FUSS.docx

1 (The following proceedings were
2 had in open hearing.)
3 (Staff Exhibit Nos. 107 through
4 116 were marked for identification.)
5 COMMISSIONER KJELLANDER: If you would
6 proceed.
7 MS. NORDSTROM: The State would tender
8 this witness for cross-examination by Ponderosa.
9 COMMISSIONER KJELLANDER: Thank you.
10 Mr. Cobott.
11
12 CROSS-EXAMINATION
13
14 BY MR. COBOTT:
15 Q. I agree with Michael Fuss's testimony.
16 I do have a few questions for him. I'm not sure if
17 he's the one I should be giving these questions to,
18 but he's going to get them.
19 How is PUC going to address the back
20 payments owed before PUC?
21 MS. NORDSTROM: I don't think that
22 this witness can address that particular issue. It
23 has been addressed somewhat by the Commission in its
24 last Order, but this witness can't testify as to
25 Commission procedure on this issue.
88
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 COMMISSIONER KJELLANDER: And as
2 clarification, since that's not part of his
3 testimony, it's not something that he could defend
4 and answer credibly on. However, I do think that
5 when we take a break that you could get that
6 question answered, and I think it has been at least
7 included partially in some of the previous Orders;
8 but when we do take a break, I think we could get
9 you some additional information on that specific
10 question.
11 Q. BY MR. COBOTT: Am I going to be
12 allowed late fees and interest to be applied to
13 customers' accounts if they're past due 30 days?
14 A. I did not recommend late fees or
15 interest to be included in rates.
16 Q. Why?
17 A. Typically in water systems, they are
18 allowed to shut off a customer and their
19 collection -- and that is their primary collection
20 tool, so late fees and interest are typically not
21 included in rates.
22 Q. Do you think it's fair to the other
23 customers that pay on time that the customers that
24 are delinquent don't have to pay a late fee or
25 interest?
89
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 A. That's why they get -- their water
2 typically gets turned off when they don't pay. Then
3 they're not using the water and causing additional
4 expense.
5 Q. The water is not turned off until
6 after they're delinquent 30 days, they haven't paid
7 their bill within 30 days of the statement date. Is
8 that correct?
9 A. Typically correct, yes.
10 Q. Then it takes another few days to get
11 the paperwork typed up, give them seven days, give
12 them another 24 hours, so on and so forth. With all
13 this added expense of having to put out paperwork to
14 get them to pay or shut them off, why isn't late
15 fees and interest appropriate to cover some of those
16 costs?
17 A. I would assume that many of the costs
18 are averaged in on the annual costs of the system if
19 it's a -- if it's that consistent. Otherwise,
20 typically, it's an infrequent activity. Every
21 customer isn't terminated every month. For the few
22 that are, I would assume that it's not as frequent.
23 Q. Before PUC got involved and restricted
24 my amount that I could charge, there was a goodly
25 amount of landowners that were late, some of them
90
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 late many, many months, still late many, many
2 months. Why am I not allowed to be compensated for
3 this?
4 A. When? Compensated for lateness? We
5 would typically set rates on cost of service, and
6 that's why we review the expenses of the system. So
7 the rates that would be in effect would include all
8 of the activities that are included, and not
9 necessarily just the time in waiting between when a
10 bill is paid and when the payment is received. It's
11 more on cost base.
12 Q. The rest of the landowners that pay on
13 time are not affected, nobody is affected except the
14 landowner that is late.
15 I would like a late fee imposed after
16 30 days, and 18 percent interest. In other words,
17 if they owed $60, they're going to pay $70 plus 18
18 percent interest if they pay from day 31 on before
19 the shutoff. Something has to make these people
20 pay.
21 COMMISSIONER KJELLANDER: Okay,
22 Mr. Cobott, do you have a question for Mr. Fuss?
23 Q. BY MR. COBOTT: Will you consider this
24 late fee and interest?
25 A. I have not recommended it in my rates
91
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 and I just testified that I did not change my
2 recommendation.
3 Q. Okay.
4 MS. NORDSTROM: Staff would like to
5 clarify that Staff does not make the Commission
6 rules or policy issues; that it merely makes
7 recommendations and the Commission itself is the one
8 that sets those rules or fees, not the Staff.
9 Q. BY MR. COBOTT: When it comes to
10 rules, does the owner/operator have an opportunity
11 to add rules, or do we just have to go with PUC's
12 rules?
13 A. All the rules -- it is my
14 understanding that all the rules that would -- that
15 a water system would operate under would have to be
16 approved by the Commission --
17 Q. So --
18 A. -- not necessarily dictated.
19 Q. So what you're saying is I could have
20 some rules enforced by the Commission so that I
21 could enforce them?
22 A. It is not unusual to receive
23 Applications from Utilities to look at different
24 tariff measures that could be submitted by
25 Utilities.
92
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 Q. I'm going to go over a few of these
2 with you. One of them, landowner abuse of the water
3 system that causes pipes to break in the spring
4 thaw, landowner is not present, the pipes break and
5 spew water everywhere at a great cost to the water
6 system, and also the Water Company has to go in and
7 repair the problem in the absence of the owner.
8 Now, in your opinion, can I get
9 revenue for this, can I get a fee for this, for
10 doing this, or should I just let the water run?
11 A. I have not -- in my testimony I did
12 not address this issue, but as you are asking, I
13 would assume that we would -- that you could propose
14 in the rules, in your rules for your water system, a
15 method of collecting the direct costs that you have
16 incurred for breakage if you can assign it directly
17 to a customer; but I could not rule on that
18 myself -- I'm Staff -- but I certainly would assume
19 that I could review it. And I do not know that -- I
20 would not rule on it.
21 Q. How about landowners that are using
22 the water to water the roads?
23 A. Again, if those were some rules that
24 you would like to have on your system, I suppose you
25 could file them with the Commission for their
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HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 acceptance, but I cannot accept them. I don't make
2 that decision; I'm Staff.
3 Q. Then who should I talk to about this?
4 A. I would suggest in our conclusion of
5 the hearing and the entire process that, as we have
6 requested, you file tariffs which are -- include the
7 rules for your system, you would include those
8 additional rules. They would then -- they could
9 then be adopted as not only the rules that are
10 required to be adopted for customer rules, but
11 possibly additional operational rules.
12 Q. So the way I understand on
13 delinquency, if somebody -- if a landowner receives
14 water for the month of May, they are billed in June
15 for the month of May -- all billings are for the
16 previous month -- and on June 30th if that landowner
17 has not paid -- or, say, July 3rd, 30 days from the
18 statement date -- if the landowner has not paid,
19 then I have the rights to send a letter for shutoff.
20 Is that correct?
21 A. I would have to check the customer
22 rules, but it sounds within the general --
23 Q. So in other words, at this point in
24 time, the landowner has 60 days of water at this
25 point?
94
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 A. That could be, yes.
2 Q. Do you know if the Commission has any
3 opinion -- any options for water meters? Am I able
4 to put in water meters and get the -- and charge the
5 customers, the landowners, for the water meter and
6 the installation? Is there any provisions for this?
7 A. There are no provisions for water
8 meters in the rates that I have recommended in my
9 testimony. However, I did address in my testimony
10 on -- on page 10 that water meters may be one of --
11 may be an option to address the differences between
12 customer usage.
13 Q. Could this become a surcharge to the
14 system or, say, calculated over a one-year period,
15 so much a month?
16 A. Again, I would assume that it could be
17 requested. Whether or not -- without reviewing any
18 further data, I couldn't say, nor would I ever rule
19 on, whether or not it was allowed. Would not be
20 unusual to have a request for meter installation.
21 Q. One of the things that I'm quite
22 concerned with, we've had lots of problems in the
23 past and we would have to have some type of
24 terminology or rule or however you want to put it to
25 the fact we have landowners that go out and try to
95
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 turn on their own water or turn off their own water,
2 and by doing that they destroy the valves, which
3 costs the Company considerable amount of money. You
4 have to dig that back up and repair it.
5 Is there something -- what I need is
6 something that states that they do not have the
7 right to turn their water on or off in the stand-up,
8 and that they have to either get ahold of me to turn
9 on or off or Larry to turn on or off, if Larry
10 continues to work for me, which is debatable at this
11 point. Can something be done about that?
12 A. I assume you would have -- you could
13 put in the rules of your system and file with the
14 Commission that no -- that only certified operators
15 or employees of the system could operate system
16 equipment, and I would assume that the valve that
17 you're discussing is owned by the system.
