possible for installing meters in the Barber Water service area within two years. Staff notes that the two-year rate freeze will save Barber Water customers approximately $46,850 in charges.
Financial Evaluation
Barber Water Company carries on its books a net book value for plant in service of negative $52,742 at year-end 1998. For ratemaking purposes, the net book value would be restated to $11,035. The difference between the two book values is due to Barber Water’s continued over depreciation of its gross plant in service which includes $84,125 of contributions in aid of construction. This difference in recorded depreciation versus allowed depreciation produces a difference in the stockholders equity in Barber Water of $63,777. Equity shown on the Barber Water books is a negative $48,229. Equity restated for the over depreciation of contributions is a positive $15,548.
The ratemaking book value of $11,035 when compared to the proposed sale price of $105,000 indicates that the sale price includes a premium on the sale of regulated assets of $93,965.
The Commission must decide first if the sale price including premium is reasonable and then determine the appropriate accounting treatment for the sale price. Staff does not oppose the amount of the premium but believes the premium, if approved by the Commission, should not flow entirely to the stockholders of Barber Water Corporation.
Customers of Barber Water have paid rates that include recovery of appropriate depreciation expense. In that regard, the customers have in essence purchased an interest in the assets of Barber Water. The Supreme Court of Idaho in Boise Water Corporation vs. Idaho Public Utilities Commission, 99 Idaho 158, 578 P.2d 1089 (1978) regarding the sale of Boise Water Company’s old general office building stated: “One way of looking at a depreciation allowance on a utility’s personal property is that the public buys that property from the utility as it is used up. In one sense, therefore, the company owns depreciable property and when the company sells depreciable property, the ratepayers are entitled to have the sale treated as if it were the sale of the ratepayers’ property.”
Customers also have, through the purchase of their residential lots, acquired an interest in the initial cost of installing the water system serving the Golden Dawn and Barberton subdivisions. Barber Water carries on its books contributions in aid of construction in the amount of $84,125. These contributions include all the real property of Barber Water including the reservoir and well sites. The Commission stated in Order No. 27798 (Case No. UWI-W-98-2, Acquisition of South County Water by United Water), “Contributed property was then and is still appropriately excluded from rate base. The requested addition to rate base was not a capital investment of South County stockholders.” (Page 7) This language makes it perfectly clear that it is the customers, not the company that has a vested interest in the real estate properties included in the contributions in aid of construction account.
The ratemaking accumulated depreciation amount of $57,386 together with the recorded contributions in aid of construction in the amount of $84,125 indicate that customers have acquired an interest in the Barber Water system in the amount of $141,511.
Although one could argue that customers are entitled to 93% ($141,511/$152,546) of the premium paid by UWI, Staff believes that the owners of Barber Water have, over the years, done a good job of managing the system; therefore, we recommend that ½ (50%) of the premium be used for system improvements in the form of customer meters. Any additional meter installation cost in excess of $46,982 ($93,965 / 2) should be invested by United Water. Installation of meters that more equitably charge customers based on usage, when combined with a two-year rate freeze will provide a substantial benefit to Barber Water customers.
To provide for meter installation, Staff recommends that the purchase price be reduced by ½ (50%) of the proposed premium. Reduction of the purchase price in this manner reduces the income tax liability of the Barber Water stockholders and preserves that portion of the premium needed to install meters. If, on the other hand, the full premium were to be paid to the stockholders with instructions to donate ½ (50%) of the premium amount after taxes toward the installation of meters, approximately ¼ (25%) of ½ of the premium ($11,746) would be lost to income taxes on the capital gain realized on the sale by the stockholders.
Accounting for acquisitions of operating property by one utility from another is well established in regulatory utility accounting theory and practice. The Uniform System of Accounts for Class A Water Utilities (NARUC 1996) Accounting Instruction No. 21 B. (Pg. 25) sets forth the accounting procedures to be followed by the acquiring utility when an operating system is purchased. The premium paid by one utility for purchase of the assets of another utility is an “acquisition adjustment” as defined by the uniform system of accounts for water companies. “Accounting for Public Utilities” (© Mathew Bender & Co., 1995) by Robert L. Hahne and Gregory E. Aliff of Deloitte & Touche § 4.04[2] states: “…if a utility acquires major fixed assets (i.e., an operating unit or system) from another utility by purchase, merger, consolidation, liquidation, or otherwise at a price in excess of the seller’s original cost (net of accumulated depreciation), the addition to the acquiring utilities rate base reflecting the acquired assets may be limited to the undepreciated original price. The excess amount paid is referred to as an acquisition adjustment and is placed in a separate account to be treated as so authorized by the jurisdictional regulatory commission.”
Accounting theory dictates that United Water should record the acquisition as follows:

