PUC4231.docx

1 BOISE, IDAHO, THURSDAY, APRIL 23, 1998, 9:30 A. M.
2
3
4 COMMISSIONER NELSON: Good morning. We'll
5 take up again with Idaho Public Utilities Commission
6 Case UWI-W-97-6. When we recessed the technical part of
7 the hearing yesterday afternoon, I believe that
8 Mr. Miller was just ready to start his cross of
9 Mr. Smith.
10 MR. WOODBURY: Mr. Chairman, there were
11 some questions that were posed to Mr. Smith in his
12 initial venture on cross with respect to calculation and
13 he wasn't able to provide those answers, I think, with
14 ad valorem and AFUDC and he would like to make a
15 clarifying statement at this time before the cross
16 begins.
17 COMMISSIONER NELSON: That's the trouble
18 with taking the night off. Okay, Mr. Smith.
19 Mr. Woodbury, why don't you help him
20 through those queries.
21
22
23
24
25
545
CSB REPORTING COLLOQUY
Wilder, Idaho 83676
1 ROBERT E. SMITH,
2 produced as a witness at the instance of the Staff,
3 having been previously duly sworn, resumed the stand and
4 was further was examined and testified as follows:
5
6 DIRECT EXAMINATION
7
8 BY MR. WOODBURY: (Continued)
9 Q Mr. Smith, do you remember the questions
10 posed to you by Sharon Ullman yesterday?
11 A Yes.
12 Q And were there areas that you were unable
13 to provide accurate answers or answers based because you
14 didn't have the calculations in front of you knowing
15 which numbers you used?
16 A Yes, that's correct.
17 Q And could you provide that clarification
18 now?
19 A Yes. Specifically, Ms. Ullman asked me
20 about the calculation of the ad valorem taxes, quizzing
21 me on the numbers that I had used both for the assessed
22 valuation as well as the levy rate. I did not have my
23 workpapers with me at the time. I do have them here
24 now. For clarification, I did use the most recent
25 assessment rate as well as the most recent levy rate as
546
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 provided to Ms. Ullman in the Company's response to her
2 Request No. 27, so the numbers I have used, both the
3 assessment and the levy rate, are the most recent data
4 available.
5 Q Okay. Anything further to add?
6 A Just one other clarifying comment regarding
7 a question that Commissioner Nelson asked me yesterday
8 about the agreed-to adjustment for the capitalized AFUDC
9 regarding substituting Mr. Healy's adjustment for my
10 adjustment that appears on my Exhibit No. 114 in
11 column F. I believe I indicated to Commissioner Nelson
12 that I believed the $54,000 adjustment would be
13 substituted for my adjustment shown on line 1 when indeed
14 it should be the net rate base adjustment shown on
15 line 12, so the $54,000 adjustment in Mr. Healy's exhibit
16 would be substituted for the 78,432 shown on line 12,
17 column F of my exhibit.
18 MR. WOODBURY: Thank you very much. We
19 have no further clarification and present Mr. Smith for
20 cross again.
21 COMMISSIONER NELSON: Mr. Smith, just to
22 clarify further, why don't you tell us what those numbers
23 were that you actually used for the assessed valuation.
24 Wasn't that about a $70 million number and a point
25 something?
547
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 THE WITNESS: The net assessed valuation as
2 of January 1, 1997, based on the Tax Commission's
3 decision dated August 25th, '97, was 65,899,778. The
4 most recent levy rate based upon the 1997 taxes, the
5 number I used was 1.7224 percent.
6 COMMISSIONER NELSON: Okay, thank you. You
7 did not use that figure that appeared early in 1998 of
8 approximately 70 million?
9 THE WITNESS: Excuse me a moment, I'm
10 looking at the wrong workpaper. No, I beg your pardon, I
11 was correct to begin with. It was a $65 million number
12 that goes into the adjustment.
13 COMMISSIONER NELSON: Okay. Mr. Miller,
14 can we go to you?
15 MR. MILLER: Yes, thank you, Mr. Chairman.
16 I thought I understood the ad valorem tax issue, but now
17 I'm not sure I do, so rather than trying to explore that
18 through cross-examination, I may want to revisit that in
19 our rebuttal testimony.
20
21 CROSS-EXAMINATION
22
23 BY MR. MILLER:
24 Q So putting that aside for the moment, good
25 morning, Mr. Smith.
548
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Good morning.
2 Q First, let me thank you for your effort
3 with Mr. Healy to resolve a number of the previously
4 contested technical accounting issues so that those
5 adjustments have now become agreed upon and saving me the
6 effort of trying to cross-examine on things I don't know
7 much about and also saving the Commission the agony of
8 watching me do that, so my questions this morning will be
9 more of a general nature in areas that I hope are within
10 my ability to comprehend.
11 First, just a few questions about audit
12 procedures that Commission analysts use in the course of
13 utility audits. Is one of the techniques used by utility
14 auditors, particularly in the area of expense evaluation,
15 to evaluate by category the overall level of expense and
16 make a judgment as to whether the overall level of
17 expense in a category seems reasonable or unreasonable?
18 A That's one of the techniques used, yes.
19 Q And one of the advantages of that technique
20 I take it would be that within the category, if there are
21 some individual items that seem somewhat high and that
22 there are some individual items that seem somewhat low,
23 if overall the expense level within the category is not
24 unreasonable, there isn't a regulatory or auditing
25 concern about the category as a whole?
549
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Well, that's partially true. On the other
2 hand, periodically, we will randomly select specific
3 accounts for more detailed analysis just as a random
4 check.
5 Q Sure. One of the other advantages or
6 features of that technique I take it would be that
7 indirectly it recognizes the principle that in the first
8 instance, management of the utility has both the
9 obligation and the right to manage the business of the
10 company within those categories and if the overall result
11 within the category is not unreasonable, then the
12 Commission doesn't have to engage in second guessing on
13 specific items or in micro-management of the utility.
14 A If overall the final results produce a
15 reasonable result, that's correct.
16 Q In this case, did you make any adjustment
17 to reduce the overall level of salaries and wages?
18 A No.
19 Q Let me now change to another topic. One of
20 the themes that seems to run through your testimony is a
21 concern about the magnitude of charges to United Water
22 Idaho from its affiliated company, what we can refer to
23 as the M&S Company?
24 A That's correct.
25 Q If I could direct your attention to page 5
550
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 of your testimony, which is where I think you start to
2 introduce the topic, starting on line 12, you indicate
3 the overall magnitude of charges during the years '95
4 through '97; is that correct?
5 A Yes.
6 Q And just to take one year and one that I
7 have some information on, looking at 1995, you indicate
8 that there was approximately $7.2 million in charges for
9 that 12-month period?
10 A That's correct.
11 Q Is it correct that of that $7 million,
12 $3.2 million is reimbursed interest?
13 A I wasn't able to break down all of these
14 charges into their individual components as has Mr. Healy
15 in his rebuttal testimony, neither have I had an
16 opportunity to review the breakdown that he has prepared.
17 Q Do you have any reason to believe that
18 Mr. Healy's so-called breakdown is inaccurate?
19 A No.
20 Q So assuming for the purpose of our question
21 that that breakdown is accurate, if I represented to you
22 that of the total $7 million, 3.2 million is reimbursed
23 interest, you at this point don't have any reason to
24 disagree with that?
25 A I would have no reason to disagree with
551
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 that.
2 Q Very good. Similarly, if I represented
3 that of the total amount approximately $2.2 million
4 represents reimbursed federal income tax, would you have
5 any reason to disagree with that?
6 A No.
7 Q Similarly, if I was to represent to you
8 that $400,000 of the total amount represents payroll
9 deductions, would you have any reason to disagree with
10 that?
11 A Not at this time.
12 Q If I was to represent to you that of that
13 total amount $546,000 is insurance reimbursement, would
14 you have any reason to disagree with that?
15 A No.
16 Q So of this total, I'm just going to use
17 round numbers here, $7.2 million, only approximately
18 950,000 is for services. The rest is for reimbursement
19 of things such as interest, federal income tax and the
20 other items we discussed?
21 A According to Mr. Healy's testimony, that's
22 correct.
23 Q Could we look at Mr. Healy's Exhibit 25?
24 A That's in his rebuttal exhibits?
25 Q Yes, sir.
552
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Okay, I have that.
2 Q Good, you're ahead of me, and does
3 Exhibit 25 kind of lead us to what we just got to through
4 another way, which is in the first column a list by year
5 from 1991 through 1998 of the actual fees that were paid
6 to the M&S Company as opposed to reimbursements?
7 A Well, that's what Mr. Healy's exhibit is
8 purported to show, yes.
9 Q Do you have any reason to believe it's
10 inaccurate?
11 A I haven't had an opportunity to check it,
12 but I couldn't disagree with it absent an opportunity to
13 check.
14 Q All right so subject to your opportunity to
15 check, you would accept this as accurate for the purpose
16 of our questions this morning?
17 A For these purposes, yes.
18 Q Very good. Now, one of the problems with
19 big numbers, and just for the purpose of our discussion,
20 let's say that 950,000 is a big number, is that we often
21 lack a sense of appropriate scale with which to evaluate
22 the number; that is, as individuals or human beings, we
23 kind of react to big numbers, but if we don't have an
24 appropriate sense of scale by which to measure their
25 significance, we may misinterpret their significance.
553
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 That's more of a speech than a question, but would you
2 disagree with that idea generally?
3 A You're asking me to agree with your
4 testimony?
5 Q Right.
6 A Yes.
7 Q For example, a salary of $120,000 may seem
8 from one perspective to be large, but if you compared it
9 to the salary of the chief executive officer of
10 Washington Water Power, it would be pretty small or if
11 you compared it to the salary of Bill Gates, it would
12 seem pretty small.
13 A Minute.
14 Q So finding the appropriate scale with which
15 to measure big numbers is kind of the challenge of big
16 numbers, isn't it?
17 A That's correct.
18 Q Very good; so if we try to find some scales
19 with which to measure the significance of the M&S fees
20 that you're concerned about, one scale that we could use
21 would be to compare those fees as a percentage of
22 operation and maintenance expense as a whole would be one
23 scale we could use.
24 A That would be an indicator to look at as
25 has Mr. Healy on this exhibit.
554
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 Q And on that exhibit, we see that for a
2 five- or six-year average or maybe a seven-year average
3 those fees are about 10.7 percent of O&M generally?
4 A That's what this exhibit depicts.
5 Q And you have no reason to for the purpose
6 of our questions this morning believe that that's
7 inaccurate?
8 A That's correct.
9 Q All right. Have you done any studies or
10 any objective comparisons to determine for similarly
11 situated utilities that have a relationship with a parent
12 or a management company whether 10.7 percent as a
13 percentage of operations and maintenance is out of line
14 in any sense for similarly situated industries?
15 A I'm not sure I follow your reference to
16 reasonable for similarly situated utilities.
17 Q Well, do you know what the percentage of
18 affiliated charges as a percent of O&M expense are for
19 GTE?
20 A No, I don't.
21 Q So you don't have any testimony or
22 information to indicate that management/service fees that
23 are at this relationship or level in comparison to O&M
24 generally is unreasonable?
25 A Not on a comparative basis, no.
555
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 Q I suppose another scale we could use in
2 evaluating the significance of this number would be
3 this: In very round terms, what is the jurisdictional
4 rate base for United Water Company of Idaho? Is it in
5 the vicinity of $80 million?
6 A Somewhere in that neighborhood. I was
7 going to refer to an exhibit.
8 Q Just for talking purposes, let's just use
9 $80 million as a benchmark.
10 A Fair enough.
11 Q What would $950,000 be as a percent of
12 $80 million?
13 A One percent? Am I misplacing the decimal?
14 Q I think you are.
15 A A tenth of a percent?
16 Q There you go; so the utility as an
17 $80 million utility has assets committed to public
18 service in approximately that amount and the fees it
19 incurs to operate those assets, to operate its business
20 from its management company, are, I think we have agreed,
21 about one-tenth of a percent of the Company's rate base
22 value.
