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HomeMy WebLinkAbout20260514Comment_1.pdf Before the Idaho Public Utilities Commission In the Matter of CDS Stoneridge Utilities, LLC Water Rate Increase Application Idaho PUC Case No. SWS-W-25-02 Public Comment/Objection by Customer and Ratepayer I respectfully submit the following comments and objections regarding the requested water rate increase proposed by CDS Stoneridge Utilities, LLC. Introduction I am a customer and ratepayer of the CDS Stoneridge Utilities water system.I am concerned that the requested increase is substantially larger than what is justified by the actual operational impacts associated with the departure of the golf course from the system. The utility has stated that the golf course accounted for approximately 40%of total system water usage, while contributing only approximately 16-17%of total system revenue.The utility now seeks a rate increase of approximately 43%to remaining customers. [See Idaho PUC Workshop Presentation and related filings: https://puc.idaho.gov/Fileroom/PublicFiles/Press/Workshop/ CDS%20Stoneridcie%20Rate%20Case%20Presentatioo.pdf] The Commission should carefully examine whether: 1.The golf course was historically underpaying relative to its system burden; 2. Current customers are being asked to absorb costs that were previously subsidized; 3.Variable operating costs have been properly reduced following the departure of the golf course; 4. Proposed capital improvements are appropriately sized for the current system demand; 5. Related-party relationships may have influenced historical pricing or cost allocation. 1 . The Requested Increase Appears Disproportionate to the Claimed Revenue Loss The Commission should require the utility to meet its burden of proof demonstrating that the proposed rates are just, reasonable, prudent,and supported by adequate evidence. 1 At present,the record appears insufficient to establish that the full requested increase is: • prudent; • reasonably necessary; •appropriately allocated; • or properly supported under a post-golf-course demand profile. The utility bears the burden of demonstrating that all proposed expenditures and rate impacts remain used and useful for current regulated utility operations. According to the utility's own filings,the departure of the golf course represents approximately: \$65,744 annual revenue loss[Idaho PUC filing materials: https://If-puc.idaho.gov/WebLink/ DocView.aspx?dbid=0&id=153771 ] • comprised of approximately: •\$18,743 fixed/meter revenue •\$47,000 commodity revenue However,the utility is requesting approximately: •\$111,015 in additional annual revenue [Idaho PUC workshop materials: https://puc.idaho.gov/ Fileroom/PublicFiles/Press/Workshop/CDS°/o20Stoneridge%20Rate%2OCase%2OPresentation.pdf] • representing an increase of approximately 43% This means the requested increase substantially exceeds the direct revenue loss associated with the golf course. The Commission should require the utility to clearly identify: •which portions of the increase are directly attributable to lost revenue; •which portions are attributable to new capital expenditures; •which portions are attributable to administrative,financing, depreciation, legal,or related-party costs. 2. The Golf Course May Have Been Historically Undercharged The utility has represented that the golf course consumed approximately 40%of total system water demand while contributing only approximately 16-17%of total revenue. This raises a serious question regarding historical cost allocation fairness. 2 If one customer consumed approximately 40%of system capacity, pumping demand, infrastructure burden, and operational usage while paying only a small fraction of system revenue,then residential customers may have been subsidizing that customer for years. If that occurred, remaining customers should not now be required to absorb the financial consequences of prior rate design decisions. The Commission should require the utility to provide, under oath where appropriate: • historical rate structures for the golf course; • gallon-per-dollar comparisons between customer classes; • cost-of-service analysis showing whether the golf course paid proportionately for the infrastructure burden it imposed on the system. 3. Variable Operating Costs Should Decline Following the Departure of the Golf Course The utility's own statements indicate that approximately 40%of water demand has been removed from the system. While many utility expenses are fixed, several categories are clearly variable or partially variable, including: • purchased power; • pumping costs; •treatment chemicals; • mechanical wear; • pump cycling; •some maintenance and materials costs. The filings indicate approximate annual costs of the following categories: [Idaho PUC filing materials: https://If-puc.idaho.gov/WebLink/DocView.aspx?dbid=0&id=153771 ] • Purchased power:--\$23,092 • Chemicals: -\$12,045 • Materials and supplies:--\$5,683 These categories should reasonably decline following a substantial reduction in demand. The Commission should require the utility to demonstrate: • projected reductions in pumping power; • projected reductions in chemical usage; • revised operating assumptions after removal of golf course demand; •whether updated operating budgets reflect the lower system burden. 