20250228Amended Application_Redline.pdf

RECEIVED
February 28, 2025
IDAHO PUBLIC
UTILITIES COMMISSION
Preston N.Carter,ISB No.8462
GIVENS PURSLEY LLP
601 West Bannock Street
P.O.Box 2720
Boise,Idaho 83701-2720
[phone]
18597179.3[13988.231
Attorneys for Gem State Water Company,LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION Case No.GSW-W-24-01 Deleted Cells
OF GEM STATE WATER COMPANY, AMENDED
LLC.FOR THE AUTHORITY TO
INCREASE ITS RATES AND CHARGES APPucATIoNAPPPcA4 o
FOR WATER SERVICE IN THE STATE OF
IDAHO i4
Gem State Water Company,LLC(Gem State,Applicant,or Company)requests an order
from the Idaho Public Utilities Commission(Commission)approving revisions to its schedules of
rates and charges for water service in the State of Idaho,to become effective on or after
April 1,2025.1
Please address communications regarding this Application to:
The Commission extended the proposed effective date of the original application(February 1.2025)for five
months and 30 days.See Order No.36445.Gem State does not object to the effective date of the rates proposed in
this amended application becoming effective on the date established by Order No.36445.
AMENDED APPLICATION PAGE 1 OF-515

Preston N.Carter Leslie Abrams-Rayner
Givens Pursley LLP General Manager,Gem State Water Company
601 W.Bannock St. P.O.Box 3388
Boise,Idaho 83702 Coeur d'Alene,ID 83816_
[e-mail] leslieggemstate-water.com
stephhaniew@ ig�venspursle .com4ephftnie Matt Rowell
Manager of Water Rates and Regulatory
Eric Nelsen
Senior Regulatory Attorney
250 SW Taylor St.
Portland,OR 97204-3038
Matt.Rowell(&nwnatural.com
Eric.Nelsen(a_nwnatural.com laa n owel&w
deem
INTRODUCTION AND BACKGROUND
1. Gem State is a wholly owned subsidiary of NW Natural Water of Idaho,LLC
(NW Natural Water of Idaho),which in turn is a wholly owned subsidiary of NW Natural Water
Company,LLC(NW Natural Water).
2. Gem State is a public utility,and a water corporation,as defined in the Idaho
Public Utility Laws.It is duly organized and exists under the laws of the State of Idaho,and is
engaged in conducting a general water utility business in Northern Idaho and provides service to
approximately 1,040 customer connections as of June 2024.
3. Gem State currently operates under the Certificates of Public Convenience and
Necessity shown in Table 1.
AMENDED APPLICATION PAGE 2 OF 315

Table 1:Certificate of Convenience and Necessity Numbers
Company CPCN Cer-:fleate Order No. Date
CPCN Certificate
No.
Bitterroot Water Company,Inc 319 34616 7/15/2022
Bar Circle"S"Water Company 296 34416 7/15/2022
Spirit Lake East 293 34372 7/15/2022
Happy Valley Water Systems,Inc. 390 34616 7/15/2022
Troy Hoffman Water Corporation, 280 35108 7/15/2022
Inc.
Diamond Bar Estates 413 34416 7/15/2022
Lynnwood Estates Subdivision 293 34372 7/15/2022
(q MOrder No.34027 amended CPCNNo 319 to include Rickel Water
Company CPCN No. 324 and cancelled CPCN No. 324.
4. Included with the Application are Exhibit Nos. 1 through 9,which support the
requests in this Application.
5. Gem State requests that this Application be processed by modified procedure.
REQUESTED CHANGES To RATES,CHARGES,AND RELATED MATTERS
6. Gem State's current rates were approved by Order Nos.35692 and 35728 and
became effective on March 1,2023.
7. Gem State requests authorization to(i)change the rates it charges to customers for
water service to produce an increase in the Company's revenues of$494,9"602,050,which
represents an increase in the Company's revenues of 64,978.8%;(ii)incorporate the consolidation
of rates into one system under the Gem State Water Company tariff,and(iii)make various
additions and revisions to its tariffs.
8. Gem State requests that the changes proposed in this Application become effective
for bills rendered on or after Fe�Anril 1,2025,though the Company would not object to the
dates becoming effective for bills rendered on or before the date established by Order No.36445.
9. The changes sought by Gem State in this Application are set forth in the exhibits
to this Application.Exhibit 8 is a redline copy of Applicant's existing tariff,showing the changes
AMENDED APPLICATION PAGE 3 OF 315

proposed in this Application.Exhibit 9 is a clean copy of the proposed tariff.
AMENDED APPLICATION PAGE 4 OF 315

