20250812Comment_1.pdf

Name: Christopher Norton
Email: chrisnortoniphonekgmail.com
Phone: [phone]
Address: 346 North Star Ln., Sandpoint, Idaho 83864
Re: Case No.: VID-W-25-02
Company: TIC Utilities, LLC
Matter: Application of TIC Utilities, LLC for Authority to Increase its Rates
Re: Reply to Staff's Comments
To: secretgakpuc.idaho.gov
As I stated in my Public Comments filed and included in the comments identified as 2025-08-05
Comments_3, I planned to participate in the August 14 hearing and to address the Staff's 08-06-
2025 Comments. Unfortunately, my wife and I will be on a lengthy plane ride at the exact time of
the hearing and will not be able to attend in person or by phone. This trip has is already paid for
and has been scheduled for over a year. Because I will not be able to attend the hearing, I hope you
will accept this document as my testimony and reply to the Comments made by the Staff.
Contributions in Aid of Construction ("CIAC")
In their Comments, the Staff states "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." See,
Page 5 of the Staff's Comments. Their justification for this proposition is set forth in the
immediately following sentence when they state "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."
I must, with all due respect, strongly disagree with the Staff's position. Both Valiant and TIC
Utilities were intimately involved in the Gem State case. They were the Sellers of the water
system and had everything to lose if the IPUC did not render a determination that the Total Plant
in Service would be included in the Rate Base Case. In fact,Valiant and TIC Utilities were so
much involved that the only actual information introduced in the Gem State case regarding Total
Plant in Service was the invoices paid by Valiant and TIC Utilities. The "additional information"
being submitted in this matter are the same invoices that were submitted by Gem State in Case
No. GSW-W-2301 plus the possibility of a few minor additional invoices. In the "2023-07-06
Reply Comments" and"2023-07-10 Reply Comments Supplemental Invoices" submitted in Case
No. GSW-W-2301, Gem State included 90 pages of Invoices and Summaries in support of the
proposition that the expenses should be included in the Rate Base Case. If one examines the
actual invoices submitted by Gem State, you see that every single invoice submitted by Gem
State was an invoice from either TIC Utilities, LLC,Valiant Idaho, LLC or Bill Haberman Idaho
Club. I want it to be very clear, 100% of the information made a part of the record submitted by
Gem State in Case No GSW-W-2301 was invoices paid by Valiant/TIC Utilities. The
Attachments to the Staff's Comments in this matter makes it perfectly clear that the information
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submitted by Valiant/TIC Utilities is not "additional information". Rather, it is the same
information that was submitted in the Gem State proceeding with the possible addition of a few
minor expenses.
In addition,because the invoices submitted in the Gem State proceeding are the same invoices
submitted in this proceeding, the invoices, by necessity, relate to plant and equipment installed
after Applicant's acquisition of the water system from VP Inc. There is no "additional
information that was not part of the record in the earlier Gem State Water proceeding" other than
a possible few minor invoices. The "additional information" supporting the CIAC items were
previously submitted in the prior Gem State proceeding. If the Commissioners have any doubt,
simply go back and examine the 2023-07-06 and 2023-07-10 Reply and Supplemental Invoices.
There is effectively nothing new for the Commissioners to consider. The CIAC issue relates to
the same water system, the same entity(Valiant/TIC Utilities) that made the capital investments,
the same capital investment, the same invoices with the possible addition of a few minor
expenses, and the same items. The Commissioners have already examined these capital
investments and have already made the proper determination. These capital investment expenses
are simply being submitted a second time, hoping the Commissioners will reverse themselves.
