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HomeMy WebLinkAbout20030505Hearing Transcript.pdf00010002 0003 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSIONIN THE MATTER OF THE APPLICATIONOF DIAMOND BAR ESTATES LLC , DBADIAMOND BAR ESTATES WATER COMPANYFOR A CERTIFICATE OF PUBLICCONVENIENCE AND NECESSITY ANDAPPROVAL OF RELATED RATES AND FORCHARGES. PUBLIC HEARINGTAKEN ON BEHALF OF THE PUCAT RATHDRUM , IDAHOAPRIL 29, 2003 , AT 7:00 P.REPORTED BY:DAVID E. HIX , C.Notary Public LISA NORDSTROM Attorney At Law , Hearing Officer Depu ty At torney General. SCOTT WOODBURY Attorney at Law , Deputy Attorney General. ALSO PRESENT: CAROL ABELHANZ MI KE MEEHAN I N D E X 0004 0005 TESTIMONY OF CAROL ABELHANZ:Examina t ion by Mr. Woodbury PAGETESTIMONY OF MIKE MEEHAN:Examina t ion by Mr. WoodburyREPORTER I S CERTIFICATEMS. NORDSTROM: Good evening, ladies andgentlemen. The hearing will now come to order. Thisis the time and place set by the Idaho Public Utili tiesCommission in Case No. GNR-02-3. This case is reference to the application of Diamond Bar Estates Water Company for a Certificate of Public Convenience and Necessity and for Approval of Related Rates and Charge s My name a Lisa Nordstrom , and I ve been designated by the Commission to be the Hearing Examinerin this case. Although I am facilitating the taking of public testimony tonight , the three Commissioners who comprise the Commission will ultimately decide on this case once the evidentiary record is complete. The purpose of tonight I s hearing is to take public testimony regarding the rates and charges the Commission should authorize for Diamond Bar Estates Water Company. For those interested in testifying there should still be a sign up sheet located in the back of the room up next to Gene Fadness , and he can help you sign up if you ve already not done so. If at any time during tonight I s proceedings you should feel like you wish to testify and haven I already signed up, we will go through all the names on the list that I have currently in front of me , and then I I II give you another opportunity to come forward and give your thoughts and opinions , if you wish to do toward the end of the hearing. For individuals who do not wish to testify, but would still like to submi t comments for the 0006 0007 Commission to consider , youform, which is also locatedback of the room.When you I ve completed the form you can handit to one of the PUC staff members present , or you canfinish it at home and mail it to the Commission.However , the deadline for the Commission to receivecomments is May 6th , so you can t wait too long. Youmay also submit comments electronically via our websiteon the Internet , and if you haven t already visi ted ourwebsi te it can be found at WWW. PUC. STATE. ID. US.Your written comments will become part of therecord and will be used by the Commissioners during thecourse of their deliberations. Before we get startedtonight I need to take the appearances of the parties.And let I s begin with the attorney representing theCommission staff.MR. WOODBURY: Scot t Woodbury, DeputyAttorney General for the Commission staff.may fill out a commentback by Mr. Fadnes s in theMS. NORDSTROM: And for the company?MR. NELSON: I I m Roger Nelson , and this Bob Turnipseed.MR. TURNIPSEED: Bob Turnipseed , Bar Circle, I mean , Diamond Bar Water Company.MS. NORDSTROM: Thank you. For the recordthe Commission is making a full transcript of theseproceedings, which means that your comments will betaken down by our court reporter so that they will beavailable for review by the Commissioners during their deliberations. This public hearing functions very similarly to a court of law , which means that when people make comments or ask questions , it is inappropriate to applaud or yell out comments while these individuals are providing their testimony. Please keep in mind that such actions make it difficult for people to hear the testimony and for the court reporter to get an accura te record. As we proceed tonight I will call your name from the sign up sheet and you will approach the table here in front with the chair. And before you are seated , I will swear you in. And then once that is complete you may offer your statement of testimony. This is not an opportuni ty to ask questions of me or of the Commission staff , but opportunity to provide your testimony Commission can have a complete record base its decisions in this case. Once you I ve completed your statement , the attorney representing the staff and the company