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HomeMy WebLinkAbout20210426Technical Hearing Transcript Vol II.pdfBEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF SUEZ WATER IDAHO rNC. IS APPLICATION FOR AUTHORITY TO INCREASE ITS RATES AND CHARGES EOR WATER SERVTCE IN IDAHO ) )CASE NO. SUZ-W-20-02 ) ) vTDEocoNFERENCTNG/ I TELEPHONIC HEARING BEFORE t 'i; *4 ('-' -*t:..i _ lt -,'#t'-1. \ r -.l.- i::-li-; siding)tfri5 0n() 4- r:! I:I :,! u *'-i " i_l l"arr2Jr*) lJcfi lrl*ffir:lt\} (:) COMMISSIONER PAUL KJELLANDER (PTe COMMISSIONER KRISTINE RAPER COMMISSIONER ERIC ANDERSON PLACE:Commission Hearing Room 11331 West Chinden B1vd.Building 8, Suite 201-ABoise, Idaho DATE:April 20, 2021 VOLUME If Pages 42 106 CSB REPORTING C e rtifwd S h o rth an d Repo rt e rs Post Office Box9774 Boise,Idaho 83707 c sbreportin gl@yahoo. com Ph: 208-890-5198 Fur: 1-888-623-6899 Reporter: Constance Bucy, csR ORIGINAL 1 2 3 4 q 6 7 8 9 10 11 t2 1_3 L4 15 16 l1 18 19 20 2t 22 23 24 CSB REPORTING 208.890.5198 APPEARANCES Eor the Staff:Matt Hunter, Esq. Dayn Eardie, Esq. Deputy Attorneys General 11331 West Chinden B1vd.Building 8, Suite 201-A PO Box 83120 Boise, Idaho 83720-0074 REMOTE APPEARANCES For SUEZ Water Idaho Inc Preston N. Carter Givens Purlsey LLC 601 West Bannock Street PO Box 2120 Boise, Idaho 83701-2720 For City of Boise:ldary Grant, Esq. Deputy City Attorney Boise City Attorneyr s Office 105 North Capitol Blvd. PO Box 500Boise, Idaho 83701-0500 Eor SUEZ Water Customer Group: Norman M. Semanko, Esq. PARSONS BEHLE & LATTMER 800 West Main, Suite l-300Boise, fdaho 83102 For the Community Action Partnership of Idaho: Brad M. Purdy Attorney at Law 20L9 North 17th Street Boise, Idaho 83702 Eor Micron Technology,Inc.:Thorvald A. NeJ.son, Esq. HOLLAND & HART LLP 555 17th Street, suite 3200 Denver, Colorado 8020225 APPEARANCES 1 2 3 4 5 6 1 8 9 10 11 12 13 L4 15 16 L1 18 L9 20 2L 22 23 24 CSB REPORTING 208.890.5198 rNDEX WITNESS EXAMINATION BY PAGE Marshal-I Thompson (SUEZ Water) Mr. Carter (Direct) Prefiled Direct Testimony Commissioner Raper Commissioner Kj ellander 47 49 56 65 Donn English ( Staff ) Mr. Hunter (Direct) Prefiled Direct TestimonyMr. Semanko (Cross) Commissioner Raper 74 16 91 99 EXHIBITS NUMBER DESCRIPTION PAGE EOR THE STAEE: 101.Professional Qualificationsof Donn English Premarked Admitted 10s 25 INDEX/EXHIBITS 1 2 3 4 5 6 1 I 9 10 11 72 13 t4 15 76 L7 18 t9 20 2! 22 23 24 CSB REPORTING 208 .8 90 . s198 BOTSE, IDAHO, TUESDAY, APRIL 20, 202L, 1:30 p. M COMMISSIONER KJELLANDER: Good afternoon. This is the time and place for a technical hearing in Case No. SUZ-W-2)-02, further identified as in the matter of SUEZ Water Idaho Inc.rs application for authority to increase its rates and charges for water service in the State of Idaho. My name is Paul Kjellander. I'11- be the Chairman of todayrs proceedings, and I'm going to raise my hand right now so you know it's me. For those of you who haven't seen me sj-nce this whole pandemic, y€s, this is a beard and, y€s, it will come off as soon as I can travel freely in the country again. To my right 1s Commissioner Eric Anderson and to my left is Commissioner Kristine Raper. The three of us comprise the Commission and ultimately, at the conclusion of this case when it's fuI1y submj-tted, we will be those who deliberate and render a final Order i-n rel-ationship to appearances Applicant. of this rate case. We'1I begin this afternoon by taking the the parties and let's begin with the That woul-d be SUEZ Water. MR. CARTER: Thank you, Commlssioner25 42 COLLOQUY 1 2 3 4 6 7 I 9 Kjellander and Commissioners. This is Preston Carter with Givens Pursley representing SUEZ Water Idaho Inc., the Applicant in this matter. COMMISSIONER KJELLANDER: Thank you very much and if I could just remind people that when they're not speaking if they cou1d just mute so that we can ensure that we avoid as much as possible any cross talk or interference that we may have through open mics. Thank you very much, Mr. Carter. Let's move now to 1ega1 counsel representing Commission Staff . MR. HUNTER: Thank you, Mr. Chai-rman, members of the Commission, Matt Hunter, last name spelled H-u-n-t-e-r. MR. HARDIE: And Dayn Hardie. COMMISSIONER KJELLANDER: Thank you very much. Let's move on through our l-ist of parties to the case. Ada County, do we have any 1ega1 counsel representing Ada County? Eor the record, we wil-l note that we do not have any audio that suggests that we have lega1 counsel- representing Ada County. If we should discover that Ada County was oD, but had some audj-o difficulties on that, w€ certainly will make a note of that. Let's move on now to the City of Boise, CSB REPORT]NG 208 .890.5r-98 10 11 L2 13 74 15 t6 t7 18 19 20 2L 22 23 24 25 43 COLLOQUY 1 2 3 4 5 6 7 I 9 10 11 72 13 74 15 t6 1,1 18 79 20 2L 22 23 24 CSB REPORTING 208.890.5198 1egaI counsel representing the City of Boise. MS. GRANT: Mary Grant for the City of Boise. COMMfSSIONER KJELLANDER: Thank you much, Ms. Grant. We welcome you today. Let's move now to SUEZ Water Customer Group. MR. SEMANKO: Good afternoon, Commissioners. My name is Norman Semanko with Parsons Behle & Latimer. Thank you. COMMISSIONER KJELLANDER :Thank you for the list ofyour presence parties to the today, and as we move down case, letts move to the Community Action also known as CAPAI.Partnership Association of MR. PURDY: Idaho, Thank you, Mr. Chairman. Brad Purdy appearing on behal-f of CAPAI, and as I indicated earlier, also on the line is our expert Jeremy Gunter should the Commissioners have any questions of him as our expert witness. COMMISSIONER KJELLANDER: Thank you, and 1et's move, then, to counsel representing Micron Technology. MR. NELSON: Good afternoon, Mr. Chairman, Thor Nelson of the law firm of Holland & Hart appearing today on behalf of Micron Technology. COMMfSSIONER K,IELLANDER: Thank you to all25 44 COLLOQUY 1 2 3 4 5 6 7 8 9 10 11 t2 13 !4 15 L6 T7 1B 19 20 2L 22 23 24 CSB REPORTING 208.890. s198 the parties to aII of you, we the case and I ' lI l-et you know that were able to hear you well and for recognize that understanding as witness stand, too, so that for get a this room. the ones YOU, good. some and, we actually were able to I realize there may be of your abiJ-ity to access many of see your videosr so that's some technical problems in video. We again, appreciate your patience and we move through this proceeding today. What we will sdy, though, is that there wil-l be however, we will you can better very little when there view of that witness if they're and camera movement around the dais; are witnesses on the make sure that it I s broad enough, see the witness and wil-l- likely try to l-ive in I'm fai-rIy certain that you will be able to see remotely wj-thout any difficulty. We'11- decent image of the one witness that we try to give you a anticipate will so I think atbe on the witness stand here today, that point where werre at with this if there are any prelj-minary matters process is that need just ask to come before the Commission before we begin today's proceedings. For those of you that can't see the shaking of no on the heads within the Hearing see none there and f am checking wlth Adam. any hands raised, so my assumption is there Room, we I donrt see are no25 45 COLLOQUY 1 2 3 4 5 6 7 I 9 10 11 L2 13 1-4 15 L6 t1 18 L9 20 2t 22 23 24 CSB REPORTING 208.890.5198 preliminary matters that need to come before us today, so we're ready now to move forward with the proceeding and so we move, then, to the Applicant to call their witness. MR. CARTER: Thank you, Chair Kjellander. This is Preston Carter representing SUEZ Water Idaho. We will present Marshall Thompson as the Company's witness. COMMISSIONER KJELLANDER: Mr. Thompson? Can you hear me, Mr. Thompson? MR. THOMPSON: Yes, sir. COMMISSIONER KJELLANDER: Great, and Mr. Thompson, I can see you. Mr. Thompson, first, I'm goJ-ng to swear you in. MARSHALL THOMPSON, produced as a witness at the instance of the Applicant SUEZ lrflater Idaho Inc., having been first duly sworn to tell the truth, was examj-ned and testified as follows: COMMISSIONER KJELLANDER: Just for for the court reporter, if couldpurposes your full will make you that the poi-nt, record. j ust too, state wename and spell it and at sure that we have that on THE WITNESS: Okay, my name is Marshall25 46 COLLOQUY Thompson, spelled M-a-r-s-h-a-1-1 T-h-o-m-p-s-o-n. I'm the vice president and general manager of SUEZ Water Idaho. COMMISSIONER KJELLANDER: Great, thank you very much, and so it's up to your attorney now to help you get your testimony on the record, so I will be quiet and we will all-ow the proceedings to move forward. MR. CARTER: Great. Thank you, Chairman Kj e1lander. DIRECT EXAMINATION BY MR. CARTER: O Mr. Thompson, you stated your name and spelled it for the record. Would you state again just by whom you're employed and what your positi-on is? A I am employed by SUEZ Water Idaho Incorporated, and my position is vice president and general manager. O And are you the same Marshal-l Thompson who submitted prefiled direct testimony in this matter on March 17th, 2021? A Yes, I am. O Do you have any corrections or changes to that prefiled testimony? 1 2 3 4 5 6 7 8 9 10 11 t2 13 74 15 L6 t7 18 t9 20 21 22 23 24 CSB REPORTING 208 .8 90 . 