20080425Comments.pdf

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
RECEiVED
~,)v."".
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ALGOMA WATER )
COMPANY'S APPLICATION FOR APPROVAL )
TO SELL THE WATER COMPANY AND FOR )
AN ORDER AUTHORIZING INCREASES IN )
THE COMPANY'S RATES AND CHARGES FOR)
WATER SERVICE. )
)
CASE NO. AWS-W-07-1
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilties Commission, by and through its attorney of record,
Donald L. Howell, II, Deputy Attorney General, submits the following comments in response to
Order No. 30526 issued on April 18, 2008.
BACKGROUND
In July 2007, Algoma Water Company fied 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 requested a significant increase
in its monthly flat rates for water service.
In August 2007, the Commission issued a Notice of Application and set a deadline for
intervention. Order No. 30405. No persons petitioned to intervene. The Commission then issued a
Notice of Parties in September 2007. Thereafter, the Company and Staff engaged in protracted
STAFF COMMENTS 1 APRIL 25, 2008
discovery. On March 27, 2008, the Company requested that its initially proposed rate be increased.
Based upon this request, the Commission issued an Amended Notice of Application and determined
to process this Application by Modified Procedure. Order No. 30526. The Amended Notice was
served on every customer.
In the Application, Mr. Greenwood proposed to sell Algoma Water (and apparently the three
non-regulated sewer systems) to Mr. Carier for approximately $161,000. Attachment D,
Addendum NO.2. As part of the Application, Mr. Carier submitted a financial statement. The
Application indicated that Mr. Carier 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 stated that Mr. Carier possesses the
financial ability to assume responsibilty for the Algoma Water System. ¡d.
In addition to the financial statement, the parties also included an abbreviated business plan
that explains how Mr. Carier 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
indicated that Mr. Carier intends to continue to employ Ms. Brittain as the bookkeeper/accountant.
Ms. Brittain has been Algoma's bookkeeper for the last five years.
Algoma recently requested a greater increase in its monthly flat rates for service than was
originally sought in its July 2007 Application. The Company now proposes to increase its existing
monthly flat rates for service as set out below:
Commercial Rate: from $28.15 to $54.00 per month
Residential Rate: from $17.59 to $36.00 per month
The Company's March 2008 request states that it has been many years since there has been a rate
increase. The Company anticipates making major repairs to its system during the sumer of2008.
It further states that the Company is operating "in the red with negative net income" and requests an
expedited review.
STAFF ANALYSIS
Staff has reviewed the Company's Application along with the financial records of Algoma
Water Company for the years 2004-2007, Commission Orders and prior Staff audits. Based upon
this review, Staffis generally supportive of the Company's Application requesting an increase in
STAFF COMMENTS 2 APRIL 25, 2008
rates and the transfer of Certificate of Necessity and Convenience No. 396 from Paul Greenwood to
Robert Carrier, as discussed in further detail below.
A. System Description
The Algoma water system serves the Algoma Addition Subdivision. The subdivision is
located in Bonner County about six miles south of Sandpoint.
The water system is supplied by one deep well with a pump rated at 96 gallons per minute
(GPM) capacity and with a storage reservoir holding 60,000 gallons. There are two booster pumps
capable of delivering water from the reservoir into the distribution system consisting mostly of 6-
inch PVC pipe with one section of 8-inch PVC pipe serving commercial customers. According to
Water System Mgt., Inc. (current operator of Algoma Water) the system is not individually metered
and does not have meter boxes. As-built drawings for the system are inadequate to properly
identify individual shut off valves from the distribution main to the customer service line. A flow
meter was installed at the pump house to measure total water production and usage. Algoma Water
indicated that there are no plans for meter installations for individual customers.
According to Algoma Water, the system can service 30 customers. At present, there are 27
customers being served, 21 residential and six commercial customers. Assuming a peak household
demand of 3 GPM, the total requirement for 27 customers is approximately 81 GPM, which is well
below the 96 GPM rating of the pump operating without the reservoir. The Company does not
expect additional hook-ups in the near future.