Debits Credits
Plant in Service $152,546
Acquisition Adjustment $ 46,982
Accumulated Depreciation $ 57,386
Contributions in Aid of Construction $ 84,125
Cash $ 58,017

UWI then would invest $46,982 of the unpaid retained premium in meter installations plus whatever additional installation cost is required to accomplish the installations. Accounting for the meter installation cost would follow normal construction accounting procedures. However, under no circumstances should UWI’s total investment in the Barber Water system including purchase price, well and reservoir repair, attorney fees, telemetry equipment, and meter installation costs exceed the $186,000 maximum that UWI’s rates will support.
The acquisition adjustment could be treated in one of several ways. Generally, acquisition adjustments are excluded from rate base and amortized below the line (charged to stockholders) unless the regulatory commission specifically authorizes some other ratemaking procedure. Some commissions have allowed amortization of the acquisition adjustment above the line (included in expenses recoverable from customers) while not allowing a return on the unamortized balance (excluded from rate base). In other cases, commissions have allowed both a return on the investment and recovery of the amortization expense in setting customer rates. Although it clearly stated an intent not to set precedent, the Idaho Commission has allowed UWI’s recovery of acquisition adjustments related to purchase of the South County and Mesa Water systems.
UWI has requested that it be allowed to earn a return on the premium (acquisition adjustment) and to recover its depreciation/amortization costs in rates. UWI is not seeking any change in rates at this time but is seeking assurance from the Commission that it will receive such favorable treatment of its purchase costs in the future.

Purchase Price Evaluation
The Joint Application submitted by UWI and Barber Water states that the owners of the Barber Water system would like to retire, that they no longer believe they can operate the system on a part-time basis, and that they would have difficulty in conducting system repairs and upgrades. Consequently, the Barber Water owners negotiated a system purchase agreement with UWI. The terms of the sale are summarized as follows:

1. Sale of Barber Water’s assets to UWI for $105,000.
2. UWI will invest up to $55,000 in capital improvements (telemetering and automated control systems $15,000; repair storage reservoir $35,000; and, rehabilitate wells $5,000).
UWI would assume ownership of all equipment and property used in furnishing domestic water service to the area served by Barber Water.

