20061228order_no_30213.pdf

Office of the Secretary
Service Date
December 28, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF EAGLE WATER
COMPANY'S REQUEST FOR A
TEMPORARY SURCHARGE
ORDER NO. 30213
CASE NO. EAG-OS-
On October 30 2006, the Commission issued Order No. 30160 directing Eagle Water
Company to "submit its final engineering report and an application to implement and recover
system improvements identified in the engineering report no later than December 31 , 2006.
Order No. 30160 at 3. The Order authorized Eagle Water to continue to collect the existing rate
surcharge until December 31 , 2006, subject to refund. !d. The Commission stated that if "the
engineering report and the application for ii:nprovements are not filed by December 31 , 2006
then we shall order Eagle Water to refund the surcharge revenue collected above $112 414 to
individual customers.Id.
On December 20, 2006, Eagle Water filed a Petition seeking relief from the three
requirements of Order No. 30160. In particular, the Company requested that the surcharge be
continued, that the engineering report be due January 20, 2007, and that the application to
implement the system improvements identified in the engineering report be due March 1 , 2007.
BACKGROUND
In August 2005 the Commission issued an emergency Order directing Eagle Water to
use all deliberate speed" to increase low water pressure in a portion of its service territory.
addition to taking immediate action, the Company was directed to prepare an engineering report
to address the chronic low-pressure problems in the existing water system and project water
supply needs out to 2010. "The report shall include the recommended system improvements
construction schedule and estimated cost of each individual (improvement)." Order No. 29840
at 3. The engineering report was to "serve as a 'road map' for determining exactly what
infrastructure improvements are necessary to serve the present and future needs of Eagle Water
and its customers.Order No. 29903 at 7. The Company was ordered to "complete its
engineering study as soon as possible.Id. at 9.
On February 6, 2006, the Commission issued Order No. 29969 authorizing Eagle
Water to implement a temporary rate surcharge.The surcharge was intended to recover
ORDER NO. 30213
$112 414 for the costs of the engineering report and other associated expenses. Once the
authorized amount was recovered, the surcharge would be discontinued. Order No. 29969 at 6.
On June 2, 2006, Eagle Water submitted its "preliminary engineering report" to the
Commission and to the Idaho Department of Environmental Quality (DEQ). Both Staff and
DEQ asked the Company to submit additional information as part of the Company s final
engineering report. Order No. 30160.
THE PETITION
In its Petition, Eagle Water asserts that it has been "diligently pursuing" the
completion of the final engineering report but will not be able to file the report and the
implementing application by December 31. In addition to addressing the requirements set forth
by this Commission, the Company indicates that it was also using the engineering report to meet
the requirements of a Consent Order the Company entered into with DEQ. Petition at 1. The
Company indicates there have been "numerous setbacks in the completion of the report, not the
least of which was Mr. Rees s recent surgery to repair an . . . aneurysm.Attached to the
Petition was an affidavit of the Company s Salt Lake City engineer, Chet Hovey. Mr. Hovey has
been assisting the Company s local engineer, Jim Rees, in preparing the final engineering report.
Mr. Hovey s affidavit recites the history of preparing the final engineering report.
He was engaged by Mr. Rees ' s firm (MTC) when the previous engineer working on the report
departed MTC. Mr. Hovey alleged in his affidavit that the delay in finalizing the engineering
report has been caused in large part by changing DEQ requirements. Affidavit at ~~1 0-21.
Mr. Hovey stated that there are 12 computer models of Eagle Water s distribution
system. Id. at ~ 21. Each time DEQ requests a change in the model parameters, it necessitates
changing 900 inputs, adjusting pump curves and checking flow rates. Id. at ~ 20.
In summary, Eagle Water requests that the Commission:
1. Extend the deadline for submitting the final engineering report to January
2007.
2. Extend the surcharge "at least through the end of January 2007, when the
exact cost of the engineering study will be known.
3. Extend the deadline for the filing of the application to implement the
system improvements identified in the engineering report until March 1
2007.
ORDER NO. 30213
DISCUSSION
As we noted in our emergency Order, we required the preparation of an engineering
report to address the immediate, near-term, and long-term pressure problems as well as the future
development of Eagle Water s system. Order No. 29840 at 3. The engineering report was to
include a comprehensive analysis of the existing (water) system including
projected water needs out to 2010. The analysis will consider all possible
options including additional water supply, storage, booster pumps and
additional main lines necessary to meet the existing and projected water
requirements. The report shall include the recommended system
improvements, construction schedule and estimated cost of each individual
project. ... Within twenty-one (21) days of this Order, Eagle Water shall
advise the Commission of when this engineering study can be completed and
submitted to the Commission.
Order No. 29840 at 3. In response to the quoted Order above, the Company indicated that it
would take between three to five months to complete the engineering report. Order No. 29870 at
citing Exhibit 4, p. 5.
In Order No. 29903 issued October 27, 2005 , we implemented a surcharge designed
to recover the estimated cost of the engineering report - $79 895. Although the Company sought
permission to drill a new well with an estimated cost of nearly $400 000, the Commission
deferred any decision until submission of the engineering report. Order No. 29903 at 7.
In its current Petition, the Company cites a number of reasons why the engineering
report has been delayed. These reasons include illness of the primary engineer, the need to hire
an outside engineering consultant, the departure of the engineer working on the project, and
changes in the planning criteria and modeling assumption requested by DEQ.
After reviewing the Petition and its supporting affidavit, we find good cause exists to
grant an extension in the deadline for the engineering report to be filed until January 20, 2007.
We expect the engineering report to be detailed and to meet the requirements of Order No.
29903.
Rather than extend the surcharge until "the end of January 2007," we find it
reasonable to extend the existing surcharge until we have completed our review of the soon to be
filed engineering report. To safeguard customers , we find that Eagle Water has no authority to
appropriate surcharge funds in excess of the currently approved $112 414 and that the surcharge
shall be subject to refund. It makes little sense to stop the surcharge when we do not know the
ORDER NO. 30213
cost of the study it is intended to fund. Staff shall continue to audit this account for compliance
with our Orders.
We also grant the Company s request to postpone the deadline for filing an
application to detail its proposal to implement system improvements. This application shall be
filed no later than March 1 , 2007. The purpose of this application is two-fold. First, the
application is to identify the infrastructure improvements necessary to serve the present and
future needs of Eagle Water and its customers. Second, the application will include Eagle
Water s proposal for a new rate design to recover the costs of the identified infrastructure
improvements and make other rate changes as necessary.
ORDER
IT IS HEREBY ORDERED that Eagle Water Company s Petition is granted as
modified above. Eagle Water shall file its final engineering report no later than January 20
2007.
IT IS FURTHER ORDERED that Eagle Water submit an application no later than
March 1 , 2007 that details its proposal to implement the system improvements identified in the
engineering report.
IT IS FURTHER ORDERED that the Company is authorized to continue to collect
the existing surcharge, subject to refund. Use of the surcharge fund is restricted to those items
specifically identified in Order Nos. 29903 and 29969, and shall not exceed $112,414 without
the explicit approval of this Commission.
ORDER NO. 30213
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~f(
day of December 2006.
PAUL~a~~
OWL
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~el
Commission Secretary
bls/O:EAG-05-02 dh5
ORDER NO. 30213