20141029UWI to Staff 1-15.pdf

(20r) 34s-7s00
(208) 33tu912 (Fax)
McDevitt & Miller r,r,r
Lawyers
420 West Bannock Street
P.O. Box 256+&3701
Boise, Idaho E3702
qEflH 11,7r:' [":
Octobet 29,2074
Yia llaad Delivety
JeanJewelt Secretary
Idaho Public Utilities Commission
472W. Washington St.
Boise,Idaho 83720
Re:Case No. LIS7I-W-14-01
Bdan Subdivision Water fIsem Association, Inc.'s/United Water Idaho Inc.
Deat Ms.Jewell:
Enclosed for filing in the above matter, please find three (3) copies of United Water Idaho Inc.'s
Response to the First Production Requests of Commission Staff.
Kindly return a file stamped copy to me.
Very Truly Yours,
McDevitt & Millet LLP
$w-
DJM/M
Enclosures
?01!1OCT 29 PH 21 35
Celeste K. Miller
Dean J. Miller (ISB No. 1968)
Chas. F. McDevitt (ISB No. 835)
Celeste K Mller (SB No. 2590)
McDEVTIT & MILLERLLP
420 WestBannock Sheet
P.O. Box 25il-8370t
Boise, E 83702
TeL [phone]
Fa,x: 208.33 6.6912
i oe@mcdevitt-miller. com
chas@mcdevitt-miller. com
ck@mcdevitt-miller. com
Attorney for Brian Subdivision Water Users Association, Inc.
IN TIIE MATTER OX'TIIE JOINT
APPLICATION OF UMTED WATER
rDArro INC., AnD BRrAN SUBDTVISTON
WATER USERS ASSOCIATION FOR
APPROVAL OX'AN AMENDMENT TO
CERTIFICATE OF PT]BLIC
CONVENIENCE AIID I\TECESSITY NO.
143; APPROVAL Of,'AI\t AGREEMENT
FOR COI\TIYECTION AI\[D TRANSTER OX'
WATER SYSTEMS; APPRoVAL OF
RATES AI\ID CHARGES
GOPY
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BEFORE THE IDAHO PIJBLIC UTILITIES COMMISSION
Case No. tM-W-14-01
T]MTED WATER IDAIIO INC.'S
RESPONSE TO COMIVISSION STAtrT"S
F'IRST PRODUCTTON REQUESTS
United Water Idaho Inc, ('United Water') by and through its undersigned attorneys,
hereby submits its Responses to the Commission Staffs First Production Request No's I through
15.
DATED thts 1A day of Octobe420l4.
I]MTED WATER IDAIIO INC'S RESPONSE TO COMMISSION STATT'S FIRST PRODUCTION
REQTTESTS- 1
I.]NITED WATER IDAHO INC.
Attorney for United Water ldaho Inc.
I hereby cefiiry that on,n -d$ry of October, 2014,I caused to be served, via the
method(s) indicated below, frue and correct copies of the foregoing document upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
47 2 W est Washington Steet
P.O. Box 83720
Boise,ID 83720-0074
ij ewell@puc. state.id.us
Karl Klein
Deputy Attomey General
Idaho Public Utilities Commission
47 2 W est Washington Steet
P.O. Box 83720
Boise,ID 83720-0074
Karl.Klein@puc. idaho. gov
CERTItr"ICATE OF SERVICE
Hand Delivered
U.S. Mail
Farr
Fed. Express
Email
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Email
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UNITED WATER IDAHO INC'S RESBONSE TO COMMISSION STAFI,S tr'IRST PRODUCTION
REQTJEST$2
UNITED WATER IDAHO INC.
CASE UWI.W.14.O1
FrRST PRODUCTION REQUEST OF THE COMMTSSION STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 1:
Please provide copies of United Water's water treatment alternatives, calculations, and
analysis for the Brian Subdivision Water Users Association ('BSWUA") with the
formulas, macros, and links activated, including copies of all files linked.
