20060427final_order_no_30027.pdf

Office of the Secretary
Service Date
April 27 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF FALLS WATER COMPANY, INc. FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES
CASE NO. FLS-05-
ORDER NO. 30027
On November 4, 2005, Falls Water Company, Inc. (Falls Water; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting authority to
increase its revenue requirement by $258 364 (48.2%). In reply comments the Company reduced
its requested increase to $86 720 (15.29%). The Commission in this Order authorizes a revenue
requirement increase for Falls Water of $81 576 (14.39%). Under the rates we approve, the
average annual water bill for Falls Water customers will increase by 5.6% for metered residential
customers; 11.12% for metered commercial customers; 2.62% for multi-family residential
customers; and 15.26% for non-metered residential customers.
increase varies by class of customer and usage.
The net amount of actual
Falls Water is an Idaho corporation and holder of Certificate of Public Convenience
and Necessity No. 236. Falls Water provides water service in the Idaho Falls area to
approximately 2 225 metered residential customers, 57 multi-family residential customers, 41
metered commercial customers, and 585 flat rate residential customers.
The issues, comments and related Commission findings are set forth below. The
Commission has reviewed and considered the filings of record in Case No. FLS-05-
including the analysis, comments and recommendations of Commission Staff and the Company
related reply, the written comments of customers and the transcript of customer testimony. We
have also reviewed our prior rate Orders in Case Nos. FLS-97-1 (Order No. 27110); FLS-
01-1 (Order No. 28907); and FLS-03-1 (Order No. 29397). We continue to find it appropriate
to process this Application without a technical hearing based on the written filings of record.
Reference IDAPA 31.01.01.204.
Application
The Company maintains that an increase in rates is needed to keep up with the
increasing costs of operations and maintenance and to replace its aging infrastructure. Pursuant
ORDER NO. 30027
to prior Commission Orders, and as recognized by the Company in its Application, retained
earnings for Falls Water until changed by Commission Order are to be used only for capital
improvements, repair and replacement. Reference Order No. 28907, Case No. FLS-Ol-
Order No. 27110, Case No. FLS-97-The last general rate increase for Falls Water was
authorized by Commission Order No. 29397 in Case No. FLS-03-
Falls Water is seeking a reduction in the amount of water included in the minimum
billing charge, and proposes to create a summer and winter rate schedule for metered residential
customers. The Company proposes a new Schedule R-4 metered residential tariff for
subdivisions that have surface water rights and separate irrigation available for lawns and
landscaping. Extension of service to Schedule R-4 developments would be designed to provide
only potable domestic in-house water. Also proposed by the Company is a planned phase-out of
its flat rate and a field collection fee for past due balances.
Included with the Company s filing are balance sheets, income statements, rate base
calculations, explanation of rate calculations, a map of planned metering of mobile home estates
and proposed tariffs.
On November 28, 2005 , the Commission issued Notices of Application and
Intervention Deadline in Case No. FLS-05-1. The deadline for filing for intervention was
December 23 2005. No party requested intervention.
On January 25, 2006, Commission Staff conducted a public workshop for Falls
Water customers in Idaho Falls, Idaho. The public workshop offered the public and customers of
Falls Water an opportunity to meet with Commission Staff, ask questions and receive
information regarding Falls Water s Application.
On March 15 , 2006, the Commission conducted a public hearing in Idaho Falls to
obtain public testimony. In addition to the public workshops and hearing, the Commission also
provided an opportunity to submit written comments. Comments were filed by Commission
Staff and customers of Falls Water. The Company was given until March 24 to file reply
comments. The Company filed reply (rebuttal) comments and filed a correction to its comments
on March 29 2006.
ORDER NO. 30027
Revenue Requirement
Test Year, Capital Structure, Rate Base and Return on Equity
Falls Water in its initial Application requested authority to increase its revenue
requirement to $794 328 , an increase of $258 364 (48.2%).The Commission Staff in its
comments proposes adjustments to the Company requested test year revenues, expenses, rate
base, capital structure and overall rate of return (Staff Comments Attachment A (as amended)).
