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HomeMy WebLinkAbout20070727Application.pdfFALLS WATER :"...., ~""~"""~""-""""' c~""~~~"' .,...."""".",,.-- ..~,c.,, PANY ,,;,., ",-""". ..~.C. ~~~" "","",. "~JJ'~""","","""'~, ~,"-""=", 1770 Sabin Dr, Idaho Falls, Idaho 83406-6747 Website: www.fallswater.com Tel.: 208 522.43QOH i'. Z I "',' '-' '.. ", Fax: (208) 522-4099 ie' IJnUJI ~..; ! .. ~8 July 25 2007 Idaho Public Utilities Commission A TTN: Commission Secretary O. Box 82720-0074 Boise, Idaho 83720 S -O 7- Subject: Application to Increase Rates and Charges Dear Commission Secretary: Enclosed are an original and seven copies of an application together with supporting exhibits requesting an increase in rates and charges of Falls Water Co., Inc. An extra copy is also enclosed. Please date stamp and return this extra copy to the company for our records. The Company has informed its customers of this application through a notice included with customer bills mailed on July 25 2007. The Company has arranged for publication of the notice of this application in the Post Register Newspaper in Idaho Falls. A copy of the notice is also enclosed (The same notice was sent to the customers and printed in the Post Register). Also enclosed is a computer disc containing the application, exhibits and work papers in electronic media to aid the Commission Staff in its review of this application. Sincerely, ~~~ K. Scott Bruce Manager ' l~J. L.t~ i , .. K. Scott Bruce Falls Water Company, Inc. 1770 Sabin Dr. Idaho Falls, ID 83406 Tel. (208) 522-1300 Fax (208) 522-4099 E-mail: scottI ~fallswater.com Representative for Falls Water Company, Inc. ti: ' UT\LH\ BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF FALLS WATER CO MP ANY FOR AN ORDER AUTHORIZING INCREASES IN) THE COMPANY'S RATES AND CHARGES FOR) WATER SERVICE IN THE STATE OF IDAHO CASE NO. FLS-O7- APPLICATION COMES NOW Falls Water Company Inc. , (" Falls Water , " Applicant" or Company ) and hereby makes application to the Idaho Public Utilities Commission for an Order approving revisions to Applicant's schedules ofrates and charges for water service in the State of Idaho to become effective with service provided on and after September 1 2007. Applicant is requesting the Commissions authorization to: 1) Increase the water rates it charges its customers by approximateiy 46.2%. The Company is proposing to increase its metered customer base rate from $11.53 to $16.47 (43%) and it's commodity rate from $0.48 to $0.73 per thousand gallons (52%) to place more emphasis on the commodity rate in the interest of encouraging conservation. The Company is not requesting any increase in its current flat rate Schedule R-2. The Company last increased its basic rates and charges pursuant to Commission Order No. 30027 (Case No. FLS-05-1) dated April 27, 2006; 2) Increase it's new customer connection fees from $825.00 to $930.00 for 1.5" meters and from $900.00 to $1 205. for 2" meters and; 3) Request language in the Commission s Order that recognizes the change in the corporate organization of the Company and clarifies the Company s right to distribute earnings, if any, to stockholders. Applicant is requesting this Application be processed under the Commissions Rules of Modified Procedure. Applicant further requests an Order of the Commission authorizing the new rates be effective for all water delivered after the first meter reading on or about September 3 2007. GENERAL Applicant is a public utility water corporation within the meaning of the Idaho Public Utility Law, is duly organized and existing under the laws ofthe State ofIdaho and is engaged in conducting a general water business in an area generally north of the City of Ammon and northeast of the City ofIdaho Falls in Bonneville County, Idaho having its principal office and place of business at 1770 Sabin Drive, Idaho Falls, Idaho. A copy of Applicant's Articles of Incorporation together with all amendments to date is on file with the Commission. Applicant's current Certificate