20120917Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6864
V :0
.10, ) S '7 F 23
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
COUNTRY CLUB HILL UTILITIES, INC. FOR ) CASE NO. CCH-W-12-01
AUTHORITY TO INCREASE ITS RATES AND
CHARGES FOR WATER SERVICE. ) COMMENTS OF THE
) COMMISSION STAFF
)
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of
Record, Neil Price, Deputy Attorney General, in response to the Notice of Modified Procedure,
Notice of Intervention Deadline and Notice of Public Workshop, issued on August 8, 2012, Order
No. 32610, submits the following comments.
BACKGROUND
On March 22, 2012, Country Club Hills Utilities (Country Club Hills, CCH, Company)
filed an Application requesting authority to increase its rates and charges for water service.
Country Club Hills requests the following changes regarding rate design and structure:
• Increase flat rate residential/commercial rates from $17 per month to $25 per
month.
• Increase metered residential/commercial rates from $0.60 per 1,000 gallons for all
consumption in excess of 30,000 gallons per month to $0.60 per 1,000 gallons for
STAFF COMMENTS 1 SEPTEMBER 17, 2012
all consumption in excess of 15,000 gallons to 25,000 gallons and $0.70 per 1,000
gallons for all consumption in excess of 25,000 gallons.
. Increase the condo with no landscape flat rate from $15.75 to $23.75 per month.
. Increase metered landscape rates for condos from $20.00 per month to $23.75 per
month during the months of use. Increase metered landscape rates for condos from
$0.60 per 1,000 gallons for all consumption in excess of 30,000 gallons per month
to $0.60 per 1,000 for all consumption in excess of 15,000 gallons to 25,000
gallons and $0.70 per 1,000 gallons for all consumption in excess of 25,000
gallons.
. Increase the hook up fee from $500 to $750 per hook up.
. Increase reconnection fee from $14 per reconnection during normal business hours
and $28 of all other times to $50 per reconnection during normal business hours
and all other times.
In its Application, the Company did not include the amount of revenue desired, although it
requests that the Commission authorize a general increase of 32% in water rates. This is also the
amount of requested increase the Company communicated to its customers via customer notice.
Based on the requested changes in the rate design and structure, Staff later calculated that the
overall rate increase is approximately 49.1% compared to the actual revenue reported by the
Company in 2011. This discrepancy appears to be due to the Company's inability to calculate the
exact impact of its proposed rate design.
STAFF ANALYSIS
System Description
Country Club Hills provides water service to 147 residential customers and one
commercial customer in Bonneville County, Idaho. The Company's water supply sources consist
of two production wells equipped with submersible pumps. The water system has an elevated
concrete storage tank with a capacity of 150,000 gallons. All customers are metered with the
exception of eight condo customers. Water is delivered to all metered residential customers with
one-inch service lines and meters.
STAFF COMMENTS 2 SEPTEMBER 17, 2012
Pump Replacements
The major capital investments made by the Company since its last general rate case in
2005 are the replacement of pumps and motors for Well Nos. 1 and 2 as shown in the following
tabulation.
Year Description of Replacements Costs
2005 Pump and motor replacement, Well No. 2 N/A'
2006 Pump and motor replacement, Well No. 1 $11,749
2008 Pump and motor replacement, Well No. 2 $7,265
2011 1 Pump and motor replacement, Well No. 1 $7,755
Total 1 $26,769
As noted in the table above, the Company replaced the Well No. 2 pump and 30-hp motor
unit that failed in February 2005. No Company maintenance record exists nor could the
Company explain why that particular pumping unit failed. The cost of pump replacement at that
time was $7,370. In August 2008, the same pumping unit in Well No. 2 failed again. It happened
during the peak of the summer season and was immediately replaced by the Company. Pumping
units properly designed and operating in normal conditions are expected to operate about 15 to 20
years. Staff queried the Company why the pumping unit failed again after being replaced within a
span of only three years. The Company could not provide explanation as to why the pumping
unit failed after three years of operation except to say that not replacing it is not an option,
particularly when it fails in summer. The Company paid $7,265 for the replacement of the pump
and motor. Staff does not disagree with the Company in replacing the failed pumping unit. The
pumping unit became inoperable and should be restored to provide adequate water supply to the
customers.
Staff also compared the cost of replacement to the cost of similar projects and obtained
cost estimates from independent vendors in the area. Staff believes that the replacement cost is
reasonable. However, Staff questions the Company's neglecting to try to determine the cause of
the pump failure so the Company can implement precautionary measures in case such cause(s)
can be controlled or avoided. Staff expects the Company to apply reasonable management
practices to protect its investments and avoid future rate increases if such occurrence can be
avoided. Vendors/contractors who install pumping units are generally experts in their field and
'N/A-not applicable as a new investment for Well No. 2 in this rate case since this was included in Case No. CCH-
W-05-0 1. It is included in the table as a point of reference for replacing the same unit in 2008.
STAFF COMMENTS 3 SEPTEMBER 17, 2012
should be able to provide this analysis as part of their services. Staff recommends that if similar
events occur in the future, the contractor should be asked to analyze the cause(s) when a unit is
restored. In addition, the Company should maintain a good maintenance record.
The Company also replaced a failed pump and motor unit for Well No. I in 2006 with a
total cost of $11,749. Again, the Company replaced the same pumping unit in 2011 - a span of
five years. As in the case of Well No. 2, the Company could not explain why the pumping unit
failed, and there is no maintenance record kept by the Company that indicates the cause of failure.
The Company paid the vendor $7,755 to replace the failed pump in August 2011. The cost paid
in 2006 was higher than the cost in 2011 because the drop pipe broke and extra labor was required
in fishing and retrieving the pump unit from the bottom of the well.
Staff believes it was necessary to restore the pumping unit to resume service and provide
adequate water supply, especially during the peak season. Staff reviewed the cost of replacement
and believes it is reasonable based on comparison with similar projects and with independent cost
estimates obtained by Staff from vendors in the area.
Staff Audit
In Case No. CCH-W-05-01, Staff recommended adjustments totaling $10,972 for the test
year 2004. Among the adjustments, $1,500 was added to repair expenses for ongoing repairs or
replacements of abandoned service lines. All Plant in Service, except $12,697, was determined to
be contributed capital. The Revenue Requirement, $42,718, equaled a 32.0% increase in rates.
Normally, return on equity is one source of funds to purchase additions to Plant in Service.
Earning only a small return on equity, necessary additions to Plant in Service were funded by
personal debt. Recognizing this necessity, the Commission authorized certain interest charges to
be included in the revenue requirement as a surrogate for return on equity. As shown in Order
No. 29794, the Company agreed to all adjustments, the contributed capital valuation and the
$12,697 of additions to Plant in Service.
In CCH-W- 12-01, Country Club Hills reported revenues and expenses for the calendar
year end (CYE) 2011 on a cash basis. During this case, the designated channel for financial
documentation was through Mr. Jeff Freiberg. Mr. Freiberg is admittedly unfamiliar with the
audit process, documentation needs and accounting terminology. With certain exceptions,
documents supporting reported amounts were inadequate or not available. Staff notes that
reported labor expenses for operations and maintenance have decreased since the CYE 2004.
STAFF COMMENTS 4 SEPTEMBER 17, 2012
Staff's audit showed this occurred in part, because no salary was claimed in 2011 for Mr. Groth.
