HomeMy WebLinkAbout20070430Objections.pdfTHE LAW OFFICE OF
PAINE HAMBLEN LLP
Janet D. Robnett
Attorney at law
janet. robnett(Q)painehamblen.com
701 FRONT AVENUE, SUITE 101
O. BOX E
COEUR D'ALENE, IDAHO 83816-0328
(208) 664-8115
FAX: (208) 664-6338
www.painehamblen.com
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April 27, 2007
SENT VIA FEDERAL EXPRESS
Ms. Jean Jewell
The Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ill 83702-5983
Re:Application of Stoneridge Water Co. - Case No. SWS-06-
Dear Ms. Jewell:
Enclosed for filing are the original and seven (7) copies of the Objections of Stoneridge
Recreational Club Condominium Owners Association , Inc. to the proposed increases in rates and
charges described in the above-referenced application. A copy of the Objections was also filed
electronically with you, as of this date.
Thank you for your assistance in this matter.
Sincerely,
PAINE HAMB LEN LLP
~~;tfJ6 ~-ff-
JDR:smk
Enc.
cc:Donovan Walker
Wayne Benner
Joe M.Olmstead
Cindy Thomas
Bob Smith
H:\CDADOCS\24194\OOOO2\ltr\CO145496.DOC
A Limited Liability PartnershiP
Offices in Spokane' Coeur d'Alene . Kennewick
Janet D. Robnett
Attorney at Law
O. Box "
701 Front Avenue, Suite 101
Coeur d'lene. Idaho 83814
Telephone: (208) 664-8115
ISBA # 3268
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF STONERIDGE WATER COMPANY FOR
AN INCREASE IN RATES AND CHARGES
CASE NO. SWS-06-
OBJECTIONS OF STONERIDGE
RECREATIONAL CLUB
CONDOMINIUM OWNERS
ASSOCIATION, INe.
INTRODUCTION AND BACKGROUND
This matter is before the Idaho Public Utilities Commission (the "Commission ) on the
application of CDS Stoneridge Associates - Land, LC , doing business as Stoneridge Water
Company (the "Company ), for a general rate case establishing new rates and charges for
customers in the Company s service area near Blanchard, Idaho.
The Stoneridge Recreational Club Condominium Owners Association, Inc. is the
governing body for the operation and management of Stoneridge Resort, a timeshare
condominium project. Stoneridge Resort consists of four (4) residential buildings containing 102
studio units , 39 one-bedroom units, and five (5) two-bedroom units, for a total of 146 units.
OBJECTIONS OF STONERIDGE RECREA TIONAL
CLUB CONDOMINIUM OWNERS ASSOCIA nON, INC. - 1
Each unit contains a single bathroom, and a small efficiency kitchen. Each building has its own
two inch (2") metered water line connection. In addition , the Resort has a separate recreation
center and a small park, each with separate water line connections.
The buildings and features of Stoneridge Resort are clustered in a relatively small
geographic area in comparison to the total service are of the Company. Stoneridge Resort is
located a short distance from the Company s wells, and therefore utilizes very little of the
Company s water distribution system. Maintenance of the service lines and meters to serve the
residential buildings involves only the four (4) metered connections described above.
Nevertheless, the Company now proposes to treat each of the 146 condominium units as a
separate residential customer. The Company s proposed rates would result in an increase to
Stoneridge Resort of 1882%! Under these circumstances, Stoneridge Resort is compelled to
object to the proposed rates, from both the revenue requirements and the rate design points of
view, as described more fully below.
REVENUE REO UIREMENTS
A public utility, of course, should be allowed such rates as will produce sufficient funds
to meet necessary maintenance and operating expenses , and a fair and reasonable return on the
value of its property. However, a review of the Company s proposed rates should not be
conducted in a vacuum. The Company is affiliated with, and a part of, the developer of the golf
and recreational community surrounding Stoneridge Resort. The developer is in the business of
developing land for resale as residential home sites, condominiums and the like. As such, it is
presumed that the capital investment is "contributed capital", excluded from the rate base, and
ultimately to be recovered from lot sales. IDAPA 31.36.01.103.
