20021028_306.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
RICK STERLING
TONYA CLARK
BEV BARKER
GENE FADNESS
WORKING FILE
FROM:LISA NORDSTROM
DATE:OCTOBER 24, 2002
RE:IN THE MATTER OF THE APPLICATION OF UNITED WATER IDAHO
INC., TO AMEND ITS CERTIFICATE OF PUBLIC CONVENIENCE AND
NECESSITY NO. 143 TO INCLUDE THE NAMPA CHARTER SCHOOL.
CASE NO. UWI-02-
On August 1 , 2002, United Water Idaho Inc. (United Water; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting authority to
amend the certificate service area boundaries of its Certificate of Public Convenience and Necessity
No. 143 (as amended) to include the Nampa Charter School. The Commission issued a Notice of
Application, Notice of Modified Procedure, and Notice of Comment /Protest Deadline on August 23
2002. The Commission Staff, Wes Miller and Coventry Development (Coventry), and United
Water Company each filed comments. On October 25, 2002, Staff and United Water entered into a
Stipulation settlement regarding the refund amount owed to Coventry.
THE APPLICATION
The expanded certificated area proposed in the Application is located in Canyon County
off Lewis Lane between 12th Avenue Road and Powerline Road. By installing a pipeline along
Sunnyridge Road, this proposed expansion would connect to the Coventry Place Subdivision -
which is within United's certificated territory and only 0.4 mile from the Nampa Charter School.
Reference Application Exhibit A legal description; Idaho Code 9 61-526; Commission Rules of
DECISION MEMORANDUM
Procedure, IDAP A 31.01.01.112 and -201. The proposed area to be served is non-contiguous to
United Water s main system.
United Water contended that the areas requested are not within the authorized service
territories of any other public utility water corporation under the jurisdiction of the Commission and
will not interfere with the operation of any water utility corporation under the Commission
jurisdiction.The Company further stated that there are no known public utilities, persons or
corporations with whom the expansion is likely to compete.
United Water indicated that the owners of the Nampa Charter School have executed a
Water Main Extension Agreement, which it has attached as Exhibit B to its Application. The
Company noted that the Agreement is identical to standard form agreements approved by the
Commission in previous cases. United Water stated that it intends to provide service pursuant to its
Tariff No. 1 (General Metered Service). United Water also maintained that the requested expansion
of its Certificate No. 143 and service territory is consistent with the public convenience and
necessity.
STAFF COMMENTS
In short, Staff recommended that the Commission approve United Water s Application
to amend and revise its certificate of convenience and necessity to provide service to the Nampa
Charter School under the terms and conditions of service proposed by United Water without a
supply source refund to Coventry s developer.
Staff noted that Commission Order No. 27976, issued on March 29, 1999, authorized
United Water to serve the Coventry Place subdivision as a non-contiguous area. Future growth in
subsequent phases of the Coventry subdivision will occur in the general direction of the Nampa
Charter School, lessening the distance between the subdivision and the school. As long as no other
capable public water provider in the area objects to United Water providing service to the Charter
School, Staff supported United Water s Application to expand the non-contiguous area and provide
service. Staff stated that water sources were adequate to serve both the subdivision and the School
and that other customers would necessarily be harmed by United Water providing service to the
Nampa Charter School.
The Nampa Charter School has a fire flow requirement substantially higher than the
requirement for the residential customers in the Coventry subdivision. In order to meet the fire flow
requirement of the School, United Water required the Charter School to bear the entire cost of the
DECISION MEMORANDUM
necessary pump modifications because they were made solely for the benefit of the Charter School
and not for other customers in general.
