20061013Comments.pdf

CECELIA A. GASSNER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 6977
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Street Address for Express Mail:
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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 INCREASE ITS RATES AND
CHARGES FOR WATER SERVICE IN THESTATE OF IDAHO
CASE NO. CAP-O6-
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of
record, Cecelia A. Gassner, Deputy Attorney General, in response to the Notice of Modified
Procedure and Notice of Public Workshop in Order No. 30124 issued on September 6, 2006
submits the following comments.
BACKGROUND
Capitol Water Corporation ("Capitol Water" or "Company ) filed a general rate case
application seeking authority to increase its rates approximately 27.8%. If approved the
Company s revenues would increase by $132,449 annually. Capitol Water provides service to
approximately 287 commercial, 125 industrial and 2 293 residential customers in Boise, Idaho.
The Company s Application includes proposed tariffs and requests an effective date of August 1
2006.
STAFF COMMENTS OCTOBER 12, 2006
STAFF ANALYSIS
Revenue Requirement
Staff examined the books and records of the Company for the fiscal year ending
December 31 , 2005. A field audit was conducted in July and August 2006 at the Company
office. The purpose of the audit was to verify the accuracy of the revenues, expenses and rate
base amounts included in the Company s Application; verify that the 2005 revenues, expenses
and rate base amounts are in the proper accounts; and to determine if the Company s filing is
reasonable.
The Company used a 2005 test year, with a year-end rate base. The audit included
examination of general ledger accounts and supporting vouchers and invoices, verification of
physical plant and property, and discussions with the Company owners and employees. The
Company does not employ an independent auditor to audit its financial statements; however, it
does employ an accounting firm to facilitate the preparation of the annual reports required by the
Commission and to prepare its federal and state tax returns.
Revenues & Expenses
The Company proposes using the actual test year data for 2005. The Application is based
upon the actual recorded performance of the Company for 2005 and is comparable to the 2005
annual report filed with the Commission. The actual 2005 data has not been adjusted for any
known and measurable changes beyond the test year because the Company believes that the 2005
test year is indicative of the Company s continuing operations.
The operating revenues for Capitol Water are generated through proper billing under the
existing tariffs on file with the Commission. The accounting for operating revenues is consistent
with the requirements of the Uniform System of Accounts, as adopted by this Commission. In
2005, its actual operating revenues totaled $475 805 , and the major sources of revenue were the
sale of water to unmetered residential customers (Schedule 1 - $375 977), metered sales to
commercial and industrial customers (Schedule 2 - $94 151), and fire protection revenue
(Schedule 3 - $4 788). The Company did not propose any adjustments to revenue in the
Application. Staff proposes that annual test year revenues be adjusted by $6,493 to reflect what
current rates should generate when applied to the number of existing year-end customers and the
commodity consumed (Adjustment N).
STAFF COMMENTS OCTOBER 12 2006
The operating expenses for Capitol Water are, for the most part, properly recorded on the
books of the Company. Operating expenses have increased since the last general rate case in
1995. Staff proposes adjustments to the Application that fall into the following categories:
Reclassification of expenses between accounts
Removal of below-the-line expenses, or expenses that would be inappropriate to recover
through rates
Annualization of water testing expenses, and
Inclusion of expenses currently being paid by surcharge funds.
Staff proposes thirteen adjustments to operating expenses. These adjustments are shown on Staff
Attachments A and B. The first six involve reclassifying expenses from one account to another
account. The next four Staff adjustments remove expenses for ratemaking purposes as these
expenses are below-the-line expenses. The following two adjustments annualize water-testing
expenses, and the last adjustment includes expenses that have previously been charged to Capitol
Water s surcharge fund account.
Reclassification of Expenses
Staff Adjustments A and B reclassify an accounting InVOICe from Account 620.
Customer Accounting and Collections, to Account 632., Accounting Services. The invoice
was improperly coded to the wrong account. There is no net revenue requirement impact as a
result of these two adjustments.
