20251114Final_Order_No_36846.pdf

Office of the Secretary
Service Date
November 14,2025
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
INVESTIGATION INTO SYRINGA WATER ) CASE NO. SWI-W-24-02
INC.'S RATES AND CHARGES FOR )
SERVICE )
ORDER NO. 36846
On September 6, 2024, the Idaho Public Utilities Commission ("Commission") issued
Order No. 36317, directing Commission Staff("Staff') to investigate the service rates of Syringa
Water Inc. ("Company") and recommend further action, if necessary. Since that time, Staff has
propounded production requests upon the Company and conducted an on-site evaluation of the
Company's current rates and reviewed its rate structure, billing statements, operating expenses,
lease agreements, and infrastructure investment.
On December 30, 2024, the Commission issued a Notice of Public Workshop, scheduling
an in-person public workshop in Coeur d'Alene, Idaho, on January 25, 2025.
On July 2, 2025, the Commission issued a Notice of Modified Procedure, establishing a
public comment deadline and a Company reply deadline. Order No. 36664. Staff and nine of the
Company's customers filed comments. The Company did not reply.
With this Order, we find that the Company's current rates, together with a few newly
authorized non-recurring charges, generate sufficient revenue for the Company to cover expenses
and provide a reasonable opportunity for a fair return on its capital investments. Accordingly, we
find it reasonable to direct the Company to submit an updated tariff as described below. After
approval of this updated tariff, the Commission Secretary shall close this docket.
BACKGROUND
On March 28, 2024, the Company applied for a Certificate of Public Convenience and
Necessity ("CPCN") to operate as a public utility providing water service near Coeur d'Alene,
Idaho. The Company serves 78 customers and charges volumetric rates. Staff recommended
approval of the Company's request for a CPCN. Subsequently, the Commission issued Order No.
36290,granting the Company authority to operate as a regulated water utility in Idaho and directing
the opening of this docket to determine whether the Company's rates are fair,just, and reasonable.
ORDER NO. 36846 1

STAFF COMMENTS
Staff audited the Company's operating expenses and plant-in-service for the 12-month
period ending June 30, 2024, to develop its revenue requirement analysis. Based on its findings,
Staff concluded that the Company's current rates are reasonable and allow sufficient recovery of
operating costs necessary to provide safe and reliable service.
I. Revenue Requirement
After reviewing the Company's financial data, Staff calculated an annual revenue
requirement for the Company of $99,130. Staff s analysis of each component of this revenue
requirement is described below.
II. Rate Base
Staff calculated a net rate base of$94,861, which includes $84,470 in net Plant in Service
("PIS") and$10,391 in working capital.
A. Plant-in-Service
The Company's water system was originally developer-owned, with system investments
made after lot sales and upgrades completed as needed. The Company's financial records show a
plant-in-service balance of$40,155, which Staff determined to be fully contributed capital and
therefore excluded from the rate base. However, the Company has since made new capital
investments to improve system reliability and maintain safe and consistent service. In 2023, it
funded a facility plan to install new pumps and expand its storage tank, and in 2024, it installed a
new communication system to support its pump stations and treatment facility.
Staff reviewed vendor invoices supporting these investments and found that the 2024 pump
costs, totaling $52,455, had been incorrectly recorded as operating expenses instead of capital
assets. Staff reclassified these costs to Federal Energy Regulatory Commission Plant-in-Service
Account No. 311 — Power Pumping Equipment and applied straight-line depreciation over 20
years. Staff also included the $34,278 cost of the new communication system in rate base, noting
that although it was installed after the test year ending June 30, 2024, it is now in service and
benefits customers. This investment was depreciated over an 18-year life. In total, Staff calculated
$86,733 in additional plant-in-service.
B. Accumulated Depreciation
The Company's financial records showed no accumulated depreciation. To establish an
appropriate balance, Staff calculated accumulated depreciation by applying each asset's annual
ORDER NO. 36846 2