of Convenience and Necessity is Certificate No. 236. Currently the Company provides water service to approximately 3 200 residential and commercial customers. CONNECTION FEES Attached to this Application is Exhibit No.6 composed of a single page in support of these connection fee requests. Materials and labor costs have increased resulting in installation costs that exceed the fees authorized in the Company s current Commission approved tariffs. GENERAL RATE INCREASE REQUEST Enclosed, with this Application, are Exhibits Number 1 through 4 in support of the increase in water revenue requested. Applicant is proposing the year 2006 as the test year in this case adjusted to normalize and proform the test year for known and measurable changes that have or will occur in the near future. RATE BASE Exhibit No.1 presents the Company s calculation of rate base. Lines 1 8 and 11 of this exhibit present the balances of accounts on the books of the Company at December 31 2006. On lines 2, 5 , 9 and 12 are adjustments to the year end account balances to correct for some prior period accounting errors that have been corrected on the Company s books during 2007. The Corrected year-end 2006 Net Utility Plant at December 31 2006 $568 924.34 is shown on line 15 Column (C). Lines 16 and 17 of this exhibit increase the Company s investment in plant for several projects that are either completed, in process or scheduled for completion within 12 months ofthe date ofthis application. None of these projects produce incremental revenue. The first of these projects (line 16) is the three (3) year program to convert the Company s flat rate customers to meters. The adjustment on this line recognizes the cost incurred in 2007 and those that will be incurred in 2008 to finish the program. This program is in conformance with the Commissions Order Number 30027 (Case No. FLS- W -05-1) dated April 27, 2006. In that case, the Company announced its plan to convert flat rate customers to meters over a six (6) year period. PUC Staff proposed that the Company complete the project more quickly and proposed a three (3) year period. The Company replied it would comply but requested a temporary surcharge to help pay the increased cost. The Commission did not authorize a surcharge in its order but expressed its desire " ... to see the meters purchased and installed sooner than later, preferably much sooner than six years.(Order at page 11) The Company commenced a conversion program later that year and will finish by mid year 2008. Line 17 of this exhibit is an adjustment for four (4) line-looping projects the Company is planning. These four projects are necessary to improve system reliability, pressure and quality of service. The projects have been engineered and are currently out for bid. The adjustment shown here is based upon the Company s outside engineer estimate of cost. The Company will inform the Commission of any changes once bids are received and contracts signed. The Company expects to complete these projects in 2007. Line 18 is an allowance for working capital equal to 1/8th of operating expenses shown on Exhibit No.2. Total Rate Base for this case of$I 010 876.82 is shown on line 19. RESULTS OF OPERA nONS Exhibit No.2 presents the Company s Results of Operations adjusted for known and measurable changes. Column (A) of the exhibit presents the actual recorded results on the Company s books for the year 2006. These actual results are adjusted in Columns (B) through (K) to develop the adjusted results shown in Column (L) that is used to determine the Company s revenue requirement on Exhibit No. The adjustment shown in Column (B) of Exhibit No.2 adjusts the Company revenues to recognize the number of customers connected to the system at the end of the test year. This adjustment also recognizes the effect of converting all flat rate customers to metered rates. These adjustments are consistent with the use of a year-end rate base and the adjustment to rate base for the cost of the metering project