20241113Reply Comments.pdf

RECEIVED
Wednesday, November 13, 2024
IDAHO PUBLIC
JASON T. PISKEL, ISB #7433 UTILITIES COMMISSION
[e-mail]
Piskel Yahne Kovarik, PLLC
612 W. Main Ave., Suite 207
Spokane, WA 99201
Telephone: [phone]
Fax: [phone]
Attorney for CDS StoneRidge Utilities,LLC
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CDS STONERIDGE ) Case No.: SWS-W-24-01
UTILITIES, LLC'S APPLICATION FOR )
AUTHORITY TO INCREASE ITS RATES ) CDS STONERIDGE UTILITIES,
AND CHARGES FOR WATER SERVICE IN ) LLC'S REPLY COMMENTS RE
THE STATE OF IDAHO ) COMMISSION STAFF'S MOTION
TO ACCEPT THE CORRECTION
OF A CALCULATION ERROR
INTRODUCTION
The Company has reviewed the Staff s request to correct a mistake in the Staffs'excel
model worksheets,and provides this Response in accordance with the interim order issued
in this case.The Company does have some bubbling concern about the overall sufficiency of
the excel model, but will presume that Staff has subjected the rest of their model to a
thorough re-examination as well after finding this critical error. Notwithstanding, the
Company was placed in a short time frame to review the excel model itself and found
another error in its own recommended model. (Described in more detail below).
The Company used the Staff s model in its response, and therefore the Company's
excel sheet must be likewise updated.These changes result in lower rates in both the Staff s
model and the Company's model.
CDS STONERIDGE UTILITIES, LLC'S REPLY COMMENTS RE COMMISSION STAFF'S
MOTION TO ACCEPT THE CORRECTION OF A CALCULATION ERROR- 1

ANALYSIS
The Commission's acceptance of the revised proposal will increase the new 3/4"base
rate to$28.23.This reflects a 17%increase over 17 years,since the last general rate case,or
a little more than a 1% per year rate increase.
It is incredibly difficult to accept that the IPUC rate making process would lead to
such an insubstantial increase over so many years. CPI adjustment alone would result in a
base rate of$36.xx per month. Effectively, Company customers today pay 77% (adjusted
for inflation) of what they were spending in 2007 for water service.
This inflation analysis provides a valuable comparison to Staffs approach and
method by demonstrating it does not hold water against the historical scrutiny in light of
historical inflation on such fundamental services. Federal Reserve data shows inflation
exceeded 23% in the last 5 years alone.
The staffs reduction of the return with the correction of this error exacerbates the
fundamental problem and lack of foresight of staff s recommendation into the actual or
projected costs of providing services especially in this case with a 30+-year-old system near
the end of its physical life. Preliminary estimates to replace the system over the next 10-15
years range from $2,000,000 to $3,000,000, including a new Water Storage Tank.
The Company is now in the very predicament rate cases are meant to avoid. That is
creating a situation where the utility has the right to recover prudent and reasonable
operating expenses, and assuming efficient operation, to earn a fair return on invested
capital.With Staff s approach there is little likelihood that the Company will find any viable
way to either accumulate retained earnings or source additional equity and debt capital,
when we are being limited to an annual net income in the $20,000 range by IPUC's
corrected calculated methodology of valuing water companies for rate making purposes.
With Staffs Use of the Original Cost Less Depreciation (OCLD) method for
company rate base calculation (rather than a Market Value Model), the methodology
seemingly results in protection of customers from "higher" rates,but also will lead to the
eventual inability of the Company to attract sufficient capital to replace and upgrade the
system as it continues to wear out.The Company will likely face unnecessary and avoidable
hurdles to providing services. Combined with the "Regulatory Lag" of IPUC approval
CDS STONERIDGE UTILITIES, LLC'S REPLY COMMENTS RE COMMISSION STAFF'S
MOTION TO ACCEPT THE CORRECTION OF A CALCULATION ERROR- 2

