20220512Reply Comments.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.9810
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DONALD SORRELLS,)
)CASE NO.GNR-U-22-03COMPLAINANT,)
vs.)REPLY COMMENTS OF
)THE COMMISSION STAFF
SUNNYSIDE PARK UTILITIES,INC.,)
RESPONDENT )
COMES NOW the Staff of the Idaho Public Utilities Commission ("Staff'),by and
through its Attorneyof record,Chris Burdin,Deputy AttorneyGeneral,and submits the following
reply comments.
BACKGROUND
On March 9,2022,Donald Sorrells ("Sorrells"or "Complainant")filed a Formal
Complaint ("Complaint")against Sunnyside Park Utilities ("SPU"or "Company"),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
disconnecting his service.Sorrells further requested the Commission find that SPU is a regulated
utility under the regulatory authority of the Commission.On March 29,2022,the Commission
STAFF COMMENTS 1 MAY 12,2022
issued a Summons to SPU.On April 21,2022,the Company filed its Answer to Complaint
("Answer").
OVERVIEW OF SUNNYSIDE INDUSTRIAL PARK &SPU WATER SYSTEM
SPU provides water and sewer service to 19 commercial and industrial customers within
the Sunnyside Industrial and Professional Park ("SIPP").The developed properties are located
just south of Idaho Falls,Idaho on the east side of South Yellowstone Highway.According to
SPU,the water source for water service is a metered well capable of providing 80 to 100 gallons
per minute.SPU provides sewer service to SIPP using a single septic tank and drain field system.
Sorrells originally purchased the developed lot on August 6,2018,and subsequently
constructed 5 buildings on the site.Currentlythe property is identified as the Teton Business Park,
which appears to lease or rent out a total of 18 individual commercial spaces.
STAFF RESPONSE
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),in the event that the
Commission determines that SPU should be regulated.
The followingare Staff's responses to each of Sorrells'nine relief requests contained in
his Complaint.
1.A determination that Respondent SPU is a regulated utility under the
regulatory authority of the IPUC pursuant to Idaho Code Title 61 and
IDAPA 31.21.01.et seq.
The primary question before the Commission is whether SPU should be regulated by the
Commission as a Public Utility.Staff believes the Commission should find that SPU is a Public
Utility that is subject to the Commission's authority.Staff recommends that the Commission order
the Company to file for a Certificate of Public Convenienceand Necessity ("CPCN")to become a
regulated water company.
A "public utility"is an entity that is dedicated to serving the general public in its service
area.See 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'...
STAFF COMMENTS 2 MAY 12,2022
does not include ...mutual nonprofitor cooperative ...water ...corporation or any other public
utility organized and operated for service at cost and not for profit ...."Idaho Code §61-104.
In making its recommendation,Staff reviewed several similar Commission cases and
orders dealing with small water company regulation.'Staff has compiled a list of non-exclusive
factors it believes the Commission may 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,and under the totality of the circumstances,Staff believes that the
Company should be regulated by the Commission.
A.Is the Company a Non-Profit or Co-op?
Based on Staff's investigation,SPU is not recorded as a not-for-profit organization with
the Secretary of State.Staff questioned SPU's owner,Doyle Beck,and confirmed that SPU was
incorporated as a general corporation.Staff believes this factor weighs toward regulation.
B.Does the Company operate for the service of the customers and not forprofit?
Despite being incorporated as a general corporation,the Commission may consider
whether SPU was operated for profit.In its Answer,SPU claims that "SPU is organized as a
general corporation,however it is operated at cost and no distributions have ever been made to the
owners and no wages have been paid to the owners."Answer pp.3-4.Similarly,Staff spoke with
Mr.Beck about SPU's operation,and he stated that he has never taken a salary or a dividend from
the Company.However,Staff has reviewed the "Third Party Beneficiary Utility Agreement"
("Agreement")between SPU and Sunnyside Park Owners Association,Inc.("Owners
Association"),and there are no protections in the Agreement that would prevent shareholders from
receiving a dividend or paying the owners for services rendered.While the Commission may take
SPU at its word that it has never been run for profit,based on the submitted evidence,Staff believes
there are no protections against that happeningat some point in the future.Staff believesthat this
factor weighs toward regulation.
I See Case No.PKS-W-15-01,Order No.33603;Case No.CCH-W-15-01,Order No.33384;Case No.MUR-W-14-
01,Order No.33351.
STAFF COMMENTS 3 MAY 12,2022
C.Is the Companyowned by the customers?