23 A I don't think I could agree with the way
24 you characterized that. The cost to operate and maintain
25 that system also includes the local operating employees
556
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 which would raise that tenth of a percent significantly.
2 The one-tenth of a percent is the management/service
3 company affiliated's contribution to that.
4 Q Certainly, the overall cost to operate
5 those assets and maintain them and keep them dedicated to
6 public service is higher, but the portion of M&S fees
7 that is dedicated to those is the .10 percent --
8 A That's correct.
9 Q -- .1 percent, all right. Would another
10 possibility for judging the significance of that number
11 be to compare those fees as a percent of operating
12 expense generally?
13 A That would be another indicator you could
14 refer to, yes.
15 Q And I don't have the number here, but at
16 some point within the last few days I think I did that
17 calculation which would show that $950,000 is about
18 six-tenths of a percent of operating expense. I could be
19 wrong. Maybe it's 6 percent, probably 6 percent.
20 A That sounds like a ball park area, yes.
21 Q So I guess having gone through this, we
22 could conclude by observing that even though the number
23 in itself on its surface seems like a big number, when
24 it's put in an appropriate scale, we have a better basis
25 for evaluating the significance of the number.
557
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Well, I don't know if it's better. It's a
2 way of looking at the number. I think comparing the
3 operating expense to the rate base valuation is not
4 necessarily the best way of looking at a particular
5 expense item. I think you have to look at the magnitude
6 of the expense on the rates of the Company and expenses
7 flow through dollar for dollar, not as a percentage of
8 rate base.
9 Q But in judging whether those flow-throughs
10 are reasonable, it's important to have some sense of
11 relationship with respect to the number as it relates to,
12 for example, operations and maintenance, rate base or
13 operating expense. There are several ways to look at it,
14 in other words, is what I'm trying to point out with
15 you.
16 A There are a multitude of ways of looking at
17 the numbers.
18 Q All right, very good. Another theme that
19 runs through your testimony is an expressed concern that
20 the Company in its acquisition and construction projects
21 was motivated by a desire to quickly reinvest
22 condemnation proceeds it received or that its parent
23 received through the condemnation of an asset in
24 New Mexico; is that correct?
25 A That's one of the indicators that I refer
558
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 to, yes.
2 Q And you raise that suspicion on page 7, I
3 think, of your testimony, starting at line 12.
4 A That's right.
5 Q And you say here on lines 21 and 22 that
6 this transaction raised the suspicion of Staff regarding
7 not only the timing but the need for construction and
8 acquisition activities.
9 A Yes.
10 Q Isn't there, I guess, in our country some
11 sort of a sense that a person or a company shouldn't be
12 penalized based on mere suspicion or speculation?
13 A Yes, I believe that's right.
14 Q You know, if the sheriff came out to you
15 and said, Bob, you know, I think that you've been doing
16 something wrong with that boat of yours and I'm going to
17 pull the scuttle plug on it, as you watched your boat
18 sink to the bottom of Lucky Peak Reservoir, wouldn't you
19 feel that was kind of unfair?
20 A Well, it would depend upon the grounds, I
21 think, for the suspicion. I think the action was a
22 little radical.
23 Q Just like disallowances in a rate case can
24 be a little radical, but what is the Internal Revenue
25 section code that governs reinvestment of condemnation
559
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 proceeds?
2 A I don't have the code in front of me. I
3 would have to refer to it.
4 Q Did you examine the Internal Revenue code
5 that controls these matters?
6 A I took a very quick look at it, yes. I
7 relied primarily upon the Company's reports in its 10-Q
8 and 10-K to the FCC, primarily.
9 Q So you took a quick look at this code
10 section that you can't recall or the number of which you
11 can't recall?
12 A I can't recall the paragraph number. I
13 know it came out of the Commerce Clearinghouse Tax Code.
14 Q Did you in your investigation of this or in
15 an effort to confirm any suspicion or your initial
16 suspicions, did you seek and obtain a legal opinion from
17 the Commission legal Staff with respect to the meaning of
18 the Internal Revenue code section and its application
19 here?
20 A No.
21 Q To investigate your initial suspicion, did
22 you seek and obtain a tax opinion from any of the
23 Commission experts in the area of internal or of federal
24 income taxation?
25 A No.
560
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 Q If it's shown that as a matter of fact
2 there is no linkage between the receipt of condemnation
3 proceeds and the Company's investment program in Idaho,
4 would you agree that the Staff adjustments that have been
5 proposed should be reversed?
6 A Well, you prefaced that with an "if" and I
7 have seen records on the Company's books indicating that
8 they are accumulating accounts or investment dollars into
9 reinvestment accounts specifically for that purpose.
10 Q Mr. Linam in his rebuttal testimony offers
11 an explanation and a, for purposes of this question, I'll
12 just use the word, vigorous defense that there is no link
13 between receipt of the proceeds and the Company's
14 investment program. If the Commission decided that
15 Mr. Linam was correct in that regard after reviewing all
16 the testimony, would you then agree that the adjustments
17 proposed by the Staff should be reversed?
18 A I have a hard time agreeing with that.
19 I'm familiar with Mr. Linam's testimony where he does
20 indicate that at the time of the condemnation in
21 New Mexico that United Water Idaho was not a part of the
22 tax group qualifying for the reinvestment program;
23 however, United Water Idaho now is rolled into the tax
24 group and is reporting reinvestment numbers on its books
25 and records.
561
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 Q Well, that certainly may be, but I thought
2 your point was that the Company has unreasonably engaged
3 in acquisitions and construction projects in order to use
4 up that money within a certain period of time. What I'm
5 saying is that if it's shown that the Company has not
6 done that, would you then agree that the adjustments the
7 Staff has proposed based on this suspicion should be
8 reversed?
9 A No.
10 Q So in your mind there are independent
11 reasons for the Staff's proposed adjustments with respect
12 to acquisitions and construction projects?
13 A That sale was only one of the factors that
14 led to the recommendations, quite frankly. There were
15 several other activities occurring outside this case that
16 also raised our suspicion as to what the Company's
17 motives for investment into some of these projects were.
18 Q So now I understand your testimony to be
19 that even if the Company was not motivated by the desire
20 or the intent that you suspicioned that there are
21 independent reasons for the disallowances the Staff has
22 proposed?
23 A That reinvestment program, as I
24 characterized it in my testimony, was one of the issues
25 that raised our concern, and in looking at the projects
562
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 as discussed in the testimony of Mr. Lobb, he discusses
2 in some detail the need for some of those projects.
3 Q Well, let me ask it this way: If there are
4 truly independent reasons for the disallowances that the
5 Company has proposed unrelated to the Rio Rancho issue,
6 why did the Staff bring that issue up if for any reason
7 other than to create an innuendo?
8 A Well, I hate to think of it as an
9 innuendo. I think it's an actual action that occurred
10 that is contributing to the Company's desire to invest
11 capital into rate base items.
12 Q But, again, if it's shown that that is
13 completely unrelated to the Company's construction and
14 acquisition activities, then it's now your testimony that
15 there are independent reasons for the disallowances
16 proposed by the Staff?
17 A Well, you sound like I'm changing my
18 testimony. I'm not really changing my testimony. I'm
19 just saying that that is only one of the factors that led
20 to our position.
21 Q In and of itself, to do it other way, then,
22 in and of itself, it's not your testimony that that
23 suspicion is a sufficient basis for the disallowances you
24 have proposed?
25 A It's one of several things that led us to
563
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 our recommendation. Even absent that occurrence, I think
2 we would still have the same concerns.
3 Q Okay, that's what I wanted to understand.
4 Now, if we tried to think about this process of
5 disallowances based on suspicions and tried to think of
6 words that would describe regulatory disallowances based
7 on suspicion, would the word arbitrary come to mind?
8 MR. WOODBURY: Mr. Chairman, if I could
9 inject in here, Mr. Miller is attempting to characterize
10 Staff's direct testimony as adjustments made on the basis
11 only of suspicion or innuendo and, in fact, I don't
12 believe Mr. Smith characterizes his adjustments that way
13 in his testimony at all. It's only characterized that
14 way in the Company's rebuttal and so I don't think that
15 we're accomplishing very much in attempting to hammer
16 that in at this point because those aren't Mr. Smith's
17 reasons for making the adjustments and as much as we try
18 to establish a record from the question point, you know,
19 that won't be his answer.
20 COMMISSIONER NELSON: Mr. Miller.
21 MR. MILLER: I'm about ready to leave this
22 topic, so I'll withdraw the question.
23 COMMISSIONER NELSON: Well, thank you.
24 Mr. Scott, if you're going to be in here
25 this morning, maybe you could help us out by making sure
564
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 that when people speak that just kind of unobtrusively
2 making sure their microphones are on.
3 MR. MILLER: Am I having difficulty with
4 mine?
5 COMMISSIONER NELSON: I'm having a little
6 trouble.
7 MR. MILLER: Is this better?
8 COMMISSIONER NELSON: That's great.
9 Q BY MR. MILLER: Let me direct your
10 attention now to page 10 of your testimony and here we're
11 discussing the Company's acquisition of the Garden City
12 area; correct?
13 A Yes.
14 Q And in the middle of the page starting at
15 line 16, one of the reasons that you advance for opposing
16 the acquisition is your statement that it would require
17 existing customers to forfeit their claim to water supply
18 sources already embedded in the rates they pay.
19 A Yes.
20 Q Now, if you buy a gallon of gas from
21 Chevron, do you become a partial owner of the gas pump?
22 A No.
23 Q Do you by purchasing a gallon of gas from
24 Chevron acquire the right to buy gas at any particular
25 price in the future?
565
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A No.
2 Q Is there something different about the
3 relationship a customer of Chevron has than a customer of
4 a utility has that gives a utility customer some claim to
5 water supply sources?
6 A Yes.
7 Q And what's the nature of the difference?
8 A To your use your analogy with the gas pump
9 versus the utility company, the gas station operator
10 builds his plant assuming he's going to sell so much
11 gasoline. He has a capacity to pump, let's just use
12 hypothetically, 1,000 gallons a day. He is going to
13 charge a set price, a set markup, for that in competition
14 with his neighbor across the street. If he only attracts
15 enough customers --
16 (Off the record discussion.)
17 THE WITNESS: Getting back to the analogy,
18 we'll say you have two gas station owners right across
19 the street from each other. One has been there for some
20 time and has a large clientele and he is selling all the
21 gasoline that he can pump in one day. Another station is
22 built across the street. He has the capacity to pump
23 1,000 gallons a day, but there are a finite number of
24 customers, most of whom owe their allegiance to the
25 existing service station owner that they've been trading
566
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 with for many years, so the new service station owner is
2 only selling 500 gallons a day. He cannot increase his
3 price double to recover the revenues that he needs to
4 stay in business. He has to compete with the fellow
5 across the street and his price will be competitive. If
6 he is not earning enough, he's going to lose his money.
7 A utility company, on the other hand,
8 drills a well, puts it in rate base, comes to the
9 Commission and says we need rates to recover our costs on
10 this. Sure, this well will serve 1,000 customers. We
11 only have 500 customers right now, but those 500
12 customers have to provide us the revenues to return our
13 investment on that well that will serve 1,000. Those 500
14 customers in my mind have some kind of an investment in
15 that well because they have been paying higher rates to
16 meet growth in the system in the future.
17 If part of the capacity of that well is
18 taken away and is given to another group of customers and
19 a new well has to be drilled to help supplement the
20 supply to the original 500 customers, they should not be
21 required to bear that burden, so there I see is a real
22 difference between your service station and your utility
23 company.
24 Q BY MR. MILLER: Would you agree that the
25 Idaho Supreme Court disagrees with you on that point?
567
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A I can neither agree nor disagree because
2 I'm not sure what case you're referring to.
3 Q For both a regulated utility and a
4 nonregulated company, investors initially supply a
5 capital to the company and take a risk in supplying the
6 capital; correct?
7 A That's correct.
8 Q And then customers either for a regulated
9 utility or a nonregulated utility through the prices they
10 pay return that capital and hopefully return a reward for
11 the capital being advanced?
12 A Yes.
13 Q In that respect, a utility company is no
14 different from any other company; is that correct?