shown on Exhibit No. 1. This adjustment increases the Company s test year income by $27 891.78 shown on line 59. Column (C) of this exhibit adjusts the Company s labor costs for wage and salary levels at current pay rates and increases to take effect on December 18 , 2007. The adjustment also includes the addition of a new administrative employee who will be hired within the next several months. This adjustment decreases the Company s test year income by $168 622.53 shown on line 59 Column (C). The Company is currently negotiating a lease for new office, warehouse and maintenance space and will be moving to a new location before the end of the year 2007. The Company s current office space is cramped and is not large enough to accommodate the addition of another administrative employee. The Company currently uses a trailer and shed at the location of one of its wells for storage and maintenance purposes. Well- head protection regulations require the Company to move these programs to another location. Column (D) of Exhibit No.2 recognizes the increased cost of leasing new space to consolidate the Company s administrative, warehouse and maintenance functions in one location. This adjustment decreases the Company s test year income by $24 643. as shown on line 59 Column (D). Exhibit No.2 Column (E) adjusts the Company s source of supply costs to recognize increases in electric power costs, chemical costs and increases in well site maintenance and fee increases. This adjustment recognizes the effect on electric power and chemical costs for the year-end 2006 level of customers served based upon historical average costs per customer. Contract maintenance and fee increases are based upon current costs. This adjustment decrease the Company s income by $26 325.78 as show in Column (E) line 59. The administrative adjustment shown in Column (F) of Exhibit No.2 recognizes increased costs of office materials, contract billing services, postage, utilities and janitorial service. This adjustment is based upon the current level of costs adjusted for the year-end level of customers and the move to a new office location. This adjustment decreases the Company s income by $11 704.53 shown on line 59 Column (F). Column (G) of Exhibit No.2 sets forth the increased contract services costs associated primarily with the growth of the water system and the aging infrastructure. Leak repair requiring excavation and repair of roads, sidewalks and landscaping account for the majority of the increased costs. Water testing expense has increased with the growth of the system. These costs are levelized over the frequency of the testing periods. Fees charged for contract service have also increased. This adjustment decreases the Company s income by $30, 122.58 shown in Column (G) line 59. The Adjustment for equipment and vehicle expense shown in Column (H) of Exhibit No.2 recognizes the addition of a vehicle for maintenance and increased costs of equipment rent. The additional vehicle was required for a new maintenance employee hired by the Company. The increased cost of equipment rent is due to the increased number of repairs required due to growth and the aging of the Company s plant as well as increases in the hourly rate for rental equipment. This adjustment decreases the Company s income by $13 987.39 as shown on line 59 of Column (H). The Company is proposing to amortize its cost for preparing this rate case over a period of two years. The Company s history shows that it has been on a two year frequency cycle between rate cases. The adjustment in Column (I) of Exhibit No. includes one half (1/2) of the Company s costs to date for this case. The Company will update this adjustment before the Commission issues its order in this case. This adjustment decreases the Company s income by $3 200.00 as shown in Column (I) line 59. The adjustment shown in Column (J) of Exhibit No.2 is necessary to be consistent with the adjustment to plant in service adjustments to rate base on Exhibit No. 1. This adjustment