27179.pdf

Office of the Secretary
Service Date
October 29, 1997
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CAPITOL WATER CORPORATION,
Respondent.
CASE NO. CAP-97-
Complainant,
vs.
COLE ROAD COMPANY, LLC DBA
SIGNATURE POINT AND CONSTRUCTION
PARTNERS, INC.,
ORDER NO. 27179
On May 30, 1997, Capitol Water Corporation (Capitol Water; Company) filed a
Complaint with the Idaho Public Utilities Commission (Commission) against Cole Road Company,
LLC, dba Signature Point and Construction Partners, Inc. (Respondents). A Summons was mailed
by the Commission to each Respondent on June 2, 1997. On June 20, 1997, Construction Partners
Inc. filed its answer with the Commission. On June 23, 1997, an answer was filed by Cole Road
Company, LLC, dba Signature Point, followed by an amended answer on June 26, 1997.
Capitol Water contends that during 1994 at the Respondents' request , the Company
agreed to and did extend its main service lines to a development known as Signature Point. The
Company contends that the Respondents were advised that they would be required to contribute the
costs of the main extension including an amount to cover the related federal income taxes Capitol
Water would be obligated to pay on the value of the contributed facilities (CIAC). The Company
contends that on July 12, 1996, the Respondents were notified by letter that the income tax portion
of the main extension charge currently owing to Capitol Water was $32 470.88. Capitol Water
contends that despite repeated attempts to collect said amount, the Respondents have refused to pay.
Capitol Water requests that the Commission issue an order
Finding that in accordance with the Commission s orders implementing the Uniform
Main Extension Rule and the Commission s Order No. 21933, Respondents are jointly and severally
ORDER NO. 27179
obligated to pay the costs relating to the income tax on the CIAC of the Signature Point
development; and
Ordering Respondents to pay Capitol Water the outstanding balance in the amount
of $32 470.88 attributable to the income tax on CIAC of the Signature Point development.
Respondent Construction Partners, Inc. denies that it was a developer for Signature Point
and requests dismissal and an award of attorney fees and court costs.
Respondent Cole Road Company, LLC denies that there exists any privity between the
parties, contends that there was no valid contractual agreement, and alleges that there was no
consideration for any contract alleged to exist. Cole Road further denies the existence of any tariff
requiring payment of income taxes by any party to this case, or obligation of Capitol Water to collect
CIAC taxes pursuant to the Tax Reform Act of 1986. Cole Road denies that the income tax amounts
requested were properly calculated and contends that Capitol Water should be estopped from
collecting any income tax payment for failing to adequately and timely notify them of such a
requirement. Cole Road requests that the Complaint be dismissed.
By this Order and for reasons described below, the Commission dismisses the Complaint
of Capito 1 Water Corporation in Case No. CAP-97-1 and closes the case.
By Notice and Order issued August 15 , 1997, the Commission scheduled a prehearing
conference of the parties in Case No. CAP-97-1 for Thursday, September 11 1997. In our Notice
the Commission stated the following:
The Commission after reviewing and considering the filings of
record in Case No. CAP- W -97 -, finds it reasonable to schedule
a prehearing conference of the parties to explore the nature of
relief requested by Capitol Water, and as pertains to same the
statutory jurisdiction of the Commission and related Commission
powers of enforcement. The Commission further finds it
reasonable to require the Company at the prehearing conference
to demonstrate why alternative judicial forums for relief are not
more appropriate in a contract action to recover alleged monies
owed.
As per scheduling, a prehearing conference was held in Boise, Idaho on September 11
1997. The following parties appeared by and through their respective counsel:
ORDER NO. 27179
CAPITOL WATER
COLE ROAD COMPANY
JED W. MANWARING
MORGAN W. RICHARDS
CONSTRUCTION PARTNERS, INe.
COMMISSION STAFF
The arguments of counsel can be summarized as follows:
LEE B. DILLION
SCOTT D. WOODBURY
Capitol Water
Capitol Water is requesting interpretation of the Commission rules and orders relating
to CIAC-whether the Commission s Orders required Capitol Water to collect this gross-up amount
for CIAC as related to income taxes; whether such assessment was fair and reasonable; and whether
the Company s calculation in this instance was correct. Tr. Vol. I, pp. 4, 8.
The Company agrees that if this were purely a contractual interpretation claim or purely
a collection claim, that it should be sent to the District Court. Tr. Vol. I, p. 5. The Company
contends that Commission jurisdiction is appropriate because under Section A(7) of the
Commission s Uniform Main Extension Rules for water utilities, disputed matters may be referred
to the Commission for determination. Tr. Vol. I, pp. 5, 6.
Although recognizing that the Commission is not a collection agency (Tr. Vol. I, p. 7),
Capitol Water contends that it is appropriate for the Commission to retain jurisdiction and grant the
limited relief requested because the reasonableness and interpretation of the Commission s rules
regarding CIAC overlap into contractual issues of fact, and may not easily be understood by the
District Court. Tr. Vol. I, pp. 7, 8. It is the Company s understanding when you have a Commission
Order that says you must charge something and you charge it, that there is no need to have some
tariff on file. Tr. Vol. I, p. 22. Reference Commission Order No. 21933.
Cole Road Company
Cole Road contends that the Commission, despite its expertise, does not have primary
jurisdiction in this matter, maintaining that pursuant to cited authority, contractual disputes are to
be heard by the courts, not the Commission. Tr. Vol. I, pp. 13-15. Indeed, the Commission, Cole
Road argues, has no jurisdiction to award damages. Tr. Vol. I, p. 17. Cole Road contends that the
Commission s Orders did not require Capitol Water to collect CIAC from parties requesting main
extensions, but merely provided small water companies the option. Cole Road contends that Capitol
Water never exercised its option (Tr. Vol. I, p. 16), and that there is nothing in the Company s tariffs
ORDER NO. 27179
that requires the payment of this tax. Tr. Vol. I, pp. 11 , 16. Cole Road requests a dismissal of the
complaint. Tr. Vol. I, p. 17.
Construction Partners
Construction Partners maintains that the central issues are whether a tariff or a contract
exists that would allow imposition of this charge and whether Construction Partners has a
substantive obligation to pay this tax. Tr. Vol. I, pp. 18, 19. Construction Partners believes the
Commission to be without jurisdiction. Tr. Vol. I, p. 19.
Staff
The Commission Staff in response to Commission inquiry reports that it has looked at
the numbers submitted by the Company in this case (reference Complaint, Exhibit C-Worksheet
prepared by Capitol Water s accountants, Presnell-Gage) and believes that the underlying calculation
of federal income tax due on CIAC for the Signature Point development, based on acceptance of the
total contributed property amount, is correct. Tr. Vol. I, p. 23.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case
No. CAP-97-, the transcript ofthe September 11 , 1997, prehearing conference, its prior Order
No. 21933 in Case No. U-1500-176 (Attachment A) and the Uniform Main Extension Rule for Water
Utilities approved by the Commission in Case No. U-1500-, Order No. 7830 (Attachment B).
