20241018Comments Re Joint Motion for Approval of Settlement.pdf

RECEIVED
Friday, October 18,2024
IDAHO PUBLIC
Jennifer Reinhardt-Tessmer (ISB 7432) UTILITIES COMMISSION
Ashton G. Ruff (ISB 12220)
KIRTON MCCONKIE
1100 W. Idaho St., Ste. 930
Boise, ID 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Attorneys for Dry Creek Water Company LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
INVESTIGATION INTO DRY CREEK ) CASE NO. DRY-W-24-01
WATER COMPANY, LLC OWNER OF A )
WATER SUPPLY AND DISTRIBUTION ) DRY CREEK WATER COMPANY'S
SYSTEM ) COMMENTS IN SUPPORT OF
JOINT MOTION FOR APPROVAL
OF SETTLEMENT
Dry Creek Water Company ("Dry Creek"), by and through its counsel of record,
Kirton McConkie, hereby submits to the Idaho Public Utilities Commission (the "IPUC" or
"Commission") comments in support of the pending Joint Motion for Approval of
Settlement in the above-captioned proceeding ("the Motion"), which Dry Creek and Staff
for the Commission ("Staff") (collectively, "the Parties") filed on September 23, 2024.
As provided in the Parties' Motion, the Settlement Agreement reached by Staff and
Dry Creek was the culmination of multiple confidential telephone conferences and in-
person meetings (including an additional site visit by a Staff auditor to Dry Creek for
further examination of business records selected by Staff). During these meetings, the
Parties engaged in thoughtful and collaborative discussions to determine if a settlement
DRY CREEK WATER COMPANY'S COMMENTS IN SUPPORT OF JOINT MOTION
FOR APPROVAL OF SETTLEMENT - 1

of the issues could be reached that was in the public interest. The Parties captured their
successful settlement efforts in the Settlement Agreement attached to the Parties' Motion,
which agreement represents a reasonable compromise of the issues the Parties raised.
The Parties agree that Commission approval of the Settlement Agreement, as filed, is in
the public interest.
I. PROCEDURAL BACKGROUND
In 2021, the Staff began an informal investigation into whether Dry Creek was
operating as an unregulated public utility. On May 24, 2024, upon Staff's
recommendation, the Commission issued Order No. 36195, commencing proceedings for
a formal investigation into whether Dry Creek qualifies as a public utility under the
Commission's regulatory jurisdiction. On June 12, 2024, Staff filed comments,
recommending the Commission find that Dry Creek was operating as a public utility and
impose regulation. No public comments were filed. On June 25, 2024, Dry Creek moved
to amend Order 36195 to extend the deadline for Dry Creek's reply comments. While that
motion was pending, Dry Creek filed preliminary reply comments asserting it was not
subject to regulation by the Commission under applicable law.
The Commission granted Dry Creek's June 25, 2024 motion to extend the reply
comment deadline to afford Dry Creek additional time to provide complete comments and
to explore settlement discussions. Thereafter, the Commission granted Dry Creek's
request to further extend its reply comment deadline to September 22, 2024 to
accommodate ongoing settlement discussions between the Parties. The additional time
allowed the Parties to reach a successful, mutually agreed upon resolution they found to
DRY CREEK WATER COMPANY'S COMMENTS IN SUPPORT OF JOINT MOTION
FOR APPROVAL OF SETTLEMENT - 2

be in the public interest, and on September 23, 2024, the Parties submitted the Motion
and proposed Settlement.
II. DRY CREEK'S POSITION
The Parties have agreed, pursuant to the uncertainties and risks associated with
litigation, to the terms in the Settlement Agreement, finding the terms to be just,
reasonable, fair and in the public interest. Dry Creek's uncompromised position outside
of settlement is set forth, generally and in abbreviated form, in its preliminary reply
comments, filed with the Commission on June 16, 2024. As provided therein, Dry Creek
believes it does not currently meet the definition for a "water corporation" under Idaho
Code and Idaho precedent, in part, because under its current operating structure, it is not
dedicated to public use. Further, Dry Creek has only served one customer (the
Homeowners' Association ("HOA")) and it is not operating at a profit and was further
willing to amend its bylaws to reflect its operation status. Nevertheless, as a result of the
Parties' successful settlement discussions, Dry Creek has agreed to remove uncertainty
surrounding its operational status by modifying its operating structure to serve the Dry
Creek subdivision residents directly (rather than the HOA) and to apply for a CPCN as a
regulated large water company, as set forth in detail in the Settlement Agreement.
III. SETTLEMENT AGREEMENT
Pursuant to settlement efforts, Dry Creek retained an experienced outside
regulatory consultant to provide an analysis of Dry Creek's financial picture to determine
if regulation would contribute to the health and longevity of the company. The Parties
discussed key aspects of the consultant's analysis in one of the confidential settlement
meetings, which provided the Parties an opportunity for an open dialogue to better
DRY CREEK WATER COMPANY'S COMMENTS IN SUPPORT OF JOINT MOTION
FOR APPROVAL OF SETTLEMENT - 3

understand how a rate case for Dry Creek would unfold, including the standards to be
met for recovery, and for the Parties to exchange questions. Staff also conducted an
evaluation of Dry Creek's current rates, including rate structure, hookup fees, billing
statements, its operator contract, legal expenses, its management fees allocation
method, inventory list, water right documents, debt/loan documents and infrastructure
investment. Staff concluded that Dry Creek's current rates are fair, just and reasonable.
Pursuant to the terms of the Settlement Agreement, regulation shall not be
effective until January 1, 2025. Should the Commission approve the Parties Motion, this
will allow time for Dry Creek to restructure (while easing tax complications); the HOA to
amend its corporate papers (including CC&Rs); and for Dry Creek to begin serving and
billing homeowners accordingly in Dry Creek Ranch (after providing the homeowners
notice of the change) before submitting necessary information for the Commission to
issue a CPCN. It will also afford time for Dry Creek to draft its Tariff with Commission
assistance. Of note, Dry Creek has agreed not to increase its rates for water service
during this interim period.
IV. CONCLUSION
The Parties have invested considerable time into achieving a thoughtful Settlement
Agreement that provides a compromise of disputed issues, resolves risk for the Parties,
is fair, just, reasonable and in the public interest. Dry Creek respectfully requests the
Commission to recognize the Settlement Agreement as filed, without modification.
Respectfully Submitted this 18th day of October, 2024.
/s/Jennifer Reinhardt-Tessmer
Jennifer Reinhardt-Tessmer
Attorneys for Dry Creek Water Company LLC
DRY CREEK WATER COMPANY'S COMMENTS IN SUPPORT OF JOINT MOTION
FOR APPROVAL OF SETTLEMENT - 4

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 18th day of October, 2024, 1 served the foregoing
document upon the following named parties by the method indicated below, and
addressed to the following:
Commission Secretary ❑ U.S. Mail
Idaho Public Utilities Commission ® Email
P.O. Box 83720
❑ Hand Delivery
Boise, ID 83720-0074
[e-mail] El Overnight Mail
❑ Facsimile
/s/ Valerie R. Altig
Valerie R. Altig
Legal Assistant for Kirton McConkie
Counsel for Dry Creek Water Co., LLC
DRY CREEK WATER COMPANY'S COMMENTS IN SUPPORT OF JOINT MOTION
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