20250812Staff Comments - Includes Attachment.pdf

RECEIVED
ADAM TRIPLETT August 6, 2025
DEPUTY ATTORNEY GENERAL IDAHO PUBLIC
IDAHO PUBLIC UTILITIES COMMISSION 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 VALIANT IDAHO, )
INC./TIC UTILITIES,LLC's APPLICATION ) CASE NO. VID-W-25-02
TO INCREASE ITS 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 March 4, 2025, TIC Utilities, LLC, an entity affiliated with Valiant Idaho, Inc.
("Company"), a public utility providing water service under Certificate of Public Convenience
and Necessity No. 554, applied to increase the rates and charges for the Company's water
service. The Company requests a July 1, 2025, effective date for the proposed rate increase.
On March 20, 2025, the Commission issued a Notice of Application and Notice of
Intervention Deadline, setting a deadline for interested persons to intervene. Order No. 36520.
STAFF COMMENTS 1 AUGUST 6, 2025

The Commission also suspended the Company's proposed July 1, 2025, effective date for the
proposed rate increase for 30 days and 5 months under Idaho Code § 61-622(4).
At the Commission's May 20, 2025, Decision Meeting, Staff presented a Decision
Memorandum recommending the Commission issue a Notice of Modified Procedure, setting an
August 6, 2025,public comment deadline and a Company reply deadline of September 3, 2025.
STAFF ANALYSIS
Staff reviewed the Company's Application, exhibits, workpapers, and responses to
production requests. Staff also conducted an audit of the Company's financial records, processes,
and internal controls. Based on its review, Staff recommends a total revenue requirement of
$201,869, or an increase in the Company's annual revenue requirements of$36,623, or 22.1
as shown on Attachment A. This revenue requirement is based on capital structure consisting of
100% equity and an 11.0% Return on Equity("ROE") applied to net rate base of$434,673.
System Description
The Valiant Idaho, LLC ("Idaho Club") water system is located at the City of Sandpoint,
in Bonner County, Idaho. The water system has two groundwater wells with individual
capacities of 378 and 279 gallons per minute ("GPM")that pump water to the primary 225,000
gallon reservoir("Moose Mountain")through a series of two booster stations. Each booster
station is equipped with individual small tanks to maintain system pressure. The third booster
station pressurizes water to the highest-altitude services through the Moose Mountain reservoir.
Currently, the Company serves treated water to 105 equivalent residential units, and the
connections are unmetered. The water treatment process consists of voluntary disinfection using
12.5% Sodium Hypochlorite solution("Chlorine"), pretreatment using Potassium Permanganate,
followed by further filtration to remove elevated levels of Iron and Manganese from the water.
The distribution system piping includes pipes of various sizes ranging between 2.5 to 12-inch
and made of ductile iron, steel and Polyvinyl Chloride ("PVC"). The Company's water system
is summarized in Table No. 1 below:
STAFF COMMENTS 2 AUGUST 6, 2025

Table No. 1: Idaho Club Water System Summary
System Components Capacity
Water Source(s) Well No. 1: 378 GPM;
Well No. 2: 279 GPM
Moose Mountain Booster Station: 2 X 126 GPM;
Booster Pump(s) Booster Station No. 1: 3 X 175 GPM;
Booster Station No. 2: 3 X 175 GPM
Moose Mountain Reservoir: 225,000 gallons;
Storage Reservoir(s) Booster Reservoir No. 1: 19,000 gallons;
Booster Reservoir No. 2: 10,000 gallons
Distribution Piping 2.5 to 12-inch; ductile iron, steel, and PVC
Customer Meters Not metered
Water Treatment/Chlorination Pretreatment with Potassium Permanganate, disinfection
using Chlorine, followed by Iron and Manganese filtration
Reliability of Water System
According to Staff s review, the Company's water system is capable of providing reliable
and safe water to its customers.
Staff assessed the Company's latest Idaho Department of Environmental Quality
("IDEQ") sanitary surveys and believes there are no outstanding sanitary issues or significant
deficiencies that impede system reliability. Company's Response to Production Request No. 21.
Additionally, the Commission received no customer complaints during the past three years
(during 2021 —2024) indicating any issues regarding low water pressure or system-level
reliability.
Water Rights
Staff reviewed the Company's available water rights and believes the rights are sufficient
to provide water service to the Company's customers. The Company currently has total water
rights at a diversion rate of 2.86 cubic feet per second("CFS") or equivalently 1283.568 GPM,'
which is higher than the Company's maximum pumping capacity of 657 GPM. Company's
Response to Production Request No. 20 and Facility Plan at 7.
' 1 CFS is equivalent to 448.8 GPM.
STAFF COMMENTS 3 AUGUST 6, 2025

