20260507Staff Comments.pdf

RECEIVED
May 07, 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 CDS STONERIDGE )
UTILITIES,LLC'S APPLICATION FOR ) CASE NO. SWS-W-25-02
AUTHORITY 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, Jeffrey R. Loll, Deputy Attorney General,
submits the following comments.
BACKGROUND
On December 1, 2025, CDS Stoneridge Utilities, LLC ("Company") applied to the
Commission requesting authorization to increase its rates and charges for water service of 43
percent ("Application"). The Company requested an effective date of February 1, 2026.
On December 31, 2025, the Commission issued a Notice of Application, a Notice of
Intervention Deadline establishing a 21-day intervention period, and a Notice of Suspension
suspending the Company's proposed effective date. Order No. 36896. The Commission granted
intervention to Randolph Lee Garrison, pro se, and Stoneridge Property Owners Association, Inc
("SPOA"). Order No. 36922.
STAFF COMMENTS 1 MAY 7, 2026

STAFF ANALYSIS
Staff reviewed the Company's Application, exhibits, workpapers, and responses to Staff s
Production Requests. The Company used a historical test year from October 1,2024,to September
30, 2025, and made adjustments to reflect known and measurable changes in expenses and capital
investments expected to occur after September 30, 2025. For analysis and calculation purposes,
Staff used the same historical test year and adjusted revenues, expenses, and rate base to reflect
known and measurable changes through the proposed effective date of July 1, 2026.
Based on its review, Staff recommends a revenue requirement of$254,213, which is an
increase of$2,092 or 0.83 percent from a revenue of$252,121 at present rates.
Company Ownership
As a preliminary matter, Staff notes uncertainty as to the Company's ownership structure.
On August 2, 2019, the Commission approved the transfer of Certificate of Public Convenience
and Necessity ("CPCN")No. 395 from CDS Stoneridge Utilities, LLC to J.D. Resort, Inc. Order
No. 34391. Since the approval of the CPCN transfer, communications and filings with the
Commission have continued to reference CDS Stoneridge Utilities,LLC,an entity whose business
registration was revoked in 2019 and is not the certificated utility authorized by the Commission.
Staff reviewed Commission records and corporate filings with the Idaho Secretary of State
and identified multiple business entities associated with the Company, as shown in Table No. 1
below. Staff believes that J.D. Resort, Inc. is the certificated utility holding CPCN No. 395 and
that the Company is a separate legal entity, despite common management. See Attachment A.
Based on this review, Staff believes that recent filings and communications do not consistently
identify the certificated utility authorized by the Commission.
STAFF COMMENTS 2 MAY 7, 2026

Table No 1.—Business Entities
Business Name Manager Current Status
Primary Esprit Enterprises LLC Chan Karupiah Active
Subsidiary CDS Stoneridge Utilites,LLC[sic] Esprit Enterprises LLC Active
Primary J.D.Resort,Inc. Chan&Teresa Karupiah Active
DBA JD's Resort Chan&Teresa Karupiah Active
Primary CDS Stoneridge Utilities,LLC Dean Alara Inactive-Revoked
Staff recommends the Commission order the Company to ensure that all future filings and
communications accurately identify J.D. Resort, Inc. as the certificated utility holding CPCN No.
395. Alternatively, if the Company intends to operate under CDS Stoneridge Utilites, LLC [sic]
or another legal entity, Staff recommends the Commission require the Company to file an
application to amend CPCN No. 395 to reflect the appropriate utility entity and ensure that future
filings and communications accurately reflect the approved certificated utility.
System Description
The Company's water system provides water to condominiums, single-family homes,non-
irrigation uses for a golf course, and individual RV parking pads within the Stoneridge and nearby
Happy Valley Ranchos("HVR")communities,located in the City of Blanchard in Bonner County,
Idaho. In total, the Company has 373 service connections.
The Company's water system consists of two drilled wells, two booster stations, three
storage reservoirs (consisting of seven tanks), and a chlorination facility. The wells are equipped
with 125 and 100 horsepower pumps that produce water at approximately 1,100 and 600 gallons
per minute ("GPM"), respectively. The system has an approximate total storage capacity of
347,000 gallons, including the Stoneridge Reservoir (the largest storage), as well as the Happy
Valley mid-level and upper-level tanks. The water system also uses a Supervisory Control and
Data Acquisition system with Programmable Logic Controllers to remotely control the pumps in
wellhouses and booster stations.
The Company's water distribution system consists of PVC pipes ranging from 3-inch to
10-inch diameter. There are approximately 49 fire hydrants located in the Stoneridge service area,
and one fire hydrant in the HVR area, all of which have flushing hydrants at the individual dead-
STAFF COMMENTS 3 MAY 7, 2026

ends. The Company uses a 10:1 dilution mix of 12.5 percent sodium hypochlorite solution to treat
its water supply. The Company delivers water to customers using service meters ranging from 3/4-
inch to 6-inch, with approximately 93 percent of connections equipped with 3/4-inch meters. The
Company does not expect growth in service connections over the next five years.
System Reliability & Capital Plan
The Company's water system has five significant deficiencies that affect safety and
reliability, as well as four additional deficiencies and seven recommendations identified in the
Company's latest Idaho Department of Environmental Quality ("IDEQ") Sanitary Survey
("Survey") conducted on July 17, 2025. Application, Attachment AB at 10-15. The significant
deficiencies include the following:
1. Happy Valley Midlevel Tanks 2 and 3 and Upper-Level tank 3 are cracked and/or have
missing bolts.
2. Manholes for all the below ground storage tanks are not elevated high enough to
prevent contamination.
3. A leak in the main storage reservoir was observed above ground on the west side of the
tank.
4. The manhole access on the main storage reservoir does not have a solid watertight
cover.
5. The golf course backflow preventer is overdue for a test.
Id. at 10-12.
The Commission directed the Company to work with Staff to develop a Capital Plan that
demonstrates the Company's plan for system growth and maintenance. Corrected Order No.
36407 at 4.The Commission also required the Company to ensure the system can maintain
sufficient service during a fire to promote community safety and comply with the rules governing
fire flow. Id. The Commission directed the Company to submit the Capital Plan within one year
of the Order and prior to its next general rate case. Id. However, the Company submitted its
Capital Plan as part of its Application rather than in advance of this proceeding. Application,
Attachment AD.
STAFF COMMENTS 4 MAY 7, 2026

Upon review, Staff believes the Capital Plan does not address the specific requirements
outlined in Order No. 36407, including planning for system growth and maintenance and
demonstrating the ability to maintain adequate fire flow. The Capital Plan outlines the deficiencies
identified in the Survey, and Staff recognizes the Company's efforts to correct these deficiencies.
However, Staff believes the timelines and scope of the Capital Plan are not consistent with the pro
forma capital projects included in this case, or with the Corrective Action Plan submitted to IDEQ.
See Response to Staff Production Request No.20. Staff believes the order of projects in the Capital
Plan may not prioritize actions that protect water quality and system reliability. For example,
cleaning the tank prior to repairing the tank seal and lid may expose the system to potential
contamination risk.
Staff reviewed the Survey to identify potential issues related to system pressure and
reliability. Based on the Survey,the system pressure is sufficient but may be reduced during power
outages or if the tank needs to be taken offline for cleaning or repairs. These specific situations
were identified as other deficiencies in the Survey and the Company has included projects in its
Capital Plan to help address these issues, as well as five significant deficiencies in the future.
Additionally, Staff reviewed customer complaints from 2019 to 2025 and was not able to identify
any complaints that indicated issues with water pressure or reliability issues.
System Efficiency
Staff evaluated the water pumping efficiency of the Company's water system for the past
five years(2021 to 2025). Based on its review, Staff believes the Company's system is sufficiently
stable and generally efficient. Staff believes the system is able to reliably produce water all year
and does not have major concerns.
Water Rights
The Company currently leases water rights at a total diversion rate of 7.48 cubic feet per
second, or approximately 3,357 GPM,which includes municipal, irrigation, irrigation storage, and
recreation storage use. Application, Attachment AC. Staff calculates the Company's maximum
system capacity, including all pumps and booster pumps to be 2,032 GPM. Staff believes the
Company has adequate water rights to support its system operations at maximum capacity.
STAFF COMMENTS 5 MAY 7, 2026

