20180202Teton Water & Sewer Response.pdf

TETON WATER & SEWER COMPANY
PO Box 786, Driggs Idaho 83422 RECEIVED
20lB FIB -2 Atl B: 59
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Date: January 26,2018
To: Idaho Public Utilities Commission
Prepared By: Jon Pinardi, Teton Water & Sewer Company
RE Case No. GNR-U-I8-01
Notice of Investigation - Order No. 33965
In response to the Notice of Investigation Order, and after review of the Utilities Corporate and Tax situation:
To Item (lXa) - Immediately account for the financial benefits from the January 1,2018 tax rate reduction to
2lYo as a deferred regulatory liability;
(a) Teton Water & Sewer Company, LLC is a Limited Liability Company organized in the State of
Idaho on the l2th of April,2ol2. As an LLC, it is not subject to the Corporate Tax Rate of either
35%o or 21%. Net Income for the LLC flows into the Partner personal tax liability and is taxed at the
personal rate.
(b) It appears upon review of the 2008 Rate Case No. TTS-W-08-1 that a Federal Tax Rate of 15olo was
applied to the Revenue Requirement, not 35% (see enclosed document titled "Attachment C").
(c) Per Commission Staff recommendations, included is a Financial Statement showing Net Income for
the Utility. Below Net Income are the Tax Expenses under 3 different scenarios: 1) The 25oh"Pre-
2017 Tax Act" personal Federal Tax rate for the Partner, 2) The 22o/o"Post-2017 Tax Act" personal
Federal Tax rate for the Partner, and, 3) The l5%o Federal Tax rate as used for the Revenue
Requirement from 2008.
Based on these items, (1) that the utility is not subject to the "Corporate Tax Rate", (2) that there is no tax rate
reduction due to a l5%o rate used in the calculation of the Revenue Requirement, and that, (3) if the personal tax
rate were to be used for rate and charge adjustments, the incremental decrease in our current/future tax expense
is not existent or material, therefore, there would be no material impact on the Utilities rates and charges.
To Item (lxb) -By Friday, March 30,2018, file a report with the Commission identiffing and quantifring all
tax changes individually. The report must disclose the federal income tax components for the year 2017, and
the federal income tax components if the utility had been subject to 2017 Tax Act's revisions to the tax code,
including the 2loh tax rate.
(a) As stated, it appears that the 2017 Tax Act will have no material impact on the Utilities current or
future tax expense, therefore rates and charges would not decrease under the revisions to the tax
code.
Jon Pinardi
eton Water & Sewer Company, LLC
TETON SPRINGS WATER
Case No. TTS-W-08-01
Rate Case
Revenue Requirement Calculation
Return on rate base $ 7,103 Attrachment B
Net to Gross Multiplier 127.3237o/o See below
Retum grossed up for taxes ,$ 9,044
Annual Expenses (i 118,461 Attachment A
Annual Revenue Requirement (i 127,505
Gross Up Multiplier:
Beginning 100.0000%
State Tax @7.6Yo 7.6000%
FederalTaxable 92.4000%
@ 15o/o
Net After Tax
13.8600%
78.5400o/o
Net to Gross Multiplier 127.3237%100o/o 178.ilo/o
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Attachment C
Attachment C
Case No. mS-W-08-l
StaffComments
09/0s/08
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01t24118
Cash Basis
Ordinary lncome/Expense
lncome
600.000 .Water lncome
600.461 ' Wator Metered Sales Residential
600.462 .Water Metered Sales Commercial
600.463 .Water Meterod Sales Mult-Family
600.475 . Water On / Water Off Service Fe
600.476 .Water Connection Feos
Total 600.000 .Water lncome
Total lncome
Gross Profit
Expense
700.000 .Water Expense
700.615 . Water - Purchased Power
700.616 . Water - Fuel for Power Product
700.618 'Water - Chemicals
700.621 .Water- Matorial & Supplies-O&M
700.627 .Water- Materials & Supplies-G&A
700.631 ' Water - Contrct Srvice-Profsnl
001 .Regulatory Expense - IPUC
700.63{ . Water - Contrct Srvice-Profsnl - Other
Total 700.631 . Water - Contrct Srvice-Profsnl
700.635 ' Water - Contrct Srvice-Testing
700.636 . Water - Contract Srvice - Other
700.641 .Water-Rents
700.656 . Water - lnsurance Expenses
Total 700.000 ' Water Expense
720.000 .WS. Unallocatod Expenses
720.610' Unallocated . Bank Fees
720.620. Unallocated - Operating Expense
720.630 . Unallocated - Postage
720.640' Unallocated - Telephone
Total 720.000 .WS - Unallocated
Total Expense
Net Ordinary lncome
Other Exponse
800.403 . Water-Depreciation Expense
800.408 .Taxes & Fees
800.010 .Water - Regulatory Fees (IPUC)
800.011 . Water. Propefi Taxes
800.013 .Wator - Other Taxes - DEQ
Total 800.408 .Taxes & Fees
900.000 ' lnterest Expense
900.100 ' lnterest Exp on Long-Term Oebt
Total 900.000 . lnterest Expense
Total Other Expense
Net lncome
Pre-Tax Act Personal Tax Rate 12016120171 - 25o/o
Post-Tax Act Persona! Tax Rate (20181 - 22%
Revenue Requirement Tax Rate - 15%
Teton Water & Sewer Go.
Profit & Loss
January through December 2017
102,872.84
7,648.00
35,872.00
1 ,180.00
11,203.56
158,776.40
158,776.40
158,776.40
11,133.41
267.92
6,635.60
'18,416.01
492.45
0.00
15,686.40
15,686.40
693.00
52,760.42
699.60
3,476.00
1 10,260.81
2,771.34
20.24
259.07
2,641 .45
5,692.10
1 15,952.91
42,823.49
144.00
329.00
5.294.20
1 ,168.00
6,791.20
1 7,691 .1 3
1 7,691 .1 3
24,626.33
18,'t97.17
4,549.29
4,003.38
2,729.58
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