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HomeMy WebLinkAbout20090804Application.pdfFALLS WATER COMPANY Tel.: (208) 522-1300 Fax: (208) 522-4099 2180 N. Deborah Dr., Idaho Falls, Idaho 83401 Website: ww.fallswater.com August 3, 2009 Idaho Public Utilities Commission ATTN: Commission Secretar P.O. Box 82720-0074 Boise, Idaho 83720 c::c--tom::cn:I0°0::3:~ 3:r"'~ Subject: Application to Increase Rates and Charges (,01:"'(Jo:z Dear Commission Secretar: ~aJ :Dc:en l,f ::mQm ~-..'::; (J 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 stap and retu this extra copy to the company for our records. The Company wil informed its customers of this application through a notice to be mailed on August 5, 2009. The Company wil send a news release to the Post Register Newspaper in Idaho Falls on August 6, 2009. Copies ofthe notices are enclosed as Exhibits 8 & 9. Also enclosed is a computer disc containing the application and work papers in electronic media to aid the Commission Staffin its review of this application. Sincerely,K\~~ K. Scott Bruce General Manager ~ R'E (' F.l \J ¡: n\U__¡'f~¡¡t ZOOS AUG -4 PH I: 5 I K. Scott Bruce Falls Water Company, Inc. 2180 North Deborah Drive Idaho Falls, ID 83401 TeL. (208) 522-1300 Fax (208) 522-4099 E-mail: scottl(ffallswater.com Representative for Falls Water Company, Inc. i,"~LlO. O¡IPilr'".'~,J;-\i \,- f, "'~~rJ..~~-¥ · ';=,., ,.;" r,o..,~.t'-"SIOuUTIL.1 l a:;; '-- ;ñ1i~"v i"4 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF ) FALLS WATER COMPANY ) FOR AN ORDER AUTHORIZING INCREASES IN) THE COMPANY'S RATES AND CHARGES FOR) WATER SERVICE IN THE STATE OF IDAHO ) CASE NO. FLS-W-09-1 APPLICATION COMES NOW Falls Water Company Inc., ("Falls Water", "Applicant" or "Company") and hereby makes application to the Idaho Public Utilities Commission, ("Commission") for an Order approving revisions to Applicant's schedules of rates and charges for water service in the State of Idaho to become effective with service provided on and after September 10, 2009. Applicant is requesting the Commission's authorization to: 1) Change the water rates it charges its customers to produce an increase in the Company's revenues by approximately 14.39%. The Company is proposing to increase its metered customer base rate from $14.00 to $18.00 (29%) to improve cash flows to meet minimum fixed costs during the winter months and decrease it's commodity rate from $0.667 to $0.601 per thousand gallons (-10%). The Company proposes to delete its obsolete curent flat rate Schedule R-2. The Company last increased its basic rates and charges pursuant to Commission Order No. 30484 (Case No. FLS-W- 07-1) dated Januay 11, 2008; 2) Add certain non-recurng charges to the Company's Schedule No. M. Applicant is requesting this Application be processed under the Commissions Rules of Modified Procedure. Applicant fuher requests an Order of the Commission authorizing the new rates be effective for all water delivered afer the first meter reading on or about September 10,2009. 1 GENERA Applicant is a public utilty water corporation within the meaning of the Idaho Public Utilty Law, is duly organized and existing under the laws of the State of Idaho and is engaged in conducting a general water utility business in an area generally north of the City of Amon and northeast of the City of Idaho Falls in Bonnevile County, Idaho, having its principal office and place of business at 2180 North Deborah Drive, Idaho Falls, Idaho. A copy of Applicant's Aricles of Incorporation together with all amendments to date is on fie with the Commission. Applicant's current Certificate of Convenience and Necessity is Certificate No. 236. Curently the Company provides water service to over 3,600 residential and commercial customers. GENERAL RATE INCREASE REQUEST Enclosed, with this Application, are Exhibits Number 1 through 9 in support of the increase in water revenue requested. Applicant is proposing the year 2008 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. Colum (A) of this exhibit presents the balances of accounts on the books of the Company at December 31, 2008. Colums (B), (C), (D) and (E) are adjustments to the year end account balances to include assets put into service durng 2009. Colum (F) presents Applicant's proforma rate base of$I,856,499.20. Colum (B) is an adjustment to recognize the costs for the Company's new Well #9, which went into service in May 2009, and includes new water rights acquired. The total adjustments to