20260604Final_Order_No_37060.pdf

Office of the Secretary
Service Date
June 4,2026
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION ) CASE NO. MWL-W-25-01
INTO MEADOWS WATER, LLC'S RATES )
AND CHARGES FOR SERVICE )
ORDER NO. 37060
On May 8, 2025, the Idaho Public Utilities Commission ("Commission") issued an order
granting Meadows Water, LLC ("Company") a Certificate of Public Convenience and Necessity
("CPCN"). Order No. 36595. The Commission also directed Commission Staff("Staff') to open
a separate docket to evaluate whether the Company's interim rates are fair,just, and reasonable.
Case No. MWL-W-25-01 was opened on October 1, 2025, to investigate the rates and
charges of the Company. Order No. 36595.
On March 25, 2026, the Commission issued a Notice of Modified Procedure, establishing
public comment and Company reply comment deadlines. Order No. 36984. Staff and several
customers field comments. The Company did not file a reply.
Based on our review of the record, the Commission now issues this Final Order directing
the Company to file a general rate case application within 90 days, submit a compliance tariff
identifying all non-recurring charges within 30 days, and provide a status update addressing
unresolved system deficiencies and corrective actions within 6 months.
STAFF COMMENTS
Staff audited the Company's operating expenses and plant-in-service for the 12-month
period ending December 31, 2024, to determine whether current revenues adequately supported
safe and reliable service while providing an appropriate return on investment. Staff Comments at
1. As part of the review, Staff examined the Company's system description, revenues,rate design,
non-recurring charges, and overall system reliability.Id. at 2.
Staff confirmed that the Company owned and operated the water system serving 214
customers in the Meadows at West Mountain subdivision in Valley County, Idaho, consisting of
groundwater wells,pressure tanks, treatment systems, and a distribution network.Id. Based on its
investigation, Staff believed that the Company's current rates generated revenues exceeding those
necessary to recover prudently incurred costs and provide an appropriate return.Id. Staff calculated
that revenues under present rates totaled approximately $148,376, while the adjusted revenue
ORDER NO. 37060 1

requirement was approximately $133,502, indicating an over-recovery of about 10% and
supporting the need for a rate reduction.Id.
In reviewing the Company's rate base and plant investments, Staff calculated a net rate
base of$300,214, including plant-in-service and working capital.Id. at 3. Staff excluded from rate
base a generator rebuild project costing $31,418 because the generator had never been connected
or placed into service and therefore was not considered used and useful for providing customer
service. Id. Staff also adjusted accumulated depreciation and depreciation expense to remove
amounts associated with the unused generator.Id. Staff believed that an 11%return on equity was
appropriate based on recent rate cases involving similarly situated small water utilities. Id. at 4.
After reviewing operating expenses, Staff reduced the Company's reported operating expenses
from$265,247 to $104,298 by excluding or adjusting costs that were not considered reasonable or
prudent for ratemaking purposes. Id. Significant adjustments included the removal of legal
expenses associated with disputes between the Company and its customers,exclusion of regulatory
fines and penalties assessed by the Idaho Department of Environmental Quality ("IDEQ"), and
normalization of power and chemical expenses using historical usage data. Id. at 5-7. Staff also
believed that the bookkeeping, insurance, internet, and certain routine operating costs were
reasonable for inclusion in rates.Id. at 5.
Staff reviewed the Company's flat-rate rate design and believed that the existing residential
rate of $57 per month continued to produce revenues above the level necessary to recover
prudently incurred expenses and provide safe and reliable service. Id. at 7-8. Staff therefore
recommended that the Commission require the Company to file a general rate case to align
revenues with the calculated revenue requirement. Id. at 8. Staff also reviewed the Company's
non-recurring charges,including returned check fees,reconnection charges,late payment fees,and
hookup fees, and generally found them reasonable for interim use, although Staff recommended
that the Company file a compliance tariff clearly identifying such charges.Id. at 8-9.
In its reliability analysis, Staff identified significant operational and compliance concerns
affecting the water system. Id. at 9-10. Staff noted that several deficiencies identified in IDEQ's
2022 sanitary survey remained unresolved, including the absence of annual backflow device
testing, lack of auxiliary backup power, and failure to install auto-proportioning chlorinators. Id.
at 10. Staff believed that these deficiencies could affect the system's ability to provide safe and
continuous service. Id. Staff was unable to verify whether the system had sufficient capacity to
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meet regulatory requirements because the Company failed to provide requested engineering data.
Id. Additionally, Staff identified potential concerns regarding the adequacy of the Company's
water rights, noting that the authorized pumping rate appeared to be significantly lower than
historical peak demand levels. Id. at 10-11. Because IDEQ and the Idaho Department of Water
Resources ("IDWR") hold jurisdiction over many of these matters, Staff stated that it would
coordinate with those agencies and continue monitoring the issues. Id. at 11.
Based on its overall investigation, Staff recommended that the Commission order the
Company to file a general rate case to reduce rates, submit a compliance tariff identifying non-
recurring charges, and provide a status update within six months addressing unresolved system
deficiencies and corrective actions.Id. at 11-12.
PUBLIC COMMENTS
The Commission received eight public comments from customers of the Company.
Customer comments raised concerns regarding service reliability, infrastructure deficiencies,
water quality issues, and attempted rate increases implemented without Commission approval.
Customers reported recurring water pressure losses, "Do Not Drink" and "Boil Water" notices,
inadequate communication, and a lack of infrastructure improvements such as backup power and
backflow prevention systems.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter and the issues in this case under Title 61
of the Idaho Code. The Commission regulates "public utilities," including "water corporations"
that serve the public, or some portion thereof, for compensation.Idaho Code §§ 61-125, -129, and
-501.
The Commission's regulatory authority extends to the service rates charged by public
utilities. Specifically, upon finding that the rates charged by a public utility are "unjust,
unreasonable, discriminatory or preferential, or in any way in violation of any provision of law"
the Commission must "determine the just, reasonable or sufficient rates."Idaho Code § 61-502;
see also Idaho Code § 61-503.
The Commission has reviewed the record in this case, including Staff s Comments
evaluating the Company's operations, plant-in-service, revenues, expenses, rate design, and
system reliability for the 12-month period ending December 31, 2024. Based on the record, the
Commission finds Staff s analysis reasonable for purposes of this proceeding.
ORDER NO. 37060 3

