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HomeMy WebLinkAbout20030509_467.pdfDECISION MEMORANDUM TO:COMMISSIONER KJELLANDER COMMISSIONER SMITH CO MMISSI 0 NER HANSEN COMMISSION SECRETARY COMMISSION STAFF LEGAL FROM:SCOTT WOODBURY DATE:MAY 7, 2003 SUBJECT:CASE NO. GNR-02-3 (Diamond Bar Estates Water Company) APPLICATION FOR CERTIFICATE OF PC&N AND FOR APPROVAL OF RELATED RATES AND CHARGES On November 29 2002, Diamond Bar Estates LLC dba Diamond Bar Estates Water Company (Diamond Bar; Company) filed an Application with the Idaho Public Utilities Commission for a Certificate of Public Convenience and Necessity to serve the Diamond Bar Estates Subdivision in Kootenai County, Idaho. Reference Application Attachments, legal description and maps of subdivision and service area; Idaho Code ~ 61-526; Commission Rules of Procedure, IDAP A 31.01.01.111. Diamond Bar Estates is more particularly described as a portion of the North Yz of Section 3 , Township 51 North, Range 4 West Boise-Meridian Kootenai County, Idaho. Attached to the Application of Diamond Bar are 1) financial statements for 2000 and 2001 with profit and loss statements, 2) water rates from different water districts, 3) rate schedule information, 4) names of customers and addresses, 5) legal description, 6) plat map, 7) request for tariff connection fees, 8) customer notice for discontinuance of service, 9) bill statement, and 10) rule summary. The Company indicates that the water system currently provides service to 37 customers. When complete, ultimately, the Company will serve 45 households with water service. The Company indicates that initial service was started in 1994 by Diamond Bar Homeowners. On June 3 , 2002, the Homeowners Association elected to turn the water system DECISION MEMORANDUM over to Diamond Bar Estates LLc. The Company proposes a 2001 test year and an annual revenue requirement of$23 123. The rate structure proposed by Diamond Bar is as follows: A customer s water usage will be determined by the reading on the meter. Readings will be taken the first week of each month (April through November) and the consumption figures will be measured in gallons used. Diamond Bar Water Company will bill each current customer every month based on the following rate schedule which, as proposed, will go into effect January 1 , 2003. Domestic Service: 0- 7500 gallons more than 7500 gallons $21. 85 per thousand Irrigation Service:75 per thousand for all consumption During the months of December through March, meters will not be read. The customers will be charged the base rate of $21.00 per month. In April of each year customers ' meters will be read and usage will be prorated according to the number of months since the last reading. In addition to the commodity charge, the Company proposes implementing the following non-recurring charges: A charge of $1 000 for installation of water meter A charge of $500 for water hookup fee A fee of$50 will be charged for reconnection during business hours A fee of $65 will be charged for reconnection after normal business hours and weekends. The existing rates of the Company for residential customers are $15 for the first 7500 gallons plus $.95 per 1 000 gallons thereafter. Customers with irrigation service pay a flat fee of $225 per year for irrigation. The Commission in Order No. 29177 suspended the Company s proposed January 2003 effective date and determined that the Company shall continue charging existing rates and charges until such time as the Commission issues an Order accepting, rej ecting or modifying the Application. DECISION MEMORANDUM On January 10, 2003 , the Commission issued a Notice of Application, Public Workshop and Modified Procedure in Case No. GNR-02-3. Individual copies of the Commission s Notice were provided to all customers. public workshop conducted by Commission Staff was held in Rathdrum, Idaho on February 2003 to discuss the Company Application. The established deadlines for filing written comments were February 18, 2003 for customers and February 21 , 2003 for Commission Staff. Reply comments were filed by the Company on March 17, 2003. On April 29, 2003 , following the initial round of comments, a public hearing was held in Rathdrum to establish a formal transcript record of customer testimony and oral comments regarding the Company s Application and the various proposals for revenue