the rate base for the new well and water rights are $752,969.39. Column (C) is an adjustment to recognze the costs of meters and MXU transmitters that have or will be installed in 2009 to continue the Company's long-term asset replacement and upgrade program. The costs are for 300 new meters and 300 MXU transmitters. The adjustment increases rate base by $85,536.23. Colum (D) presents costs to purchase a new offce desk and paritions acquired in 2009 for the new offce that the Company moved to in September 2008. The total adjustment to rate base is $1,535.96. Column (E) presents the costs to replace a hydrant on the water system in June of 2009. The tota adjustment to rate base is $2,149.70. 2 Line 14 is an adjustment to depreciation to include the 2009 depreciation on the above asset adjustments using the ~ year convention. Line 20 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 $1 ,856,449.20 is shown on line 21. RESULTS OF OPERATIONS Exhibit NO.2 presents the Company's Results of Operations adjusted for known and measurable changes. Colum (A) of the exhbit presents the actual recorded results on the Company's books for the year 2008. These actual results are adjusted in Colums (B) through (H) to develop the adjusted results shown in Colum (I) that is used to determine the Company's revenue requirement on Exhibìt NO.4. The adjustment shown in Colum (B) of Exhibit NO.2 adjusts the Company's revenues and expenses to recognize the elimination of an $850.00 loss from disposal of a plotter in 2008, the removal of non-recurng consulting expense of $10,000 from operational expenses, and the removal of a $40 federal tax refud resulting from filing a correction to the 2006 taxes. This adjustment increases the Company's test year income by $10,810 shown on line 73. Colum (C) of this exhibit adjusts the Company's labor costs for wage and salar levels which took effect on December 19, 2008. This adjustment decreases the Company's test year income by $70,809.53 shown on line 64 Colum (C). Column (D) of Exhibit NO.2 recognzes the increased cost of rent for the new offce and warehouse space into which the company moved on September 1, 2008. The Company had outgrown its existing space and made the move to consolidate operations in one location to improve communications and efficiency. This adjustment decreases the Company's test year income by $17,651.22 as shown on line 64 Colum (D). Colum (E) of Exhibit No. 2 recognizes the increased premium for liabilty insurance for the Company. The premium increase was effective July 11, 2009. The adjustment decreases the Company's income by $1,007.00 as shown in Column (E) line 64. Exhibìt No. 2 Colum (F) 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 2008 level of customers served based upon historical average costs per customer. Contract maintenance and fee increases are based upon current costs. This adjustment decreases the Company's income by $31,121.18 as shown in Column (E) line 64. 3 The administrative adjustment shown in Column (G) of Exhibit NO.2 recognizes increased costs of postage, accounting services, and payroll services. This adjustment is based upon the curent level of costs adjusted for the year-end level of customers. This adjustment decreases the Company's income by $2,158.05 shown on line 64 Colum (G). The adjustment shown in Colum (H) of Exhibit No. 2 is due to using a composite amortization rate for contributions in aid of constrction. This adjustment increases the Company's income by $3,416.95 as shown on line 64 of Colum (H). Colum (I) of Exhibit No. 2 presents the Company's proforma results of operations for use in ths case. The proforma results reflect a loss of $28,144.52 as shown in Column (I) line 64. COST OF CAPITAL Exhibit NO.3 presents the Company's capital structure and calculation of the weighted cost of capital as of December 31, 2008. An adjustment to the Company's equity component of the capital structure is shown on line 3. This adjustment is for the State Revolving Loan, of $1,200,000 at 3.25%, which the Company finalized with DEQ in June 2009. The Company is requesting a retur on its common equity of 12%. This return is equal to the retur granted the Company in its last case and is the same as returs granted recently by the Commission for other small water companies. The overall weighted cost of capital for Falls Water Company is 4.74%. 