B. Transfer of Ownership
Upon the sale of a utilty from one pary to another, Staff evaluates the transaction to
determine ifit is in the public interest, the bona fide intent of the buyer, and financial abilty of the
buyer to assume the responsibilities of providing adequate service to the customers. Staff has
reviewed the financial information provided by Mr. Carier and believes that Mr. Carrier possesses
the financial wherewithal to continue the uninterrpted obligations of Algoma Water Company.
The business plan submitted by Mr. Carrier states his intent to maintain the curent system
operator, bookkeeper and pump supplier, which wil help ensure that the transaction will have little
impact on customers. Mr. Carier has also been investing in real estate in northern Idaho, and Staff
is satisfied with his intentions of maintaining the water system. Staff believes it serves the public
interest for the Commission to approve the sale.
STAFF COMMENTS 3 APRIL 25, 2008
Mr. Carrier also owns and operates three community sewer systems in Bonner County, near
the area of Algoma Water Company's service territory. Staff has concerns with the potential to
coming Ie fuds and the impact from activities between the water utility and these unegulated
affiliated companies. The danger of transactions between affiliated businesses is that the pressure
for profits creates a risk for customers that management may shift the costs and burdens of company
operations so that the beneficial aspects flow to the affiliates and the burdensome aspects flow to
the regulated water company.
During its review, Staff did not discover any affiiated transactions between the unegulated
sewer systems and Algoma Water. The financial bookkeeping of the water company is on a stand-
alone basis, and should continue to operate that way. Staff does recognize that there are similarities
between the businesses which may provide some economies of scale when purchasing equipment
for maintenance and repairs, and reminds the Company that in those instances, the cost of the
equipment should be allocated among all companies receiving a benefit from the purchase of such
equipment.
The sale of Algoma Water Company was finalized on April 1,2007 and Mr. Carier has
been operating the system since that date. Mr. Carer continues to use the service of Water
Systems Management as operator of the system and retains the bookkeeping services of Ms.
Brittain. Given that the system has been operating without customer complaints since the date of
sale and the same personnel are in place to operate the business, Staff has no objections to the
transfer of the certificate to Mr. Robert Carier. Staff recommends the Commission approve the
sale.
C. Revenue Requirement
The Company's current rate structure was approved by the Commission in May 2002, as
par of Order No. 290 i 3. That Order authorized the Company to continue the rates and water
service previously established and approved for the Algoma water system. The curent rates consist
of flat rates for residential service of $17.59 per month and $28.15 per month for commercial
service. Based upon our audit, Staff determined that the current rates are not sufficient to cover the
operating costs of the system. The Company has operated at a loss for three of the past four years,
as shown in the table below:
STAFF COMMENTS 4 APRIL 25, 2008
2004 2005 2006 2007
Revenue $ 5,930.98 $ 7,662.81 $ 5,680.52 $ 6,002.77
Expenses 8,846.08 5,884.00 9,266.66 10,803.34
Net Income $(2.915.10)$ 1.778.81 $(3.586.14)$(4.800.57)
The previous owners did not record any rate base (physical plant) and therefore the rates in
effect did not reflect a return on capital investment. All improvements made to the system, dating
back to at least 2004, were accounted for as repairs and maintenance (expenses) and not capital
improvements. Additionally, the purchase price of the system when purchased by Paul Greenwood
from Larry Neu in 2006 was recorded off the books and not recoverable in rates, presumably
because all plant was considered contributed capitaL. Staff recommends the same treatment for the
curent transaction. The purchase price paid for the system by Robert Carier should not be
recorded as rate base or ear a return and as such should not be recoverable in rates from customers.
The Company's financial statements and Annual Report for 2007 indicated total anual
expenses of$1O,803.34. Staff uses the expenses for 2007 as the test year expenses for
determination of the annual revenue requirement except for two adjustments discussed below in
further detail and ilustrated on Attachment 1.
The first adjustment removes from test year expenses $17.55 for penalties paid by the
Company. Staff removes this expense because late fees and penalties are not expenses that should
be passed on to customers and recovered in rates.