requirement, rate design, and rates and charges. A May 6, 2003 deadline was established for further written comments. The comments can be summarized as follows: Customer Comments Numerous and sometimes multiple written comments were filed with the Commission by customers of Diamond Bar.All comments were distributed to the Commissioners and are part of the official case file. Customer comments filed by February 19 2003 were summarized in the following manner by Commission Staff: The number beside each item shown below reflects the number of customers who address that particular issue in their comments. If a customer filed multiple comments on a particular issue, his or her comments are counted only once. For example, if a customer filed three comments and objected to the proposed rate design in each comment, his or her comment would only be counted once as objecting to the rate design. Because customers discussed multiple issues, the total exceeds ten. Obj ects to change from flat fee for irrigation water to a metered rate. (5 of 10) Objects to developer selling lots based on flat irrigation fee and then changing policy when development's CC&R's require landscaping. (5 of 10) Objects to proposed rate increase. (5 of 10) . Found a rate plan like one Staff proposed had merit. (3 of 10) Pump replacement cost covered by insurance; should not be in rate base. (3 of 10) DECISION MEMORANDUM Concerned about water pressure if all properties use irrigation; already notices lower water pressure during irrigation season. (2 of 10) Request for either another workshop or a hearing before the Commission makes its final decision. (2 of 10) Objects to Staffs failure to provide customers its workpapers so customers could make meaningful comments at workshop. (2 of 10) The Company s Application said it had 31 water users when there are 38 users, with a possible 45 when the subdivision is full. (2 of 10) Mobile generator can work only on the back up well at Rob Turnipseed' due to size of the generator. Since the generator is mobile and can be used in multiple locations Diamond Bar customers should not pay for entire cost of generator. (2 of 10) Cost of electricity overstated. (2 of 10) Requests that all customers be required to support the water system including owners of a vacant lot. (2 of 10) Objects to unfairness of being billed on a monthly basis when meters aren t read during winter months. (1 of 10) Encourages irrigation meters to be read once annually to cut costs. (loflO) Questions the potential for meter error and costs associated with installing and removing irrigation meters each year. (1 of 10) Customer thought IPUC Staff was condescending, insulting, and threatening during workshop discussions. (1 of 10) Request for Commission to reject the Company s Application and refer it back to the homeowners association for further consideration. (1 of 10) Customer provided water rate comparisons using three local non- regulated water systems. (1 of 10) Meter read costs should be based on 8 months only (no reads during winter). (1 of 10) One customer provided an alternate rate design on disk. (1 of 10) See Staff revised Attachment E. DECISION MEMORANDUM Public Hearing - April 29, 2003 Two customers testified at the public hearing. Ms. Carol Abelhanz noted that the Company provides its utility billings to customers by postcard and that the annual postage expense should be reduced from $172.20 to $137., an annual difference of$34.00. Mr. Mike Meehan in his testimony (see attached summary) presents an alternative rate structure that continues a flat irrigation rate of $250/summer, a domestic metered rate of 50/1 000 gallons up to 90 000 gallons and $.70/1 000 gallons for usage exceeding 90 000 gallons. Also proposed is an annual fee of $180 for all lot owners, regardless of whether or not they are hooked up. As calculated, Mr. Meehan s proposal provides the Company with total annual revenue of$16 392 (irrigation $5 750; domestic $2 542; customer charge $8 100). May 6, 2003 Comments In customer comments filed, the Commission is apprised that customers were without water for three hours on May 3 , 2003 during a scheduled interruption of electric power by Kootenai Electric. During this outage, the water company did not engage its emergency back up generation. The commenting customer contends that the Commission should require the water company to