20090401final_order_no_30762.pdf

Office of the Secretary
Service Date
Aprill, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF CAPITOL WATER CORPORATION
FOR AUTHORITY TO INCREASE ITS
RATES AND CHARGES.ORDER NO. 30762
CASE NO. CAP-08-
On November 17 2008, Capitol Water Corporation filed an Application for authority
to increase its rates for water service by 7.8%. The Company requested that the Application be
processed by Modified Procedure and that the tariff changes become effective January 1 2009.
On December 9, 2008 , the Commission issued a Notice of Application, suspended
the Company s requested effective date, and set a deadline for intervention. Order No. 30700.
No persons petitioned to intervene. Commission Staff filed comments on February 24, 2009.
The Company filed responsive comments on March 2, 2009. In an effort to clarify the issues
raised by the Company in its response, Staff filed reply comments on March 9, 2009. The
Commission also received two public comments in support of the Company s Application to
increase its rates and one public comment that suggested Ada County Highway District (ACHD),
not water customers, reimburse Capitol Water for costs incurred during the Ustick Road project.
After reviewing the Application and the comments, we approve an increase of
existing rates by $27 025 which produces an increase to Capitol Water s customers of 4.326%.
We authorize the new rates to become effective on May 1 , 2009.
THE APPLICATION
The Company s current rates and charges were authorized by Order No. 30198
issued on December 12, 2006. Since that time, the Company contends the Ustick Road widening
project caused the Company to incur $102 006.34 in costs beyond its control. As part of this
ACHD project, the Company was required to relocate distribution piping, fire hydrants and
customer service connections located in the public right-of-way. In addition, in October 2008
the pump at Well No.6 failed. The cost to repair the pump and put the well back in service was
$11 234.37.
The Company asserts that, since 2006, it has experienced a significant increase in its
electric power rates. The Company maintains that its cost for electric power is the single most
expensive cost over which the Company has no control.The Company seeks to put a
ORDER NO. 30762
mechanism in place that would allow rates to be adjusted coincident with changes in its electric
rates.
The Company characterizes its Application as a "make whole" request limited to the
three issues stated above.
REVENUE REQUIREMENT
The Company is proposing that the costs associated with the Ustick Road Rebuild
Project and the Well No.6 rebuild be recovered in rates. The Ustick Road project began in 2007
and was completed in 2008. The highway district required the Company to relocate distribution
piping, fire hydrants and customer service connections. The total cost to Capitol Water
amounted to $102 006.34. Application, p. 2.
In October 2008, the pump at Well No.6 failed. The Company incurred $11 234.
in costs to repair the pump and put it back into service. Id. Following a review of the documents
pertaining to the pump failure, Staff believed that the price paid by the Company to rehabilitate
the well was reasonable when compared to other projects of similar size and scope. Staff audited
the costs for both the Ustick Road project and Well No.6 and found them to be accurately
recorded and reasonably incurred.
requirement by $21 232.
These two projects increase the Company s revenue
Commission Findings: Pursuant to ACHD Resolution No. 330, the Commission
finds that it was appropriate for the Company to pay the costs of relocating its main and
distribution lines and related appurtenances for the Ustick Road Rebuild Project. The
Commission further finds that the Company acted quickly to rebuild the facilities at Well No.
in a cost-effective manner. The costs for these projects were reasonably and prudently incurred.
Consequently, the Commission finds an increase of $21 232 in the Company s revenue
requirement associated with these capital improvements to be reasonable.
ELECTRIC EXPENSE
The Company asserts that its electric rates (via Idaho Power Company) have
increased significantly since the Commission issued its 2006 Order establishing Capitol Water
present rates. Order No. 30198. The Company maintains that electric power costs are the single
most expensive cost over which the Company has no control. Application, p. 4. As such, the
Company argues that it will remain vulnerable to changes in its electric rates unless a mechanism
is put in place adjusting the Company s rates coincident with changes to its electric rates. Id.
ORDER NO. 30762
The Company claims that the increase in electric costs together with the Ustick Road and Well
No.6 projects warrants a 7.8% increase in the total revenue requirement authorized by the
Commission in December 2006. Order No. 30198.
Staffs review of the Company s annual power costs between 2005 and 2008
revealed that, in fact, Capitol Water s power costs dropped from 2005 to 2007, then slightly
increased in 2008. When initially calculating the average annual energy and power pumping
expense, both Staff and the Company included 2005 electricity costs. However, the Company
acknowledged that there was a significant leak during the 2005 test year that abnormally
increased the Company s energy consumption. Capitol Water Comments, p. 3. In its reply
comments, Staff maintained that the Company s average annual energy consumption should be
recalculated without using the abnormally high 2005 costs. Staffs Reply Comments, p. 2.
Commission Findings: Following a thorough review of the Company s Application
and the evidence produced during this case, the Commission finds that Capitol Water s power
costs have not increased as dramatically as the Company initially claimed. Capitol Water does
not appear to be facing a financial hardship to an extent that would warrant the use of a cost-
adjustment mechanism tied to changes in Idaho Power Company s electric rates. Therefore, the
Commission declines to approve such a mechanism.
The Commission finds it reasonable to exclude the abnormally high 2005 energy
consumption from a calculation of the Company s average annual energy usage. Excluding 2005
consumption because of the significant leak will produce a more representative estimate of
energy consumption that can be expected in 2009.
Since comments were filed in this case, the Commission issued Order No. 30754 on
March 19, 2009, granting Idaho Power an additional 1 % increase in its electric rates. Utilizing
the Company s energy consumption from 2006 through 2008 to calculate average annual energy
consumption and applying the Company s estimated average cost per kWh of 5.19 cents results
in increased power supply expense of $75 483 for 2009. It is reasonable for the Company to
include this increased power supply cost in rates. As a result, we calculate that Capitol Water is
entitled to include an additional $4 974 for incremental electricity costs in its revenue
requirement.