15 A Basically, that's true.
16 Q Let me direct your attention now to the
17 issue of capital overheads, and could you indicate for me
18 or help me out, which number is that an adjustment?
19 A That would be the adjustment on Exhibit
20 No. 114, column G; is that what you're referring to?
21 Q Yeah, and that's discussed at page 14 of
22 your testimony?
23 A Yes.
24 Q You've proposed to eliminate overheads for
25 a three-year period ending June of 1997?
568
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A That's correct.
2 Q Would that have the effect of eliminating
3 overheads that were already approved by the Commission in
4 the 96-3 case which was based on a rate base test year of
5 1995?
6 A I'd like to qualify the question with a
7 tentative yes, subject to the caveat that the issue was
8 not addressed, so I can't say that the overheads were
9 specifically approved. They were not specifically
10 addressed. They were embedded in the rate base that was
11 approved.
12 Q They were not disapproved by the Commission
13 and they were in the rate base the Commission approved;
14 correct?
15 A That's correct.
16 Q Now, as I understand it, it's your proposal
17 to eliminate these capitalized overheads in full.
18 A Yes.
19 Q Is it your testimony that United Water
20 Idaho received absolutely zero service from the M&S
21 Company?
22 A No, I don't believe I'm saying that. I'm
23 saying that they did receive services and it goes back to
24 the adjustment for the M&S fees. These overheads are in
25 addition to those M&S fees.
569
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Wilder, Idaho 83676 Staff
1 Q Right. Is it your testimony that the
2 services received had absolutely zero value?
3 A No.
4 Q Your proposal to eliminate capitalized
5 overheads in full, then, denies the Company the
6 opportunity to recover for services that you admit had
7 value?
8 A It would deny the Company the opportunity
9 to earn a return on the value of those services that were
10 capitalized in this case.
11 Q Right. Now, the reason advanced for the
12 adjustment, as I understand it, is stated in your
13 testimony that follows that Staff is not convinced that
14 the cost for services provided to UWI by M&S are
15 justified.
16 A Yes, that's right.
17 Q For how long have you been auditing United
18 Water Company in connection with rate cases or general
19 surveillance audits?
20 A About four years, maybe five. I've been
21 involved in the last -- this rate case, the last general
22 rate case in '93 and the make whole interim case between
23 these two.
24 Q Have you ever previously recommended a
25 total disallowance of capitalized overheads?
570
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A No.
2 Q So there's nothing new in this case --
3 well, strike that. Are you aware that the level of
4 capitalized overheads in the Company's rate base
5 reflecting services from M&S Company has been the subject
6 of management audits?
7 A I am aware that there were some management
8 audits conducted, yes.
9 Q And are you aware that the management audit
10 that was co-sponsored by the Idaho Commission some years
11 ago examined the area of capitalized overheads?
12 A I believe that was in the early '80s.
13 Q Right.
14 A Yes.
15 Q And at that time the management audit found
16 the capitalized overheads to be reasonable.
17 A At that time, yes.
18 Q You don't seem to provide in your testimony
19 any evidence of something that is new or has changed in
20 1997 that would be different or that would explain why
21 you have never previously recommended disallowances in
22 this area.
23 A Well, as I indicated earlier in the cross
24 here when you were asking about auditing techniques, we
25 used several techniques. One is the comparative change
571
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 in expense levels, investment levels, as well as selected
2 areas randomly picked for review. The area of the
3 affiliated transactions between United Water Idaho and
4 some of its sister and parent companies has been somewhat
5 in the back of our mind for some time, and in this case,
6 I began to delve a little more deeply into that,
7 specifically, as a result of the most recent merger.
8 Since the 1983 management audit was conducted until now,
9 there have been at least two major mergers between United
10 Water Idaho's parent and other corporations.
11 Q Could we look at your Exhibit 118, page 1
12 of 1?
13 A Yes.
14 Q The exhibit may require some degree of
15 interpretation, but to speed it up, perhaps I could help
16 out. Towards the right-hand side of the exhibit is a
17 column labeled "Corporate." Are you with me?
18 A Oh, yes.
19 Q I'm sorry.
20 A I was waiting for the question.
21 Q And as we look at the exhibit, we see that
22 the exhibit reflects overhead rates by month starting
23 from July of 1994 through June of 1997?
24 A Yes.
25 Q And if we look at the exhibit in a little
572
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 closer detail, we can see that through the 1994 period,
2 overheads were accruing at a rate of about 3.5 percent?
3 A Yes.
4 Q Then in the 1995 period, we see that they
5 were accruing at about 3.4 percent?
6 A Right.
7 Q Then from 1996 through current period, we
8 see that they have ranged from about 2.7 and now are at
9 about 2.9?
10 A Right.
11 Q One thing we can learn from this exhibit is
12 that since 1994, the rate of overhead accrual has
13 actually gone down?
14 A Yes.
15 Q And notwithstanding that, it's your
16 recommendation that the Commission eliminate in its
17 entirety the total of capitalized overheads?
18 A Yes.
19 Q All right, I just want to be clear. Now,
20 let's go to everybody's favorite topic, vehicle leasing.
21 Just as a small point to start out with, let me direct
22 your attention to the question starting on page 16,
23 line 25, and your answer starting on page 17, line 4.
24 Upon reviewing that question and answer, do you have any
25 desire to make any correction to the way the question is
573
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 written or to the answer?
2 A No, I don't believe so.
3 Q You seem to be implying there that the
4 prior Commission Order contained within it a specific
5 requirement to produce hard evidence that proved the
6 benefits of leasing over ownership, and I won't argue
7 with you about that other than just to say that the
8 Commission, I think, can read that Order and decide
9 specifically if that was ordered or not, but putting
10 aside that small quibble, as I understand it, the Company
11 has proposed leasing expense for inclusion in this case
12 of approximately $286,000?
13 A I don't have the exact number before me,
14 but I think that's probably about right.
15 Q And you have proposed reducing the allowed
16 expense to approximately $171,000?
17 A Yes.
18 Q How many vehicles are there in the fleet of
19 leased vehicles?
20 A Thirty-five, I believe, right now. I've
21 got that in my workpapers someplace. I'll accept your
22 characterization if you have the number.
23 Q My information is that it's 43.
24 A Forty-three, I would accept that.
25 Q For the purpose of our questions this
574
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 morning, would you accept, then, we're talking about 43
2 leased vehicles?
3 A Yes.
4 Q Is there any claim by the Staff that that
5 is too many vehicles?
6 A No, we didn't do any kind of a study
7 regarding the ratio of vehicles to employees or mileage
8 use, anything like that, strictly the economics of the
9 cost.
10 Q So you would admit that there are 43
11 vehicles that actually exist?
12 A Oh, yes.
13 Q And they are used by the Company to fulfill
14 its public service obligations?
15 A Yes.
16 Q And there is no claim or no evidence that
17 you're offering that that's too many vehicles?
18 A No.
19 Q You're not offering, as I understand it,
20 any claim or testimony that the vehicles are extravagant
21 or too luxurious?
22 A Only the Lincoln Continental loaner that
23 Management and Service Company or United Water Resources
24 has.
25 Q But that's not in Idaho, is it?
575
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A No, it is not.
2 Q Even if such a thing existed; so
3 notwithstanding that these 43 vehicles do exist, that
4 there are not too many of them and they're not too
5 luxurious and notwithstanding the fact that they are all
6 used in the Company's public service obligation, you
7 propose a reduction of allowed expense of about 40
8 percent.
9 A That's in the neighborhood, yes. I haven't
10 calculated the exact percentage.
11 Q So in a sense, you effectively cut the
12 Company's vehicle fleet almost by half?
13 A No, only the cost.
14 Q If the Company was going to try to operate
15 its public service business on the basis of the allowed
16 cost, would it not have to reduce its fleet by 40
17 percent?
18 A If it continued with the leasing program,
19 yes.
20 Q And haven't you just testified that the
21 level of vehicles, the number of vehicles, used by the
22 Company to meet its public service obligations is not
23 inappropriate?
24 A Yes.
25 Q Now, as I understand it, the methodology
576
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 that you used was to compare the transportation overhead
2 rate that existed during the time when most of the
3 Company's vehicles were owned with the transportation
4 overhead rate that exists now for leased vehicles.
5 A Yes.
6 Q Previously the transportation overhead rate
7 was about 6.5 percent and now it's 11 percent?
8 A That's correct.
9 Q So you do your reduction by reducing the
10 11.5 to 6.5 which is a 43 percent change so that you
11 reduce the allowed expense by 43 percent?
12 A Yes.
13 Q The 11.5 percent when vehicles are leased
14 reflects in effect all of the costs of owning the vehicle
15 because everything is expensed through the expense
16 categories; correct?
17 A I assume that's correct.
18 Q When a company owns vehicles, does the
19 6.5 percent overhead rate reflect all of the costs of
20 ownership?
21 A I believe that if the Company is properly
22 calculating that overhead rate, yes, it would.
23 Q It would, of course, include depreciation
24 when vehicles are owned, but it would not include, would
25 it, return on investment or federal income tax?
577
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Probably not.
2 Q So the comparison of overhead rates when
3 vehicles are leased versus overhead rates when vehicles
4 are loaned doesn't take into account the different items
5 that are reflected in overhead rates depending on lease
6 versus ownership?
7 A It may not be a direct one-to-one
8 relationship.
9 Q Now, one of the reasons that you have
10 suspicions about the viability of leasing is a concern
11 that studies the Company has done in your opinion don't
12 accurately reflect resale or residual values at the time
13 the vehicles are disposed of; is that a fair statement to
14 introduce this topic?
15 A That's part of it, yes.
16 Q And as part of your analysis in that area,
17 you relied on the National Automobile Dealer, National
18 Association of -- strike that. As part of your analysis,
19 you relied on a publication of the National Association
20 of Automobile Dealers or NADA; correct?
21 A Yes, I did.
22 Q Do you have that with you?
23 A Yes, I do.
24 Q And is it the Pacific Northwest edition for
25 October 1997?
578
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A It is.
2 Q Very good. Could you turn to the truck
3 section at page T-34?
4 A All right.
5 Q And let's look there at the one-half ton
6 Chevrolet pickup, fleet side six-and-a-half foot. Are
7 you with me?
8 A Okay, I guess I am. There's just two of
9 them listed there.
10 Q Yeah, let's take the second one just for
11 the fun of it. Now, the NADA book attempts to predict
12 trade-in values, loan values and retail values; correct?
13 A Yes.
14 Q So let's just write down here, the trade-in
15 value for that pickup is predicted at $8,275.
16 A Yes, that's correct.
17 Q And the loan value is predicted at 7,550.
18 A I believe mine shows 7,450.
19 Q All right, thank you, and the retail is
20 predicted at 10,375; correct?
21 A Yes.
22 Q All right. Now, could you turn to
23 page T-100?
24 A Okay.
25 Q And if we look at the very bottom item, we
579
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 see the one-half ton wide side special eight foot.
2 A Okay.
3 Q And let's just write these values down.
4 The trade-in is predicted at 6,100.
5 A Yes.
6 Q Loan at 5,500.
7 A Correct.
8 Q And retail at 7,975.
9 A Right.
10 Q Then if we could go, we'll do just one
11 more, to the very next page.
12 A Excuse me, Mr. Miller?
13 Q Yes, sir.
14 A For the record here, would it be
15 appropriate to indicate what we're looking at here on
16 these vehicles? This last one was a 1991 GMC.
17 Q Very good, thank you.
18 A Okay, and the first one, you said that was
19 on page 34; correct?
20 Q Yes. This is very helpful, thank you.
21 A That would have been a 1992 Chevrolet.
22 Q Very good. Then if we could look on
23 page T-101, we see the 1991 three-quarter ton GMC
24 pickup.
25 A There are several there.
580
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 Q Let's take the wide side eight foot. The
2 trade-in is shown as 8,175.
3 A All right, just a moment here. You're
4 looking at the three-quarter ton pickup in this case?
