20211027Comments.pdf

EAGLE WATER CUSTOMER GROUP’S COMMENTS ON PROPOSED SETTLEMENT – Page 1 (26573.001)
4868-3194-9057.v1
Norman M. Semanko, ISB #4761
PARSONS BEHLE & LATIMER
800 W. Main Street, Suite 1300
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Attorneys for Intervenor Eagle Water Customer Group
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT
APPLICATION OF SUEZ WATER IDAHO,
INC., TO ACQUIRE EAGLE WATER
COMPANY
Case Nos.: SUZ-W-18-02; EAG-W-18-01
EAGLE WATER CUSTOMER GROUP’S
COMMENTS ON PROPOSED
SETTLEMENT
Eagle Water Customer Group (“EWCG”), by and through its counsel of record, Parsons
Behle & Latimer, hereby submits these comments pursuant to the Commission’s Notice of
Proposed Settlement; Notice of Amended Schedule; Order No. 35198 (October 15, 2021) and in
response to the Stipulation and Settlement (October 8, 2021).
I.BACKROUND
On October 8, 2021, Commission Staff and the Applicants filed a proposed Stipulation
and Settlement. On October 13, 2021, Exhibit 1 to the Stipulation and Settlement was filed.
Among other things, the settlement proposes a phased-in rate increase for existing Eagle Water
Customers (“EWC”).
In year 1, the current EWC average residential bill would increase from $12.35 to $19.48
per month – a 58% increase. In year 2, the increased rate of $23.85 would be a 93% increase
from the current EWC average monthly residential bill. This escalating, phased rate increase
would level out in year 7 when the increased rate of $40.88 per month would be a 231% increase
from the current EWC average monthly residential bill.
RECEIVED
2021 OCT 27 PM 4:31
IDAHO PUBLIC
UTILITIES COMMISSION
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For EWC commercial customers, the average year 1 rate increase from $38.96 to $79.19
per month would be a 103% increase. In year 2, the increased rate of $96.95 would be a 149%
increase from the current EWC average monthly commercial bill. In year 7, the phased rate
increase would level out at $166.19 per month – a 327% increase from the current EWC average
monthly commercial bill.
II. STANDARDS OF REVIEW
The Commission is not bound by a settlement proposal. The Commission will
independently review any proposed settlement to determine whether it is just, fair, and
reasonable, and in the public interest, or otherwise in accordance with law or regulatory policy.
The Commission may accept a settlement, reject a settlement, or state additional conditions
under which a settlement will be accepted. IDAPA 31.01.274-276.
“The Commission has an established practice of evaluating the transfer of water systems
under the criteria found in Idaho Code Section 61-328.”1 As the Commission observed in the
Falls Water Company acquisition (Case No. FLS-W-18-01): “Idaho statutes do not specifically
address the acquisition of water companies. However, the Commission generally looks to the
standards outlined in Idaho Code Sec. 61-328 related to the sale of electric utilities.” Order No.
34103 at 3. Among these criteria is whether the transaction is in the public interest and whether
rates would be increased because of the transaction. I.C. Sec. 61-328; Order No. 34416
(Acquisition of Gem State Water Company, Case Nos. BCS-W-19-01; DIA-W-19-01) at 3.

1 Order No. 35018 (Acquisition of Troy Hoffman Water Corp., Case No. GSW-W-21-01) at 3:
Order No. 34833 (Acquisition of Morning View Water Company, Case No. FLS-W-20-04) at 4; Order
No. 34616 (Acquisition of Happy Valley Water System and Bitterroot Water Co.) at 3; Order No. 34486
(Acquisition of Water Business of Taylor Mountain Water and Sewer District, Case No. FLS-W-19-01) at
3; Order No. 34416 (Acquisition of Gem State Water Company, Case Nos. BCS-W-19-01; DIA-W-19-
01) at 4; Order No. 34391 (Acquisition of Stoneridge Utilities LLC Water Co., Case No. SWS-W-18-01)
at 2.
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A phased-in rate increase can be a “responsible and reasonable method of mitigating the
rate shock that would otherwise result” to existing customers. Order No. 27798 (United Water
Idaho Acquisition of South County Water, Case No. UWI-W-98-2) at 10.
III. EWCG COMMENTS
1. The Acquisition of Eagle Water Company Would Result in a Rate Increase for Existing
Customers, Contrary to Idaho Code Section 61-328.