18 Q. Yes.
19 A. Okay.
20 Q. We talked when you came out, we
21 reviewed the system. We talked about Larry Fairfax
22 and the electricity going to his house, and I stated
23 at that time that that was a retainer. I considered
24 that a retainer, and for that, he took care of the
25 testing and any minor little problems that might
96
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 crop up. Larry has been on call 24/7. Now, I don't
2 think that's unreasonable to give Larry the electric
3 as retainer for his services. I've got well more
4 out of Larry than that small retainer over the
5 years, believe me. The main thing is up here, we
6 get six months of bad weather, snow, ice, deep. If
7 something happens at 11:00 at night with three foot
8 of snow on the ground, ten degrees above zero,
9 Larry's there to fix it. Now, to me, that's worth
10 something and that's what the retainer was for. Why
11 do you not approve that?
12 A. I did not provide testimony towards
13 the revenue requirement. Staff Smith has been --
14 did the revenue requirement. So I -- and nor do I
15 approve or disapprove any of the expenses. My
16 testimony is primarily for rates and some of the
17 hookup fees, and the nature of the system.
18 Q. Did you not make comment to me that we
19 were going to -- you were going to have to deduct
20 the electric expense for Larry's residence; and then
21 a few days later, a week later or something when I
22 talked to you on the phone, you said that you were
23 going to allow that?
24 Well, when I saw the paperwork, you
25 allowed it on one end and you took it away on the
97
HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 other side. In other words, Larry was given $10 a
2 day to do the testing, record the water flow, check
3 the chlorinators and all this type of stuff. You
4 said you were going to allow it, and then I see that
5 you deducted $1,800 from his income for doing these
6 services. So in other words, what you did, you took
7 it away from the electric -- I mean, you allowed the
8 electric and you took it away from the water
9 testing.
10 MS. NORDSTROM: I would ask that this
11 question be directed towards Robert Smith. He is
12 the Staff witness that has sponsored this and has
13 prepared the exhibits and has filed testimony on the
14 electricity issue as far as it affects wages. So
15 Staff has no objection to Mr. Smith being directed
16 to answer those questions at some later point in the
17 hearing, but would ask that Witness Fuss does not
18 answer them at this time.
19 COMMISSIONER KJELLANDER: And that is
20 what the Commission will move on since Mr. Fuss did
21 not sponsor that specific testimony.
22 So, Mr. Cobott, when you're finished
23 with your questioning of Mr. Fuss and since
24 Mr. Smith has already been sworn in, we can bring
25 him back up and you can address those questions to
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HEDRICK COURT REPORTING FUSS (X)
P.O. BOX 578, BOISE, ID Staff
1 him. Are there further questions for Mr. Fuss?
2 MR. COBOTT: Not at this time, no.
3 COMMISSIONER KJELLANDER: Thank you.
4 Let's move now to questions from members of the
5 Commission. Commissioner Smith.
6 COMMISSIONER SMITH: Thank you.
7
8 EXAMINATION
9
10 BY COMMISSIONER SMITH:
11 Q. Mr. Fuss, are you aware of any Utility
12 where the Commission allows late fees?
13 A. None that I'm aware of.
14 Q. Are you aware of any Utility where the
15 Commission has allowed interest on unpaid balances?
16 A. I believe that there are in some
17 Utilities in -- but I can't put my finger on it if
18 there are.
19 Q. Okay. You're not sure about that?
20 A. I'm not sure. I would have to do -- I
21 would have to check.
22 Q. Does a Utility have to allow 30 days
23 for people to pay their bills? Could they choose a
24 shorter --
25 A. There is a shorter period in the
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HEDRICK COURT REPORTING FUSS (Com)
P.O. BOX 578, BOISE, ID Staff
1 customer rules. I believe it's closer to 15.
2 Q. Fifteen. So all they have to allow is
3 15 days?
4 A. I believe that's the case.
5 Q. And for people who do get terminated,
6 their service terminated for nonpayment, have you
7 recommended a reconnect fee?
8 A. Yes, I've tried to address the, say,
9 terminated of service in two ways:
10 One, to compensate the owner for
11 turning -- physically coming out and turning on the
12 valve once the customer has paid. I recommended a
13 reconnection charge, and that reconnection charge,
14 the customer would have to pay that before -- with
15 their outstanding balance, the reconnection charge,
16 to get the water turned back on.
17 As a further encouragement to continue
18 a customer to pay, after six months -- this system
19 is somewhat unique because it can only serve so many
20 customers, and if a customer were not to pay, I've
21 recommended that after six months that they be moved
22 to a Former Customer class. And if that's the case,
23 one, they would have been likely turned off or their
24 service would have been shut off after 60 days or
25 whatever their standard shutoff procedure was; and
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HEDRICK COURT REPORTING FUSS (Com)
P.O. BOX 578, BOISE, ID Staff
1 then if they would still continue to not pay their
2 bill, they would be removed, put in a Former
3 Customer class, so if they were to ever ask for
4 water again, they would then have to pay a $2,500
5 hookup fee.
6 So I believe that those were two
7 substantial factors to encourage a customer to
8 continue to make their monthly payment.
9 Q. Is your reconnect fee -- how much is
10 that, do you remember?
11 A. I've recommended $25, and that's
12 fairly consistent with other water companies
13 throughout the state.
14 Q. Would that also perhaps cover some of
15 the cost of sending the shutoff notices?
16 A. It could include cost for shutoff
17 notices.
18 Q. With regard to meters, which is a very
19 sticky issue for water companies simply because it's
20 so expensive, isn't it customary though that the
21 Utility makes the investment and installs the meters
22 and it's just rolled into their revenue requirement,
23 so it would then take quite a while to get back that
24 cost?
25 A. Meters do have I believe it's a
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HEDRICK COURT REPORTING FUSS (Com)
P.O. BOX 578, BOISE, ID Staff
1 30-year depreciation life if they are to become rate
2 based, so it would take a considerable amount of
3 time to get your money back from a meter.
4 Operationally I believe they're efficient, but --
5 Q. Thank you.
6 COMMISSIONER KJELLANDER: Commissioner
7 Hansen.
8
9 EXAMINATION
10
11 BY COMMISSIONER HANSEN:
12 Q. I just had a couple of questions. In
13 your -- in your Exhibit No. 111 in your recommended
14 option, you set the rate of part-time and full-time
15 customers the same and yet in Option 4 and 5 that
16 the Staff makes, there is a considerable difference
17 in the rate of these two customer classes. Why?
18 Why is there such a difference in a couple of the
19 options and yet they're the same in the other?
20 A. Well, technically, I tried to address
21 rates from a technical direction first, what are
22 cost causers or who's impacting the system. And
23 Option 3 I believe technically addressess who's
24 impact -- which customers impact the system
25 approximately equally.
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HEDRICK COURT REPORTING FUSS (Com)
P.O. BOX 578, BOISE, ID Staff
1 Part-time customers aren't on-demand
2 customers. When they want to turn -- they want the
3 water on when they turn on the valve, so there's no
4 specific -- there's no way to know that they only
5 want part of their water on when they want the
6 valve, when they want to turn it on.
7 But I also met with a number of
8 customers while I was up here and I felt that
9 they -- they were looking for a compromise for the
10 part-time customers. They're not here all the
11 time. And so I tried to put together rates that
12 were more reflective of maybe the actual daily usage
13 of the customers, and that's when I came up with
14 Options 4 and Options 5.
15 Option 4 addresses rates similarly to
16 Option 3, except the part-time customer is
17 considered a portion of a full-time customer and a
18 portion of one of the other customer classes so that
19 it was a way to closer relate their actual rates to
20 how they're actually -- how they actually visit the
21 facility.
22 Option 5 is a compromise between what
23 the customers had requested and the Option 4 which
24 is -- provides rates for all the different customer
25 classes. I tried to more specifically address
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HEDRICK COURT REPORTING FUSS (Com)
P.O. BOX 578, BOISE, ID Staff
1 rates, specifically to the individual customer
2 classes, as they affect the system.
3 Q. But your recommendation is Option 3,
4 which is not a compromise. Is that correct?
5 A. Well, yes, but I believe that 4 and 5
6 are all equally as well and they're equal -- they
7 provide -- they collect the revenue requirement and
8 they do more directly relate rates to the individual
9 customer classes, but for ease of use, I've
10 recommended 3.
11 Q. Okay.
12 COMMISSIONER KJELLANDER: Thank you.
13 We're ready now for redirect.
14 MS. NORDSTROM: Thank you.
15
16 REDIRECT EXAMINATION
17
18 BY MS. NORDSTROM:
19 Q. Mr. Fuss, I want to discuss the issue
20 of meters a little bit further. Are you familiar
21 with customer connection charges?
22 A. I am.
23 Q. And how frequently are they used in
24 connection with meters?