Also, Staff found two of the six largest categories of reported expenses included transactions with
related parties. Staff audited Repairs Expenses and the annual provision of repairs to abandoned
service lines, concurrently. Finally, in its current application, Country Club Hills did not request
a special fund for capital replacements. Consequently, Staff did not include amounts for a capital
replacement fund in its recommendations or adjustments.
Related Party Transactions: During this audit, Staff found payments to related parties
included in reported expenses. Related party transactions are not arms length transactions.
Therefore, additional documentation comparing the recorded cost to market or comparable cost is
required to prove the expenditures are reasonable. The Idaho Supreme Court has defined the
standards for related party transactions. In this standard, all related party transactions are subject
to closer scrutiny and the regulated utility bears an increased burden to prove the reasonableness
of these transactions. The burden of proof includes the need to show the costs in these
transactions are reasonable and benefit customers of the utility. In this audit, documentation
provided by the Company included records of payments to Pembroke Corporation, a related party.
These payment records did not include any arms length comparisons from an unrelated party.
Therefore, the Company did not meet the burden of proof required for related party transactions.
Plant in Service records: The documents provided by the Company lacked the most basic
details such as asset descriptions, dates of service and historical cost. Because historical cost
information was absent, these records did not support the Plant in Service detail shown on the
Balance Sheet.
Service Line Repair Expenses: In CCH-W-05-01, Staff recommended an annual
provision of $1,500 for repairs to abandoned service lines. Anticipating a periodic accounting for
this repair provision, Order No. 29794, included 2004 data for, average repair cost, average
annual completion rate and the estimated number of uncompleted repairs. Staff's Audit of
payment records showed payment for service line repairs during 2011. They were recorded in
Materials and Supplies Expense for Operations and Maintenance. In CCH-W-12-01, the
supporting documentation for these expenses included copies of original source documents.
However, the source documents did not differentiate repairs expenses for older, abandoned
service lines, from repairs expenses for newer service lines. Staff requested clarifying
information for 2005 through 2011 but none was provided. Staff believes an analysis and
comparison of these two types of repair expenses cannot be made using this documentation.
STAFF COMMENTS 5 SEPTEMBER 17, 2012
Also, Staff does not believe the available information is definitive enough to support Company's
statement that average repair costs for older service lines is increasing. Staff recognizes repair
costs vary from year to year and our analysis of the most current information shows the average
cost for all service line repairs is decreasing. The reported expense total did not include items that
should have been capitalized. Staff concludes total repairs expenses reported in Materials and
Supplies for Operations and Maintenance are correctly reported for the CYE 2011. Staff
recommends no change to the annual provision for service line repairs.
Staff Adjustments
Revenues: Staff examined the record of collections identifying several sources of
collections including sewer services, several fees, owner contributions of capital and water sales.
Water Sales Revenues equaled $43,707, DEQ Fees equaled $725 and Hook Up Fees totaled $323.
Total collections reported equal $44,755.
Adjustment 1-DEQ Fees
These fee collections are equal to the DEQ fees expense. Since they offset each other,
they are not part of the incremental revenue requirement or incremental base rate design.
Attachment A reclassifies both the $725 of total revenues and reported DEQ Fees Expense.
Adjustment 2- Hook Up Fees
These fees are collected when new water service lines are established. Consequently, the
fees are Contributions in Aid of Construction and used to reduce the recorded cost of Hook Up
connections. Attachment B shows Staff's recommended adjustment to reclassify Hook Up fees
totaling $323.
Adjustment 3 - Purchased Power Expense
The reported cost of power shown in the Company's 2011 Annual Report is $11,015. The
purchased power cost for water production is the largest reported operational expense for the 2011
test year
The Company did not submit an annualized cost of purchased power for the two well
pumps. Staff believes it would be more appropriate to normalize the test year purchased power
cost based on average water usage. The cost of purchased power is affected directly by the total
STAFF COMMENTS 6 SEPTEMBER 17, 2012
volume of water pumped and the power rates applied during the time of use. Staff calculated
normalized purchased power expense by applying current electric rates to a five-year average of
water sales volumes.2 Staff calculated the normalized cost of purchased power to be $11,845.
Attachment C shows Staff's calculation of normalized purchased power cost equaling $11,845
and the recommended increase in Purchased Power Expense equaling $830.
Adjustment 4-Water Testing Expense
The Company did not submit the cost of water testing as part of its Application. Because
different testing cycles are required by the IDEQ for various regulated water contaminants, Staff
believes it is necessary to normalize water testing costs over several years. In consultation with
IDEQ, a complete list of required tests was provided to Staff with a water testing cycle of nine
years. The annualized water testing cost calculated by Staff is $738.78. See Attachment D for the
list of various water quality tests required and the annualized cost of $739. Staff recommends an
increase of $409.
Adjustment 5 - Rental Expense - Property and Equipment
The annual Rental Expense for the CYE 2004 was $3,850. The annual rental expense for
2011 equals $8,400. This is the second largest annual expense. The increase in annual rental
expense equals a compound annual growth rate (CAGR) of 11.79% for seven years. Staff does
not believe increases of this magnitude are justified by current economic conditions. The
payment record shows Country Club Hills rents its office from Pembroke Corporation, a related
entity. These records did not meet the requirements for related party transactions as it did not
contain evidence of arms length bargaining or the reasonableness of the expense(s). There was no
apparent attempt to demonstrate the owner's underlying cost. The Bonneville County Assessor's
Office confirms Pembroke Corporation is the owner. Additional requests for documentation
resulted in responses that no written contracts exist and an arm's length transaction equivalent
was not available. During the on site visit, Staff was informed that the reported $8,400 included
rental of office space and storage space. This office space includes a dedicated office of
approximately 180 square feet and the use of common areas, such as bathrooms and the reception
area. Use of equipment and furnishings are also included. Utilities are paid separately. Staff
2 The Company has flow meters installed in both Well Nos. I and 2 but neither are working. Since the volume of
water pumped was not available, the total volume of water sold was used to derive the cost of power.
STAFF COMMENTS 7 SEPTEMBER 17, 2012
believes a compound annual growth rate of 3.0 percent is more reasonable. A 3.0% CAGR would
equal a total cost of $4,735 for 2011. Staff believes this total is a reasonable amount for office,
common and storage spaces, including their furnishings and equipment. Attachment E shows the
growth calculation and comparison, plus the recommended adjustment, reducing these rental
expenses by $3,665.
Adjustment 6 - Bad Debt Expenses
Country Club Hills reports on a cash basis. Bad Debt Expense is allowed only when the
revenue was previously accrued and reported or collection expenses were paid. No supporting
documents were supplied and Staff's inquiry on the use of collection services received no reply.
Attachment F illustrates Staff's recommendation to reduce Bad Debt Expense by $337.
Adjustment 7 - Depreciation Expense
Staff's audit of depreciation expenses included a request for property records, a
depreciation schedule and a schedule of Contributions in Aid of Construction. The only
information supplied was a list of values based on estimates or other valuations assigned to asset
groups. Required details, such as historical cost, year of service depreciation rates, and salvage
values were absent. No depreciation schedules were submitted. Similarly, the data on
Contributions in Aid of Construction and the related amortization was absent. Staff's analysis of
the documentation presented showed the $7,912 included depreciation on plant which was
previously determined in Case CCH-W-05-01 to be contributed capital. As stated in Order No.
29794, the Company accepted this valuation. Consequently, Staff recalculated depreciation
expense using the $12,697 in Plant in Service determined in the prior case plus changes during the
interim period of 2005 through 2011. Attachment G shows the plant changes, the Depreciation
Expense calculation and Staff's recommended adjustment reducing depreciation by $6,622.