reflects the additional depreciation expense the Company will experience associated with the line-looping construction projects and the completion of the conversion of flat rate customers to meters. This adjustment reduces the Company income by $25 684.58 as shown on line 59 of Column (J). The final adjustment proposed by the Company is shown in Column (K) of Exhibit No.2. This adjustment recognizes changes in the property taxes paid by the Company based upon the year 2007 tax rates. The adjustment also includes recognition of additional irrigation taxes the Company will pay to Progressive Irrigation District. The Company has entered into an agreement with the district to pay the annual assessments on properties within the Company s service area that are no longer utilizing the Districts surface water. In return, the Company may use the water to provide future pressurized irrigation or recharge ponds as mitigation to protect the Company s ground water rights. This adjustment decreases the Company s income by $5 553.37 as shown in Column (K) line 59. Column (L) of Exhibit No.2 presents the Company s proforma results of operations for use in this case. The proforma results reflect a loss of $232 008.59 as shown in Column (L) line 59. COST OF CAPITAL Exhibit No.3 presents the Company s capital structure and calculation of the weighted cost of capital at December 31 , 2006. An adjustment to the Company s equity component of the capital structure is shown on line 4. This adjustment is consistent with the adjustment discussed earlier to correct accounting errors from prior periods regarding amortization of contributions in aid of construction. The Company is requesting a return on its common equity of 12%. This return is equal to the return granted the Company in its last case and is the same as returns granted recently by the Commission for other small water companies. The overall weighted cost of capital for Falls Water Company is 7.2%. REVENUE REQUIREMENT Exhibit No.4 presents the calculation of the revenue requirement for Falls Water Company. Lines 1 through 5 of this exhibit develop the net operating deficiency of $304 820.16 shown on line 5 utilizing the rate base, rate of return and operating results from Exhibits No., 2 and 3. Lines 6 through 9 of Columns (B) and (C) calculate the revenue increase necessary to overcome the income deficiency. The revenue gross-up calculation is performed in two steps. Column (B) calculates the incremental revenue requirement of$235 995.35 necessary to overcome the Company s operating loss. These incremental revenues will not result in any income tax obligation since the revenue would simply bring the Company to a break even point where revenue equal expenses. The only costs associated with these revenues would be increased exposure to bad debts increased regulatory fees and increased bank charges for credit card payments. Column (C) calculates the incremental revenue requirement of $94 709.40 necessary to produce the net operating income requirement of$72 811.58. These incremental revenues will be subject to income taxes in addition to the bad debt exposure, regulatory fees and bank service charges. The total revenue increase requirement of $330 704.75 is shown on line 10. This represents an increase in the Company s revenues of 46.18%. RATE DESIGN Exhibit No.5 shows the calculations to develop a rate design that will produce the required revenues. The Company is not proposing any change to the flat rate customers at this time. These customers will within a year be converted to meters and will begin paying at the metered rate. When the last customer is converted, the Company will file a Tariff Advice letter with the Commission proposing that the Residential Flat Rate Schedule 2 be cancelled. The Company has placed more emphasis on the commodity rate than on the basic charge in an effort to encourage conservation. As shown on lines 26 and 27 of this exhibit, the Company s current base rates produce 62% of revenues and commodity