25 A. The connection charge, meaning an
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HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 original hookup fee to the system is what I'm
2 assuming, and it would not be unusual that when a
3 customer connects to the system there's a meter
4 charge associated with it.
5 Q. Would you say that $450 to $750 is an
6 approximate range for typical customer connection
7 charges for meters?
8 A. I think in my testimony I said between
9 three and eight is a typical meter cost for
10 installation, so that would be consistent.
11 Q. Are these typically paid up front?
12 A. It would not be unusual that they
13 would be for municipal systems or other types of
14 systems.
15 Q. So they can either be amortized and
16 depreciated over time, or they can be paid up front.
17 Is that correct?
18 A. Correct.
19 Q. How long have you been working on
20 these issues with Ponderosa Water?
21 A. I've been working on this for six,
22 seven months, but most -- most expediently since
23 about May, mid-May, first of May.
24 Q. Has this involved very many contacts
25 with the owner of the system?
105
HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 A. Yes. On May 16 and 17, I believe, I
2 was up -- up in -- and visited the system. I met
3 with customers, and I met with Mr. Cobott. We
4 toured the system. He showed me each part. We
5 looked at every customer and what their service was
6 like. I've probably talked to him one to two times
7 a week since then and tried to help wherever I
8 could.
9 Q. Did you make any effort to assist him
10 in preparing for this hearing?
11 A. Yes. I sent him -- we sent him a copy
12 of all of the filed information, all of the official
13 information from the Commission that has went
14 through the case so far as of the first of the
15 month.
16 I also sent him a list of -- he had
17 asked somewhat informally in one of his letters for
18 additional information on other water companies,
19 as well as other water companies throughout the
20 state. I tried to prepare that information for him.
21 Q. Was that his May 21st letter?
22 A. May 27th letter.
23 I sent him a letter on May 31st which
24 included portions of the PUC's annual report, and
25 then the entire annual reports for I believe it was
106
HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 every water system that we had on file.
2 Q. So did you treat that essentially as a
3 production request of sorts?
4 A. I believe that to be a production
5 request. I think that was his attempt, his
6 interest, to ask that question.
7 Q. When you said that you sent him the
8 documents that had been filed in this case up
9 through the first of the month of June, what types
10 of documents were typically included in the mailing
11 that you sent?
12 A. There was the -- the mailing that was
13 sent, I included the -- all the way from the Notice
14 of Investigation issued in July 31 of 2000 through
15 the comments of Commission Staff filed on May 23rd,
16 as well as utility customer rules, customer
17 information rules, and policies for small water
18 companies, and Rules of Procedure.
19 Q. Okay. Do you know if he received your
20 mailings?
21 A. I believe he has. We have talked
22 since then and he said he received packets from
23 myself and other members of the Commission --
24 Q. Okay.
25 A. -- or, Staff.
107
HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 Q. Did you discuss with him the
2 possibility that he could retain an attorney for
3 this hearing?
4 A. I believe we discussed that, that we
5 did discuss that, and I don't know, obviously he
6 didn't.
7 Q. And what was his response?
8 A. Again, I think his concern was the
9 cost associated with that, I believe.
10 Q. Given those concerns, did you make any
11 additional efforts to help him prepare for this
12 hearing?
13 A. Yes. I sent him a letter on June 10th
14 with a list of questions that might assist him in
15 preparing his testimony. It was kind of a list of
16 questions he might like to answer in his testimony,
17 and much of his -- I believe he has answered them,
18 the majority of those questions.
19 Q. Thank you. Have you been available by
20 phone to answer any questions that he may have in
21 preparing his testimony?
22 A. We discussed the Friday before his
23 testimony was due.
24 I was also -- notified him that I
25 would be in the office on Saturday, the two days
108
HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 before his testimony was due. I did call and leave
2 a message, but I'm sure he was plenty busy to worry
3 about whether or not I'm calling.
4 Q. Has Mr. Cobott generally been
5 available to help answer the questions that you've
6 had?
7 A. I believe so, yes.
8 Q. And if I understand correctly, you've
9 made yourself available to answer the questions that
10 he's had?
11 A. As -- you bet.
12 Q. Okay. Directing your attention to
13 pages 6 and 7 of your testimony, you discuss
14 restrictions on the maximum number of users that can
15 be hooked up to the system. You state that number
16 should be at 37. Is that correct?
17 A. That's correct.
18 Q. To your knowledge, what is the current
19 status of the ability of new customers to connect to
20 the system?
21 A. I believe they are currently
22 restricted based on previous Commission Order, but I
23 am recommending that that restriction be lifted to
24 the 37 customers.
25 Q. And what do you base that number of 37
109
HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 customers on?
2 A. I did an analysis of customers and the
3 customers' usage based on the actual well log
4 information provided on file and a test performed or
5 a study performed by an engineer that was hired by
6 the Company, using those two pieces of information
7 to determine that 37 customers was the maximum that
8 could be served with the current supply.
9 Q. If I understand your testimony
10 correctly, you're saying that the 37 customers
11 should be those that are classified as either
12 full-time or part-time?
13 A. That's correct.
14 Q. On page 2 of Mr. Cobott's testimony,
15 he states that part-time customers should not be
16 included in this 37 number. Do you agree or
17 disagree with that?
18 A. Well, I disagree, primarily because
19 the part-time customers -- that's those with a
20 dwelling on the property -- are an at-will customer.
21 When they are there they want the water to work, so
22 they are, in essence, using that water, and so all
23 of the existing customers and any of the others
24 would use it at the same time.
25 Q. So is the purpose of --
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HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 Well, obviously, part-time customers
2 don't use as much water as full-time customers, so
3 is the purpose of your recommendation to ensure that
4 the system has enough water to serve its customers?
5 A. That's correct, so that based on the
6 average daily usage of a customer, I assumed that at
7 some point all part-time and full-time customers
8 could be there, or a maximum of 37 customers could
9 be on the system.
10 Q. Okay. Mr. Cobott recommends that --
11 on page 3 of his testimony -- that a $50
12 disconnection fee be imposed if disconnection is
13 necessary. Do you have a recommendation with regard
14 to disconnection fees?
15 A. To my knowledge, I don't know of
16 any -- any water companies that have a disconnection
17 charge. Disconnection or turning off of a
18 customer's water is primarily used for a collection
19 tool, so it's in the Company's best interest to shut
20 the water off.
21 Q. So you're recommending a -- you're
22 recommending a hookup fee of $2,500 and a $50
23 reconnection fee, but no disconnection fee?
24 A. I'm recommending a $25 reconnection
25 fee and a $2,500 hookup fee, and no disconnection
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HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 fee. So when the customer wants the water back on
2 after the Company has turned it off, then they must
3 pay $25 for the operation of the valve, primarily.
4 The $2,500 hookup fee is for a customer, a new
5 customer to the system, or a customer that has been
6 for some reason removed from the system or become a
7 former customer. That could be done, as I'm
8 recommending, either after six months of a
9 delinquent bill, or a customer may choose to become
10 a former customer or not served by the system. The
11 $2,500 was based generally on the cost of a new well
12 so that as customers come on they pay -- a new
13 customer comes on the system, they pay their
14 prorated share of a new well, because wells, I
15 believe, are one of the primary concerns of this
16 system.
17 Q. Thank you. I have no further
18 questions at this time.
19 COMMISSIONER KJELLANDER: Thank you,
20 Mr. Fuss. We'll excuse you.
21 (The witness left the stand.)
22 COMMISSIONER KJELLANDER: And as we
23 had mentioned earlier, we're going to bring back up
24 Mr. Smith. I believe that Mr. Cobott had a question
25 that he wanted to pose to Mr. Smith.
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HEDRICK COURT REPORTING FUSS (Di)
P.O. BOX 578, BOISE, ID Staff
1 Following those questions, just so
2 that we can kind of get a time line, it's our intent
3 to take a short break and open up the drapes to get
4 a little light in here, and then to come back after
5 that break and Mr. Cobott will then be allowed to
6 put on his witnesses.
7 So with that then, let's bring back up
8 Mr. Smith.
9 And, Mr. Smith, just a reminder you
10 have been sworn in, and as soon as you get situated,
11 we'll allow Mr. Cobott to ask some additional
12 questions that he originally posed to Mr. Fuss.
13
14 ROBERT E. SMITH,
15 recalled as a witness at the instance of the Staff,
16 having been previously duly sworn, resumed the stand
17 and was further examined and testified as follows:
18
19 RECROSS-EXAMINATION
20
21 BY MR. COBOTT:
22 Q. Let's go to the retainer for
23 Larry Fairfax. You disallowed the electric to
24 Mr. Fairfax's residence that the Company was paying
25 for, which I stated was a retainer for his services
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 to be on call 24/7. Why?
