20250409Staff Comments.pdf

RECEIVED
April 09, 2025
ADAM TRIPLETT IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10221
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 PRIEST LAKE WATER )
LLC'S APPLICATION TO INCREASE ITS ) CASE NO. PLW-W-24-02
RATES AND CHARGES FOR WATER )
SERVICE IN THE STATE OF IDAHO )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Adam Triplett, Deputy Attorney
General, submits the following comments.
BACKGROUND
On October 8, 2024, Priest Lake Water, LLC ("Company") applied for a Certificate of
Public Convenience and Necessity("CPCN"), to provide water service near Priest Lake in
Bonner County, Idaho in Case No. PLW-W-24-01. The Company also requested authorization
to increase its rates for water service by $51,360, or 153 percent. The Company requested a
December 1, 2024, effective date for the rate increase.
On December 4, 2024, the Commission opened this case, bifurcating the Company's
request to increase rates for additional processing and evaluation. Order No. 36408.
STAFF COMMENTS 1 APRIL 9, 2025

On January 13, 2025, the Commission issued Order No. 36442, granting the Company's
request for a CPCN. During the Commission's February 4, 2025, decision meeting, Staff
presented a decision memorandum, recommending a schedule for processing this case.
The Company is a Commission-regulated water corporation that serves customers in
Idaho under Certificate of Public Convenience and Necessity No. 557. The Company currently
serves approximately 72 residential customers in the Marvin Estates Subdivision, Priest Lake,
Idaho. When completely built out, the Company could serve up to 113 lots. The Company seeks
to increase its rates from the current monthly minimum charge of$37, which includes a water
allowance of up to 10,000 gallons, to a minimum monthly charge of$98 for residential
customers and a monthly minimum charge of$100 for commercial customers, which includes a
water allowance of up to 30,000 gallons. The Company included a copy of a notice informing
customers of the proposed rate increases with its Application.
STAFF ANALYSIS
Staff reviewed the Company's Application, exhibits, workpapers, and responses to
Production Requests. Staff also conducted audits of the Company's financial records, processes,
and internal controls. Based on its review, Staff recommends that the Commission establish a
revenue requirement of$42,356, or an increase of$8,084. See Attachment A, Line 13. This
revenue requirement is $42,578 less than the Company's request, and results in an increase of
24%to the Company's annual revenues.
System Description
The water system currently provides drinking water to 72 connections for residential
customers and will eventually extend water service to 113 lots. The water system is in the
Marvin Estates subdivision at 279 Tracy Lane, Priest Lake, Idaho. The system consists of two
wells, a pump house, a storage reservoir, and a distribution system. There is no infrastructure to
chemically treat the water.
The wells were constructed in 1996 with 8-inch diameter well casings and are
approximately 200 feet depth. Each well is operated by one 10-horsepower submersible pump
and can pump 100 gallons per minute ("gpm") of water. The pump house includes a flow meter,
pressure gauge, air vacuum relief valve, raw water sample tap, and two small bladder tanks to
STAFF COMMENTS 2 APRIL 9, 2025

reduce water hammer. The pumped water is delivered to a 120,000-gallon storage reservoir.
Water is delivered to customers through a distribution pipeline consisting of over 2-miles of 6
and 8-inch diameter polyvinyl chloride pipe.
Reliability of Water System
Staff reviewed the Application, responses to production requests, and the Idaho
Department of Water Resources and Idaho Department of Environmental Quality ("IDEQ")
documents such as sanitary report, water rights, and monitoring results for the reliability analysis
of the system. From its review, Staff recommends that the Company monitor its demand as more
customers come onto the system relative to its current capacity and upgrade system capacity to
ensure it maintains sufficient supply to meet IDEQ requirements.
Equipment Deficiencies
Staff believes that some of the equipment in the system is approaching the end of its
useful life and may need to be replaced in the future. Staff recommends that the Company
evaluate the need to upgrade or replace equipment in its system. The evaluation should include a
comparison of the cost of maintaining the current equipment beyond its useful life to the cost of
replacing it.
Although there are no significant deficiencies in the latest 2022 IDEQ sanitary survey,
the Company reported that the system is nearly 30 years old and some equipment such as a back
generator, pumps, valves, and meters might need to be replaced and/or updated. In addition,
Staff recommends the Company evaluate potential replacements and upgrades due to equipment
approaching end of life.
Capacity of Water System
Based on its review, Staff believes a capacity shortfall may occur in the future if all lots
authorized for its service territory are developed and served by the water system. The system
may require upgrades to increase the capacity. Staff recommends the Company evaluate the
capacity of its system versus future water consumption and likely customer growth scenarios. If
the potential for a capacity shortfall is likely, the Company should develop least-cost plans to
STAFF COMMENTS 3 APRIL 9, 2025