Staff believes that the Company is not owned by the customers.SPU stated the Company
has twenty-two(22)shares of ownership.Answer p.3.One share is owned by Kirk Woolf,one
is owned by Mr.Beck,and the other twenty (20)shares are owned by Sunnyside Industrial and
Professional Park,LLC ("Sunnyside").The Annual Report for Sunnyside shows that the
managing director is Mr.Beck,and the evidence shows that there is no ownership stake granted
to the customers.In addition,Mr.Woolf was the president of the Owners Association and SPU at
the time of signing the Agreement and signed as both parties to the Agreement.Staff believes that
this factor weighs toward regulation.
D.Do the customers have control over the rates that the Companycharges?
Staff reviewed Section 7 of the Agreement,which states that should the Company wish to
change rates in either the water or sewer service,it must first send notice to each customer.If
more than half of the customers file a protest in writing the rate increase will then be sent to
arbitration.The arbitrators will make written recommendations within ninety days.If there is a
written objection to the arbitrators'proposal,then the rates will go to court for resolution.Based
on the Agreement,Staff believes that the customers do have significant control over the rates SPU
charges.Staff believes that this factor weighs against regulation.
E.Do the customers have control over the operations and capitalexpendituresoftheCompany?
After reviewing the Agreement,Staff believes there is no place in the Agreement that
allows the customers to have any influence on the operations or capital expenditures of the
Company.At best,Section 5 of the Agreement provides that if the Company fails to operate or
maintain the water supply systems,then the customers have the rightto take the Company to court.
In contrast,Section 6 expressly states that the Company has the right to establish and revise rules
and regulations that are binding upon the customers.There is no review process or voting that
allows customers to have input or control over any of the operations or capital expenditures.Staff
believes that this factor weighs toward regulation.
Based upon the above analysis,Staff believes the Commission should find that SPU is a
Public Utility that is subject to the Commission's authority,and Staff recommends that the
Commission order the Company to file for a CPCN to become a regulated water company.
STAFF COMMENTS 4 MAY 12,2022
2.A determination that Complainanthas not provided information that ismateriallyfalseormateriallymisrepresentsSorrellsstatus.
SPU presents two arguments that Sorrells provided materially false information;one with
respect to Sorrells'status as a customer and lack of standing to bring the complaint;and one with
respect to the number of connections Sorrells'requested upon connection of service.
A.Customer Status
Sorrells argues that he has not provided any information to SPU that was materially false
or materiallymisrepresented his "true"status.In response,SPU contends that Donald and Meri
Sorrells purchased Lot 4,Block 4,Sunnyside Industrial &Professional Park located in Bonneville
County,Idaho ("Subject Property")on or about August 6,2018,and that on March 10,2020,
Sorrells transferred the Subject Property to the Donald Dail Sorrells and Meri Sorrells LivingTrust
("Trust").SPU claims the Trust did not apply for service and that Sorrells never notified SPU of
the transfer of ownership.As a result,SPU argues that Sorrells no longer qualifies as a customer
under IDAPA 31.21.001.005.02and lacks standing to file a complaint against SPU.Additionally,
SPU contends that because Sorrells failed to identify the "true"status of ownership of the Subject
Property,and that omission constitutes grounds for termination of service under IDAPA
31.21.01.302(d).
Staff Position
Rule 302.01(d)provides that "[a]utility may deny or terminate service to a customer ...
[after]...[t]he utility has determined that information provided by the customer or applicant is
materially false or materially misrepresents the customer's or applicant's true status."IDAPA
31.21.01.302.01(d).Rule 5.02 defines "customer"as "any person who has applied for,has been
accepted by the utility and is ...[r]eceiving service from a utility;or [h]as assumed responsibility
for payment of service provided to another or others."IDAPA 31.21.01.005.02(a),(c)."If the
person receiving service is not the same person as the person assuming responsibility for payment
of service,the latter is the customer for purposes of obtaining or terminating service,receiving
refunds,or making changes to the account."Id.
Staff believes that long standing policy for any given regulated utility,and Staff s own
interpretation of UCCR Rule 005.02,is that bill responsibility is based on the name on the utility
bill.The owner of a property is under no obligation to have service in their name,nor could they
be held responsible for service that was not in their name.Staff believes that Sorrells meets the
definition of a customer under Rule 005.02,and Staff finds no evidence that Sorrells provided
STAFF COMMENTS 5 MAY 12,2022
materially false information or materially misrepresents Sorrells'status in filing the Complaint.
Staff recommends that the Commission find that Sorrells has standing as a customer to bring the
Complaint.
B.Additional Connections
Regarding SPU's request that Sorrells remove all unauthorized plumbing,Sorrells claims
that he did not provide any materially false information or make any false misrepresentationto
SPU maintaining his status with respect to alleged number of restrooms.In response,SPU argues
that on August 23,2018,it issued a "Will Serve"letter to Sorrells based on representations that
Sorrells would only install two restrooms on the Subject Property,and that no other water or sewer
needs will be required.SPU claims that Sorrells installed a washer/dryer connection,an RV
septic/water connection,and ten (10)frost free hydrants on multiplebuildings on the Subject
Property.SPU contends such actions are grounds for termination under IDAPA 31.21.303.03.