2 A. Mr. Cobott, it is not eliminated. We
3 did not adjust the electric power bill at all.
4 Q. You didn't adjust the power bill, but
5 you adjusted the testing bill, the water testing
6 daily. You took the $1,800 off of that bill?
7 A. Off of the labor charge.
8 Q. Right.
9 A. Because it had been included in the
10 electric bill. That $1,800, the value of the
11 retainer that is included in the electric is a part
12 of the total compensation. We came up with what we
13 determined was reasonable compensation for all labor
14 for the system, both administrative and operations
15 regardless of how they fall out, and determined that
16 that appeared to be a reasonable level of
17 compensation. But, embedded in the electric bill
18 was the cost of the electricity going to
19 Mr. Fairfax's home, which constitutes additional
20 compensation above and beyond what we determined was
21 reasonable compensation. So we left the electric
22 bill alone and reduced the line item called "labor"
23 for that $150 retainer value.
24 Q. So in other words, having somebody on
25 the premises 24/7 means -- in other words, if I took
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 off the electric from Larry Fairfax, put him on a
2 separate meter and had it charged separately, then
3 he would be paid for taking the water test daily,
4 but there would be nothing there to entice him to be
5 on call 24/7. Is that correct?
6 A. The total compensation is the total
7 compensation. Whether it's taking a water test or
8 being on call, doing repairs, it's all rolled into
9 one basic package. It's compensation for operation,
10 maintenance of the system.
11 Q. And those are figures that you came up
12 with?
13 A. They are figures that we estimated,
14 yes.
15
16 RECROSS-EXAMINATION
17
18 BY MR. FAIRFAX:
19 Q. I talked to Michael Fuss this morning
20 and he told me the figures he came up with for a
21 part-time water person was 8,000 to 9,000 a year.
22 You're saying it's only $3,600 a year. Is that what
23 you're saying?
24 A. I have no idea what kind of
25 conversation you had with Mr. Fuss or the context.
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 Q. Okay, but I'm just saying you're
2 saying $3,600 a year is okay for a part-time person
3 to take care of the water system?
4 A. If that's what's in here. I don't
5 recall what the total compensation is off the top of
6 my head, to tell you the truth.
7 Well, if I could get to the exhibit.
8 Q. The only one I can find says $3,600
9 minus the 1,800 from my electricity.
10 A. There would be -- if you refer to my
11 Exhibit No. 101, there is $1,800 reflected on
12 line 28, there is $1,200 reflected on line 29, and
13 then you add to that the value of the electric
14 retainer of 1,800 would make a total of 36- --
15 46- -- $4,800.
16 Q. So half of the going rate. Is that
17 what you're saying?
18 A. What is the going rate you're
19 referring to?
20 Q. Eight to $9,000.
21 A. I have --
22 Q. And that's by your --
23 A. I can't comment on that number. I
24 don't know what it represents, where it came from.
25 Q. Where would -- where did you get your
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 figures from to compensate somebody for a part-time
2 water system?
3 A. As I have responded several times
4 already today, it's based upon my discussions with
5 Mr. Cobott beginning last August with estimates of
6 what kind of time is required to operate and
7 maintain the system.
8 Q. And you didn't get any sources from
9 any other water systems?
10 A. My Exhibit 102 is a comparison with
11 other water systems.
12 Q. And they say $4,800 a year. Is that
13 what you're saying?
14 A. Total compensation package is --
15 for -- that is being recommended in this case is
16 higher or at the high end of comparable companies.
17 MR. FAIRFAX: That's all I have.
18
19 FURTHER RECROSS-EXAMINATION
20
21 BY MR. COBOTT:
22 Q. Okay, you talked about the well and
23 the difference in the price between 26,000-something
24 and 30,000. The information that you've got that
25 you're referring to is what the well digger charged
117
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 me, or pretty close to it. You did not take into
2 consideration the engineering, the extra plumbing
3 supplies we had to get from PlumbCo and Crescent
4 Electric that had to go into all of that. None of
5 those figures are there. The only thing that you're
6 referring to is what the well digger did. There's a
7 lot of other costs that went into that well.
8 MS. NORDSTROM: Mr. Chairman, I'd like
9 to ask that Mr. Cobott be directed to provide this
10 particular testimony again when he's under oath,
11 unless he has a particular question that he would
12 like to ask of Mr. Smith.
13 COMMISSIONER KJELLANDER: Your
14 response, Mr. Cobott.
15 Q. BY MR. COBOTT: Why was I not told
16 that I could demand payment from landowners in 15
17 days, opposed to 30 days? I have never been told
18 this. Why?
19 A. I don't know why.
20 Q. Why was I never told that the moneys
21 that you are allocating in your findings can be
22 distributed in other means? In other words, the way
23 I was -- the way I was instructed is that whatever
24 you said was law. Now you're telling me that I can
25 have -- I can adjust my wage, I can adjust anything
118
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 I want in there, but I was never told this before
2 this day. Why?
3 A. Mr. Cobott, that specific language is
4 in my direct testimony filed early in June when I
5 specifically indicated that the building blocks we
6 use to come up with the revenue requirement
7 recommendation is simply that: It's just a way of
8 getting to a revenue requirement and does not in any
9 way represent a line-item budget that you must live
10 with. It is in my direct testimony.
11 Q. In regards to my testimony, I put down
12 eight trips per month. Unless something changes,
13 the only thing that Larry Fairfax does is the daily
14 water tests at this point. He does not fix any
15 leaks, he does not do anything. The report that he
16 gave you was past, not what's happening now or
17 present. Why are you not allowing my testimony?
18 You requested my testimony, I gave it in good faith.
19 Why are you rebuttaling it?
20 A. Mr. Cobott, first of all, I don't
21 allow or disallow testimony. You offer your
22 testimony, the Commission takes it into its record
23 under advisement, and they will render a decision.
24 I have put in rebuttal testimony
25 because, as I have indicated several times today,
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 the information that appears in those exhibits and
2 that testimony appears to be in several places
3 repetitive and duplicative.
4 Q. In your opinion?
5 A. Yes.
6 Q. Back referring to the real estate
7 contract when I bought this water system, I'd like
8 to read this and I want your comment:
9 A water system located in Section 5,
10 Township 55 North, Range 1, West of the Boise
11 Meridian, Bonner County, Idaho, more fully described
12 as follows: A water system serving the Ponderosa
13 Terrace Estates, a recorded plot -- looks like
14 Situated in said Section 5, along with all
15 equipment, deeded well, site -- deeded well site,
16 water tank -- I can't even read this; says some kind
17 of pipe --
18 COMMISSIONER SMITH: Site.
19 Q. BY MR. COBOTT: -- hydrants, spigots,
20 electrical components, pumps, water, tanks, wells,
21 easements, and water rights.
22 Next Paragraph:
23 It is agreed that any sale of property
24 by the grantee concerning the land in this said
25 section -- which is Section 5 -- will be applied to
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 this contract at the rate of 50 percent of the sale
2 price.
3 What that is referring to, at the time
4 I bought this I bought a lot of property, and what
5 they wanted -- what they wanted, what my
6 father-in-law, this is my father in law -- what he
7 wanted was that if I sold any of that property, sold
8 a piece for $10,000 for an example, I would give him
9 5,000 of that, which would be applied to this
10 contract. That's what that terminology means, not
11 what you're representing it to mean. Am I correct
12 or not?
13 A. I agree with the way you've
14 characterized the contract. I don't believe I can
15 agree with you the way you would characterize my
16 position. I don't understand your question in that
17 regard.
18 Q. Did you not say that the property
19 according to this contract, that the water system
20 owns the property that the water system sits on?
21 A. Yes.
22 Q. It does not.
23 A. Mr. Cobott, the paragraph you just
24 quoted and read into the record is included in my
25 testimony, and if you'll read through there, you
121
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 will see that the water system sale, including all
2 pumps, wells, well sites, tanks, and the land it is
3 situated upon.
4 Q. It doesn't say "land"; does not say
5 "land."
6 MS. NORDSTROM: Mr. Cobott, could I
7 have you clarify from what exhibit or contract
8 you're reading from?
9 COMMISSIONER KJELLANDER: Exhibit 104.
10 MR. COBOTT: 104.
11 MS. NORDSTROM: Okay.
12 THE WITNESS: All right. I said,
13 "land." The exact language is deemed "well sites."
14 A well site is a piece of real estate, it is a
15 property, it is a piece of land.