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 $116,200.54 shown on line 5 utilzing the rate base, rate of retur and operating results from Exhibits No.1, 2 and 3. Lines 6 through 9 of Colums (B) and (C) calculate the revenue increase necessar to overcome the income deficiency. The revenue gross-up calculation is pedormed in two steps. Colum (B) calculates the incremental revenue requirement of $28,694.16 necessar 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 ban charges for credit card payments. Column (C) calculates the incremental revenue requirement of $114,802.65 necessary to produce the net operating income requirement of $88,056.01. These incremental revenues will be subject to income taxes in addition to the bad debt exposure, regulatory fees and ban service charges. The total revenue increase requirement of $143,496.81 is shown on line 10. This represents an increase in the Company's revenues of 14.39%. RATE DESIGN Exhibit NO.5 shows the calculations to develop a rate design that wil produce the required revenues. The exhibit presents the anualized revenue that would be produced 4 by the Company's present rates. Due to the fact that all customers in the water system are curently metered and the Company will not allow new customers to come onto the system without a meter installed, the Company is proposing that the Residential Flat Rate Schedule 2 be cancelled. Exhibit 5 presents the Applicants proposal to develop new rates. The Company has placed more emphasis on the basic charge in an effort to remedy winter cash flow issues. The Company's curent monthly winter bilings create a revenue shortfall of approximately $9,000 each month. Conservation of water has increased as a result of metering the flat rate residential customers. The decrease in the commodity rate should not adversely affect the customers' use of water. The increase to the base rate will minimize the affect of the rate increase to customers during the high use sumer months. As shown on lines 26 and 27 of this exhibit, the Company's current base rates produce 59% of revenues and commodity rates produce 41 % of revenues. The Company proposal increases the ratio of base charges from 59% to 68% and decreases the ratio of commodity charges from 41 % to 32%. The Company is proposing to increase the base rate for all metered schedules. from $14.00 to $18.00. This is an increase of 29%. The Company proposes to decrease the commodity rate for all metered schedules from $0.667/1000 gallons to $0.601/1000 gallons. This is a decrease of 10%. The proposed rate design will produce $1,140,570.54 in revenues. The revenue generated is within $31.18 of the revenue requirement of $1,140,539.36. As shown on Exhibit 5, lines 28 through 30, the average residential metered customer will experience an increase in their average bil of approximately 14.88%. The average multifamily residential customer wil experience a increase in their average bil of 8.51 %. The average commercial customer will experience a increase in their average bil of 4.22%. SCHEDULE NO. M - NON-RECURRG CHARGES Meter Test at Customer Request Fee The Company requests a new charge for testing meters. At the beginning of the sumer irrigation period, many customers question the usage being biled. As the number of customers has increased over the years, the Company has spent more time testing meter accuracy. The Company uses the meter manufacturer's accuracy specification of plus or minus 1.5% to gauge when a meter needs to be replaced due to being inaccurate. Rarely does the meter test outside of the manufacturer's accuracy specification. When the meter tests inaccurate, the meter is replaced and if the meter read higher than it should the customer's billng is adjusted accordingly. The time and resources used to test meters, which overwhelmingly test accurate, could be put to better use maintaining the water system and benefitting a larger number of customers. The Company proposes that it be permitted to charge a meter test fee of $10.00 to customers who want the meter's accuracy tested and the results of the test are within the manufacturer's specification of plus or minus 1.5% of the factory calibrated 5 test meter. This would place the burden of cost on the customers responsible for the costs incured by the Company and remove it from being wholly subsidized by all customers of the Company. If the customer's meter tests outside of the manufactuer's specification, the Company wil replace the meter, adjust the customer's biling,ifthecustomer's meter is over reading, and waive the $10.00 meter test