20090223notice_of_application_order_no_30734.pdf

Offce of the Secretar
Service Date
Februar 23, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF EAGLE WATER
COMPANY'S APPLICATION FOR
AUTHORITY TO IMPLEMENT A
CUSTOMER SURCHARGE
)
) CASE NO. EAG-W-09-01
)
) NOTICE OF APPLICATION
)
) NOTICE OF DEADLINE
) FOR INTERVENTION
)
) ORDER NO. 30734
On Januar 22, 2009, Eagle Water Company fied an Application to implement an
immediate surcharge on customers' water usage in excess of 600 cubic feet per month. The
Company also requests permission to access existing funds in its surcharge account. The new
surcharge and the existing balance in the surcharge account would be used by Eagle Water to
defray the costs of several large capital improvement projects and to pay for outstanding legal
and accounting fees. Application at 3-5. The Company states in its Application that the
surcharge wil be subject to refud if the requested expenses are "not ultimately approved by the
Commission for Surcharge recovery." ¡d. at 7 (emphasis added). Eagle Water requests that its
Application be processed via Modified Procedure.
BACKGROUND
In the Company's last case, the Commission allowed Eagle Water to recover
$146,635 from the existing surcharge account to defray the costs of preparing its Engineering
Report. Order No. 30654 at 12. After allowing Eagle Water to recover its prudent professional
fees and expenses, the Commission ordered the Company's rate surcharge to be terminated.
Order No. 30667 at 5-6. The Commission calculated that after subtracting the allowed
engineering costs, the surcharge account would have a balance (as of October 30, 2008) of
approximately $120,000. ¡d. at 6. On reconsideration, Eagle Water requested that the surcharge
be continued so it could recover the costs of new capital improvements and its monthly
interconnection fee with the City of Eagle to serve the Floating Feather Mobile Home Park (Case
No. EAG-W-08-01).
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 1
In denying the Company's Petition for Reconsideration, the Commission found that
the Company's request to recover the costs of its capital projects was "a new matter and outside
the scope of reconsideration in (the Engineering fees) case." Order No. 30667 at 5. The
Commission stated that the appropriate course of action was for Eagle Water "to fie an
application seeking recovery of its capital projects." ¡d. at 7. The Company's present
Application is its request to recover the costs of its capital projects and other expenses.
THE APPLICATION
YOU ARE HEREBY NOTIFIED that Eagle Water seeks to recover the costs of
constructing several capital projects that are either complete or under construction. In addition,
the Company also seeks to recover its $10,000 per month "tie-in" expense with the City of Eagle,
$600 in accounting fees, and approximately $37,500 in legal fees. The costs of the capital
improvements and other expenses are outlined below.
Capital Improvements Completed
Well NO.7
Floating Feather Pressure Reducing Valve
Tie- In to City of Eagle
Rebuild Well NO.4
Sub Total
Cost
$605,988
$ 43,630
$ 12,910
$ 59,755
$722,303
Capital Improvements in Progress
Main Booster Station (Motor & Generator)
Well NO.8
Sub Total
Cost
$175,100
$636,520
$811,620
Expenses
Legal & Accounting Fees
Prior Surcharge Application Legal Fees
Engineering Report Legal Fees
Surcharge Extension Application Legal Fees
Surcharge Extension Accounting Fees
Legal & Accounting Fees Sub Total
Eagle City Tie-In Expense ($1O,OOO/month)
Sub Total
Cost
$ 6,048
$16,554
$14,906
$ 600
$38,108
$60,000
$98,108
The combined total for the capital improvement projects is $1,533,923 and the total for expenses
is $98,108. Application at 2-5.