16 Q. BY MR. COBOTT: It's a site that's 100
17 by 100. It's not where the tanks are, it's not
18 where the pipes go, not anything else. I have
19 separate deeds on every piece of this property in my
20 name, separately. This property is not owned by the
21 water system. The only thing that they're referring
22 to there is when the well was put in, the initial
23 well was put in, the State required -- whether the
24 State or County, I'm not sure who it was -- but they
25 had to have a piece of property dedicated, and that
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 piece of property is dedicated as a well site. The
2 rest of the property is not dedicated to Ponderosa
3 Terrace Estates.
4 A. I understand that, and if I could
5 respond, I don't believe that any of the land is
6 necessary for the water system except the, quote,
7 well site.
8 Q. Well, what about the pumphouses? What
9 about the tank -- where the tanks are at, the pipes
10 going to the tanks and coming back down? That land
11 can't be sold. It belongs to somebody; somebody has
12 to pay taxes on it. Why have you allowed me taxes
13 on something that Ponderosa supposedly owns?
14 Ponderosa does not own that property. I own that
15 property. I have deeds to that property, individual
16 deeds. I'm not going be told that something is such
17 when it's not.
18 Getting back to the wage thing again
19 because that's probably the only thing that we're
20 apart from here that's really drastic, as far as I'm
21 concerned, so let me make sure that I understand it.
22 You are saying that 12 hours a week is unjust for me
23 to be an owner/operator of this water system. Is
24 that correct?
25 A. I don't think I made any reference to
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 any 12 hours anywhere in my testimony.
2 Q. Well, that's basically $240 a week,
3 times four and a third months -- or, weeks, which
4 comes out to $1,000.
5 A. I'm sorry, could you rephrase that? I
6 didn't follow you.
7 Q. I said 12 hours a week is $240 per
8 week, times four and a third weeks roughly, is
9 $1,000 per month, and that's what I'm asking for.
10 A. Now, do I think that's reasonable?
11 Q. Yeah. I want it to be a matter of
12 record. You're talking about two hours a day here,
13 less than two hours. One and three quarter hours a
14 day or one and a half hours a day?
15 A. I think I've responded to this
16 question in various forms numerous times, and I'll
17 go back and reiterate one more time, Mr. Cobott. My
18 initial testimony was based upon oral discussions
19 that you and I had beginning last August regarding
20 the amount of time that you dedicated to operating
21 the system, and the fact that Mr. Fairfax was the
22 on-site operator and did most of the daily routine
23 work and you didn't put in very much time other than
24 the time it took to keep track of customer records
25 and mail or pay your bills.
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 Q. Do you have records of that
2 conversation, of what I said, because I never said
3 anything to that effect. Do you have some type of
4 proof to show me that I gave you information to that
5 effect?
6 A. Mr. Cobott, I did not record our
7 conversations. I have somewhere in my scribbled
8 notes somewhere references to those discussions.
9 Q. Did I give you other information
10 during those meetings that we had, like tax
11 statements and so on?
12 A. You mean your income tax --
13 Q. Yes.
14 A. -- returns?
15 You gave me two income tax returns,
16 yes.
17 Q. Okay. And on one of those income tax
18 returns, you called me back and you questioned a
19 auto insurance or auto expense of $411 or whatever
20 it was. Is that correct?
21 A. That's correct.
22 Q. So then at that point in time, the
23 conversation went something like this: You demanded
24 the individual invoices and receipts to verify the
25 $411. Is that correct?
125
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 A. I wouldn't characterize it,
2 Mr. Cobott, as a demand. I think I told you that
3 for us to do our job, we have to have documented
4 evidence, that we cannot just accept guesses without
5 trying to come up with some kind of a documented
6 trail to show where the cost figures are coming
7 from.
8 Q. So you were indicating then that my
9 tax statements were incorrect?
10 A. No, I was not making any reference to
11 your tax statement whatsoever.
12 Q. Then why wouldn't you accept what the
13 tax statement said?
14 A. There are many, many things that are
15 accepted for tax purposes that are not used for
16 rate-making purposes and vice versa.
17 Q. It's a one-way street.
18 Michael Fuss made a comment about the
19 initial letter that came to me, supposedly it was in
20 July and he said it was July 2000. I believe it was
21 July 2001, not July 2000. So that's incorrect by
22 one year. Is that correct, that the initial letter
23 come out to me in July of 2001?
24 A. The initial letter from our Commission
25 that was mailed to you, Mr. Cobott, was mailed in
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 1998.
2 Q. Did I receive that letter?
3 A. I have no idea. It was mailed to you,
4 it was not returned to our office. Neither were
5 numerous phone calls following up on that letter
6 that were never returned.
7 Q. You can substantiate the phone call
8 and you can substantiate the mailing of this letter?
9 A. I have a copy of the letter in my work
10 papers.
11 Q. Does that mean it was mailed?
12 A. When our Commission mails or sends
13 correspondence out, you can be assured that it is
14 mailed. The lady who wrote this particular letter,
15 Rose Schulte, has been retired for a number of
16 years.
17 Q. Do you by any chance have the address
18 that was on that letter?
19 A. I do and I mentioned it to you once
20 before, and it was still on Wrenco Loop Road. And
21 when I mentioned that letter to you and gave you the
22 address, you said, Oh, well, that's -- the Post
23 Office has changed our addresses up there over and
24 over again and they keep getting mail lost.
25 But it never came back to our office.
127
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 Q. Well, it never came to me either. My
2 address at that time was 1600; it's now 2626.
3 COMMISSIONER SMITH: Mr. Chairman, I
4 hate to interrupt, but I need a break. Can we take
5 a break, please?
6 COMMISSIONER KJELLANDER: This is a
7 good time to take a break, and when we come back,
8 Mr. Cobott, we'll still have Mr. Smith, and if you
9 have further questions you can address those to him
10 at that time.
11 Why don't we take a break for roughly
12 15 minutes.
13 (Recess.)
14 COMMISSIONER KJELLANDER: Ladies and
15 gentlemen, we're ready now to go back on the record,
16 and let me just run through a very brief sort of
17 sketch of at least of how I hope things unfold for
18 the remainder of the afternoon.
19 We're going to try to get through the
20 additional questioning that Mr. Cobott has with
21 Mr. Smith, and then we would like to just break from
22 this portion of the proceeding and bring up one of
23 the customers, Jerry Favor, who is here from Sagle,
24 Idaho, and wanted to stay for the public hearing
25 later this evening and won't be able to. So we'll
128
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 just kind of break away from the technical portion
2 for just a moment or two to take his statement, and
3 then allow for any cross-examination from
4 Mr. Cobott, from the Commission, and also from the
5 Staff. So that's our plan as we move forward this
6 afternoon. Once we're done with that brief
7 interlude with Mr. Favor, we'll then return back to
8 the technical part of the hearing and we'll allow
9 Mr. Cobott to present his case and his witnesses.
10 So with that now, let's turn now to
11 Mr. Cobott and his questioning of Mr. Smith.
12 MR. COBOTT: I have no further
13 questions for Mr. Smith --
14 COMMISSIONER KJELLANDER: Okay.
15 MR. COBOTT: -- at this time.
16 COMMISSIONER KJELLANDER: Thank you,
17 Mr. Cobott.
18 Are there questions from the
19 Commission? Commissioner Smith.
20 COMMISSIONER SMITH: Just one. Thank
21 you.
22
23
24
25
129
HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID Staff
1 EXAMINATION
2
3 BY COMMISSIONER SMITH:
4 Q. Mr. Smith, just so I want to have this
5 electric thing straight, the amount of electric
6 power costs that were the retainer, so to speak,
7 were left in your Exhibit 101 as electric power
8 costs?
9 A. Yes.
10 Q. Okay. So if we adjusted electric
11 power cost to take that out, would you then add that
12 amount on a different line?
13 A. I would add it back to labor.
14 Q. Okay. So that amount is going to be
15 included either as electric or labor, depending on
16 where you want to include it?
17 A. Correct. It just represents
18 compensation regardless of which line item it
19 happens to reside on.
20 Q. So the retainer was not disallowed or
21 recommended to be disallowed?
22 A. No.
23 Q. Okay. Thank you. That's all I have.
24 COMMISSIONER KJELLANDER: Thank you.
25 Further questions from the
130
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID Staff
1 Commission? If not then, we'll move now to any
2 redirect.
3 MS. NORDSTROM: Yes. Thank you.
4
5 FURTHER REDIRECT EXAMINATION
6
7 BY MS. NORDSTROM:
8 Q. On page 4 of your testimony, you
9 describe the total labor costs proposed by Staff
10 down around line 21, and you suggested a $4,160
11 management fee, an $1,800 allowance for checking the
12 wells, and an $1,800 allowance for the free
13 electricity -- so together that makes the $36,000
14 (sic) number that we had previously referenced --
15 and a $1,200 allowance for general system
16 maintenance. When added together, you represent
17 that this comes out to $8,960. Is that correct?