To demonstrate that these capital investments are the same in both proceedings, I am attaching
screen shots from Gem State's Submission as well as the Staff's analysis of Valiant/TIC's
submission. In Case No. GSW-W-2301, Gem State was claiming, and in this proceeding
Valiant/TIC are claiming identical or nearly identical expenses in their efforts to increase their
Total Plant in Service to be included in the Rate Base Case. Below are the four major expenses
submitted by both Gem State in Case No GSW-W-2301 and by Valiant/TIC Utilities in this
proceeding. The Well amounts claimed by both Gem State and Valiant/TIC Utilities are
identical. With respect to the total amounts claimed, over 95% of the amounts claimed by
Valiant/TIC Utilities in these four categories were also claimed by Gem State in the prior
proceeding. And why not, the same invoices show up in both proceedings. To the extent that
Valiant/TIC Utilities submits some additional minor expenses (less than 5% of the amount
submitted by Gem State in the prior proceeding), the sale of the 130 lots by Valiant/TIC Utilities
more than compensates for this minor increase. Furthermore, we don't know if Valiant/TIC
Utilities simply reclassified the $303,574 which Gem State identified in subcategory"330-
Distribution Reservoirs and Tanks" and included them in some other subcategories. This is
especially true given that Valiant/TIC Utilities shows $0 for subcategory"330-Distribution
Reservoirs and Standpipes" according to Staff's Attachment B. See,below. Where did the
$303,574 in subcategory 330 claimed by Gem State go or how was it reclassified? In summary,
both Gem State and Valiant/TIC Utilities are claiming the same capital improvements in their
respective Rate Base Case.
Description Gem State Valiant/TIC Utilities
Wells $123,780 $123,780
Structures and Improvements $203,577 $208,502
Power Pumping Equipment $181,232 $193,056
Purification Systems $402,895 $430,733
Total: $911,484 $956,071
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So that the Commissioners have a quick reference, below are screen shots from page 7 of the
2023-07-06 Reply Comments in Gem State's Case No GSW-W-2301, as well as Attachment B
Summary of the 2025-08-06 Staff Comments in this case. The Commissioners are welcome to
compare the entries or look at the originals.
Screen Shot of Page 7 of the 2023-07-06 Reply Comments
in Case No GSW-W-23-01
Gem State Water Company
Case No.GSW-W-23-01
Prelinsnary Rate Base for Assets Acquired from the Water Business of Valiant Idaho,UC
2023 Ptoforma
Plant in Serncc As of 6/24/2022 Filtration Total Notes
1 3D4-Well Structures&Improvements 203.577 203,577
2 307-Wells 123,780 123,780
3 311-Pumps&Accessories 191,232 191,232
4 320-Purificatwn Systems 402,895 402,89S we"Filtration"tab for invokes related to filtration plant in sem—in 2023
S 330-Oistnbutioo Rcsersnon and Tanks 303,574 303,574
6 Total Nation Serve 812,163 1.215,058
7 less Accumulated Depreciation 154.189) (54,2891
8 Net Plant in Service 167.974 1,164969
Screen Shot of Attachment B to the 2025-08-06 Staff Comments
in Case No.VID-W-25-02
58 304 Structures and Improvements 208,502
59 305 Collecting&Impounding Reservoirs
60 306 Lake, River&Other Intakes
61 307 Wells 123,780
62 308 Infiltration Galleries&Tunnels
63 309 Supply Mains
64 310 Power Generation Equipment
65 311 Power Pumping Equipment 193.056
66 320 Purification Systems 430.733
67 330 Distribution Reservoirs&Standpipes
Nothing has changed since the Commissioners made their determination in Order No. 35971 that
the plant in service should be excluded from the rate base. Furthermore,the Commissioners'
statement in Order No. 35971 that "the evidence in the record does not show that the Selling
Parties [Valiant Idaho, LLC] or any other entity involved in the construction of the water system
have not recovered the cost of this endeavor through the sale of lots in the area that it serves"
was true back then, and is even more true today. Valiant/TIC Utilities have sold 130 lots. See,
Exhibit 1 of my Public Comment dated April 22, 2025. Many of these lots are at or near the top
of Moose Mountain and command prices such that a single sale could cover the cost of these
Expenses. For example, on The Idaho Club's current website, there are two properties listed for
sale on Moose Mountain. Lot T1-A on Green Monarch is listed for$1,000,000
https://theidahoclub.com/idx listing/nna-tl-a-green-monarch-sandpoint-83864/; and Lot T1-B
on Green Monarch is listed for$679,000 https://theidahoclub.com/idx_listing/nna-tl-b- rg een-
monarch-Sandpoint-83 864/.