Current Capacity and Demands
Staff reviewed the Company's facility plan and believes the system has sufficient total
pumping capacity to satisfy its current average daily demand("ADD") and maximum daily
production with the largest source out of service. Company's Response to Production Request
No. 18 and Facility Plan at 12. The Company does not have meters installed throughout its
system, so there is no actual consumption data available. As a result, the facility plan did not
assess some critical parameters such as maximum daily demands or peak hourly demands.
Instead, it analyzed average daily production("ADP"), maximum daily production("MDP"),
and peak hourly production. With the largest source being offline, the current pumping capacity
is 279 GPM, which is higher than the current ADP (56 GPM), MDP (177 GPM), and ADD (38
GPM). Staff s analysis is summarized in Table No. 2 below.
Table No. 2: Current System Capacity and Demand
Source Capacity Capacity with Largest Current Current Current
(GPM) Source Offline ADP MDP ADD
(GPM) (GPM) (GPM) (GPM)
Well No. 1: 378
GPM
279 56 177 38
Well No. 2: 279
GPM
REVENUE REQUIREMENT
Revenue requirement is the amount of revenue the Company needs to earn to recover its
operating expenses and earn a return on its capital investment. Staff proposes a revenue
requirement of$201,869, using an ROE of I I% and total rate base of$434,673. A detailed
revenue requirement calculation is provided in Attachment A. Staff proposes a number of
adjustments to the Company's Application which are listed in Attachment B and discussed in
detail below.
STAFF COMMENTS 4 AUGUST 6, 2025

Rate Base
Rate base is the value of a utility's assets that are used to provide service to customers, on
which the utility is allowed to earn a specified rate of return. Staff proposes a rate base amount of
$434,673, which is $170,728 lower than the amount included in the Company's Application.
Staff s recommended adjustments to rate base are discussed in the following section.
Contributions in Aid of Construction ("CIAC") (Adjustment No. 1)
Under IDAPA 31.36.01.102, the capital invested in the systems for small water
companies is presumed to be contributed capital and therefore excluded from rate base. In Case
No. GSW-W-23-01, Gem State Water filed an application requesting the Commission approve of
the purchase of TIC UtilitiesNaliant Water Idaho's water system. In that case, the Commission
stated"...that Gem State Water failed to overcome this presumption, and the Commission
excluded plant from rate base."See Order No 35971 at 6. However, the Commission did not
need to make this determination to approve the sale of the water system, and neither TIC Utilities
nor the Company were involved in that case. Therefore, Staff believes that the earlier finding—
that Gem State Water didn't overcome the CIAC presumption—doesn't prevent the issue from
being reconsidered in this case.
The Company provided additional information that was not part of the record in the
earlier Gem State Water proceeding. Specifically, the Company has asserted that all the plant
included in the Application was installed after its acquisition of the water system from VP Inc.,
and that it serves both new and existing customers. The Company proposed a method of using
the number of lots the developer was unable to purchase for resale later and dividing that number
by the total lots in the development. The formula would in essence be:
Lots Unavailable for Purchase At Sale
Total Lots of the Development at Time of Sale
If the current owner had the ability to sell all the lots in the development, the capital
invested in the system would have been recovered through the sale of the lots and none of the
assets would be included in rates. However, because some lots had been sold to individuals
before the current owner purchased the system, and the Company was unable to use the proceeds
from the prior lot sales to offset system capital costs, the Company requests that 76.97% of the
post-purchase plant be included in rate base.
STAFF COMMENTS 5 AUGUST 6, 2025

Staff accepts the Company's proposed methodology in principle but disagrees with the
inputs of the calculation. Staff recommends that the denominator be the total number of planned
and platted lots, and the numerator be the number of lots not unavailable for purchase by the
current owner, and therefore not able to sell later. The updated formula is proposed as follows:
Lots Unavailable for Purchase At Sale
Total Lots of the Development at Time of Sale +All Planned and Platted Lots
The proposed formula results in a contributed capital percentage of 49.32%. See
Attachment C.
Applying this percentage, Staff recommends reducing Plant in Service by $477,657 and
Accumulated Amortization by$130,956. Instead of classifying this adjustment as CIAC, Staff
recommends recording CIAC as a reduction in the Plant in Service accounts as shown in
Attachment A. Using the method of reducing plant in service vs recording CIAC and amortizing
it over time will simplify future regulatory filings and accounting because the Company will not
have to track which assets have CIAC associated with them, nor will the Company have to track
the amortization of the CIAC.
As a result of this treatment, Staff also reduced Depreciation Expense by $27,708 to
reflect that CIAC-related plant should not be depreciated.
Proforma Plant-In-Service (Adjustment No. 2)
Staff reviewed capital projects included in Exhibit 1- Schedule A of the Application.
Staff s review was based on whether the project is used and useful, and whether the project cost
is known and measurable. Based on the review, Staff believes that a total of$5,168 of capital
cost in the facilities plan ($4,111) and Meters ($1,057) should be adjusted from the capital
project expenses included in the Company's filing. Additionally, Staff recommends that meters
be purchased and installed to all customers as soon as possible so that the meter installation
project is able to realize its full benefits.
Services (IDEA Facilities Plan)
The Company requested $40,000 to recover the cost to prepare and present the IDEQ
Facilities Plan. In the Company's response to Staffs Production Request Nos 28 and 49, the
actual cost for this project was $35,889 through June 2025. Even though the Company states
STAFF COMMENTS 6 AUGUST 6, 2025