10. The proposed consolidation,if approved,would result in a single monthly
minimum charge for each meter size,as shown in Table 2.
Table 2:Current and Proposed Month l Minimum Char es
Water System: Meter Size Current Proposed
Monthly Monthly
Minimum Minimum
Charge Charge
Bar Circle"S"and Spirit Lake East 1 Inch 35.00 51 6453.50
Bar Circle"S"and Spirit Lake East 1 1/2-Inch 70.00 103.28107.00
Bar Circle"S"and Spirit Lake East 2 Inch 112.00 165.23171.20
Diamond Bar Estates 1 Inch 41.00 51.6453.50
Diamond Bar Estates 2 Inch 112.00 165 25171.20
Lynnwood Water 1 hich 35.00 51.6453.50
Bitterroot and Rickel 1 Inch 35.00 51.6453.50
Troy Hoffman 1 Inch 35.00 51.6453.50
Happy Valley 1 Inch 35.00 51.6453.50
Happy Valley 1 1/2-Inch 70.00 403.28107.00
Happy Valley 2 hich 112.00 16525171.20
Diamond Bar Estates Irrigation 1 hich 35.00 51.6453.50
Diamond Bar Estates Irrigation 1 1/2-Inch 70.00 103.28107.00
Diamond Bar Estates Irrigation 2 Inch 112.00 16525171.20
All Systems 3 hich NA -4 5 99321.00
All Systems 4 Inch NA 576.76535.00
All Systems 6 inch NA 1153.181070.00
AMENDED APPLICATION PAGE 5 OF 31 5

11. The proposed consolidation,if approved,will result in a single allowance for
gallons included in the minimum charges for each meter size,as shown in Table 3.
Table 3:Current and Proposed Gallons Included in Monthly Minimum Char es
Water System: Meter Size Current Gallons Proposed
Included in Gallons Included
Minimum in Minimum
Bar Circle"S" and Spirit Lake East 1 Inch 7,500 5,000
Bar Circle"S" and Spirit Lake East 1 1/2-Inch 15,000 10,000
Bar Circle"S" and Spirit Lake East 2 Inch 30,000 20,000
Diamond Bar Estates 1 Inch 7,500 5,000
Diamond Bar Estates 2 Inch 35,000 20,000
Lynnwood Water 1 Inch 15,000 5,000
Bitterroot and Rickel 1 Inch 10,000 5,000
Troy Hoffinan 1 Inch 7,500 5,000
Happy Valley 1 Inch 15,000 5,000
Happy Valley 1 1/2-Inch 15,000 10,000
Happy Valley 2 Inch 30,000 20,000
Diamond Bar Estates Irrigation 1 Inch 7,500 5,000
Diamond Bar Estates Irrigation 1 1/2-Inch 20,000 10,000
Diamond Bar Estates Irrigation 2 Inch 32,000 20,000
All Systems 3 Inch NA 30,000
All Systems 4 Inch NA 40,000
All Systems 6 Inch NA 50,000
AMENDED APPLICATION PAGE 6 OF 315