rates produce 38% of revenues. The Company proposal drops the ratio of base charges from 62% to 60% and increases the ratio of commodity charges from 38% to 40%. The Company is proposing to increase the base rate for all metered schedules from $11.53 to $16.47. This is an increase of 43%. The Company proposes to increase the commodity rate for all metered schedules from $0.48/000 gallons to $0.73/000 gallons. This is an increase of 52%. The proposed rate design will produce $1 046 995.89 in revenues. The revenue generated is within $107.89 of the revenue requirement of$I 046, 888.00. As shown on lines 28 through 30, the average residential metered customer will experience an increase in their average bill of approximately 46.27%. The average multifamily residential customer will experience an increase in their average bill of 46.59%. The average commercial customer will experience an increase in their average bill of 49%. Flat rate customers will not see an increase at this time. T ARRIFS Exhibit No., a four (4) page exhibit, is a marked-up copy of the Company current rate schedules showing the proposed changes in rates for Schedules R-, R-, C- and M. Exhibit No., a four (4) page exhibit is composed of the Company s new proposed rate schedules CONTACT INFORMA nON Questions regarding this application should be addressed to: K Scott Bruce, Manager Falls Water Co. 1770 Sabin Dr. Idaho Falls, Idaho 83404 Robert E. Smith 2209 N. Bryson Rd. Boise, Idaho 83713 Ph: (208) 522-1300 e-mail scott 1 ~fallswater .com Ph: (208) 761-9501 e-mail utilitygroup~yahoo.com Please provide copies of all correspondence, notices and orders to the above individuals. Respectfully submitted K. s:t!?(l K Scott Bruce Manager Falls Water Company, Inc. Calculation of Rate Base Rate Base 2006 (A) Net Assets 1 Utility Plant in Service Net Correcting Entry to Utility Plant in Service Corrected Total of Utility Plant in Service 4 Less: Contributions in Aid of Construction Correcting Entry to Contributions in Aid of Construction Corrected Total of Contributions in Aid of Construction Subtotal of Investor Owned Assets for Rate Base Less: Accumulated Depreciation Correcting Entry to Accumulated Depreciation10 Corrected Total of Accumulated Depreciation11 Less: Accum Amort of Contribution in Aid of Construction12 Correcting Entry to Accum Amort of CIAC13 Corrected Accum Amort of CIAC14 Total Accum Depr net of Accum Amort of CIAC 15 Corrected Net Utility Plant 12/31/200616 Proforma additions to Plant (2007 & 2008 Meter Conversions17 Proforma Additions to Plant (Line Loop Extensions) 18 Working Capital (1/8 of Operation and Maintenance Expenses) 19 Rate Base 573 701. 794.37 * 512 893. 158 680.44 ** 491 076. 889.34 *** 633. 333.95 **** (B) 673,496. 671 573. 509 966. 967. (C) 001 922. 432 998. 568 924. 181 522. 152 800. 107 629. $ 1 010 876. ** Correction to reflect assets purchased with CIAC funds. * Correcting entry to capitalize labor in 2004 and 2005 for the installation of meters in new construction. *** Correction to recognize Accumulated Depreciation Assets Purchased with CIAC funds. **** Correction to recognize Accumulated Amortization of Assets Purchased with CIAC funds. Exhibit No. Or d i n a r y I n c o m e / E x p e n s e In c o m e 40 0 . O p e r a t i n g R e v e n u e 46 0 . U n m e t e r e d R e v e n u e 5 4 6 1 . 1' M e t e r e d R e s i d e n t i a l 6 4 6 1 . 2 . C o m m e r c i a l R e v e n u e 47 4 . O t h e r U t i l i t y R e v e n u e To t a l 4 0 0 . O p e r a t i n g R e v e n u e To t a l I n c o m e 10 Ex p e n s e 11 6 0 1 . 5' L a b o r F i e l d 12 6 0 1 . 7' L a b o r M e t e r R e a d i n g 13 6 0 1 . 8' L a b o r O f f l c e 14 6 0 1 . 9' A d m i n . L a b o r 15 60 3 . S a l a r y O f f I c e r s & D i r e c t o r s 16 60 4 , E m p l o y e e B e n e f i t s 17 61 0 ' P u r c h a s e d W a t e r 18 61 5 . E l e c t r i c a l P o w e r 19 61 8 . C h e m i c a l s 20 6 2 0 . 2 . S o u r c e M & S 21 6 2 0 . 6 . D i s t r i b u t i o n M & S 22 6 2 0 . 7 . P o s t a g e 23 6 2 0 . 