20240424Staff Comments.pdf

RECEIVED
Monday, April 24, 2024 10:08AM
IDAHO PUBLIC
UTILITIES COMMISSION
CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
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
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF FALLS WATER CO., INC. FOR ) CASE NO. FLS-W-24-01
APPROVAL OF A REPLACEMENT WELL )
FOR ITS MORNING VIEW SYSTEM )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Chris Burdin, Deputy Attorney General, submits the following
comments.
BACKGROUND
On January 31, 2024, Falls Water Co., Inc. ("Company") filed an application
("Application") with the Idaho Public Utilities Commission("Commission") seeking approval
for a replacement well to serve customers within the Company's recently acquired Morning
View("MV") Water Company water system.
The Company represents that in 2020, the Company filed an Application seeking the
Commission's approval for the acquisition of the assets of MV Water Company. Application at
2. The Company states that after acquiring MV Water Company's assets, the Company
STAFF COMMENTS 1 APRIL 24, 2024

conducted a review of system needs and contracted with Aspen Engineering, Inc. to complete a
Facility Plan for the system. Id.
The Company represents that the Facility Plan indicates that a new backup well for the
system is needed"immediately"to ensure sufficient water supply if the primary well fails. Id.
The Company states that it believes that installing a new well and related infrastructure
(collectively, the "Project") for the MV Water Company system is reasonable, necessary, and in
the public interest. Id. at 3.
STAFF ANALYSIS
Based on its review of the Company's Application, exhibits, and responses to discovery
requests, Staff recommends the Commission authorize the Company to construct a backup well
and related infrastructure for the MV water system as proposed, with the caveats that the
capacity of the proposed well be right-sized for customer's water demand and that the need and
economics for a sand separator is justified. If the Commission authorizes the decision to
construct, Staff will review the actual cost of the Project to ensure it is properly sized to meet
customer's water needs and is implemented at a reasonable cost when the Company seeks
recovery in a future general rate case.
The Company's current system includes three wells. The Company states that Well Nos.
I and 2 are not operating adequately and Well No. 3 (the largest well)produces nearly all the
water for the MV system. Application at 3. In addition, the Company is required by the Idaho
Department of Environmental Quality ("IDEQ") to have a backup well that can supply water in
the event of a failure of the Company's largest well, which in this case is Well No. 3. Facility
Plan at 4. The proposed Well No. 4 will serve as the backup well replacing Well Nos. I and 2 as
a part of the Project as detailed below.
Description of the Project
In its Application, the Company has identified several tasks to complete the Project
including developing engineering plans, constructing the well, updating piping in the wellhouse,
installing a new sand separator and Variable Frequency Drive ("VFD") controls, and purchasing
and installing a backup power generator. Application at 4.
STAFF COMMENTS 2 APRIL 24, 2024

The Company plans to decommission both Well Nos. I and 2 once Well No. 4 is
operational. The Company also plans to reutilize the same meter from existing Well Nos. I and
2 for the proposed Well No. 4. Company's Response to Production Request No. 3. The
Company estimates that Well No. 4 will have an estimated useful life of 40 years. Company's
Response to Production Request No. 28.
Need for a Backup Well
Without the new backup well, Staff believes the Company's water system cannot reliably
satisfy customers' water demand or meet the requirements outlined in the Idaho Rules for Public
Drinking Water Systems (IDAPA 58.01.08 Section Nos. 501, 541, and 552). Staff believes the
need for the backup well is adequately justified based on the following:
1. Regulatory requirements for a backup well;
2. Well maintenance history;
3. Considered alternatives to a backup well; and
4. Projected future growth.
However, analyzing the Company's current demand and projected future growth, Staff is
concerned that the Company's proposed well capacity exceeds projected water demand. Thus,
Staff will review the installation of Well No. 4 when the Company seeks recovery for the actual
cost of the new well to ensure it is not oversized for the system without sufficient justification.
The consequence of installing an unjustified, oversized well could result in an adjustment to the
cost of the well allowed for recovery.
Regulatory Requirements for a Backup Well
Without the installation of Well No. 4 as a backup well, Staff believes the Company will
fall short of three requirements as contained in Idaho Rules for Public Drinking Water Systems.
The Company needs to meet minimum requirements for Maximum Daily Demand("MDD"),
water pressure, and Peak Hourly Demand("PHD"), if the Company's largest well goes out of
service.
STAFF COMMENTS 3 APRIL 24, 2024

