20240906Final_Order_No_36312.pdf

ORDER NO. 36312 1

Office of the Secretary
Service Date
September 6, 2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On April 23, 2024, the Commission issued a Notice of Investigation of Valiant Idaho,
Inc. (“Valiant”) and TIC Utilities, LLC (“TIC”) (collectively the “Companies”), directing the
Companies to respond to discovery requests from Staff and providing notice that Staff would
recommend (1) whether Valiant or TIC should be deemed a regulated public utility; (2) whether a
Certificate of Public Convenience and Necessity (“CPCN”) is required; and (3) whether any
further action related to the adequacy of service or rate setting is necessary. Order No. 35998.
On July 8, 2024, the Commission issued a Notice of Modified Procedure, setting public
comment and Company reply deadlines. Order No. 36254. The Commission Staff (“Staff”) and
five members of the public filed comments to which the Companies replied.
Having reviewed the record, the Commission issues this Final Order finding that
Valiant is a public utility, issuing it a CPCN, and directing it to submit additional documentation
described below.
BACKGROUND
The Companies own and operate a water supply and distribution system that serves
customers in a development and golf club called the Idaho Club in or near Bonner County, Idaho.
Valiant obtained the water system assets, an undeveloped portion of the Idaho Club, and land
comprising of the golf course in a 2016 sheriff sale.
The Commission initially sent a letter to the Companies inquiring into their regulatory
status in 2022. Subsequently, a representative of Valiant expressed in an email to Staff the intent
to operate the system as a Commission regulated utility. However, the Companies did not apply
for a CPCN as they were negotiating to sell the system to Gem State Water Company, LLC (“Gem
State”). Although the Commission approved Gem State’s acquisition of the water system in Order
No. 35971, Gem State subsequently filed a notice indicating it had terminated the purchase
IN THE MATTER OF THE INVESTIGATION
INTO VALIANT IDAHO, INC. AND TIC
UTILITIES, LLC, OWNERS OF A
NORTHERN IDAHO WATER SUPPLY AND
DISTRIBUTION SYSTEM

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CASE NO. GNR-W-24-01

ORDER NO. 36312
ORDER NO. 36312 2

agreement. The Commission then issued an order releasing Gem State from any further obligations
in the proceeding and directing Staff to contact the Companies regarding their regulatory status.
Order No. 36099.
After receiving conflicting information regarding a potential sale of the water system
to the Idaho Club Homeowners Association (“HOA”), Staff presented a decision memorandum
during the Commission’s April 9, 2024, decision meeting recommending the Commission open
this investigation. The Commission ultimately issued the aforementioned Notice of Investigation
and directed Staff to investigate if one or both Companies should be a regulated utility under the
Idaho Code and if any steps should be taken by the Companies to comply with Idaho Public
Utilities Law.
STAFF COMMENTS
Staff believed that Valiant should be regulated under Title 61 of the Idaho Code and
recommended the Commission issue it a CPCN. Through discovery Staff learned, Valiant owns
the water system and contracts with TIC to operate and maintain it. Accordingly, Staff’s
investigation focused on Valiant. In reaching the conclusion that Valiant should be regulated, Staff
used the following non-exclusive list of criteria:
a. Is the Company a Non-Profit or a Co-op?
b. Does the Company operate for the service of the customers and not for profit?
c. Is the Company owned by the water users?
d. Do the customers have control of the operations and capital expenditures of the
Company?
e. Do the customers have control of the rates that the Company charges?
Staff noted that Valiant is neither organized nor registered with the Idaho Secretary of State as a
non-profit, municipal corporation, or a cooperative. Nor does Valiant provide water service at cost.
Indeed, Staff noted that Valiant’s bylaws do not limit distributions of company assets to its owner,
which Staff asserts is a primary indicator that the Company is operating for profit. Because Valiant
owns the water system and is not providing service to customers at cost, Staff asserted that Valiant
falls within the statutory definition of a “water corporation.”1 See Idaho Code § 61-125.
Furthermore, because Valiant serves the general public in its service area, but not as a mutual

1 Under Idaho Code § 61-125, a “water corporation” is any corporation that owns, controls, operates, or manages a
water system for compensation.
ORDER NO. 36312 3

