20241219Final_Order_No_36427.pdf

Office of the Secretary
Service Date
December 19,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CAPITOL WATER ) CASE NO. CAP-W-24-01
CORPORATION'S APPLICATION TO )
INCREASE ITS RATES AND CHARGES FOR ) ORDER NO. 36427
WATER SERVICE IN THE STATE OF )
IDAHO )
On March 1, 2024, Capitol Water Corporation ("Company") applied to increase its rates
and charges for water service in Idaho. The Company requested an April 1, 2024, effective date
for the new rates.
On March 22,2024,the Commission issued a Notice of Application,Notice of Intervention
Deadline, and Notice of Suspension of Proposed Effective Date, setting a deadline for interested
parties to petition to intervene and suspending the Company's proposed effective date for 30 days
plus five months. Order No. 36118. The city of Boise City intervened. Order No. 36167.
On May 21, 2024, the Commission issued a Notice of Modified Procedure establishing
dates for public comments and the Company's reply in addition to setting dates for a virtual public
workshop and customer hearing. Order No. 36187.
On August 20, 2024, the Commission issued Order No. 36295, vacating the comment
deadlines and customer hearing set in Order No. 36187 and indefinitely suspending the effective
date of the Company's proposed rate increase. The Commission did this to provide Commission
Staff ("Staff') with additional time to review the Company's financial records which it was
directed to review in Order No. 36281.
On October 11, 2024, the Commission issued Order No. 36356, establishing comment
deadlines and scheduling an in-person customer hearing. Three customers filed comments. Staff
also filed comments to which the Company replied.
On November 1, 2024,the Commission held an in-person customer hearing. One customer
of the Company testified, supporting the proposed rate increase.
Having reviewed the record in this case,we issue this Final Order authorizing the Company
to raise its rates as described below. Additionally, we direct the Company to take the steps
described below to rectify the overbilling issue discovered during this general rate case.
ORDER NO. 36427 1

BACKGROUND
The Company is a Commission-regulated water corporation serving approximately 2,521
residential, 279 commercial, and 35 private fire protection customers in Boise, Idaho. The
Company provides service under Certificate of Public Convenience No. 239. The Company's
water system draws from four wells that operate throughout the year. Due to its high iron content,
the water drawn from these wells is treated with polyphosphates. The Company also uses a supply
return well during the irrigation season. The Company's current rates were set about 15 years ago
in Case No. CAP-W-08-02.
THE APPLICATION
The Company applied to increase customer rates through the addition of a $5.12 monthly
service charge to all its customers including residential, commercial, and private fire protection. If
approved as filed, this rate increase will satisfy a proposed revenue requirement of$881,396, rate
base of$1,143,371, a working capital adjustment of$65,872, and a 12 percent Return on Equity
("ROE"). The Company represented that, if its request is approved in full, bills for most of its
customers would increase by 24.61 percent and increase the Company's annual revenues by
$174,068.
STAFF COMMENTS
After reviewing the Company's Application, exhibits, workpapers, and responses to
production requests, Staff recommended that the Commission establish an $821,545 revenue
requirement for the Company, increasing annual Company revenues by 16.15 percent. This
proposed revenue requirement is based upon a ROE of 10.5 percent applied to a net rate base of
$963,760. Departing from the Company's proposed uniform service charge, Staff recommends a
uniform percentage increase to all billing components,believing this would more equitably recover
costs from customers.
1. Revenue Requirement
a. ROE & Rate of Return
Staff recommended the Commission authorize a ROE of 10.5 percent and a corresponding
10.08 percent rate of return. This rate of return resulted in a$22,136 adjustment to the Company's
proposed revenue requirement. In support of this recommendation, Staff cited recent rate cases for
water corporations smaller than the Company that have resulted in ROEs of 11 percent. See Order
No. 33658, 33910 & 35978. Staff indicated that smaller companies like these generally require a
ORDER NO. 36427 2

