20241119Corrected Staff Comments.pdf

RECEIVED
Tuesday, November 19, 2024 11:36.17 AM
IDAHO PUBLIC
UTILITIES COMMISSION
`
Idaho Public Utilities Commission Brad Little,Governor�.._ P.O. Box 83720, Boise, ID 83720.0074 Eric Anderson,President
John R.Hammond,Jr.,Commissioner
Edward Lodge,Commissioner
November 19, 2024
Via E-mail secretMgpuc.idaho.gov
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Ste. 201-A
Boise, Idaho 83714
Re: Case No. SWS-W-24-01
CDS Stoneridge Utilities, LLC's Application for Authority to Increase Its Rates
and Charges for Water Service in the State of Idaho
Dear Commission Secretary:
Attached for electronic filing please find Corrected Comments of the Commission Staff in
the above-referenced matter.
Staff discovered a mathematical error in Staff s model which led both Staff and the
Company to adopt a higher revenue requirement. The Company was provided with an opportunity
to comment on this matter. For Staff s submissions, the Commission approved a correction of the
record to fix the mathematical error in the revenue requirement and underlying information. Order
No. 36389. The highlighted sections contained within the corrected comments are areas where
information has been updated.
Please feel free to reach out with any questions.
Regards,
Michael Duval
Deputy Attorney General
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Enclosure
1,\Legal\W ATER\S W S-W-24-01\Di scow ery\20241 119_Ltr re comments.docx
11331 W.Chinden Blvd.,Building 8 Suite 201-A,Boise ID 83714
Telephone:[phone] Facsimile:[phone]

RECEIVED
2024 November 19, 11:36AM
IDAHO PUBLIC
MICHAEL DUVAL UTILITIES COMMISSION
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11714
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CDS STONERIDGE )
UTILITIES,LLC'S APPLICATION FOR ) CASE NO. SWS-W-24-01
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR WATER SERVICE IN )
THE STATE OF IDAHO ) CORRECTED COMMENTS OF
THE COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Michael Duval, Deputy Attorney General, submits the following
comments.
BACKGROUND
On February 28, 2024, CDS Stoneridge Utilities, LLC ("Company" or"Stoneridge")
applied for authorization to increase its rates and charges for water service by 270.8%
("Application"), or an annual revenue requirement of$760,187. The Company made a separate
supplemental filing requesting an April 1, 2024, effective date.'
On March 13, 2024, the Idaho Public Utilities Commission("Commission") issued a
Notice of Application,Notice of Intervention Deadline, and Notice of Suspension of Proposed
'In its Application the Company initially requested a July 1,2024,effective date.See Application Attachment G.
CORRECTED COMMENTS 1 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Effective Date. Order No. 36116. The Stoneridge Property Owners Association, Inc., the
Stoneridge Recreational Club Condominium Owners Association, Inc., and an individual,
Randolph Garrison,pro se, petitioned to intervene (collectively the"Intervenors"). Order Nos.
36144 and 36163.
STAFF ANALYSIS
Overview
Staff reviewed the Company's Application, responses to production requests, and
information discovered during an on-site audit and recommends the Commission establish a total
revenue requirement of$271,113 or a 17.6% increase, which is a $489,074 decrease from the
Company's request. See Staff s Attachment A, Line No. 16. Staff s revenue requirement is
calculated on a net rate base of$264,251 and a recommended return on equity ("ROE") of 10%.
A summary of Staffs adjustments is included as Staffs Attachment B.
System Description
The Stoneridge water system provides water to condominiums, single-family homes, a
golf course, and individual RV parking pads within the Stoneridge community and nearby Happy
Valley Ranchos ("HVR") community, located in the City of Blanchard in Bonner County, Idaho.
In total, the Company serves approximately 569 Equivalent Residential Units.
The Company's water system consists of two drilled wells, two booster stations, three
storage reservoirs, and a chlorination facility. The wells are equipped with 125 and 100
horsepower pumps producing water at an approximate rate of 800 and 600 gallons per minute
("GPM") respectively. The system has an approximate total storage capacity of 340,000 gallons
including the Stoneridge Reservoir(the largest storage), and the Happy Valley Mid-level and
Upper-level tanks. The water system also uses a Supervisory Control and Data Acquisition
system through Primary Logic Controllers to remotely control the pumps in wellhouses and
booster stations. The Company's water distribution system consists of PVC pipes ranging from
3 to 10-inch. There are approximately 30 fire hydrants attached to the system in Stoneridge
service area, and one fire hydrant in the HVR area, all of which have flushing hydrants at their
individual dead-ends. The water system utilizes a cross-connection program to prevent
CORRECTED COMMENTS 2 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

backflow, and the Company maintains a record of annual backflow inspections. The Company
uses 12.5% Sodium Hypochlorite solutions ("Liquid Chlorine")to treat its supplied water. The
Company delivers water to Customers using service meters ranging from 3/4-inch to 6-inch,
where approximately 93% of all connections are equipped with 3/4-inch meters. Currently, there
are 112 vacant lots available to be connected to the water system in the future and the Company
is expecting to connect 50 new service connections in the next five years.
System Reliability
There are no significant deficiencies that affect the safety and reliability of the water
system. Staff s assessment is based on the Company's latest Idaho Department of
Environmental Quality("IDEQ") Sanitary Survey and a review of existing customer complaints.
In response to the Staffs discovery request, the Company stated that it started to monitor
system pressure using the radio system from April 1, 2024, and no prior pressure data is
available. Response to Staff Production Request No. 17. Staff reviewed the 2019 IDEQ
Sanitary Survey("Survey") to identify any potential issues regarding system pressure and
reliability. Based on the Survey, the system pressure is sufficient and there were no
depressurization events (under 20 pounds per square inch) reported. Response to Staff
Production Request No. 16. Staff also believes there are no outstanding sanitary issues or
significant deficiencies that impedes system reliability. Additionally, Staff concluded that there
are no existing consumer complaints related to water pressure or reliability issues during 2019—
2023.
System Efficiency
Staff assessed the water pumping efficiency of the Company's water system for the past
five years (2019—2023). According to Staffs evaluation, the Company's systems are
sufficiently stable and generally efficient to reliably produce water all year round and do not
raise any major concerns.
Water Rights
Stoneridge currently leases water rights at a total diversion rate of 6.27 Cubic Feet per
Second or approximately 2,814 GPM that includes municipal, irrigation, irrigation storage, and
recreation storage usage. According to Staff calculation, with all pumps and booster pumps
CORRECTED COMMENTS 3 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

