20241212Reply Comments.pdf

RECEIVED
2024 December 12
H. Robert Price, President IDAHO PUBLIC
Capitol Water Corp. UTILITIES COMMISSION
2626 N. Eldorado St,
Boise, Idaho 83704-5926
Ph: [phone]
Fax: [phone]
E-mail: [e-mail]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CAPITOL )
WATER CORPORATION'S ) CASE NO. CAP-W-24-02
APPLICATION TO CHANGE ITS )
SCHEDULE NO. 3 PURCHASED ) COMPANY REPLY
POWER COST ADJUSTMENT RATE ) COMMENTS
INTRODUCTION
Capitol Water Corporation ("Company") submits these Reply Comments regarding
comments submitted by the Staff of the Idaho Public Utilities Commission("Staff')regarding
the above referenced case.
BACKGROUND
On October 9, 2024, Capitol Water Corporation applied for authority to change its Schedule
No. 3 - Purchased Power Cost Adjustment ("Schedule No. 3 PPCA") rate to recover the electricity
costs that exceeded what it collected through rates. In the Company's filing, the Company requested
to change the PPCA rate from 4.51%to 4.21%- with the understanding that the rate would change
due to the outcome of its general rate case - to recover its actual power costs in calendar year 2024.
The Company requested its filing be processed by Modified Procedure and that the tariff changes
become effective December 1, 2024,the anticipated effective date from Case No. CAP-W-24-01.
On December 5, 2024, Staff filed comments. Staff recommended that the Commission
approve Staff s proposed 3.34% PPCA rate, with an effective date of January 1, 2025. Staff s
proposed rate is calculated using the revenue calculated in Staff Comments in Case No. CAP-W-
Reply Comments of Capitol Water Corporation Page 1
Case No. CAP-W-24-02

24-01. Staff recommends the Commission order the Company to submit a compliance filing to
update the PCPA rate using the authorized base rate revenue, and for the Company to file a
conforming tariff with the approved PPCA rate, at the conclusion of its general rate case, Case
No. CAP-W-24-01. The Company notes this was its intention, as stated in its Application.
CAPITOL WATER COMPANY REPLY COMMENTS
The Company acknowledges the comments provided by Staff, and does not agree with
the recommendations, with exception of Recommendation No. 5. The Company will address
each Staff Recommendation individually.
Recommendation No. 1 is that the Company "maintain a set deferral period using the
calendar year, and the Company work with Staff to determine a consistent filing deadline and
collection period moving forward." Staff Comments, page 2.
The Company's current deferral period is the calendar year and has maintained this since
the Commission approved modifications to simplify the PPCA methodology in Order No. 33876,
Case No. CAP-W-17-01. In the previous 3 cases filed in 2021, 2022, and 2023, the Company
has filed in early September, with the new PPCA rate effective November 151", and, since the
Company bills at the beginning of the month, changed rates with the December billings. This
current year, the Company filed the Application to coincide with the anticipated effective date of
its general rate case, Case No. CAP-W-24-01. The Company understood from Staff that a final
order in that case would be effective on or about December 1, 2024. The Company has no
objection to determining a filing date, and the collection period. The Company is anticipating
changing the PPCA rate with the January 2025 billings, therefore going forward, it would not be
unreasonable to continue with a collection period of January through December.
Recommendation No. 2 is that the Company track the amount of PPCA revenue that is
collected each month starting January 1, 2025, and that the revenue be reported in the Com-
pany's PPCA filings each year. While the Company is able to track this billed revenue, it is in-
formation that is not required currently and will not align with the current simplicity of the meth-
odology. Therefore, the Company objects to this change in methodology. In Staff s discussion
of the PPCA Methodology, the comments state, "The difference or"true-up" amount is the
Reply Comments of Capitol Water Corporation Page 2
Case No. CAP-W-24-02