Staff Adjustments C and D reclassify bank service fees that the Company included in
Account 427., Interest Expense - Other, to Account 675., Miscellaneous Expense. The
bank service fees are more properly included in the miscellaneous expense account rather than
interest expense, as these charges do not represent interest expenses.
Staff Adjustment E removes expenses from Account 620., Maintenance-Source of
Supply. The Company booked this expense to Account 620.10 in a year-end adjustment. This
adjustment was reversed in July 2006 with a post-closing adjustment by the Company. The post-
closing adjustment was made after the Company filed this Application. Staff agrees with the
post-closing adjustment to the Company books. This adjustment reflects the removal of these
expenses from the operating expense account to the surcharge account.
Staff Adjustment F reclassifies an expense invoice from Account 602., Dues and
Memberships, a below-the-line account, to Account 620.40, Maintenance, Materials and
Supplies. The invoice is for the annual membership dues of the American Water Warks
STAFF COMMENTS OCTOBER 12, 2006
Association (A WW A). The paid invoice did not include the optional amounts for lobbying or
research and development, items the Commission normally disallows recovery of through rates.
The American Water Works Association (A WW A) is an international nonprofit scientific and
educational society dedicated to the improvement of water quality and supply. Membership in
the A WW A is beneficial to customers because the A WW A is a reliable resource for current
information for the water profession. A WW A provides water utilities with reliable information
on technology, trends, and news through its periodicals, Web site, and media outreach.
Removal of Below- the-Line Expenses
Staff Adjustments G, H, and I remove expenses related to personal use of Company-
owned vehicles. Through discussions with the Company owners and officers, Staff determined
that at least 50 percent of the vehicle use is personal use and not business related.
Staff Adjustment G removes half of the cost of licensing the Company-owned vehicles
driven by Company owners. Staff Adjustment H removes half of the transportation expense for
the Company-owned vehicles driven by the owners.
Staff Adjustment I removes the depreciation expense attributable to one of the two
Company-owned vehicles. The vehicles are depreciated over a 5-year life, using the half-year
convention. The 1998 Mercury Mountaineer was fully depreciated by the end of 2003 so no
depreciation expense for this vehicle is included in the test year. The 2000 Suburban was fully
depreciated at the end of the test year, 2005. Therefore, it is reasonable to remove all of the
depreciation expense associated with the Suburban. Because both vehicles are fully depreciated
by the end of the test year, no adjustment to rate base is necessary.
The Company has continued a long-standing practice of charging all personal
transportation expenses to the Company. The vehicles that are owned by the Company are often
driven for personal use, yet all expenses for these vehicles are borne by the Company.
In Order No. 21185, dated April 17, 1987, Case No. U-I080-, the Commission
removed 50% of the transportation expenses associated with personal use of the Company
vehicle. The Order also directed the Company to "keep accurate records so the use of its
vehicles may be confirmed by an audit." Order No. 21185, at 7.
In Order No. 24789, dated March 18 , 1993 , Case No. CAP-92-, the Company agreed
to Staff adjustments, including an adjustment to transportation expense for personal use. Staff
in direct testimony, reiterated the direction to the Company by the Commission from the prior
STAFF COMMENTS OCTOBER 12, 2006
rate case for the Company to maintain accurate records of personal usage of Company-owned
vehicles.
In Order No. 26247, dated November 27, 1995, Case No. CAP-95-, as part of the
Settlement Stipulation, Capitol Water agreed to "adequately document vehicle expenditures by
vehicle." Order No. 26247, at 2. In the current audit, Staff notes that repairs and maintenance
expenses are documented by vehicle; however, other expenses, especially car washes and
gasoline purchases, are not identified by vehicle. The monthly statement for the credit card used
for the purchase lacks clarification as to which vehicle has been washed or which gasoline tank
filled.