combined, the Company's maximum system capacity is 1,732 GPM. Staff believes the
Company has adequate water rights to support its system at its maximum capacity.
Capacity to Meet Current and Future Demands
Based on the information provided in the IDEQ sanitary survey and lack of customer
complaints, Staff believes the Company has enough capacity to meet its current demands.
However, due to the lack of adequate information, Staff could not assess the Company's
projected growth and associated capacity needed to serve its future demands. The Company's
Facility Plan was documented in 2006, and Staff believes it should be revised with detailed
analysis reflecting the Company's current system capacity and critical parameters (such as
average daily demand, maximum daily demand, peak hourly demand, etc.) for both current and
future customers. Staff recommends the Commission to direct the Company submit its updated
Facility Plan within one year from the date of the final order in this case, or prior to filing its next
general rate case, whichever comes first.
Staff inquired about the Company's system capacity in meeting the current and future
peak demands. The Company responded that its 2006 Facility Plan study was limited to average
demands, and it does not analyze peak demands. Response to Staff Production Request Nos. 9
and 23. According to Idaho Administrative Procedures Act("IDAPA") Rules Section No. 58.
01.08.50104, a community water system shall be designed to maintain its maximum daily
demand or peak hourly demand with its largest source being out of service. Although Staff
believes the Company's system should satisfy the current average daily demands, it is critical for
Staff to assess the Company's system in meeting its current and future peak demands, which can
be analyzed through an updated Facility Plan.
Corporate Structure and Ownership and Related party Issues
Stoneridge is a wholly owned subsidiary of Esprit Enterprises, LLC ("Esprit"), which is a
wholly owned subsidiary of JD Resort. JD resort is owned by Chan and Teresa Karupiah.
Therefore, all transactions between these three companies and the Karupiahs are related party
transactions and subject to increased scrutiny for prudence determination. The general rule
places "upon the utility the burden of proving reasonableness of its operating expenses paid to an
affiliate . . . ."Boise Water Corp. v. Idaho Pub. Utilities Comm'n, 97 Idaho 832, 838, 555 P.2d
163, 169 (1976). The Boise Water Court also noted that"if there is an absence of data and
CORRECTED COMMENTS 4 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

information from which the reasonableness and propriety of the services rendered and the
reasonable cost of rendering such services can be ascertained by the commission, allowance is
properly refused."Id. at_837 (emphasis added).
Specific related party transactions will be discussed in greater detail in the comments below.
Management Issues
Staff has concerns about the management of the Company. Specifically, Staff believes
that the management of the Company is not properly maintaining ownership and control of assets
that are fundamental to the operations of the Company; Staff believes that some of these crucial
responsibilities are abdicated to a related party. For example, upon purchasing the Stoneridge
water system, Esprit transferred the land that the Company's assets are placed on, the Right of
Way Easements, and the water rights from the Stoneridge to Esprit, then leased these back to the
Company at$2,000 a month. These assets were originally owned by Stoneridge at the time JD
Resort purchased the water Company. These assets were considered contributed capital under
IDAPA 31.36.01.102, and Stoneridge was not allowed a return on these assets. These assets
have already been paid for by customers and the Company is now proposing that the customers
pay for them again through a lease agreement with its parent company. This agreement
effectively allows the owner of the Company to earn a return on assets determined to have no
book value for ratemaking purposes because they were considered contributed by the original
developer.
Additionally, when the pump on Well No. 3 failed on July 24, 2024, the Company sent a
notice to the customers requesting that customers reduce irrigation until a replacement pump
could be installed. See Staff s Attachment C. The notice also stated that the Company was
requesting expedited review and approval by the Commission for the replacement pump. The
Company further requested its customers contact the Commission in support of the purchase and
expedited recovery of the pump. Staff believes this may have delayed the Company's ordering
of the replacement pump for several days while it waited for the Commission Staff to approve of
the Company performing repairs/replacements that are mandatory to provide safe and reliable
service. Commission Staff does not have the authority to approve purchases and recovery of
equipment, and the Company is statutorily obligated to provide safe and reliable service.
CORRECTED COMMENTS 5 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Afterwards, Staff requested that Stoneridge provide copies of the invoices for the well
pump that was purchased. The Company's response did not include any evidence of payment
nor copies of any invoices. In its response, Stoneridge stated"Esprit was unwilling to invest
more capital in the Company in exchange for additional equity. Esprit offered a Lease Purchase
option which The Water Company accepted."See Staff s Attachment D. Staff believes this
response was not adequate for several reasons. First, Esprit and StoneRidge are related parties,
and the lease agreement is not an arm's length transaction. Additionally, per Idaho Code § 61-
610, the Commission has right to inspect the records of a utility's parent company and any
affiliated company "...that engages directly in any transaction with the regulated utility which
results in expenses being incurred...". Staff has the statutory right and obligation to review
invoices to determine the appropriate recovery of plant investments, and denying Staff access to
the invoices for the new pump violates Public Utilities Law. Third, Mr. Karupiah signed an
affidavit, in Case No. SWS-W-18-01 stating that he would use his personal funds to support the
capital needs of the Company. A lease purchase agreement may not be in accordance with that
affidavit.
Stoneridge's response included a copy of the lease with terms of$1,200 a month for five
years. Based on the initial estimates provided for the price of the pump, Staff calculated the
interest on the lease to be 12.5%, which is above the ROE requested by the Company in this
case. Because it is not fair,just, and reasonable for the Karupiahs to use its other entities to gain
additional profits from Stoneridge customers, recovery of related party transactions should be at
the lower of actual cost or market. Therefore, any interest on a lease with Esprit is not
appropriate to be included in customer rates and if recovery of the pump were allowed, it must be
the actual cost paid by Esprit. As previously stated, the Company refused to provide invoices for
the pump and the actual cost is unknown.
Importantly, during a September 16, 2024,phone conversation with the Company, Staff
learned that the pump was missing a drive component making the pump non-functional. This
lease agreement has monthly lease payment beginning on August 1, 2024, before the pump is
used and useful. The Company provided a copy of a check dated August 30, 2024, to Stoneridge
Property Management for$2,400, stating this was for the lease of the pump. Staff recommends
that the Commission not include the cost of the new pump in rates until it is functional, the
proper invoices have been provided, and Stoneridge has full ownership.
CORRECTED COMMENTS 6 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