fee. The Commission approved a similar fee for United Water Idaho Inc. under their Schedule NO.5 Miscellaneous Fees and Charges item number 6, effective August 2, 2005. Retured Check Charge The Company requests a new charge of $20.00 per occurence for retured checks. The fee would apply to all customers where the customer's check or ban draft is retured by the ban for insuffcient fuds, closed account, or some other appropriate reason. The Company, curently, uses a collection agency to collect the retured checks. Many customers prefer to deal directly with the Company instead of the collection agency. The Company has sufficient manpower to handle the retued checks and eliminate the collection agency. This results in improved customer relations because the customers will deal directly with the Company instead of the collection agency. The costs of handling the returned check should be paid by the customer responsible for those costs. The Commission approved a similar retued check fee for United Water Idaho Inc. under their Schedule NO.5 Miscellaneous Fees and Charges item number 1, effective August 2, 2005. Late Payment Charge The Company seeks the Commission's approval to include on the Company's Schedule M a late payment charge of 1 % per month (12% APR). The Company cannot proceed with the collection process on past due balances if "The customer's unpaid bil cited as grounds for termination totals less than fifty dollars ($50) or two (2) months' charges for service, whichever is less." (Utility Customer Relations Rules IDAPA 31.21.01.310.01). The customer must use at least 66,000 gallons in a billng cycle under curent rates to receive a bil of $50.00 and thus allow the Company to begin collection on the customer's past due balance,. The only months in which customers use that much water in a biling cycle is durng the summer months from June through September. The remaining eight months of the year, the average customer is below that amount of usage and is generally being biled only the minimum charge because their usage is 12,000 gallons or less. Due to the low minimum biling amount, the company is unable to do collections until the customers' account balance includes two months of past due charges. Many customers will pay their bil every other month simply because it is a small amount and 6 no penalty is assessed for not paying their bil in a timely maner. (Applicant is providing a work paper (AR Aging) for the Commission Staffs review which details the monthly past due balances for 2008 and the first half of 2009.) The average monthly percentage of customers with past due balances is 20%. One in five customers is not paying their bilings by the due date. The past due data is taen from month end reports and the biling due date is on the 15th of the month. The Company will send 7 -day notices to 3 % to 9% of its customers each month. The remaining 11 % to 17% of the average 20% of customers with past due balances each month have no incentive to pay their past due balance. A late payment charge would encourage some of the customers to pay their bil in a timely maner. The results of this would include having fewer customers on the Company's collections list, less manpower and company resources going to the collections process, and improved cash flow for the Company. CUSTOMER NOTIFICATION & PRESS RELEASE Exhibit 6 is a copy of the notice mailed to the Company's customers informing them ofthe rate case. Exhibit 7 is a copy of the press release e-mailed to the Post Register newspaper in Idaho Falls, Idaho on August 3,2009. TARIFFS Exhibit No.8, a five (5) page exhibit, is a marked-up copy of the Company's curent rate schedules showing the proposed changes in rates for Schedules R-l, R-2, R- 3, C-2 and M. Exhibit No.9, a five (5) page exhibit is composed of the Company's new proposed rate schedules, CONTACT INFORMATION Questions regarding this application should be addressed to: K Scott Bruce, General Manager Falls Water Co. 2180 N Deborah Dr. Idaho Falls, Idaho 83401 Ph: (208) 522-1300 e-mail scottl(ffallswater.com Robert E. Smith 2209 N. Bryson Rd. Boise, Idaho 83713 Ph: (208) 761-9501 e-mail utiltygroup(fyahoo.com Please provide copies of all correspondence, notices and orders to the above individuals. 7 Respectfully submitted,K~ K. Scott Bruce General Manager 8 i- ãiI ~ Q):; II c: aiai ai a. Q) E -o ai00: Q¡ Õ10 §S~ai.!'3ã' 0u.ã'o LO 0 00 "" 00 LO 00 0) .. 