20080731notice_of_modified_procedure_order_no_30605.pdf

Office of the Secretary
Service Date
July 31 , 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF EAGLE WATER
COMPANY'S ENGINEERING REPORT AND
APPLICATION TO CONTINUE THE EXISTING SURCHARGE
CASE NO. EAG-07-
NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 30605
In August 2005 , the Commission directed Eagle Water Company to prepare a
system-wide Engineering Report for the purpose of identifying infrastructure improvements
necessary to serve Eagle Water and its customers then and in the future. On August 6, 2007
Eagle Water filed its Engineering Report and an Application to recover the professional fees
(engineering, legal, accounting) for preparation of the Report and the Application. In its
Application, the Company requests authority to recover $201 434 in professional fees.
On September 18, 2007, the Commission issued a Notice of Application and set a
deadline for intervention. The Commission s Notice also observed that the Eagle City Council
had approved an "Asset Purchase Agreement" that would allow the City to purchase the utility.
Order No. 30430 at 1. The transaction was initially supposed to close in November 2007. The
parties were not able to complete the Asset Purchase Agreement and the Agreement expired on
March 31, 2008. Given this turn of events, the Commission Staff has completed its review ofthe
reasonableness and prudency of the requested engineering, legal and accounting fees. The Staff
and Eagle Water now recommend that this case be processed under Modified Procedure.
BACKGROUND
A. Procedural History
The history behind this case is contained in Order No. 30266 but the pertinent events
are briefly outlined here. 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 actions, the Company was directed to prepare an
engineering report 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
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30605
determining exactly what infrastructure improvements are necessary to serve present and future
needs of Eagle Water and its customers." Order No. 29903 at
To recover the costs of preparing the engineering study, the Commission authorized
Eagle Water to implement a rate surcharge. Order No. 29969. The surcharge was based upon
the legal and engineering fees necessary to prepare the Engineering Report and to file the
accompanying application. The authorized surcharge was designed to recover $112 414.
After the Commission issued its surcharge Order, Eagle Water and the Department of
Environmental Quality (DEQ) signed a "Consent Order " which, among other issues, required
Eagle Water to submit the Engineering Report to DEQ for approval. DEQ directed that Eagle
Water submit a preliminary engineering report for review and comment, followed by the
preparation of the final report.
Although the Commission directed that the Engineering Report should be completed
as soon as possible, its submission to the Commission was significantly delayed. Eagle Water
attributed the delay to various issues including: the health of its primary engineer; the need to
engage another engineering firm; changing DEQ system requirements; and the lengthy DEQ
review process. Order Nos. 30213 30266, 30331. The Company also reported that the cost of
preparing the Engineering Report greatly exceeded the amount authorized by the Commission.
Order Nos. 30266 at 2, 30331 at 2.
B. The Present Application
In the present Application, Eagle Water requests authority to recover a total of
$201 434 in expensed and anticipated fees, and to reimburse other accounts. The Company
requested authority to recover this amount from two sources. First, Eagle Water requested that it
be allowed to take possession of revenues in the surcharge account in excess of its previously
authorized collection of $112,414. Order No. 30430 at 4. Second, the Company requested
authority to borrow approximately $110 000 "to cover the (remaining balance of the)
professional fees.Id., citing Application at ~ 24. To payoff this bank loan, Eagle Water
proposes that the existing surcharge be continued and the bank 10an would be paid off with
proceeds from the continued surcharge. Id.
C. The Cash Flow Order
In Order No. 30440 issued September 21 , 2007, the Commission granted Eagle
Water authority to borrow up to $110 000. The Company was also granted authority to access
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30605
the existing surcharge account to pay for this bank loan conditioned upon the Commission
subsequent review to determine the reasonableness and prudency of the proposed professional
fees for preparation of the Engineering Report and the accompanying Application. The
Commission found that "Eagle Water may be required to reimburse the surcharge account for
any disallowed amounts paid from that account. If the outstanding loan covers disallowed costs
Eagle Water will be required to pay these amounts directly to the bank." Order No. 30440 at 3.
THE CURRENT STATUS
In Order No. 30430, the Commission set a deadline for intervention. No person
petitioned for intervention. The Order also directed that once the deadline for intervention
passed, the parties should informally convene to devise a recommended schedule to process the
remaining phase of this case. The Staff and the Company met on July 24 , 2008. The parties
recommend that the proposed recovery of the professional fees be processed under Modified
Procedure. Shortly after the Commission issues its Notice of Modified Procedure, the Staff is
prepared to file its comments. Consequently, this would give the Company approximately three
weeks to file its comments in support of its Application and in response to the Staff s comments.
Through June 30, 2008 , the surcharge has collected approximately $304 000. The
Company was previously authorized to recover $112 414 and it has an outstanding request for an
additional $201 434. The available balance in the surcharge account is $191 586 ($304 000 -
112,414). After completion of this proceeding, the parties anticipate that Eagle Water will file a
new application seeking to recover new expenses for the cost of two new wells, a new booster
pump, and the costs of interconnecting with the City of Eagle (Case No. EAG-08-01).
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure IDAPA 31.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission within
twenty-one (21) days from the service date of this Notice. The comment must contain a
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30605
statement of reasons supporting the comment. Persons desiring a hearing must specifically
request a hearing in their written comments. Written comments concerning this Application
shall be mailed to the Commission and Eagle Water at the addresses reflected below:
Commission Secretary Robert V. DeShazo, Jr.
Idaho Public Utilities Commission Eagle Water Company, Inc.PO Box 83720 172 W. State Street
Boise, ID 83720-0074 Eagle , ID 83616
Street Address for Express Mail:Molly O'Leary
Richardson & O'Leary PLLC
PO Box 7218
Boise, ID 83707
Mail: molly~richardsonandoleary.com
472 W. Washington Street
Boise, ID 83702-5918
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to Eagle Water at the e-mail address listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application and Engineering Report have
been filed with the Commission and are available for public inspection during regular business
hours at the Commission offices. The Application and Engineering Report (except for the
Appendices) are available on the Commission s website at www.puc.idaho.gov under "File
Room" and then "Water Cases.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction under this
matter under Title 61 of the Idaho Code, and specifically Idaho Code ~~ 61-302, 61-307, 61-502
61-503 , 61-507 , and 61-622. The Commission may enter any final Order consistent with its
authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30605
ORDER
IT IS HEREBY ORDERED that this Application be processed under Modified
Procedure, IDAPA 31.01.01.201-204. The Commission Staff shall file its comments in this
proceeding within three days ofthe service date of this Order.
IT IS FURTHER ORDERED that Eagle Water Company and other persons
interested in submitting written comments in this matter do so within 21 days of the service date
of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this \tM"
day of July 2008.
/~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:EAG-07-01 dh3
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30605