20030811_578.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL STAFF
FROM:SCOTT WOODBURY
DATE:AUGUST 7, 2003
RE:CASE NO. FLS-03-01 (Falls Water)
GENERAL RATE CASE
On July 25 , 2003, Falls Water Company, an Idaho not-for-profit corporation and
holder of Certificate of Public Convenience and Necessity No. 236, filed an Application with the
Idaho Public Utilities Commission (Commission) requesting authority to increase its revenue
requirement by $129 564.25 (38%). As set forth in its Application, the proposed increase
reflects the increased cost of maintenance and replacement of aging infrastructure and improving
its customer service response.
If the proposed increase is approved, metered residential customers would experience
an average monthly increase of $6.39 (46%). Metered commercial customers would experience
an average monthly increase of $15.96 (79%). Unmetered residential customers would
experience a monthly increase of $4.27 (31%). Multi-family residential customers would
experience an average monthly decrease of $9.99 (-73%) per unit.
Falls Water requests the following change in water rates and charges:
Schedule No. R-l-residential metered service
Metered rates to increase from $10.00 for the first 20 000 gallons and $0.32984 per
thousand gallons in excess of20 000 gallons to $14.50 for the first 17 000 gallons and
$0.40 per thousand gallons in excess of 17 000.
Schedule No. R-2-residential flat rate service
Monthly charges to increase from $13.73 to $18.00.
DECISION MEMORANDUM
Schedule No. R-residential multi-family
Existing flat rate of $13.73 per vacant or occupied unit will be changed to a metered
rate of $14.50 for the first 17 000 gallons and $0.40 per thousand gallons in excess of
000. The rate would apply to all duplexes, four-plexes, and apartment buildings
where individual units in a building are not metered separately and/or living units
cannot be sold separately.
Schedule No. C-metered commercial service
Existing rate of $10 for the first 20 000 gallons and $0.32984 per thousand gallons in
excess of 20 000 gallons will be changed to $14.50 for the first 17 000 gallons and
$0.40 per thousand gallons in excess of 17 000.
Falls Water requests that the proposed changes in rates take effect on October 15
2003. The Company requests that its Application be processed under the Commission s Rules of
Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission
Rules of Procedure, IDAPA 31.01.01.201-204.
Falls Water certifies that notification of the Company s intent to file its Application
has been included with its July 25, 2003 water bills mailed to all customers. A similar notice
was released to the local television stations and newspapers. A copy of the notice is included
with the Company s Application.
Falls Water states that the need for filing its Application has come about due to' the
fact that the Company is currently operating at a loss. The requested increase in charges, it
states, will result in revenues sufficient to pay for the current operating expenses and provide a
small return, which will be held by the corporation for system improvements and replacement.
Falls Water states that the aging of many of the infrastructure assets of the Company
is requiring more repair and replacement. Currently, about 900 of the 1500 meters in the system
are in need of replacement over the next ten years. The annual replacement cost for 93
meters is $13 050. Routine maintenance, the Company states, is not being done with the
frequency that it should be done. Maintenance on fire hydrants is not being completed as
promptly as needed due to lack of funds and manpower. For the same reason, Falls Water states
that approximately 50 street valves are in disrepair and an additional 25 new valves have yet to
be installed to correct deficiencies of needed street valves in older portions of the water system.
The Company states that a new field employee was hired in 2003 and that another employee is
needed. A study by its engineer, compared the Falls Water Company employee total to the
DECISION MEMORANDUM
number of employees in other comparably sized water systems and found that Falls Water was
5 employees short of the average number of employees at the other water systems..
Included with the Company s Application are the following attachments, schedules
and proposed tariffs;
1. Copy of customer notification of this filing.
2. Three year balance sheet
3. Three year income statement
4. Calculation of rate base
5. Comparison of income at present rates and income at proposed rates
6. Explanation of rate calculations
7. Proposed tariff schedules in legislative format
Commission Decision
Falls Water has filed a general rate case requesting a 38% increase in its annual
revenue requirement. The Company proposes an October 15 effective date and requests that its
Application be processed pursuant to Modified -Procedure. Staff recommends that the proposed
effective date be suspended and that the Commission issue a Notice of Application. Commission
Staff has plans to audit and inspect the Company s physical plant the first week of September.
Staff will bring the matter back before the Commission by mid September with a
recommendation of further procedure.
procedure?
Does the Commission agree with Staff s proposed
Scott Woodbury
Vld/M:FLSWO30 l
DECISION MEMORANDUM