28121.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
BITTERROOT WATER COMPANY FOR AUTHORITY TO INCREASE ITS RATES.

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CASE NO. BIT-W-99-1

ORDER NO. 28121

On January 19, 1999, Bitterroot Water Company, Inc. (Bitterroot; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting a change in its tariff rates from a flat rate of $20 per month to a metered rate of $20 per month plus $1.10 per 1,000 gallons of water consumed in excess of 15,000 gallons per month. According to the Application, this change in rates would produce increased revenues to the Company of $9,636 representing an increase in total water revenues of approximately 80%. For reasons detailed below, this Order authorizes Bitterroot to move to a metered rate and to increase its rates and charges for water service by $4,153 annually, or 32% over current revenues, to a total annual revenue requirement of $17,113.
Bitterroot is a regulated water utility providing water service under Certificate of Public Convenience and Necessity No. 319 to approximately 54 customers in Silver Meadows Subdivision, a development located in Kootenai County, Idaho, approximately 15 miles north of Coeur d’Alene to the west of Old State Highway 95. Most of the Company’s customers reside on 5-acre lots and use the water system for both domestic and irrigation purposes.
The Company’s water rates were initially established on May 1, 1996, at a flat rate of $20 per month. Reference Order No. 26436. Customer consumption data was not available at that time. Since that time, the Company has read company meters and now has customer consumption data that can be used to develop a metered rate design. The Company used calendar year 1998 as its test year for this Application. The Company has no authorized rate base on which to earn a return. Reference IDAPA 31.36.01.103.
On June 9, 1999, following completion of its investigation into the Company’s filing, the Commission Staff filed a report with the Commission Secretary containing its analysis and recommendation in Case No. BIT-W-99-1. Staff’s investigation included on site audit of the Company’s records from its inception to December 31, 1998, review of the Company’s past case files, annual reports filed with the Commission and complaint records.

Staff Recommendation
Based on its investigation, Staff concludes that the annual revenue necessary to recover the Company’s operating costs is $17,113, requiring a $4,153 increase in total revenues or 32%. See attachment to this Order. Staff proposed four alternative rate designs for the Commission’s consideration. The Company in written response to Staff’s Report maintains “. . . that the customers are currently abusing the system by extravagant usage and that this alone could exceed the water system’s current capabilities.” The Company requests that rates be set to send a strong conservation signal to customers.
Acknowledging the excessive use of water by many of the Company’s customers, Staff recommended at Commission decision meeting on June 11, 1999, that the calculated revenue requirement be collected by means of a metered rate of $20 per month plus $.75 per 1,000 gallons of water in excess of 15,000 gallons per month, one of the four rate designs presented in its Report. Staff points out that customers on this water system have, under the current flat-rate, used extraordinary amounts of water as compared to customers on metered systems. The change to a metered rate, Staff notes, will result in significant increases in bills to high volume customers unless they change their consumption habits. The following table estimates the effect of this rate design on the Company’s customers:
Annual Consumption Annual
Bill Peak Month Consumption Monthly
Bill Maximum use customer
Average use customer
Minimum use customer 684,400 gal
284,970 gal
<180,000 gal $623
$330
$240 142,680 gal
42,820 gal
<15,000 gal $116
$ 41
$ 20
Following Commission review and consideration of the Company’s Application and Commission Staff’s report, analysis and recommendation in Case No. BIT-W-99-1, the Commission made a preliminarily finding that Staff’s recommended revenue requirement and rate design was fair, just and reasonable and proposed to adopt same. The Commission also preliminarily found that the public interest regarding implementation of Staff’s proposed revenue requirement and rate design did not require a hearing to consider the issues presented and that the Application could be processed under Modified Procedure.
On June 23, 1999, the Commission issued Notices of Application, Staff Report (analysis and recommendation)—and Commission’s proposed adoption of same, and Modified Procedure. The deadline for filing written comments was July 23, 1999. Timely comments were filed by Commission Staff and Ed & Colleen Cliff, customers of the Company.
Staff adopted as its comments its previously filed Report and recommendations.
Ed and Colleen Cliff object to the proposed rates contending that the Company’s customers have not been apprised as to how the rates were calculated. In response to their letter, the Cliffs were provided with a copy of Staff’s Report, a letter from Staff dated August 2, 1999, detailing the manner in which the Staff proposed rates were calculated, and an August 6, 1999, letter from the Company with specific information regarding the customer’s metered usage.

Commission Findings
The Commission has reviewed the filings of record in Case No. BIT-W-99-1 including Staff’s filed report and recommendations, the Company’s related correspondence, and filed comments of Ed and Colleen Cliff and related correspondence. The Commission finds that Staff and Company have provided adequate response to the Company’s customer. The Commission continues to find that the issues presented in this case are suitable for processing under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
The Commission finds it fair, just and reasonable based on Staff accounting, engineering and related financial data to approve an annual revenue requirement for Bitterroot Water of $17,113 (an increase of $4,153 or 32%), and to establish tariff rates for metered service for the Bitterroot Water system at $20 per month plus $.75 per 1,000 gallons of water in excess of 15,000 gallons per month. We trust that the rate design we approve will send a conservation signal to those customers of the Company whose average water usage can only be characterized as unusually large. The Company is directed to file tariff sheets reflecting authorized rates.

CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction and authority over Bitterroot Water Company, Inc., a water utility, and the issues raised in this case, pursuant to Title 61, of the Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.

O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED and the Commission in the Case No. BIT-W-99-1 approves a $4,153 or 32% increase in authorized annual revenue for Bitterroot Water Company, Inc., for a total authorized annual revenue requirement of $17,113.
IT IS FURTHER ORDERED and the Commission does hereby establish rates and charges for metered service as set out above. The Company is required to file tariff sheets consistent with this Order. The Company is required to inform its customers of the Commission approved rates. The rates will be effective on one days’ notice to customers.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of August 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

bls/O:bitw991_sw

ORDER NO. 28121 1

Office of the Secretary
Service Date
August 12, 1999