5198 THOMPSON (Di) SUEZ Water Idaho Inc. 25 47 A No, Ido O If I were set out in your prefiled the same today? A Yes, they not. to ask you the same questions testimony, would your answers be wou1d. MR. CARTER: Okay, Commissioners, I move that the prefiled direct testimony of Marshal-I Thompson be spread upon the record as if read in ful-l-. COMMISSIONER KJELLANDER: And without objection, and I'11 pause to see if any Star 3's or raised hands emerge, I see noner so there being no objection, we'11 spread the testimony across the record as if read. (The following prefiled of Mr. Marshall Thompson is spread upon direct testlmony the record. ) 1 2 3 4 5 6 1 8 9 10 11 72 13 14 15 16 77 r_8 19 20 2t 22 23 24 CSB REPORTING 208.890.5198 THoMPSON (Di) SUEZ Water ldaho Inc. 25 48 O. Pl-ease state your name and business address. A. My name is President and General ( "suEZ, " is 8248 "SUEZ Water, " Marshall Thompson. I am the Vice Manager of SUEZ l{ater Idaho, fnc. or "Company"). My business address Boise Idaho.West Victory Road, Please describeo your invol-vement in this proceeding. A. I have been deeply involved in all aspects of this proceeding. I filed direct testimony in support of SUEZ Water's Application. f reviewed and assisted in responding to the numerous discovery requests filed by Commission Staff and the intervenors in this case. I attended and participated in each of the four settlement conferences, as well as informal phone and video call-s with various combinations of the parties to this case, and am familiar with the negotiations, communi-cations, and agreement reached by the parties. O. What is the purpose of your testimony? A. The purpose of my testimony is to descrj-be the Stipulation and Settlement that was signed by the parties to the case, and to recommend that the Commission approve the settlement without change. 0. While maintaining confidentiality, please descrj-be the process that resulted in the Settlement. A. Of course, al-l statements made in the course of 1 2 3 4 5 6 1 8 9 10 11 12 13 L4 15 15 L7 18 t9 20 2t 22 23 24 THOMPSON, DI 1 SUEZ WATER IDAHO INC. 25 49 settl-ement are confidential, and I will respect that confidentiality. After exchanging extensj-ve discovery, staff scheduled three settlement conferences. Following the third conference, the parties agreed to schedule a fourth conference. To my recollection, every intervenor in this case attended at least a substantial portion of each settlement conference. Simply stated, the parties to / 1 2 3 4 5 6 7 8 9 10 11 t2 13 1"4 15 76 t7 18 19 2o 2L 22 23 24 THOMPSON, DI 1a SUEZ WATER IDAHO INC. 25 50 the settlement devoted considerable t.ime, effort, and resources for the purposes of reaching settlement i-n thj-s CASC. a A Did al-l- parties join All intervenors that the Settlement? have expressed the intent have joined the this case involved a to remain parties in this proceeding settl-ement. As the Commission knows, rel-atively large number of intervenors representing a number of different perspectives. At the conclusion of the settlement conferences and what I understand to be additional- discussions, two intervenors agreed to withdraw from the case. The remaining partj-es Commission Staff, Micron Technol-ogies, fnc. ("Micro["), the City of Boise, Ada County, Community Actlon Partnership Association of Idaho ("CAPAI"), and the Suez Water Customer Group ("SWCG") - have joined the Settlement. O. Pl-ease describe the Settlement. A. The Settl-ement contai-ns several components, each described in the Settl-ement itself. I would like to briefly describe revenue requirement; rate design and further study; pubI1c outreach; pubfic workshops; and l-ow-income assj-stance program. As can be expected, revenue requirement was vj-gorously negotiated. The parties eventual-Iy agreed that 1 2 3 4 5 6 7 I 9 10 t_ t_ L2 13 L4 15 16 L1 1B t9 20 2t 22 23 24 THOMPSON, DI 2 SUEZ WATER IDAHO ]NC. 25 51 the Company would be aIlowed to i-mplement revised tariff schedules designed to recover $3r996r00. This reflects an overall increase of 8.758', implemented over two years. As I understand it, based on calculations conducted by the SUEZ team, for the average residential- customer using 11.36 ccf, the Settlement would result in an increase of approxlmately $1.05 per month for the first year and an additj-onal- $1.54 per month beginning in the second year. The implementation over two years reflects certain tax amortizations, and confers the greatest benefit to customers in the first 1 2 3 4 5 6 7 8 9 10 11 t2 13 t4 15 t6 11 18 19 20 2t 22 23 24 THOMPSON, Dr 2a SUEZ VOATER IDAHO INC. 25 52 year, when the benefit may be needed most due to lingering effects of the pandemic. would go into effect in the second The remaining increase yearr ds described in the Settl-ement. The Sett]ement describes in detail severa1 components of revenue requirement. These components, as well as the overall revenue requirement, reflect reasonable compromises reached through intensive negotiations and are consistent with traditional rate-making principles. SUEZ also has agreed to undertake a load study, as described in the Settlement, and to present the resufts to the Commission in the Company's next rate case. This commitment is deslgned evaluate and customers use improve its the water system, and SUEZ al-so agreed to expand public outreach efforts to members of the public within its servj-ce area, and to conduct publi-c workshops that involve the Company's regulators and members of the public. In the Company's view, these commitments reflect a creative resolution to issues presented in this case that may not have been possible if the case were fu1ly litigated. Finally, SUEZ agreed to work with CAPAI to examine and consider opportunities to expand SUEZ's to ensure that the Company continues to understanding of how how use drives costs 1 2 3 4 5 6 7 8 9 1_0 11 L2 13 !4 15 76 77 1B 19 20 2I 22 23 24 THOMPSON, Dr 3 SUEZ WATER IDAHO INC. 25 53 program a. public A. for low-income customers. Do you bel-ieve that the Settlement is j-n the interest? Yes, I do . All remaj-ning parties in the case Settlement, indicating thej-rhave agreed satisfaction to the wlth the outcome. The Settlement addresses a number of important issues and reflects a reasonable resolutj-on of the issues currently presented, as well as a number of issues on a going-forward basis. Erom SUEZ's perspectj-ve, the Settlement provj-des the Company with a reasonable opportunity to update its rates to 1 2 3 4 5 6 7 8 9 10 11 L2 13 \4 t_5 t6 L7 t_8 19 20 21, 22 23 24 THOMPSON, DI 3a SUEZ WATER IDAHO INC. 25 54 better reflect current costs, to economically flnance new its Idaho customers. In a commitment by SUEZ to investments, and to better serve addltion, engage in parties as Settlement could not the Settlement refl-ects outreach and other efforts with several of the well as the public. Accordingly, the reflects an outcome on a number of i-ssues that have been achieved if the proceeding were fu1Iy litigated. Overal-l, I believe the Settlement i-s fair, a balance between thejust, and reasonable and interests of the Company, reflects the parties, and the public. your direct testimony?O. Does this conclude A. Yes it does. 1 2 3 4 5 6 7 8 9 10 l_1 t2 13 t4 15 L6 L7 18 19 20 21, 22 23 24 THOMPSON, Dr 4 SUEZ WATER TDAHO INC. 25 55 (The following proceedings were had in open hearing. ) MR. CARTER: And at this time I have no further questions and would present Mr. Thompson for cross-examination. COMMISSIONER KJELLANDER: I think the easiest thing to do at this point is to see if there are any of the parties who woul-d like to cross-examine, if you could hit Star 3 or the raj-se hand function. At this point we don't see any. Now, that doesn't mean that if the Star 3 or the hand shoul-d somehow emerge in the next moment or so that given the circumstances that we wouldn't allow you to chj"me in if we mi.ssed thatr so I think that brings it to if there members of the Commission and I are any questions from believe that there are some and so why don't I all-ow Commissioner Raper to kick it off. COMMISSIONER RAPER: Thank you, Chairman. EXAMINATION BY COMMISSIONER RAPER: today. It a Mr. Thompson, thank you for being with us l-ooks like someone put you in a tj-me-out in a 1 2 3 4 5 6 1 8 9 10 11 L2 13 74 15 16 l1 18 19 20 2L 22 23 24 CSB REPORTING 208.890.5198 THOMPSON (Com) SUEZ [ilater ldaho Inc. 25 56 very small room. Can you hear me okay? A I can, thank you. O I have a couple of questions. One is rel-ated to the effective date. It looks like the Stipulation is asking that the first increase become effective on May l, 202L, and as Irm sure that you are aware, yesterday at the decision meeting we extended the suspension of an effective date. Do you anticipate that even if the Commlssj-on were to issue an Order after the May 1 deadline that we would retroactively apply that or that we would issue an Order, dt which time the rates would become effective upon issuance? A I believe it was I donrt know that I have an opinion one way or the other indicated, the Stipulated Settlement a May 1st effective date. Ifd have on thj-s. As you as written does have to confer internally to see if we have a different opini-on on that. Personally, I don't have an opinion one way or the other. o may have an for a 1ega1 I just want reqard to the parties that filed Okay. Eor my next question your lawyer instinct to object and say that it's calling conclusion. I donrt want a 1egal conclusion. any recollection that have. Withyou may a motion for leave to 1 2 3 4 5 6 7 8 9 10 11 1-2 13 74 15 t6 71 18 19 20 2L 22 23 24 CSB REPORTING 208 .8 90. 