that it is billed monthly by the contractor, additional bills from July 2025 are not known. Thus,
Staff believes that the difference of$4,111 of project cost should be adjusted from rate base.
Meters and Meter Installations
The Company requested $43,615.55 for meters and meter installations. The Company
states that the requested cost is based on order acknowledgements for purchasing 100 water
meters and related software for reading the meters. See the Company's response to Staff s
Production Request No. 48. Staff compared the order acknowledgement for the software setup
to the actual cost in the receipt. Through the comparison, Staff found that the order
acknowledgement does not represent the actual cost,because the order acknowledgement
included a sales tax rate of 8.9 %while the receipt applied a 6.0% sales tax rate. See the
Company's response to Staff s Production Request No. 28. Staff recalculated all costs to
$42,558.61,using the updated Idaho sales tax rate of 6.0% and recommends the difference of
$1,057 between the requested cost and the recalculated cost should be excluded from rate base.
Additionally, as noted in Application, the Company currently provides water service to
100 residential customers. However, the Company has purchased and installed only 50 meters
through this project. Although the meters are used and useful, most of the benefit of the meters
cannot be realized until all customers have meters allowing the Company to begin billing
volumetrically to reduce water consumption through price signals. Staff encourages the
Company to purchase and install meters for all customers, as soon as possible, so that the full
benefits of the meters can be realized.
Depreciation for Proforma Plant (Adjustment No. 3)
Depreciation is the systemic allocation of the cost of a fixed asset over its useful life. It
spreads the cost of that asset over the useful life of the plant and therefore matches the cost
recovery with the benefits provided by the asset.
The Company also included proforma plant for new meters and a water facility plan.
However, no depreciation expense was included for these additions. Staff recommends a 40-year
life for meters based on National Association of Regulatorily Utility Commissioners
("NARUC") guidelines and an estimated 10-year life for the facilities plan. This results in a total
increase of$5,090 in depreciation expense.
STAFF COMMENTS 7 AUGUST 6, 2025

Revenues (Adjustment No. 4)
The Company only included three quarters of actual revenues in its filing. The Company
recently changed its billing services provider and some of the data was missing after the
transition. To correct for the incomplete data, Staff used the total number of customers provided
by the Company and multiplied it by the applicable monthly rate for twelve months. This
calculation resulted in an annual revenue figure of$165,240, which represents an increase of
$37,657 from the amount originally included by the Company.
Expense Adjustments
Staff proposes a total expense amount of$117,153, which is $116,783 lower than the
Company's Application. The adjustments to those expenses are detailed below.
PUC Fees Adjustment(Adjustment 5)
The Company did not include a PUC Assessment in its Application. The Company
recently became regulated and therefore has yet to pay an assessment to the PUC. Staff applied
the Public Utilities Commission assessment fee rate of 0.2223%, based on Order No. 36545, to
the normalized revenue proposed in Adjustment No. 4 above. This calculation adds $368 to the
Company's expenses to account for the required PUC fees. The Net to Gross Multiplier
mentioned below is designed to include PUC Fees but is only intended to update the additional
PUC assessment and taxes for incremental revenue and not of the imbedded revenue.
Salary Adjustment Adjustment No. 6)
The Company included a proforma salary of$48,000 for the owner's management of the
Company. However, the Company does not have any formal salary rates or time records for this
role. In response to Staff s production requests, the owner indicated spending an average of 10-
15 hours per week managing the utility. Staff agrees that the owner should be compensated for
their work relating to the Company. To assess the appropriate salary for the owner, Staff used
data from the U.S. Bureau of Labor Statistics (BLS). Staff used the occupation title of Managers,
All Other to assess the appropriate salary expense to recommend. The analysis indicated a
reasonable salary range of$22,037 to $38,290 for similarly situated positions, depending on
hours worked and whether one used the mean, median, or 75th percentile wages. See Attachment
STAFF COMMENTS 8 AUGUST 6, 2025