OBJECTIONS OF STONERIDGE RECREA TIONAL
CLUB CONDOMINIUM OWNERS ASSOCIATION, INc. - 2
Stoneridge Resort believes the increase in revenues requested in this case is excessive.
has not, however, undertaken to do an exhaustive audit of the Company s revenue requirements
and trusts that the Commission and its staff will be thorough, just and reasonable. In that
process, consideration should be given to the fact that the system has excess capacity available to
service new developments. Costs that are now proposed to be included in the rate base for
charges to existing customers were also incurred for the benefit of that excess capacity. To that
extent, it is somewhat analogous to "property held for future use , for which the Company is
prohibited from receiving a return. See, Idaho Code ~ 61-502A. Such a return is per se unjust
unreasonable, unfair, unlawful and illegal." Id.
The amount of such excess capacity, and the incremental cost associated with it, is
difficult to determine from the Company s submittals. In a discussion relating to Stoneridge
Ground Water Rights, there is a reference to the present system being capable of serving more
than 710 Equivalent Residency Units or "ERU's . The costs in the rate proposal, however, are
divided amongst 374 customers (which includes Stoneridge Resort with 146 residential
customers rather than four (4)).We could not identify anything in the submittals which
identified how many ERU's those 374 customers relate to. Furthermore , the Company points out
that there is a potential for 1 207 customers at build out. One would assume that the water
system has been designed, developed, maintained, and most recently brought into compliance
for the benefit of all of the current and future capacity. That portion of the cost attributable to
future needs should be deemed contributed capital. If a new source of supply or additional
distribution facilities are needed to fully serve new customers, then those costs would even more
clearly be contributed capital, and would not affect the current customers.
OBJECTIONS OF STONERIDGE RECREATIONAL
CLUB CONDOMINIUM OWNERS ASSOCIATION, INC. - 3
At the end of the day, the developer is in the best position to recover the costs that it has
incurred for the benefit of future growth through the price of its lots , rather than having that
subsidized by the Company s current customers.
RATE DESIGN
All charges of a public utility "shall be just and reasonable." Idaho Code ~ 61-301. The
cost of providing service is one criterion for consideration in forming a basis for rate
differentiation between classes of service or classifications of customers. Grindstone Butte
Mutual Canal Company v. Idaho Public Utilities Commission , 102 Idaho 175 , 179, 627 P.
804, 808 (1981). Other relevant criteria include:
the quantity of the utility used, the nature of the use, the time of use, the pattern of
use, the differences in the conditions of service, the costs of service, the
reasonable efficiency and economy of operation, and the actual difference in the
situation of the consumers for the furnishing of the service. !d.
The Company proposes to treat each of the condominium units of Stoneridge Resort as a
separate ERD. For design purposes, ERU's are used to determine the adequacy of supply
sources to meet the daily needs of a water system. Attached hereto as Exhibit No. 201 are
excerpts from a dictionary of drinking water terms. As demonstrated by those excerpts, ERU'
may be used at times for rate design purposes by comparing a large use customer s requirements
with the equivalent number of smaller customers that would have similar requirements. In this
case, the Company is applying the rate design approach backwards.
Attached to these comments is a three page exhibit (Exhibit No. 202) composed of copies
of rate schedules for United Water Idaho, Capitol Water Co. and the City of Coeur d' Alene. For
all of these systems, each meter represents a customer. Multiple living unit buildings with a
single meter represent a single customer. Every customer is treated the same as any other
OBJECTIONS OF STONERIDGE RECREATIONAL
CLUB CONDOMINIUM OWNERS ASSOCIATION, INc. - 4
customer on the system. Commodity rates for water are the same for all customers. It is the base
charge or meter charge that escalates with the size of the service line and meter serving the
customer s property. This recognizes the potential demand a customer s service may place on
the water system and is consistent with the normal application of ERU' s for rate design purposes.
The Company s own worksheets show that residential customers on the Happy Valley
Rancho s portion of the system have an average annual consumption of over 90 000 gallons.
Residential customers on the original Stoneridge portion of the system average approximately
000 gallons annually. The average annual consumption per unit for the resort complex is only
500 gallons.The individual units obviously are not the equivalent of a single family
residential customer for purposes of consumption. This , combined with the proximity to the
source, and the collective meter reading and billing costs for each of the four residential
condominium buildings comprising Stoneridge Resort, demand a differential rate from single
family dwelling customers.
Stoneridge Resort proposes that rates be established based upon actual physical meter
connection sizes and water consumption. Two exceptions to this proposal include the golf
course irrigation connection and the new motor coach village under development. Both of these
are served through six inch (6") meters. It is our understanding that the reason for the large size
of these meters is to allow for fire flow protection beyond the meter. We recognize that the golf
course irrigation system is not pressurized by the Company but rather pumps water from storage
that is filled from the water system during off peak hours. We also realize that the motor coach
units within the village are not separately metered or billed, and will have minimal water
consumption on a per unit basis. Stoneridge Resort proposes that these services be treated on par
OBJECTIONS OF STONERIDGE RECREATIONAL
CLUB CONDOMINIUM OWNERS ASSOCIA TION, INC. . 5
with each of the timeshare condominium buildings, and charged as though they were served
through two inch (2") meters.