Staffs second adjustment is to Repairs and Maintenance Expense. The Company expensed
$5,131.46 for repairs in 2007, the bulk of which was for labor to repair a leak in the water main. A
similar leak occurred in 2006. The Company stated that major repairs are expected for this coming
summer at an estimated cost of $4,000. The repairs are consistent with what can be anticipated of
an aging water system. The table below ilustrates the increasing cost of maintenance on the system
since 2004.
Repairs and Maintenance
I
St I f is concerned with the high level of maintenance expenses in that they may not be
recurring d thus should not be recoverable in rates as ifthey would occur every year. However,
Staff is als cognizant of the capital intensive nature of small water companies and the financial
2004
$ 825.40
2005
$ 1050.92
2006
$ 4,565.24
2007
$5,131.46
5 APRIL 25, 2008
burden imposed on the owners. Therefore Staff recommends a more level amount of $4,000 to be
included in rates, which is also anticipated to cover the scheduled expenses for 2008 and provide
additional funds for repairs and maintenance in the future years. Staff notes that this amount is
higher than the average repairs for the previous four years of $2,893. If more expensive repairs are
necessary, the Company has some options available when seeking rate recovery. The expenditues
could be capitalized as plant assets and the Company could seek to recover the associated anual
depreciation expense, along with a return on investment. Major capital improvements or installng
individual customer meters may also justify a request for a surcharge, in which the Company could
recover the costs. However, Staff believes that $4,000 is an appropriate level for maintenance and
repairs.
In setting rates for small water companies, Staff typically adjusts Water Testing Expenses to
recover a multi-year average of annual testing expenses. Because water tests are required at
different times on different schedules, some tests only being required once every nine years, the
multi-year averaging methodology spreads the recovery of all testing expenses equally over a period
of time. With multiple changes in ownership of Algoma Water Company, historical records for
water testing were not available. However, Staff met with the Water Quality Analyst at the Coeur
d' Alene offices of the Idaho Department of Environmental Quality who provided the testing
requirements for the Algoma system, which are shown on Attchment NO.2. Based on this
information, Staff recommends an annual level of Water Testing Expense of$615.89, which is the
anual average of all required tests.
Staffs recommended adjusted Revenue Requirement for Algoma Water Company is
$10,002.22, as shown on Attachment 1. This represents an increase of approximately $4,000 (or
67%) over the 2007 revenue of $6,002.77.
D. Rate Design
In its initial Application for a monthly rate change fied with the Commission on July 18,
2007, the Company proposed to increase the flat rates for residential customers to $30 per month
and $40 per month for commercial customers. On March 27, 2008, the Company amended its
Application and proposed increasing the flat rates for residential customers to $36 per month and
$54 per month for commercial customers. The Company justifies this change because it is
expecting major repairs on the system during the summer of 2008.
STAFF COMMENTS 6 APRIL 25, 2008
Staff recognizes the Company's desire to keep all the rates simple and because the system is
not individually metered, Staff believes that maintaining a flat rate design is appropriate.
The Company's proposed rate design causes the residential customers to receive a greater
percentage increase than the commercial customers. As proposed by the Company, the percent rate
increase for residential customers is 104.7% and 91.8% for commercial customers. Staff believes
that a rate design based on a uniform percent rate increase to both customer classes is more
appropriate.
As indicated previously, the Staff-adjusted anual revenue requirement for the Company for
the test year is $10,002.22. Using this adjusted revenue requirement, Staff calculated the new
monthly flat rates of$27.00 for residential and $44.50 for commercial, a 53.5% and 58.1% increase,
respectively. A comparison of the current rate, the Company's proposed rates and Staffs proposed
rates are shown in the summary table below.