D. Staff recommends a mid-point estimate of$30,000 for salary expense, which reduces the
Company's proposed salary expense by$18,000.
E3 Consulting (_"E3) EMenses Reclassification (Adjustment No. 7)
The Company contracts with E3 Consulting for general water operations, including
services as responsible charge operators, system testing, water testing, chemical purchases, etc.
After reviewing invoices from E3 dated in 2024, Staff discovered expenses that should be
reclassified to Chemicals and Contract Services-Water Testing. See Production Request No. 33.
Specifically, $3,740 was moved to Contract Services—Water Testing, and $10,168 to Chemicals
Expense. These reclassifications do not impact the revenue requirement but will be referenced in
other the Chemical and Lab Adjustment(Adjustment Nos. 10 and 11). See Attachment E.
E3 Wastewater Expenses Adjustment No. 8)
While reviewing the E3 invoices mentioned above, Staff discovered $1,960 in
wastewater-related expenses. See Attachment E Staff recommends the wastewater expenses of
$1,960 be removed.
Sewer Expenses from Production Request No. 34 (Adjustment No. 9)
The Company admitted that $30,592 in sewer expenses were mistakenly included in the
water utility's expense records. These were identified through Production Request No. 34. Staff
recommends removal of$30,592 in expenses as they are not associated with regulated water
utility operations.
Chemical Adjustment(Adjustment No. 10)
The Company currently uses 12.5% Sodium Hypochlorite to treat the water. Utilizing
the information provided in response to Staff Production Request No. 29, Staff calculated the
average $/gallon chlorine purchase cost over the past four years (2021 —2024). Staff then
multiplied the average $/gallon amount with the average annual chlorine purchase (in gallons) to
estimate the annualized chemical expense. Attachment No. F provides Staff s detailed analysis
of the Company's annual chemical expenses.
STAFF COMMENTS 9 AUGUST 6, 2025

Staff proposes chemical expenses of$3,944 to be included in the revenue requirement.
This reduces chemical expense by$6,224.
Annualizing Water Testing(Adjustment No. 11)
Water testing costs were also reviewed. Staff determined that the Company is on a three-
year testing cycle and received the relevant schedule in response to Staff Production Request No.
4. Staff calculated the total amount of costs on a three-year cycle. By spreading the cost of the
three-year cycle over three years, Staff calculated an annualized water testing cost of$1,338 and
recommends this be the annual water testing expenses. This represents a reduction of$2,402
from the amount originally requested by the Company. See Attachment G.
Attorney Fees MSTB Law (Adjustment No. 12)
Attorney fees totaling $9,247 were paid to MSTB Law for legal assistance with selling
the utility to the homeowners' association(HOA) and converting to a planned unit development
(PUD). These services did not result in any direct customer benefit and therefore are not
appropriate for recovery in rates. Staff recommends removal of$9,247 from Contract Services—
Professional.
Rate Case Expenses Adjustment No. 13)
Fees paid to McConnell Wagner Sykes & Stacey for assisting with the general rate case
and regulatory approval were included for recovery as an annual expense. Though Staff agrees
these expenses are prudent, it is not appropriate for these expenses to be recovered annually.
Staff recommends amortizing these costs over a three-year period. As a result, $3,812 would be
removed from Contract Services—Professional and$1,271 would be included under Rate Case
Amortization. The net effect of these two adjustments is a reduction of$2,541in expenses.
Electricity Adjustment(Adjustment No. 14)
Staff recommends a total annualized electricity expense of$9,794 to be included in the
revenue requirement. Staff determined this amount by calculating the $/gallon electricity costs
and multiplying it by the normalized water production amount using three years of data from
November 2021 —October 2024.
STAFF COMMENTS 10 AUGUST 6, 2025