Using the Company s reported revenue requirements (which remain subject to adjustment
during the audit process and taking into consideration the points discussed above), Stoneridge
Resort proposes the following rate design:
Meter Size Base Charge
3 /4 x 5 / 8"$47.
1 "$61.57
1 1 / 2"$100.
$144.
All Commodity $1.40/ 1 000 Gallons
This rate design would produce total revenues of $229 912.16 as compared to the Company
proposed revenue of $230 453.00. Attached as Exhibit No. 203 is a summary of the effect this
rate design would have on the average residential customer and each of the commercial
customers connected to the water system. A detailed spreadsheet supporting these calculations
has been delivered electronically.
CONCLUSION
The rate schedule proposed by the Company, and the differentiation of rates among its
customers, are not just and reasonable. The revenue requirements are excessive, include costs
not properly allocable to the water system, and unfairly burden the current and existing
customers for the benefit of future development. The rate design fails to adequately differentiate
amongst customers based upon the cost of providing service to them -- taking into consideration
OBJECTIONS OF STONERIDGE RECREA TIONAL
CLUB CONDOMINIUM OWNERS ASSOCIA TION, INc. - 6
such things as the quantity of water used, the nature of the use, the time of use, the pattern of use
the differences in the conditions of service, and the actual difference in the situation of the
consumers for the furnishing of the service.
Stoneridge Recreational Club Condominium Owners Association, Inc., therefore requests
the Commission to reduce the revenue allowed to be recovered from the current customers of the
Company, consistent with staff's more complete audit of the Company s submittals, and to adopt
a rate design based upon the comparative meter sizes of the Company s customers.
DATED this 27th day of April, 2007.
PAINE HAMB LEN, LLP
B Y fl!!/Q to b ru
ANET D. ROBNETT
Attorneys for Stonendge Water Company.
OBJECTIONS OF STONERIDGE RECREA TIONAL
CLUB CONDOMINIUM OWNERS ASSOCIATION, INC. - 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 27th day of April , 2007 , I caused to be served a true
and correct copy of the foregoing by the method indicated below, and addressed to the following:
Via Federal Express
Via E-mail
Via u.S. Mail
Ms. Jean Jewell
The Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83702-5983
iean.jewell (g)puc.idaho.gov
Wayne Benner
O. Box 280
Blanchard, ID 83804
wbenner(g) stoneridgeidaho.com
Via Federal Express
Via E-mailL- Via u.S. Mail
Joe M.Olmstead
James A. Sewel & Assoc.
600 4th St. West
Newport, W A 99156
Via Federal Express
Via E-mail
Via U.S. Mail
&. ;2 bill:
Janet D. Robnett
H:\CDADOCS\24194\OOOO2\plead\CO145246.DOC
OBJECTIONS OF STONERIDGE RECREA TIONAL
CLUB CONDOMINIUM OWNERS ASSOCIA TION, INc. - 8
SELECTED DEFINITIONS OF DRINKING WATER TERMS
Equivalent customer. The designation for the number of fictitious customers whose
water use through a 5/8-inch meter (single-family unit) is the same as the water use of a
large-use customer. This calculation is based on a composite of all elements of cost
differences between the single-family unit customer and the large-use customer. It is
normally expressed as the ratio of the single-family unit customer to the large-use
customer. For example, if the large-use customer is equivalent to 10 single-family use
customers , the ratio is 10: 1.
Equivalent meter. A means of expressing different sized water meters in terms of an
equivalent number of "standard" size meters. The 5/8-inch or 3/4-inch meter size is often
used as the standard in terms of which all other meters are expressed. For example, a 1-
inch meter is equivalent in capacity to two and one-half 5/8-inch meters. Equivalent meters
are often used in ratemaking to assess customer monthly service charges based on meter
size and to distribute capacity costs based on meter size in developing connection charges.
Equivalent Residential Unit. A means of expressing different levels of residential
customer demand for water in terms of an equivalent number of least-size residential
demand accounts. If the base residential demand is 300 gallons (1,135 litres) per day per
account, then other customer groups ' accounts would be expressed in terms of the
equivalent number of these least-size accounts. In this manner, the customer may be said
to be paying for a proportionate share of the share of the capacity that customer is using.
