20180525Report - Schweitzer Basin Water LLC.pdf

KARL T. KLEIN
DEPUTY ATTORNEY GENERAL
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5156
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Staff of the
Idaho Public Utilities Commission
IN THE MATTER OF THE INVESTIGATION
INTO THE IMPACT OF FEDERAL TAX CODE
REVISIONS ON UTILITY COSTS AND
RATEMAKING
REC E IVED
?li8itAY 25 Al{ 9:36
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. GNR.U-18.01
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REPORT OF THE
COMMISSION STAFF RE:
SCHWEITZER BASIN WATER
LLC.
The Staff of the Idaho Public Utilities Commission submits this report about the impact
of the federal Tax Cuts and Jobs Act of 2017 (the "TCJA") on Schweitzer Basin Water LLC (the
"Company"), as directed by Order No. 33965.
BACKGROUND
On December 22,2017 , the President signed the TCJA into law. Effective January l,
2078, the TCJA decreased the federal corporate tax rate from 35Yo to 2lYo. In response, the
Commission opened this multi-utility case to investigate whether to adjust the rates of certain
utilities that benefit from the reduced tax rate. See Order No. 33965. The Commission directed
all rate-regulated utilities-except for small water companies with less than 200 customers, and
the small electric utility, Atlanta Power-to immediately account for the tax benefits as a
regulatory liability, and to report on how the tax changes affected them, and how resulting
benefits could be passed on to customers. See id. at l-2.
ISTAFF COMMENTS MAY 25,20t8
The Company filed a response on February 9,2018, stating that Order No. 33965 does
not apply to it because it has fewer than 200 customers. The Company's response also indicated
that it is a sole proprietorship and not taxed as a corporation.
STAFF REVIEW
Staff has reviewed the Company's response, the 2017 Annual Report filed by the
Company on April 13, 2018, and additional information requested from the Company. Based
upon its review, Staff believes that Order No. 33965 does not apply to the Company because it
has less than 200 customers. Staff notes that the TCJA also reduced individual income tax rates,
so the Company was not exempt from Order No. 33965 on the basis of its sole proprietorship
filing status.
In its 2016 and20l7 Annual Reports, the Company reported ithas 442 residential
customers. The Company has been reporting customer counts based on the Equivalent
Residential Use ("ERUs") method, where an ERU equals the water use for a single-family
residence. The Company uses the ERU method in its Annual Reports and for billing and
planning purposes. The Company has varying flat rates for service depending on the size of the
customer's home. The varying flat rates assume that smaller units use less water than larger
units, and that an area added to a house for a rental with a kitchen adds an additional ERU for
billing purposes. Staff reviewed the Company's customer database and determined that, while
the Company's total ERU may have equaled the use of 442 single-family residences, the
Company actually had just I l9 customers in 2017.
STAFF RECOMMENDATION
After reviewing the Company's customer database to confirm the Company has less than 200
customers, Staff recommends that the Commission acknowledge that Order No. 33965 does not
apply, and close the case as to Schweitzer Basin Water LLC.
2STAFF COMMENTS MAY 25,2018
Respectfully submitted this Zt+l day of May 2018
lu 4u.
Karl T. Klein
Deputy Attorney General
Technical Staff: John Nobbs
JSTAFF COMMENTS MAY 25,2018
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 25TH DAY OF MAY 2018,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
SCHWEITZER BASIN WATER',S TAX REPORT, IN CASE NO. GNR-U-18-01, BY
MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
MEL BAILEY
SCHWEITZER BASIN WATER
PO BO){ 772
SAGLE ID 83860
E-mail: rnbsnowski(Ogmail.corn
CERTIFICATE OF SERVICE
J.22,,,\
SECRETARY