depreciation rate to the number of years it has been in service. Based on this analysis, Staff
determined an accumulated depreciation balance of$2,263.
C. Contributions in Aid of Construction ("CIAC")
The Company's financial records show a plant-in-service balance of$40,155. Staff intends
to verify these balances in a future filing. However, Staff noted that under IDAPA 31.36.01.102,
capital investments in small water company systems are presumed to be contributed and therefore
excluded from rate base.
Because the Company's water system infrastructure, including wells, pumps, distribution
lines, valves, and the storage tank, was originally funded by the developer, Staff concluded that
the entire $40,155 represents contributed capital. Accordingly, this amount is excluded from rate
base treatment.
D. Working Capital
Using the one-eighth method, Staff calculated a working capital allowance for the
Company of$10,391.
III.Rate of Return
The Company has no authorized or reported debt. Thus,its return on equity("ROE")serves
as the overall rate of return. Consistent with recent rate cases involving small water utilities, Staff
based its revenue requirement on a ROE of I I%, representing the Company's weighted average
cost of capital. Recent investments in the water system have been recorded as common stock,
retained earnings, or other liability accounts, which Staff treated as equity for this audit.
IV.Revenues
For the 12-month period ending June 30, 2024, the Company reported total revenues of
$153,794, consisting of $113,294 from metered residential water sales, $12,500 from sewer
charges, and $28,000 from hookup fees. Staff removed both the sewer revenues and hookup fees.
Sewer revenues were excluded because the Company's sewer operations are not regulated by the
Commission. Hookup fees were removed because they are intended to offset the costs of new
customer connections and should therefore be recorded as CIAC.
In January 2024,the Company adopted a new rate structure consisting of a$60.00 monthly
fixed charge and a tiered volumetric rate based on water use per 1,000 gallons.' During its audit,
' The Company reads meters monthly from May through October, and customers are billed for actual usage during
that period.From November through April,customers are charged the fixed monthly rate,with a"true-up"adjustment
applied to the first metered bill in spring to account for winter usage.
ORDER NO. 36846 3

Staff found that the Company had inconsistently applied its tiered rates (some customers were
charged the highest tier rate for all consumption instead of the correct tiered breakdown)resulting
in overcharges. The Company agreed to correct all 2024 billing errors and issue account credits in
October 2024.Billing practices have since been corrected,and proper tiered billing is now in place.
Based on the corrected data, Staff recalculated test year revenues to be $111,343, approximately
10.97% above Staff s calculated revenue requirement.
V. Operating Expenses
For the 12-month period ending June 30, 2024, the Company reported total operating
expenses of$129,723, which included professional fees, repairs and maintenance, utilities, and
other general operating costs. Staff audited these reported expenses and, after making adjustments
and reclassifications, calculated total test-year operating expenses of $91,831, a decrease of
$37,892 from the amounts originally reported by the Company.
A. Purchase Power
The Company correctly records its electricity costs in a Utility Expense account.Electricity
is purchased from Avista Utilities to operate the three pump stations and treatment facilities. Staff
reviewed all monthly invoices and determined the annual electricity expense to be $19,860,
compared to the Company's reported$18,961. The discrepancy resulted from a duplicated invoice
and the omission of one month, which Staff corrected in its adjustment.
B. Materials and Supplies—Operations and Maintenance
The Company reported$68,683 in repair and maintenance expenses for the test year.Under
standard utility accounting practices,operational and maintenance-related costs should be recorded
in the Materials and Supplies—Operations and Maintenance expense account, which Staff has
identified and relabeled accordingly.
After reviewing all related invoices, Staff made several adjustments. Staff reclassified
$49,279 as capitalized assets, reducing the repair and maintenance expense to $19,404 for the test
year. Specifically, the Company purchased and installed new pumps totaling $47,980 that were
incorrectly recorded as operating expenses. Because these pumps have a useful life exceeding one
year and extend the system's overall service life, Staff determined they should be capitalized and
depreciated over the appropriate period. Additionally, Staff reclassified $1,295 in water testing
costs to the Contract Services—Water Testing expense account and removed a$4 late fee,which is
not recoverable from ratepayers.
ORDER NO. 36846 4

