20070928Meehan Comments.pdf

COMMENTS TO THE PUBLIC UTILITIES COMMISSION HEARING
IN THE MATTER OF DIAMOND BAR EST A TES WATER CO.
DIA-07-
26 SEPT., 2007
The following comments are in response to the Staff comments on this case as submitted to the
Commission on 10 Aug., 2007.
In their calculation of the Revenue Requirement, page 8, the Staff is proposing a gross up
for taxes on the result of an allowance of 12% on the rate base. In as much as the
Commission treats all applicants as if the are "C Corporations , and since the applicant
shows a loss for one or more prior years no such tax provision should be included. The
applicant will be able to use tax loss carryforwards to offset any such income.
In the proposed rate design the Staff makes 2 proposals which are not in the best interests
of the consumer. These are:
If the Staff is truly worried about conservation then they should abandon the
stated preference for a single rate design. They should instead adopt a dual rate
the first providing for usual and customary household usage, including some
landscape watering so that homes may meet the CC&R requirement of at least a
front lawn. Beyond that the second rate covers those households who wish to
keep animals or have a more extensive landscape.
The second problem is the inclusion in the base monthly rate of 4 000 gallons.
This is after they note that winter usage averages over 5 579 gallons/month and
that the median was 4 678 gallons/month. They are proposing a base which
would not meet normal household use. As to the median they would have
included some of the residences which are vacant for some or all of the /winter as
the people go South, thus using minimal water. It must also be noted that in the
Staff attachment G, an allotment of 4000 gallons/month is far less that all but 2 of
the other water companies shown, and Stoneridge may be somewhat different
being a golf course community.
The Staff seems to have a visceral reaction to charging people for what they use
regardless of when they use it. The most appropriate design, one which allows people to
conserve if they wish, and yet meet their needs is to provide a "water year allowance
which should be based on the current program. Thus the fIrst 90 000 gallons would be
billed at one rate. Above that becomes the clients choice. The Stoneridge design, of a
flat fee to access the system and then a usage fee is the model the Staff should be
following.
As to the Applicant's cash flow , most seasonal business realize that they have to set aside
funds from the busy season to cover the lean. What are the applicants cash needs during
the Winter months? I fyou assume 1/12th ofthe salary costs and 60% of 1/12th of the
utility cost (less pumping in the Winter) you get a monthly cost of $1100. Offset this
with the flat monthly fee, whatever it turns out to be and you get the amount the Company
needs to set aside.
It seems to this customer that the appropriate rate design is as follows:
Meter fee $27 x12 = 324 x 43 = 13 932
Rate / 1000 gallon .45 x90 = 36.x43 =742
Rate /1000 gallons x 16 127.870*096
770
Thus income is equal to revenue requirement as determined by the Staff, less the tax gross up,
because there will no taxes payable.
* from attachment F as follows:
43 * 4000 * 12 = 2 064 000 + 17 933.870 = 19 997 870
997 870 - (43 * 90000) = 16 127 870
Two additional comments;
This rate design still does not reflect the reality that the Applicant is an LLC and thus has
an entirely different tax structure than either the Commission or Staff is willing to
consider; and
I am not certain what this entire exercise is/was for. According to the Commission
web site the public comment period extended through 10 August. Yet we see that the
Staff report was filed on the 10th so they clearly had written the memo and decided on the
recommendations before that date.
Michael R. MeehaJi#
14201 NRams
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Jean Jewell
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From:
Sent:
To:
Subject:
m ikemeehan (g)operamail. com
Thursday, September 27 200710:13 AM
Tonya Clark; Jean Jewell; Gene Fadness; Ed Howell
PUC Comment/Inquiry Form
A Comment from Mike Meehan follows:
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Case Number: D1A=W-07-
Name: Mike MeehanAddress: 14201 N Ramsey Rd
City: Rathdrum
State: 1D
Zip: 83858
Home Telephone: [phone]
Contact E-Mail: mikemeehan0operamail. com
Name of Utility Company: Diamond Bar Water
Add to Mailing List:
Please describe your question or comment briefly:
A comment made at the public hearing last evening, 26 Sept. got me to thinking about the
cost basis of the water co. the water company was developed to sell lots and it belonged
to the Homeowners Assoc.. When the time came for the developer to give up control of the
Assoc. the water co reverted to the the Board of the Assoc. at no cost, the developers
costs having been recouped via sales of lots.
For various reasons the Assoc opted not to take control (good thing as the Assoc is
completely disfunctional) and the developer took control with no funds changing hands.
Therefore it would seem that his cost basis must be limited to those improvements, repairs
etc, which he has made after that date. The Staff should investigate how this impacts his
cost basis.
Thank you.
The form submited on http://www.puc.idaho.gov/forms/ipuci/ipuc.html
1P address is 69.76.142
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