upgrade its system to ensure it maintains sufficient capacity to serve customer water
consumption while also meeting IDEQ pressure and demand requirements.
As per the engineering report of the system, the water system was initially designed for
107 residential lots within the Marvin Estates subdivision with an average daily demand of
86,500 gallons per day. The design capacity is more than the current demand to serve water to
72 lots. However, if the water system eventually provides water service to 113 lots approved in
CPCN No. 557, the water demand will likely exceed the design capacity.
Water Quality and Pressure
Staff verified that the monitoring results requested by IDEQ satisfied all of EPA's
drinking water regulations for water quality. Additionally, Staff has no indication whether the
water pressure is sufficient to meet IDEQ requirements. However, since there were no
deficiencies reported in the last IDEQ sanitary survey, Staff assumes it is adequate.
Furthermore, the Company has not received any complaints regarding low water pressure over
the past three years according to the Application.
Water Rights
Staff reviewed Water Right No. 97-7368 and No. 97-9802. Based on the analysis, Staff
concludes that the place of use boundary is consistent with the approved water service territory
in CPCN No. 557 and the authorized amount of water that can be pumped is sufficient for
current and future water demand.
Both water rights are active. Water Right No. 97-7368 is for domestic use and provides
supply for the 106 lots in the Marvin Estates subdivision. Water Right No. 97-9802 covers the
commercial area within the subdivision and the residential area outside the subdivision. When
both are combined, the total pumping capacity cannot exceed 0.68 cubic feet per second or 305
gpm. Assuming all lots are for residential use and the same factors stated in the initial design are
applied, the peak hourly demand will not exceed 184 gpm, which is sufficient to supply all 113
lots, that could be in-service in the future.
STAFF COMMENTS 4 APRIL 9, 2025

REVENUE REQUIREMENT
The Company requested a revenue requirement of$84,945, which is an increase in
annual revenues of$51,360, or 153%, based on a 2023 test year. Staff reviewed all components
of the revenue requirement and recommends an annual revenue requirement of$42,356,based
on a 2024 test year, which is an increase of$8,084, or 24%, as outlined in Attachment A. Each
component is discussed in greater detail below.
Net to Gross Multiplier
The Net to Gross Multiplier grosses up the operating income deficiency for income taxes
and other revenue contingent items. In the test year, the Company reported an operating loss.
The Company is not subject to taxes on an operating loss. In determining the revenue
requirement, the Company is permitted to recover an additional amount to offset the reported
operating loss,but this amount should not be subject to the full net-to-gross multiplier because
the Company will not incur tax liability on the losses. Instead, only one component
Commission assessment fee—should be applied to the revenue deficiency necessary to overcome
the operating loss. Staff calculated a multiplier of 1.0021, as detailed in Attachment A, Line 7.
Staff recommends that the 1.0021 multiplier be applied to the revenue deficiency associated with
overcoming the operating loss, and for any excess above the reported loss, a multiplier of 1.3468
should be applied to account for the additional tax liability on the allowed income.
Rate Base
Rate base represents the amount invested by the Company into the system which is
eligible to earn a return. Rate base is the plant-in-service ("PIS") offset by accumulated
depreciation and contributions in aid of construction. Rate base can also include cash working
capital. Staff recommends a rate base of$45,821, which includes net PIS of$41,958 and
working capital of$3,863. Attachment B, Column C, Lines 22-27.
Plant-in-Service
PIS represents the original cost of all assets used to provide water service to customers.
Staff calculated a PIS balance of$41,958 as shown on Attachment C. The Company's financial
statements indicate that most assets have been fully depreciated, resulting in a zero-book value.
STAFF COMMENTS 5 APRIL 9, 2025

However, in 2024 and 2025, the Company began investing in new capital improvements to its
water system, including $15,295 for additional water rights and$26,308 for cleaning and
repairing its storage tank.
In its Application, the Company requested $8,748 in capital investments for water rights
to serve commercial customers. A commercial customer requested service from the Company,
which required it to obtain the additional water rights. The costs are primarily associated with
hiring legal assistance to navigate the complexities of obtaining water rights and working with
various State of Idaho agencies. Staff recommends increasing the PIS balance by$15,295 for
water rights, which includes costs incurred in both 2023 and 2024.
Additionally, in 2024, the Company began the process of cleaning and repairing its
storage tank. During cleaning, the contractor identified cracks and holes in the tank's roof. To
address these issues, the Company secured an agreement and contract, which remains valid
through 2025. Staff reviewed the contract, and the Company confirmed that payment to the
contractor is forthcoming. Based on its review of the Company's filings and supporting
documentation, Staff recommends including an additional $22,825 in PIS as a known and
measurable proforma plant addition for the tank repairs.
Working Capital
Working capital is the amount needed to fund the day-to-day operations of the Company.
This amount is typically considered an advance of funds by the owners prior to amounts being
recovered through customers' bills. Working Capital may be considered a component of rate
base and eligible to earn a return. Staff recommends a working capital allowance of$3,863,
which is calculated using the one-eighth method. Attachment B, Column C, Line 26.
Return on Equity("ROE")
The Company requested an ROE of 11%, which is consistent with Commission orders for
similarly sized water companies. See Order Nos. 35973, 35978, and 36012. Staff supports the
requested 11%ROE in this case. Because the Company has no authorized debt, the ROE
represents the overall rate of return applied to the Company's rate base for calculated the revenue
requirement.
STAFF COMMENTS 6 APRIL 9, 2025

