HomeMy WebLinkAbout20000620.min.docMINUTES OF DECISION MEETING
JUNE 20, 2000 - 1:30 p.m.
In attendance were Commissioners Dennis Hansen, Marsha H. Smith and Paul Kjellander.
Commissioner Dennis Hansen called the meeting to order. First item to consider was Approval of the Minutes of the April 24, May 3 and May 8, 2000 Decision Meetings. Commissioner Hansen made a motion to approve the minutes; vote taken; motion carried.
MATTERS IN PROGRESS
Item No. 3 was held at this time.
Scott Woodbury's June 5, 2000 Decision Memorandum re: Case No. UWI-W-00-3 (United Water) Agreement for Purchase and Sale M&M Mountain View Acres Subdivision Water Company, Inc. (Held from 6-13-2000 Decision Meeting).
Scott Woodbury reviewed the matter. Company proposes unmetered rates. Company seeks approval of attorney fees of $2,500. Rate of return is 7.74%. The proposed tariff is based on average system useage for residential customer; 93 ccf consumption is anticipated. In 1996 there was an application involving M&M. This matter is now before the Commission. There is a question as to whether the proposed rates would be sufficient to recover all the investment requested by the Company. Staff believes it is not sufficient to recover the $2,500. Staff also estimates chlorination equipment cost of approximately $5,000. He reported that when it was last on the agenda, Commissioner Kjellander asked staff to run some numbers if the company was to meet its rate of return and recover the $2,500 and the $5,000. Those runs have been made and they are in front of the Commissioners. Required bi-monthly charge would be $60.00.
Commissioner Hansen had a question of Joe Miller, attorney for United Water, who was in attendance at the decision meeting. Said he thought in the recent acquisitions, that the Company scheduled to chlorinate right into the system and here they are saying it could be as late as 2004. Asked if the Company had done that in the past?
Joe Miller responded that in circumstances where the acquired system is connected or will be connected to the United Water system, disinfection is done because the system otherwise is treated and it is the company's policy that if part of the system is treated the whole system has to be treated. Barber is in this category, health concerns require chlorination. In systems such as M&M where it is not connected and if there is not an immediate health reason for doing the chlorination, the company does not do it immediately.
Commissioner Kjellander commented that it looked like there was going to be a mandate coming down for EPA on this.
Mr. Miller said it has been coming for 15 years. Didn't think it will be implemented until 2004, based on their best estimate.
Commissioner Kjellander asked if the likelihood of it happening in the near future is good?
Mr. Miller said he thought on the one hand there is the mandate and on the other hand, many years have passed. It was hard to predict.
Commissioner Kjellander said here we are in a situation where you are going to do it in the future, wouldn't this be a logical time to make that transition and get it over now?
Mr. Miller asked Mr. Wyatt of United Water to respond.
Mr. Wyatt said as best he understands it, the timing for that kind of a change on a small system might be advantageous on sale of the system. One view is make all changes and get it over with. On the other hand, this is not a change that is necessary at this time. It may be difficult on customers to see why it is being implemented at that time. Said as he looks this case over, it seems that there is no argument of the purchase price and the only other point is $14,400. Can live with the $2,500 legal fees and $5,000 for disinfection. Think this may be the time to do this. Said in the numbers that staff ran, if the Commission goes that route, with purchase price of $20,250 and legal expenses and estimate of $5,000 for inspection and disinfection, would be a bi-monthly fee of $60 for those people.
Commissioner Kjellander said he appreciated what the Company has come in with, this can be justified because it is somewhat of an isolated island. With that, would make a motion to look at $20,650 acquisition price to include $2,500 legal fees and $5,000 for inspection and disinfection. That is $28,150 and would leave the bi-monthly fee at $60.00.
Commissioner Hansen called for discussion on the motion. Said he agreed with Commissioner Kjellander except including the $5,000. He is concerned that if it isn't required for health reasons, it is passing on a cost where it isn't required. Said he was concerned about putting that kind of money in before it is required or needed and it could be 4 or 5 years out. Said he was sympathetic to the customer who has to come up with it. Those are the comments he had. Other than that he agreed with Commissioner Kjellander on everything else.
Commissioner Smith said she shared Commissioner Hansen’s concern about chlorination if it isn't necessary. Assume this is a remote place and people have well water that isn't treated. Agree with purchase price and would include the $2,500. Her question of the rate is: as staff pointed out, the tariffed rate for non-contiguous operations doesn't achieve their authorized rate of return. Her question would be: If the company's shareholders are prepared to pay that, why should we care? Why should they pay $50.00 or $57.00?
Commissioner Hansen asked if anyone cared to address that?
Scott Woodbury said all staff was pointing out is that the 24 customers did not generate enough money.
Commissioner Smith asked if they were proposing an accounting treatment?
Scott Woodbury said no.
Commissioner Smith asked - so is the company losing it for the interim?
Mr. Wyatt replied that he didn't see it any different - $50.36 or bi-monthly and according to calculations it was a small decrease in rate, thought for the intervening period of time, the company would be willing to absorb that minor loss.
Scott Woodbury said the calculation of what it would take to get Company's authorized rate, would be $53.10.
Commissioner Smith then indicated to the Chairman that she would like to try a substitute motion. Said she would make a motion that the Commission approve the purchase of M&M Water Company, by United Water Company for $20,650 and an acquisition premium of $2,500 and establish a bi-monthly rate of non-contiguous rates of $50.36.
Commissioner Hansen asked for discussion on the substitute motion.
Commissioner Kjellander said he would support the substitute motion.
Commissioner Hansen called for a vote on the substitute motion. Vote taken; motion carried.
Decision meeting was then adjourned.
Dated at Boise, Idaho, this ____ day of August, 2000.
Myrna J. Walters, Commission Secretary