The pump in Well No. 3, the land the Company's assets sit on, the right of way
easements, and the water rights are all fundamental assets for the Company to provide its basic
services to the rate payers and should remain with Stoneridge. Should potential litigation freeze
Esprit's asset, Stoneridge could potentially be in a situation where it could not provide basic
water service. Staff believes that this is not appropriate management of the Company's assets
and recommends that the Commission order Esprit to transfer all assets included in the original
purchase of Stoneridge, and any asset fundamental to providing service to customers,back to
Stoneridge.
Staff is also concerned about the Company's collection practices. Stoneridge has a
reasonable collections policy that dictates first notifying customers who are in arrears by more
than$300, and increasing efforts to collect until notice of disconnection is given and the
customer is ultimately disconnected. However, Staff noticed the golf course was routinely in
arrears to the Company by more than$300, and the Company did not follow its policy. The golf
course is owned by Mr. Karupiah. The Company cannot discriminately apply its policy based on
ownership and Stoneridge must follow its policy in diligently collecting money owed, even if it
means disconnecting service to the golf course.
Proforma Plant in Service
In its Application, the Company included several proforma capital projects and
equipment for recovery. See Company Application Exhibit 1, Schedules A and B and Exhibit
Nos. 9, 10, and 11. These projects will not be completed by the time new rates go into effect,
and therefore have not been evaluated by Staff. Staff recommends removing these capital items
from Plant in Service because they are not currently used and useful. Removing the proforma
capital projects reduces the Company's proposed Plant in Service by $730,457, accumulated
depreciation by $117,603 and associated depreciation expense by $114,315.
Depreciation Expense
In its Application, Stoneridge included$18,259 in depreciation expense on existing Plant
in Service. Staff reviewed the Company's proposed depreciable lives and depreciation rates for
the various categories of plant, and recommends the Company use the depreciation rates that
align with the depreciable lives provided in the National Association of Regulatory Utility
CORRECTED COMMENTS 7 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Commissioners ("NARUC") Depreciation Practices for Small Water Utilities. A summary of the
changes is included in Table No. 1 below:
Table No. 1: Depreciable Lives for Company Assets
Company
Plant Life NARUC
Account ears Life
309 Supply Mains 23.92 50
311 Power Pumping Equipment 20
320 Purification Systems 14.98 20
331 Trans.& Distribution Mains 50
333 Services 20.00 30
334 Meters and Meter Installations 13.99 35
335 Hydrants 31.70 40
339 Other Plant&Misc. Equipment 58.67 10
There are two accounts that the Company did not provide depreciation rates for because
no plant was booked to those accounts. However, Staff proposes the Company capitalize some of
the repair and rebuild expenses, which would create plant assets for those accounts. The
depreciation rates Staff is proposing for those accounts are included in Table No. 1 above.
Additionally, the Company included $1,948 of depreciation expense for plant in Account 334 -
Meter and Meter Installations, which was completely depreciated in 2023. Therefore, Staff
proposes reducing depreciation expense by $1,948 to account for the fully depreciated items in
Account 334. In total,by using the recommended depreciations rates provided by NARUC, and
removing the depreciation expense on fully depreciated assets, Staff s proposed depreciation
expense is $8,007 less than the Company's requested amount. See Staffs Attachment E.
Capitalizing Repairs and Rebuilds
The Company recorded three expenses that Staff believes should be capitalized. The first
expense was $6,151 for pump repairs to the Happy Valley Ranchos booster site, the second was
$8,600 to repair water main breaks, and the third was $2,700 for another water main repair.
Because these repairs will extend the life of the assets, they should be capitalized as Plant in
Service. Staff recommends that expense account Maintenance & Supply-Operating be reduced
by$17,451, and that Plant in Service be increased by$6,151 for pumps and accessories in
CORRECTED COMMENTS 8 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