Capacity to Meet Current and Future Demands
Based on the information provided in the Survey, Staff believes the Company has enough
capacity to meet current demand. However, due to limited information, Staff cannot assess the
Company's ability to serve its peak demands with potential system growth. The Company's
Facility Plan was documented in 2006,and Staff believes it should be revised with detailed analysis
reflecting the Company's current system capacity and critical parameters such as average daily
demand, maximum daily demand, peak hourly demand, etc. for both current and the future
customers.
The Company's 2006 Facility Plan study is limited to average demand and does not analyze
peak demands. According to Idaho Administrative Procedures Act("IDAPA")Rules Section No.
58.01.08.50104, a community water system shall be designed to maintain its maximum daily
demand or peak hourly demand with its largest source being out of service. Although Staff
believes the Company's system should satisfy the current average daily demands, it is critical for
Staff to assess the Company's system in meeting its current and future peak demands, which can
be analyzed through an updated Facility Plan.
Golf Course Irrigation Disconnection
According to the Company,the golf course's irrigation system has been disconnected from
the Company's water system and is supplied by its own well. Application at 3. The Company
provided a photograph of the disconnection located in the golf course irrigation building, as shown
below in Figure No. 1 and stated"StoneRidge Utilities has capped the line feeding the golf course
irrigation, rendering this portion of the public water system disconnected and unusable."
Company's Response to Staff Production Request No. 12.
STAFF COMMENTS 6 MAY 7, 2026

Figure No. 1: Golf Course Irrigation Disconnection
Due to the Company no longer providing service for the golf course irrigation, Staff
removed golf course consumption data from its analysis for purposes of determining the revenue
requirement and rate design. Staff has concerns about the Company's disconnection shown in
Figure No. 1 related to potential pipe dead-end issues, required maintenance of the abandoned
irrigation line, and the ability to use the pipe in the future. Staff believes the Company should
provide a more permanent disconnection from the golf course's irrigation system. A permanent
disconnection would: (1) ensure customer's water source and golf course water source are
completely separated; (2)reduce the required maintenance of the abandoned golf course irrigation
line; and(3)reduce the risk of unauthorized use of the abandoned golf course irrigation line. Staff
recommends the Commission order the Company to permanently disconnect the golf course
irrigation system by removing all infrastructure related to providing service to the golf course,
including the irrigation building and the main well pump house, and to submit a compliance filing
within 90 days of a final order demonstrating that the disconnection has been completed.
STAFF COMMENTS 7 MAY 7, 2026

REVENUE REQUIREMENT
The Company calculated a revenue requirement of $369,288, which is an increase of
$111,015, or 43 percent. Application, Attachment N. In its calculation, the Company used
"Income Realized" of $279,769, and "Revenue at Existing Rates" of $258,273, resulting in an
inconsistent revenue basis within revenue requirement calculation. Id. Using different revenue
amounts for these categories affects the calculation of the revenue deficiency and results in an
inaccurate revenue requirement. Staff recalculated the Company's requested revenue requirement
using the Company's provided revenue of$279,769. Application, Attachment L. The results of
Staff s recalculation of the Company's requested revenue requirement are shown in Table No. 2
below and would modify the Company's request if calculated correctly.
Table No. 2—Company Recalculated Revenue Requirement
Line No. Description Amount
1 Rate Base $484,800
2 Rate Of Return 7.97%
3 NOI Requirement $38,630
4 Net Operating Income -$43,811
5 NOI Deficiency $82,441
6 Net-to-Gross Multiplier 134.66%
7 Additional Revenue Required $111,015
8 Revenue at Present Rates $279,769
9 Percentage Increase 39.68%
10 Revenue Requirement $390,784
As shown in Table No. 2 above, Staff calculated a revised requested revenue requirement
of$390,784, which would represent an increase of$111,015 or 39.68 percent.
Staff Revenue Requirement Calculation
Based on its review, Staff calculated a revenue requirement of$254,213, which represents
an increase of$2,092, or 0.83 percent from revenues at present rates of$252,121. Staffs revenue
requirement calculation is shown in Table No. 3 below and is based on Staff s recommended inputs
to the revenue requirement formula, which are discussed throughout these comments.
STAFF COMMENTS 8 MAY 7, 2026

Table No. 3 - Staff Revenue Requirement Calculation
Line No. Description Amount
1 Rate Base $257,356
2 Rate Of Return 7.37%
3 NOI Requirement $18,971
4 Net Operating Income $17,409
5 NOI Deficiency $1,562
6 Net-to-Gross Multiplier 133.96%
7 Additional Revenue Required $2,092
8 Revenue at Present Rates $252,121
9 Percentage Increase 0.83%
10 Revenue Requirement $254,213
Staff recommends 18 adjustments to the Company's requested revenue requirement, as
summarized in Attachment B. Staff calculated rate base of $257,356, a rate of return of 7.37
percent, a net operating income of $17,409, a net-to-gross multiplier of 133.96 percent, and
revenue at present rates of $252,121. Each recommended adjustment is explained in detail
throughout these comments.
Rate of Return
The Company requested a rate of return("ROR")of 7.97 percent. Application,Attachment
M. The requested ROR is based on a capital structure consisting of 59.7 percent equity and 40.3
percent debt, with a proposed return on equity ("ROE") of 12 percent. Id.
Staff reviewed the Company's proposed capital structure and believes the 59.7/40.3 percent
equity-to-debt ratio is consistent with the Company's actual capital structure.' However, Staff
recommends a ROR of 7.37 percent, as shown in Table No. 4, based on a recommended ROE of
11 percent, as discussed below.
t Includes existing Company IDEQ loan balance.See Response to Production Request No.5,Exhibit No.5.Excludes bank loan requested in
SWS-W-25-03,as loan has not been finalized.See Response to Production Request No.50.
STAFF COMMENTS 9 MAY 7, 2026

Table No. 4 —Rate of Return
Percent of Weighted
Line No. Description Total Capital Cost Average
1 Equity
2 Common Equity 746,537
3 Retained Earnings (592,577)
4 153,960 59.7% 11.0% 6.57%
5 Debt
6 Long Term Debt 104,005 40.3% 2.0% 0.81%
7 Total 257,965 100% 7.37%
Return on Equity
The Company requests a ROE of 12 percent. In the last rate case, the Company's
authorized ROE was limited to ten percent due to Commission concerns regarding management
practices. Corrected Order No. 36407 at 22. Staff believes the Company is making strides to
improve management practices such as taking steps to improve the water system and working to
improve relations with customers and Staff. Staff reviewed ROEs approved by the Commission
for similarly situated,privately-owned water companies and believes that an ROE of 11 percent is
consistent with recent Commission precedent.2 Accordingly, Staff recommends an ROE of 11
percent.
Net-to-Gross Multiplier
The Company calculated a net-to-gross multiplier of 134.66 percent. 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 determined the Company used an Idaho
state income tax rate of 5.8 percent and a Commission assessment rate of 0.1982 percent. Staff
recommends using the current Idaho state income tax rate of 5.3 percent and a Commission
assessment rate of 0.2091 percent.3 Based on Staff s calculations, Staff recommends a net-to-
gross multiplier of 133.96 percent, as shown below in Table No. 5.
2 E.g. Order No.37002 at 7.
3 Order No. 37001,dated April 14,2026.
STAFF COMMENTS 10 MAY 7, 2026

Table No. 5—Net-to-Gross Multiplier
Line No. Description Total
1 Revenue 100.000%
2 Bad Debt Rate 0.000%
3 2026 Regulatory Fee Rate 0.2091%
4 Net Revenue 99.791%
5 State Income Tax Rate 5.300%
6 Actual State Income Tax Rate 94.491%
7 Federal Income Tax Rate 21.000%
8 Actual Federal Income Tax Rate 19.843%
9 Net Operating Revenue 74.648%
10 Net-to-Gross Multiplier 133.96%
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, and cash working capital.
Staff reviewed the Company's rate base calculations and recommends the Commission
authorize a total rate base of$257,356, a decrease of$227,444 from the Company's requested
amount of$484,800 as shown in Attachment C to these comments.
Pro forma Plant Investment Review
Staff reviewed the pro forma plant investments the Company included in its Application.
These investments include: (1) a backup generator for the primary wellhouse; (2)repair,
cleaning, and inspection of the main storage reservoir; and(3)preliminary engineering for the
main storage reservoir bypass. Application, Attachments G and AD. Staff evaluated 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 project was incurred at a reasonable cost. Based on its review, Staff believes the
projects have a justifiable need; however, the Company has not shown these projects have been
completed and that they are currently used and useful. The exception is the leak repair to the
main storage reservoir, which Staff believes is a nonrecurring Operation and Maintenance
expense and recommends excluding from the revenue requirement, as discussed in Adjustment
STAFF COMMENTS 11 MAY 7, 2026