First, the Company is required to have enough firm capacity' to satisfy its MDD if the
largest well is out of service due to malfunction, maintenance, etc. (IDAPA 58.01.08.501.17).
As can be seen from Table Nos. 1 and 2 below, the MDD of 399,200 gallons per day("gpd")
cannot be currently met by Well Nos. 1 and 2, if its largest well, Well No. 3, goes out of service.
Table No. 1: Estimated Customer Demand
Estimated demand in gpd
ADD 124,000
MDD 399,200
PHD 496,000
Facility Plan at 16.
Table No. 2: Pumping Capacity of MV System Wells.
Pumping Capacity in Pumping Capacity in gallons per minute
gpd m"
Well Nos. 1 and 2 288,000 2002
Well No. 3 720,000' 5004
Well No. 4 792,000—864,000' 550-600
(Proposed)
Second, the Company has enough capacity to satisfy its Average Daily Demand("ADD")
of 124,000 gpd and maintain 58 pounds per square inch("psi") system-level pressure with all of
its wells operational; however, Staff believes that the Company will fail to satisfy its ADD,
resulting in depressurization, if Well No. 3 is out of service, given the capacity of Well Nos. 1
and 2 and the operational status of those wells (IDAPA 58.01.08 Section Nos. 501.07 and
552.O1.b).
1 Firm pumping capacity is defined as the production capacity of the water supply wells in the system with the
largest well out of service.Facility Plan at 18.
2 Facility Plan at 4.
3 Facility Plan at 18.
4 Staff calculated this value from the information provided in Company's Facility Plan at 18.
5 Staff calculated this value from the information provided in Company's Response to Production Request No. 5.
STAFF COMMENTS 4 APRIL 24, 2024

Third, the Company does not have enough firm capacity to satisfy Peak Hourly Demand
of 496,000 gpd if Well No. 3 is out of service with Well Nos. 1 and 2 only having capacity of
288,000 gpd in total, even when they are operational (IDAPA 58.01.08.501.17).
Projected Future Growth
Staff believes that the capacity of proposed Well No. 4 may be oversized to meet current
and future water demand and minimum regulatory requirements. Without sufficient justification
for the size of the well when the Company seeks recovery in a future rate case, Staff may
recommend to the Commission an adjustment to the amount allowed for recovery to prevent
customers from being overcharged for an oversized well.
The Company is currently serving approximately 400 people via 138 residential
connections. The Company is anticipating only 3 additional connections by the end of 2026.
Facility Plan at 16. Furthermore, the Company affirms it is not projecting any significant
changes to its water demand in the future. Company's Response to Production Request No. 14.
Since the Company can currently meet its current water demand solely with existing Well No. 3
that has a capacity of 720,000 gpd, Staff believes a backup well of similar size will be sufficient,
unless there are additional circumstances unknown to Staff at this time.
Alternatives to a Backup Well and Cost-Benefit Analysis
According to Staff s analysis, there are no feasible alternatives other than to construct a
backup well. Two potential alternatives to the proposed well include deepening existing Well
Nos. 1 and 2 or adding a storage tank.
The Company considered deepening existing Well Nos. 1 and 2; however, the diameter
and thickness of well casings do not satisfy current IDEQ requirements. Company's Response to
Production Request Nos. 16 and 17.
Staff also inquired about the possibility of constructing a storage tank; however, the
Company asserted, and Staff agrees, that a storage tank is not feasible because it would be
insufficient to stay ahead of demand on maximum demand days. Company's Response to
Production Request No. 15.
STAFF COMMENTS 5 APRIL 24, 2024

