20260211Staff Comments.pdf

RECEIVED
February 11, 2026
JEFFREY R. LOLL IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO BAR NO. 11675
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF DRY CREEK WATER )
COMPANY LLC'S APPLICATION FOR A ) CASE NO. DRY-W-25-01
GENERAL RATE CASE )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its attorney of record, Jeffrey R. Loll, Deputy Attorney
General, submits the following comments.
BACKGROUND
On September 15, 2025, Dry Creek Water Company LLC ("Company") applied to the
Commission requesting authority to increase its rates and charges for providing water service in
the State of Idaho over a 3-year period,beginning with an average increase of 6 percent for
residential customers effective October 15, 2025 ("Application").
On October 6, 2025, the Commission issued a Notice of Application, a Notice of
Intervention Deadline establishing a 21-day intervention period, and a Notice of Suspension of
the Company's proposed effective date. Order No. 36790. No parties intervened in the time
permitted.
STAFF COMMENTS 1 FEBRUARY 11, 2025

STAFF ANALYSIS
Staff reviewed the Company's Application, exhibits, workpapers, and responses to Staff
production requests. Staff also conducted on-site audits to review the Company's infrastructure,
processes, and internal controls. The Company used a historical test year from January 1, 2024,
to December 31, 2024, and adjusted its test year based on known and measurable expenses and
capital expected to be incurred after December 31, 2024. For analysis and calculation purposes,
Staff used the same historical test year and updated revenues, expenses, and rate base to reflect
known and measurable changes through the proposed effective date of April 15, 2026.
Based on its review, Staff recommends a revenue requirement of$1,024,038, which
represents an increase of$165,531, or 19.28 percent, over present revenues. Staff does not
recommend the full increase as a single step, but recommends the Company be granted the
requested six percent increase in each of the next three years, as discussed further below.
System Description
The Company owns a water system serving 705 customers as of December 2025 in the
Dry Creek Ranch development, which is comprised of two subdivisions: Dry Creek Ranch and
Dry Creek Ranch Village. At full build-out, the Company will provide service to a total of 1,889
lots with 811 lots currently completed or under development.'
The system currently consists of three wells, a booster pump station, one storage tank,
and a distribution system. At first, the Company operated two wells, Well Nos. 1 and 2. The
third well,booster pump station, storage tank, and related pipeline were added as the service
territory developed. Well Nos. 1 and 2 have been in service since June 2018. Well No. 1 has
one pump, and Well No. 2 has three pumps with total pumping capacities of 3,500 and 2,500
gallons per minute ("gpm"), respectively. Well No. 3 has 3,500 gpm of pumping capacity with
one vertical turbine pump. The pumped water is delivered to a 500,000-gallon storage tank to
buffer variation in water demand. Booster Pump Station#1, currently in operation,provides
service to the intermediate and upper zones in the southern part of the Company's service
territory. At full build-out, two additional booster pump stations and pressure-reducing valves
'See Company's Response to Staff Production Request No.19.
STAFF COMMENTS 2 FEBRUARY 11, 2025

will be installed in the Company's service territory.2 A total of 53,547 feet of distribution
pipeline has been installed, and the in-service date of each distribution pipeline is aligned with
the development of each phase.
System Reliability
To provide safe and sufficient water service to customers, it is important to determine
whether the Company's system will be able to reliably meet the increase in customer counts and
corresponding consumption. Staff investigated the reliability of the water system in terms of(1)
water system capacity, (2) water system deficiency, and(3)water rights. Staff verified that the
water system has sufficient capacity to meet future water demand based on regulatory
requirements.
Water System Capacity
Staff analyzed current water demand, future water demand at full build-out, and current
and future system capacity. Staff verified that the water system will have sufficient capacity to
meet future water demand necessary to comply with Idaho Department Environmental Quality
("IDEQ") rules at full build out.
As explained in the System Description, the Company owns three wells to provide water
to 1,889 lots at full build-out, with a total pumping capacity of 9,500 gpm. As shown in Table
No. 1, the peak-hour demand and maximum-day demand("MDD") at full build-out are 6,999
gpm and 2,458 gpm, respectively.3 The well capacity of 9,500 gpm exceeds total demand, which
includes the required fire flow of 2,000 gpm.
Table No.1: Water Demand at Full Build-Out
Category Full Build-Out
Total Lots number 1,889
Maximum Day Demand(gpm) 2,458
Peak Hour Demand(gpm) 6,999
Fire Flow Demand(gpm) 2,000
2 See Company's Response to Staff Production Request No.17.
3 See Company's Response to Staff Production Request No.19.
STAFF COMMENTS 3 FEBRUARY 11, 2025

IDEQ's rule, IDAPA 58.01.08.501.18(a), states that pumping systems supporting fire
flow must be designed so that the MDD plus fire flow can be met with any pump out of service.
When the largest pump of 3,500 gpm is out of service, the remaining 6,000 gpm is greater than
the total demand, which meets the MDD plus fire flow requirements, of 4,458 gpm. In addition,
the difference between the water system's maximum pumping capacity of 6,000 gpm and the
peak-hour demand of 6,999 gpm is 999 gpm. Staff believes that the storage tank is designed to
account for this difference.
Water System Deficiencies
Through Staff's review of the latest IDEQ sanitary survey report conducted in September
2024, Staff did not find any significant deficiencies. Staff believes the system is being
maintained and has no critical deficiencies in providing safe and sufficient water service.
Water Right Analysis
Staff verified that three wells are permitted under a municipal water permit(#63-32426)
of 5 cubic feet per second("cfs") and that the Company currently has a pending 1.5 cfs
municipal use application(#63-35505)with the Idaho Department of Water Resources for
increased service to new customers. Staff believes that if the beneficial use application is
approved, the total 6.5 cfs (2,917 gpm) is greater than the 5.48 cfs (2,458 gpm) of MDD needed
for the entire service territory. The Company used irrigation rights to meet peak-hour demand,
farming several crop fields to maintain those rights. However, as the Company stated, the use
application will be approved in the near future, and the Company will no longer be using its
water rights for irrigation.4
Revenue Requirement
Company Revenue Requirement
The Company calculated a revenue requirement of$1,637,275, based on revenues of
$1,016,176, resulting in an increase of$621,073, or 61.12 percent.' Staff determined that the
Company calculated revenue using the proposed 2026 rates with updated consumption and
'See Company's Response to Staff Production Request No.55.
'See Company's Exhibit No.6 Column P,Row 36&37.
STAFF COMMENTS 4 FEBRUARY 11, 2025

customer counts. Calculating test year revenues at proposed rates overstates revenues, as test
year revenues should be calculated using present rates.
Staff further notes that the Company calculated a net-to-gross multiplier of 151.48
percent; however, this factor was inadvertently excluded from the Company's revenue
requirement deficiency calculation, resulting in a lower calculated revenue requirement than
would otherwise occur. For consistency and clarity, Staff recalculated the revenue requirement
by updating the Company's revenue requirement inputs, as discussed further below and in
subsequent sections of these comments.
Staff Revenue Requirement Calculation
Based on its review, Staff recommends a revenue requirement of$1,024,038, which
represents an increase of$165,531, or 19.28 percent, over revenues at present rates. Staff s
revenue requirement calculation is shown below in Table No. 2 and is based upon Staff
recommended inputs to the revenue requirement formula, which are discussed throughout these
comments.
Table No. 2—Revenue Requirement
Line No. Description Amount
1 Rate Base $1,957,154
2 Rate Of Return 11.00%
3 NOI Requirement $215,287 line 1 mult. line 2
4 Net Operating
5 NOI Deficiency $123,564 line 3 less line 4
6 Nenvoss Multiplier o
7 Additional Revenue Required $165,53 line 5 mutt.line 6
8 Revenue at Present Rates $858,5
9 Percentage Increase 19.28% line 7 div.line 8
10 Revenue Requirement $1,024,038 sum line 7,line 8
Staff is recommending 20 adjustments to the Company's request, as summarized in Table
No. 3. Staff calculates a rate base of$1,957,154, net operating income of$91,723, and revenue
at present rates of$858,507. Each recommended adjustment is explained in detail later in these
comments.
STAFF COMMENTS 5 FEBRUARY 11, 2025