Revenues
Staff reviewed the Company's rates for water charges that determined the amount of
revenue produced in the test year for revenue requirement purposes. Staff believes that revenues
have been misstated, and Staff recommends several adjustments to 2023 test year revenues.
Staff recommends a test year revenue of$34,272.
The Company reported $31,524 in revenue from monthly customer charges in 2023. In
2024, the Company had 72 customers.' Using the present number of customers at present rates
results in $31,968 of revenue from monthly customer charges, an increase of$444 to 2023 the
Company's proposed test year revenue.
The second adjustment is for revenue from volumetric charges. The Company reported
$1,641 of test year revenue from volumetric charges.2 Staff analyzed customer consumption
data from May 2020 through October 2024 and calculated a four-year average of$2,304 in
revenue from volumetric charges.3 Staff believes that using a four-year average provides a better
indicator of typical water sales and mitigates significant consumption deviations that may have
occurred during the Company's test year due to weather fluctuations. Using Staff s calculation
results in an increase of$663 to test year revenue.
Finally, the Company included late fees of$420 as revenues. Late fees are non-recurring
charges and are not to be expected to occur with certainty in future years. Combining the
adjustments results in a Staff-adjusted total test year revenue of$34,272.
Operating Expenses
In 2023, the Company reported an operating expense of$69,320. Staff recommends a
total operating expense of$41,748, which is a reduction of$28,259. Staff made specific
adjustments to the Company's expenses which are discussed in greater detail below. Attachment
B, Column C, Lines 3 through 20.
1 See Company Response to Production Request No. 14.
2 See Company Response to Production Request No. 12.The Company refers to revenue from volumetric charges as
"overage"charges.
s See Company Response to Production Request No. 16. The Company provided 2024 data in an email sent to Staff
on March 4,2025. Staff excluded consumption data from 2021 due to Covid.
STAFF COMMENTS 7 APRIL 9, 2025

Labor—Operations & Maintenance
The Company included$23,400 in pro forma labor costs, based on an hourly rate of$65
and an estimated 360 hours annually. Company records indicate the owner worked 360 hours in
2024. The owner's responsibilities include meter reading, water sampling, routine maintenance,
well-pump maintenance, and other essential tasks. According to the Idaho Department of Labor
Employment Survey, water operators in the 90th percentile earn over$30 per hour. Staff
recommends an hourly rate of$35, which better reflects a reasonable cost for these services.
Applying this rate to 360 hours results in a total labor expense of$12,600—$10,800 less than the
Company's proposed amount. Staff finds this adjustment necessary to ensure labor costs
included in rates are reasonable and accurately reflect actual hours worked.
In future general rate case filings, the Company will need to continue to keep records and
timesheets for all labor hours worked on the water system if it wishes to increase recovery for
labor expenses.
Purchased Power
Staff calculated an annualized electricity expense of$1,142 to be included in the revenue
requirement. Staff estimated this amount by calculating the $/gallon electricity cost of the most
recent year and multiplying it by the normalized water production amount using four years of
production data.
Staff reviewed the Company's annual water production for the period of 2020—2024 and
discovered the amount water pumped in 2021 is significantly higher than its typical production
compared to adjacent years.4 Staff believes 2021 is an outlier and to avoid the skewness of the
production data, Staff excluded the 2021 production amount and calculated the normalized
annual production using four years of data including years 2020, 2022, 2023, and 2024.
According to Staff calculations, the Company's normalized annual production is 3,848,800
gallons as shown in Equation No. 1,below.
Normalized Annual Production= (4,026,800 +4,378,900+ 3,626,300+ 3,363,200) -4 =
=3,848,800 gallons. (Equation No. 1)
4 Case No.PLW-W-24-01:Response to Staff Production Request No. 6.
STAFF COMMENTS 8 APRIL 9, 2025

Staff reviewed the Company's power bills for the years 2023 and 2024 and computed the
$/gallon of electricity cost using the latest 2024 total annual electricity cost and production
amount as shown in Equation No. 2, below. Response to Production Request No. 8.
$/Gallon= $998.02 -3,363,200 = $0.000297. (Equation No. 2)
Staff then calculated the annualized electricity expense by multiplying the results of
Equation Nos. 1 and 2 as shown in Equation No. 3,below.
Annualized Electricity Expense $0.000297 X 3,848,800 = $1,142. (Equation No. 3)
Staff s calculations for the Company's annualized electricity expenses are summarized in
Table No. 1.
Table No. 1: Annualized Electricity Expenses
Year Production Electricity Cost $/Gallon
(gallons) ($)
2020 4,026,800 -
20215 5,525,200 -
2022 4,378,900 -
2023 3,626,300 $862.47 $0.000238
2024 3,363,200 $998.02 $0.000297
Average Annual Production(Gallons)5 3,848,800
$/Gallon(2024) $0.000297
Annualized Electricity Expense $1,142
Unaccounted Water Losses
Staff analyzed Company's monthly consumption data at the customer's meters over the
last five years (2020—2024) and compared it to the annual water production during the same
period. See Company's Response to Production Request No. 16. Through this analysis, Staff
believes that the Company is experiencing significant water losses within its system. As the
5 Average annual production is calculated using a 4-year average(for 2020 and 2022—2024 production period).
Annual water production amount in 2021 is excluded as an outlier to compute average production because the
gallons of water pumped in 2021 is excessively higher than adjacent years.
STAFF COMMENTS 9 APRIL 9, 2025