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Pr o f o r m a R e s u l t s o f O p e r a t i o n s (A ) (B ) (e ) (D ) (E ) (F ) (G ) (H ) (I) Ad j u s t m e n t f o r In c r e a s e d In c r e a s e d In c r e a s e d In c r e a s e d In c r e a s e d De c r e a s e d No n - R e c u r r i n g La b o r Of f i c e R e n t Ll a b . l n s . So u r c e o f S u p p l y Mi s c e l l a n e o u s De p r e c i a t i o n Ja n . D e c 0 8 It e m s Co s t s Co s t s Co s t s Co s t s Op e r a t i n g C o s t s Co s t s Pr o f o r m a 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 1 46 0 . U n me t e r e d R e v e n u e 22 , 9 4 7 . 3 1 22 , 9 4 7 . 3 1 2 46 1 . 1 . M e t e r e d R e s i d e n t i a l 93 9 , 2 3 0 . 5 6 93 9 , 2 3 0 . 5 6 3 46 1 . 2 . C o m m e r c i a l R e v e n u e 32 , 0 7 4 . 6 8 32 , 0 7 4 . 6 8 4 47 4 , O t h e r U t i l t y R e v e n u e 2, 7 9 0 . 0 0 2, 7 9 0 . 0 0 5 To t a l 4 0 0 . O p e r a t i n g R e v e n u e 99 7 , 0 4 2 . 5 5 - 99 7 , 0 4 2 . 5 5 6 41 4 . G a i n ( L o s s ) o n P r o p e r t (8 5 0 . 0 8 ) 85 0 . 0 8 7 To t a l I n c o m e 99 6 , 1 9 2 . 4 7 85 0 . 0 8 99 7 , 0 4 2 . 5 5 8 Ex p e n s e 9 60 1 . 5 . L a b o r F i e l d 13 1 , 8 3 7 . 3 3 41 , 7 8 2 . 9 8 17 3 , 6 2 0 . 3 1 10 60 1 . 7 . L a b o r M e t e r R e a d i n g 2, 2 9 7 . 4 0 1, 4 0 9 . 8 5 3,7 0 7 . 2 5 11 60 1 . 8 . L a b o r O f f i c e 54 , 4 2 6 . 1 4 80 1 . 4 6 55 , 2 2 7 . 6 0 12 60 1 . 9 . A d m i n - L a b o r 10 4 , 3 9 9 . 2 1 5, 2 0 0 . 8 7 10 9 , 6 0 0 . 0 8 13 60 4 . E m p l o y e e B e n e f i t s 64 , 0 1 6 . 9 9 8, 7 8 4 . 2 3 72 , 8 0 1 . 2 2 14 61 0 . P u r c h a s e d W a t e r 1, 1 1 2 . 0 0 1,1 1 2 . 0 0 15 61 5 . E l e c t r i c a l P o w e r 96 , 5 9 6 . 2 8 30 , 0 2 5 . 3 3 12 6 , 6 2 1 . 6 1 16 61 8 . C h e m i c a l s 6,3 3 6 . 8 7 1,0 9 5 . 8 5 7, 4 3 2 . 7 2 17 62 0 . 2 . S ò u r c e M & S 17 , 9 2 0 . 7 7 17 , 9 2 0 . 7 7 18 62 0 . 6 . D i s t r i b u t i o n M & S 63 , 6 7 7 . 4 9 63 , 6 7 7 4 9 19 62 0 . 7 . P o s t a g e 15 , 9 0 7 . 4 5 1,1 4 8 . 1 5 17 , 0 5 5 . 6 0 20 62 0 . 8 . O f f i c e 31 , 6 4 4 . 0 3 31 , 6 4 4 . 0 3 21 62 0 . 8 1 . T e l e p h o n e E x p e n s e 12 , 9 6 0 . 0 1 12 , 9 6 0 . 0 1 22 62 0 . 8 2 . B a n k s e r v i c e c h a r g e s 3, 8 2 9 . 0 1 3,8 2 9 . 0 1 23 62 0 . 8 3 . O f f i c e U t l l t e s E x p e n s e 4, 1 7 5 . 6 1 (1 , 8 3 4 . 8 2 ) 2, 3 4 0 . 7 9 24 63 1 . 1 . E n g i n e e r i n g 1, 6 2 0 . 0 0 1, 6 2 0 . 0 0 25 63 1 . 2 . A c c o u n t i n g 2, 6 0 5 . 0 0 18 0 . 0 0 2, 7 8 5 . 0 0 26 63 1 . 4 . P a y r o l l S e r v i c e s 2, 5 1 0 . 6 0 82 9 . 9 0 3,3 4 0 . 5 0 27 63 5 . T e s t i n g 9, 8 6 5 . 6 3 9,8 6 5 . 6 3 28 63 6 . 2 . S o u r c e C o n t r a c t R e p a i r s 83 9 . 5 8 83 9 . 5 8 29 63 6 . 3 . T r a s h 1,0 3 9 . 5 7 1, 0 3 9 . 5 7 30 63 6 . 4 . O u t s o u r c e d B a d D e b t C o l l e c t i o n 26 9 . 7 9 26 9 . 7 9 31 63 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 28 , 0 5 5 . 5 7 28 , 0 5 5 . 5 7 32 63 6 . 7 . D a t a P r o c e s s i n g 4, 2 2 7 . 5 0 4, 2 2 7 . 5 0 33 63 6 . 8 . C o n t r a c t S e r v i c e - C o n s u l t i n g 10 , 0 0 0 . 0 0 (1 0 , 0 0 0 . 0 0 ) 34 64 1 . R e n t a l o f P r o p e r t y 24 , 1 9 8 . 0 0 19 , 4 8 6 . 0 4 43 , 6 8 4 . 0 4 35 64 2 . R e n t a l o f E q u i p m e n t 20 , 7 0 0 . 6 0 20 , 7 0 0 . 6 0 36 65 0 . T r a n s p o r t t i o n E x p e n s e 32 , 9 8 5 . 7 8 32 , 9 8 5 . 7 8 37 65 6 . I n s u r a n c e E x p e n s e 14 , 3 1 1 . 0 0 1, 0 0 7 . 0 0 15 , 3 1 8 . 0 0 38 65 6 . 1 . W o r k e r s C o m p e n s a t i o n I n s 7, 4 3 6 . 8 5 2, 7 8 5 . 3 5 10 , 2 2 2 . 2 0 39 66 0 . A d v e r t i s i n g E x p e n s e 3,5 2 1 . 8 2 3, 5 2 1 . 8 2 40 66 6 . R a t e C a s e A m o r t 51 0 . 0 0 51 0 . 0 0 41 67 0 . B a d D e b t E x p e n s e 13 , 6 1 2 . 3 3 13 , 6 1 2 . 3 3 42 67 5 . 2 . D u e s & P u b l i c a t i o n s 96 8 . 0 0 96 8 . 0 0 43 67 5 . 4 . I D H W F e e E x p e n s e 10 , 9 8 7 . 9 7 10 , 9 8 7 . 9 7 44 To t a l E x p e n s e 80 1 , 4 0 2 . 1 8 (1 0 , 0 0 0 . 0 0 ) 60 , 7 6 4 . 7 3 17 , 6 5 1 . 2 2 1,0 0 7 . 0 0 31 , 1 2 1 . 1 8 2, 1 5 8 . 0 5 90 4 , 1 0 4 . 3 6 45 N e t O r d i n a r y I n c o m e 19 4 , 7 9 0 . 2 9 10 , 8 5 0 . 0 8 (6 0 , 7 6 4 . i 3 ) (1 7 , 6 5 1 . 2 2 ) (1 , 0 0 7 . 0 0 ) (3 1 , 1 2 1 . 1 8 ) (2 , 1 5 8 . 0 5 ) 92 , 9 3 8 . 1 9 Pa g e 1 o f 2 46 O t h e r I n c o m e / E x p e n s e 47 O t h e r I n c o m e 48 4 2 1 . N o n - U t i l t y I n c o m e 49 T o t a l O t h e r I n c o m e 50 O t h e r E x p e n s e 51 4 0 3 . D e p r e i a t i o n E x p e n s e 52 4 0 8 . T a x e s 53 4 0 8 . 