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 2
YOU ARE FURTHER NOTIFIED that to defray the costs set out above, the
Company proposes to borrow $995,500 from the Idaho Baning Company. According to the
proposed terms of the ban loan, Eagle Water wil borrow $995,500 at 6.75% over a term of
seven years. Application, Exh. E. To repay the loan, the Company proposes to implement an
immediate surcharge of 48.075% for usage above 600 cubic feet per month. In addition to the
surcharge, the Company also seeks permission to access the remaining balance in the surcharge
account. The Company reports the current balance in the surcharge account is approximately
$218,000. Application at n.3. The Company proposes to use these surcharge account fuds to
complete work on the main booster pump and Well No.8. ¡d. at 6. Completion of Well No.8
would allow the Company to terminate its tie-in agreement with the City of Eagle, thereby
saving $10,000 per month.
YOU ARE FURTHER NOTIFIED that even if the surcharge is approved, Eagle
Water asserts that its overall rates "would remain well below those of the City of Eagle and
United Water of Idaho." Application, Exh. H. Eagle Water maintains that an immediate
surcharge (subject to refund) is necessar to ease its cash flow restrictions "brought about by the
need to complete Well NO.7 and the City of Eagle tie-in in order to satisfy DEQ regulatory
requirements and lift the sanitary restrictions moratorium." Application at 7. The curent
constriction of the Company's cash flow severely limits Eagle Water's "abilty to meet curent
demands for payment of other capital improvements that are underway." ¡d. The Company
requests that the surcharge take immediate effect. ¡d.
YOU ARE FURTHER NOTIFIED that the Application has been filed with the
Commission and is available for public inspection durng regular business hours at the
Commission offices. The Application is also available on the Commission's Website at
ww.puc.idaho.gov under the "File Room" and then "Water Cases."
STAFF REVIEW
YOU ARE FURTHER NOTIFIED that after reviewing the Company's Application,
the Commission Staff does not oppose the Company's request to implement the requested
surcharge (subject to refund) effective Februar 23, 2009. Although Staff has not completed a
detailed audit of the Company's capital projects, Eagle Water has provided suffcient evidence
that it has completed several costly capital projects. Staff believes that ratepayers are sufficiently
protected by the Company's offer to make the surcharge subject to refud.
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 3
YOU ARE FURTHER NOTIFIED that Staff reports that it appears the Company is
completing its capital improvements in compliance with its Engineering Report approved by
DEQ. Staff also agrees with the Company's plans to use the available fuds in the existing
surcharge account to complete work on the main booster pump and Well NO.8. Completing
Well NO.8 would allow the Company to terminate its tie-in agreement with the City of Eagle for
a savings of$10,000 per month.
YOU ARE FURTHER NOTIFIED that Staff recommends that the Commission
authorize Eagle Water to borrow $995,500 from the ban. Staff also suggests that Eagle Water
be required to provide the final draft loan documents with the ban for Staffs review. Copies of
all executed agreements for the loan should be filed with the Commission.
YOU ARE FURTHER NOTIFIED that Staff believes this case is appropriate for
processing under the Commission's rules of Modified Procedure. Staff recommends that the
Commission issue a Notice of Application and set a deadline for intervention. The paries can
then meet informally to establish a schedule to process this case via Modified Procedure.
DISCUSSION AND FINDINGS
After reviewing the Company's Application and Staffs recommendations, we find it
is reasonable to allow Eagle Water Company to implement its proposed 48.075% surcharge
(subject to refud) for customers who consume more than 600 cubic feet of water per month.
Because the surcharge is subject to refud, we believe ratepayers are protected until the
Commission has completed its review of the reasonableness and prudency of the Company's
capital costs and expenses set out in its Application. In paricular, "Eagle Water recognizes that
it wil be required to repay any . . . surcharge (collected) if the expense(s are) not ultimately
approved by the Commission for surcharge recovery." Application at 7. Staff further asserts
that the impact of the surcharge should be mitigated because the irrigation season has not staed.
Based upon representations made in the Application, we further find that the proceeds
from the surcharge account and the proposed bank loan will be used to pay for the costs of the
capital projects and expenses set out in the Application. We further find that the Company's
request to borrow $995,500 subject to those conditions recommended by Staff is for a lawfl
purpose, is within Eagle Water's corporate duties, and is generally compatible with the public
interest. The Commission specifically reserves its right to review the capital expenditures and
other expenses for reasonableness and prudency. The authority contained in this Order to
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 4
execute the loan agreement does not constitute a final decision regarding the reasonableness and
prudency of the Company's capital costs and expenses.