5198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 57 withdraw that this Commission granted, within their motion for their leave to withdraw, they have a sentence that says, "Intervenors reserve the rlght to apply for Intervenor funding. " The Stip addresses how intervenor funding might be recovered. The Stip does not specifical-Iy talk about whether the parties agreed as to whether withdrawing parties would be -- will continue to be eligible to request intervenor funding in this case. Do you have because allthe parties motion for a recollection as to whether I have is a reference in a l-eave to withdraw, but I donrt have any other parties' representations with regard to A The Stipulated Settlement this i-ssue. was parties prior recollection to their wi-thdrawal and it is that i-t was offered as written offered to my as though the parties any independent of statements that might have the Stipulated Settlement been made and were made in their withdrawal motions is not something I speak to, I don't believe. I don't know the behind those motions. can really intent OSo agreed within the Settlement process donrt remember process or the it just didn't that the parties Stipulated get reduced to you MOU and writing? It was not addressed? A To the extent that i-t was addressed in the l_ 2 J 4 5 6 1 8 9 10 11 T2 13 14 15 1-6 L1 1B t9 20 2t 22 23 24 CSB REPORTING 208.890. s198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 5B Stipulated Settl-ement, w€ there was no stipulation Settl-ement, to O Okay. A I believe Stipulated did dlscuss there was no for intervenor funding in the the best of my recol-Iection. that we just Commisslon's considered that it discretion.would be handl-ed at the 0 Okay, I appreciate that, and one more open-ended question that Commissioner Kjellander or Commissioner Anderson may also want to address, but if I l-ose the mic, I'11 l-et it go to them, so I want to make sure and get it out there and that is if you aI1 were paying attention to the public hearing the other day, there was entirely, actual1y, testimony about brown water on the Bench and I understand that issue was addressed. I understand those parties withdrew in order to enter into the memorandum of understanding, but I wanted to give you an opportunity on the record to address the testimony of the public, because they were looking for answers from us, of course. The publj-c was directing thei-r questions to us, which we don't answer in that setting and it was really was a question to the Company. Besides the fact that memorandum of understanding has been entered into, I'm wondering about thi-ngs l-ike whether the repair of the Taggart wel-l wil-l- 1 2 3 4 5 6 1 I 9 10 11 t2 13 L4 15 L6 1't 18 19 20 2L 22 23 24 CSB REPORTING 208 .8 90 . 5198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 59 resolve that brown water issue, whether you know, somebody said there had been brown water for 42 years j-n their home on the Bench and so those are all things, of course, that concern us greatly here at the Commj-ssion and I'm sure concern you as well, and I just wanted to give you an opportunity to address on the record the issues that were brought up in t.hat public hearing. A Well, thank you. I think it should be stated that the intervenors related to the Bench, as you indicated, did withdraw and it doesn't necessarily pertain to the terms of Settlement; however, frm happy to tal-k about it. Personally, I'm a Bench resident as wel-l-. I think the intervenors know that through the process and so I do take this very serj-ousIy. What the Company has done is maintain an entirely open and transparent process about all of our planning and improvement efforts, the engineering studies that we've conducted for the Bench to understand the issue in great ever been done detail, I think far better detail- than has in the past, and the memorandum of understanding that you alluded to a moment ago in your question between Staff and those withdrawing parties actually produced its first task force report last week, whj-ch I think substantially validated most of the good work that the Company has been doing to resolve these 1 2 3 4 5 6 7 8 9 10 11 72 13 t4 15 t6 l1 18 t9 20 21 22 23 24 CSB REPORTING 208.890. s198 THOMPSON (Com) SUEZ Water'Idaho Inc. 25 60 r-ssues. Our efforts have three main parts. I think it's good to understand these. We've been iterating these back to the community as well through a variety of means, whether they be town hall meetings or outreach newsl-etters, in person, and virtual meetings over the last couple of years, but there's three main efforts. One is the source water at Taggart. Vfhat I can tell- you about our improvement efforts there is that the treatment design that we're putting in place is meant to el-iminate iron and manganese that is a it's just a source water mineral component from entering the distribution system from that well-r so will- the Taggart proj ect issues ?iron and manganese Taggart well andas designed that's what it's designed to do. It's not the first such plant that we have j-n the system. Itrs the fourth, actually. If we think about the Bench as a wider whoIe, going back to the early 2000s, 2003, 2004 specifically, we buil-t our first two of these iron and manganese removal plants at different wells further west of the East First Bench. A third such plant was built approximately behind the Hillcrest Library near Orchard in 20L0r so a few years later and, in and of itsel-f resolve all Bench water quality It will not. It will remove from the source water at 1 2 3 4 5 6 7 I 9 10 1l_ t2 13 L4 15 16 l1 18 19 20 21, 22 23 24 CSB REPORTING 208 - 890.5198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 6L 1 2 3 4 5 6 7 R 9 again, a1l of these areas had been plagued by, you know, nuisance discol-ored water concerns primarily as a resul-t of iron and manganese for quite a long time, and aII of those plants have made a significant difference to the areas that they were installed for. The East First Bench, which is the specific sort of eastern area of the Bench that we're talking about. in these comments and substantially thatrs who represents the callers that came into the public comment session earlier in the week, the East First Bench does not have one of these plants and they're fairly well- a self-sustaining site. They get water from a variety of sources, Taggart being a primary one but others as we1l, so installing one of these plants at Taggart will reduce the l-oad of iron and manganese that introduces itself into the system and we think it wil-l definitely have a benefit. We afso have ongoing plans that we've undertaken over the l-ast four years. Therers a technique cal-1ed unidirectional- flushing. It is a specifically engineered, stamped engineered, designed directional flushing effort. ftrs sort of the equivalent of pressure washing inside of the mains to reduce any sediment built up that exists in the plpes themselves, many of which don't have to be metal- by their nature. This is not CSB REPORTING 208 .8 90 . 5198 10 11 72 13 L4 15 t6 t7 1B 19 20 2L 22 23 24 THOMPSON (Com) SUEZ Water ldaho Inc. 25 62 necessarily -- things being a of concerns, but has plastic and I know a l-ot of the comments tal-k about deterioration of metal- pipes, a good portj-on of the East those types Fi-rst Bench Itrs not pr_pes. a rust issue, so in those cases, cement the flushing efforts remove old sediment that might be residing in those mains and hard to get loose, and then additionally, we have i-nstituted with the help of a 1ot of outside experts stabil-ization plans to make sure that we reduce mixing and increase its own stability in the East Ej-rst Bench to make sure that water quality from a variety of wel-ls donrt contribute to the issue by mixing in ways that they shouldn't, you know, so we have to keep it very, very stabl-e, so it's sort of a three-front attack, I guess, if I was to sum it up, and in a1l- of those efforts, w€ have demonstrated a strong track record over the last several years of committing ourselves to them, j-ncreasing the number of sampling locations, the number of samples taken in that entire area to ensure water quality, disproportionately to be honest. That smal-l- section of town has had over 1,400 water quality sampJ-es taken in the last years, which is probably three a population the to four times couple of the normal that's justforquantlty really to same size, and demonstrate our commitment to securj-ty and 1 2 3 4 5 6 7 I 9 10 11 l2 13 14 15 L6 L1 l_B 1,9 20 2\ 22 23 24 CSB REPORTTNG 208.890. 