Staff recommends a revenue requirement increase of only $63 115 (11.13 %). The Company in
reply (rebuttal) comments amends its revenue increase request to $86 720 (15.29%).
Staff reviewed Falls Water s Application and performed a field audit of the
Company s financial books and records. Falls Water accepts Staff adjustments for known and
measurable changes to normalize 2005 test year operating revenues. Staff corrected Attachment
A shows total operating revenue as $567 027. Staff recommends changes to both the rate base
amounts and the revenues and expenses proposed by Falls Water. Staff proposes a total
calculated rate base for Falls Water of $579 926, a number acquiesced to by the Company in
reply comments. Staff continues to find a 12% return on equity to be reasonable for Falls Water.
Staff notes that the Company s capital structure has changed from being made up entirely of
common equity in 2002 to currently 71.8% long-term debt and 28.2% common equity. Using
this capital structure, Staff calculates an overall return of 6., also agreed to by the Company, a
return that was calculated as follows and equates to annual return on rate base of$36 535.
WEIGHTED
DESCRIPTION AMOUNT PERCENT COST COST
State Revolving Loan Fund $259,363 50.25%64%
Long Term Loan to Parent $109 305 21.3%00%1.28%
Common Equity $144,834 28.2%12.00%38%
Total $513 502 30%
We fln d:
In reviewing the filed comments, we find that Staff s recommendations are based on
its audit of Company records and operations. We find that the Staff identified exceptions and
related adjustments to the Company s financial records as reflected in the Attachment to this
Order were based on information provided and are proper and in conformance with observed
accounting standards. The further adjustments we make are based on clarification and further
ORDER NO. 30027
information provided by the Company in its reply comments. We find that the resulting
schedules accurately reflect the Company s financial profile, rate base and operations for test
year 2005.
In the context of the record established in Case No. FLS- W -05-1 and the results of
Staff audit and adjustments and the further adjustments detailed below, we approve and find just
and reasonable for Falls Water Company the following: use of a 2005 test year, a rate base of
$579 926, a return on equity of 12%, an authorized revenue requirement of $648 604, and a
resultant authorized revenue increase of$81 576 or 14.39%.
Staff Adjustments - O&M Expense
As reflected in Staff comments and Falls Water reply comments the Company does
not agree with all of Staffs adjustments to operation expense. Specifically the areas of
difference pertain to meter reading labor expense, employee benefits, telephone expense, office
expense, transportation expense and training expense. We address those areas below.
Meter Reading Labor Expense
Staff Adjustment B proposes to reduce labor meter reading expenses. As reflected in
Staff comments, currently the meter reader is paid a monthly salary. The present meter reader
has been employed by the Company for five years. The salary is spread out over 12 months and
is calculated on a monthly salary for 9 months. Meters are read by the meter reader beginning on
or about April 15 with the final read of the summer season taking place on or about October 15.
Residential meters are not read during the winter months. The commercial meters are read either
by the manager (summer) or one of the field labor personnel (winter).
After discussions with the Company, Staff determined that meter reading labor takes
approximately 20 hours per month to complete during the 7 months that meters are read. Staff
proposes to adjust the labor meter reading expense to reflect the current market rate for meter
readers with five years experience. As represented, the residential meters are read a total of
seven times a year. Staff proposes an adjustment based on 20 hours monthly (2.5 days at the
standard 8 hours/day) at a rate of $18.79 per hour (the wage paid to meter readers with similar
experience at United Water Idaho). This monthly amount, calculated based upon the seven times
per year that meters are read equates to $3 110.42 per year. Staffs adjustment reduces O&M
expenses by $4 871.