account 311, and an additional $11,300 in account 331 for Transmission&Distribution Mains &
Accessories.
Stoneridge should depreciate the reclassified plant using the depreciation rates in Table
No. 1 above, which increase the test year depreciation expense by $534. See Staffs Attachment
E.
Golf Course Revenue
In its Application, Stoneridge excluded all revenue from the golf course owned by Chan
Karupiah in its rate design. See Exhibit 5, Schedule A. Staff disagrees with the exclusion of
revenue from water sold to the golf course and believes it is reasonable that the Company will
continue serving the golf course at a reduced amount. Staff recommends that 81.7% of the golf
course's historical consumption be included when determining the revenue for the Company.
Using this estimated amount, Staff proposes an adjustment to revenue in the amount of$25,457
associated with the consumption used by the golf course.
In October of 2023, the golf course installed its own well to help provide irrigation water
for the golf course, which will reduce the amount of water provided from Stoneridge. Stoneridge
estimated the golf course would use less than 20 million gallons in 2024,but through August of
2024 the golf course has used approximately 27 million gallons. See Response to Staff
Production Request Nos. 67, 82, and 102. Based on the actual golf course consumption through
August of 2024, Staff does not believe the Company's estimate of 20 million gallons is accurate.
Some amount of 2024 golf course usage above the Company's estimate can be explained by the
new golf course well being offline April through June 2024 because of issues with the new well
pump. See Response to Staff Production Request No. 66.
To determine the actual amount of reduced consumption by the golf course, Staff
compared the actual 2024 golf course consumption for the months of July and August to the
historical July-August consumption for the years 2022 and 2023. Staff did not include the other
months in 2024 due to the new well pump being offline for April through June. Table No. 2
shows the comparison of July-August 2024 consumption to 2022 and 2023.
CORRECTED COMMENTS 9 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Table No. 2: July-August 2024 Golf Course Consumption Comparison
Line Date Consumption
(gallons)
1 July-August 2024 20,529,200
2 July-August 2023 25,384,000
3 July-August 2022 24,844,600
4 Average 2022-2023 Consumption 25,114 300
(Avg of Line 2 and Line 3)
5 2024 Consumption Reduction 4 585 100
(Line 1 minus Line 3) ( ' )
2024 July-August Percent Reduction o
6 (Line 5 divided by Line 4) -18.3/o
2024 Percent of Historical Average o
7 (Line 1 divided by Line 4) 81.7/o
Staff determined the amount of golf course consumption to include for determining
revenue by multiplying the 2024 percent of historical average value of 81.7%by the historical
(2022-2023) annual average golf course consumption of 42,705,600 gallons. This calculation
results in a golf course test year consumption of 34,908,8692 gallons.
Staff s golf course test year consumption of 34,908,869 gallons was multiplied by the
current approved Schedule 1 commodity charge for the golf course to determine the consumption
revenue. To determine the revenue from the golf course customer charge, Staff calculated the
customer charge based on the golf course using a 1.5"meter for 7 months of the year. In 2023
the golf course had a 6" meter,but in 2024 the meter was changed to a 1.5"meter. See Response
to Staff Production Request No. 103. Starting in November of 2023 the golf course meter was
turned off and was not charged a monthly charge until April 2024, Staff assumes this practice
will continue and the Company will only receive monthly charge revenue for 7 months of the
year. Staff s total test year revenue including the consumption revenue and the customer charge
revenue for the golf course is $25,457.30. Additional details on this calculation can be found in
Staff s Attachment F.
2 The calculation of this number requires more significant digits for the 2024 percent of historical average value of
81.7%shown in these comments.
CORRECTED COMMENTS 10 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Annual Electricity and Chemical Expenses
Staff calculated a normalized 2023 test year electricity expense of$28,798 and chemical
expense of$8,557 to be included in the revenue requirement. Staff determined both amounts by
calculating a weighted-average cost per gallon for electricity and chemicals using (1) actual
billed amounts for 2022 and 2023 and(2) amounts of water consumption for both years.
Production/Consumption of Water
Staff first had to determine the Company's actual system-level water production over the
two-year period(January 2022—December 2023) and estimate the amount of golf course
consumption. The results are shown in Table No. 3 below. The consumption data provided by
the Company was limited to two full years (2022—2023), which Staff used in its analysis. See
Response to Staff Production Request Nos. 12, 13, and 102.
Table No. 3: System-level Water Production and Golf Course Consumption
Year Well No. 1 Well No. 2 Annual Total Actual Golf Course
Production Production Production Consumption
(Gallons) (Gallons) (Gallons) (Gallons)
2023 52,855,300 64,516,100 117,371,400 46,548,200
2022 54,524,000 49,093,700 103,617,700 38,863,000
Staff estimated golf course consumption for test year 2023 (includes reduction in golf course
consumption from its own well): 34,908,869 Gallons.
Annual Electricity Expenses
Staff reviewed the power bills provided by the Company to calculate the annualized
power expenses incurred for 2023. See Response to Staff Production Request No. 11. Staff
calculated a 2023 annualized electricity expense of$28,798, which is $7,889 more than the
Company's test year expense. In its calculations, Staff considered the weighted average of
electricity cost per gallon of water produced over a two-year period(January 2022—December
2023) and the estimated golf course water consumption for 2023 test year. Staff analysis of the
Company's annualized electricity expense is summarized in Table No. 4 below.
CORRECTED COMMENTS 11 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Table No. 4: 2023 Annualized Electricity Expense
Year Well HVR Pump Forest Way Total Annual Annual Total Electricity
Pumps House Water Tank Electricity Production Cost/Gallon
Cost (Gallons) Produced
A B C =A=B
2023 $26,820 $1,655 $2,533 $31,009 117,371,400 $0.000264
2022 $25,443 $1,439 $2,242 $29,124 103,617,700 $0.000281
Weighted average electricity cost/gallon of water produced: $0.000272.
2023 annualized electricity expenses: $28,798.
Staff accounted for the weighted average electricity cost per gallons of water produced by
weighing it against the total annual electricity cost for respective years during 2022—2023
period as shown below:
Weighted average electricity cost/gallon of water produced=
($31,009X$0.000264+$29,124X$0.000281) -($31,009+$29,124) _ $0.000272.
(Equation No. 1)
According to the Company, the golf course is planned to be disconnected in 2025 as the
course will be producing its own water through its well. As a result, the Company's water
system still needs to provide a partial amount of water to the golf course. See Response to Staff
Production Request Nos. 65 —67. For the 2023 test year, Staff believes the golf course is
estimated to produce 11,639,331 gallons, which is the difference between the reported golf
course consumption and Staff-calculated consumption (46,548,200— 34,908,869 = 11,639,331
gallons). Staff calculated the actual amount of water produced by the Company's water system
that serves the customers in test year 2023 by subtracting the expected golf course's production
from the Company's total well production in the same year.
Company's water production less the expected golf course production in test year
2023 = 117,371,400— 11,639,331 = 105,732,069 gallons. (Equation No. 2)
Staff then multiplied the water production amount as calculated in Equation No. 2 with
the weighted average electricity cost/gallon of water produced in Equation No. 1 to calculate
2023 annualized electricity expenses.
2023 annualized electricity expenses = 105,732,069 X $0.000272 = $28,798.
(Equation No. 3)
CORRECTED COMMENTS 12 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Annual Chemical Expenses
Staff reviewed the past two years (January 2022—December 2023) of chemical costs
provided by the Company to calculate the annualized chemical expense (liquid chlorine) incurred
for the year 2023. See Response to Staff Production Request No. 15. According to Staff s
calculations, the annualized 2023 chemical expense is $8,557, which is $52 more than the
Company's test year expense.
In its analysis, Staff discovered the average cost of chlorine per gallons of water in 2023
increased significantly compared to 2022. To calculate a fair and reasonable annualized
chemical expense, Staff performed a weighted average of annual expenses for the past two years
(2022—2023) and considered the estimated golf course's water consumption in 2023. Staffs
analysis of 2023 chemical expense is illustrated in Table No. 5 below.
Table No. 5: 2023 Annualized Chemical Expenses
Year Total Annual Annual Total Chlorine Cost/
Chlorine Cost Production(Gallons) Gallon Produced
A B C =A-B
2023 $10,987 117,371,400 $0.000094
2022 $5,969 103,617,700 $0.000058
Weighted average chlorine cost/gallon of water produced: $0.000081.
2023 annualized chemical/chlorine expenses: $8,557.
Staff gauged the weighted average chlorine cost per gallons of water produced by
weighing it against the total annual chlorine cost for respective years during 2022—2023 period
as shown below:
Weighted average chlorine cost/gallon of water produced=
($10,987X$0.000094+$5,969X$0.000058) -($10,987+$5,969) _ $0.000081.
(Equation No. 4)
Staff then multiplied the water production amount as calculated in Equation No. 2 with
the weighted average chlorine cost/gallon of water produced in Equation No. 4 to compute 2023
annualized chemical expenses.
2023 annualized chemical expenses= 105,732,069 X $0.000272 $8,557.
(Equation No. 5)
CORRECTED COMMENTS 13 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Water Testing
Water testing requirements follow a nine-year rotation schedule. As has been the
Commission's preferred practice, Staff included an annualized amount to allow collection of the
total amount over the nine-year schedule. Calculation of total testing costs and the annual
adjustment is included in Staff s Attachment G. This adjustment increases the Company's water
testing expense by $1,328 to a total of$1,358.
Management Administration & General("A&G")
Stoneridge included$67,863 in A& G—Labor associated with the management of the
Company. Stoneridge does not have any employees,but instead relies on a staffing contract with
Esprit. Because Esprit is a related parry, the prudence of all labor expenses requires additional
scrutiny. Generally, Staff applies a standard of the lower of cost or market as the basis for all the
related party expenses. The only person performing Management A&G labor for Stoneridge is
paid, on average, $3,039 per month, for an annual expense of$36,468. Staff recommends
reducing the Company's Labor—Administrative & General expense by $31,395 to align with
amounts actually paid to the Esprit employee. In addition, the Company included one payment
to the same employee in Contract Services—Professional. Since the total cost of this employee
is already included in Staff s A&G Labor adjustment, Staff recommends this be removed from
rates as well, which reduces Contract Services by $3,168.
Customer Accounts Labor Expense
Stoneridge included$35,766 in Labor—Customer Accounts for costs associated with an
administrative person who performs billing and payment processing and is the first response to
customer complaints. As with the contract employee discussed in the A&G Labor section above,
this person is not employed by Stoneridge but performs duties under the staffing contract with
Esprit. Staff reviewed documents and discovered that Esprit paid this person an average of
$1,400 a month, or$16,800 per year. Staff included an additional 25% increase for payroll taxes
for a total of$20,160. However, this person also performs work for the sewer company which
shares an office with the water company. After discussions with the Company, Staff agrees that
about 20% of this person's time is related to the sewer company, and 80%to the water company.
CORRECTED COMMENTS 14 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Therefore, Staff reduced the labor expense by 20%to account for the time spent on unregulated
activities. Staff s adjustment reduces the Company's request by $18,966.
Operations & Maintenance ("O&M") Expense to Actuals
Stoneridge included$68,355 O&M Expense for a water operator. In 2023, the Company
had a water operator through its staffing contract with Esprit. Stoneridge now relies on Integrity
Water Management for its water operator. Therefore, Staff recommends removing the O&M
expense for a water manager of$68,335 and increasing Contract Services—Professional by
$24,430 to account for the amounts paid to Integrity Water Management.
Tax Preparation Expense
Stoneridge inadvertently recorded a second tax preparation expense, which Staff
recommends be removed. This adjustment decreases Contract Services—Processional by $875.
Misc Expense
Stoneridge included an uncategorized expense to JD Resort for$1,049. In its response to
Production Request No. 43, the Company stated the expense was for interest on a loan that was
later ordered to be classified as equity in Order No. 36084 in Case No. SWS-W-23-03. Staff
recommends removing this expense which reduces Miscellaneous Expense by $1,049.
711 Engineering Expense
Stoneridge included an expense to 7B Engineering for$5,800. In its response to
Production Request No. 37, the Company stated that this was a sewer expense inadvertently
posted to the books of the water company. Staff recommends that this expense be removed
reducing Contact Services—Professional Expense by $5,800.
Securities Issuance Application Fee
Stoneridge paid$320 for an application fee for the requested securities issuance Case No.
SWS-W-23-03. Because this expense is not recurring, the Company should not recover this
amount on an annual basis. Therefore, Staff recommends removing this expense and reducing
regulatory fee expense by $320.
CORRECTED COMMENTS 15 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Right of Way Lease
As mentioned in the Management Issues section, Stoneridge included a lease expense
totaling $30,233 in 2023 for Right of Way, Water Rights and Easement Leases. This amount is
greater than the $2,000 per month stated in the lease agreement provided in the response to
Production Request No. 39. As stated above, these assets were considered contributed capital
and essentially paid for by customers prior to JD Resort's acquisition of Stoneridge. It is not
reasonable for JD Resort to remove the assets of Stoneridge and lease them back to the Company
at customers' expense when customers have previously paid for those assets. Therefore, Staff
recommends that these assets be returned to Stoneridge immediately and the lease agreement be
removed from rates. This adjustment decreases rental expense by $30,233.
Truck/UTV Lease
Stoneridge has a lease contract with Esprit for all its equipment. During its audit, Staff
reviewed the complete list of equipment and the monthly expense of each item. Staff believes
that much of the leased equipment is not beneficial to customers and recommends that only the
Ford F-150 and Kubota UTV lease expenses should be included in customer rates.
The Lease contract shows that Stoneridge is paying $600 per month for a backhoe and
$120 per month for a Ford Ranger, plus the costs of licenses, fuel and a yearly percentage
increase. Staff believes that the backhoe should be rented on an as-needed basis. Additionally,
the Company does not have a qualified operator on its staff to operate the backhoe. The Ford
Ranger is not a necessary expense, since there is only one employee who uses a vehicle, and
Staff recommends the lease associated with the F-150 already be included in rates.
Staff s review of the Ford F-150 and the Kubota UTV under the lease agreement show
that these two pieces of equipment would be useful and at least cost to the customer. This
adjustment reduces Rentals—Property &Equipment by $14,663. See Staff s Attachment H.
Rental of Property
Staff reviewed the Rental Expense associated with the water company's office space.
The water company shares office space with the sewer company, but records the entire expense
on its books. Staff believes that the monthly rent should be split evenly between the water
company and the sewer company. This adjustment reduces rental expense by $13,614.
CORRECTED COMMENTS 16 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Insurance Expense
The Company included$432 in insurance expense in the filing. Upon review of the
insurance, Staff discovered that the Company was included in the umbrella plan that covered all
of the entities owned by Mr. Karupiah. The total cost of this insurance policy was $29,839.
Stoneridge was allocated $7,000 of the total expense. When Staff reviewed the contract, Staff
discovered that much of the insurance policy covered worker's comp as well as other employee
and director related insurance. Stoneridge stated that it intended to be removed from the policy
that covered all of Mr. Karupiah's companies and instead have its own insurance policy, which
would increase the Company's estimate of insurance expense to $9,000.
Staff does not support either of the proposals,but also believes that the test year expense
of$432 is too low. Reasonable insurance coverage has historically been considered prudent and
recoverable. Staff does not believe that Stoneridge's allocation of approximately 25% of the
total insurance cost is representative of the risk that the insurance policy is covering. Staff also
believes that Stoneridge having its own, more expensive, policy is not reasonable when it can be
included in the umbrella policy of Mr. Karupiah at a decreased cost. Therefore, Staff proposes
splitting the entire insurance expense of the umbrella policy evenly among the six entities
covered under the policy. This adjustment increases insurance expense by $4,451 to a total of
$4,973.
Working Capital
Working capital is the amount of money the Company needs to have on hand to pay its
short-term obligations. It is used to bridge utility finances between the time expenditures are
made and revenue is received from ratepayers to cover these costs. Because it is generally
money that is advanced by the Company, it is common to include working capital in rate base so
the Company can earn a return. Staff recommends using the 1/8th formula method, which equals
the sum of total annual operating expenses divided by eight. The 1/8t'method is a common
practice for small water utilities without the capability of performing a more complex analysis.
With this calculation Staff recommends a working capital allowance of$32,107.
CORRECTED COMMENTS 17 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Return On Equity("ROE")
Stoneridge proposed a 12% ROE. In the last several rate cases for small water companies
of similar size, the Commission has awarded an 11%ROE. See Case Nos. KHW-W-23-01,
AWS-W-23-01, MNV-W-19-01, and GPW-W-17-01. Staff would recommend a 11%ROE to be
consistent with other small water companies in the state, however, due to the management issues
stated above, Staff believes a reduction in ROE is appropriate until the Company corrects the
issues identified. The Commission has previously reduced the ROE of a water company for
operations and management issues. In Order No. 30279, Case No. SPL-W-06-01, the
Commission reduced the ROE from 12%to 6%until the identified issues in that case were
resolved. See Order No. 30279 at 10. Additionally, in that Order, the Commission stated once
the issues were resolved the ROE could be reset to 12%.
Staff believes the same treatment is appropriate here. Based on the concerns stated
previously, Staff recommends the Commission apply a 100-basis point reduction to the
Company's ROE until these issues are resolved. Therefore, Staff recommends the Commission
approve a 10% ROE.
Capital Structure
In its Application, the Company stated it has $105,005 in long term debt and $361,900 in
equity, for a capital structure of 22.32% debt, and 77.68% common equity. See Staff s
Attachment I. The long-term debt is a state drinking water revolving loan at 2%. Using a 10%
ROE and a cost of debt of 2%, Staff recommends an overall rate of return of 8.21%.
Rate Design
In the Application, the Company proposed a uniform percentage increase to the monthly
minimum charge and commodity charge with no major changes in rate design. Staff supports the
proposed rate design—albeit using Staff s proposed revenue requirement. Staff s calculation of
revenue at present rates and revenue at proposed rates is shown in Staffs Attachment F. A
comparison of the Company's proposed rates and Staffs proposed rates is shown in Table No. 6
below.
CORRECTED COMMENTS 18 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Table No. 6: Company and Staff Rate Proposals
Meter Size(in.) Company Proposal Staff Proposal
Customer Charge Commodity Rate Customer Charge Commodity Rate
0.75 $87 $2.94 $27.70 $0.91
1 $154 $2.94 $27.70 $0.91
1.5 $347 $2.94 $110.78 $0.91
2 $616 $2.94 $196.95 $0.91
2.5 $963 $2.94 $307.74 $0.91
3 $1386 $2.94 $443.14 $0.91
4 $2464 $2.94 $787.80 $0.91
6 $5546 $2.94 $1,772.54 $0.91
To show monthly bill amounts and percentage changes under the different proposals,
with a given level of consumption, Table No. 7 is presented below.
Table No. 7: Comparison of Monthly Bill Amounts and Percentage Increases
Meter Consumption Current Rates Company Proposal Staff Proposal
Size (x1000 Percent Percent
Monthly Bill Monthly Bill Monthly Bill
(in.) gallons) Increase Increase
0.75 10 $31.90 $116.40 265% $36.81 15.4%
1 30 $82.14 $242.20 195% $55.01 -33.0%
1.5 50 $135.50 $494.00 265% $156.37 15.4%
2 70 $225.97 $821.80 264% $260.77 15.4%
2.5 90 $337.77 $1,227.60 263% $389.79 15.4%
3 110 $470.90 $1,709.40 263% $543.42 15.4%
4 200 $840.67 $3,052.00 263% $970.13 15.4%
6 400 $1,852.00 $6,722.00 263% $2,137.21 15.4%
Staff evaluated alternative rate design options, including one in which the percentage
increase to commodity charges was larger than the percentage increase to the monthly minimum
charge. This design would shift more revenue recovery to commodity charges and provide a
stronger conservation signal than the uniform percentage increase. Staff is concerned that this
plan could create more revenue instability for the Company. This is primarily due to the
CORRECTED COMMENTS 19 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