The Commission finds that the Company's current rates generate revenues exceeding those
necessary to recover prudently incurred operating expenses and provide an appropriate return on
investment. Staff calculated annual revenues under present rates of approximately $148,376 and
an adjusted revenue requirement of approximately $133,502, indicating that the Company's
existing rates may result in over-recovery from customers.
Based on the record, the Commission finds it necessary for the Company to file a general
rate case so the Commission may comprehensively review the Company's rates,charges,revenues,
operating expenses, rate base, and overall revenue requirement. The Commission directs the
Company to file a general rate case within 90 days of the service date of this Order. The filing
shall include all information necessary to evaluate whether the Company's rates are just, fair,
reasonable, and sufficient, including updated financial information, plant records, and supporting
documentation for all proposed rates and charges.
The Commission further finds that the Company's tariff and customer charge provisions
require clarification and formalization. Staff reviewed the Company's non-recurring charges,
including returned check charges, reconnection fees, late payment charges, and hookup fees, and
generally believed those charges were reasonable for the interim period. However, the
Commission agrees that the Company should formally identify all non-recurring charges in an
approved tariff to promote transparency,consistency,and regulatory compliance.Accordingly,the
Commission directs the Company to work with Staff and submit a compliance filing within 30
days of the service date of this Order that includes a tariff identifying all non-recurring charges,
fees, and applicable terms and conditions of service.
The Commission also finds that continued monitoring of the Company's system reliability
and regulatory compliance is necessary. Staff s investigation identified unresolved deficiencies
previously documented by the IDEQ, including the absence of annual backflow testing, lack of
auxiliary power for safe and continuous operation, and lack of auto-proportioning chlorinators.
Staff also identified unresolved concerns regarding system capacity and water rights. The
Commission finds these matters significant because they directly relate to the Company's ability
to provide safe, adequate, and reliable water service to customers.
The Commission directs the Company to provide a status update to the Commission as a
compliance filing within 6 months of the service date of this Order. The filing shall address all
unresolved system deficiencies identified in Staffs Comments, describe corrective actions taken
ORDER NO. 37060 4

or planned, and include documentation demonstrating progress toward resolution of those issues.
The filing shall also address the status of any engineering studies, infrastructure improvements,
operational changes, or other corrective measures related to system reliability, capacity, and water
rights.
The Commission further directs the Company to comply with all applicable directives,
requirements, consent orders, and regulatory determinations issued by IDEQ and IDWR. The
Commission expects the Company to coordinate with those agencies and complete all required
corrective actions necessary to ensure continued safe and reliable utility service and compliance
with applicable laws and regulations.
Based on the foregoing, the Commission finds the above measures reasonable and
necessary to ensure that the Company provides safe, adequate, and reliable service while moving
toward full compliance with applicable regulatory requirements and cost-based ratemaking
principles.
ORDER
IT IS HEREBY ORDERED that the Company shall file a general rate case within 90 days
of the service date of this Order.
IT IS FURTHER ORDERED that the Company shall work with Staff and submit a
compliance filing within 30 days of the service date of this Order that includes a tariff identifying
all non-recurring charges, fees, and applicable terms and conditions of service during the interim
period.
IT IS FURTHER ORDERED that the Company shall provide a status update to the
Commission as a compliance filing within six months of the service date of this Order and shall
address all unresolved system deficiencies identified in Staff s Comments, describe corrective
actions taken or planned, and include documentation demonstrating progress toward resolution of
those issues. The filing shall also address the status of any engineering studies, infrastructure
improvements, operational changes, or other corrective measures related to system reliability,
capacity, and water rights.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within 21 days of the service date of this Order regarding any matter decided in
this Order.Within 7 days after any person has petitioned for reconsideration, any other person may
cross-petition for reconsideration.Idaho Code § 61-626.
ORDER NO. 37060 5

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 4th day of
June, 2026.
G
EDWARD LODGE, RtAIDENT
J R. HAMMOND JR., COMMISSIONER
DAYN HA IE, COMMISSIONER
ATTEST:
do i a a n c h e z
Commission Secretary
I:\Legal\WATER\MWL-W-25-01_rate invest\orders\MWLW2501_final_em.docx
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