20221019Comments.pdf

CLAIRE SHARP
DEPUTY ATTORNEY GENERAL 001 i9 PM 3:03IDAHOPUBLICUTILITIESCOMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.8026
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CAPITOL WATER )CORPORATION'S APPLICATION TO )CASE NO.CAP-W-22-01
CHANGE ITS SCHEDULE NO.3 PURCHASED )POWER COST ADJUSTMENT RATE )
)COMMENTS OF THE
)COMMISSION STAFF
Staff of the Idaho Public Utilities Commission ("Staff'),by and through its attorney of
record,Claire Sharp,Deputy Attorney General,submits the followingcomments.
BACKGROUND
On September 6,2022,Capitol Water Corporation ("Company")applied for authority to
increase its Schedule No.3 -Purchased Power Cost Adjustment ("PPCA")rate from 0.89%to
2.72%.
The Company's Schedule No.3 PPCA rate provides a mechanism for the Company to
recover its cost of electricity related to Idaho Power Company's electric rate schedules that have
been approvedby the Commission.The Commission approved the Company's current base
rates by Order No.30762 in Case No.CAP-W-08-02.In that Order,the Commission adopted a
three (3)year average of 1,454,401 kilowatt hours of electricity consumption at an average cost
STAFF COMMENTS 1 OCTOBER 19,2022
of $5.19 to establish rates for the Company.The Company states that,"together these produce a
total cost of electric power for the [Company]of $75,483.41."
According to the Company,the actual power costs for calendar year 2021 were $93,212
which is $17,729 more than embedded in the Company's base rates.Based on its calculations,
the Company now seeks to increase the Schedule No.3 PPCA rate from 0.89%to 2.72%to
recover these additional power costs.
STAFF ANALYSIS
PPCA Adjustment
Staff reviewed the Company's Application and supporting documents,and recommends
the Commission approve the proposed 2.72%PPCA rate,which is a 1.83%increase from the
current PPCA rate of 0.89%.This is $17,729 more than the $75,483 cost of electricity embedded
in the Company base rates.Staff verified that the calculations in the Application and the
workpapers are correct and calculated the actual power costs incurred in 2021 were $93,212.
Rate Design
With the proposed change in the PPCA,the monthlybill for an unmetered customer with
a ¾-inch service line would increase by $0.53 from $28.96 to $29.48 for May through
September and increase by $0.23 from $12.76 to $12.99 in all other months.The annual bill for
this customer would increase by $4.54,from $250.31 to $254.85,a 1.81%increase.The bill for
a metered customer will vary with water usage and the PPCA portion of the bill will increase by
1.83%.These bill calculations exclude franchise taxes.
PPCA Methodology
In Order No.33876,Case No.CAP-W-17-01,the Commission approvedmodifications to
simplify the PPCA methodology.The Company compares its actual charges for electricity
directly from Idaho Power to the energy cost embedded in base rates.The difference becomes
the new PPCA balance to include in rates.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.
STAFF COMMENTS 2 OCTOBER 19,2022
Due to 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 experienced 3.0%increase in customers since 2016.The
number of customers continues to be stable and is not expected to change in the future due to a
service territory with little room for growth.
Svstem Efficiency
Customers should not have to pay for higher electricity costs due to preventable
operational inefficiencies.Staff reviewed the electrical efficiency of the Company's wells
because the adjustment mechanism allows a 100%pass-through of electricity costs to ratepayers.
Staff calculated the efficiency of each well on a gallon per kilowatt-hour (gal/kWh)basis,and
then compared the results to prior years.See Table No.1.
Table No.1:Pump Efficiency Comparison
2019 Pump 2020 Pump 2021 Pump
Efficiency Efficiency Efficiency Change between
(gallkWh)(gallkWh)(gallkWh)2021 and 2020
Well #3 311 318 320 1%
Well #4 434 398 498 25%
Well #5 381 557 496 -11%
Well #6 505 533 514 -4%
Well #7 740 744 730 -2%
The results show that Well No.4 was 25%more efficient while Well No.5 showed an
11%decrease in efficiency from the previous year.The other wells showed minimal change.
With the exception of Well No.4,Staff believes these results are sufficiently stable and do not
raise concern.The improvement in Well No.4's efficiency was not attributed to any Company
actions.Staff recommends the Company assess Well No.4 to identify possible causes and apply
any lessons learned to its other wells.
The Company did not conduct any well efficiency enhancements in 2021 but plans to
perform scheduled maintenance on Well Nos.5 and 7,the two largest production wells,in 2023.
Periodic maintenance is necessary to maintain well efficiency.
STAFF COMMENTS 3 OCTOBER 19,2022
CUSTOMER NOTIFICATION
The Company filed its customer notice and press release with its Application.Staff
reviewed the documents and determined that they met the requirements of Rule 125 of the
Commission's Rules of Procedure.(IDAPA 31.01.01.125).The customer notice was included
with customers'October 1,2022,billing statements.
The Company sent a press release to the Idaho Statesman and the Idaho Business Review
at the time the Application was filed on September 2,2022.In the press release,the Company
erroneously states "Metered customers will see a decrease of 1.83%in their bill"in the body of
the press release,although the remainder of the press release correctly states that the rate is an
increase of 1.83%over the prior year's rate.The Company filed a corrected press release on
October 17,2022.
As of Wednesday,October 18,2022,the Commission has not received any comments.
STAFF RECOMMENDATION
Staff recommends that the Commission:
1.Authorize an overall 2.72%PPCA;
2.Direct the Company to file an updated Schedule No.3 -Other Recurring and
Non-recurring charges;
3.Direct the Company to assess Well No.4 to identify possible causes for the
change in efficiency and apply any lessons learned to its other wells;and
4.Direct the Company to continue to monitor all wells for efficiency and address
issues that have negative impacts.
STAFF COMMENTS 4 OCTOBER 19,2022
Respectfullysubmitted this /day of October 2022.
Claire Sharp
Deputy AttorneyGeneral
Technical Staff:Kathy Stockton
Chris Hecht
Robin Maupin
Matt Suess
i:umisc/comments/capw22.01cskiscwhrmmscomments
STAFF COMMENTS 5 OCTOBER 19,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19TH DAY OF OCTOBER 2022,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,INCASENO.CAP-W-22-01,BY E-MAILING A COPY THEREOF,TO THEFOLLOWING:
ROBERT PRICE
PRESIDENT
CAPITOL WATER CORP
2626 ELDORADO
BOISE ID 83704
E-MAIL:[e-mail]
SECRETARÑ
CERTIFICATE OF SERVICE