Adjustment 8- Property Taxes
The documents provided showing the annual property taxes are summarized in
Attachment H. The reported property taxes exceed the annualized billing by $77. Staff
recommends a reduction of $77.
STAFF COMMENTS 8 SEPTEMBER 17, 2012
Adjustment 9 - Interest Expense
Country Club Hills reported interest expenses of $3,784 for 2011. During the current
audit, Staff examined payment records and account statements, including those on credit card
accounts. Normally, interest is not included as an expense in the revenue requirement. Instead, it
is included in revenue requirement with the debt portion of the overall rate of return calculation.
In CCH-W-05-01, interest expense was used as a surrogate for Return on Rate Base. In CCH-W-
12-01, Staff recalculated interest expense associated with water utility operations as a surrogate
return compared to the normal Return on Rate Base. Staff found the normal return on rate base
calculation (Attachment M) to be reasonable in this case as it is more advantageous to Country
Club Hills. An overall rate of return of 12% is included in the Total Revenue Requirement.
Attachment I shows the recommended removal of Interest Expense, totaling $3,784.
Adjustment 10 - Rate Base
The Company's accounting records and reports do not contain accounts for recording
amortization of Contributions in Aid of Construction. Consequently, the Company has reported
the same unamortized amount, $275,200, for Contributions in Aid of Construction on its Balance
Sheet, since the previous audit and rate case. Country Club Hills did not provide a calculation of
Rate Base in its Application. Attachment J shows Staff's calculation of Rate Base and does not
include assets acquired as Contributions in Aid of Construction for ease of understanding and
computation. A chronological list of changes in assets since the previous audit and rate case is
shown in Attachment K. The calculation of Accumulated Depreciation is shown in Attachment
L. Staff recommends a Rate Base of $23,534.
Adjustment 11 - Total Revenue Requirement
Staff recommends a return on rate base of $2,824 grossed up for taxes plus audited
expenses of $49,375, as shown in Attachment M. Staff recommends a Total Revenue
Requirement totaling $52,425, as shown in Attachment N. This equals a revenue increase of
$9,358, or 21.7%.
CAPITAL REPLACEMENT FUND
The Company did not request the establishment of a Capital Replacement Fund to pay for
system deficiencies and water service problems in its original Application. However, in response
STAFF COMMENTS 9 SEPTEMBER 17, 2012
to Staff production requests, the Company indicated that it is seeking the rate increase to offset
yearly operating losses for the past several years and hopes to establish a Capital Replacement
Fund. In addition, the Company claims that IDEQ requires all Public Water Systems to maintain
a Capital Replacement Fund and that the Company does not have such a fund because of the
negative income range where it currently operates.3 The Company further claims that if major
components in the water system fail, Country Club Hills has no method to pay for the repairs
other than the owner's personal credit.
The establishment of a Capital Replacement Fund (Depreciation Reserve Account,
Sinking Fund, Emergency Reserve Fund, or similar funds) has been authorized by the
Commission for small water utilities in some cases. Establishment of a Capital Replacement
Fund may also be appropriate for Country Club Hills Utilities in the future. However, Staff does
not recommend the establishment of a Capital Replacement Fund as part of this rate case for three
reasons. First, the Company has provided no support to justify the size of the fund or describe
under what condition it would actually be used. Second, the Company did not specifically request
the establishment of a Capital Replacement Fund as part of its Application for a rate increase.
Finally, the total overall percent revenue requirement increase recommended by Staff is
approximately 21.7%. Any additional increase of the revenue requirement for the establishment
of a Capital Replacement Fund will be a significant burden to the customers at this time. The
Company, in the future, may file a separate case for the establishment of such fund.
Staff checked with IDEQ and it confirmed that the establishment of Capital Replacement Fund for Public Water
Systems in Idaho is only a recommendation and not required by its Rules and Regulations.
STAFF COMMENTS 10 SEPTEMBER 17, 2012
RATE DESIGN
The Company proposes the following rate design:
BaseCustomer Charge
Base Charge
Present Present Proposed Proposed Diff. Diff.
Customer Class Monthly Volume Monthly Volume in In
Base Charge Allowance Base Allowance Dollars Percent
(gallons) Charge 1 (gallons)
Metered
Residential and $17.00 30,000 $25.00 15,000 $8.00 47.1%
Commercial
Non-metered
residential-Condo $15.75 N/A $23.75 N/A $8.00 50.8%
(flat rate)
Metered
Landscaping 20.00 30,000 $23.75 15,000 $3.75 18.8%
(condo)
The Company is proposing to change its rate structure from single block uniform
commodity rate design with 30,000 gallons minimum charge volume allowance to an inverted
(increasing) two-block rate design with a minimum volume allowance of 15,000 gallons. The
Company states that it is proposing to use an inverted block rate design to promote water
conservation and reduce power consumption.
Commodity Charge
Present - Proposed Proposed
Commodity Commodity Commodity
Customer Class Charge-over Charge (1st Wk.) Charge (2w' BIk.)
30,000 gal. 15,001-25,000 gal. over 25,000 gal.
Metered Residential
and Commercial $0.60/1,000 gal $0.60/1,000 gal $0.70/1,000 gal
Non-metered
residential-Condo N/A N/A N/A
Metered Landscaping
(condo) $0.60/1,000 gal $0.60/1,000 gal $0.70/1,000 gal
Volume Allowance for Base Charge
Staff does not generally support a large volume allowance as part of the base charge,
particularly for water systems that are fully metered. Country Club Hills, with a base charge
volume allowance of 30,000 gallons, has the highest allowance of all the 30 water utilities
regulated by the Commission. Staff sees no continuing justification to maintain such a high
STAFF COMMENTS 11 SEPTEMBER 17, 2012
volume allowance and believes that it is appropriate to reduce it to a more reasonable level. As a
point of reference, Staff calculates the average residential monthly winter usage to be
approximately 6,500 gallons per customer.
The Company proposes to reduce the volume allowance to 15,000 gallons per month. The
Company explains that with the new rate structure in place, this will encourage the customers to
conserve water, thereby reducing power consumption for Country Club Hills.
Staff concurs with the Company that reducing the volume allowance would send a strong
conservation signal to its customers. Staff does not oppose the Company's proposal to set the
volume allowance to 15,000 gallons for metered customers. This amount is about twice as much
as the current average winter monthly usage but a reduction of one-half the current volume
allowance.
Staff calculated the impact of decreasing the volume allowance from 30,000 gallons to
15,000 gallons using the current rates for base and commodity charges. A customer with an
average summer usage of 67,000 gallons would experience a rate increase of 23%. The average
67,000-gallon water usage was estimated using the summer months of June, July and August for
two years (2010 and 2011).
Inverted Two-Block Rate Design
The Company proposes an inverted (increasing) two-block rate design to encourage
conservation. Staff generally supports a rate design that would encourage conservation.
However, in this particular case, Staff does not support the Company's proposal to change the
single block rate design to a two-block inverted rate design for several reasons. First, using the
current single block rate design with a minimum volume allowance is simpler to administer, and
is already understood by the Company's customers. Second, as explained earlier, using the
current single block rate design and reducing the volume allowance for a minimum charge from
30,000 gallons to 15,000 gallons already incorporates a strong conservation element in the rate
design. Third, a two-tiered rate design is unnecessarily complicated for a small water company
such as Country Club Hills with only 136 residential metered customers. Finally, the Company's
residential and commercial meters are not read monthly throughout the season. Staff believes that
the application of an inclining, two-block rate design becomes ineffective during the winter
season or even during the shoulder months when meter readings are either delayed or lumped into
STAFF COMMENTS 12 SEPTEMBER 17, 2012
one reading such as the case for meter readings done in 2010 (later part of June covering May and
June usage) and in 2011 (readings in early July covering May and June usage).