In its Application(Well and System Information) and response to Production Request
No. 23, the Company provided water pumping records for the period of October 2021 —October
2024. Using this information and analyzing the trend of typical production amounts for a three
year period(November 2021 —October 2024), Staff first calculated the normalized annual
production. Staff did not include the production amounts from November 2021 through October
2022 in its calculation because the amount appeared to be an outlier, which Staff believes could
be due to seasonal residents during the Covid pandemic and because of growth in the number of
customers. Staff then calculated the $/gallon electricity cost by dividing 12 months electricity
expense (November 2023 —October 2024)by the respective production amount. Company's
Response to Production Request No. 22 and 35. Attachment No. H shows Staff s calculations of
the Company's annual electricity expenses.
Reclassifying Expenses Relating to Water Facili . Plan(Adjustment No. 15)
The Company included costs associated with a water facilities plan under Materials &
Supplies—Operation & Maintenance. As this plan has a useful life extending beyond one year,
the associated costs should be capitalized and recovered through depreciation. Since the
Company already included this project in proforma plant, Staff removed the corresponding
O&M expenses to avoid double-counting and reducing expenses by $33,309.
Rate of Return
The Company proposed a capital structure composed entirely of common equity. The
Company has no approved debt, and the balance sheet shows no long-term debt. To impute debt
and provide a more balanced capital structure, Staff would have to estimate the cost of debt
available to the Company. Based on the Small Business Association 7(a) program, a Company
of this size needing approximately$210,000 in long term debt, the interest rate would not exceed
13.5%2, which would likely be equal to or higher than the ROE recommended by Staff in this
case. Therefore, Staff accepts the proposed 100% equity capital structure for this case.
The Company requested a 12%ROE. Staff reviewed several recent small water utility
cases in Idaho and found that the Commission has consistently awarded an 11%ROE in Orders
2 https://www.nerdwallet.com/article/small-business/sba-loan-rates
STAFF COMMENTS 11 AUGUST 6, 2025

33658, 33910, 35978, and 36587. Accordingly, Staff recommends an 11% ROE for this case.
The resulting overall rate of return is 11.0%.
Staff s proposed rate of return when applied to the Staff s proposed rate base of$434,673
calculates a Return on Rate Base (or Net Operating Income Requirement) of$47,814. Staff
proposal is a $24,834 reduction from the Company's Application
Taxes and Net to Gross Multiplier
Taxes are calculated through a Net to Gross Multiplier("Gross-Up"). The Gross-Up is
multiplied to the operating deficiency which then calculates the amount of taxes the Company
would need to pay to achieve the return on rate base ("Net Operating Income Deficiency")
authorized by the Commission. See Attachment A, Line Nos. 5, 9, 10, and 11.
Tax Rates
Staff reviewed the Company's proposed tax rates and discovered that the Company
included a 5.8% state income tax rate. However, House Bill 40, which was enacted on March 6,
2025, reduced the Idaho state corporate income tax rate to 5.3%. Staff recommends using this
updated rate.
PUC Assessment
Staff reviewed the Public Utilities Commission assessment fee included in the
Company's Application and noted that it used an outdated rate of 0.1982%. Staff proposes using
the current assessment rate of 0.2223% as set in Order No. 36545.
After adjusting the Net to Gross multiplier for the IPUC assessment and State taxes and
applying it to Staff s proposed revenue deficiency, Staff proposes a tax amount of$9,175. This is
$16,509 lower than the Company's Application.
RATE DESIGN
The Company currently charges all customers a fixed customer charge of$45 per month
for unmetered water service. There are 110 connected customers ("flowing") with finished
homes and 207 non-connected customers ("non-flowing")with vacant lots. All customers are
billed the customer charge whether they are flowing or non-flowing.
STAFF COMMENTS 12 AUGUST 6, 2025

In its Application, the Company proposed to introduce a commodity rate of$0.01 per
gallon for monthly water usage exceeding 7,500 gallons and changes to its monthly customer
charge. Staff analyzed the Company's proposal of a commodity rate and changes to its customer
charge.
Although Staff recognizes and supports the benefits provided by metered commodity
rates, it does not recommend any commodity rate in this case because the Company has not read
customer meters in the past and does not have any customer usage data. Setting a commodity
rate based on estimated usage could result in large differences between actual revenues collected
and the Commission authorized revenue requirement. Additionally, 60 of the 110 flowing
customers do not have meters installed.3 Charging some customers based on usage while
charging similar customers a flat rate could result in discriminatory rates amongst customers.
For fixed charges, the Company proposed a$150 monthly customer charge for flowing
customers and to keep the $45 monthly charge for non-flowing customers. The Company
currently collects 65% of its revenues from non-flowing customers. Staff considered this
proportion and prior Commission Orders in evaluating the Company's proposal. Commission
Order No. 36313 stated that"only those receiving services from the water system should pay for
its operation pursuant to past Commission decisions. Consequently, the Company cannot charge
`non-flowing' customers." However, due to the current proportion of revenue collected from
non-flowing customers, Staff evaluated the effects of collecting all of Staff s recommended
revenue requirement from flowing customers along with alternate designs that mitigate rate
increases for flowing customers. Table No. 3 shows option(A)with no charge for non-flowing
customers, and subsequent options that include a monthly charge for non-flowing customers.
3 See Company Response to Staff Production Request No. 6.
STAFF COMMENTS 13 AUGUST 6, 2025