RESPONSE NO. 1
Enclosed is an Excel file titled "#1 Onsite Treatment Estimate.xlsx" that provides the
Company's desk-top estimate provided to BSWUA, at their request, for constructing an
on-site treatment system for their existing well supply.
UNITED WATER IDAHO INC.
cAsE uwl-w-14-01
FrRST PRODUCTION REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 2:
Please explain why connecting and transferring BSWUA's water systems to United
Water:
(a) Specifically benefits United Water's customers; and
(b) Is for the public convenience and necessity.
RESPONSE NO. 2
(a) The proposed River Route main line will eventually provide benefits to the
United Water delivery system. (Seq Direct Testimony of Gregory P. Wyatt,
Pgs. 5-7) which benefit United Water's other customers. Additionally, the 46
new BSWUA customers will provide continuing revenue which helps support
the investment revenue requirement. Due to the proposed 10-year
surcharge, the BSWUA customers will be providing additional revenue thereby
reducing the revenue requirement that all other United Water customers
would have to support when the interconnecting main line is installed later,
as needed, if not installed presently.
(b) United Water objects to this request on the basis of RP 225.0t.a which
provides:
"Production requests or written interrogatories should not be used to obtain
statements of opinion or poliry not previously written or published and may be
objected to on that ground."
Notwithstanding this objection, United Water believes the proposed
interconnection is consistent with the pubtic convenience and necessity because the
interconnection represents the only feasible solution to a public health problem. (See
Letter Comment of Idaho Department of Environmental Quality, October 8,20t4; Public
Comment of Jennifer Miller, October L5,20t4). The burden placed on existing United
Water customers is minimal and the proposed investments will provide a benefit to the
United Water delivery system. (See, Direct Testimony of Gregory P. Wyatt, Pgs. 5-7).
UNITED WATER IDAHO INC.
cAsE uwr-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 3:
Please provide a map showing the seruice area for State of Idaho Ceftificate of Public
Convenience and Necessity (i.e., CPCN No. 143) as that seruice area would be amended
if the Application is approved.
RESPONSE NO. 3
Enclosed is the file titled "#3 BSWUA Seruice Area Expansion.pdf" identifoing the
Company's seruice area (i.e., CPCN No. 143) as that seruice area would be amended if
the Application is approved.
UNITED WATER IDAHO INC.
CASE UWI.W-14-01
FrRST PRODUCTION REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 4:
Please provide an explanation, suppofting diagrams, estimated fiscal values, and
calculations that demonstrate the anticipated benefits from the proposed looped system
configuration that extends United Water's system to Brian Subdivision and ultimately to
the other water service areas that United Water serves to the west of Brian Subdivision.
RESPONSE NO. 4
The proposed extension to serue the Brian Subdivision system will provide significant
beneflts, as described below, to the Company's existing Harris pressure zone when
ultimately connected:
. Redundancyo The seruice area between the Harris Tank and Brian Subdivision is supplied
primarily from a single 12-inch water main in E. Warm springs Avenue. If this
main is out of seruice due to a leak or for maintenance purposes, domestic
seruice and fire protection would be disrupted. The new main would continue
to maintain seruice in these circumstances.o Similarly, if the Harris Tank or the Harris Booster Station is taken out of
service for maintenance or repairs, the new main would continue to maintain
domestic seruice and fire protection.o The new main would also provide a secondary supply to the Barber Service
Area as a whole to back up the connection between the Columbia Village
pressure zone and the Barber Booster/Reseruoir inteftie.o Fire Protection Supporto The service area east of Harris Tank is fed by a single 12-inch water main in
E. Warm Springs Avenue. This main is supplied solely from the Harris Tank.
The further east this main is extended, the more pressure loss is
accumulated. Being supplied from both the Harris Tank and the new Brian
Water connection substantially improves fire protection capabilities by an
average of about 75o/o.
Both the Barber Seruice Level and the Harris Tank Pressure Zone are limited in source
of supply. During summer months Barber receives 40o/o of its supply from adjoining
seruice levels. There are currently two major supply points: the Federal Way Intertie
and the Barber Booster/Reseruoir intertie. The proposed new Brian Water inteftie will
assume a poftion of import flows and thereby lessen the stress the existing intefties
place on their parent seruice levels. (See enclosed map with service areas, etc.
identified)
UNITED WATER IDAHO INC.