Table No. 3 —Adjustment Summary
column b less column c
(A) (B) (C) 03)
Une No. Rate Base Revenue Expense Net Income
1 Adj.No. Company Request 5,077,169 1,016,176 1,078,761 (62,584)
2 Proposed Adjustments
3 1 Non-CIAO Plant-In-Service (3,209,517) (181,996) 181,996
4 2 Materials&Supplies to PIS 77276 2,869 (2,869)
5 3 Engineering Services to PIS 26,526 977 (977)
6 4 Cash Working Capital (14,301) -
7 5 Revenue at Current Rates (157,669) (157,669)
8 6 Bonuses (14,639) 14,639
9 7 Payroll Taxes (1,120) 1,120
10 8 401(k) (1,607) 1,607
12 9 Chemicals (1,259) 1,259
11 10 Power Costs 1,051 (1,051)
13 11 Materials&Supplies Expense (45,812) 45,812
14 12 Engineering Services Expense (9,309) 9,309
15 13 Payment Services Network (403) 403
16 14 InfoSend (932) 932
19 15 Contractual Services-Other (1,530) 1,530
17 16 Legal Expense Baseline (71,098) 71,098
18 17 Legal Expense Amortization 43,683 (43,683)
20 18 Miscellaneous-Postage&Deliveries (1,500) 1,500
21 19 Commission Assessment Fee (253) 253
22 20 State&Federal Income Taxes (29,100) 29,100
23 Staff Total Adjustment (3,120,015) (157,669) (311,977) 154,308 ;um line 3 to line 22
11957,154 91,723 1 sum line 1,tine 23
Rate of Return
The Company requests a rate of return("ROR") of 11 percent. The requested ROR is
based on a capital structure consisting of 100 percent equity and zero percent debt, with a
requested return on equity("ROE") of 11 percent.
Staff reviewed the Company's proposed ROR and capital structure and believes the
requested ROR to be reasonable for a privately-owned water utility. The Company does not
have long-term debt and therefore finances its operations entirely through equity. Staff
recommends approval of the requested ROR of 11 percent, as shown below in Table No. 4.
STAFF COMMENTS 6 FEBRUARY 11, 2025

Table No. 4—Rate of Return
A M ult by B
(A) (B) (C)
Percent of
Line No. Description Capital Cost WeightedAverage
1 Long Term Debt 0% 0.0% 0.00%
2 Common Equity 100% 11.0% 11.00%
3 Total 100% 11.00%
Return on Equity
The Company requests a ROE of 11 percent. Staff reviewed ROES approved by the
Commission for similarly-situated and privately-owned water companies and believes the
requested ROE to be consistent with recent Commission precedent.6 For these reasons, Staff
believes that a ROE of 11 percent is reasonable. Accordingly, Staff recommends an ROE of 11
percent.
Net-to-Gross Multiplier
The Company calculated a net-to-gross multiplier of 151.48 percent; however, Staff
recommends using a net-to-gross multiplier of 133.96 percent for ratemaking purposes. The net-
to-gross multiplier is intended to gross up the revenue requirement deficiency to account for
uncollectible expenses, Commission assessment fees, and state and federal income taxes, to
ensure the Company recovers sufficient revenue to meet these obligations.
Staff reviewed the Company's calculation and recalculated the net-to-gross multiplier
using the actual authorized Commission assessment rate and the applicable federal and state
income tax rates. Based on Staff s calculations, Staff determined a net-to-gross multiplier of
133.96 percent, as shown below in Table No. 5.
a See Order Nos.34146,36012,36587,and 36818.
STAFF COMMENTS 7 FEBRUARY 11, 2025

Table No. 5 —Net-to-Gross Multiplier
Line No. Description Total
1 Revenue 100.000%
2 Bad Debt Rate 0.000%
3 2025 Regulatory Fee Rate 0.222%
4 Net Revenue 99.778% line 1 less line 2 less line 3
5 State Income Tax Rate 5.300%
6 Actual State Income Tax Rate 5.288% line 4 mult.Line 5
7 Base Taxble Federal Income 94.489% line 4 less line 6
8 Federal Income Tax Rate 21.000%
9 Actual Federal Income Tax Rate 19.843% line 7 mult.Line 8
10 Net Operating Revenue 74.647% line 7 less line 9
11 Net-to-Gross Multiplier 133.964% 1 div.line 10
Rate Base
Rate base represents the value of utility assets that are used and useful in providing
service to customers, and on which the Company is authorized to earn a return. The Company's
proposed rate base includes plant in service ("PIS"), accumulated depreciation, Contributions in
Aid of Construction ("CIAC"), cash working capital, and inventory.
Staff reviewed the Company's rate base calculations and generally agrees with the
Company's methodology for CIAC and inventory. However, Staff recommends adjustments to
PIS, accumulated depreciation, and cash working capital, as discussed in greater detail below.
Based on these adjustments, Staff recommends a total rate base of$1,957,154 as shown in
Attachment A.
Plant-in-Service
The Company requests a PIS balance of$10,650,870. Staff reviewed the Company's PIS
calculations and supporting documentation, including invoices and workpapers. Based on its
review, Staff recommends a PIS of$7,219,322, which is a decrease of$3,431,548 from the
Company's request, as shown in Attachment A. Staff s recommended adjustments to PIS are
primarily driven by adjustments related to asset usefulness to current customers as of April 15,
2026, and the reclassification of certain expenses from operating expenses to capital assets, as
detailed below.
STAFF COMMENTS 8 FEBRUARY 11, 2025

Non-CIAC Plant-in-Service (Adjustment No. 1)
Staff reviewed the non-CIAC investments included in the Company's requested PIS for
cost recovery. These investments include Well No. 3, the storage tank, the pipeline connecting
the storage tank to the system, and Booster Pump Station#1. Staff based its review of these
projects on: (1)whether the project is used and useful; (2) whether the project cost included for
recovery is known and measurable; (3) whether the project has a justifiable need; and(4)
whether the costs associated with the project were reasonable. As a result, Staff believes all the
projects had a justifiable need and likely incurred reasonable costs. However, Staff recommends
the Company obtain competitive bids from multiple sources for future capital projects to
demonstrate that project costs are reasonably aligned with market rates.
The first set of adjustments updates the cost of the projects to actual known and
measurable cost and moves costs that were booked to the incorrect account, which reduces the
amount of PIS by $55,262. The second set of adjustments alter the amount of PIS that should be
recovered in rates based on the degree to which each project is estimated to be used and useful
by the rate effective date of April 15, 2026. This second set of adjustments reduces PIS by
$3,490,557. Staff recommends a reduction to PIS of$3,545,819, as calculated in Attachment B;
a reduction in accumulated depreciation of$336,302; and depreciation expense of$181,996, as
calculated in Attachment C. The methodology used to quantify the degree to which each project
is used and useful and the details of the adjustments to each project are described below and
shown in Table Nos. 6 through 8.
Used and Useful Determination Method
A large portion of the Company's service territory remains undeveloped. To provide
service to the Company's current and future customers, the Company constructed and installed
system infrastructure targeted for full build-out of the development resulting in several oversized
facilities that are not used and useful to customers projected to receive service by the rate
effective date. The oversized facilities include Well No. 3, a storage tank, the pipeline to the
storage tank, and Booster Pump Station#1.
To determine how much of the cost of these resources are used and useful, Staff
developed Useful Percentages that were multiplied by the adjusted cost of each project
determined as a result of the first set of adjustments described above. These percentages
STAFF COMMENTS 9 FEBRUARY 11, 2025