C. Materials and Supplies—Administrative and General
The Company uses QuickBooks accounting software to manage its financial records,
incurring both annual and monthly subscription fees. The Company reported $19 for this expense
under "Other Expenses," but Staff determined that it should be classified under Materials and
Supplies—Administrative and General.
Staff also reviewed office supply expenses for items such as printer ink, paper, stamps,
envelopes, and other related materials. These costs were similarly reclassified to the Materials and
Supplies—Administrative and General account. Based on its review, Staff calculated a total test-
year expense of$1,932 for this category.
D. Contract Services—Professional Fees
Professional Fees covers payments to contractors providing accounting, engineering,
bookkeeping, water operations, and meter reading services. The Company reported $39,464 for
the test year, but this included only seven months of expenses. To reflect a full year, Staff added
$6,724.
During 2023,the Company hired an engineering firm to prepare an IDEQ-required facility
plan costing$17,241. Staff amortized this expense over five years instead of allowing full recovery
in one year. Staff also reclassified $305 in IDEQ fees to Other Taxes—DEQ Fee, added $109.99
in computer charges, and included an$850 tax preparation fee. After adjustments, Staff calculated
total Contract Services—Professional Fees of$29,602 for the test year.
E. Contract Services—Water Testing
Staff reviewed all invoices related to water testing for the test year ending June 30, 2024.
The Company recorded$1,295 in water testing expenses under Repairs and Maintenance,but these
costs are more appropriately classified as Contract Services—Water Testing. Accordingly, Staff
reclassified the $1,295 from Materials and Supplies—Operations and Maintenance to Contract
Services—Water Testing.
F. Insurance
During its onsite audit, Staff reviewed documentation supporting the Company's water
system insurance premiums and found the expense reasonable. Accordingly, Staff included
$10,460 for insurance expense in the test year.
ORDER NO. 36846 5

G. Miscellaneous Expenses
The Company's miscellaneous expense account included bank fees, computer and internet
costs, and meals and entertainment. Staff reviewed these expenses and reclassified them to the
appropriate accounts in accordance with the Uniform System of Accounts for Water Utilities, as
specified in IDAPA 31.12.01.002.04.
As noted earlier, Staff reclassified the $109.99 computer and internet expense to Contract
Services—Professional Fees. After adjustments, Staff calculated total test-year miscellaneous
expenses of$572.
H. Additional Expenses
During its audit, Staff identified $13,574 in pro forma expenses not recorded during the
test year, including insurance, the IDEQ drinking water fee, state income tax, and facility plan
amortization. The Company leases the land for its pump stations and treatment facilities from an
affiliated entity for $12,000 annually. Staff excluded this lease in the revenue requirement but
recommended comparing it to estimated property taxes in the next rate case.
Staff reclassified the $405 IDEQ fee to Other Fee—DEQ Fee, the $20 state income tax to
State Income Taxes, and amortized the $17,241 facility plan over five years, resulting in a$3,448
annual expense. The plan, required by IDEQ for system upgrades, provides long-term benefits,
making amortization appropriate.
I. Depreciation Expense
Since 2023, the Company has been purchasing water system assets without capitalizing
them. Staff reclassified these expenses to plant-in-service and calculated annual depreciation using
NARUC's average depreciable lives for small water utility assets. Staff determined a total new
depreciation expense of $4,527 for the added assets and advises the Company to maintain and
calculate annual depreciation for each asset as outlined in this report.
VI.Rate Design
The Company's rates, effective January 1,2024,were set to cover system maintenance and
repairs. Staff confirmed the rates are reasonable. Previously,the $60 basic charge included 20,000
gallons with tiered rates, but high usage prompted the current structure to better align with
consumption and promote conservation. Reverting to the old structure would be retroactive
ratemaking.
ORDER NO. 36846 6