The Commission s Order No. 21933 in Case No. U-1500-176 was a generic Order in a
generic case and was applicable to Capitol Water Company. In our Order we made the following
findings of fact:
Under the Tax Reform Act of 1986, contributions in aid of construction are
treated as taxable income. . . .
On December 16, 1987, the Commission issued Order No. 21660, which
initiated an investigation into the treatment of contributions in aid of
construction. . .
We find that the individual aspects of each utility prohibit us from setting a
standard policy of treatment for all utilities. Thus, we find it appropriate to
order the adoption of different methods for different types of utilities.
ORDER NO. 27179
1. Every utility's option. To begin, we find each utility has the option of
charging to its shareholders any additional expense for the tax on the
contribution in aid of construction. . . .
2. Small water. . . utilities. For small water companies, the Commission
fmds that the full gross-up method must be used, whereby the person making
the contribution pays the full tax obligation of the utility on the contribution.
This method requires a full gross-up to $1646.90 on a contribution of$1000
toward plant. . . . The income tax collected from the contributor will be used
to pay the income tax on the contribution.. . .
The Commission knows from experience that these small companies simply
do not have the capital or operating resources to absorb additional tax
liabilities. In addition, the risk associated with the development will be on
the developer and not the ratepayers. . . .
The Commission finds that this method will apply. . . to those water
companies with fewer customers than Boise Water Corporation. . . .
In our ordering paragraphs we required the following:
IT IS HEREBY ORDERED that water companies with fewer customers than
Boise Water Corporation. . .shall use a full gross-up method whereby the
person making the contribution in aid of construction pays the federal tax
obligation of the utility on the contribution, unless they exercise the option
in the following paragraph.
IT IS FURTHER ORDERED that any utility may adopt the method used by
Pacific Power & Light Company whereby the additional expense for the tax
on the contributions in aid of construction is charged to the stockholders. . . .
Order No. 21933. Emphasis added.
Based on our Order, Capitol Water Company was required to collect a gross-up amount
for CIAC as related to income taxes on all contributed facilities or to charge such amount to its
stockholders. The Commission was empowered to enter its Order pursuant to Idaho Code 61-
503-Power to Investigate and Fix Rates and Regulations, and 61-507 Determination of Rules and
Regulations. A uniform practice regarding CIAC is required of the Company, as discrimination and
preference is generally prohibited. Reference Idaho Code ~ 61-315.
ORDER NO. 27179
Having reviewed the Commission s Order and requirements related to CIAC, we now
look to the Company s requirements under the Uniform Main Extension Rule for Water Utilities.
Specifically, we look to the following language:
Uniform Main Extension Rule for Water Utilities
A. General provisions and definitions
1. Applicability
a. All extensions of distribution mains from the utility'
existing distribution system, to serve new customers, except for those
specifically excluded below, shall be made under the provisions of this rule
unless specific authority is first obtained from the Commission to deviate
therefrom. A main extension contract shall be executed by the utility and
the applicant or applicants for the main extension before the utility
commences construction work on said extensions or, if constructed by
applicant or applicants, before the facilities comprising the main
extension are transferred to the utility.
Order No. 7830. Emphasis added.
We continue to fmd the Uniform Main Extension Rules to be just and reasonable. Reference Idaho
Code 61-303. We make no rIDding regarding whether or not a main extension contract exists.
note only that such a contract is required by our rules and would be the logical place for a regulated
utility to address payment responsibility for project-related CIAC federal taxes. The calculation of
the tax amount is formulaic (see Order No. 21933) and requires no Commission expertise. Billing
and collection of the CIAC tax-related expense is authorized by Commission Order and requires no
separate tariff. Correctly calculated, the charges are just and reasonable. Reference Idaho Code 61-
301.
The Commission has considered the Application of Capitol Water in Case
No. CAP-97-1 wherein the Company seeks recovery of$32 470., the federal income tax related
to a main extension contribution. The Commission has also considered two additional complaints
filed with the Commission in which the Company is requesting similar relief. Reference Case
No. CAP-97-, Capitol Water Corporation v. John S. Esposito, dba Whispering Pines Apartments
($20 173.61), and CAP-97-, Capitol Water Corporation v. Greg Unruh, dba Certified Dental
($3 427.58). The existence or non-existence of a contract in this case or verification of underlying
ORDER NO. 27179
costs or expenses is a matter that more appropriately rests with the courts. The Commission cannot
provide the full relief requested. As recognized by Capitol Water, the Commission is not a
collection agency. Accordingly, the Commission finds it reasonable to dismiss the complaint of
Capitol Water Corporation in Case No. CAP-97-1 and to close this case.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Capitol Water Corporation
a water corporation and public utility, pursuant to Title 61 of the Idaho Code and the Commission
Rules of Procedure, IDAPA 31.01.01.000 et seq. The authority of the Commission is restricted to
that expressly and by necessary implication conferred upon it by the Legislature. Idaho Code 61-
501. Generally, construction and enforcement of contract rights are matters within the jurisdiction
of the courts and not the Commission. If the matter is a contractual dispute, it should be heard by
the courts. Lemhi Telephone Company v. Mountain States Tel Tel Co 98 Idaho 692, 571 P .2d 753
(1977). The Commission is not a court of justice as derIDed in Idaho Constitution Article 1 Section
, and has no authority to issue or enforce an Order for recovery and collection of any monies
owing Capitol Water Company by Cole Road Company, LLC DBA Signature Point and/or
Construction Partners, Inc., the ultimate relief requested by Capitol Water in Case No. CAP- W -97-
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED that the complaint of Capitol Water Corporation in Case No. CAP-97-
be dismissed and the case docket closed.
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 ~ 61-626.
ORDER NO. 27179
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ..;?c;:tL
day of October 1997.
4---( ,
RALPH ELSON, COMMISSIONER
MARSHA H. SMITH, COMMISSIONER
ATTEST:~J?~
Myrna J. Walters
Commission Secretary
vld/O:CAP-97-1 .sw2
ORDER NO. 27179
BEFORE THIS IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ADOPTION
OF THE UNI FORM EXTENSION RULE
FOR WATER UTILITIES UNDER THE JURISDICTION OF THE IDAHO PUBLIC UTILITIES COMMISSION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
CASE NO. U-1500-
ORDER NO. 7830
On March 30. 1965. this Commission mailed copies of a pro-
posed uni form extensi on ru1 e to all water uti 1 i ti es comi ng under i
jurisdiction. The transmittal letter stated that the Commission, on
its own motion, would set a hearing to consider the adoption of the
- uniform extension rule and notified each of the companies that they
had until May 1, 1965, to file comments, suggestions, or objections to
the ru1 e and wou1 d be gi ven an opportuni ty to appear at the heari
to present testimony and examine witnesses.