ORDER NO. 30027
Falls Water in reply comments reports that approximately 1 200 meters have been
added to the meter reading routes since July 2000. The current number of meters read each
month starting April 2006 will be 2 311. Additional meters will be added as new construction
customers come onto the system. Another addition to meters read by the meter reader will be the
conversion of unmetered flat rate customers to metered. With the current number of meters, the
Company reports that the meter reader works not 20 hours but 44 hours per month to complete
the reading of the system.
At the Staff proposed rate of $18.79 per hour, the Company calculates the meter
reading expense should be $5 787.32 plus 18.24% for employer payroll expense (i., workers
compensation insurance, FICA, FUT A, state unemployment insurance, etc.) for a total annual
labor meter reading expense of $6 842.92.
110.42.
This adds $3 732.50 back to Staffs proposed
We fln d:
The Commission accepts the Company s proposed reply comment adjustment
increasing the monthly hours of the meter reader from 20 to 44 hours per month. The resulting
and authorized annual expense for labor meter reading is $6 843. The Company is directed to
document the actual hours worked by the meter reader by time cards or other time keeping
records and to maintain those records for audit purposes.
Employee Benefits
Staff Adjustment B also proposes an adjustment to employee benefits. In the
Company s Application, the Company has included an adjustment for an increase in health
insurance premiums. At the time of Staff s audit, the increase in premiums had not taken place
nor was the Company able to provide evidence that the proposed increase would be
implemented. Staff removes this increase to employee benefits as not being known and
measurable. Staff reduces health benefits by $8 400. Staff notes that the Company has begun a
401(k) retirement program. The Company contributes a percentage based on the employee
salary. Because Staff has reduced employee labor, there is a corresponding reduction to benefits.
Staff reduces benefits for the 401(k) retirement plan by $259. Staffs total employee benefits
adjustment reduces O&M expenses by $8 659.
Falls Water in reply comments proposes an adjustment to Staff adjustments for the
Company paid portion of health insurance benefits. The Company reports that on February 22
ORDER NO. 30027
2006, Frontier Property Group sold Falls Water Company, Inc. to LaSal Group. In October
2005 , the insurance company increased the health insurance premiums. The LaSal Group is not
going to pick up the additional insurance costs that Frontier Property Group did. This leaves the
Company to pay these additional costs.
Falls Water has new rates for its employee s health insurance and has a new known
rate that the Company will pay for each employee. The Company adjustment includes the costs
that Frontier Property Group had paid and not passed along to Falls Water Company or its
employees. Falls Water submits the annual increase in Company paid employee health benefits
is $10 800. The new total for employee benefits expense is $34 055.
We fln d:
The Commission is informed that Staff has reviewed the new contracts recently
signed with the health insurance provider for the Company. The Commission accepts the
Company proposed adjustment as just and reasonable. Staff in comments contends that a sharing
of the premium increase between the employees and the Company would be appropriate. The
Company proposes to absorb the entire increase in premium rather than pass on any of those
costs to the employees. We will accept the Company s decision in this regard. The resultant
employee benefit expense that we authorize for health benefits and the 40 1 (k) plan is $34 055.
Telephone Expense
Staff Adjustment C proposes to remove $1 200 from telephone expense. The
Company provides its employees with cellular telephones. The Company currently provides
cellular telephones to the three field labor employees, the meter reader, the full-time office
receptionist and the Company manager. Staff does not believe that it is reasonable to provide the
full-time office receptionist or the part-time meter reader with a cell phone. Staffs adjustment
removes $100 per month from telephone expense for the two cellular telephones.
Falls Water in reply comments disagrees with the amount that is being deducted.
The expense for the Company for the two phones, it states, is not $50 per phone per month. The
Company reports that it has two cell phone plans with three phones per plan. The first phone in
each plan is $131.70 and $116., respectively. The second phone per plan is $28.44 and
$27.44, respectively. The third phone is $6.41 per plan. The Company contends that the
adjustment for cell phones should be $6.41 per phone per month or $153.84 annually instead of
ORDER NO. 30027
the $1 200 annual adjustment made by Staff. The Company proposes that $1 046.16 be added
back to the telephone expense for a total annual telephone expense of$IO 965.