For the above reasons, Staff recommends maintaining the single block rate design with a
reduced allowance from 30,000 gallons to 15,000 gallons.
Number ofActive Customers
Staff reviewed the process of how the Company applies the current tariffs approved by the
Commission in the last rate case.4 For the 136 residential metered customers, the Company
simply applies the current tariff for "Residential and Commercial Metered Year Round
Customers." For residential non-metered condo customers using domestic water only, the
Company applies the tariff "Flat Rate Condo Rate" for eight condo customers. However, there
are two other duplex units with no meters. The Company bills these units separately but applies
the base charge of the tariff for "Residential and Commercial Metered Year Round Customers."
Staff believes the Company is applying the wrong tariff because the two units (customers) are not
metered.
There is only one metered commercial account and the Company simply applies the tariff
for "Residential and Commercial Metered Year Round Customers." However, the same
commercial meter is being used to record year round domestic consumption of another residential
building (owned by the commercial customer). The Company charges this additional customer
using the base charge under the tariff for "Residential and Commercial Metered Year-Round
Customers." Technically, this customer should not be billed because its consumption is already
being billed in conjunction with another metered account. Because the Company maintains the
service line going to the residential building, Staff believes it would still be appropriate to meter
and bill this account as an individual residential customer. However, Staff believes that since this
is not a currently metered residential customer, the Company should apply the current tariff for
"Flat Rate Condo Rate." For condo customers using water for outdoor use only, the Company
charges one customer by applying the current tariff on "Metered Landscaping Rate for Condo
Customers." The Company only applies the base charge for five months when water is generally
used for watering lawns and landscapes.
Case No. CCH-W-05-0 1, Order No. 29794
STAFF COMMENTS 13 SEPTEMBER 17, 2012
The Company has submitted different conflicting number of customers for each customer
class as follows:
Customer Class 2011 An.
Report
Application
& PR#2 a!
Resp. to Staff
Email c/
Applicable Schedule
Current Tariff
Residential-metered 136 147 b/ 146 Res. & Corn. Metered Rates
Res.- unmetered (Condo) 10 1 (8 units) Flat Rate Condo Rate
Commercial-metered 1 1 1 Res. & Corn. Metered Rates
Landscaping-metered ____ ____________ I Metered Landscaping Rate
Total No. of Customers 147 1 148 149
a! Company response to Staff Production Request No. 2.
b/ Includes condo units.
c/ Company response to Staff email on 8/8/12.
For the purpose of calculating the expected revenues to be collected by the Company
under the Staff proposed rate design, and the pro forma revenue under the current rate, the total
number of customer used is 149 with the following breakdown:
. Residential customers-metered year-round- 136
• Unmetered customers - Flat rate (Residential, condos and other buildings using
domestic water only year round) - 11
• Commercial customers-metered year-round -
Landscaping customers-metered -
Staff recommends that the current tariff classification and description be maintained with
the exception of the "Flat Rate Condo Rate." To make it clearer to customers and easier for the
Company to administer, Staff recommends that this rate be referred to as "Unmetered Customers
- Flat Rate." This rate will apply to all customers without meters and using only domestic water
year-round, and include residential, condos and other building units served by the Company.
Staff Rate Design Proposal
As noted earlier, Staff recommends an annual revenue requirement of $52,425. The Staff
proposed rate design is to maintain the single block rate structure with a minimum volume
allowance of 15,000 gallons for all metered residential, commercial and landscaping customers.
Using two years of customer billing records (20 10 and 2011), Staff estimated the average annual
pro forma excess usage for various metered customers as follows:
STAFF COMMENTS 14 SEPTEMBER 17, 2012
. Residential-metered - 29,000,000 gallons per year
. Commercial-metered - 801,000 gallons per year
• Landscaping-metered - 802,000 gallons per year
Before exploring various rate design elements to meet the Staff-recommended revenue
requirement, the projected Company revenue under current rates was calculated using the reduced
volume allowance of 15,000 gallons. Using the estimated volume of excess usage, the projected
annual revenue is $48,489, which is insufficient to cover the Staff recommended revenue
requirement of $52,425, a difference of $3,936. See Attachment 0.
Staff then investigated other design options to meet the Staff recommended revenue
requirement. There are many combinations possible using the basic rate structure to satisfy the
revenue requirement. To emphasize the conservation element of the rate design for metered
customers, Staff recommends increasing the commodity charge and leaving the customer charge
at the current level. Using the various design elements as noted above, Staff proposes the
following rate design:
Base Customer Charges
Proposed Prop. Volume
Customer Class Base Charge Allow.(gallons)
Metered Residential and
Commercial $17.00 15,000
Unmetered Customers-
Flat Rate $20.25 N/A
Metered Landscaping
(condo) Rate $20.00 15,000
Commodity Char2es
Proposed Commodity
Customer Class Charge (over 15,000 gals.)
Metered Residential and
Commercial Rate $0.71 per 1,000 gallons
Unmetered Customers - Flat
Rate N/A
Metered Landscaping
(condo) Rate $0.71 per 1,000 gallons
With the Staff-recommended rate design shown above, the proposed allowance decreases
but there is no increase in the monthly base customer charge for metered residential and
commercial customers. There is an increase in commodity charge from $0.60 to $0.71 per 1,000
STAFF COMMENTS 15 SEPTEMBER 17, 2012
gallons of water usage, a difference of $0.11 per 1,000 gallons or 18.3%. The non-metered flat
rate for condo customers is increased from $15.75 to $22.25, a 28.6% increase close to the
general overall increase in revenue requirements. For the metered landscaping rates, the base
charge remains at the same rate. The total annual revenue generated from rates is $52,449
($30,721 from base + $21,728 from commodity). The basic customer charge still generates about
59% of the total gross revenue. The rate proof for the Staff-proposed rate design is presented in
Attachment P.
With the Staff-recommended rate structure, the average monthly bill for a metered
residential customer is approximately $35.46, an increase of $7.36 or 18.8% above current rates.
The average bill was calculated by taking the average water usage during winter season and the
average usage during the summer season as shown in the following tabulation:
Season
Ave.
Usage-
gals.
Current
Monthly
Bill
Proposed
Monthly
Bill
Amount of
increase in
$
Percent
Increase
Winter 6,500 $17.00 $17.00 $ 0.00 0.0%
Summer 67,000 $39.20 $53.92 $14.72 37.6%
Average increase in dollars and % $35.46 $ 7.36 18.8%
The rate impacts for metered residential customers using various monthly water volumes
are presented in Attachment Q. A bill frequency analysis for metered residential customers
broken down into various usage levels in July 2011 was also prepared by Staff. As shown in the
Attachment R, 84 out of 127 residential metered customers or 66% used water between 48,000
gallons to 100,000 gallons in July 2011.
HOOK-UP FEE
The Company proposes to increase the hook-up fee for new service from $500 to $750.
The Company states that there are 31 undeveloped residential lots and three undeveloped
commercial lots in the subdivision currently served by Country Club Hills and anticipates that one
to two residential developments will take place annually with no commercial developments in two
to three years.
As justification for its request to increase the hook-up fee, the Company with a detailed
estimate of the costs including a typical plan for a new hook-up installation. However, the
STAFF COMMENTS 16 SEPTEMBER 17, 2012
Company's estimated hook-up cost of $1,179 was considered higher than the original request of
$750. The Company explains that when the Application was made a very rough estimate for
installing a new hook-up was included without making a detailed estimate.
