20240531Final_Order_No_36200.pdf

Office of the Secretary
Service Date
May 31,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE CITY OF EAGLE ) CASE NO. VEO-W-23-05
AND VEOLIA WATER IDAHO'S JOINT )
APPLICATION TO AMEND VEOLIA )
WATER IDAHO'S CERTIFICATE OF ) ORDER NO. 36200
PUBLIC CONVENIENCE AND NECESSITY )
On December 28, 2023, the City of Eagle ("City") and Veolia Water Idaho, Inc.
("Company") (collectively the "Applicants")jointly applied to amend and revise the Company's
Certificate of Public Convenience and Necessity("CPCN")No. 143 to remove a portion of service
area covering the City from the Company's certificated service territory. The Applicants requested
their Application be processed via modified procedure.
On January 18, 2024, the Commission issued a Notice of Application and Notice of
Intervention deadline, setting a deadline for interested persons to intervene. Order No. 36064. No
parties petitioned to intervene.
On March 4, 2024, the Commission issued a Notice of Modified Procedure, establishing
public comment and Applicant reply deadlines. Order No. 36104. Staff submitted the only
comments.
Having reviewed the record, the Commission issues this Order approving the Application
and directing the Company to take further action as described below.
THE APPLICATION
The Applicants seek to remove from CPCN No. 143 what they refer to as"Area 4,"an area
encompassing the Bighorn Subdivision, the LDS Church located at 2090 N. Eagle Road, and two
connections from the 12" mainline along Eagle Road. Veolia services 25 customers and four fire
hydrants in the impacted area. If the Application is approved, the water system assets servicing
these customers along with other assets serving the Eagle Skate Park in the Eagle Sports Complex
will be transferred to the City.
Prior to acquisition by Veolia, the Eagle Water Company ("EWC") serviced Area 4. In
settling prior litigation between the Applicants related to the Company's eventual acquisition of
EWC, the Applicants formed a Water Management Agreement ("WMA") that, among other
things, required the City apply (with Company cooperation) for removal of Area 4 (and other
ORDER NO. 36200 1

areas) from the Company's service territory. The Applicants assert that approval of their
Application is in the public interest, the City's and Company's rates are comparable, and the City
has a bona fide intent and financial ability to operate and maintain the water system infrastructure
to be transferred.
STAFF COMMENTS
After reviewing the Application,supporting testimony,WMA,and responses to production
requests, Staff recommended approval of the proposed service territory reduction, asset transfer,
and the accounting treatment. Additionally, Staff recommended the Commission direct the
Company to submit a compliance filing amending CPCN No. 143 by removing Area 4 from the
Company's service territory. In support of these recommendations, Staff expressed the belief that
the Application satisfies the WMA requirements; the transfer of service territory and assets will
have minimal impact on the public; and the proposed accounting treatment for the asset transfer is
reasonable. Staff s analysis of each of these considerations is discussed further below.
WMA Requirements
The WMA requires an application to the Commission requesting the removal of Area 4
from the Company's Certificated Area by June 30, 2023. However,the Applicants agreed that the
Application was pursued in good faith and extended the filing deadline to December 30, 2023.
Public Impact
Staff figured the Transaction would minimally impact the public for several reasons. First,
the City's history of serving its residents shows it can provide safe and adequate service to
customers in Area 4. Additionally, Staff believed the City has the intent, along with the financial
and system capacity, to provide service within the transferred area. Second, the City and
Company's rates for the transferred customers are comparable.Finally,Area 4 is part of the WMA,
which facilitates better communication and water service planning between the Company and the
City, which Staff opined should benefit the public over time.
Asset Transfer and Accounting Treatment
After reviewing the assets being transferred and their proposed accounting treatment, Staff
recommended approval of both. Staff believed the assets listed in Attachment 8 of the Application
are necessary for the City to serve Area 4 and the irrigation connection in the Eagle Skate Park.
Assets currently serving Area 4 that are not transferred will be removed from the system and
repurposed, if possible.
ORDER NO. 36200 2

Staff also believed the proposed accounting for the transferred assets is appropriate and
will minimally impact customers. The transferred assets and accumulated depreciation will be
removed from plant-in-service. Because no money is changing hands, the remaining book value
of the assets will be offset as expense to General Ledger account 71225426 — Impairment Other
that will not be recoverable in the next general rate case.
Customer Notice and Public Comments
After reviewing a copy of the notice the Company provided to customers with its
Application, Staff determined the document meets the requirements of Rule 125 of the
Commission's Rules of Procedure. Customers and property owners within the affected area
received the notice. The Applicants also issued a press release with the same information as the
notice.
COMMISSION FINDINGS AND DECISION
The Idaho Public Utilities Commission has jurisdiction over the Company, a water
corporation, and the issues presented in this case pursuant to Idaho Code, Title 61, specifically
including,but not limited to,Idaho Code §§ 61-104, 61-125, 61-129, and 61-526.
Having reviewed the record,the Commission finds it fair,just,reasonable,and in the public
interest to approve the Applicants' request to remove Area 4 from the Company's CPCN No. 143.
The Applicants agreed to transferring this portion of the Company's service area as part of their
WMA, showing the City's intent to service customers in Area 4. Considering its history of serving
other residents, we find that the City has the financial and system capacity to adequately serve
customers in Area 4. Additionally, customers in Area 4 will continue paying rates for service
following the transfer that are comparable to those charged by the Company.
We also find it fair,just, and reasonable to approve the proposed asset transfer between the
Applicants. The assets proposed for transfer are necessary for the City to serve Area 4 and the
irrigation connection in the Eagle Skate Park. The Company will withdraw and repurpose, if
possible, other assets currently serving Area 4 that are not being transferred. By removing the
transferred assets and accumulated depreciation from plant-in-service while offseting the
remaining book value of the assets as an expense in General Ledger account 71225426 —
Impairment Other, as the Applicants propose, the accounting treatment of the transferred assets
will minimally impact customers.As such,we find the Applicants' proposed accounting treatment
to be reasonable.
ORDER NO. 36200 3

However, it is also important that the Company's CPCN No. 143 continues to accurately
reflect the Company's service territory once Area 4 is removed. We therefore direct the Company
to submit a compliance filing amending CPCN No. 143 to remove Area 4 from the Company's
service territory within 15 days.
ORDER
IT IS HEREBY ORDERED that the Applicants' request to remove Area 4 from the
Company's CPCN No. 143, is approved.
IT IS FURTHER ORDERED that the transfer of assets identified in Attachment 8 within
the Application and the proposed accounting treatment for the asset transfer are approved.
IT IS FURTHER ORDERED that the Company submit a compliance filing amending
CPCN No. 143 to remove Area 4 from the Company's service territory within 15 days of the
service date upon this Order.
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. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 31St day of
May 2024.
ERIC ANDERSON, PRESIDENT
?HN R. HAMMOND JR., COMMISSIONER
G
EDWARD LODGE, CCaMISSIONER
ATTEST:
M o A arri n aJ
Commission Secretary
IALega1\WATER\VE0-W-23-05_CPCN Eag1e\orders\VE0W2305_final_at.docx
ORDER NO. 36200 4