higher ROE to obtain a return on their investments sufficient to maintain safe, reliable operations.
In addition to the Company's larger customer base, Staff also cited the Company's Purchased
Power Cost Adjustment ("PPCA") as a justification for a lower ROE. According to Staff, the
largest expense a water utility generally incurs annually is for electricity to power well pumps. The
PPCA mitigates the Company's risk of underearning due to unanticipated high energy costs.
b. Interest on Debt
Staff recommended reducing the Company's proposed revenue requirement by $156 to
avoid counting interest on long-term debt as a factor in the gross-up multiplier and the revenue
requirement.
c. Net-to-Gross Multiplier
Staff recommended slightly adjusting the Company's proposed 135.04 percent net-to-gross
multiplier. Specifically, Staff recommended recalculating the multiplier using the current Idaho
income tax rate of 5.8 percent and Commission's assessment rate of 0.21270 percent. This results
in a 134.77 percent net-to-gross multiplier and a corresponding $301 reduction to the Company's
request.
d. Plant-In-Service & Accumulated Depreciation
Staff recommended updating the Company's proposed adjustments to 2023 year-end plant
and proforma adjustments to plant for 2024 to 2023 actuals. Staff s recommended year-end plant
balance for 2023 of $4,199,968 exceeds the Company's proposed plant-in-service by $12,689,
increasing its revenue requirement by$2,947.In addition to updating plant-in-service to 2023 year-
end actuals, Staff recommended similarly updating accumulated depreciation to the 2023 year-end
value of$3,000,583, decreasing the Company's proposed revenue requirement by $9,338.
2. Rate Base
Staff recommended a net rate base for the Company of$963,760, representing a $179,611
reduction in the Company's $1,143,371 proposed rate base.' Staffs specific proposed rate base
adjustments are discussed more thoroughly below.
'Staff also recommended that the Company document and retain certain information related to large plant investments.
While reviewing the Company's plant investments since its last general rate case, Staff discovered that the Company
could not provide project plans or quotes from multiple sources. Staff indicated that the Company should, at least
periodically,obtain quotes from sources other than its preferred contractors to ensure low-cost investments are made.
Staff provided a specific example of what it expected the Company to provide in relation to future vehicle purchases.
ORDER NO. 36427 3

a. Well Repairs, Rehab, and Fencing
Staff recommended updating the Company's proforma investment for a safety fence
surrounding its Well No. 4 to the actual total project cost of$24,543. Using this amount reduces
the Company's proposed rate base by$5,857 and the revenue requirement by$1,112.Additionally,
Staff recommended including $10,201 the Company spent to repair a pump motor for Well No. 4
in rate base as the work was completed during 2024 and necessary to provide safe,reliable service
to customers. The additional $10,201 of rate base increased the Company's proposed revenue
requirement by $1,936.
Staff further recommended removing two proforma investments for fencing and
rehabilitation of Well No. 7 from the Company's proposed rate base. Both projects remain
incomplete and their final costs remain unknown.Removing these two projects decreases rate base
by$98,703 and reduces the Company's revenue requirement by $18,734.
b. Billing Software
Staff recommended adjusting the depreciation expense the Company proposed for its new
billing software from a 9-year life to the 7-year useful life guideline endorsed by the National
Association of Regulatory Commissioners ("NARUC"). This would reduce rate base by $23,750,
and depreciation expense by $1,964 while increasing Operating Expense by $18,768 and the
revenue requirement by $19,419.
c. Lincoln Aviator
Staff recommended removing the Lincoln Aviator the Company purchased in 2020 from
rate base, arguing that purchasing the luxury vehicle was not reasonable and prudent. Instead of
including the full purchase price of the Lincoln Aviator, Staff proposed including the average
manufacturer's suggested retail price of four comparable non-luxury vehicles and adjusting the
accumulated depreciation and depreciation expense associated with the vehicle to reflect a 10-year
depreciable life. Staff further recommended reducing the Company's depreciation expense by
$6,287, accumulated depreciation by $16,241, and the Company's revenue requirement by
$16,241.
d. Working Capital
As a result of the adjustments Staff proposed to the Company's operating expenses, Staff
recommended reducing the company's working capital by $603 and the revenue requirement by
$82.
ORDER NO. 36427 4