In accordance with United Water s tariffs, the Non-Contiguous Water System
Agreement (Agreement) for the Coventry Place subdivision contains a provision that requires
United Water to reimburse the developer of the subdivision for use of the source of supply by
latecomers. The Agreement also contains provisions specifying an $800 source of supply refunds
for residential customers, including provisions for proportional refund amounts when multiple
sources of supply are utilized. In this instance, Staff found that the Nampa Charter School was in
fact a "latecomer" and utilized the same wells as Coventry. However, all incremental costs for
source of supply needed to serve the Nampa Charter School were paid for by the School. Staff
argued that the School effectively contributed its own source of supply and relied only partially on
the source of supply contribution provided by the developer of Coventry. Since the costs Coventry
originally contributed will provide sufficient capacity to serve the needs of the subdivision through
build out, Staff maintained that the developer was no worse off and would continue to receive
refunds as customers within the subdivision utilize his contributed supply.
Staff also argued that the Charter School is not a residential customer for which the $800
refund was intended. Even if a refund were warranted in this case, Staff believed it should not be
based on average residential consumption when the new connection serves a commercial customer
that has the potential for significantly different annual consumption.
COMMENTS OF WES MILLER AND COVENTRY DEVELOPMENT
In response to Staff s Comments, Wes Miller and Coventry Development, Inc.
(collectively referred to as "Coventry ) filed comments in this case on October 18 , 2002. Mr.
Miller is the developer of the Coventry subdivision whose well would serve the Nampa Charter
School. Of the $152 000 expended for its own distribution lines, the Charter School paid
approximately $7 000 in well improvements. Coventry s comments contrasted this with the
approximately $240 000 spent by Coventry to drill the well and install the water system. Although
the well was designed to be adequate for 400 to 500 lots, the School's use of the water will cut
down on the number of lots that can be connected to the well.
Coventry stated that its agreement with Untied Water entitled them to be repaid for the
cost of the well and water system at the rate of$800 per hook-up. When fully developed Coventry
Place Subdivision will only have 53 lots, which will not generate sufficient monies to reimburse
DECISION MEMORANDUM
Coventry for its costs. Rather, 300 hook-ups at $800 each are required to reimburse Coventry
costs. Since the agreement to reimburse Coventry s costs is limited to Coventry s out-of-pocket
expenses, United Water will never pay Coventry more than the $240 000.
Coventry agreed with United Water that the utility owes it a fee resulting from the
Charter School hook-up. If United Water is not allowed to pay a fee for each hook-up including the
Nampa Charter School's hook-up, Coventry argued that it would never receive reimbursement for
turning ownership of the well and system to United Water.
UNITED WATER'S REPL Y COMMENTS
While United Water appreciated Staffs recommendation to amend and revise its
certificate of public convenience and necessity to provide service to the Nampa Charter School, the
Company disagreed with Staff s recommendation to disallow a refund to the developer of the
Coventry Place Subdivision for two reasons.
First, United Water argued that Staff s proposed disallowance of refunds would
undermine the predictability of the non-contiguous expansion program and impair United Water
contract with Coventry. Although Staff stated that the development of non-contiguous systems
should be encouraged, United Water stated that Staffs recommendation to disallow refunds would
act as a disincentive since developers will install their own systems if they cannot receive
reimbursement by "latecomers." The Company agreed with Staff that the Nampa Charter School
qualified as a "latecomer" under the Agreement. Since Coventry s developer had a contractually-
based expectation of receiving refunds pursuant to Paragraph 14, the Company argued it would be
highly inequitable to rewrite the contract after the fact.
Second, United Water maintained that Staff misunderstood the level of investment made
by the Nampa Charter School. While Coventry s developer advanced $240 570 for source of
supply, the Nampa Charter School paid only $8 315 in source of supply costs to upgrade the pump
for fire flow requirements. Increasing the capacity of the well did not take into account the other
components or costs necessary to develop a well as a source of supply, i., land, pump house, well
drilling and development, and electrical pumping equipment. The Company did not believe the
315 paid by the Nampa Charter School has any bearing on the cost advanced by Coventry
developer that is subj ect to reimbursement under the Agreement.
