980330v2.docx

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO  83720-0074
[phone]
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO  83702-5983
Attorney for the Commission Staff
BEFORE  THE  IDAHO  PUBLIC  UTILITIES  COMMISSION
IN THE MATTER OF THE APPLICATION)
OF UNITED WATER IDAHO INC. FOR) CASE  NO.  UWI-W-97-6
AUTHORITY TO REVISE AND INCREASE)
RATES CHARGED FOR WATER SERVICE.) STAFF’S RESPONSE TO
)UNITED WATER IDAHO’S
)THIRD SET OF INTERROGA-
)TORIES TO COMMISSION
)STAFF/MR. ROBERT E. SMITH
__________________________________________)
The Staff of the Idaho Public Utilities Commission by and through its attorney of record, Scott Woodbury, Deputy Attorney General, hereby responds to United Water Idaho’s Third Set of Interrogatories to Commission Staff/Mr. Robert E. Smith dated March 24, 1998.
INTERROGATORY NO. 37:  At page 17, lines 8 -14 of your testimony, you
state:
The Cost/Benefit analysis is flawed and superficial.   Assumptions
regarding vehicle residual values are artificially low and adjusted to
favor leasing.  The actual experience of United Water Idaho over the last
few years demonstrates unequivocally that the residual values are wrong
and that leasing is more costly to the Company.
Is your opinion that the Cost/Benefit analysis is “flawed and superficial” based on any fact or opinion other than the identified concern about residual values?  If so, please state each and every other fact or opinion that supports the assertion that the Cost/Benefit analysis is flawed and superficial.
RESPONSE TO INTERROGATORY NO. 37:  No. The “analysis” dated July 15, 1997 provided in response to Staff Production Request No. 82 has several obvious flaws.  The Company’s own historical experience indicates that owned vehicles typically are kept for an average period of 6.4 years rather than the three-year period used in the “analysis”.  The analysis arbitrarily assumes that the initial cost of leased vehicles will be less than vehicles purchased directly by the Company.  The analysis of ownership over the three-year period assumes a beginning cost reduced by the artificially low trade-in value based upon the unamortized balance of the leased vehicle option.  The memorandum indicates that UWR has received manufacturers’ rebates of $125,000 to $150,000 that are not recognized in the analysis, nor is there any evidence that these rebates are credited to the operating companies.  Annual cost of loaner vehicles are provided by the leasing company.   
DATED  at Boise, Idaho, this              day of March 1998.
_______________________________
Scott Woodbury
Deputy Attorney General
Technical Staff:Robert Smith
SW:/umisc/prodreq/respons/ uwiw976.rs3