DEADLINE FOR INTERVENTION
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
for the purose of presenting evidence or paricipating as a pary must fie a Petition to Intervene
with the Commission pursuant to this Commission's Rules of Procedure 72 and 73, IDAPA
31.01.01.072 and -.073. Persons intending to paricipate at the prehearing must fie a Petition to
Intervene no later than 14 days from the service date of this Order. Persons seeking
intervenor status shall also provide the Commission Secretary with an electronic mail address to
facilitate fuher communications in this matter.
YOU ARE FURTHER NOTIFIED that persons desiring to present their views
without paries' rights of paricipation and cross-examination are not required to intervene and
may present their comments without prior notification to the Commission or to other paries.
YOU ARE FURTHER NOTIFIED that once the deadline for intervention has passed,
the Commission Secretar shall issue a Notice of Paries. The Notice of Parties shall assign
exhibit numbers to each pary in this proceeding.
YOU ARE FURTHER NOTIFIED that after the Notice of Paries is issued, the
Commission directs that the paries informally convene to devise a recommended schedule to
process this case. 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, IDAPA 31.01.01.201-204. The Commission notes that Modified Procedure and
written comments have proven to be an effective means to obtain public input and paricipation.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over 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.
ORDER
IT IS HEREBY ORDERED that Eagle Water Company's request to implement a
48.075% surcharge (subject to refud) for consumption above 600 cubic feet of water per month
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 5
is approved. The surcharge shall become effective Februar 23, 2009. Eagle Water is directed
to file conforming rate schedules to reflect the new surcharge and its effective date within seven
(7) days of this Order.
IT IS FURTHER ORDERED that persons desiring to intervene in this case for the
purose of presenting evidence or paricipating as a pary shall fie a Petition to Intervene with
the Commission no later than fourteen (14) days from the service date of this Order.
IT IS FURTHER ORDERED that after the Notice of Parties is issued, Staff shall
convene an informal prehearing conference with the parties to discuss the processing of this case
via Modified Procedure.
IT IS FURTHER ORDERED that Eagle Water Company's request for authority to
borrow up to $995,500 is granted. The Company is also granted authority to access the existing
and future surcharge account fuds subject to our subsequent review and final reconcilation as
proposed by Staff.
IT IS FURTHER ORDERED that Eagle Water provide the final draft loan documents
for Staffs review. The Company shall also fie copies of all executed agreements for the loan
with the Commission.
IT IS FURTHER ORDERED that the Commission specifically reserves the right to
determine the reasonableness and prudency of the capital costs and expenses for which the
Company curently seeks recovery. In the event the Commission subsequently disallows
recovery of any portion of the costs or expenses, the amount disallowed will be solely the
responsibility of Eagle Water Company and not recoverable from customers. Eagle Water may
be required to reimburse the surcharge account or customers for any disallowed amounts paid
from that account. If the outstanding loan covers disallowed costs, Eagle Water wil be required
to pay these amounts directly to the ban.
IT IS FURTHER ORDERED that nothing in this Order or any act or deed done or
performed in connection with this Order shall be construed to obligate the State of Idaho to pay
or guarantee in any maner whatsoever any loan authorized under this Order.
IT IS FURTHER ORDERED that the loan authorized in this Order is without
prejudice to the regulatory authority of the Commission with respect to rates, services, accounts
or determination of costs or any other matter which may become before the Commission
pursuant to its jurisdiction and authority as provided by law.
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 6
IT IS FURTHER ORDERED that the issuance of this Order does not constitute
acceptance of Eagle Water's materials accompanying the Application for any purpose other than
the issuance of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~3 ,.
day of Februar 2009.
~~
MACKA. REDF ~T
~u~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:EAG-W-09-01 dh
NOTICE OF APPLICATION
NOTICE OF DEADLINE FOR INTERVENTIONORDER NO. 30734 7