20070824Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER RED FO RD
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL
DATE:AUGUST 10,2007
SUBJECT:EAGLE WATER COMP ANY'ENGINEERING REPORT AND
APPLICATION TO CONTINUE THE EXISTING SURCHARGE, CASE
NO. EAG-07-
On August 6, 2007 , Eagle Water Company filed its long awaited Engineering Report
pursuant to several previously issued Commission Orders. The purpose of the Engineering
Report was to identify infrastructure improvements necessary to serve Eagle Water and its
customers. The Company was directed to file an application seeking approval to begin
construction on the necessary infrastructure improvements and to propose a new rate design to
recover the costs of the identified improvements and make other rate changes as necessary.
Order No. 30331 at 1.
In its Application Eagle Water reports that on July 10, 2007 , the Eagle City Council
approved an Asset Purchase Agreement which would allow the City to purchase Eagle Water.
Pursuant to its Purchase Agreement, the parties anticipate that the transaction will close in
November 2007. Application at ~ 21.
THE APPLICATION
Although the sale of the Company is pending, Eagle Water makes several requests in
its Application. First, the Company seeks authority to recover additional engineering, legal and
accounting fees of$201,434. Application at ~ 23. The Company s fee request is broken down as
follows:
DECISION MEMORANDUM
Type of Fee Amount Requested
Engineering $138 653.
Legal 842.
($11 334 paid from other sources)
Accounting 862.
TOTAL $167 357.50*
* Plus $34 076 to reimburse other accounts, for a total of $201 ,433.
The Application indicates that Eagle Water has thus far paid $102 358 (from all sources) in
engineering, legal and accounting fees. Application ~~ 14-16. Some of these fees were paid
from sources other than the existing surcharge account.
Second, the present surcharge account has a balance of approximately $91 300.
Eagle Water requests that it be allowed to take possession of this existing balance to pay for the
outstanding fees. Id. at ~ 24. Third, after obtaining access to the $91 300, Eagle Water requests
authority to borrow approximately $110 000 "to cover the (remaining balance of the)
professional fees.Id. Finally, the Company requests that the existing surcharge be continued
and the surcharge would presumably be sufficient to defray the $110 000 bank loan over two
years. The Company requests that this Application be processed under Modified Procedure.
ST AFF RECOMMENDATION
Given the voluminous nature of the Engineering Report, the Staff has not had
sufficient time to review the Report and Application. Consequently, the Staff is not in a position
to recommend whether this case be processed under Modified Procedure. However, Staff
believes that the Commission may issue a Notice of Application and a deadline for intervention.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and a deadline for
intervention?
Don Howell
bls/M:EAG-O7-01 dh
DECISION MEMORANDUM