UWIW963S.docx

Q.Are you the same Robert E. Smith who previously filed prepared testimony in this case on behalf of the Staff (Staff) of the Idaho Public Utilities Commission?
A.Yes I am.
Q.What is the purpose of this supplemental testimony?
A.Subsequent to the filing of the Staff testimony on September 6, 1996, Staff learned that the Idaho State Tax Commission ordered a reduction in the assessed valuation of United Water Idaho’s (United or Company) property used for ad valorem tax assessments.  My supplemental testimony addresses the effect of the reduced valuation on the Company’s revenue requirement in this case.
Q.Are you sponsoring any additional exhibits?
A.Yes.  I am sponsoring a new Exhibit No. 111 entitled “United Water Idaho, Staff Corrected Ad Valorem Tax.”  I am also sponsoring revised Exhibit Nos. 108 and 109 that recognize this new adjustment and track the effect through the Staff case.
Q.What is the effect of these revisions on the Staff’s revenue requirement recommendation?
A.Staff’s recommended revenue requirement drops from $823,114 to $634,800.
Q.How does the revised revenue requirement compare with the Company request in this case?
A.The revised Staff recommendation is $481,552 less than the $1,116,352 the Company requested.  Staff’s revised recommendation would result in an increase to United Water Idaho customers of 3.011% as compared to the 5.3% increase the Company requested.
Q.Please explain Exhibit No. 111?
A.Column “A” of this exhibit was prepared using the Company’s Exhibit No. 3, Schedule 4.  Column “B” shows the same calculation substituting the lowered valuation of $62,000,000 on line 1 for the $69,323,951 preliminary number used by the Company.  The effective mil levy, shown on line 2, has also been changed to substitute the actual 1995 rate for the average 1994-95 rate used by the Company.  As shown on line 6, these two changes produce a property tax amount that is $187,290 less than shown on the Company’s exhibit.
Q.Intervenor Sharon Ullman, in her prefiled testimony, recommended a lower mil levy than used in the Company’s case.  Have you incorporated her recommendation in this exhibit?
A.No.  While Ms. Ullman may be correct, the Staff has no way of knowing what the actual mil levies of the various taxing districts may be.  The mil levies are a function of the relationship between each taxing district’s budget and the value of all the property within its taxing district.  Until each of those districts determine individual mil levy assessments it is not possible to know how much the real property tax will be.  Projecting the mil levy in this fashion is not based upon a known and measurable change.
Q.How does the ad valorem tax adjustment shown on Exhibit No. 111 track through the revised Exhibit Nos. 108 and 109?
A.I have added a new Column “K” on revised Exhibit No. 108 to recognize the ad valorem tax adjustment.  That change increases the Company’s net operating income shown on line 10, Column “L” from $6,577,611 shown on the original exhibit to $6,691,334.  The revised net operating income is carried forward to revised Exhibit No. 109, line 4.  With this change, the required revenue increase shown on revised Exhibit No. 109, line 7 becomes $634,800.
Q.Does that conclude your supplemental testimony?
A.Yes.