provide standby power generation capacity that is automatic when the primary source is lost. Failing same, the customer contends that customers are subjected to serious loss of property and perhaps life. Staff Comments Following some general comments regarding the Diamond Bar Estates water system and its prior history as a homeowners association system, Staff addresses the following areas in its comments: financial analysis, rate design, hookup fees and consumer issues. Based on its investigation and analysis, Staff makes the following recommendations: 1. The Certificate Request: No objection has been received by the Commission from any party other than the customer comment expressing a desire to revisit the transfer of the system from the Association to Diamond Bar Estates, LLC. Staff recommends the Commission express its intent to issue a Certificate of Convenience and Necessity in sixty (60) days unless it receives positive proof that indeed the Association has entered into negotiation/litigation to reverse the sale transaction and return the system to the Association. 2. Staff recommends that the Commission either schedule a public hearing or provide the company and its customers an opportunity to present written responses to these Staff Comments. DECISION MEMORANDUM 3. Revenue Requirement: Staff recommends that the Commission determine that a revenue requirement of $16 104 is just and reasonable unless the Company or customers submit compelling evidence that this revenue requirement is not justified. 4. The Commission should direct the Company to submit documentation supporting the requested rate case expense amortization and adjust the revenue requirement to reflect the actual costs. 5. Rate Design: Staff recommends that the Commission establish a single fixed/variable rate design for all water use with a base rate of $21.00 for the first 7 500 gallons of consumption and $0.50/1000 gallons for consumption in excess of the 7 500 gallon base. 6. Staff recommends that the rate design be reevaluated after one year to assess how usage patterns may have changed, what effect the new rates have had on customers bills, and how effectively the rate design generates the revenue requirement authorized by the Commission. 7. Staff recommends denial of the $1 000.00 domestic water meter fee and the $500.00 domestic water hook-up fee. The Company was unable to provide cost justification for the level of these fees. In addition, these fees were recovered from each lot owner at the time of purchase. 8. Staff recommends the Company work with Staff to develop an appropriate line extension tariff for the system and have it in place prior to extension of any service beyond the subdivision boundary. 9. Staff recommends approval ofthe Company s requested $500.00 one time meter fee for irrigation meters. 10. Staff recommends that customer reconnection fees (voluntarily involuntarily disconnected) be set at $15.00 during normal business hours and $30.00 at all other times. This charge does not apply to the seasonal installation or removal of irrigation meters. Attached to this Decision Memo are Staff schedules for calculation of revenue requirement, Staff adjustment worksheets and alternative rate design proposals. Company Reply Comments The Company prefaces its reply comments by stating that it is the reluctant owner of the water system and would be willing to negotiate a sale of the water system back to homeowners association. DECISION MEMORANDUM As a privately owned system, however, the Company contends that water customers must pay rates that support a self-sustaining system. How the system was financed when Mr. Turnipseed, as the developer, operated the system, the Company states, is of no important to the analysis now before the Commission. The water system became a self-supporting system on the date of the transfer from the homeowners association to the LLC, June 3 , 2002. The Company provides the following specific comments regarding Staff proposed adjustments: Staff Adjustment (I): Technical Computer Support. Company Position. The Company agrees that this is a one-time cost, however, this is a cost that will provide benefits for several years. If Staff does not want this cost to be expensed then the Company contends it should be capitalized and depreciated over five years as are other computer expenses. Staff Position. Staff agrees with