HomeMy WebLinkAbout20201028Falls Water to Staff 21-60.pdf+: t' .1 rj-l ._ .'" : I Y *U
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Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 51
REQUEST NO. 51: Exhibit 2 (Proforma of Ops) shows $6,984 in Training Expenses
booked to Account 675.1 in 2019. The training expenses for 2018 and 2017 were
$1,018 and $654, respectively. Please provide documentation and the Company's
rationale for the 586% increase.
Response:
ln the past, Falls Water has done the minimum training required to ensure that
operators and field personnel earned the annual CEUs necessary to maintain their
water operator certifications. Little to no training was given to managers and office
personnel.
With the acquisition of Falls Water Co., lnc. by Northwest Natural Water on September
13,2018, the new owner wants to have more training for Falls Water's managers to
ensure that they are given ongoing educational opportunities to improve their
managerial skills. ln 2019, Northwest NaturalWater held a management training in
Portland, Oregon, and the expectation is that this will be a recurring event, The
Company's General Manager and Operations Manager attended this training, and the
Company looks forward to attending these trainings going forward. Northwest Natural
Water presented corporate policies and programs which were new to the managers of
the water companies acquired by them. lt also presented an environment to meet the
other water companies' managers and share ideas and experiences. lt is valuable to
gain understanding of what resources Northwest Natural Water brings to the Company
in risk management, legal, accounting, and human resources.
The other major training opportunity was for the Genera! Manager, Operations
Manager, and one serviceman to attend the annual AWWA conference in Sun Valley,
Idaho. The training at the conference was exceptional. Practical reviews of system
maintenance, safety, and management principles were helpful and insightful. lt is
valuable to learn from the experiences of others who work in the industry, and the
Company plans to send representatives to AWWA conferences going forward.
Other training for the servicemen was available for them to learn and prepare for their
water distribution operators certification tests and to earn CEUs needed to maintain
thei r existing operator certifi cations.
Please see FLS-W-20-03 IPUC DR 51 Attachment 1 for the requested documentation
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Rates & Regulatory Affairs
FLS-W-20-03
Fa!!s Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 52
REQUEST NO. 52: ln Response to Production Request Nos. 5 and 37, please provide
updated costs on projects listed in Exhibit 1, Column B.
Response:
The final cost for the 8-inch main on Crowley Road from 1st Street to John Adams
Parkway project listed in Exhibit 1, Column B is $188,732.68.
No other updates are applicable.
0 .* ]toturor
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 53
REQUEST NO. 53: ln Response to Production Request No. 16, please provide the Cost
Allocation Manualfiled with the OPUC and WUTC.
Response:
Please see FLS-W-20-03 IPUC DR 53 Aftachments 1 and 2 for the most recent Master
Services Agreement and Cost Allocation Manual filed by Northwest Natural with the
Public Utility Commission of Oregon in Docket UI 385 on December 28, 2018, and with
the Washington Utilities and Transportation Commission in Docket UG-181053 on
December 31,2018, respectively. The attached filings redact the confidential
organizational chart. Falls Water filed the current version of the organizational chart
with the ldaho Public Utilities Commission as Confidential Exhibit 3 to the Direct
Testimony of Justin Palfreyman accompanying its Application in FLS-W-20-04,
Application for Approval of Acquisition of Assets of Morning View Water.
o llYY Noturqf
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case' Data Request Response
Request No.: FLS-W-20-03 IPUC DR 54
REQUEST NO. 54: ln Response to Production Request No. 16, Attachment 1, Row 19
and Row 21, please provide a detailed cost breakdown of each amount in Column E.
Also, include with your response the workpapers calculating the benefits to Falls Water
Company ratepayers.
Response:
Please see FLS-W-20-03IPUC DR 54 Aftachment 1.
For a discussion of quantifiable benefits to Falls Water Company ratepayers, please see
the Company's responses to FLS-W-20-03 IPUC DR 55 and DR 56.
{$ t, ltoturol'
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 55
REQUEST NO. 55: Please provide cost savings that Falls Water has realized through
2019 for Shared Services paid to NW Natura!. Please provide workpapers with formulas
intact detailing the savings amount and include a list of any positions that have been
eliminated as a result.
Response:
As a result of NW Natural Water's acquisition of Falls Water in September 2018 and the
resulting Shared Services paid to NW Natura! through 2019, Falls Water has saved on
paying the salary and related costs of the former owner, Brent Johnson, after
September 2019. Such cost savings are reflected, for example, as a component in the
net removal of $50,484 (partial year salary) from Account 601.9 (Admin - Labor) in
Column (C) of Exhibit No. 2. ln addition ,2019 results shown in Column (A) of Exhibit
No. 2 already reflect the removal of about $3,100 in annual income tax preparation
costs that Falls Water had been incurring as a stand-alone company.
Further, NW Natural Holdings' structure as a publicly traded holding company provides
substantial benefits to its regulated utilities and other affiliates through access to capital
markets. This access to capital markets will allow for execution of a business plan of
further consolidation of smaller systems and the benefits of sharing @mmon costs over
a larger customer base.
