20181214Motion for Approval.pdf

Dtllr-'tr1\/i:[)l\L_t-J"-t'. i*vBRANDON KARPEN, ISB No. 7956
Deputy Attomey General
State of Idaho
Idaho Public Utilities Commission Staff
P.O. Box 83720
Boise, Idaho 83720-007 4
Telephone: [phone]
Facsimile: [phone]
brandon. karpen@puc. idaho. eov
IN THE MATTER OF EAGLE WATER
COMPANY'S APPLICATION FOR
AUTHORITY TO IMPLEMENT A
CUSTOMER SURCHARGE
il'l l0: l+9
CASE NO. EAG-W-T5-01
MOTION FOR APPROVAL OF
STIPULATION AND SETTLEMENT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
The Idaho Public Utilities Commission Staff hereby moves the Commission for an Order
accepting the Settlement Stipulation filed herewith. See Commission Rules 56,276 and274.
l. On November 10, 2015, Eagle Water Company filed an Application seeking
authority to implement an immediate and temporary surcharge of 53.82% on customers' water
usage in excess of 600 cubic feet per month. The Company also requested permission to access
funds in an existing surcharge account.
2. The Commission suspended the proposed effective date several times, and
eventually stayed the application indefinitely. See OrderNos. 33478,33509,33567, and 3391l.
3. After numerous audits, and extensive settlement discussions, the Staff and the
Company (the only Parties appearing in the case), agreed to resolve and settle all issues in the case.
A copy of the signed Stipulation evidencing that settlement is attached to this motion as
Attachment l.
MOTION FOR APPROVAL OF STIPULATION AND SETTLEMENT- I
ili--^ I !i: I-'., I 'i
4. The Parties respectfully request that the Commission consider the Motion, the
Stipulation, and the comments in support of the Stipulation to be filed at a later time.
5. As noted in the Stipulation, the Parties agree that the agreement is in the public
interest and that all of its terms and conditions are fair, just and reasonable.
NOW, THEREFORE, the Parties respectfully request that the Commission issue an order
in Case No. EAG-W-I5-01 granting this Motion and accepting the Stipulation (Attachment l), in
its entirety, without material change or condition.
Respectfully submitted this 14th day of December,20l8
A GENERAL
General
Attomey for the Idaho Public Utilities
Commission Staff
I:\Lega|\WATER\EAG-W-15-01\EAGWI 501_ Mtn to approve settlement_bk.docx
MOTION FOR APPROVAL OF STIPULATION AND SETTLEMENT- 2
BRAND0N KARPEN, ISB No. 7956
Deputy Attorney General
P.O. Box 83720
Boise, Idaho 83720-0074
Telephone: [phone]
Atton*y for Conunission Stcrff
M0LLY O'LEARY, ISB No.4996
BizCounselor @ Law, PLLC
1775 W. State Strcet #150
Boise, Idaho 877A2
Telephone: [phone] I 06
Attonrcyfor Eagle Water Computl,, lttc,
IN THN MATTBR OT'NAGLE WATER
COMPANY'S APPTICATION TOR
AUTHORITY TO IMPLTMENT A
CUSTOMER SURCHANGT
BETORE THE INAHO PUBLIC UTILITIXS COMMISSION
)
)
)
)
)
cAsE NO. BAG-W-15-01
JOINT SET?LBMBNT
STIPULATION
This Settlement Stipulation is entered into by Eagle Water Company and the Staff of
the ldaho Public Utilities Commission (collectively, "Parties"). The Partics, by and through their
counsel of record, hereby stipulate and agree to the following:
INTRODUCTION
The Parties rgree this Stipulation repr€sent$ a fair, just and reasonable compromise of
the issues raised in Eagle Water's Application for authority to implemenl a customer surcharge,
and beyond the issues raised in rhe Company's Application to recognize the needs and conditions
of the Company. The resulting s€ttlement will not increase ratcs or charges to customers, and is
in the public interest" The Pnrties helieve the Stipulation and its acceptance by the Commission
rcpresents a reasonable resolution of the systemic issues identified in this matter. The Parties,
therefore, recommend that the Commission, in accordance with Rule 274, apprave the
Stipulation and ail of its terms and conditions without material change or condition.