the Company s proposal to capitalize and depreciate technical computer support expense over five years. Staff Adjustment (J): Backup Generator. Company Position. The Company is disappointed that the Staff recognizes the need and usefulness of backup generation but only wants to give credit for one-half of the cost of a generator. It appears to the Company that Staffs position is based in large part upon comments made by the Company that the generator would be mounted on a trailer. The Company informs the Commission of its intent to use the generator full-time as a backup generator for the system and permanently install and place the generator at the backup well location. The Company requests that the Commission allow full recovery of the cost of a generator including the related cost of installing and housing. The estimated cost of installing the generator is $11 838. The cost break down is as follows: generator $5 500; concrete pad $1,438; electric transfer switch/hookup $2 500; and building $2,400. Without full recovery ofthe ordinary and necessary operating costs such as the cost of a backup generator, the Company contends that the water system cannot operate. Staff Position. Staff concedes that it discounted the emergency backup generator by 50% due to mobility. Staff notes that the second well, generator and proposed housing are located outside the subdivision on property belonging to the Turnipseed family and not the water company. Staff contends that for rate base consideration, the Company should obtain an DECISION MEMORANDUM easement from the Turnipseed family for permanent rights of access to the building, well and generator. Staff notes that the Company has indicated that it is unwilling to grant an easement. That being the case, should a back up generator at the second well continue to be a reasonable requirement, Staff suggests that a service contract may be appropriate. No contract price has been proposed. Staff Adjustment (L): Irrigation Meters. Company Position. The Company notes that the meters on hand are presently being used and are part of the property acquired and transferred to the Company by the homeowners association. How the purchase of these meters were treated on the prior books, the Company contends, is of no consequence.Without being able to rate base the meters and expense replacement meters, the Company contends that there is simply no reasonable method to recover these costs. Without any manner for recovery, no further investment can be made. Staffs contention that a one-time connection fee of $500 is sufficient to offset the cost of the meter investment for rate base purposes is disputed by the Company. Revenue generated from a $500 connection fee, the Company states, would be insufficient. Staff Position.Staff disagrees with the Company.Staff notes that what the The first class would beCompany is proposing would result in three classes of meters. developer contributed meters, the initial 10 contributed prior to 2001. The second class would be the five meters in dispute acquired during 200112002 for which the Company requested to rate base $2 951. The third class would be future meters which would be customer contributed. Staff Adjustment (M): Rate Case Expense. Company Position. Staff in its comments recommended that documentation be submitted supporting this expense item. In preparation of the Application for the workshop, the Company reports that it has spent $500 in accounting fees and $585 in legal fees. The Company estimates that it will spend an additional $800 in accounting fees and $900 in legal fees to perfect its reply comments. Should a formal appeal prove necessary, the Company states that it is not unreasonable to expect the associated fees to reach and even exceed the $4 000 expense originally presented by the Company. Therefore, the Company continues to request that $4 000 of rate case expense be provided in the rate base calculation. Staff Position. The Company has presented documentation consisting of actual and estimated or projected costs. The actual billed costs are $1 085. Estimated additional costs to DECISION MEMORANDUM date are $1 700. Staff contends that the remaining $1 215 for costs of appeal are speculative and should not be allowed. Staff Adjustment (N & 0): Depreciation. Company Position. Should the Company s arguments concerning the inclusion of irrigation