20081126Comments re Order No 30656.pdf

Gerald J. Corvino
11865 West Tustin LN
Kuna, Idao 83634
Email: GCorvino(ßyahoo.com
[phone]
Ei\i,. r',REC. ,,: L':~~'
2008 NOV 26 AM 8: 09
IDAHO PUBLIC .1
UTILITIES COMMISSIOI;¡
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
MAYFIELD SPRINGS WATER COMPAN, )
INC. FOR A CERTIFICATE OF PUBLIC )
CONVENIENCE A.~ NECESSITY )
)
)
)
)
CASE NO. MSW-W-08-1
COMMNTS WITH RESPECT
TO ORDER No. 30656
The followig constitutes the comments of Gerald J. Corvino as intervenor in the application of
Mayfield Springs Water Company (aka Idaho Springs Water Company and Arbor Ridge, LLC) (the
"Company") for a Certificate of Public Convenience and Necessity (CPCN) to provide water
service to the Arowrock Ranch Subdivision. Specifically these comments relate to the item
approved for reconsideration related to hook up fees for new servce in Commission Order No.
30656.
"Subdivision" in the following comments refers to Arowrock Ranch Subdivision Phase I and II.
"Developer" refers to Arbor Ridge, LLC and Powder River Development, Inc.
The Company indicated through discovery that all shares and membership interest in Arbor Ridge,
LLC, Intermountan Sewer and Water, Inc., Idaho Springs Water, Inc. and Mayfield Sprigs Water
Company are owned by Greg Johnson.
Intervener Gerald J Corvino Comments
MSW-W-08-1
1 November 24, 2008
Hook Up Fee for New Service
The following is a brief analysis of the information provided by the Company to the Commssion
and deemed by the Company to be trade secret, confdential and exempt from public disclosure. We
believe the following sumar does not violate the intent of that designation based on a discussion
with the Company's counsel regarding the reasons for said designation.
From October 17, 2005 though Augut 29, 2007 the Company collected $140,000 from the hook
up fee of $2,500 on 56 lots in the Subdivision. This amount represents an excess of $99,400 over
the PUC approved hook up fee of $725 per Commission Order No. 30628.
There is no need for the PUC to revisit the legal issues regarding the Company operating without a
CPCN or application from October 2005 though Janua 2008 as the 4th Distrct Cour has aleady
ruled on ths matterl:
"From the statute and regulations, a certificate of necessity and
convenience was required before the constrction of the water system at
alL. The Defendants have gone fuer than merely commencing
constrction-constrction has been completed. The Defendants have gone
even fuer and have begu to charge customers for its services."
Furer, the Cour went on to determine the penalty on August 4th, 2008 when the Cour ruled in a
Memorandum Decision on a request for sumar judgment in the same case:
"Thus, the Cour finds that there is a clear basis under the law for it to
award the Plaintiffs any amounts paid for water servces before the
Defendants fied their Application for Convenience and Necessity. A
water corporation operating ilegally canot collect fees for their
"service."
We respectively request that the Commission affrm the Cour's decision and order refuds of all
hook up fees paid prior to the Company filing for a CPCN for the 14 plaintiffs. Furer, we request
the Commission order the Company to refud $1,775 (the difference between the $2,500 charged
and the $725 PUC approved) to the other customers not par to the lawsuit. We believe the
i Case No CVOC07089t8, Guy and Lori Bourgeau et at, Plaintiffs versus Greg Johnson et aI, Defendats, March 10,
2008
Intervener Gerald J Corvino Comments
MSW-W-08-1
2 November 24, 2008
difference between the two amounts is fair and just as the plaintiffs incured the cost for ths action
and directly caused the Company to fie for a CPCN which it had delayed for over 28 months.
We expect the Company to argue that 36 of the 56 hook up fees were paid by constrction
companies or others and not directly by the curent customer. It is reasonable to assume that ths
cost was passed on to the buyer of the propert as were any building permt fees, other utilty
connection fees, etc. We also believe it is reasonable and fair to pay those refuds to the curent
customers.
We expect the Company to argue as it has in the past that the Commission defer to the Distrct
Cour in the interest of judicial economy. However, only 25% (14 of 56) of the propertes are
represented in that lawsuit. A Commission decision in ths matter could avoid expensive, multiple
litigations and reduce the cost to a "small water company with an expected rate of retu of $1,615
anuallr." In the absence of such an order, each of the other 42 customers not par to the lawsuit
could file separately resulting in a significant expense to the Company.
Furer, we expect the Company to argue that it has no cash to pay any ordered refud. This
arguent is irrelevant since the Company is nothg more than a "care out" of Arbor Ridge, LLC.
The Company appears to have been staed to simplify accounting issues related to the reguation
process. As attested by the Company in discovery, Greg Johnson is the 100% owner of Arbor
Ridge and Mayfield Springs Water Company among others. Arbor Ridge collected $140,000 from
the hook up fees in addition to an estimated $3.5 millon on the sale of 50 lots in phae one of the
subdivision alone. It is this revenue that the Commission should consider in determining the abilty
of the Company to pay. This approach would be in line with the Commission's treatment of
contrbuted capital and the Commission's Policies and Presumptions for Small Water Companes,
IDAPA,31.36.31.103
2 Company "Response to Petition of Reconsideration of Intervenor Gerald J. Corvo", dated September 22, 2008
Intervener Gerald J Corvino Comments
MSW-W-08-1
3 November 24, 2008
Finally, the Commssion may be concerned about the viability of the water service to the
Subdivision. The Arowrock Rach Home Owners Association (HOA) has suffcient financial
assets to operate the water service and its members are the only customers other than Intermountan
Sewer and Water. Intermountain's customers are also only in the Subdivision. The Company has no
employees (disclosed in discovery) and operation, maintenace and biling related services are all
contracted out. In addition, the "Amended and Restated Master Declaration of Covenants,
Conditions and Restrctions" (CC&R's) for the Arowrock Rach Subdivision previously filed with
the Commission anticipated the possibilty of the HOA operating the water company in Aricle IX.
Section 12, "Transfer of Water System." For these reasons, we believe service would be adequately
maintaned by the HOA in the event the Company ceases operation.
DATED at Kuna, Idaho, this 24th day of November, 2008.
/J~JC-'
Gerald J. Corvino
Cc: John R. Hamond
Krs Sasser
Intervener Gerald J Corvno Comments
MSW-W-08-1
4 November 24, 2008