The assets to be purchased by UWI include two groundwater wells and associated property, transmission/distribution system, and storage reservoir and associated property. The $105,000 purchase price was determined based on a financial analysis by UWI. This figure represents the maximum price that UWI could pay Barber Water for the system and earn its authorized rate of return. That is the proposed purchase price, relative to the operating income, results in the return on investment of 10.49% which exceeds UWI’s authorized rate of return of 9.51%, based on UWI’s calculations. This indicates that the purchase of the Barber Water system will have a positive effect on existing UWI customers since it will bring in more money than it costs to serve.
Staff has performed a calculation of the “value” of the excess capacity of the Barber Water system. This excess capacity may be used in the future to serve other UWI customers, thereby deferring the development of other resources. Based on information provided by UWI in other cases, a source capacity of 1.2 gpm per customer is used in planning peak consumption. The Barber Water system with an estimated well capacity of 380 gpm (excluding storage reservoir capacity) thereby could support 317 customers. The Barber Water system currently has 241 customers plus the equivalent of 16 residential customers for the Idaho Shakespeare Festival site. This appears to indicate that the Barber Water system can accommodate an additional 60 customers (72 gpm). At an estimated value of $208 per gpm and an available capacity of 72 gpm, the source supply value of the wells is approximately $14,976. The excess source supply value could range up to $75,240 assuming an estimated $1,045 per gpm treated surface water source supply cost. Staff therefore has determined that the proposed net purchase premium of $46,982 paid by UWI to be received by Barber Water stockholders is a reasonable estimate of the premium value for the excess water source supply.
The majority of UWI customers are metered and Staff recommends that the Barber Water customers also be metered. Based on information provided by UWI in July 1995, the cost for installing a 3/4-inch meter and meter setting is $201.60. Based on this estimate, the estimated cost to install 241 meters on the Barber Water system is $48,585.60.
As previously discussed, Staff proposes that $46,982 of the proposed purchase premium be applied to the cost of installing meters. Staff recognizes that this figure is below the estimated costs of metering and meter costs will likely exceed $201.60 per meter setting. Nevertheless, Staff maintains that meters should be installed by UWI in the near future. We also maintain that the cost of the acquisition can not exceed $186,000 with meter costs included.
In summary, Staff finds the $105,000 sale price should be reduced by $46,982 for the installation of meters. Given the Staff calculated book value of $11,035, the purchase premium to be received by Barber Water is approximately $46,982. Staff has determine that this premium is a reasonable estimate of the value of the excess source of supply that UWI may utilize for other customers. Staff recommends that UWI be allowed to rate base an amount not to exceed $186,000 including the cost of metering.

System Improvements Evaluation
UWI personnel have inspected the Barber Water equipment and determined that repairs and modifications are required to bring the system up to regulatory and UWI standards. Barber Water owners, who are aware that the system is in need of repair and modification, have stated they “… are not in a position to upgrade, handle repairs, respond to emergencies and provide service that a large corporation such as United Water can offer ...”
Installing a telemetering and automatic control system is planned by UWI. The telemetering system will be used by UWI to monitor system operation from a central location, including allowing the Company to determine if the pumps are not operating. In addition, UWI plans to install an automatic control system on the pumps and storage reservoir that will be used to maintain a preset level in the storage reservoir. UWI anticipates that these modifications will ensure reliable service to the Barber Water customers in the future.
The proposed repairs to the storage reservoir are necessary due to leakage. The reservoir is a subgrade concrete tank with a sheet metal-wood frame cover. The concrete is reported to have cracked as a result of soil subsidence over the twenty- plus years since the tank was installed. The leaks, although unquantified to date, appear to be significant based on the visible pooling of water downslope from the reservoir. UWI is proposing to install a flexible membrane liner on the bottom of the reservoir. This repair would be expedited to ensure adequate water during the irrigation season.
UWI also proposes to inspect and rehabilitate as necessary, the wells. A downhole camera inspection of each well would be performed to determine the condition of the well casing. In addition, UWI will install disinfection equipment (chlorine-based) on each well in accordance with internal UWI procedures. Maintaining a disinfection residual is conducted by UWI in order to ensure safe water supply. UWI reports that the disinfection system will be operated to meet State of Idaho, Division of Environmental Quality standards (DEQ).
No additional modifications or improvements to the Barber Water system are proposed by UWI at this time. If and when the Harris Ranch development is initiated, UWI may serve the first phases using the excess capacity of the Barber Water system. System modifications will be performed as needed at that time.

Meter Installation Benefits
Barber Water provides service to its customers through a water distribution system that is not currently metered. This is reasonable under these particular conditions where there was an adequate supply for the current customer base. However, Staff prefers metered service whenever possible because it is a more equitable and accurate way to determine consumption. It also encourages responsible water usage, it promotes conservation and it is consistent with service provided other customers of United Water.
We believe that metering is more equitable than flat rates for Barber Water residents that have small yards or use gravel to reduce maintenance. With meters, these customers will be better able to control their consumption and their water costs.
Staff recommends that UWI complete meter installation within two years and submit a plan detailing how that will be accomplished.