On May 3, 1965, the Commission set this matter for hearing
on June 8. 1965, in Room 301, at 317 Main Street, Boise, Idaho. at
which time and place the hearing was hel-d before the entire Commission,
with President Ralph H. Wickberg presiding and the following appearances
were entered:
Carey H. Nixon , Attorney at Law, 112 North6"Street, Boise,
Idaho, appearing on behalf of Boise Water Corporation
and Idaho Water Company.
Walter H. Smith, 500 Idaho Street, Boise, Idaho, appearing
on behalf of Boi se Water Corporatton and I daho Water
Company.
Nash Bideganeta, Boise, Idaho, appearing on behalf of Capital
Securi ti es Water Corporati on.
Grant Stowell, Pocate110, Idaho, appearing on behalf of
Cherokee Water Company.
Commissioners Rulon Swensen and Leon Fairbanks, appearing on
beha 1 f of the Ada County Commi ss i oners.
Rulon E. Larsen, Director, Utilities Division, and K. D. Smith,
Audi tor, appeari ng on beha 1 f of the Commi ss i on.
The Commission staff exp1ained- in detail the 'proposed uniform
extension rule, how it is different from the present uniform extension rule,
and the need for changing the rule now in effect.From the discussion that
followed the staff presentation, there were some changes suggested to the
Order No. 27179
Attachment A
proposed rule and these changes were taken under consideration by the
Commission. At the conclusion of the ,hearing, the Commission determined
to hold the record open for a period of two weeks for the submission of
any further comments or proposals from any interested parties. The two
week peri od now havi ng passed, and the Coll'll1issi on has not recei ved further
comments or suggestions, the records should be closed.
FI NDI NGS
THE COMMISSION HEREBY FINDS:
THAT the Commission has on its own motion held a hearing on the
adoption of the proposed uniform extension rule for water utilities under
the jurisdiction of the Commission.
I I.
THAT as a result of this hearing certain changes and amendments
were suggested to the proposed uniform extension- rule and these changes
and amendments have been i ncorporated in the, revi seduni form extensi on
rule attached hereto as Exhibit A and by reference made a part hereof.
III.
THAT the revised uniform extension rule attached hereto as
Exhibit A should be adopted to become effective on and after August 1, 1965.
ORDER
IT IS THEREFORE ORDERED that the. revised uniform extension rule
attached hereto and marked as Exhibi t A -and-by -reference made a part hereof
should be and the same is hereby adopted. to become 'effecttve on and after
August 1~ 1965.
IT IS FURTHER-ORDERED ,that the 'record. in- this matter be closed.
DATED at Boise, Idaho,.this 19th day ,of July, 1965.
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hJJ.
PREST DENT
COMMISSIONER
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77 -N--lo~MlssIONER
ATTEST:
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UNIFORM MAIN EXTENSION RULE FOR WATER UTILITIES
General Provisions and Definitions
EXHIBIT !fA"
Appl icabil ity
All extensions of distribution mains from the utility s existing
di stri but ion system, to serve new customers, except for those
specifically excluded below, shall be made under the provisions
of this rule unless specific authority is first obtained from
the Commission to deviate therefrom.A main extension contract
shall be executed by the utility and the applicant or applicants
for the main extension before the utility commences construction
work on said extensions or, if constructed by applicant or appli-
cants, before the facilities comprising the main extension are
transferred to the uti 1 i ty.
Extensions solely for fire hydrant, private fire protection,
resale, temporary, standby, or supplemental service shall not
be made under th is ru 1 e.
The uti 1 i ty may, but wi 11 not be requi red to, make extens ions
under thi s rul e .i n easements or ri ghts of way where fi nal grades
have not been establ i shed, or where street grades have not been
brought to those established by public authority.If extensions
are made when grades have not been establ i shed and there is a
reasonable probability that the existing grade will be changed,
the utility shall require that the applicant or applicants for
the main extens i on depos it, at the time of execut i on of the ma in
extension agreement, the estimated net cost of relocating raising
or lowering facilities upon establishment of final grades.Adjust-
ment of any di fference between the amount so depos i ted and the
actual cost of relocating, raising or lowering facilities shall
be made within ten days after the utility has ascertained such
actual costo The net deposit representi ng actual cost is not
subject to refund.The entire deposit related to the proposed
relocation, raising or lowering shall be refunded when such dis-
placements are determined by proper authority to be not required.
Definitions
A "bona fide customer , for the purposes of this rule, shall be
a customer (excluding any customer formerly served at the same
ocati on) who has gi ven sati sfactory evi dence that servi ce wi
be reasonably permanent to the property which has been improved
with a building of a permanent nature, and to which service has
commenced.The provi s i on of servi ce to a rea 1 es tate developer
or builder, during the construction or development period, shall
not establ ish him as a bona fi de customer
A "real estate developer" or "builder , for purposes of this
rule, shall include any individual, association of individuals,
partnership, or corporation that divides a parcel of land into
two or more portions.
The "adjusted construction cost", for the purposes of this rule,
shall be reasonable and shall not exceed the costs recorded in
conformity with generally accepted water utility accounting and
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sound engineering practices, and as specifically defined in the
Uniform System of Accounts for Water Util ities prescribed by the
Commission, of installing facilities of adequate capacity for the
servi ce requested.If the utility, at its option, should install
facilities with a .larger capacity or resulting in a greater foot-
age of extension than requi red for the servi ce requested, the
adjusted construction cost", for the purposes of this rule, shall
be determined by the appl ication of an adjustment factor to actual
construction cost of facilities installed. This factor shall be
the ratio of estimated cost of required facilities to estimated
cost of actual facilities installed.
Commi ssion" shall mean Idaho Publ i c Util iti es Commi ssion.
Ownership, Design and Construction of Facilities
a. Any faci 1 i ti es ins ta 11 ed hereunder shall be the sole property of
the utility.In those instances in which title to certain portions
of the installation, such as fire hydrants, will be held by a
political subdivision, such facilities shall not be included as a
pa rt of the ma in extens i on under th is ru 1 e.
b. The size, type, quality of materials, and their location shall be
specified by the utility; and the actual construction shall be
done by the uti 1 i ty or by a cons truct i ng agency acceptable to it.
c. Where the property of an applicant is located adjacent to a right-
of-way, exceeding 70 feet in width, for a street, highway, or
other public purpose, regardless of the width of the traveled way
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or pavement; or a freeway, waterway or railroad right-of-way the
utility may elect to install a main extension on the same side
thereof as the property of the applicant, and the estimated and
adjusted constructi on costs in such case shall be based upon such
an extension.
