Loading...
HomeMy WebLinkAbout20200813Falls Water to Staff 1-40.pdf Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 1 REQUEST NO. 1: Please provide a schedule of all additions and retirements to Plant in Service since the beginning of 2012, including installation date, account, installed cost, and estimated depreciable life, that were not included in the "2020 Depr" tab of the 2020 Rate Case Exhibits. Response: Please see FLS-W-20-03 IPUC DR 1 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 2 REQUEST NO. 2: Please provide all journal entries related to additions and retirements to Plant in Service since the beginning of 2012. Response: The Company has provided Staff with an accountant’s copy of its 2020 QuickBooks Pro company file that contains transactions through December 31, 2019. Staff may view all of the requested journal entries from this file. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 3 REQUEST NO. 3: Please provide the running balance and all deposits and withdrawals from the special plant reserve fund since its inception in Order No. 32663 in Case No. FLS-W-12-01. Response: Please see FLS-2-20-03 IPUC DR 3 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 6 REQUEST NO. 6: What are the SCADA functions in the rate base addition shown in Exhibit 1, Column G? Response: Final connection of Well 10 SCADA had not been completed. The invoice from Exhibit 1, Column G is for work done to help get the well site to communicate with the SCADA computer. The invoice from the vendor was not received until early January 2020. The communication between Well 10 and the SCADA computer was finalized in November 2019. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 4 REQUEST NO. 4: Please provide a copy of the Company's Chart of Accounts and any related instruction material. Response: Please see FLS-W-20-03 IPUC DR 4 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 7 REQUEST NO. 7: In Final Order No. 33863, the Commission ordered the Company to "...notify the Commission when on-site power is installed at the well and the cost of any such installation" Please provide the following information: a. The make, model, power rating, equipment cost, and installation costs of this generator. b. The date on which the generator became fully operational. c. Reports of any tests or inspections conducted by the DEQ indicating the status of the generator (e.g. results of the Company's latest DEQ Sanitary Survey). Response: The Company should have filed the separate notification of the backup generator installation being completed in March 2020 and apologizes for the oversight. The generator for Well 10 is a Caterpillar Model C7.1 KW 175 generator. A variable frequency drive (VFD) was needed for the well motor to provide a soft start for the 150 hp pump motor. Cost of generator and VFD: Generator $47,123.00 Manual Transfer Switch $14,459.62 VFD $29,776.29 Total $91,358.91 The generator was delivered August 28, 2019. Full utilization of the generator was delayed until the manual transfer switch could be installed on March 27, 2020. The Company has no documentation from DEQ indicating the status of the generator. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 8 REQUEST NO. 8: Please list any additions to rate base or expenses in 20l9 that are related to abandoned projects (such as expenses for engineering and preliminary work for a project that is stopped before it is completed). Response: No projects were abandoned in 2019. Therefore, no costs added to rate base or to expenses relate to abandoned projects. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 10 REQUEST NO. 10: Please summarize all benefits and retirement plans provided to any classification of Company employees. Please also include any changes that have occurred to benefits/accruals during the past five years. Response: Employee benefits at Falls Water Co., Inc. include: Paid Vacation Paid Sick Time Flex Savings Accounts Health Insurance Vision Insurance Dental Insurance 401(k) with Company Match up to 4% Field Personnel receive a clothing allowance No changes have been made in the past five years to benefits/accruals. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 9 REQUEST NO. 9: Please provide the depreciable life for all assets in Account 334 - Meters, as well as all documentation and justification for how that length of life was determined. Response: FLS-W-20-03 IPUC DR 9 Attachment 1 is an Excel file, “Request No 9.xls”. The file has all the individual meters listed with the individual unit depreciation. The life of the water meters historically has been determined by the warranty of the unit. Prior to June 2011, all meters installed were Sensus SR2 meters. The manufacturer’s warranty was a 10- year warranty. The depreciable life of these meters was set at 10-year straight-line. The Company made the decision in June of 2011 to begin using Sensus IPERL meters. The decision was made because of the better accuracy of the IPERL meter over the SR2 model. The IPERL has a 20-year battery life and a 20-year warranty, full replacement value for the first 10 years and a declining replacement value for the remaining 10-years. The meters will generally last a bit longer than the warranty so the depreciable life for the IPERL meters was set at 25-year straight-line. On the Excel spreadsheet, a variety of straight-line values are shown. The reason for the variation is due to the adjustment made to value the assets to the net book value of the asset as of the date that Northwest Natural Water purchased Falls Water Co., Inc. The adjusted straight-line life of the asset was calculated by dividing net book value as of 9/14/2018 by the value of the monthly depreciation value for that unit, then dividing the result by 12 months to determine the years of straight-line asset life carried to two decimal places. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 11 REQUEST NO. 11: Please provide the source of the "Idaho Falls wage at years of service by employee" data used in the "Payroll 2020" tab of the 2020 Rate Case Exhibits. Response: The City of Idaho Falls salary schedule can be found on line at: https://www.idahofallsidaho.gov/DocumentCenter/View/7626/Salary-Chart-2019-PDF The employee class titles used from the City of Idaho Falls Job Descriptions page (https://www.idahofallsidaho.gov/189/Job-Descriptions) are: Office Assistant I – Water Water Laborer Water Distribution Operator Water Supply Operator Water Service Operator Water System Equipment Operator Water Supply Foreman Water Distribution Foreman Lead Water Supply Operator Water Lead Distribution Operator Water Superintendent The job descriptions list the pay grade to be used on the salary schedule. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 13 REQUEST NO. 13: Please provide copies of the Company's insurance policy coverage and any invoices or receipts supporting the Company's insurance expense for 2019 and pro forma Insurance Expense Charge from NWN. Response: Please refer to ‘FLS-W-20-03 IPUC DR 13 Attachment 1’ for a summary of the Company’s insurance policy coverage and insurance expense for 2019, including the allocated insurance charge from NW Natural. Please refer to ‘FLS-W-20-03 IPUC DR 13 Attachment 2’ for a copy of the Company’s ‘Certificate of Insurance’ to evidence the company’s insurance policy coverage and expense. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 15 REQUEST NO. 15: Please provide the invoice and receipt for the $3 charge per connection IDWH Fee paid to the Idaho Department of Environmental Quality for 2019. Response: Please see FLS-2-20-03 IPUC DR 15 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 14 REQUEST NO. 14: Does the Company expect to have any rate case expense for this case? Response: The Company does not expect to have any external rate case expense for this case. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 20 REQUEST NO. 20: Please provide a copy of the Company's federal and state income taxes for 2019. Response: The 2019 federal and state income tax returns for Falls Water Company (FWC) are not expected to be filed with the respective taxing authorities until October 15, 2020. These income tax returns have not yet been prepared. For your reference, we are sharing our best estimate of the 2019 taxable income calculation for FWC (see the figure below). This calculation was originally prepared in January 2020 and reflects the anticipated 2019 income tax reporting. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 16 REQUEST NO. 16: Please provide an itemized list of the services and costs provided by NW Natural Water as shown in Exhibit 2, Column D. Please provide the calculations of shared services with NW Natural Water in Excel format with formulas intact. Please include a description of the Massachusetts method and why it was chosen. Response: Please refer to FLS-W-20-03 IPUC DR 16 – Attachment 1 for the itemized list of services and costs provided by NW Natural Water that result in the $79,225 of costs to be allocated to Falls Water as show in Exhibit 2, Column D. The Massachusetts Method is the allocation process that has been selected by NW Natural Water and its affiliates to allocate costs and to follow the National Association of Regulatory Utility Commissioners (NARUC) Guidelines for Cost Allocations and Affiliate Transactions. Consistent with the NARUC guidelines, for costs that cannot be directly assigned, the Company should allocate costs based on the function or driver of the cost and ensure that unauthorized subsidization of regulated or unregulated activities does not occur. The general allocator is based on the Massachusetts Formula, which is a generally accepted allocation formula used by many utilities. The Massachusetts Formula uses an average of plant, revenues, and employee headcount for the preceding year ended December 31st to allocate the indirect costs to affiliates. Costs incurred by NW Natural Water or its affiliates that directly relate to an affiliate will be directly assigned to that affiliate, and only the remaining unassigned expenses will be allocated to the affiliates using the general corporate allocation methodology of the Massachusetts method. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 17 REQUEST NO. 17: Please describe the "non-recurring non-utility income" removed from net income in Exhibit 2, Column B. Response: Please see FLS-W-20-03 IPUC DR 17 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 19 REQUEST NO. 19: Please explain the Company's proposed $15,872 increase in property taxes in Exhibit 2, Column E. Response: The year over year change in property taxes tends to bear a strong relationship to changes in plant balance investments. The forecast for property taxes begins by determining the ratio of current property tax to plant. This ratio is then applied to forecasted increases in plant to arrive at forecasted property taxes. The figure below provides the supporting calculation for the $15,872 increase in property taxes and includes references to the source of the underlying information used. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 24 REQUEST NO. 24: Please provide a list of "out-of-period adjustments"and "extraordinary items" for the years 2017 - 2020 to date. Response: The out-of-period adjustments found for the period requested were adjustments made to asset and depreciation accounts as of the date Falls Water was purchased by Northwest Natural Water. The entries were made to show the net book value of the assets as of the date of purchase, September 14, 2018. Extraordinary items occurring during the period include:  Purchase of Falls Water Co., Inc by Northwest Natural Water on September 14, 2018.  Sale of 12-inch water main to the City of Idaho Falls, Idaho on April 6, 2020.  System wide pressure loss on April 20, 2020.  Purchase of Taylor Mountain Water and Sewer District’s water business assets on August 3, 2020. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 21 REQUEST NO. 21: Please explain the Company's provisions for deferred federal and state income taxes. Please provide any associated schedules, analyses, or descriptions of the Company's deferred income taxes. Response: Falls Water Company (FWC) does not currently have any federal or state accumulated deferred income tax (ADIT) balances associated with regulatory rate accounting. ADIT generally represents the cumulative difference between total income tax expense and income taxes paid (total income tax expense = current income taxes + deferred income taxes). We would generally expect that utility rates be designed in a general rate case to allow for recovery of total utility income tax expense, both current and deferred. Unfortunately, this has not historically been the case for FWC. The figure below demonstrates that FWC was only allowed an income tax recovery of 19 percent in its last Idaho general rate case (2012). This was reasonable for the estimate of income taxes paid but it did not contemplate a recovery of deferred income taxes. In other words, ADIT has not been recovered in rate making. FLS-W-20-03 IPUC DR 21 NWN Response Page 2 of 3 In order for ADIT to be recovered in rate making, income tax expense in the determination of revenue requirement must be determined using the full statutory rates as in effect at the time. In 2012, this would have resulted in income tax expense of $70,618 in ratemaking, versus the $30,659 actually allowed, to arrive at the same approved return on equity of $130,164. The figure below demonstrates the proforma calculation of income tax expense of $70,618 that would have applied to the approved return on equity of $130,164 if income tax expense had been determined using the full applicable rates in effect in 2012. FLS-W-20-03 IPUC DR 21 NWN Response Page 3 of 3 FWC does have ADIT balances in its books and records but those balances were not previously recovered in utility rates. At the end of 2019 a net deferred income tax asset balance of $234 thousand was recorded. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 22 REQUEST NO.22: Please describe how all overheads (including but not limited to materials, supplies, vehicles, etc.) are allocated among plant and expense accounts. Response: The Company has not allocated overheads unless capitalizing labor and materials for repairs and projects done by its employees. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 23 REQUEST NO. 23: Please provide a list of any events in 2019, such as unplanned outages, storm damage or use of a diesel generator, that required repairs and/or increased expenses. Response: In 2019, no events occurred that resulted in increased repair costs and/or increased expenses. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 31 REQUEST NO. 31: Please provide the Company's practice for determining uncollectible accounts and its policy for customer account deposits and terminations. Response: The Company considers an account uncollectible when a customer has moved out of our service area and an outstanding balance remains on the books for three months. The former customer is contacted by phone if the balance has not been paid within two months of leaving our service area and is notified that an outstanding balance is owed. The customer is given an opportunity to pay the balance or make a payment arrangement. If the customer disputes the balance owed, we investigate the situation and inform the customer of the findings. If a mistake was made on the Company’s part, an adjustment is made. Otherwise the customer is asked to remit payment. The customer is told that the past due account will be turned over to a collection agency in the next month if payment is not received. A voice message is left for the customer if possible when our employee cannot speak directly to the former customer. They are asked to contact us about an unpaid balance on their account. If it is not possible to contact the former customer by phone and no other contact information is available, the unpaid balance of the account is considered uncollectible three months after the final billing goes out. The unpaid balance is turned over to a collection agency three months after the final billing. The Company does not require customer account deposits at this time. The Company follows the IPUC’s Customer Relations Rules for termination of a customer account for non-payment. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 25 REQUEST NO. 25: Please list any prepaid items for 2018 and 2019 showing amounts posted, vendor names, explanations, and accounts to which these items were booked. Please include within your response any significant changes to prepaid items occurring or planned to occur in 2019 and 2020. Response: Prepaid items in Account 162.3 – Prepaid Insurance were posted December 31, 2019 for General Liability Insurance, Umbrella Insurance, Auto Insurance, and Workers Compensation Insurance in the amount of $51,217.45. The Company has been under NW Natural’s insurance policies since November 1, 2019. NW Natural provided the prepaid insurance costs which are booked in the Prepaid Insurance account. The original entry was booked as a debit to 162.3 – Prepaid Insurance of $51,217.45 and a credit to 233.1 – NWN Water Intercompany Acct Pay of $51,217.45. Each month in 2020, $4,268.12 (1/12 of the total) has been moved by debiting Account 656 – Insurance Expense and crediting Account 162.3 – Prepaid Insurance to recognize the monthly insurance expense. Prepaid Workers Compensation Insurance was posted to Account 162.2 – Prepaid Workers Comp Insurance on November 11, 2018 in the amount of $1,561.80. In October 2018, the amount had been incorrectly posted to Account 656.1 Workers Compensation Ins when the policy renewal payment was posted. The policy was with Advantage Workers Compensation Insurance Co. The prepaid balance of $1,561.80 was applied on October 1, 2019, to Account 241.6 – Workers Compensation Insurance Liability to offset the September 2019 payroll workers compensation insurance liability. No additional prepaid items are planned for 2019. In late 2020, the Company is upgrading its billing software and SCADA software. It will also be acquiring notification software to notify customers of outages and emergency situations. Currently, the annual costs of these software applications have not been finalized. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 27 REQUEST NO. 27: Please provide a list of all contractors used in 2017, 2018, and 2019. Please include with this response the contract amount, project name, project location, and completion date. Response: Please see FLS-W-20-03 IPUC DR 27 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 30 REQUEST NO. 30: Please list all the Company's long-term debt issuances. Please include: dates of issuance and expiration, amounts, premiums or discounts, interest rates, dates of pre-payment, and payment schedules for each issuance. Response: Please see FLS-W-20-03 IPUC DR 30 Attachment 1 for the requested list. Please see FLS-W-20-03 IPUC DR 30 Attachments 2 and 3 for a copy of the payment schedule for each issuance. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 36 REQUEST NO. 36: Please explain why the Company is proposing a larger 38.89% increase to its commodity charge than the 5.63% to its base charge. Response: In past rate cases, the Company has structured its request for revenues so that base charges make up about 65% of total requested revenues and 35% of revenue is based on commodity charges. In Order 32663 Attachment 2, the Commission-approved rate design provides as a percentage of gross revenue a ratio of 67% minimum charge and 33% commodity charge. In preparing the proposed rates for this rate case, the Company used the prior rate design ratio as a guide. The ratio of the proposed rates in this case is 64.4% base and 35.6% commodity. The result was an increase in the commodity portion of 38.89% versus a 5.63% increase in the base fee. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 32 REQUEST NO .32: Please provide a current hydraulic model of the Company's water system. Response: A digital file will be provided of the latest hydraulic model of Falls Water’s system – “FWC_2020_07_16.net”. It was created in EPANet version 2.0, which is a free download at https://www.epa.gov/water-research/epanet. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 34 REQUEST NO. 34: Please provide a copy of the Company's policy for water main extensions. Response: The Company’s policy for water main extensions is found in Appendix A of the 2010 General Tariff file, provided with this response as FLS-W-20-03 IPUC DR 34 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 35 REQUEST NO. 35: Please provide the following for each meter size for each month from January 2017 through December 2019 a. Number of Billed Customer Charges b. Gallons of water provided to customers at no charge as part of the Minimum Charge c. Gallons sold to customers in excess of the maximum gallons allowed in the Minimum Charge. Response: Please see FLS-W-20-03 IPUC DR 35 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 37 REQUEST NO. 37: Please confirm that all projects listed on Exhibit 1 are complete. Response: Please refer to the response to FLS-W-20-03 IPUC DR 5 as it confirms the status of the projects listed in Exhibit 1. All projects are in service at this time. Final costs for the project in Column B are incomplete because final invoices from the contractor have not been received. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 38 REQUEST NO. 38: Column Q of the "Avg Mnthly Bill - Current Rates" tab of the 2020 Rate Case Exhibits shows the average monthly bill for each customer type (Residential, Commercial, and Multi Family) and meter size. For some customer types, meter sizes, and months, the average bill is smaller than the monthly basic charge. Please explain this discrepancy in the following instances: a. December: Residential 5/8" and 3/4" Meters b. January through April, November and December: Residential 1" Meters c. January through April: Commercial 2" Meters. Response: During the review of the discrepancies, an error in the calculation of the 2019 average monthly billings was found. The “Avg Mnthly Bill – Current Rates” tab of the 2020 Rate Case Exhibits used the actual revenues from 2019 and used total connections as of December 31, 2019 to calculate the average monthly billings. Please refer to FLS-W-20-03 IPUC DR 38 Attachment 1, an Excel file “Revised 2019 Average Monthly Bill per Active Customer,” to see the corrected average monthly billing per active customer for 2019. Note that December: Residential 5/8” and ¾” Meters still show an average less than the base charge. This is the result of a billing adjustment made in December 2019 for a billing error of $6,881.04 to customer account 3.1369.01 in November 2019. The customer account’s usage was not corrected prior to the billings being sent in November 2019 and the error was not found until December 2019. Item b and item c discrepancies are the result of using the higher December 31, 2019 customer count instead of the actual monthly customer count as shown in “Revised 2019 Average Monthly Bill per Active Customer”. The discrepancies are corrected in the revised file, FLS-W-20-03 IPUC DR 38 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 40 REQUEST NO. 40: Please provide the Idaho Department of Water Resources unique identifier (e.g. Well Tag/D-Tag Number) for each of the Company's wells. Response: Please see FLS-W-20-03 IPUC DR 40 Attachment 1. Rates & Regulatory Affairs FLS-W-20-03 Falls Water Company Rate Case Data Request Response Request No.: FLS-W-20-03 IPUC DR 39 REQUEST NO. 39: For each of the Company's wells, please provide the quantity (gallons) pumped for each month between January 2017 and December 2019. Response: Please see FLS-W-20-03 IPUC DR 39 Attachments 1 through 3 (2017, 2018, 2019).