Proposed Customer Rates
In the Application, UWI has proposed setting a flat rate customer charge of $36 bimonthly for the Barber Water residential customers. Barber Water customers currently do not have meters installed on the service lines. UWI has stated that it does not intend to install meters unless and until large-scale maintenance repairs are required on the distribution system. The costs for installing the meters at the onset of the purchase were deemed by UWI to not be justified due to the typical lower than average consumption patterns for mobile home parks.
The exception is the Idaho Shakespeare Festival service line that has a 2-inch meter set in-place. UWI proposes to use the existing meter rates for the Idaho Shakespeare Festival service connection (customer charge $41.64 bimonthly and commodity charge $0.9113 per CCF winter rate, $1.1388 per CCF summer rate).
Staff has evaluated UWI’s proposed rates. Staff is in agreement with the proposal to apply existing metered rates to the Idaho Shakespeare Festival site, given that a meter is already in place. However, in evaluating the proposed residential customer rate of $36 bimonthly, Staff considered the representativeness of the proxy data on which the proposed rate is based and the anticipated impact of metered rates on the Barber Water customers.
In terms of the appropriateness of the $36 bimonthly rate to be applied to Barber Water customers, Staff has reviewed the support data supplied by UWI. Consumption data for the Westgate Mobile Manor was used to develop the proposed bimonthly fixed charge billing rate for Barber Water customers. The Westgate Mobile Manor customers had an average consumption of 128 CCF (hundreds of cubic feet) for the November 24, 1997 to September 28, 1998 billing periods.
In summary there appear to be several differences between the Westgate and the Golden Dawn/Barberton mobile home parks. However, both are mobile home parks, both have roughly comparable lot sizes, and lot size is substantially less than the average UWI residential customer. The average UWI customer consumption is 220 CCF per year, at least 28% higher than the Barber Water customers currently use on an unmetered basis. Consequently, Staff is prepared to accept the equivalency of the Westgate Mobile Manor data as representative of Barber Water customer consumption after meters have been installed.
The second issue is the anticipated impact of metered rates on Barber Water customers. The $36 bimonthly rate is the annual average bimonthly bill that Barber Water customers are expected to pay after they have adjusted to metered rates. While the average annual increase will be in the range of 80%, summer bills may increase as much as 150%. Consequently, Staff has evaluated whether metered rates should be phased-in to reduce the impact on the Barber Water customers. The majority of the Barber Water customers reportedly are retired and on fixed incomes, and there are concerns about allowing a large sudden increase in rates.
In lieu of an immediate increase in rates or a multi-year phase in, Staff proposes that existing Barber Water rates be retained for a two-year period. This provides a benefit to the customers of approximately $46,850 over two years and allows UWI time to complete meter installation. Furthermore, Staff recognizes the fact that many of the Barber Water customers may actually use significantly less than 128 CCF, on which the $36 bimonthly rate is based. A comparison of existing Barber Water, Barber Water/UWI proposed and current UWI metered rates is given in Attachment A. As can be seen in the table, a Barber Water customer who is using 125 CCF annually will benefit from the installation of meters and paying the UWI metered rates. Based on customer comments Staff expects there to be a number of customers who would fall into this low consumption category.
A two-year rate freeze will provide Barber Water customers the opportunity to prepare for potentially higher water billings, and once the UWI metered rates are implemented, for the customers to each pay for their actual consumption.
Staff thereby recommends maintaining the current Barber Water rates of $8.90 per winter month and $10.90 per summer month until the meters are installed (two-year period). At that time the customers would begin paying based on the authorized tariffed metered rates.
United Water proposes and Staff supports the formation of a committee to assist customers in the transition after the sale to assure that customer concerns and needs are addressed. A Staff person from the PUC has served on these committees in the past and it has been very beneficial to the customers.

