20221227Order_No_35645.pdf

ORDER NO. 35645 1

Office of the Secretary
Service Date
December 27, 2022
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

DONALD SORRELLS,

COMPLAINANT,

vs.

SUNNYSIDE PARK UTILITIES, INC.,

RESPONDENT.
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CASE NO. GNR-U-22-03

ORDER NO. 35645

On March 9, 2022, Donald Sorrells (“Complainant” or “Sorrells”) filed a complaint
(“Complaint”) against Sunnyside Park Utilities, Inc. (“Company” or “SPU”), an un-regulated
small water company, with the Idaho Public Utilities Commission (“Commission”). Sorrells
alleged that SPU had notified him that it intended to terminate his water service pursuant to
violations of IDAPA 31.21.01.302, and Sorrells requested the Commission prohibit SPU from
doing so. Sorrells further requested the Commission find that SPU was a regulated utility under
the regulatory authority of the Commission.
At the March 29, 2022, decision meeting, Commission Staff (“Staff”) recommended the
Commission accept the Complaint but hold it in abeyance until the Commission could investigate
whether SPU should be regulated by the Commission. The Commission agreed. On that same date
a Summons was issued to SPU requesting:
1. an explanation, to include documentation, explaining the Parties’ belief that the Idaho
Public Utilities Commission (“Commission”) has jurisdiction over this dispute. Please
include the Court Order directing the Parties to file this dispute with the Commission.
2. a copy of Mr. Sorrells’ contract with Sunnyside Park Utilities.
3. an explanation, to include any documentation, of why Sunnyside Park Utilities desires
to terminate water service to Mr. Sorrells.
4. an explanation, to include any documentation, of how Mr. Sorrells is currently wasting
water provided through improper equipment.
5. an explanation, to include any documentation, of why Sunnyside Park Utilities failed
to apply for a Certificate of Convenience and Public Necessity with the Commission to
deliver water to its current customers.
Summons at 1-2.
ORDER NO. 35645 2

SPU was given twenty-one (21) days in which to file an answer to the Complaint, and the
Summons provided that Staff would have twenty-one (21) days after the answer was filed to file
reply comments. On April 21, 2022, SPU filed its answer (“Answer”) to the Summons and
Complaint, and on May 12, 2022, Staff filed its reply comments.
THE COMPLAINT AND ANSWER
Sorrells presented multiple issues in the Complaint, and requested relief as follows:
1. A determination that Respondent SPU is a regulated utility under the
regulatory authority of the IPUC pursuant to Idaho Code Title 61 and Idaho
Admin. Code r. 31.21.01. et seq;
2. A determination that Applicant has not provided information that is
materially false or materially misrepresents Applicant’s status;
3. An interpretation of the term “access” under Idaho Admin. Code r.
31.21.01.302.01(e);
4. A determination that Applicant has not denied or willfully prevented SPU’s
access to the subject water meter;
5. An interpretation of the phrase “willfully wasting or interfering with
service” under Idaho Admin. Code r. 31.21.01.302.01(f);
6. A determination that Applicant has not willfully wasted or interfered with
water service;
7. Alternatively, a determination that any alleged violations of Idaho Admin.
Code r. 31.21.01.302 have been cured or satisfied;
8. A determination that Respondent SPU lacks sufficient grounds to terminate
Applicant’s water services and therefore is not authorized to terminate water
services to the subject real property; and
9. Any other determinations and/or interpretations that are deemed proper and
appropriate.
Complaint at 7-8. In its Answer, SPU requested an order from the Commission:
a. Denying Sorrells Formal Complaint and dismissing this proceeding for the
reason that Sorrells does not own the Subject Property and has no standing
to pursue this action.
b. Declaring that Sorrells is a persistent and continuing violator of the Rules
and Regulations applicable to the Subject Property.
c. Declaring that Sorrells is in violation of IPUC Rules by reason of (1)
material misrepresentations, (2) failure of The Trust to apply for SPU’s
services, (3) obtaining, diverting or using SPU’s services without SPU’s
knowledge or authorization, (4) interference with SPU’s access to SPU’s
water meter, (5) failure to comply with pertinent 1egal requirements during
construction of buildings on the Subject Property, and/or (6) by willfully
wasting of water provided by SPU.
ORDER NO. 35645 3