3. Revenue
Staff believes the Company properly billed its flat rate customers, but miscalculated its
revenue from metered customers. Staff discovered errors in the Company's billing practices that
resulted in the collection of amounts differing from the Company's authorized tariff rates. Staff
confirmed that the Company overbilled metered customers a total of $9,162 during 2022.
Accordingly, Staff recommends a revenue requirement increase of$12,348.
4. Expenses
Staff recommended various adjustments to the expenses that the Company seeks to recover.
Staffs analysis of each expense adjustment is discussed below.
a. Depreciation Expense
After adjusting the depreciable life of the Company's plant accounts to align with the
NARUC Depreciation Manual for Small Water Utilities, Staff recalculated the Company's annual
depreciation expense for plant as of December 31, 2023, and Staffs plant proforma for 2024.
Based on these calculations, Staff recommended a depreciation expense of$88,691. Additionally,
Staff noted that its$12,024 in adjustments to proforma additions must be removed to avoid double
counting, resulting in a $1,848 reduction to depreciation expense and a $2,491 reduction to the
revenue requirement.
b. Salaries
Staff recommended that only 3 percent of the Company's planned 10 percent increase to
employee's salaries be included in the Company's revenue requirement because only that amount
has been awarded. This reduces the Company's proposed salary expense by $15,956 and the
revenue requirement by $21,504.
c. 401k Contributions
Staff recommended that, consistent with prior Commission orders, the Company's 401k
matching expenses be based upon test year levels. According to Staff, not only would using the
Company's 401 k matching contributions from the 2022 test year to determine the Company's 401k
matching expenses be consistent with prior orders, but it would also avoid including in rates
overpayments the Company made during 2023.Accordingly, Staff recommended a$596 reduction
to the Company's revenue requirement.
ORDER NO. 36427 5

d. FICA & Medicare
Instead of calculating FICA&Medicare expenses by applying the current 7.65 percent tax
rate to the Company's total salary calculation, Staff used its salary expense calculation to
determine FICA & Medicare expenses. Based on these calculations, Staff recommended
decreasing the Company's revenue requirement by $1,950.
e. Phonebook Advertising
Staff recommended removing $1,182 from the revenue requirement associated with
expenses for advertisements in the YellowPages and White Pages that the Company no longer
purchases.
f. Food
Staff recommended removing expenses arising from the purchase of meals and snacks
provided for employees. According to Staff, provision of snacks and food to employees is not
essential for the Company to service customers,nor does it benefit customers. Consequently, Staff
recommended reducing the Company's revenue requirement by $206.
g. Dental Procedures
Despite acknowledging that dental insurance premiums generally can be included in rates,
Staff argued that the Company should not be permitted to include the cost of actual dental
procedures that did not result directly from an on-the-job injury. Consequently, Staff
recommended removing $3,082 from the Company's revenue requirement related to employee
dental procedures.
h. Rate Case Expenses
Staff recommended removing $6,750 of rate case expenses the Company incurred because
the invoice for these expenses did not describe the work performed. Additionally, Staff indicated
that it believed that the work performed for this $6,750 rectified Company billing errors that
resulted from a mistake by the Company. As such, Staff believed the expenses should not be
included in rates. Consequently, Staff asserted that the Company should be allowed to recover a
total of$9,435 amortized over a three-year period, increasing the Company's revenue requirement
by$4,238.
Staff further recommended reducing the Company's revenue requirement by an additional
$1,669 to eliminate expenses the Company paid an attorney to review its financial records in
preparation for this rate case. However, because the Company did not elect to use this vendor for
ORDER NO. 36427 6