Attachment 1
EAG-W-I5-01
JOTNT SETTLEMENT STTPULATION I
BACKGROUND
l. On November 10,2015, Eagle Water filed an Application seeking authority to
implement a 53.829o surcharge on customers' water usage. Eagle Water requested that its
Application be processed via Modified Procedure and that the surcharge become effective in
approximately 30 days. On December 3, 2015, the Commission issued Order No. 33430
suspending the proposed effective date for a period of 90 days, until March 10, 2016.
2. On March 4,?416, with Eagle Water's concurrence, Staff liled a motion to further
suspend the proposed eflective date in this matter for an additional 90 days, untilJune 8,2016.
The Commission approved the Motion in Order No. 33478.
3. On April 75,2016, pursuant ta ldaho Code $ 6l-622(4), the parties jointly
stipulated to again suspend thc effective date in this matter until September 6, 2016. The parties
further agreed that by July l, 2016, Eagle Water would inform Staff of its position on settlement,
or if the Company would rather set a schedule for modified procedure for the Application. The
Commission approved this request in Order No. 33509.
4. Following the stipulated suspensionsr on August 10, 2016, by agreement, the the
case was stayed until a full resolution of the issues was reached, or dismissal was requested by
Staff. See Order Nos. 33567, 33836, and 3391 l.
5. On December 4, 2018, the Company and Staff agreed to a full settlement.
TERMS OF THE STIPULATION
6. Fair Resolution. The setllement is reached as a fair resolution to several disputed
issues belween the parties, recognizing that no party was likely to prevail on every issue at
hearing. The settlcment re.sults in a significant change to the Company's financial books through
the allowance of a one-time accounting adjustment. Customer rates will remain the same. The
Parties consider this a one-time accounting correction-an atypical process unique to the
Company's circumstances. This is not a reward for the Company, but a measure to ensure
stability for the Company and its customers based on reasonable evidence.
7. Negative Ratc Base. The parties agree that the Company has accumulated a
negative rate base through years of improperly booking capital expenditures, xnd providing
inadequate documentation of plant installation. The negative rate base has accumulated to the
point ol creating unsound ratemaking requests. The parties agree to a one time elimination of
negative base in 2008 by reducing $1,236,375 in year 2008 contribudons in aid of construction.
JOTNT SETTLEMENT STIPULATION 7,
Year 2008 is used for the purpose of settlement due to the construction of well number 8 during
that year. Until now, well 8 has only been partially capitalized. The settlement capitalizes all
documented well 8 costs as plant in service.
8. Plant. The plant in service referenced in the Company's Application will be
capitalized, so long as the plant has not been previously capitalized and is supported by invoices
and proper documentation. This includes plant, equipment, materials, and labor, as specified in
The Company shall be allowed to capitalize a lSVo labor adder for this plant to reflect the
Company's undocumented labor costs. Coing forward, the Company must properly document
and capitalize actual labor costs.
9. Other Plant. The parties agree to allow capitalization of certain plant in service
items put in service 2009-2015, such as meters, rvells, and repairs that should have been
capitalized previously by the company, but wcre found by Staff to be improperly booked by the
Company.
10. Depreciation. Allow the Company to depreciate this newly capitalized plant and
begin depreciation as if placed in service, allowing for depreciation of the full amount.
ll. Meter Charges. The parties agree to allow the Company (o continue to collect a
$245 meter charge. The Company agrees, that as a condition to allowing this charge, thet it will
properly capitalize the meters and installation cost into plant-in-service in order to prevent a
reoccurrence of negative ratc base. Labor will bc properly allocated between capitalized and
expensed amounts. The Company acknowledges the meter charge may not change without prior
Commission approval.
12. Hookup charges/Line of credit. The Company will discontinue the $100 and $500
hookup charges it has been collecting per Tariff Schedule No. 5. The balance o[ the accounts that
contain the hookup charges ($365,580, as of July 12, 2018) will be allowed to remain in the
surcharge account, and going forward be used as a line-of-credit (funds to be used and repaid).