Well Maintenance History
Staff inquired about the possibility of maintaining operation of Well Nos. 1 and 2;
however, Staff agrees that maintaining those wells into the future is not a viable option. The
Company stated that Well Nos. I and 2 have suffered from a buildup of rocks and mud resulting
in murky water despite the use of sand separator and regular maintenance over the past three
years. Company's Response to Production Request No. 19. Due to such challenges, Well Nos. 1
and 2 experienced a 99.6%reduction of water production in 2023 compared to 2021, while Well
No. 3 has been acting as the dominant source to satisfy the customer demands. Company's
Response to Production Request No. 8—Attachment 1-3.
Need for Related Infrastructure of the Project
The Company has included, and Staff assessed the need for, a backup generator, a
variable frequency drive, and a sand separator for the proposed well.
Need for Backup Generator
Staff believes the Company needs a backup generator for the proposed Well No. 4 as a
part of the Project to reliably satisfy water demand during unforeseen power outages. According
to Idaho Rules for Public Drinking Water Systems, a water system must have enough water
supply wells with backup power to satisfy ADD or emergency storage equal to one days ADD
(IDAPA 58.01.08.501.07).
Staff inquired about the potential to share the backup generator at Well No. 3 for the
proposed well; however, the Company ruled out this option since proposed Well No. 4 will be
located approximately 2,500 feet away from Well No. 3. Company's Response to Production
Request No. 10. Staff agrees that due to the long distance, the cost of necessary wiring, conduit,
excavation, permitting, and labor, this option is not feasible or cost effective.
Need for a Variable Frequency
Staff agrees that a VFD is required for the proposed backup well as a part of the Project
to improve the flow of water production and maintain a consistent pumping capacity when the
existing Well No. 3 is not in service.
STAFF COMMENTS 6 APRIL 24, 2024

Staff inquired whether the Company has considered reusing the existing VFDs from Well
Nos. 1 and 2. The Company responded it is not feasible because the proposed well will be
equipped with a higher capacity pump compared to Well Nos. 1 and 2. Company's Response to
Production Request No. 18 and 26.
Need for a Sand Separator
The Company has included the cost of a sand separator for proposed Well No. 4 even
though the Company's Facility Plan did not require one. Facility Plan at 22. If the Company
purchases and installs a sand separator, Staff recommends the Company provide economic
justification for the need compared to other feasible alternatives when the Company seeks
recovery for the cost of the Project.
A sand separator is utilized to remove sand from produced water when the amount of
sand exceeds IDEQ's permitted limit of 5 parts per million ("ppm"), and to ensure safe, clean
usable water. Company's Response to Production Request No. 24. An alternative is to install a
stainless-steel screen, which does require regular maintenance.
The Company's existing Well No. 3 does not have a sand separator installed, rather it is
equipped with a stainless-steel screen, and it has not been compromised with sand, rocks, or
sediments. The Company agrees that any potential issues of sand accumulation may be
mitigated by drilling Well No. 4 deeper(similar to Well No. 3), which may provide better water
supply in dry years. According to the Company, a screen may be adequate to avoid sand or
sediment build-up, and a sand separator can be installed"If Necessary" in such scenarios.
Company's Response to Production Request No. 25. However, Staff is uncertain whether there
will be additional costs associated with a screen in the future. Staff believes it would be prudent
for the Company to perform a cost-benefit analysis between the options of installing a sand
separator during the implementation of the Project and using a screen and maintaining it
regularly.
Cost Estimate Analysis of the Project
The Project has a preliminary cost estimate of$466,470, performed on March 12, 2024,
by Aspen Engineering, Inc. This cost estimate includes a 10% contingency and a 7.5% contract
administration fee. However, the estimate does not include the following:
STAFF COMMENTS 7 APRIL 24, 2024

