20100114Petition for Reconsideration.pdf

Bar Circle '5' Water Co Inc
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PO Box 1870
Hayden ID 83835
2086659200
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Janua 11,2010
Jean D. Jewell, Secretar
Idaho Public Utilties Commssion
P.o. Box 83720
Boise, Idaho 83720-0074
Re: CASE NO. BCS-W-09-02
IN THE MATTER OF THE APPLICATION OF BAR CIRCLE "s"
WATER COMPANY FOR AN ORDER AUTHORIZING INCREASES
IN THE COMPANY'S RATES AND CHARGES FOR WATER
SERVICE IN THE STATE OF IDAHO
Dear Ms. Jewell:
Enclosed for filing are an original and seven (7) copies of Applicant's Petition for
Reconsideration of Order No. 30970 in this case.
Also enclosed are 2 sets of new taff sheets for the Commission's approval that comply
with the Commission's fmdings in Order No. 30970. Please retu one set ofthe taff
sheets with the Commission's approval stamp to the Company for our records.
Robert N. Turnipseed, President
Bar Circle "s" Water Company Inc.
P.O. Box 1870
Hayden, Idaho 83835
TeL. [phone]
Fax [phone]
e-mail avondalecon~verizon.net
Representative for Bar Circle"S" Water Co.
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ZO i 0 JAN 14 PH 2: 21
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
BAR CIRCLE "S" WATER COMPANY ) CASE NO. BCS-W-09-02
FOR AN ORDER AUTHORIZING INCREASES IN)
THE COMPANY'S RATES AND CHARGES FOR) PETITION FOR
WATER SERVICE IN THE STATE OF IDAHO ) RECONSIDERATION
COMES NOW Bar Circle "s" Water Company Inc., ("Bar Circle "S",
"Applicant" or "Company") and hereby petitions the Commission for
reconsideration of certain parts of Order No. 30970.
Applicant filed an Application with the Idaho Public Utilities Commission on
June 19, 2009 for authority to increase the water rates it charges its customers
and to make changes in certain non-recurring charges. On October 23, 2009,
the Staff of the Idaho Public Utilities Commission (Staff filed its "Staff Report"
presenting its analysis of the Company and making recommendations regarding
the Application to the Commission. Applicant filed a reply to the Commission
Staff report on November 5, 2009. The Commission issued its Order No. 30970
on December 30,2009.
Although Applicant does not agree with a number of the Commission's
findings in Order No. 30970, it is willng to accept the majority of those findings.
Application
BCS- W -09-02
1
However, there are two issues Applicant believes are very important to the
continued viability of the water company. The first of these issues is discussed in
the Commission's findings on pages 5 and 6 of the order regarding Applicant's
meter upgrade project. The second is regarding Applicants new customer
connection fees discussed in the findings on page 13 of the order. The two
issues are discussed separately below.
Automated Electronic Meter Reading Project
On May 4, 2009 Bar Circle "s" Water Company filed an application for
authority to incur debt in the amount of $55,000 (Case No. BCS-W-09-01) to pay
for the installation of a 6 inch flow meter required by the Idaho Department of
Environmental Quality (DEQ), to pay abandonment costs of a six inch well that
was no longer in service and to convert from manual meter reading to an
automated electronic meter reading (AMR) system. The Commission issued
Order No. 30832 on June 3,2009 authorizing the Company to borrow $55,000
for these system improvements from Community Bank in Post Falls Idaho.
In its Order No. 30832 at page 3, the Commission reiterated the Staffs
recommendations stating "At this time, Staff believes the Company can justify the
AMR installation provided rate base return over the life of the meters is used as
the ratemaking treatment. This ratemaking treatment wil allow for the final AMR
cost quantification and evaluation in the rate case."
The Commission's findings in the order at page 4 stated "These
improvements, we find, wil put the Company's water system in compliance and
wil generally benefit the Customers of Bar Circle "S". The Commission went on
to state 'We expect the Company to present a cost-benefit analysis of its capital
expenditures in the next rate case." Applicant complied with the Commission's
directive and submitted Exhibit NO.5, a cost benefit analysis, in its rate case
(BCS-W-09-02).
Application
BCS- W -09-02
2
Staff, in its report in this case, incorrectly concluded that Applicant had
withdrawn its request to install the AMR project. Applicant in its reply to the Staff
report explained that an internal ownership problem had delayed the project but
the problem had been resolved and the project was back on track. Applicant
intended to order the new meters the week of November 1, 2009 and indeed did
meet with the equipment suppliers and received an updated cost quote. (Note
that due to delays, the escalation in equipment costs have increased the total
project cost from $44,985 to $51,274.) However, Applicant grew nervous about
placing the order and committing the Company to a large loan requiring monthly
debt service costs without assurance that the new rates the Commission would
authorize at the end of this case would provide the necessary cash flow.