When an extension must comply wi th an ordinance, regu1 ation, or
specification of public authority, the estimated and adjusted
construction costs of said extension shall be based upon the
facilities required to comply therewith.
Estimates, Plans and Specifications
a. Upon request by a potential applicant for a main extension, the
utility shall prepare, without charge, a preliminary sketch and
rough estimates of the cost of installation to be advanced by
said applicant.
b. Any applicant for a main extension requesting the utility to
prepare detailed plans, specifications and cost estimates shall
be requ i red to depos i t wi th the uti 1 i ty an amount equa 1 to the
estimated cost of preparation of such material. The utility shall,
upon request, make available within 45 days after receipt of the
deposit referred to above, such plans, specifications and cost
es ti mates of the proposed main extens i on.I f the extens i on is to
include oversizing of facilities to be done at the utility
expense, appropriate details shall be set forth in the plans,
specifications and cost estimates.
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In the event a main extension con~ract with the utility is
executed within 180 days after the utility furnishes the detailed
plans and specifications, the deposit shall become a part of the
advance, and s ha 11 be refunded in accordance wi th the terms of
the main extension contract.If such contract is not so executed,
the deposit to cover the cost of preparing plans, specifications
and cost estimates shall be forfeited by the applicant for the
main extension and the amount of the forfeited deposit shall be
credi ted to the account or accounts to whi ch the expense of pre-
paring said material was charged.
When detailed plans, specifications and cost estimates are requested,
the applicant for a main extension shall furnish a map to a suitable
scale showing the street and lot layouts and, when requested by
the utility, contours or other indication of the relative elevation
of the vari ous parts of the area to be developed. . I f changes are
made subsequent to the presentation of this map by the applicant,
and these changes requi re addi ti ona 1 expense in revi sing plans,
specifications and cost estimates, this additional expense shall
be borne by the applicant, not subject to refund, and the additional
expense thus recovered s ha 11 be credi ted to the account or accounts
to which the additional expense was charged.
Timing and Adjustment of Advances
Unless the applicant for the main extension elects to arrange for
the installation of the extension himself, as permitted by Section
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c., the full amount of the required advance or an acceptable
surety bond must be provided to the util ity at the time of
execution of the main extension agreement.
If the appl icant for a main extension posts a surety bong, in 1 ieu
of cash, such surety bond must be repl aced wi th cash not 1 ess than
ten calendar days before construction is to commence; provided,
however, that if special facilities are required primarily for the
service requested, the applicant for the extension may be required
to deposit suffici~nt cash to cover the cost of such special
faci 1 it; es before they are ordered by the ut i 1 i ty .
c. An applicant for a main extension who advances funds shall be
provided with a statement of actual construction cost and adjusted
construction cost showing in reasonable detail the cost incurred
for material, labor, any other direct and indirect costs, overheads,
and total costs; or unit costs; or contract costs, whichever are
appropri ate.
Said statement shall be submitted within sixty days after the
actual construction costs of the installation have been ascer-
tained by the utility.In the event that the actual construction
costs for the entire installation shall not have been determined
within 120 days after completion of construction work, a pre-
liminary determination of actual and adjusted construction costs
shall be submitted, based upon the best available information
at that time.
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Any differences between the adjusted construction costs and the
amount advanced shall be shown as a revi s i on of the amount of
advance and shall be payable within thirty days of submission
of statement.
Assignment of Main Extension Contracts
Any contract entered into under Sections B and C of th i s ru e, or
under similar provisions of former rules, may be assigned, after
sett1 ement of adjusted construction costs, after wri tten notice to
the utility by the holder of said contract as shown by the uti1ity
records.Such assignment shall apply only to those refunds which
become due more than thirty days after the date of receipt by the
utility of the notice of assignment.The uti 1; ty shall not be
requi red to make anyone refund payment under such contract to more
than a single assignee.
Interpretations and Deviations
In case of disagreement or dispute regarding the application of any
provision of this rule, or in circumstances where the application
of this rule appears unreasonable to either party, the utility,
app1 icant or app1 icants may refer the matter to the Commission for
determi nati on.
Extensions to Serve Individuals
Free-Footage Allowance
The utility shall extend its water distribution mains to serve
new bona fi de customers at its own expense, other than to serve
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subdivisions, tracts, housing projects, industrial developments
or organized commercial districts, when the required total length
of main extensions from the nearest existing utility facility is
not in excess of fifty feet per service connection.
Advances
I f the total ength of ma in extens i on is in exces s of 50 feet
per service connection app1 ied for, the app1 icant or app1 icants
for such service shall be required to advance to the utility,
before construction is commenced, that portion of the estimated
reasonab1 e cost of such extension which exceeds the estimated
reasonable cost of 50 feet of the main extension per service
connecti on, exc1 us i ve of the cos t of servi ce pi pes, meter boxes
and meters.Such estimated reasonable cost shall be based upon
the cos t of a main not in exces s of 6 inches ; n diameter except
where a larger main is required by the special needs of the
applicant or applicants.The amount of the advance is subject
to adjustment in accordance with the' provisions of Section A.
of this ru1e~
Refunds
The money so advanced shall be refunded by the uti 1 i ty, in cash
without interest, in payments equal to the adjusted construction
cost of 50 feet of the main extension for which advance was made,
for each additional service connection made to said main extension
exclusive of that of any customer formerly served in a reasonable
manner at the same location.At the request of app1 icant, refunds
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shall be made within 180 days after the date of first service
to a bona fide customer. If no request is received from app1 icant,
the utility shall initiate refunds on an annual basis.No refunds
sha 11 be made after a peri od of ten years from the date of com-
pletion of the main extension and the total refund shall not
exceed the amount advanced.
Exceptions
Where a group of five or more individual applicants requests ser-
vice from the same extension, or in unusual cases after obtaining
Commission authorization, the utility, at its option, may require
that the individual or individuals advance the entire cost of the
ma in extens i on as herei n provi ded and the uti 1 i ty shall refund
this advance as provided in Section C.2. of this rule.
C. Extensions to Serve Subdivisions, Tracts, Housing Projects,
Industrial Developments or Organized Commercial Districts
Advances
Unless the procedure outlined in Section C.c. is followed,
an applicant for a main extension to serve a new subdivision,
tract, housing project or industrial development or organized
commercial district shall be required to advance to the
utility, before construction is commenced , the estimated
reasonable cost of the extension to be actually installed,
from the nearest utility facility at least equal in size or
capacity to the main required to serve both the new customers
and a reasonable estimate of the potential customers who
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might be served directly from the main extension without
addi ti ana 1 extension. The costs of the extens i on shall
include necessary service stubs or service pipes, fittings,
gates and hous i ng therefor, and meter boxes, but shall not
i nc1 ude meters.To this shall be added the cost of fire
hydrants when requested by the app 1 i cant for the ma in ex-
tens i on or requi red by pub 1 i c authori ty, whenever such
hydrants are to become the property of the utility.