No. 2 below. Accordingly, Staff recommends removal of all associated costs from PIS, resulting
in a total decrease of$219,610.
The Company's Capital Plan, included in the Application and in responses to Staff s
Production Requests, indicate the Company is seeking Commission approval for rate recovery of
these projects before incurring the costs. Company Response to Staff Production Request Nos. 23
and 62. The Commission generally requires utilities to incur the cost of the project and for the
project to be used and useful before the project can be recovered through rates. Based on this,
Staff believes the Company should seek recovery with proper documentation to show prudently
incurred project costs once the projects are used and useful. Staff does not believe preapproval of
these projects is needed as long as the Company can verify that the projects are needed to meet the
IDEQs requirements and that the Company obtained competitive bids from multiple
vendors/contractors to prove that the selected bid for a project is aligned with the market and used
and useful when it seeks recovery.
Plant in Service
The Company requested a PIS balance of$1,508,799. Application, Attachment G. Staff
reviewed the Company's PIS calculations and supporting documentation, including invoices and
workpapers. Based on its review, Staff recommends the Commission authorize PIS of$1,289,189,
reflecting a decrease of$219,610 from the Company's requested amount, as shown in Attachment
C and further detailed in Adjustment Nos. I through 3.
Generator(Adjustment No. 1)
Staff recommends removal of the requested amount of the generator from revenue
requirement, which results in a decrease to PIS of $202,400, because the project has not been
completed and is not used and useful. Staff believes the need for backup generation is justified
based on improving the reliability of the system in response to IDEQ's requirements; however,
Staff has concerns regarding the Company's communication with IDEQ on this project, as
information provided to IDEQ and reflected in vendor bids appears to be inconsistent.
The Company stated "StoneRidge Utilities has not submitted plans and specifications to
IDEQ as we do not believe the installation of backup power generators materially affects the water
system." Company Response to Staff Production Request No. 62. However, Staff has been in
STAFF COMMENTS 12 MAY 7, 2026

communication with the IDEQ about the Company's latest sanitary survey and believes backup
power is considered a material modification to the system to ensure reliability. Based on these
conversations, the Company should meet with IDEQ regarding its requirements and submit plans
and specifications for backup generation for verification before moving forward with the project.
After verification with IDEQ, the Company should consult with an independent qualified
professional engineer. The engineer's recommendations should be used to determine the least cost
options to adequately pressurize the distribution system during power outages, provide the
technical specifications for the required backup equipment, and specify potential upgrades to the
electrical service.
The Company has historically experienced issues with its existing utility electrical service
being unable to support the simultaneous long-term operation of both existing well pumps. The
Company has also received conflicting requirements and equipment specifications in bids for
backup generation with significantly different equipment sets and costs. For example, the
Company only received two bids for the backup generator. One of the bids proposed a 200 kilowatt
("kW") generator, along with installation of a soft start on the Well No. I pump, claiming that this
configuration would be able to run both well pumps at the same time. Application, Attachment V
at 8. A second bid proposed installation of a 250 kW generator but claimed it would not be able
to power both well pumps at the same time and would require a variable frequency drive installed
on Well No. 1. Company Response to Staff Production Request No. 62, Exhibit No. 62. This bid
also stated a 450kW generator would need to be installed to run both well pumps at the same time.
Id.
The Company's solicitation for multiple proposals or quotes to complete the project at least
cost should include an engineer's technical specifications for the required equipment, instead of
relying on potentially unqualified or self-interested vendors to specify the equipment. In addition,
the Company's existing utility electrical service may not support long term operation of both
existing pumps at the same time. The Company should consult with a qualified engineer to address
both of these issues.
Accordingly, Staff recommends the Commission order the Company to meet with IDEQ
regarding the need for submitting plans and specifications for the backup generator. Additionally,
Staff recommends the Commission order the Company to consult with an independent qualified
professional engineer to determine the least cost options to adequately pressurize the distribution
STAFF COMMENTS 13 MAY 7, 2026

system during power outages, provide the technical specifications for the required equipment to
be included in the Company's request for proposals or quotes, and determine whether electrical
service is adequate.
Reservoir(Adjustment No. 2)
The repair, cleaning, and inspection of the main storage reservoir are two separate projects.
The first project is to repair a leak in the outer wall of the reservoir and the second is cleaning and
inspection of the tank. Staff recommends removal of the requested amount for the repair,cleaning,
and inspection of the main storage reservoir from revenue requirement,which results in a decrease
to PIS of$12,260.
The Company had the leak repaired at a cost of $3,700. Company Response to Staff s
Production Request No. 63, Exhibit No. 63. Staff recommends removing this cost from PIS due
to it being a temporary fix to the leak that does little to extend the life of the reservoir and should
be considered a non-recurring maintenance expense. The Company stated in its Capital Plan that
the repair is "a stopgap solution before long-term planned tank refinishing." Application,
Attachment AD. Because this is a non-reoccurring expense,it should not be included for recovery
in the operation and maintenance expense account in this case. Staff discussed this leak repair
with the IDEQ, which was previously unaware this project had been completed. The Company
should communicate with IDEQ when projects are completed that address significant deficiencies
and recommendations included in sanitary surveys.
The second project related to cleaning and inspection of the tank has not been completed
and is not used and useful. Response to Production Request No. 63. Staff recommends also
removing the cost for this portion of the project from PIS.
Water Tank Bypass Engineering(Adjustment No. 3)
The last project included in the Company's Application is the preliminary engineering for
the main storage reservoir bypass. Staff recommends removal of the requested amount of the
water tank bypass engineering from the revenue requirement,which results in a decrease to PIS of
$4,950.
Staff believes this project is justifiable due to the need for the reservoir to be taken offline
for cleaning and repairs without depressurizing the distribution system. The Company stated that
STAFF COMMENTS 14 MAY 7, 2026

the expected completion date for the preliminary engineering is May 22, 2026. Company
Response to Staff Production Request No. 64. Regardless of the completion date of the
preliminary engineering, Staff does not recommend recovery of this cost in rates until the bypass
for the main storage reservoir is installed on the system and it is used and useful. When that occurs,
the cost of the engineering study should be included as a capital expense along with the
construction cost of the bypass project, both of which should be subject to competitive bidding.
Accumulated Depreciation (Adjustment No. 4)
The Company requested an accumulated depreciation balance of $1,060,310.4 Staff
reviewed the Company's accumulated depreciation calculations and supporting documentation,
and workpapers. The Company did not include accumulated depreciation associated with pro
forma plant additions addressed in Adjustment Nos. 1 through 3; therefore, no additional
accumulated depreciation adjustments are required for those items. The Company has previously
been directed to use National Association of Regulatory Utility Commissioners ("NARUC")
Depreciation Practices for Small Water Utilities ("Depreciation Manual") guidelines for
depreciable lives; however, Staff believes the Company used depreciable lives for its assets in
2025 that do not align with those guidelines. Corrected Order No. 36407 at 8. Staff recalculated
accumulated depreciation on existing PIS using depreciable lives consistent with the NARUC
Depreciation Manual, as shown in Attachment D. Based on its review, Staff recommends the
Commission authorize an accumulated depreciation balance of$1,058,163, reflecting a decrease
of$2,147 from the Company's requested amount, as shown in Attachment C.
Cash Working Capital(Adjustment No. 5)
The Company requested cash working capital of$36,311, calculated using the one-eighth
method, which is an accepted ratemaking principle used to recognize the timing difference
between cash-based operating expenses incurred and when revenues are collected. See
Application,Attachment I. Staff reviewed the Company's calculation and believes that the use of
the one-eighth method is reasonable. However, Staff recalculated cash working capital using
4 The Company calculated accumulated depreciation of$1,090,980 in Application,Attachment H.However,the
Company used an accumulated depreciation of$1,060,310 in rate base when calculating revenue requirement.See
Application,Attachment I.
STAFF COMMENTS 15 MAY 7, 2026

Staff s recommended operating expenses rather than the Company's requested operating expenses.
The Company calculated cash working capital using operating expenses of $290,488. Staff
calculated operating expenses of$210,638 based on its recommended adjustments. Applying the
one-eighth method to Staffs adjusted operating expenses results in a cash working capital of
$26,330. Accordingly, Staff recommends a decrease to cash working capital of $9,981, as
calculated in Attachment F.
RESULTS OF OPERATIONS
Net Operating Income
The Company calculated a net operating income ("NOI") of negative $43,811, based on
revenues of$279,769 and total operating expenses of$323,580. Application,Attachment L. Staff
reviewed the Company's calculations and recalculated NOI to reflect Staff s recommended
adjustments to revenues and expenses, as discussed throughout these comments. Staffs
adjustments to revenue primarily reflect removal of non-recurring revenue items and normalization
of water sales volumes based on multi-year average consumption, resulting in revenue at present
rates of$252,121. Based on its review, Staff calculated a NOI of$17,409, reflecting revenue at
present rates of$252,121 and total operating expenses of$234,712, as shown in Attachment G.
Revenue at Current Rates (Adjustment No. 6)
The Company made several pro forma adjustments to test year revenue from water sales,
resulting in a test year revenue of$279,769. Id.
Staff believes certain components of the Company's pro forma revenue are not appropriate
for ratemaking purposes and require adjustment. Specifically, Staff recommends removing
$16,569 of Other Water Sales Revenue, which includes Happy Valley loan surcharges and
reconnection fees. The Happy Valley loan surcharge is no longer collected by the Company, and
reconnection fees are not a known and measurable source of recurring revenue used in calculating
customer rates.5
Staff recommends additional adjustments to the Company's test year revenue based on
water sales volumes. The Company used test year actual water sales of 73.8 million gallons,
5 In Case No. SWS-W-24-01,the Company"determined that the last surcharge payment will occur in May of 2025."
Supplement to Company's Petition for Reconsideration,Page 9.
STAFF COMMENTS 16 MAY 7, 2026

