09192001.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
TONYA CLARK
DON HOWELL
LYNN ANDERSON
DAVE SCHUNKE
MICHAEL FUSS
RANDY LOBB
ALDEN HOLM
GENE FADNESS
WORKING FILE
FROM:
DATE:
SEPTEMBER 19, 2001 RE: CASE NO. FLS-W-01-01 (Falls Water)
APPLICATION FOR INCREASE IN RATES AND CHARGES

On July 9, 2001, Falls Water Company, Inc. (Falls Water) filed an Application with the Idaho Public Utilities Commission (Commission) in Case No. FLS-W-01-1 requesting authorization to increase its rates and charges for water service.
Falls Water requests a 38% increase in water rates as follows:
Increase flat rate residential customer monthly charges from $10.00 to $13.90.

Increase the residential metered rate from $10.00 for the first 20,000 gallons and $.30 per 1,000 gallons in excess of 20,000 gallons to $12.65 for the first 10,000 gallons and $.37 per 1,000 gallons in excess of 10,000 gallons.

Increase the commercial metered rate from $10.00 for the first 20,000 gallons and $.30 per 1,000 gallons in excess of 20,000 gallons to $13.25 for the first 10,000 gallons and $.37 per 1,000 gallons in excess of 10,000 gallons.

Falls Water also proposes to:

Eliminate the Metered Commercial Service Seasonally Read rate.

Establish tiered hook-up fees based on the size of the water meter installed.

1. Standard ¾" meter hook-up fee will remain unchanged at $500

2. Proposed 1" meter hook-up fee of $600

3. Proposed 1½" meter hook-up fee of $825

4. Proposed 2" meter hook-up fee of $900

Increase the reconnection fees from $14.00 during office hours to $20.00 during office hours and from $28.00 for after hours to $40.00 for after hours.

Institute a service charge for delinquent accounts in the amount 1.5% per month with a $.50 minimum.

Except for these charges, the tariffs on file with the Commission will remain the same.

Falls Water requests that its requested rate changes take effect as soon as possible but at the beginning of a calendar month to avoid partial month increases. Even with the increases proposed, Falls Water contends that its rates would be among the lowest for water service in Idaho. The Company requests that this Application be considered by the Commission under the rules of Modified Procedure, i.e., by written submission rather than by hearing. Reference IDAPA 31.01.01.201-204.
Falls Water states that the need for filing this Application has arisen because it is currently operating at a loss. The requested increase in charges will result in revenue sufficient to pay current operating expenses and provide a small return that will be held by the corporation for system improvements and replacement. Falls Water Company, Inc. is an Idaho not-for-profit corporation and is therefore not authorized to make any distributions of return on investment to owners, but can utilize retained earnings for expansion and improvements.
Falls Water notes that it has not made application for a rate increase since May 1997. At that time, an increase of 21.64% was granted. Reference Case No. FLS-W-97-1, Order No. 27110. Falls Water notes that the age of some of its system means more frequent repairs and has caused this "inevitable application."

Included with the Company’s filing are the following attachments, schedules and proposed tariffs:
1. Copy of customer notification of this filing.
2. Three year balance sheet.
3. Three year income statement.
4. Calculation of rate base.
5. Comparison of income at present rates and income at proposed rates.
6. Explanation of rate calculations.
7. Proposed tariff schedules in legislative format.

Commission Decision
On July 31, 2001, the Commission issued a Notice of Application in Case No. FLSW-01-01. Staff was directed to recommend further scheduling following its audit of Company books. Staff represents that its audit is now complete. While Staff cannot support the percentage increase in rates requested by the Company, Staff recommends that the matter be processed pursuant to Modified Procedure (i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204) and that the Company be given the opportunity to file reply comments. Does the Commission agree with Staff’s proposed procedure?

vld/M:FLS-W-01-01_sw

DECISION MEMORANDUM 1