3 Without those reductions,the requested revenue increase may overstate the actual financial impact. 4. The Proposed Backup Generator Project Must Be Re-Evaluated Based on Current System Demand The proposed backup power project raises substantial prudence, sizing, allocation, and affiliate-benefit concerns. Publicly available documents reportedly reference a"Stoneridge Golf Community Well Generator Installation"associated with portions of the proposed project. [See Idaho PUC application materials and related exhibits: https://If-puc.idaho.gov/WebLink/DocView.aspx?dbid=0&id=153730]To the extent utility- funded infrastructure may benefit affiliate-owned golf, resort, development, or non-regulated facilities,the Commission should apply heightened scrutiny. The Commission should require disclosure of: •all engineering drawings; • one-line electrical diagrams; •well-site ownership records; • pump schedules; • generator sizing calculations; •site plans; •and identification of all utility versus non-utility facilities receiving direct or indirect benefit from the project. The Commission should specifically determine whether any portion of the proposed generator project has been intentionally sized or configured to support anticipated future expansion beyond current regulated customer demand. The undersigned has received communications from individuals associated with utility operations, system installation activity, and development-related discussions indicating that portions of the proposed infrastructure may have been designed not only for current system requirements, but also for anticipated future growth over an approximately 5-10 year planning horizon. Those communications reportedly referenced: • infrastructure planning for future residential expansion; • backup-system sizing extending beyond current customer demand; • undeveloped parcels within the service area; •and possible future expansion from roughly 500 existing units toward approximately 1,000 total units under current zoning assumptions. The undersigned does not present these communications as definitive proof of the utility's formal planning assumptions. However,they raise substantial questions regarding whether portions of the proposed 4 infrastructure may be sized in part for speculative future growth,future subdivision buildout, or anticipated development expansion beyond current regulated service obligations. To the extent proposed facilities are being intentionally sized to accommodate future growth,future development,speculative future demand,or affiliate-controlled expansion areas,the Commission should carefully determine whether such facilities presently satisfy the"used and useful"standard applicable to recovery from existing ratepayers. Existing customers should not automatically be required to finance substantial future-capacity infrastructure intended primarily to support later development activity,future customer additions,or expansion benefiting future land-development interests. The Commission should therefore require production of: •all engineering demand assumptions; •future growth projections; • projected future customer counts; • development buildout assumptions; • planning-horizon analyses; •and all sizing criteria relied upon in determining the capacity of the proposed facilities. The Commission should specifically determine whether any portion of the proposed generator project: • benefits non-regulated affiliate operations; • benefits golf-course-related infrastructure; •supports future development capacity; • or exceeds current regulated utility demand requirements. Absent such evidence,the record does not presently establish that the proposed investment is prudent, used and useful, or appropriately limited to regulated utility purposes. The utility proposes a backup power project reportedly costing approximately\$202,400. [See Idaho PUC workshop presentation and application materials: https://puc.idaho.gov/Fileroom/PublicFiles/Press/ Workshop/CDS%20Stoneridge%20Rate°/02OCase%2OPresentation.pdf; https://If-puc.idaho.gov/WebLink/ DocView.aspx?dbid=0&id=153730] The publicly available materials do not appear to disclose: • generator size(M); • load calculations; • pump horsepower assumptions; • emergency demand calculations; •whether golf course irrigation loads were excluded; •whether lower-cost alternatives were evaluated. 