1 1 . P r o p e r t T a x e s 54 4 0 8 . 1 2 . P a y r o l l T a x e s 55 4 0 9 . 1 0 ' F e d I n c o m e T a x 56 4 0 9 . 1 1 . S t a t e I n c o m e T a x 57 T o t a l 4 0 8 . T a x e s 58 59 60 61 62 40 8 . 1 0 . R e g u l a t o r y F e e 42 6 . M i s c . N o n - U t i l t y E x p e n s e s 42 6 . 1 . D o n a t i o n s - T a x D e d u c t i b l e To t a l O t h e r E x p e n s e 63 N e t O t h e r I n c o m e 64 Ne t I n c o m e EX H I B I T 2 Fa l l s W a t e r C o . , I n c . Pr o f o r m a R e s u l t s o f O p e r a t i o n s (A ) (B ) Ad j u s t m e n t f o r No n - R e c u r r i n g It e m s (C ) In c r e a s e d La b o r Co s t s (0 ) In c r e a s e d Of i c e R e n t Co s t s (E ) In c r e a s e d Ua b . I n s . Co s t s (G ) In c r e a s e d Mi s c e l l a n e o u s Op e r a t i n g C o s t s (F ) In c r e a s e d So u r c e o f S u p p l y Co s t s (H ) De c r e a s e d De p r e c i a t i o n Co s t s (I ) Ja n . De c 0 8 Pr o f o r m a 78 , 2 1 0 . 2 0 (3 , 4 1 6 . 9 5 ) 74 , 7 9 3 . 2 5 16 , 7 6 6 . 0 1 16 , 7 6 6 . 0 1 19 , 4 5 8 . 6 6 10 , 0 4 4 . 8 0 29 , 5 0 3 . 4 6 (4 0 . 0 0 ) 40 . 0 0 20 . 0 0 20 . 0 0 36 , 2 0 4 . 6 7 40 . 0 0 10 , 0 4 4 . 8 0 46 , 2 8 9 . 4 7 11 4 , 4 1 4 . 8 7 40 . 0 0 10 , 0 4 . 8 0 (3 , 4 1 6 . 9 5 ) 12 1 , 0 8 2 . 7 2 (1 1 4 , 4 1 4 . 8 7 ) (4 0 . 0 0 ) (1 0 , 0 4 4 . 8 0 ) 3, 4 1 6 . 9 5 (1 2 1 , 0 8 2 . 7 2 ) 80 , 3 7 5 . 4 2 10 , 8 1 0 . 0 8 (7 0 , 8 0 9 . 5 3 ) ( 1 7 , 6 5 1 . 2 2 ) ( 1 , 0 0 7 . 0 0 ) ( 3 1 , 1 2 1 . 1 8 ) _ . ( 2 , 1 5 8 . 0 5 ) 3 , 4 1 6 . 9 5 ( 2 8 , 1 4 4 . 5 2 ) Pa g e 2 0 1 2 EXHIBIT 3 Falls Water Company, Inc. Capital Structure and Overall Rate of Return Weighted Cost of Capital as of December 31, 2008 (A)(B)(C)(D) Per Company Weighted Description Books Ratio Cost Cost 1 Total Long Term Debt - Loan # DW-9923 $238,184 13.19%3.25%0.43% 2 Long Term Loan - FPG $86,228 4.78%6.00%0.29% 3 Proforma Long Term Debt (Well #9 & Water Right)$1,200,000 66.47%3.25%2.16% 4 Common Equity $281,007 15.56%12%1.87% 5 Total $1,805,420 100.00%4.74% Page 1 of 1 EXHIBIT 4 FALLS WATER COMPANY CALCULATION OF REVENUE REQUIREMENT (A) 1 Rate Base 2 Rate of Return 3 Net Operating Income Requirement 4 Net Operating Income Realized 5 Net Operating Income Deficiency $ 1,856,449.20 4.74% $ 88,056.01 (28,144.52) $ 116,200.54 Revenue Requirement Increase 6 Overcome Loss 7 Subject to Income Tax 8 Gross-up Factor 9 Revenue Increase Requirement 10 Total Revenue Increase Required 11 Adjusted Test Year Revenue 12 Percent Increase Required Falls Water Company, Inc. Net to Gross Multiplier Net Deficiency Less Bad Debts ( percentage of Gross Revenue) Less PUC Fees (percentage of Gross Revenue) Less Bank Service Charge Fees (percentage of Gross Revenue) Taxable Amount State Income Tax Rate ~ 8% Federal Taxable Federal Income Tax Rate ~ 15% Net After Tax Net Income to Gross Revenue Multiplier Gross-up Factor to overcome loss Page 1 of 1 (B) Non-Tax $ 28,144.52 102% $ 28,694,16 100% 1.3653% 0.1662% 0.3840% 98.0845% 7.8468% 90.2377% 13.5357% 76.7021% 130% 102% (C) Taxable $ 88,056.01 130% $ 114,802.65 $143,496.81 997,042.55 14.39% EXHIBIT 5 Falls Water Company Calculation of Rate by Customer Class At Proposed Rates 71 $1,278.00 $15,336.00 23,885 $14,354.97 $29,690.97 3,460 $62,280.00 $747,360.00 548,891 $329,883.49 $ 1,077,243.49 $ 1,140,570.54 Metered Commercial: 1 Number of Customers 2 X Proposed Rate of $18.00 3 X 12 Months 4 Annual Excess Usage in 1000's of Gallons 5 Annual Excess ~ $0.601 per 1000 gal. 6 Total for Metered Commercial 62 $ 1,116.00 33,684 Metered Residential & Multi-family Residential: 7 Multi-family Residential: 8 Number of Customers 9 X Proposed Rate of $18.00 10 X 12 Months 11 Annual Excess Usage in 1000's of Gallons 12 Annual Excess ~ $0.601 per 1000 gat. 13 Total for Metered Residential Metered Residential: 14 Number of Customers 15 X Proposed Rate of $18.00 16 X 12 Months 17 Annual Excess Usage in 1000's of Gallons 18 Annual Excess ~ $0.601 per 1000 gal. 19 Total for Metered Residential 20 Total Revenue at Proposed Rates 21 22 Total Gross Revenue Requested Variance of Gross Revenue from Proposed Rates Over/(Under) $ 13,392.00 $ 20,244.08 Proposed Rates: 23 24 Metered Customer - Base Charge for 12,000 Gal $ Metered Customer Commodity Charge $ 18.00 0.601 25 26 27 Rates as a percentage of gross revenues: Base Charge - Fixed Commodity - Variable Proposed 68% 32% Rate Tariff Tariff Description 28 R-1 Metered Residential Customers 29 R-3 Metered Multi-Family Residential Customers 30 