O ** Noturol'
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 56
REQUEST NO. 56: Please provide any additional cost savings that Falls Water will
realize during the year 2020 tor Shared Services with NW Natural. Please provide
workpapers with formula intact detailing the savings amount and include a list of any
positions that will be eliminated as a result.
Response:
During the year 2020, Fa!!s Water continues to realize the cost savings identified in its
response to FLS-W-20-03 IPUC DR 55. The Company has not identified any
"additional' cost savings.
o ilW ]aqturof
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 57
REQUEST NO. 57: Please provide the yearly percentiage pay rate increase by
employee and position since the last general rate case in 2015. Please provide an excel
spreadsheet with formulas intact.
Response:
The Company requests that the accompanying spreadsheet be kept confidential due to
its listing of commercially sensitive employee wage information. Please see the
accompanying spreadsheet file CONFIDENTIAL FLS-20-03 IPUC DR 57 Attachment 1
for the yearly percentage pay increase by employee and position since the last general
rate case in 2012. The wage data are available for all employees who worked for the
Company during the requested timeframe.
$ ** ltsturoln
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 58
REQUEST NO. 58: Please explain why the amounts booked to Account 675.9 - 2012
MXU Proj Mtr Reader Lbr are not booked to Account 127.1- MXU Project Depr
Savings as ordered in Order No. 32663, page 11.
Response:
The amounts booked to Account 675.9 - 2012 MXU Proj Mtr Reader Lbr are booked to
Account 127.1 - MXU Project Depr Savings, as ordered in Order No. 32663, page 1 1.
The transaction that books the $692.92 for the meter reading labor savings is a part of
the totalfunds that is transferred each month from Account 129 - FWC - BofCommerce
to Account 127.1 - MXU Project Depr Savings. Table 1 is an excerpt found in the Meter
Depreciation 2019.x1s spreadsheet on the "520 M MXU's Part of 2011 Pr$" worksheet
tab. Note the line "Mtr Rdng Labor Savings" in the table corresponds to the amount
booked in Account 675.9 - 2012 MXU Proj Mtr Reader Lbr.
Table 1
January February March April May June July August September October November December
Monthly
Denr 7.203.21 2.O40.57 2.039.31 2.038.68 2 n3A n5 2.037.42 2.035.53 2.034.90 2.034.90 2.033.64 2.033.64 2.033.01 2.033.O1 24.432.66
I I I I I
Oamaged
MXU's 26q C4 1?434 133.71 't33.O8 397.35 171.A2 2F,1 ',t2 1)0 ao 1 sqn 66
Total to
Doposit in
SRF
3,003.4it 2,866.57 2,731.@ 2,864.68 2,863.42 3,125.80 2,859.64 2,727.82 2,987.67 2,726.6 2,855.22 2,725.92 34,338.32
The amount in the "Totalto Deposit in SRF" line is the balance transferred to Account
127.1- MXU Project Depr Savings from Account 129 - FWC - BofCommerce. This
total is the total depreciation of the MXU's from the project, retired damaged project
MXU's, and the Meter Reading Labor Savings. The amount is transferred at the
beginning of the following month to capture any MXU's from the project that have been
retired due to damage during the month. Table 2 below is a copy of the Account 127.1
register lor 2019. Note the highlighted amounts correspond to the totals shown on the
table above.
FLS-W-20.03 IPUC DR 58
NWN Response
Page2 of 2
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{f ** Noturol'
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 59
REQUEST NO. 59: Please provide any supporting documentation for the Company's
requested 10.5o/o requested return on equity.
Response:
The Company's requested '10.5o/o return on equity is the same percentage as the
Commission approved in Falls Water's last rate case, FLS-W-12-01, Order No., 32663,
dated October 12,2012. Falls Water's position is that the 10.5% ROE continues to be
fair to both the Company's investors and its customers and will enable the Company to
successfully operate and attract capital.
The Company also notes that Suez Water filed its most recent rate case on September
30,2020, SUZ-W-20-O2, and its expert consultiant is recommending a 10.2% ROE
(Walker, p. 62). Falls Water's 10.5% requested ROE is within the range of
reasonableness, especially given its smaller size compared with Suez Water. The
Company could have hired an expert ROE consultant for this rate case, but decided that
it was more in the public interest to not incur such rate case expense to be amortized
over a period of time and recovered from customers.
A final consideration is that while Falls Water's actua! capital structure as of December
31,2019 was 84.6% equity I 15.4o/o debt, the Company is proposing a more balanced
hypothetical capital structure of 55% equity I 45o/o debt, and that concession merits
adopting an ROE at the top end of any range.
{} .* Noturof
Rates & Regulatory Affairs
FLS-W-20-03
Falls Water Company Rate Case
Data Request Response
Request No.: FLS-W-20-03 IPUC DR 60
REQUEST No. 60: Please provide the fee schedule for the Xpress Bill pay
Transactions. Also include a copy of the contract with Xpress Bilr pay.
Response:
lncluded with the response are pdf fites of Xpress Bill Pay's current fee schedule and a
copy of the original contract for services. Please refer to the following fites:
FLS-W-20-03 IPUC DR 60 Attachment 1 (Xpress Bill Pay Current Fee Schedule.pdf)
FLS-W-20-03 lPUc DR 60 Attachment 2 (Falls Water xBp GAS Agreement.pdf)