CASE UWI.W-14.01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 5:
Please provide the following:
an explanation of how United Water estimated the proposed capital investments,
construction, and operation costs (i.e., actual bids submitted in response to a
proposal request);
an Excel-file copy of the actual values and calculations suppofting both the
Application's cost estimates and the cost estimates for the analyzed alternatives
in an Excel file with the formulas activated; and
the proposed construction method and payment methods.
RESPONSE NO. 5
a) The proposed capital investments were estimated predominantly based upon
cost proposals received from Owyhee Construction Company for the standard
main line work and from Earth Energy, Inc. for the canal and river bores. These
cost proposals are provided in response to Staff Production Request No. 6. The
construction cost estimates shown Wyatt Testimony Exhibit No. 2 used the unit
cost estimates from these proposals, but the quantities (i.e. length of main)
changed from the time of their proposals to the final alignment and cost estimate
completion.
b) The Excel file titled "#5 Wyatt Exhibit No. 2.xlsx" suppoftive of Wyatt Testimony
Exhibit No. 2 is enclosed.
c) The Company intends to contract with Earth Energy, Inc. for the river and canal
bores. The Company intends to bid out the remaining main line and seruices
work and contract with the successful bidder for that work. Payment for work
will be based on invoices submitted and verified for work completed.
a)
b)
c)
UNITED WATER IDAHO INC.
cAsE uwr-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMISSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 6:
Please provide the basis for the construction cost estimates, including labor rates and
unit prices for materials.
RESPONSE NO. 6
Enclosed are the following three PDF files showing cost proposals from Owyhee
Construction Company and Eafth Energy, Inc. which were used as the basis for unit
pricing of the proposed construction:
#6 Earth Energy Bore Estimate.pdf
#6 Owyhee hwy2l-river-xing Estimate.pdf
#6 Owyhee Warm Springs Route Estimate.pdf
UNITED WATER IDAHO INC.
cAsE uwl-w-14-01
FIRST PRODUCTION REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 7:
Please provide a copy of United Water's most recent Water System Master Plan, if the
Master Plan has been updated since 2009. To the extent not discussed in the Master
Plan, please provide copies of other repofts or plans that describe United Water's
i nfrastructu re i m prove me nt/rep lacement prog ra ms.
RESPONSE NO. 7
United Water's Master Facilities Plan is currently in process of being updated. The
Company anticipates the new Plan to be completed and available in the first quarter of
2015. As part of its annual Capital Budgeting process, the Company prepares a seven-
year forecast of capital expenditures which includes infrastructure
improvement/replacement. The Company's most recent proposed seven-year Capital
Budget forecast is enclosed (see file "#7 20L5-202L CapEx Budget Proposed.pdf").
UNITED WATER IDAHO INC.
cAsE uwl-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 8:
Please provide the backup documentation for the Capital Structure and Component Cost
as stated in Exhibit Nos. 3 and 4 from Mr. Wyatt's direct testimony.
RESPONSE NO. 8
Enclosed is a PDF flle ("#8 Capital Structure & Component Cost_Wyatt Exh 3&4.pdf")
containing the document titled "United Waterworks Inc., Consolidated Capital Structure,
30-Jun-14". This document indicates the cost rate for long-term debt as of June 20L4
was 6.040/o. Also included is the computation of the Composite Cost Rate of Debt,
indicating the description of each issuance, issue & maturity date, outstanding amount
and weighted embedded debt cost rate, among other information.
The source of the common equity return rate of L0.4o/o is the Company's 2009 rate case
filing, UWI-W-09-01. In an agreement (letter contained in the attached PDF file) dated
July 31, 2009, the Commission Staff and the Company agreed to an ROE of 10.4%. The
case was settled and no definitive ROE was included in the Order. The Company filed
general rate case UWI-W-11-02 in April 2011. This case was also settled with no
definitive ROE.