Company proposed to recover the annualized electricity expenses from customers,based on the
large amount of water losses it is experiencing, Staff recommends the Company to:
1. Conduct necessary root cause analyses that identify specific causes of water loss and
develop a plan of actions by March 31, 2026, that can be taken to mitigate them; and
2. Implement the plan of actions developed by the Company and demonstrate the
reduction of water losses when the Company files its next general rate case.
Staff estimated the annual water losses by subtracting the total consumption at the
customer meters from annual water production from its wells for respective years. According to
its assessment, Staff discovered the Company's water system experienced 1,209,596 gallons of
unaccounted water losses (approximately 29% of total production) on average over the last five
years. Table No. 2 summarizes Staff s calculations of water losses within the Company's
system. Additionally, this amount of water loss represents approximately $359 in electricity cost
when 5-year average annual water losses are multiplied by the $/gallon electricity expense.
Although this amount is small, the percentage of water lost compared to the total gallons pumped
is significant. This could result in higher maintenance costs and the potential for unnecessary
capital investment to supply a sufficient amount of water to meet future customer demand as new
customers are connected to the water system.
Annualized Water Loss (in terms of$) = $0.000297 X 1,209,596 $358.94.
Table No. 2: System-Wide Unaccounted Water Losses Over the Past Five Years
Year Well Production Consumption at Estimated Estimated
Meters Customer Meters Water Loss Water Loss
(gallons) (gallons) (gallons) (%)
2020 4,026,800 2,608,520 1,418,280 35%
2021 5,525,200 4,080,850 1,444,350 26%
2022 4,378,900 2,669,468 1,709,432 39%
2023 3,626,300 2,842,087 784,213 22%
2024 3,363,200 2,671,495 691,705 21%
5-Year 49184,080 299749484 19209,596 29%
Average
Annualized Water Loss (in terms of$) $359
STAFF COMMENTS 10 APRIL 9, 2025

According to the Water Research Foundation6, non-revenue water losses can be classified
as following.
• Apparent losses:
o Unauthorized consumption;
o Customer metering accuracies; and
o Systematic data handling errors.
• Real losses:
o Leakage in transmission and distribution mains;
o Leakage and overflows in utility storage tanks; and
o Leakage in service connections up to the point of customer metering.
During Staff s on-site audit on March 4, 2025, the Company stated that the missing
amount of water is potentially associated with: (1) weekly flushing of the lines, (2) cleaning of
the storage reservoir that usually is performed every week during winter, and(3) during
depressurizing the lines when connecting new customers. However, appropriate action cannot be
taken until the root causes of water loss are identified.
Materials & Supplies—Operations &Maintenance
In 2023, the Company's materials and supplies expenses was $10,766. However, in
2024, the Company only purchased$1,794 in materials and supplies expenses, which is $8,972
less than requested. Staff recommends a materials and supplies expense of$1,794.
Material & Supplies—Admin& General
The Company included administrative and general expenses of$684 in its Application.
The Company spent $368 less in 2024 on postage, shipping, and other miscellaneous items.
Therefore, Staff recommends an administrative and general expense amount of$316 to reflect
the 2024 actual expense.
6 Please visit at:https://www.waterrforg/serve-file/resource/4949-Water-Loss-Control.pdf
STAFF COMMENTS 11 APRIL 9, 2025

Contract Services—Professional
The Company included$18,765 in its request for contract services related to excavation
and water system repairs, based on an assumed rate of$150 per hour for 120 hours per year,
equating to approximately ten repairs annually. However, Staff notes that in 2024, the Company
did not utilize an external contractor for these services. Instead, the owner performed the
necessary repairs. Given this, and consistent with Staff s previous recommendation to adjust the
Company's labor rate, Staff recommends that the contract services rate be revised from $150 per
hour to $35 per hour. This adjustment more accurately reflects a reasonable and supportable cost
for such services. Applying Staffs recommended hourly rate results in a total contract services
expense of$4,200, which is $14,565 lower than the Company's proposed amount.
Contract Services—Water Testing
The Company requested an annual water testing expense of$2,872. Consistent with past
Commission practices, Staff recommends a nine-year average of water testing expenses to reflect
the inconsistent frequency of many of the required tests. Staff calculated an annual water testing
expense of$1,051, or a decrease of$1,821, as shown on Attachment D.
Insurance
During discovery, the Company provided its 2025 insurance policy, which reflects
updated coverage and associated costs. Staff has reviewed the policy and finds it reasonable to
include the updated expense in the Company's revenue requirement. To ensure that rates reflect
the most current and accurate costs, Staff recommends incorporating the new policy and setting
the annual insurance expense at $2,571.
Rate Case Expense—Amortization
The Company included$2,500 in rate case expense amortization in its Application,
covering legal costs associated with processing the CPCN and general rate case. These expenses
include responding to Staff s production requests and compiling financial information. To
ensure accurate cost recovery, Staff reviewed the Company's legal expenses for 2024 and 2025,
which total $11,961. Staff finds these costs reasonable and recommends their inclusion as an
operating expense. To mitigate customer impact, Staff recommends amortizing the total expense
STAFF COMMENTS 12 APRIL 9, 2025

over three years, resulting in an annual expense of$3,987, an increase of$1,487 over the
Company's proposed amount.
Depreciation Expense
The Company included a depreciation expense of$2,362. After evaluating the
Company's depreciable assets and adjusting its plant-in-service accounts, Staff adjusted the
depreciable expenses of each plant account. Further, Staff ensured the depreciable rates align
with National Association of Regulatory Utility Commissioners Depreciation Manual for Small
Water Utilities. Consistent with Staff adjustments to PIS, Staff re-calculated the Company's
annual depreciation expense for all assets as of December 31, 2024, and the 2025 tank repair.
Staff recommends a depreciation expense of$1,351. Attachment B, Column C, Line 14 and
Attachment C, Column E, Line 4.
Property Taxes
During discovery, Staff identified that Bonner County issued a property tax assessment to
the Company. As a regulated public utility, the Idaho State Tax Commission will evaluate the
value of the Company's assets and may reassess its property tax obligations accordingly.
Property taxes are an essential and ongoing cost of providing service, and it is appropriate to
include them as part of the Company's revenue requirement. Based on the information provided,
Staff recommends including the $43 Bonner County property tax as an expense.
State and Federal Taxes
State and federal taxes are a necessary and unavoidable cost of doing business for
regulated utilities. Staff believes the inclusion of these tax expenses are reasonable. By allowing
the recovery of these costs through rates, the Commission ensures that utilities remain compliant
with tax obligations without compromising their ability to invest in infrastructure, operations,
and service improvements. Staff recommends including $1,351 in state and federal taxes.
STAFF COMMENTS 13 APRIL 9, 2025