meters and the backup generator in the rate base prevail, the Company requests that the depreciation expenses addressed in Staff Adjustments N & 0 be recalculated. Staff Position. Staff tenders for Commission consideration a schedule depicting the result of Company requested changes to Staff revenue requirement adjustments. Inflation. Company Position. The Company included a 3% inflation factor anticipating that utility suppliers, A vista and Kootenai Electric Coop will receive rate adjustments this year increasing the cost of electricity to the Company. Given the low snowpack experienced by northern Idaho this winter, the Company does not believe its request to be arbitrary. The Company continues to request that a 3% inflation factor be included in the rate base. Staff Position. Neither Avista nor Kootenai Electric have requested or implemented a change in rates. The Company s requested inflation factor is speculative and should be denied as being neither known nor measurable. Hook-up Fees. Company Position. Staff recommended a line extension policy in lieu of a hook-up fee and connection fee. The Company does not have a line extension policy in place. A sampling of surrounding water companies was completed and submitted as a part of the original Application. The Company contends that it is customary and typical of small water companies in northern Idaho to charge a hook-up fee and connection fee. The Company maintains that the charges presented are reasonable based upon the charges of similar water companies in the area and appear to be sufficient to reimburse the Company for the costs incurred for such connections. Staff Position. Staff notes that regarding those lots in the subdivision, costs have already been paid. Should the Company choose to extend service outside the subdivision, Staff contends that the Company would need to request a Certificate amendment. The Company proposes $1 500 for domestic hook-up ($1 000 for the meter $500 for hook-up fees) and $500 for irrigation hook-ups. DECISION MEMORANDUM Rate Design. Company Position. Staff recommends a fixed variable rate design without a separate rate for irrigation. The Company prefers a separate rate for irrigation. However, knowing Staffs preference on the issue, and its recommendation for a $21 base charge for the first 7500 gallons and then $.50 per 1000 gallons for each gallon thereafter, the Company tested the proposed rate against current data for water usage. The Company states that its analysis shows that the rate design proposed by Staff would be insufficient to meet the revenue needs established by Staff, $16 104, for the system. The Company respectively requests that the base rate charge be changed from $21 to $23.50 so that the revenue needs established by Staff can be met. Additionally, if the Commission should determine to allow any or all of the changes requested by the Company, the Company requests that the base rate be further increased to allow coverage for the revenue requirement allowed. The Company includes a survey of water rates from different water districts in the area. Staff Position. Staff notes that what the Company is proposing is using actual versus normalized. Staff notes that a lot of customers have not established their lawns and their storage usage will increase. Need for Additional Workshop. Company Position. If further workshops are required to establish rate base, the Company states that its costs under comment M should be increased. Further information required of the Company will be furnished upon request. COMMISSION DECISION Diamond Bar Estates Water Company has applied for Certificate of Public Convenience and Necessity and for approval of related rates and charges. Staff recommends that the Certificate be granted and recommends that the requested rates and charges be adjusted. The customers have provided their comments and the Company and customers have responded to Staff s proposed adjustments. A public hearing has been held to provide customers an additional opportunity to comment. Certificate Does the Commission believe that a Certificate should be issued to Diamond Bar? DECISION MEMORANDUM Revenue Requirement Should an emergency generator be required for back up at the second well site? , should it be rate based or expensed under a service contract? Other Staff, customer Company adjustments? What revenue requirement is appropriate? Rate DesignlNon-Recurring Charges Staff has proposed an all-metered rate for domestic and irrigation water.Mr. Meehan proposes a flat rate for irrigation, a metered domestic rate and an annual customer charge for all lot owners, regardless of usage. appropriate? What charges, rates and rate design are Scott Woodbury bls/M:GNRWO203 sw3 DECISION MEMORANDUM Diamond Bar Estates Revenue Requirement Year Ended 12/31/2001 (A)(B) As Filed Com (C) Staff Adjustments (D) (E)Staff Adj. Recommendation Ref. Expenses: 1 Meter Statements 560.