d. Declaring that SPU is authorized to terminate water services to Lot 4, Block
4, Sunnyside Industrial and Professional Park.
e. Granting SPU such further relief as the IPUC deems just and proper.
Answer at 17.
INITIAL STAFF COMMENTS
Staff reviewed Sorrells’ Complaint and SPU’s Answer to evaluate whether SPU should be
a regulated utility. Additionally, Staff reviewed whether SPU would be justified to terminate
service under Utility Customer Relation Rules (“UCCR”) (IDAPA 31.21.01), if the Commission
determined that SPU should be regulated. Staff believed the Commission should find that SPU
was a public utility that was subject to the Commission’s authority. In making its recommendation,
Staff reviewed several similar Commission cases and orders dealing with small water company
regulation,1 and Staff compiled a list of non-exclusive factors it believed the Commission might
consider when reaching its final determination in this case:
A. Is the Company a Non-Profit or a Co-op?
B. Does the Company operate for the service of the customers and not for profit?
C. Is the Company owned by the water users?
D. Do the customers have control of the rates that the Company charges?
E. Do the customers have control of the operations and capital expenditures of the
Company?
After considering each factor, Staff believed: (1) that SPU was not recorded as a not-for-profit
organization with the Secretary of State; (2) that the “Third Party Beneficiary Utility Agreement”
(“Agreement”) between SPU and Sunnyside Park Owners Association, Inc. provided no
protections that would prevent shareholders from receiving a dividend or paying the owners for
services rendered; (3) that the evidence showed that there was no ownership stake granted to the
customers; (4) that the customers did have significant control over the rates SPU charges; and (5)
there was no place in the Agreement that allowed the customers to have any influence on the
operations or capital expenditures of the Company.
Staff recommended the Commission find:
(1) SPU is a regulated utility under the regulatory authority of the IPUC pursuant to
Idaho Code Title 61;
(2) Sorrells meets the definition of a customer under Rule 5.02, IDAPA
31.21.01.005.02;

1 Staff reviewed Case No. PKS-W-15-01, Order No. 33603; Case No. CCH-W-15-01, Order No. 33384; and Case No.
MUR-W-14-01, Order No. 33351.
ORDER NO. 35645 4

(3) Sorrells has not provided information that is materially false or materially
misrepresents Sorrells’ status;
(4) Sorrells has prevented SPU’s access to the water meter;
(5) Sorrells has willfully wasted water;
(6) Sorrells has not cured or satisfied the alleged violations of Rules 302.01(e) and (f),
IDAPA 31.21.01.302.01(e), (f); and
(7) SPU is authorized to terminate water service.
ADDITIONAL COMPANY FILINGS AND COMMUNICATIONS
On May 23, 2022, Sorrells filed a Notice of Compliance and Demand for Determination
of Water Rate (“Notice”). The notice provided:
We are writing this letter as notice of Donald Sorrells’s compliance with
Commission rules as identified in the Reply Comments of the Commission Staff
dated May 12, 2022 (“the Comments”). As explained in the Comments, SPU is not
authorized to terminate water services as long as the following steps are taken: (1)
Mr. Sorrells’s lock is removed from the water meter; (2) SPU regains unimpeded
access to the water meter; (3) all known leaks are fixed; and (a) Mr. Sorrells’s
account is paid up to date. All steps have been satisfied. Mr. Sorrells has removed
the lock from the water meter, SPU may access the meter as defined under the
Comments, all leaks have been repaired, and the account is paid up to date. Where
the steps are satisfied, we believe the Commission has supported a finding that SPU
is not authorized to terminate water services at this time.
Additionally, as per the Comments, a proper water rate must be established to bill
for “excessive use.” To date, none of the invoices received by Mr. Sorrells have
identified the base water rate to calculate usage or, by extension, excessive use of
water services. Thus, we ask that SPU provide the water rate on all invoices moving
forward, as well as provide the supporting documents, measurements, and other
materials used to determine the water rate upon which previous determinations of
“excessive use” were billed.
In light of the foregoing, we believe that this matter has been resolved with regard
to water services. Please advise as to your client’s plans to establish a proper water
rate and provide amended invoices demonstrating usage against such rate.
Notice at 1-2.
In response, SPU filed a Motion to Strike the Notice. SPU argued that IDAPA 31.01.01
did not allow the Complainant to file a “Notice” in response to Staff’s recommendations and
unilaterally declare that Sorrells was in compliance with the Commission’s Rules and Regulations,
that no controversy remained, and that no sanction was appropriate for the years of alleged
violations committed by Complainant. SPU argued that it was entitled to the full due process rights
afforded under the Commission’s Rules and Regulations.
ORDER NO. 35645 5