this rate case, Staff asserted that this one-time expense should be removed from the revenue
requirement as it was not used and useful.
i. Water Testing
Staff recommended calculating the Company's water testing expenses according to a nine-
year rotation schedule and including an annualized amount in rates. Staff determined that the
annual amount to be recovered over a nine-year period is $13,608, decreasing the Company's
water testing expenses by $5,844.
j. Chemical & Power Expenses
Staff believed that the Company's proposed $36,322 expense for water treatment
chemicals and$105,652 expense for power are reasonable.
5. Rate Design
Staff disagreed with the Company's proposed flat monthly service charge of$5.12. Instead,
Staff argued that imposing a uniform 16.53 percent increase for all customers and the Company's
sprinkling charge was a more equitable method of cost recovery. To support this argument, Staff
reasoned that the Company's proposed monthly service charge did not address the difference
between land-owning customers who use additional water during the summer to irrigate their
lawns and customers who do not own land(e.g., residents of multi-unit properties). Additionally,
Staff noted that its proposed uniform percentage increase better aligns revenue recovery with class
consumption and provides for more even increases to customer bills.
6. Tariff,Notices & Press Release
The Company submitted copies of the customer notice and press release issued in relation
to this case. The Company included the notice in customer bills sent February 29, 2024, and the
press release was sent to local news outlets on March 1, 2024. Staff reviewed the customer notice
and press release and believed they satisfy Rule 125 of the Commission's Rules of Procedure.
Staff also observed that the Company has not updated its tariff since 2009. As the
Commission's Model Tariff for small water companies has changed since then, Staff
recommended that the Company submit a revised tariff reflecting these changes within 30 days of
2 From May I'through September 30,the Company collects an additional monthly charge from customers who use
water to irrigate their lawns.The Company refers to this charge as a"sprinkling charge".See Company's Tariff Sheet
No. 1.
ORDER NO. 36427 7

the issuance of a final order in this case. Staff indicated that it is willing to work with the Company
to update its tariff.
7. Billing Errors
As indicated above, the Company incorrectly billed its metered customers prior to July
2024. The improper billing resulted from errors in its billing software, causing metered customers
who used more water than the minimum charge commodity allowance to be over or underbilled
depending on their connection size. After learning of the billing issue, The Company updated its
billing software prior to sending customer bills for July 2024 service and verified with Staff that
customers would not be overbilled from July 2024 going forward.
The Company reviewed the bills for its metered customers from January 2022 through July
2024 and that customers were overbilled by a total of$30,150.35 during that period. Staff reviewed
and confirmed the Company's calculations. Overbilled customers are entitled to a refund of up to
three years of incorrect bills.
The Company proposes refunding overbilled customers up to $100.00 via a credit to their
monthly bills. If the credit does not fully refund the amount a customer was overbilled, then that
customer can request a refund for the amount exceeding $100.00. The Company indicated that it
does not intend to rebill customers who were underbilled.
Staff noted that the Company's proposal does not comply with the refund provisions of the
Commission's Utility Customer Relations Rules ("UCRR"). The relevant portion of the UCRRs
states:
04. Refunds. The utility will promptly recalculate the refund amounts overpaid by
the customer and issue a credit within two (2)billing cycles. Any remaining credit
balance will be credited against future bills unless the customer, after notice from
the utility, requests a refund. The utility will advise the customer of the option to
have any remaining credit balance exceeding twenty-five dollars ($25) refunded.
IDAPA 31.21.01.203.04.
However, Staff believed that strictly applying the rules could cause the Company financial
hardship.Accordingly, Staff recommended that the Commission approve the Company's proposed
refund procedure. Staff further recommended that the Company expeditiously process refund
requests and submit quarterly reports disclosing the status of all accounts affected by the billing
issue described above and a final report once all rebilling is complete.
ORDER NO. 36427 8

