20090928_2716.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KEMPTON
CO MMISSI 0 NER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:CHRIS HECHT
DATE:SEPTEMBER 24, 2009
RE:SPIRIT LAKE EAST WATER COMPANY TARIFF ADVICE
On August 20 2009, Spirit Lake East Water Company filed a Tariff Advice to modify
the Company s Tariff Schedule No.1. The Company wishes to begin billing its customers on a
monthly basis beginning on October 1 , 2009. In addition, the Company proposes to modify
language in Tariff Schedule No.1 regarding how it will bill its customers in the event that it
cannot read a meter(s). The Company also wishes to add the following charges to the existing
tariff: a late payment fee, a returned check charge, an after hours reconnection charge, a seasonal
reconnection charge and an after hours seasonal reconnection charge. The Company originally
requested that this filing become effective within thirty (30) days after filing. On September 11
2009, the Company sent a letter requesting that the effective date be moved to October 1 2009.
Background
Spirit Lake wishes to begin billing its customers on a monthly basis for water service
starting October 1 , 2009, for the previous thirty (30) day period and continuing thereafter
indefinitely. Currently, the Company bills its customers on a quarterly basis for water service
received the previous three months. The revised Tariff Schedule No.1 reflects this change by
adding language stating that the Company will bill customers on a monthly basis unless
conditions make it impossible to reach and read the meters. In the event the Company cannot
read a meter for one billing period, the customer will be billed the minimum charge of $12.50.
Subsequent billings will aggregate the 9 000 gallon monthly allowance for each month that no
meter reading is taken and bill the usage exceeding the total allowance. If, for example, the
DECISION MEMORANDUM - 1 -SEPTEMBER 24, 2009
customer has used more than 18 000 gallons over two billing periods, 27 000 over three billing
periods and so on, he or she will be billed for usage exceeding these amounts. Spirit Lake is
requesting the change to monthly billing because: 1) it will produce a more consistent revenue
stream to support the operations of the Company and the provision of safe, adequate and reliable
water service to its customers; 2) will send better and more timely signals to the Company
customers about their individual water usage; 3) allow the Company to obtain data showing a
more accurate account of water usage or loss; and 4) provide for a more timely discovery and
disclosure of any leaks on the customer s side of the meter.
In addition to the changes in billing frequency, Spirit Lake also proposes several non-
recurring charges not previously contained in the Tariff. The Company wishes to add: 1) a late
payment charge of one percent (1 %) per month of the unpaid balance not received by the next
statement date; 2) a $20.00 returned check fee each time a customer s check for payment for
water service is returned by the bank; 3) a reconnection fee of $32.00 for reconnection within 30
days of disconnection but at times other than normal business hours; and 4) new reconnection
fees for customers disconnected more than thirty days of $52.00 during normal office hours and
$65.00 for other than normal business hours. Spirit Lake is requesting these fees and charges
because they allow the Company to recover a portion of the costs incurred by the Company for
late payment, returned checks, and reconnecting service directly from those customers causing
the cost to be incurred.
The Company has provided notice of these changes to its customer through a direct
mailing dated August 20, 2009 to each of its customers.
ST AFF RECOMMENDATION
In response to Staff s request for information, the Company indicated that the existing
billing system, software program and special postcard sized forms would need to be upgraded as
part of the process of switching from quarterly to monthly billing. Staff recommends that the
Commission suspend the effective date of this tariff advice to allow the Company additional time
to provide information and Staff to complete its investigation. Because the Company s request
for monthly billing may have a significant impact on its revenue requirement, Staff believes it
would be more appropriate to treat the Company s request as an Application rather than a tariff
DECISION MEMORANDUM - 2 -SEPTEMBER 24, 2009
advice. Staff recommends that the Commission initiate a formal case to be processed under
Modified Procedure with a fourteen-day comment period for all interested parties.
COMMISSION DECISION
1. Does the Commission wish to suspend the effective date of Spirit Lake s tariff advice?
2. Does the Commission wish to initiate a case to be processed under modified procedure
with a 14-day comment period?
Ltv ~fJ--
Chris Hecht
i: udmemos/sp Iwdmtariffadvicech 1
DECISION MEMORANDUM - 3 -SEPTEMBER 24, 2009