The Company has not maintained records associated with personal use of the Company
vehicles, nor has the Company kept transportation expense records by vehicle. However, Staff
finds it unreasonable to disallow all transportation expenses, as some level of expense
justified. In the absence of improved record keeping, Staff recommends that all gasoline and
other miscellaneous purchases, such as car washes, for the vehicles driven by the owners be paid
for with personal funds, and that they be reimbursed by the Company for business miles. This
requires that a logbook of business miles must be kept. The owners could be reimbursed by the
Company using the standard mileage rate set by the Internal Revenue Service (IRS) as a proxy
for the actual cost. The IRS standard mileage rate incorporates not only gasoline, but also
regular vehicle maintenance such as oil changes, new tires, and general wear and tear, including
an amount for depreciation. Although both vehicles are fully depreciated, the IRS standard
mileage rate is an impartial rate that could be used to reimburse business expenses to the Prices.
In this way, not only would customers be paying for actual business transportation expenses, but
also a clearer picture of the actual personal usage would emerge. The Staff adjustments G ($85),
H ($3 145), and I ($4 085), for all transportation-related expenses, are $7 315.
Staff Adjustment J removes expenses for Company year-end holiday events for
employees. The Commission has traditionally moved these types of expenses below-the-line for
ratemaking purposes, as they do not directly benefit customers. The adjustment is $392.
Annualization of Water Testing Expenses
Staff Adjustments K and L annualize the water testing expenses. Adjustment K removes
the actual amount of the water testing expenses of $2 503 included in the test year and
Adjustment L replaces the actual expenses for water testing with an annualized amount of
313. Because not all water tests are performed every year, and several of the tests that are
STAFF COMMENTS OCTOBER 12, 2006
performed less frequently are quite costly, it is more equitable to use the average yearly cost of
water testing expenses when setting rates. The average cost per well for all required tests is
$885.58 and the Company has six wells that require water testing. The average cost per well was
calculated by the Company and is acceptable to Staff. The net Staff adjustment for water testing
is $2 810.
Inclusion of Expenses Currently Being Paid by Surcharge Funds
The first expense that is currently being paid by surcharge funds and under review by
Staff is the Company s electric PCA expense. Order No. 28801 authorized the Company to
charge incremental electric expenses resulting from Idaho Power Company s electric PCA
surcharge(s) against Capitol Water s surcharge account by applying the Idaho Power PCA
surcharge rate, which at that time was $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 Company was directed to change the rate
when the Commission approved Idaho Power PCA surcharge rate was modified. This action
was taken at a time when Idaho Power had PCA surcharges reflective of the high power costs
during the energy crisis of 2000-2001. The Company has continued to charge the amount of the
electric PCA surcharge to the surcharge account until recently, when Idaho Power s PCA
resulted in a decrease in the rate charged to customers.
The current expenses for power included in the Company s Application do not include
the past portion of the PCA rate that was charged to the Company s surcharge account, and are
reflective of current power expenses going forward. Although the current PCA rate is negative
Staff is not proposing a reduction in the amount of power expense included in the test year. Staff
believes that the Company s surcharge funds should no longer be used for power expenses, as
the 2005 test year expenses should be more than sufficient to cover the ongoing power costs of
Capitol Water. In fact, due to the current Idaho Power PCA resulting in a reduction to rates, the
amount included in power expenses for ratemaking purposes will most likely prove to be greater
than the actual power costs going forward (at least through May 2007).
Staff makes no adjustment to the amount included in the Application. Staff recommends
that the surcharge account no longer be used to pay for the excess power costs, now that the
power costs are being updated in this rate case. Staff notes that the Company may file another
rate case if it determines that increased power costs or other expenses necessitate filing for rate
relief.
STAFF COMMENTS OCTOBER 12 2006
Another expense that the Company was authorized to recover with surcharge funds is the
purchase of sequestering chemicals. The Company s recovery of this expense through
surcharge is somewhat unorthodox, but grew out of a prior request by the Company to take on
certain debt to help improve the quality of its water. In Case No. CAP- W -02-, the Staff noted
that continuing operating expenses for heating fuel, sequestering chemicals and incremental
water testing are part of what the Company is requesting (i.e. $13 600 - Exhibit 3). These costs
Staff notes although nominal are operating expenses that would be recognized as known changes
to the Company s operating expenses in a general rate case and included in the Company s base
rate design." Order No. 27022 , at 5.