18 A. That's correct. No, 8,960 I believe.
19 Q. Okay. Thank you. So if I'm
20 understanding your total labor costs correctly,
21 you're proposing that this be the amount to
22 compensate Mr. Fairfax and Mr. Cobott for their work
23 on the system?
24 A. That's correct.
25 Q. Okay. So it doesn't really matter how
131
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID Staff
1 much money is spent on which task, so long as the
2 bottom line comes out to be about that dollar
3 amount?
4 A. Yes, that's correct.
5 Q. Okay. You also have a $2,400
6 maintenance reserve. Could you describe what that
7 is?
8 A. That was an additional amount that we
9 put in in this case, which is a departure from any
10 prior Commission authorization for a small water
11 company. We realize the problems that Ponderosa
12 Terrace has with the severe water, critical water
13 situation they're in, and the need to develop
14 additional water sources. We put this additional
15 amount in with a caveat that the $200 per month
16 represented by this be set aside into a reserve
17 account, an interest-bearing account somewhere, to
18 earn interest and accumulate over time to help pay
19 for future system improvements to assure water
20 supply in the future as the system grows to the
21 point where it maxes out the ability of the current
22 wells to provide water.
23 Q. And is that represented on line 33 of
24 your Exhibit No. 101?
25 A. Yes.
132
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID Staff
1 Q. If major repairs were needed on the
2 system, could the labor expenses that are necessary
3 to conduct this maintenance be taken out of this
4 fund?
5 A. Well, it could be taken here out
6 there, or you'll also notice that there's a line
7 item at line 10 for an additional $2,601, which is a
8 pretty much a catch-all for other unforeseen
9 contingency repairs that may be necessary. That
10 could be used for direct labor by the employees of
11 the company or for hiring of outside service people
12 to come in to effectuate the repairs and pay for
13 materials.
14 Q. So Staff's proposing the $8,960 in
15 total labor costs, but with line item 10 and line
16 item 33, there's another approximately $5,000 out
17 there per year that could go towards labor and
18 repair, if necessary?
19 A. Yes, for items outside the normal
20 daily routine.
21 Q. Okay. Thank you. No further
22 questions.
23 COMMISSIONER KJELLANDER: Thank you.
24 Then, Mr. Smith, we appreciate your
25 testimony and thank you, and I believe that you are
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HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID Staff
1 excused.
2 (The witness left the stand.)
3 COMMISSIONER KJELLANDER: At this
4 point, we'll take -- we'll go off the record for
5 purposes of the technical hearing and go on the
6 record for purposes of the public hearing, and we'll
7 call Mr. Jerry Favor, if he would come forward to
8 the stand and be sworn in.
9 And, Mr. Favor, as you're coming
10 forward, just wanted to let you know that this is an
11 opportunity for you to provide a statement, not to
12 ask any questions of any of the parties to the case,
13 but only to make a statement. Once that's occurred,
14 then what will happen is that all the parties,
15 including the Commissioners, will have an
16 opportunity to ask questions based on the statement
17 that you've made.
18 MR. FAVOR: Okay.
19 COMMISSIONER KJELLANDER: So with
20 that, Commissioner Smith will swear you in.
21
22
23
24
25
134
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID Staff
1 JERRY FAVOR,
2 appearing as a public witness, being first duly
3 sworn, was examined and testified as follows:
4
5 COMMISSIONER KJELLANDER: Now at this
6 point, we will have just a few brief questions to
7 get you formally introduced onto the record.
8
9 EXAMINATION
10
11 BY MS. NORDSTROM:
12 Q. Good afternoon. Please state your
13 name and spell your last name.
14 A. Jerry Favor, F-A-V-O-R.
15 Q. And what is your mailing address?
16 A. P.O. Box 664, Sagle, Idaho, 83860.
17 Q. Are you here tonight representing
18 yourself, or some other advocacy group or
19 organization?
20 A. Myself and my family.
21 Q. Are you a customer of Ponderosa
22 Terrace Estates --
23 A. Yes.
24 Q. -- Water Company?
25 A. Yes, I am.
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HEDRICK COURT REPORTING FAVOR
P.O. BOX 578, BOISE, ID Public
1 Q. Thank you. Please proceed.
2 THE WITNESS: Okay, so I'm just giving
3 a statement, so I'll give my statement.
4 I am a pastor of a church here in the
5 area. I have eight kids and one on the way. And I
6 lived there in the place there I can't remember how
7 many years; it's been quite a few years. I like the
8 area; it's a nice place.
9 And I -- my relationship with Larry
10 and Cobaer (sic) is basically I know Larry well,
11 pretty well for being out there. He's -- I've liked
12 him a lot and I like his family, and they -- I
13 haven't had no complaints about Larry and his being
14 there to turn the water off for me and doing the
15 roads and helping with that type of thing. So this
16 doesn't have any reflection on Larry, so just to let
17 him know.
18 And then Cobaer (sic), I don't know
19 Cobaer (sic) at all. I've never seen him until
20 today, which I think is part of the problem in the
21 communication not being there for the property
22 owners, not getting phone calls answered, not being
23 able to talk. Or for me personally, I've talked to
24 Larry and I get a lot of information from him, but
25 there's been many times I wanted to talk to Cobaer
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1 (sic). And I think part of the big blowup of a lot
2 of things is resulting from a lack of communication
3 and levelheadedness of communication too.
4 And I'm just guessing that somewhere,
5 somewhat down the line, someone had to put in a
6 water system, and I assumed it was in the '60s or
7 '70s. I don't know when it was put in, I have no
8 idea, but from my limited knowledge -- I'm not a
9 lawyer, I haven't researched all this. I just know
10 what I hear, so this may not be true. But as far as
11 I know, this -- to my knowledge, we have inadequate
12 pipes that are very thin-walled, and that's why a
13 lot of things break. And a lot of people have
14 turned the water off and on maybe because they felt
15 like they couldn't get ahold of anybody. I've never
16 really had a problem with any of this, but that's
17 what I've heard from other people.
18 And I'm thinking that maybe -- and it
19 seems to me that some of the problems are a result
20 of this system being put in years ago, not providing
21 for the future eventuality that all the properties
22 might be filled. So if they're all filled, you
23 would think that there would be some future plan
24 that they would all be -- that there would be enough
25 water to provide all the properties that are
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1 supposed to be serviced by the water system.
2 Evidently that didn't happen because we were out of
3 water for a couple months when it went dry, and I
4 don't know all the reasons for that either, but all
5 I know is that when you have eight kids, it's real
6 obvious. It takes about ten minutes to figure out
7 you're out of water and then it becomes somewhat of
8 a nightmare for a while.
9 Now, we did have water off and on for
10 a couple hours, and Larry I know worked really hard
11 at trying to make that work with what he had to work
12 with, and that was great and I appreciated that, but
13 it wasn't easy to be without water in the past for
14 that long of a time. And, again, I don't know all
15 the reasons, I just know we were out of water and I
16 know that's not really the way it's supposed to
17 work, you know, so what can I say?
18 And so I don't know, maybe -- and then
19 I'm wondering if there was supposed to be some way
20 where money was to be set aside for wells to be
21 drilled in the future to provide for the future
22 growth, I don't know, and it didn't happen so now we
23 are responsible. I'm kind of looking, wondering if
24 that was situation. So, all the responsibility is
25 being borne on the back of the customers today for
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1 all these problems in the past. I don't know.
2 That's the way I'm seeing it, though I may be wrong,
3 although that's the way I'm seeing it.
4 So anyway, I think a lot of it has to
5 do with a lack of communication and not being able
6 to talk and get ahold of Cobaer (sic) and ask
7 questions, and it would have helped me a lot and I
8 would have been a lot less frustrated if that would
9 have occurred.
10 And like I say, having the water off
11 and on not work has been a problem. Lately it seems
12 to be fine.
13 The only other communication I
14 received from Cobaer (sic) is letters saying things
15 about whatever, you know: We're not -- like the
16 system's not designed to water lawns or gardens and
17 whatever. And I'm sure it's not designed to water
18 roads and I know that. That is a little bit
19 extreme, but still.
20 That's basically about it.
21 So my perception of Cobaer (sic) as
22 the owner/manager has been somewhat negative I guess
23 just because of not being able to talk, and then the
24 letters are always a response to some situation
25 saying you can't do this, you can't do that, why are
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1 you doing this, and, you know, this type of thing.
2 But he may not be that kind of person, I don't know,
3 but that's all I can say because that's all I've
4 ever been able to communicate with him.
