20221013Comments.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 9810
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Street Address for Express Mail:
1I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 837I4
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DONALD SORRELLS,
COMPLAINANT,
vs.
SUNNYSIDE PARK UTILITIES, INC.,
RESPONDENT.
CASE NO. GNR.U-22-03
COMMENTS OF THE
COMMISSION STAFF
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Staff of the Idaho Public Utilities Commission ("Staff'), by and through its Attorney of
record, Chris Burdin, Deputy Attomey General, submits the following comments.
BACKGROUND
On March 9, 2022, Donald Sorrells ("Complainant" or "Sorrells") filed a complaint
("Complaint") against Sunnyside Park Utilities ("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 3 I .2 I .0 1 .3 02, and Sorrells requested the Commission prohibit SPU from terminating his
service. Sorrells further requested the Commission find that SPU was a regulated utility under the
regulatory authority of the Commission.
After reviewing the record and the arguments of the parties, on August 23, 2022, the
Commission issued Order No. 35513. The Commission found that, based upon the evidence
1STAFF COMMENTS ocroBER 13,2022
submitted, the Company was subject to the Commission's regulatory authority. The Commission
gave the Company until September 23,2022, to file for a Certificate of Public Convenience and
Necessity ("CPCN").
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 non-profit 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.
STAFF REVIEW
Staff has reviewed the Company's amended answer and all submitted documents. Based
upon its review, Staff continues to recommend that Sunnyside 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, and listed below,
Staff believes the Company's amended answer does not meet three of those criteria and the
Company should be regulated by the Commission.
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?
The Company represented that it changed its corporate structure to that of a non-profit.
Staff believes the Company's amended answer addresses only two of the criteria above. The
Company intends to operate as a non-profit (Criteria A) and the Company's bylaws prevents the
members of the Board of Directors ("Board") from receiving any stated salary, which Staff
2STAFF COMMENTS ocToBER t3,2022
believes provides some protections to customers that the Company will operate solely for the
service of the customers and not its Board (Criteria B). See Bylaws, Article l, Section 1 l.
However, the Board manages the Company's operations. The new bylaws state that the
next Board will be voted in by the current Board, thus bypassing customers completely. Therefore,
the customers have no say on who is on the Board and who will direct the operations of the
Company. Further, under the bylaws, directors can serve in other capacities and receive
compensation. Such compensation is set by the Board under Article 4 Section I of the Company's
bylaws. Given that the Board is not elected or represented by customers, Staff believes this clause
could be used as a back door method for members of the Board to receive direct benefits.
If the Company were to change the bylaws so that every customer would be a member of
the non-profit and have the ability to vote on members of the Board, Staff would recommend that
the Company not be regulated by the Commission.
In making its recommendation, Staff reviewed prior Commission cases. In Case No.
MUR-W-14-01, Murray Water became a non-profit association of water users, where every
customer became a member of the association. In Case No. CCH-W-15-01, Country Club Hills
became a water and sewer district, where the directors were voted in by the customers in the
district. In both cases, the Commission cancelled the utilities' Certificate of Public Convenience
and Necessity ("CPCN") declaring both companies no longer need to be regulated. In Case No.
PKS-W-15-01, Packsaddle Estates was converted to a non-profit. Staff opposed the cancellation
of the CPCN due to concerns that the Board of Directors would be able to manipulate the company
to their advantage. However, the Commission ruled in Order No. 33603 against further regulation
because, the Company "Has customers who are members of the Company, with each customer
having one vote..." OrderNo.33603 at 6.
While the Company represents itself as a non-profit, Staff does not believe that the new
bylaws allow the customers to have any vote or ability to determine the members of the Board.
Additionally, customers do not have any real ability or authority to have an influence on the
operations of the Company; the Company is not owned by the customers; the process by which
rates are changed remains the same; and customers have no control over the operations and capital
expenditures of the Company. Therefore, Staff continues to recommend that the Commission find
that SPU is a regulated utility under the regulatory authority of the IPUC pursuant to Idaho Code
Title 61.
aJSTAFF COMMENTS ocToBER 13,2022
STAFF RECOMMENDATION
Staffrecommends the Commission affirm Order No. 35513, finding that SPU is a regulated
utility under the regulatory authority of the IPUC pursuant to Idaho Code Title 61. Stafffurther
recommends the Commission lift the stay on Order No. 35513, and order SPU to file for a CPCN
to become a regulated water company within 3O-days of the lifting of the stay.
Respecttully submitted this l7t1 day of October2022
Deputy Attorney General
Technical Staff: Joe Terry
i:umisc/commentVgnru22.3cbjt comments
4STAFF COMMENTS ocToBER 13,2022
CERTIFICATE OF SERYICE
I HEREBY CERTIFY THAT I HAVE THIS 13TH DAY OF OCTOBEF.}OZZ,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. GNR.U-22-03, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
PAUL B RIPPEL ESQ
AUSTIN O ALLEN ESQ
HOPKINS RODEN CROCKETT
428 PARK AVE
IDAHO FALLS ID 83402
E-MAIL : [e-mail]
austinal len@ho pki nsroden. com
MARK R FULLER
DANIEL R BECK
PAUL L FULLER
FULLER & BECK
410 MERORIAL DR., SUITE 201
PO BOX 50935
IDAHO FALLS ID 83405.0935
E-MAIL: [e-mail]
[e-mail]
CERTIFICATE OF SERVICE