This concept is sometimes used to determine capacity costs for new accounts and to
develop monthly service charges based on meter size. See also equivalent customer;
equivalent meter.
UNITED WATER IDAHO INC.
IDAHO PUBLIC UTILITIES COMMISSIONApproved Effective
July 28 2006 August 1 , 2006
Per O.N. 30104
Jean D. Jewell Secretary
Sheet No.
Replacing all Previous Sheets
SCHEDULE NO.
GENERAL METERED SERVICE
Availabilitv:
To all metered customers not served under a separate schedule.
1 "
Bi-Monthly
Per Meter
Charge
5 16.
16.
21.
34.
49.
91,
145.
280.
423.
591.
Customer Charqes:
Meter Size
5/8"
3/4"
1/4" and 1-1/2"
2" or multiple meters of equivalent capacity
3" or multiple meters of equivalent capacity
4" or multiple meters of equivalent capacity
6" or multiple meters of equivalent capacity
8" or multiple meters of equivalent capacity
10" or multiple meters of equivalent capacity
Volume Charqe:Winter
Rates
Summer
Rates
For all water used less than 3CCF (100 cubic
Feet) (CCF)(1 CCF=748 gallons):
For all water used greater than 3CCF
$1.2112
$1.2112
51.2112
51,5141
Conditions of Contract:
The customer shall pay the total of the customer charge plus the volume charge.
The volume charge is based on all metered \vater for the billing period.
Consumption is expressed in hundred cubic foot units or thousand gallon units as
determined by the meter installed by the Company. The customer charge will be
prorated whenever the customer has not been a customer for the entire billing
period.
Summer Period:
The summer rate \Nill apply to water consumed between May 1 and September 30. Meter
readings straddling these dates will be prorated.
UNITED
Issued Per IPUC Order No. 30104
Effective - August 1 2006
Issued by UNITED WATER IDAHO INC.
Gregory P. Wyatt, Vice President
8248 West Victory Road, Boise, Idaho
Tarriff No.Page
'DAliO PUBLIC UTILITIES COMMISSIONAPPROVED EffECTIVE
I.P.C. No.nEt 21 '
~~
sECRETARY
JAM 1 - '
Canceli
Name of Utility
CAPITOL WATER CORPORATION
SCHEDULE NO.
APPLICABLE: To all metered customers
For all consumption in excess of 000 cu. Feet per
month, Per 100 cu. feet
Basic Surcha TotalCOMMODITY RATE:
For the first 1000 cu. feet per month
Per 100 cubic feet
For the next 1000 cu. feet per month
Per 100cu. Feet
OTHER CHARGES:
Boise City Franchise Tax of 3% will be added to each customen5 bill.
Idaho Department of Environmental Quality Fee of $0.34 will be added to each bill.
MINIMUM CHARGE:
Customers using less than the following minimum charge allowance
will be billed the minimum charge.
Service Min. Charge Commodity Allowance Minimum Surcharge Total Monthly
Size In Cubic Feet Char e Minimum Char
314" and smaller 653
915 10.13.
1 1/2"597 15.19.
760 27.33.
080 48.60.
Per Commission Order No. 30198
Issued December 21 , 2006 Effective Janua 1 , 2007
Title
resident
Water Rates and Charges for the
City of Coeur d'Alene Water- System
Metered Rates
Rates (monthly):
1'"
1 '
3'"
8'"
leV'
Meter Size
314" or less
Water Charqe IJer 1,000 Gallons
Residential
$0.
Mu Iti-Famil
$0.47
Mobile Home Park
$0.
Government Commerda:1
SO.67 $0.51
Definitions:
Residential (Singie Family, Duplex)
Singie-family dw'el!ing or singte permanent mobEe home on an individually piatted lot:,
and duplexes,
Multi-Famify
Tnree or more residential dwelling units under one roof.
Mobile Home Park
Includes an mobile home parks with master meters for more t'1an one unit~
Commercial (Inc~udes Hospitais, Industrial Users, R"'" and Tr-3i!er Parks)
Including all commer-:::ial and industrial users~ Also incllJded are R\i and Trailer Pari..
users.
Government (CIT'. County, State, federal, and Schools)
IndJdes all go'"ernment -3nd public agencies.
NOTES:
(1) Users which are considered in more than one of the classifications above ""iil
charged the highest commodity charge of their ure classificatiol1 for all 'water use.
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