20260209Staff Comments.pdf

RECEIVED
February 09, 2026
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO BAR NO. 11560
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, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On March 4, 2025, TIC Utilities, LLC, an entity affiliated with Valiant Idaho, Inc.
("Company"), applied to increase the rates and charges for the Company's water service
("Application"). The Company requested a July 1, 2025, effective date for the proposed rate
increase.
On November 3, 2025, the Commission issued Order No. 36818 ("Order"), authorizing
the Company to increase its rates in an amount less than that requested in the Application.
On November 24, 2025, the Company filed a Request for Reconsideration of the Order.
The Company argued that certain revenue and expense adjustments in the Order unfairly,
unjustly, and unreasonably understated its operating costs, depriving it of the opportunity to
obtain a return on its investments in the water system. No responses to the Request for
Reconsideration were filed.
STAFF COMMENTS 1 FEBRUARY 9, 2026

On December 19, 2025, the Commission issued Order No. 36879, granting the
Company's Request for Reconsideration and providing additional time for the Company to
submit documentation in support of its request. The Commission also set deadlines Staff to file
written comments and for the Company to file any reply. Order No. 36879 at 8.
STAFF ANALYSIS
Staff reviewed the Company's Request for Reconsideration, accompanying documents,
and additional information obtained through discovery. Based on its review of additional
information, Staff recommends the Commission increase the Company's approved revenue
requirement by $12,040 to account for increases for power expense, water testing expense, and
chemical expense. Staff recommends that the Commission make no changes to revenues and
salary expense. Additionally, Staff recommends the Commission include a rate for the 2-inch
meter that serves the clubhouse
Normalizing Revenues
On page 2 of its Request for Reconsideration, the Company states it has never collected
the normalized revenues approved by the Commission in its Order. The Company explains that
it reports revenues on a cash basis and has not recorded any write-offs for uncollectible accounts.
The Company further asserts in an email included as Attachment A, that nearly all accounts
receivable are associated with non-flowing lots; however, it did not provide documentation to
support this assertion.
Staff s normalized revenue calculation is based on the number of lots currently capable of
receiving service, multiplied by the approved monthly rate and annualized. Staff acknowledges
that the Company may experience collection challenges and may not be able to collect the full
amount of normalized revenues. However, the Company's treatment of non-collection is
inconsistent with established ratemaking principles. Revenues are determined on an accrual
basis, not a cash basis, and non-collection is not addressed through revenue normalization.
Instead,uncollectible amounts are addressed through the revenue conversion factor("RCF"),
which is applied to the revenue deficiency. The purpose of the RCF is to convert an income
deficiency into a required rate increase by accounting for applicable taxes and a reasonable
allowance for uncollectible revenues. To determine an appropriate bad debt allowance for
STAFF COMMENTS 2 FEBRUARY 9, 2026

inclusion in the RCF, Staff must review an accounts receivable aging report identifying accounts
that are significantly past due and unlikely to be collected. Without such aging report, Staff is
unable to calculate a reasonable bad debt percentage. Accordingly, Staff cannot recommend any
changes to the Commission-ordered revenues.
Collection Practices for Delinquent Accounts
In its review of the Company's operations in this case, Commission Staff examined the
Company's customer account management and collections practices. Based on that review, Staff
identified concerns regarding the Company's failure to actively and consistently pursue
collection of overdue or delinquent customer accounts. It is unclear if the Company has a
reasonable and timely collection process for the accounts that are overdue.
Staff is concerned that the Company's failure to proactively manage delinquent accounts
has resulted in increased accounts receivable and uncollectible balances, weakening the
Company's financial position. Allowing overdue accounts to accumulate without appropriate
collection efforts undermines revenue stability and increases the likelihood that unpaid costs will
be recovered through general rate increases, rather than from the customers responsible for the
charges.
Staff recommends that the Company utilize the Utility Customer Relations Rules found
in IDAPA 31.21.01. These rules help to establish both customer protection and reasonable tools
for utilities to help manage and reduce delinquent accounts. Staff emphasizes that the effective
use of the Customer Relations Rules is essential to support balancing customer protection with
the utility's obligation to manage its revenues prudently. Proactive outreach, timely notices, and
reasonable payment arrangements not only assist customers experiencing financial difficulty but
also help stabilize cash flow and reduce the need for future rate increases.
Additionally, Staff recommends that the Company improve its collections practices by
more consistently applying the tools available under IDAPA 31.21.01, including documented
payment arrangement offers, enhanced customer communications, rule-compliant notices
regarding delinquent accounts, and termination of service. Staff further recommends that the
Commission consider the prudence of the Company's collections practices when evaluating the
revenue deficiency and requested rate relief in this case.
STAFF COMMENTS 3 FEBRUARY 9, 2026

