11012001.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
TONYA CLARK
DON HOWELL
LYNN ANDERSON
DAVE SCHUNKE
MICHAEL FUSS
RANDY LOBB
BOB SMITH
MARGE MAXWELL
GENE FADNESS
WORKING FILE
FROM:
DATE:
NOVEMBER 5, 2001 RE: CASE NO. BCS-2-01-01 (Bar Circle “S” Water)
PURCHASE OF GARWOOD BUSINESS CENTER WATER SYSTEM
EXPANSION OF CERTIFICATED AREA

On July 22, 2001, Bar Circle “S” Water, Inc. (BCS; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting Commission approval of the Company’s purchase of the Garwood Business Center Water System. Reference July 20, 2001 Purchase and Sale Agreement (Agreement). The Company also seeks to extend its certificated area of service to two areas that are presently undeveloped. Reference IDAPA 31.01.01.112.
BCS is a Commission regulated water company operating in Kootenai County near Hayden Lake, Idaho. As reflected in its most recent annual report, the Company provides metered water service to 117 residential customers and 1 commercial customer. The Bar Circle “S” water system is a looped metered distribution system with one (1) 50 horsepower 600 gallon per minute well and a 55,000 gallon elevated steel water tank.
The Garwood Business Center Water System serves one (1) commercial customer and 13 additional commercial development lots. It consists of a looped metered distribution system with one (1) 15 horsepower 58 gallon per minute domestic well. The system also includes three (3) booster pumps and a 185,000 gallon storage tank that provides 2000 gallons per minute of fire booster pump capacity.
The proposed purchase price for the Garwood Business Center Water System is $50,000. Pursuant to the Agreement, possession was transferred on the first day of August 2001. The closing will occur one week after approval by the Commission. Following Commission approval of the proposed purchase, the Company proposes to interconnect the two water systems and provide service under the Company’s existing tariffs. The Company has requested no change in rates.
A Notice of Application and Modified Procedure in Case No. BCS-W-01-01 was issued by the Commission on September 19, 2001. The deadline for filing written comments was October 26, 2001. Commission Staff was the only party to file comments. Staff recommends that the Company’s Application be approved. The acquisition, Staff contends, will provide BCS with an additional culinary water supply source and an increase in available fire flow capacity. Staff believes that the purchase price appears to be negotiated at arms length and is a reasonable price given the added benefits to Bar Circle “S”. The acquisition of the Garwood well and reservoir will also provide additional water supply to meet future growth. The Company’s line extension rules, if followed, Staff contends, should ensure that the costs for expansion into the certificate expansion area will be properly allocated to customers or developers requesting service and will not be borne by existing customers.
Staff notes that the Company’s current gross investment in plant (well and reservoir improvements) is $73,755 and that all distribution mains and services in the BCS system have been contributed to the Company. The $50,000 Garwood purchase price together with the estimated $64,000 in interconnection costs represents a new investment of $114,000 or a 154% increase in the Company’s gross investment in plant.
Commission Decision
Bar Circle “S” has requested Commission approval of its purchase of the Garwood Business Center Water System and an expansion of its certificated service area into two contiguous areas that are presently undeveloped. The Company has provided individual notice of the Garwood purchase to its customers. Staff recommends that the Company’s Application be approved. Does the Commission find it reasonable to approve the Company’s Application? Does the Commission find that the present and future public convenience will be served by approval of the Company’s Application? If not, how does the Commission wish to proceed?

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DECISION MEMORANDUM 3