excluding golf course irrigation service, to calculate its test year revenue at present rates. See
Application, Attachment V at 3. Staff calculated an annual historical average based on 2023
through 2025 consumption data provided by the Company and excluded golf course irrigation
service. Company Response to Staff Production Request No. 25. Staff believes using average
consumption over multiple years better represents water sales under average conditions than using
a single year of data. Staff s average calculation resulted in a 6.4 million gallon decrease to test
year water sales volumes.
Based on these adjustments, Staff recommends test year revenue at present rates of
$252,121, as shown in Attachment H (Rate Proof).
Operating Expenses
Staff conducted a detailed review of all expenses the Company seeks to recover in rates.
This review includes evaluation of whether expenses are reasonable, prudent, and directly related
to providing utility service to customers. Based on its review, Staff recommends total operating
expenses of$234,712, which is a decrease of$88,868 from the Company's requested expenses of
$323,580, as shown in Attachment G and discussed in detail below. Staffs recommended amount
reflects removal of unsupported, non-recurring, or non-utility-related expenses, as well as
adjustments to normalize certain costs for ratemaking purposes.
Depreciation Expense(Adjustment No. 7)
The Company included $32,485 in depreciation expense on existing PIS. Application,
Attachment L. The Company did not include depreciation expense related to pro forma PIS
additions; therefore, no additional depreciation expense adjustments for Adjustment Nos. I
through 3 were required. The Company also requested accelerating the depreciable life of Account
333 — Services from 30 years to 7 years to increase cash flow for debt service. Application,
Attachment V at 2. Staff does not support accelerating depreciation for cash flow purposes, as
depreciation should reflect the useful life of assets,not financing needs,as discussed further below.
Consistent with depreciable lives established under the NARUC Depreciation Manual, as detailed
in Adjustment No. 4, Staff recommends a depreciation expense of$17,314, which is a decrease of
$15,171, as calculated in Attachment E.
STAFF COMMENTS 17 MAY 7, 2026

Labor(Adjustment No. 8)
Staff reviewed the Staffing Agency Contract between Esprit Enterprises, LLC ("Esprit")
and the Company. Company's Response to Staff Production Request No. 6, Exhibit No. 6. As a
result, Staff identified several inconsistencies and areas lacking sufficient detail.
First, the contract contains inconsistent effective dates. The agreement lists an effective
date of November 1, 2025, while the Description of Services indicated services began on January
15,2025. The discrepancy creates uncertainty regarding when services were initiated. In addition,
Exhibit A to the contract states that rates are subject to annual review beginning January 1, 2026,
which is not consistent with the stated service start date.
Second, the contract lacks sufficient detail regarding certain compensation terms and
references a rate case consultant position with variable hours but does not provide an hourly or
salary rate. Without this information, Staff is unable to evaluate the reasonableness of the
associated costs.
Finally,portions of the described duties appear unrelated to the provision of water service.
For example, certain administrative and management responsibilities reference activities
associated with real estate transactions and golf community operations. Staff believes these
activities are not directly related to utility operations,and the extent to which contract costs include
non-utility activities cannot be determined.
Staff encourages the Company to ensure that contracts are complete, accurate, and clearly
identify services and compensation related to utility operations. Staff further recommends the
Company maintain records to distinguish between utility and non-utility activities for ratemaking
purposes.
Contract Labor Expense. Staff reviewed copies of all invoices received by the Company
from Esprit. Company's Response to Staff Production Request No. 67, Exhibit No. 67. Staff
identified charges for contract labor positions that are not included in the Staffing Agency
Contract. Specifically, Staff identified invoice amounts of $18,323 for a position listed as
Financial Compliance and$23,812 for a position listed as Owner. These positions are not included
in the Staffing Agency Contract, and the associated costs are not supported by the contract terms.
STAFF COMMENTS 18 MAY 7, 2026

Accordingly, Staff recommends a decrease of$42,135 in contract labor expense related to these
positions.
Power& Chemical Expense(Adjustment No. 9 and 10)
The Company requested a test year power expense of$23,092 and a chemical expense of
$11,045. Application, Attachment K. Staff calculated power and chemical expenses by first
determining the normalized production/consumption of water for the Company's system and
multiplying this value by the average cost per gallon for power and chemicals to determine
normalized expenses. Staff calculated and recommends normalized power expense of$21,008, a
decrease of$2,084, and chemical expense of$1,278, a decrease of$9,767.
Normalized Production/Consumption of Water
Staff first determined the Company's normalized system-level water consumption without
golf course irrigation over a three-year period(January 2023 —December 2025),which was 67.43
million gallons ("Mgal"). The results are shown in Attachment I.6 To determine a normalized
system-level water production value over the three-year period, Staff divided the normalized
system-level water consumption of 67.43 by the 3-year average consumption to production ratio
of 0.93 to obtain a value of 72.68 Mgal for normalized production.
Normalized Power Expense
Staff reviewed the power bills provided by the Company to calculate the normalized power
expense. See Company's Response to Staff Production Request No. 46, Exhibit No. 46. Staff
calculated a normalized power expense and recommends an annual expense of$21,008, which is
$2,084 less than the Company's test year expense. In reviewing power bills, Staff discovered late
payment fees on many of the monthly bills. Staff removed these fees from power expense, as late
fees should not be included in customer rates. Staff s proposed normalized power expense is based
on power expense related to pumping water and the power expense of the water administration
office building. The expense related to pumping is based on normalized power consumption per
gallon of water produced from 2023 through 2025, the normalized water production, and the
known and measurable electricity rates that the Company will likely be charged on July 1, 2026,
6 See Response to Staff Production Request Nos.25a and 47 for production and consumption data.
STAFF COMMENTS 19 MAY 7, 2026

to ensure the Company is likely to recover its power cost based on the most current electricity
rates. The expense related to the office building is based on allocating a portion of the total power
expense from the meter associated with space used by the business in the building where the
administration office is located.
The electricity expense related to pumping water is $20,290 and was determined by
multiplying the cost of power per amount of water production of$279.18 per Mgal by the 72.68
Mgal of normalized annual water production fully described in the Normalized
Production/Consumption of Water section of these comments. The power expense related to
pumping water plus the power expense of the water administration office building results in Staff s
proposed power expense of$21,008.
The $279.18 per Mgal was derived by first determining the appropriate electricity rate of
$0.1164 per kilowatt-hour ("kWh"). This rate was determined by annualizing the Company's
2025 power bills to reflect the most recent electricity rates the Company is being charged. This
annualizing of 2025 costs is $35,855 and then is divided by the amount of power consumption
during 2025 of 307,944 kWh to determine the $0.1164 per kWh rate. The resulting $0.1164 per
kWh rate was then multiplied by the number of kWhs required per amount of water production of
2,398 kWh/Mgal. This kWh/Mgal amount was calculated by summing the power consumption
from 2023 through 2025 and dividing this by the amount of water produced over the same period
as illustrated in Table No. 6 below.
Table No. 6 -Normalized Power Consumption and Unit Cost
Year 2023 2024 2025 Total
Power Consumption(kWh) 289,454 280,438 307,944 877,836
Water Production(Mgal) 117.37 113.66 135.08 366.11
Normalized Power Consumption - - - 2,398
per Gallon of Water Production(kWh/Mgal)
The expense related to the office building is $718 and was determined by allocating a
portion of the total normalized power expense based on the square footage of the water
administration office relative to the total square footage of the building where it is located. This
method is consistent with the IRS guidelines for deducting utilities in shared office spaces. The
water administration office is 1,200 square feet and the building where it is located is 4,156 square
STAFF COMMENTS 20 MAY 7, 2026

feet, which indicates the water administration office should be allocated 28.9 percent of the total
power expense. See Company Response to Staff Production Request Nos. 7 and 65.
Staff calculated a normalized power use of 26,018 kWh for the office building from 2024
through 2025.' An annual electricity rate of$0.0956 per kWh was determined by annualizing the
Company's 2025 power bills to reflect the most recent electricity rates the Company is being
charged. This annualizing 2025 cost is $2,488 and then is divided by the amount of power
consumption in 2025 of 26,019 kWh to determine the $0.0956 per kWh rate. The normalized
power use of 26,018 kWh multiplied by the $0.0956 per kWh rate multiplied by the 28.9 percent
allocation results in a normalized power cost of$718 for the water administration office.
Normalized Chemical Expenses
The Company proposed$11,045 for chemical expense in the Application. However,based
on Staffs analysis, Staff recommends annual chemical expense of$1,278, which is a decrease of
$9,767. Staff believes this amount will allow the Company to recover its chemical costs by using
the most up-to-date cost of chemicals. Staffs calculations are effectively based on normalized
chemical usage per gallon of water production over two years and the ratio of water production to
water consumption.
The major reason for the large difference in the Company's proposed chemical expense in
the Application and Staff s recommended chemical expense is the Company's overstated chlorine
usage due to a failure to recognize a 10:1 dilution ratio of the chlorine. See Company Response to
Staff Production Request No. 48. As a result, Staff s chemical expense is approximately one tenth
of the Company's proposed chemical expense.
Staff calculated the$1,293 chemical expense by multiplying the chemical cost per amount
of water production of$17.79 per Mgal by the amount of normalized annual water production of
72.68 Mgal fully described in the Normalized Production/Consumption of Water section of these
comments.
The $17.79 per Mgal unit chemical cost was derived by first determining the normalized
chemical usage over two years using the Company's chemical consumption and water production
7 See Company Response to Staff Production Request No. 65. Staff only used 2024 through 2025 because the
Company could not provide power bills for all months in 2023. In addition, Staff used January values as a proxy for
December values due to the Company not providing December 2024 and 2025 power bills.
STAFF COMMENTS 21 MAY 7, 2026