represent the proportion of capacity of each project that is estimated to be used and useful as of
April 15, 2026. The percentages for each facility are shown in Table No. 6 below.
Table No. 6: Proposed Useful Percentage
System Well No. 3 Pipeline to Booster Pump
Tank Station#1
Required Capacity or Current Served Lots 555 gpm 728 20
Total Capacity or Served Lots 3,500 gpm 1,889 191
Useful Percentage 15.85% 38.54% 10.47%
Staff proposed 15.85 percent Useful Percentage for Well No. 3 accounts for a 2,000 gpm
minimum fire flow demand requirement, and IDAPA 58.01.08.501.18(a). Based on these two
requirements, and an MDD built on the projected demand as of April 15, 2026, the system must
meet 3,055 gpm of total demand as shown in Table No. 7 below.
Table No. 7: Water Demand as of Rate Effective Date
Category Water Demand (gpm) Note
Minimum Fire Flow 2,000 Supplemental response to PR No. 18
MDD 1,055 Response to PR No. 19
Total Demand 3,055 As of rate effective date,April 2026
To comply with the IDEQ's rule, the pump assumed to be out of service had to be the
pump in Well No. 1 because it only has one pump which is the largest pump between Well Nos.
1 and 2,both of which existed prior to Well No. 3. As seen in Table No. 8 below, only 555 gpm
of capacity is needed from Well No. 3 to meet the total demand of 3,055 gpm. The 15.85
percent Useful Percentage for Well No. 3 is calculated by dividing 555 gpm, the amount of
capacity needed from Well No. 3 to meet the total demand,by Well No. 3's 3,500 gpm of actual
capacity.
'See Company's Supplemental Response to Staff Production Request No.18.
STAFF COMMENTS 10 FEBRUARY 11, 2025

Table No. 8: Pumping Capacity With Out-Of-Service Well No. I
Category Actual Pump Capacity(gpm) Total Demand with Well No. 1 out of
Service
Total Demand as of April 1,2026 - 3,055
Capacity Well No. 1 3,500 0
Capacity Well No.2 2,500 2,500
Capacity Well No. 3 3,500 555
Capacity Deficit 0
Staff proposes a 38.54 percent Useful Percentage for the storage tank. This percentage is
calculated by dividing 728 customers assumed to be served by April 15, 2026,'by the 1,889 lots
projected to be served at full build-out of the Company's service territory.9 Additionally, Staff
believes the same percentage can be applied to the pipeline that connects the wells to the storage
tank.
Staff proposes a 10.47 percent Useful Percentage for Booster Pump Station#1. Booster
Pump Station#1 serves two pressure zones: the intermediate zone and the upper zone in the
southern part of the service territory located in the Dry Creek Ranch Village subdivision,
comprised of Phases 4, 7, 8, and 9. These pressure zones are projected to have 191 lots at full
build-out.10 Staff has projected that 20 of these lots will be served by the Company in these
pressure zones by April 15, 2026. Staff calculated the Booster Pump Station#1 Useful
Percentage by dividing the 20 lots by the 191 lots that will eventually be served by the booster
pump station.
Well No. 3 Adjustments
Staff recommends a total decrease of$854,431 to the Company's requested $1,020,324
PIS for the Well No. 3 project,based on two sets of adjustments, as shown in Attachment B.
Before applying the used and useful adjustment below, Staff recommends a net increase
to PIS of$26,322, consisting of two separate adjustments. First, Staff recommends an increase
of$8,434 to PIS to correct the Company's requested amount for Well No. 3 project. In response
to Staff Production Request No. 27, the Company explained that it incorrectly recorded a
reduction of$8,434 to the Well No. 3 project related to a radio receiver that should not have been
8 The 728 customers excludes one bulk water customer.
'See Company's Supplemental Response to Staff Production Request No.19.
10 See Company's Supplemental Response to Staff Production Request No.18.
STAFF COMMENTS 11 FEBRUARY 11, 2025

included in the Company's Well No. 3 project spreadsheet. The Company's response
demonstrated that the difference between the originally requested Well No. 3 cost of$150,651
and the actual 2023 project cost of$159,085 resulted from this corrected journal entry.
Second, Staff recommends an increase of$17,888 to include a change order that was
incorrectly booked to the Booster Pump Station#1 project but should have been assigned to the
Well No. 3 project. As explained in the Company's Supplemental Response to Staff Production
Request No. 29, the change order was processed after the Well No. 3 project was closed and was
mistakenly associated with a work order having an in-service date similar to Booster Pump
Station#1. Together, these two corrections increase PIS from the Company's proposed
$1,020,324 to $1,046,646.
For the used and useful adjustment, Staff applied the 15.85 percent useful percentage
described above to the adjusted PIS of$1,046,646, resulting in an overall PIS of$165,893 for
Well No. 3.
Storage Tank Adjustment
Staff recommends a total decrease of$644,754 to the Company's requested $1,049,063
PIS for the storage tank project as shown in Attachment B. The only adjustment for the storage
tank was for the amount of the tank that is used and useful as of April 15, 2026.
This adjustment was calculated by multiplying the Company's requested PIS of
$1,049,063 by the 38.54 percent Useful Percentage described above to arrive at an overall PIS of
$404,309 for the storage tank.
Pipeline-to-Storage Tank Adjustments
Staff recommends a total decrease of$914,409 to the Company's requested $1,461,491
PIS for the pipeline-to-storage tank project, based on two adjustments, as shown in Attachment
B.
First, before applying the used and usefulness adjustment, Staff recommends a decrease
of$41,974 to PIS to remove a contract cancellation fee. As explained in the Company's
response to Staff Production Request No. 33, the Company entered into a contract with StorTek
for$839,476 for the project. The contract was cancelled and included a five percent cancellation
fee of$41,974, as shown on page 50 of the attachment provided with the response. Staff does
STAFF COMMENTS 12 FEBRUARY 11, 2025

not believe it is reasonable for customers to pay costs associated with the cancellation of a
contract. This adjustment reduces the requested PIS from $1,461,491 to $1,419,517.
The second adjustment reflects the portion of the project that is used and useful. Staff
applied the 38.54 percent useful percentage described above to the adjusted PIS of$1,419,517,
resulting in an overall PIS of$547,082 for the pipeline-to-storage tank project.
Booster Pump Station #1 Adjustments
Staff recommends a total decrease of$1,132,225 to the Company's requested $1,260,000
PIS for the Booster Pump Station#1 project,based on two sets of adjustments, as shown in
Attachment B.
Before applying the used and useful adjustment, Staff recommends a decrease of$39,610
to PIS, consisting of three separate corrections. First, Staff recommends a decrease of$17,888 to
remove a change order that was incorrectly booked to the Booster Pump Station#1 project but
should have been assigned to the Well No. 3 project, as described above. See the Company's
supplemental response to Staff Production Request No. 29.
Second, Staff recommends a decrease of$8,242 to true-up the project cost to actual
invoice amounts.
Third, Staff recommends a decrease of$13,480 to remove the costs associated with the
Company's sewer business that were improperly included in the Booster Pump Station#1
project. These costs were identified through an invoice related to sewer plant construction. See
Company's response to Staff Production Request No. 29.
Together, these corrections reduce the requested PIS from $1,260,000 to $1,220,390.
The second adjustment reflects the portion of the project that is used and useful. Staff
applied the 10.47 percent useful percentage described above to the adjusted PIS of$1,220,390,
resulting in an overall PIS of$127,775 for the Booster Pump Station#1 project.
Materials and Supplies to PIS (Adjustment No.Q
The Company calculated material and supply expense by averaging actual expenses
incurred from 2022 through 2024. Staff reviewed the expenses and believes certain costs are
more appropriately classified as capital assets because they improve or extend the useful life of
the Company's system rather than support routine operations.
STAFF COMMENTS 13 FEBRUARY 11, 2025