5198 THOMPSON (Com) SUEZ Water Idaho fnc. 25 63 water quality to the community, but aI1 plans that we have, whether they're for pipeline replacements, unldirectional flushing, which is a costly activity in and of itself, revision of those pIans, the wel-lhead treatment effort at Taggart, everything remains on track, if not fast tracked, and, you know, j-n total, if we go back to the early 2000s when that first wel-Ihead treatment plant was constructed for the wider Bench, I think werve spent cl-ose to 8.75 or $9 million total on continued efforts to improve water quality across the Bench. The East First Bench is definitely coming in l-ater. Their iron and manganese issues were you know, werre sympathetic to the issues that the customers have and addressing them, I think, with all the bigger effort that we can, and that was a very long-winded answer, somewhat technical in some ways, but I do want to assure you that we are taking it very seriously, and I was happy to see that the, you know, independent report by the Commission Staff, who have been at every public meeting we've done, have really done a tremendous job in thej-r response, validated and rea11y kind of attested to the commitment that the Company has put forward, and our to be open, transparent, andplan is to aggressive in our response to the effort and to try to do continue 1 2 3 4 5 6 1 B 9 10 11 t2 13 t4 15 16 17 1B t9 20 27 22 23 24 CSB REPORTING 208 .8 90 . 5198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 64 what's right for the customers in as well- every other. COMMISSIONER RAPER: that part of the system appreciate the you went to to it's important are your customers to hear good to have it as part of caser so those are the only No, I depth that you went to and the detail that answer the Thank you. I think for both us question. and the people who think itrsthose thlngs and I the underlying record questions that I have.Thank you. COMMISSIONER KJELLANDER: Thank you, EXAMINATION in this Commissioner Raper. BY COMMISSIONER KJELLANDER: O This have a fol-low-on to Commissioner Raper thatrs targeted for will we know if the successful ? is Commissioner Kjellander and I do the line of questioning that had. When we l-ook at the project the eastern area of the Bench, when efforts of SUEZ have been A Thank you for the question. As part of the design and the implementation effort of that particular project, an entire test treatment setup has already been conducted and I believe is on record with 1 2 3 4 5 6 7 I 9 10 11 L2 13 14 15 16 t7 18 19 20 2L 22 23 24 CSB REPORTING 208.890.5198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 65 sel-ect the ultimate medla type and technological implementation that treatment, sor you know, the proof been validated in the fie1d. the Commj-ssion, so sort of a smal-l mobile treatment plant was deployed, a test quantity of water was brought from that wel-1 through a variety of treatment technologies to engineeringj ust wil-1 of concept has already That's been certified through a fairly lengthy review process with the Idaho DEQ as part of the standard engineering design revi-ew process, and construction on that wel-lhead treatment facility wil-l- take pJ-ace of 2021 with a l-ate winter to will kick off later this goal live date sometime early spring of 2022. Sampling results from it be used for year in the faII probably in the i-n the term will certainly like al-l- of our wel-l-head very short treatment plants, you can do a pre- and post-treatment lab assessment to say the wel-l produced a certain quantity of j-ron and manganese and the water produced post-treatment has an absence of those same mineral products and see whether or not that is effective in and of itsel-f . The other efforts that I alluded to in response to Commissioner Raperrs questions on unidirectional flushing efforts and zone stability, I 1 2 3 4 5 6 1 I 9 10 11 t2 13 t4 15 t6 t7 18 L9 20 2t 22 23 24 CSB REPORTING 208.890.5198 THOMPSON (Com) SUEZ Vfater ldaho Inc. 25 66 think, already have measurable results that show that they're making a difference. di-rectional flushlng effort can specifically measure and that's turned over and ensure, quality the vol-ume of sediment the main and we're doing that area, reach One of the purposes of that is that you can see the volume I guess, by that's been see you of water quantity and removed from in the spring peak season of and the fal-l-, sort of a year. We do that before and after the the year, and, again, have I think we are on our third or fourth cycle, I believe, of unidirectional flushing and consistently are showing improved resul-ts every time we go out. In addition, one of the other measurabl-e results that we try to keep track of more specifically is customer calls, right? Customer caIIs, we both map the time and place of every call- that comes in, trying to correlate that with Iocations where we've had known past histories of higher customer concern and we've seen the volume of calls drop off substantiatly. We do social media outreach as well-, specifically asking the the Boise Bench dwel1ers have a very active Facebook group of whj-ch f 'm a member, not just from the SUEZ perspective, but as a resident in the twice and so we wil-l- commonly out and ask is having discolored water concerns and, if sor and they don't hold back, anyone fo1low up 1 2 3 4 5 6 1 I 9 10 11 72 13 L4 15 L6 L7 18 19 20 21 22 23 24 CSB REPORTING 208 .890.5198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 61 and try to make sure we understand where those are and start to understand the parameters around those, so I think in that it's every case your question was improved, we know it's improved the short answer and every step how will we know already, I that we take component that a worthwhile guess, moving we can effort l-s forward has some measurable resu]ts use to assess whether or not it was in the end, so that's what I can offer. 0 I appreciate that and unless I misheard you, and it's always the possibility that I did, is that construction on the actual project that you've done the proof of concept for, and I appreciate the fact you're not just going to throw money at an issue, that you're actually trying to find the right sol-ution for the right pIace, but I think I heard you say that it won't start, the construction for thisr u1tiI the fa1l. If I heard you correctly, why so far in the future? I mean, f hate to sound l-ike the rancher who puts the bul-l- with the cows and expects to see calves running around the next day, but this problem has been around now for a while. I'm wondering why we have to wai-t unti-I the f a1l. A There are seasonal demand considerations on any water system where there are ti-mes of the year where capacity from wells are needed and other times of 1 2 3 4 5 6 7 I 9 10 11 L2 13 74 15 16 11 1B 19 20 2L 22 23 24 CSB REPORTING 208 .8 90 . 5198 THOMPSON (Com) SUEZ Water ldaho Inc. 25 6B the year where theyrre not, spring. The hotter weather and we are currently 1n the that everybody can see and increasing demand on the well- is needed for fire of town through that enloy 1n system to protection the community today is point that the Taggart capacity in that area peak season, and we have timed the construction project so that it can take place as soon as possible when the wel-l- is not needed for active production for fire protection in t'he zone. And, you know, the timing, although we expedited it greatly for design review with the Idaho Department of Environmental Quality, we took what woul-d typically be a greater, you know, somewhere in the neighborhood of maybe an eight-month approval process and tried to condense that down into 1,4 [sic] months to try to expedite it as quickly as possible, but the timing just did not line up in time to get that constructed during the previous low season system, and the wel-I has always been promised or the well-head treatment project has always been on track to be built in 202I and the fal-l- period is the next available time when that weII is going to be available for this work to be conducted. O And f appreciate the response about public health and safety as it relates to fire issues, so thank you for helping clarify that. The last thing that I 1 2 3 4 5 6 7 8 9 10 11 1-2 l_3 L4 15 L6 L7 18 19 20 2t 22 23 24 CSB REPORTING 208.890. s198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 69 wanted to raise with this and I just need some assurances, the residents of the eastern area of the Bench were kind enough I have to confess while A to send us some water samples that be within tolerance drinking water. have any water they may well to consume, I'd be hard-pressed to think that I would ever open agai-n that one of those jars and consume that. TelI me that water is acceptable So I donrt think we short answer is it is. I donrt think that we have any water in the system that has been sampled more rigorously than water in the East First Bench. Going back probabJ-y three years d9o, we had the required number of approved sampling sites in that zone of town, whlch was, I bel-ieve, seven to satisfy the Idaho DEQ standards for water quality sampling, and we doubl-ed that installation in the time being after that, installing more sampling stations than any other part of town and then aggressively sampled the water through every season of production, pre- and post-flushing, peak season, Iow season to try to get a comprehensive baseline panel of what water quality characteristics look Iike in that area of town throughout the year. Those