RATE DESIGN
The Company currently charges customers a monthly minimum charge of$37, which
includes a water allowance of up to 10,000. All usage exceeding the monthly water allowance is
billed at a volumetric rate of$3.00 for each additional 1,000 gallons.
In its Application, the Company proposed to increase the monthly minimum charge to
$98 for residential customers and to $100 for commercial customers. The volumetric rate of
$3.00 per 1,000 gallons was unchanged. The Company proposed to increase the monthly water
allowance to 30,000 gallons.
Staff agrees with a rate design that includes a monthly charge and volumetric rate.
However, Staff disagrees with the Company's proposed water allowance included in the monthly
charge, as well as the volumetric rate. Using customer consumption data from October 2021 to
October 2024, an allowance of 30,000 gallons per month would result in the Company collecting
an average of$501 annually in volumetric charges. This amount of revenue would be less than
the Company's costs to read customer meters and results in a very small number of customers
being assessed the volumetric charge when their consumption exceeds 30,000 gallons.
In contrast to the Company's proposed allowance, Staff recommends an allowance of
7,500 gallons to be included in the monthly minimum charge. Staff s recommendation is based
on conservation signals and equity in cost recovery. A lower allowance sends a signal to
customers that their bill can increase starting at a lower level of consumption and encourages
conservation. The lower allowance also results in revenue from volumetric charges being
collected from a larger proportion of customers, and not just the highest users.
Staff also recommends an increase in the volumetric rate from $3.00 to $3.50 per 1,000
gallons for all consumption exceeding the monthly allowance. The combination of a lower
allowance and higher volumetric rate allow for the same percentage of revenue recovery from
volumetric charges as the current rate design.
Using Staffs proposed monthly water allowance, volumetric rate, and average
consumption data from October 2021 to October 2024 results in$3,343 of revenue from
volumetric charges. Dividing the remainder of Staff s recommended revenue requirement
among all customers results in a monthly minimum charge of$45.15.
7 In its Application,Appendix 11,the Company stated a rate of$3 for each additional 10,000 gallons. This was
clarified as a typographical error. See Company Response to Production Request No. 15.a.
STAFF COMMENTS 14 APRIL 9, 2025

Table No. 3 below compares monthly bill impacts between the Company's and Staff s
rate designs at various consumption amounts.
Table No. 3: Bill Impacts at Various Consumption Levels for 3/4-Inch Connections
Consumption Bill at Bill using Percent Bill using Percent
(gallons) Present Company's Increase Staff s Rate Increase
Rates Rate Design Design
5,000 $37.00 $98.00 165% $45.15 22%
15,000 $52.00 $98.00 88% $71.40 37%
30,000 $97.00 $98.00 1% $123.90 28%
During discovery, the Company also informed Staff that there are potential customers
that would like to be served by 1-inch meters. Currently there are no rates for 1-inch meters in
the Company tariff, as all customers are served by 3/4-inch meters. Staff calculated a 1-inch
monthly customer charge of$75.25 using meter equivalent ratios from the American Water
Works Association M1 Manuals and recommends that this rate be included in the Commission-
approved tariff resulting from this case.
Additionally, the Company does not have any active commercial customers, and Staff did
not discover any consumption data or cost drivers to support charging commercial customers a
different rate than residential customers at this time. Therefore, Staff recommends that the
monthly minimum charge for commercial customers be the same as that of residential customers
based on their meter size.
TARIFF
Reconnection Charges for Voluntary Disconnections Exceeding 3g 0 DaYs
In its Application, the Company proposed a$25 charge for shut-offs at the customer's
request. See Appendix 10, Schedule No.2. Staff recommends that the Commission direct the
Company to include a charge for shut-offs by customer request equal to three times the
Commission-approved monthly customer charge in this case, when the shut-off exceeds 30 days.
8 M1 Manual of Water Supply Practices,71 ed.,Table VII.2-5.
STAFF COMMENTS 15 APRIL 9, 2025

Staff is concerned that seasonal customers facing a $25 shut-off charge may be induced
to voluntarily disconnect from the system during periods of prolonged vacancy to avoid the
monthly minimum charge. Staff believes it is essential for all customers, whether year-round or
seasonal, to pay the monthly minimum charge. This allows for recovery of the year-round fixed
costs that the Company incurs to operate and maintain the system that all customers receive
service from.
Bulk Water Sales
Staff discovered that the Company has infrequently provided and sold water to
commercial water trucks. Staff reviewed the Company's process for providing water to these
customers and bulk water rates of other Commission regulated water utilities. Staff recommends
a rate of$40 per day plus $1.50 per 1,000 gallons sold allowing the Company to recover its
administrative, labor, and water production expenses for bulk water sales.
New Connection Fees
In its Application, the Company proposed new connection fees for a customer to
physically connect to its water system. Staff believes that the Company's proposed connection
fees are not reasonable. Based on Staff s review of the Company's Application and the
Company's responses to Staffs production requests, Staff recommends:
1. The Schedule No. 3 —Hookup Fee (New Service) of the Company's tariff be
modified based on Staff s recommended new connection fee schedule;
2. Allow customers the option to request either 3/4-in or 1-in meters for new connections;
and
3. Allow customers the option to directly contract work necessary to establish service if
work is completed by the Company's approved contractors and the work is approved
through a Company inspection.
During the discovery process,9 to have a complete understanding of the actual costs
incurred by the Company, Staff requested the Company provide detailed information about the
body of work done for new installations, and a breakdown of costs that was included in the
Application.
9 Staff Production Request Nos.24 and 26.
STAFF COMMENTS 16 APRIL 9, 2025