• Cost of reprogramming the SCADA system—$5,000;
• Decommissioning Well Nos. 1 and 2—$8,060; and
• Increased annual power expense—$1,841.
The Company represented that it will ensure the construction of the Project is completed
at a reasonable least cost by submitting bids and selecting the best low-cost and qualified
vendors. The Company stated it will provide the bid results to Staff by August 1, 2024.
Company's Response to Production Request Nos. 20, 21, 27, and 30.
The Company will receive an equity infusion from its parent companies to fund this
Project. Company's Response to Production Request No. 6. Staff expects the Company to
provide sufficiently detailed supporting documentation when it seeks recovery of these costs in a
subsequent filing, such as how the construction of the well and related Project infrastructure was
completed as a least-cost solution and to provide cost estimates of alternate well pumping
capacities to meet the PHD, etc.
Project Timeline
The Company expects the proposed construction will take approximately 198 days to
complete with an anticipated completion date of November 15, 2024. The construction design
has not been finalized or approved by IDEQ at this time. The Company mentioned it would
provide all Project requirements and specifications to the Commission Staff by July 1, 2024.
Company's Response to Production Request No. 20.
Water Rights
Currently, the Company's water rights for the MV system allow for a total annual water
production of 196.9 acre-feet("AF") for domestic water use and 92 AF for irrigation use.
Application—Appendix B. In 2023, the MV Well Nos. 1 and 2 produced 0.07 AF and Well No.
3 produced a total of 135.07 AF. Company's Response to Production Request No. 8—
Attachment 3.
The Company expects to build Well No. 4 to the same pumping capacity as Well No. 3 of
nearly 600 gpm. This will provide the Company with an approximate total pumping capacity of
1,100 gpm. The Company's current water rights allow it to produce water at a rate of 840 gpm.
STAFF COMMENTS 8 APRIL 24, 2024

Facility Plan at 18. The Company articulated it will utilize the SCADA system to alternate the
operation of Well Nos. 3 and 4 and if demand is greater than normal, both wells may run
concurrently. However, Staff notes that the water production capacity may exceed available
water rights if both Well Nos. 3 and 4 are running at maximum production capacity
simultaneously. If these two wells run alternatively as planned, Staff believes the inclusion of
Well No. 4 on the MV system should not have an impact on the Company's available water
rights.
The Company plans to decommission Well Nos. 1 and 2 for the construction of Well No.
4. It also expects that the proposed Well No. 4 will produce approximately half of the system's
total annual demand of 67.57 AF based on 2023 water production. Company's Response to
Production Request No. 5. As the Company attempts to repair system leaks once identified, if it
does not experience any drought conditions, the Company expects the annual water production
levels to trend down in the future from 2023 levels. Company's Response to Production Request
No. 22.
STAFF RECOMMENDATION
Staff recommends the Commission authorize the Company to construct the backup well
and related infrastructure of the Project subject to a review of prudently incurred actual cost in a
future rate case.
Respectfully submitted this 24th day of April 2024.
Vq. j-
Chris Burdin
Deputy Attorney General
Technical Staff: Shubhra Deb Paul
Kimberly Loskot
I:\Utility\UMISC\COMMENTS\FLS-W-24-01 Comments.doex
STAFF COMMENTS 9 APRIL 24, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE ON THIS 'DAY OF APRIL 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. FLS-W-24-01, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
PRESTON N CARTER ERIC W. NELSEN
MORGAN D GOODIN SENIOR REGULATORY ATTORNEY
GIVENS PURSLEY LLP NW NATURAL 250 SW TAYLOR ST.
601 W BANNOCK ST PORTLAND, OREGON 97204
BOISE ID 83702 E-MAIL: eric.nelsen(&nwnatural.com
E-MAIL: prestoncarter(@,givenspursley.com
morgang_oodin@.givenspurslecom
stephaniewnu ig'venspursley.com
K. SCOTT BRUCE
FALLS WATER CO., INC.
2180 NORTH DEBORAH DRIVE
IDAHO FALLS, ID 83401
E-MAIL: scottl Wall swater.com
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PATRICIA JORDAN
CERTIFICATE OF SERVICE