COMPANY REPLY COMMENTS
The Company accepted Staff s adjustments to the net-to-gross multiplier and rate design.
The Company also largely accepted Staff s rate base adjustments. However, the Company
disagreed with some of Staffs proposed expense adjustments. These differing expense
adjustments resulted in the Company proposing a different working capital adjustment than Staff.
The Company's objections to Staffs proposed expense adjustments are described separately
below.
1. Interest on Debt
The Company indicated that, due to an accounting error, returned check fees and other
bank charges had been erroneously listed in its Application and 2022 Annual Report in Account
427.3 Interest Exp. on Long-Term Debt. Because these fees are appropriately recorded in Account
620.7-8, Materials & Supplies —Administrative and General, the Company contends it should be
allowed to recover these fees and charges. Reversing Staffs proposed adjustment for interest on
long-term debt would increase the Company's revenue requirement by$156.
2. Food
The Company argued that the meals and snacks it purchased for employees benefited
customers by (1) allowing certain employees to remain at the site of necessary after-hours water
line repairs,thereby minimizing service outages; and(2)increasing productivity and collaboration
between the Company's employees and its outside accountant via biannual working lunches.
Reversing Staffs proposed adjustment for the Company's food purchases would increase the
Company's revenue requirement by $206.
3. Dental Procedures
The Company asserted that, over a decade ago, it determined that the benefits of providing
dental insurance to its President and Office Manager outweighed its cost. In lieu of paying dental
insurance premiums for these employees, the Company provides them with a $1,500 annual
allowance for dental expenses. The Company contends this practice is reasonable, and reversing
Staff s proposed adjustment for these expenses would increase the revenue requirement by$2,021.
4. Rate Case Expenses
The Company challenged Staff s characterization of the amounts it paid to a vendor to
evaluate its financial records in preparation for this case as a one-time expense that was not used
and useful. Despite acknowledging that it ultimately looked elsewhere for help with its rate case,
ORDER NO. 36427 9

the Company asserted that the preliminary consultation with this initial vendor was useful by
revealing what to expect when assembling a general rate case. The Company also indicated that
an awareness that its decisions affect customers prompted it to seek out a less expensive consultant
after determining that the initial vendor would be too costly. Accordingly, the Company asserted
that it should be allowed to recover the initial vendor's costs. Reversing Staff s proposed
adjustment for this expense would increase the Company's revenue requirement by $1,669.
5. Working Capital
As a result of the above-described expense adjustments, Staff recommended increasing its
working capital revenue requirement by $49.
PUBLIC COMMENTS/TESTIMONY
Three customers of the Company filed comments. Two comments supported the
Company's proposed rate increase, and one comment opposed it.
COMMISSION JURISDICTION
The Commission is "vested with power and jurisdiction to supervise and regulate every
public utility in the state and to do all things necessary to carry out the spirit and intent of[The
Public Utilities Law]." Idaho Code § 61-501. A "water corporation" as defined in Idaho Code §
61-125 is a"public utility" as defined by Idaho Code § 61-129. Accordingly,the Commission has
jurisdiction over "every corporation or person, their lessees, trustees, receivers or trustees,
appointed by any court whatsoever, owning, controlling, operating or managing any water system
for compensation within this state"Idaho Code § 61-125.
The Commission's regulatory authority extends to the service rates charged by public
utilities. Specifically, upon finding that the rates charged by a public utility are "unjust,
unreasonable, discriminatory, or in any wise in violation of any provision of law, or that such rates
. . . are insufficient"the Commission must"determine the just,reasonable or sufficient rates . . . to
be thereafter observed and in force and shall fix the same by order. . . ."Idaho Code § 61-502;see
also Idaho Code § 61-503.
However, this authority over rates is not unlimited. Public utilities are entitled to a
reasonable rate of return on prudent investments. "[A] public utility is entitled to such rates as will
permit it to earn a return on the value of the property which it employs for the convenience of the
public, equal to the return generally being made at the same time and in the same general part of
the country on investments and other business undertakings which are attended by corresponding
ORDER NO. 36427 10