On June 13, 2022, SPU sent the Commission’s counsel an email with an attached copy of
an Acknowledgement of Conversion Certificate that SPU received from the Secretary of State’s
office, confirming that Sunnyside Park Utilities, Inc. was converted into a non-profit corporation.
SPU represented that it was in the process of taking the necessary steps to qualify for exemption
from the Commission’s regulatory authority.
ORDER NO. 35513
On August 23, 2022, the Commission issued Order No. 35513. The Commission ordered
the Company to file an Application for a CPCN to become a regulated water company within 30-
days of issuance of the order. The Commission suspended consideration of the remaining
substantive issues until after the Company was granted or denied a CPCN.
ORDER NO. 35534
On September 7, 2022, the Company filed a motion to amend its answer, a petition to stay
Order No. 35513, and a petition to review Order No. 35513. The Company represented that it had
transitioned into a nonprofit corporation that was statutorily exempt from Commission regulation.
The Company submitted new documentation in support of its motion, petitions, and amended
answer.
On September 20, 2022, the Commission considered the Company’s motion and petitions
during the Commission’s decision meeting and, upon motion therein, granted the Company’s
motion to amend its answer; granted the Company’s petition to review Order No. 35513, setting
an initial comment deadline of October 13, 2022, and a Company reply comment deadline of
October 20, 2022; and granted the Company’s petition to stay Order No. 35513 for ninety (90)
days, or the Commission issues an earlier order.
ADDITIONAL STAFF COMMENTS
Staff reviewed the Company’s amended answer, and all submitted documents. Based upon
its review, Staff continued to recommend that the Company be regulated by the Commission. The
Company represented that it changed its corporate structure to a non-profit; however, based upon
the criteria Staff included in its Reply Comments filed on May 12, 2022, Staff believed the
Company’s amended answer did not meet three of those criteria and the Company should be
regulated by the Commission.
COMPANY COMMENTS
The Company argued that it was not a Corporation under Idaho Code § 61-104 because it
was a nonprofit entity organized and operating at cost. The Company contended that it is not a
ORDER NO. 35645 6

Water Corporation under Idaho Code § 61-125, as interpreted by the Idaho Supreme Court,
because the Company had never expressed clear, unequivocal intent to dedicate itself to public
use. Further, the Company argued that all potential abuse concerns raised by Staff were mitigated
by the provisions of the Idaho Nonprofit Corporation Act, which imposes specific duties on the
Company’s Board of Directors and were designed to protect the customers from abuse by the
Directors. The Company contended that none of the issues of potential abuse raised by Staff were
based upon customer complaints, and Staff had already conceded that the Company’s customers
have significant control over the Company’s rate changes. The Company requested that the
Commission determine that the Commission did not have jurisdiction over the water system
operated by Sunnyside Park Utilities and dismiss Sorrells’ Complaint.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter and the issues in this case under Title 61
of Idaho Code. The Commission regulates “public utilities,” including “water corporations” that
serve the public or some portion thereof for compensation. Idaho Code §§ 61-125, -129, and -501.
A “public utility” is an entity that is dedicated to serving the general public in its service
area. Idaho Code § 61-129(1). The term “public utility” is defined to include “water corporations.”
Id. A “water corporation” is “every corporation” that owns, controls, operates or manages a water
system for compensation. Idaho Code § 61-125. “The term ‘corporation’ . . . does not include . . .
mutual nonprofit or cooperative . . .water . . . corporation or any other public utility organized and
operated for service at cost and not for profit . . ..” Idaho Code § 61-104.
In its petition to review Order No. 35513, the Company represents that it has transitioned
into a nonprofit corporation. The Company claims that it is now statutorily exempt from
Commission regulation. Specifically, the Company argues that it is not a “corporation” under
Idaho Code § 61-104 because it is a nonprofit entity organized and operating at cost; and, that it is
not a “water corporation” under Idaho Code § 61-125, as interpreted by the Idaho Supreme Court,
because the Company has never expressed clear, unequivocal intent to dedicate itself to public use.
A. Idaho Code § 61-104
Idaho Code § 61-104 provides three exceptions to the Commission’s regulatory authority
over “corporations.” The Commission does not regulate “mutual nonprofits,” “cooperative
corporations,” nor “any other public utility organized and operated for service at cost and not for
profit.” Idaho Code § 61-104.
ORDER NO. 35645 7