5 Because the golf course reportedly represented approximately 40%of system demand,the Commission should require the utility to demonstrate that the proposed backup power system is sized for: • current demand; • reasonably anticipated future demand; •and not historical peak irrigation demand that no longer exists. Generator sizing is heavily influenced by: • peak simultaneous pump loads; •starting surge requirements; • irrigation and booster demands. If the golf course was a major contributor to those peak demands,the proposed project may now be oversized relative to the remaining customer base. The Commission should carefully evaluate whether all proposed facilities remain used and useful for current utility operations following the substantial reduction in system demand. Customers should not be required to finance oversized infrastructure based upon historical irrigation demand, speculative future expansion,or affiliate-development assumptions that may no longer apply. The Commission should require production of: • engineering load calculations; • pump and motor schedules; • peak demand assumptions; •alternative system sizing evaluations; •and any DEQ correspondence specifying required backup capacity. 5. Utility Infrastructure, Easement Rights, and Access Concerns The Commission should also carefully examine whether portions of the utility infrastructure currently operate on land where: • recorded easement rights may have expired; • permanent easements may never have been properly recorded; •access rights may rely upon affiliate agreements or private arrangements rather than durable recorded utility easements; • or utility infrastructure may now exist without clear long-term legal access protections benefiting ratepayers. 6 Public records and related documents appear to raise concerns that portions of the system may historically have relied upon lease arrangements, affiliate permissions, or temporary easement structures rather than permanent independently enforceable easements. If utility infrastructure is located on land owned or controlled by affiliated entities,the Commission should determine: •whether the utility possesses valid and enforceable perpetual easement rights; •whether any easements have expired or are subject to termination; •whether ratepayers are being asked to fund improvements located on land without secure long- term utility access rights; •and whether affiliate-controlled land arrangements expose ratepayers to future relocation costs, legal disputes,or operational uncertainty. Particular scrutiny should be given to any easement or land-use agreements that may have expired on or around December 31, 2025, or which depend upon revocable or affiliate-controlled arrangements. [See Bonner County Recorder records portal: https://bonnercountyid.gov/departments/recorder/] The Commission should require disclosure of: •all easement agreements; • recorded utility access documents; • lease arrangements affecting utility infrastructure; •affiliate land-use agreements; •and any legal analysis regarding the continuing validity of utility access rights. Ratepayers should not be required to finance substantial infrastructure investments where the underlying land rights or access protections remain uncertain. Infrastructure located on affiliate-controlled land without durable perpetual recorded easement protections creates ongoing operational,financial,and regulatory risk for customers. Ratepayers should not be required to fund long-lived infrastructure improvements where the utility may lack secure perpetual legal access necessary to ensure continued utility operations and protection of customer-funded assets. 6. Related-Party Relationships, Affiliate Transactions, and Cross-Subsidization Should Be Carefully Examined The Commission has previously expressed concern regarding allocation, separation, and affiliate-related issues involving Stoneridge-affiliated entities. [See Idaho PUC Final Order No.36407: https://puc.idaho.gov/ 7 Fileroom/PublicFiles/WATER/SWS/SWSW2401/OrdNotc/20241129Final%200rder%20No.%2036407.pdf] Those concerns warrant renewed scrutiny in the present proceeding. The historical structure of the system appears to have been developed around an integrated golf, resort, development,and residential model.If portions of that integrated structure are now separating,the Commission should carefully evaluate whether remaining residential customers are being asked to absorb stranded costs, oversized infrastructure costs, or affiliate-related financial impacts that were historically tied to broader commercial development activities. To the extent affiliate entities historically received below-cost utility service, benefited from utility-funded infrastructure, or were provided favorable rate treatment,the Commission should consider imputed revenue adjustments, affiliate reimbursement mechanisms, or other corrective allocation measures rather than shifting those costs onto residential customers. The Commission should carefully examine whether related-party relationships exist or historically existed between: • CDS Stoneridge Utilities; •Stoneridge Golf Course; •Stoneridge Resort; •affiliated ownership entities; • or affiliated land-development entities. Because the golf course reportedly consumed a disproportionately large share of water relative to revenue contribution,the Commission should ensure: • no preferential pricing existed; • no improper cross-subsidization occurred; • no utility-funded infrastructure disproportionately benefited affiliated entities; •and no costs are being shifted from affiliated commercial entities onto residential customers. Any related-party transactions, leases, shared infrastructure arrangements, management agreements,or affiliate allocations should receive careful scrutiny. 