12. The proposed consolidation,if approved,will result in a single Commodity Charge
per 1,000 gallons delivered above the amount included in the Minimum Charge,as shown in Table
4.
Table 4:Current and Proposed Commodity Charge All Meter Sizes}2
Water System: Current Proposed
Commodity Rate Commodity Rate
(per 1,000 gallons (per 1,000 gallons
not included in not included in
Minimum Charge) Minimum Charge)
Bar Circle"S"and Spirit Lake 1.88 3.954.50
East
Diamond Bar Estates 2.45 3.954.50
Lynnwood Water 2.45 3.954.50
Bitterroot and Rickel 2.45 3-954.50
Troy Hoffman 2.45 3.954.50
Happy Valley 1.45 3-154.50
Diamond Bar Estates Irrigation 2.26 3.954.50
CUSTOMER NOTICE
13. Gem State certifies that it is notifying customers of thethis Amended Application
by providing mailed notice onto each^��lcustomer starting oover
'''z, 2024March 4,2025 or as soon as possible thereafter.A press release will be mailed or
delivered to the Coeur d'Alene Press on Deeembe.27,202 February 28,2025.Copies of the
notice and press release are included as Exhibit No.7.
TEST YEAR AND RATE BASE
14. Gem State proposes the 12 months ended September 30,2024 as the test year in this
case,with adjustments to normalize and pro forma the test year for known and measurable changes.
15. Exhibit No. 1,presents the Company's calculation of rate base.Column(A)of this
}z The Company is proposing to bill all customers in gallons as now measured by all meters across the Gem State
Water platform,so converting usage measured in cubic feet no longer is needed.
AMENDED APPLICATION PAGE 7 OF 315

exhibit represents the balances of accounts on the books of the Company as of September 30,2024.
Pro forma adjustments consisting of plant additions expected to be in service by January 30,2025
are summarized in Column(B).Column(C)shows the calculation of Applicant's pro forma rate
base of$3,4� �,'I"3,7 99,220.
16. The pro forma adjustments summarized in Column(B)are detailed in Exhibit 1
(D).The Bitterroot system rebuild is the biggest single project listed there and accounts for over
half of the dollar value of the pro forma plant additions.The meter replacement program is
another large part of the pro forma plant additions.
RESULTS OF OPERATIONS
17. Exhibit No.2 presents the Company's Results of Operations(Income Statement)
adjusted for known and measurable changes.Column(A)of the exhibit presents the actual
recorded results of the Company for the 12 months ended September 30,2024.The reported
income tax is a calculated number with the calculation shown on Exhibit 2(B). These results are
adjusted in Columns(B)through(D)to develop the adjusted results shown in Column(E)that
are used to establish the Company's revenue requirement.
18. Column(B)shows increases in labor costs resulting from employee raises and the
hiring of a new part time employee.These labor cost increases are detailed in Exhibit 2(A).The
incremental labor costs are required to operate and maintain the respective systems and respond
to customers.The total payroll costs are allocated among Gem State Water;Gem State
Infrastructure,LLC(a non-Commission regulated affiliate)("Infrastructure");and the Pelican
Point Water system in Moses Lake,Washington,owned by Cascadia Water,LLC and operated
by Infrastructure(regulated by the Washington Utilities and Transportation Commission)on a
direct allocation and customer count basis.
AMENDED APPLICATION PAGE 8 OF 315

19. Column(B)also includes rate case expense which is detailed on Exhibit 2(C).
20. Column(C)shows the increase in depreciation expense associated with the pro
forma plant additions summarized in Column(B)of Exhibit 1.
21. Column(D)shows the calculated change in income tax as a result of the other pro
forma additions.
22. Column(E)shows the total pro forma income statement.On a pro forma basis,the
Company's operating income is negative$44r342145,019.
COST OF CAPITAL
23. Exhibit No.3 presents the Company's capital structure and the weighted cost of
capital as of September 30,2024.The requested return on equity is 10.2%.Gem State is
proposing a hypothetical capital structure of 55%equity 145%debt consistent with the capital
structure approved in Order No.35692.Gem State is proposing a 5.22%cost of debt which is the
actual cost of debt of NW Natural Water,the holding company that owns NW Natural Water of
Idaho,the direct owner of Gem State.These values produce an overall weighted cost of capital
for Gem State Water of 7.96%.
REVENUE REQUIREMENT
24. Exhibit No.4 presents the revenue requirement for Gem State.
25. Lines 1 through 5 of Exhibit 4 develop the net operating deficiency of
$349-,000447,399 shown on line 5 utilizing the rate base,rate of return and operating results from
Exhibits Nos. 1,2,and 3.Lines 6 through 8 calculate the revenue increase necessary to
overcome the income deficiency.The incremental revenue requirement is$48602,050,
which represents an increase in the Company's revenues of 64.-878.8%.
AMENDED APPLICATION PAGE 9 OF 315

