20030814Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
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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 THE SALE/PURCHASE
OF BITTERROOT WATER COMPANY.
COMMENTS OF THE
COMMISSION STAFF
CASE NO. BIT-O3-
COMES NOW the Staff ofthe Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on
July 25, 2003 , submits the following comments.
On June 17 2003 , Bruce Burnett, owner of Bitterroot Water Company, Inc. (Bitterroot;
Company) filed documentation with the Idaho Public Utilities Commission (IPUC; Commission)
for the sale of the water system s common stock to Cathy and Kenneth Rickel. The Bitterroot
Water Company is a regulated public utility maintaining and operating a water system servicing
approximately 101 customers in Kootenai County, Idaho. The Commission issued Certificate of
Public Convenience and Necessity No. 319 to Bitterroot Water Company, Inc. on
December 14, 1995. Case No. GNR-95-, Order No. 26268.
STAFF COMMENTS AUGUST 14 2003
STAFF ANALYSIS
Staff has reviewed Bitterroot's Application requesting approval to sell the Bitterroot
Water system to Ken and Cathy Rickel. The Rickels currently own and operate the Rickel Water
Company adjacent to, and interconnected with, the Bitterroot water system. The Rickels have an
established history of successfully operating the Rickel Water Company in compliance with
IPUC requirements.
The Bitterroot Water system serving the Silver Meadows subdivision is currently owned
and operated by Bruce Burnett, the subdivision developer. As a developer-owned and operated
system, the physical plant is considered contributed property to the water corporation (IDAP A
31.36.01.103) and therefore has no net value (rate base) for ratemaking purposes.
Bitterroot Water Company, Inc. proposes to sell its common stock rather than the
physical assets of the water system. The Rickels plan to retain the corporate identity of the
Bitterroot Water Company and to operate the two water systems as separate businesses. Staff
has informed the Rickels that the plant valuation of Bitterroot Water Company will be carried
forward at its existing zero net value for ratemaking purposes and the $50 000 stock purchase
price should not be recorded on the books of the Bitterroot Water Company. The stock purchase
is a personal investment by the Rickels and as such is not recoverable from ratepayers.
Staff has contacted the Idaho Department of Environmental Quality (DEQ) to insure that
both the Rickel and the Bitterroot systems are in compliance with DEQ regulations. DEQ
informed Staff that both systems are in compliance except that neither system currently has a
certified operator. DEQ requires that each system have not one but two certified operators. Mrs.
Rickel told Staff that her husband Ken and his brother would be taking the certification course in
the near future. Therefore, with common ownership, the Rickles themselves will be able to
satisfy the requirement for both the Bitterroot and the Rickel water systems. Staff recommends
that the Commission direct both companies to attain full compliance with the DEQ requirements
as soon as possible.
Staffhas determined that both corporations are in good standing with the Idaho Secretary
of State s office. Staff believes that this sale will not adversely impact the customers of either
water system. Although no rate changes are proposed, the Application indicates that a future rate
increase may be necessary due to anticipated repair and maintenance work on the Bitterroot
system. Common ownership and management of the two systems may provide operational
efficiencies that do not currently exist.
STAFF COMMENTS AUGUST 14 2003
CONSUMER ISSUES
On July 1 , 2003 , Bitterroot Water Company provided its customers a notice regarding the
proposed sale of the water system to Ken and Cathy Rickel, local landowners and operators of
the nearby Rickel Water Company. As of August 12 2003 , the Commission has received no
comments from Bitterroot customers regarding the proposed sale.
Bitterroot Water Company states that no customer deposits have been collected.
Therefore, it is not necessary for the Company to file a report regarding deposits on file as
required by the Utility Customer Relation Rule 109.03.
Staff reminds the Company that even though a rate change is not requested at this time
should such a request occur in the future it will require proper customer notification and an
additional application with the Commission. Staff further recommends that the Commission
Order make it clear that water rates are set by the IPUC after an audit and investigation of the
Company s income and expenses during a rate case. Customers will have an opportunity to
review any future rate change application and offer comments prior to the Commission s final
decision.
Both Rickel Water Company and Bitterroot Water Company are generally in compliance
with the rules and regulations of the Idaho Public Utilities Commission, including the Utility
Customer Relations Rules (IDAPA 31.21.01), Utility Customer Information Rules (IDAPA
31.21.02), and Small Water Company Policies (IDAP A 31.36.01). IPUC rules can be reviewed
on line at http://www.puc.state.id.us/Rules.htm. Staff will work with the Companies to make
minor revisions to the annual rules summaries pursuant to IPUC rule changes, that became
effective in May of this year.
Additionally, the rules summary for Bitterroot Water Company indicates there is a
reconnection fee of $25. However, Bitterroot has no tariff approved for a $25 reconnection
charge. The Company has never imposed the unauthorized fee because it has never disconnected
a customer. Because a $25 fee is reasonable and comparable with other approved reconnection
charges, Staff recommends the Commission approve a $25 reconnection charge even though it
was not included in the Application. Staff further recommends that the Commission allow the
reconnection charge to be included with the full set of replacement tariffs to be submitted by the
new owners after the sale is approved.
STAFF COMMENTS AUGUST 14 2003
RECOMMENDATIONS
1. Staff recommends that the Commission approve the sale of Bitterroot Water
Company, Inc.s common stock to Cathy and Kenneth Rickel.
2. Staff recommends that the Bitterroot Water Company be prohibited from recording
any costs of this transaction on the books of the corporation.
3. Staff recommends that the Commission direct the Company to attain full compliance
with the DEQ Certified Operator requirements.
4. Staff recommends that the Company be directed to file the appropriate tariffs to
incorporate the change of ownership and the $25 reconnection charge.
Respectively submitted this !/I ii-
II day of August 2003.
fit ck Inmt
Scott Wood ury
Deputy Attorney General
Technical Staff:Bob Smith
Michael Fuss
Marge Maxwell
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STAFF COMMENTS AUGUST 14, 2003
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF AUGUST 2003
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. BIT-03-, BY MAILING A COpy THEREOF POSTAGE PREPAID, TO
THE FOLLOWING:
KENNETH & CATHY RICKEL
C/O TIM V ANY ALIN
ATTORNEY AT LAW
PO BOX 1228
RATHDRUM ID 83858-1228
BRUCE BURNETT
C/O NORM GISSEL
ATTORNEY AT LAW
1424 SHERMAN AVE, SUITE 100
COEUR D'ALENE ID 83814
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CERTIFICATE OF SERVICE