Applicant has not taken out the loan and has diverted owner capital for the other
projects. Applicant therefore elected to not place the order until the Commission
issued its order. Applicant fully intends to move forward with the project and
place the order for installation as soon as spring weather allows assuming the
Commission wil provide rates adequate to provide the necessary cash flow.
Applicant finds itself in a catch 22 situation. It cannot commit to a loan it
cannot repay. The Commission characterizes the project as "...uncertain and
speculative..." (Order page 5) and denies the project for inclusion in the
calculation of revenue requirement to set rates.
Applicant specifically requests that the Commission reconsider its decision
on this issue, find that the project is beneficial and authorize the Company to
move forward with the project. Applicant proposes that the Commission consider
the rates currently authorized by Order No. 30970 to be interim rates, subject to
change upon completion of the AMR project. Exhibit No. 11 attached shows the
effect of this proposal on the rates already approved by the Commission's order.
Applicant pledges to provide the Commission with copies of purchase orders,
invoices and status reports as the Commission deems necessary.
Application
BCS- W -09-02
3
Customer Connection Fees
The Commission's Order No. 30970 at pages 12 and 13 discusses
Applicants proposal to institute a new customer connection charge of $2,500 for
first time connection to the Company's water system when there is no main line
service tap, service line or meter box in place on the propert. The Commission
accepted Staffs recommendation and denied this request stating in its findings
on page 13 "We find no need to include this charge in the Company's tariff. The
Company can request this charge later should its service territory be expanded
and service conditions change." The Commission relied on the Staffs
assessment that there are no lots within the Company's service area excluding
the recently approved Double T Estates expansion that do not have meter boxes
installed on the propert. Applicant failed to address the Staffs recommendation
in its reply to the Staff report.
Bar Circle "s" Water Company requests that the Commission reconsider
its denial of this issue and approve the tariff submitted with the original
Application. The Commission invites the Company to request this charge later
should its service territory be expanded and service conditions change. The
Commission has already approved (by Order No. 30731, Case BCS-W-08-01) an
expansion of the service area to provide service to the Double T Estates
subdivision as acknowledged by the Commission on page 12 of its order. As this
subdivision is developed, no main line service taps or meter boxes have or wil
be installed until a property is purchased and water service requested. Due to
the size of the building lots (5 acres and larger) the location of the main line
service tap and service line are unknown until the location of structures on the
propert are known.
Denial of this tariff at this time wil cause the Company to incur additional
costs to file another application at a later time, increase the Commission's future
case load and could unreasonably inconvenience and delay a propert owner's
construction of a new home. Contractors need access to a water source as well
Application
BCS- W -09-02
4
as electricity during the course of construction. With the tariff in place the
Company can respond quickly to a request for new service. Should there be no
requests for new service for several years the problem is moot as no charges wil
be assessed.
CONTACT INFORMATION
Questions regarding this petition should be addressed to:
Robert Turnipseed
Bar Circle "S" Water Co.
P.O.Box 1870
Hayden, Idaho 83835
Ph: [phone]
Fax [phone]
e-mail XX~verizon.net
(replace XX with avondalecon)
Robert E. Smith
2209 N. Bryson Rd.
Boise, Idaho 83713
Ph. [phone]
Fax [phone]
e-mail XX~yahoo.com
(replace XX with utilitygroup)
Please provide copies of all correspondence, notices and orders to the above
individuals.
Respectfully submitted,
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President
Application
BCS- W -09-02
5
25,034 $27,522
1.2809 1.2809
32,066 $35,254
53,736 $60,347
1,998 1,998
55,734 $62,345
$6,611
11.86%
Bar Circle liS" Water Company
Additional Revenue Requirement for AMR Project
(A)
Approved by
Order 30970
1 Rate Base
2 Rate of Return
3 Net Operating Income Required
4 Net Operating Income realized
5 Net Operating Income Deficiency
6 Incremental AMR Depreciation
7 Adjusted Net Operating Income Deficiency
$ 208,617
12.00%
$ 25,034
(21,634)
$ 46,668
$ 46,668
8 Revenue Requirement to overcome Loss
9 (Includes AMR Depreciation)
10 Incremental PUC Fees ~ .1662%
11 Gross Revenue Requirement to Overcome Loss
$ 21,634.00
36
$ 21,670
Revenue Requirement to Achieve Income Requirement
12 Net Operating Income Requirement Subject to Tax $
13 Tax Gross-Up Factor14 Revenue Increase Required $15 Revenue Increase Required $
16 Amortize Rate Case Expenses17 Total Revenue Increase Required $
18 Additional Increase Required for AMR Project
Percent Increase Required Over Commission
19 Authorized Rates
(B)
Adjusted for
AMR Project
& Loan
$ 259,891
10.59%
$ 27,522
(21,634)
$ 49,156
3,418
$ 52,575
$ 25,052
42
$ 25,094