Customer Comments
Staff has noted a significant interest by Barber Water customers in this Application. A petition with approximately 108 names of individuals reported to be served by Barber Water was submitted to the Commission. These customers requested that an open public hearing be held regarding the sale. UWI in anticipation of the significant interest by the customers held a public informational meeting on May 4, 1999 at the Idaho State Parks and Recreation building located adjacent to the Idaho Shakespeare Festival site. In this meeting Barber Water and UWI presented information on the proposed sale, background information on UWI, and answered questions from the approximately 75 individuals present at the meeting. The questions covered a broad range of areas including rate increases, billing changes, chlorination, historic customer contributions, metering, Harris Ranch development potential impacts, and system modifications, repairs and cleanup.

IDWR and DEQ Status
The Idaho Department of Water Resources (IDWR) was contacted regarding several issues. In conversations with Gary Spackman, IDWR, he indicated that Barber Water was issued an amended water rights permit. A copy of the amended permit was provided to Staff by Barber Water.
In addition, Staff contacted DEQ personnel regarding their findings from inspections of the Barber Water system. DEQ conducted a brief site investigation in the fall of 1998 by Steve Ray. He indicated that no formal report was issued because of the reported pending sale of the company, rather he would wait until UWI had repaired and modified the system and then conduct a complete system audit. Specific issues of concern he did note in the brief audit are: repair storage reservoir basin; repair or replace storage reservoir roof; install storage reservoir level controls; install check valve on small well pump; and isolate Harris Ranch well connection. In addition, Mr. Ray expressed concern regarding the proper disinfection of the service line running to the Idaho Shakespeare Festival site.

Summary
Staff has reviewed the Application and production request information provided by Barber Water and UWI. Based on an analysis of the information presented, Staff’s comments are summarized as follows:

( Staff recommends that UWI be required to open a separate work order to accumulate all of the costs of this acquisition. UWI should record all costs of purchase, repairs to wells and reservoirs, installation of telemetry equipment, premiums and meter installation costs to the work order. Should the total of these costs not exceed the maximum $186,000 cost UWI’s rates will support, the premium (acquisition adjustment) should be allowed in rate base in future rate cases. To the extent these costs exceed the maximum cost UWI’s rates will support, the excess cost should be recorded below the line or written off and excluded from rate base in future cases.

( Staff recommends that the proposed purchase price of $105,000 be reduced by $46,982 to help defray the cost of installing meters.

( Staff agrees with the purchase of the Barber Water system by UWI. The improvements in the storage reservoir, wells and control systems are expected to improve customer service. Additionally, the UWI’s customer services are expected to be a benefit to Barber Water customers.

( Staff recommends that UWI be required to install meters on Barber Water customers at its earliest opportunity but not later than two years. UWI shall submit a plan for installing meters in the Barber Water service area, as soon as possible.

( Staff recommends that UWI be limited to maximum rate base addition of $186,000, including all meter installation costs.

( Staff recommends that current Barber Water residential customer rates, $8.90 per winter month and $10.90 per summer month, be continued for two years to allow meter installation. After two years, the applicable UWI metered rates should be applied.

( Staff recommends the Idaho Shakespeare Festival rates be set per the existing UWI tariff rates effective immediately.

( Staff recommends that UWI initiate the system repairs and modifications at its earliest convenience.

( Staff proposes approval of UWI’s right to provide water service to the area now served by Barber Water and to the amendment to UWI’s Certificate of Convenience and Necessity No. 143, as filed.

( Staff proposes that the cancellation of Barber Water’s Certificate of Convenience and Necessity No. 277 and Barber Water’s current tariffs for water service be approved as filed.

DATED at Boise, Idaho, this day of June 1999.

_________________________________
Scott D. Woodbury
Deputy Attorney General
Technical Staff: George Fink
Bob Smith
Tonya Clark
Judy Stokes
Attachment

SW:GF:RES:TLC:gdk\umisc\comments\uwiw992.swg

COMMENTS 1 JUNE 4, 1999