Salary Adjustment
On page 2 of its Request for Reconsideration, the Company outlined that the salary
expense of$30,000 is comparable to wages paid to a cook and is inadequate compensation for a
utility manager position. The Company further states that managers in comparable positions
receive higher compensation.
Staff s salary recommendation was based on information provided by the Company
regarding the owner's reported work schedule during the onsite audit, as well as industry wage
data published by the U.S. Bureau of Labor Statistics. The owner indicated spending an average
of 12.5 hours per week performing utility management duties. Using the occupational
classification"Managers, All Other," Staff calculated an hourly wage rate approximately $46,
resulting in the approved annual wages of$30,000.
The Company did not provide new information regarding hours worked, expanded
responsibilities, or other factors that would support a higher salary expense than Staffs position.
Absent evidence, or documentation, that supports increased time commitment or expanded duties
beyond those previously reported, Staff supports the approved salary expense and does not
recommend a change to the $30,000.
Annual Chemical Expense
Staff recommends that the annualized chemical expense of$9,716 be included in the
Company's revenue requirement instead of the $3,944 recommended in Staff s original
comments. Staffs calculations are based on the most up-to-date information regarding chlorine
purchases in 2023 and 2024, provided in the Company's Request for Reconsideration. 1
First, Staff estimated annual 12.5% Sodium Hypochlorite ("Chlorine")usage by
averaging the gallons of Chlorine purchased in 2023 and 2024, which were the latest two years
provided in Response to Staff Production Request No. 29 ("PR29"). Then Staff calculated the
$/gallon Chlorine cost for the latest year of 2024 using the invoices provided in the Request for
Reconsideration.2 Staff multiplied 2024 $/gallon Chlorine cost by the estimated annual Chlorine
1 Request for Reconsideration—Exhibit Nos.Al—A5 and E3 Consulting-Invoices-Chemical&Testing-Final.
2 Request for Reconsideration—Exhibit Nos.Al—A5 and E3 Consulting-Invoices-Chemical&Testing-Final.
STAFF COMMENTS 4 FEBRUARY 9, 2026

usage amount in gallons to derive the annualized Chlorine expense. Attachment B to these
comments provides Staff s detailed calculations for the Company's annual chemical expense.
In its previously filed Comments, Staff utilized a summary of invoiced chemical costs
from the Company's contractor, E3 Consulting LLC ("E3"), that was provided in PR29.
However, while reviewing the individual invoices included in the Request for Reconsideration
(referenced as Footnote 1 on page 4), Staff discovered the costs reported in PR29, which
appeared to be E3's invoice costs to the Company were in fact the invoice costs of chemicals
from Oxarc LLC, E3's chemical supplier. By examining the actual invoices from E3 and from
E3's supplier, Staff was able to determine that E3 marked up the chemical cost from its supplier
to include additional overhead, such as transportation, mileage, administration, processing fees,
etc., that was then charged to the Company. Staff believes it is appropriate for the Company to
receive recovery of Chlorine costs using the last two years of data to account for load growth and
with the additional markup included in E3's invoices to the Company submitted in the Request
for Reconsideration.
Water Testing Adjustment
On pages 5 and 6 of its Request for Reconsideration, the Company included total water
testing expenses of$8,910 in 2024, and $16,656 through October 2025. This amount included
actual laboratory testing fees as well as sampling fees, administrative fees, and other related
costs. The Company maintains that water testing expenses should be restored to at least 2024
levels to reflect operational requirements.
In the Order, the Commission approved Staffs two-step adjustment to normalize water
testing expenses. First, Staff reclassified actual laboratory testing fees from Contract Services—
Professional to the water testing expense account. s This reclassification included only
laboratory fees and excluded sampling fees and administrative costs. As a result, the water
testing expense base was reduced from $8,910 to $3,740, while $5,170 in sampling and
administrative costs remain in the revenue requirement within Contract Services - Professional.
Second, Staff normalized the water testing expenses based on testing requirements
mandated by the Department of Environmental Quality("DEQ"). Staff identified the number of
3 On January 24,2025,NARUC adopting a new Uniform System of Accounts for Water Utilities,water testing
expense account is now account 635. Contract Services—Testing.
STAFF COMMENTS 5 FEBRUARY 9, 2026