test results were continuously supplied to DEQ, validated. A11 of our test results are done by a third party outside Iab. We also included 1 2 3 4 5 6 1 I 9 10 11 t2 13 74 15 16 t7 18 1,9 20 21, 22 23 24 CSB REPORTING 208.890. s198 THOMPSON (Com) SUEZ Water Idaho Inc. 25 10 copies of those results wj-th local legislator John Gannon who I think was one of the intervenors as wel-l and the City of Boise for outside validation, so every detail on the water quality parameters that has been gathered and got over this sort of extraordinary sampling period, they've been reviewed by outside experts and somewhat openly have been shared with l-ocal- stakehol-ders that have a concern in this effort. There real1y is nothing to hide with any of the resul-ts that we have offered for public review. I've seen those water quality samples myself in the past as well and what's interesting with many of them is that I like to dig into the story of when and how it was obtaj-ned, during flushlng and post-flushlng, finding out a littl-e bit more about the situations that might take pIace. I believe there l-ast week's public session that concerns at their residence and those customers is going to make sure that we understand was even a caller during talked about quality ,you know, fo11ow-up every one of from us to very seriously, but some of parks, post-master meter. apartment complexes. The dynamics get a their concerns and take them those were large trail-er Some of those were large of what can happen in large 1 2 3 4 5 6 7 I 9 10 l- l_ t2 13 L4 15 L6 77 1B 19 20 2L 22 23 24 CSB REPORTING 208 .890. s198 THOMPSON (Com) SUEZ Water Idaho fnc. 25 1L 1 2 3 4 5 6 1 B 9 facilities like that are varied and each is handl-ed somewhat differently, so whil-e some of those quality samples that you might see wil-I raise alarms, I think when they're brought to our attenti-on, we tend to get very, very curious and we intend to investigate them very rigorously and wiII continue to do so and try to do what's right for aII those customers, that be spot fJ-ushing, incidental reviews of, you know, maybe plumbing systems past our meter. A11 of those things are something that we offer to customers and I think we have a pretty good track record of demonstrati-ng that responsibility to the community. COMMISSIONER KJELLANDER: I thank you for that and just one last request is that as you do further investigatj-on on those specific issues that were raised during the public hearing, and I appreciate the fact that you were paying attention to that, tf you could just keep our consumer division apprised of what you discover so at least we know internally whatfs occurred and what your perception is of what you've discovered. THE WITNESS: Certainly. COMMISSIONER KJELLANDER: Thank you. I think that that exhausts the questions that we have from the dais and so that, then, leaves us to turn you over to your 1egaI counsel for redirect. CSB REPORTING 208-890.5198 10 11 72 13 L4 15 76 t7 18 19 20 27 22 23 24 THOMPSON (Com) SUEZ Water Idaho Inc. 25 72 1 2 3 4 5 6 1 8 9 10 11 1-2 13 L4 15 L6 1"7 18 19 20 2t 22 23 24 CSB REPORTING 208.890. 5198 MR. CARTER: Thank you, Commissioner Kjellander, I donrt have any further questions. COMMISSIONER KJELLANDER: Thank your and Mr. Thompsonr we certainly do appreciate your testimony today. I don't anticipate that there wiII be any additional- reason to re-ca11 you, but if you could just stay availabl-e in case somethj,ng should emerge. Thank you again for your testimony today in helping us develop the record. THE WITNESS: Thank you. (The witness left the stand. ) COMMISSIONER KJELLANDER: At this point, then, we look to Commission -- 1ega1 counsel representing Commission Staff to call their wj-tness, and while you're everybody witness. can appropriately focus thelr attention on your MR. HUNTER: Thank you, Mr. Chair. At this time f woul-d like to call Staff's witness Donn English to the stand. calling your witness, information officer to readjust the camera COMMI SS IONER KJELLANDER : swear him in if you would, please. Thank Commj-ssioner Raper. if we could ask our public so that Why don't you you very much, 25 73 COLLOQUY 1 2 3 4 5 6 7 I 9 IU 12 13 74 11 15 L6 17 18 19 20 2t 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (Di) Staff DONN ENGLISH, produced as a wj-tness at the instance of the Staff, having been first duly sworn to tel-l the truth, was examined and testified as follows: much for actualJ-y hal1way, COMMISSIONER KJELLANDER: Thank you very your patience and I hope that that's it does look like that witness. Irve seen him in the so we feel confident that thatrs the case. He's been sworn in, so why don't we move it, then, for 1egaI further develop the recordcounsel representing Staff to as it relates to this witness. MR. HUNTER: Thank you, Mr. Chair. D]RECT EXAMINATION BY MR. HUNTBR: O Mr. English, could you please state your name for the record, spelling your last name? A My name is Donn English, E-n-g-I-i-s-h. O Are you the same Donn English who previously filed direct testimony consisting of 14 pages and one exhibit and an erratum consisting of four pages and one attachment? A Yes.25 14 1 2 3 4 5 6 7 I 9 10 11 72 13 74 15 t6 77 18 19 20 2L 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (Di) Staff O Do you have any changes to your testimony? A I do not. O If I asked you the same questions as appear in your testimony as modified by your erratum, woul-d your answers be the same? A Yes, they would. MR. HUNTER: Thank you. the testj-mony of Donn English witness to cross-examinati-on. COMMISSIONER KJELLANDER : Chalr, I move the record and And without Mr to spread open the on objection, we'11 spread the testimony and the erratum across the record as if read. I'1I pause just a moment to see if there's any objection. No objection noted for the record. (The foll-owing prefiled direct testimony of Mr. Donn English is spread upon the record. ) 25 75 a. Pl-ease state your name and business address? A. My name is Donn English. My business address is 11331 W. Chinden B1vd., BLDG 8, STE 207-A, Boise, Idaho 83714. O. By whom are you employed and in what capacity? A. I am employed by the Idaho Public Utilities Commissj-on as a Program Manager overseeing the Accounting and Audit Department in the Utilities Division. I am also the Program Manager overseeing the Technical Analysis Department, also within the Util-ities Division. O. Please describe your educational background and professional experience. A. My educational-background and professional- Exhibit No. 101.experiences are shown O. What is the purpose of your testimony in this proceeding? A. The purpose 9f *y testimony is to descrj-be the SUEZ Water Idaho, Inc. ("SUEZ htrater" or l_n Application "Company" ) service in Idaho, describe Stipulation and Settlement partj-es in this case, and Settlement. How is your testimony organized? My testimony is subdivided under the following of to increase i-ts rates and charges for water the proposed comprehensive ("Sett1ement") reached by the explain Staff's support for the proposed o. A. 1 2 3 4 5 6 7 8 9 10 11 12 13 t4 15 L6 1-7 18 19 20 21, 22 23 24 CASE NO. SUZ-W-20-02 03/1.7 /2L ENGLISH, D. (Stip) 1 STAFT 25 16 headlngs: Background Page 2 Staff Investigation Page 3 Settlement Evaluation Page 5 Settl-ement Overview Page 6 Background O. Pl-ease describe SUEZ Waterrs original filing. A. SUEZ Water made its original filing with the Idaho Pub1ic Utilities Commj-ssion on September 30, 2020, requesting authority to increase its revenues by $10.16 milllon, or 22.3%, effective on or after October 31, 2020. The requested increase was based on a test year ending June 30, 2020, wj-th proforma adjustments through March 3L, 202L. Rate base was included through March 31, 2027, using the 13-month average method. The Company proposed using its current capital structure of 54.072 equi-ty and 45.93% debt, and a return on common equity ("ROE") of 1-0.2%. The Company proposed a uniform increase to all customer classes. 