8 . O f f I c e 24 6 2 0 . 81 . T e l e p h o n e E x p e n s e 25 6 2 0 . 82 . B a n k s e N l c e c h a r g e s 26 6 2 0 . 83 . O f f I c e U t i l l t e s E x p e n s e 27 6 3 1 . 1 . E n g i n e e r i n g 28 6 3 1 . 2' A c c o u n t i n g 29 6 3 1 . 3' A t t o r n e y 30 63 5 . T e s t i n g 31 6 3 6 . 2 . S o u r c e C o n t r a c t R e p a i r s 32 6 3 6 . 3' T r a s h 33 6 3 6 . 6 . D i s t r i b u t i o n C o n t r a c t R e p a i r s 34 6 3 6 . 7 . D a t a P r o c e s s i n g 35 6 3 6 . 8 . C o n t r a c t S e N l c e . C o n s u l t i n g 36 64 1 . R e n t a l o f P r o p e r t y 37 64 2 . R e n t a l o f E q u i p m e n t 38 65 0 . T r a n s p o r t a t i o n E x p e n s e 39 65 6 . I l l s u r a n c e E x p e n s e 40 66 0 . A d v e r t i s i n g E x p e n s e 41 66 5 . R e g u l a t o r y C o m m i s s i o n E x p e n s e s 42 67 0 . B a d D e b t E x p e n s e 43 6 7 5 . 1 . T r a i n i n g E x p e n s e s 44 6 7 5 . 2 . D u e s & P u b l i c a t i o n s 45 6 7 5 . 4 . D E Q F e e E x p e n s e 46 6 7 5 . 9 . U n c a t e g o r l z e d E x p e n s e s 47 To t a l E x p e n s e 48 N e t Or d i n a r y I n c o m e Fa l l s W a t e r C o m p a n y Pa g e 1 Re s u l t s o f O p e r a t i o n s Te s t Y e a r E n d e d 1 2 / 3 1 / 2 0 0 6 (A ) (B ) (C ) (D ) (E ) (F ) (G ) (H ) (I ) (J ) (K ) (l ) Pe r An n u a l i z e Pr o f o r m Pr o f o r m So u r c e Co n t r a c t Eq u i p Ra t e C a s e Pr o f o r m Pr o p e r t y Ad j u s t e d Bo o k s Re v e n u e la b o r Re n t a l Su p p l y Ad m i n Se r v i c e s & V e h i c l e Ex p e n s e De p r . & I r r i g Te s t 20 0 6 Co s t s Ex p Ad j Ad j Ad j Ad j Ad j Ex p e n s e Ta x A d j Ye a r 11 6 57 0 . 55 1 29 6 . 19 , 4 2 1 . 83 5 , 68 8 , 12 2 . 68 8 12 2 . 10 8 51 8 . 04 5 . 47 , 76 5 . 31 3 . 30 4 . 80 7 . 11 2 . 89 , 38 0 . 21 5 , 38 7 . 10 5 . 12 , 4 1 6 . 74 8 . 17 0 . 66 7 . 93 1 . 4 1 28 2 . 47 1 . 01 6 . 46 5 . 65 9 . 61 5 . 44 4 . 00 0 . 86 8 . 76 2 . 27 , 37 1 . 10 , 63 3 . 08 1 . 67 9 . 38 7 . 51 5 . 96 2 , 98 6 . 58 2 , 09 0 . 10 6 03 2 . (1 1 6 57 0 . 61 ) 14 2 45 9 . 17 1 . 06 0 , 72 , 74 6 , (8 , 04 5 . 67 ) 11 , 52 7 . 68 7 , (2 , 30 4 . 00 ) 01 0 . 39 2 . 60 0 , 33 2 . 24 , 64 3 , 87 7 . 54 1 . (3 4 6 . 60 ) 63 . 70 4 . 46 4 . 30 0 . (2 8 . 75 ) (9 9 8 . 34 ) 12 5 . 65 3 . 63 4 , 40 0 . 35 7 . 19 . 80 4 , 27 2 , 00 0 . 34 5 . 64 1 . 20 0 . 69 3 , 75 6 . 59 2 . 83 5 . 71 6 , 18 3 , 71 6 18 3 . 18 1 26 4 . 29 2 . 12 8 00 1 . 81 8 , 11 2 . 10 9 , 77 3 . 81 6 . 10 , 71 9 . 10 5 . 29 3 . 29 0 , 12 , 82 4 . 73 1 . 63 6 . 28 2 . 12 5 . 01 6 . 09 9 . 1, 4 0 0 . 01 7 . 30 , 42 0 . 71 6 . 24 , 00 0 . 51 1 . 20 , 10 8 . 35 , 01 3 . 09 7 . 08 1 . 87 9 . 68 8 . 51 5 . 27 5 . 10 , 98 8 . 12 5 . 86 1 03 7 . 4 1 (1 4 4 , 85 4 . 16 ) Ex h i b i t N o . Fa l l s W a t e r C o m p a n y Pa g e 2 Re s u l t s o f O p e r a t i o n s Te s t Y e a r E n d e d 1 2 / 3 1 / 2 0 0 6 (A ) (B ) (C ) (D ) (E ) (F ) (G ) (H ) (I ) (J ) (K ) (L ) Pe r An n u a l i z e Pr o f o r m Pr o f o r m So u r c e Co n t r a c t Eq u i p Ra t e C a s e Pr o f o r m Pr o p e r t y Ad j u s t e d Bo o k s Re v e n u e La b o r Re n t a l Su p p l y Ad m i n Se r v i c e s & V e h i c l e Ex p e n s e De p r . & I r r i g Te s t 20 0 6 Co s t s Ex p Ad j Ad j Ad j Ad j Ad j Ex p e n s e Ta x A d j Ye a r Ot h e r E x p e n s e 40 3 . D e p r e c i a t i o n E x p e n s e 47 , 53 7 . 68 4 . 73 , 22 2 . 40 8 . T a x e s 40 8 . 11 ' P r o p e r t y T a x e s 59 8 . 52 3 . 12 1 . 40 9 . 10 ' F e d I n c o m e T a x 40 9 . 11 ' S t a t e I n c o m e T a x 30 . 30 . To t a l 4 0 8 . T a x e s 59 8 . 4 0 15 1 . 40 8 . 10 ' R e g u l a t o r y F e e 61 1 . 16 8 . 78 0 . To t a l O t h e r E x p e n s e 74 7 . 87 , 15 4 . 58 N e t Ot h e r I n c o m e (5 5 , 74 7 . 90 ) (8 7 , 15 4 . 42 ) Ne t I n c o m e $ 5 0 28 4 . 27 , 89 1 , (1 6 8 , 62 2 . 53 ) (2 4 , 64 3 . 50 ) (2 6 , 32 5 . 78 ) (1 1 70 4 . 53 ) (3 0 , 12 2 . 58 ) (1 3 , 98 7 . 39 ) 20 0 . 00 ) (2 5 68 4 . 58 ) 55 3 . 37 ) (2 3 2 , 00 8 . 