When the subdivision was developed there was no meter base installed in the undeveloped
lots. A one-inch service line was previously installed from the mainline to the lot and capped. To
provide a new customer hook-up, a meter base must be installed, as well as the new meter and
other fittings. For small water utilities regulated by the Commission, the hook-up fee is generally
defined as a non-recurring charge paid by a customer requesting service for partial or full
recovery of the Company's cost of providing a new service connection. Sometimes, it includes
the cost of usual circumstances such as a service line crossing a road.
Staff does not oppose the Company's request to increase the hook-up fee for new
customers from $500 to $750. The requested amount is comparable to the hook-up fee charged
by Falls Water Company, a neighboring small water utility in Idaho Falls regulated by the
Commission which charges a $600 hook-up fee for a one-inch meter.
NON-RECURRING CHARGES
Reconnection Charge
In its Application the Company requested an increase in its reconnection charge from
$14.00 during normal business hours and $28.00 for all other times to $50.00 for all times. No
reason was given for the requested increase or an explanation for why the requested charge is the
same for normal business hours, evenings, weekends and holidays. The system is located about
ten (10) miles from the Company's office location. In the case of a reconnection requested after
hours, someone would have to be dispatched to the system. Staff disagrees with the amount of
the proposed increase and with the Company's request for a charge that does not vary regardless
of when the customer requests reconnection.
During normal business hours, reconnections can be scheduled as part of an employee's
regular workload. However, the need to dispatch an employee after hours is an additional duty
and expense that justifies a differential in the charge for normal business hours and after hours.
The amount of the charge should allow the Company to recover a portion of the cost to perform
the service and encourage customers who are involuntarily disconnected to request reconnection
during normal business hours or avoid disconnection altogether by making payment
arrangements. An excessive reconnection charge places a further financial burden on customers.
STAFF COMMENTS 17 SEPTEMBER 17, 2012
Both the customers and the Company would be better served by the Company's implementation
of an improved collections policy. Staff recommends a $20.00 reconnection charge during
normal business hours (Monday - Friday, 8:00 am to 5:00 pm, excluding State holidays) and a
$40.00 charge for other than normal business hours. Recent orders approving such charges
include Order No. 30668 (ISL-W-08-01), Order No. 30703 (ROC-W-08-01) and Order No. 32152
(TRH-W- 10-01).
Late Payment Charge
The Company does not have a late payment charge and did not request one in its
Application. The Company stated in discussions with Staff that it has a problem with past due
accounts. While the Company has not submitted an Accounts Receivable Aging Report, its
balance sheet indicates that over the past seven years the percentage of past due accounts has
increased to almost nine percent of the total amount owed to the Company.
A late payment charge is intended to encourage prompt payment of bills. The Company
benefits from implementation of d late payment charge in two ways: 1) when customers pay on
time, the Company's cash flow improves; and 2) the late payment charge collected from
customers who pay late helps to cover the cost of additional collection efforts. Staff believes that
a late payment charge along with a revised collections procedure as mentioned below will help to
encourage customers to pay in a timely manner, decrease the dollar amount and aging of
arrearages, and reduce the Company's Accounts Receivable to a more acceptable level.
The typical late payment charge previously approved by the Commission has been 1% per
month (12% annually) of the unpaid balance at the time of the next billing. Staff recommends
approval of such a charge. Recent orders approving a one-percent (1%) late payment charge
include Order No. 30567 (AWS-W-07-01), Order No. 30628 (MSW-W-08-01), Order No. 30938
(SPL-W-09-01), Order No. 31022 (FLS-W-10-01), and Order No. 32324 (BRN-W-1 1-01).
Company Tariff
The Company's existing tariff was submitted prior to the Commission's adoption of the
Model Tariff for Small Water Utilities, which was implemented in 2008. The Company's tariff
does not include the Uniform Main Extension Rules. The rate schedule portion of the Company
tariff includes a public drinking water fee which is no longer effective according to the tariff page
itself. Staff recommends that the Company update its tariff to include the revised and updated
STAFF COMMENTS 18 SEPTEMBER 17, 2012
General Rules and Regulations for Small Water Utilities (2008 version) and the Uniform Main
Extension Rule. Staff will assist the Company in revising its tariff by providing it an electronic
copy of the 2008 Model Tariff and the updated Uniform Main Extension.
Billing Documentation
Country Club Hills Utilities operates both the water system regulated by the Commission
and a sewer system providing service to the same customers. The Company bills customers for
both services utilizing a postcard-sized billing format. While the current billing format restricts
the amount and placement of information required by the Utility Customer Relations Rules
(UCRR - IDAPA 31.21.01), the billing samples provided included all required information in
accordance with the UCRR.
The Company applies a $20.00 "collection fee" on bills for past due sewer charges but is
not authorized to collect a late payment charge under its current water tariff. The Company
should clarify on its bills that this charge applies only to past due sewer charges. Alternatively, if
the Commission authorizes a late payment charge on water service as recommended by Staff, the
Company may wish to change its sewer charge to be consistent with the authorized late payment
charge for water service.
Summary of Rules
Rule 701 (UCRR) requires that the Company provide a Summary of Rules to all
customers at least once a year and provide a copy to new customers upon commencement of
service. The Company mails a copy of its summary to new customers, but Staff does not know
whether it is mailed to all customers on an annual basis. The Company's Summary of Rules does
not meet the requirements of the UCRR. The Commission has samples of the Summary of Rules
available on its website and Staff is willing to provide assistance to the Company in revising this
document. Staff recommends that the Company update its Summary of Rules to comply with the
UCRR and make it available to new customers and provide all customers a copy on an annual
basis.
Rate Schedule Explanation
Rule 702 (UCRR) requires that the Company send an Explanation of Rate Schedules to its
customers annually and provide a copy to new customers upon initiation of service. In response
STAFF COMMENTS 19 SEPTEMBER 17, 2012
to production requests the Company states that historically it has never sent a copy of the rate
schedule explanation as required by the rule. Typically a Company will combine the information
from its tariff schedules with the Summary of Rules and provide both to customers in a single
document. Staff is willing to provide assistance to the Company in the creation of such a
document and recommends that the Company mail its customers a copy of its Explanation of Rate
Schedule annually.
Collection Procedure and Termination Notices
Rule 304 (UCRR) describes the requirements a Company must follow prior to termination
of a customer's service. The UCRR states that the Company shall send an initial notice giving a
minimum of seven days notice and may send a final notice at least three days prior to the
termination date. The UCRR also requires the Company to make a diligent attempt to contact the
customer either in person or by telephone at least 24 hours prior to termination. The Company's
procedures and notice do not follow the UCRR. The Company's termination notice is labeled as
a Final Notice; however, review of the language indicates that it is an Initial Notice. The
Company stated that it initially calls the customer and then sends the final notice. Staff
recommends that the Company revise its termination policy and modify its notices to confirm to
the UCRR. The Commission has sample forms of the termination notices available on its website
and Staff is willing to assist the Company in revision of its notice and procedures.
Customer Notification and Press Releases
The Company's Application did not include a copy of the customer notice that is to be
provided to the customers or a copy of the press release as required by the Commission's Rules of
Procedure, Rule 125 (IDAPA 31.01.01). Staff contacted the Company by telephone and by email
regarding the need for a notice to customers and a press release. Staff also sent a draft copy of a
customer notice along with reference to Rule 125. On May 18, 2012, the Commission received a
copy of the notice as it was sent to the customers. The notice did not include a reason for the
requested increase as required by the rule. It is not known if the Company sent a press release to
the local newspaper.