We find:
The Commission accepts the Company s incremental adjustment for the third cell
phones used by the office receptionist and meter reader. The annual cell phone adjustment we
find reasonable is $153.84. The resultant total annual telephone expense we authorize is
$10 965.
Office Expense
The Company in reply comments contends that to provide a bill stuffer regarding
water conservation to customers (as recommended by Staff) office expense should be adjusted to
allow for the printing and handling of the bill stuffer by the Company s third-party bill preparer.
The cost to present and stuff the conservation billing stuffer is $0.225 each. The total cost to
send the conservation billing stuffer to 2 908 customers, the total number of customers at the end
of 2005, is $654.30. The original rate case Application did not include this expense.
Wefind:
The Commission finds Staffs bill stuffer recommendation and the Company
related expense request to be reasonable. The benefits of a well-crafted conservation message
for customers, we find, should exceed the cost of bill stuffing. We approve the requested
$654.30. The Company is encouraged to work with Staff on the content of the message. The
resultant annual office expense we authorize is $12 398.
Transportation Expense
Staff Adjustment D adjusted the Company s transportation expense to include the
current cost of fuel in the transportation calculation. The Company used $2.869 per gallon of
fuel. This was the cost of fuel at the time the Company was compiling its rate case. Staff used a
more current cost of $2.269 per gallon of fuel.
Falls Water in reply comments notes that the retail gasoline price for the Rocky
Mountain region as of March 20, 2006 was $2.395 per gallon of regular grade gasoline. The
price was taken from the Energy Information Administration website. The Company recognizes
that the prices for gasoline are not stable and will continue to fluctuate. The Company requests
that the best known and reasonable pricing be used for this expense item. The Company
adjustment for the price of gasoline increases transportation expense by $1 032.38.
ORDER NO. 30027
Weflnd:
The Commission finds it reasonable to use the Company updated gasoline rate of
$2.395 per gallon. The resultant annual transportation expense we authorize is $19 561.
Training Expense
Staff Adjustment F removes $900 of training expense as not being representative of
the normal amount of yearly training incurred by Falls Water Company. Staff removed half the
amount of training included by the Company. Staff asserts that its adjustment provides for a
more reasonable level of ongoing training.
Falls Water in reply comments seeks to reclassify costs removed from transportation
expense for travel and lodging pertaining to employee training in the amount of $954.50. The
Company reports that it has over the past two years sought to give more training opportunities to
its employees. The addition of a new full-time employee in 2004 and the addition of another
full-time employee and a part-time employee in 2005 have effectively doubled the Company
workforce. The Company wishes to continue to provide effective and beneficial training for its
employees. Many of the classes and seminars to which its employees go are local, it states;
however, not all of the training needs can be fulfilled in the eastern Idaho area. The needed
training sometimes requires that an employee travel outside eastern Idaho. The Company feels
that it is appropriate to train its employees well and believes that well trained employees benefit
the customer.
We find:
The Commission recognizes that small water companies may have to travel to obtain
specialized training. We also recognize the benefits that accrue to customers from employee
training. It is also reasonable to expect that as the Company s labor force increases, its training
expense will also increase. We find it reasonable to grant the Company-requested $954.
increase in training expense. The resultant annual training expense we authorize is $1 855.
Rate Design
Secondary Irrigation Systems
Falls Water in its Application represents that the Company has experienced
significant customer growth in the past two years. Many recent housing developments, the
Company states, have been built on land that was previously used for agriculture and is part of an
irrigation district. Falls Water proposes to better utilize its existing water rights and promote
ORDER NO. 30027
responsible use of existing water rights for new development by contractually requiring new
developments to utilize existing irrigation rights and by implementing a new water rate
(Schedule R-4) for new customers with access to secondary irrigation systems for lawns and
landscaping, a tariff rate and water allotment based on domestic in-house use. To discourage use
of potable and treated water for irrigation the Company proposed as part of the R -4 tariff to levy
an excess use charge priced intentionally high (three times the standard commodity charge).