uncertain continuing customer status of a high consumption customer, the Golf Irrigation Pond
6" (Golf Course). Details surrounding the Golf Course are further discussed below.
The Company and Staff also discussed implementing inverted block tier pricing for its
commodity charge. This design charges a higher commodity rate as consumption increases and
sends stronger conservation signals than a flat commodity rate. Staff acknowledges the
Company's concern and willingness to send stronger conservation signals to customers. Staff
presently does not support inverted block tier pricing because the Company does not read meters
during winter months and does not have a customer's specific consumption during these months.
To implement block tiered pricing would require separate winter and summer rate schedules.
However, Staff encourages the Company to explore tiered commodity rates in a future rate case
if it can measure customer consumption on a year-round basis.
Treatment of Golf Course
The Golf Course service connection provides water to irrigate the Stoneridge Golf Course
and accounts for a large percentage of the Company's water sales. Staff highlights that the
Company and Stoneridge Golf Course share a common owner, Esprit Enterprises, LLC. Staff
performed extensive analysis regarding the commodity rate for the Golf Course and its
consumption of Company water.
Currently, the Golf Course receives a 10 percent discount on commodity charges. Staff
disagrees with the inclusion of this discounted rate. The discount was established in Case No.
SWS-W-06-01, per Commission Order 30342. Reasoning for the discount was based on the
concept of interruptible service to the Golf Course. See Case No. SWS-W-06-01, Staff
Comments at 10 and 12. If the Company were to face capacity issues, it could temporarily stop
or interrupt service to the Golf Course.
Staff notes that the Company's application in Case No. SWS-W-06-01 did not include a
discounted rate for the Golf Course. After reading the Reply Comments filed in that case, Staff
presently believes that the discount was originally included out of concern that the Golf Course
would source its own water and cease being a customer if its annual cost exceeded$45,000.
Case No. SWS-W-06-01 Reply Comments at 4.
In its communications with the Company, Staff also notes that the Golf Course has
constructed and begun using its own well to supply a portion of its water needs as of October
CORRECTED COMMENTS 20 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

