20090812notice_of_public_workshop_order_no_30878.pdf

Office of the Secretary
Service Date
August 12 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-09-
) NOTICE OF PUBLIC WORKSHOP
) NOTICE OF
) MODIFIED PROCEDURE
) ORDER NO. 30878
On January 22, 2009, Eagle Water Company filed an Application to implement a
surcharge on customers' water usage in excess of 600 cubic feet per month. The Company also
requested permission to access existing funds in its surcharge account. The new surcharge and
the balance remaining in the previous surcharge account would be used by Eagle Water to defray
the costs of several capital improvement projects and expenses totaling more than $1.6 million.
Application at 3-5. The Company stated in its Application that the surcharge will be subiect to
refund if the requested expenses are "not ultimately approved by the Commission for Surcharge
recovery.Id at 7 (emphasis added). Eagle Water requested that its Application be processed
via Modified Procedure.
On February 23, 2009, the Commission issued Order No. 30734 granting the
Company s request for surcharge, subject to refund. The Commission also set a deadline for
interested persons to intervene in this case.No Petitions to Intervene were filed.Staff
completed its review of the Application and discussed with the Company how this case should
be processed. The Company and the Staff recommend that the case be processed under Modified
Procedure. We agree and issue this Order accordingly.
BACKGROUND
A. The Application
In its Application, Eagle Water sought to recover the costs of constructing several
capital projects that are either complete or under construction. In addition, the Company
requested recovery of its $10 000 per month "tie-" expense with the City of Eagle , $600 in
1 In Case No. EAG-08-, the Company agreed to pay the City of Eagle $10 000 per month so that the utility
could serve the Floating Feather Mobile Home Park.
NOTICE OF PUBLIC WORKSHOP
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30878
accounting fees, and approximately $37 500 in legal fees. As set out in the Application, the
projected costs of the capital improvements and other expenses are outlined below.
Capital Improvements Completed
Well No.
Floating Feather Pressure Reducing Valve
Tie-In to City of Eagle
Rebuild Well No.
Sub Total
Cost
$605 988
$ 43 630
$ 22 347
$ 59,755
$731 720
Capital Improvements in Pro2;ress
Main Booster Station (Motor & Generator)
Well No.
Sub Total
Cost
$175 100
$636.520
$811 620
Expenses
Legal & Accounting Fees
Prior Surcharge Application Legal Fees
Engineering Report Legal Fees
Surcharge Extension Application Legal Fees
Surcharge Extension Accounting Fees
Legal & Accounting Fees Sub Total
Eagle City Tie-In Expense ($IO 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 $1 543 340 and the total for expenses
is $98 108. Application at 2-
To defray the costs set out above, the Company proposed to borrow $995 500 from
the Idaho Banking Company. According to the proposed terms of the bank loan, Eagle Water
will borrow $995 500 at 6.75% over a term of seven years. Application, Exh. E. To repay the
loan, the Company proposed to implement an immediate surcharge of 48.075% for customer
usage above 600 cubic feet per month. In addition to the surcharge, the Company also requested
permission to access the remaining balance in the surcharge account. At the time of the
Application, the Company reported the current balance in the surcharge account was
approximately $218 000. Application at n.3. The Company proposed to use these surcharge
account funds to complete work on the main booster pump and Well No.8. Id 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.
NOTICE OF PUBLIC WORKSHOP
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30878
Even with the surcharge, Eagle Water asserted that its overall rates "would remain
well below those of the City of Eagle and United Water of Idaho." Application, Exh. H. Eagle
Water maintained that an immediate surcharge (subject to refund) is necessary to ease its cash
flow restrictions "brought about by the need to complete Well No.7 and the City of Eagle tie-
in order to satisfy DEQ regulatory requirements and lift the sanitary restrictions moratorium.
Application at 7. The current constriction of the Company s cash flow severely limits Eagle
Water s "ability to meet current demands for payment of other capital improvements that are
underway.Id The Company requested that the surcharge take immediate effect.
B. The Commission s Prior Order
In Order No. 30734 issued February 23, 2009, the Commission allowed Eagle Water
to implement its surcharge subject to refund. The Commission observed that because the
surcharge is subject to refund
, "
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." Order No. 30734 at
The Commission also found it was reasonable to allow the Company to execute the
bank loan and access the remaining balance in the surcharge account. The Commission observed
that completing Well No.8 would allow Eagle Water to save $10 000 per month by eliminating
the tie-in expense. The surcharge would provide the revenue to pay back the loan. Id The
Commission expressly reserved the right to subsequently determine the reasonableness and
prudency of the capital costs and expenses. Id at 6.
Pursuant to our Order No. 30734, the Company and the Staff met informally
develop a schedule to process this case. The parties recommended that the case be processed
under Modified Procedure and that the Commission schedule a public workshop. Given the
agreement between the parties, we adopt the proposed schedule as set out in greater detail below.
NOTICE OF PUBLIC WORKSHOP
YOU ARE HEREBY NOTIFIED that the Commission Staff will hold a public
workshop for customers of Eagle Water Company. The purpose of the public workshop is to
provide customers with an overview of the Company s Application and advise customers how to
participate in the process. At the workshop customers will also have an opportunity to ask
questions of the Staff regarding the Company s Application. Representatives of the Company
may also be available. The Staff will hold its public workshop AT 7:00 P.M. ON
NOTICE OF PUBLIC WORKSHOP
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30878
WEDNESDAY. AUGUST 26. 2009. AT THE EAGLE CITY HALL. 600 EAST CIVIC
LANE. EAGLE. IDAHO
YOU ARE FURTHER NOTIFIED that the Application has been filed with the
Commission and is available for public inspection during regular business hours at the
Commission offices. The Application is also available on the Commission s web site at
www.puc.idaho.gov by clicking on "File Room" and then "Water Cases.
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 no later
than August 27, 2009. The comment must contain a 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
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Robert V. DeShazo, Jr.
Eagle Water Company
PO Box 455
Eagle, ID 83616
Street Address for Express Mail:Molly O'Leary
Richardson & 0' 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.NOTICE OF PUBLIC WORKSHOP
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30878
YOU ARE FURTHER NOTIFIED that Eagle Water may file reply comments no
later than September 18, 2009.
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 Commission has jurisdiction over this
matter under Title 61 of the Idaho Code, and specifically Idaho Code 99 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 this Application be processed under Modified
Procedure, IDAP A 31.01.01.201-204. Persons interested in submitting written comments in this
matter should do so no later than August 27 , 2009. If necessary, Eagle Water may file reply
comments no later than September 18 , 2009.
IT IS FURTHER ORDERED that the parties conform to the schedule set out in the
body ofthis Order.
IT IS FURTHER ORDERED that the parties serve any further discovery and their
comments upon each other by electronic mail. IDAPA 31.01.01.063.
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 currently 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 will be required
to pay these amounts directly to the bank.
NOTICE OF PUBLIC WORKSHOP
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30878
DONE by Order ofthe Idaho Public Utilities Commission at Boise, Idaho this /J.. fA
day of August 2009.
~/.~
JI . KEM TO , PRESIDENT
ARSHA H. SMITH, COMMISSIONER
~~
MACK A. REDFORD, COM SSIONER
ATTEST:
€ttPD. Jewel
Co mission Secretary
bls/O:EAG-09-01 dh2
NOTICE OF PUBLIC WORKSHOP
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30878