Adjusted test-year revenues of$111,343 exceed Staff s calculated revenue requirement by
$12,213,indicating rates are sufficient. If the$12,000 land lease is deemed reasonable,the revenue
requirement would rise to $115,497. Staff did not recommend changing the current rates.
VII. Tariff
In Case No. SWI-W-24-01, the Company's proposed tariff reflected its current rate
structure, with no changes for non-recurring charges. Staff recommended updating the tariff to
include such charges, which the Company may enforce if approved by the Commission. Staff
suggested adding a return check fee, reconnection charge, and late payment charge, and will work
with the Company to ensure the tariff reflects these charges once approved.
A. Return Check Charge
Idaho Code § 28-22-105, allows a company to charge up to $20 or the face amount of the
check, whichever is less, for a returned check. Consistent with this statute, Staff recommended a
$20 return check fee for payments returned due to insufficient funds.
B. Reconnection Charge
The Company's tariff does not currently include a reconnection fee for involuntary service
disconnections. Staff recommended a $50 fee for reconnecting customers after non-payment,
which is reasonable given the system's remote location and the water operator's travel time.
C. Late-Payment Charge
Staff supported a late payment charge to encourage timely bill payment. A 1% monthly
fee, previously allowed for utilities, should be applied to any unpaid balance at the next billing
cycle.
D. Hookup Fees
Staff did not recommend a hookup fee. The Company previously charged $7,000, which
was not tied to actual costs like labor, meters, pipes, or fittings. Currently, customers cover all
hookup costs,including the meter,while the Company's only potential expense would be the meter
and the operator's labor to complete the connection.
In sum, Staff concluded that the Company's current rates generate sufficient revenue to
cover operating expenses while providing a reasonable return on capital investments. Staff
recommended the Commission find the current rates fair, just, and reasonable, and direct the
Company to file a compliance tariff including the additional non-recurring charges discussed in
these comments.
ORDER NO. 36846 7

CUSTOMER COMMENTS
Nine customers filed comments with some customers filing multiple comments. These
comments raised various issues,including improper billing,inadequate fire protection, and system
inadequacies. Some comments also challenged the reasonableness of the Company's rate increase
that occurred in January 2024.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. The Commission has the express statutory authority to investigate rates, charges, rules,
regulations, practices, and contracts of public utilities and to determine whether they are just,
reasonable, preferential or discriminatory, or in violation of any provision of law, and may fix the
same by Order.Idaho Code §§ 61-502 and 61-503.
Based on our review of the record,we acknowledge Staff s conclusion that the Company's
current rates are fair,just, and reasonable. Although Staff may propose different adjustments or
rate designs following a more detailed review of the Company's financial information in a general
rate case, we find it appropriate to leave the initiation of such a case with the Company.
We find it further reasonable to authorize the Company to include a return check charge,
reconnection charge, and late payment charge in its tariff. By statute, the Company is allowed to
charge a customer up to the lesser of$20 or the face amount of any check that is not honored. See
Idaho Code § 28-22-105. We find it reasonable to allow the Company to impose such a charge for
dishonored checks. We further find it reasonable to authorize a $50 fee to reconnect customers
who are involuntarily disconnected due to unpaid bills.This amount will cover the water operator's
travel and labor associated with reconnecting the customer. Finally, we also find it reasonable to
authorize the Company to impose a 1% monthly late payment charge. This amount is consistent
with the late charge authorized for other similar utilities.
Additionally, we encourage the Company to ensure compliance with the Commission's
Utility Customer Relations Rules (see, e.g., IDAPA 31.21.01.203) as it corrects billing errors that
occurred after coming under Commission regulation. These rules apply to all Commission-
regulated water utilities and establish fair, just, and non-discriminatory rules regarding billing
issues like those Staff identified in its comments.
ORDER NO. 36846 8

ORDER
IT IS HEREBY ORDERED that the Company's current rates generate sufficient revenue
to cover the Company's operating expenses while providing a reasonable opportunity for the
Company to obtain a fair return on its capital investments.
IT IS FURTHER ORDERED that the Company shall work with Staff to file an updated
tariff reflecting the additional non-recurring charges authorized above.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. Idaho Code §§ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 14th day of
November 2025.
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DWARD LODGE RES NT
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OHN R. HAMMOND JR., COMMISSIONER
DAYN HARDI , COMMISSIONER
ATTEST:
14.A
L a Calderon Robles
Interim Commission Secretary
I:\Legal\WATER\S WI-W-24-02_lnvest\orders\S WI W2402_final_at.docx
ORDER NO. 36846 9