5 Q Yes, sir.
6 A Okay.
7 Q Are you with me?
8 A Yes, that's correct.
9 Q And the loan is 7,375?
10 A Right.
11 Q And retail of 10,275.
12 A Correct.
13 Q All right, thank you. I apologize to the
14 Commission for the little bit of time it took to get
15 those numbers written down.
16 Now, let's look at Exhibit 119. Are you
17 with me?
18 A I'm with you.
19 Q And that is, of course, your exhibit and,
20 as I understand it, this exhibit contains a schedule of
21 vehicles that were disposed of by the Company over a
22 period of 1993 through 1996.
23 A Okay, I was looking at page 1 and you're on
24 page 2.
25 Q I'm sorry.
581
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Yes, I'm there now.
2 Q Very good, and just to be sure I understand
3 the exhibit, the figure that's in the column labeled
4 "Salvage" would in effect be the price received by the
5 Company upon disposition of the vehicle; is that correct?
6 A Less its disposal costs, if any.
7 Q If any, right. All right, let me direct
8 your attention to about the middle of the exhibit where
9 in July of 1997 we see the disposition of a 1992 Chevy
10 one-half ton pickup?
11 A Okay.
12 Q And the price received upon disposition was
13 $4,185?
14 A Okay.
15 Q And of the numbers that we just wrote down,
16 the predicted value on the NADA basis for trade-in was
17 8,275?
18 A Okay.
19 Q And just to clarify, the NADA values are
20 actually for two years later; that is, this disposition
21 occurred in '96, this is based on '97 or somewhat later,
22 okay?
23 A Okay.
24 Q Let's go down a little bit further. In
25 July of 1996, we see the disposition of a 1991 GMC
582
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 three-quarter ton pickup for $4,830?
2 A Okay.
3 Q And based on what we saw in the NADA guide,
4 was the predicted trade-in value 6,100?
5 A Okay.
6 Q The predicted loan 5,500?
7 A Right.
8 Q And the predicted retail 7,900 -- $7,975?
9 A Yes.
10 Q And if we go now closer to the bottom of
11 the exhibit in the month of November of 1996, we see the
12 disposition of a 1991 GMC one-half ton pickup for
13 $3,000.
14 A Okay.
15 Q And based on what we saw in the NADA guide,
16 was the predicted trade-in $8,175?
17 A Right.
18 Q And the predicted loan value was $7,375?
19 A Okay.
20 Q And the predicted retail value was $10,275?
21 A Okay.
22 Q So in each of these cases the amount
23 received by the Company upon resale was substantially
24 less than the predicted NADA values whether based on
25 trade-in, loan or retail values; is that correct?
583
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Well, Mr. Miller, I'd have to do some
2 double-checking here, but just a real quick reference
3 here to the last one you just mentioned, the half ton GMC
4 1991 which you drew reference to on the exhibit, the
5 numbers we went through in the NADA book was for a
6 three-quarter ton truck, and I'd like to check the
7 references back on the other two as well.
8 COMMISSIONER NELSON: Maybe this would be a
9 good time to take a short break.
10 MR. MILLER: I'm sure I'm right and during
11 the course of the recess could convince Mr. Smith of
12 that.
13 COMMISSIONER NELSON: We'll reconvene at
14 five till.
15 (Recess.)
16 COMMISSIONER NELSON: Okay, we'll go back
17 on the record and go to Mr. Miller.
18 MR. MILLER: Thank you, Mr. Chairman, and
19 we appreciate the Commission's indulgence to allow us to
20 get that little snafu figured out which I think we now
21 have.
22 Q BY MR. MILLER: We have already discussed
23 the 1992 Chevrolet pickup. To clarify now, let's go to
24 the three-quarter ton GMC pickup that was released from
25 the fleet in July of 1996.
584
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Okay.
2 Q That had a disposition price or value of
3 4,830?
4 A Right.
5 Q And based on our review of the NADA values,
6 the predicted trade-in was what?
7 A I'm tying to follow my cryptic notes here.
8 I believe that was 8,175 if I'm on the right line.
9 Q Yes, sir, you are, and the predicted loan
10 was 7,375 and the predicted retail was 10,275; correct?
11 A Correct.
12 Q And then going to the 1991 GMC one-half ton
13 pickup that was released in November of 1996, the price
14 upon disposition was $3,000 according to your
15 Exhibit 119?
16 A Correct.
17 Q The predicted NADA value on trade-in was
18 $6,100?
19 A Correct.
20 Q The predicted loan value was $5,500?
21 A Right.
22 Q And the predicted retail was $7,975?
23 A Yes.
24 Q For the purpose of your analysis, which is
25 the most relevant, trade-in, loan or retail?
585
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A For the purposes in this case, I would say
2 that the trade-in was probably the more relevant, the
3 lower of the numbers.
4 Q All right, very good; so with respect to
5 the 1992 Chevrolet half ton, the predicted NADA value was
6 in rough figures twice what the Company actually realized
7 upon disposition?
8 A Roughly.
9 Q The predicted NADA value for the
10 three-quarter ton GMC pickup was not quite twice the
11 actual value?
12 A Correct.
13 Q The value, predicted value, for the
14 one-half ton GMC pickup was more than twice the actual
15 value realized?
16 A Yes.
17 Q Can't we say from this little analysis that
18 we've just done here jointly that NADA values are
19 virtually useless in predicting the actual value of the
20 sale of vehicles that have been in utility fleets?
21 A I wouldn't say it's of no value. I would
22 say that they probably are higher than a utility company
23 would expect upon disposition.
24 Q It's off by a minimum of 40 percent and in
25 some cases almost 60 percent?
586
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A In those particular cases, yes. I think
2 that you could probably pick out some cases on my exhibit
3 where the Company realized equal to or even more than
4 those numbers. I haven't had an opportunity to go
5 through and do that.
6 Q Why don't we do that.
7 A I can do that.
8 Q Should we wait for you?
9 A It would take me some time to go through
10 this entire exhibit and check each of those. The point
11 here is that I was not relying exclusively on NADA values
12 in making the Staff's adjustment, but rather was relying
13 on the Company's actual experience.
14 Q Okay, well, let's go to that. We've now
15 established that NADA is of little value in this
16 analysis. Let's look at --
17 MR. WOODBURY: Mr. Chairman, I don't know
18 that we've established that NADA is of little value in
19 the analysis. You know, perhaps there's a more in-depth
20 analysis that he did in preparing his questions. If he
21 has comparisons for all the other vehicles, he'd share
22 those with us, but I don't think we're at that point of
23 making that judgment at this juncture.
24 MR. MILLER: I'll withdraw the remark.
25 COMMISSIONER NELSON: I'll note your
587
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 problem with Mr. Miller's statement.
2 MR. MILLER: Fine.
3 Q BY MR. WOODBURY: Your Exhibit 119 is put
4 together to show, to try and make the point that the
5 actual values upon disposition were greater than the
6 Company's estimated values in its cost-benefit analysis;
7 correct?
8 A Absolutely.
9 Q I've used it for a different purpose which
10 is to give us an idea of what relevance NADA has in the
11 picture, but let's now use it for your purpose. You
12 indicated earlier in the questions that the amounts shown
13 in the salvage column do not include costs of
14 disposition.
15 A Well, early on that exhibit, yes, indeed it
16 does. In the first three lines there's some $95.00 of
17 costs to remove reflected there as reported by the
18 Company.
19 Q But as we go down through the rest of the
20 exhibit, there aren't costs to remove shown; right?
21 A No, there aren't.
22 Q So if cost to remove was taken into
23 account, the net salvage number would be smaller;
24 correct?
25 A If there were costs that are not reflected
588
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 in the actual salvage value, yes.
2 Q So that would be one way in which
3 adjustments might be made to this exhibit. Also, in
4 arriving at your overall residual value of 31 percent,
5 you included within the exhibit disposition of some items
6 of heavy equipment, did you not? I'm directing your
7 attention specifically to the International dump truck.
8 A There are a couple of those reflected here,
9 yes.
10 Q And there's a backhoe?
11 A Yes.
12 Q And by comparison to the rest of the group,
13 the value received for disposition of heavy equipment
14 items is somewhat larger than disposition values for
15 pickups and passenger cars; that is, 69 percent for a
16 dump truck and 28 percent for a backhoe?
17 A Are you referring to actual dollar values
18 or percentage basis? I'm not sure.
19 Q Well, percentage basis.
20 A The International dump truck I believe is
21 probably by far the individual component that realized
22 the most salvage value on a percentage basis; however,
23 the, let's see, that backhoe is, reflects less salvage
24 than some of the others.
25 Q But if we removed heavy equipment items
589
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 from the analysis and just tried to do an analysis of
2 pickups and passenger cars, the overall residual
3 percentage would change somewhat, would it not?
4 A Somewhat.
5 Q All right, the Commission has always
6 recognized, has it not, that a utility is entitled to
7 some reasonable allowance in its rates for transportation
8 expense?
9 A Certainly.
10 Q You have reduced the expense based on your
11 formula by almost 43 percent; is that correct?
12 A Approximately, yes.
13 Q Would you agree that your adjustment
14 substantially understates what a reasonable allowance for
15 transportation expense would be?
16 A No.
17 Q Didn't think so, all right. Let's go then
18 to one last topic, if we could, and that is the question
19 of rate case expense, and could you direct us to the
20 pages of your testimony where that issue is discussed?
21 A Possibly you could direct me. You probably
22 have it in your notes.
23 Q I think I can get to it pretty quickly.
24 Would that be adjustment "L" discussed on page 23?
25 MR. WOODBURY: Line 11.
590
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 THE WITNESS: Yes, that's the right page.
2 Q BY MR. MILLER: And as we go through your
3 testimony, we get over to page 4 -- pardon me, 24 and we
4 get to the final Staff position which is Staff recommends
5 disallowing at least one-half of the Company's estimated
6 charges. You go on to argue that the expense of a rate
7 case, as you say, should be shared between the
8 stockholders and the customers; correct?
9 A Yes.
10 Q Are you aware of any Commission rule that
11 says rate case expenses should be shared between
12 customers and shareholders?
13 A No, I believe that's more in terms of a
14 Commission prerogative to make that kind of decision.
15 Q The Commission has always recognized, has
16 it not, that rate case expense in reasonable amounts is a
17 legitimate cost of doing business?
18 A With a reasonable qualification, yes.
19 Q Right, and if reasonable an amount,
20 legitimate costs of doing business are recovered through
21 prices, not through charges to shareholders; isn't that
22 correct?
23 A Yes.
24 Q During the course of your investigation,
25 both your audit and your production requests, did you ask
591
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 the Company for documentation regarding its rate case
2 expense?
3 A Yes, I believe that there was a production
4 request both by Staff and by Ms. Ullman in that regard.
5 Q And you were able to review the materials
6 that the Company provided?
7 A Yes.
8 Q I'm curious to know, then, if there's any
9 factual basis for recommending a 50-50 split; that is, is
10 that just sort of a subjective impression of your idea of
11 fairness?
12 A It was based upon a lot of judgment, quite
13 frankly. In reviewing the material that was provided to
14 us, the estimate was based upon the Company's last
15 general rate case back in 1993. In that case, the
16 majority of the testimonies were provided by the M&S
17 Company. In this particular case, Mr. Healy is providing
18 some of the expert testimony and analyses that was
19 provided by the M&S Company in the prior case; therefore,
20 I felt that there should be some recognized savings from
21 that.
22 In reviewing the other charges from the
23 M&S Company as discussed in other parts of my testimony,
24 I just had a feeling that those charges were somewhat
25 extraordinary, may I say, and should be adjusted downward
592
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 and that somehow some kind of brakes should be put on the
2 Company so that there is not a green light that they can
3 throw as much money as they want to into a rate case,
4 that it has to be done with some discretion.
5 Q So as I understand it, then, this is a
6 judgment-based recommendation, not a recommendation based
7 on evidence that specific expenses, specific items of
8 expense, are excessive?
9 A I do not have a mathematical calculation,
10 no.