Table No. 3: Bill Impacts of Rate Designs Using Staffs Revenue Requirement
Option Customer Current Bill Proposed Bill $ Change % Change
A. Flowing, 3/4"and 1" $45 $149 $104 231%
Non-Flowing $45 $0 -$45 -100%
B. Flowing, 3/4"and 1" $45 $67 $22 49%
Non-Flowing $45 $45 $0 0%
C. Flowing, 3/4"and 1" $45 $94 $49 109%
Non-Flowing $45 $30 -$15 -33%
D. Flowing, 3/4"and 1" $45 $121.50 $76.50 170%
Non-Flowing $45 $15 -$30 -67%
Staff recommends rate option C, which proposes a $30 monthly rate for non-flowing
customers. Rate shock and gradualism factored heavily into Staff s recommendation. Flowing
customers would see a 231%bill increase if the non-flowing customer charge were eliminated
under option A. Option C represents a more gradual move towards removal of the non-flowing
rate, with flowing customers seeing a 109% increase to their bill. Additionally, the Company
must acquire water rights to meet minimum fire flow requirements for non-flowing customer
lots. The Company must be prepared to serve those non-flowing customers and incur additional
costs to do so.
During discovery, Staff became aware that the Company provides service to Idaho Club's
golf course clubhouse via a 2-inch service connection.4 Staff recommends a monthly customer
charge of$302 for serving the 2-inch connection based on American Water Works Association
meter equivalent ratios, which represents an amount 3.2 times the rate for 1-inch service
connections.5 A rate proof for the proposed rate design is included as Attachment 1.
4 See Company Response to Staff Production Request No. 39.
5 AWWA M1 Manual,7'edition,Table VII.2-5,page 338.
STAFF COMMENTS 14 AUGUST 6, 2025

METER READING
As previously noted, the Company has recently installed meters at 50 of its service
connections. Staff supports the Company's efforts to install meters due to the benefits that
metered service can provide the Company and its customers.
Staff recommends that the Commission direct the Company to begin reading customer
meters to obtain consumption data. This data can be used to inform a commodity rate in a future
general rate case, which in turn can improve cost-based recovery, reduce subsidization among
customers, and address seasonal usage costs to the Company. Additionally, reading customer
meters can also benefit with leak detection within the system. If monthly meter reads are
unfeasible to the Company, Staff believes it is reasonable for the Company to read customer
meters and record consumption according to Table No. 4 below.
Table No. 4—Staff Proposed Meter Reading Schedule
Time Period Purpose
June-September Obtain consumption data during peak occupancy and
Read Monthly water use.
October-May Obtain consumption data during winter off-peak
Read Once season.
NON-RECURRING CHARGES
Hookup Fee
In its Application, the Company proposed a hookup charge of$2,500 for new customers
to physically connect to the Company's water system. Staff believes that the Company's
proposed hookup charge is not reasonable. Based on Staff's review of the Company's
Application and its responses to the production requests, Staff recommends:
1. The Company's Tariff Schedule 3 —Non-Recurring Charges be modified to allow for
hookup charges based on Staff's recommended hookup fees schedule as provided in
Table No. 5 below.
2. The Company inspect the connection during and after the builder or developer
completes necessary construction up to the pit setter for connecting a parcel to the
water system.
STAFF COMMENTS 15 AUGUST 6, 2025

3. The Company obtains and retains contractor quotes, invoices, and other cost records
for all future new hookups broken down by labor(hours and labor rate), material cost
(cost of meters and necessary components), and equipment cost(hours and cost per
hour) as necessary.
Table No. 5: Staff Proposed New Hookup Charges
Category Meter and Installation and Total Hookup
Materials Cost Inspection Charge Charges
Meter Installation and $500 $100 $600
Turn on Service
According to the Company's response to Production Request No. 29, it has not
previously charged hookup fees for the water service and thus it could not provide detailed
information and justification on the scope of work, breakdown of actual costs associated with
materials and labor, and number of new hookups over the past three years. The Company
asserted that it only plans to purchase and install meters using a contracted water system operator
(e.g., E3 Consulting LLC, Plummer, Idaho) and turn on the water service as a part of all new
hookups in the future. Furthermore, the Company has stated that it will require developers or
builders to perform or contract separately for a limited hookup from the Company's main up to
the curb-stop installed in a standard pit-setter; the cost-responsibility being the builder or
developer who can recover the cost through the purchaser or owner of the lot.
However, these facilities will become part of the Company's system. The Company has
an obligation to ensure the installation will maintain the reliability of its system so that other
customers will not bear the cost of maintenance for inadequate materials and/or improperly
installed facilities. Staff recommends that the Company be required to specify standards for the
materials and installation of these components and perform the necessary inspection during and
after construction to ensure the builders or developers conform to these standards.
To facilitate and efficiently communicate these standards, Staff suggests the Company
identify preferred contractors with knowledge of the Company's standards that developers,
builders, or lot owners can use for these limited hookups.
STAFF COMMENTS 16 AUGUST 6, 2025