Attachment D identifies the material and supply expenses reviewed by Staff. Expenses
highlighted in green represent costs Staff recommends be classified to PIS. These costs
contribute to improving or repairing the Company's system, such as building roads to well
houses, commissioning wells, or repairing major leaks. Expenses highlighted in red represent
spare parts or items that are not appropriate to include in test year operating expenses.
Based on this review, Staff recommends an increase to PIS of$84,957, a corresponding
increase to accumulated depreciation of$7,681, and an increase to depreciation expense of
$2,869 as shown in Attachment E.
Engineering Services to PIS (Adjustment No. 3)
The Company included engineering service expenses incurred from 2022 through 2024 in
its operating expense calculations. Based on its review, Staff believes these engineering service
expenses relate directly to the design and development of utility plant, such as tank sizing, and
developing models, and should therefore be capitalized. Accordingly, Staff recommends an
increase to PIS of$29,314, a corresponding increase to accumulated depreciation of$2,788, and
an increase to depreciation expense of$977 as shown in Attachment F, which identifies each
engineering service expense recorded to Account No. 334—Services.
Accumulated Depreciation
The Company requested an accumulated depreciation of$1,182,092. Staff reviewed the
Company's accumulated depreciation calculations and depreciation schedules.
Based on its review and Staffs recommended adjustments to PIS, Staff recommends
accumulated depreciation of$856,258, a decrease of$325,834 from the Company's request, as
shown in Attachment A. Staffs recommended accumulated depreciation reflects adjustments
related to asset usefulness and the reclassification of certain expenses to capital assets, which
were previously discussed in Staffs recommended Adjustment Nos. I through 3.
Contributions in Aid of Construction (No Adjustment)
The Company calculated a CIAC balance of$4,489,456, which is a reduction to rate
base. Staff reviewed the Company's calculations and supporting documentation.
STAFF COMMENTS 14 FEBRUARY 11, 2025

Staff believes that distribution system costs were funded through the sale of lots and
CIAC reflects customer-funded plant that is not eligible to earn a return." Staff further
recommends that all non-CIAC capital additions be adjusted for usefulness to current customers,
as discussed previously in Staff s recommended Adjustment No. 1. Staff believes that the
Company's CIAC calculation of$4,489,456 is reasonable and does not recommend an
adjustment.
Cash Working Capital (Adjustment No. 4)
The Company requested cash working capital of$62,639, calculated using the one-eighth
method, which is an accepted ratemaking principle intended to recognize the timing difference
between expenses incurred and when revenues are collected.
Staff reviewed the Company's calculation and believes that using the one-eighth method
is reasonable. However, Staff recalculated cash working capital using Staffs recommended
operating expenses rather than the Company's requested operating expenses.
The Company calculated cash working capital using operating expenses of$501,109.
Staff calculated operating expenses of$386,704 based on Staffs recommended adjustments.
Applying the one-eighth method to Staff s operating expense results in a cash working capital of
$48,338. Accordingly, Staff recommends a decrease to cash working capital of$14,301, as
shown in Attachment G.
Net Operating Income
The Company calculated a net operating income ("NOI") of negative $62,584, based on
revenues of$1,016,176 and expenses of$1,078,761. Staff reviewed the Company's calculations
and recalculated NOI to reflect Staffs recommended adjustments to revenues and expenses, as
discussed throughout these comments.
Based on its review, Staff recommends net operating income of$91,723, which reflects
revenues at present rates of$858,507 and total operating expenses of$766,784. Staffs
calculation of NOI is shown in Attachment H.
" IDAPA 31.36.01.102.
STAFF COMMENTS 15 FEBRUARY 11, 2025

Revenue at Current Rates (Adiustment No. 5)
The Company reported 2024 test year revenue of$624,025 from residential metered
water sales.12 Staff proposes an adjusted test year revenue of$858,507 at present rates, which is
an increase of$234,482 from the Company's test year. Staff included three adjustments that
account for the large increase in Staff s test year revenue. For the first adjustment, Staff used
December 2025 meter counts for all customer classes,13 and adjusted for April 2026 growth from
the Company's forecast.14 This is to align test year revenue with Staff s proforma expenses and
plant expected to be used and useful as of April 15, 2026. The increased meter counts and
corresponding use per meter calculated by Staff results in an increase to the Company's reported
revenue.
The second adjustment to Staffs test year revenue reflects an increase to fixed charge
revenue from the Dry Creek Ranch Homeowners Association ("HOA"). The standard practice
for water companies is to bill a fixed monthly charge for each metered service connection.
However, the Company currently bills the HOA a single monthly fixed charge, even though the
HOA had 61 metered service connections as of September 2025.1516 Staff believes that it is
appropriate to include fixed charge revenue at present rates from all HOA meters in its proposed
test year.
The final adjustment is to include revenue from bulk water customers who typically use
water for dust control at construction sites. The Company does not currently bill these
customers. Because these customers benefit from the use of the Company's system, Staff
believes it is appropriate to include revenue associated with their water usage as an adjustment to
revenue.
Operating Expenses
Staff conducted a detailed review of all expenses the Company seeks to recover in rates.
Based on its review, Staff recommends total operating expenses of$766,784, a decrease of
$311,977 from the Company's requested expenses of$1,078,761, as shown in Attachment H and
discussed below.
12 See Company's Exhibit 3—Income Statement.
13 See Company's Supplemental Response to Staff Production Request No.13.
14 See Company's file`DRY-W-25-01 Attachment 12026 Revenue Requirement',worksheet'*meters 2026-2028".
5 See Company's Response to Staff Production Request No.11.
6 See Company's Exhibit 7—Schedule A—Redlined Tariff.
STAFF COMMENTS 16 FEBRUARY 11, 2025

Salaries and Wages
The Company requests salary and wage expense of$162,782, which includes salary and
bonus compensation. Staff reviewed the Company's methodology and calculations for salary
expenses. Based on its review, Staff recommends the Commission accept the Company's
requested base salary amounts,"but completely remove $14,639 of bonus expenses, as detailed
below.
Bonuses (Adjustment No. 6)
The Company included bonus expenses of$14,639, which is based on the water-system
manager receiving compensation tied to the Company's net operating income. The Commission
has historically disallowed bonus expenses tied to financial performance metrics, because
bonuses do not directly benefit customers or contribute to providing safe and reliable service.
In a recent general rate case, a water company requested recovery of bonus expenses
based on both customer service metrics and a net income or revenue metrics. The Commission
denied recovery of bonus expenses tied to the financial performance metrics. Order No. 36745
states: "we find that only the customer service metrics the Company uses to award bonuses have
a sufficiently direct benefit to customers to justify inclusion in rates." Thus, Staff recommends a
decrease to bonus expenses of$14,639.
Payroll Taxes (Adjustment No. 7)
The Company requests a payroll tax expense of$10,825. Staff reviewed the Company's
payroll tax calculation and recalculated payroll taxes to reflect Staff s recommended adjustment
to salaries and wages, including the removal of bonuses. Based on Staff s recalculation, the
payroll tax expense is $10,213. Staff recommends a decrease to the payroll tax expense of
$1,120, as shown in Attachment I.
"BLS Western Region data used for comparison of similar job titles:Western Subjects:Western Information Office:U.S.Bureau of Labor
Statistics(last visited Feb.5,2026).
STAFF COMMENTS 17 FEBRUARY 11, 2025