In addition to the 130 lots that have already been sold by Valiant/TIC Utilities, the Staff's
Comments point out that in addition to the lots still owned by Valiant/TIC Utilities, there are an
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additional 78 Lots either before the GRC or Planned Plots. See,Attachment C entitled"Attach C
CIAC Cale"to Staff's Comments.
In its Comments, the Staff acknowledges that in Order No. 35971, the Commission found that
"Gem State has failed to overcome the presumption of contributed capital under IDAPA
31.36.01.102" (See page 5 of Staff's Comments), but the Staff goes further and states that the
Commission did not need to make this determination to approve the sale of the water system.
(See, page 5 of Staff's Comments). In Order No. 35971, the Commission did more than simply
approve the sale of the water system, it also approved the establishment of a separate tariff. In
doing so, the Commission found that"the record does not show that the Selling Parties
[Valiant/TIC Utilities] or any other entity involved in the construction of the water system have
not recovered the cost of this endeavor through the sale of lots in the area that it serves", that"all
current plant-in-service of the Selling Parties'water system shall be excluded from rate base",
and finally, "ORDERED that Gem State establish a separate tariff for the Selling Parties'water
system within 90 days after the Transaction closes." (See,pages 6 and 7 of Order No. 35971).
The Commissioners directly addressed the issue of contributed capital when it considered and
entered its Order on the rate base and tariff.
Nowhere in the Staff's Comments does the Staff put forth any evidence that Valiant/TIC Utilities
have not recovered their capital costs through Valiant/TIC Utilities sales of 130 lots. Pursuant to
Idaho Admin. Code 31.36.01.102, it is "presumed that the capital investment in plant associated
with the system is contributed capital, i.e., that this capital investment will be excluded from rate
base". The burden to overcome this presumption is on Valiant/TIC. It will be interesting to see if
Valiant/TIC Utilities can demonstrate that the funds they received from the sale of 130 lots were
insufficient to recover their capital costs.
Furthermore, in Order No. 35971, the Commissioners stated, "any person interested in this Order
may petition for reconsideration within twenty-one (21) days of the service date of this Order."
Citing Idaho Code § 61-626. The IPUC's Case Processing Guidelines Section V.A.1. provides as
follows:
"Who may Petition. Section 61-626(l)provides that any corporation,public
utility or person may petition for reconsideration. The person or entity petitioning
for reconsideration is not required to have been a party in the underlying
proceeding. See Order No. 13532."
See, Page 19 of the Case Processing Guidelines and Style Manual. It flies in the face of logic to
assert that Valiant and TIC Utilities were not interested in Order No. 13532, when they were the
Selling Parties referenced by the Commissioners, and the only evidence submitted in the Gem
State proceeding relating to contributed capital was the invoices from Valiant and TIC Utilities.
Neither Valiant nor TIC Utilities filed a petition for reconsideration. As such, Order No. 13532 is
final and may not be collaterally attacked. See Idaho Code § 61-625 which states "All orders
and decisions of the commission which have become final and conclusive shall not be attacked
collaterally."In Order No. 13532, the Commissioners determined the capital investments of
Valiant/TIC Utilities were contributions in aid of construction and should be excluded from the
rate base.Any assertion to the contrary in this proceeding by the Staff, Valiant or TIC Utilities
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constitutes an impermissible collateral attack on Order No. 13532. Moreover, the evidence
demonstrates that Valiant/TIC has already recovered the cost of this endeavor through the sale of
130 lots in the area that it serves.
Equations Proposed by the Staff and Applicant are Erroneous
The equations proposed by the Staff and Applicant attempt to create a ratio based upon the
number of lots that Applicant has sold or could sell to the number of lots that were previously
sold when Applicant acquired the property in the tax sale for$1,665,855.14. See, full citation to
Idaho Supreme Court's opinion outlining the purchase price and date found at Page 4 of my
Public Comment dated April 22, 2025. Apparently, the argument is that if Applicant only has
approximately 50% of the lots to sell, then his ability to "recover the cost of this endeavor
through the sale of lots"is reduced by 50%. The problem with this argument is that it compares
apples to oranges. In this proceeding the only capital investments that must be recovered are a
small fraction of the total capital that was needed to be recovered by the sale of all the lots.