0. How was the case processed after the Company's filing was received? A. The Commission issued a combined Notice of Application ( "Notice" ) and Notice of Intervention Deadline on October 27, 2020. The Notj-ce suspended the proposed effective date for thirty days and fj-ve months 1 2 3 4 5 6 1 8 9 10 13 11 1,2 1,4 15 t6 !7 18 19 20 2L 22 23 24 CASE NO. SVZ-W-20-02 03/1.1 /27 ENGLISH, D. (Stip) 2 STAFE 25 11 1 2 3 4 5 6 7 8 9 and established an Interventlon Deadline of November lL, 2020. Intervenor status was subsequently granted to Ada County, Boise City, SUEZ Water Customer Group ("SWCG"), Community Action Partnership Association of Idaho ("CAPAI"), Micron Technology, Tnc. ("Micron"), Intermountain Eair Housing Council, Inc. ("IEHC"), and four individual- residents of the Boise Bench col-l-ectively referred to as the Individual Intervenors. The parties participated in four settlement conferences, and on March 72, 2021, all parties either agreed to the proposed settlement term sheet or stated their intent to withdraw as a party from the case. On March L6, 202!, the Individual Intervenors filed a Moti-on to Wi-thdraw from the proceeding, and on March 17, 202L, IFHC expressed their intent to also file to withdraw. A Joint Motion to Approve the Settl-ement was filed with the Commission on March 11, 202L. The Settlement was signed by all remaining parties. Staff Investigation O. What type of lnvestigatj-on did Staff conduct to evaluate the Company's rate increase request? A. Staff's approach in any general rate case is to extensively review the Company's Applicatj-on and associated testimony and workpapers, identify adjustments to its revenue requirement, and prepare to file testimony CASE NO. SUZ_W-20_02 03/17 /27 10 11 L2 13 14 15 16 17 18 19 20 2L 22 23 24 ENGLISH, D. (Stip) 3 STAFE 25 78 L 2 3 4 5 6 1 I 9 for a fully-litigated proceeding. There were 74 Staff members / CASE NO. SUZ-S{-20-02 03/L7 /2L 10 11 1,2 r_3 t4 15 16 17 l_8 19 20 2t 22 23 24 ENGLISH, D. (Stip) 3a STAFF 25 79 anal-yzing this case consisting of auditors, engineers, utility analysts, and consumer investigators, along with supervisors. Staff auditors reviewed the Company's test year resul-ts of operations, capi,tal budgets, capital spending trends, operations and maintenance ("O&M") expenses and trends, and verified al-l- of the calculations and assumptions with regard to revenue requirement. Because of the public emergency due to the COVID-19 virus, Staff Company' s the overall heafth members were not able to conduct onsite audits or reviews of the Companyrs books and records and they did not have extensive interviews with Company personnel. However, the auditors reviewed thousands of transactions, selected samples, and performed transaction testing in accordance with standard audit practices. Staff reviewed the Company's l-abor expense, incentj-ve plans, and employee benefits to ensure the appropriate level of expenditures are i-ncluded in rates. Staff reviewed both completed and proposed Company investments to determine the prudence of capital additions. Expenditures including pension expense, salaries, and O&M expenses were also examined. Additionally, Staff investigated the Company's cost of capital, capital structure, cost of service, and revenue normalization. In tota1, Staff submitted over 155 1 2 3 4 5 6 1 I 9 1_0 11 72 13 74 15 16 L1 18 1_9 20 2L 22 23 24 CASE NO. SUZ-W-20-02 03/71 /21 ENGLISH, D. (Stip) a STAFF 25 80 production requests and held several virtual- meeti-ngs with Company personnel as a part of its comprehensive investigation. Entering into the settlement negotiations, Staff had a list of potential revenue requirement adjustments to present to the parties. Return on Equity ("ROE") is always a major issue in general rate cases. Cal-culations of ROE ranged from 8.75? to the Company proposed 10.2% but the partles did not reach a specific agreement on the appropriate ROE or capital structure. Based on the success of its investigation, Staff and the parties were able to negotiate a rate increase total-ing 8.75% over two years as opposed to the one-time 22.3% requested by the Company. Sett].enent Evaluation O. How did Staff determj-ne that the overall Settl-ement was reasonable? A. In every settlement parties must hearing and overal-l outcome. Staf f must examine the risks determine if the agreement evaluate each individuaf and determine the likelihood of the Commission or rejecting Staff's rationale for the . Ultimately, Staff's intent in every conference is to negotiate the best possible evaluation, of losing Staff and other positions at a betterl-s adj ustment accepting adj ustment settlement 1 2 3 4 5 6 7 I 9 1_0 11 t2 13 1-4 15 t6 1,7 18 19 20 2t 22 23 24 CASE NO. SUZ_W_20-02 03/L] /21, ENGLISH, D. (Stip) 5 STAFE 25 B1 1 2 3 4 5 6 7 8 9 outcome for customers. O. Does Staff support the Settlement as reasonable? / cAsE NO. SUZ-W-20-02 a3/L7 /2r 10 11 1,2 13 L4 15 76 1,7 18 19 21 22 20 23 24 ENGLISH, D. (Stip) 5a STAFF 25 82 1 2 3 4 5 6 7 8 9 A. Yes. After a comprehensive revi-ew of the Company's Application, thorough audit of the Company's books and records, and extensive negotlations with the parties to the case, Staff supports the proposed Settlement. The Settlement offers a reasonabl-e balance between the Company's opportunity to earn a reasonable return on its investment and affordable rates for customers. The Settlement addresses several of Staff's primary goals in thj-s proceeding, including a revenue requirement increase that is more palatable to customers, adjusting amorti-zation periods to better refl-ect time periods between rate cases, and the commitment by SUEZ Water to perform a load study to assist in allocating costs to different customer classes. Staff beli-eves the Settlement, supported by all remaining parties to the case, is in the public interest; fa,,r, just, and reasonable; and should be approved by the Commission. Sett].enent Overview O. Would you please describe the terms of the Settlement? A. The proposed Settlement adopts a phase in of the negotiated revenue j-ncrease. Instead of the Company's proposed 22.3% increase, customers will see an increase of 3.55% on May 1, 202L, representing a revenue increase of $7.62 million for the Company. On May L, 2022, rates will- CASE NO. SUZ-W-20-02 03 /71 /2L 10 l-1 L2 13 74 15 !6 L7 18 t9 20 2t 22 23 24 ENGLISH, D. (Stip) 6 STAPF 25 83 increase by another $2.38 j-ncrease for the Company, $3.996 million, or 8.75%. The Settlement million, or 5.2%. The overall- phased in over two years, is does not detail all of the different components of the revenue requirement Settl-ement specificallycalculation. However, the a framework for the treatment of amortizationprovides expenses, return of Jobs Act depreciation expense, the remainlng benefits ("TCJA") to customers. pension expense, and the from the Tax Cuts and AdditionalIy, the Settlement outlj-nes how the parties believe intervenor fundj-ng, if granted by the Commission, shoul-d be recovered by the Company. O. Please explain how the Settlement treats amortization expenses . A. In its Applj-cation, the Company requested to amortize the balance of its deferred pension costs, deferred power costs, rate case expenses, and deferred convenience fees over a three-year period. To mitigate the impact of the rate increase to customers, the parties agreed to a four-year amortization period. The Settl-ement also specifies that any remaining balances associated with deferred pension costs and power costs, either positive or negative, will be j-ncorporated into 1 2 3 4 5 6 7 8 9 10 11 t2 13 L4 t-5 t6 71 18 19 20 27 22 23 24 CASE NO. SUZ-W-20-02 03/77 /21 ENGLISH, D. (Stip) 7 STAEF 25 B4 1 2 3 4 5 6 7 I 9 L0 Ll_ t2 13 L4 L5 1.5 l7 18 19 20 2t 22 23 24 the amortj-zation expense ln the Companyrs next general rate case. Thie I / / cAsE NO. SUZ-W-20-02 a3/!1 /21 2 ENGLISH, D. (Stip1 7a STAFF 5 85 treatment ensures that customers will pay, and the Company will recover, no more and no less than the actuaf pension contributions and power costs incurred by the Company. Consistent with Order Nos. 29838 and 32443, the Company wiII be authorized to accrue a carrying charge on the bal-ances at the Commission-authorized customer deposit rate. Regulatory assets associated with deferred tank painting costs will be amortized over twenty years as previously approved by the Commission and as requested in the Company's Application. Additionally, the amortization of the Al-lowance for Eunds Used During Construction ("AEUDC" ) equity wll-l- continue with the 35-year in the amortization period approved in Order No. 33436 Company' s Pfease l-ast general rate case. o describe the tax benefits associated with the TCJA. A. On January tt, 20!8, the No. GNR-U-l-8-01 to investigate the utility costs and ratemaking. The rates SUEZ Water charges customers in the reduced j-ncome tax expense at the tax rate. However, the TCJA required revalue their deferred tax amounts at Commission impact of Commi-ssion opened Case the TCJA on reduced the Idaho to reflect new 21? corporate companies to the new corporate 1 2 3 4 5 6 1 I 9 10 11 L2 t_3 T4 15 16 t1 1B 19 20 2t 22 23 24 CASE NO. SUZ_W_20_02 03 /17 /2L ENGLISH, D. (Stip) g STAFF 25 86 1" 2 3 4 5 6 7 8 9 10 11 1,2 l-3 1,4 15 1-6 !7 18 L9 20 2t 22 23 24 25 tax rates (218) which resulted in excess deferred federal income tax / cAsE NO. SUZ-W-20-02 o3/L7 /2t ENGLISH, D. (Stip) 8a STATF 87 reserve balances. Bal-ances associated with regulated utility operations resulted j-n a bal-ance sheet reclassification from deferred tax to a deferred regulatory both plant non-pIant bal-ances. asset or liability. This revaluation effected (protected or permanent tax benefit) and (unprotected or temporary tax benefit) Company must amortize the balance under the Internal Revenue Service ("IRS") Average the IRS Rate Assumption Method ("ARAM"). To comply with normalization rules, the Company must return the over the remaining lifeplant-related ADFIT to customers of the associated assets the composite remaining associated amortization The ARAM serves as a proxy for of the plant-related ADFIT provides customers approxi-mately $221,000 per year. The temporary (one-time) tax benefits associated with non-pIant ADFIT balances can be returned to customers in any manner approved by the Commission. The parties in this case agree to return the entirety of the approximately $1.6 million unprotected ADFIT to For plant-related excess Federal Income Taxes ("ADFIT"), the