Here, the Company does not claim to be a mutual nonprofit, nor does the Company claim
to be a cooperative corporation. Rather, the Company argues that it has established that it is
organized as a nonprofit and operates at cost. Company Reply Comments at 3. The Commission
disagrees.
Pursuant to Idaho Code § 61-104, the Company must not only show that it is “organized”
for service at cost and not for profit, but also that it is “operated” for service at cost and not for
profit. In these proceedings, the Company submitted some evidence that it has changed
designations with the Secretary of State to register as a nonprofit. The Company has also submitted
bylaws, a Third-Party Beneficiary Utility Agreement, and some other documentation to show that
the Company is “organized” for service at cost and not for profit.
However, the record does not contain evidence that the Company is, or has been,
“operated” for service at cost and not for profit. The Company has yet to submit any financial
statements with supporting documentation, cost analysis, nor tax information for the Commission
to review and consider. Based upon the lack of evidence in the record concerning the operating
cost of the Company, the Commission cannot find that the Company is exempt from Commission
regulation under Idaho Code § 61-104 as both organized, and operated, for service at cost and not
for profit.
B. Idaho Code § 61-125
The Company argues that it is not a “water corporation” under Idaho Code § 61-125, as
interpreted by the Idaho Supreme Court, because the Company has never expressed clear,
unequivocal intent to dedicate itself to public use. The Company bases its claim on the Idaho
Supreme Court case of Stoehr v. Natatorium Co., 34 Idaho 217, 200 P. 132 (1921). The Stoehr
case provides in relevant part:
Under appellant’s assignments, there is but one question for our
determination, which is set forth in appellant’s brief in the following language:
“Is defendant and respondent, in so far as its natural hot water system is
concerned, a public utility? If it is a public utility, the lower court erred and should
be reversed, and, if it is not a public utility, the lower court should be sustained by
this court.”
C. S. § 2396, provides that:
“The term ‘public utility’ when used in this chapter includes every * * *
water corporation * * * as those terms are defined in this section. * * *”

ORDER NO. 35645 8

C. S. § 2392, provides that:
“The term ‘water corporation’ * * * includes every corporation * * *
owning, controlling, operating or managing any water system for compensation
within this state.”
To hold that a water corporation is a public utility because it receives
compensation for water owned by it and furnished to a limited number of the
inhabitants of Boise within a limited area would be an unreasonable interpretation
of the foregoing statutes. Such a construction may involve the question of the
constitutionality of the statutes. Allen v. Railroad Commission, 179 Cal. 68, 175
Pac. 466, 8 A. L. R. 249, at page 260. In determining whether a corporation is a
public utility, we must not lose sight of the basic principles underlying
governmental control of business, nor fail to appreciate and respect constitutional
limitations. Salt Lake City v. Utah Light & Traction Co., 52 Utah, 210, 173 Pac.
556, 3 A. L. R. 715.
If the service is dedicated to the public or some portion thereof, or to persons
within a given area, then any member of the public or of the given class, or any
person within the given area, may demand such service without discrimination, and
the public or so much of it as has occasion to be served is entitled to the service of
the utility as a matter of right and not of grace. Del Mar Water, Light & Power Co.
v. Eshleman, 167 Cal. 666, 140 Pac. 591, 948.
A corporation becomes a public service corporation, and therefore subject
to regulation as a public utility, only when and to the extent that the business of
such corporation becomes devoted to a public use. Thayer v. California
Development Co., 164 Cal. 117, 128 Pac. 21.
Stoehr v. Natatorium Co., 34 Idaho 217, 200 P. 132, 133 (1921). Specifically, the Company argues
that “[a]bsent evidence of unequivocal, voluntary intent to become a utility devoted to public use,
SPU is not a Water Corporation under Idaho Code Section 61-125, as interpreted by the Idaho
Supreme Court, and is not subject to IPUC jurisdiction.” Company Reply Comments at 9. The
Company’s argument is unpersuasive.
First, the Commission is not convinced that Stoehr remains good law. The Court in Stoehr
reasoned that “[t]o hold that a water corporation is a public utility because it receives compensation
for water owned by it and furnished to a limited number of the inhabitants of Boise within a limited
area would be an unreasonable interpretation of the foregoing statutes.” Id. (emphasis added). The
Stoehr Court based its holding on the idea that unreasonable interpretations of statutes may be
corrected by the judiciary. That reasoning has since been emphatically rejected by the Idaho
Supreme Court. In Verska v. Saint Alphonsus Reg’l Med. Ctr., 151 Idaho 889, 265 P.3d 502 (2011),
the Court held that:
ORDER NO. 35645 9