If, for any purpose, special facilities are required primarily
for the service requested, the cost of such special facilities
may be included in the advance, subject to refund, as herein-
after provided, along with refunds of the advance of the cost
of the extension facilities described in Section C.a. above.
In lieu of providing the advances in accordance with Sections
a. and Co b., the applicant for a main extension shall
be permitted, if qualified in the judgment of the utility to
construct and install the facilities himself, or arrange for
their installation pursuant to competitive bidding procedures
initiated by him and limited to qualified bidders. The cost,
including the cost of inspection and supervision by the
utility, shall be paid directly by applicant. The applicant
shall provide the utility with a statement of actual con-
struction cost in reasonable detail The amount to be treated
as an advance subject to refund shall be the lesser of
(1) the actual cost or (2) the price quoted in the utility
- 10 -
detailed cost estimate.The installation shall be in
accordance with the plans and specifications submitted by
the utility pursuant to Section A.
Refunds
The amount advanced under Sections C.aD' Co 1.b. and CD 1.
shall be subject to refund by the utility in cash, without
interest, to the party or parties entitled thereto as set
forth in the following two paragraphs The total amount so
refunded shall not exceed the total of the amount advanced.
Except as herei nafter provi ded, the refunds shall be made i n
annual, semi-annual or quarterly payments, at the election of
the utility, and for a period not to exceed 20 years after
the date of the contract.
Whenever costs of main extensions have been advanced pur-
suant to Sections C.aD or C.c., the utility shall deter-
mine the revenue received from customers other than residential,
including fire protection agencies, supplied by service pipes
connected directly to the extension for which the cost was
advanced.The refund shall be 22% of the revenue so recei ved.
For residential customers connected directly to the extension
for which the cost was advanced, the utility shall refund 22%
of the average revenue per residential customer of the entire
system for the immediately preceding 12 month period.
section C.d. & B-
(See
Whenever costs of special facilities have been advanced pur-
- 11 -
suant to Secti ons C. 1. b. or C. 1 . c., the amount so advanced
sha 11 be di vi ded by the number of lots to be served by the
special facilities.Thi s advance per lot shall be refunded
for each lot on wh i ch one or more bona fi de cus tomers are
served by those faci 1 i ti es.
With respect to a contract entered into on and after the
effective date of this rule, if, at any time during the 20
year refund period specified above, 80% of the bona fide
customers for which the extension or special facilities were
designed are being served therefrom, the utility shall
immediately notify the contract holder of that fact, and at
that time shall become obligated to pay, in cash, any balance
which may remain unrefunded at the end of said 20 year period.
Such balance shall be refunded i n fi ve equal annual i ns ta 11-
ments, payable beginning 21 years after the date of the contract.
Where a contract has been entered into under a former main
extension rule, and where 80% of the bona fide customers for
whi ch the extensi on or speci a 1 faci 1 i ti es were desi gned are
bei ng served therefrom the uti 1 i ty may negoti ate and enter
into a new and substitute contract, identical in all respects
with the original contract, including the original termination
date, except that said substitute contract shall include the
following provisions:Notwithstanding any other provisions
hereof, any unrefunded balance remaining at the termination
date of this contract shall be paid in five equal annual install-
- 12 -
ments beginning one year after said termination date.
3. Termination of Main Extension Contracts
a. Any contract entered into under Section C of this rule, or
under similar provisions of former rules, may be purchased
by the uti 1 i ty and termi nated, after fi rst obtai ni ng the
authorization of the Commission, at any time after the number
of bona fi de customers then recei vi ng servi ce from the ex-
tension for which the advance was made equals at least 60% of
the total number of b9na fide customers for which such extension
was designed by the utility and the terms are otherwise mutually
agreed to be the parties or their assignees and that Section
b. and Section C.c. hereof are complied with.
b. The utility, in requesting authorization for such termination,
shall furnish to the Commission the following information in
writing by an advice letter in the event the termination is
to be accomplished by payment in cash, or by a formal application.
(1) A copy of the main extension contract, together with data
adequa'te1y describing the development for which the advance
was made and the total adjusted construction cost of the
extens i on.
(2) The balance unpa i d on the contract, as above defi ned,
as of the date of termination and the terms under which
the obligation is requested to be terminated.
(3) The name of the holder of the contract when terminated.
- 13 -
(4) The total number of bona fi de cus tomers for wh i ch the
extension was designed and the number of bona fide
customers actually receiving service on said extension
as of the proposed termination date of the contract.
Discounts obtained by the utility from contracts terminated
under the provisions of this section shall be accounted for
by credits to Ac. 265, Contributions in Aid of Construction.
- 14 -
Office 01 the Secretary
S~"'lce Date
JUN G - 1988
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGA-
TION OF THE EFFECTS OF REVISIONS
OF THE FEDERAL INCOME TAX CODE
UPON THE COMMISSION. S POLICIES
CONCERNING CONTRIBUTIONS IN AIDOF CONSTRUCTION.
CASE NO. U-1S00-176
ORDER NO. 21933
Apri I 18,1988,the Idaho Public Utilities
Commission (Commission) issued a Proposed Order in this case
pursuant to Rule 31.2 of the Commiss ion ' s Rules of Practice and
Procedure.' Comments regarding the Proposed Order were received
from the Mountain States Telephone and Telegraph Company
(Mountain Bell), Idaho Power Company, Boise Water Corporation,
Washington Water Power Company (WWP) ,and the Idaho Ci tizens
Coalition.Having fully considered the comments filed in this
matter,the Commission hereby issues its Final Order in this
case.
FINDINGS OF FACT
Under the Tax Reform Act of 1986, contributions in aid
of construction are treated as taxable income.Utilities are
now requi red to pay income tax on contributions in aid of
construction and in return are allowed to depreciate these
contributions for income tax purposes.Such treatment
contributions in aid of construction significantly affects our
policies concerning the amount of contributions that should be
requi red.
ORDER NO. 21933
Order No. 27179
Attachment B
On December 16, 1987, the Commission issued Order No.
21660 which initiated an investigation into the treatment
contributions aid construction.requested all
regulated utili ties subject to our jurisdiction to recommend
methods treating taxes on contributions for ratemaking
purposes.recei ved comments from Mountain Bell,Idaho
Telephone Association, Contel of the West, Inc., GTE Northwest,
WWP, Boise Water Corporation, Intermountain Gas Company, Pacif ic
Power & Light Company, Utah Power & Light Company, Idaho Power
Company, and the Commission Staff.