(560.00) $(I) 2 Water Testing 500.250.750.(C) 3 Meter Reading 350.(22.00)328.(B) 4 Regulatory Fees (DEQ)120.135.255.(D) 5 Meter Repair & Maint 500.(522.55)977.45 (G) 6 Well Repair & Maint 400.400. 7 Elec & Gas 500.(342.03)157.(F) 8 Maint & Repair 900.158.75)741.(H) 9 Auto Expense 300.12.312.(E) 10 Casual Labor 330.330. 11 Depreciation Exp 994.(771.10)222.(N) 12 Rate Case Expense Amortization 800.BOO. 13 Insurance 300.300. 14 Postage & Delivery 415.(188.80)226.(A) 15 Bookkeeping/Customer Billing 800.1 ,BOO. 16 Legal Fees 228.228. 17 Management Fees 2,400.2,400. 18 Property Taxes 120.120. 19 Income Taxes 50.(50.00)(P) 20 Total Expenses 18,567.217.58) $349.42 21 Rate Base As Filed Staff Staff by Company Adjustments Recommendation 22 Investment in System 23 Generator 500.750.00) $750.(J) 24 New Pump 14,482.(11 982.00)500.(K) 25 Irrigation Meters 951.951.00)(L) 26 Rate Case Expense 000.000.00)(M) 27 Total 26,933.(21,683.00) $250. . Note: Appl had incorrect total of 23 933 28 Less Accumulated Depreciation 29 Generator 30 New Pump 31 Irrigation Meters 32 Net Rate Base 34 Rate of Return 35 Net Operating Income Requirement 36 Gross-up Factor for Income Tax 37 Pre-Tax Revenue Requirement 38 Add Expenses 39 Gross Revenue Requirement 40 Inflation Factor Gross-up 41 Revenue Requirement 196.(98.00)98.(0) $ 27 731.00 $ 5,152. . Note: Co. Rate Base Total does not compute $ 3 882.34 882. 567. . 22 449. 23,122. 618. 754. 349.42 16,103. (P) 103. Attaclnnent C Case No. GNR-02- Staff Conunents 02/21/03 Diamond Bar Estates Water Co. PUC Staff Adjustments Worksheet Assumes 41 Lots Improved and Taking Service (A)Cust Billing Cost Estimate (Excluding Labor) No. Cust Mo. Postage Materials Cust Billing Cost / Mo.14. Annual Billing Cost 172.20 NP & Correspondence (Excluding Labor) Cks(correspondence) / Mo. Postage Materials Cost / Mo Annual Cost 54. Total Postage & Supplies $226. (B)Meter Reading Cost per Lot per Read Number of Lots Number of Reads per Year Annual Cost $328. (C)Water Testing (6 year cycle Normalized)750. Expense Included in Application 500. Adjustment $250. (0)Regulatory Fees DEQ ($5/ Customer)205. PUC (Statutory Minimum)50. Total $255. (E)Auto Expense Round Trip Mileage to Coeur d'Alene Trips per Year Total miles 480 1 mile per day to monitor system 365 Total Annual Miles 845 Mileage allowance per Mile Total Annual Cost $312. Attachment D Case No. GNR-O2- Staff Comments 02/21/03 Page 1 of 4 Diamond Bar Estates Water Co. PUC Staff Adjustments Worksheet Assumes 41 Lots Improved and Taking Service (F)ElectricPower Recalculate for 41 Users Billing Pumphouse Electric Date Vendor Gas Heat Pumping Total Aug-01 Avista Kootenai 236.236. Sep-01 Avista Kootenai 429.429. Oct-01 Kootenai 360.360. Nov-O1 Avista 29.29. Kootenai 323.323. Dec-01 Avista 75.75. Kootenai 116.116. Jan-02 Kootenai 79.79. Avista 114.114. Feb-02 Kootenai 72.72. Avista 129.129. Mar-02 Kootenai 70.70.43 Avista 115.47 115.47 Apr-02 Kootenai 67.67. Avista 69.69. May-02 Avista 35.35. Kootenai 78.43 7B.43 Jun-02 Avista 76.76. Kootenai 86.86. Jul-02 Avista 200.200. $656.124.780. Actual Consumption (Gallons)939 320 Pump Power Cost 000 Gal Annualized Consumption (41 Customers) (000 GaL)737 Annualized Pumping System Elec Cost 501. Add Pumphouse Gas Heat 656. Total Annualized Power Cost 157. Attachment D Case No. GNR-O2- Staff Comments 02/21/03 Page 2 of 4 Diamond Bar Estates Water Co. PUG Staff Adjustments Worksheet Assumes 41 Lots Improved and Taking Service (G)Meter Repair and Maintenance As Booked by Company 1,493. Eliminate Irrigation meter purchase (516.29) PUC Staff Adjusted Total 977. (H)Maintenance Exp. As Booked by Company 900. Remove Dev. Co. Costs 158.75) PUC Staff Adjusted Total 741. (I)Meter Statements Expense As proposed by Company $560. Reverse and Remove (560.00) $0. (J)Generator Investment As Proposed by Company 500. Eliminate 1/2 