20160609Hearing Comments.pdf

Jean Jewell
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Jean Jewell
Thursday, June 09, 20L6 3:15 PM
Jean Jewell
FW: Your Comments and Questions Regarding Case No. DIA-W-I5-01
DBEWD Hearing presentation.docx
From: Nate Simmons [mailto:[e-mail]]
Sent: Wednesday, June 08, 2016 10:29 AM
To: Jean Jewell <Jean.Jewell @puc.idaho.gov>
Cc: Front <front@ puc.idaho.gov>
Subject: Re: Your Comments and Questions Regarding Case No. DIA-W-15-01
Jean,
I attended the public hearing on the Diamond Bar Estates Water District last night and presented my
thoughts. The commissioners stated that they were going to allow public input until June 10th, so I am
sending you a copy of what I presented last evening regarding the requested rate increase. lt is for the record,
as it was last night, and can be posted onto the web if that is the appropriate thing to do. Thank you.
To: Commissioners, ldaho Public Utility Commission
My name is Nate Simmons, and I have already submitted comments to the original rate increase request
as well as the PUC staff response. Just so you understand that I am not just a homeowner that doesn't
want to pay an exorbitant increase no matter the justification, I want you know where I am coming from
on this matter. I had a 35 year career in Facilities at the Boeing Company. I did many jobs over the
years, including project management, construction management, managing budgets, identifliing and
solving problems, and value engineering. I believe this gives me a good foundation to evaluate the
appropriateness of the proposed huge rate increase proposed by Diamond Bar Estates Water District.
Since the Diamond Bar Estates Water District filed their request for a rate increase last year, there have
been several steps along the way. There was a public workshop, a chance for the homeowners to input
their thoughts, the posting of the Public Utilities Commission staff report with recommendations, and
finally the response from DBEWD. We homeowners now have the opportunity to present thoughts and
questions publicly, after which the actual commission will make a decision as to how much the water
rates will be allowed to rise. Unfortunately, there are still several important issues to consider before an
informed and just decision can be made by the commissioners.
Major areas to discuss include the operation of the company and whether it has been operated in a
prudent and efficient manner, whether they have provided good service to customers, whether all costs
and revenues have been properly accounted for, and whether the PUC staff has done a thorough job of
investigating the validity of the rate request. This specifically includes several key items already
presented by homeowners but ignored in the staff report.
Companv Operations-Smart and Prudent?
Why was a 50 HP pump installed originally, against the contractor's recommendation, thus
incurring higher operating costs every time the pump failed?
Why was there no action taken when it was stated in 2OO2 that there was a problem with the
electrical system?
When pump life is expected to be 15-20 years, why was there never a thorough investigation of
the problem until after six pump failures in 13 years? After only two or three failures there
should have been a thorough root cause analysis done to avoid future problems. Failure to do
so is a failure of proper management and causes the customers to pay more than they should.
When Kootenai Electric Cooperative requires all motors larger than 20 HP to have a soft start
installed, why has this never been done?
Why has there been no action to replace the soft start for the pump since the AEI engineering
report that stated it was a requirement? I have talked to AEI engineering as well as an electrical
contractor and both state that it is imperative to do that to maximize pump life. To relate it to a
personal level, operating without the soft start is like always rewing up your car engine to 3000
RPM before shifting into drive and not expecting any damage.
Per the documents filed by the DBEWD and the PUC, it is clear that the company is not run
efficiently and effectively. There are clearly issues with the bookkeeping and annual reports, as
well as the consultant that was non-responsive. All these things caused more work for the PUC
staff as well as those of us trying to understand the rate request, and it is not justified to reward
the company and punish the customers for this.
The company claims that the staff is working more hours, yet does not present justification why.
Since they are basically serving the same number of customers, there should not be a reason for
allowing increased hours worked. Time spent solving problems of their own making should not
be compensated. Any increase in labor costs should be limited to cost of living factors.
Cost and Revenue lssues
Why did operations costs increase by $18-20,000 in 2O7O? I have not seen a valid explanation
from DBEWD or staff for this, and with the service record showing a pump failure at well #2 that
year, it appears that labor and expense was incorrectly allocated from the private homeowner
to DBEWD. This cannot be allowed and must be removed from the base.