typically coming months and/or years after the related capital investments, which also
lower the return on said investments as depreciated dollars discount the net return on the
historical investments.
COMPANY AND STAFF ERRORS DISCOVERED BY COMPANY:
In preparing the Company response to the recent discovered error,it was discovered
there was an error in the Company's Application excel models as well that translated into a
Staff error in the irrigation income and expenses assumption. The Company inserted a
monthly amount for Expense 666-rate case, and it should have reflected the monthly
amount.
These items are summarized in the table below:
Proposed Company Changes
Revenue
Act# I item I company Staff Difference lReason
465 Golf Revenue 1 $7,783 $25,457 $ (17,674.00)Wron Assum ion
Total Revenue $ (17.674.00)
Expense
AM# I Item companv staff Difference Reason
Cannot keep an office open 5 days a week at this rate-this
amount includes all laboroverhead,payroll cost,workmans
601. Labor-Office $ 35,766.00 $ 18,966.00 $ 16,800.00 comp,FICA etc.
631.2.34 Labor-Contract $ 50,916.00 $ 50,075.08 $ 840.92 Contract o eratoractual billing matches company proposal
641,42 Office Lease $ 27,228.00 $ 13,614.00 $ 13,614.00 Staff error-cost include space,all utilities,office supply,
computer equipment,building insurance,landscaping,
stamps,paper-Amount already adjust for sewer user
641.41 Rental-Badchoe $ 7,200.00 $ $ 7,200.00 This is used for snow plowing,locate,fix minor repairs etc
641-4A ROW Lease $ 30,233.00 $ - $ 30,233.00 Water company never owned any land ever.
Rate Case $ 27,73100 $ 1,889.00 $ 25,843.00 Include attorney cost
641.42 Rental-Well#3 Pump $ 12AW.00 $ $ 12,480.00 Lease modified to 11%which staff suggested.
656 Insurance $ 9,000.00 $ 4,973.27 $ 4,026.93 Insurance company has dropped the utility portion at renewal
for the Golf Course
Total Expense $ 111,037.75
The Company requests that the Commission accept these changes and update the
Staff model(s) appropriately. Based on the corrected staff model and other errors in the
staff assumption, the total revenue will be reduced by $17,674.00 and the expenses
increased by$111,037.75•
With these changes, the rate will increase by 79.7% with a monthly minimum of
$43.13 per each 3/4 meter.
CDS STONERIDGE UTILITIES, LLC'S REPLY COMMENTS RE COMMISSION STAFF'S
MOTION TO ACCEPT THE CORRECTION OF A CALCULATION ERROR-3

CONCLUSION
It is important for the Commission to consider that given the length of the rate case
process, that the rate be set correctly to attract capital at reasonable rates and so such
invested capital is used and useful in providing service of quality water delivery to its
customers.Therefore,the Company requests the Commission adopt the proposed changes
by the Company.
DATED this /T day of November 2024.
AE KOVARIK, PLLCT. P KEL
Attorney for CDS StoneRidge Utilities, LLC
CDS STONERIDGE UTILITIES, LLC'S REPLY COMMENTS RE COMMISSION STAFF'S
MOTION TO ACCEPT THE CORRECTION OF A CALCULATION ERROR-4

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the /3 of November 2024,I caused to be served
a true and correct copy of the foregoing document to the below individuals as follows:
® Email Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83220
Boise, ID 83720-0074
[e-mail]
® Email Norman Semanko, ISB #4761
Patrick M. Ngalamulume, ISB #11200
Parsons Behle &Latimer
80o W. Main Street, Suite 1300
Boise, ID 83702
[e-mail]
[e-mail]
Attorneys for Stoneridge Property Owners
Association
® Email Brady Espeland
Ramsden, Marfice, Ealy& De Smet, LLP
PO Box 1336
Coeur d'Alene, ID 83816-1336
[e-mail]
[e-mail]
Attorney for Condominium Owners
Association, Inc.
® Email
Michael Duval
Deputy Attorney General
P.O. Box 83720
Boise, ID 83720-0074
[e-mail]
Attorney for Commission Staff
CDS STONERIDGE UTILITIES, LLC'S REPLY COMMENTS RE COMMISSION STAFF'S
MOTION TO ACCEPT THE CORRECTION OF A CALCULATION ERROR- 5

® Email
Randolph Lee Garrison
76 Bellflower Court
Blanchard, ID 83804
[e-mail]
SON PISKEL
CDS STONERIDGE UTILITIES, LLC'S REPLY COMMENTS RE COMMISSION STAFF'S
MOTION TO ACCEPT THE CORRECTION OF A CALCULATION ERROR- 6