may ask you follow-up questions. Although we call that cross-examination , that word is really much worse than it actually is. They may just have an additional question or two that they wish to ask you to clarify your statement , and once they I ve done that I may ask rather it is an so that the upon which to 0008 0009 you a question as well.It all sounds very formal , but qui te honestlyit I S not all that scary, so don't let that prevent youfrom offering your thoughts and opinions on the mattersthat we re going to discuss tonight. We really do wantto hear what you have to say, and the Commission doesso also , so that they can make a fully informeddecision.wi th that said we are ready to call our firs twi tness in the case , and that I s Carol Abelhanz. Pleasecome forward.CAROL ABELHANZcalled as a witness , having been first duly sworn , wasexamined and testified as follows:MS. NORDSTROM: Please be seated.Mr. Woodbury will ask you a few questions.MR. WOODBURY: Madam Hearing Examiner , I havea preface statement that I would like to make before weget into this , and it I S regarding the information thathas been provided to the customers. We - - theCommission made an attempt to provide staff I s comments- - individual copies of staff I s comments , the companyreply and the decision memorandum that was originallypresented to the Commission. And - - and the Commissionalso had at that time all of the customers I commentsand determined , you know , to essentially set this outfor hearing to provide customers the additionalopportunity, I guess , to put their testimony live onthe record. But there is one thing; that the company has had some conversations wi th staff regarding the backupgenerator. And in reviewing the staff I s comments and the decision memorandum staff had contended that the company should obtain an easement from the Turnipseed family for permanent rights of access to the building well and generator. And it was our understanding that Mr. Turnipseed does not wish to provide that formal type of easement , and that changes staff I s recommendation in that case. Staff no longer feelsthat. Staff feels that without that right it I inappropriate to rate base any of that investment. However , it might be a reasonable way of going about it if the customers still feel that a backup generator provides them with added reliabili ty, to enter into some sort of service agreement withMr. Turnipseed in order to provide that type of backupservice. So that being - - that being the case , what would need to be determined is wha t would be a reasonable value to customers to have that backup serVlce. So that was the only thing out - - the only change outside of the record and documents that you been provided , and so that being the case I just I I II ask you some question now and put you on the 0010 0011 record , and you can give your statement.MS. NORDSTROM: Mr. Woodbury, before youbegin I should ask the company if they have anypreliminary matters that they feel as though should bebrought to the attention of the Hearing Officer?MR. NELSON: I don't believe so.MS. NORDSTROM: Okay. Thank you.EXAMINATIONBY MR. WOODBURY:Please state your full name and spell yourlast name?A. Carol Abelhanz , A-n- z.Q. And you re a customer of Diamond Bar?A. Yes.Q. You may give your statement.A. I have here a copy or an actual water billthat we receive each month , and it comes on a postcard.I m sure it must be some sort of - - printed off oftheir computer or some type of system. And I noticedin your allotment for billing and postage and that youwould allow 37 cents postage and ten cents formaterials.And I question that because postage is , infact, 23 cents , and this is a regular normal billing.And I don t know what the cost of this little cardwould be , but I don t think it would generate a 10 centcharge. So your total , I think it was $172.20. Iquestion -- I figured it up that going by 23 centpostage, and I figured 5 cents for materials , would come to $11.48 a month , would be - - it would be $137.a year. Difference in the year would be $34.44. That was all that I had. MS. NORDSTROM: Does the staff have any questions of this witness? BY MR. WOODBURY:Q. Is this the standard method of billing, on the postcard?A. Yes.Q. Okay. No further questions. MS. NORDSTROM: Thank you. You are excused. Thank you for your testimony. The second wi tness that I s signed up to testify is Bob Turnipseed. MR. TURNIPSEED: I I II waive my presentation. MS. NORDSTROM: Okay. Thank you. Next on the list is Mike Meehan. MIKE