2023. See Response to Staff Production Request Nos. 66-67. As the Golf Course moves to
supplying a larger percentage of its own water, its consumption of the Company's water will
decline. Any benefit the Company derives from interrupting service to the Golf Course will also
decline.
As stated above, the Company indicated the Golf Course's plans to supply a portion of its
own water instead of purchasing it from the Company. Staff stresses that consumption changes
of a large customer can have large effects on revenue recovery and rate design. In calculating
billing determinants in the case, Staff weighed historical Golf Course consumption with
discovery regarding its own well. Staff's calculation of Golf Course consumption is explained in
detail in the Golf Course Revenue section above.
Treatment of Service Connections with 1-inch meters
Staff believes it is necessary to discuss the monthly minimum customer charge for
customers with I-inch meters. Under the current tariff, customers with 3/4-inch and I-inch meters
pay the same monthly minimum customer charge of$24.00. Typically, customers with larger
meter sizes pay higher monthly minimum customer charges. Staff investigated past cases of the
Company to discover reasoning for an equal monthly minimum charge for 3/4-inch and 1-inch
meters.
In its review of Case No. SWS-W-20-01, Staff notes that the Company faced lower
material costs for installing a I-inch meter compared to a 3/4-inch meter, and that installing the
larger size may be a prudent method of minimizing expenses. See Case No. SWS-W-20-01,
Staff Comments at 3-4. In Commission Order No. 34969, the Commission stated that customers
with I-inch meters should be charged the same monthly minimum customer charge as customers
with 3/4-inch meters. Effectively, the Company could install a 1-inch meter at its discretion, so
long as it charged the same monthly minimum charge as a 3/4-inch meter.
In its Application, the Company proposed to charge I-inch meter customers a higher
monthly minimum charge than 3/4-inch meter customers. See Application Exhibit No.7, Changes
in Rates Table. The Company clarified in its response to Production Request No. 24 that
customers currently connected to I-inch meters will be billed at the 3/4-inch rate indefinitely.
Staff supports the Company's stance of continuing to charge existing 1-inch meter customers the
same monthly minimum as 3/4-inch meter customers, as this is consistent with Commission Order
CORRECTED COMMENTS 21 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