The Commission acknowledged Staff s point "that continuing operating expenses are
included in the Company s request and are not normally the type of expense recovered by way of
surcharge.Id. at 6. The Commission continued that
, "
(w)hile we agree with Staffs
characterization of the expenses, we note that the expenses identified are relatively nominal in
dollar amount. Given the cash flow constraints of the Company as reflected in the record, we
find it reasonable to permit recovery of these amounts in the surcharge. ... We limit recovery to
the authorized amounts, i., a principal loan amount of $402 624., and an annual operation
and maintenance expense figure of $13 600. We expect actual cost figures to be substituted for
these entries.Id.
The amount spent for phosphates from the surcharge account during 2005 is $14 796.
Staff Adjustment M includes this amount in the calculation of base rates. Since the surcharge
was first implemented in June of 1997, the expenses related to the sequestering chemicals have
been charged to the surcharge account. Staff notes that these expenses will continue beyond the
life of the surcharge and are more appropriately reflected in base rates going forward. Absent
this change, the Company likely will not have the expense amount for the chemicals in base rates
when the surcharge ends, which may compromise the Company s ability to maintain its water
quality.
Staff therefore recommends that the Company be directed to continue with the surcharge
as it is currently in place, and that the Company no longer use surcharge funds for power
expenses or sequestering chemical expenses, as Staff recommends including these expenses in
base rates. This shift in the source of funds for payment for power and chemical expenses will
allow the Company to retire the surcharge sooner.
STAFF COMMENTS OCTOBER 12, 2006
Capital Structure
Staff agrees with the Company s capital structure and overall rate of return, including a
return on equity of 12%, as presented. Staff accepts the Company s method of calculating
working capital, one-eighth of annual Operating and Maintenance expenses. Due to Staff s
adjustments to operating expenses, however, Staff suggests an adjustment to the resulting
working capital. Adjustment 0, as shown on Staff Attachment C, increases working capital.
Staff Attachment D incorporates Staff Adjustment N in Staff s Rate Base calculation.
Staff s calculation of the proposed revenue requirement is shown on Staff Attachment E.
Staffs Gross-Up Factor Calculation uses the actual bad debt expense to arrive at Staffs Net to
Gross Multiplier. In discussions with the Company, Staff notes that bad debts are not
particularly large, and that the amount included in the test year is typical. Therefore, Staff uses
the actual amount of bad debt expense in its calculation of the Net to Gross Multiplier.
Staff proposes a revenue increase of$137 312 or 28.47%, compared to the request by the
Company of an increase of $132,449 or 27.84%. Staff notes that its increase is slightly higher
than requested by the Company, due to shifting of expenses from the surcharge accounts to base
rates.
Rate Issues
System Condition
As part of its evaluation of the Company s request, Staff accompanied the owner and
operator on an inspection tour of the system. All above-ground facilities were visited and
inspected. A high level of cleanliness and maintenance of equipment was observed. The owner
has installed newer instrumentation and keeps all equipment in good working order. The
Company s shop, where repairs and modifications are made, was found to be well-organized and
stocked with spare parts.
operations and maintenance.
Staff believes the Company is performing well in the area of
Metering
None of Capitol Water s residential customers are currently metered, and such metering
was last considered in Case No. CAP-96-2. At that time metering was viewed as an alternate
to developing new wells with the belief that metered water rates would result in reduction in
consumption. In that case, other issues of water quality overshadowed the metering question and
metering was judged to not be cost effective for Capitol Water s customers. An engineering
STAFF COMMENTS OCTOBER 12 2006
report prepared for the case by Scanlon Engineering estimated the capital costs and annual
operating costs of metering the residential customers as $1 000 000 and $50 000 respectively in
1996 dollars.
Staff, as part of evaluating this case, again considered the possibility of metering Capitol
Water s residential customers. The key issues considered were: 1) consumption patterns
conservation and the effects of drought on the aquifer, and 2) the effect of the cost to meter on
Capitol Water s customers.