Public notification for a customer workshop was accomplished by the Commission
through a Press Release dated August 9, 2012. The workshop was held on Tuesday, August 21,
2012, with 25 people in attendance.
STAFF COMMENTS 20 SEPTEMBER 17, 2012
CUSTOMER RELATIONS
Customer Comments
As of September 7, 2012, the Commission has received comments from five customers
regarding this case. The majority of comments reflect concerns about the high percentage of the
requested increase, and the effect that the change in rate design would have for large water users
on the system.
Complaint Records
The Company maintains that it has received no written complaints or requests for a
conference from customers. The Commission's Consumer Assistance Staff has received three
complaint and one inquiry regarding the Company from 2009 * 2012 to date. One of the
complaints concerned the Company's disconnection procedure. The Company was found at fault
for failing to provide proper notice to the customer as required by Rule 304 (UCRR).
STAFF RECOMMENDATIONS
Staff makes the following recommendations:
1.Staff recommends use of a 2011 test year.
2.Staff recommends a 12.0% return on equity and an overall rate of return on rate base of
12.0%.
3.Staff recommends a rate base of $23,534.
4.Staff recommends an increase in Working Capital of $6,011.
5.Staff recommends a revenue requirement of $52,425. This represents additional revenue
of $9,358, or a 21.7% increase in revenues.
6.Staff recommends the Commission approve the new rates proposed by Staff maintaining
the single block rate design with a base charge volume allowance of 15,000 gallons for
metered residential and commercial customers.
7.Staff recommends the Commission approve the new rates proposed by Staff far other
customer classes: a) Unmetered Customers - Flat Rate; and b) Metered Landscaping
(Condo) Rates.
8.Staff recommends the Commission approve a new hook-up fee of $750.
STAFF COMMENTS 21 SEPTEMBER 17, 2012
9.Staff recommends a late payment charge of 1% of the unpaid balance at the time of the
next monthly billing (12 percent annually).
10.Staff recommends a reconnection charge of $20.00 for normal business hours (8:00 am to
5:00 pm Monday through Friday, excluding State holidays) and a reconnection charge of
$40 for other than normal business hours.
11.Staff recommends the Company revise its collections and termination procedure to
conform with Commission Rules.
12.Staff recommends the Company revise its Termination Notice and its Summary of Rules
to conform with Commission Rules.
13.Staff recommends the Company create an Explanation of Rate Schedules and mail to new
customers upon initiation of service and annually to existing customers to conform with
Commission Rules.
14.Staff recommends the Company revise its Tariff, deleting obsolete rate schedules and
including the updated General Rules and Regulations for Small Water Utilities and the
Main Extension Rules.
Respectfully submitted this 1 ay of September 2012.
/j aQ- - t '-
Neil Price
Deputy Attorney General
Technical Staff: John Nobbs
Gerry Galinato
Chris Hecht
i:umisc:comments/cchw 12.1 npjncwhgdg comments
STAFF COMMENTS 22 SEPTEMBER 17, 2012
Country Club Hills Utilities, Inc.
Adjustment of DEQ Fees & Expense
CYE 2011
Audit
Reported Adjustment Totals
1 DEQ Fees Collected from Customers ($725) 725 $0
2 DEQ Fees Expense $725 (725) $0
Attachment A -
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities, Inc.
Adjustment of Hook-Up Fees
CYE 2011
Reported
1 Hook Up Fees Collected (323)
2 Audit Adjustment 323
3 Total $o
Attachment B
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities, Inc.
Analysis of Purchased Power Expenses
CYE 2011
1 Year
2 2,011
3 2010
4 2009
5
2008
6 2007
7 Total
8 Average
9
10
11
12
13
14
15
Well No. I
kWh Used
38,758
59,173
46,835
41,111
52,481
238,358
47,672
Well No. 2
kWh Used
83421
83557
104564
99459
103289
474,290
94,858
Total
kWh Used
122,179
142,730
151,399
140,570
155,770
712,648
142,530
$0.24
$11,845
11,015
$830
Total Power
Cost
$11,015
$11,027
$10,615
$9,808
$10,460
52,925
10,585
Volume
Sold (Gals)
45,987,678
46,965,430
47,329,128
51,362,371
55,614,423
247,259,030
49,451,806
$ per 1,000 gallons:
$ for average water usage
Total
Reported
Audit Adjustment
Attachment c -
Case No. CCH-W12.0I
Staff Comments
09/17/12
Well #1 Gross Alpha I in 3 Years 3 $ 95.00 285.00 31.67
Well #1 Radium 226 1 in 9 Years 1 $ 165.00 $ 165.00 $ 18.33
Well #1 Radium 228 1 in 9 Years 1 $ 165,00 $ 165.00 $ 18.33
Well #1 Uranium Tin 6 Years 1.5 $ 125.00 $ 187.50 20.83
Well #1 Arsenic 1 in 9 Years 1 $ 27.00 $ 27.00 700
Well #1 Sodium 1 in 3 Years 3 $ 25.00 $ 75.00 8.33
Well #1 QC's" 1 in 9 Years 1 5 210.00 $ 210.00 I 4i 23.3
Well #1 9uoride 1 in9Years 1 $ 15.00 $ 15.00 $ 1.bl
Well #1 IOC 's 1 in6Years 1.5 5 155.00 5 277.50 5 30.53
Well #1 5(X; S** 1 in 9 Years 1 5 225.00 5 225.00 $ 25.00
well #1 itrate Annual 9 5 =17o iiO.UU S ..iO.UU
VV eIl #1 Nitrite 1-In 9 Years 1 $ 35.00 5 5.00 S
Sub-total I $ 220.22
1 Well #1
2
3
4
5
5
7
8
9
10
11
12
13
14
15
Country Club Hills Utilities, Inc.
Analysis of Water Testing Expenses
CYE 2011
17 Well #2
18
19
20
21
22
23
24
25
26
27
28
29
30
31
33
34
35
36
Well #2 Gross Alpha 1 in 3 Years 3 $ 95.00 $ 285.00 $ 31.67
Well #2 Radium 226 1 in 9 Years I $ 165.00 $ 165.00 $ 18.33
Well #2 Radium 228 1 in 9 Years 1 $ 165.00 $ 165.00 $ 18.33
Well #2 Uranium 1 in6Years 1.5 $ 125.00 $ 187.50 $ 20.83
Well #2 Arsenic I in 9 Years 1 $ 27.00 $ 27.00 $ 3.00
Well #2 Sodium 1 in 3 Years 3 $ 25.00 $ 75.00 $ 8.33
Well #2 IOCs** 1 in 9 Years 1 $ 210.00 $ 210.00 $ 23.33
Well #2 Fluoride 1 in 9 Years 1 $ 15.00 $ 15.00 $ 1.67
Well #2 VOCs** 1 in 6 Years 1.5 $ 185.00 $ 277.50 $ 30.83
Well #2 SOCs** 1 in 9 Years 1 $ 225.00 $ 225.00 $ 25.00
Well #2 Nitrate Annual 9 $ 35.00 $ 315.00 $ 35.00
Well #2 Nitrite 1 in 9 Years 1 $ 35.00 $ 35.00 $ 3.89
Subtotal $ 220.22
Distribution Lead & Copper 5 samples/3 yea 15 35.00 $ 525.00 $ 58.33
Distribution Total Coliform Monthly 108 $ 20.00 $ 2,160,00 $ 240.00
rand Total I I I I $ 738.78
37 * Total number of tests in 9-year cycle.