No. 34969. Staff disagrees with the Company introducing a different monthly minimum charge
for new 1-inch meter customers at this time. Allowing a higher monthly minimum charge for
these new customers would put existing 1-inch meter customers at risk of also being charged the
higher monthly minimum amount.
Another issue Staff discovered with regards to 1-inch meter customers is that there is one
specific customer with a 1-inch meter that is being charged a monthly minimum amount of
$82.44—which differs from the Company's current approved rates. Staff recommends that the
Company charge this customer consistent with Commission Order No. 34969.
Tariff
The Company supplemented its Application with a proposed tariff. The Company's
supplemental tariff did not match the filed Application. Within the proposed tariff, the Company
included new language and definitions, new recurring rates, and new non-recurring rates. Staff
reviewed the proposed tariff and had many issues with the proposed rates and language included.
During Staff s review, it was apparent there were many duplications of definitions and language
borrowed from other water utilities approved tariffs that were slightly updated. Through
discussions with the Company, the Company agreed to let Staff integrate the proposed tariff into
an updated water utility tariff template to address some of the issues.
One of the issues Staff had concerns with was the Company's office hours and charges
based on those hours. The Company's office hours are 10:00 a.m. to 2:00 p.m., Monday through
Thursday. Staff believes it is not reasonable to have reconnection charges and call out charges to
be based on the office hours. Standard business hours are 8:00 a.m. to 5:00 p.m., Monday
through Friday and standard after hours are 5:01 p.m. to 7:59 a.m., Monday through Friday and
weekends. Staff recommends the Commission order the Company's tariff use standard business
hours for the reconnection and call out charges.
Below are some of the Company's proposed charges from the Company's tariff and
Staff s review and recommendations.
• Account Transfer Charge—The Company proposed a$65 charge for when there is a
transfer of the ownership or occupancy of a property. Staff disagrees with the proposed
application of this charge as the language is vague. This should be a cost-based charge
CORRECTED COMMENTS 22 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

and the additional costs the Company incurs to transfer an account is minimal; therefore,
Staff does not recommend the Commission set an account transfer charge.
• Reconnection Charge for 30 days or less—The Company proposed a reconnection charge
for 30 days or less of$50 during office hours and $80 after office hours. Staff
recommends the reconnection charge for 30 days or less remain the same as the currently
approved charge of$18.50 during business hours and $33.50 after business hours. These
charges are comparable with other utilities and are more representative of the cost of an
operator leaving from the Company's local office.
• Reconnection Charge for 31 days or more (MO) —In the Application, the Company
proposed to change the reconnection charge to $50 for all meter sizes during office hours,
$80 after office hours, and$80 after 31 days. Staff disagrees with the proposed
reconnection charges for disconnections exceeding 30 days.
Disconnections exceeding 30 days are commonly referred to as seasonal
disconnections. The basis for a seasonal reconnection charge is to spread fixed costs
more equitably among all customers. A seasonal customer facing a lower reconnection
charge may be induced to voluntarily disconnect from the system during winter periods
of prolonged vacancy to avoid the monthly minimum charge. This has the effect of
shifting cost recovery to customers who stay connected year-round. A higher seasonal
reconnection charge allows for more equitable recovery of year-round fixed costs
required to operate and maintain the system that all customers benefit from.
Staff reviewed the tariffs of other regulated water utilities that serve resort
communities such as Aspen Creek Water Company and Teton Water and Sewer
Company and notes that seasonal reconnection fees range from three to six months of the
monthly minimum charge. In Case No. SWS-W-02-01, Order No. 29108, the
Commission authorized a seasonal reconnect fee amounting to slightly more than three
times the monthly minimum customer charge. Order No. 29108 at 3.
Staff examined the Company's current reconnection charge for disconnections
exceeding 30 days. The present reconnection charge for disconnections exceeding 30
days is 2.71 times the monthly minimum customer charge. Staff recommends the rate be
set at three times (3x) the monthly minimum customer charge.
CORRECTED COMMENTS 23 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

• Return Check Charge—The Company's proposed tariff included this charge with a rate
of$25. According to Idaho Code § 28 22-105, which governs "Checks Dishonored by
Nonacceptance or Nonpayment," a charge may not exceed twenty dollars. Staff
recommends the return check charge be set at $20.
• Late Payment Charge—The Company proposed to include a late Fee of 10% or $5
minimum on the current month's new charges. Staff compared the fee to several other
tariffs and found the proposed fee to be much higher. Staff recommends the standard
charge of one (I%)percent monthly applicable to the unpaid balance owning at the time
of the next billing statement. In addition, in a production request, the Company
mistakenly stated that an account is past due after 60 days. They have changed the tariff
language to match the Uniform Customer Relations Rules ("UCRR") of 15 days instead
of 60 days.
• Certified Mail Charge—The Company proposed to have a$20 fee for certified mail. The
Company provided no additional information on its need for the charge. Rule 304 of the
UCRR requires notification but does not require notices to be certified. IDAPA
31.21.01.304. Staff does not recommend a charge or a fee for certified mail be set.
• Paper Statement Fee—The Company proposed to include a $10 paper statement fee.
Historically, the Commission has never had a paper statement fee proposed by a
Company. If this fee were to be approved, it would need to be cost based. The Company
would need to show that the savings such a fee would provide to the body of the rate
payers. The costs of printing and mailing statements has not been broken out by the
Company, and the benefits of this extra fee has not been supplied. Therefore, Staff does
not recommend the Commission set a paper statement fee.
• Call Out Charge—The Company proposed a call out charge for the water operator to
inspect/repair the system if the problem was determined to be the Customer's
responsibility for a rate of$50/hour during office hours and $80/hour after office hours.
The Company's explanation is not clear as to when this charge would apply and how the
hours applied would be calculated. Staff does not agree with the proposed rate. Staff s
concerns with the Company's limited office hours have been discussed above.
Additionally, Staff does not agree with the per hour rate as the Company's water operator
is not local; this charge was intended to cover the Company's cost for the water operator
CORRECTED COMMENTS 24 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

to drive to the system, and this charge could be a deterrent for customers to report issues
with the water system. Staff does not recommend a call out charge be set.
• Field Collection Trip Charge—The Company proposed a new field collection trip charge
of$40. This charge would also need to be cost based, and the Company did not provide
the details of the costs involved for a field collection. The benefits of a field collection
charge are to incent customers to pay their bills on time. Staff recommends no field
collection charge in this case.
• Bulk Water Sold to Contractors Charge—The Company proposed a $100 charge for any
contractor needing to fill a water tanker of any kind shall do so at a location designated
by the Company and each truck shall be equipped with an approved and inspected
backflow prevention device as approved by the Company. The Company did not provide
any justification for the proposed rate of$100. Staff does not disagree with this charge;
however, Staff believes the rate is too high. Staff recommends the contractor rent a meter
(including a backflow device) from the Company to measure usage and charge a meter
rental charge of$26.77 (which is comparable to other utilities). Staff also recommends
that all water consumption be billed at the approved Schedule 1 usage charge.
• Construction Water Charge—The Company proposed a charge for contractors, builders,
or others who wish temporary service from an approved service connection shall apply to
the Company for temporary service. This application may be made in writing, in person
or over the telephone. The Company's proposed rate language is "[t]he requesting party
agrees to pay the minimum monthly rate and commodity charges during time of use."
See Company's Marked-Up Tariff No. 5, Schedule No. 5, Sheet 12. Staff supports the
Company's proposal but recommends modified language for the proposed rate that will
help maintain consistent language throughout the tariff. Staff recommends the proposed
rate language read: "The requesting party agrees to pay the approved Schedule 1 metered
water rates including the customer charge for the appropriate meter size and usage charge
for all consumption during the time of use."
CORRECTED COMMENTS 25 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Table No. 8 below summarizes Staff s recommendations for the proposed non-recurring
charges.
Table No. 8: Non-Recurring Charges
Proposed Charges Company Staff
Account Transfer Charge $65 $ 0
Account Initiation $ 0 $ 0
Charge
Out of Cycle Meter Read $ 0 $ 0
Charge
Reconnection Charge— $50 during office hours $18.50 during business hours
30 days or less $80 after office hours $33.50 after business hours
Reconnection Charge— $50 during office hours 3 times the monthly customer charge
31 days or more $80 after office hours
Return Check Charge $25 $20
Late Payment Charge 10% or$5 minimum 1%per month
Certified Mail Charge $20 $ 0
Paper Statement Fee $10 $ 0
Call Out Charge $50/hour during office hours $ 0
$80/hour after office hours
Field Collection Trip $ 40 $ 0
Charge
Bulk Water Sold to $100 $26.77 meter rental charge and
Contractors Charge consumption billed a Schedule 1
usage charge
Construction Water Minimum monthly rate and Schedule I minimum monthly rate
Charge commodity charges during and commodity charges during time
time of use. of use.
CORRECTED COMMENTS 26 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