The Commission has considered all comments submi tted in
this case.The Commission has taken various factors into
account and we find that the individual aspects of each utility
prohibi t us from setting a standard policy of treatment for all
utilities.Thus, we find it appropriate to order the adoption
of different methods for different types of utilities.
Every utility s option.To begin, we find each
utility has the option of charging to its shareholders any
addi tiona 1 expense fa r the tax on the cont ribut ions in a id
construction.This method does not have any impact on the
utility customers.Pacific Power & Light Company (PP&L) pro-
posed that it continue charging the taxes on the contributions
its stockho lders it historically has in Idaho.The
Commission commends PP&L on its treatment of contributions in
aid construction and urges other utilities follow
Pacific s lead.
ORDER NO. 21933
Small water and telephone utilities.For small
water and telephone companies,the Commission finds that the
full gross-up method must be used, whereby the person making the
contribution pays the full tax obligation of the utility on the
cont ribution.This method requires a full gross-up to $1646.
on a contribution of $1,000 toward plant.Under this method,
the uti Ii ty wi 11 depreciate the contribution for tax purposes
and pass through that benefi t to the ratepayers.The income tax
collected from the contributor will be used to pay the income
tax on the contribution resulting in no effect on rate base.
Passing through the income tax benefit on the tax depreciation
to the ratepayers would result in a total revenue reduction over
a 30-year period of $303.40 at a net present value of $259.29.
Although this method will tend to discourage developers from
contributing thei r systems to these uti Ii ties, the Commission
knows from experience that these small companies simply do not
have the capital or operating resources to absorb additional tax
liabilities.In addi tion, the risk associated wi th the develop-
ment will be on the developer and not the ratepayers.The
Commission finds that this method will apply to those telephone
companies wi th fewer customers than Century Telephone Company
and to those water companies wi th fewer customers than Boise
Water Corporation.The calculations for this method are
outlined in Schedule I, which is attached to this Order.
ORDER NO. 21933
Boise Water Corporation currently uses method
authorized by the Commission in Order No. 20955 whereby Boise
Water Corporation enters into escrow agreements wi th developers
who have requested water main extensions and special facilities
for residentiaL development.The Commission finds that Boise
Water Corporation may continue treating contributions
prescribed in Order No. 20955,subj ect review by the
Commission.
CSPP.For cogenerators and small power producers,
the Commission finds that the net present value method
appropriate.This method requires that the contributor be given
the benefit of the net present value of tax depreciation in
determining the total contribution.Under this method, the net
present value the tax depreci ation $1,000.contribu-
tion $156.11,which subtracted from the income tax
$392.leaving net cost income tax the contribution
$236.69.Because of the tax-on-tax effect of paying income tax
liability for another entity, the additional income tax calcu-
lates to $153.11, requiring a total contribution for income tax
purposes of $1389.80 from the contributor for $1,000 of plant.
Under this method, no residual is to be absorbed by the utility
or the ratepayers.The additional tax payment of $156.11 will
not be passed on to the ratepayers in the cost of service since
the future depreci at ion benefi ts will not inure the
ratepayers.The calculations for this method are shown on
Schedule 2, which is attached to this Order.
ORDER NO.2 1933
All others.Fo r the remaining uti lit ies subj ect
to our jurisdiction, the Commission finds that the income tax
paid on contributions in aid of construction should be rate
based and charged to the ratepayers over an extended period of
time.Under this method, . the income tax of $392.80 on
$1,000.00 contribution is paid by the uti Ii ty wi th rate base
treatment of the income tax paid.The total revenue requirement
of a 3D-year period is $614.10 wi th a net preeent value of
$293.52.In addi tion to being the simplest method to adminis-
ter,rate basing the contribution promotes development and
recognizes that the developer contributor making the
contribut ion is providing something of va lue to the ut i 1 i ty and
its customers.Requi ring the developer or contributor
increase its contribution by the amount of tax the utility must
pay on the contribution imposes an additional burden that would
discourage contributions in aid of construction and development
in general.The calculations for this method are shown on
Schequle 3, which is attached to this order.
Options that may later appropriate.
addi tional method considered by the Commission was the method
whereby the contributions in aid of construction are grossed up
for net present value of the revenue requirement for rate base
treatment of tax on the contribution.This method requires the
calculation of a net present value of rate basing the income
tax.This method would require the contributor to pay an addi-
ORDER NO. 21933
tional $295.89 for each $1,000.00 contribution.Under this
method, the additional cost to the ratepayers would be $57.
and assumes that the utility will not charge the additional
current income tax payment of $213.14 to the ratepayers.Unde r
this method, the utility passes the net present value of taz
depre- ciation to the contributor and is reimbursed as tax
depreciation is taken.But because Idaho is a capi ta I-short, as
well as an energy-surplus state, the Commission is not inclined
to adopt this method at this time.The climate for development
in Idaho is mediocre at best.If the Commission could justify
this method, it would adopt it.However, as long as the present
inertia surrounding development in Idaho exists,thi s method
cannot be justified.We commend Intermountain Gas Company for
its recommendation of this method and the Commission is hopeful
that one day this method can be adopted.
Transi tion.All persons who have capi tal contri-
buticn applications currently pending before any uti Ii ty or who
enter binding agreements to contribute capital on or before
July 1, 1988, may opt to contribute capital under the utility
existing polities or the policies in this Order.Those who have
not made an election in wri ting must do so by July 1988;
otherwise, they will be subject to the terms of this Order.
Furthermore, the Commission finds that the amortization
for the income tax paid on contributions shall occur over the
tax 1 i fe of the investment.The Schedules attached to this
ORDER NO. 21933
Order and the numbers associated wi th each method merely assume
a 3D-year life and are used for illustrative purposes only.
CONCLUSIONS OF LAW
The Idaho Public Uti Ii ties Commission has jurisdiction
over the subject matter of this Order pursuant to Title 61, Idaho
Code.
IT IS HEREBY ORDERED that water companies wi th fewer
customers than Boise Water Corporation and telephone companies
with fewer customers than Century Telephone Company shall use a
full gross-up method whereby the person making the contribution
in aid of construction pays the full tax obligation of the
uti Ii ty on the contribution, unless they exercise the option in
the following paragraph.
IT IS FURTHER ORDERED that any utility may adopt the
method used by Pacific Power & Light Company whereby the
addi tional expense for the tax on the contributions in aid of
construction is charged to the stockholders and has no impact
upon the customers.All tax impacts of contributions are
excluded from results of operation and no additional costs are
passed onto the customers.
IT IS FURTHER ORDERED that Boise water Corporation may
continue using the method approved Order No. 20955, subject to
review by the Commission.
