20240520Final_Order_No_36186.pdf

Office of the Secretary
Service Date
May 20,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CDS STONERIDGE ) CASE NO. SWS-W-23-02
UTILITIES, LLC'S TARIFF ADVICE )
REQUESTING AUTHORITY TO INCREASE ) ORDER NO. 36186
ITS NEW CONNECTION FEES )
On November 27, 2023, CDS Stoneridge Utilities, LLC ("Company") applied for
authorization to increase its "non-refundable hook-up fees for a `new water service connection"'
for new customers that are connecting to the Company's system.'Application at 1.
On December 26, 2023, the Commission issued a Notice of Application and established
public comment and Company reply deadlines. Order No. 36034. Commission Staff("Staff") and
members of the public filed comments to which the Company replied. The Company also
submitted a revised proposed tariff with its reply.
Having reviewed the record in this case, the Commission finds that it is not fair,just, or
reasonable to authorize an increase in the hook-up fee ("Hookup Charge")2 for new customers in
the amount requested by the Company. Instead, based on the record in this case, the Commission
finds that it is fair,just,and reasonable to authorize a smaller increase than requested to the Hookup
Charge as discussed below.
THE APPLICATION
The Company proposed to increase the non-refundable Hookup Charge for new
connections under its Tariff No. 3, Sheet 3. Exhibit A to the Company's Application contained
proposed modifications to the Company's proposed Tariff No. 3, Sheet 3.
The Company explained it no longer had in-house contractors able to perform connections
for new homes. Accordingly, the Company reviewed its costs incurred from outside contractors
for new connections for 2021 to 2023 and determined that it needed an "Emergency Increase" to
'The body of the Application does not include a requested effective date.However,a redlined section in the footer of
Exhibit A indicates that the Company desires that an order approving its requested changes be issued prior to May 21,
2024.
z The Company's Tariff No. 3 refers to a"Hookup Charge"and for purposes of this Order this term will be used
rather than connection fee or hook-up fee.
ORDER NO. 36186 1

its Hookup Charges. Application at 2.3 The Company provided an estimate in the amount of
$9,734.75 prepared by 7B Engineering in the Spring of 2021 for a full install. See Exhibit C
attached to the Application. The Company also asserted it provided other recent estimates and
details on completed connections. The Company also stated that the new homes in the area now
typically request 1-inch service meters rather than the 3/4-inch that had customarily been requested.
COMMENTS
Staff Comments
Staff believed the Company's proposed increase to its Hookup Charge was unreasonable
but generally supported that a change to these charges may be warranted. Staff recommended that
the Commission direct the Company to:
1. Update the Non-Recurring section of the Company's Tariff(Tariff No. 3 Sheet
3, effective March 25, 2021) to allow for Itemized Hookup Fees based on
Staff s proposed Hookup Fee Schedule;
2. Obtain and retain contractor, quotes, invoices, and other cost records of all
future customer hookups broken down by individual installation categories(i.e.,
Complete Installation, Tap Main and Install Service Line to Curb Stop only,
etc.), and further broken down by labor (hours and labor rate), material cost
(cost of individual components), and equipment cost (hours and cost per
hour)[;]
3. Allow customers the option to directly contract for their service connection
using the Company's approved contractors and at their own expense as long as
the work is approved through a Company inspection, or have the Company
perform the installation and be billed at the Tariff rates for installation of the
service connection; and
4. Work with Staff to update the language in the tariff(s) after the final order has
been submitted and to submit the updated tariff(s) to the Commission through
a compliance filing within 30 days for Commission approval.
Staff Comments at 2-3.
Staffs Proposed Hookup Charges
Staff requested that the Company provide detailed information for different categories of
new connections and an itemization of costs for each of the contractor invoices that were attached
3 It appears that the Company assumed that updating the price would change Tarriff No. 3 to Tarriff No.4. Staff did
not support the Company's assumption regarding how tariffs are numbered. Therefore, in the record, the proposed
increase is often referred to as Tariff No.4 by the Company and Tariff No. 3 by Staff.
ORDER NO. 36186 2