from 2024 through 2025. The normalized chemical usage over two years is 1.70 gallons per Mgal
of water produced as shown in Table No. 7. Staff then derived a $10.36 per gallon unit chemical
cost, including delivery fees and sales tax, based on the latest December 2025 invoice to ensure
chemical cost reflects the most current prices to account for inflation. Company Response to Staff
Production Request No. 17, First Production Request Supplement. The unit chemical cost is
calculated by multiplying the 1.70 gallons per Mgal of normalized chemical usage by the unit
chemical cost of$10.36 per gallon.
Table No. 7-Normalized Chemical Usage
Year Chemical Consumption Water Production Normalized Usage per Water Production
(Gallons) (Mgal) (Gallons/Mgal)
2024 222 113.7 -
2025 201 135.1 -
Total 422 248.7 1.7
Water Testing(Adjustment No. 11)
The Company requested$955 for water testing. On April 2, 2026, Staff obtained the IDEQ
Public Drinking Water System Monitoring Schedule Report for the Company. Water testing
requirements for the Company are based on a nine-year schedule for various tests required by
IDEQ. Staff requested and the Company provided supporting documentation for the requested
costs. See Company Response to Staff Production Request No. 42,Exhibit No. 42. Based on that
documentation, Staff reviewed published laboratory testing costs for all required IDEQ tests.
Consistent with the Commission's practice, Staff recommends annualizing water testing costs over
the nine-year schedule to ensure recovery of total required testing expenses. Staff calculated and
recommends an annual water testing expense of$1,965, which is an increase of$1,010 as shown
in Attachment J.
Office Rent(Adjustment No. 12)
Staff reviewed sales office rental charges the Company is requesting for recovery and
identified that the Company currently has two separate expenses from the affiliated company
Esprit for the same space. Company Response to Staff Production Request Nos. 7 (Exhibit No. 7)
and 67 (61h Production Request Supplemental). Staff believes an additional sales office rental
STAFF COMMENTS 22 MAY 7, 2026

expense of $1,352 is unnecessary for the provision of water service, as the Company already
maintains adequate office space under its existing lease. Accordingly, Staff recommends a
decrease of$1,352 for the Company's requested sales office rental expense.
Insurance (Adjustment No. 13)
The Company requested$4,973 for General Liability and Property Insurance. Application,
Attachment V at 4. Staff reviewed a copy of the insurance invoice for policy period July 4, 2025,
to July 4, 2026, and supporting invoice totals $1,341 for General Liability and$2,019 for Property
insurance, a combined total of$3,360. Company Response to Staff Production Request No. 43,
Exhibit No. 43. Accordingly, Staff recommends a decrease of$1,613 to insurance expense.
Rate Case Amortization (Adjustment No. 14)
The Company requested $47,703 for rate case expenses related to general rate cases SWS-
W-24-01 and SWS-W-25-02. Application, Attachment V at 5. The Company proposes to
amortize these expenses over a 30-month period, resulting in an annual amortization of$19,081.
Id. Staff recommends a total rate case expense of$25,383, amortized over a three-year period,
resulting in an annual amortization of $8,461. Staff recommends a decrease to rate case
amortization expense of$10,620 from the Company's request, as calculated in Attachment K.
Case No. SWS-W-24-01. Regarding Case No. SWS-W-24-01, the Company requested a
total of$31,921 of rate case expenses to be amortized over a 30-month period, resulting in an
annual amount of$12,768. Id. The requested expenses include $196 for customer notice mailing
costs, $250 for publication costs, and $31,475 in legal costs. Application, Attachment Z.
However, during discovery the Company provided a list of all legal costs, which totaled only
$29,988. Company Response to Staff Production Request No. 10, Exhibit No. 10. The
Commission approved amortizing the legal costs over a three-year period and did not approve
recovery of non-legal rate case expenses. Corrected Order No. 36407 at 20. The Commission also
authorized the Company to defer any legal costs above those included for recovery in case SWS-
W-24-01, to be verified and evaluated in a future rate case proceeding. Final Reconsideration
Order No. 36593 at 14. Staff recommends denying recovery of$196 in customer notice mailing
STAFF COMMENTS 23 MAY 7, 2026

costs and $250 in publication costs, totaling $446 as prior Corrected Order No. 36407 does not
allow for recovery of these non-legal costs.
Staff recommends reducing legal costs by $5,993 related to the reconsideration request in
Case No. SWS-W-24-01. Legal costs incurred for reconsideration are discretionary and should be
evaluated by the Company based on a risk-reward assessment of the issues being contested. The
Corrected Final Order in Case No. SWS-W-24-01 was issued on December 24, 2024, and Staff
considers legal costs after this date to be associated with the reconsideration process. Allowing
recovery of reconsideration-related legal costs in rate cases may reduce the Company's incentive
to carefully consider whether such filings are warranted, because those costs could be passed on
to customers.
Accordingly, Staff recommends rate case expenses of$23,995 related to SWS-W-24-01 be
amortized over a three-year period, resulting in an annual amount of$7,998, a decrease of$4,878
from the Company's requested annual amount.
Case No. SWS-W-25-02. Regarding Case No. SWS-W-25-02, the Company requested a
total of$15,782 consisting of$232 for customer notice mailing costs, $250 for publication costs,
and$15,300 legal costs. Application,Attachment Z. Staff recommends denying recovery of$232
in customer notice mailing costs and $250 in publication costs, totaling $482, as Corrected Order
No. 36407 does not allow recovery for non-legal costs.
The Company states that the related expenses for Case No. SWS-W-25-02 are"an estimate
of anticipated costs for the current case and are approximately half of the actual costs incurred in
SWS-W-24-01". Company Response to Staff Production Request No. 35,Exhibit 35a. However,
the Company provided supporting invoices for legal expenses totaling just $1,710. Company
Response to Staff Production Request No. 10, Exhibit 10.
Staff believes only invoiced and supported legal expenses are appropriate for recovery.
Accordingly, Staff recommends total recoverable rate case expenses of$1,710,related to this case,
be amortized over a three-year period,resulting in an annual amount of$570, a decrease of$5,743
from the Company's requested annual amount.
Customer Participation in Regulatory Proceedings. On December 2, 2025, the
Company sent a letter to the SPOA regarding its application to increase rates. Attachment L. The
STAFF COMMENTS 24 MAY 7, 2026

letter referenced the cost of intervenors and encouraged residents to consider those costs when
evaluating participation in the proceeding. While regulatory proceedings can involve legal and
administrative costs, costs associated with customer or intervenor participation are typically a
limited portion of overall rate case expenses. While Staff acknowledges the Company's intent to
limit legal expenses associated with processing general rate cases, the letter could be perceived as
an attempt to discourage customer participation in the process. Staff encourages the Company to
ensure communication with customers are clear and accurately reflect the regulatory process.
Staff also encourages customers to participate in Commission proceedings, as appropriate,
through public comments, public hearing, or intervention.
Miscellaneous (Adjustment No. 15)
Staff believes certain miscellaneous expenses are not appropriate for recovery in rates and
recommends three adjustments totaling a decrease of$2,596.
First, the Company provided a copy of an invoice selected by Staff for review, which
totaled$85 for napkins and laundry detergent for the grill. Response to Staff Production Request
No. 45,Exhibit No.45 at 9. Staff believes these expenses are not related to providing water service
and do not benefit utility operations. Accordingly, Staff recommends a decrease of$85.
Second,the Company provided a copy of an invoice,which included$665 related to repairs
of a sewer pump and $540 related to repairs on the Happy Valley booster pump for a total of
$1,205. Response to Staff Production Request No. 45, Exhibit No. 45 at 9. Staff recommends a
decrease to expenses of $665 for repair of the sewer pump, as it does not contribute providing
water service.
Lastly, Staff identified mileage reimbursement charges in the Company's Response to
Staff s Production Request No. 67 related to contract labor provided by Esprit Enterprises LLC.
The contract states the Company "will not provide fringe benefits, including health insurance
benefits, paid vacation, or any other employee benefit," and Exhibit A specifies that Esprit
Enterprises LLC is responsible for all payroll items and benefit expenses for contract personnel.
Staff believes mileage reimbursement is a payroll-related expense and, under the terms of the
contract, is the responsibility of Esprit Enterprises LLC rather than the Company. Accordingly,
Staff recommends a decrease of$1,846.
STAFF COMMENTS 25 MAY 7, 2026