C-2 Metered Commercial Customers Avg Monthly Bill at the Present Rates $ 22.58 $ 32.12 $ 43.38 Page 1 of 1 Present 59% 41% Avg Monthly Bil at the Proposed Rate $ 25.95 $ 34.85 $ 45.21 $ 33,636.08 1,140,539.36 $ 31.18 Percentage of Change From Present 14.88% 8.51% 4.22% Percentage of Total Customers 96% 2% 2% EXHIBIT 6 NOTICE TO FALLS WATER CO., INC. CUSTOMERS During the week of August 3, 2009, Falls Water Co., Inc. filed an application with the Idaho Public Utilities Commission (I PUC) for a proposed general rate increase to become effective September 10, 2009. The filing is a proposal, subject to public review and a Commission decision before it can take effect. Falls Water Co., Inc. seeks approval to increase rates to recover the increasing costs of operations and maintenance, and replacing its aging infrastructure. If the proposed rate increases are approved, the average metered residential customer's annual rates would increase from $22.58 per month to $25.95 per month an average monthly increase of $3.37 per month or 14.88%. Average metered commercial customer's rates would increase from $43.38 per month to $45.21 per month an average increase of $1.83 per month or 4.22%. Multi-family residential customer's rates would increase from $32.12 per month to $34.85 per month an average increase of $2.73 per month or 8.51%. If approved the proposed increase would increase the Company's total annual revenues by $143,496.81 (14.39%). A copy of the application is available for review at Falls Water Co., Inc.'s office located at 2180 North Deborah Drive in Idaho Falls or on our website, ww.fallswater.com. Copies of the application are on file at the Idaho Public Utilities offices at 472 West Washington Street, Boise, Idaho 83702. The application is also available for review on the Commission's web site at ww.puc.idaho.gov. Please send any comments or questions to either Falls Water Company or the Idaho Public Utilities Commission: Idaho Public Utilities Commission PO Box 83720 Boise, ID 83720-0074 (800) 432-0369 Falls Water Company, Inc. 2180 North Deborah Drive Idaho Falls, ID 83401 (208) 522-1300 Comments may be submitted to the Idaho Public Utilities Commission via e-mail by going to the following website: http://ww.puc.idaho.gov/comments-complaints/choose%20form.htm Please refer to Case No. FLS-W-09-1 in all correspondence. Page I EXHIBIT 7 News Press Release Falls Water Co., Inc. is a privately owned water utility serving over 3,600 homes and businesses north of the City of Ammon and east of Idaho Falls. It is regulated by the Idaho Public Utilties Commission (IPUC) and has filed an application for a proposed general rate increase with the IPUC. The application was filed on August 3, 2009 and requests the increase to become effective September 10,2009. The filng is a proposal, subject to public review and a Commission decision before it can take effect. Falls Water Co., Inc. seeks approval to increase rates to recover the increasing costs of operations and maintenance, and replacing its aging infrastructure. If the proposed rate increases are approved, the average metered residential customer's annual rates would increase from $22.58 per month to $25.95 per month an average monthly increase of $3.37 per month or 14.88%. Average metered commercial customer's rates would increase from $43.38 per month to $45.21 per month an average increase of $1.83 per month or 4.22%, Multi-family residential customer's rates would increase from $32.12 per month to $34.85 per month an average increase of $2.73 per month or 8.51%. If approved the proposed increase would increase the Company's total annual revenues by $143,496.81 (14.39%). A copy of the application is available for review at Falls Water Co., Inc.'s office located at 2180 North Deborah Drive in Idaho Falls or on our website, ww.fallswater.com. Copies of the application are on file at the Idaho Public Utilities offices at 472 West Washington Street, Boise, Idaho 83702. The application is also available for review on the Commission's web site at ww.puc.idaho.gov. Please send any comments or questions to either Falls Water Company or the Idaho Public Utilities Commission: Idaho Public Utilities Commission PO Box 83720 Boise, 1083720-0074 (800) 432-0369 Falls Water Company, Inc. 2180 North Deborah Drive Idaho Falls, 10 83401 (208) 522-1300 Comments may be submitted to the Idaho Public Utilities Commission via e-mail by going to the following website: http://ww.puc.idaho.gov/comments-complaints/choose%20form.htm Please refer to Case No. FLS-W-09-1 in all correspondence. Page I E.'XI.I BIT -¡ !rariffNo. 