required tests within a three-year regulatory cycle, calculated the total cost of each test over that
period, and averaged those costs to determine an appropriate annual expense. This methodology
accounts for the cyclical nature of DEQ testing requirements, as certain tests are required only
once every three years. As a result, actual testing expenses incurred in 2024 were higher than the
normalized annual amount because several three-year cycle tests occurred in 2024.
Lastly, the Company provided updated information regarding testing frequency and
laboratory pricing. See Attachment C (attached hereto). Based on this new information, Staff
recalculated the three-year normalization, which increased the normalized annual water testing
expense from $1,338 to $2,137. Staff recommends that the Commission increase normalized
water testing expenses by $799 and revise the Company's revenue requirement accordingly.
Annual Electricity Expense
Staff recommends that the total annualized electricity expense of$15,263 be included in
the revenue requirement instead of the $9,794 recommended in Staff s original comments. Staff
determined the updated amount by calculating the $/gallon electricity costs for 2024 and
multiplying it by the normalized water production amount over the last two years from 2023 to
2024. In its calculation, Staff utilized the revised annual electricity costs and water production
amount that was provided in the Company's Request for Reconsideration.
Staff used the Company's well production records for 2023 and 2024 to calculate the
normalized annual production amount. Request for Reconsideration—Exhibit A. With the
limited amount of production data, Staff was challenged to perform a detailed and accurate trend
analysis and project overall system growth. However, Staff believes using the latest two years of
production information in computing the normalized production amount provides a strong
foundation to estimate growth.
As the next step, Staff calculated the $/gallon electricity cost by dividing annual
electricity expense for 2024 by the annual production amount for the same year. Finally, Staff
multiplied the $/gallon electricity cost by the normalized annual production amount to calculate
the annual electricity expense. Attachment D to these comments shows Staffs calculations of
the Company's annual electricity expense.
In previously filed Staff Comments, Staff calculated the normalized water production
over two years period of November 2022—October 2024, using the information provided in its
STAFF COMMENTS 6 FEBRUARY 9, 2026

Application—Attachment: Well and System Information, and its response to Staff Production
Request No. 23.4 In its original comments, Staff also used the electricity costs provided in the
Company's Response to Staff Production Request No. 35, which was incomplete as the
Company's response did not include the power bills for its main wells and filtration system. The
Company provided additional information as a part of the Reconsideration Response and Staff
integrated the missing data to calculate the revised annual electricity expense.5
Rate Design
Staff recommends that the increase in revenue requirement be spread among all flowing
customers. Staff believes this is the best approach because its adjustments are based on changes
to electricity, chemical, and water testing expenses. These expenses relate directly to water
production and Staff believes it is reasonable that they be paid for by customers receiving water.
Table No. 1 below details Staff s recommended rates for each customer class compared to the
rates in place prior to this case and the rates authorized in Order No. 36886.
Staff also included a rate for a 2-inch service connection shown in Table No. I below. In
its Comments filed on August 6, 2025, rate options presented by Staff included revenue from the
Company's lone 2-inch service connection in its calculation of recommended rates. Staff
Comments at 14 &Attachment I—Rate Proof. However, in Order No. 36818, the Commission's
language did not address Staffs recommendation for the 2-inch service rate. To ensure
consistency with the intent of the rate option approved by the Commission, Staff calculated a rate
for a 2-inch connection based on its updated revenue requirement and American Water Works
Association meter equivalent ratios.6
4 In Staff Comments,Staff discovered the well production amount during November 2021 through October 2022 appeared to be
an outlier,thus Staff did not use this period's production in calculating normalized annual production. Staff Comments at 11.
5 Reconsideration—Attachment:Hidden Lakes Drive Invoices 2023&2024.
6 AWWA M1 Manual,7'edition,Table VII.2-5,page 338.
STAFF COMMENTS 7 FEBRUARY 9, 2026