It is beyond question that the proposed transaction will result in a rate increase for
existing Eagle Water Company customers. While the record in this matter indicates that a rate
increase of some size would be required even without the proposed acquisition, the amount of
this potential increase is less than the rate increase following the transaction. The difference is
directly attributable to the proposed transaction and is therefore an increase in rates resulting
from the transaction.
In other water corporation acquisition cases, the Commission has been able to conclude
that customer rates would not increase because of the transaction. See e.g., Order No. 34103 at 3
(“We also find that the sale will not cause rates to increase.”); Order No. 34416 at 5 and Order
No. 34486 at 4 (“The cost of and rates for supplying service will not increase because of the
transaction.”); Order No. 34833 at 4 and Order No. 35108 at 4 (both noting that “customer rates
will not increase because of the transaction.”). That cannot be said here.
In recent water company acquisitions, Commission Staff has assured the Commission
that “it will ensure that the requested rate increase was not driven by the transaction, and that
rates will not be higher than they would have been absent the transaction.” Order No. 35108 at 4;
Order No. 34616 at 2. The Stipulation and Settlement appears to depart from this approach.
The Commission has an established practice of evaluating the transfer of water systems
under the criteria found in Idaho Code Section 61-328. This includes determining whether rates
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on existing customers will be increased as a result of the transaction. In the current matter, the
acquisition of Eagle Water Company by SUEZ Water Idaho will result in an increase in the rates
of existing customers. This is true even after factoring out the rate increase that would inevitably
occur if the acquisition did not happen. The cost of being brought into rate parity under the
existing SUEZ tariff is higher for existing customers than the costs that would result from the
required improvements to Eagle Water Company’s system. That is a rate increase resulting from
the transaction, which is precluded under the guiding statute.
In addition, the proposed rate increase – 231% for EWC residential customers and 327%
for commercial customers – is not in the public interest. If there is an example of such a large
rate increase resulting from the acquisition of a water corporation in Idaho, EWCG has been
unable to locate it.2 The magnitude of the rate increase would be unprecedented.
Given the Commission’s previous reliance on the factors enumerated in Idaho Code
Section 61-328, including whether the transaction will result in a rate increase and whether it is
in the public interest, the Stipulation and Settlement and the underlying Application should be
rejected and denied by the Commission.
2. The Proposed Phased-In Rate Increase will not Mitigate the Rate Shock that will Occur to
Existing Customers.

If the Commission is otherwise inclined to approve the acquisition of Eagle Water
Company by SUEZ Water, it must satisfy itself that the rate phase-in is reasonable to approve.
See Order No. 27798 at 10 (“Although the Company has proposed a five-year transition, we find
it reasonable to provide South County customers with a longer period. . .The rate phase-in that