MEEHAN called as a witness , having been first duly sworn , was examined and testified as follows: EXAMINATION BY MR. WOODBURY:Q. Mr. Meehan , will you name and spell your last name?A. Mike R. Meehan.Q. And you re a customer A. Yes , sir , I am. please state your full of Diamond Bar also? 0012 0013 0014 Q . And did you recei ve a copyCommission I s orders and notices?A. Yes , I did.Q. Thank you.of theYou may give your testimony.A. I bel ieve tha t there are a number of issuesrelating to the proposed water structure which need tobe reexamined. I have a proposal for rates and chargesfor the customers , and they re based on the following:During the 12-month period , November of 2001to October 2002 , this last full year for which I hadda ta - - because they do not read the meters over thewinter - - there were 34 homes on the system. Of thosehomes 17 use less than 90 000 gallons of water , which500 times 12. The remaining 17 use over 90 000gallons.In at least one case , to show how this worksone homeowner used 9,000 gallons of water in one monthand thus was charged the current excess rate , eventhough that homeowner , for the entire 12 -month periodused less than 55 000 gallons of water.There were 19 homes on the irrigation systemduring the summer of 2002. Currently, there are homes - - or in one case a home and business , which everit is at the end of the street -- on the water system.I m proposing that the rate structure be as follows:That the irrigation be on a flat fee of $250 , which is10 percent increase over the current raterecognizing that Avista I s rates are increasing.Keeping in mind that the irrigation users are subsidizing the basic system because the cost of the water they use is essentially the cost of the pump. This is all one system. There I s no extra well to provide the irrigation , so to the extent that they are using this water at 225 , the current rate , or 250 , they are subsidizing the basic system. There are four others that I know that were planning on going on the system this year. Whether or not they will depends on what the Commission decides the rating action for the cost of water. If we assume that the usage of the 34 homes that were on for the full year doesn t change , and the seven homes which have come on during the interim use the amount that the 1 7 used , which is less than the 000 gallons , the basis usage of all these homes , up to 90 000 gallons , would be 2.7 million gallons. The excess for those 17 homes that used excess last year would be 1.6 at 50 cents a gallon on the first 90 000 gallons a year and 70 cents a thousand above that would genera te a revenue to the wa ter company 400. Assuming that the four new irrigation users came on at $250 per , that would generate a revenue 750. Lastly, all homeowners and lot owners benefit from the main tenance of thi s sys tem. There are 0015 0016 currently four lots vacant , but these people benefi tfrom this system as surely as if they were hooked upbecause having a viable water system is important forthem to ei ther resell the lot or to ul timately build ontheir own.For this reason I believe that every lotowner should pay the basic fee towards the maintenanceof the system. This is not like Avista or a gasutility that has an unlimited open exposure. There I45 lots. The system will not grow. It I S limi ted tothat effect.At $15 a month , which was based on myestimate of the underlying cost of maintaining thesystem based on the water company I s original submissionto the PUC , that would produce $15 a month times the times 12 , or $8 , 100 a year. This would be paidregardless of your water usage.If the PUC were to decide that these fourhomes derived no economic benefi t from having a watersystem available , then the cost would come to theremaining 41 homeowners of $197.56 a year as opposed to180. Whichever way you do it the total revenue for thewater company on this basis is $16 392.Why am I proposing these rates? First , thedevelopment, which started long before I bought here 2001 , was sold on the basis of flat rate irrigation.Any number of people feel that this is important , eventhough at the end of day it is their decision to dividetheir usage by the water rate to determine if $250 favorable over to metered rate. Secondly, it I S not a fair deal for those people who own vacant lots to escape the maintenance the basic underlying system. Thirdly, it I S not fair to charge homeowners for water they aren t using. The current system , and the staff proposal , have in their a minimum of 