20140930final_order_no_33143.pdf

Office of the Secretary
Service Date
September 30,2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF BOISE VALLEY )
RAILROAD,LLC’S OBJECTION TO ITS )CASE NO.BVR-R-14-01
2014 ASSESSMENT FEE )
)ORDER NO.33143
____________________________________________________________________________________________
)
On May 15,2014,Boise Valley Railroad,LLC (“Boise Valley”or “Company”)sent a
letter to the Commission registering its objection,pursuant to Idaho Code §61-1007,to the
Company’s 2014 Railroad Assessment Fee.Boise Valley attached several invoices as
attachments,documenting the Commission’s Fee Assessment as well as the Company’s gross
operating revenues for the calendar year of 2013.
On May 29,2014,the Commission issued a Notice of Objection to Assessment and
Notice of Modified Procedure with a 90-day comment period.See Order No.33045.
On August 27,2014,Commission Staff (‘Staff’)submitted its written comments
after conducting an audit of the Company’s revenue records.Boise Valley declined the
opportunity to submit reply comments.
THE COMPANY’S OBJECTION
The Commission’s operating budget is derived from the assessment of regulatory fees
upon utilities and railroads subject to the Commission’s jurisdiction.Idaho Code §6 1-1003
provides that on or before April 1st of each year,each railroad corporation shall report its gross
operating revenues from its intrastate railroad business in Idaho for the preceding calendar year.
Based upon the total amount of gross intrastate revenues reported by all the railroads,the
Commission then determines the proportionate assessment applicable to each railroad to recover
the Legislature’s authorized appropriation.
Once each railroad’s assessment is determined,the Commission notifies the railroad
of its regulatory fee no later than May 1st of each year.Such fee shall be paid to the
Commission in equal semi-annual installments.Idaho Code §61-1005.Any utility or
corporation may object to the fee ‘on or before the time specified for payment for the first
installment of the assessment made against it.”Idaho Code §6 1-1007.
In its letter to the Commission,Boise Valley acknowledges that it committed an error
in reporting to the Commission its gross interstate operating revenues instead of its gross
ORDERNO.33143
intrastate operating revenues.Allegedly,the difference between Boise Valley’s 2013 Gross
Interstate Revenues ($3,143,915.00 (Attachment B))and its 2013 Gross Intrastate Revenues
($838,703.00 (Attachment C))is significant.The Company awaits acknowledgement of its
objection and further instructions from the Commission on how to proceed in this matter.”
STAFF COMMENTS
During its audit,Staff examined documents from the files of the Commission and
copies of documents provided by Watco,Inc.,the owner of Boise Valley Railroad,and copies of
Journals and Ledgers of Boise Valley.
Staffs audit of the Journals and Ledger of Boise Valley reflects total revenues of
$3,143,913 for 2013.Total intrastate revenues for Idaho,for the Year 2013 totaled $846,598.
Staff performed extended testing of the Idaho intrastate revenues and believes $846,598,as
adjusted,is the correct amount of Idaho intrastate revenues for 2013.Staff notes the amount of
Idaho intrastate revenues supported by the Ledger and Journals are different than the amount
reported by the Company on the original report to the Commission.In its Objection Letter dated
May 14.2014,the Company acknowledged the difference.The Company also reported that it is
taking steps to prevent this from recurring in the future.
The definition of revenue has been previously outlined by the Commission in its final
Order in Case No.EIR-R-01-01.Confidential Attachment B shows the detailed revenue
accounts and the Company’s error/oversight statement.Boise Valley provided supporting
documentation referring Staff to a group of deferral accounts containing corrections.
Staff performed several tests on billings and reconciled all journal entries by source
of revenue,with the summary of revenue sources provided by the Company,and found no
exceptions.Staff examined the billing method of Boise Valley.These billings are organized
with a multiple invoice reference system.This includes a group billing method involving
contract arrangements,disputable rates and third parties undisclosed to Staff.Staff understands
these disputable rates are treated as adjustments to accounts receivable in the year of resolution.
Staff’s concerns include three items:(1)extended time periods for resolution;(2)the inability to
test the reasonableness of any single adjustment;and (3)the need to rely on simplified
explanations,rather than documentation,to test complex transactions with interested third
parties.
ORDER NO.33143
Staff recommended an audit of the internal oversight/controls and intrastate revenues
be performed for the 2014 operating year to verify compliance with the definition of intrastate
revenues described in Case No.EIR-R-0l-0l for the 2014 reported revenues.Staff
recommended the Commission accept the amount of $846,598 as the Idaho intrastate operating
revenue for Boise Valley for the year 2013.This would result in a reduction of $2297,3l7 in
reported Idaho interstate revenues,($3,143,915 -$846,598).
COMMISSION FINDINGS
Based upon our review of Boise Valley’s objection letter and Staff comments,the
Commission finds that Boise Valley filed a timely objection to its 2014 assessment.We further
find that Boise Valley overreported its gross intrastate operating revenue for calendar year 2013.
Based upon Staff’s review of the Company’s intrastate revenue source records and
Boise Valley’s lack of objection to Staff’s corrected intrastate revenue amount,we find the
Railroad’s correct intrastate gross operating revenue for calendar year 2013 to be $846,598.
Applying the assessment percentage of 0.5327%,as mandated by Commission Order,to the
corrected revenue of $846,598 produces a corrected 2013 regulatory fee of $4,509.83.
ORDER
IT IS HEREBY ORDERED that the total intrastate revenues for Boise Valley
Railroad for the 2013 calendar year totaled $846,598.Accordingly,the Company’s 2014
regulatory assessment fee shall be $4,509.83.
IT IS FURTI-JER ORDERED that the Commission shall refund in a timely manner to
Boise Valley Railroad the difference between the regulatory fee previously remitted by the
Company to the Commission and the corrected 2014 regulatory assessment fee of $4,509.83.
IT IS FURTHER ORDERED that an audit of the Company’s internal
oversight/controls and intrastate revenues shall be performed for the 2014 operating year to
verify compliance with the definition of intrastate revenues outlined in Case No.EIR-R-Ol-0l.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)may petition for reconsideration within twenty-one (21)days of the
service date of this Order with regard to any matter decided in this Order.Within seven (7)days
after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.Idaho Code §61-626.
ORDERNO.33143 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this .36k k
day of September 2014.
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1
PAUL KJELLANDER,DESIDENT
o
MACK A.REDFORD,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
,/1 ‘
tLU
Jean D Jewell
Commission Secretary
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ORDERNO.33143 4