While Staff states that it supports the secondary irrigation rate measures proposed
Staff believes it is inappropriate to implement a rate differential before a separate irrigation
ordinance exists or before separate pressurized irrigation systems are available.Staff
recommended elimination of Schedule R-
Schedule R-4 from its revised proposed tariffs.
The Company in reply comments eliminated
We fln d:
The Commission supports the Company s efforts to marshal its water rights and to
encourage conservation of potable water and promote the use of pressurized secondary irrigation
systems. We note, as reflected in comments, that in July 2005 an Idaho law was enacted
requiring the use of surface water for irrigation where surface water rights are reasonably
available. Reference Idaho Code 9 67-6537. We note also that the Company in water right
proceedings before the Idaho Department of Water Resources agreed in 2005 to "actively seek a
new county ordinance for Bonneville that would require new subdivisions to acquire or use
appurtenant surface water rights for irrigation purposes.
We concur with the acquiescence by the Company in the elimination of its proposed
tariff Schedule R-Other options, we find, need to be pursued first.We commend the
Company for its reply comment commitment to provide water conservation/wise water use
information to customers. We note, however, that the Company has been previously directed by
the Commission to provide such information and failed to do so. Reference Order No. 29397
(December 12, 2003). By this Order we direct the Company to provide brochures or fact sheets
specifically directed at water conservation and wise water use and mail them out once each year
with the bills prior to the summer months. Staff can provide examples of printed materials used
by other water companies if the Company needs assistance in preparing this information.
ORDER NO. 30027
Minimum Charge Water Allowance
Falls Water in its Application requests that the amount of water usage included in the
minimum charge for metered customers be reduced from 20 000 gallons to 8 000 gallons in the
summer time and from 20 000 to 15 000 gallons in the winter time. The Company reports that
the historical average monthly usage per residential household during the six-month winter time
was 7 500 gallons/month in 2002, and 7 167 gallons/month in 2003 and 2004. The Company
contends that winter usage is a reasonable gauge for in-house use for the average household in its
system and that in-house use of 8 000 gallons for summer months would lead to greater water
conservation. The higher winter time allowance, the Company states, would allow customers to
run some water during cold weather to prevent freezing of household water lines.
Staff represents that even a significant change in the amount of water included with
the minimum charge has a relatively small effect on revenue. Revenue derived from the
commodity rate was calculated at the 10 000, 12 000, 15 000 and 20 000-gallon allowance
levels. A 12 000-gallon minimum charge allowance is recommended by Staff based on the
average winter use for metered customers that varies from about 6 000 gallons per month to
approximately 12 000 gallons per month. Staff believes it is appropriate to set the minimum
charge allowance at a level where few, if any, will pay for excess water in the winter months.
Falls Water in its reply comments and tariff proposal adopts the allowance proposed
by Staff.
We fln d:
The Commission finds the 12 000-gallon monthly allowance included in the
minimum charge to be reasonable. We find it also reasonable to defer consideration of the
Company s proposed summer/winter differential in allowance levels until such time as the
Company s flat rate customers are metered. Based on Staff observations and recommendations
we direct the Company to follow through on its reply comments commitment to implement
operational measures to improve its well log and system recordkeeping, to enhance its SCADA
software capabilities, to identify and better control its water loss and to improve its delivery
efficiency.
Metering of Unmetered Customers
Falls Water in its Application announces a planned phase out of its flat rate.