7. The Requested Increase May Shift Legacy System Costs Onto Residential Customers The utility appears to be attempting to maintain infrastructure and financial assumptions developed under a substantially larger system demand profile. However, if approximately 40%of historical demand has permanently left the system,the Commission should evaluate whether: •all prior infrastructure assumptions remain necessary; 8 •all prior capacity assumptions remain prudent; • capital investments should be resized; •and whether customers are being asked to fund infrastructure built around historical commercial irrigation demand. Customers should not be required to indefinitely subsidize oversized infrastructure if the underlying demand assumptions have materially changed. 8. Requested Commission Actions I respectfully request that the Idaho Public Utilities Commission: 1. Require detailed disclosure of the basis for the requested increase; 2. Require updated operating-cost projections reflecting reduced system demand; 3. Require full engineering justification for the proposed generator capacity and project cost; 4. Require cost-of-service analysis comparing residential and golf course contributions; 5. Review all related-party relationships,affiliate land arrangements, easement agreements, and infrastructure access rights; 6. Require disclosure of all utility easements, leases, and land-use agreements affecting utility infrastructure; 7. Carefully evaluate whether utility infrastructure currently exists on property lacking secure permanent recorded easement rights; 8. Carefully evaluate whether the requested increase improperly shifts historical costs onto remaining residential customers. 9. Carefully evaluate whether the requested increase improperly shifts historical costs onto remaining residential customers. 9. Conclusion Absent clear and convincing evidence establishing that the proposed expenditures,allocations, infrastructure sizing,affiliate relationships, and land-access arrangements are prudent, reasonable, necessary, properly allocated,and used and useful for current utility operations,the Commission should deny or substantially reduce the requested increase. The departure of the golf course appears to expose longstanding structural and allocation issues within the utility's rate design. While some increase may be justified,the currently proposed increase appears substantially larger than what can be explained solely by the direct revenue loss associated with the golf course. The Commission should require detailed evidence demonstrating that: • costs are prudent; 9 • costs are necessary; • costs are properly allocated; •and remaining customers are not being asked to absorb unfair or historically distorted system costs. References and Public Records Cited The following publicly available filings,workshop materials,and public records are referenced or relied upon in connection with the concerns raised in this submission: 1.Idaho Public Utilities Commission-CDS Stoneridge Utilities Rate Case Workshop Presentation https://puc.idaho.gov/Fileroom/PublicFiles/Press/Workshop/ CDS%20Stone rid ge%20Rate%20Case%20 Presentation.pdf 2.Idaho Public Utilities Commission-CDS Stoneridge Utilities Application Materials https://If- puc.idaho.gov/WebLink/DocView.aspx?dbid=0&id=153730 3.Idaho Public Utilities Commission- Revenue and Rate Information/Filing Materials https://If- puc.idaho.gov/WebLink/DocView.aspx?dbid=0&id=153771 4.Idaho Public Utilities Commission- Final Order No.36407 https://puc.idaho.gov/Fileroom/ PublicFiles/WATER/SWS/SWSW2401/OrdNotc/20241129Final%20Order%20No.%2036407.pdf 5.Idaho Public Utilities Commission-2024 Application(Redacted) https://puc.idaho.gov/Fileroom/ PublicFiles/WATER/SWS/SWSW2401/Case Files/20240228AppIication%20%28redacted%29.pdf 6. Bonner County Daily Bee- Hearing Set on Proposed CDS Stoneridge Water Rate Increase https:// bon nercou ntydailybee.com/news/2026/apr/22/hea ri ng-set-on-proposed-cds-Stoneridge-water-rate- increase/ 7. Bonner County Daily Bee-Utility Seeks Rate Increase https://bonnercountydailybee.com/news/ 2026/jan/21/utility-seeks-rate-increase/ 8. Historical Spokesman-Review Reporting Regarding Stoneridge Water Utility https:// www.spokesman.com/stories/2007/'u n/28/stoneridge-water-co-customer-rates-rising/ 9. Bonner County Recorded Property and Easement Records https://bonnercountyid.gov/departments/ recorder/ 10.Idaho Department of Environmental Quality(IDEQ) Public Water System Information https:// www.deq.idaho.gov/drinking-water-system-search/ The Commission is respectfully requested to require full disclosure of all additional engineering studies, easement records,affiliate agreements, infrastructure ownership documents,and cost-allocation materials relied upon by the utility in support of the requested increase. 10 Respectfully submitted, Name: Kevin Krieg Address:2910 W Seltice Way, Post Falls,Idaho 83854 Property owner and Rate Payer at: 1025 Blanchard Elk Rd. Blanchard Idaho 83804 Date: May-14-2026 11