ORDE~ NO. 21933
IT IS FURTHER ORDERED that the remaining utilities
subject to our jurisdiction shall rate base the income tax paid
on the contributions in aid of construction and recoup it from
ratepayers over an extended period of time, unless they exercise
the option used by Pacific Power & Light Company.
IT IS FURTHER ORDERED that cogenerators shall adopt the
net present value method whereby the person making the contri-
bution pays the full income tax expense less the net present
value of the tax depreciation on the contributed property.
IT IS FURTHER ORDERED that all persons who have capi tal
contribution applications current ly pending before any uti Ii ty
or who enter binding agreements to contribute capi tal on or
before July 1988, have the option of contributing capital
under the utili ty ' s existing policies or the policies in this
order.Those who have not made an election in wri ting must do
so by July 1988; otherwise the terms of this Order shall
apply.
IT IS FURTHER ORDERED that interested persons have
twenty-one (21) days from the service date of this Order within
which to fi Ie exceptions and briefs to this proposed Order.
addition,a party may fi Ie and serve answers and accompanying
briefs to the exceptions wi thin seven days after service of. said
exceptions.
ORDER NO. 21933
IIIII
IIIII
IIIII
IIIII
IIIII
IIIII
at Boi se, Idaho, this
DONE by Order of the Idaho Public Utili ties Commission
3/ld-day of June, 1988.
ATTEST:
~,~
fZ~~-
MYRNA J. WALTERS, SECRETARY
LM: vs/O-
ORDER NO. 21933
NOTE:Please see attached co~ents.
DEAN J. MILLER, PRESIDENT
---
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fl A.A/\~ L----
---
PERRY SWI HER, COMMI
. 1
:'" ,-,:,--
-2:'/ .
--~--'-'" --
RALPH NELSON, COMMISSIONER
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGA-
TION OF THE EFFECTS OF REVISIONS
OF THE FEDERAL INCOME TAX CODE )
UPON THE COMMISSION'S POLICIES
CONCERNING CONTRIBUTIONS IN AIDOF CONSTRUCTION.
CASE NO. U-1500-176
ORDER NO. 21933
COMMISSIONER DEAN J. MILLER,
DISSENTING IN PART AND CONCURRING IN PART
I continue to adhere to my views expressed in my
separate opinion attached to the Proposed Order issued on
Apri 1 18, 1988.
~L-
DEAN J. MILLER, PRESIDENT
LM: dc/O-5 6
CIAC GROSSED-UP FOR TAX
FUTURE T~~ DEPREDIATION
PASSED THROUGH TO RATEPAYERS
ROR 11%DISCOUNT RATE 12%
DEBT 50%- CAST 10%
TAX TAX TOTAL NPV
INCOME INCR BOOK BOOK TAX BOOK INT REV REV
CONTR.TAX P LANT DEPR VALUE DEPR VALUE DED REO REO 12.
= =
==ss ----_s_=--- __=_a__== ===
= == == == == = === = ~ ==== ==== = == = - == = = = =-= = = = = = = = = = = = == = =
1646.646.646.21. 56 625.42.604.12.33.54.48.
21. 56 603.40.563.11. 86 31.-51.49 ~41. 0
21. 56 582.39.523.11. 43 29.48.34.
21. 56 560.38.485.11.27.45.28. e
21. 56 539.36.449.10.25.42.24.
21. 56 517.35.414.10.23.39.19.
21. 56 495.33.380.21.36.16.
21. 56 474.32.347.20.33.-13.
21. 56 452.30.316.18.30.-10.
1. 56 431.29.287.16.26.
21. 56 409.28.259.-14.23.
21. 56 388.26.232.12.20.
21. 56 366.25.207.10.-17.
14-21. 56 345.23.184. 01 -14.
21. 56 323.22.161.73 7. 07 11.
21. 56 301.20.140.-5.-8.1.4
21. 56 280.19.121. 47
21. 56 258.17.103.5. 08 -1. 49
21. 56 237.16.86.
21.56 215.15.71.88
21. 56 194.13.58.
21. 56 172.12.46.
21.56 150.10.35.12.0 . 9
21. 56 129.25.15.1. a
21.56 107.7 .17. 11.54 19. 00 1.1
21. 56 86.11.50 1. 69 13.22.1.1
21. 56 64.1. 27 15.25.1. l.
21.56 43.17.28.1.1
21. 56 21. 56 0 .18.31. 26 1.1
21. 56 O. 00 20.34.1. 1
---------------------- ---- -- --- - - --- ---- --- -----------
646.646.303.259.
= = = == ~- --- ---- ----~====== = == == == = = === = == = = = = = = == = = = == = =
SCEEDC1_E 1
NET PRESENT VALUE METHOD.
CONTRIBUTOR PAYS TAX.
TAX MINUS NPV OF DEPRECIATION
BENEFITS GROSSED UP.
NET CUR NET NPV
BOOK BOOK TAX INC FED FED TAX
CONTR DEPR VALUE DEPR TAX INC TAX BEN 12%
== = == === === ========== == == == = = ========= ============= === = = = === = = = = = === = = = = = = =
1000 33.966.65.60.20.25.22.
33.933.63.58.-19.24.19.
33.900. 00 61.11 56.19.24.17. 09
33.866.58.-54.18.23.14.
33.833.56.52.17.22.12.
33.800. 00 54.-50.17.21.10.
33.766.52.4 . 18 48.16.20.
33.733.50. 00 46. 00 -15.-19.
33.700.47.43.14.-18.77.
33.666.45.41.14.-17.
33.633.43.39.13.-17.4 . 89
33.600.41.11 37.12. 8S 16.4 . 14
33.566.36.-3.35.12.15.
33.533.36.33.11.-14.
33.500. 00 34.31.10.13.
33.466.32.29.-10. 08 -12.2. 06
33.433.30. 00 27.11.
33.400. 00 21.25.-10.1. 42
33.366.25.23.10.1.17
33.333.23.1. 87 21.7 . 30 ..
' -
33.300.21.11 1. 69 19.
33.266.18.1. 51 17.~5. 91
33.233.16.1. 33 15.
33.200.14.1.16 13.
33.166.12.11.
33.133.10. 00
33.100.3. 06 0 .
33.66.0. 09
33.33.1. 04 1.31
0. 00 1.11 0. 09
---- - - -- - - -- - - - -- -- - ---------- -- - - - - - - - -- - -- - - - - - - - - - - -
TO~;'..LS 1000 1000 920 313 393 156.
SCHEDULE 2
CALC OF GROSS-UP ON CIAC
DEVELOPER PAYS INCOME TAX
CONTRI-TAX STATE FED TOTAL
BUTION PAID TAX TAX TAX
==== = == ==== === == ======== =========== = = = = =
236.18.74. 04 92.
