20200827Comments.pdf

MATT HUNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-OO] 4
[phone]
IDAHO BAR NO. 10655
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Street Address for Express Mail:
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BOISE, D 837 T4
Attorney for the Commission Staff
BBFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CAPITOL WATER
CORPORATION'S APPLICATION TO
DECREASE ITS SCHEDULE NO. 3
PURCHASE POWER ADJUSTMENT RATE
CASE NO. CAP.W-20.01
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of record,
Matt Hunter, Deputy Attorney General, submits the following comments.
BACKGROUND
On July 15,2020, Capitol Water Corp. ("Capitol Water") applied for authorization to
decrease its Schedule No. 3, Purchased Power Cost Adjustment ("PPCA") rate, from 2.93Vo to
2.06Vo. Capitol Water proposed an effective date of August 17, 2020.
Capitol Water stated its "current base rates were established by Order No. 30762 in Case
No. CAP-W-08-02." Application at 1. Capitol Water asserted that in Order No. 30762 "the
Commission adopted a three (3) year average of 1,454,401 kWh of electricity consumption [by
Capitol Waterl at an average cost of 5.19Q, to establish rates for Applicant." Id. Capitol Water
asserted this results in Capitol Water incurring a total electric power cost of $75,483.41.
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ISTAFF COMMENTS AUGUST 27 ,2020
Capitol Water asserted that in Case No. CAP-W-17-01 "the Commission adopted...the
most recent twelve months of power costs as a more efficient method for Capitol Water to recover
its increased electric power costs." Id.; see also Ordet No. 33876.
Capitol Water requested a decrease in its PPCA rate. Specifically, Capitol Water claimed
the actual electric power supply cost it incurred in2019 was $88,888 which is $13,405 more than
what is embedded in the Company's base rates. Id.; see alsoExhlbit 1 to the Application. By
comparison, Capitol Water's actual electric power supply cost in 2018 was $94,57I. Order
No. 34445 at2. Therefore, Capitol Water's actual electric power supply cost was less in 2019
than 2018.
Capitol Water requested its PPCA rate be reduced fromZ.93%or to 2.O6Eo. Capitol Water
included a worksheet with the Application detailing its electric power cost calculations, a copy of
the proposed Schedule No. 3 in legislative format, and a copy of a direct customer notice and a
news release that will be printed in the Idaho Statesman and Idaho Business Review.
On August 6,2020, the Commission issued a Notice of Application and Modified
Procedure, setting an August 27,2020 comment deadline and a September 3,2020 reply comment
deadline. The Commission also suspended Capitol Water's proposed effective date for the new
PPCA rate. Order No. 34748; see ldaho Code $ 6l-622(4).
STAFF REVIEW AND ANALYSIS
PPCA Adjustment
Staff reviewed the Company's Application and supporting documents, and recommends
the Commission authorize the proposed 2.06Vo PPCA rate, which is a decrease from the current
PPCA rate of 2.93Vo. The proposed PPCA rate reduces the PPCA from $19,088 to $13,405. Staff
verified that the calculations made in the Application and the workpapers are correct and
confirmed actual power costs incurred in 2019 were $88,888.
Rate Desien
With the proposed change in the PPCA, the monthly bill for an unmetered customer with a
3/t - rnch service line would decrease by $0.26 (from $29.54 to $29.28) in May through September
and decrease by $0.11 (from $13.02 to $12.91) in all other months. The annual bill for this
I Capitol Water's current PPCA rate was authorized by Commission Order No. 34445
STAFF COMMENTS AUGUST 27 ,20202
customer would decrease by $2.07, from $238.84 to $236.77 (0.87Vo decrease). The bitl for a
metered customer will vary with water usage and the PPCA portion of the bill will decrease by
0.87Vo. These bill calculations exclude franchise taxes.
PPCA Methodology
In Order No. 33876, Case No. CAP-W-17-01, the Commission approved changes to the
PPCA methodology. The Company compares its actual charges directly from Idaho Power to the
energy cost embedded in base rates to calculate the PPCA. Staff notes that by using this
approach, PPCA filings are completed in-house without the need for a consultant. Only the costs
related to the supply of metered energy are used in the calculation of the PPCA. Costs related to
late payment fees or services beyond the delivery of metered energy are excluded from the
calculation.
With the current customer charge rate structure, the current methodology can maintain its
simplicity and remain accurate without a true-up as long as the number of customers remains
stable over time. Capitol Water experience d a O.9Vo growth in customers in 20 19, a O.6Vo growth
in customers in 2018, and an overall 1.5Vo increase in customers since 2017. There was an
increase of 18 customers in 2018,26 customers in 2019, and an overall increase of 44 customers
since 2017. Staff notes that the number of customers continues to be stable, and that Capitol
Water's service territory has little room for growth.
System Efficiencv
Staff is concerned by the marked decrease in pumping efficiency that has occurred since
last year's PPCA. Since last year, average well pump efficiency decreased from6JVo to 5l%o.
Because the PPCA mechanism passes electrical costs directly to customers, there is no financial
incentive for the Company to use electricity efficiently. Consequently, Staff performs an analysis
to ensure that electricity costs have been incurred prudently over the PPCA period.
The Company pumpe d 25Vo less water in 2Ol9 than it pumped in 201 8, and we would
expect a concomitant reduction in electrical consumption. Instead, electrical consumption
decreased by just l.4Vo.
Staff found that Well Nos. 5 and 6 are primarily responsible for the decrease in electrical
efficiency. In particular, Well No. 5 only pumped about half as much water in20l9 as it did in
STAFF COMMENTS AUGUST 27 ,20203
2018 but used about the same amount of electricity in both years. As a result, the efficiency of
WellNo. 5 dropped fromSTVo to 407o. Well No. 6 produced less water but consumed more
energy in2019 than it did in 2018.
ln conversations with the Company, Staff learned that in calendar year 2020, the Company
took steps to correct the problem with Well No. 5; however, the Company has not yet corrected
problems with Well No. 6. Staff encourages the Company to continue evaluating well problems
and make reasonable improvements.
CUSTOMER NOTIFICATION
The Company filed its customer notice and press release with the Company's Application.
Staff reviewed the documents and determined that both met the requirements of Rule 125 of the
Commission's Rules of Procedure. (IDAPA 31.01.01.125). The notice was included with
customers' August 1,2020 billing statements.
The Company sent a press release to the Idaho Statesman and the Idaho Business Review
at the time of the Application's filing on July 15, 2020.
As of Wednesday, August 26,2020, no customer comments have been received.
STAFF RECOMMENDATION
Staff recommends that the Commission authorize an overall 2.067o PPCA rate and
approve the Company's proposed Schedule No. 3.
flRespectfully submitted this ZZ day of August 2020.
Hunter
Deputy Attorney General
Technical Staff: Kathy Stockton
Bentley Erdwurm
Michael Morrison
Chris Hecht
i:umisc:comments/capw20. I rnhklsmmbecwh comments
STAFF COMMENTS AUGUST 27 ,20204
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 27fi DAY OF AUGUST 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMTSSION STAFF, IN
CASE NO. CAP-W-20-01, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
ROBERT PRICE
PRESIDENT
CAPITOL WATER CORP
2626ELDORADO
BOISE ID 83704
E-MAIL: capitolwatercorp @ yahoo.com
Y
CERTIFICATE OF SERVICE