Pension& Benefits
The Company requests pension and benefit expense of$16,986, which includes
employee training, fringe benefits, medical benefits, and 401(k) matching contributions. Staff
reviewed each component of the requested pension and benefit expenses. Staff believes the
requested amounts for employee training, fringe benefits, and medical benefits were reasonable
based on the calculation method. However, Staff recommends an adjustment to the Company's
requested 401(k)matching expense.
401(k) (Adjustment No. 8)
The Company included a 401(k) expense of$6,210, calculated using an assumed
employee contribution level and allocated the expense to water operations. Staff does not
believe the use of assumed contribution level is reasonable because employee participation in a
401(k)plan is voluntary and may vary over time. Instead, Staff believes that known and
measurable historical expense more accurately reflects actual employee participation.
The Commission has consistently found that actual test year contributions should be used
when calculating 401(k) expense. In Order No. 29838, Case No. UWI-W-04-04, and Order No.
35762, Case No. VEO-W-22-02, the Commission determined that proforma adjustments to
401(k) expenses are not known and measurable because employees may commence or cease
payroll deductions at any time, and employee turnover and vacancies further affect employer
matching obligations.
The Company did not incur 401(k) matching expense during the 2024 test year but
incurred$4,603 in 2025, as provided by the Company." Based on this information, Staff
recommends a decrease to the 401(k) expense of$1,607, as shown in Confidential Attachment J.
Chemicals (Adjustment No. 9)
The Company proposed $11,720 for chemical expense in its Application, based on 2024
water production and chemical costs. However,based on Staff s analysis, it recommends an
annual chemical expense of$10,461, which is a decrease of$1,259. Staff believes this amount
will allow the Company to likely recover its chemical costs by using the most up-to-date cost of
18 See Company's Supplemental Response to Staff Production Request No.1,Attachment"Trial Balance November 2025"tab"Income Sheet."
STAFF COMMENTS 18 FEBRUARY 11, 2025

chemicals and projected customer counts. Staff s calculations are based on normalized chemical
usage per gallon of water production over three years, normalized water consumption per
customer, the ratio of water production to water consumption, and the number of customers
projected to be served by the rate effective date of April 15, 2026.
Staff calculated the $10,461 chemical expense by multiplying the chemical cost per
amount of water production of$41.47 per million gallons ("Mgal")by the amount of annual
water production of 252.25 Mgal.
The $41.47 per Mgal unit chemical cost was derived by first determining the normalized
chemical usage over three years using the Company's chemical consumption and water
production from 2023 through 2025. The normalized chemical usage over three years is 8.44
gallons per Mgal of water produced, as shown in Table No. 9. Staff then derived a$4.91 per
gallons unit chemical cost, including delivery fees and sales tax, based on the latest August 2025
invoice to ensure chemical cost reflects the most current prices to account for inflation.19 The
unit chemical cost is calculated by multiplying the 8.44 gallons per Mgal of normalized chemical
usage by the unit chemical cost of$4.91 per gallon.
Staff calculated the 252.25 Mgal of annual water production by first determining the
normalized water consumption per customer. Staff determined the amount of water consumption
per customer and the 729 projected number of customers being served by the rate effective date
to determine the amount of total annual water consumption of 221.49 Mgal. Due to water loss,
the Company pumps more water than the amount consumed, which Staff calculated to be 0.878
gallons of water consumed for every gallon of water produced using 2025 metered consumption
and production data. By dividing the amount of annual water consumed by this ratio, Staff
determined the normalized annual water production amount.
19 See Company's Response to Staff Production Request No.16.
STAFF COMMENTS 19 FEBRUARY 11, 2025

Table No. 9: Normalized Chemical Usage
Chemical Consumption Water Production
Normalized Usage
Year (CF) (Mgal) per water production
(CF/Mgal)
2023 986 136.13 -
2024 1,943 201.68 -
2025 1,805 223.16 -
Total 4,734 560.97 8.44
Power Costs (Adjustment No. 10)
Staff proposes a normalized annual power expense of$42,565, which is an increase of
$1,051 relative to the Company's proposal. The Company requested $44,691 in purchased
power expense in its Application, which includes other utilities such as internet and the cost of
operating an alarm system. Staff recommends isolating these non-power costs and recording
them in account 636-Contractual Services-Other; therefore, Staff used$41,514 as the baseline
for its adjustment.
Staff s proposed annual power cost is based on normalized power consumption per gallon
of water produced from 2023 through 2025, the same amount of water production used to
calculate Staffs chemical expense, and the known and measurable electricity rates that the
Company will be charged on April 15, 2026. This treatment is to ensure the Company is likely
to recover its electricity cost once rates go into effect.
Staff calculated$42,565 power expense by multiplying the cost of power per the amount
of water production of$168.74 per Mgal by the 252.25 Mgal of normalized annual water
production as fully described in the Chemicals section of these comments.
The 168.74 per Mgal was derived by first determining the appropriate electricity rate of
$0.108 per kilowatt-hour("kWh"). This rate was determined first by dividing the total cost of
electricity in 2025 of$35,264 by 340,920 kWh, which is the amount of power consumption
during the same period. This initial rate was then escalated by 4.03 percent to account for the
rate increase approved for Idaho Power Company's Schedule 9S through Commission Order No.
36891 with an effective date of January 1, 2026. The resulting $0.108 per kWh rate was then
multiplied by the number of kWhs required per amount of water production of 1,568 kWh/Mgal.
This kWh/Mgal amount was calculated by summing the power consumption from 2023 through
STAFF COMMENTS 20 FEBRUARY 11, 2025

2025 and dividing this by the amount of water produced over the same period as illustrated in
Table No. 10 below.
Table No. 10: Normalized Power Consumption and Unit Cost
Year 2023 2024 2025 Total
Power Consumption (kWh) 231,280 313,040 340,920 885,240
Water Production (Mgal) 136 177.95 250.57 564.52
Normalized Power Consumptionper Gallon
1,568 of Water Production (kWh/Mgal)
Materials & Supplies Expense (Adjustment No. 11)
The Company requested a material and supply expense of$52,677, calculated by
averaging expenses incurred from 2022 through 2024 to develop a 2025 budget and then
averaging 2023 actuals, 2024 actuals, and 2025 budget to develop its 2026 budget.
Staff reviewed the material and supply expenses incurred and then evaluated whether the
costs were classified as operating expenses or capital additions. As discussed in Adjustment No.
2, Staff recommends reclassifying $84,957 of material and supply costs to PIS because these
costs relate to capital assets rather than ongoing operations. Based on this adjustment, Staff
recommends a corresponding increase to depreciation expense of$2,869, as shown in
Attachment E (Adjustment No. 2).
After removing capital related costs, Staff reviewed the remaining material and supply
expenses included in the test year. While the Company's system has expanded and the material
and supply expenses increased from 2022 through 2024, Staff believes the use of the 2024 test
year provides a more reasonable representation of ongoing annual material and supply expenses
than an averaged budget. Based on this review, Staff recommends a material and supply expense
of$6,865, which is a decrease of$45,812, as shown in Attachment D (Adjustment No. 2).
Engineering Services Expense (Adjustment No. 12)
The Company requested an engineering expense of$9,309, calculated by averaging
expense incurred from 2022 through 2024 to develop a 2025 budget and then averaging 2023
actuals, 2024 actuals, and the 2025 budget to develop its 2026 budget.
STAFF COMMENTS 21 FEBRUARY 11, 2025

Staff reviewed engineering service expenses incurred from 2022 through 2024 and
evaluated whether the costs were classified as operating expenses or capital additions. As
discussed in Adjustment No. 3, Staff believes that these engineering service expenses relate to
the design and development of utility plant and are more appropriately classified as capital
expenses. Accordingly, Staff recommends reclassifying engineering service expenses of
$29,314 to PIS, along with a corresponding increase to depreciation expense of$977, as shown
in Attachment F (Adjustment No. 3).
After removing capital-related costs, Staff evaluated the remaining engineering service
expenses for inclusion in the test year. Staff believes that there are no additional engineering
service expenses remaining that are an operating expense. Accordingly, Staff recommends
engineering service expense of$0, representing a decrease of$9,309 from the Company's
request.
Contractual Services—Billing
The Company requested a billing expense of$26,284 for contractual services, which
includes billing software and system operation services provided by Payment Services Network,
Banyon, InfoSend, Sensus, and RiaFox. The Company used 2024 actual expenses, adjusted for
known and measurable changes, to develop a 2026 budget. Staff reviewed each contractual
service component, including the Company's calculations and supporting documentation, to
evaluate the reasonableness of the inputs and methodologies used. Staff believes the Company's
calculations of Banyon, Sensus, and RiaFox to be reasonable. However, Staff recommends
adjustments to Payment Services Network and InfoSend expenses, as discussed below.
Payment Services Network(Adjustment No. 13)
The Company requested a Payment Service Network expense of$11,910, calculated by
multiplying an annual cost per customer of$15.81 by a projected customer count of 753. Staff
believes the Payment Services Network calculation is reasonable; however, Staff recalculated the
projected customer amount of 728 as of April 15, 2026. Applying the annual cost per customer
to Staffs customer count results in an expense of$11,507. Thus, Staff recommends a decrease
to billing expense of$403, as shown in Attachment K.
STAFF COMMENTS 22 FEBRUARY 11, 2025