The parties agree that the Company will deposit $45,288 of overearnings annually in to the
surcharge line-of-credit account beginning in 2016. This arrangement shall remain until the
Company requests and the Commission approves different treatment.
13. Rent. The parties agree to allow the Company include in its revenue requirement
office rent of $950 per month. While Staff found that the Company had improperly booked its
JOTNT SETTLEMENT STIPULATION 3
ofFrce space rent in the past, the parties agree that $950 per month for the water company is a
reasonable compromise, and represents a proper market value.
14. Reallocation of costs. The Parties agree to Staff adjustments to the Company's
revenue requirement for reallocation of costs between the Company and the owners' comingled
construction business. Costs were added and removed to properly reflect the correct business
expenses and costs.
15. Water Testing. The parties agree to allow the Company to increase the revenue
requirement for water testing costs to better refiect the normalized costs over a 9'year testing
cycle.
16. Accounting and reporting. The Company aggress that it will provide Staff with
quarterly reports. Staff will conduct routine audits to ensure propcr booking of expenditures.
l7. Successor in Interest. Any successor in interest to Eagle Water shall comply rvith
all terms of this agreement
CUSTOMER RATES
18. Customer Riltes. The parties agree that the Company's water rates will be
unchanged as a result of this agreement.
19. Tariffs. The Company agrees to work with Staff to updates the Company's tariff
language.
FURTHER COOPERATION
2A. Supporting Commenls. Ths Parties will lile written comments supporting this
Stipulation within 2l days oI the Commission providing notice of the proposed Stipulation.
21. Just and Reasonable: The Parties agree that this Stipulation is in the public's
interest and that all of its terms and conditions are fair, just and reasonable. The Parties agree to
use their best efforts to obtain Commission approval of the Stipulation.
22. No Acknowledgement. No Party shall be bound, benefited or prejudiced by any
position asserted in the negotiation of this Stipulation, except to the extent expressly stated
herein, nor shall this Stipulation be construed as a waiver of the rights of any Party unless such
rights are expressly waivcd herein. Execution of this Stipulation shall not be deemed to
constitute an acknowledgement by any Party of the validity or invalidity of any particular
method, theory or principle of regulation or cost recovery. No Party shall be deemed to have
agreed that any method, theory or principle of regulation or cost recoyery employed in arriving at
JOINT SET'TLEMENT STIPULATION 4
this Stipulation is appropriate for resolving any issues in any other procceding in the furure. No
findings of fact or conclusion of larv other than those statEd herein shall be deemed to be implicit
in this Stipulation.
23. Comrnission Approval. The obligations of the Parties under this Stipulation are
subjcct to the Commission's approval of this Stipulation in accordance rvith kF 274-276.
24. Confidentiality. The Parties agree that this Stipulation represents a compromise of
the positions of the Parties. Therefore , other than any testimony filed in supporr of the approval
of this Stipulation, and except to the extent necessary for a Parry to explain before the
Commission its own staternents and positions rvitlr rcspect to the Stipulation, as directed by RP
272, all statemenls mads and positions taken in negotiations relating to this Stipulation shall be
confidential and rvill not be admissible in evidence in this or any othe r proceeding.
25. Best Efforts. The Parties submit this Stipulation to the Cornrnission and
recommend approval in its entirely. Parties shall support this Stipulation belore the Commission,
and no Pa(y shall appeal a Commission Order approving the Stipulation or an issue resolved by
the Stipulation. lf this Stipulation is challenged by any person not a party to the Stipulation, the
Parties to this Stipulation reserve the right to file testimony, cross-examine rvitnesses, and put on
such case, as they deem appropriate to respond fully to the issues presented, including the right
to raise issues that are incorporated in the settlernents ernbodied in this Stipulation.
Nolwithstanding this reservation of rights, thc Parties 10 this Stipulation agree that they will
continue to support the Commission's adoption of the tcrms of this Stipulation.
26. Counterparts. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
DATED thisl0'tay of December 2018 DATED this?{&y of December 2018.
.]rnni, &"Udt
Teni Carlock, Utilities Division Administrator
Irlaln Public Utilities Contmissiotr StalJ'Eugle lVater Conryany, lnc.
Robert V r., President
JOINT SET'TLEMENT STIPULATION 5