Currently the flat rate is restricted to the 585 residential R-2 customers located in Mobile Home
ORDER NO. 30027
Estates Subdivision, Monte Vista Estates and First Street Mobile Park. The Company in its
Application proposed to convert these customers to the R-l metered tariff over a period of six
years using meters from its meter replacement program. As proposed by the Company in its
Application, the meter installation would divert meters from an ongoing meter replacement
program (5% of its oldest meters each year) and would not require additional funds.
Customer water use analysis, Staff notes, suggests that there is excessive water use
leakage or both, taking place in the Company s unmetered service area. To support conservation
by individual customers and to identify and locate leaks, Staff recommends a three year program
to meter unmetered customers. Staff estimates the total cost to convert to metered status to be
approximately $169 670. Staff further recommends that the Company provide those customers
with weatherization information and assistance that could help them identify and eliminate leaks
and reduce or eliminate frozen pipe concerns.
Falls Water in reply comments states that the Company is not financially able to
meter all unmetered customers within three years. To finance the project within the 3 years
proposed by Staff, the Company proposes a $.96 per customer monthly surcharge for 36 months.
The total surcharge cost brought forward by shortening the implementation from six years to
three years as calculated by the Company is $100 966. The Company commits to provide
previously unmetered customers with weatherization information to minimize frozen pipe
problems at the time of conversion to metered status.
Weflnd:
The Commission finds the record incomplete with respect to the Company proposed
surcharge. The Company s surcharge proposal was first presented in reply comments. We find
it reasonable that Staff and customers be provided an opportunity to comment. We support the
Company s proposal to meter unmetered customers. We accept the Company s commitment to
provide previously unmetered customers with weatherization information. We encourage the
Company to discuss its metering and surcharge proposal with Staff and to prepare and file a
surcharge application. We would like to see the meters purchased and installed sooner rather
than later, preferably much sooner than six years.
Authorized Rate Design
Falls Water proposes in its Application to increase both the monthly mmlmum
charge and the commodity charge for water used in excess of the minimum water allowance for
ORDER NO. 30027
metered R-l customers. Additionally, the Company would set summer and winter tariffs with
differing minimum charges and minimum allowances and establish a new tariff for new
subdivisions with secondary irrigation.
In developing a rate design proposal for Falls Water, Staff proposes changes to the
tariff design to encourage conservation. Staffs proposal involves eliminating the unmetered R-
flat rate customers over the next three years, increasing the portion of total revenue collected
from excess commodity usage and reducing the amount of water included with the minimum
charge. The minimum charge in the tariff proposed by Staff provides approximately 72% of
required revenue while the excess use commodity charge will provide 28%. The Company
present tariff structure and the 2005 test year provided approximately 78% of its revenue from
fixed charges and 22% from excess water commodity charges.
Staff finds no justification for the seasonal split rate for R-l customers, especially
when compared to the single rate for metered multi-family and commercial customers. While
Staff supports the secondary irrigation measure proposed, it believes it is inappropriate to
implement a rate differential before a separate irrigation ordinance exists or separate irrigation
systems are available.
We fln d:
The Commission finds the rate design proposed by Staff and agreed to by the
Company in reply comments to be fair, just and reasonable and an equitable way to recover the
Company s revenue requirement. Reference Idaho Code 9 61-503. We further find that the
realignment of revenue generation in the rate components for metered customers is a move
designed to promote conservation of water. Applying the rate design to generate the approved
$648 604 annual revenue requirement results in the following tariff rates and estimate annual
average bills. The net amount of actual increase varies by class of customer and usage.
CommIssion
Present Commission Approved Estimated Percent
Average Approved Commodity Average Annual Change
Annual Bill Minimum Charge/l OOO Gallon Bill with from
Schedule (Adjusted)Charge over 12 000 Approved Tariff Present
$202.$11.53 $0.48 $214.36 64%
$210.$20.n/a $242.15.26%
$208.$11.53 $0.48 $214.62%
$388.$11.53 $0.48 $431.11.10%
ORDER NO. 30027
Other Fees and Charges
Field Collection Charge
Falls Water in its Application seeks to charge a $15 field collection fee for customers
who fail to respond to notices of termination for non-payment on account and do not pay until
the service technician is at the home ready to terminate service. In calendar year 2004, the
Company collected payment at the doors of 12 customers; in 2005 at the doors of 10 customers.