7 , 500 gallons a month. Yet we I ve seen in the year in question half the people did not use that much water. Therefore , I suggest that the first 90 , 000 gallons a year , regardless of the month used , be charged at the lower rate , and anything in excess of 000 gallons in the 12-month period - - and you can choose any 12 -month period you propose - - would be billed at an excess right. This would avoid people if the staff determines - - and the PUC determines - - that a flat rate irrigation is not practical. Then people who use more water in the summer for lawns , new lawns - - and the CCRs require lawns be developed - - would not be charged extra. But over the remaining months of the year they use far less water than the monthly minimum. The excess amounts - - I would propose that the $180 , if that I s agreed to as the flat rate , be billed as an annual rate , and thus would be billed whenever the Commission ruled on the new rates , June 0017 0018 Usage would be billed on any basis that thecompany decided was reasonable. However , I believethat monthly billing would be inordinately expensive toboth the company and the homeowner. I f someone is onlyusing 5 000 gallons a month , that means that they'generated a monthly bill of $2.50. The water companyis going to spend 30 cents to send out a bill. I 1going to spend 37 cents to send back the check. Itmakes no sense.They could bill -- since they have gotten theannual fee up-front , they could bill on a quarterly,semi annual , whatever basis would seem to bereasonable. And that I s the end of my comments.MS. NORDSTROM: Thank you. Does the have anyquestions of this witness?BY MR. WOODBURY:Q. Mr. Meehan , have you discussed your proposalwi th any of the other cus tomers A. No.Q. -- or with the company?A. No , I haveQ. Is it -- isusage will not changeseeded or tha t sod bedone that?A. Usage should go up for a number of new homesthat are in their first year or second year. The CCRsrequire that a front lawn be established within a year.The homeowners association has been somewhat lacks on this , but it is a requirement. And for those people who are now putting in new lawns - - and there are a number of them , myself included , expanding mine - - that water usage and putting in a new lawn will be higher. And arborists have advised that new treesrequire 25 gallons of water a day for the first year they re in to get them established. Now , if you I putting in trees on the prairie , you know , one tree at 25 gallons a day is going to run your water usage considerably.Q. Regarding the basic fee that you propose for those four lots that are still vacant , are there any components to that basic fee?A. I used the -- in the submission that was made to the staff originally by the water company - - and the staff has my comments as to where I broke it off on not.a reasonable assumption thatif the CCRs require that lawns belaid and some customers have not their various accounts. I don t have that proposal with me , but it was about halfway down the list of accounts that Mr. Turnipseed submi tted that I broke into variable versus fixed. Q . Do I unders tand tha t under your proposal would a portion of that be electric and gas utili ties?A. Electric and gas. Gas would be a fixed expense because you have to heat the building. Electric is a variable expense because it depends on the amount of water being produced. 0019 0020 Q. And does the basic charge include bothelectric and variable?A. No. The basic charge includes gas. Theavailable - - the 50 cents a thousand is a variableexpense for water.Q . Do you have any commen t regarding the backupgenera tor and whether or not A. Well , I had not heard -- the last I had heardwas Mr. Turnipseed had submi t ted something about a the expense of pu t t ing a pad in for the backupgenerator to , I guess , blunt prior comments that havingthe generator as a mobile meant that he could move anywhere else.If he I s not willing to provide the easementthat the staff discussed , I think that he would have toprovide a draft service agreement for review by thehomeowners association and whatever legal orengineering staff thing they wish to retain todetermine the value of that service agreement.Q. How long - - how long have you been a customerof Diamond Bar?A. Just short of two years.Q. And during that period have there been anyperiods of service interrupt ion?A. We had a week I s outage last summer , and wehad a brief outage the other day. I I m not sure what was. It was down for two hours or something.Supposedly, somebody