Staff Position
Rule 303.03 provides that "[a]utility may deny or terminate service without prior notice to
the customer or applicant and without the customer's or applicant's permission ...[if]...[t]he
service is obtained,diverted or used withoutthe authorization or knowledge of the utility."IDAPA
31.21.01.303.03.
Staff believes that a regulated utility does not have the authority to control what the
customer does on their side of the meter.While it is possible that adding extra connections could
be a violation of ordinances (city/county),building codes,or other state agency rules,Staff does
not believe that adding extra connections would constitute grounds for termination of service on
its own under Rule 303.03.Staff is unaware of any written agreement regarding the number of
restrooms that would be installed on the property;therefore,it does not believe that Sorrells
provided information that is materially false or material that misrepresents Sorrells status under
Rule 302.01(d).
3.An interpretationof the term "access"under IDAPA 31.21.01.302.01(e).
Rule 302.01(e)provides that "[a]utility may deny or terminate service to a customer ...
[after]...[t]he customer or applicant denied or willfully prevented the utility's access to the
meter."IDAPA 31.21.01.302.01(e).
STAFF COMMENTS 6 MAY 12,2022
Staff's suggested interpretation of the term "access"under Rule 302.01 (e),implies that a
utility must have the unimpeded ability to physically:read the meter;inspect the meter;replace
the meter;test for leaks;repair the meter;and disconnect/reconnect service.
4.A determination that Sorrells has not denied or willfully preventedSPU's
access to the subjectwater meter
Sorrells claims the water meter is not SPU's property because he purchased the meter,and
Sorrells denies having restricted SPU's access to the meter for the purpose of readings.In
response,SPU provided an invoice paid in full for the purchase of a water meter and the cost to
install the meter in the right of way,on or about June 17,2021,to measure water consumption on
the Subject property.SPU claims the water meter is the property of the Company.Further,SPU
contends that on October 25,2021,while an employee was taking a meter reading,a tenant of the
Subject Property informed the SPU employee that the employee was not allowed to access the
water meter.SPU also claims that Sorrells sent a text message to SPU stating in part,"...this is a
formal notice that if you or anyone representing you enters my property for any reason again you
will be removed by force if necessary."Answer p.10.Additionally,on October 27,2021,SPU
claims it discovered that its lock was removed,the water was turned on,and that Sorrells had
installed a new lock it its place.
Staff Position
Due to the threats SPU claims regarding access to the meter,and the installation of the lock
on the meter by Sorrells,Staff believes Sorrells attempted to deny SPU access to the water meter.
Staff recommends that the Commission find that Sorrells "denied or willfully prevented"SPU's
access to the water meter in violation of Rule 302.01(e).
5.An interpretation of the phrase "willfully wastingor interfering with
service"under IDAPA 31.21.01.302.01(f).
Rule 302.01(f)provides that "[a]utility may deny or terminate service to a customer ...
[after]...[t]he utility determines that the customer is willfully wasting or interfering with service
to the customer or other customers through improper equipment or otherwise."IDAPA
31.21.01.302.01(f).
Staff's suggested interpretation of the phrase "willfully wasting or interfering with service"
under Rule 302.02(f)is when a customer obtains knowledge that a leak exists,either throughtheir
own actions or the actions of another,and the customer either refuses to take action to address the
leak,or fails to act to address the leak in a reasonably timely manner.
STAFF COMMENTS 7 MAY 12,2022
6.A determination that Applicanthas not willfully wasted or interfered with
water service.
Sorrells argues that he is not in violation of Rule 302.02(f)and has not willfully wasted
water because he claims he repeatedly repaired or had repaired any toilet that was found to be
defective.In response,SPU claims that after Sorrells was connected to SPU's water/septic system,
SPU noted repeated instances of excessive water discharge originating from the Subject Property.
SPU contends that it repeatedly notified Sorrells of the issues and Sorrells routinelyassured SPU
that the issue would be addressed.
Leakage Events
SPU claims that on or about August 21,2019,SPU sent a violation notice regarding a leaky
toilet that was continuouslydischarging water into SPU's septic system and the additional
connections.SPU requested remediation or service would be terminated.Subsequently,SPU
mailed a second notice of violation letter on or about September 5,2019,and a third letter was
mailed on or about February 12,2021,regarding the same issue.On or about April 5,2021,
counsel for Sorrells notified SPU,claiming that the toilet issue and drainage/leakingissue had been
remediated.
