20040830_931.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DONOVAN E. WALKER
DATE:August 25, 2004
SUBJECT:CASE NO. RES-04-RESORT WATER COMPANY'
APPLICATION FOR A CERTIFICATION OF PUBLIC CONVENIENCE
AND NECESSITY, FOR APPROVAL OF RATES, AND FOR APPROVAL
OF RULES AND REGULATIONS
On August 13, 2004 Resort Water Company, Inc. (Resort Water; Company) filed an
Application requesting that the Commission issue Resort Water a Certificate of Public
Convenience and Necessity. Idaho Code ~ 61-526; IDAPA 31.01.01.111. The Company also
requested that the Commission approve an increase in existing rates and charges for water
service and approve the Company s Rules and Regulations governing the rendering of water
servIce.
Resort Water provides domestic water service to customers in Bonner County, Idaho
primarily to customers located within the Schweitzer Mountain Resort Planned Unit
Development. Resort Water currently serves 287 residential units, or equivalent residential units
(ERU), which include 11 condominium associations billed as a single customer, as well as six
commercial customers representing approximately 91 ERU's. Resort Water s current water rate
is a monthly flat rate of $33.00 per ERU.
According to Resort Water s Application they are requesting an increase in their monthly
flat rate from $33.00 per ERU to $61.96 per ERU. See Exhibit D of the Application. The
Application states that the Company seeks the additional revenues to recover increased expenses
and costs associated with plant additions, and to produce a fair rate of return. The accompanYing
testimony of Tim Elsea, Director of Resort Water Company, states that Resort Water is owned
by Harbor Mountain Utility Company LLC, who in turn is part of a larger family of companies
DECISION MEMORANDUM
know as Harbor Mountain LLC. In 1999 Schweitzer Mountain Resort, including the domestic
water system, Resort Water, was purchased from the Trustee in a federal bankruptcy proceeding.
Mr. Elsea further states that the Company, as part of the larger family of companies, has
access to the necessary capital to enable it to operate the water system in a safe an reliable
manner as a regulated utility, assuming the Company is allowed to earn revenues sufficient to
cover operation expenses and produce a reasonable return on its investment. He describes some
unique circumstances for the operation of the water system given its stand-alone, mountain
location and harsh winter climate. Additionally many of the dwelling units are occupied only in
the winter months, and the resort nature of the customers dictates that very small units may
house many more individuals than a normal residence would support.
Lastly, Mr. Elsea states that Chief of the Schweitzer Fire District has determined that the
water system lacks sufficient storage to meet the flow requirements of the 2000 International Fire
Code. Their engineers have determined that an additional 500 000 gallon reservoir will be
necessary in the near future at a cost of approximately $380 160.
STAFF ANALYSIS
It appears from the Company s Application that they are a water corporation operating a
water system for compensation in the State of Idaho, and therefore subject to the jurisdiction of
this Commission. Idaho Code ~~ 61-124 61-125 61-129. Staff recommends that the proposed
rates be suspended to allow time to audit the Company s financial books, to inspect its physical
facilities, and to investigate the issues raised by the Application. Staff recommends that the
current rate and service be maintained until such time as they can complete their investigation
and report back to the Commission.
COMMISSION DECISION
Does the Commission wish to suspend this matter for a period of five (5) months from
September 13 , 2004?
DECISION MEMORANDUM