The Company delivers a final disconnect notice to customers at least 24 hours in advance of the
proposed disconnect date. If the customer fails to respond, the service technician makes a
second trip to the residence to disconnect service. If customers are experiencing financial
difficulties in paying the full amount of the bill, they can call the Company to work out payment
arrangements. Staff supports the Company requested field collection charge. Staff notes that
other water, gas and electric companies charge a field collection fee in amounts ranging from
$15 to $20.
Weflnd:
The Commission finds it reasonable to authorize the requested $15 field collection
charge. The "field collection" fee is to be included in the Company s tariffs. The fee will be
assessed when a personal visit is made by a Company representative to a service address in order
to terminate service and at such time the customer makes a partial or full payment on the bill.
Notice of the field collection charge should be provided with the final disconnect notice. The
field collection charge should not be assessed if service is terminated. In such instance, the
already authorized reconnection fee will apply.
Customer Comments
The Commission received both written comments and oral testimony from the
Company s customers. Most comments were directed to affordability issues and the 48%
increase requested in the Company s Application, the Company s proposal to seasonally change
the minimum allowance of water provided in base rates, and the Company s proposal to assess
an excess usage penalty for new customers with access to separate irrigation waters. Several
customers addressed the disparity in the requested tariff rate increase to metered and unmetered
customers (64.7% for metered; 10% for unmetered). A few compare Falls Water rates to those
of nearby municipal water companies. One customer states that the City of Ammon requires a
certain amount of landscaping, implying that the customer s ability to conserve by changing to
ORDER NO. 30027
drought resistant landscaping may be limited. One other customer raises the contention that
customers did not receive any promotional information from Falls Water encouraging
conservation.
We find:
The Commission appreciates the comments of Falls Water customers and considered
them in its deliberation. We note that the revenue increase authorized by the Commission in this
Order is significantly less than the Application request of the Company. In this Order we
support the Company s plan to transition non-metered customers to metered. We also support
conservation of water and direct the Company to provide customers with related information.
Although we have reduced the minimum allowance of water in existing rates, we have not
authorized the seasonal differential recommended by the Company. We note also that the
proposed R-4 schedule and excess usage penalty for new customers with access to separate
irrigation waters was withdrawn.
While the authorized mcrease in rates is less than originally requested by the
Company, we recognize that the increase for some customers will result in economic hardship.
As we indicated in prior Falls Water Order No. 29397, while this Commission is not insensitive
to the economic circumstances of customers, we note that we also have an obligation to Falls
Water to set rates at a level sufficient to recover its costs of production and service. The
Commission is not aware of any assistance programs or aid available to Falls Water customers.
We encourage customers who are having difficulty in paying their water bills to contact the
Company to discuss payment arrangements.
CONCLUSIONS OF LAW
The Commission has jurisdiction and authority over Falls Water Company, Inc., a
water utility, and the issues raised in Case No. FLS- W -05-, pursuant to Title 61 of the Idaho
Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission in Case No. FLS-05-1 does hereby approve as
just and reasonable an annual revenue requirement of $648 604, an increase of $81 576
(14.39%). We also approve as just and reasonable the detailed changes in revenue requirement
ORDER NO. 30027
capital structure, return on rate base, rate design and Schedule R-, R-, R-3 and C-2 tariff
reVIsIons.
IT IS FURTHER ORDERED and the Company is directed in compliance with the
foregoing to file amended tariffs to reflect the authorized rates and charges for an effective date
of April 1 , 2006.
IT IS FURTHER ORDERED and the Company is directed as more particularly
described above to comply with the Commission s directives regarding water conservation/wise
water use information, weatherization information, well log and system recordkeeping and
enhancement of SCADA software capabilities.
