20070302Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL
DATE:MARCH 1, 2007
RE:EAGLE WATER'S STATUS REPORT AND PETITION FOR AN
EXTENSION OF TIME IN WHICH TO FILE ITS CAPITAL
IMPROVEMENTS APPLICATION, CASE NO. EAG-OS-
On February 28 , 2007, Eagle Water Company filed a "Status Report and Petition for
Extension of Time" in which to file an application ordered by the Commission to be filed no
later than March 2007. In Order No. 30213, the Commission directed that Eagle Water file its
final engineering report no later than January 20, 2007. The engineering report was to address
chronic low-pressure problems in the Company s existing water system and project water supply
needs out to 2010. Order No. 30213 at 1. The Order also required that Eagle Water submit an
application no later than March 1 , 2007 that contains plans for implementing the system
improvements identified in the engineering report. In its Petition, Eagle Water requests that the
Commission grant an extension for filing the application until 30 days after the Department of
Environmental Quality (DEQ) approves the final engineering report.
BACKGROUND
In August 2005 , the Commission issued an emergency Order directing Eagle Water to
use all deliberate speed" to increase water pressure in a portion of its service territory. In
addition to taking immediate action, the Company was directed to prepare an engineering study
to address the chronic low-pressure problems in its system and to project its water supply needs
for the future. 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.
DECISION MEMORANDUM
To recover the cost of preparing the engineering study, the Commission in February
2006 authorized Eagle Water to implement a temporary rate surcharge. Order No. 29969. The
surcharge was designed to recover $112 414. Once the authorized amount was recovered, the
surcharge would be discontinued. Order No. 29969 at 6.
After the Commission issued its surcharge Order, Eagle Water and DEQ signed a
Consent Order" in which Eagle Water acknowledged violations of DEQ's Drinking Water
Rules. In addition to paying a civil penalty of $13 500, Eagle Water was required to submit a
Preliminary Engineering Report" to DEQ. The Consent Order provided that Eagle Water was
to submit the report no later than March 10, 2007 and then DEQ would review the report. Based
upon DEQ's review, Eagle Water would then submit a "final" engineering report for DEQ'
approval. Consent Order at p. 2.
On June 2, 2006 , Eagle Water submitted its "Preliminary Engineering Report" to the
Commission and to DEQ. Both DEQ and Commission Staff asked the Company to submit
additional information as part ofthe Company s final engineering report. Order No. 30160.
On October 30, 2006, the Commission ordered Eagle Water to submit its final
engineering report and the application to implement the system improvements no later than
December 31 2006. Order No. 30160. Following this Order, Eagle Water petitioned and was
granted an extension. In Order No. 30213 , the Commission directed Eagle Water to file its
engineering report no later than January 20, 2007 , and its implementing application no later than
March 2007. Order No. 30213 at 4. Eagle Water filed its final engineering report on January
2007 and DEQ filed its comments to the draft report on February 13 2007.
THE CURRENT PETITION
In its Petition, Eagle Water again asserts that it has been "diligently pursuing" the
completion of the final engineering report but asserts that it will not be able to meet the March
deadline for submitting the implementing application because DEQ has not yet approved the
report. Petition at 1. The Company anticipates filing the "revised" final engineering report for
DEQ's approval on or about March 15 2007.
The Company also reports that the cost of preparing the engineering report to meet
DEQ's approval has exceeded the initial estimate of $79 895 (grossed-up for tax purposes to
$102 170). Order No. 29903 at 2 7. According to the Company, the cost of preparing the
I A timeline for this proceeding is attached.
DECISION MEMORANDUM
engineering report has exceeded the Commission s authorization by approximately $88,605
($53 000 + $35 605). Petition at 2; Exhibit 2. Eagle Water does not seek recovery of the
additional engineering costs at this time. Petition at 2.
In summary, Eagle Water requests that the Commission:
(1) Continue to allow Eagle Water to collect the current surcharge; and
(2) Extend the deadline for filing the application "to 30 days from the date
Eagle Water gets a final acceptance of its Engineering Report from DEQ.
Petition at 3.
COMMISSION DECISION
Does the Commission wish to continue the current surcharge? Does the Commission
wish to grant Eagle Water an extension for filing its system improvement application? Anything
else?
Don Howell
blslM:EAGWO502 dh6
DECISION MEMORANDUM
EAGLE WATER TIMELINE
August 3 , 2005 Commission issues emergency Order to correct low-pressure
conditions and prepare engineering report.
August 24, 2005 Eagle Water submits surcharge application to recover costs of
immediate improvements, engineering report, and three additional
system improvements.
September 16, 2005 Scheduled workshop and public hearing
October 12, 2005 Workshop and public hearing.
October 27 2005 Order approving surcharge and directing Company to complete
engineerIng report ASAP.
February 6, 2006 Further Order approving surcharge to recover $112 414
February 17 2006 DEQ/Eagle Water Consent Order
May 31 , 2006 Draft Preliminary Engineering Report (PER)
August 2006 DEQ comments on draft PER
September 2006 Eagle Water engineers working on water system model
October 10, 2006 DEQ implements new fire flow rules
October 25, 2006 DEQ rejects Eagle Water s peak day demand rate in model
October 30, 2006 PUC orders Eagle Water to submit final engineering report by
December 31 2006.
December 20, 2006 Eagle Water seeks extension to file engineering report to January
2007.
December 28 , 2006 PUC grants extension to January 2007, extends system
improvements to March 1 , 2007 and continues surcharge but limits
recovery to $112 414.
January 20, 2007 Draft final engineering report filed.
February 28 , 2007 Eagle Water seeks extension to file system improvements
application.
DECISION MEMORANDUM