Consumption patterns of Capitol Water s residential customers were established and
compared to those of metered customers in other utilities.Falls Water was used as a
comparative utility, as it is approximately the same size as Capitol Water, has a similar
residential customer base, and 2005 data are available. Additionally, the consumption patterns of
Bitter Root Water and United Water customers were compared using 2005 data. The results are
shown below in Figures 1 and 2, entitled "Average Monthly Residential Customer Water
Consumption" and "Total Annual Water Consumption Per Customer " respectively.
Average Monthly Residential Customer Water Consumption
Calendar Year 2005
000
50,000
~Capitol
Water
-Falls Water
000
III
,g30,OOO
000
000
, BitterRoot
Water
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nav Dee -*=" United
Water
STAFF COMMENTS OCTOBER 12, 2006
Total Annual Water Consumption Per Customer
350 000
300 000
000
131 927
250 000
~ 200 000
150 000
100 000
Water Company
II Capitol Water II Falls Water 0 BitterRoot Water 0 United Water
The Capitol Water residential water consumption is significantly higher on an annual basis than
all of the others, but is nearly identical to the most similar companies, Falls Water and Bitterroot
Water, in peak consumption rates. The United Water data matches poorly due to its much higher
rates and the fact that multi-family residence customers are included in United Water s data but
not in the other utilities ' data.
The Idaho Department of Water Resource (DWR) was contacted for information
regarding Capitol Water s impact on the aquifer. DWR examined the location of Capitol
Water s service area, Capitol Water s well locations and depths, and reviewed the history of the
affected aquifer for any impacts. DWR concluded that the minor drawdown of that aquifer over
the past few years is solely caused by the drought the surrounding area has experienced. He
further noted that the aquifer dropped similarly in past droughts and recharged after the drought.
The expected costs to meter the residential customers in Capitol Water s system would be
higher than in 1996 but would probably not exceed $1 500 000. This could result in a 35% or
greater impact on customers ' rates.
In view of the substantial costs, the fact that water consumption by Capitol Water
customers has not been deemed as impacting the aquifer they draw on, and current capacity is
adequate to meet demand, metering is not recommended at this time. If, at a later date, it is
determined that the aquifer is being adversely affected, or it is determined that additional supply
is needed, Staff may reconsider its metering recommendation.
STAFF COMMENTS OCTOBER 12, 2006
Rate Design
Staff generally supports the recommendation of the Company to spread the revenue
requirement increase uniformly across all rate components.However, Staff has two
modifications as described in greater detail below. Staff has proposed a revenue requirement for
Capitol Water of$619 610, which is an overall rate increase of28.47%.
Schedule 1 consists of non-metered customers, generally residential, designed as a flat
rate that varies according to service size. This schedule also includes an additional monthly flat
summer surcharge of $11.07 for all customers. To meet the targeted revenue, Staff proposes that
the flat charge and the summer surcharge be increased by 28.47%, resulting in an $11.20 flat
charge and a $14.20 summer surcharge for a %" service. This increase maintains the current
relationship between the respective charges as depicted in Attachment F, Table 1.
The Company has proposed to include the month of April in Schedule 1 summer rates.
Currently, summer rates are in effect from May through September. The Company s purpose for
making this proposed change is to increase annual revenues by approximately $27 000. Staff
does not recommend changing the summer rates for Capitol Water to include April for three
specific reasons.
First, including April in summer rates would not be consistent with other water
companies in the area. Staff reviewed the rate schedules of United Water and Eagle Water and
neither company includes April in their summer rates.
Second, according to the Application, when using February as a base indicator of power
use, April usage is significantly higher, indicating more water use for lawn irrigation. Upon
examination, although there is a slight increase in water use in April, it is not at nearly the same
level as current summer months. Staff reviewed power consumption and found that total energy
use by the company in April was 17% higher than February s usage. By comparison, energy use
in May was 42% higher than February s usage. This analysis of energy use is consistent with
actual water use. From February to April, average gallons of water used by non-metered
customers increased only 11 %. From February to May, the increase was 61
Finally, Staff conducted an evapotranspiration analysis to examine Boise lawn water
demand. Staff believes that the 2005 data is representative of typical growing conditions for
Boise area lawns. This analysis shows that April water demand for a lawn is approximately 2.
inches. The water requirement goes up to about 3 inches in May, and then for the peak irrigation
months of June-August the average is over 6 inches per month.