InfoSend(Adjustment No. 14)
The Company requested an InfoSend expense of$7,633, calculated using a per-bill cost
of$1.55 and a projected mailed-bill customer count of 410. InfoSend is a software used to print
bills and notices to customers. Staff reviewed the Company's assumptions and updated stamp
costs to a known and measurable rate of$0.78 and used a projected customer count of 661 as of
April 15, 2026. Applying these assumptions results in a revised per-bill cost of$1.49 and a
mailed bill customer count of 375. Based on this calculation, Staff recommends an InfoSend
expense of$6,701, a decrease of$932, as shown in Attachment L.
Contractual Services- Other (Adjustment No. 15)
The Company requested Contractual Services—Other expense of$57,510, which
represents costs paid to a contracted water operator based on the number of metered connections.
The Company calculated this expense using a meter count of 791.
Staff reviewed the Company's calculation and recalculated the expense using a projected
meter count of 728 as of April 15, 2026. Based on this adjustment, Staff recommends a decrease
to Contractual Services—Other expense of$1,530, as shown in Attachment M.
Legal- Expenses
The Company requested a legal expense of$88,801, calculated by averaging expenses
incurred from 2022 through 2024 to develop a 2025 budget and then averaging 2023 actuals,
2024 actuals, and the 2025 budget to develop its 2026 budget. Staff reviewed the Company's
legal expenses and supporting documentation.
Staff recommends a net decrease of$27,415 to legal expenses, as described in
Adjustments Nos. 16 and 17 below.
Legal Expense Baseline (Adjustment No. 16)
Staff recommends using the 2024 test year legal expense as the starting point for
evaluation. In its Application, the Company included $166,711 for 2024. Upon review of the
legal expenses incurred in 2022 through 2024, Staff identified certain costs associated with the
Company's initial regulation and CPCN proceedings, including charges described as "water
regulation advice,""regulatory counsel and representation," and"water case advice."
STAFF COMMENTS 23 FEBRUARY 11, 2025

Staff believes these expenses are non-recurring and should not be included in annual test
year legal expense. In Order No. 29838, Case No. UWI-W-04-04, the Commission stated that
expenses related to extraordinary, non-recurring events are generally not appropriate for annual
recovery in rates and instead may be amortized over a reasonable period.
Consistent with Commission precedent, Staff recommends a decrease of$71,098 to
remove non-recurring legal expense from the test year baseline, as shown in Confidential
Attachment N.
Legal Amortization (Adjustment No. 17)
Although Staff does not recommend full inclusion of non-recurring legal expenses in test
year expense, Staff recognizes that certain legal costs related to initial regulation were necessary
for the Company to comply with Commission requirements. Accordingly, Staff recommends
recovery of these costs through amortization.
Staff identified$174,731 in non-recurring legal expenses incurred from 2022 through
2024 related to initial regulation. Staff recommends a four-year amortization period, which
allows reasonable cost recovery with minimal rate impact to customers. Based on this review,
Staff recommends an annual amortization expense of$43,683, as shown in Confidential
Attachment N.
Miscellaneous—Postage and Deliveries (Adjustment No. 18)
The Company requested a postage and deliveries expense of$1,704. The Company
incurred actual expenses of$204 during the 2024 test year and added a proforma increase of
$1,500.
After Staff reviewed the Company's calculation, the Company acknowledged the
proforma increase is not necessary and that the expense can be reduced to the historical test year
amount.211 Staff believes that the 2024 test year expense is reasonable and represents ongoing
postage and delivery costs. Thus, Staff recommends a decrease to the miscellaneous postage and
deliveries expense of$1,500.
20 See Company's Response to Staff Production Request No.41.
STAFF COMMENTS 24 FEBRUARY 11, 2025

Commission Assessment Fee (Adjustment No. 19)
The Company requested a Commission assessment fee expense of$2,161. The Company
calculated this amount by applying a Commission assessment rate of 0.2127 percent to its
proforma revenue of$1,016,176.
Staff reviewed the Company's calculations and recalculated the Commission assessment
fee using Staff-calculated revenues and the current authorized Commission assessment rate of
0.2223 percent. Staff calculated Company revenues of$858,507 using present rates. Applying
the authorized assessment rate to Staff s calculated revenues results in a Commission assessment
fee of$1,908. Staff recommends a decrease to Commission assessment fee expense of$253, as
shown in Table No. 11 below.
Table No. 11 —Commission Assessment Fees
column c less column d
(A) (B) (C) (D)
Line No Company Staff Staff Adjuts me nt
1 Revenue 1,016,176 858,507
2 PUC Assessment Rate 0.2127% 0.2223%
3 Total PUC Fee 2,161 1,908 (253)
Federal and State Income Taxes (Adjustment No. 20)
The Company requested federal and state income tax expense of$287,533. The
Company calculated income taxes using a federal tax rate of 30 percent and a state income tax
rate of 5.7 percent. Staff reviewed the Company's calculations and recalculated income taxes to
reflect Staff-recommended adjustments to revenues and expenses. For ratemaking purposes,
Staff applied a combined income tax rate of 26.3 percent, reflecting a 21 percent federal income
tax rate and a 5.3 percent state income tax rate.
Based on Staffs recommended adjustments to revenues and expenses, taxable income
decreases, which results in a reduction to income tax expense. Staffs recommended adjustments
reduce net operating income by $110,647 before income taxes. As taxable income decreases,
income tax expense is correspondingly reduced. Accordingly, Staff recommends a decrease to
federal and state income taxes of$29,100, as shown in Table No. 12 below.
STAFF COMMENTS 25 FEBRUARY 11, 2025

Table No. 12—Income Taxes
Line No.
1 Staff NOI Adjustments -110,647
2 Federal Income Tax Rate 21%
3 State Income Tax Rate 5.3%
4 Total Income Tax Rate 26.3% sum line 2,tine 3
5 Staff Adjus tme nt -29,100 line 1 mult.Line 4
Rate Design
CompanyApplication
The Company currently provides metered water service to the Dry Creek Ranch
development, consisting of approximately 645 residential customers and the HOA.21 It also
serves a sewer treatment facility, which it refers to as a"utility" customer.22 The current rates
consist of a monthly fixed charge of$47.50 per customer and a usage charge of$2.00 for every
1,000 gallons of water used. With two exceptions, the Company proposed a phased rate
adjustment to be implemented over a three-year period, with an average 6 percent increase to the
monthly fixed charge and usage charge to occur in 2026, 2027, and 2028.21 The Company's
exceptions include a $15.00 monthly fixed charge billed to the HOA for all years of the phased
rate adjustment and billing the HOA for each meter rather than as a single customer.24 The
Company does not charge, nor does it propose monthly fixed charges based on meter size. A
summary of the Company's current and proposed rates is shown in Table No. 13 below.
Table No. 13: Present and Proposed Rates
Charge Present 2026 2027 2028 Total '% Change
Monthly Fixed:All non-HOA.[1] $47.50 $50.35 $53.35 $56.50 18.90%
Monthly Fixed:HOA $47.50 $15 $15 $15 -68.40%
Usage:per 1,000 gallons $2.00 $2.12 $2.25 $2.39 19.50%
[1] For simplicity, Staff excluded the Company's proposed$130 fixed charge for Commercial customers,
as it does not currently serve any Commercial customers
21 See Company's Supplemental Response to Staff Production Request No.13.
22 See Company's Exhibit 7,Sheet 1.
"See Company's Application at 5-6.
24 See Company's Exhibit 7,Schedule A-Redlined Tariff.
STAFF COMMENTS 26 FEBRUARY 11, 2025