Bad Debt(Adjustment No. 16)
The Company requested $10,693 for bad debt expense. Application, Attachment K. The
requested amount is a 2025 write-off associated with one customer, Motor Coach Village, for two
of their three accounts and from an internal billing error in which the Company failed to restart
billing following a seasonal shutoff during the period of 2018 through 2021. Company Response
to Staff Production Request No. 38. The Company previously filed Case No. SWS-W-23-01 to
address the underbilling associated with the two accounts.
In Order No. 35936,the Commission denied the Company's request to rebill Motor Coach
Village's Meter 247 account for the period of three years. The Company asserted that an employee
was inexperienced in performing billing functions for water and sewer operations. Order No.
35936 at 4. The Commission determined the explanation to be unavailing, stating that the
Company "must monitor and verify the accuracy of its customer billings. Id. at 5. That it failed
to do so is not excused by concerns about its employee's experience." The Commission further
stated that"[b]ased upon the record presented, the Commission cannot find that it is fair,just, and
reasonable to determine that the three-year rebilling period under UCCR 203.03(c)is appropriate".
Id. After carrying the past due balances for several years, the Company wrote off the remaining
uncollectible balance in 2025. Company Response to Staff Production Request No. 38, Exhibit
No. 38.
Staff believes the requested bad debt expense is directly attributable to the Company's prior
billing error and relates to costs the Commission has already determined are not recoverable.
Accordingly, Staff recommends denying recovery of this expense and recommends a decrease to
bad debt expense of$10,693.
Commission Assessment Fee (Adjustment No. 17)
The Company requested a Commission assessment fee expense of $587, calculated by
applying an assessment rate of 0.2127 percent to its pro forma revenues of $279,769. See
Application, Attachment L.
Staff reviewed the Company's calculations and recalculated the Commission assessment
fee using Staff calculated revenues of $252,121 and the current authorized assessment rate of
0.2091 percent. Applying the authorized assessment rate results in a Commission assessment fee
STAFF COMMENTS 26 MAY 7, 2026

of$527. Thus, Staff recommends a decrease to Commission assessment fee expense of$60, as
shown in Table No. 8.
Table No. 8— Commission Assessment Fee
Line No Company Staff Staff Adjuts me nt
1 Revenue 279,769 252,121
2 PUC Assessment Rate 0.2091%
3 Total PUC Fee 587 527 (60)
Federal and State Income Taxes (Adjustment No. 18)
The Company calculated no federal or state income tax expense due to a negative net
income. Id. Staff calculates net income before taxes of$23,622,which results in applicable federal
and state income tax expense. Using a federal income tax rate of 21 percent and an Idaho state
income tax rate of 5.3 percent, Staff calculates federal income tax expense of$4,961 and state
income tax expense of$1,252, as shown below in Table No. 9. Accordingly, Staff recommends a
federal and state income tax expense of$6,213.
Table No. 9— Federal & State Income Taxes
Line No.
1 Staff\OI Before Taxes 23,622
_' Federal Income Taff Rate 21%
3 State Income Tay Rate 5.3%
4 Total Income Tax Rate 26.3%
Total Federal Income Tat 4,961
6 Total State Income Tax 1?�2
Stag Total Tat Adjustment 6,213
Cash Flow
The revenue requirement is designed to recover operating expenses and provide an
opportunity to earn a return on rate base, rather than generate profit directly through operations.
A regulated utility earns a return on investments deemed prudent for customer benefit, while also
recovering the cost of those investments over time through depreciation expense, which is a non-
cash expense. Together, return on and return of rate base provide cash flow available to meet
STAFF COMMENTS 27 MAY 7, 2026

financial obligations. Staff calculates a return on rate base of$18,988 and a return of rate base of
$17,314, for a total of $36,302 annually. The Company's current IDEQ loan has an annual
payment of$26,900. Application, Attachment V at 2. The Company also has a separate bank
loan,which has been authorized but not yet executed as of the date of these comments. Company
Response to Staff Production Request No. 50.
After payment of the IDEQ loan, the Company would have $9,384 in remaining annual
cash flow based on Staff s revenue requirement calculations. Staff believes current cash flow
appears sufficient for the Company to meet its existing financial obligations without affecting
customers. Staff recommends the Company evaluate its cash flow if additional debt is incurred,
including any future loan associated with the backup generator. Future increases in rate base may
improve cash flow if such investments are deemed to be prudent in a future rate case.
RATE DESIGN
The Company provides monthly metered service and bills its customers with a fixed
customer charge based on meter size in addition to a commodity rate applied to all gallons of water
consumed. The Company did not propose changes to this rate structure but proposed to increase
the fixed customer charge by 37.5%and the commodity rate by 43%to meet its requested revenue
requirement. Application, Attachment Y.
Staff supports the Company's rate design, albeit with different percentage increases that
produce Staff s recommended revenue requirement shown in Table No. 10. The fixed charge
component provides sufficient revenue for the Company and bill stability for its customers. The
commodity rate provides a cost signal to customers to encourage reduced consumption. It also
provides customers with the ability to control a portion of their total bill by varying their
consumption.
Table No. 10 - Present, Company, and Staff Proposed Rates for a 3/4-Inch Metered
Connection
Component Present Company Proposed Increase%:Company Staff Proposed Increase 9+0: Staff
Fixed Ch a rg e: '.4- $28.85 $39.70 37.6091,-j 529.00 0.521�b
inch Meter
Commodity Rate: $0 96 $1.37 42.70% 50.99 3.13%
per 1.000 Gallons
STAFF COMMENTS 28 MAY 7, 2026

Bill Impacts
Based on its recommended revenue increase, Staff s proposed rates produce a reasonable
range of percentage increases for all customers under a wide range of consumption amounts. A
large majority of customers are served by 3/4-inch meters. Therefore, analysis here is focused on
bill impacts to those customers. During the months of November through March, when the
Company does not normally read meters, customers' bill increases are identical to the increase in
the fixed monthly charge. Staff calculated a three-year average annual consumption from June to
September consumption using data from 2023 to 2025 provided in the Company's Response to
Staff Production Request No. 27. During the months of June through September, when water use
is at its highest, a 3/4-inch metered customer using a summer monthly average of 21,285 gallons
would see a 1.6 percent increase to their monthly bill. On an annual basis, a 3/4-inch metered
customer using the yearly average of 125,946 gallons would see a 1.2 percent increase in their
annual bill amount. Customers connected by other meter sizes that use the annual average for their
respective meter size would see bill increases ranging from 0.5 percent to 1.6 percent on an annual
basis. The detail of bill impacts is shown in Attachment M and a rate proof calculation showing
Staffs proposed rates recover its recommended revenue requirement as shown in Attachment H.
Idaho Department of Environmental Quality Fee
IDAPA 58.01.08, Section 7, requires all regulated public water systems to pay an annual
fee assessment to the IDEQ to support drinking water protection, based on the number of service
connections. The IDEQ fee is removed from operations and maintenance expense and is not
included in Staff s revenue requirement; therefore, it is not recovered in customer rates because it
varies based on the number of service connections and is appropriately recovered as a pass-through
charge. To allow recovery of this cost, Staff recommends the Commission order the Company to
establish a separate tariff schedule to recover the IDEQ public drinking water fee as a per-
connection charge, identify the fee as a pass-through charge, and include the fee as a separate line
item on customer bills. The tariff schedule should reflect the amount assessed by IDEQ based on
the number of service connections and be updated as necessary to reflect IDEQ's annual
assessment through a tariff advice. This approach is consistent with Commission-approved tariffs
for other regulated water utilities, including Dry Creek Water Company, Capitol Water
Corporation, and Veolia Water Idaho, Inc.
STAFF COMMENTS 29 MAY 7, 2026

CUSTOMER RELATIONS
Customer Notice and Press Release
The Company included a Customer Notice with its Application. Staff had previously
reviewed the document and worked with the Company to meet the requirements of Rule 125
of the Commission's Rules of Procedure. IDAPA 31.01.01.125. The Customer Notice was
mailed separately to all customers on December 12, 2025.
The Company only sent a press release to the Bonner County Daily Bee on December
11, 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.
Public Comments
As of May 7, 2026, 23 comments have been submitted. All 23 comments received are
against the proposed rate increase. Customer concerns included the following:
1. The previous rate increase being so recent.
2. That customers will be charged a higher rate due to the Golf Course revenue no
longer being included.
3. The Company and parent company having mixed assets and passing excess costs
on to customers.
4. Issues with water pressure.
5. Concerns with water quality and a lack of improvement in water quality.
Customer Workshop
The Commission held a virtual Customer Workshop on March 18, 2026, at 6:00 p.m.
PT (7:00 p.m. MT). Three customers attended the workshop. One customer was focused on
clarification of the golf course separation and impact that has on future rates and revenues.
Another customer asked about validity of legal fees as it referred to a letter from the Company
which was uploaded as part of a Public Comment after being distributed to members of the
SPOA. The letter contained an assertion from the Company that legals fees previously spent
on interveners can be claimed as expenses in future rate cases.
STAFF COMMENTS 30 MAY 7, 2026