STAFF COMMENTS OCTOBER 12, 2006
Based on these analyses, Staff is not convinced that water use in the month of April is
sufficiently high to justify including April in the summer rate.
summer rates in Schedule 1 be retained as May-September.
Staff recommends that the
Metered customers under Schedule 2, generally commercial and industrial, are charged a
minimum monthly charge based on service size plus a declining block commodity charge.
Currently, 96% of the revenue under this schedule is obtained from the commodity charge. Staff
believes this amount is a sufficiently strong incentive to conserve water, therefore Staff proposes
that the relationship between the base rate and the commodity rate remain unchanged and that all
rates on Schedule 2 be increased by approximately 28.47%, as shown in Attachment F.
Staffs proposed rate design includes one major change, to eliminate Schedule 3, public
fire hydrants, and allocate the costs to Capitol Water base rates. Currently, Schedule 3 consists
of a flat rate per hydrant of $2.34, which is currently paid by the City of Boise. There are two
significant reasons for Staff s proposed change. First, Staff s proposal is reasonably consistent
among Idaho water companies who collect hydrant costs from their customers. Staff was unable
to find any Idaho water company that has a separate charge for public fire hydrants; other water
companies generally have fire protection costs included in their rate bases. Secondly, Staff
believes charging the City of Boise for fire hydrants poses an inequity to Boise citizens.
Charging the City of Boise results in a subsidy to Capitol Water customers paid for by other
Boise City water customers (United Water Idaho) that pay both city taxes and hydrant costs in
water rates. Therefore, Staff believes that it is appropriate to integrate the fire hydrant charges
into Capitol Water rates. This small increase is in addition to the proposed increase in annual
revenue requirement for a total average increase of 28.47%. The only change to Schedule 4, fire
protection services (such as sprinkler systems), is an average increase of 28.47% to all of the
rates.
Customer Relations
A Notice to Capitol Water s customers was filed with its Application. The Notice was
mailed to customers in their July billing statements in compliance with the Utility Customer
Relations Rules (IDAP A 31.21.02102). A review of Capitol Water s forms, notices and billing
statement show the Company complies with all the Utility Customer Relations Rules (IDAP A
31.21.01000 et seq.) and Utility Customer Information Rules (IDAPA 31.21.02000 et seq.
The Commission has received only one complaint regarding the Company since 2001.
STAFF COMMENTS OCTOBER 12, 2006
The complaint concerned disconnection of service for nonpayment.
On September 25 2006, a Public Workshop was held in the Commission Hearing Room.
No customers attended the workshop. The Commission has received two written comments
regarding this rate case. Both were in support of the requested rate increase. One comment also
expressed concern about the ACHD road widening creating a financial burden on the Company
and its customers. The Staff has responded to assure the customer that those costs are not
included in this request for a rate increase.
STAFF RECOMMENDATION
Staff recommendations are as follows:
1. Staff recommends increasing revenues by $137 312 or 28.47% to recover the revenue
requirement of$619 610.
2. Staff recommends that the Company eliminate Schedule 3 (Rates for Public Fire
Hydrants).
3. Staff recommends that the Company discontinue charging excess power costs (Idaho
Power PCA related expenses) and the cost of purchasing sequestering chemicals
(phosphates) to the Surcharge account as these expenses are built into general rates
proposed by Staff.
4. Staff recommends that the Company implement the recommended changes regarding
expense reimbursement for business related usage of Company vehicles.
5. Staff recommends that the current summer rate schedule be maintained and the
Company not expand the schedule to include April.
6. Staff recommends that the Company file tariffs incorporating Staffs
recommendations for Schedule No.1 (Non-metered Customers), Schedule No.
(Metered Customers), and Schedule No.4 (Fire Sprinkler Systems and/or Inside Hose
Connections) as described in the rate design section above.