To develop the cost of the meter, installation of the meter, and to perform a final
inspection, Staff estimated the meter and materials purchase cost of$500,using the invoice from
H.D. Fowler Company, Bellevue, WA. The Company recently purchased 100 water meters and
relevant materials from the above-mentioned source. Response to Production Request No. 48 —
Attachment.
During its on-site audit on July 7, 2025, Staff also learned the Company-contracted water
system operator charges a flat $100 fee for each meter installation and final inspection. Due to
the lack of detailed labor costs (hourly labor rate, number of hours, etc.), Staff used$100 for a
meter installation and inspection labor charge in its calculation.
Finally,because of the lack of information and breakdown of costs that could be used to
determine updated hookup charges, Staff recommends that the Commission direct the Company
to obtain and retain information including but not limited to contractor quotes, invoices, and
other cost records of all future customer hookups broken down by labor charge (hourly labor
rate, number of hours), material cost(cost of individual components), and equipment cost (cost
per hour and number of hours). This will allow a more robust review if the Company seeks
further update to its hookup fees in the future.
Reconnection Charge
In the Company's proposed Schedule 3,Non-Recurring Charges sheet, the Company
proposes a$2,500 reconnection charge. Staff finds the proposed charge to be excessive. The
Company did not provide documentation or calculations to justify the $2,500 amount. Staff
recommends the Commission approve reconnection charges that reflect cost of dispatching a
Company operator from the local office to the service location. Staff recommend a $20
reconnection charge for work performed during business hours (8:00 a.m. to 5:00 p.m., Monday
through Friday, excluding holidays) and a $40 reconnection charge for work performed after
hours (5:01 p.m. to 7:59 a.m., Monday through Friday, and on weekends and holidays).
Late Payment Charge
The Company proposes a late payment charge of three percent(3%)per quarter in its
tariff. Staff recommends a late payment charge of 1%per month to comply with Idaho Code §
STAFF COMMENTS 17 AUGUST 6, 2025

28-22-104. The tariff language should be updated to reflect this change and to clarify that the
charge applies to the unpaid balance at the time of the next billing statement.
Account Initiation Charge
The Company proposes a $250 account initiation charge for new customers. Staff does
not support this proposed fee. The Company has not provided a cost basis for the charge. Staff
believes the cost to initiate a customer account is minimal and recommends that the account
initiation charge not be approved.
Meter Testing Charge
The Company is requesting a meter testing charge of$500 if a customer requests the
Company to test the accuracy of a meter and the error in registration is 1.5% or less. The
Company did not provide justification for the $500 amount. The proposed error threshold of
1.5% is inconsistent with the 2% error threshold included in Section 7 of the Company's current
General Rules and Regulations. If a metered rate is not approved, a meter testing charge is not
required because customers will not be billed based on the accuracy of a meter.
Staff believes a metering testing charge is reasonable if the Commission approves a
metered rate in this case. Staff does not agree with the proposed $500 charge and recommends
the charge be $10 for each occurrence. This charge is comparable with other water utilities
water testing charges. In addition, Staff recommends the error threshold be consistent with the
current 2% error threshold included in the Company's current General Rules and Regulations.
IDEQ Charge
The proposed tariff includes a charge for the IDEQ assessment to fund the Company's
drinking water program. The Company's tariff states that the cost will be passed along to
customers as a fixed charge, shown as a separate line item on each bill, and reimbursed quarterly.
Staff reviewed the Company's bank account records and found no evidence of payments
made to IDEQ for this assessment. Based on this review, Staff recommends that the Commission
deny the inclusion of this charge at this time. If the Company incurs IDEQ assessment charges in
the future and provides documentation of payment, it may request to include these costs in a
subsequent general rate case.
STAFF COMMENTS 18 AUGUST 6, 2025