Staff was able to determine the following recommended new connection fee schedule
from the cost information provided by the Company as shown in Table No. 4, below.
Table No. 4: Comparison Between Company and Staff s Proposed New Connection Fees
Category Company Proposal Staff Estimation
3/4-inch Meter 1-inch Meter
Cost of Materials $3,116 $2,016 $3,016
Labor $1,500 $384 $384
Total $4,616 $2,400 $3,400
The Company stated it has historically performed new installations with in-house labor to
ensure quality and integrity of the water system and to pass on the cost savings to customers.
Staff s proposed new connection fees are based on the materials cost invoice from"Consolidated
Supply Co—Sandpoint"that was provided by the Company. Response to Production Request
No. 26. Staff estimated the labor cost for the connection fees using the in-house labor rate
provided in this rate case.
Meter Size
Staff recommends separate connection charges for both 3/4- and 1-inch meters for new
customers to be connected the Company's water system. Staff believes that it would be fair and
reasonable for the customers to be: (1)provided with the option of choosing either 3/4- or 1-inch
meters based on their needs and(2) charged for the appropriate costs based on the chosen meter
sizes. Staff further recommends the Company work with the Commission Staff to develop the
specific language that should be added to the tariff, thus reflecting the customer choice in
selecting its own meter size.
In response to Staff Production Request No. 26, the Company stated it is proposing new
connection fees for only 1-inch meters. However, in its analysis,10 Staff discovered that the
Company's water system only consists of 3/4-inch meters. Id. Staff also recognized there is a
significant difference between the material costs for 3/4- and 1-inch meter sizes. Through a
10 Company's Response to Production Request No.26—Exhibit 6 and Confidential Exhibit 7.
STAFF COMMENTS 17 APRIL 9, 2025

discussion with the Staff,11 the Company confirmed that most of its existing customers are
connected to the water system using 3/4-inch meters,but for future connections, the Company is
only proposing 1-inch meters for all new hookups. Staff believes and the Company agrees that
new customers should be given the option to select the appropriate meter size (either 3/4- or f-
inch)based on the amount of flow needed for their individual needs and then charged
accordingly to ensure their rates reflect their appropriate share of cost based on the amount of
capacity and cost they cause to the system.
Customer Option to Directly Contract Hookup Services
In addition to allowing customers to choose their own meter size, Staff believes and the
Company agrees that customers should be given the option to directly contract with Company-
approved contractors to connect to the system as long as the Company performs a final
inspection of the work. The Company provided the following list of third-parry contractors 12
that the customers can hire for new connection installations and their contact information:
1. Storro Excavating, LLC (208-290-5912)
2. Dixon Dirt Works, LLC (208-610-6057)
3. Nefzger Development(509-991-8463)
Staff understands this above-mentioned list of contractors may change in the future.
Customers should inquire about the list of approved contractors before hiring them to perform
new hookups and the Company should provide the most up-to-date list in its communication
with potential customers.
The Company should be responsible for final inspection of new connections. Staff
recommends that the Company work with the Staff to develop the specific language that should
be added to the tariff. Performing final inspections will ensure the Company will maintain
adequate control over their water system to ensure safe and reliable water service to its
customers. Furthermore, it is the Company's responsibility to ensure each connection is
constructed in a manner that meets applicable Local, State and Federal rules.
" Staff conducted a telephonic conference with the Company on March 26,2025,to clarify various meter sizes
within the water system.
12 Company's Response to Production Request No.26(b)and(c).
STAFF COMMENTS 18 APRIL 9, 2025

Updates to Tariff
The Company's existing tariff needs to be updated and/or revised depending on the
Commission's final decisions in this case. This includes:
1. Updating the New Connection Fees in Schedule No. 3 —Hookup Fee (New Service);
2. Adding language that would allow customers to request their meter sizes (either 3/4- or
1-inch) in writing;
3. Adding language that would allow customers to directly contract for their own service
connections while maintaining Company oversight; and
4. Adding language that requires the Customer and Company to work together to
determine the location of the pit-setter and meter.
Staff recommends that once a final order in this case has been issued by the Commission,
the Company should collaborate with Staff to determine revisions to the Company's tariffs with
updated tariffs filed through a compliance filing within 30 days of the final order in this case.
CUSTOMER NOTIFICATION, PRESS RELEASE, WORKSHOP, AND CUSTOMER
COMMENTS
Customer Notification and Press Release
On November 11, 2024, the Company sent a draft of the customer notice regarding
the CPCN application to Staff. Staff reviewed the notice and determined that the notice
did not meet the requirements as outlined in the Commission's Rules of Procedure,
IDAPA 31.01.01, Rule 125. The Company was advised to revise the notice and resubmit
the notice for review. The Company submitted a Customer Notice with the Application on
December 5, 2024, without further Staff review. The Company sent the notice as an insert
with their monthly billing to all established customers on January 1, 2025. No notices
were published in local newspapers.
Online Customer Workshop
An online virtual customer workshop was held on Thursday, February 27,2025,
beginning at 6:00 pm PST. There were seventeen people attending as well as several
Company representatives. The Customers represented echoed those presented in customer
comments submitted to the case record.
STAFF COMMENTS 19 APRIL 9, 2025