EXISTING RATES COMPANY'S REQUEST STAFF'S PROPOSAL
Customer No. of Current Current Proposed Proposed Percent Proposed Proposed Percent
Class Customers Rate Revenue Rate Revenue Increase Rate Increase Increase
Residential 2 i $ i 7.59 $4,432.68 $36.00 $9,072.00 104.7%$27.00 $6,804.00 53.5%
Commercial 6 $28.15 $2,026.80 $54.00 $3,888.00 91.8%$44.50 $3,204.00 58.1%
Total 27 $6,459.48 $12,960.00 $10,008.00
E. Other Operational and Maintenance Issues
Staff requested that the Company provide records of water production data for the water
system for the past five years. The Company indicated that monthly readings were made at the well
house meter between April 11,2006 and September 20,2007. Based on these readings, an average
monthly production during the period was calculated to be 524,765 gallons or 19,435 gallons per
customer. However, during Staffs visit at the facilty on April 23, 2008, the well meter log book
indicates that there were missing monthly records from September 2007 to March 2008. Staff also
noted that the well house meter was no longer functioning. Staff stresses the importance of
collecting well production data and recommends that the Company replace the well meter as early
as possible. Staff is also concerned about the irregular reading of the well meter and recommends
that the Company reads the meter continuously on a monthly basis. This wil provide a good base
of production data which could be used in managing the system, especially since individual
STAFF COMMENTS 7 APRIL 25, 2008
customer meters are not installed. For example, water production in one month that is significantly
higher than the same month in a previous year could indicate a system leakage subject to
investigation and repair by the Company.
Staff contacted the Coeur d' Alene Regional Office of the Idaho Deparent of
Environmental Quality (IDEQ) to check on Algoma's compliance with DEQ regulations. IDEQ
informed Staff that a Sanitary Survey was conducted by IDEQ on July 22,2005 on the Algoma
water system. Sanitary Survey is an onsite review of the water source, facilties, equipment,
operation and maintenance of a public water system for evaluating the adequacy of such source,
facilities, equipment, operation and maintenance for producing and distributing safe drinking water.
Generally, for community water systems, IDEQ conducts a Sanitary Survey every three (3) years,
with some exceptions. During the 2005 Sanitary Survey, IDEQ found several deficiencies that must
be addressed which were contained in its letter to the Company in July 28,2005. Staff discussed
these deficiencies with the Company and IDEQ, and it appeared that all these deficiencies were
corrected by September 2006.
The Commission also received comment from a customer indicating that the drain field for
all the septic tans is just two lots away from the well and it contaminates the well regularly. The
Company indicated that the drain field has no influence on water quality for the Algoma water
system. Staff notes that test results done in 2006 reported to IDEQ indicate no violations for nitrate
and fecal coliform which are potential contamination indicators from sources such as leachate from
septic tan and sewage or from human and animal wastes. Staff contacted the Company to find out
if there have been recent tests for microbial contaminants. In 2006 and 2007, the Company
performed monthly bacteria testing and the required annual nitrate tests were also completed.
Copies of 2007 test results were provided to the Staff. Staff reviewed the data and it appears that
results of microbial and nitrate tests are in compliance with IDEQ's drinking water quality
standards.
The customer comment also indicated that the shut-off valve serving the customer's
property could not be located by Algoma Water personnel when the customer requested to be
shown its location. Staff notes that the system is not individually metered and does not have meter
boxes. Staff also notes from the Algoma water system design plans that each customer is provided
a %-inch shut-off valve (curb stop). Staff asked the Company how they stop the flow of water to a
customer in case of emergency or when requested by the customer. The Company indicated that the
drawings for the system are inadequate to properly identify individual shut-off valves from the
STAFF COMMENTS 8 APRIL 25, 2008
distribution main to the customer service line. Rather than digging up every customer service, the
Company is addressing this issue as the need arises. In few cases, valves have been located by the
Company. However, most of shut-off valves could not be located and the Company believes that
these valves have been buried under the pavement over the years durng road improvement. The
Company affirms that if a customer requests a service line shut off, the Company would locate the
service line and a new shut-off valve would be installed.
The Company's plan to locate shut-off valves when the customer requires a service line shut
off appears reasonable if it is not an emergency situation. However, if there is a sudden break in the
service line on the customer side of the shutoff valve, excessive damage to the customer's property
may occur if the Company has not already located the shut-off valve. Staff recommends that
Algoma works with Staff in developing a plan and cost estimate to properly identify and mark
approximate locations of the individual shut-off valves before problems occur.