Accumulated Deferred life of the assets. The beginning on May 7, 202I. After benefits associated with customers over one year, the one-year period, al-I 1 2 3 4 5 6 1 U 9 l_0 11 t2 13 L4 15 L6 L7 18 19 20 2I 22 23 24 CASE NO. SUZ-W-20-02 03/L7 /2L ENGLISH, D. (Stip) 9 STAFF 25 88 1 2 3 4 5 6 7 I 9 10 11 12 13 L4 15 16 t7 18 1,9 20 2t 22 23 24 25 non-plant ADFIT will have been returned to customers and rates will increase on May 1, 2022. / CASE NO. SUZ-W-20-02 03/L7 /21 ENGLISH, D. (Stip) 9a STAFF 89 regulatory rates from The last component of the TCJA is the liability associated with the reduced tax January t, 2018 through May 31, 2018, prior to the Commi-ssion on June !, 2078the rate rel-ief offered by to account for the reduction in the corporate tax rate. The parties in this case agree that $712,504 represents the correct calculation of the regulatory liability and customers will receive this benefit over one year, similar to the treatment of the non-pIant ADFIT. On May 7, 2022, customer rates wil-l- increase by $2.38 million, or 5.202 to refl-ect the depletion of these tax benefits. O. Why does Staff support returning the benefj-ts of the non-plant ADFIT and regulatory liability associated with the reduced tax rate from January t, 2078 through May 3!, 20tB to customers in one year. on theA. The Commission has discretion tj-mi-ng and Themethod to return these benefits to customers. parties agree that returning these benefits to customers in one year is a practj-caI approach to mitigate any rate increase granted during a time that many customers may stil1 be recovering from diminished employment opportunities and other financial difficulties. This approach essentially creates a two-year phase in of the stipulated revenue requirement increase. I 2 3 4 5 6 7 8 9 10 11 t2 13 L4 15 t6 71 18 t9 20 27 22 23 24 CASE NO. SUZ_W_20_02 03 /71 /21, ENGLISH, D. (Stip) 10 STAFF 25 90 O. How does the Settlement address other revenue requirement issues? A. The Settl-ement specj-ficalJ-y addresses the contrj-butions to its pensionrecovery of the plan and updates O. Please Company's the Company's depreciation discuss the recovery of the rates. Companyr s pension contributions. A. Consistent with Commission in Order Nos. settl-ements approved by the 32443 and 33436 (Case Nos. UWI-W-11-02 and UWI-W-15-01, respectively), a base 1eve1 of pension expense will be authorized recovery to record the difference between the is established. The Company a deferred asset or actual cash level- included i-n agree that for pension Iiability for contributions rates. In this each year and Settlement, the the basel_n parties $1,372,595 is the approprlate base l-evel recovery. O. Please discuss the Company's depreciation expense and how it is reflected in the Settlement. A. Prior to the filing of its Application, the Company hired Alliance Consul-ting Group to conduct a depreciation study of the Company's depreclable assets as of December 31, 201,9. This was the Company's first comprehensive depreciation study and it established the proposed deprecJ-ation rates included in the testimony 1 2 3 4 5 6 1 8 9 10 11 1,2 13 T4 15 16 71 18 19 20 21 22 23 24 CASE NO. SUZ-W-20-02 03/77 /2L ENGLISH, D. (Stip) 11 STAFF 25 9L L 2 3 4 5 6 7 E 9 and exhibits sponsored by r-,ritness Dane A. Watson on behalf of / / I cAsE NO. SVZ-W-20-02 03/t7 /21 10 11 12 13 l4 15 16 L7 r-8 19 2A 22 21 23 24 ENGLISH, D. (Srip) 11a STAFF 25 92 the Company. Settlement are The depreciation rates included in Exhibit C agreed to in the of the Settl-ement These updated proposed and reflect updates proposed by Staff. reduce the Companyrsratesdepreciation depreciat j-on O. How expense and revenue does the Settlement requirement. propose the recover intervenor funding if granted by the Company Commission? A. The revenue requirement agreed to in the Settl-ement does not include an amount to recover intervenor funding. As allowed by statute and by Commission's procedural rules, parties may request and the Commission may award intervenor funding to be paid by the Company. If the Commission awards intervenor funding in this case, the parties agree that the Company should be al-lowed to recover the intervenor funding as an incremental- addition to the first-year revenue requirement. The second-year revenue requirement will decrease by the amount of intervenor fundlng awarded by the Commission, so the Company wil-l- not continue to recover intervenor funding after April 30, 2022. O. Are there any other provisions in the Settl-ement that you would l-ike to address? A. Yes. The Settlement requires the Company to complete a load study to provide max-day and max-hour factors for each customer class and the water system as a 1 2 3 4 5 6 1 I 9 10 11 72 13 t4 15 76 77 1B 19 20 27 22 23 24 CASE NO. SUZ-W-20-42 03/17 /27 ENGLISH, D. (Stip) 72 STAEF 25 93 who1e. The Company will convene a with interested parties to receive discussion process input on the different be filed in thewiIIstudy components. The study Company's next general rate to determine the approprlate assigned or allocated to the case and wil-1 all-ow parties leve1 of costs to be different customer classes. The Company will also broaden its pubJ-ic outreach efforts and host annual workshops for all interested parties. Commission Staff, the Idaho Department of Environmental Quality, and the Idaho Department of Water Resources wil-l participate in the discussion on a range of topics related to water conservation and resource planning. Additionally, the Company has agreed to meet with representatives of CAPAI to examine the current status of SUEZ Waterrs low-income assistance program, the Ievel of participation and effectiveness of the program, and to identify and consider opportunities to improve the program for low-income customers. O. Do you have any other comments on the Settlement? A. Yes. Staff has examined Exhibits A - C and verified they are consistent with the Settlement and reasonably recover the proposed revenue requirement. As implied in this testimony, the Settlement represents a 1 2 3 4 5 6 1 I 9 10 t_1 \2 13 74 t-5 t6 L1 18 1,9 20 2L 22 23 24 CASE NO. SUZ_W_20_02 03 /17 /2L ENGLISH, D. (Stip) 13 STAFF 25 94 1 2 3 4 5 6 7 8 9 fair, just, and reasonable compromise of the positions put forth by all parties and is in the public interest. CASE NO. SUZ-W-20-02 03/17 /2t 10 11 t2 13 t4 15 16 1.1 18 19 20 2t 22 23 24 ENGLISH, D. (Stip) 13a STAFF 25 95 1 2 3 4 5 6 7 8 9 Therefore, Staff recommends the Commj-ssj-on approve the Settlement without material changes or modifications. O. Please explain concerns you are aware of related to water quality. A. Customers in the Boise Bench area continue to have complai-nts about water quality. Staff has investigated complaints and attended town hall- style meetings held by SUEZ Water with customers. Although SUEZ Water has made some improvements, customer concerns still- exj-st. Staf f wil-1 continue to investigate these concerns. Staff will also monitor and track the Company's ongoing pJ-ans to replace pipe, flush lines, and make improvements to the Taggart well as approved by the Idaho Department of Environmental Quality. Staff wil-1 al-so evaluate delayed or accelerated timelines for improvements and provide additional customer communications. O. Does this conclude your testimony? A. Yes, it does. CASE NO. SUZ_W-20_02 03 /77 /2L 10 t2 13 L4 15 L6 1-'7 18 19 20 2L 22 11 23 24 ENGLISH, D. (Stip) 14 STAFF 25 96 1 2 3 4 5 6 1 I 9 10 11 t2 13 74 15 16 L1 18 l_9 20 2L 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (X) Staff open hearing. ) now make this witness available If you'd like to cross-examine the hand function raise hand or customers you know, proposed increase, middle of I'd like you recap (The following proceedings were had in COMMISSIONER KJELLANDER: And so we will for cross-examination. the wj-tness, either press the Star 3. Do we have someone who is ready, Adam? MR. RUSH: Norm Semanko. MR. SEMANKO: Great, thank you. Mr Semanko. MR. SEMANKO: Thank you, Mr. Chairman. CROSS-EXAMINATION BY MR. SEMANKO: O Mr. English, I appreciate your assistance throughout this. As you know, I'm counsel for what we call the SUEZ Water Customer Group, which is a group of of Idaho SUEZ Water Idaho who, of course as were very interested in both the size of the rate increase and the timing of the rate the 22.3 percent proposal, and comj-ng in the the pandemic as it did last year. Coul-d you -- to have on the oral record, if we could, could under the Settl-ement agreement, which the25 97 1 2 3 4 5 6 1 I 9 10 11 72 13 L4 15 16 11 1B 19 20 2t 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (X) Staff Applicant has increase will May 1st, what percent in the first year and share that with us on A Yes. just testified be? Commissioner in favor of, what the rate Raper asked about effective increase wilI that rate increase be in the second year? Cou1d you the record here? The Stipulation calls for a rate in year one. Thatrs is that. someone thatrs real? increase of 3.55 percent approximately $1.62 miI1ion. In year two, an additional increase of three 2.37 6 million, which woul-d be 5.2 percent for a tot.al- of 8.75 percent. MR. SEMANKO: Thank you. That's the only question I had. Thank you. COMMISSIONER