38 IOC = Inorganic Contaminants
39 VOC = Volatile Organic Contaminants
40 SOC = Synthetic Organic Contaminants
41
42 Annualized Water Testing Expenses 739
43 Reported Testing Expenses 330
Audit Adjustment $409
Attachment D
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills
Analysis of Lease/Rental Expenses and
Comparison of Compound Annual Growth Rates (CAGR)
CYE 2011
I Description 3.00% CAGR 11.79% CAGR Difference
2 2004 Audited Rental Expense $3,850 $3,850 $0
3 2005 Rent $3,966 $4,304 $338
4 2006 Rent $4,084 $4,811 $727
5 2007 Rent $4,207 $5,379 $1,172
6 2008 Rent $4,333 $6,013 $1,680
7 2009 Rent $4,463 $6,722 $2,258
8 2010 Rent $4,597 $7,514 $2,917
9 2011 Rent Expense $4,735 $8,400 $3,665
10
11 Office & Storage Rent for 2011 $4,735
12 Reported Rent for 2011 ($8,400)
13 Audit Adjustment ($3,665)
Attachment E
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities
Analysis of Bad Debts Expenses
Cash Basis Reporting
CYE 2011
1 Reported Bad debts Expense $337
2 Allowed for Cash Basis reporting 0
3 Audit Adjustment ($337)
Attachment F
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities
Schedule of Depreciation Expense
CYE 2011
Plant in Service Audited
1 Description Date Cost 2004 2005 2006 2007 2008 2009 2010 2011
2 CCH-W-05-1 Additions Dec-04 $5,327 178 178 178 178 178 178 178 178
3 to incl Feb 2005 Adds Dec-04 $7,370 246 246 246 246 143
4 25HP Pump; Well 1 Aug-06 $11,749 245 587 587 587 587 587
5 30HP Pump;Well 2 Aug-08 $7,265 151 363 363 363
6 Remove - Well 2 Aug-08 ($7,370)
7 30HP Pump; Well 1 Aug-li $7,755 162
8 Remv Pump - Well 1 Aug-il ($11,749)
9 Total Annual Depr Expense $20,347 $423 $423 $668 $1,011 $1,060 $1,128 $1,128 $1,290
10 Reported Depr Exp 7,912
11 Audit Adjustment ($6,622)
p CD
Country Club Hills Utilities
Analysis of Property Taxes
CYE 2011
1 Description TaxYr Bill No. Half For
2 Bonneville 2011 154717 2nd Pipeline Miles
3 Bonneville 2011 154348 2nd Pipeline Miles
4 SemiAnnual subtotal
5 Annualizing factor
6 Total Annual Property Tax
7 Reported Expense
8 Audit Adjustment
Amount
121
114
$234
2.0
$469
54A
( 11)
Attachment H
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities
Analysis of Interest Expense
CYE 2011
1 Accounts
2 Account Numbers -last 4
3 Statement Closing dates
4
5 Reported Interest Expense - 2011
6 Audit Adjustment
7 Total Interest Expense
Calculation of Interest Surrogate
Plant Purchased (Attachment K)
Working Capital Supplied (Attachment J)
Total
WFgo VISA
6906
12/28/11
1,537
WFgo VISA USB
9627 2198
12/28/11 01/11/12
2,247
Total
$3,784
($3,784)
$0.00
Amount Interest Rate Interest

$7,755 9.24%
$717

$6,011 21.99% 'i 177
Z,U3
CdD
-)
CD
n
Country Club Hills Utilities
Rate Base Calculation
as of CYE 2011
L# Description Staff Reported Difference
I
2
3
4
5
6
7
8
9
10
II
12
13
14
15
Plant In Service
Accumulated Depreciation
CIAC
Net Plant In Service
Working Capital - 1/8th Rule
Total Rate Base
Working Capital Calculation
Expenses
less: Depreciation
Less: Bad Debts
Subtotal
1/8 Rule

20,347 314,852 294,505

(2,823) (241,747) (238,924)

0 (275,200) (275,200)

17,524 (202,095) (219,619)

6,011 0 6,011
$23,534 ($202,095) ($213,608)
49,375 63,346 13,971
(1,290) (7,912) (6,622)
0 (337) (337)
$48,085 $55,097 $7,012
$6,011 $0 $6,011
Attachment J
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities
Schedule of Additions to Plant in Service
Subaccount 311.00 - Pumping
CYE 2004 thru 2011
Date
1 2004 Audit Bals*
2 2004 Audit Bals*
3 2005 Adds
4 2005 Audit Adj
5 2006 Adds
6 2006 Audit Adj
7 2007 Adds
8 2007 Audit Adj
9 2008 Adds
10 2008 Remove
11 2009 Adds
12 2009 Audit Adj
13 2010 Adds
14 2OlO Audit Adj
15 2011 Adds
16 2011 Remove
17 2011 Audit Adj
18 2011 Total Cost
Items Cost
Various 5,327
Pump - Well 2 7,370
25HP Pump Well l 11,749
30 HP Pump Well 2 7,265
Old Pump Well 2 (7,370)
30 HP Pump Weill 7,755
Old Pump Weill (11,749)
$20,347
*2004 Audit found all Plant in Service prior to 2004 was contributed.
The 2004 audited balance for acct #311.0, of $12,697 includes $5,327
reclassified from Materials and Supplies, plus
$7,370 for Well 2, which was added in early 2005
Attachment K
Case No. CCH-W-12-01
Staff Comments
09/17/12
Country Club Hills Utilities
Calculation of Accumulated Depreciation
Subaccount 311.00 - Pumping
CYE 2004 thru 2011
L# Description
1 2004 Additions
2 incl Feb 2005 Adds
3 25HP Pump
4 30HP Pump; Well 2
5 Removal - Well 2
6 30HP Pump; Well 1
7 Remove - Well I
Totals
SvcDat HistCost 2004 2005 2006 2007 2008 2009 2010 2011 Accum
Jan-04 $5,327 178 178 178 178 178 178 178 178 1,421
Jan-04 $7,370 246 246 246 246 143 1,126
Aug-06 $11,749 245 587 587 587 587 343 2,937
Aug-08 $7,265 151 363 363 363 1,241
Aug-08 ($7,370) (1,126)
Aug-li $7,755 162 162
Aug-Il ($11,749) (2,937)
$20,347 $423 $423 $668 $1,011 $1,060 $1,128 $1,128 $1,045 $2,823
CD
(DC)
Country Club Hills
Summary
CYE 2011
L#
I Water Revenues
2 Unmetered Sales
3 Metered Sales- Residential
4 Metered Sales-Corn & Ind
5 Other water sales
6 Total Water Sales
7 DEQ fees-billed to customers
8 Hookup or Connection fees
9 GrTotal Collected
10 Labor-O&M
11 Labor-Customer Accts
12 Purchased Power
13 Mat&Suppl-O&M
14 Mat&Suppl-A&G
15 Contr Svs-Professional
16 Contr Svs-water testing
17 Contr Svs-Other
18 Rentals-Property & Eqpt
19 Transportation
20 Insurance
21 Rate Case Amtz
22 Bad Debts Expense
23 Miscellaneous
24 Depreciation Expense
25 Reg fees-PUC
26 Property Taxes
27 DEQ fees
28 Water Assesment fee
29 Licenses
30 State Income Taxes
31 Interest Charges
32 Total Op Expenses
31 Net Income (Loss)
Reported Audit Audited Attachment
2011 Adjustmts Balances
(1,920) (1,920)
(39,118) (39,118)
(1,621) (1,621)
(1,048) (1,048)
($43,707) $0 ($43,707)
(725) 725 0
(323) 323 0
($44,755) $1,048 ($43,707)
5,273 5,273
600 600
11,015 830 11,845
7,641 7,641
1,384 1,384
3,428 3,428
330 409 739
1,649 1,649
8,400 ($3,665) 4,735
4,800 4,800
315 315
0 0
337 (337) 0
4,808 4,808
7,912 (6,622) 1,290
101 101
546 (77) 469
725 (725) 0
243 243
35 35
20 20
3,784 (3,784) 0
$63,346 (13,971) $49,375
18,591 (12,923) 5,668
Attachment M
Case No. CCH-W.1201
Staff Comments
09/17/12 -
A
B
C
L
E
F
g
H
A
Country Club Hills Utilities
Total Revenue Requirement
Case # CCH-W-12-1
CYE 2011
1 Return on Rate Base
2 Gross Up Factor
3 Grossed up Return
4 Audited Expenses
5 Total Revenue Required
6
7 Proforma Water Sales Revenues
8 Additonal Revenue Increase
9
10 Percent Revenue Increase
RateBase Rate Return
23,534 12.00% $2,824
1.08
$3,050
$49,375
$52,425
$43,067
$9,358
21.7%
Attachment N
Case No. CCH-W-1201
Staff Comments
09/17/12
Country Club Hills Water Co.