Phased Rate Increases
Staff agrees with the Company's proposal to increase rates over a three-year period.
Staff s revenue requirement represents a 19.28 percent increase from its adjusted test year
revenue at present rates. The Company's Application states that"Applicant is committed to
easing the impact on customers through a phased approach."21 Staff supports the Company's
phased, or stepped, approach as it results in gradual rate increases compared to a one-time rate
increase while still allowing the Company the opportunity to earn its revenue requirement by the
end of the stepped increases.
Fixed Fee
Staff agrees with the Company's proposal of a fixed monthly charge for every meter
connection. The water system is built to distribute water to all connected points of service,
which is represented by each meter. The HOA had 61 metered service points as of September
2025.26 Continuing to charge the HOA only one monthly fixed charge would not fairly recover
the cost to serve all of the HOA's service points, shifting revenue recovery to the other
customers.
Staff does not agree with the Company's proposed fixed monthly charges based on its
customer class distinctions. It is common for water companies to set fixed monthly charges
based on meter sizes. Larger meters can place greater demand on the system and require more
system capacity to deliver water at adequate pressures. Many regulated water companies in
Idaho, such as Veolia Water Idaho, Inc. and Gem State Water Company, have fixed monthly
charges that increase as meter size increases.
Additionally, Staff reviewed customer consumption data provided by the Company and
believes that a fixed monthly charge based on meter size is appropriate given differences in
usage. Table No. 14 below shows average water use by meter size in July from 2022 to 2025,
which historically has been the system's peak month of consumption during the year.
21 See Company's Application at 2.
26 See Company's Response to Staff Production Request No.11.
STAFF COMMENTS 27 FEBRUARY 11, 2025

Table No. 14: Average Monthly Use Per Meter during Month of July, 2022-2025, Gallons27
Meter Size (inches)Residential HOA Utility(Sewer)
0.75" 47,853 67,119
1" 88,910 93,197
2" 435,655 564,975
4" 453,000
Staff used the Base-Extra Capacity method described in the American Water Works
Association("AWWA") M1 manual to inform its allocation of revenue to be recovered from
fixed charges.28 Staff included customer costs such as billing and meter reading expenses, base
plant required to serve customers during non-irrigating months, and plant needed for fire
protection flows. This results in approximately 48 percent of revenue to be recovered via
monthly fixed charges. However, due to its concerns regarding water rights and plant investment
explained below, Staff believes collecting 40 percent of revenue from fixed charges is a
reasonable amount. Shifting more revenue recovery to usage charges sends a stronger price
signal to customers to reduce water usage. Once Staff calculated the proportion of revenue to be
recovered from fixed charges, it calculated the specific charge for each meter size following
AWWA meter ratio guidelines.29
Usage Charges
The Company charges a uniform usage or commodity rate per 1,000 gallons of water
consumed. After reviewing customer consumption data and Company water rights, Staff
recommends a two-block seasonal usage rate. Staff s proposal would charge a uniform rate for
all usage from October through April, and a higher rate from May through September for all
monthly usage exceeding 7,000 gallons. Total water system consumption shows large changes
depending on the month. In 2025, total system use in January was 3 million gallons compared to
a July total of 40.2 million gallons. Table No. 15 below shows system water use during the five-
month May through September period compared to the remainder of the year.
27 See Company's Response to Staff Production Requests No.13 and No.60.
28 AWWA Ml Manual,7`h Edition,pgs.62-67.
29 AWWA MI Manual,71h Edition,Table VH.2-5.
STAFF COMMENTS 28 FEBRUARY 11, 2025

Table No. 15: Metered Water Use, Gallons30
Time Period 2024 2025
May-September 131 million 164 million
Full Year 166 million 201 million
May-September % of Total 79% 81%
Staff supports a seasonal usage rate because it encourages conservation during periods
when peak water consumption is highest, which can save the Company money that can be passed
on to customers. The Company currently holds an Idaho Department of Water Resources permit
to divert an annual water volume of 1,764 acre feet31, which equates to 575 million gallons. Staff
calculated normalized annual use for 2025 by multiplying average use per meter by the number
of connected meters as of December 8, 2025.32 Staff then calculated annual usage based on the
number of projected connections at full buildout of the Dry Creek Ranch subdivision.33 Staff s
calculations are summarized in Table No. 16 below and show that forecasted use at full buildout
reaches 100 percent of the Company's water rights.
Table No. 16: 2025 Annual Water Use Versus Forecasted Use at Full Buildout, Million Gallons
2025 Forecast at Full Buildout
Residential 162.1 458.3
Se we r Utility 6.2 6.2
HOA[1] 43.7 110.6
Totals 212 575.1
Water Permit 575 575
[1] For the HOA forecast, Staff multiplied normalized 2025 usage by the ratio of forecasted irrigated
acres to the number of irrigated acres in 2025
Based on this forecast, Staff is concerned that annual system usage may exceed the
Company's permitted water volume as the subdivision is completed. In a drought year or during
periods of high usage, annual demand may surpass permitted volumes. The overproduction of
water could lead the Company to incur future large expenditures in the form of acquiring
30 See Company's Response to Staff Production Requests Nos.13 and 60.
31 IDWR Water Permit No.63-32423
httns://research.idwr.idaho.gov/apes/shared/WrExtSearch/Reports/PermitReport?basin=63&seq=32423&suffix=(last visited Feb.5,2026).
32 See Company Supplemental Response to Staff Production Request No.11
33 See Company response to Staff Production Request No.19
STAFF COMMENTS 29 FEBRUARY 11, 2025

additional water rights or fines for overproduction. A stronger price signal during periods of
high use may help mitigate these expenditures as well as avoid or postpone new capital
investment required to meet increasing peak demands.
Rates and Bill Impacts
Staff recommends the Commission approve rates as shown in Attachment O. The bill
impacts of these proposed rates are shown in Attachment P. Staff s rate design results in large
percentage bill increases in the first year, specifically for customers with 2-inch and 4-inch
meters. Much of this is caused by the Company's current fixed monthly charges and Staff s
recommended change to using AWWA meter ratio guidelines. Staff believes that employing a
uniform rate for the fixed monthly charge results in customers with smaller meters subsidizing
customers with 2-inch and 4-inch meters. Billing each of the HOA meters a monthly fixed
charge of$15, as the Company proposes, would result in even more subsidization of all the
HOA's meters by other customers. Given the Company's level of consumption on a system and
individual customer basis, Staff believes that its recommended rates improve fairness by
allocating recovery of revenue by differences in costs that customers cause to the system, and by
providing improved price signals to customers about their water usage.
During discovery, Staff learned that the Company provides service to bulk water
customers, which the Company does not currently bill.34 These customers benefit from the water
system and should contribute to system costs. Staff recommends a bulk water rate be included in
the Company's tariff. The recommended bulk usage rate is based on Staff s calculated annual
average rate. The recommended meter rental rate is based on a reasonable amount of costs
incurred by the Company in providing meters and billing these customers.
Other Fees and Charges
Hookup Fee
The Company proposed a hookup fee of$600 for both 3/4-inch and 1-inch meters in its
Application but revised it to $648 to reflect the latest invoice costs for some of the equipment
required as part of a customer hookup. As a result of Staff s review, Staff came to the following
conclusions and recommendations:
34 See Company's Supplemental Response to Staff Production Request No.14.
STAFF COMMENTS 30 FEBRUARY 11, 2025