ran into an electric meter orsomething. Q . And the extended one week I s ou tage do you know the reason for that?A. The pump in the Q . Do you see that backup genera tor? A. Well , clearly, if we have to rely on a backup well , that well has to have some means of producing water for the community. If there's -- I mean , if there I s no way we can get the wa ter from the backup well without that well having a generator , then we would have been wi thout water for a week. So there I existing system failed. there I s value in having a I believe , a need for a backup generator. However sans the easement , I think that the value of that has to be somewha t determined by wha tever the service agreement would provide. MR. WOODBURY: no further questions. MS. NORDS TROM : Thank you. have any questions of this wi tness? MR. NELSON: Madam Chair , maybe more of a short statement than a question for Mr. Meehan. appreciate the serious study that Mr. Meehan made in his rate proposal to the proposal that the company made , perhaps different priori ties in mind. One of the things is cash flow during the winter months when there I s not much water being used , and that I s why we Madam Hearing Examiner I have Does the company 0021 0022 proposed a base rate.We I re really more concerned in meeting ourrevenue requirement than in a particular rate designand perhaps after some studies his ideas would havemeri t. But we really can t comment on it at this time.MS. NORDSTROM: Okay. Well , the commentdeadline isn t until May 6th MR. NELSON: Right.MS. NORDSTROM: - - so I would encourage thecompany, if you need addi tional time , to review hisproposal tha t perhaps you could do tha t and filecomments before that date.MR. NELSON: I think the company is moreinterested in a swift resolution to this than we are delaying it. And while we would like to take a look his proposal , I don t think we want an extension time for comments.Right. Well , the commentMay 6th , which is a week.MS. NORDS TROM :deadline has been set forthat I s set regardless.MR. NELSON:tomorrow , right?MR. WOODBURY: Mr. Meehan , did I unders tandthat you had some wri tten copies of that?MR. MEEHAN: Yes , perhaps you could provideone for the company.MS. NORDSTROM: And for the record , I I 11 notethat Mr. Meehan has provided me a copy summarizing hisoral testimony, and I will put that in the Commission I file so that the Commissioners will have an opportuni to see it as well. wi th that , I don t have any questions personally. So you are excused. MR. MEEHAN: Thank you. MS. NORDS TROM : Thank you. the list is Bill Snodgrass. Well , we I ve have a transcript The next name on MR. SNODGRASS: MS. NORDS TROM : I m going to wai ve right now.Okay. Thank you. And Gary White. MR. WHITE: I pass. MS. NORDSTROM: Okay. Well , that I s the only names that I have signed up. Does anyone else wish to make a comment or testify at this time? This is yourlast chance. Do any of the parties have any addi tional matters that should be brought up at this time? MR. WOODBURY: No . MR. NELSON: Thank you , no. MS. NORDSTROM: Okay. If not , I want to thank everyone for taking time out of your busy schedules to come here tonight. I recognize that sometimes these proceedings can be a bit intimidating, but the Commission greatly appreciates your comments and we III take into account when deliberating on these matters. As I mentioned earlier you have ample opportunity to submit written comments , and there's the 0023 0024 written comment forms in the back of the building for-- which you can take to complete , at your leisureuntil May 6th. Or if you know one who could not makeit tonight , but who would ike to commen t , take a formfor them as well. That being said , this meeting adj ourned. Thank you.(Thereupon , the public hearing was concluded at 7:30 REPORTER I S CERTIFICATE , DAVID E. HIX , Certified Shorthand Reporter , do hereby certify: Tha t the foregoing proceedings were taken before me at the time and place therein set forth; That the testimony and all obj ections made were recorded stenographically by me and were thereafter transcribed by me or under my direction; That the foregoing is a true and correct record of testimony given , to the best of my ability; That I am not a relati ve or employee of any at torney or of any of the part ie s , nor am I financially interested in the action. IN WITNESS WHEREOF , I have hereunto set my hand and seal thi s day of , 2003 DAVID E. HIX , C.R. #1992 816 Sherman Avenue Sui te Coeur d I Alene , ID 83814