From 2008 until 2014, annual revenues were within approximately 52500 each year. However,
we know that the company received insurance payments of 55530, 59500, and 54170 during
these years. lt is inconceivable that payments like these would not cause greater fluctuations in
annual revenues, thus we must conclude that the insurance payments were improperly
excluded from the revenues in the annual reports. This cannot be allowed.
Why should this company be granted a guaranteed 72% return when their own poor decision
making allows them to increase the plant in service and thus get a higher return?
Companv Service
I lived for L7 years in Maple Valley, WA, and had a private water company supply our house. I
do not recall a single outage in that entire time, yet have endured at least four major outages in
just four years here. These outages have ranged from 2-L9 days, during which time our lawns
and plants were at risk. This is clearly inferior and unacceptable service.
The outages incurred by the company allowed air to enter the system, which caused two hot
water recirculation pumps to burn out. I requested to have the company call me whenever they
were aware of an outage so I could protect the pumps, but they argued against it, and did not
care that they caused my pumps to fail. I was actually hung up on one time when asking why I
did not get a call to alert me. Customer service appears to be a foreign concept to them. I
would like to have the commission direct the company to establish a group email and/or texting
alert system to notify customers of outages and service restorations.
Public Utilities Commission
e I am very disappointed in what the PUC staff posted in response to DBEWD and the
homeowners' input. I feel that there were many significant issues raised by us that were
ignored or glossed over in the report. As a result, several of them must be brought up again at
the public hearing. While not every single question or comment need be addressed, there were
several major issues raised that deserve explanation. Of particular concern are the huge
expense jump in 2010 and the treatment of the insurance compensation for the pump failures.
o The PUC staff states that they are going against "normal accounting treatment" by allowing
recovery of costs for early retirement of an asset. They state that unique circumstances exist
that justifies doing this. However, the unique circumstance is that improper management of the
system caused the pumps to fail prematurely, thus allowing recovery of those costs is basically
rewarding management incompetence to the detriment of the customers. This CANNOT be
allowed.
Miscellaneous
I was told in a conversation with Mr. Turnipseed that the pump failures were the fault of
Kootenai Electric and he was trying to get them to compensate him for the problems with their
electrical service. However, at the same time he refused to take any responsibility for allowing
air to get into the lines and cause two recirculation pumps to fail at my house. Allowing the air
into the lines caused me to spend over Sg00 to replace them.
When reading through the documents in this case, it is clear that DBEWD expects to be paid for
time and money spent to prepare their case. Well, I have spent 50-60 hours working on this
case, so who is going to compensate me? Sometimes company owners and execs need to be
like exempt employees-they do not get overtime pay and must invest their own time for the
good of the company and to build up the company value. I did that in my career, and they can
as well.
I believe that if DBEWD is guaranteed a 12% return and the customers are forced to pay for their
poor management, then the homeowners should be guaranteed to get our water supplied
without interruptions in service. ln the long term I believe the only way to do this is to grant
legal rights to access water from the back up #2 well when necessary. This will protect the
investments in our homes as well as allow us to avoid having to move into motels the next time
the pump fails and there is a new owner of that property.
ln the DBEWD response to the PUC staff report, the company tries to justify ignoring the key AEI
engineering recommendation to install a soft start system to protect the pump. Their
f ustification is that "thet/' aren't sure it is needed, they don't have the money, and they think
everything is working fine. Well, everything was always working fine in the past, right up until
the point when the pumps failed. Cutting corners and using short sighted logic like this is a
perfect example of the management and operational problems within this company.
. ln the public workshop and in other PUC documents, "prudent" is a word that is often used.
Given everything that has been presented to the PUC by DBEWD customers, it is abundantly
clear that the water system has not been prudently managed. lt is imperative that the
commissioners recognize this and refuse to reward DBEWD for their shortcomings as a
company. The commissioners must ignore the recommendation of the PUC staff and take
action to adjust the rate downward from the staff recommendation to take into account the
problems and issues that we have brought forward.
Thank you for allowing me to present my thoughts to you today, and for your careful consideration and
implementation of them as justified. I also urge you to carefully consider the concerns submitted
previously by other homeowners and me to the PUC website.
Nate Simmons