KJELLANDER: Thank you, Mr. Semanko. I bel-i-eve we have another hand raised and I'm guessing that that would be from CAPAI, I think. MR. PURDY: Commissioner, this is Brad Purdy. I got that do not have a question. I rm not sure how you impression. COMMISSIONER KJELLANDER: Oh,I'm sorry, I fivejust see a hand something. Ad.am raised. It says cal-I-in user MR. RUSH: Brad, can you press Star 3 to lower the hand icon? MR. PURDY: Oh,sure. , 25 98 1 2 3 4 5 6 7 B 9 10 11 L2 13 L4 15 16 17 1B 1,9 20 2t 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (Com) Staff MR. RUSH: Thank you, appreciate it. MR. PURDY: Is that better? COMMISSIONER KJELLANDER: It is much better. We're very fortunate that there is no flip-the-bird icon on these virtual meetings. Is there anyone else who would like to cross-examine this witness who are parties to the case? I don't see any others hands up. Are there any questions from members of the Commission? We have a question or two from Commissioner Raper. COMMISSIONER RAPER: Thank you, Chairman. EXAMINATION BY COMMISSIONER RAPER: O I have for Mr. Thompson, but you as wel-I based on first question I want some of the same questions I had I have an additional one or two for what your testimony to make sure that is. One is the I heard correctly, did you say that the May of 2022 rate increase Lo 2.37 mj-1Iion, because your testimony 2 -38? A Itrs 2.316, so it may be rounded to you wiII says 25 99 1 2 3 4 5 6 7 I 9 10 11 t2 13 t4 15 1,6 L7 1B 79 20 27 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (Com) Staff 2-38. testimony testimony,and wlth regard to understand O Okay, f just wanted to make sure that your live was consistent with that your written rate increase, I just want to make sure I On page 10 of your testimony, see where it starts, actually. the tax benefits. Ultimately, because there was there were ways that you the rates and included that your testimony correct. it talks about Iet me It was a question about my question was the a couple of different addressed how the tax benefits would impact I wanted to make sure with everything the 2022 increase is a total- of 5.2 percent of an increase wi-th all of the tax benefits and everything else calculated, because there was a benefit to be gained through the first year that was going to be removed because it woul-d have been consumed in that first year. I know Irm not doing this in accounting terms, my apologies. Ifm not an accountant, Irm a lawyer, but I wanted to make sure that that included everything. It will be a 5.2 percent increase in 2022 if approved? A That is correct. f t does i-ncl-ude al-l- of the temporary tax benefits that will harie expired after the first year.25 100 1 2 3 4 5 6 7 B 9 O Okay, and so then to the questions that I asked Mr. Thompson and I just want a little clarity for the record, the reference that the withdrawi-ng parties made to their our consi-deration of them in an intervenor funding context, that is part of their request to withdraw. It is not part of the MOU or the Settl-ement. Do you recall that that was an understanding of the parties? A I do not recal-l any conversation as to whom or who may not apply for intervenor funding. The conversation around the Stipulation was based on when recovery of the intervenor funding will occur and so I woul-d defer to Iegal counseL as to who is eligible for intervenor funding 0 Or the Commission? A Or the Commission, yeah. O Okay, and then last question, same one I asked Mr. Thompson, the May 1 effective date, it was just my assumption that that was contemplated based on when everyone was hoping that these things woul-d be fu11y deliberated and a final Order issued by the Commission. Was that May 1 effectj-ve date, is that a hard date or now that the now that we have created an extension of the suspension of the proposed effective date, is there an understanding of the parties that that would be upon CSB REPORTING 208 .8 90 . 5198 ENGLISH (Com) Staff 10 11 L2 1_3 L4 15 L6 t7 1-8 19 20 2t 22 23 24 25 101 1 2 3 4 5 6 7 I g 10 11 1,2 l-3 1,4 15 16 L1 18 19 20 21 22 23 24 CSB REPORTING 208.890.5198 ENGLISH (Com) Staff issuance of a A effective May to extend the Commission decided final Order by the Commission? II 1st, time was always our intent to have the rate but the Commission does have authority frame to issue an Order, and if the that it needed more time to fulIy evaluate the record in this case, then f would defer to you to j-ssue the Order as soon as you can. O Okay, does that impact the date, the effective date, of the new rates in A It would. I believe would be the date of the Commisslon your mind? the effective date Order.It was always it done by Mayour intent to move expeditiously and have 1st. 0 OkaY, stipulations, and therein lies my and this one hol-ds concern, because all the sameusually normal terms of the settlement, so I guess You, too? Irm just tryj-ng to reconcile that A I would say that the Staff and the parties had set a schedule realizing that it was time constrained, but we all had made our best efforts to language, whi-ch is if we substantially then every party can change the withdraw, i-n my head. stick to the time frame, and we 1st effecti-ve date, recognj-zing are anticipating a May that the Commission does have authority to extend for good cause.25 t02 1 2 3 4 5 6 1 I 9 0 And you can only speak to Staffrs position, I understand, but j-t would be Staf f 's posit j-on that that term change within the context of the Stipulation and Settlement agreement would not impact Staff's adoption of the Stipulation? A Staff would continue to support the Stipulation. COMMISSIONER RAPER: Perfect, thank you. COMMISSIONER KJELLANDER: Are there any other questions from members of the Commissj-on? , """ noner so we will allow for redirect. MR. HUNTER: Thank you, Mr. Chair. I have no redirect. COMMISSIONER KJELLANDER: Thank you, and so you are excused, Mr. Eng1ish. (The witness left the stand. ) COMMISSIONER KJELLANDER: And that exhausts our witness l-ist for this specific hearing and I will ask if there yes, Adam, if you'd like to come up and change this video so at least they can see that there's not an empty chair talking to them. I know they think therers an empty suit talking to them, but at l-east l-et it not be an empty chair. Good. Are there any other items or issues or motions that need to come before the Commission at this ENGLISH (Com) Staff 10 11 12 13 1-4 15 16 L7 18 19 20 2t 22 23 24 CSB REPORTING 208 .890.5198 25 103 1 2 3 4 5 6 1 8 9 10 11 t2 13 t4 15 16 77 1B L9 20 2t 22 23 24 CSB REPORTING 208.890.5198 time? T don't see anybody bringing anything to our attention. Well, since we have moved to the exorcist camera vaew, excitement of we will just consider al-l the fun and a virtual video hearing having been experienced today. What I want to do is that apply this point as we conclude this hearj-ng today, the record will be considered fully submitted and the Commission will- have an opportunity to request expeditiously from Fortunatefy, this has Rule 764 does all-ow for 74 days for funding as is spelled out to just reference for i-ntervenors to in that rul-e, and at our court reporter the transcript not been a lengthy meeting, so I to get that in a reasonabl-e time think we shoul-d be able I sure would rather see you all in you all feel the same way. I look the new normaf is and hope that the frame and I'm hopeful that that occurs so that we can qet an Order out as soon as is reasonable. f want pati-ence. I recogni-ze circumstances. Quite to thank everybody, a1so, for their that these are not the most ideal honestly, I can't believe Irm saying this, but I knowperson. forward that to whatever j-dea of having proceedings are year. to conduct these types of virtual eliminated as we move further into this 25 104 COLLOQUY 1 2 3 4 5 6 1 I 9 Thanks again for all your efforts. Thanks again for helping us develop the record. We certainly do appreciate all your efforts in bringing this case in for this specj-fic component, which is the technical hearing, and since there are no other matters that need to come before us today, we are adjourned. (A11 exhibits previously marked for identif ication were admitted j-nto evi-dence. ) (The Hearing adjourned at 2229 p.m. ) CSB REPORTING 208 .8 90 . 5l_98 10 11 t2 13 t4 1-5 16 L7 18 79 20 2L 22 23 24 25 105 COLLOQUY 1 2 3 4 5 6 1 8 9 10 11 L2 13 74 15 t6 !7 18 19 20 2L 22 23 24 CSB REPORTING 208.890.5198 AUTHENTICATION This is to certi-fy that the foregoing videoconferencing/telephonic proceedings held in the matter of SUEZ Water Idaho Inc. for authority to increase its rates and charges for water service in the State of Idaho, contmencing at 1:30 p.il, on Tuesday, April 20, 2027, dt the Commission Hearj-ng Room, 11331 W. Chinden Bl-vd., Building 8, Suite 201,-A, Boise, Idaho, is a true and correct transcript of said proceedings and the original thereof for the file of the Commi-ssion. Accuracy of all prefiled testimony as originally submitted to the Reporter and incorporated herein at the direction of the Commission is the sol-e responsibility of the submitting parties. CONSTANCE Certified S. BUCY Shorthand Reporter 7 BUCYsCON$TANCE r0M0OFSTATEPUBLICNOTARY29951NUMBERCOMMISSION9+2024EXPIRESMYCOMMISSION 25 106 COLLOQUY