UNITED WATER IDAHO INC.
cAsE uwr-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 9:
Please explain:
(a) O&C in Exhibit No.and
(b) Why O&C is calculated in Mr. Wyatt's direct testimony at 10% on Exhibit No.
2, pages 2,3 and 4, and calculated at 150/o on Exhibit No. 2, page 5.
RESPONSE NO. 9
a) O&C in Exhibit No. 2 refers to Omissions & Contingencies. The Company
adds an O&C percentage factor to all capital expenditure project estimates as
a way of estimating for factors involved in the project that are unknown or
unmeasurable at the time of estimating, but that come into play during actual
construction.
b) The 10% O&C in Exhibit No. 2, pages 2, 3 and 4 is the standard amount
Engineering typically applies to main line project estimates. The O&C
calculated on Exhibit No. 2, page 5 was increased to 15olo because there are
more unknown factors when working in established roadways and
subdivisions. These factors can include other underground utilities, soil
conditions, and the fact that this cost estimate covers work in and around
existing water lines, services, and homeowner properties.
UNITED WATER IDAHO INC.
cAsE uwr-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 10:
Please define what is included in projects'overhead rate and provide the rationale for
why that rate is LZ.Sto/o. Please provide a schedule documenting the t2.Sto/o.
RESPONSE NO. 10
The overhead rate is a factor applied to all capital expenditure projects. The L2.5lo/o
overhead in the cost estimates provided is made up of 3.73o/o Corporate capital
overhead and 8.460lo Local capital overhead. These overheads are not additive; they
are compounded (1.0846 x 1.0373 - | = 0.1251 or L2.SLo/o). The overhead costs
represent non-project specific expenditures incurred at both the local and corporate
level of the Company, and are primarily comprised of labor. These labor costs are
associated with activities including capital budget preparation, capital management and
forecasting, project review and approvals, preliminary design and expenditure analysis,
project finalization, accounting and recordkeeping, mapping, and other similar capital
costs not easily associated with a specific project.
UNITED WATER IDAHO INC.
cAsE uwl-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMISSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 11:
Please provide the construction schedule with budgeted expenses at each step.
RESPONSE NO. 11
The construction schedule will be dependent on the timing of a decision from the
Commission in this current matter. If the Company receives an affirmative decision
later this year, and there is sufficient time to accomplish the bores while the irrigation
canals are dry, then we plan to proceed first with the bore projects (the canal
jurisdictions prohibit boring when the canals are in water). As soon as hot mix is
available, typically around March 1't, and weather permits, we plan to construct the
remaining main line work.
If the Company receives an affirmative decision from the Commission too late in time to
bore the canals this "irrigation-off'season, then we plan to construct the remaining
main line work in the summer/fall of 2015, and then followed by the bores as soon as
the irrigation canals are dry in late 2015.
In either scenario, the seruice line and meter setter work will follow after the entire
main line and bore work is complete and able to be charged with water. Each
customer's seruice will be tied over from the BSWUA system to United Water's system
on a customer-by-customer basis. The BSWUA system will need to continue functioning
until the last customer is changed over.
Cost estimates for the various components of construction can be found in Exhibit No. 2
of my direct testimony and was provided in Excel format in response to Production
Request No. 5.
UNITED WATER IDAHO INC.
cAsE uwr-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 12:
Section 3 of the Agreement for Connection and Transfer of Water Systems
('Agreement") provides that certain costs will be recovered from existing customers of
the BSWUA. See Exhibit C, page 4. Does the reference to "existing customers" mean
all BSWUA customers of record as of the closing date of the transfer of the Tangible
and Intangible Property as specified in Section 10 of the Agreement? See Exhibit C,
page B. If not, please explain how "existing customers" will be identified.
RESPONSE NO. 12
Yes, "existing customers" means all BSWUA customers of record as of the closing date
of the transfer of the Tangible and Intangible Propefi as specified in Section 10 of the
Agreement. On a going forward basis, the surcharge will apply to the customer of
record for each of the 46 premise addresses within the Brian Subdivision that had been
serued by BSWUA.