Customer Hearing
A Customer Hearing will be held on May 20, 2026, at 5:00 p.m. PDT and ending at
8:00 p.m. PDT with in-person and virtual participation options. The customer hearing will be
held at the Blanchard Community Center, 685 Rusho Lane, Blanchard, ID 83804. Persons
attending the hearing both in-person and virtually will have an opportunity to provide
testimony. The Public notification for the hearing was provided through an April 20, 2026,
news release. The virtual meeting information can be found in the new release and in Order
No. 37012.
Company Documentation
Staff recommends the Commission order the Company submit revised tariff schedules
and Summary of Rules reflecting approved rates within 30 days of the final order for approval
by the Commission.
STAFF RECOMMENDATION
Based on Staffs review and analysis of the Company's Application, exhibits,workpapers,
responses to Staff Production Requests, and supporting documentation, Staff recommends the
Commission approve the revenue requirement as calculated in Table No. 3 based on the
adjustments described throughout these comments.
Specifically, Staff recommends the Commission:
1. Approve a total revenue requirement of$254,213, consisting of rate base of$257,586,
rate of return of 7.37 percent with 59.7 percent equity and 40.3 percent debt, authorized
ROE of 11 percent, and a net to gross multiplier of 133.96 percent as shown in Table
No. 3;
2. Order that all future filings and communications accurately identify J.D. Resort,Inc. as
the certificated utility holding CPCN No. 395 or if the Company intends to operate
under another legal entity,the Company file an application requesting to amend CPCN
No. 395 to reflect the appropriate entity and ensure that future filings and
communications accurately reflect the approved certificated utility;
STAFF COMMENTS 31 MAY 7, 2026

3. To permanently disconnect the golf course irrigation system by removing all
infrastructure related to providing service to the golf course, including the irrigation
building and the main well pump house, and to submit a compliance filing within 90
days of a final order demonstrating that the disconnection has been completed;
4. Order the Company to consult with IDEQ on the need for submitting plans and
specifications for backup generation before moving forward with the project;
5. Order the Company to consult with a qualified professional engineer to determine the
least cost options that satisfy IDEQ's requirements to adequately pressurize the
distribution system during power outages, provide the technical specifications for the
required equipment to be included in solicitations for competitive bidding, and assess
the adequacy of its electrical service;
6. Approve rates shown in Attachment M that produce Staffs recommended revenue
requirement;
7. Order the Company to establish a separate tariff schedule to recover the IDEQ public
drinking water system fee on a per-connection charge,identify the fee as a pass-through
charge, and include the fee as a separate line item on customer bills;
8. Order the Company to submit a revised tariff and Summary of Rules reflecting
approved rates within 30 days of a final order; and
9. Grant such other and further relief as the Commission deems just and reasonable.
Respectfully submitted this 7th day of May 2026.
Jeffrey R. Loll
Deputy Attorney General
Technical Staff:
James Chandler
Ray McArthur
Michael Eldred
Michael Ott
Vicki Stephens
Kevin Maxwell
Jolene Bossard
I:\Utility\UMISC\COMMENTS\SWS-W-25-02 Comments.docx
STAFF COMMENTS 32 MAY 7, 2026

ATTACHMENT A

No. W 21482 Due no later than Nov 30,2017 2. Registered Agent and Address (ND PO BOX)
Return to: Annual Report Form BRAD HANSEN
SECRETARY OF STATE ,, ,, ,-, 364 STONERIDGE ROAD
700 WEST JEFFERSON CDS STONERIDGE UTILITIES,LLC BLANCHARD ID 83804
PO BOX 83720 DANUEL STANGER
BOISE,ID 83720-0080 111 E SEGO LILY DR STE 400
SANDY UT 84070 3. New Registered Agent Signature:*
NO FILING FEE IF USA
RECEIVED BY DUE DATE
4. Limited Liability Companies: Enter Names and Addresses of at least one Member or Manager.
Office Held Name Street or PO Address City State Country Postal Code
MANAGER DEAN A ALARA III E SEGO LILY DR STE 400 SANDY UT 84070
MANAGER DANUEL R STANGER III E SEGO LILY DR STE 400 SANDY UT USA 84070
5.Organized Under the Laws of: 6.Annual Report must be signed.*
LIT Signature: Marcus Sherman Date: 10/25/2017
W 21482 Name(type or print): Marcus Sherman Title: Authorized Agent
Processed 10/25/2017 * Electronically provided signatures are accepted as original signatures.
STONERIDGECDS
Foreign • Liability Company
Certificate
Filing Type Foreign Limited Liability
Company
Foreign Name CDS STONERIDGE UTILITIES,
LLC
Status Inactive-Revoked
(Administrative)
Formed In UTAH
Term of Duration Perpetual
Principal Address 111 E SEGO LILY DR STE 400
SANDY, UT 84070
Mailing Address 111 E SEGO LILY DR STE 400
SANDY, UT 84070
Initial Filing Date 11/21/2002
Inactive Filing Date 03/05/2019
8 AR Due Date 11/30/2018
Registered Agent Noncommercial
0000000
NO AGENT
AGENT RESIGNED OR ATTACHMENT A
INVALID
BOISE, ID 83702 Case No. SWS-W-25-02
Staff Comments
May 7, 2026

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000661109D I
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�¢ Ito °•� Office of the secretary of state, Phil McGrane
y C ANNUAL REPORT -FILED-
Idaho Secretary of State O
s� tigQ PO Box 83720 File#:0006611095
ATE o� Boise, ID 83720-0080 Date Filed: 1/12/2026 1:13:10 PM \
[phone]
Filing Fee:$0.00 N
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CD
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Entity Name and Mailing Address: 61
Entity Name: ESPRIT ENTERPRISES, LLC
The file number of this entity on the records of the Idaho 0000535971
Secretary of State is:
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Address KRISTEN MORGAN
PO BOX 770 'b
BAYVIEW, ID 83803-0770
Entity Details:
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Entity Status Active-Existing n
This entity is organized under the laws of: IDAHO
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the Idaho Secretary of State was:
The registered agent on record is:
Registered Agent KRISTEN MORGAN
Registered Agent
Physical Address 0
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17173 E PIER RD r-h
BAYVIEW, ID 83803 I-_
Mailing Address O
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Agent or Address Change O
® Select if you are appointing a new agent.
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The name and street address of the new registered agent and office in Idaho is:
Registered Agent Registered Agent
Kyle Karupiah H
Physical Address:
18354 E HIGHWAY 54
BAYVIEW, ID 83803-0105 0
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Mailing Address:
18354 E HIGHWAY 54 W
BAYVIEW, ID 83803-0105
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® I affirm that the registered agent appointed has consented to serve as registered agent for this entity.
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Limited Liability Company Managers and Members
Name Tltle Business Address �C
CHAN Karupiah Manager 18354 E HIGHWAY 54 O
PO BOX 770 1-h
BAYVIEW, ID 83803 W
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The annual report must be signed by an authorized signer of the entity. rt
Job Title: Manager (D
CHAN KARUPIAH 0111212026
Sign Here Date
Page 1 of 1 Page 1 of 1