Case No. CCH-W-12-01
Calculated Revenue - Present rate with 15,000 gallons volume allowance.
Present Metered Rates
Customer Charge: $ 17.00 (Residential & Commercial)
Volume Allowance (Metered): 15,000 gallons
Commodity Charge: $ 0.60 First Block (remaining volume in excess of 15,000 gallons)
Staff-Proposed Revenue Requirement: $ 52,425
Customer Base Com. Charge Corn. Charge Commodity Total CaIc.
Customer Class No. of Cust. Charge Revenue 1st Block 2nd Block Revenue Revenue
Residential - Metered
1-inch meter 136 $ 17.00 $ 27,744 $ 0.60 $ - $ 17,400.00 $ 45,144
Excess Volume (x 1000 gal) 29,000
Residential - Unmetered Customers
Flat rate 11 15.75 $ 2,079 0 $ - 0 $ 2,079
Commercial - Metered
2-inch meter 1 $ 17.00 $ 204 $ 0.60 $ - $ 480.60 $ 685
Excess Volume (x 1000 gal) 801
Landscaping - Metered (Condo Unitsl
Meter size - not applicable 1 $ 20.00 $ 100 $ 0.60 $ - $ 481.20 $ 581
Excess Volume (x 1000 gal) 802
Total Expected Revenue $ 30,127 $ 18,362 $ 48,489
Revenue from Rates (base and commodity charges) $ 48,489
Revenue collected over (under) Revenue Requirement $ (3,936)
' c> Various Charges as a % of Gross Revenue:
Base (Customer Charge) 62.1%
Commodity Charge 37.9%
CD
Country Club Hills Water Co.
Case No. CCH-W-12-01
Calculated Revenue - Present Rate (Pro forma) and Staff Proposed Rates
Present Proposed
Rates Rates
Customer Charge: $ 17.00 $ 17.00
Volume Allowance (Metered): 30,000 15,000 gallons
Commodity Charge: $ 0.60 $ 0.71 per 1,000 gallons
Staff Proposed Revenue Requirement: $52,425
Customer Class
No. of
Customers
No. of Cust.
Present
Customer
Charge
Present
Base
Revenue
Present
C ommodity
Revenue
Present
Total
Revenue
Proposed
Customer
Charge
Proposed
Base
Revenue
Estimated
Commodity
Revenue
Estimated
Total
Revenue
Residential - Metered
1-inch meter 1 136 $ 17.00 $ 27,744 $ 12,115 $ 39,859 $ 17.00 $ 27,744 $ 20,590 $ 48,334
Excess Volume (x 1000 gal) 20,192 29,000
Residential - Unmetered Customers
Flat Rate 11 $ 15.75 $ 2,079 $ - $ 2,079 $ 20.25 $ 2,673 $ - $ 2,673
Commercial - Metered
2-inch meter 1 $ 17.00 $ 204 $ 385 $ 589 $ 17.00 $ 204 $ 569 $ 773
Excess Volume (x 1000 gal) 642 801
Landscaping - Metered (Condo Unitsi
Meter size - N/A 1 $ 20.00 $ 100 $ 439 $ 539 $ 20.00 $ 100 $ 569 $ 669
Excess Volume (x 1000 gal) 732 802
Total Revenue 149 $ 30,127 $ 12,940 $ 43,067 $ 30,721 $ 21,728 $ 52,449
Revenue from Rates (base and commodity charges)
$ 52,449
Revenue collected over (under) Revenue Requirement
$ 24
Various Charges as a % of Gross Revenue:
Base (Customer Charge)
59%
g Commodity Charge 41%
Total Percent
100%
Monthly
Usage
Gallons
Current
Base
Rate
Volume
Allow.
Gallons
Corn.
Rate
$/1000 gal
---
-
Company
Poposed
Base Rate
Volume
Allowance
Base Rate
:R:ate
.
gal
Difference
per
Month
Percent
Difference
per month
0 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ - 0.0%
2,000
4,000
$
$
17.00
17.00
30,000
30,000
$
$
0.60
0.60
t
'$
$ 17.00
17.00
15,000
15,000
$
$
0.71
0.71
$
$
-
-
0.0%
0.0%
5,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 , $ - 0.0%
$ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ -
10,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ - 0.0%
12,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 - $ 0.0%
14,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ - 0.0%
15,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 8 - 0.0%
17,000 $ 17.00 30,000 $ 0.60 - $ 17.00 15,000 $ 0.71 $ 1.42 8.4%
20,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 - $ 3.55 20.9%
25,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 7.10 41.8%
29,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 9.94 58.5%
30,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 10.65
40,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 11.75 51.1%
50,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 - $ 12.85 44.3%
60,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 - $ 13.95 39.9%
80,000
$ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 - $ 14.72
$ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 16.15 34.4%
90,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 17.25 32.5%
100,000 $ 17.00 30,000 $ 0.60 $ 17.00 15,000 $ 0.71 $ 18.35 31.1%
al average usage during winter period..
b/ average usage during summer period.
a!
b/
"0 P
a
Country Club Hills Case No. CCH-W-12-01
Rate Impacts - Current Rates Vs. Staff- Proposed Rates for Metered Residential Customers
Rate Elements Current Proposed
Monthly Base Rate: $ 17.00 $ 17.00
Commodity Rate (per 1,000 gallons) $ 0.60 $ 0.71
Volume Allowance (gallons) 30,000 15,000
Country Club Hills - Frequency Distribution of Residential Water Usage
35
30
25
>. U
C w
Cr
15
U-
10
5
0
0
ZN
0
0 1 0
Range of Volume Usage in Gallons
D
to 0 CD
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 17TH DAY OF SEPTEMBER 2012,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. CCH-W-12-01, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
MIKE GROTH
COUNTRY CLUB HILLS UTILITIES
570 S. YELLOWSTONE AVE.
IDAHO FALLS, ID 83402
SECRETAI
CERTIFICATE OF SERVICE