11 Q Very good. I have one last area of
12 inquiry, Mr. Smith. Directing your attention now to
13 page 26 and your adjustment "N" --
14 A Okay.
15 Q -- and this adjustment proposes to
16 eliminate a projected increase to the test level year of
17 M&S fees in the amount of $80,000?
18 A That's correct.
19 Q And your rationale is stated as, "Given the
20 discussion in this testimony regarding such fees, Staff
21 cannot support an adjustment increasing those fees to
22 even higher levels"?
23 A That's correct.
24 Q And the discussion to which you're
25 referring is the other parts of your testimony where you
593
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 raise concerns about whether United Water receives fair
2 value at fair prices from the M&S Company?
3 A Yes.
4 Q It's not your testimony, is it, that the
5 $80,000 is an inaccurate estimate of expense that will be
6 incurred during the period that these rates are in
7 effect?
8 A Well, I'm glad you characterized it as an
9 estimate because that's what I believe it is, but, no, I
10 can't testify that it is inaccurate.
11 Q So basically, your allowance is not that
12 the estimate is faulty in and of itself?
13 A No.
14 Q And we previously discussed with you the
15 question of whether the M&S fees as a category are in
16 some sense too high and we compared the M&S fees as a
17 percentage of operations and maintenance; correct?
18 A Right.
19 Q As a percentage of rate base?
20 A Yes.
21 Q As a percentage of operating expense
22 generally?
23 A Yes.
24 Q Is your sense that they are in some sense
25 too high anything more than a subjective impression?
594
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A I think it's educated opinion based upon my
2 review of the Company's operations, looking at the
3 magnitude of the charges, not necessarily in percentages,
4 but in real dollars. There was some discussion
5 yesterday, I believe, during the cross-examination of
6 Company witnesses regarding the relative wage, salary,
7 cost of living considerations between the Boise area and
8 the greater New York area that just adds, I think, to my
9 personal belief that many of these functions could be
10 handled much more economically locally than through the
11 M&S Company at a lower cost to the ratepayer.
12 Q In that regard, one of the things you
13 suggest is that if handled locally, it would contribute
14 to the local economy. What do you think $950,000 is as a
15 percentage of the Ada County economy?
16 A I'm sure it's probably relatively small.
17 Q You've indicated to us, though, that you've
18 not done any objective study to compare these levels of
19 M&S fees with industry standards, fees incurred by
20 comparable companies?
21 A I am not acquainted with any companies with
22 a similar structure personally and, no, I have conducted
23 no studies of that type.
24 Q So there's no objective measure by which we
25 can say these charges are in some sense too high?
595
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 A Nor is there an objective measure to say
2 that they are reasonable.
3 Q Just one last point here. In the last
4 general rate case, skipping over the make whole case to
5 what we refer to as the Marden case, it's true, is it
6 not, that the Company's budgeted increase for M&S
7 expenses to occur during the period the rates were in
8 effect was accepted by the Commission?
9 A I don't recall.
10 Q Do you have any reason to believe that I'm
11 inaccurate in that?
12 A I have no reason to believe that you're
13 leading me down the path at this time anyway.
14 MR. MILLER: All right, thank you,
15 Mr. Chairman. I think those are the questions I had.
16 COMMISSIONER NELSON: Thank you,
17 Mr. Miller.
18 Do we have questions from the Commission?
19 Commissioner Hansen.
20 COMMISSIONER HANSEN: No.
21 COMMISSIONER SMITH: No, I don't.
22 COMMISSIONER NELSON: I have one or two
23 questions, Mr. Smith.
24
25
596
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 EXAMINATION
2
3 BY COMMISSIONER NELSON:
4 Q Earlier this morning you were having a
5 discussion about capitalized overheads that you recommend
6 disallowing and I didn't, I wasn't sure from the
7 discussion what you did with those expenses. Did those
8 become expenses or did you consider those expenses that
9 were unnecessary and so you just disallowed them
10 completely?
11 A Eliminated those capitalized overheads from
12 the rate base.
13 Q Did you then transfer them to an expense
14 account?
15 A No.
16 Q Did you determine that they were
17 unnecessary expenses?
18 A No. Those are part of the M&S fee charges
19 to United Water Idaho, an incremental charge loaded on to
20 the construction costs for the M&S services.
21 Q Was that local construction or was that --
22 A United Water Idaho work orders.
23 COMMISSIONER NELSON: Okay, thank you.
24 Mr. Woodbury, do you have redirect?
25 MR. WOODBURY: Thank you, Mr. Chairman,
597
CSB REPORTING SMITH (Com)
Wilder, Idaho 83676 Staff
1 just a few questions.
2
3 REDIRECT EXAMINATION
4
5 BY MR. WOODBURY:
6 Q Mr. Smith, actually, earlier this morning
7 you had an exchange with Commissioner Nelson regarding
8 ad valorem and his question to you was which number was
9 used as the base for the assessment and you indicated
10 65 million something and he was questioning you as to
11 whether or not that wasn't in fact 70 million. Do you
12 have any further clarification on that?
13 A I misspoke earlier this morning. I was
14 reading off the wrong line. The mill levy used was
15 1.7224 as I indicated. The appraised valuation that I
16 used was the 70,624,792. That produced an adjustment of
17 223,525 to the Company's case which is the $18,000
18 reduction that is reflected in my exhibits.
19 Q Thank you. If I could refer you to your
20 Exhibit 116? There was some discussion regarding
21 verification of charges from M&S and I'd just like to ask
22 you a question, do you have that exhibit in front of you?
23 A Yes, I even have a legible one.
24 Q In the context of companies receiving
25 services from multiple affiliates located in multiple
598
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 states, are there any challenges presented in auditing
2 within the time lines established by statute?
3 A Given the corporate structure of United
4 Water Idaho up through the corporate structure to United
5 Water Resources, there are numerous auditing hurdles to
6 try and find your way through, most of which are nearly
7 impossible to accomplish in Boise.
8 Q And was the Company able -- did you request
9 that the Company provide all the information here
10 locally?
11 A All of the information for United Water
12 Resources?
13 Q Yes.
14 A No.
15 Q And they wouldn't have been able to provide
16 that, would they?
17 A I have an idea that Mr. Miller would have
18 had an objection filed at the drop of a hat had I made
19 such a request. It would be a terrible burden to try and
20 do that.
21 Q There was some discussion regarding your
22 research of tax issues and the inference in my mind was
23 that you consulted with no one in reaching your
24 conclusions; is that true?
25 A No, not entirely. I did not consult with
599
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 counsel.
2 Q Well, then I think he had a follow-up
3 question as to whether you had consulted with others and
4 your answer to that was no. Did you consult with other
5 Staff members and conduct some joint research for that?
6 A Yes, I had some discussion with other
7 Staff.
8 Q And which Staff members would those be?
9 A Primarily Mr. Syd Lansing.
10 Q And what is his position on Staff?
11 A He's an auditor with a certain level of tax
12 expertise. I also discussed it with Terri Carlock.
13 Q And what is her position?
14 A I believe she concurs with the Staff's
15 position in this case or the testimony would not have
16 been filed as you see it.
17 Q Related to rate case expense, what
18 amortization period did you use?
19 A For the rate case expense?
20 Q Yes. Did you use two years?
21 A I accepted the Company's two-year period
22 for the rate case expense.
23 Q And could the Commission reasonably
24 determine a longer period is appropriate?
25 A Again, that's a discretionary item. I
600
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 think that the Commission has full ability to change and
2 modify as they see fit.
3 Q Referring to your testimony on -- I guess
4 it started off with discussion of vehicles, which I'm not
5 going to get into with you, but Mr. Miller said -- was
6 questioning, actually the question that was framed at the
7 bottom of page 16, top of page 17 where it says "Did the
8 Company, in response to the language of the Commission
9 order..." and by that question as it was framed, were you
10 intending to say that the Company was directly ordered to
11 provide a cost of service study in this case?
12 A No, I don't think there was any directive
13 included in that Order, but there was a significant
14 amount of language that would lead one to believe that
15 the Commission would expect to see such evidence in the
16 next case.
17 MR. WOODBURY: Okay, thank you. We can get
18 into that on the Company rebuttal.
19 Mr. Chairman, I have no further questions.
20 MR. MILLER: Mr. Chairman, could I have one
21 brief opportunity at recross on just one topic that was
22 raised by Mr. Woodbury that I didn't touch on?
23 COMMISSIONER NELSON: Mr. Miller, go ahead.
24 MR. MILLER: Thank you very much.
25
601
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 CROSS-EXAMINATION
2
3 BY MR. MILLER:
4 Q You offered in response to questions from
5 Mr. Woodbury the observation relating to difficulties of
6 auditing within the statutory period.
7 A Yes.
8 Q How many auditors did the Commission Staff
9 assign to this case?
10 A One.
11 Q In other cases recently before the
12 Commission has the Staff assigned more than one auditor
13 to a case?
14 A It happens on occasion.
15 Q Now, I don't mean to be critical of the
16 Staff decision of how many to assign or not assign, I
17 understand the Staff has constraints in terms of its
18 available personnel and so on, but just to make the
19 point, it wasn't the Company that said you can only have
20 one auditor?
21 A No, I don't believe so.
22 Q And the Company never said you can't go to
23 New Jersey?
24 A No.
25 Q You worked with Mr. Healy in the course of
602
CSB REPORTING SMITH (X)
Wilder, Idaho 83676 Staff
1 the audit procedure?
2 A Very closely.
3 Q And did Mr. Healy personally have a
4 cooperative attitude with you?
5 A Mr. Healy was very cooperative, very
6 helpful.
7 Q One tool commissions have used to examine
8 affiliate transactions rather than making sort of ad hoc
9 adjustments in rate cases is management or affiliate
10 audits; is that correct?
11 A Yes.
12 Q And has United Water ever indicated that it
13 would object to or not cooperate in a management audit?
14 A No.
15 MR. MILLER: Thank you very much,
16 Mr. Chairman, for allowing me that.
17 MR. WOODBURY: I have one question in
18 follow-up.
19 COMMISSIONER NELSON: Mr. Woodbury.
20
21 REDIRECT EXAMINATION
22
23 BY MR. WOODBURY:
24 Q Mr. Smith, was it ever represented to you
25 by Mr. Healy that response to a Staff production request
603
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 would not be provided until the very last day?
2 A Not in so many words, no. Initially, when
3 I began the investigation, I was providing Mr. Healy with
4 handwritten field requests that were followed up later
5 with formal production requests for the benefit of other
6 parties to the case, the intervenors. As we got further
7 into the case, the timing of the responses to those field
8 requests slowed down and I can't put my finger on exactly
9 what was said, but I was led to the impression that the
10 rest of the field requests that had been submitted in the
11 form of a formal production request would not be provided
12 until all of the production requests were submitted at
13 the deadline.
14 MR. WOODBURY: Thank you. No further
15 questions.
16 COMMISSIONER NELSON: Okay, Mr. Smith,
17 thank you for your testimony.
18 (The witness left the stand.)
19 COMMISSIONER NELSON: Let's go off the
20 record a second.
21 (Off the record discussion. )
22 COMMISSIONER NELSON: Let's go ahead.
23 MR. WOODBURY: Staff would call as its
24 final witness Randy Lobb.
25
604
CSB REPORTING SMITH (Di)
Wilder, Idaho 83676 Staff
1 RANDY LOBB,
2 produced as a witness at the instance of the Staff,
3 having been first duly sworn, was examined and testified
4 as follows:
5
6 DIRECT EXAMINATION
7
8 BY MR. WOODBURY:
9 Q Mr. Lobb, will you please state your name
10 and indicate for whom you work?
11 A My name is Randy Lobb. I work for the
12 Idaho Public Utilities Commission.
13 Q And in conjunction with your work for the
14 Commission, what is your title?
15 A I'm the engineering supervisor.
16 Q And in that capacity, did you have occasion
17 to prefile testimony in this case consisting of 20 pages
18 and exhibits from 102 to 113?
19 A Yes.
20 Q And have you had the opportunity to review
21 that testimony and those exhibits?
22 A Yes, I have.
23 Q And do you have an amended Exhibit No. 113
24 that you would like to provide at this time?