Here, the lot sales by Applicant do not even need to cover the total cost of the water system. The
water system was already in place when Valiant acquired the property. Applicant did not have to
install the reservoir, the lifting pumps, the distribution lines, etc. Furthermore, when Valiant
acquired The Idaho Club in the tax sale, it did not acquire just the water system. It acquired
everything in The Idaho Club including the water system, the wastewater system, the roads, the
other utility distribution systems, the water rights and the golf course.
If Applicant had to recover the entire capital costs expended by all the developers, both prior and
current, from the sale of only 50% of the available lots, then the proposed equations would be
appropriate. However, in this case Applicant has 50% of the lots available to recover only a
small fraction of the total development costs. To make the proposed equations truly equitable,
one would need to additionally compare the capital invested for the water system by Applicant to
all the capital costs that have been invested over the years by all the developers. I don't know
the specific amount of money that has been invested in this development over the years,but it is
clearly in tens or hundreds of millions of dollars. Therefore, if the Commissioners want to adopt
an equation that incorporates a 50%reduction, it should also reduce the Plant in Service by the
ratio of Applicant's capital investment divided by the total capital invested by all developers.
This would reduce the Plant in Service to only 1/10 or 1/100 of the Applicant's capital
investments, depending upon the total amount of capital costs expended by all developers. In
either event, it reduces the amount that should be included in the Total Plant in Service
effectively to zero. When one additionally considers that Valiant/TIC has already sold 130 lots,
it is clear that Valiant/TIC has "recovered the cost of this endeavor through the sale of lots in the
area that it serves" as the Commissioners found in Order No. 35971.
Moose Mountain Booster
If the Commissioners do decide to use the formula proposed by the Staff, the Commissioners
should look at that specific facility and what it covers. As the Staff correctly points out, the
Moose Mountain Booster Station pressurizes water to the highest-altitude services through the
Moose Mountain reservoir. See also the Water System Schematic in the Case files. This includes
North Star Lane, Green Monarch Lane, and the lots to be developed at the top of Moose
Mountain identified in Green on The Idaho Club's Community Site Map on its website. A copy
is attached as Exhibit 1 and can be found online at https://theidahoclub.com/real-
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estate/community-site-map/. There are 20 lots included in this area serviced by the Moose
Mountain Booster plus 11 lots designated for future development. Using the Bonner County GIS
Department online interactive map (See, https://cloudgisgpps.bonnercountyid.goy/public/), I
pulled each of these lots to determine whether Valiant or one of its related entities currently owns
the lot, whether Valiant or one of its related entities sold the lot, and finally if Valiant or one of its
related entities never held an interest in the lot. A spreadsheet showing each lot by Bonner
County PIN number and the Bonner County Public Record Instrument Number of the related
deed showing who sold or owns the property is Attached as Exhibit 2. In summary, of these 31
lots, 3 are currently owned by Valiant, 11 are currently listed as lots for future development, 12
lots have been sold by Valiant, and 5 lots have never been owned or sold by Valiant.
The Staff proposes using the following formula to determine the percentage of lots not available
to sell:
Lots Unavailable for Purchase At Sale
Total Lots of the Development at Time of Sale+ All Planned and Platted Lots
Plugging in the actual lot data related to the Moose Mountain Booster Station yields the
following formula:
Lots not available 5 = 5 = 16.13%
To sell 20+ 11 31
Thus,using the Staff's proposed formula, 16.13% of the lots are either not available or have not
been available to sell by Valiant, and 83.87% of the lots were sold or are available to sell by
Valiant. Therefore,using the actual numbers for the Moose Mountain Booster Pump and the
Staff's formula and analysis for CIAC Adjustment shown in Column H of Attachment B of the
Staff's Comments spreadsheet, the Plant in Service related to the Booster Pump should be
reduced by 83.87%not 49.32%.
Furthermore, the amount of money Valiant/TIC Utilities have recovered through the sale of lots
has already vastly exceeded the cost of this booster pump through the sale of lots in the area. As
seen by the listing price of two of the lots (Lot T1-A and Lot T1-B) serviced by the Moose
Mountain Booster Pump, the sale of a single lot is more than the cost of the Moose Mountain
Booster Station, and Valiant has already sold 12 lots and has 14 more that it can sell.