5 And then having the bills jump from
6 18.65 to $60 was quite a shock, and so I have to
7 admit, even as a pastor, I have sinned. I was a
8 little angry, but -- and I wasn't outraged angry,
9 but it seemed like a lot of money to be expected,
10 okay, today I'm going to pay 60, yesterday I paid
11 18. You know, why? And I know -- I knew there were
12 some things going on, I knew something was going to
13 happen, and it just seemed like a lot of money.
14 And I don't know what it takes to run
15 a water system, I have no expertise in that area. I
16 know what I can handle, and what I feel would be
17 reasonable would be somewhere in the 40 to $45
18 range. And I don't understand why maybe some of the
19 part-time customers and seasonal people, that they
20 could maybe make it a little bit more equitable to
21 where they may pay a little bit more to take a
22 little bit of the burden off of the full-time people
23 who have the water system. Maybe that's a little
24 selfish, but that's just the reality of what can I
25 pay and what can I afford, has no bearing on what it
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1 costs Cobaer (sic), because I have to -- I can only
2 pay what I can pay. But I will pay, you know, to
3 get water and Cobaer (sic) will tell you that I have
4 been, you know, good on my water as far as I can
5 tell. I try to pay my bill consistently.
6 And so many people are becoming
7 frustrated, and I've talked to people. And I'm not
8 saying I talked to people in a gossipy sort of way.
9 Just people have said, Well, I'm going to do a well,
10 or, I'm going to drill a well here, I'm going to
11 drill a well there. There's a lot of people
12 thinking -- saying that they have decided that
13 they're going to put in a well, and so I can think
14 of five or six people right now that are wanting to
15 put a well in tomorrow and, you know, and basically
16 if the rates are going to be 56 to $60, I think
17 several of these people are going to do that.
18 Well, what's going to happen if they
19 do that now? Those are coming out of an amount that
20 was figured for $56. Well if that happens, is that
21 going to go up? I'm going to be paying $90 or
22 $100. Well that's going to make me drill a well,
23 and I can do it. I have the setbacks. I have --
24 I'm not -- I can do it and not be by septics. I can
25 rearrange. It will cost me a lot of money but I can
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1 do it. I don't want to do it, I really don't want
2 to do it. I'd rather just have a system, you know,
3 and get water, but then someone is going --
4 someone's property is not going to get a well
5 because the setbacks aren't going to be right or
6 whatever. I have almost two lots, it's not quite
7 two lots on the end of a section, so I'm fine, but I
8 know a lot of people won't be.
9 So, I don't know, that's what's
10 happening. People are going to be putting in wells
11 and if things -- if the rates stay at 56 to $60
12 they're going to put wells in, and I will have no
13 choice but to have to do that, and I'd rather pay my
14 credit card $60 a month or $70 a month than to pay
15 somebody else $100 because all these other people
16 have dropped out of the system. And then the whole
17 thing collapses. I don't know -- you know, there
18 won't be anybody left. There may be three people
19 left, I don't know. That's just my -- what I'm
20 thinking will happen.
21 So anyway, you know, that's -- I'm not
22 mad at anybody and I'm not, you know, mad at Cor- --
23 Cor- -- Corbaer (sic) -- whatever your name is, I
24 always -- Cobaer, and I'm not mad at Larry or
25 anything like that. I just have property and I need
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1 water, and at a reasonable rate. And I just wish it
2 wouldn't have got this far, but it did and here it
3 is.
4 So, you know, that's all I have to
5 say.
6 COMMISSIONER KJELLANDER: Thank you
7 for your testimony, Mr. Favor. Let's move first to
8 Ms. Nordstrom.
9 Ms. Nordstrom, do you have any
10 follow-up questions?
11 MS. NORDSTROM: Staff doesn't have any
12 questions. Thank you.
13 COMMISSIONER KJELLANDER: Any
14 questions from Mr. Cobott?
15
16 CROSS-EXAMINATION
17
18 BY MR. COBOTT:
19 Q. Yeah, what phone calls are you
20 referring to?
21 A. Well I've left messages off and on
22 once in a while whenever I've thought I needed to
23 talk and never got an answer.
24 Q. Can you give me a specific?
25 A. Absolutely can't.
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HEDRICK COURT REPORTING FAVOR (X)
P.O. BOX 578, BOISE, ID Public
1 Q. Recently or a year ago?
2 A. Probably somewhere around there.
3 Q. Have I ever called you back?
4 A. Nope.
5 Q. Have I ever written you a personal
6 letter?
7 A. Nope.
8 Q. I never have?
9 A. Nope.
10 Q. Okay. When you're talking about being
11 out of water, this was a few years back. Is that
12 correct?
13 A. I don't know. Was it last year,
14 something like that? I don't know. Maybe it was a
15 couple years ago.
16 Q. It was a couple years ago?
17 A. There was a couple months where we had
18 water like an hour or two a day.
19 Q. When you said you wanted to get ahold
20 of me, what was your reasoning for getting ahold of
21 me? What was your questions?
22 A. Where is the water? Where is the
23 water?
24 Q. Weren't you aware that we were having
25 problems with the water, with the drought and stuff?
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HEDRICK COURT REPORTING FAVOR (X)
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1 A. Yep. Still wanted to talk to you.
2 Q. Were you aware that I was contracting
3 to have another well put in to alleviate this
4 problem?
5 A. At that time, I'm not sure. I can't
6 remember.
7 Q. You must have had conversations with
8 other landowners and with Larry?
9 A. Could have, yeah. I don't remember
10 exactly.
11 Q. That's what I thought.
12 A. Yeah.
13 Q. I was told here just a week ago that
14 somebody -- I don't know whether it was you -- but
15 somebody in your household was watering roads. Is
16 that correct?
17 A. No, not that I know of, not in my
18 house.
19 Q. Well, I have a witness right here
20 sitting next to me that saw it.
21 A. Someone was watering the road?
22 Q. Watering the road.
23 A. At my house?
24 Q. From your establishment.
25 A. Well, that wasn't me.
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HEDRICK COURT REPORTING FAVOR (X)
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1 Q. Well it was somebody connected with
2 you?
3 A. Of course I have -- could have been
4 one of my kids.
5 Q. How many other families are living on
6 your property besides you?
7 A. I have my mother in the back in her
8 RV.
9 Q. So how many people total do you have
10 on the system that are using the water system?
11 A. I have, let's see, if we count, eight,
12 nine, ten, 11 people all in the family.
13 Q. So you're probably the biggest abuser
14 of the system. Are you --
15 A. I'm not an abuser.
16 Q. I mean by "abuser," what I mean by
17 "abuser," I mean putting stress on the system.
18 A. I only see the word "abuser" is
19 "abuser," and I'm not an "abuser," so there's no
20 other meaning for that word, so you have to find a
21 different word.
22 Q. Stress?
23 A. Stress on the system. I don't know.
24 I went out and bought a front-loader washer so we
25 don't use near the water on washing the clothes.
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1 We water our garden sometimes, and we
2 don't water our lawn hardly ever. I haven't watered
3 it yet.
4 So I wouldn't think that we were
5 necessarily -- maybe by sure numbers as far as who
6 takes baths, you know. My kids take baths a couple
7 of times a week, three times a week. They share the
8 water. So we try conserve as much as we can.
9 Q. Okay. Your comments on wells --
10 A. Uh-huh.
11 Q. -- I've been researching this, and
12 because it's a concern of mine.
13 A. Me too, because I don't want to drill
14 a well.
15 Q. Okay. I'm going to give you the
16 answer to it right now and I want you to comment on
17 it.
18 A. Okay.
19 Q. I talked to Water Resources. Water
20 Resources will issue permits.
21 A. Uh-huh.
22 Q. They will issue Jerry Favor a
23 permit --
24 A. Right.
25 Q. -- to dig a well, but with that permit
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HEDRICK COURT REPORTING FAVOR (X)
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1 there's a clause in there that says you have to
2 check with City and County government --
3 A. Uh-huh.
4 Q. -- for any restrictions.
5 A. Right.
6 Q. Well, I have just found the
7 restriction.
8 A. What's that?
9 Q. When I bought this system, it was from
10 my father-in-law. He developed it.
11 A. Uh-huh.
12 Q. When he got the subdivision, he was
13 told -- and I've been saying this all along -- he
14 was told he had to put in a sewer system or a water
15 system in order to get approval.
16 A. Uh-huh.
17 Q. Well, on the original plat for
18 Ponderosa Terrace, it states:
19 Unless an approved community sewer
20 system is installed, no wells will be permitted.
21 A. Okay. What about the ones that are
22 already there?
23 Q. I don't know what's going to happen
24 there yet.