25 A Yes.
605
CSB REPORTING LOBB (Di)
Wilder, Idaho 83676 Staff
1 MR. WOODBURY: If I could distribute that.
2 (Mr. Woodbury distributing
3 documents.)
4 Q BY MR. WOODBURY: And could you indicate
5 why this exhibit is being presented?
6 A The original exhibit contained a summation
7 error of the columns, so the percentages changed. The
8 percent of rate increase request, the percent of rate
9 base increase request also changed, as did the grand
10 total of annual expenses which requires that changes be
11 made in the -- in my direct testimony starting on page 3,
12 line 25.
13 MR. MILLER: Just one second.
14 THE WITNESS: The number "450,000" should
15 be changed to "346,000." On page 4, line 1, "13%" should
16 be changed to "10%," and again on page 19, line 13, the
17 "$450,000" figure should be changed to "346,000." The
18 "13%" in the same line should be changed to "10%," and
19 finally, on page 19, line 15, the "30%" should be changed
20 to "26%."
21 Q BY MR. WOODBURY: Were there any other
22 changes that were required in your testimony?
23 A No.
24 Q And if I were to then ask you the questions
25 set forth in your testimony as corrected, would your
606
CSB REPORTING LOBB (Di)
Wilder, Idaho 83676 Staff
1 answers then be the same?
2 A Yes, they would.
3 MR. WOODBURY: Mr. Chairman, I'd ask that
4 the testimony be spread, that the exhibits be identified
5 and I'd present Mr. Lobb for cross-examination.
6 COMMISSIONER NELSON: Thank you,
7 Mr. Woodbury.
8 Without objection, why, we would order
9 Mr. Lobb's testimony spread on the record and
10 Exhibits 102 through 113 marked.
11 (The following prefiled testimony of
12 Mr. Randy Lobb is spread upon the record.)
13
14
15
16
17
18
19
20
21
22
23
24
25
607
CSB REPORTING LOBB (Di)
Wilder, Idaho 83676 Staff
1 Q. Please state your name and business address
2 for the record.
3 A. My name is Randy Lobb and my business
4 address is 472 West Washington Street, Boise, Idaho.
5 Q. By whom are you employed?
6 A. I am employed by the Idaho Public Utilities
7 Commission as Engineering Supervisor.
8 Q. What is your educational and professional
9 background?
10 A. I received a Bachelor of Science Degree in
11 Agricultural Engineering from the University of Idaho in
12 1980 and worked for the Idaho Department of Water
13 Resources from June of 1980 to November of 1987. I
14 received my Idaho license as a registered professional
15 Civil Engineer in 1985 and began work at the Idaho Public
16 Utilities Commission in December of 1987. My duties at
17 the Commission include analysis of utility rate
18 applications, rate design, tariff analysis and customer
19 petitions. I have testified in numerous United Water
20 Idaho proceedings including cases dealing with rates,
21 line extensions, developer complaints and facility
22 acquisitions.
23 Q. What is the purpose of your testimony in
24 this case?
25 A. The purpose of my testimony is to identify
608
UWI-W-97-6 LOBB (Di) 1
03/06/98 Staff
1 the investment requested for recovery by United Water
2 Idaho (UWI) that is either not financially supported by
3 associated new revenue or is not adequately justified by
4 the Company. I will also address aesthetic water quality
5 investment and expenses requested for inclusion in rates
6 and how the costs compare to those presented in Staff's
7 water quality report in Case No. UWI-W-96-6.
8 Q. Please summarize your testimony.
9 A. The Company has proposed to include in rate
10 base, the investment associated with various water system
11 acquisitions and water facility additions. Staff
12 recommends that approximately $2.42 million of the
13 requested acquisition and additional investment not be
14 allowed in rate base. Staff analysis shows that
15 insufficient revenue is generated by customers served
16 within the existing Island Woods and Redwood Creek water
17 systems to cover the revenue requirement associated with
18 all of the acquisition investment requested for recovery.
19 Failure to reduce the investment allowed in rate base
20 will burden the general body of existing UWI ratepayers.
21 Therefore, I recommend that the Company's rate base
22 proposal for these two projects be reduced by $897,650.
23 With respect to the Garden City acquisition,
24 it is inappropriate to allow UWI to rate base its Garden
25 City investment when the purchased facilities were
609
UWI-W-97-6 LOBB (Di) 2
03/06/98 Staff
1 previously contributed by customers. Allowing the
2 $577,664 facility investment in rates after the
3 facilities were previously contributed constitutes a
4 double recovery of costs. However, if the purchase price
5 is allowed in rates, insufficient new revenue is
6 available as a result of the exchange to cover both the
7 purchase price and the cost of water supply to serve the
8 area. In that instance, Staff believes that the
9 incremental water supply investment required to serve
10 this area would need to be quantified and subtracted from
11 rate base to assure that existing ratepayers are not
12 harmed by the acquisition.
13 In the context of the cost to acquire new
14 water supply, the Company has not shown sufficient
15 justification to require existing customers to pay for
16 the Northwest pipeline and thereby the stranded water
17 supply and distribution facilities in the Eagle area.
18 Given the recently improved water supply situation in the
19 main service level, the planned expansion of the Marden
20 water treatment plant and the potential for growth in the
21 Eagle area, an investment of this type and magnitude at
22 this time is not supported by the facts and is not
23 prudent. Therefore, the Northwest pipeline investment of
24 $940,000 should not be allowed in rates.
25 Finally, over $346,000 of additional revenue
610
UWI-W-97-6 LOBB (Di) 3
03/06/98 Staff
1 requirement or about 10% of the Company's requested
2 increase in this case is associated with the Company's
3 attempt to resolve aesthetic water quality problems. The
4 actual effect of this investment on customer water
5 quality complaints will not be measurable until a summer
6 irrigation season is complete and may not even be
7 measurable at that time.
8 Q. Would you please describe the acquisitions
9 made by the Company that are the subject of cost recovery
10 in this case?
11 A. Yes. The Company has requested cost
12 recovery on five different projects. Three of the
13 projects including Warm Springs Mesa, the Banbury
14 Subdivision and Island Woods are all existing systems
15 purchased by the Company. The Redwood Creek project is a
16 combination of purchased existing facilities and new
17 facilities constructed by the Company. The final project
18 consists of an exchange of existing facilities with
19 Garden City. Staff Exhibit No. 102 provides an itemized
20 listing of each project, the number of customers, the
21 projected annual revenue and the amount of associated
22 investment requested in rates.
23 Q. Do you support the Company's proposed
24 recovery of costs associated with these acquisitions?
25 A. No, not entirely. While I do support
611
UWI-W-97-6 LOBB (Di) 4
03/06/98 Staff
1 recovery of costs associated with the purchase of the
2 Banbury Subdivision and the Warm Springs Mesa systems, I
3 cannot support recovery of some if not all of the
4 acquisition costs associated with Island Woods, Redwood
5 Creek and the Garden City exchange.
6 Q. Would you please explain?
7 A. Yes. I will address acquisition cost
8 recovery for each project beginning with Island Woods.
9 Island Woods
10 The Company states in its response to
11 Staff's Production Request No. 62 that a net rate base
12 addition of $260,751 was made for the acquisition of the
13 Island Woods water system. The effect of increasing rate
14 base by this amount to acquire the system was evaluated
15 using an investment model shown as Staff Exhibit No. 103.
16 The model determines the incremental increase in revenue
17 requirement due to increased operating expenses, taxes
18 and depreciation expense. The increased revenue
19 requirement is then compared to the incremental increase
20 in annual revenue generated from the new customers to
21 determine if the Company will earn its authorized return
22 on investment. If insufficient new revenue is generated,
23 then allowed investment must be reduced or the general
24 body of ratepayers will be required to subsidize the
25 acquisition. Staff Exhibit No. 103 shows that new
612
UWI-W-97-6 LOBB (Di) 5
03/06/98 Staff
1 revenue generated from Island Woods customers can only
2 support an investment of $187,351 without burdening the
3 general body of UWI ratepayers. Therefore, I recommend
4 that $73,400 of the requested net rate base increase for
5 Island Woods be disallowed.
6 Redwood Creek
7 Using the same investment model, I evaluated
8 the Company's request to increase rate base by $890,269
9 for the acquisition/construction of the Redwood Creek
10 Water system. Staff Exhibit No. 104 shows that new
11 customer revenue generated as a result of the Redwood
12 Creek acquisition can only support an addition to rate
13 base of $66,019 without burdening the general body of
14 existing UWI ratepayers. Therefore, I recommend that
15 $824,250 of the requested net rate base increase for
16 Redwood Creek be disallowed.
17 North State/Garden City Exchange
18 The facility and customer exchange between
19 Garden City and UWI was previously heard by the
20 Commission in Case No. UWI-W-95-2. In testimony filed in
21 that case, Staff recommended that none of the investment
22 made by the Company to purchase Garden City facilities in
23 the North State area be allowed in rate base on the
24 grounds that the purchased plant was previously
25 contributed. The original Staff position in this case is
613
UWI-W-97-6 LOBB (Di) 6
03/06/98 Staff
1 still valid and, therefore, I recommend that the $673,530
2 requested net rate base for the Garden City exchange be
3 disallowed. Staff witness Smith will address this issue
4 more fully in his direct testimony. I have also
5 evaluated the Garden City exchange using the same
6 investment model described above for Island Woods and
7 Redwood Creek. Staff Exhibit No. 105 shows that new
8 incremental revenue will support an incremental increase
9 in rate base of $583,164 or slightly more than the
10 $577,664 incremental increase requested by the Company in
11 this case. The incremental increase is the $673,530
12 depreciated investment paid for the North State area less
13 the $95,866 exchanged Millstream facilities already in
14 rate base.
15 The purpose of this analysis is to show
16 that while new revenue will support the incremental
17 increase in rate base caused by the exchange, should the
18 Commission allow the investment, it will support very
19 little additional expense or investment for water supply
20 needed to serve the North State area. Therefore, the
21 cost of water supply to serve the North State area would
22 need to be quantified.
23 Q. What is the cost of water supply in the
24 North State area?
25 A. Because the North State area is currently
614
UWI-W-97-6 LOBB (Di) 7
03/06/98 Staff
1 integrated into UWI's existing system, water supply costs
2 should reflect the incremental cost of providing water to
3 the area whether the supply comes from traditional
4 groundwater, purchases, remote well fields or a
5 combination of all three.
6 Q. Did the Company need to acquire additional
7 water supply in order to serve the North State area?
8 A. Yes. Initially, the Company had to purchase
9 water from Garden City because the system serving the
10 North State area was not physically connected to UWI's
11 system. The Company indicated in Case No. UWI-W-95-2
12 that the estimated North State area summer demand of
13 about 1 million gallons per day (MGD) would be provided
14 through purchase of water from Garden City. The Company
15 also stated that it would not have to develop additional
16 source of supply capacity to serve this area, adding that
17 the cost of drilling a new well to provide capacity would
18 be approximately $300,000.
19 Q. Does the Company currently have a water
20 supply agreement with Garden City?
21 A. Yes. The water supply agreement with Garden
22 City attached as Staff Exhibit No. 106 shows that the
23 Company shall have the right to purchase 1 MGD during the
24 peak season from May through September for five years and
25 up to 2.3 MGD during the peak season in 1997 and 1998.
615
UWI-W-97-6 LOBB (Di) 8
03/06/98 Staff
1 The agreement also allows for additional supplies subject
2 to availability and approval by the City and one year
3 extensions for up to ten years. Finally, Garden City has
4 agreed to provide UWI with an additional 0.5 MGD to serve
5 the Duncan's Landing subdivision located just west of the
6 North State area for a total combined purchase capacity
7 of nearly 3 MGD.
8 Q. Did the Company have a water purchase
9 agreement with Garden City prior to the Garden City
10 Exchange?
11 A. Yes. The Company indicates that 170 million
12 gallons of water was purchased in 1996 before the Garden
13 City exchange was completed.
14 Q. How much does the Garden City water purchase
15 agreement cost UWI?