Although Staff based its recommendation on Paragraph 10 (its text was printed above) of
the Agreement, the Company did not feel that this paragraph applied to reimbursement of costs for
DECISION MEMORANDUM
Source of Supply triggered by "latecomers." Rather, Paragraph 10 established the amount of
reimbursement for each lot within the Project and how much reimbursement would be divided in
cases where additional sources of supply were developed. The Company strongly disagreed with
Staff s position that the $8 315 cost to increase the size of the pump bowl paid by the Nampa
Charter School was an "additional potable Source of Supply" as contemplated in Paragraph 10 of
the Agreement.According to the Company, Staffs logic that any number of "latecomers
contributing various upgrades to a single source of supply would then result in an innumerable
number of sources of supply where in fact only one existed, misapprehended the configuration of
the existing water system.
STIPULATION
On October 25, 2002, Commission Staff and United Water filed a Stipulation resolving
the refund amount owed to Coventry s developer. The Stipulation resulted from clarifications made
at a meeting held on October 24, 2002. Pursuant to Commission Rule of Procedure 272, Staff
notified Coventry s attorney of the conference but he declined to participate.
Staff and the Company stipulated that Coventry Place is entitled to a one-time refund of
600. The rationale for this amount is that since a one inch meter residential connection generates
a refund of $800 under the Non-Contiguous Agreement between Coventry and United Water, then
Nampa Charter School's two inch meter connection should generate a refund of $1 600. The
Company and Staff also agreed to discuss possible revisions to the standard form non-contiguous
agreement regarding refunds to "latecomers" with a view toward recommending any appropriate
revisions to the Commission. Finally, United Water and Staff stipulated that the Commission may
approve United Water s Application to Amend its Certificate of Public Convenience and Necessity
subject to these clarifications without objection.
COMMISSION DECISION
Does the Commission wish to extend the certificate service area of United Water
Certificate of Public Convenience and Necessity No. 143 (as amended) to include the Nampa
Charter School and authorize United Water to pay a $1 600 supply refund to the developer of the
Coventry Subdivision?
(J\ JL2Iv p/l
\..
Lisa Nordstrom
M: UWIWO203 In2
DECISION MEMORANDUM
Dean J. Miller (ISE No. 1968)
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2565-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
RECEIVED II)FILED
2082 nCT 25 AM 11:
((JuLIC
UTILITIES Cm.tMiSS1ON
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
UNITED WATER IDAHO INC., TO AMEND
AND REVISE CERTIFICATE OF
CONVENIENCE AND NECESSITY NO 143 TO
INCLUDE THE NAMP A CHARTER SCHOOL
Case No. UWI-02-
STIPULATION
United Water Idaho Inc., (United, the Company) and the Commission Staff
(Staff), stipulate and agree as follows, to wit:
On October 24 2002, the Company and Staff met at the Commission offices to
discuss issues set forth in Comments filed by United and Staff. Pursuant to IPUCRP 272
the attorney for the developer of Coventry Place was notified of the conference, but
declined to participate. As a result of clarifications made during the conference Staff and
the Company stipulate and agree that:
Pursuant to the Non-Contiguous Agreement between Coventry Place and
United, Coventry Place is entitled to a one-time refund of One Thousand Six Hundred
Dollars ($1 600.00). The rationale for this amount is that since a one-inch meter
residential connection generates a refund of Eight Hundred Dollars ($800), then a two-
inch meter connection, as is the case with Nampa Charter School, should generate a
refund of One Thousand Six Hundred Dollars ($1 600.00).
STIPULATION Page 1
The Company and Staff will meet further to discuss possible revisions to the
standard form non-contiguous agreement regarding refunds to "latecomers" with a view
toward recommending any appropriate revisions to the Commission.
United's Application to Amend its Certificate of Public Convenience and
Necessity may be approved by the Commission subject to the foregoing clarifications.
Dated this y of October, 2002
IDAHO PUBLIC UTILITIES COMMISSION
STAFF~~J~Lisa No strom
Deputy Attorney General
ISi~AHO
' mc.
Dean J. Miller
Attorneys for United Water
STIPULATION Page 2