1999820_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
DON HOWELL
STEPHANIE MILLER
TONYA CLARK
RON LAW
JUDY STOKES
BOB SMITH
GEORGE FINK
WORKING FILE

FROM:

DATE: August 23, 1999
RE: CASE NO. UWI-W-99-4 (United Water)
PROPOSED PURCHASE OF BARBER WATER

On August 18, 1999, a Joint Application in Case No. UWI-W-99-4 was filed with the Idaho Public Utilities Commission (Commission) by United Water Idaho Inc. (United Water) and Barber Water Corporation (Barber Water) for an Order approving the sale and transfer of the Barber Water domestic water system to United Water. Reference Application Exh. 4—Agreement for Purchase and Sale. The purchase price is $58,000. United Water further requests approval of certain rate and ratemaking matters including the right of United Water to include in rate base in future rate proceedings the full purchase price of the assets and up to $55,000 in proposed capital improvements for system upgrades and repairs.
This is the second Joint Application filed by the parties regarding the sale and purchase of Barber Water. The prior Application in Case No. UWI-W-99-2 was withdrawn. Reference Order No. 28076, June 18, 1999.
United Water provides water service to approximately 60,000 customers within the Idaho Counties of Ada and Canyon and operates under Commission Certificate of Public Convenience and Necessity No. 143 (as Amended). Barber Water provides service to approximately 240 residential customers within the Golden Dawn and Barberton Mobile Home Park subdivisions in Ada County and to the nearby Idaho Shakespeare Festival (ISF) site and operates under Commission Certificate of Public Convenience and Necessity No. 277 (as Amended). As represented in the Application and related letter to customers (Application Exh. No. 6), the current owners of Barber Water desire to sell the water system because:
Barber Water has been supplying service to the users in the Golden Dawn Mobile Home Subdivision and the Barberton Mobile Home Subdivision for thirty (30) years and we would like to retire.

Due to the many changes in the water business, we can no longer continue to serve the users on a part-time basis. Trying to serve the users, dealing with complaints and the increased time in handling late payments has increased the work load. The extra time and work involved in handling the requirements of additional testing, monitoring, keeping certified and responding to government agency complaints with regards to service and service areas has created a very stressful situation for the manager. To remain in the water business, we would have to submit a large rate increase for system management and repairs that are needed at this date. We view this process to be very time consuming, adversarial and stressful.

The water system is not new and we are not in a position to upgrade, handle repairs, respond to emergencies and provide the service that a large corporation such as United Water can offer the users. They are the experts with the ability and experience to extend better service for the future of this service area.

We believe that the best interest of the users will be served with this change of management.

United Water represents that it possesses the technical, managerial and financial ability to provide reliable and adequate service to Barber Water customers. United Water contends that the proposed sale and transfer of the Barber Water domestic water system to United Water and the related expansion of United Water’s Certificate is in the public interest.
As represented in the Application, United Water has examined and investigated Barber Water's property and plant used to provide domestic water service and has determined that the following investments are necessary in order to provide adequate service:
Install master meters, telemetering, automated control systems $15,000
Repair storage reservoir $35,000
Rehabilitate wells $5,000
As represented, Barber Water currently provides service to its customers at a tariffed flat rate through a water distribution system that is not metered. (Residential Tariff Schedule No. 1—$10.90/mo. May-October; $8.90/mo. November-April; Commercial Tariff Schedule No. 3 (ISF) $174.40/mo.May-October; $142.40/mo. November-April). As reflected in the Application, as soon after closing as is feasible, United Water proposes to install master meters at the well serving Golden Dawn and Barberton Subdivisions. Thereafter, bills for individual customers will be calculated by dividing the number of service connections into the monthly production as measured by the master meters. Each customer would pay a customer charge based on a ¾ inch service connection and pay for their proportionate share of water produced at United Water’s rates as they currently exist or may hereafter be changed. Notwithstanding the foregoing, the Application states that for a period of six months following installation of the master meters, United Water will continue to render bills to residential customers at the rates contained in Barber Water’s Residential Tariff Schedule No. 1. At the same time, however, United Water will provide to customers information-only bills that would show the customers the amount of charges the customer would have received if the customer had been billed at United Water’s rates as measured by the master meters. This proposal, United Water believes, will help ease the transition from Barber Water’s current rates to United Water’s rates. United Water proposes to provide metered service to the Idaho Shakespeare Festival site at United Water’s regular metered rates. In all other respects, United Water will provide service to Barber Water customers in accordance with the rules and regulations applicable to United Water’s service territory.
United Water in its Application commits to form a customer liaison committee to help ensure that customer needs and concerns are understood and addressed.
Accompanying the Application is a map of United Water’s certificate service area, a map and legal description of the proposed boundary expansion, and the underlying Agreement for Purchase and Sale. United Water and Barber Water contend that the public interest in this sale requires expeditious review of the Application and does not require a hearing to consider the issues presented. United Water requests that the Application be processed under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.

Commission Staff
As in their prior Application, the Commission Staff believes that the public interest and the issues presented in this case require a hearing and the development of a record. As before, Staff does not believe that a formal technical hearing with prefiled testimony is required. What is needed, Staff contends, is an evening hearing for public testimony. Staff recommends that the Commission adopt a hybrid procedure in this case consisting of both written comments and an evening hearing for public testimony.

Commission Decision
The Company requests Modified Procedure. The Commission Staff recommends a hybrid procedure with written comment in lieu of a technical hearing and an evening hearing for public testimony. What procedure does the Commission wish to adopt in this case?

vld/M: UWI-W-99-4_sw

DECISION MEMORANDUM 1