25 A. Which is why I haven't drilled yet,
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1 because I don't want to --
2 Q. Well, I'm just bringing this up to
3 save you. We've already notified a lot of people
4 and I've already notified some of the well diggers
5 and so on and so forth.
6 It's obvious that when a well digger
7 comes out to your house and you say, I want a well
8 right there; he goes to his truck and he pulls out a
9 permit book and he writes the permit right on the
10 spot. The well digger does not check with the City
11 or County and either do you.
12 A. I will.
13 Q. They just dig it.
14 A. I will.
15 Q. So what's happened here is the wells
16 that are there, the County was never checked with.
17 What's going to happen what the ramification, is
18 going to happen with this, I don't know at this
19 point, but I know what the plot says. It's a
20 restriction. It's a zoning restriction. And it
21 will come out in the next few weeks or week or so.
22 I don't know how soon.
23 A. Okay.
24 Q. But don't spend money on a well at
25 this point. I'm not trying to get the rates up.
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HEDRICK COURT REPORTING FAVOR (X)
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1 A. Oh, I know.
2 Q. I don't want people to have to pay a
3 lot of money for water.
4 COMMISSIONER KJELLANDER: Let's see.
5 Is there a question in this?
6 MR. COBOTT: Okay. I guess there's no
7 question in there.
8 COMMISSIONER KJELLANDER: Okay. Thank
9 you. Are there any additional questions?
10 MR. COBOTT: No, I think I answered
11 everything that he commented on.
12 COMMISSIONER KJELLANDER: Okay. Let's
13 move to see if there are any questions from members
14 of the Commission.
15
16 EXAMINATION
17
18 BY COMMISSIONER KJELLANDER:
19 Q. And I just had one up front, and that
20 is:
21 Did you mention in your testimony that
22 as far as the service today and the pressure today,
23 that you consider it to be reasonable and
24 acceptable --
25 A. Yes.
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HEDRICK COURT REPORTING FAVOR (Com)
P.O. BOX 578, BOISE, ID Public
1 Q. -- the way it is today?
2 A. It's great.
3 Q. So the problems in the past seem to
4 have been resolved and service appears to be?
5 A. As far as I can tell.
6 Q. Okay. Thank you. No further
7 questions.
8 COMMISSIONER KJELLANDER: Commissioner
9 Smith.
10
11 EXAMINATION
12
13 BY COMMISSIONER SMITH:
14 Q. This road thing is a mystery to me.
15 Is this like a dirt road?
16 A. Yes, I guess. Gravel, dirt, whatever,
17 depends on what time of year it is.
18 Q. Okay. I think I got it now.
19 You mentioned that your rate went from
20 $18.65?
21 A. Eighty-five, I think it is.
22 Q. Eighty-five. Sorry. How long had you
23 been paying that rate?
24 A. Several years. However -- since I
25 moved in.
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HEDRICK COURT REPORTING FAVOR (Com)
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1 Q. When did you move in?
2 A. She would ask me that. Let's see, I
3 moved here in '94. '96 or '97.
4 Q. Okay.
5 A. Somewhere around there.
6 Q. So that's six years --
7 A. Something like that.
8 Q. -- you got the same rate. So you
9 probably understand that rates change?
10 A. Oh, yeah, I understand.
11 Q. Have you looked at the Staff rate
12 options that were Exhibit No. 111 of Mr. Fuss's
13 testimony?
14 A. Yeah, but I don't remember what they
15 say anymore.
16 Q. So you wouldn't have a preference?
17 A. I couldn't tell you what they are
18 right now. I know they would be less than $56 a
19 month.
20 Q. Well, actually, the Staff-recommended
21 Option No. 3 is $61.50.
22 A. Yeah.
23 Q. For both full-time and part-time
24 customers.
25 A. For both full-time and part-time, 61.
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HEDRICK COURT REPORTING FAVOR (Com)
P.O. BOX 578, BOISE, ID Public
1 Q. 61.50?
2 A. Fifty?
3 Q. 61.50.
4 A. 61.50. Yeah, I don't like that, but
5 that doesn't mean --
6 Q. You could go to Option No. 4 which is
7 $64 for full-time and $33 for part-time?
8 A. Sixty-four and 33. I don't remember
9 looking at those higher -- it seemed like the ones I
10 looked at were -- went lower than 60, but that was
11 probably a long time ago.
12 Q. We have Option 5 which was $52 for a
13 full-time customer and 33 for a part-time, and then
14 22 for something called active service customer,
15 whatever that is. So that's more in your price
16 range?
17 A. That would be more in my ballpark.
18 Now, whether that's fair or not, I don't know. I
19 just know what I can afford, you know.
20 Q. Thank you for your help.
21 COMMISSIONER KJELLANDER: Commissioner
22 Hansen.
23
24
25
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1 EXAMINATION
2
3 BY COMMISSIONER HANSEN:
4 Q. You mentioned that you had tried to
5 pay your bill consistently, and my question would be
6 do you receive a regular monthly billing --
7 A. Yeah.
8 Q. -- every month at approximately the
9 same time and so forth?
10 A. It seems like it. I haven't had any
11 problem with billing.
12 Q. Always received it?
13 A. Yeah.
14 Q. Okay.
15 A. And I paid everything, I guess.
16 Cobaer (sic) would know, but I'm pretty sure I'm
17 up-to-date.
18 COMMISSIONER HANSEN: That's all I
19 have.
20 COMMISSIONER KJELLANDER: Thank you.
21 Thank you, Mr. Favor, for your
22 testimony. We appreciate it.
23 (The witness left the stand.)
24 COMMISSIONER KJELLANDER: And with
25 that then, we'll go off the record for purposes of
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1 the public hearing and return to the record with
2 regard to the technical hearing. And at this point,
3 I believe we're ready for Mr. Cobott and his
4 witnesses, and I think to help us sort of move
5 things along and get you on the record, I would
6 request that the Deputy Attorney General
7 Lisa Nordstrom just go ahead and ask you some of the
8 initial questions that she asked of her witnesses
9 just so we can get that on the record and move
10 forward from there.
11 So, Ms. Nordstrom, will you get it
12 started? Oh, my apologies.
13 MR. COBOTT: I do.
14 COMMISSIONER SMITH: Oh, let me say
15 it.
16 MR. COBOTT: Okay.
17
18
19
20
21
22
23
24
25
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HEDRICK COURT REPORTING COBOTT
P.O. BOX 578, BOISE, ID Public
1 ROBAER COBOTT,
2 produced as a witness at the instance of Ponderosa
3 Terrace Estates Water System, Inc., being first duly
4 sworn, was examined and testified as follows:
5
6 EXAMINATION
7
8 BY MS. NORDSTROM:
9 Q. Good afternoon.
10 A. Good afternoon.
11 Q. Please state your name and spell your
12 last name for the record.
13 A. My name is Robaer Cobott, C-O-B-O-T-T.
14 Q. And how are you related to the
15 Ponderosa Terrace Estates Water System?
16 A. I am the owner/operator.
17 Q. Are you the same Robaer Cobott that
18 filed direct testimony on June 17th or 18th that
19 numbered three pages?
20 A. Yes.
21 Q. Excuse me, four pages?
22 A. Yes.
23 Q. Is that correct?
24 Okay. Do you have any corrections or
25 changes to your testimony?
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HEDRICK COURT REPORTING COBOTT
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1 A. Yes.
2 Q. And could you explain what those are?
3 A. One thing that we did not include is
4 the preparation of income tax statement for the
5 year. You have to make out by April 15th your
6 income tax statement. I did not allow any time for
7 that.
8 Q. So would you like to include that as
9 Item No. 17 on page 2? Is that --
10 A. Yes. Well, it would be -- yes.
11 Q. Okay. So how would you like No. 17 to
12 read: Preparation of income tax statements?
13 A. Yeah, probably 12 hours a year, one
14 hour a month.
15 Q. Okay. Do you have any other changes
16 or corrections?
17 A. No.
18 Q. If I were to ask you the questions set
19 out in your prefiled testimony with your corrections
20 today, would your answers be the same?
21 A. Yes.
22 MS. NORDSTROM: On behalf of
23 Mr. Cobott, I would move that the prefiled testimony
24 of Robaer Cobott be spread upon the record as if
25 read and be marked for identification.
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P.O. BOX 578, BOISE, ID Public
1 COMMISSIONER KJELLANDER: And without
2 objection, with those changes, the addition of Item
3 No. 17 in reference to income tax preparation of 12
4 hours, we will spread the testimony across the
5 record as if read from Mr. Cobott.
6 (The following prefiled testimony
7 of Mr. Cobott is spread upon the record.)
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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