9~. 97 29. 08 36.
36.11. 42 14.
14.1.15
1. 76
O. 07
11.
o. as
O. 05 o. 02
O. 02 o. 01
O. 01
O. 00
o. 00
O. 00 o. 00 O. 00
00 .
o. 00
- - - -- -- - - - - - -- -- -- - -- - ---------- -- -- - -
TOTAL 236.153.31.18 121. 93 153.
- '.. .
SCHEDULE 2 -2-
1000.
80. 00
312.
392.
156.
236.
153.
389.
1389.
111.
1278.
434.
111.
545.
BALANCE SHEET
-------------
TAXABLE INCOME
ID INCOME TAX
FED TAX (NET OF STATE)
TOT
DISCOUNTED BEN TO UTIL
NET COST OF TAX ON CIAC
TAX ON C Ij\C TAX
TOTAL PMT REQUIREMENTS TO
NEUTRAL I ZE TAX EFFECT (TOTAL GROSS UP)
TOTAL TAXABLE INCOME
ID INCOME TAX i 8 ,
FEDERAL TAXABLE INCOME
TOTAL FEDERAL TAX
TOTAL ID STATE INC TA.~
OTAL TAX PAYMENTS
:."" "- """," ',- :.
LESS NPV OF TAX DEPRECIATION
TOTAL ADDITIONAL REVENUE FROM CUSTOMER
COST TO RATEPAYERS
3 C~iL. =)'.; L =
..,- .;,"""":
156.
389.
O. 00
UTIL RATE BASES TAX ONCIAC, REVENUE REQUIREMENT
CHARGED TO RATEPAYERS
DISCOUNT 12' - ROR 11'
TOTAL NPV
INCOME DE:' D TAX RETURN BOOK TAX !NT TAX INC REV
CONTR.TAX TAX RESRV REQ CHARGES DEPR EXPENSE BASE:TA.,(REO
-.. - -.--------------.- -------
- -. ___a.
-.. .--- -.... -.-... -.... ..... -... -....... .
a - = =
=. = =......
1000. 00 392.25.367. as 43.68.65.19.16.-10.sa. 45 52.
24. SS 342.40. 3S 65.63.18.-15.-10.54.43.
24. 00 318 .37.61.64 61.11 17.16.-10.50.36.23.295. 04 35.58.58.15.-16.10.47.30. 0922.272.32.5".56.14.-15.-10.43.24.
21. 39 251. 39 30.51. 39 54.13.-16.10.40.20.20.230.27.4S .52.12.15.10.37.16.19.211.25.45. 04 50. 00 11.16.-10. 6a 34.13.18.192.23.42.47.10.-16.-10.31.11. 34
17.174.21.39. 07 45.16.-10.28.
17. 02 157.19.36.43.15.10.25.
16.141. 41 17.33.41.11 -15.-10.23.6. 02
15.126.15.30.38.7. 07 15.21. 04
14.111. 73 13.28.36.14.18.
13.98.12.25.34.-14.16.3. 04
12.85.10. SO 23.32.13.14.
11.73.21.30 .13. 08 -8.12.1.85
10.62.19.27.12.8. as 10.1.43
10.52.16.25.11.1.09
43.14.2.3 . 33 11. 00
35.13.21.10.27.11. 31 18.1. 77
21. 39 3. 07 16.1. 40 -5.
15.14.1. 07
10.1. 73 12.
1. 20 10.1. 62 O. 09
7. 7S 1. 04 O. as
1. 75 2. 03
1. 31 1. 50 -1. 92 1. 24lollO. 02
---- - ------ - - --- -- --- --- - - - - -- - - ------ - -- - - ----- - - - -- - --- - - - -- - - - - -- - -- - ----
3733.1000.206.359.232.61oL10 293.
------------------------------------------===="'======..==------------------------------------------
SCEI::DULE
Capitol
Water
;;: ~,;,:-",=,:,-.:;-:, '.,.~;-
"1.~!'
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.r~.':::J
Corp.
2626 Eldorado Boise , Idaho 83704
Telephone [phone]
July 12, 1996
Construct ion Partners, Inc.P. O. Box 190690Boise, Idaho 83719
RE:Contribution of Costs of Main Extension - Sign at ur e
Pointe
Development
Dear Mrs. Vande~poOl,
You have recently connected the above-referenced development to the water servicefacilities of Capitol Water Corporation ("Capitol Water
). In accordance with the Orders of theIdaho Public Utilities ' Commission ("IPUC"), Capitol Water is required to recover fromdevelopers in its service area the costs associated with extending main lines to provide waterservice to new develcpments. By IPUC Order, main extension costs include material, laborand the income !a.xes attribUtable to the contributed main extension facilities.
Enclosed is an invoice showing the amount due to Capitol Water for your main extension,
Also enclosed is a work sheet for the Development. This work sheet was prepared by CapitolWaters accountants, Presnell-Gage. It is based on the fomula for detennining income tax due
on contribu60ns in aid of construction as detennined by the IPUC for smaller water companieslike Capitol Water.
Upon payment of the amount shown on the enclosed invoice , Capitol Water will enterinto a contract with you under which Capitol Water will make payments to you in the future
based on the number of connections that customers make to Capitol Water s system.
If you have any questions regarding the enclosed invoice and the computation of the
amounts shown on the invoice, please contact H. Robert Pr ice
Your prompt attention to this matter will be greatly appreciated.
Very truly yours
;40N
Roben Price
Exhibit 1
;.:.'-' -
l:~::..
. -~;~\
CapttOI f-'
"":':;':"~.. '. ,/;":"(/
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, ' Corp.
:'." ,. ,-, -
2626 Eldorado Boise, Idaho 83704
Telephone [phone]
""-"';; ,_.."
July 12, 1996
Total Tax Due - Signature Pointe
$32, 470.
CAPITOL WATER CORPORATION
COMPUTATION OF TAX DUE ON CIAC
1 DEVELOPER SIGNATURE POINTE
14 Total Contributed Property (Line 7 + Line 12)
16 Grossed Up Contribution (Line 14/60.72%)
18 NET TAX DUE (Line 16 x 39.28%)19
22 PROOF OF TAX DUE
24 State Tax Due25 Gross Contribution (Line 16)
. 30 Federal Tax Due31 Gross Contribution (Line 16)32 Less state tax33 Federal taxable amount
37 Total Tax Due
DISTRIBUTION MAINS
Materials
Labor
Total
SERVICES
Materials
Lacer
Total
20,528.
17.849.
38.377.
237.
580.
11.817.
50,194.
82.665.
32.470.
State tax due at 8%
Federal tax at 34%
82,665.
613.21 ~
82.665.
(6.613.21)
76.051.
25.857.66 ~
32.470.88 ~