59 ) Ex h i b i t N O . Falls Water Company, Inc. Capital Structure and Overall Rate of Return Cost of Capital as of December 31 , 2006 (A)(8)(C)(D) Percent of Total Line No.Description Amount Capital Cost Component 1 Total Long Term Debt $248 944 43.51%25%1.41% 2 Long Term Loan - FPG $94 382 16.50%00%99% 3 Common Equity $ 166 536 Correcting Adjust*****$ 62 255 228 791 39.99%12%80% 5 Total $572 118 100.00%20% ***** Adjustment from prior periods required because Company failed to recognize amortization of Contributions is Aid of Construction coincident with depreciation expense on assets. Exhibit No. FALLS WATER COMPANY CALCULATION OF REVENUE REQUIREMENT 1 Rate Base 2 Required Rate of Return 3 Net Operating Income Requirement 4 Net Operating Income Realized 5 Net Operating Income Deficiency 6 Revenue Increse necessary to overcome loss (A) $ 1 010 876. 20% 811. (232 008.59) $ 304 820. 7 Revenue Increase Necessary For Income Requirement 8 Gross-up Factor 9 Revenue Increase Requirement 10 Total Revenue Increase Required 11 Adjusted Test Year Revenue 12 Percent Increase Required (B) Non-Tax $ 232 008. $ 235 995. (C) Taxable $ 72 811. $ 94 709.40 $ 330 704. 716 183. 46.18% Exhibit No. Falls Water Company Calculation of Rates By Customer Class Proposed Rates: Metered Commercial: Number of Customers X Proposed Rate of $16.47 X 12 Months Annual Excess Usage in 1000's of Gallons Annual Excess ~ $0.73 per 1000 gal. Total for Metered Commercial Metered Residential & Multi-family Residential: 7 Multi-family Residential: Number of Customers X Proposed Rate of $16.4710 X 12 Months11 Annual Excess Usage in 1000's of Gallons12 Annual Excess ~ $0.73 per 1000 gal.13 Total for Metered Residential Metered Residential: Number of Customers X Proposed Rate of $16.47 X 12 Months Annual Excess Usage in 1000's of Gallons Annual Excess ~ $0.73 per 1000 gal. Total for Metered Residential 20 Total Revenue at Proposed Rates 856.44 277. 29,995 896. 301. 613. 514. 325. 071 $ 50 579. 521 823 Total Gross Revenue Required Variance of Gross Revenue from Proposed Rates Over/(Under) $ 606 952.44 $ 380 930. Proposed Rates: Metered Customer - Base Charge for 12 000 Gal Metered Customer Commodity Charge Rates as a percentage of gross revenues: Base Charge - Fixed Commodity - Variable RateTariff Tariff Description 28 R-Metered Residential Customers 29 R-Metered Multi-Family Residential Customers 30 C-Metered Commercial Customers 16.47 Proposed Present 60% 40% Avg Annual Bill at the Present Rates $ 219. $ 232. $ 415. 62% 38% Avg Annual Bill at the Proposed Rate $ 321. $ 341. $ 618. 173.43 939. $ 987 883. $ 1 046 995. 046 888. $ 107. Percentage of Change From Present 46.27% 46.59% 49.00% Exhibit No. Falls Water Company Detail of Connection Costs (A)(B) Costs Costs Component 1 1/2" Meters 2" Meters 1 Meter 492.687. 2 MXU 150.150. 3 Fittings 194.274. 4 Total Parts 837.112. 5 Labor 74.74. 6 20X12 Barrel Extension 22.22. 7 Total 933.40 208. I $$ 1 205.00 I8 Requested Rates 930. 9 Currents Rates 825.900. 10 Increase 105.305. 11 Percent Increase 13%34% Exhibit No. Page 1 of 4 ariffNo. 1 c.!. No. Canceling !. No. Name of Utility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R- RESIDENTIAL METERED SERVICE RATE:$11 53 $16.47 PER BILLING CYCLE MINIMUM CHARGE 18 $0.PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12 000 GALLONS PER BILLING CYCLE. AVAILABLE TO ALL RESIDENTIAL CUSTOMERS EXCEPT THOSE QUALIFYING FOR RATE SCHEDULE R- Issued: April 28, 2006 Effective: Aprill, 2006 Issued by FALLS WATER COMPANY, INC.By Title MANAGER K. Scott Bruce Exhibit No. Page 2 of 4 Tariff No. 3 !. No. Canceling c.!. No. lName 01 ~tility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R- RESIDENTIAL MULTI-FAMILY RATE:$11 53 $16.47 PER BILLING CYCLE MINIMUM CHARGE $0.48 $0.PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12 000 GALLONS PER BILLING CYCLE. METERS ARE READ YEAR ROUND. AVAILABLE TO RESIDENTIAL DUPLEXES, FOUR-PLEXES, AND APARTMENT BUILDINGS WHERE INDIVIDUAL UNITS IN A BUILDING ARE NOT METERED SEPERATEL Y OR LIVING UNITS CANNOT BE SOLD