16 A. The purchase of water from Garden City
17 required an interconnection investment of approximately
18 $52,000 and specifies a contract rate for all purchased
19 water of $0.35 per 1000 gallons. The actual cost of
20 water during the test year was $59,554. However, this
21 amount does not include purchases required for the North
22 State area. The Company estimates that purchase cost
23 will total about $79,000 per year when the North State
24 area is included. The annual revenue requirement
25 associated with water purchases for the North State area
616
UWI-W-97-6 LOBB (Di) 9
03/06/98 Staff
1 would support a water supply capital investment of
2 approximately $187,000.
3 Q. So the purchase of water from Garden City is
4 a good deal when compared to the $300,000 cost of a new
5 well?
6 A. Yes, and the Company has the opportunity to
7 purchase up to three times as much water from Garden City
8 at a similar price over the next two to ten years.
9 NORTHWEST PIPELINE
10 Q. Then by purchasing water from Garden City,
11 will the Company be able to defer the cost of drilling
12 new wells to serve this portion of the main service
13 level?
14 A. Not exactly. According to the Company, the
15 main service level which includes the North State area
16 has a capacity deficiency of 6 MGD requiring new water
17 supply facilities. However, instead of constructing new
18 wells for approximately $300,000 per 1 MGD, the Company
19 has constructed a 3.5 mile long pipeline to connect the
20 Hidden Hollow Storage reservoir with the Redwood Creek
21 water system west of Eagle. The total cost of this water
22 supply alternative, when the cost of the pipeline is
23 combined with the otherwise stranded Redwood Creek
24 investment, is nearly $1.8 million dollars or over
25 $700,000 per 1 MGD provided.
617
UWI-W-97-6 LOBB (Di) 10
03/06/98 Staff
1 Q. Should the Company be allowed to begin
2 recovery of this water supply investment at this time?
3 A. No, I do not believe that it should for
4 several reasons. First of all, when the available peak-
5 day capacity in the main service level is compared to
6 peak-day demand, the current deficiency is as low as it
7 has been in the past five years. Staff Exhibit No. 107
8 shows the peak day demand and peak day capacity for the
9 years 1993 through 1997 and estimates for the years 1998
10 and 1999. Deficiencies have grown as high as 9 mgd in
11 1994 and 7.6 mgd in 1996 but are currently less than 4
12 MGD. Moreover, storage capacity in the main service
13 level has been increased by over 17% with the 1995
14 addition of the 2 million gallon Hidden Hollow reservoir
15 and surplus capacity can be expected in 1999 when the
16 planned Marden treatment plant expansion comes on line.
17 Therefore, the current situation makes justification for
18 the project less compelling now than it has been for the
19 last five years.
20 Another reason to oppose cost recovery for
21 this water supply investment deals with current and
22 future development in the Eagle area and the possibility
23 that water supplies in the Eagle area will not be
24 available for use in the main service level. Although
25 the Company characterizes its water supply obligation to
618
UWI-W-97-6 LOBB (Di) 11
03/06/98 Staff
1 the City of Eagle as one limited to augmenting the City's
2 fire flow capacity, the agreement to provide supplemental
3 water for fire flows, attached as Staff Exhibit No. 108,
4 seems to indicate otherwise. Item B. Under RECITALS
5 states that "Eagle desires to obtain an additional source
6 of water, including for fire protection purposes, to
7 serve Eagle." It also states under Item 1, Provision of
8 Water, that "United Water agrees to provide the City
9 additional water and supplemental fire flows..." In
10 addition, Staff Exhibit No. 109 is an agreement between
11 the City of Eagle and UWI obligating the Company to
12 provide emergency back-up water to and through the City's
13 system from the Hidden Hollow water storage reservoir.
14 This would be very much like what is already expected to
15 happen in the Columbia/Gowen service level. Company
16 witness Linam has indicated in testimony that water
17 supplying the Boise Water Supply Project, the only other
18 project connecting ground water supplies to a remote
19 service area via pipeline, will be needed to serve new
20 residential development in the immediate area of the
21 wells rather than the remote service area as intended.
22 Finally, construction of the pipeline and
23 inclusion of costs in rates at this time eliminates, in
24 part, the requirement that distribution facilities be
25 contributed by developers as part of the line extension
619
UWI-W-97-6 LOBB (Di) 12
03/06/98 Staff
1 rules. A lengthy distribution pipeline constructed ahead
2 of development places a substantial portion of the cost
3 of new development on the backs of existing ratepayers
4 rather than the developers as rules require. For
5 example, in Case No. EAG-W-98-1, the Bonita Hills New
6 Service Complaint, the Company states in its application
7 to intervene:
8 United has constructed or is in the
process of constructing, mainline
9 facilities within the vicinity of
Bonita Hills Subdivision. United has
10 the ability to provide service to
Bonita Hills.
11
12 UWI's ability to serve this subdivision and
13 any other proposed along the largely undeveloped
14 alignment of the pipeline will be made less costly for
15 developers because the pipeline will become the
16 responsibility of the general body of ratepayers. There
17 is no provision in current line extension rules for
18 developers that benefit from existing mains to reimburse
19 ratepayers who pay for the mains through rates.
20 Q. What would be the effect if the Commission
21 determines that the Northwest pipeline project is
22 justified?
23 A. The reason cited by the Company for
24 constructing the pipeline is to utilize the Redwood Creek
25 facilities to supply the main service level. I assume
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1 that this would mean also allowing all of the Redwood
2 Creek facilities in rate base, and in effect providing a
3 potentially declining 2.5 MGD of capacity to the system
4 at $1.8 million.
5 Q. If construction of the Northwest pipeline
6 makes the Redwood Creek water supply facilities used and
7 useful by the general body of ratepayers, wouldn't you
8 conclude that the additional water supply is needed in
9 the main service level?
10 A. While it is true that the main service
11 level continues to be supply deficient on a stand alone
12 basis, the Company has been able to provide supply from
13 other service levels to meet deficiencies that were
14 significantly greater than they are today. As
15 deficiencies decline in the main service level or as new
16 supply is added from the Eagle area, supply is made
17 available for use by the entire system. In my opinion,
18 the Company has not shown that this is the most cost
19 effective alternative at this point in time either within
20 the main service level or system wide.
21 In addition, UWI has expressed a desire to
22 displace existing water supplies including water
23 purchases from Garden City and wells in the main service
24 level because the aesthetic water quality is not as high
25 as the Company would like. UWI has not indicated what
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1 its objective ultimately is with regard to water quality,
2 how the Company will know when the objective has been
3 achieved or how much money should be spent in pursuit of
4 improvement. I will further address the aesthetic water
5 quality issue later in my testimony.
6 Q. Would you please summarize your opposition
7 to cost recovery for the Northwest pipeline project?
8 A. Yes. There are significant incentives for
9 the Company to construct the Northwest pipeline that are
10 unrelated to the need for new supply in the main service
11 level. It will arguably make nearly $850,000 worth of
12 investment in the Eagle area used and useful, it will
13 provide reservoir backup and emergency fire protection to
14 the Eagle City Water system and it will make lower cost
15 service available to a large undeveloped area that would
16 simply not be possible without the pipeline. However,
17 none of these reasons are justification for making
18 existing customers pay for the project through rates.
19 Given the current and future supply resources of the
20 Company including purchases from Garden City and
21 expansion of the Marden water treatment plant, I believe
22 the Company could have and should have taken more time to
23 investigate other supply alternatives more fully and at
24 the same time allowed more infill to occur between the
25 main service level and the Eagle area.
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1 Q. Do you have comments on any of the other
2 investments proposed by the Company for cost recovery in
3 this case?
4 A. Yes. The Company has requested that its
5 $1.9 million investment in the Boise River diversion and
6 pipeline project located in southeast Boise be allowed in
7 rate base even though it is not used and useful. The
8 Company admits that the water treatment plant requiring
9 these facilities will not be constructed until the year
10 2005, but insists that the cost savings associated with
11 constructing the project now justifies its inclusion in
12 rates. The Company has also stated in response to
13 Staff's Production Request No. 7 that no water rights
14 have been obtained for the treatment plant. While I
15 recognize the cost savings that result from sharing
16 project costs and do not necessarily oppose the Company's
17 proposal, I am concerned about matching system costs with
18 the ratepayers who benefit. If the cost of the diversion
19 is included in this case, then today's customers will pay
20 for facilities that benefit a greater number of customers
21 in seven years. In addition, rate basing at this time is
22 contrary to representations made to the City of Boise
23 regarding recovery of costs. Staff Exhibit No. 110 is an
24 internal City memo provided by the Company in response to
25 Staff's Production Request No. 58 stating that UWI has
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1 provided assurances not to rate base the diversion
2 facilities until they were used and useful. The annual
3 revenue requirement associated with this investment is
4 approximately $306,000.
5 Q. Have you reviewed the annual test year
6 revenue generation estimates presented by the Company?
7 A. Yes. While Staff did identify several
8 errors in the Company's calculation of normalized
9 revenue, we did not find them to be material. Staff
10 Exhibit No. 111 shows actual test year revenue, test year
11 revenue normalized for weather and test year revenue
12 normalized for new customers.
13 Q. Do you accept the weather normalization
14 adjustment proposed by the Company?
15 A. Yes. Staff has reviewed the weather
16 normalization analysis and found the resulting adjustment
17 to be acceptable in this case.
18 AESTHETIC WATER QUALITY
19 Q. In Case No. UWI-W-96-6, Staff was directed
20 to address water quality in this case. Do you have any
21 comments or recommendations regarding this issue?
22 A. Yes. Case No. UWI-W-96-6 dealt primarily
23 with aesthetic or non-health threatening water quality
24 problems throughout the UWI system. Iron and manganese
25 introduced into the system by groundwater wells were
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UWI-W-97-6 LOBB (Di) 17
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1 identified as the primary cause of the aesthetic water
2 quality problems and have been identified as issues in
3 the Garden City exchange and in water supply acquisition
4 problems in the west main service area.
5 Q. How does the aesthetic water quality issue
6 relate to the Garden City exchange and general water
7 supply cost in the west main service level?
8 A. Aesthetic water quality was raised as an
9 issue in the Garden City exchange because water supplies
10 in the west main service level, whether from Garden City
11 or UWI, generally have higher levels of iron and
12 manganese than those found in other areas. As a
13 condition of the exchange and in conjunction with
14 increasing rates, customers expected water quality to
15 improve over that provided by Garden City. The
16 Commission, in Order No. 26562, also directed the Company
17 to strive for cost effective improvement in aesthetic
18 water quality. In response, the Company has attempted to
19 improve water quality by replacing existing supplies with
20 supplies that have lower levels of iron and manganese.
21 Staff discussed this issue as part of its final report in
22 the water quality case identified above. The Staff water
23 quality report is attached as Staff Exhibit No. 112.
24 As indicated in Staff's report, UWI is
25 investing significant sums of money to replace supply
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03/06/98 Staff
1 resources that do not meet its standard for aesthetic
2 water quality. In this case the Company has requested
3 cost recovery for several projects located in the west
4 main service level including the new Swift well, costs
5 associated with the Gary Lane exploratory well and to
6 some extent, the costs associated with the Northwest
7 pipeline. Staff Exhibit No. 113 provides an itemized
8 listing of capital projects and annual expenses
9 undertaken by the Company to improve aesthetic water
10 quality and requested for recovery in this case. The
11 exhibit also shows that the estimated annual revenue
12 requirement associated with the improvements is over
13 $346,000, representing over 10% of the overall requested
14 increase. The capital investment for these projects
15 represents over 26% of the rate base increase requested
16 in this case.
17 The Company has not specified what its
18 standard for aesthetic water quality is, nor has it
19 indicated how it will measure if its projects have been
20 successful. The effect of these projects cannot really
21 be measured until a full summer season is completed and
22 even then measurement may be difficult. Nonetheless, the
23 only project on the list opposed in this case is the
24 Northwest pipeline. I believe this project is ill timed
25 and is not cost justified for providing capacity or
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1 improved water quality.
2 Q. Does this conclude your direct testimony in
3 this proceeding?
4 A. Yes, it does.
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1 (The following proceedings were had in
2 open hearing.)