Metered Rates
On page I of my Public Comment dated August 5, 2025, I said the vast majority of the costs
associated with producing water were fixed and the variable costs consisting of electricity and
chemicals are minimal. The Staff has now done that analysis and confirms the minimal costs
associated with producing additional water. On Attachment H"Attach H Electricity", the Staff
states the "$/gallon electricity cost= $10,285 -20,235,000 = $0.0005." See cell Alb. Staff also
states the Annualized chemical expense is $3,944 (See Cell A18 of Attachment F "Attach F
Chemicals") and the water volume is 20,235,000 gallons See Cell C 16 on Attachment H "Attach
H Electricity"). This yields a cost per gallon for Chemicals of$3,944 -20,235,000 = $0.0002.
Under Valiant/TIC Utilities proposed rate, a homeowner who uses more than 7,500 gallons a
month will be charged$10 for every 1,000 gallons over this amount. However, the incremental
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cost to produce that 1,000 gallons is only ($0.0005 + $0.0002) x 1,000 gallons or $0.70. Ninety-
three percent(93%) of each incremental gallon is pure profit for Valiant/TIC Utilities. For an
owner of a lot on the golf course who uses 30,000 gallons per month during the summer when he
waters his lawn, the $225 charge for usage only cost Valiant$15.75 ($0.0007 per gallon x 22,500
gallons)to produce the water. The golf course residents would effectively be paying 60% of their
water rate ($225/($225+$150)) for variable costs. This resultant revenue is nearly pure profit for
Valiant. The golf course residents under a metered rate would be paying a disproportionate
amount of profit over flat rate customers.
As others have stated, The Idaho Club CCRs require homeowners to maintain lawns including
watering, and the HOA can enforce the watering requirements. The HOA is controlled by Valiant
with its super majority voting rights, and Mr. Haberman who owns Valiant/TIC Utilities controls
both Valiant/TIC Utilities and the board of the HOA. Do we really want Valiant which controls
both the utility and the HOA board to be able to force residents to use more water over the 7,500
base amounts when the enormous profit for this incremental water goes directly into the pocket
of Valiant/TIC Utilities? This clearly creates a conflict of interest.
Conclusion
I request the Commissioners to
1. Reconfirm their statement in Order#35971, when they first looked at this issue, and find
that Valiant/TIC Utilities have already"recovered the cost of this endeavor through the
sale of lots in the area that it serves", hold the capital invested by Applicant is contributed
capital under IDAPA 31.36.01.102, and the plant-in-service of the Valiant/TIC Utilities
water system shall be excluded from rate base;
2. Implement a flat rate billing system rather than a combination of flat rate and metered
rate; and
3. Adopt the Rate Design outlined in Option B (first choice) or Option C (second choice) in
Table No. 3 on page 14 of the Staff's Comments.
Page 7 of 7

SCREEN SHOT FROM COMMUNITY SITE MAP
ON THE IDAHO CLUB'S WEBSITE
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https://theidahocLub.com/real-estate/community-site-map/
Exhibit 1

Lots at the Top of Moose Mountain serviced by the Moose Mountain Booster
Lots Currently Owned by Valiant Lots Sold by Valiant Lots Sold by Non-Valiant Owner
Bonner Couty PIN Instrument Number Bonner Couty PIN Instrument Number Bonner Couty PIN Instrument Number
RP033830050050A 908053 RP033830050060A 982657 RP033830050020A 928978
RP033830040040A 908054 RP033830040010A 991428 RP033830050040A 739310
RP033830050010A 908052 RP033830040030A 992342 RP033830050030A 861603
Future Development Lots 11 Lots RP033830030010A 928873 RP033830010050A 979716
RP033830010060A 977317 RP033830010070A 944728
RP033830010080A 988513
RP0317900001AOA 1004277
RP0317900001BOA 1004257
RP031790000020A 970144
RP031790000030A 983427
RP031790000040A 987747
RP031680020090A 970861
(Number of Lots 14 Number of Lots 12 Number of lots: 5
Lots Sold by Valiant or Currently Owned by Valiant which it can sell:1 26
Total Number of Lots:j 31
Ratio to Use if One Applies the Staff's Equation:1 16.1%
Exhibit 2