7. Staff recommends that the system not be metered at this time but that the Company
continues to advise its customers of the importance of water conservation.
STAFF COMMENTS OCTOBER 12, 2006
Respectfully submitted this
Technical Staff: Kathy Stockton
Harry Hall
Mike Darrington
Tammy Estberg
i:umisc:comments/capwO6, lcgklshhmdte
STAFF COMMENTS
I Z day of October 2006.
Cecelia A. Gassner
Deputy Attorney General
OCTOBER 12 2006
Line Account
460
461.
461.
462
464
465
466
400
Capitol Water Corporation
Case No. CAP-06-
Income Statement
For the Test Year 2005
Commission Staff Proposal
Description
REVENUES
Unmetered Water Revenue
Metered Sales - Residential
Metered Sales - Commercial , Industrial
Fire Protection Revenue
Other Water Sales Revenue
Irrigation Sales Revenue
Sales. for Resale
Commission Approved Surcharges Collected
Total Revenue
10 601,
11 601,
12 603,
13 603
14 604
15 610
16 615-
17 618
18 620.
19 620,
20 631-
21 635
22 636
23 641-
24 650
25 656-
26 660
27 666
28 667
29 670
30 675
32 403
33 406
34 407
35408,
36408.
37408.
38408,
41 409,
42409,
43410,
44410.
45411
46412
49419
51 427,
EXPENSES
labor - Operation & Maintenance
labor - Customer Accounts
labor - Administrative & General
Salaries, Officers & Directors
Employee Pensions & Benefits
Purchased Water
Purchased Power & Fuel forPower
Chemicals
Materials & Supplies - Operation & Main!.
Materials & Supplies - Administrative & General
Contract Services - Professional
Contract Services - Water Testing
Contract Services - Other
Rentals - Property & Equipment
Transportation Expense
Insurance
Advertising
Rate Case Expense (Amortization)
Regulatory Comm, Exp, (Other except taxes)
Bad Debt Expense
Miscellaneous
Tota~ Operating Expenses
Depreciation Expense
Amortization, Utility Plant Acquisition Adj.
Amortization Exp, - Other
Regulatory Fees (PUC)
Property Taxes
Payroll Taxes
Other Taxes (list)
Irrigation
Vehicles
Federal Income Taxes
State Income Taxes
Provision for Deferred Income Tax - Federal
Provision for Deferred Income Tax - State
Provision for Deferred Utility Income Tax Credits
Investment Tax Credits - Utility
Total Expenses from operations before interest
Net Operating Income
Interest & Dividend Income
Net Income Before Interest Charges
DEQ Fees
Interest Exp, on long-Term Debt
NET INCOME
Total
Company Staff Staff
Pro osal ustments Pro osal
$ 375 977 1 ,469 377 446
151 039 190
788 (15)773
889 889
$ 475 805 6,493 482 298
$ 125,462
661 661
591 591
633 633
015 015
884 884
255 255
796 879
19,452 026)16,426
026 350)676
314 350 664
313 313
886 886
853 145)708
673 673
271 815 10,086
$ 350 640 753 $ 365 393
937 085)852
589 589
125 125
623 623
766 681
$ 470,700
$ 5 105
583 $ 481 283
$ 1 015
105
678
(573)
1207 4,471
456)
015
Attachment A
Case No. CAP-06-
Staff Comments
10/12/06
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1 Plant in Service
2 Less Accum Depr
3 Less Contributions in Aid
4 Add Accum Amort of clAc
5 Add Working Capital
6 Company Requested Rate Base
7 Staff Proposed Rate Base
Capitol Water Co.
Case No. CAP-06-
Rate Base
2005 Test Year
Commission Staff Proposal
Company Staffroposal Adjustment
598 939
642 271)
(150 065)
734
830 844
940 167
Staff
roposal
598 939
642 271)
(150 065)
734
674
942 011
Attachment D
Case No. CAP-06-
Staff Comments
10/12/06
1 Rate Base
2 Required Return on Rate Base
3 Required Net Operating Income
4 Net Operating Income Realized
5 Net Operating Income Deficiency
6 Net to Gross Multiplier
7 Gross Revenue Deficiency
Capitol Water Co.