On October 25,2021,SPU discovered that the toilet was continuallyrunningand shut the
water off to the subject property.On October 26,2021,SPU again noticed excessive flow of water
from the Subject Property;therefore,SPU returned to the water meter where it discovered that the
water had been turned back on without SPU's knowledge.SPU again turned the water off and
installed a lock on the meter.
On October 27,2021,SPU was contacted by Sorrells council who requested the water be
turned back on because the toilet was repaired.Upon return to the water meter,SPU discovered
that SPU's lock was removed,water was turned on,and a new lock was installed by Sorrells.
On November 2,2021,SPU claims that it was informed via a response given by Sorrells
contractor that a frost-free hydrant was leaking and would be fixed but until it was fixed,Sorrells
would continue to use the water service.SPU claims that,with the exception of November 2-4,
2021,when water appears to have been shut off during the evening,the leak has continued
unabated.
Staff Position
Staff would not support an action to terminate service due to a leaky toilet or frost-free
hydrant(s).However,consistent with Staff's interpretation of Rule 302.02(f)above,Staff believes
STAFF COMMENTS 8 MAY 12,2022
a customer who refuses to take action to address a leak,or act to address the leak in a reasonably
timely manner,could be terminated from service.Alternatively,Staff believes the Company could
bill the customer for excessive usage identified via meter readings if a proper water rate is
established.Based on the evidence presented,Staff believes Sorrells willfully wasted water
because Sorrells had knowledge of the leaks,repairs were not timely,and the problems have not
been fully resolved.Staff recommends that the Commission find Sorrells in violation of Rule
302.02(f).
7.Alternatively,a determination that any alleged violations of IDAPA.31.21.01.302 have been cured or satisfied.
Staff does not believe the alleged violations have been cured or satisfied.Staff believes
that Sorrells'lock is still on the water meter in violation of Rule 302.01(e).Furthermore,it is
Staff's understandingthat there still exists a known leak of a frost-free hydrant.Staff believes that
constitutes a continued willful wasting of water in violation of Rule 302.01(f).
8.A determination that Respondent SPU lacks sufficient grounds toterminateApplicant'swater services and therefore is not authorized toterminatewaterservicestothesubjectrealproperty.
Based upon the analysis above,Staff believes SPU has sufficient grounds to terminate
service at this time.Staff notes that if Sorrells'lock is removed from the meter,SPU regains
unimpeded access to the meter,all known leaks are fixed,and Sorrells account is paid up to date,
then Staff does not believe there would be any remaining grounds for termination of service under
Commission rules.
9.Any other determinations and/or interpretationsthat are deemed properandappropriate.
SPU has alleged that a frost-free hydrant leak is likely seeping into the ground and may
lead to future problems on the Subject Property and adjacent property.Rule 303.01 provides that:
"[a]utility may deny or terminate service without prior notice ...[when]...[a]condition
immediately dangerous or hazardous to life,physical safety,or property exists,or if necessary to
prevent a violation of federal,state or local safety or health codes.IDAPA 31.21.01.303.01.
Staff has not been presented with sufficient argument or evidence to make any
recommendations regarding a potential violation of Rule 303.01,or what,if any,potentially
dangerous conditions may develop;however,Staff notes the potential for signification issues in
the future if SPU's allegations are true.
STAFF COMMENTS 9 MAY 12,2022
STAFF RECOMMENDATION
Staff recommends 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;
(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.
Additionally,Staff recommends that the Commission order SPU to file for a Certificate of
Public Convenience and Necessity to become a regulated water company within 30-days of
issuance of the final order.
Respectfullysubmitted this é day of May 2022.
Chris Burdin
Deputy Attorney General
Technical Staff:Daniel Klein
Rick Keller
Kevin Keyt
Joseph Terry
Curtis Thaden
i:umisc/comments/gnru22.3cbdk reply comments
STAFF COMMENTS 10 MAY 12,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 121"DAY OF MAY 2022,SERVED
THE FOREGOING REPLY COMMENTS OF THE COMMISSION STAFF,IN CASE
NO.GNR-U-22-03,BY E-MAILING A COPY THEREOF,TO THE FOLLOWING:
PAUL B RIPPEL ESQ MARK R FULLER
AUSTIN O ALLEN ESQ DANIEL R BECK
HOPKINS RODEN CROCKETT PAUL L FULLER
428 PARK AVE FULLER &BECK
IDAHO FALLS ID 83402 410 MERORIAL DR.,SUITE 201
E-MAIL:[e-mail] PO BOX 50935
[e-mail] IDAHO FALLS ID 83405-0935
E-MAIL:paulfuller.law email.com
fullerandbeck email.com
SECRETARY
CERTIFICATE OF SERVICE