20070315final_order_no_30272.pdf

Office of the Secretary
Service Date
March 15, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF CAPITOL WATER CORPORATION FOR
APPROVAL OF CUSTOMER REFUNDS
CASE NO. CAP-07-
ORDER NO. 30272
On January 9, 2007, Capitol Water Corporation filed an Application for approval of
customer refunds totaling approximately $65 000. On February 2, 2007, the Commission issued
a Notice of Application and Modified Procedure and solicited comments from interested persons.
Order No. 30236. The only comments received were submitted by the Staff. The Company did
not file reply comments.
THE APPLICATION
Capitol Water s Application stated that during the course of its recent rate case, Case
No. CAP-06-, a billing error was discovered that resulted in overcharges to certain metered
customers. The total over-billing from December 1 , 2003 until September 1 , 2006, was
approximately $65 000. In this Application, the Company proposed a mechanism to return these
overcharges to the pertinent customers.
The Company proposed the following plan to distribute the necessary refunds:
(1) To the 99 customers currently connected to the water system to whom the
Company owes a refund of $100 or less, an immediate credit to each of
their respective accounts in the proper amount;
(2) To the 18 former customers to whom the Company owes a collective
269.30, by locating them and issuing them refund checks;
(3) To the 13 former customers who were in arrears on their accounts, by
reducing the amount owed to them by the amount in arrears;
(4) To the 112 current customers to whom the Company owes more than
$100 each, bill credits each month over a 36-month period. The total
credits would be calculated as an amortization of the refund principal due
together with interest at the Commission s approved rate for customer
deposits of 5%. These refunds represent an aggregate total of
$58 937.26. The billing credits would reduce the Company s monthly
revenues by $1 767.51 during the refund period.
ORDER NO. 30272
STAFF COMMENTS
Staff commented that it believes the Company has identified the impacted customers
and the corresponding overcharges, and is proposing a reasonable method for providing the
refunds. Staff also noted that the over-billing total of approximately $65 000 over the three-year
period is consistent with Staff s analysis of metered customers that were over-billed. Therefore
Staff generally supported the Company s proposed method for refunding metered customers that
were over-billed from December 1 , 2003 through September 1 , 2006.
Staff also voiced its concern regarding the 18 former customers to whom the
Company owes refunds totaling $2 269.30. In the event that the former customers who have left
the system cannot be located, the Company proposed to transfer to the Company s surcharge
account funds equal to the amount of the refunds due to those customers. Staff believes that any
refund checks for customers that cannot be located may be subject to Idaho s unclaimed property
law Idaho Code ~ 14-501 et seq.and that depositing the unreturned refunds in the Company
surcharge account may be inappropriate.
For those customers owed more than $100 , the Company proposed to refund the
principal due with interest at the Commission s approved rate for customer deposits. Staff
agreed with the Company s proposal to apply interest at a rate equal to the current customer
deposit rate of 5%. While the customer deposit rate has the potential to change yearly, Staff
believes that keeping the interest rate at 5% for the entire 36-month amortization period, rather
than changing it to reflect any future changes to the customer deposit rate , is reasonable. Staff
noted that the amount of interest is minimal, and keeping the methodology for the refunds simple
is beneficial to customers.
Staff Recommendation
Staff recommended that the Application be approved, except that the Company be
directed to handle any amounts owed to former customers who cannot be located in accordance
with Idaho s unclaimed property laws. Staff also recommended that the Company keep track of
the refunds and file a report with the Commission detailing the amount of refunds pending and
the amount of refunds paid, and any other pertinent information necessary to keep track of the
balance of the refunds with the Company s next quarterly surcharge report and then annually
thereafter. Staff had further recommended that the Company file its customer notice with the
ORDER NO. 30272
Commission prior to sending it to customers. The Company has done so since the Staff filed its
comments, and the Staff believes the notice is adequate.
FINDINGS AND CONCLUSIONS OF LAW
We find that the Company s proposal for providing certain of its customers refunds
for overcharges to be reasonable; however, we do not find that the Company should necessarily
deposit into its surcharge fund the monies due to former customers (not in arrears) who cannot be
located. Instead, we direct the Company to contact the Idaho State Tax Commission to verify
any steps it may need to take with regard to such monies if it cannot locate these former
customers.
We also find that it would be useful for the Company to file a report with the
Commission to inform us of its progress in making the refunds as set forth above. We direct the
Company to set forth in its reports an update on its discussions with the Idaho State Tax
Commission with regard to the refunds to its former customers not in arrears. If necessary, we
may revisit the handling of these refunds at a later date, once the applicability of the State
unclaimed property laws is understood. Lastly, we find that using an interest rate equal to the
current customer deposit rate of 5% is reasonable.
The Commission has jurisdiction over the Company pursuant to Idaho Code ~~ 61-
125 and 61-129. We further have jurisdiction over this matter pursuant to Idaho Code ~~ 61-641
and 61-642.
ORDER
IT IS HEREBY ORDERED that the Application of Capitol Water Corporation, Case
No. CAP-07-, is hereby approved, except that Capitol Water shall handle all refunds to its
former customers not in arrears as set forth above.
IT IS FURTHER ORDERED that Capitol Water shall file a report as set forth above
with its next quarterly surcharge report, and then annually thereafter.
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 with regard to any
matter decided in 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.
ORDER NO. 30272
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this I S.f-J..
day of March 2007.
MARSHA H. SMITH, COMMISSIONER
MACK A. REDFO
ATTEST:
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JD.
Jewell
Commission Secretary
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ORDER NO. 30272