RATE DESIGN
26. Exhibit No.5 presents the Company's current and proposed rates.The Company
is proposing full consolidation of rates across the six current tariffs. The proposed rates collect
-451%of the revenue requirement from the Monthly Minimum Charges and 4649%from the
Commodity charge per 1,000 gallons.
27. Each of the current tariffs include an allowance of free gallons in the monthly
minimum.Such an allowance is contrary to the goal of encouraging conservation and we are
unclear on its basis in cost of service.However,we are not proposing to eliminate the free
allowances entirely in this rate case.The Company is proposing to reduce the allowances for
each meter size.The Company's long-term goal is to eliminate the free allowances entirely but
will do so gradually.
28. There are several benefits to the consolidation of rates:enhanced customer service
and ease of doing business,reduced customer confusion,and mitigated rate impacts related to
large capital investments.
29. The consolidation of rates allows for improved customer service and
responsiveness by reducing the complexity of the tariff structure.Reducing the number of tariffs
and rates improves understanding of tariffs and rates for both customers and staff,which in turn
should further enhance the customer experience.
30. The larger customer base also mitigates rate volatility for the different systems.
Water utilities are highly capital intensive,and a relatively large investment can significantly
�'-In the Company's last rate case,the Commission approved partial consolidation,explaining that doing
so"offers administrative efficiency and is a necessary step towards attaining uniform rates and charges for
all customer classes on the eight Commission-regulated systems owned and operated by Gem State." Case
No.GSW-W-22-01,Order No.35692 at 16(dated-March 1,2023);p.467
AMENDED APPLICATION PAGE 10 OF-515

impact rate base and the associated revenue requirement.Additionally,facilities,technology and
other shared investments impact all customers,rather than a single system.As the Commission
explained in Gem State Water's last rate case,"in the long term,consolidating systems by
implementing uniform rates and charges will help spread the costs of system-wide improvements
among a larger body of customers more equitable,"which"will ultimately benefit all Gem State
customers now and in the future."44
31. Exhibit 6 shows the bill impacts of the Company's proposed rates for the typical
customers on each current tariff and meter size.The vast majority of customers are on 1"meters.
The median 1"usage across all the current tariffs is used to represent the typical customer.
Currently the median usage is less than the free usage allowance included with the minimum
charges on all of the current 1 inch tariffs.The proposed lower free usage allowance results in
34- the median customer's bill including commodity charges under the proposed rates.Under
proposed rates,the median use customer will experience an increase between$44.6721.65 and
$24-.6727.65 depending on their current tariff.The bill impacts across the six systems are thus
fairly similar with no systems experiencing bill impacts disproportionate to what other systems
would experience.The proposed consolidation affects customers across the six systems in a
fairly similar manner and thus does not present equity issues.
32. The 1.5-inch and 2-inch minimum charges both intend to align costs with the rates
charged to customers,as larger services require more system capacity.The Company has no
customers on meters larger than 2 inches but is proposing rates for 3,4,and 6-inch meters in its
34 Case No.GSW-W-22-01,Order No.35692(dated March 1,2023),p.16. Similarly,the Commission
more recently stated in the last rate case of Gem State Water's affiliate,Falls Water,that it"support[s]the
move towards increased consolidation of rates for the Falls Water,Morning View,and Taylor Mountain
water systems"and"encourage[s]the Company to continue working towards consolidation of the three
water systems"so that"customers are treated more equitably in rates and that customers are receiving
appropriate price signals." Case FLS-W-23-01,Order No.36027(dated December 14,2023).
AMENDED APPLICATION PAGE 11 OF-515