amount the Company needs to credit or surcharge customers so that customers pay no more or no
less than actual power cost..." Staff Comments at 2. This statement is true for Idaho Power's
Power Cost Adjustment. The Company's PPCA was not designed to ensure that customers "pay
no more or no less than actual power cost" and it is not set up like Idaho Power's Power Cost
Adjustment mechanism. In the current, simplified methodology, there is the calculation of the
difference between the current year power costs and the costs embedded in base rates as of the
last general rate case. This is how the rate is calculated, but the amount collected by the Com-
pany is not reconciled to the actual difference, and there is no "true-up" to actual costs, nor is
there a catch-up provision for under collection or over collection like the true-up of the true-up in
Idaho Power's Power Cost Adjustment mechanism. Furthermore, there is no interest component
in the collection of the Company's PPCA. Adding such items would place an unnecessary bur-
den on the Company and significantly change the simplified methodology. The Company's
PPCA has never been a refund, rather it has fluctuated from year to year based on its power con-
sumption in the calendar year being collected. Should the Commission order the Company to
add a"true-up" component to its PPCA, the Company would also request that an interest compo-
nent be added to the PPCA as well.
The Company has reviewed the Comments with regards to "Revenue Stability." Staff
Comments at 2. The recently filed general rate case, Case No. CAP-W-24-01, will better align
the PPCA with the new base rates, and going forward, the Company expects the PPCA amounts
and rates to be minimal. The Company intends to file general rate cases with greater frequency,
which will keep the PPCA rates minimal.
The Staff Comments do not provide the transparency necessary to fully examine the un-
derlying calculations in Table No. 1, and the abbreviated time required for Reply Comments
does not allow the Company time to fully investigate this section of Staff Comments. In each
scenario, the Company notes that the over and under collection is minimal. The Company, as
shown in its 2023 Annual Report, has a total of 2801 residential and commercial customers. The
greatest over and under collection is shown to be $2,465; this is less than a dollar per customer
per year.
Reply Comments of Capitol Water Corporation Page 3
Case No. CAP-W-24-02

Recommendation No. 3 is for the "Company to track the amount of PPCA revenue col-
lected for November and December 2024 to facilitate the calculation of an adjustment due to the
delay in the effective date of this year's PPCA and work with Staff to calculate the adjustment to
the actual power cost in next year's filing to adjust for over collections..." Comments page 3.
The Company objects to this recommendation for the reasons stated above, and notes that the
Application requested an effective date of December 1, 2024, and that effective date would have
allowed the Company to change the rate for the December billings, as it has done in previous
years. The Company is aware of the complications of changing the rate absent a final order in its
general rate case. In addition, the Company has not kept track of over and under collections in
previous years, as the simplified methodology did not include this type of requirement, nor has
the Commission previously ordered the Company to do this.
Recommendation No. 4 is that the Company "focus on Well No. 4 for the next cleaning
and rehabilitation if the leakage repair in 2024 does not rectify poor pumping efficiency..."
Comments at 3. The repair at Well No. 4 was not a leakage repair, rather it was to replace a bad
bearing in the 200-horsepower motor. At that time, the motor and the head shaft were inspected.
The head shaft was replaced, the packing box was rebuilt, and the motor was inspected, repaired
and new bearings installed.
The Company strives to maintain its system for safe, efficient, and cost-effective opera-
tions. To that end, the Company periodically cleans and rehabilitates its wells. The Company de-
termines how best to direct its funds for the cleaning and rehabilitation of all its wells, based on
the overall needs of the system, water quality, and cost constraints. The year-to-year comparison
for Pump Efficiency, as shown in Table No. 3, does not consider how the variable speed pumps
operate. If the pressure in the system drops, the variable speed pumps will start up, idling for a
maximum of 30 minutes. If there is no need for the pump to begin pumping water as the pres-
sure in the system has changed, the pump will stop idling. During this period, no water is being
pumped, yet power is still being consumed.
Staff asserts that it is not able to determine the prudence of the Company's power cost
due to the simplified method, and therefore relies on a trend analysis of the "efficiency" of its
Reply Comments of Capitol Water Corporation Page 4
Case No. CAP-W-24-02

pumps. The Company asserts that the methodology has always allowed for a review of the pru-
dency of its power costs. With each PPCA filing, the Company has made copies of the power
bills, and well logs available to Staff. Staff has not formally requested a discussion with the
Company about power consumption and well performance so as to better understand the overall
system and the interplay between the wells, pressure in the system, and power consumption in
this current PPCA case. Nor has this been requested in the past. During the ongoing general rate
case, Case No. CAP-W-24-01, the Staff did have the opportunity to determine the prudence of
the Company's power cost and proposed no adjustments.
Recommendation No. 5 requests that the Company review its customer notices with Staff
prior to submitting future PPCA applications. The Company does not object to this recommen-
dation.
Respectfully submitted this 12t" day of December 2024.
H. Robert Price, President
Capitol Water Corporation
Reply Comments of Capitol Water Corporation Page 5
Case No. CAP-W-24-02