to the Application. Staff represented it used the different connection categories set forth in Order
No. 34969 for estimating costs. Based on its review, from the limited data provided by the
Company and few actual new connections since Order No. 34969 was entered, Staff recommended
the following schedule.
For Applicants Requesting a 3/4" or 1" Connection:
Complete Installation $4,200
Tap Main and Install service line to curb stop only $1,900
Pit Setter and meter only $3,000
Install meter and turn-on water only $ 620
For Applicants Requesting a Connection Larger Than 1":
Customer pays actual construction costs.
Staff Comments at 4.
Due to the Company not providing the detailed information requested in Production
Requests, Staff had difficulty gaining clarity on specific new connection services and costs that
could have informed its recommendations. Staff noted that after losing its operator who previously
performed new connections, the Company did not believe that it was practicable to hire an
employee to perform new connections going forward. Staff also noted that the Company did not
furnish adequately itemized breakdowns from the two contractor bids it provided—which would
have aided Staff's review and recommendation. The Company also failed to provide Staff with a
third bid it requested through discovery. The Company stated it was unable to secure another bid
due to its remote location. Due to the Company's failures to provide Staff adequate information,
and to allow for a more robust evaluation in the future, Staff recommended that the Commission
order the Company to provide additional contractor bids in its final order.
Staff believed it was reasonable to allow the Company to charge additional fees for boring
and excavation but noted that these services were extraordinary and not required for most new
connections. Accordingly, Staff recommended that the Commission not approve boring as a
component of a standard Hookup Charge, but rather "allow the Company to charge the lesser of
the contractor's bid price or actual cost, based on time, material, and equipment cost basis" when
boring and excavation are required for a new connection. Staff Comments at 6.
Staff noted that the Company had stated it used 1-inch meters, rather than 3/4 -inch meters,
due to supply chain issues. Staff was not concerned about this issue because the monthly rate for
ORDER NO. 36186 3

both meter sizes is the same, and Staff understands the desire for timely installation by customers
and the Company. Accordingly, this was not an issue Staff believed required direction from the
Commission.
The Company's proposed rate increases varied from 140 percent to 231 percent; Staff's
proposed Hookup Charge increases varied from 16 percent to 31 percent. Both sets of proposals
are illustrated in Table No. 1 below compared to the currently approved rates.
Table 1: Comparison of impacts on customers due to Hookup Charge increases
Category Current Company % Increase Staff % Increase
Fee Proposal with Proposal with Staff
Company Proposal
Proposal
Complete installation $3,500 $9,000 157% $4,200 20%
Tap main and install service $1,512 $5,000 231% $1,900 26%
line to curb stop only
Pit setter and meter only $2,296 $5,500 140% $3,000 31%
Install meter and turn-on water $533 $2,000 275% $620 16%
only
Customer Option to Directly Contract Connection Services
While a customer has the option to connect to the system at the tariff rate, Staff proposed
that the Commission also allow customers to use pre-approved third-party contractors—with the
Company inspecting that contractor's work prior to backfilling the excavation. Staff noted that the
Company requested approval to "outsource not only all new connection work, but the oversight,
pricing, management, and approval of all new connection to the customer directly and to remove
[the Company] from these functions." Id. at 7. Staff believed the Company's position would
unreasonably permit the Company to avoid its duties to ensure customers received safe and reliable
service—noting that the Company has a duty to ensure that the water system would not be
compromised, and that associated construction complied with State and Federal law. Staff s
proposal would give customers the option of using the Company at the tariff rate or hiring their
own,pre-approved third-party contractor to perform the new connections.
Contributions in Aid of Construction ("CIAO")
Staff discussed the Company's CIAC fees in relation to total costs for construction of new
connections. Staff also discussed amortization of CIAC in relation to Plant-in-Service and
applicable depreciation. Finally, Staff stated that the Company had reported that connection costs
ORDER NO. 36186 4