2 The acquisition of South County Water by United Water Idaho resulted in a rate increase of
over 100%, phased-in over six years. Order No. 27798 at 8-10. During the acquisition of the Algoma
Water System, Commission Staff proposed, and the Commission approved, a 53.5% increase for
residential customers and a 58.1% increase for commercial customers. Order No. 30567 at 3-6.
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we find reasonable to approve for existing South County customers is a six-year phase-in
period.”) (emphasis added). The decision is clearly the Commission’s to make.
While the length of the proposed phase-in seems relatively long at seven years, the
structure of the phase-in is also a critical consideration in avoiding rate shock. See e.g.,
Memorandum from Scott Woodbury to Commissioners, Case No. UWI-W-98-2, United
Water/South County Water (November 4, 1998) (“Woodbury Memo”) (noting that the
considerations for the proposed phase-in of rates include both the structure and the length).
In the South County Water acquisition case, the length of the phase-in was increased
from the proposed five-years to six-years by the Commission. The structure of the phase-in
included no rate increase during year 1. Order No. 27798 at 10. In addition – and critically
important in comparison to the current case – the first year of the rate increase (year 2) was only
30% more than the existing customer rates. See Woodbury Memo (“without purchase, South
County customers would realize a 30% increase in their rates. . .an amount equivalent to the
proposed first-year phase-in rate increase”).
For Eagle Water Company customers, the first year of the rate increase would be almost
twice as much (58%) for residential customers and more than three times higher (103%) for
commercial customers. While it is true that this would be largely offset by a one-time Surcharge
Account Refund to Eagle Water customers in year 1, this will do nothing to mitigate the rate
shock that will ultimately hit existing customers in year 2 when the rate increase is 93% more
than existing residential rates and 149% more for commercial customers. That is rate shock.
To bring the Eagle Water Company rate phase-in structure into parity with the South
County Water phase-in, and thereby mitigate the rate shock that would otherwise occur, the first
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year of the rate increase would need to be 30%. The structure and the length of the phase-in
should be adjusted by the Commission as necessary to achieve this reasonable rate increase.
IV. CONCLUSION
For the reasons set forth above, EWCG requests that the Commission: (1) reject and deny
the Stipulation and Settlement and underlying Application pursuant to the factors considered
under Idaho Code Section 61-328; or (2) modify the structure and length of the proposed rate
increase phase-in as reasonably necessary to mitigate the rate shock that would otherwise occur
to existing Eagle Water customers, as it did for existing customers in the South County Water
acquisition case.
DATED this 27th day of October, 2021.

PARSONS BEHLE & LATIMER

Norman M. Semanko
Attorneys for Eagle Water Customer Group

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 27th day of October, 2021, a true and correct copy of
the foregoing document was served on the following via email:
SUEZ WATER IDAHO, INC.
Marshall Thompson
SUEZ WATER IDAHO INC.
8248 W. Victory Road
Boise, ID 83709
E-mail: [e-mail]
Michael C. Creamer
Preston N. Carter
GIVENS PURSLEY LLP
PO Box 2720
Boise, ID 83701-2720
E-mail: [e-mail]
[e-mail]
EAGLE WATER CUSTOMER GROUP’S COMMENTS ON PROPOSED SETTLEMENT – Page 7 (26573.001)
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EAGLE WATER COMPANY:
Molly O’Leary
BIZCOUNSELOR @ LAW, PLLC
1775 W. State St. #150
Boise, ID 83702
E-mail: [e-mail]

Robert V. DeShazo, Jr., President
EAGLE WATER COMPANY, INC.
PO Box 455
Eagle, ID 83616-0455
E-mail: [e-mail]
N. L. Bangle
H2O EAGLE ACQUISITION, LLC
188 W. State Street
Eagle, ID 83616
E-mail: [e-mail]

COMMISSION STAFF:
Dayne Hardie
Erick Shaner
Deputy Attorneys General
IDAHO PUBLIC UTILITIES COMMISSION
472 W. Washington (83702)
PO Box 83720
Boise, ID 83720-0074
E-mail: [e-mail]
[e-mail]

CITY OF EAGLE:
B. Newall Squyres
Murray D. Feldman
HOLLAND & HART LLC
800 W. Main St., Suite 1750
PO Box 2527
Boise, ID 83702-2527
E-mail: [e-mail]
[e-mail]
Jason Pierce
Mayor
CITY OF EAGLE
E-mail: [e-mail]
[e-mail]
CITIZENS ALLIED FOR INTEGRITY AND
ACCOUNTABILITY:

James M. Piotrowski
Marty Durand
PIOTROWSKI DURAND, PLLC
1020 W. Main Street, Suite 440
PO Box 2864
Boise, ID 83701
E-mail: [e-mail]
[e-mail]

EAGLE WATER CUSTOMER GROUP’S COMMENTS ON PROPOSED SETTLEMENT – Page 8 (26573.001)
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CITY OF BOISE CITY
Mary Grant
Scott B. Muir
Deputy City Attorney
BOISE CITY ATTORNEY’S OFFICE
150 N. Capitol Blvd.
PO Box 500
Boise, ID 83701-0500
E-mail: [e-mail]

DATED this 27th day of October, 2021.

Norman M. Semanko