tariff to prepare for the eventuality of a larger customer requesting service.
33. The Company is proposing to charge its customers with irrigation meters the same
rates as other meters.The current irrigation rates are very similar to the other tariffed rates so this
is not a dramatic change.The Company has provided a service to irrigation customers whereby it
removes and stores their meters through the winter and then reinstalls them each spring.The
Company is proposing to introduce a charge of$50 per year for that service.
REQUEST FOR RELIEF
34. Gem State stands ready for immediate consideration of this Application.
35. Gem State respectfully requests that the Commission issue an Order:
i. Approving use of modified procedure to process this Application;
ii. Finding that the changes to rates,charges,and conditions of service proposed
in this Application are just and reasonable;
iii. Approving the changes to Applicant's rates,charges,conditions of service as
proposed in this Application,effective on or after FebpaafyApril 1,2025 or
the effective date established by Order No.36445;
iv. Approving tariffs that reflect the changes to Applicant's rates,charges,and
conditions of service as proposed in this Application;
v. Granting other relief as the Commission determines proper under the
circumstances.
DATED Deeember f
2024.
Dated:February 28,2025
GIVENS PURSLEY LLP
By Is/Preston N. Carter
Preston N.Carter
Givens Pursley LLP
AMENDED APPLICATION PAGE 12 OF-515

Attorneys for Gem State Water
Company,LLC
AMENDED APPLICATION PAGE 13 OF 31 5

CERTIFICATE OF SERVICE
I hereby certify that on Deee be-27 202 February 28,2025,I caused to be served a true
and correct copy of the foregoing document to the person(s)listed below by the method
indicated:
Monica Barrios-Sanchez ®Email - Deleted cells
Commission Secretary ❑U.S.Mail
Idaho Public Utilities Commission ❑Fax
P.O.Box 83720 ❑Hand Delivery
Boise,Idaho 83720-0074
[e-mail]
Al Preston N. Carter
Preston N.Carter
AMENDED APPLICATION PAGE 14 OF-515

Summary report:
Litera Compare for Word 11.9.1.1 Document comparison done on
2/28/2025 2:57:50 PM
Style name:Default Style
Intelligent Table Comparison:Active
Original filename:GP Draft,Gem State General Rate Application, 12.27.2024
1 .docx
Modified filename:Amended Application,Gem State,2-28-2025.docx
Changes:
Add 72
Delete- 76
Move]From0
Move To 0
Table Insert 0
Table Delete 2
Table moves to 0
Table moves from 0
Embedded Graphics Visio,ChemDraw,Images etc. 0
Embedded Excel 0
Format changes 0
Total Changes: 150

i
GEM STATE WATER COMPANY
EXHIBIT 7
CUSTOMER NOTICE AND PRESS RELEASE
NOTICE TO GEM STATE WATER COMPANY CUSTOMERS
On DesembeF 27z2A2-4February 28, 2025, Gem State Water Company filed an amended application
with the Idaho Public Utilities Commission (IPUC)for a proposed general rate increase to become
effective on or after 1, 2025.The filing is a proposal subject to public review and a
Commission decision before it can take effect.
Gem State Water Company seeks approval to increase rates to recover the current cost of operating and
maintaining they water systems, which have escalated in recent years, prudently incurred system
improvements, and recent investments to replace aging infrastructure required to provide water service
to customers.
If the proposed rate increases are approved,the table below shows the current and proposed typical
monthly bill for customers using an aveFage ^f 15,000with median usage of 7,000 gallons.
System Current Proposed $ Increase %Change
Median Bill Median Bill
Bar Circle "S" and
Spirit Lake East $35.00 $ 7-62.6 $24-.6727.65 7979%
Diamond Bar Estates 41.00 59.6762.65721.65 4653%
Lynnwood Water 35.00 6$6762.6 24-.67-27.65 7979%
Bitterroot and Rickel 35.00 59.6762.65 24.6727.65 7979%
Troy Hoffman 35.00 5Q-4762.6 24-.6727.65 7979%
Happy Valley 41.00 59-4762.6 48.6721.65 4653%
If approved,the proposed increase would increase the Company's total annual revenues by
$494,808602,050, or 6"78.8%.A copy of the application is available for review at Gem State Water
Company's office located at 250 Northwest Blvd.Suite 203, Coeur D'Alene, Idaho,83814. Copies of the
application are on file at Idaho Public Utilities offices at^" West` ashin^+^^StF ^t11311 W. Chinden
Blvd.,Ste. 201-A, Boise, Idaho 9370283714.The application is also available for review on the
Commission's website at www.puc.idaho.gov. Please send any comments or question to either Gem
State Water Company or the Idaho Public Utilities Commission:

i
Idaho Public Utilities Commission Gem State Water Company
PO Box 83720 PO Box 3388
Boise, ID 83720-0074 Coeur D'Alene, ID 83816
[phone] [phone]
Comments may be submitted to the Idaho Public Utilities Commission via email by going to the following
website: https:HPuc.idaho.gov/Form/CaseComment. Please refer to Case No. GSW-W-24-01 in all
correspondence. Customers may also subscribe to the Commission's RSS feed for periodic updates via
email.

i
For Immediate Release
Media Contact:
Leslie Abrams-Rayner at [phone] or [e-mail]
Gem State Water Company Files Amended Application in General Rate Case
Coeur D'Alene, ID--On Deeember 27 '^2 February 28, 2025, Gem State Water Company filed an
amended application with the Idaho Public Utilities Commission (IPUC)for a proposed general rate
increase to become effective on or after`April 1, 2025.The filing is a proposal subject to public
review and a Commission decision before it can take effect.
Gem State Water Company seeks approval to increase rates to recover the current cost of operating
and maintaining they water systems, which have escalated in recent years, prudently incurred system
improvements, and recent investments to replace aging infrastructure required to provide water service
to customers.
If approved the proposed increase would increase the Company's total annual revenues by
$494,888602,050, or 64-878.8%.The table below shows the current and proposed typical monthly bill
and proposed increase for customers ^^ ^ arte ef' ^^^with median usage of 7,000 gallons.
System Current Proposed $ Increase %Change
Median Bill Median Bill
Bar Circle "S" and
Spirit Lake East $35.00 $59.6762.6 $24-.&727.65 7979%
Diamond Bar Estates 41.00 59.6762.65 18.6721.65 4.653%
Lynnwood Water 35.00 59.6762.65 24.6727.65 7979%
Bitterroot and Rickel 35.00 59-4762.6 246727.65 7979%
Troy Hoffman 35.00 59.6762.65 24.6727.65 7979%
Happy Valley 41.00 59.6762.6 18.6721.65 4653%
A copy of the application is available for review at Gem State Water Company's office located at 250
Northwest Blvd. Suite 203, Coeur D'Alene, Idaho, 83814. Copies of the application are on file at Idaho
Public Utilities offices at 472 West Washington Street11311 W. Chinden Blvd., Ste. 201-A, Boise,Idaho
8370283714.The application is also available for review on the Commission's website at
www.puc.idaho.gov. Please send any comments or question to either Gem State Water Company or the
Idaho Public Utilities Commission:
Idaho Public Utilities Commission Gem State Water Company
PO Box 83720 PO Box 3388
Boise, ID 83720-0074 Coeur D'Alene, ID 83816
[phone] [phone]

i
Comments may be submitted to the Idaho Public Utilities Commission via email by going to the following
website: https:HPuc.idaho.gov/Form/CaseComment Please refer to Case No. GSW-W-24-01 in all
correspondence. Customers may also subscribe to the Commission's RSS feed for periodic updates via
email.

i
i

Summary report:
Litera Compare for Word 11.9.1.1 Document comparison done on
2/28/2025 2:18:43 PM
Style name: Default Style
Intelligent Table Comparison: Active
Original filename: Exhibit 7 - Gem State Press Release and Customer Notice,
GP Draft, 12.26.2024 (1).docx
Modified filename: Amended Exhibit 7 - Gem State Press Release and
Customer Notice (1).docx
Changes:
Add 59
D I 50
" nz 0
Move To 0
Table Insert 0
Table delete 0
Table moves to 0
Table m es F 0
Embedded Graphics Visio, ChemDraw, Images etc. 0
Embedded Excel 0
Format changes 0
Total Changes: 109