During the Staffs review of Algoma's water rights, it was found that the latest owner of
record of the Company's water right is Goldan, Inc. Staff contacted the Idaho Deparment of Water
Resources (IDWR) and confirmed that Goldan, Inc. is stil the owner of the water rights. No
application for change of ownership of the water rights has been made to date. IDWR indicated that
an appropriate form must be fied with IDWR for change of water right ownership if there is a
change of ownership of the public water system. Verification of system water rights could be
complicated when IDWR starts the water rights adjudication process in northern Idaho if the water
rights ownership is not updated. Staff recommends that Algoma should fie the required notice in
water rights ownership as soon as possible.
CUSTOMER RELATIONS
The Company provided notice of the proposed transfer of ownership from Paul Greenwood
to Robert Carrier in a letter to customers dated June 1, 2007, which was included in the June bil.
The Company provided notice of the initial proposed rate increase in a letter mailed to customers
August 10,2007, and published a notice in the Bonner County Daily Bee on August 16,2007.
These documents meet the requirements of the Utilty Customer Information Rules (UCIR), IDAPA
31.21.02.000 et seq.
When the Company responded to the second set of Staff Production Requests in March
2008, it included a proposal to revise its rate increase request. Additional revenue was requested to
cover the costs of scheduled repairs to be done this summer. Notification of this change to the
STAFF COMMENTS 9 APRIL 25, 2008
originally proposed rates was included in Commission Order No. 30526 and sent to all customers
on April 11, 2008.
The General Rules and Regulations section of the Company's tariff was submitted by the
Company in its original Application and does not comply with current Commission requirements.
Staff is wiling to assist the Company in this update by providing a sample tariff including the
Commission's General Rules and Regulations for Small Water Utilties in electronic format for ease
of editing. The Rules Summary provided by the Company, updated in 2006, fulfills the
requirements of the Utility Customer Relations Rule 700 (IDAPA 31.21.01.700) and is curently
being mailed to existing customers on an anual basis.
The Company's billng statements and disconnection notices meet the requirements of the
Commission's Customer Relations Rules, IDAP A 31.21.01. However, the example of a past due
biling notice provided by Algoma suggests that the Company postpones disconnection efforts for
several months after a bil has become due and payable. The Company has expressed concern about
the effectiveness of its past due notices and disconnect procedure. The Company states that some
customers do not pay until after the second and final notice has been mailed, and some customers
make parial payments rather than paying off the entire balance past due. Staff appreciates the
wilingness of the Company to work with customers of limited financial means, but also recognizes
the Company's need for consistent cash flow to operate. Staff recommends that the wording of its
past due biling statements and its disconnection notices be revised. Staff is wiling to work with
the Company in revising its documentation and improve collection procedures including the
implementation of a late payment charge if approved by the Commission. Other utilties, including
several small water companies, have adopted a late payment charge as a means to encourage
customers to pay on a timely basis. While the Company has not requested this charge in its
Application, the Staff recommends the Commission authorize a late payment charge of one percent
per month on any balance owing at the time of the next monthly biling as a means of encouraging
prompt payment.
The Company states that it has never disconnected a customer, has never denied service to a
customer, and does not require deposits from either new or existing customers. At the present time,
disconnection is not a cost-effective method for the company to use for collection of past due
accounts. The absence of meter boxes on the unmetered system hampers the Company's abilty to
identify the exact location of some shut-off valves. Having to search for and excavate shut-off
valves makes disconnection time-consuming and expensive, which, combined with its willngness
STAFF COMMENTS 10 APRIL 25, 2008
to give customers additional time to pay, has lead to the Company's reluctance to disconnect
service. Revising its collection procedures and implementing a late payment charge would give the
company a cost-effective means to encourage customers to pay on a timely basis.
The Commission received two written comments from customers regarding this case. The
comments received to date expressed concern about the percentage of increase rather than the total
monthly rate. One of the comments included system design issues that were addressed above.