Public Customer Workshop
In addition to the online customer workshop, an in-person customer workshop was
held at the Inn at Priest Lake, located at 5310 Dickensheet Road, Coolin, Idaho 83821, on
Tuesday, March 4,2025, at 6:00 pm PST. There were twenty-two people in attendance as
well as Company representatives. As in the virtual customer workshop, the customers
represented at the in-person customer workshop echoed those presented in customer
comments submitted to the case record.
Customer Comments
As of March 11, 2025, 24 customer comments have been received by the
Commission. The following is compiled from customer comments submitted but also
include comments from the virtual and in-person Customer Workshops that were held:
I. All the customer comments indicated that they are against the increases proposed
by the Company. Customers stated that they are opposed to both the increase in
the monthly charge as well as an increase in the allotment of water from ten-
thousand gallons to thirty-thousand gallons, which the customers felt the increase in
allotment would disincentivized people to conserve water and could result in less
available reserves in the event of fires;
2. Customers felt that there is a lack of clarity or transparency regarding the rate
increase;
3. Customers cited being retired or on a fixed income and the detrimental effects a rate
increase would create for them;
4. Customers would like to limit the rate increase and commented that they felt the
Company was making too much profit;
5. Customers noted concerns with the age and condition of the system. They felt that
it was the Company's responsibility to maintain the system and that customers
should not be responsible for costs related to repairs or improvements;
6. Customers with vacant lots are dissatisfied with the price of the hook-up fees and
wanted the option to use outside contractors to perform new hook-ups;
7. Customers indicated that running the water system was a part-time job and did not
feel that full-time wage was warranted;
STAFF COMMENTS 20 APRIL 9, 2025

8. Customers want the PUC to ensure that additional project costs such as the tank
repair are used and useful prior to adding costs to rates;
9. Both the Customers and the Company would like definitions for the following
terms: duplex, multi-family, multi-use, and accessory dwelling unit(A.D.U.'s);
10. Additionally, the Company and Customers would like clarification on how the
following impact rates: recreational vehicle use on existing connected lots,
residential and commercial property and how the rate classification would be
determined for each property; and
11. Customers indicated concerns with the language in the tariff, specifically related to
short-term rentals, and felt the tariff was not in compliance with Idaho Statutes,
specifically that Idaho Code § 67-6539 which defines short-term rentals as
residential and not commercial use.
STAFF RECOMMENDATION
Based on its audit and investigation, Staff Recommends the Commission:
I. Establish a revenue requirement of$42,356, which is an increase of$8,084;
2. Approve Staff s rate structure in Attachment D;
3. Deny the Company's proposed commercial customer rate and charge commercial
customers the same rate as residential customers based on their meter size;
4. Approve a voluntary disconnection exceeding 30 days charge to be an amount equal
to three times the Commission-approved monthly customer charge;
5. Approve a bulk water sale rate of$40 per day plus $1.50 per 1,000 gallons sold;
6. Approve connection fees that are based on Staff s proposed Connection Charges for
both 3/4-in and I-in meter;
7. Order the Company to work with Staff to update the language in the tariff after the
final order has been submitted and to submit the updated tariff to the Commission
through a compliance filing within 30 days for Commission approval;
8. Order the Company to conduct root cause analyses to identify specific causes of
water losses and develop a plan of actions to mitigate them by March 31, 2026; and
9. Order the Company to implement the plan of action and demonstrate the reduction of
water losses when the Company files its next general rate case.
STAFF COMMENTS 21 APRIL 9, 2025

Respectfully submitted this 9th day of April 2025.
(-A A
Adam riplett
Deputy Attorney General
Technical Staff: Travis Culbertson
1:\Utility\UMISC\COMMENTS\PLW-W-24-02 Comments.docx
1
STAFF COMMENTS 22 APRIL 9, 2025

REVENUE REQUIREMENT
(A) (B) (C)
Company Staff Staff
Application Adjustments Rev. Req.
1 Rate Base 17,102 28,899 46,001
2 Required Rate of Return 11.00% 11.00%
3 Income Required 1,881 5,060
4 Income Realized (36,254) 34,987 (1,266)
5 Income Deficiency 38,135 6,326
6 Net Operating Income Realized $ (1,266)
7 Gross Up Factor 1.002127
8 Total Incremental Revenue Requirement 1,269
9 Net Operating Income Required $ 38,135 $ 5,060
10 Gross Up Factor 1.346802 1.346802
11 Total Incremental Revenue Requirement $ 51,360 $ 6,815
12 Revenues at Existing Rates $ 33,585 $ 34,272
13 Total Revenue Requirement $ 84,945 $ 42,356
14 Percent Increase Required 153% 24%
15 Total Gross Revenues 1.000000 1.000000
16 Less Regulatory Fees (percentage) 0.002127 0.002127
17 State Income Tax Rate 0.058 0.058000 0.058000
18 Total Expenses 0.060127 0.060127
19 Federal Income Tax Base 0.939873 0.939873
20 Federal Income Tax Rat 0.21 0.197373 0.197373
21 Net Operating Revenue 0.742500 0.742500
22 Net Income to Gross Revenue Multiplier 1.346802 1.346802
Attachment A
Case No. PLW-W-24-02
Staff Comments
April 9, 2025

