capw01.1.swres.doc

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 1895

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 APPLICATION OF CAPITOL WATER CORPORATION FOR AUTHORITY TO USE EXISTING SURCHARGE MONIES TO PAY FOR INCREASED ELECTRIC POWER COSTS. )
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CASE NO. CAP-W-01-1

COMMENTS OF THE COMMISSION STAFF

COMES NOW the Staff of the 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 June 27, 2001, submits the following comments.
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 2,754 customers. The Company receives electric service from Idaho Power Company.
Capitol Water’s existing surcharge of $3.27 per month was authorized by Commission Order No. 27022 (Case No. CAP-W-96-2) dated June 30, 1997. The surcharge authorized was for the purpose of repaying a loan for which the proceeds would be used for specific capital improvements that would improve water quality and supply on the system. The Commission also authorized proceeds from the surcharge to be used to pay specific operating costs associated with the capital improvement program and to pay incremental income taxes resulting from the surcharge.
Staff has monitored the surcharge expenditures and worked with the Company to insure that the surcharge proceeds were used for the authorized purposes. Although some of the surcharge monies collected were used for projects other than specifically authorized by the Commission, Staff believes the projects for which the monies were used did meet the intent of the Commission’s order to improve water quality and service to the Company’s customers.
The Company did not quantify the income tax effects of the surcharge program on its operations until June 2001 when, at Staff’s insistence, the Company’s outside accountants provided a breakdown for each year 1997-2000. Staff has reviewed those calculations and concurs with them.
The Company reported in its Application in this case that it had an unexpended balance of surcharge funds of $54,654 as of February 2001. That balance does not recognize the income tax effects discussed earlier. Staff has updated the surcharge balance as of June 30, 2000 to recognize additional revenue, loan service costs and authorized expenditures as well as the prior period income tax effects. The balance of unexpended surcharge funds at June 30, 2001 was $25,117.97.
In its Application, the Company requested authorization to charge any electric expenses above its three-year average annual electric bill of $44,764 to the surcharge account. The Company estimates the Idaho Power Company electric power cost adjustment (PCA) surcharges will result in an increase in its annual electric bill of approximately $10,744. Staff does not object to charging the 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 cost to 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 kWh on each bill to determine the amount of the electric PCA surcharge authorized to be charged against the balance of Capitol Water’s surcharge account. The Idaho Power PCA energy surcharge rate of $0.013415/kWh used in the calculation should be subject to change if the Commission approved Idaho Power PCA surcharge rate is modified. This method is precise and insures that Capitol Water will neither over or under apply the incremental electric PCA cost to the surcharge account. Staff has discussed this method with the Company and the Company agrees that it is a superior calculation. 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 RECOMMENDATION
Staff recommends approval of the Company’s request using the calculations and accounting records proposed by Staff and agreed to by the Company.

Respectfully submitted this day of July, 2001.

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Scott Woodbury
Deputy Attorney General

Technical Staff: Bob Smith

RES:SW:i/umisc/comments/capw01.1swres

STAFF COMMENTS 3 JULY 10, 2001