UNITED WATER IDAHO INC.
CASE UWI.W-14-01
FrRST PRODUCTION REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REOUEST NO. 13:
If a former BSWUA customer discontinues seruice (closes an account) with United
Water after United Water assumes system ownership and a new applicant signs up for
seruice (opens an account) with United Water at that location, will the new customer be
responsible for paying the appropriate bi-monthly surcharge from the date of sign-up
forward? Or does the obligation to pay the surcharge remain with the prior customer?
Please explain.
RESPONSE NO. 13
The intent is that the bi-monthly surcharge "runs with the premise", meaning that
whoever takes seryice at each of the 46 individual premise/addresses will assume the
responsibility for the surcharge. In the scenario cited above, the former BSWUA
customer's responsible ceases and the new customer becomes responsible for the
surcharge from the date of sign-up forward.
Attached is a copy and enclosed is a PDF file titled "#13 Proposed Tariff Schedule No.
lC.pdf" that contains the Companyt proposed tariff in this matter. The actual dollar
amounts will be available and supplied after final costs for the project are determined.
Sheet No. 1
Replacing all Previous Sheets
UNITED WATER IDAHO INC.
SCHEDULE NO. 1C
BRIAN SUBDIVISION SURCHARGE
Availability:
To all metered customers, who were previously customers of Brian Subdivision
Water Users Association lnc., located in the Brian Subdivision, Ada County,
ldaho.
Surcharoe Amount
A Bi-Monthly charge in the amount of [$] in addition to charges specified in
Schedule No. 1, General Metered Service, and other applicable charges.
Conditions of Contract:
The surcharge set forth above shall take effect in the first billing period following
the customer's connection to the Company's distribution system and computation of final
project costs. The surcharge shall continue for a period of ten (10) years thereafter.
The surcharge shall attach to the customer service address and payment thereof
shall be the responsibility of subsequent customers taking service at that address.
The surcharge shall not be subject to change in subsequent general rate
proceedings absent a showing of adversity to the public interest.
ln lieu of the surcharge a customer may elect to pay a single lump sum payment
in the amount of $[ ]. The lump sum election must be made and paid within thirty (30)
days of the Effective Date and shall be irrevocable.
UNITED
lssued Per IPUC Order No.
Effective -
lssued by UNITED WATER IDAHO lNu.
Gregory P. Wyatt, Vice President
8248 West Victory Road, Boise, ldaho
UNITED WATER IDAHO INC.
cAsE uwl-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 14:
Does United Water intend to pro-rate the surcharge on bills that cover less than a full
billing period due to opening or closing an account? Please explain.
RESPONSE NO. 14
Yes, United Water intends to have a separate tariff sheet for the surcharge (see
Company response to Staff Production Request No. 13), and would apply a pro-ration of
the surcharge in the same fashion as it pro-rates all other tariff schedule charges when
appropriate.
UNITED WATER IDAHO INC.
cAsE uwr-w-14-01
FrRST PRODUCTTON REQUEST OF THE COMMTSSTON STAFF
Preparer/Sponsoring Witness: Greg Wyatt
REQUEST NO. 15:
There are homes and lots in the Brian Subdivision that currently are not receiving
seruice from BSWUA. If a party asks United Water to connect seryice after United
Water assumes system ownership, will United Water require the customer to pay the
appropriate bi-monthly surcharge from the date the customer is connected to the
system and is receiving water? May the newly-connected customer opt to pay a one-
time fee based on net present value in lieu of paying the monthly surcharge? Please
explain.
RESPONSE NO. 15
The Company's Rules and Regulations Governing the Rendering of Seruice and
Application for Seruice (Rules l-7) speciff procedures and investments to be made by
the Company when its existing mains front the propefi of a new customer requesting
seruice. Unless directed otherwise by the Commission the Company intends to follow
its existing Rules and would not assess the bi-monthly surcharge or one-time payment
to new customers who were not previously BSWUA customers. To the Company's
knowledge, there are two residential lots within the Brian Subdivision not currently
served by BSWUA.