750.00) PUC Staff Adjusted Total 750. (K)New Pump Investment As Proposed by Company 14,482. Eliminate Insurance Paid Portion (11 982.00) PUC Staff Adjusted Total 500. (L)Meters Investment As Proposed by Company 951. Reverse to Remove 951.00) PUC Staff Adjusted Total (M)Unamortized Rate Case Expense As Proposed by Company 000. Eliminate From Rate Base 000.00) PUC Staff Adjusted Total (N)Depreciation Expense 1 Meters As Proposed by Company 74. Reverse to Remove (74.00) 2 New Pump As Proposed by Company 724. Eliminate Depreciation on portion Paid by Insurance ($11 982/20 Years)(599.10) 3 Generator As Proposed by Company 196. Eliminate 1/2 (98.00) PUC Staff Adjustment (771.10) Attachment D Case No. GNR-02- Staff Comments 02/21/03 page3 of Diamond Bar Estates Water Co. PUC Staff Adjustments Worksheet Assumes 41 Lots Improved and Taking Service (0)Accumulated Depreciation Generator Proposed by Company 196. Eliminate 1/2 (98.00) PUG Staff Adjusted Total 98. (P)Eliminate Tax Included by Company (50.00) Substitute Tax Gross-up Calculation Taxable 100. State Rate Subject to Fed Tax 96.4% Fed Effective Rate ~ 15%14. After Tax Net Residual 81. Net to Gross Multiplier 220405175 Attachment D Case No. GNR-02- Staff Comments 02/21/03 Page 4 of 4 Di a m o n d B a r E s t a t e s W a t e r C o m p a n y Ra t e D e s i g n A l t e r n a t i v e s Re v e n u e R e q u i r e m e n t Nu m b e r o f C u s t o m e r s 16 , 10 4 Do m e s t i c S e r v i c e Ir r i g a t i o n S e r v i c e To t a l s Mo n t h l y Ch a r g e Av e A n n u a l La r g e s t 4 . La r g e s t 4 . Av e Av e To t a l OV e r ( U n d e r ) Ba s e Vo l u m e Ch a r g e p e r Pe r 1 0 0 0 Ir r i g a t I o n Cu s t A v e Cu s t A v e Cu s t o m e r Cu s t o m e r ' s Es t i m a t e d Re v e n u e De s c r i p t i o n Ch a r a e In B a s e 10 0 0 G a l Fl a t R a t e Ga l Ch a r a e An n I r r B i l l An n u a l B i l l An n u a l B i l l Mo n t h l v B i l l Re v e n u e Re a u l r e m e n t Ex i s t i n o R a t e s 15 . 50 0 $ 2 2 5 . 22 5 . 22 5 . 42 3 . 34 6 . 28 . 14 2 0 0 90 4 CO m n a n v P r o M s e d 21 . 50 0 33 9 . 42 4 . 69 3 . 6 2 47 1 . 39 . 19 , 34 6 24 2 St a f f P r o p o s a l 21 . 50 0 22 6 . 28 3 . 54 5 . 39 5 . 32 . 16 , 19 6 Fla t R a t e 0 0 1 . 32 . 39 2 . 39 2 . 32 . 16 , 10 3 . N o t e : L a r g e s t F o u r C u s t o m e r s B a s e d o n T o t a l M o n t h l y C o n s u m p t i o n Oc r : o : ; : . tV . - " ' :: l : - N ~ ~ ~ :: : : : oZ S 0 0 ... . . '- " g 6 ... . g ~ , . , vr ~ Pa g e 1 o f 1 AT T A C H M E N T E Diamond Bar Estates Case No. GNR-02- Effect of Company response to Staff Comments on Revenue Requirement (I) Technical Computer Support Initial Amount Return Net Operating Income Requirement Gro.ss-up Factor Revenue Requirement Add 5 Yr Amortization Total Additional Revenue Requirement (J) Backup Generator Co. Proposed original Investment Amount Included by Staff Additional I nitiall nvestment(0) Addl Accumulated Depreciation Additional Net Investment Return Net Operating Income Requirement Gross-up Factor Revenue Requirement (J) New Investment (Borrowed Funds)(0) Additional Accumulated Depreciation Net Additional Investment Return (Debt Service Cost) Net Operating Income Requirement Gross-up Factor Revenue Requirement (N) Add Depreciation Expense Bldg & Concrete Pad (40 Yr Life) Elec Trans/Switching (25 Yr Life) Addl1/2 Generator (25 Yr Life) Additional Revenue Requirement Total Additional Revenue Requirement (L) Irrigation Meters Total Investment Return Net Operating Income Requirement Gross-up Factor Revenue Requirement (N) Add Depreciation Expense (40 Yr Life) Total Additional Revenue Requirement (M) Rate Case Expense (5 Yr Amortization) Accounting Expenditures (unsupported) Legal Expendatures (unsupported) Additional Accounting Estimate (unsupported) Additiona Legal Estimate (unsupported) Appeal Contingency Total Additional Revenue Requirement Inflation Adjustment at 3% Not Quantified by Co. But if applied to All Operating Expense Elec & Gas Only CORRECTED 1/10/03 Avg Monthly Cost Per Customer 560. 12% 67. 81. 112. 193. $ 5,500. 750.00) $ 2 750. (98.00) $ 2 652. 12.00% 318. 388. $ 6,388. $ 6,388. 75%Note: Prime rate 4.25% effective 11/07/02 + 1/2% 303.43N/A Note: Debt interest is tax deductable 303.43 $ $ 3,838. 500. 750. 95. 100 110 $ 609.38 $ $ 1,301.06 $ $ 2 951. 12% $ 354.$ 1. 432. 73. 505. $ 500. 585. 800. 900. 215. $ 4 000. 