Case No. CAP-06-
Revenue Requirement
For the Test Year 2005
Commission Staff Proposal
8 Actual Revenue Billed - Company; Proposed Revenue - Staff
9 Revenue Increase Percentage Required
10 Revenue Requirement
Gross-up Factor Calculation - Company11 Net Deficiency12 PUC Fees13 Bad Debts
State Tax (gt 8%
Federal Taxable
Federal Tax (gt 15%
Net After Tax
Net to Gross Multiplier
Gross-up Factor Calculation - Staff20 Net Deficiency21 PUC Fees22 Bad Debts
State Tax (gt 8%
Federal Taxable
Federal Tax (gt 15%
Net After Tax
Net to Gross Multiplier
100.0000%
2486%
5000%
99.2514%
9401%
91.3113%
13.6967%
77.6146%
128.8417%
100.0000%
0.2486%
0090%
99,7424%
9794%
91.7630%
13.7644%
77,9985%
128.2075%
Company
Proposal
$ 940 167
Staff
Proposal
$ 942 011
11.48%11.48%
107 905 108 116
105 015
102 800 107 101
128.84%128.21%
132,449 137 312
475,805 482 298
27.84%28.47%
608 254 619,610
Attachment E
Case No. CAP-06-
Staff Comments
10/12/06
Table 1: Current and Pro osed Base Rate Desi n
Schedule Current Tariff Company Proposed Tariff Staff Proposed Tariff
Service Size
Flat Commodity Charge Flat Commodity Charge Flat Commodity ChargeChargeChargeCharge
3/4"$ 8.N/A $ 10.N/A $ 11.20 N/A
Flat Rate $ 10.45 $ 12.$ 13.40
11/4"$ 11.$ 14,$ 15,
Additional
Summer
Charge
Ma -$ 11.07 $ 13.$ 14,
Schedule Current Tariff Company Proposed Tariff Staff Proposed Tariff
Service Size
Minimum Commodity Charge Minimum Commodity Charge Minimum Commodity ChargeChar e Char e Char e
3/4" and
First 1 000:First 1 000:First 1 000:Smaller $ 5.$ 6.
Metered $ no $0,85 per 1 00 ft3 $ 9.$1.04 per 100 ft3 $1.09 per 100 ft3
1 1/2"$ 11.Second 1 000:$ 13.90 Second 1 000:$ 14,Second 1 000:
$ 19,$0.48 per 100 ft3 $ 23.$0.59 per 100 ft3 $ 25.30 $0,62 per 100 ft3
$ 35.Balance:$ 43.Balance:$ 45.Balance:
$0,36 per 100 ft3 $0.44 per 100 ft3 $0.46 per 100 ft3
Schedule Current Tariff Company Proposed Tariff Staff Proposed Tariff
Service Size Flat Commodity Charge Flat Commodity Charge Flat Commodity ChargeChar e Char e Char e
Fire Hydrant $2.34 per N/A $2.86 per N/A N/A N/A
H drants Hydrant Hydrant
Schedule Current Tariff Company Proposed Tariff Staff Proposed Tariff
Service Size
Flat Commodity Charge Flat Commodity Charge Flat Commodity Charge
Char e Char e Char e
$ 6.N/A 7.43 N/A N/A
Fire $ 8,$ 10.$ 11.
Protection $19.43 $ 23.$ 25.
$31.$ 38.$ 41.
10"$48.$ 59.$ 63.
Attachment F
Case No. CAP-06-
Staff COrmnents
10/12/06
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 12TH DAY OF OCTOBER 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. CAP-06-, BY MAILING A COpy THEREOF, POSTAGE PREPAID
TO THE FOLLOWING:
H. ROBERT PRICE
CAPITOL WATER CORP
2626 N ELDORDO ST
BOISE ID 83704
ROBERT E SMITH
2209 N BRYSON RD
BOISE ill 83713
~~-
SECRETARY
CERTIFICATE OF SERVICE