IT IS FURTHER ORDERED and the Company is directed in accordance with the
foregoing to file a $15 Field Collection Charge tariff sheet.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
ORDER NO. 30027
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;;...r;t+'
day of April 2006.
, PRESIDENT
d~~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~~~
Je D. Jewell
Commission Secretary
bls/N:FLS-05-01 sw
ORDER NO. 30027
Ordinary Income/Expense
Income
400 . Operating Revenue
460 . Unmetered Revenue
461.1' Metered Residential
461.2' Commercial Revenue
474, Other Utility Revenue
Total 400 . Operating Revenue
Total Income
Expense
601.5' labor Field
601.7' labor Meter Reading
601.8' labor Office
601.9' Admin - labor
603 - Salary Officers & Directors
604 - Employee Benefits
610. Purchased Water
615. Electrical Power
618. Chemicals
620.2 . Source M&S
620.6 . Distribution M&S
620,7' Postage
620.8 . Office
620.81 . Telephone Expense
620.82 . Bank Service Charges
620.83 . Office Utilities Expense
631.1' Engineering
631,2' Accounting
631.3' Attomey
635 . Testing
636.2 . Source Contract Repairs
636.3' Trash
636.6 . Distribution Contract Repairs
636.7' Data Processing
641 . Rental of Property
642. Rental of Equipment
650 . Transportation Expense
656 . Insurance Expense
660 . Advertising Expense
670 . Bad Debt Expense
675.1 . Training Expenses
675.2 . Dues & Publications
675.4 . IDHW Fee Expense
65.9 . Uncategorized Expenses
Total Expense
Net Ordinary Income
Other Income/Expense
Other Income
421 . Non-Utility Income
Total Other Income
Other Expense
403 . Depreciation Expense
407 . Amortization Expense - Other
408.10' Regulatory Fee
426 . Misc. Non-utility Expenses
427.3 ' Interest Expense
Total Other Expense
Net Other Income
Net Income Before Taxes
408, Taxes
408.11 . Property Taxes
409.10. Fed Income Tax
409.11 . State Income Tax
Total 408 . Taxes
Net Income After Taxes
Rate Base
Return on Rate Base Recommended
Overall Rate of Retum
Revenue Deficiency
Net to Gross Multiplier
Total Increase Recommended
Total Revenue Requirement
Percentage Increase Requested
Commission Decision
Falls Water Company, Inc.
General Rate Case
FLS-O5-
Falls Water
Proposed
124 145
397 651
532
637
535 964
535 964
138 215
981
777
368
824
913
112
809
952
091
496
872
744
119
762
966
715
893
4,406
410
395
198
906
078
868
845
008
468
054
285
800
870
988
100
573 290
(37 326)
626
626
015
833
035
471
455
102 810
(94 184)
(131 510)
129
539
995
663
180 173
Company
Request
651,588
191
12%
258 364
258 264
794 328
48.
479)032
359)
(900)955
(33 131)220
Staff
Adjustments
537
526
063
063
654)
(4,871)
120)
658)
110
200)
(37 833)
(582)
(17,455)
(55 870)
(36 668)
(11 241)
(47 929)
Staff
Recommendation
579 926
535
714
2956
115
630 143
11.13%
Company
Rebuttal
Adjustments
3,733
800
654
046
Company
Rebuttal
579 926
535
934
2956
86,720
653 748
15.29%
Commission
Decision
124 145
427 188
058
637
567 028
567 028
130 561
843
777
368
704
055
112
102 919
952
091
24,496
872
398
965
762
966
715
893
4,406
410
395
198
906
078
868
845
561
468
054
925
855
870
988
100
558 379
649
626
626
015
453
471
940
(38 314)
(29665)
129
664)
704)
238)
(26,427)
CommissIon
Decision
579 926
535
962
2956
576
648604
14.39%
Order No. 30027 Attachment