The Company says that they have had no requests for conferences or complaints from
customers. The Consumer Staff have received no informal complaints or inquiries during 2007 or
2008 to date. No customers attended the Staff public workshop held April 22, 2008.
STAFF RECOMMENDATION
. Staff recommends that the Commission approve the sale of Algoma Water Company to
Robert Carier as well as the transfer of Certificate of Public Convenience and Necessity No.
396.
. Staff recommends that the purchase price of Algoma Water Company be recorded off-book
and not recovered through rates.
. Staff recommends that the adjusted revenue requirement based upon a 2007 test year be set
at $10,002.22 per year.
. Staff recommends that the Commission approve a flat rate tariff consisting of $27.00 per
month for residential customers and $44.50 per month for commercial customers as
presented in the Rate Analysis table.
. Staff recommends that the Commission direct the Company to develop and implement a
plan for identification of Company shut-off valves at service lines to customers.
. Staff recommends that the Commission direct the Company to immediately replace the well
meter and continuously record monthly water production meter reading.
. Staff recommends that the Commission direct the Company to update its documentation to
meet current UCRR requirements.
. Staff recommends that the Commission direct the Company to revise its bils and notice to
comply with UCRR.
STAFF COMMENTS 11 APRIL 25, 2008
. Staff recommends that the Commission approve a late payment charge of 1 % per month on
any balance owing at the time of the next monthly biling to encourage its customers to pay
in a timely manner.
· Staff recommends that the Commission direct the Company to update water right ownership
with IDWR as soon as possible due to the recent sale of Algoma to Robert Carrier.
Respectfully submitted this 2.51' day of April 2008.
Donald L. Ho ll, II
Deputy Attorney General
Technical Staff: Donn English
Gerry Galinato
Chris Hecht
i :umisc/commentslawsw07. i dhtcdeggcwh
STAFF COMMENTS 12 APRIL 25, 2008
2007 Expenses
Bank Charges
Lab Testing Fees
Licenses and Permits
Maintenance Management
Miscellaneous
Penalties
Postage and Delivery
Professional Fees
Printing and Reproduction
Repairs and Maintenance
Property Tax
Utilities
Total Expenses
Algoma Water Company
AWS-W-07-01
Attachment 1
Staff Calculation of Annual Revenue Requirement
Algoma Books
$ 32.00
268.00
215.00
1,926.00
41.16
17.55
38.22
1,278.00
30.33
5,131.46
386.16
1,439.46
$ 10,803.34
Algoma Water Company 2007 Revenue
Staff Recomended Revenue Requirement
Percentage Increase
Staff
Adjustment
347.89
(17.55)
(1,131.46)
Staff Revenue
Requirement
$ 32.00
615.89
215.00
1,926.00
41.16
38.22
1,278.00
30.33
4,000.00
386.16
1,439.46
$ 10,002.22
$
$
6,002.77
10,002.22
66.63%
Attaclient 1
Case No. AWS-W-07-1
Staff Comments
04/25/08
Algoma Water Company
Annual Cost of Water Testing
AWS-W-07-01
Tests Amount Frequency Annual Cost
Coliform Sample $16.00 monthly $192.00
Nitrate Analysis $20.00 annual $20.00
Arsenic Analysis $20.00 3 years $6.67
Organic Group $200.00 3 years $66.67
VOC Analysis $250.00 6 years $41.67
Synthetic Org. C $2,000.00 9 years $222.22
Lead & Copper $200.00 3 years $66.67
$615.89
Attachment 2
Case No. AWS-W-07-1
Staff Comments
04/25L08
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 25TH DAY OF APRIL 2007,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AWS-W-07-01, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
PAUL GREENWOOD, OWNER
ALGOMA WATER COMPANY
PO BOX 751
SANDPOINT ID 83864
BOB HANSEN
67 WILD HOPE TRAIL
SANDPOINT, ID 83864
E-mail: wsmibob(iaol.com
ROBERT CARRER
3842 HIGLEY STREET
LAS VEGAS, NV 89103
Jo~SECRETAR ..
CERTIFICATE OF SERVICE