risks and uncertainties." Utah Power & Light Co. v. Idaho Public Utilities Comm'n, 105 Idaho
822, 827 (1983). The Commission has the power and the duty to set rates of return within a"broad
zone of reasonableness."Intermountain Gas Co. v. Idaho Public Utilities Comm'n, 97 Idaho 113,
128 (1975). "The main elements in fixing reasonable rates for service rendered by[a] public utility
are the cost of rendering service on an economical and efficient basis, fair return to the utility on
its property used and useful in such service and fairness to consumers."Application of Pacific Tel.
& Tel. Co., 71 Idaho 476, 480-81 (1951).
COMMISSION DISCUSSION AND FINDINGS
Under our statutory authority, we have reviewed the record in this case, including the
Company's Application, public comments, Staff comments, and the Company's reply comments.
Based on that review,we approve a new,total revenue requirement for the Company of$823,592.
The Company shall satisfy this revenue requirement by uniformly increasing all its billing
components by 16.44 percent. Our decisions regarding the new rates and charges are set forth in
detail below. The Company's new rates shall go into effect on the service date of this Order.
1. Revenue Requirement
Our policy is to set a public utility's annual revenue requirement and rates using a historical
test year in which the utility's actual,booked costs and revenues are verified through auditing. See
e.g., Order No. 30342 at 8 (Case No. SWS-W-06-01). Based on our review of the record we find
there is no dispute on the use of 2022 as the historical test year, and that a 2022 historical test year
is reasonable and appropriate for this case. After establishing the test year, pro forma adjustments
are made to the actual test year data for all known and measurable changes to the operating results
of the test year. Id.
Using the above-described method, Staff recommended an overall revenue requirement of
$821,545. The Company did not object to Staffs recommended adjustments to the Company's
proposed Net-to-Gross Multiplier and generally agreed with the various expense adjustments Staff
recommended in its revenue requirement calculation, objecting to only five. Based upon our
review of the record, we find the undisputed adjustments Staff recommended above fair,just, and
reasonable and reduce the Company's proposed revenue requirement accordingly. Our decision
on each of the adjustments the Company disputed is set forth below.
ORDER NO. 36427 11

a. Interest on Debt
Despite the Company's assertion that Staff s recommended adjustment for interest on long-
term debt results from an accounting error,we decline to reverse this adjustment. Even if the funds
underlying this adjustment are returned check fees and other bank charges that were erroneously
recorded in Account 427.3 Interest on Long-Term Debt,we are not convinced the Company should
be allowed to recover these in rates. The Company can charge the customer responsible for a
dishonored check the lesser of $20 or the amount of the check. See Idaho Code § 22-28-105.
Because returned check fees can be recouped from the individual customers responsible causing
them and the basis for any other bank fees erroneously recorded in Account 427.3 is unclear, it
would not be fair,just, and reasonable to allow the Company to recover those funds in rates. This
results in a $156 reduction to the Company's proposed revenue requirement.
b. Meals
It is incumbent upon the Company to establish that meals and snacks it purchased for
employees benefited customers. Even if the Company is correct that food it purchased allowed
workers to remain at the site of necessary repair work, that does not necessarily mean that the
purchase reduced service outages or benefitted customers. Although the workers provided with
meals would not have to use part of their allotted meal break to leave the worksite to get food, it
is not clear that resulted in the workers returning to work any sooner than they otherwise would
have. Similarly, it is unclear to what extent, if any, the alleged increase in collaboration and
productivity resulting from the working lunches between Company staff and its outside accountant
benefited customers. Accordingly, we find that it would not be fair,just, and reasonable to allow
the Company to recover the costs of these meals in rates. This reduces the Company's proposed
revenue requirement by $206.
c. Dental Procedures
In prior cases, we have allowed utilities to recover the cost of dental insurance premiums
paid on behalf of employees. We find the Company's decision to provide its President and Office
Manager with a $1,500 annual allowance for dental procedures in lieu of paying insurance
premiums to be reasonable because the Company has explored various avenues of providing dental
insurance and the allowance provided by the Company is practical under the circumstances.
Accordingly, we reverse Staff s proposed expense adjustment for the amounts the Company paid
for employee dental procedures.
ORDER NO. 36427 12