ORDER NO. 30762
RATE DESIGN
The Company requested, and Staff supported, that any revenue deficiency be
collected on a uniform basis. The total number of customers served has not significantly
changed since the Company filed its last general rate case in 2006.
residential customers are metered.
Further, none of the
Commission Findings: The Commission finds no reason to alter the rate structure or
spread the increase on anything other than a uniform basis. Therefore, the Commission grants
Capitol Water an increase in its total revenue requirement of $26 806 based on the Ustick Road
project, the Well No.6 pump rebuild, increased electricity costs, and amortized rate case
expenses.! To meet this revenue requirement, a weighted average increase of rates was applied
to establish the correct allocation of revenue from overall revenue. The resulting tariff charges
were rounded to the nearest five cents. This results in a $27 025 overall increase in revenue, or
326% increase in rates.
RATE SCHEDULES AND TARIFFS
Staff recommended that Capitol Water place fees established by Boise City and
Idaho Department of Environmental Quality (IDEQ) on a separate rate schedule of recurring
charges (1) to clarify that the Commission allows the Company to recover these fees from
customers, and (2) to make it administratively easier to revise the tariff if the fees are changed in
the future. Staff also noted that some of the Company s references to Commission rules and
regulations within its tariffs were either severely out of date or obsolete. Staff recommended that
the Company adopt the model tariff which incorporates the latest changes to the Commission
rules and regulations. The Company did not dispute Staff s recommendations on these matters.
Commission Findings: The Commission finds that placing Boise City and IDEQ
fees on a separate rate schedule will improve clarity for customers and streamline future changes
in fees, and therefore tariffs, should they occur. The Commission also finds it appropriate for the
Company to adopt the model tariff in order to reflect the most recent updates to the
Commission s rules and regulations.
1 The Company requested, and Staff did not oppose, an increase in the Company s revenue requirement of $600 a
year for three years to recover rate case expenses ($1 800 amortized over a period of three years).
ORDER NO. 30762
CONCLUSIONS OF LAW
The Commission has jurisdiction and authority over Capitol Water Corporation, a
water utility, and the issues raised in Case No. CAP- W -08-, pursuant to Title 61 of the Idaho
Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
Idaho Code 99 61-301 and 61-307 require the Commission to establish just and
reasonable rates for each public utility. We find a total annual revenue requirement for Capitol
Water of $624 713 to be just and reasonable. We further find the rate design attached hereto as
Attachment A to be a just and reasonable allocation of the Company s revenue requirement
among its customers.
ORDER
IT IS HEREBY ORDERED that the Commission approves a 4.326% increase in
authorized annual revenues for Capitol Water Company, for a total authorized annual revenue
requirement of $624 713.
IT IS FURTHER ORDERED that the Company submit updated tariff sheets
consistent with this Order. The Company shall revise its rate schedules and rules and regulations
based on the model tariff and create a separate tariff schedule for Boise City and IDEQ fees.
Rates and charges approved herein are to be effective May 1 , 2009.
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. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
ORDER NO. 30762
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of April 2009.
~~~
MACK A. REDFO , PRESIDENT
MARSHA H. SMITH, COMMISSIONER
k!~JI . KEMPT , CO MISSIONER
ATTEST:
~t\J ~"rl
D. Jewel
mIssion Secretary
O:CAP-08-02 ks3
ORDER NO. 30762
Capitol Water Corporation
CAP-08-
Tariff Design
Revenue Requirement Approved in Order No. 30198:$624 713
Staff Proposed Revenue Deficiency:$27,025
Staff Proposed Increase:326%
RESIDENTIAL SCHEDULE 1, MONTHLY FLAT RATES
Staff Proposed
Service size Current Tariff Tariff
3/4"$12.$12.
$14.$15.
11/4"$16.$16.
Sprinkling Charge: From May 1 through September 30, the following rates will be added
to the base monthly rates
Current Tariff Staff Proposed
Sprinkling Rate Sprinkling Rate
$15.$16.
COMMERCIAL SCHEDULE 2, METERED RATES
Minimum Monthly Charge: Customers using less than the following minimum charge
allowance will be billed the minimum charge.
Min. Charge Current Tariff Staff Proposed
Com. Allowance Minimum Charge Tariff-Min. Charge
Service size cu. ft.$/mo.$/mo.
3/4" & smaller 653 $7.$8.
915 $10.$11.30
11/2"597 $15.$16.50
760 $27.$28.
080 $48.$51.
Commodity Rate Charge:
Staff Proposed
Quantity Over Current Tariff Tariff
Minimum $/100 cu. ft. $/100 cu. ft.
1st 1 000 cu. ft.$1.18 $1.20
2nd 2 000 cu. ft.$0.$0.
Balance $0.$0.
ATTACHMENT A
Case No. CAP-08-
Order No. 30762
Page 1 of 2
SCHEDULE 4
FIRE PROTECTION (SPRINKLER SYSTEMS) - FLAT MONTHLY RATES
Current Staff Proposed
Service Size Tariff Tariff
$8.50 $8.
$11.80 $12.
$27.$28.
$43.$45.
10"$67.$70.
Note: In general, rates were adjusted to the nearest 5-cent increments which caused a minor
increase of revenue defic:kncy from $26 806 (4.291% increase) to $27 025
(4.326% increase).
ATTACHMENT A
Case No. CAP-08-
Order No. 30762
Page 2 of 2