RESULTS OF OPERATIONS WITH STAFF ADJUSTMENTS
(A) (B) (C)
Test Year STAFF ADJ STAFF
2023 TOTAL TOTAL
Line Water Revenues
1 Unmetered $ 33,585 $ 687 $ 34,272
2 Total Revenues $ 33,585 $ 687 $ 34,272
Operating Expenses
3 Labor-Operations &Maintenance $ 23,400 $ (10,800) $ 12,600
4 Labor-A&G $ 4,000 $ 4,000
5 Purchased Power $ 1,089 $ 53 $ 1,142
6 Materials& Supplies-Operation&Maintenance $ 10,766 $ (8,972) $ 1,794
7 Materials& Supplies-Admin&General $ 684 $ (368) $ 316
8 Contract Services-Professional $ 18,765 $ (14,565) $ 4,200
9 Contract Services-Water Testing(Monthly) $ 2,872 $ (1,821) $ 1,051
10 Transportation Expense $ 683 $ 683
11Insurance $ 2,069 $ 502 $ 2,571
12 Rate Case Expense (Amortization) $ 2,500 $ 1,487 $ 3,987
13 TOTAL Operating Expenses $ 66,828 $ (34,485) $ 32,343
14 Depreciation Expense $ 2,362 $ (1,011) $ 1,351
15 IPUC Regulatory Fees $ 130 $ 130
16 Property Taxes $ - $ 43 $ 43
17 Other Fee IDWR $ - $ 320 $ 320
18 Federal Taxes $ - $ 1,058 $ 1,058
19 State of ID Taxes $ - $ 292 $ 292
20 TOTAL Expenses from Operations $ 69,320 $ (33,782) $ 35,538
21 Net Operating Income $ (35,735) $ 34,469 $ (1,266)
Rate Base
22 Plant in Service $ 8,748 $ 33,210 $ 41,958
23 Accumulated Depreciation $ - $ - $ -
24 Net Plant in Service $ 8,748 $ 33,210 $ 41,958
25 Total Net Plant in Service $ 8,748 $ 33,210 $ 41,958
26 Add Working Capital(1/8 Operating Expenses) $ 8,354 $ (4,311) $ 4,043
27 Total Rate Base $ 17,102 $ 28,899 $ 46,001
28 Incremental Revenue Requirement $ 50,662 $ 8,084
Attachment B
Case No. PLW-W-24-02
Staff Comments
April 9, 2025

PLANT-IN-SERVICE ("PIS") DEPRECIATION
(A) (B) (C) (D) (E)
PIS Total Depreciable Annual
Line ACCT # DESCRIPTION Application ADJ PIS Life Dep. Exp.
1 303 Water Rights - Souce of Supply $ 8,748 $ 6,547 $ 15,295 0 $ -
2 305 Collecting &Impounding Reservoirs $ - $ 26,308 $ 26,308 20 $ 1,315
3 343 Tools, Shop and Garage Equipment $ - $ 355 $ 355 10 $ 36
4 TOTAL PLANT-IN-SERVICE $ 8,748 $ 33,210 $ 41,958 $ 1,351
Attachment C
Case No. PLW-W-24-02
Staff Comments
April 9, 2025

RATES
APPLICATION STAFF RECOMMENDATION
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
Monthly Gallons Sold Volumetric Staff
No.of Present Revenue at Requested Requested No.of Customer Staff Above Rate per 1,000 Revenue-
Line Meter Size Customers Rates Present Rates Rates Revenue Customers Charge Revenue Allowance Gallons Volumetric
1 3/4"Meters 72 $ 37.00 $ 31,968 $ 98.32 $ 84,948 72 $ 45.15 $ 39,010 955,000 $ 3.50 $ 3,343
2 1"Meters 0 $ - $ - $ - $ 0 $ 75.25 $ - - $ 3.50 $ -
3 72 $ 31,968 72 $ 39,010
4 Company Requested Revenue $ 84,948 Staff Recommended Revenue $ 42,352
5 Company Reported Revenue $ 33,585 Staff Adj to Reported Revenue $ 34,272
6 Increase to Reported Revenue $ 51,363 Increase to Staffs Reported Revenue $ 8,080
7 Percentage Increase 153% Percentage Increase 24%
Attachment D
Case No. PLW-W-24-02
Staff Comments
April 9, 2025

CERTIFICATE OF SERVICE
�
I HEREBY CERTIFY THAT I HAVE THIS DAY OF APRIL 2025
SERVED THE FOREGOING COMMENTS OF THE OMMISSION STAFF , IN CASE
NO. PLW-W-24-02, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
JARED HORLACHER SARAH B McOWEN
OWNER SMITH &McOWEN
PRIEST LAKE WATER LLC 102 SUPERIOR ST
279 TRACY LANE PO BOX C
PRIEST LAKE ID 83856 SANDPOINT ID 83864
E-MAIL: jaredhorlacher �yahoo.com E-MAIL: sarahCc�smithmcowenlaw.com
Norman M. Semanko
Patrick M. Ngalamulume
Parsons,Behle& Latimer
800 W. Main Street, Suite 1300
Boise, ID 83702
E-MAIL: nsemanko parsonsbehle.com
pngalamulume kparsonsbehle.com
boisedocketacparsonsbehle.com
PA ICIA 6JOYAR, SE RETARY
CERTIFICATE OF SERVICE