20080328Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER KEMPTON
COMMISSION SECRETARY
LEGAL
COMMISSION STAFF
FROM:TERRI CARLOCK
DATE:MARCH 28, 2008
SUBJECT:ALGO MA WATER CO MP ANY'S APPLI CA TI ON TO SELL THE
COMPANY TO ROBERT J. CARRIER AND REQUEST FOR A RATE
INCREASE; CASE NO. A WS-07-
On July 182007, Algoma Water Company filed an Application seeking Commission
approval to sell the Company (and transfer its Certificate of Public Convenience and Necessity
No. 396) to Mr. Robert J. Carrier. In addition to the sale of the Company, Algoma requests a
significant increase in its monthly flat rates for water service.
Algoma is a small water company serving about 30 customers near Sandpoint, Idaho.
The Company offers unmetered, flat-rated monthly service. In October 2006, the Commission
issued Order No.3 0155 authorizing the current owner, Mr. Paul Greenwood, to purchase the
water company. Order No.3 0155 also noted that Mr. Greenwood owns three sewer systems in
Bonner County, Idaho.
A. The Proposed Sale
In the present Application, Mr. Greenwood proposes to sell Algoma Water (and
apparently the three non-regulated sewer systems) to Mr. Carrier for approximately $161 000.
Attachment D, Addendum No.2. As part of the Application, Mr. Carrier has submitted a
financial statement. The Application indicates that Mr. Carrier has a background in real estate
and "income producing business management." Application at 1. Mr. Carrier has been investing
in Bonner County since 2004 and also owns real estate in Nevada. The Application states that
Mr. Carrier possesses the financial ability to assume responsibility for the Algoma Water
System. Id. at 1.
DECISION MEMORANDUM MARCH 28, 2008
In addition to the financial statement, the parties have also included an abbreviated
business plan that explains how Mr. Carrier intends to incorporate the water company into his
other businesses in Idaho. Briefly, Mr. Carrier intends to retain Bob Hansen of Water Systems
Management, Inc. to continue the overall management of the Company and continue the services
of Terry Deal (Deal Pump & Electric) for operational maintenance and emergency purposes.
Finally, the business plan indicates that Mr. Carrier intends to continue to employ Joan Brittain
as the bookkeeper/accountant. Ms. Brittain has been Algoma s bookkeeper for the last four
years.
B. The Proposed Rate Increase
Algoma also proposes to increase its monthly, flat rates for service. The Company
proposes to increase its rates as set out below:
Commercial: from $28.15 to $40.00 (42% increase)
Residential: from $17.59 to $30.00 (70% increase)
Application at 22. The Application states that it has been many years since there has been a rate
increase and that the Company has made extensive repairs to its system during the last two years.
The Company requests that the Application be processed under Modified Procedure. The
Company has not proposed an effective date for the requested rate increase.
CURRENT STATUS
The last Production Request Response has been received. Delays caused by many factors
on the part of both parties have drawn out the timing on this case. Staff recommends this case be
processed under Modified Procedure with a 21-day comment period.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure?
Does the Commission wish to issue a notice with a 21-day comment period?
j~TL ~~d~
Terri Carlock
TC: AWS-O7-0Itc
DECISION MEMORANDUM MARCH 28 , 2008