d. Rate Case Expenses
Generally, utilities are allowed to recover actual, known, and measurable rate case
expenses that are reasonably and prudently incurred. See Order No. 33658. Based on the evidence
in the record, we find it reasonable to allow the Company to recover$9,435 in rate case expenses.
This amount shall be amortized and recovered over a three-year period resulting in $4,238 being
added to annual expenses as rate case amortization.
Although we do not intend to discourage utilities from selecting the most economical
consultants to aid with rate cases, it does not appear that the initial financial analysis the Company
had a third-party consultant perform to prepare for this case was used and useful. We commend
the Company's decision to switch to a less expensive consultant after determining that the first
consultant it engaged was too expensive. However, the record does not show why the Company
did not discover this without incurring the expense by, for example, receiving a price estimate or
quote from the consultant before engaging, even preliminarily. Nor is it clear that the work this
initial consultant performed aided the second consultant the Company hired who filed and aided
the Company in processing this rate case. Accordingly, we find that it would not be fair,just, and
reasonable to allow recovery of the amounts the Company paid for the initial financial analysis
performed in preparation for this case. This reduces the Company's proposed revenue requirement
by $1,669.
2. Rate Base
Staff recommended a net rate base of $963,760. The Company largely agreed with this
recommendation, proposing only a slight readjustment for working capital due to its objections to
Staff s proposed expense adjustments. Based upon our review of the record, we find Staff s
recommended rate base reasonable with one caveat. Our determination that the Company can
recover the amounts it paid for employee dental procedure expenses necessitates an adjustment to
working capital. This reduction to working capital results in a $56 reduction to the Company's
proposed revenue requirement.
3. Rate of Return
We find it just and reasonable to authorize the Company the opportunity to earn a 10.5
percent ROE with a corresponding overall rate of return of 10.08 percent. Although many water
utilities smaller than the Company have recently received a ROE of 11 percent, the undereaming
risk mitigation provided by the Company's PPCA justifies a slightly lower ROE.
ORDER NO. 36427 13

4. Rate Design
Based on our review of the record, we find it fair,just, and reasonable to approve Staff s
proposed uniform percentage increase to all the Company's billing components. This rate design
provides a more equitable method of cost recovery than the Company's proposed flat surcharge.
For many residential customers,the Company's proposed surcharge would constitute a significant
percentage increase to their rates. However, a large commercial customer would experience only
a relatively small percentage increase, despite using significantly more water. To recover its
authorized $823,592 revenue requirement via a uniform percentage increase, the Company will
have to increase all its billing components by 16.44 percent. Accordingly, based on our above
findings and pursuant to our authority granted under Idaho Code § 61-622, we find that the
Company's existing rates are no longer reasonable, and we approve as just and reasonable a
uniform 16.44 percent increase to all the Company's billing components.
In sum,we find that the Company's existing rates, charges, and practices are unreasonable
to the extent described above,and that those rates do not afford sufficient revenue to the Company.
See Idaho Code §§ 61-501 and-502. We also find it fair,just, and reasonable for the Company to
change its rates, charges, and practices as described in this Order.
5. Overbilling Issue
As described above, the Company has overbilled certain metered customers a total of
$30,150.35. The Company proposed a procedure for refunding customers. However, the
Commission's Utility Customer Relations Rules ("UCRRs") contain provisions governing the
refunding of amounts to customers. See e.g., IDAPA 31.21.01.203.02. Rather than approving the
Company's proposed procedure for refunding overbilled customers, we direct the Company to
promptly address the balances owed to overbilled customers according to the UCRRs. We further
find it reasonable to direct the Company to submit quarterly reports to Staff disclosing the status
of all accounts affected by the overbilling issue and a final report once all rebilling is complete.
ORDER
IT IS HEREBY ORDERED that the Company is permitted to increase its rates and charges
as described above.
IT IS FURTHER ORDERED that the Company must submit tariffs in compliance with the
rates and charges identified herein no later than 30 days from the service date of this Order.
ORDER NO. 36427 14

IT IS FURTHER ORDERED that the Company shall address the balances owed to
overbilled customers in accordance with the UCRRs and submit quarterly reports to Staff
disclosing the status of all accounts affected by the overbilling issue and a final report once all
rebilling is complete. The reports must be filed until all customers have been made whole.
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 about any matter
decided in 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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 19t" day of
December 2024.
ERIC ANDERSON, PRESIDENT
R. HAMMOND JR., COMMISSIONER
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ORDER NO. 36427 15