100 $ 117 160 180 243 800 $ 0.49 15349.42 4157. 460.4826 $ 124.7391 $ Di a m o n d B a r E s t a t e s W a t e r C o m p a n y Ra t e D e s i g n A l t e r n a t i v e s St a f f P r o p o s e d R e v R q m t Co m p a n y R e p l y R e v R q m t Nu m b e r o f C u s t o m e r s 16 , 10 4 19 , 36 5 . - A s s u m e s ap p r o v a l o f a l l r e q u e s t e d C o m p a n y a d j u s t m e n t s Do m e s t i c S e r v i c e Ir r i g a t i o n S e r v i c e To t a l s lo v e r ( U n d e r ) ov e r IC h a n g e I n St a f f (U n d e r ) Av e r a g e Mo n t h l y Ch a r g e Av e A n n u a l Av e Av e To t a l Pr o p o s e d Co m p a n y Cu s t o m e r ' s Ba s e Vo l u m e Ch a r g e p e r Pe r 1 0 0 0 Ir r i g a t i o n Cu s t o m e r Cu s t o m e r Es t i m a t e d Re v e n u e Re p l y R e v Mo n t h l y De s c r l D t i o n Ch a r l i e In B a s e 10 0 0 G a l Fl a t R a t e Ga l Ch a r l I e An n u a l B i l l Mo n t h l y B i l l Re v e n u e Re q u i r e m e n t Ra m t Bil l Ex i s t i n a R a t e s 15 . 50 0 $ 2 2 5 . 22 5 . 34 6 . 28 . 14 , 20 0 90 4 16 5 Co m D a n v P r o D o s e d 21 . 50 0 33 9 . 47 1 . 39 . 19 , 34 6 24 2 /1 9 13 6 % St a f f P r o D o s a l 21 . 50 0 22 6 . 39 5 . 32 . 16 , 19 6 /3 , 16 9 11 4 % Fla t R a t e O D t 32 . 39 2 . 32 . 16 , 10 3 26 2 11 3 % Es t o f C u s t o m e r P r o D o s e d R a t e O o t i o n 15 . $0 . 70 - $ 0 . $ 2 5 0 . 25 0 . 41 9 . 34 . 20 2 09 8 16 3 12 1 % St a f f P r o D o s a l w i t h C o R e D l Y R e v R a m t 27 . 50 0 22 6 . 47 3 . 39 . 4 2 19 , 39 4 29 0 ' $ 13 7 % Fl a t R a t e O a t . W i t h C o . R e D l Y R e v R a m t 39 . 46 8 . 39 . 19 , 18 6 06 4 /1 7 7 13 5 % Co r r e c t e d ( 0 4 / 1 0 / 0 3 ) Re v i s e d ( 0 4 / 0 1 / 0 3 ) AT T A C H M E N T E Pa g e 1 o f 1 WY'"\\kn ~rl\e"~ Sl.\h'Y1 ~"'i"Z.in ~ -tes-h'iYlOY1 a-- YY1 i K~ ~ha.11 . kpn l 2..~) Zoo s. Diamond Bar Water Basis of proposal During 12 month period 11/1/2001 to 10/31/2002 there were 34 homes on the system for the entire period. 17 used less than 90 000 gallons (7500 x 12) during the period, the remainder used over 000 gallons, In at least 1 case the homeowner was charged for using over 7500 gallons in a month, even though the total usage was 55 000 gallons. During the swnmer of 2002 there were 19 homes on the irrigation system. Currently there are 41 homes on the system. Proposal for new rates: Irrigation to be a flat rate of $250/summer. Assuming the 19 from last year renew plus the 4 others know to be planning on using irrigation this produces $5750. Assuming the usage of the 34 does not change and the 7 new homes use the average of the 17 who used less than 90k gals. (52256) the base usage of all amounts up to 90k gallons would be 2 740 092 gals. and the excess would be 1 674 310 gals.. At the rate of 50/1000 up to 90k and 0,711000 above this generates $2 542. All lot owners benefit from the system, regardless of whether or not they are hooked up, Therefore all 45 lots should pay an annual fee of $180, to maintain the system. This produces $8100. (If the PUC feels they receive no economic benefit from having the system available, and thus they can t be billed the remaining 41 homes would have to pick up that share of the cost ((180 x 4)/41) = $17.56/year) 197.56. Total revenue to the water co. $16 392. Why the new proposal? Development was sold on the premise of flat rate irrigation! II.It is not fair for some lot owners to escape responsibility for basic system maintenance, in as much as the system is there for their future use or to enhance the future selling price, III.It is not fair to charge homeowners for water they do not use, thus the charges based on a 12 month period. If someone currently uses over 7500 gals in a swnmer month they are charged an excess rate (the same holds true in the Staff proposal) but, if one month during the period Nov, - Mar. they go over 7500 but if the average for the 5 months is less than 7500 there is no excess fee, Mike Meehan Comment Summary of Oral Testimony at Public Hearing held April 29, 2003 Page 1 of 2 IV.The annual fee would be billed upon approval by the PUC of the new structure, Usage could be billed on a bi-monthly, quarterly, or other basis to avoid billing for small amounts, i.e. 7000 gallons would produce a bill of$3,50, M. R. Meehan 2003/04/29 Mike Meehan Comment Summary of Oral Testimony at Public Hearing held April 29, 2003 Page 2 of 2