had exceeded contribution through Connection fees by $200,989 since 2020. Staff noted that the
Company may seek a prudency determination and possible return on these costs in its next general
rate case but did not opine on the outcome of such a request.
Customer Notice, Press Release, and Public Comments
Staff reviewed the Company's initial customer notice and determined that it did not meet
the requirements of Rule 125 of the Commission's Rules of Procedure. IDAPA 31.01.01.125.
While revisions were made and later sent out, Staff stated that customers did not have sufficient
time to comment before the end of the public comment deadline established in Order No. 36034.
Staff recommended the Commission consider any late-filed customer comments. Staff noted that
all comments received as of the submission of its comments opposed a significant increase in the
proposed tariff.
Updates to Tariffs
Staff recommended that the Commission order the Company to make the following
changes to its existing tariff. (1) update the Hookup fee schedule in the Company's Tariff with
individualized, itemized fees based on Staff s proposal; (2) add language regarding charges for
extraordinary costs that conforms with Staff s recommendation and remove the charge for
excavation/horizontal boring; (3) add language that allows for a 1-inch meter and 3/4 -inch meter
to be exchangeable; (4) add language allowing customers to obtain an approved third-parry
contractor to perform the new connection—which would be inspected by the Company prior to
backfill; and(5) add language that mandates coordination between the Company and the customer
in determining the placement of the pit-setter and meter.
Public Comments
The Commission received 42 public comments. All comments opposed the Company's
proposal—although some comments noted that a lesser increase may be justifiable. Several
commentors noted the challenges related to living on a fixed income—a common situation in the
service area—and discussed how the proposed increase could create or exacerbate financial
hardships for the Company's customers. Some commentors relied on their relevant work
experience and expertise in support of their position that the Company's proposed increase was
too high.
Several commentors suggested the proposed increase would make it more difficult to sell
or develop the remaining undeveloped lots in the service area. Some commentors argued that
ORDER NO. 36186 5

Hookup Charges should vary based upon usage. Certain commentors associated this case with the
Company's recent request for a securities issuance and its general rate case—the latter of which
was filed after the last public comment was received. See Case Nos. SWS-W-23-03 and SWS-W-
24-01. Several commentors provided their opinion that the owner of the system was engaging in
price gouging. Certain commentors also argued that, based upon the numbers provided by the
Company, its 2022 deficits would have instead yielded an impermissibly high windfall for the
Company if its proposed rates had been in place in 2022.
Company Reply Comments
The Company stated that Gem State Water Company, LLC's ("Gem State") tariff allows
for a fee of$5,500 per new connection, arguing that despite certain similarities between itself and
Gem State, Gem State was closer to population centers—which the Company believed decreased
the cost for Gem State's connections due to increased competition. The Company argued that this
necessitated charging more than Gem State. Following this logic, the Company disagreed with
Staff s recommendation for the general Hookup Charge.4
Advancing its argument for a higher Hookup Charge, the Company committed to seeking
additional bids,potentially decreasing the cost of new connections. However, it argued that it was
difficult to get contractors to include sufficient specificity in bids, as desired by Staff. The
Company did not oppose allowing customers to directly contract for a new connection and noted
it had included language in the revised tariff, submitted with its Reply Comments, to that effect.
The Company discussed the difficulties of not being able to bill customers directly for the
difference between the tariff approved amount and the actual costs for the new connections. The
Company noted it has connected 98 homes since 2018. The Company reiterated that it does not
typically require its prospective contractors to provide the level of itemization in their bids that
Staff recommended and instead the Company's focus is on the total price of the bid, seeking to
keep the cost low.
Exhibit A of the Company's Reply Comments encouraged the Commission to approve a
process which would shift the responsibility in finding a contractor for new connections to the
a As seen in Table No. 1, Staffs recommendation for a complete installation was $4,200. However, in its Reply
Comments, the Company incorrectly stated that Staff recommended that the Commission approve "$4,700" for a
Hookup Charge.Reply Comments at 1.
ORDER NO. 36186 6