The asserted purpose for enacting the legislation cannot modify its plain
meaning. The scope of the legislation can be broader than the primary purpose for
enacting it. If the statute as written is socially or otherwise unsound, the power to
correct it is legislative, not judicial. The interpretation of a statute must begin with
the literal words of the statute; those words must be given their plain, usual, and
ordinary meaning; and the statute must be construed as a whole. If the statute is not
ambiguous, this Court does not construe it, but simply follows the law as written.
We have consistently held that where statutory language is unambiguous,
legislative history and other extrinsic evidence should not be consulted for the
purpose of altering the clearly expressed intent of the legislature.
Verska v. Saint Alphonsus Reg’l Med. Ctr., 151 Idaho 889, 892-93, 265 P.3d 502, 505-06 (2011)
(internal citations and quotations omitted). Based upon the holding in Verska, the Commission
finds the Company’s contention that Idaho Code § 61-125 requires a public utility to express an
“unequivocal intent to dedicate itself to public use” unpersuasive.
Second, even if Stoehr remains good law, the Commission is not convinced that the
Company does not provide services to the public. The Stoehr Court reasoned:
If the service is dedicated to the public or some portion thereof, or to persons within
a given area, then any member of the public or of the given class, or any person
within the given area, may demand such service without discrimination, and the
public or so much of it as has occasion to be served is entitled to the service of the
utility as a matter of right and not of grace.
Id. (emphasis added). The Stoehr Court references both a “portion” of the public and also service
to “persons within a given area.” The Company states that “Sunnyside Park Utilities, Inc. was
formed in 2002 for the purpose of providing water and sewer service to the owners and tenants of
real property located within the Sunnyside Industrial and Professional Park located in Bonneville
County.” Beck Declaration at 1. The Company further states that:
SPU currently provides water and sewer service to nineteen (19) commercial and
industrial customers, all located in the Sunnyside Industrial and Professional Park,
adjacent to Idaho Falls. There is only one vacant lot in the subdivision which could
potentially connect to SPU’s system in the future.
Amended Answer to Formal Complaint at 3. While the Company argues that the geographical
limitation of its service excludes it from providing service to the public, the Commission would
find that, even if Stoehr remains good law, the Company provides service to a portion of the public,
designated by the given area of the Sunnyside Industrial and Professional Park.
Based upon the submitted evidence in the record and the above analysis, the Commission
cannot find that the Company is a mutual nonprofit, cooperative corporation, nor a public utility
ORDER NO. 35645 10

organized and operated for service at cost at this time; thus, the Commission finds that the
Company is a public utility and subject to Commission regulation.2
ORDER
IT IS HEREBY ORDERED that the Company shall file an Application for a CPCN to
become a regulated water company within 30-days of issuance of this order.
IT IS FURTHER ORDERED the Commission shall suspend consideration of the
remaining substantive issues, as outlined in the Complaint and Answer, until SPU is granted or
denied a CPCN.
IT IS FURTHER ORDERED that parties comply with Order No. 35375, issued April 21,
2022. Generally, all pleadings should be filed with the Commission electronically and will be
deemed timely filed when received by the Commission Secretary. See Rule 14.02. Service between
parties should continue to be accomplished electronically when possible. However, voluminous
discovery-related documents may be filed and served on CD-ROM or a USB flash drive.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 27th day of
December 2022.

ERIC ANDERSON, PRESIDENT

JOHN CHATBURN, COMMISSIONER

JOHN R. HAMMOND JR., COMMISSIONER
ATTEST:

Jan Noriyuki
Commission Secretary
I:\Legal\MULTI-UTILITY\GNR-U-22-03 (Sorrells)\orders\GNRU2203_order3_cb.docx

2 Nothing in this Order shall prohibit any party from petitioning for review of this interlocutory order pursuant to
Commission Rule of Procedure 322.