20030528_489.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:JOHN HAMMOND
DATE:MAY 22, 2003
SUBJECT:IN THE MATTER OF THE APPLICATION OF CDS STONERIDGE
WATER UTILITIES, LLC FOR APPROVAL OF AN AMENDMENT TO
ITS CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO
INTERCONNECT WITH AND ACQUIRE THE SERVICE TERRITORY
OF HAPPY VALLEY RANCHOS, INC. AND TO IMPLEMENT A
SURCHARGE, CASE NO. SWS-03-
On March 13, 2003, CDS Stoneridge Utilities, LLC ("Stoneridge filed an
Application seeking Commission authorization to acquire the service territory of Happy V alley
Ranchos, Inc. ("HVR"), to complete an interconnection between the existing Stoneridge water
system and the neighboring HVR system, to amend its Certificate of Public Convenience and
Necessity ("CPCN") to expand its service territory to include the HVR customers within its
service territory and to implement a surcharge on the rates of the connecting HVR customers to
service the debt that will be incurred for the interconnection proj ect. 1
Stoneridge states that the HVR water system has been experiencing significant water
quality problems due to extremely high iron in the water from its wells. This has caused an
accumulation of iron deposits in the pipes of the system and made it necessary for HVR to install
filters that are costly to maintain. As a result Stoneridge contends that HVR initiated discussions
with it regarding a possible interconnection between the two systems in order to gain access to
1 Although this Application was submitted in March it does not request and effective date. In addition, Staff has
been waiting to obtain: 1) infonnation from the Company prior to any Notice being issued in order to expedite the
processing of this matter and, 2) information from the Division of Environmental Quality regarding Stoneridge
pending request to borrow low interest funds to finance this interconnection project. Staff has just recently received
this infonnation.
DECISION MEMORANDUM
the higher quality Stoneridge water supply.2 Stoneridge and HVR have reached an agreement in
principle to interconnect these systems and to merge the HVR water users into the expanded
Stoneridge system. Furthermore, the parties are currently working toward a definitive legal
agreement for this interconnection project and subsequent provisioning of water service by
Stoneridge to the HVR customers. However, Stoneridge states that this agreement is subject to
the approval of the Company s Application by the Commission and receipt of debt financing for
the project from the Idaho Department of Environmental Quality ("DEQ"
Stoneridge proposes to finance the interconnection project with low cost debt
financing it hopes to acquire from DEQ. Stoneridge has attached relevant documents that it has
filed with DEQ in its attempt to acquire this financing. See Exhibits F and G.
Upon completion of the interconnection project the HVR water users will become
customers of the Stoneridge water system. Stoneridge requests that once it begins providing
water service to HVR customers the Commission authorize the utility to begin charging them
Stoneridge s authorized tariff rates plus a $12.04 monthly surcharge to service the debt incurred
to complete this interconnection project. Stoneridge states the surcharge rate could go up or
down depending upon the final cost of the design, construction and completion of the
interconnection of the water systems. In addition, Stoneridge contends that this surcharge will
expire upon satisfaction of the debt incurred to complete the project. Stoneridge estimates that
this will be approximately 20 years. Currently, the HVR water users are paying $21.00 a month
for 0-000 gallons of water usage. By interconnecting with the Stoneridge system these
customers will experience an increase in their water rates of approximately 25% to 52%
(depen~ing on the number of gallons actually consumed per customer).
Stoneridge alleges that this interconnection will have a minimal effect on its existing
customers as its level of service, infrastructure and quality of water have been excellent for a
number of years. Stoneridge thus, contends that HVR customers by connecting with it will
receive better water quality and a better level of service than they currently receive.
Stoneridge states that on March 28, 2003 , a notice of this Application would be
provided to all customers on both water systems. A copy of that notice is attached to the
Application as Exhibit H.
2 Attached to the Application is Exhibit B, which is a letter to Stoneridge from the president of the HVR water
system users. Stoneridge alleges that 82% of HVR users voted in favor of interconnecting with the Stoneridge
system.
DECISION MEMORANDUM
STAFF RECOMMENDATION
The Commission Staff has reviewed Stoneridge s Application and is prepared
make the following recommendations. First, Staff recommends that the Commission issue
Notice of the Company s Application. Second, Staff recommends that the Commission set a
public workshop at or near the location of the Stoneridge water system where members of the
Commission Staff, representatives of the Company and customers can discuss the Company
Application and any issues surrounding it. Finally, Staff believes that a hearing is not necessary
for the Commission to process, review and rule upon the Company s Application. Accordingly,
Staff recommends that the Commission process this Application by Modified Procedure (i., by
written submissions) under the Commission s Rules of Procedure .201-.204. See IDAPA
31.01.01.201-204.Staff recommends that should the Commission chose to process this
Application by Modified Procedure it should establish separate written comment deadlines for
the customers of the HVR and Stoneridge water systems and for the Commission Staff and the
Company.
COMMISSION DECISION
Does the Commission wish issue Notice of this Application?
Does the Commission wish to set a public workshop in this case?
Does the Commission wish to process Stoneridge s Application by Modified
Procedure under the Commission s Rules?
Does the Commission wish to set different comment deadlines for the customers of
Stoneridge and HVR water systems and the Commission Staff and the Company?
bls/M:SWSWO301jh
DECISION MEMORANDUM