customer.' Relatedly,the Company also proposed providing a customer seeking a new connection
with a list of the customer's responsibilities as well as a list of pre-approved contractors and final
inspectors.
COMMISSION DISCUSSION AND FINDINGS
The Commission has jurisdiction over the Company and the issues in this case under Title
61 of the Idaho Code. Idaho Code § 61-501. Specifically, the Commission regulates "public
utilities," including "water corporations" that serve the public or some portion thereof for
compensation. See Idaho Code §§ 61-125, -129. The Commission, upon finding that the rates
charged by a public utility are ". . . are insufficient . . . shall determine the just, reasonable or
sufficient rates . . . to be thereafter observed and in force and shall fix the same by order . . . ."
Idaho Code § 61-502.
The Commission has reviewed the record and finds that the Hookup Charges proposed in
Staff s Comments are reasonable based on the record before the Commission and that the current
level of Hookup Charges is insufficient to cover the costs the Company incurs. The Commission
finds that Staff s proposed Hookup Charges for the Company that are based on costs,labor,vehicle
and equipment rental, mobilization, and others from invoices in the record from 2022 and 2023
are reasonable. Related to this finding, the Commission reminds the Company that it must expend
all reasonable efforts to timely and adequately respond to Staffs production requests—a
requirement of being a regulated utility. We understand Staff desired more information to review
the Company's request and ultimately inform its recommendation. As it stands, the Commission
finds that the Company's proposed increase for Hookup Charges is not supported by the record. If
the Company believes the Hookup Charge approved is too low, we remind the Company it is the
Company's—not Staffs or the Commission's—responsibility to support its proposed increases
with accurate, itemized and verifiable cost information.
To provide the Commission with greater clarity going forward,the Commission orders the
Company to report the actual cost, including the itemization of such cost, charged for any
connection performed within the next six months so that all parties involved might have a better
understanding of the true costs associated with this charge based on the varying installation
' The Company did not advocate requiring customers to find their own contractor if the new connection was a"Set
Meter Only."Id.at 13.The Commission assumes that"Set Meter Only"means that only a meter is required to connect
the customer to the system.
ORDER NO. 36186 7

requirements or categories for connections. The Commission also notes that the Company must
continue to seek additional bids that conform with Staff s itemization specifications.
The Commission finds that allowing customers to seek bids for new connections from
third-parry, pre-approved contractors is reasonable and provides additional customer protection.
The Commission approves this practice accordingly. However, the Commission notes that the
Company cannot entirely shift its duty to connect new customers to its customers or to provide
safe and reliable service. Therefore, it must adequately inspect any third-parry connections before
backfilling begins. The Company must also offer to make new connections at the approved rates
for customers who choose to have the Company perform the connection.
Staff requested that the Commission update the Non-Recurring Charges of the proposed
tariff and allow itemized connections broken down into several categories. The Commission finds
this is reasonable and directs the Company to update its tariff, as described in Staffs Comments.
Accordingly, the Commission directs the Company to work with Staff on the appropriate
language for the Company's tariff and submit an updated tariff as a compliance filing within 30
days of the publication of this Order.
ORDER
IT IS HEREBY ORDERED that increased Hookup Charges for the Company are hereby
authorized as recommended by Staff. This shall include updating the Non-Recurring Charges of
the revised tariff. The Company shall work with Staff on the appropriate language of the revised
tariff and submit a compliance filing within 30 days of the issuance of this Order.
IT IS FURTHER ORDERED that the Company's customers may seek alternative bids for
connections from a pre-approved list of third-party contractors. The Company shall inspect the
work before backfilling the excavation to fulfill its duty to ensure safe and reliable service.
IT IS FURTHER ORDERED that the Company shall obtain additional bids that are
appropriately itemized in accordance with Staffs recommendations and requests. The Company
shall keep track of the actual costs of all connections for six months following the issuance of this
Order. These bids and actuals shall be provided to Staff as the Company receives the information.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this order about any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration.Idaho Code § 61-626.
ORDER NO. 36186 8

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 20th day of
May 2024.
ERIC ANDERSON, PRESIDENT
9��
HN R. HAMMOND JR., COMMISSIONER
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Ave-
EDWARD LODGE, CO_ ISSIONER
ATTEST:
Moni os- e
Commission Secretary
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ORDER NO. 36186 9