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0006302537 1
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STATE OF IDAHO For office use only CD
�¢ Ito °•� Office of the secretary of state, Phil McGrane w
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M Idaho Secretary of State CD
s� tigQ PO Box 83720 File#:0006302537 61
ATE o� Boise, ID 83720-0080 Date Filed:6/6/2025 1:01:23 PM \
[phone] CD
Filing Fee:$0.00 6l
N
CD
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Entity Name and Mailing Address: 0­1
Entity Name: CDS STONERIDGE UTILITIES, LLC
The file number of this entity on the records of the Idaho 0003501980
Secretary of State is: CD
Address KRISTEN MORGAN
PO BOX 770 'b
BAYVIEW, ID 83803-0770
Entity Details:
(D
Entity Status Active-Existing n
This entity is organized under the laws of: IDAHO
IJ-
If applicable, the old file number of this entity on the records of C
the Idaho Secretary of State was:
The registered agent on record is:
Registered Agent KRISTEN MORGAN
Registered Agent
Physical Address 0
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17173 E PIER RD r-h
BAYVIEW, ID 83803
Mailing Address O
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Agent or Address Change O
❑ Select if you are appointing a new agent. 1-h
rt
Limited Liability Company Managers and Members
Name Tltle Business Address
H
Esprit Enterprises LLC Manager KRISTEN MORGAN
PO BOX 770
BAYVIEW, ID 83803-0770 0
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The annual report must be signed by an authorized signer of the entity. (D
Job Title: Manager n
n
N
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Chan Karupiah 0610612025
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0006226004 1
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s� tigQ PO Box 83720 File#:0006226004 p
ATE o� Boise, ID 83720-0080 Date Filed:4/30/2025 6:24:07 PM \
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Filing Fee:$0.00 CD
N
CD
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Entity Name and Mailing Address: 0­1
Entity Name: J. D. RESORT, INC.
The file number of this entity on the records of the Idaho 0000315307
Secretary of State is: N
Address PO BOX 770
BAYVIEW, ID 83803-0770
Entity Details:
Entity Status Active-Good Standing
This entity is organized under the laws of: IDAHO n
N
If applicable, the old file number of this entity on the records of C102017 N
the Idaho Secretary of State was: C
N
The registered agent on record is:
Registered Agent KRISTEN MORGAN
Registered Agent
Physical Address
O
17173 E PIER RD
BAYVIEW, ID 83803 F-h
Mailing Address ~
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Agent or Address Change
❑ Select if you are appointing a new agent. �
Corporate Officers and Directors: rt
Name Title Business Address
Chan Karupiah President PO BOX 770 I I
BAYVIEW, ID 83803-0770
Teresa Karupiah Vice President PO BOX 770 �3'
BAYVIEW, ID 83803-0770 O
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The annual report must be signed by an authorized signer of the entity. (�
Job Title: Manager n
N
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Kyle Karupiah 0413012025
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0003630916
SEA
t STATE OF IDAHO w
�¢ 1E�` For Office Use Only
Office of the secretary of state, Lawerence Denney N
y 4 c AMENDMENT TO CERTIFICATE OF ASSUMED -FILED- OD
*� BUSINESS NAME o
rr tiq Idaho Secretary of State File#:0003630916 Q0
�rE o4 PO Box 83720 \
Boise, ID 83720-0080 Date Filed: 9/28/2019 1:55:07 PM N
[phone] ap
Filing Fee:$10.00-Make Checks Payable to Secretary of State \
N
O
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The assumed business name currently on record is: l9
Select one: Standard, Expedited or Same Day Service(see Standard (filing fee$10)
descriptions below)
Assumed Business Name JD'S RESORT U'
Cn
Date Filed 08/12/1999
The file number of this assumed business name on the records of 0000098126 'b
the Idaho Secretary of State is:
The Assumed Business Name is amended to:
Change Assumed Business Name? I do not want to change the name (D
0
The type of business is amended to: N
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The general type of business transacted under the assumed Services
business name is: (D
The mailing address for future correspondence is amended to:
KRISTEN MORGAN
PO BOX 770 'C
BAYVIEW, ID 83803-0770
H
The individual or entity names and business address(es)of those doing business under the ABN: d
Name Address
J. D. RESORT, INC. KRISTEN MORGAN (D
General Business Corporation(D) PO BOX 770 0
BAYVIEW, ID 83803 n
(D
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Signature: I j
Kristen Morgan 0912812019
Sign Here Date 0
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Pagel of 1

ATTACHMENT L

December 2,2025
To: Stuart Van Horn,SPOA President
Cindy Thomas,JMBCA
Subject:Notice of Filing Application to Increase Rates for CDs StoneRidge Utilities,LLC
On December 1,2025,CDs StoneRidge Utilities("the water company")has filed an application
with the Idaho Public Utilities Commission(IPUC),case No.SWS-W-25-02,requesting that the
Commission grant it permission to increase the minimum monthly user fees and commodity
fees to become effective February 1,2026.This filing is subject to public review and an IPUC
decision before it can take effect.
The water company wishes to make you aware that this filing has just taken place.In the rate
case application,CDs StoneRidge Utilities LLC is proposing an overall revenue increase of 43%
be applied to all classes of customers(all meter sizes)plus a minimal CPI increase in rent and
labor.This change would equate to an increase of$10.61/month for users with a%inch meter.
In order for the water company to operate in a manner that allows it to continue to supply
clean,safe drinking water to all its consumers,it must pursue this application which addresses
primarily three issues:
1) Required CDs StoneRidge Utilities corrective actions resulting from significant
deficiencies identified by the Department of Environmental Quality(DEQ)when a
sanitary survey of the CDs StoneRidge Utilities water system was performed on July 17,
2025.(The Idaho Rules for Public Drinking Water Systems require sanitary surveys of
water systems every 3 to 5 years).The significant cost drivers resulting from the survey
were:
(a)the need to repair a leak in the storage reservoir tank,
(b)the need for auxiliary(back-up)power at the primary wellhouse for continuous
operation of the water system in the event of a power outage which could potentially
cause system depressurization resulting in contamination of the drinking water,
(c)the need to install a means to isolate the storage facility without causing a loss in
pressure in the distribution system when a tank is taken offline for cleaning and repairs,
(d)professional cleaning of water storage tanks,ensuring public health is protected.
2) To make up for the loss of approximately$65,000 in gross revenue from the StoneRidge
Golf Course irrigation system.The Golf Course—a significant consumer of the CDs
StoneRidge Utilities water system—has installed its own well and will no longer be
purchasing 40%of the annual gross water volume that is currently sold by CDs
StoneRidge Utilities LLC.
2 ATTACHMENT L
Case No. SWS-W-25-02
Staff Comments
May 7, 2026

3) To address the DEQ loan that CDS StoneRidge Utilities LLC acquired from Bridge Partners,
the previous owner of the water system,in November 2018.The DEQ loan is currently in
default due to the previous owner's decision to not apply funds collected to the existing
debt and due to CDS StoneRidge Utilities inability to apply funds to this loan once the
debt was uncovered at the expiration of the Happy Valley surcharge,because there was
a shortfall in funds being collected from the water system customers.
CDS StoneRidge Utilities has been in negotiations with DEQ to extend the loan maturity
date.The account has been accelerated from a 30-year recovery period to a 7-year
amortization schedule by the water company,to provide solvency to service the revised
loan payment.Based on this schedule,the loan maturity date would be extended 17
months,making the loan payoff date June 1,2029.
CDS StoneRidge Utilities LLC believes it prudent to share with you that in the previous rate case
submittal,a considerable amount of money was spent on legal fees as a result of intervenors
that opted to participate in the legal proceedings.Intervenors are typically involved in cases
such as this,when they believe they could potentially have a significant impact in the case's
outcome(i.e.:reduce the impact of the rate case application to its users).
The cost of intervenors,in the 2025 CDS StoneRidge Utilities LLC rate case,was a staggering
$31,000.This cost,as you may or may not be aware,is passed on to the water system consumer
as an allowable expense,as a rate case line item in a follow-on rate case.For these reasons,you
are encouraged to weigh whether the cost incurred by the use of an intervenor,will result in the
desired outcome you seek.
As a part of this overall process,CDS StoneRidge Utilities LLC wishes to propose a settlement
conference take place where the data is presented to all parties and we could amicably work
through our differences and come to a joint agreement that generally works for all those
impacted.
A copy of our application will be on file and available for inspection at the IPUC office in Boise
on December 1,2025 or very soon thereafter,and online at the Commission website:
www.puc.idaho.aov.
If you have questions or wish further explanation of the information contained herein,please
don't hesitate to reach out to Kyle Karupiah at [e-mail].
Sincerely,
�4& �auw"
CDS StoneRidge Utilities,LLC
3

ALL OTHER ATTACHMENTS AND TABLES
ARE ATTACHED SEPARATELY,
ACCOMPANYING THIS FILING,
AS AN EXCEL ATTACHMENT
Case No. SWS-W-25-02
Staff Comments
May 7, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 71h DAY OF MAY 2026, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NO.
SWS-W-25-02, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
KYLE KARUPIAH, OFFICE SECRETARY
CDS STONERIDGE UTILITIES, LLC
P.O. BOX 280
BLANCHARD, ID 83804
E-MAIL: utilities(a,stoneridgeidaho.com
Attorney for CDS StoneRidge Utilities,LLC
Jason T. Piskel
Piskel Yahne Kovarik, PLLC
612 W. Main Ave., Suite 207
Spokane, WA 99201
E-MAIL: jpiskel(&,pyklawyers.com
Intervenor Intervenor
Randolph Lee Garrison,pro se Stoneridge Property Owners Ass'n (SPOA):
76 Bellflower Ct. Norman M. Semanko
Blanchard, ID 83804 Parsons Behle &Latimer
E-MAIL: 800 W. Main St., Ste. 1300
garrison(a),rmgarrison.com Boise, ID 83702
E-MAIL:
nsemanko(a),parsonsbehle.com
boisedocketgparsonsbehle.com
PATRICIA JORDAN, SECRETARY
CERTIFICATE OF SERVICE