2001711_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
GENE FADNESS
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
TONYA CLARK
BOB SMITH
BEVERLY BARKER
WORKING FILE

FROM: SCOTT WOODBURY

DATE: JULY 11, 2001

RE: CASE NO. CAP-W-01-1 (Capitol Water)
ELECTRIC POWER COST PROPOSAL

On March 23, 2001, Capitol Water Corp. (Capitol Water; Company) filed a Letter Application with the Idaho Public Utilities Commission (Commission) requesting authority to use monies in its existing surcharge account to pay for increased electric power costs. Capitol Water provides water services in Boise to approximately 2754 customers. The Company receives electric service from Idaho Power Company.
Capitol Water maintains that it does not have revenue in sufficient amounts to absorb a high percentage increase in power costs. The Company provides the following information to illustrate the effect a power increase will have:
1. Total power costs for the year 1998 was $46,543.64.

2. Total power costs for the year 1999 was $45,545.50.

3. Total power costs for the year 2000 was $42,196.14 (power consumption in this year was less because Well No. 5 had to be abandoned due to trichlorethylene (drycleaning fluid) found in the well water.
The average cost of power for the last three years is $44,764.
In anticipation of increased power costs, the Company is requesting the Commission to consider the following proposal as a solution. Capitol Water would pay power bills amounting to $44,764 (past three year average). After this amount has been paid by Capitol Water, monies from the surcharge account would be used for the remainder of the year (2001). If the power rates remain high in the year 2002, the same procedure would be used for that year also. The surcharge account balance as of February 2001 is $54,654.
On June 27, 2001, the Commission issued Notices of Application and Modified Procedure in Case No. CAP-W-01-1. The deadline for filing written comments was July 13, 2001. The Commission Staff was the only party to file comments (attached).
Staff has updated the surcharge balance as of June 30, 2001 to recognize additional revenue, loan service costs and authorized expenditures as well as the prior period income tax affects. The balance of unexpended surcharge funds at June 30, 2001 was $25,117.97.
Staff does not object to the Company’s proposal to charge incremental electric expenses resulting from Idaho Power Company’s electric PCA surcharge against Capitol Water’s surcharge account. However, Staff prefers a more precise method of determining the incremental costs of the Company of that surcharge. Staff proposes that the Company determine the effect of Idaho Power Company’s electric PCA surcharge on each electric bill received by Capitol Water. The Company should be directed to apply the Idaho Power PCA surcharge rate of $0.013415 per kilowatt hour (kWh) to the billed kWhs on each bill to determine the amount of the electric surcharge authorized to be charged against the balance of Capitol Water’s surcharge account. The Idaho Power PCA energy surcharge of $0.013415/kWh used in the calculations should be subject to change if the Commission approved Idaho Power PCA surcharge rate is modified. This proposed method, Staff contends, is precise and ensures that Capitol Water will neither over nor under apply the incremental electric PCA cost to the surcharge account. Staff states that it has discussed this method with the Company and that the Company agrees. Staff has provided a sample worksheet to the Company for tracking the electric PCA costs applied to its surcharge account and the Company has agreed to maintain the worksheet for future Staff review.
Staff recommends approval of the Company’s request using the calculations and accounting records proposed by Staff and agreed to by the Company.
Commission Decision
Does the Commission find it reasonable to authorize Capitol Water to charge incremental electric expenses resulting from Idaho Power Company’s electric PCA surcharge(s) against Capitol Water’s surcharge account using the calculations and accounting records proposed by Staff and agreed to by the Company?

Scott D. Woodbury

bls/M:capw011_sw
DECISION MEMORANDUM 3