1. Staff believes there is a significant difference in the cost of a 3/4-inch meter hookup
compared to a 1-inch meter hookup. Accordingly, Staff recommends that the
Company charge a different rate for each size meter.
2. Since 3/4-inch meters can be installed in a single-port or a dual-port configuration and
the cost per customer is different for each configuration, Staff believes that there be
only one hookup fee for a 3/4-inch meter determined by a weighted-average of the
total cost for each configuration and the proportion of each configuration.
3. Staff recommends a hookup fee of$430 for a 3/4-inch meter and $580 for a 1-inch
meter; a breakdown of the costs and hookup fees are provided in Table No. 17 below.
4. Staff recommends the Company verify in its reply comments that only 3/4-inch meters
are installed or are being installed for small lots, regardless of whether they require a
single-port or a dual-port radio configuration.
Table No. 17: Hookup Fee
Cost per Lot 3/4" Meter 1" Meter
Dual Port Single Port
Radio 166.1 206.94 206.94
Meter 217.83 217.83 310.41
Yoke Adaptor Set 39.3 39.3 66.03
Installation Cost - - -
Account Setup Cost - - -
Total 423.23 464.07 583.37
Weight 35 5 -
Recommended Hookup " $430 $580
Staff analyzed the Company's costs to install different meter-size hookups and made
several adjustments based on information provided through responses to production requests.
The first adjustment was due to the latest vendor's invoice costs for radios and meters.35 Staff
also incorporated a second adjustment to the cost of the Yoke Adaptor Set. Based on the
invoices, the Yoke Adaptor Set cost for 3/4-inch meter installations decreased from $43.17 to
$39.30 and increased from $61.57 to $66.03 for 1-inch meters. For the last adjustment, Staff
removed the Installation and Account Setup costs from the requested hookup fee. Because the
35 See Company's Supplemental Response to Staff Production Request No.51.
STAFF COMMENTS 31 FEBRUARY 11, 2025

cost of installation and account setup are already recovered through the Company's contract with
its water operator, Staff removed those costs from the hookup fee to prevent double recovery.16
The Company installs 3/4-inch meters for small lots and 1-inch meters for large lots that
require increased water flow to meet customer's needs, primarily attributed to increased
irrigation. To determine whether the cost difference between 3/4-inch meter and 1-inch meter
hookups are large enough to justify separate hookup charges based on meter size, Staff
incorporated its updated costs described above and calculated the charges separately.
For 3/4-inch meters, the Company could save customers money when two small lots are
adjacent to one another, thus allowing the Company to install separate 3/4-inch meters that share a
common dual-port radio. However, when there is an odd number of adjacent small lots, one of
the lots cannot share a radio, requiring the Company to install a single-port radio. A single-port
radio configuration costs about $41 more than a dual-port configuration. Since the lot that would
require the single-port configuration is arbitrary from a customer cost allocation standpoint, Staff
believes it is fair to set a single hookup fee for all 3/4-inch meters by determining the weighted-
average cost per lot based on the proportion of each configuration. The resulting 3/4-inch hookup
fee using this method is $430.
Staff calculated the cost of 1-inch hookups adjusted for actual cost and determined the
separate hookup cost to be $580. Staff believes the $150 cost difference between a 3/4-inch and
1-inch hookup is large enough to justify separate hookup charges based on the two different
meter sizes.
The Company states that small lots all have 1-inch meters where the dual port radio
cannot be installed.37 This is inconsistent with the information provided in a meeting with Staff
on December 18, 2025, when Staff was seeking clarification on the criteria used to determine the
meter sizes that have been and will be installed in the future. The Company stated that 3/4-inch
meters are installed in all small lots and single-port radio configurations with 3/4-inch meters are
installed in case the radio can't be shared with another lot. Staff believes verification is
important because Staff is proposing to have different hookup fee charges that vary by meter
size.
"See Company's Supplemental Response to Staff Production Request No.51.
31 See Company's Response to Staff Production Request No.51.
STAFF COMMENTS 32 FEBRUARY 11, 2025

IDEQ Fee
As a public drinking water system, the Company is required to pay an annual fee
assessment to the IDEQ based on the Company's number of service connections. See IDAPA
58.01.08.007. The Company's current and proposed tariff recovers this fee through a monthly
rate per customer.38 Based on IDEQ's assessment is based on service connections, Staff
recommends the Commission order the Company to revise its tariff to assess the monthly IDEQ
fee on a per service connection basis, consistent with IDEQ's fee structure.
CONSUMER
Customer Notice and Press Release
The Company filed its customer notice and press release with its Application. Staff
reviewed the documents and determined that they met the requirements of Rule 125 of the
Commission's Rules of Procedure. IDAPA 31.01.01.125. The customer notice was sent to
customers on September 15, 2025.
The Company only sent a press release to the Idaho Statesman on September 15, 2025.
However, IDAPA 31.01.01 requires utilities to notify newspapers, radio stations and television
stations within their service area when a rate change is proposed.
Customer Workshop
The Commission provided public notification for a customer workshop through a
November 12, 2025, news release. A virtual public workshop was held for customers on
Wednesday, December 3, 2025,beginning at 6:00 pm MST. No customers attended the
workshop.
Customer Hearing
The Commission has scheduled a virtual and in person customer hearing for Thursday,
February 19, 2026, at 4:30 pm MT in the Commission hearing room at 11331 W. Chinden Blvd.,
Building 8, Suite 201-A, Boise. Public notification for the hearing was provided through a
November 7, 2025, news release.
38 See Company's Exhibit 7.
STAFF COMMENTS 33 FEBRUARY 11, 2025

Customer Comments
The Commission scheduled a public comment deadline for February 11, 2026. As of
February 11, the Commission has received three comments. All customers did not approve of
the increase and expressed concerns over the affordability of the proposed increase.
Company Documentation
Staff recommends that the Company submit a revised tariff and Summary of Rules
reflecting rate changes within 30 days of the final order.
STAFF RECOMMENDATIONS
Based on Staff s review and analysis of the Company's Application, exhibits,
workpapers, responses to Staff Production Requests, and supporting documentation, Staff
recommends the Commission approve the adjustments summarized in Table No. 3 and described
throughout these comments.
Specifically, Staff recommends the Commission:
1. Approve a total revenue requirement of$1,024,038, consisting of a$1,957,154 rate
base,rate of return of 11 percent with 100 percent equity, and a net to gross multiplier
of 133.96 percent;
2. Approve the rates as shown in Attachment O;
3. Approve the requested rate increases of 6 percent per year for each of the next three
years, shown in Attachment O;
4. Approve hookup fees as shown in Table No. 17;
5. Order the Company to bill customers for the IDEQ public drinking water system fee
based on number of connections;
6. Order the Company to submit a revised tariff and Summary of Rules reflecting rate
changes; and
7. Grant such other and further relief as the Commission deems just and reasonable.
STAFF COMMENTS 34 FEBRUARY 11, 2025

Respectfully submitted this 1 lth day of February 2026.
Jeffrey R. Loll
Deputy Attorney General
Technical Staff. James Chandler
Seungjae Lee
Michael Ott
Jolene Bossard
Kevin Maxwell
L•\Utility\UMISC\COMMENTS\DRY-W-25-01 Staff Comments.docx
STAFF COMMENTS 35 FEBRUARY 11, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I Ith DAY OF FEBRUARY 2026,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. DRY-W-25-01, BY E-MAIL PER BELOW:
JENNIFER REINHARDT-TESSMER
KIRA DALE
KIRTON McCONKIE
1100 W IDAHO ST STE 930
BOISE ID 83702
E-MAIL: jtessmergkmclaw.com
kdalegkmclaw.com
valti ,kmclaw.com
PATRICIA JORD. , SECRETARY
CERTIFICATE OF SERVICE