160906_DiamondBarfinal.pdf

Commission OKs Diamond Bar Water rate increase

Case No. DIA-W-15-01, Order No. 33578
Contact: Gene Fadness [phone]
www.puc.idaho.gov

BOISE (Sept. 6, 2016) – The Idaho Public Utilities Commission approved an approximate 46.7
percent revenue increase for Diamond Bar Estates Water Company effective Aug. 30. The
increase is less than the company’s request of 79 percent. It is the first time base rates have
been adjusted since 2007.

Diamond Bar serves about 44 residential customers, most living on five-acre lots near Rathdrum
in Kootenai County.

The largest portion of expense the company sought related to several pump failures since the
2007 rate case. Four of the failures includes in this case totaled $51,444 in expense for which
the company sought rate recovery. The commission allowed $31,258 after removing expense
the company should have received from insurance and accumulated depreciation. The
company wanted to recover the pump failure expense from customers over a four-year period,
but the commission extended the amortization over 18 years, which is the average remaining
life of the pumps. That reduced the yearly amortization required from customers to $1,737, or
$4,013 less per year than the company requested.

The commission commended the active participation of the company’s customers in helping to
determine the cause of the pump failures and the extent to which the company knew or should
have known about the cause of the failures.

“It is clear to the commission, both from the detailed written submissions and the thoughtful
testimony provided at the public hearing, that customers put a great deal of time and effort
into their comments,” the commission stated. “These efforts have not gone unnoticed.”

While a number of factors contributed to the pump failures, the commission determined the
primary cause was an electric transformer that was too small for the simultaneous starting and
operation of the water system’s four pumps. The commission directed the company to confirm
with its electric supplier, Kootenai Electric Cooperative, that the current transformer is sized in
accordance with the National Electric Code and that the service drop complies with Kootenai
Electric’s engineering guidelines.
The commission also directed the company to adopt customers’ recommendations that a “text
alert service,” be implemented to promptly notify customers when the company knows it will
have a service-related outage. Outages can cause customers’ re-circulating pumps to fail,
requiring their replacement at a cost of $400 to $500 each.

Under the new rate structure, the minimum monthly charge for all customers is $41, up from
the current $29. Diamond Bar requested a monthly minimum of $52.02. The commodity
charge increases from 80 cents for every 1,000 gallons above 5,500 gallons per month to $1.16
per thousand gallons. The company requested $1.44. The commission approved an increase in
the connection charge for new customers from $310 to $335. Diamond Bar requested a $475
connection charge. These adjustments will increase the company’s annual revenue by $37,704.
Diamond Bar requested $47,248.

The commission said it recognizes the financial hardship the increase will cause for some
customers, but cited its statutory duty to ensure utilities have the financial ability to perform
essential services. The obligation to ensure reasonable rates “must be balanced with our duty –
of equal importance – to ensure that rates are sufficient to ensure adequate service,” the
commission said. The Idaho Supreme Court has held that the commission’s duty is “not only to
fix just and reasonable, nondiscriminatory rates, but to see that adequate service is furnished
and in fixing such rates to allow the utility furnishing the service to make a just and reasonable
profit or return on its investment.” All commission orders are subject to appeal to the state
Supreme Court by either the company or its customers and other interested parties to the case.

The commission approved a 12 percent rate of return, which is consistent with what it has
allowed in other small water company cases.

Commission staff conducted a workshop on April 19, attended by more than 30 customers.
Several customers also attended a public hearing on June 7. The commission also received
about 18 written comments.

The commission’s final order, as well as other documents related to the case, can be accessed
on the commission’s Web site at www.puc.idaho.gov. Click on “Open Cases” under the “Water”
heading and scroll down to Case No. DIA-W-15-01.

Any person interested in the order may petition for reconsideration by no later than Sept. 19.
Petitions for reconsideration must set forth specifically why the petitioner contends that the
order is unreasonable, unlawful or erroneous. Petitions should include a statement of the
nature and quantity of evidence the petitioner will offer if reconsideration is granted. Petitions
can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box
83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.

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