SEPERATEL Y. RATES WILL BE BASED ON A PER BUILDING METERED BASIS. Issued: April 28, 2006 Effective: Aprill, 2006 Issued by FALLS WATER COMPANY, INC.By Title MANAGER K. Scott Bruce Exhibit No. Page 3 of 4 Tariff No. 4 !. No. Canceling !. No. Name of Utility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. C- METERED COMMERCIAL SERVICE READ YEAR-ROUND RATE:$11 53 $16.47 PER BILLING CYCLE MINIMUM CHARGE $0.48 $0.PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12 000 GALLONS PER BILLING CYCLE. AVAILABLE TO ALL NON-RESIDENTIAL CUSTOMERS. Issued: April 28, 2006 Effective: Aprill, 2006 Issued by FALLS WATER COMPANY, INC.By Title MANAGER K. Scott Bruce Exhibit No. Page 4 of 4 Tariff No. 5 !. No. Canceling !. No. Name of' Utility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. M NON-RECURRING CHARGES: RE-CONNECT FEES: During office hours After office hours $ 20. $ 40. FIELD COLLECTION FEE: Fee assessed when a personal visit is made by a Company representative in order to terminate service for non-payment of the account and the customer at such time makes a partial or full payment on the bill. Field Collection Fee $ 15. HOOKUP CHARGES: :X" Meter 1" Meter 1 %" Meter 2" Meter $500. $600. $825 00 $930. $900 00 $205. The Company shall follow the "Rules and Regulations of the Idaho Public Utilities Commission Governing Customer Relations of Natural Gas, Electric and Water Public Utilities Under the Jurisdiction of the Idaho Public Utilities Commission. Issued: April 28, 2006 Effective: April!, 2006 Issued by FALLS WATER COMPANY, INC.By Title MANAGER K. Scott Bruce Exhibit No. Page 1 of 4 ariffNo. 1 !. No. Canceling !. No. Name of Utility Original Sheet No. FALLS WATER CO, INC. SCHEDULE NO. R- RESIDENTIAL METERED SERVICE RATE:$16.47 PER BILLING CYCLE MINIMUM CHARGE $0. PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12 000 GALLONS PER BILLING CYCLE. AVAILABLE TO ALL RESIDENTIAL CUSTOMERS EXCEPT THOSE QUALIFYING FOR RATE SCHEDULES R-2 AND R- Issued:Effective: Issued by: FALLS WATER CO , INC. By:Title: MANAGER K. Scott Bruce Exhibit No. Page 2 of 4 Tariff No. 3 I. No. Canceling I. No. ~ame 01 Utility Original Sheet No. FALLS WATER CO , INC. SCHEDULE NO. R- RESIDENTIAL MULTI-FAMILY RATE:$16.47 PER BILLING CYCLE MINIMUM CHARGE $0. PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12 000 GALLONS PER BILLING CYCLE. METERS ARE READ YEAR ROUND. AVAILABLE TO RESIDENTIAL DUPLEXES, FOUR-PLEXES, AND APARTMENT BUILDINGS WHERE INDIVIDUAL UNITS IN A BUILDING ARE NOT METERED SEPERA TEL Y OR LIVING UNITS CANNOT BE SOLD SEPERATELY. RATES WILL BE BASED ON A PER BUILDING METERED BASIS. Issued:Effective: Issued by: FALLS WATER CO, INC. By:Title: MANAGER K. Scott Bruce Exhibit No. Page 3 of 4 Tariff No. 4 I. No. Canceling !. No. r'lame or Utility Original Sheet No. FALLS WATER CO, INC. SCHEDULE NO. C- METERED COMMERCIAL SERVICE READ YEAR-ROUND RATE:$16.47 PER BILLING CYCLE MINIMUM CHARGE $0. PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12 000 GALLONS PER BILLING CYCLE. AVAILABLE TO ALL NON-RESIDENTIAL CUSTOMERS. Issued:Effective: Issued by: FALLS WATER CO, INC. By:Title: MANAGER K. Scott Bruce Exhibit No. Page 4 of 4 Tariff No. 5 !. No. Canceling !. No. Name or Utility Original Sheet No. FALLS WATER CO, INC. SCHEDULE NO. M NON-RECURRING CHARGES: RE-CONNECT FEES: During office hours After office hours $ 20. $ 40. FIELD COLLECTION FEE: Fee assessed when a personal visit is made by a Company representative in order to terminate service for non-payment of the account and the customer at such time makes a partial or full payment on the bill. Field Collection Fee $ 15. HOOKUP CHARGES: %" Meter 1" Meter 1 %" Meter 2" Meter $500. $600. $930. 205. The Company shall follow the "Rules and Regulations of the Idaho Public Utilities Commission Governing Customer Relations of Natural Gas, Electric and Water Public Utilities Under the Jurisdiction of the Idaho Public Utilities Commission. Issued:Effective: Issued by: FALLS WATER CO, INC. By:Title: MANAGER K. Scott Bruce Exhibit No.