20040722Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSIONPO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
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Street Address for Express Mail:
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BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF DIAMOND BAR WATER
CO MP ANY TO AMEND CER TIFI CA TE OF
PUBLIC CONVENIENCE AND NECESSITY NO. )413. CASE NO. DIA-O4-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, , in response to the Notice of
Modified Procedure in Case No. DIA- W -04-1 issued on June 23, 2004, and submits the
following comments.
BACKGROUND
On June 7 , 2004, Diamond Bar Water Company, a water utility in Kootenai County,
Idaho, filed an Application with the Idaho Public Utilities Commission (Commission) to amend
its Certificate of Public Convenience and Necessity No. 413 and to extend its certificated service
territory to provide water service to Boekel Estates Subdivision (Boekel Estates). Reference
IDAP A 31.01.01.112; IC 61-526. Boekel Estates consists of approximately 70 acres of land
platted as 14 five-acre lots in the SE 1/4 of Section 33, Township 52 North, Range 4 West
Boise-Meridian, Kootenai County, Idaho. As part of the Application, Diamond Bar has
STAFF COMMENTS JULY 21 , 2004
submitted a Water Main Extension Agreement (Agreement) dated June 2 2004 between
Diamond Bar and Walter and Grace Singer, the developers of Boekel Estates. Diamond Bar
intends to provide domestic and irrigation water under the terms of the Agreement and an
attached exhibit setting forth General Rules and Regulations governing the Agreement.
ANAL YSIS
Staffhas reviewed Diamond Bar s Application, has had discussions with the Company
and developer and believes that there are four main issues to address:
1) The request for service area expansion.
2) The need for a hook-up fee.
3) The Water Main Extension Agreement.
4) The request for a charge for fire fighting water.
Service Area Expansion
Staff has reviewed the Company s filing and responses to requests for additional
information and recommends that the request for certificated area expansion be granted. Staff
further recommends that all extension construction costs be recorded on Diamond Bar s books as
Contribution in Aid of Construction (CIAC).
The Company has indicated that it has adequate supply to meet the needs of the expanded
service territory. No other regulated water companies are in the immediate vicinity of this
request. Service to the proposed area is at the request of the landowner/developer of the
expansion area. Extension of service to Boekel Estates will require excavation, installation of
mains, fire hydrants, services, meter boxes; grading; backfill; compaction; inspection; and
testing. The estimated cost for this project is $136 321 , all of which will be paid by the
developer pursuant to an understanding of the parties as will be more particularly referenced in a
revised Water Main Extension Agreement. Staff recommends that this transaction be recorded
as CIAC on Diamond Bar s books.
Staff believes the Company has an adequate source of supply to provide service to
Boekel Estates in a safe and reliable manner. Staff believes that extension of Diamond Bar
facilities to serve Boekel Estates is consistent with the public convenience and necessity.
STAFF COMMENTS JULY 21 2004
Meter Installation Fees
Staff recommends that a one-time $200 meter installation fee be granted to the Company.
In Order No. 29247 the Commission rejected the Company s request for a $1 000 hook-
up fee for the installation of water meters. At that time no additional customers were anticipated
and the Company reported that all lots within the original development had paid a hook-up fee
prior to regulation. Diamond Bar water is now requesting to serve an area that could allow for
14 new houses or an additional 14 regulated customers. All backbone and mainline
improvements will be contributed to the Company as CIAC. However, there are no provisions in
place to recover the cost for meter installation from the additional individual customers.
In Staff Request No. 10, the Company provides an estimated cost of$200 to install
water meter. Staff believes this is a reasonable rate based on the Company s cost estimate and it
is within the range of other regulated water system hook-up fees in the area.
Water Main Extension Agreement
Staff recommends that the June 2 2004 Water Main Extension Agreement between
Diamond Bar and the developers of Boekel Estates be rejected in its entirety. Staff recommends
that a new agreement be executed reflecting the contribution of mainline and service line
improvements by the developer of Boekel Estates Subdivision as CIAC, the application of the
Commission s Customer Relation Rules and Diamond Bar s filed tariffs and rules to the
expanded service territory.
Staffhas reviewed the Agreement submitted by Diamond Bar Water System. The
Agreement is quite extensive and makes reference to service quality, customer relations, and rate
issues. In many cases the Agreement conflicts with the Commission s Rules and the Company
existing tariffs. Staff believes that these issues are already adequately covered by the
requirements of either the Idaho Department of Environmental Quality, the Idaho Department of
Water Resources, the Commission s Rules, or Diamond Bar Water s existing Tariffs. Staff
believes that the proposed Agreement discriminates against the customers in Boekel Estates and
should not be approved. Staff has discussed this with the Company and the developer. Diamond
Bar has indicated that it will resubmit a Water Main Extension Agreement to reflect the
contribution of Boekel Estates and the application of the Company s existing tariffs and rules to
the expanded service area.
STAFF COMMENTS JULY 21 2004
Fire Fighting Water Fee
Staff recommends that the Commission reject the Company s request for a charge for fire
fighting water.
In the proposed Water Main Extension Agreement at paragraph 2., the Company
alludes to the imposition of a fire fighting water fee for customers in the service area expansion.
The Company currently has no tariff for this fee and does not charge existing Diamond Bar
Water customers such a fee. In response to Staff's production request , the Company confirms its
inability to accurately determine the amount of water used for fire fighting. The Company
indicates that it can determine an electrical demand charge that would be levied should the
Company s much larger fire pump be initiated but can only provide local fire district estimates
for the water used. In response to Staff Production Request No., the Company states that it
does not intend to submit a separate fire protection tariffbut proposes charging the customer a
water consumption fee equal to its existing water rate tariff or $.45/1000 gallons.
Should the Company wish to pursue a fire fighting water tariff, Staff believes that it
should submit a request under a separate Application. The Company s request should include a
method of determining actual costs incurred and water used for fire fighting. The Company must
also demonstrate that the costs can be directly attributable to a specific customer and expenses
such as demand charges are not the result of hydrant flushing, line breakage, or excessive
irrigation usage.
RECOMMENDATIONS
Staff Recommends that the Commission:
Grant the request for service area expansion.
Require that all water main extension costs be recorded as Contribution in Aid of
Construction on Diamond Bar s books.
Authorize a one-time meter installation fee of $200.00 and require the filing of a
related tariff.
Require the Company to execute a revised Water Main Extension Agreement with
the developer of Boekel Estates conforming to the Commission s Order and that
includes 1) a provision requiring the contribution by the developer of Boekel
Estates Subdivision of mainline and service line improvements, 2) a recitation that
STAFF COMMENTS JULY 21 , 2004
the Commission s Customer Relation Rules and Diamond Bar s filed Tariffs and
rules apply to the expanded service territory.
Deny the Company proposed fire fighting charge.
Respectively submitted this
d/
day of July 2004.
Scott Woodbury
Deputy Attorney General
Technical Staff: Michael Fuss
Carol Cooper
i:umisc:comments/diawO4.swmfusscc
STAFF COMMENTS JULY 21 2004
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 21 sT DAY OF JULY 2004
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. DIA-04-, BY MAILING A COpy THEREOF POSTAGE PREPAID
TO THE FOLLOWING:
BOB TURNIPSEED
DIAMOND BAR WATER CO.
PO BOX 1870
HAYDEN ill 83835-0081
WALTER & GRACE SINGER
11463 WRIVERVIEW
POST FALLS ill 83854
SEC
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CERTIFICATE OF SERVICE