19990806.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
DON HOWELL
STEPHANIE MILLER
TONYA CLARK
RON LAW
BOB SMITH
RANDY LOBB
GEORGE FINK
WORKING FILE

FROM:

DATE: August 6, 1999

RE: CASE NO. BIT-W-99-1 (Bitterroot Water)
RATE CASE

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%.
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.
The Company’s water rates were initially established on May 1, 1996, at a flat rate of $20 per month. 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.
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-99-01. Staff’s investigation included on site audit of the Company’s records from its inception to December 31, 1998, review of the Commission’s past case files, annual reports filed with the Commission and PUC complaint records.

STAFF RECOMMENDATION
Staff has determined that the revenue increase necessary to recover the Company’s operating costs is $4,153 representing an increase in total revenues of 32%. See attached Staff Report, Exhibit D.
Staff further recommends 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. 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 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
Month 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 proposed 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, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.0l.201-204.
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. (attached).
Staff adopts 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 and a letter dated August 2, 1999 (attached), detailing the manner in which the Staff proposed rates were calculated.

Commission Decision
Does the Commission continue to find Modified Procedure to be appropriate in Case No. BIT-W-99-1?
Does the Commission continue to find the Staff proposed revenue requirement and rate design to be fair, just and reasonable? The Company in its Application requested increased revenues of $9,636, or an 80% increase. Staff recommended an increase of $4,153, a 32% increase.

vld/M:BIT-W-99-1

DECISION MEMORANDUM 3