200112_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
TONYA CLARK
DON HOWELL
DAVE SCHUNKE
RANDY LOBB
JUDY STOKES
BOB SMITH
BEVERLY BARKER
WORKING FILE
FROM:
DATE:
JANUARY 12, 2001 RE: CASE NO. UWI-W-99-4 (United Water/Barber Water)
FINAL ORDER NO. 28205
PETITION FOR CLARIFICATION

On November 16, 1999, the Idaho Public Utilities Commission issued final Order No. 28205 in Case No. UWI-W-99-4 approving the sale and transfer of the Barber Water Corporation domestic water system to United Water Idaho Inc. On January 12, 2001, the Commission Staff filed a Petition for Clarification of Order No. 28205, Case No. UWI-W-99-4. Reference IDAPA 31.01.01.325. Staff requests clarification of the following Commission Order language:
IT IS FURTHER ORDERED and the Commission does hereby approve a transitional six-month phase in of rates for Barber Water residential customers.

Order No. 28205, p. 10.

It is United Water’s contention that the Commission intended that the six-month phase in begin immediately as of the date of the Commission’s Order (11/16/99). It is Staff’s contention that the trigger event for initiating the six-month phase in of rates was completion of master metering (4/18/2000).
Staff contends that the Commission’s Order language is qualified by the ordering preface language, i.e., “In consideration of the foregoing and as more particularly described and qualified above.” Order No. 28205, p. 9. The relevant preceding language in the Commission’s Order is as follows:
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

Order No. 28205, p. 2.

…

As reflected in the Application, as soon after closing as is feasible, United Water proposes to install master meters at the wells serving Golden Dawn and Barberton Subdivisions. Thereafter, bills for individual residential customers will be calculated by dividing the number of service connections into the total monthly consumption as measured by the well master meters. Each customer would pay a customer charge based on a ¾ inch service connection (presently a bi-monthly charge of $13.51) and pay for their proportionate share of water consumed 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. (emphasis added.)

Order No. 28205, p. 3

The Commission in its Order summarized Staff’s position and recommendations as follows:
…
( Staff recommends that UWI initiate the system repairs and modifications at its earliest convenience. Storage tank repairs are to be completed before implementation of UWI residential rates.

( Staff recommends that current Barber Water residential customer rates, $8.90 per winter month and $10.90 per summer month, be continued for no more than six months after master meter installation and operation. After this period, the applicable UWI ¾ inch residential metered rates should be applied, based on total system consumption averaged equally on a per customer basis.

Order No. 28205, p. 4
United Water in reply comments filed October 1, 1999, perceives Staff’s recommendations to be generally consistent with the Company’s proposals and supports and accepts same. O.N. 28205, p. 2. [As more particularly reflected in Staff comments, “the six-month interim period would begin upon completion of the master meter installation.” Staff Comments, p. 2.]

The Commission in its Order No. 28205 made, in part, the following findings:
Capital Improvements
We expect United Water to perform the identified capital improvements (install master meters, telemetering and automated control systems; repair storage reservoirs; rehabilitate wells) prior to any switch of Barber residential customers from present rates to United Water tariffs. Order No. 28205, p. 7

Rate Design & Transition Period
United Water proposes a rate design whereby residential customers will be assessed an amount equal to the metered well production divided by number of customer connections.… We find the proposed rate design for residential customers to be reasonable. We find a required transition to full United Water rates to be reasonable and necessary.…

United Water proposes a six-month transition period for Barber Water residential customers from Barber Water rates to United Water’s ¾ inch residential metered rate during which time residential rates for Barber Water customers will remain unchanged. We find the transition period to be a reasonable and responsible method of addressing customer concerns in mitigating the rate shock that would otherwise result. During this period customers are to be provided within 30 days with billing information that will be useful in assessing the change that will occur when they are switched to United Water rates. Order No. 28205, p. 8.

Staff also notes the following language set out in transcript of public hearing held on October 14, 1999. At that hearing United Water was represented by Bill Linam and Kathy Shiflett. The Company’s attorney was Joe Miller. Mr. Miller at Tr. 21 states:
From the Company, from the United, perspective, the starting of the transition period is very important, and from the customer perspective, the sooner the transaction can close, the sooner the repairs can be made to the system, which is kind of the quid pro quo for the starting of the transition period…the customers get the upgraded system, Barber gets the proceeds, we can start our transition period.

Staff notes that the rates for former Barber Water customers on file with the Commission are the rates reflected in United Water’s Schedule No. 1F (attached). The rates set out in that schedule are the Barber Water flat rates. The rates also contain the following language
“these rates will remain in effect for six months or until the system improvements stipulated in Order No. 28205 have been completed, whichever is longer.”

Staff contends that although the tariff language reflects an approval date of January 20, 2000, that the language itself is non-conforming to the Commission’s Order. The Commission’s Order language does not say the transition period was to begin immediately. Staff further notes that United Water failed to submit a replacement tariff when it switched on July 1, 2000, from Barber Water flat rates to the rate calculations set forth in Order No. 28205. Reference Idaho Code § 61-313—Schedule Charges Only Permitted.
Commission Decision
Staff recommends that the Commission issue a Notice of Petition and provide the Company with an opportunity to respond. Alternatively, Staff recommends that the Commission issue its Order clarifying the above referenced language and providing such other relief as may be thereby required (e.g., calculation and refund (credit) of unauthorized charges). How does the Commission wish to proceed?

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

DECISION MEMORANDUM 4