Franchise Charge
The proposed tariff includes a Franchise Charge. However, the water system is not
located within any incorporated area that imposes a franchise fee. Therefore, Staff recommends
that this section be removed from the Company's proposed tariff.
Fire Hydrant Installation Charge
The Company proposes a $5,000 charge for the installation of a private fire hydrant upon
customer request. The Company did not provide any details regarding what is included in this
fee, nor did it provide supporting documentation or a cost breakdown.
Staff notes that installation of a private hydrant may require an extension of the
Company's existing water mains. Pursuant to Commission-approved policy, the installation of
new water mains or services for customer-requested facilities must be handled in accordance
with the "Uniform Main Extension Rules for Small Water Companies,"which is on file with the
Idaho Public Utilities Commission. Staff recommends that this section of the tariff be revised to
align with those rules, and that the $5,000 charge be removed.
Return Check Charge
The Company proposes a $100 charge for returned checks. Under Idaho Code § 28-22-
105, the maximum allowable charge for a dishonored check is $20. Staff recommends the
Commission set the return check charge at $20, consistent with the statutory limitation.
Table No. 6 below summarizes Staff s recommendations for the proposed non-recurring
charges.
STAFF COMMENTS 19 AUGUST 6, 2025

Table No. 6: Non-Recurring Charges
Proposed Charges Company Staff
Hookup Fee $2,500 $600
Reconnection Fee $2,500 $20 during office hours, $40
after office hours
Late Payment Charge 3% 1%
Account Initiation Charge $250 $0
Meter Testing Charge $500 $10
IDEQ Charge Actual Costs Remove
Franchise Charge Actual Costs Remove
Fire Hydrant Installation Charge $5,000 Use "Uniform Main
Extension Rules"
Return Check Charge $100 $20
Tariff
Staff also notes that the Company's current tariff will need to be revised to reflect the
Commission's final decision in this case. Staff recommends the Company work with Staff to
prepare and file a complete,updated tariff within 30 days of the issuance of the Commission's
final order.
CUSTOMER COMMENTS
As of August 6, 2025, the Commission has received fourteen(14) customer comments
regarding the Company's Application. All fourteen of the comments opposed the proposed rate
increases. Additionally the comments included concerns about the size and scope of the proposed
increases, objected to the inclusion of a basic monthly charge, and the proposed rate of return
stating it is excessive. Several customers highlighted the impact of high inflation and the burden
on customers with fixed or limited incomes. Others questioned the timing of the Application and
noted the need for more detailed cost justification by the Company.
STAFF COMMENTS 20 AUGUST 6, 2025

CUSTOMER NOTIFICATION AND PRESS RELEASE
The Company included a customer notice and press release as part of its Application. The
customer notice was mailed to customers on March 4, 2025. In addition, the notice was
published in the Bonner County Bee between March 4 and March 10, 2025. The volume and
nature of customer comments submitted to the Commission indicate that customers were
properly informed and able to engage meaningfully in the case.
PUBLIC CUSTOMER WORKSHOP
A virtual public customer workshop was held on Thursday, July 10, 2025, at 6:30 p.m.
MT/ 5:30 p.m. PT. Six customers attended the workshop. No representatives from the Company
were present. Customers asked questions about the procedural timeline and the rate case process.
They also described how the proposed rate increases would affect them personally and
financially. Staff responded to customer inquiries and provided clarification on several topics.
STAFF RECOMMENDATION
Staff recommends the Commission:
• Approve a revenue requirement of$201,869, with a rate base of$434,973 and an
ROE of 11%.
• Approve a flat rate (billed quarterly) for the following customers:
o $302 per month for the 2-inch line to the club house;
o $94 per month flat rate for other flowing customers; and
o $30 per month rate for non-flowing customers.
• Order the Company to read the installed meters monthly from June to September and
once between October and May.
• Order the Company to obtain and retain contractor quotes, invoices, and other cost
records of all future new customer connections broken down by labor(hours and
labor rate), material cost(cost of individual components), and equipment cost(hours
and cost per hour).
• Approve the Non-Recurring Charges as summarized in Table No. 6.
• Order the Company to work with Staff to file a complying tariff within 30 days of the
Commission's final order.
STAFF COMMENTS 21 AUGUST 6, 2025

Respectfully submitted this 6th day of August 2025.
Adam Triplett
Deputy Attorney General
Technical Staff. Joe Terry
Jon Kruck
Michael Ott
Michael Eldred
Shubhra Paul
Seungjae Lee
I:\Utility\UMISC\COMMENTS\VID-W-25-02 Comments.docx
STAFF COMMENTS 22 AUGUST 6, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS DAY OF AUGUST 2025
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. VID-W-25-02, BY EMAILING A COPY THEREOF TO THE FOLLOWING:
WILLIAM HABERMAN TAYLOR BROOKS
TIC UTILITIES LLC McCONNELL WAGNER SKYKES &
151 CLUBHOUSE WAY STACEY PLLC
SANDPOINT ID 83864 827 E. PARK BLVD., STE. 201
E-MAIL: whktheidahoclub.com BOISE, ID 83712
E-MAIL: brooks Lamwsslawyers.com
PATRICIA JORDAN, CRETARY
CERTIFICATE OF SERVICE