nonprofit, cooperative, or other organization providing service at cost and not for profit, Staff
argued that Valiant is a “public utility” under Idaho Code § 61-104 and, therefore, subject to
Commission regulation.2 Staff further observed that Valiant’s customers do not own it and have
no input into its service rates or operations. Accordingly, Staff asserted that Valiant’s customers
are vulnerable to excessive billing if Valiant remains unregulated.
Staff acknowledged that Valiant has expressed the intent to sell the water system to the
HOA. Such a sale could put the water system outside the Commission’s jurisdiction, and Valiant
has previously sought to delay the determination of its regulatory status to confirm that the HOA
wished to purchase the system. However, due to concerns regarding the sincerity of the Company’s
overtures to the HOA, Staff believed the potential sale of the water system was not reason to delay
issuing Valiant a CPCN. Moreover, Staff asserted that issuing Valiant a CPCN will not prevent it
from selling or transferring the water system, noting that the Commission has cancelled CPCNs
for water companies that have transferred ownership of the water system or reorganized as a non-
regulated entity in several cases.
Staff further recommended that, if Valiant is determined to be a public utility subject
to regulation, the Commission should direct it to cooperate with Staff to submit the following
documents as a compliance filing: (1) tariffs; (2) a notice to customers regarding regulation; (3) a
full legal description of Valiant’s proposed service territory; and (4) a map showing the location
of Valiant’s utility service. Additionally, Staff further recommended that the Commission open a
separate docket to evaluate whether Valiant’s rates are fair, just, and reasonable.
PUBLIC COMMENTS
Five public comments were filed in this case. Three comments were filed by Valiant’s
customers expressly urging the Commission to find that Valiant is a public utility subject to
Commission regulation. Notably, one of the comments alleged that Valiant’s owner has retaliated
against customers who opposed the HOA purchasing the water system. Specifically, the comment
indicated that Valiant’s owner has revoked at least one person’s membership in the Idaho Club,
retained his $12,500 application fee, and threatened further legal action against him and another
HOA member. Another comment that was filed anonymously stated that some members of the
public have refrained from filing comments out of fear of having their golf, tennis, and social

2 Although water corporations generally fall within the statutory definition of a “public utility,” mutual nonprofits,
cooperatives, or any other public utility that is organized to operate for service at cost and not for profit do not. See
Idaho Code § 61-104.
ORDER NO. 36312 4

privileges at the Idaho Club revoked—indicating that this has already happened at least twice. The
final public comment contained a list of five questions related to the regulation of the Companies
and the ratemaking process.
COMPANY REPLY
Valiant agreed that it is subject to Commission regulation and, therefore, did not object
to Staff’s recommendation that it be issued a CPCN. Valiant further expressed the intent to file an
application for a CPCN, but did not indicate when this filing would occur.
DISCUSSION AND FINDINGS
Based on our review of the record and the nature and manner of control exercised by
the Company in the operation and management of the water system servicing those within the
Idaho Club, we find it reasonable to assert formal regulatory jurisdiction by finding that Valiant
operates its water system as a public utility. Accordingly, we have jurisdiction over Valiant, a
water utility, and the issues presented in Case No. GNR-W-24-01 pursuant to Idaho Code, Title
61, and the Commission’s Rules of Procedure, IDAPA 31.01.01.000, et seq.
1. CPCN
As a public utility, Valiant must have a CPCN from the Commission. See Idaho Code
§ 61-526. Although Valiant has indicated that it intends to apply for a CPCN, we find it reasonable
and more efficient to immediately issue Valiant a CPCN as we have already determined it is
operating as a public utility. However, to issue a CPCN to Valiant, a full and accurate legal
description of Valiant’s service territory is necessary to ensure that it does not overlap with that of
another public utility. Accordingly, we find it reasonable to direct Valiant to cooperate with Staff
to submit a full legal description of Valiant’s proposed service territory as a compliance filing in
this case.
Moreover, as a regulated utility, Valiant is required to adopt the Commission’s Utility
Customer Relations Rules (UCRR; IDAPA 31.21.01 et seq.) and Utility Customer Information
Rules (UCIR; IDAPA 31.21.02 et seq.). The Commission also requires the Company to adopt an
accounting system consistent with the information required by the Commission’s Annual Report
for Small Water Companies.
Considering the allegations of retaliation against customers asserted in public
comments, we encourage Valiant’s owner to carefully review and abide by UCRRs and UCIRs as
they are intended to provide a guide for just, reasonable, and nondiscriminatory treatment of
ORDER NO. 36312 5

customers. Although the alleged retaliation associated with this case ostensibly occurred via
entities outside Commission jurisdiction, allegations of a regulated utility retaliating against
customers are a very serious matter and could result in the imposition of penalties. See Order No.
35817 at 32.
2. Tariff and Other Documents
As a regulated entity, Valiant also must submit certain documentation required under
the UCRR for Commission review and approval, including a tariff, various customer notices, and
an annual rules summary. We find it reasonable to direct Valiant to cooperate with Staff to submit
these required documents as a compliance filing in this case. Staff has indicated it is willing to
work with the Company to ensure these documents meet Commission requirements.
3. Rates and Charges
Considering the current lack of clarity surrounding the Company’s financial situation,
we find Staff’s recommendation to open a separate docket to investigate the Company’s rates.
Accordingly, we direct Staff to open a separate docket to evaluate whether the Company’s rates
are fair, just, and reasonable.
O R D E R
IT IS HEREBY ORDERED that, based upon the determination that it is a public utility,
Valiant is issued a CPCN.
IT IS FURTHER ORDERED that Valiant shall cooperate with Staff to submit within
the next 30 days the following documents as a compliance filing: (1) tariffs; (2) a notice to
customers regarding regulation; (3) a full legal description of Valiant’s proposed service territory;
and (4) a map showing the location of Valiant’s utility service.
IT IS FURTHER ORDERED that the Staff open a separate docket to evaluate whether
Valiant’s rates are fair, just, and reasonable.
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. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
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ORDER NO. 36312 6

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 6th day
of September 2024.

ERIC ANDERSON, PRESIDENT

JOHN R. HAMMOND JR., COMMISSIONER

EDWARD LODGE, COMMISSIONER

ATTEST:

Monica Barrios-Sanchez
Commission Secretary

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