20040209_748.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL STAFF
FROM:SCOTT WOODBURY
DATE:FEBRUARY 5, 2004
RE:CASE NO. UWI-04-01 (United Water)
RESIDENTIAL "BUDGET BILL" PAYMENT PROGRAM
On February 3, 2004, United Water Idaho Water, Inc. (United Water; Company) filed
an Application with the Idaho Public Utilities Commission (Commission) requesting authority to
amend its Rules and Regulations to establish a "Budget Bill" payment program for its residential
customers.
The proposed Budget Bill program has the following features:
The program will be available to all residential customers residing in a
premise that has six (6) actual historical bills. Customers must be in current
account status with no past due amounts;
Emollment would be permitted at the convenience of the residential customer
with no set emollment period;
0 No interest will accrue on positive or negative balances;
Residential customers may be removed from the Budget Bill program for
failure to timely pay the agreed Budget Bill amount;
United Water may perform mid-term adjustments to the amount of the Budget
Bill payment due to rate changes; extreme weather impact or other significant
unforeseen circumstances (major leak, etc.
Upon emollment the customer s payment amount under the Budget Bill
program will be calculated based on twelve (12) months' history (six bi-
monthly reads) of consumption at the premises. History may be based upon
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the usage of the prior customer at the location. The customer will receive a
Budget Bill monthly. An ann~al reconciliation will be performed with
negative or positive balances, within limits, rolled forward into the next
Budget Bill.
United Water believes providing a "Budget Bill" program to its residential
customers will be in the public interest for the following reasons:
United Water is of the opinion that there is a significant customer demand
for such an option.
For many residential customers, over 60% of the annual bill is comprised
of the two summer period bi-monthly bills. This can lead to customer
hardship.
United Water s rates for water service have, for approximately ten (10)
years, contained a summer consumptive rate (from May 1 through
September 30) that is 25% higher than the winter rate. In the Company
opinion, the residential customers understand and react to the price signal
inherent in the seasonal rate design. United Water believes that a Budget
Bill program would not significantly dampen such a signal, while
providing the residential customer flexibility to levelize their payments.
United Water currently reads meters and renders bills on a bi-monthly
basis. Conversion to actual monthly reading and billing for all customers
would ease the burden of bi-monthly summer bills; however, the expense
is prohibitive. United Water estimates monthly reading and billing would
involve an increase in operating expenses of approximately $1 100 000
annually. The Budget Bill program provides a significantly lower cost
alternative to monthly reading and . billing. Budget Bill program
participants will receive monthly billing statements, although their meters
will continue to be read on a bi-monthly basis.
0 A Budget Bill program allows a residential customer to plan and budget
water usage more effectively than the current "pay as you go" basis.
United Water states that it will advertise the availability of the Budget Bill program
through news releases, bill messages, bill stuffers, publication of information on the Company
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website, the Company s "on-hold" telephone message and through direct customer servIce
representative contact. Residential customers will be permitted to emoll in person at United
Water s Boise Office (8248 W. Victory Road), by telephone, bye-mail to a dedicated address or
by voice mail to a dedicated voice-mail box.
United Water estimates costs associated with program implementation to be
approximately $72 000, assuming that 15% of its residential customer base emolls in the
Budget Bill" program. The $72 000 represents the annual costs of the program and is
comprised of additional billing, postage and payment processing expenses. The Company
requests an accounting order permitting the deferral of these additional costs for recovery in the
Company s next general rate case, subject to audit and review for reasonableness. In the absence
of deferral, the Company will likely defer implementation of the Budget Bill program to coincide
with the next general rate case.
The Company recommends that its Application be processed pursuant to Modified
Procedure, i., by written submission rather than by hearing. Reference Commission Rilles of
Procedure, IDAPA 31.01.01.201-204.
Commission Decision
United Water proposes a "Budget Bill" program for residential customers and
requests authority to defer program expenses. Staff recommends that the Company
Application be processed pursuant to Modified Procedure and that a standard 21-day comment
period be established. Does the Commission agree?
Scott Woodbury
Vld!M:UWIWO401
DECISION MEMORANDUM