Although it is not standard practice for Staff to propose a tariff, Staff believes it is in the
best interest of the customers and the Company. Staff s proposed tariff includes portions of the
Company's proposed tariff, but also is inclusive of all of Staffs recommendations. Staffs
proposed tariff is included as Staffs Attachment J. Staff recommends the Commission order the
Company to submit a compliance filing with Staffs proposed tariff with the approved rates.
Compliance with Order No. 34391 (Case No. SWS-W-18-01)
As part of the conditions in the approval of JD Resort to purchase the Company, the
Commission ordered the Company to comply with the following items:
1. File quarterly reports detailing customer complaints and how they were resolved
along with all non-recurring charges;
2. File balance sheets and income statement every quarter; and
3. File monthly reports showing an account balance of at least$50,00 or a line of credit
of at least $250,000.
Initially the Company was very slow in filing the quarterly reports. However, since the
Commission order was issued, the Company has filed all required monthly reports on time.
Staff believes the reporting requirements in Order No. 34391 should be discontinued.
The reports provided value after the initial acquisition to ensure the Company was viable as a
regulated utility, but the value of the reports has diminished.
STAFF RECOMMENDATION
Staff recommends the Commission:
• Approve a revenue requirement of$271,113, for a 17.6% increase. This revenue
requirement is calculated with a rate base of$264,251 and an ROE of 10%, with an
overall rate of return of 8.21%;
• Direct the Company submit its updated Facility Plan by October 30, 2025, or prior to
filing its next general rate case, whichever comes first;
• Order Esprit to transfer all assets included in the original purchase of Stoneridge, and
any asset fundamental to providing service to customers,back to Stoneridge
immediately;
• Order the Company to discontinue the discounted commodity charge for The Golf
Course, and bill at the approved tariff rates;
CORRECTED COMMENTS 27 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

• Order the Company's tariff use standard business hours for the reconnection and call
out charges;
• Approve the non-recurring charges in Table No. 8;
• Order the Company to submit a compliance filing with Staff s proposed tariff, in
Staff s Attachment J, with the approved rates; and
• Discontinue the reporting requirements in Order No. 34391.
Respectfully submitted this 19th day of November 2024.
Michael Duval
Deputy Attorney General
Technical Staff: Leena Gilman
I:\Legal\WATER\SWS-W-24-01_rates\SWSW2401_Co rected_CommentS_mAh.docx
CORRECTED COMMENTS 28 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

STAFF'S ATTACHMENT A - CORRECTED
P39 E fr
A B C D E F G I J K L M
1 CDS Stoneridge Utilities
2 Case No.SWS-W-24-01
3 Attachment A Corrected
4 Calculation of Revenue Requirement
5
6 Company Staff Difference
7 1 Rate Base 880,568 264,252 (616,317)
8 2 Required Rate of Return 9.77% 8.21% -1.55%
9 3 Net Operating Income Requirement 86.011 21.706 (64.305)
10 4 Net Operating Income Realized (326,281) (11,405) 314,876
11 5 Net Operating Income Deficiency 412.292 33.111 (379.181)
12
13
14 6 Net Operating Income Deficiency 412,292
15 7 Revenue to overcome Losses 11,405
16 8 Regulatory Fees Gross up 1.00213
17 9 Revenue Needed to Overgcome Loss 11,429
18 10 11,423
19
20 11 Net Operating Income Required 21,706
21 12 Gross up Factor 1.34653 1.34663
22 13 Revenue Requirement for NI 29.230
23 14 Total Incremental Revenue Requirement 555.190 40,659 (514,531)
24
25 15 Revenues at existing rates 204,337 230,454 25,457
26 16 Total Revenue Requirement 760,187 271,113 (483,074)
27
28 17 Percent Increase Required 270.8% 17.6% -253.2%
29
30
31 Gem State Vater Company
32 Net to Gross Multiplier
33
34
35 18 Total Gross Revenues 1 I-11—ii ii ii i 1.000000
36 19 Less Regulatory Fees(percentage) 0.001982 0.002127
37
38 20 Net Revenue 0.998018 0.997873
39 21 State Income Tax Rate 5.800% 005800 5.800% 0.057877
40
41 22 Federal Income Tax Base 0.940018 0.939996
42
43 23 Federal Income Tax Rate 21.000% 0.197404 0.197399
44
45 24 Net Operating Revenue 0.742614 0.742597
46
47 25 Net Income to Gross Revenue Multiplier 1.34659 1.34663
48
49
50
51
52
53
54
55
56
57
58
> Attachment A +
Attachment A
SWS-W-24-01
Corrected Comments
November 19,2024
CORRECTED COMMENTS 29 NOVEMBER 19, 2024
OF THE COMMISSION STAFF

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19TH DAY OF NOVEMBER 2024,
SERVED THE FOREGOING CORRECTED COMMENTS OF THE COMMISSION
STAFF, IN CASE NO. SWS-W-24-01, BY &MAILING A COPY THEREOF, TO THE
FOLLOWING:
CHAN KARUPIAH JASON T PISKEL
MANAGING PARTNER PISKEL YAHNE KOVARIK PLLC
CDS STONERIDGE UTILITIES, LLC 612 W MAIN AVE, STE 207
P.O. BOX 298 SPOKANE WA 99201
364 STONERIDGE ROAD E-MAIL: jpiskelgpyklaMers.com
BLANCHARD, ID 83804
E-MAIL: chansangcomcast.net
utilitiesgstoneridgeidaho.com
jeff(a,merkeley.com
RANDOLPH LEE GARRISON, PRO SE NORMAN M SEMANKO
76 BELLFLOWER CT. PATRICK M NGALAMULUME
BLANCHARD, ID 83804 PARSONS BEHLE & LATIMER
E-MAIL: garrisongrmgarrison.com 800 W MAIN ST STE 1300
BOISE ID 83702
E-MAIL: [e-mail]
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CERTIFICATE OF SERVICE