20250128Supplemental to Petition for Reconsideration.pdf

STONERIDGE
CDS StoneRidge Utilities,LLC
P.O.BOX 298
Blanchard,ID 83804
Ph(208)437-3148 Extn.4
SENT By: Email RECEIVED
Tuesday, January 28, 2025
IDAHO PUBLIC
January 28, 2025 UTILITIES COMMISSION
Monica Barrios-Sanchez
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd.
Bldg. 8, Ste. 201-A
Boise, ID 83714
RE: SWS-W-24-01 Supplemental Filing Petition for Reconsideration& Clarification
We have been reviewing many of the previous orders involving CDS StoneRidge Utilities, LLC., in IPUC
filings. Recently we came across a"Staff/Commission"statement made in our 2007 case that contradicts
a"Staff/Commission"statement made on our current rate 24-01 General Rate Case.
This is regarding the"Expense vs Capitalization"of"System Repairs
Attached as Exhibit A is from SWS-06-01 ORDER NO 30342 Page 7
Rate Base
"Repairs to a water system are costs that should be included in annual operations and
maintenance expenses and are not to be considered a capital improvement. Only capital
improvements are included in the rate base. Therefore, Staff removed this amount from the
Company's rate Base."
Also attached as Exhibit B is from Case SWS-W-24-01 ORDER NO 36407 Paae 9
Caoita//z Repairs and Rebui/ds
Staff Comments
Staff recommended that three expenses incurred in 2023 be removed as expenses and
instead be placed into plant in service. Two of the expenses were for water main repairs and
the third was for pump repairs. This would lower the maintenance expense by $17,451 and
increase plant in service by the same amount. The result of this reclassification would increase
the depreciation expense by$534 in the test year.
Company Reply
The Company argued against capitalizing repairs in an aging system—comparing it to "putting
makeup on a dying pig." Reply Comments at 22. The Company contended these minor fixes

(less than 1.5% of total plant value for 2023) would be discarded during eventual system
replacement. The Company preferred treating repairs as operating expenses to track system
health and guide planning. The Company thus requested that$17,451 continue to be classified
as repair and rebuild expenses.
Commission Decision
The Commission finds that costs for repairs and maintenance that extend the life of a system
are appropriately capitalized and eligible to earn a return as part of the Company's rate base.
The Company's argument that the entire system will have to be replaced at the same time is at
this time uncertain based on the record. Water systems routinely replace leaking pipes, which
in turn extends the life of the system as a whole. Staff's recommendation was well-reasoned in
this case and followed established accounting principles. After the system, or sections of the
system, is/are replaced,the Commission will review the associated expenses for prudency, but
such actions are not before the Commission at this time.As it stands, booking the expenses to
plant in service is reasonable and consistent with our past decisions. ` RR,,Q Gi
We find the e two IPUC sta ments to be 100% in opposition to each other from both Staff and the
Commissio ers in 2007 vs 24! We would like IPUC to explain what has changed between 2007 and
2024 in reg rd to establish accounting principles and whatever else IPUC believes justifies the 180-
degree pivo o this issue!
Sincerely
Cfj Karupiah, Managing Member
C,DS StoneRidge Utilities, LLC

EXHIBIT A
ORDER NO. 30342 Page 7

also incurred for the benefit of the excess capacity held by the Company for the benefit of new
development and should,to some extent,be absorbed by the developer.
A. Rate Base
During its audit of the Company's proposed rate base, Staff excluded approximately
$337,000 from rate base. Staff recommends a rate base of$103,627. Specific costs were not
included for one of the four following reasons: First, there were several invoiced charges that
were clearly for work for other entities and not associated with the water company, and other
costs included in the Company's rate base calculation that are not specifically documented as
benefiting the water company. The result of Staff adjustments in this first category decreases the
Company's requested rate base by$332,543.99. Second, Staff removed an additional $3,012.50
that was identified with the Phase I, interconnection, loan amount. As that loan amount is
subject to recovery by a surcharge to the residents of Happy Valley Ranchos, it should not be
reflected in rate base. Third, any costs that were paid for with proceeds from the Phase II loan
are included in rate base as a total "Phase II" group and not included separately in the rate base
amount. The Company indicated in its Application that the total cost for the Phase II project is
$160,457; and after audit Staff agrees with this amount. Therefore, this amount is included in
Staff's final total of rate base. Fourth,one invoice documented a repair to the system instead of a
capital improvement. Repairs to a water system are costs that should be included in annual
operation and maintenance expenses and are not to be considered a capital improvement. Only
capital improvements are included in rate base. Therefore, Staff removed this amount from the
Company's rate base. r
Commission Findings: A basic principle utilized by this Commission in setting the
rates of a public utility is that, generally speaking, a Company may earn a return on capital
improvements that are currently used and useful in providing utility service to its customers.
Here, the Company has proposed numerous items for the inclusion into rate base that are/were
not capital investment in the water company, but in other entities such as the golf course. As
such they are not appropriate for recovery from the ratepayers of the water utility. We find
Stoneridge Water's net rate base to be$103,627.
ORDER NO.30342 7

EXHIBIT B
ORDER NO. 36407 Page 8

Commission Decision
Absent a system-specific depreciation study, which can be cost prohibitive for small water
companies, using the depreciation rates in the NARUC Depreciation Manual is industry standard
and provides this Commission an objective tool to determine depreciation rates. Therefore,the
Commission finds Staff's reliance on the NARUC Depreciation Manual appropriate in this case.
CVdfffi ing Repmrs and RebuUds
Ltaf Comments
Staff recommended that three expenses incurred in 2023 be removed as expenses and instead be
placed into plant in service. Two of the expenses were for water main repairs and the third was for
pump repairs. This would lower the maintenance expense by$17,451 and increase plant in service
by the same amount.The result of this reclassification would increase the depreciation expense by
$534 in the test year.
Company Reply
The Company argued against capitalizing repairs in an aging system—comparing it to
"putting makeup on a dying pig." Reply Comments at 22. The Company contended these minor
fixes (less than 1.5% of total plant value for 2023) would be discarded during eventual system
replacement. The Company preferred treating repairs as operating expenses to track system health
and guide planning. The Company thus requested that $17,451 continue to be classified as repair
and rebuild expenses. Commission Decision
The Commission finds that costs for repairs and maintenance that extend the life of a system are
appropriately capitalized and eligible to earn a return as part of the Company's rate base. The
Company's argument that the entire system will have to be replaced at the same time is at this time
uncertain based on the record.Water systems routinely replace leaking pipes,which in turn extends
the life of the system as a whole. Staff's recommendation was well-reasoned in this case and
followed established accounting principles. After the system, or sections of the system, is/are
replaced, the Commission will review the associated expenses for prudency, but such actions are
not before the Commission at this time. As it stands, booking the expenses to plant in service is
reasonable and consistent with our past decisions_
Golf Course Revenue
Staff Comments
Staff disagreed with excluding golf course revenue from rate calculations. Despite the
course installing its own well in October 2023, the golf course's usage remains significant. The
CORRECTED ORDER NO.36407 9