Table No. 1: Comparison of rates prior to rate case and Staffs recommendation after
Interlocutory Order No. 36879
Per Tariff
Prior to
Customer VID-W-25-
Approved Staff $
02
in Order Recommended Change: Change
No. 36886
Flowing, 3/4"and 1" $45 $67 $75 $30 78%
Flowing, 2" $0 $0 $241 $241 -
Non-Flowing $45 $45 $45 $0 0%
Customer Comments and Hearing
Since the Request for Reconsideration filing on November 3, 2025, the Commission has
received four additional customer comments regarding the Company's Application and Request
for Reconsideration. All of the comments opposed the proposed rate increases. Additionally,
the comments included concerns about the size and scope of the proposed increases, timing of
invoices and payments, revenue normalization, salary expenses, increased operating costs,
electricity and chemical adjustments, water testing, and technical corrections to the tariffs.
During and after the customer hearing held on August 14, 2025, Staff received comments
from two customers alleging retaliatory conduct by the Company's owner, related to customer
participation in this proceeding. The customers stated that they are members of the Idaho Club, a
private golf course and dining establishment, owned by the same individual who owns and
operates the regulated water utility. According to the customers, their club memberships were
terminated after they submitted comments in this general rate case (VID-W-25-01). The
customers state that the termination of their membership was in retaliation for their participation
in this Commission's proceedings.
Staff has no conclusion as to the validity of these allegations. However, if substantiated,
such conduct would raise serious concerns regarding compliance with the Utility Customer
Relations Rules and the Company's obligations as a regulated utility. Rule 201 of the Utility
Customer Relations Rules (IDAPA 31.21.01.201) prohibits utilities from subjecting any
customer to unreasonable prejudice or disadvantage. Retaliatory actions taken against customers
for exercising their right to submit comments or participate in Commission proceedings may
STAFF COMMENTS 8 FEBRUARY 9, 2026

constitute unreasonable discrimination under this rule. Staff emphasizes that customer
participation in Commission proceedings is a fundamental component of the regulatory process
and must not be inhibited through intimidation, retaliation, or disparate treatment. If the
customer claims are substantiated, Staff recommends the Commission consider its authority to
assess penalties under Idaho Code §§ 61-701 et seq.
STAFF RECOMMENDATION
Staff recommends the Commission:
1. Reject the Company's request to change the normalized revenues and salary expense.
2. Increase the revenue requirement by $12,040 which consists of the following
changes:
a. Increase chemical expense by $5,772 to $9,716;
b. Increase water testing expense by $733 to $2,137; and
c. Increase power expense by $5,469 to $15,263.
3. Adopt the water rates as shown on Table No. 1.
4. Remind the Company that the Commission may assess penalties for violation of the
Idaho Public Utilities Laws, Commission Rules, or any Commission order or decree
up to $2,000 per day for each violation until the violation is rectified.
Respectfully submitted this 9th day of February 2026.
VI(�'AAA%JI,
Erika K. Melanson
Deputy Attorney General
I:\Utility\UMISC\COMMENTS\VID-W-25-02 Comments.doex
STAFF COMMENTS 9 FEBRUARY 9, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 9ch DAY OF FEBRUARY 2026,
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: whgtheidahoclub.com BOISE, ID 83712
E-MAIL: brooksgmwsslgMers.com
9';q'LL'
PATRICIA JORDAA, SECRETARY
CERTIFICATE OF SERVICE