3 COMMISSIONER NELSON: Mr. Fothergill, did
4 you have questions of Mr. Lobb?
5 MR. FOTHERGILL: I do have a couple of
6 questions.
7
8 CROSS-EXAMINATION
9
10 BY MR. FOTHERGILL:
11 Q On Exhibit 103, the number you have under
12 2, revenue requirement --
13 A I'm sorry, I don't know what exhibit.
14 Q 103.
15 A Okay, yes.
16 Q -- the number you have under 2a. is number
17 of customers connected and that number is --
18 A It's 84.
19 Q -- 84.
20 A Yes.
21 Q Where did that number come from?
22 A That came from Mr. Gradilone's exhibit. It
23 was derived from his Exhibit, I believe it's, No. 8,
24 schedule 3, page 29, 30.
25 Q And in Mr. Linam's rebuttal, his Exhibit
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1 No. 14, do you have that with you?
2 A Yes.
3 Q The numbers that are comparable to that 84
4 are altogether different than yours. This is under
5 Island Woods. Do you know the reasons for those
6 differences?
7 A Well, the exhibit does show in column 2 and
8 column 6 that I did use 84. I believe his numbers are
9 projections of customers that would be within, taking
10 service within the subdivision in subsequent years.
11 Q I see. They didn't provide you that
12 number, the projected numbers; correct?
13 A Those are not the numbers that were used to
14 determine test year revenue.
15 Q Thank you. On page 12 of your testimony,
16 line 22 and past on through page 15, line 25, you're
17 discussing the three-and-a-half mile long pipeline to
18 connect the Hidden Hollow storage reservoir with the
19 Redwood Creek water system west of Eagle and you indicate
20 that you're opposed to that program, that's a very long
21 extension, as I understand your testimony, and you
22 believe what it does is diffuse the cost of that through
23 the existing customers rather than attribute it to the
24 cost of the new customers. Are there alternatives to
25 doing it the way the Company has done it that you have in
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1 mind?
2 A Well, I think there's really two issues
3 here. One is what is the most cost-effective way to
4 provide new capacity and the other is when is that
5 capacity actually needed. The Company has improved the
6 situation, I believe, in the main service level with
7 regard to capacity and they are planning to bring on the
8 Marden, expand the Marden water treatment plant to come
9 on line in May of next year and that will provide an
10 additional 8 million gallons per day within the main
11 service level, so it's really one of a question of what
12 has the Company looked at in terms of providing their
13 needs lately, what options do they have currently, which
14 I don't believe that they have adequately addressed in
15 their testimony, and why is this expansion project or why
16 is the extension project to the Eagle area, why was it
17 conducted on the, you know, directly advance of the
18 expansion of the Marden plant.
19 MR. FOTHERGILL: That's all I have. Thank
20 you very much.
21 COMMISSIONER NELSON: Thank you,
22 Mr. Fothergill.
23 Ms. Ullman, do you have questions?
24 MS. ULLMAN: I have just a couple, I think.
25 COMMISSIONER NELSON: Thank you.
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1 CROSS-EXAMINATION
2
3 BY MS. ULLMAN:
4 Q Mr. Lobb, yesterday there was some
5 indication that there have been very few service
6 complaints with regard to this rate increase case; is
7 that correct?
8 A I believe it was letters that were received
9 by the Commission.
10 Q And yet, are you aware how many service
11 complaints have been made to United Water regarding water
12 quality over any recent period? Do you have any sort of
13 statistical information on that?
14 A I don't know the exact numbers. I believe
15 that the water quality report that I have attached to my
16 testimony indicates there's some 350 or so complaints
17 that were received over, oh, maybe a two-year period,
18 three-year period, perhaps.
19 Q Are you familiar with my production
20 request, Request No. 8, in which I asked how many service
21 complaints had been made to United Water Idaho since rate
22 Case UWI-W-96-3 and how were these complaints addressed
23 and I asked for a breakdown of that information, the
24 response being that the attached 12-page schedule
25 entitled complaint table covering the period
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1 November 4th, 1996, through December 31st, 1997, shows
2 771 service complaints and then it goes on to provide an
3 itemized breakdown?
4 A I believe I'm familiar with that production
5 response.
6 Q Does that seem like a rather high number of
7 service complaints or does that seem reasonable to you?
8 A I really don't have much of a basis for
9 comparison. On a percentage basis if you look at the
10 number of complaints versus the number of customers
11 served, it would seem very small. On the other hand, I
12 don't know exactly what the level of complaints are that
13 would be unacceptable or acceptable for that matter.
14 Q And, of course, some of these complaints
15 were either not justified or the Company did resolve
16 these problems quickly, so would you agree that they
17 can't be charged with having failed to provide good,
18 clean water to 771 people for a period of time, that that
19 was just statistical information that's somewhat useful
20 in determining the quality of the product that the
21 Company is providing?
22 A I'm sorry, could you restate that
23 question?
24 Q Yes. Although there are 771 of these
25 service complaints, the Company is not necessarily guilty
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1 of providing bad water to 771 of its customers, is that
2 correct, in being fair to the Company?
3 A Well, I suppose that a customer that
4 complains perceives his quality to be poor or perceives
5 his bill to be high or whatever drives a customer to
6 complain.
7 Q And then the 771 complaints had to do with
8 water quality, specifically, but you did mention the
9 bill. Does the Company make any kind of adjustment for
10 the people who are having ongoing water quality problems
11 such as the people that testified a couple of years ago
12 in United Water's rate increase case or are they paying
13 just as much for the water as the customers that are
14 receiving good, clean quality water that's clear, not red
15 and so on?
16 A There's no provision in the tariff to give
17 a discount.
18 MS. ULLMAN: Okay. That's all I have.
19 Thank you.
20 COMMISSIONER NELSON: Thank you,
21 Ms. Ullman.
22 Mr. Miller, again we're up against the time
23 when we're going to be recessing here in a few minutes.
24 Have you got 10 or 15 minutes' worth?
25 MR. MILLER: I can do one topic.
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1 COMMISSIONER NELSON: You've got a topic to
2 hit?
3 MR. MILLER: Maybe just one topic and try
4 and speed things along.
5 COMMISSIONER NELSON: All right.
6
7 CROSS-EXAMINATION
8
9 BY MR. MILLER:
10 Q Good morning, Mr. Lobb.
11 A Good morning.
12 Q Let me begin by indicating that on the
13 whole, most of my questions for you aren't really
14 designed to argue with you on any specific points, but to
15 try and point out for the Commission, I think, a few
16 areas that the Commission has something in the nature of
17 policy decisions to make and try and highlight the
18 considerations that the Commission might take into
19 account in making those decisions, and the first is
20 illustrated by the discussion of Island Woods.
21 A Yes.
22 Q In your testimony, you present an
23 investment model to try and model the amount of revenue
24 requirement that would be supported by the revenue from
25 the system if looked at on a stand-alone basis.
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1 A Yes, that's correct.
2 Q And with respect to Island Woods, you find
3 that there is in rough terms a $73,000 shortfall?
4 A Yes, there's a shortfall.
5 Q So that $73,000 of what I'll call rate base
6 is not covered in your analysis by the revenue from
7 Island Woods?
8 A Yeah, from the customers in Island Woods,
9 yes.
10 Q Okay; so what just in round numbers would
11 be the annual revenue requirement on that $73,000?
12 A Oh, roughly, it would probably be something
13 on the order of a third of that, perhaps.
14 Q I was thinking it would be around $7,000 in
15 annual revenue requirement.
16 A Well, if we could look at my exhibit,
17 Exhibit 103 is Island Woods.
18 Q Right.
19 A And it shows that a revenue of 36,500
20 supports an investment of approximately $187,000, so the
21 ratio would be roughly the same.
22 Q Okay; so roughly that would be, what would
23 you calculate?
24 A Well, it would be somewhere in the 4 to
25 $5,000, perhaps. Let's see. This is about, it's about
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1 25 percent, I would say, roughly in that neighborhood.
2 You've got 4 over 19 as a ratio, so it would be somewhere
3 in the neighborhood of about 25 percent, 20 to 25 percent
4 would be the ratio.
5 Q And would that include operating expense?
6 A Those are -- the operating expenses are
7 included as per response of the Company to a Staff
8 request.
9 Q So that would be an annual revenue
10 requirement of approximately how many dollars on the
11 73,000?
12 A $3,500. Let's see, it would be about
13 25 percent of 73, 1,600, $1,500, something like that per
14 year annual revenue.
15 COMMISSIONER NELSON: Maybe 16,000.
16 THE WITNESS: 16,000, pardon me, that's
17 better.
18 Q BY MR. MILLER: Okay, I apologize for this;
19 so in round numbers if we're saying it's $16,000 annual
20 revenue requirement, in round numbers, how many current
21 customers does United Water serve?
22 A 58,000.
23 Q And if you divided 16,000 by 58,000, what
24 sort of a number would you come up with, around two
25 cents?
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1 A It would be very small.
2 Q So that would be around, actually -- it
3 would be about $.30 a year.
4 A Yes, it would be very small.
5 Q And that's really what I'm trying to get at
6 here. In Staff's opinion, would $.30 per year be a
7 material burden?
8 A Well, I think if you take one of these
9 issues at a time and say, well, let's just round it off
10 and say that's close enough, you know, my opinion is that
11 they add up and this is the way that we have looked at
12 these cases in the past, these acquisitions, and there
13 seems to be more and more acquisitions all the time, so
14 in order to be consistent in looking at each one of these
15 cases, I have done it the same way in every case and to
16 the extent that the revenue generated from the new
17 acquisitions do not cover the acquisition costs, somebody
18 else is going to pay it. It may only be 16,000 in this
19 case, it may be a little more the next time, it may be
20 less, but the point is there is a deficiency in the
21 revenue that's required and I have noted it.
22 Q That's what I was trying to get at. It's
23 the Staff view that in each individual case there should
24 be absolutely no subsidy and that the Commission by
25 implication shouldn't on a case-by-case basis exercise
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1 judgment to determine if the subsidy is material or to
2 determine if in light of other benefits that might be
3 associated with the transaction some immaterial amount of
4 subsidy might be acceptable?
5 A Well, I guess since we've looked at each
6 one of these cases on a consistent basis, you know, we
7 haven't made a judgment call on what is material and what
8 isn't material. We've simply said this is what our
9 analysis shows on a consistent basis and that is the
10 standard that we use.
11 Now, in this particular case, Island Woods
12 is completely disconnected from the rest of the system.
13 Now, to what extent that benefits the general body of
14 United Water customers, I don't really know.
15 Q I'm not trying to argue with you. All I'm
16 just trying to do is point out possibly different
17 perspectives that the Commission could take an absolute
18 no subsidy approach or it could evaluate transactions to
19 determine the materiality of the subsidy, the extent to
20 which it does burden other customers, there are different
21 approaches to looking at this.
22 A I see. The Staff has chosen to take the
23 approach that we look at the monetary impact on the
24 general body of customers. Certainly, the Commission can
25 choose to consider whatever other factors they think are
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1 relevant.
2 MR. MILLER: Certainly. Well, if I start
3 down this track, it's going to take a while.
4 COMMISSIONER NELSON: Why don't we break
5 for lunch and come back at 1:15.
6 (Lunch recess.)
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1 AUTHENTICATION
2
3
4 This is to certify that the foregoing
5 proceedings held in the matter of the application of
6 United Water Idaho Inc. for authority to revise and
7 increase rates charged for water service, commencing at
8 9:30 a.m., on Wednesday, April 22, 1998, and continuing
9 through Thursday, April 23, 1998, at the Commission
10 Hearing Room, 472 West Washington, Boise, Idaho, is a
11 true and correct transcript of said proceedings and the
12 original thereof for the file of the Commission.
13 Accuracy of all prefiled testimony as
14 originally submitted to the Reporter and incorporated
15 herein at the direction of the Commission is the sole
16 responsibility of the submitting parties.
17
18
19
20
CONSTANCE S. BUCY
21 Certified Shorthand Reporter #187
22
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24
25
640
CSB REPORTING AUTHENTICATION
Wilder, Idaho 83676