20230830Comments of the Commission Staff.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION 00
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.9810
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF VEOLIA WATER )IDAHO,INC.'S APPLICATION FOR )CASE NO.VEO-W-23-02
APPROVAL OF INTERCONNECTION )AGREEMENT WITH THE CITY OF )MERIDIAN )COMMENTS OF THE
)COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
through its Attorneyof record,Chris Burdin,Deputy Attorney General,submits the following
comments.
BACKGROUND
On May 17,2023,Veolia Water Idaho,Inc.("Company"),filed an application
("Application")with the Idaho Public Utilities Commission ("Commission")requesting approval
of an Interconnection Agreement for Emergency Use ("Agreement")between the Company and
the City of Meridian ("Meridian").The Company requests that the Commission process the
Application through modified procedure.
The Company represents that the Company and Meridian have considered
interconnecting their two systems to provide,among other things,an emergency water supply.
Application at 2.
STAFF COMMENTS l AUGUST 30,2023
The Company represents that in July 2022,the Company and Meridian entered into the
Agreement and that after executing it,Meridian drafted construction plans that would facilitate
the interconnection.The Company represents that the Idaho Department of Environmental
Quality ("IDEQ")approved the construction plans in August 2022.Id.
The Company represents that Meridian intends to construct its portion of the
interconnection in conjunctionwith an Ada County HighwayDistrict ("ACHD")project known
as ACHD Project No.915001.004.Id.
The Company represents that interconnecting the two systems will benefit both parties
by,among other things,providinga backup source of water in the event of an emergency
experienced by either system.Id.
The Company represents that under the Agreement,the Company will construct,at its
sole cost and expense,the necessary facilities on the portion of the system owned by the
Company,and Meridian will do the same for the portion of the system owned by Meridian.The
Company states that Meridian will pay most of the interconnection costs since Meridian
requested the interconnection.Id.at 3.
The Company represents that Meridian would construct its interconnection facilities first,
and the Company may construct its portion of the interconnection facilities within twelve months
after the construction of Meridian's interconnection facilities is complete.Id.
The Company represents that under the Agreement,the parties are obligated to deliver,
sell,receive,and purchase water on a short-term basis,not to exceed three months,during
emergency events.Id.However,neither party will be obligated to provide water if the party
determines that supplying water will impair its ability to adequatelyserve its own customers.Id.
The Company represents that the Agreement sets forth additional details,includingcharging and
billingprocedures,requirements for water quantity,quality,and pressure,and others.Id.
STAFF ANALYSIS
Staff reviewed the Company's Application and its responses to discovery requests,and
Staff recommends that the Commission approve the Agreement.Staff believes the
interconnection will provide an increase in reliability benefits at a cost well below other
alternatives and with less risk.
STAFF COMMENTS 2 AUGUST 30,2023
Reasonable Costs and Benefits
Staff believes the cost to customers for the additional amount of reliability provided by
the interconnection is cost-effective when compared to other alternatives for additional reliability
reserves.
According to the Company,the net cost of construction to the Company's customers is
$20,000 to $25,000.See response to Staff Production Request No.1.Most of the cost of the
new construction is on Meridian's side of the interconnection and is therefore Meridian's
responsibility.In addition,some of the cost of construction required on the Company's side will
be supplied by Ada County Highway District ("ACHD")through a contribution of capital for
common facilities that interconnect the new building to the Company's system,which ACHD
will fund through the Company's mainline extensionpolicy.
With the amount of additional reserve capacity that the interconnection will provide,
Staff believes that the remaining cost to the Company's customers is much less than that of a
comparable backup well providing the same amount of capacity as the interconnection.Staff
estimated that the interconnection can provide the amount of additional reserves as a comparable
well that would cost the Company up to 20 times more.
Other Risks Are Minimal
Staff assessed other risks to the Company's customers and believes that the risks are
minimal from the followingperspectives:
1.Potential load impact by Meridian's use of the interconnection;
2.Potential for water cross-contaminationbetween the two systems;and
3.Financial loss.
The Agreement requires the Company to supply water to Meridian if Meridian has an
emergency.Staff examined whether the extra load might impair the Company's system.In its
confidential response to Production Request No.3,the Company provided analysis that its
system can sustain the extra load,which Staff believes is reasonable.Furthermore,the
Agreement has broad escape clauses that allow the Company to shut off the interconnection if it
deems that its own system is at risk.
STAFF COMMENTS 3 AUGUST 30,2023
Staff also examined the risk of water quality contamination flowing from Meridian to the
Company's system.Staff verified that both Meridian and the Company conform to the same
IDEQ water quality standards,so the risk of contamination is low.Also,the Agreement has
broad escape clauses that allow the Company to shut off the interconnection if it believes that
contamination is a risk.Therefore,Staff believes this risk is minimal.
Lastly,Staff researched the risk of financial loss to the Company during emergency water
transfers.The Agreement states that the receiving party will pay the prevailing tariff rate of the
other party for any water transferred.Staff believes this provision will protect the Company
from financial loss when it is supplying water to Meridian.If the Company receives water from
Meridian,it will have to pay the prevailing rate of a municipal utility,which is likely to be more
reasonable than alternative emergency sources.Therefore,Staff believes the financial risk is
low.
Performance Under the Agreement
The Company also requested that the Commission approve the Company's performance
of the terms under the Interconnection Agreement.Application at 5.In a separate case,the
Company has clarified that this language is a request for approval of any actions that the
Company will take pursuant to the agreement at issue.See Response to Production Request No.
3 in Case No.VEO-E-23-01.Staff believes that Commission approval of the Agreement is
sufficient by itself,and additional language approving the Company's performance of the terms
under the Interconnection Agreement is not necessary.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Agreement.
Respectfully submitted this 30th day of August 2023.
Chris Burdin
Deputy AttorneyGeneral
STAFF COMMENTS 4 AUGUST 30,2023
Technical Staff:Matt Suess
i:umisc/comments/veow23.2cbcomments
STAFF COMMENTS 5 AUGUST 30,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 30th DAY OF AUGUST 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
VEOLIA WATER IDAHO,INC.,IN CASE NO.VEO-W-23-02,BY E-MAILING A
COPY THEREOF,TO THE FOLLOWING:
PRESTON N CARTER
MORGAN GOODIN
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701-2720
E-MAIL:[e-mail]
morgangoodin givenspursley.com
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE