20240715Final_Order_No_36259.pdf

Office of the Secretary
Service Date
July 15,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF FARKO WATER ) CASE NO. PTE-W-24-01
SYSTEM'S PROPOSED CANCELLATION )
OF PONDEROSA TERRACE ESTATES )
WATER SYSTEM'S, CERTIFICATE OF ) ORDER NO. 36259
PUBLIC CONVENIENCE AND NECESSITY )
NO. 393 )
On January 18, 2024, an application ("Application") was submitted to the Commission
which stated that Ponderosa Terrace Estates Water System, Inc. ("PTE")was sold to Farko Water
System Inc. ("Farko")' on October 1, 2016. While the Application's heading requested a transfer
of PTE's Certificate of Public Convenience and Necessity ("CPCN"),the body of the Application
clearly requested that PTE's CPCN be cancelled. Rather than ask that Farko be issued a new
CPCN, the Application requested that the Commission recognize that Farko is operating the
system as a not-for-profit organization ("non-profit"). Supplemental information related to this
request was attached to the Application.
On February 16, 2024, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 36093. No parties intervened.
On May 21, 2024, the Commission issued a Notice of Modified Procedure establishing
public comment and reply deadlines. Order No. 36188. Commission Staff("Staff') filed the only
comments in this case.
Having reviewed the record, the Commission issues this Order approving the Application
subject to a compliance filing as described below.
THE APPLICATION
The Application stated that Farko supplies water and operates a water system which serves
an area east of Sagle, Idaho.
1 While the Application indicates that the word "Company" is used in both PTE's and Farko's company names,
according to the Idaho Secretary of State,both companies actually use the word"System"instead of"Company"in
their respective titles.
ORDER NO. 36259 1

The Application alleged that Farko is a non-profit with an elected Board of Directors
("Board") and president.2 The supplemental materials include several filings with the Idaho
Secretary of State which Farko included to support its claim of not-for-profit status.
STAFF COMMENTS
Staff recommended that the Commission cancel CPCN No. 393 and recognize PTE's
transfer to Farko. Staff also reviewed analogous cases and created a non-exclusive list of criteria
including whether the entity qualified or operated as a non-profit or co-op and whether the users
owned or controlled the entity—including control of its rates, operations,and capital expenditures.
Staff noted that Farko is registered as a non-profit with the Idaho Secretary of State and
that Farko is governed by an elected Board. The Board members are customers of the system and
control the rates charged. Staff also provided information outlining the roles and election of the
Board. Staff referred to a list of cases where regulated companies properly transitioned into non-
profits. Staff also reviewed Farko's financial information and determined that it is not operating
for profit. Staff outlined Farko's process to engage the public relative to the creation of the new
Board. Staff noted that the Idaho Rural Water Association offered to assist and train the new Board
and that there were also six individuals who were interested in becoming licensed operators to
assist with the transition of the system's operations.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter and the issues in this case under Title 61
of Idaho Code. The Commission regulates "public utilities," including "water corporations" that
serve the public or some portion thereof for compensation.Idaho Code §§ 61-125, -129, and-501.
A "public utility" is an entity that is dedicated to serving the general public in its service
area.Idaho Code § 61-129(1). The term"public utility"is defined to include"water corporations."
Id. A"water corporation" is "every corporation"that owns, controls, operates or manages a water
system for compensation. Idaho Code § 61-125. "The term `corporation' . . . does not include . . .
mutual nonprofit or cooperative . . .water. . . corporation or any other public utility organized and
operated for service at cost and not for profit . . .."Idaho Code § 61-104.
2 PDF pages 52-53 of the Application outlined Farko's purported`By-Laws" and process for elections. Essentially,
each system connection(for drinking water)would be a"Member"of the organization,and each Member would have
one vote in electing the organization's governing board.The`By-Laws"also outline the responsibilities of the other
individuals who would be involved with the organization in maintaining the system.
ORDER NO. 36259 2

Idaho Code § 61-104 provides three exceptions to the Commission's regulatory authority
over "corporations." The Commission does not regulate "mutual nonprofits," "cooperative
corporations," nor"any other public utility organized and operated for service at cost and not for
profit."Idaho Code § 61-104. Pursuant to Idaho Code § 61-104, the Company must show that it
is "organized" for service at cost and not for profit, and that it is "operated"for service at cost and
not for profit.
The Commission has reviewed Farko's by-laws and is satisfied that the voting structure
(whereby each customer has one vote in Board elections) ensures the customers' interests to be
sufficiently safeguarded by the Board. To completely verify the non-profit's corporate structure,
the Commission orders Farko, which is currently operating in PTE's certificated area, to submit
the following items in a compliance filing: 1)a copy of the non-profit by-laws signed by all serving
on the Board; and 2) a signed copy of the minutes of the meeting where the Board was elected.
This filing shall be made within 30 days of the publication of this Order. Once the filing is accepted
by the Commission, the Commission will cancel PTE's CPCN No. 393—which was not
transferred to Farko when PTE's assets were transferred to it.
The Commission has reviewed all submitted materials and the particular facts and
circumstances of this case. Once Farko's compliance documents have been accepted as satisfactory
by the Commission, it will not be subject to the Commission's regulatory authority under Idaho
Public Utilities Law.Idaho Code § 61-101 et seq.
ORDER
IT IS HEREBY ORDERED that Farko Water System Inc.'s request for authority to operate
as a non-regulated non-profit water company is granted—subject to the conditions described
above.
IT IS FURTHER ORDERED that within 30 days of the service date on this Order, Farko
Water System Inc. must file compliance filing with a copy of the non-profit by-laws that has been
signed by the Board of Directors as well as a signed copy of the minutes of the meeting in which
the Board of Directors were elected. Upon the satisfactory filing of these documents, CPCN No.
393 shall be cancelled.
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
ORDER NO. 36259 3

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 151h day of
July 2024.
ERIC ANDERSON, PRESIDENT
HN R. HAMMOND JR., COMMISSIONER
G
EDWARD LODGE, COM SSIONER
ATTEST:
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Commission Secretary
IALega1\WATER\PTE-W-24-01_cancel CPCN\orders\Final_md.docx
ORDER NO. 36259 4