1 p.D.C.1. No. Canceling p.D.C.1. No. Nameot Utility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R-1 RESIDENTIAL METERED SERVICE RATE:$14.00 $18.00 PER BILLING CYCLE (APPROXIMATELY 30 DAY PERIOD) MINIMUM CHARGE $0.667 $0.601 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 2. Issued: January 11, 2008 Effective: January 14, 2008 Issued by FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce fa-:Je I ()+ õ £)( !lIBrT r¡ Tariff No. 2 P.D.C.1. No. Canceling p.D.C.1. No. Name ot Utilty Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R-2 RESIDENTIAL FLAT RATE SERVICE RATE:$20.17 PER MONTH AVAILABLE TO ALL RESIDENTIAL CUSTOMERS VVITHOUT METERS LOCATED IN THE S\N1/4 OF SECTION 14, T. 2 N., R. 38 E.B.M., BONNEVILLE COUNTY, IDAHO (MOBILE HOME ESTATES SUBDIVISION, MONTE VISTA ESTATES, AND FIRST STREET MOBILE PARK). Planned metering of this area wil mo¥e customers to the ro.L .., 11~ 1\1.. 0 '" ~ .... ... _I +....iU ~~ ~..~ . ". .1 ,t.... +h~-~ ,.._. _.- - -'- .. .- ..... homes. DELETE SCHEDULE NO. R-2 Issued: April 28, 2006 Effectivé: April 1, 2006 Issued by FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce P(JtJe tf ,,+.t- £JlH.r'B i í'i ~ariffNo. 3 p.D.C.1. No. Canceling p.D.C.1. No. ¡Name ot ptility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R-3 RESIDENTIAL MULTI-FAMILY RATE:$14.00 $18.00 PER BILLING CYCLE (APPROXIMATELY 30 DAY PERIOD) MINIMUM CHARGE $0.667 $0.601 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 SEPARATELY OR LIVING UNITS CANNOT BE SOLD SEPARATELY. RATES WILL BE BASED ON A PER BUILDING METERED BASIS. . Issued: January 11, 2008 Effective: January 14, 2008 Issued by FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce Pofj e ~ cf 5 EX IIrBrT 'i irariffNo. 4 p.U.C.i. No. Canceling p.U.C.1. No. fName ot Ptility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. C-2 METERED COMMERCIAL SERVICE READ YEAR-ROUND RATE:$14.00 $18.00 PER BILLING CYCLE (APPROXIMATELY 30 DAY PERIOD) MINIMUM CHARGE $0.667 $0.601 PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12,000 GALLONS PER BILLING CYCLE. AVAILABLE TO ALL NON-RESIDENTIAL CUSTOMERS. Issued: January 11, 2008 Effective: January 14, 2008 Issued by FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce Po.j e Lf 0+ !J £.X'I8Tr ~ lrariffNo. 5 p.U.C.1. No. Canceling p.U.C.1. No.Original Sheet No. Nameot ptility FALLS WATER COMPANY, INC. SCHEDULE NO. M NON-RECURRING CHARGES: 1.RE-CONNECT FEES: During office hours $ 20.00 After office hours $40.00 2.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 $ 15.00 ~HOOKUP CHARGES: %" Meter $500.00 1" Meter $600.00 1 %" Meter $930.00 2" Meter $1,205.00 4.RETURNED CHECK CHARGE: This charge is applicable to all customers where the customer's check or bank draft is returned by the bank for insufficient funds, closed account. or some other appropriate reason. Returned check charge each occurrence $20.00 5.Meter Test at Customer Request Charge: This charge is applicable when the customer requests the Company to test the accuracy of a meter in the case of a disputed bil and the error in registration less than plus or minus 1.5%. Meter Test at Customer Request Charge $10.00 6.LATE PAYMENT CHARGE: 1 % of delinquent balance per month. nie CemßaRY si'all fells.. ti'e "Ri;les aREl Re€ll;latisRs ef ti'e IElai'e Pi;tllis Utilities CemmissieR Ge'JerRiR€l Ci;stemer RelatieRs ef ~lati;ral Gas, Élestris aREl Water Pi;tllis Utilities I;REler ti'e Jl;risElistieR El ti'e IElai'e Pi;tllis Utilities CemmissieR." Issued: January 11, 2008 Effective: January 14, 2008 Issued by FALLS WATER COMPANY, INC. By Title GENERAL MANAGER K. Scott Bruce Pa.j e .5- 0 (' S- ~x #Z'8rr q Tariff No. I p.D.C.L No. Canceling p.U.C.L No. ¡Name ot Utilty Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R-1 RESIDENTIAL METERED SERVICE RATE:$18.00 PER BILLING CYCLE (APPROXIMATELY 30 DAY PERIOD) MINIMUM CHARGE $0.601 PER THOUSAND GALLONS ADDITIONAL FOR ALL WATER USED IN EXCESS OF 12,000 GALLONS PER BILLING CYCLE. AVAILABLE TO ALL RESIDENTIAL. Issued:Effective: Issued by FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce Po- j e I o.ç.l Ë)l I4r BIT Cf Tariff No. 2 P.U.C.L No. Canceling p.U.C.LNo. Name ot Utilty Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R-2 DELETE SCHEDULE NO. R-2 Issued:Effective: Issued by: FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce PO-fj e J. c;r S- EX 14rB rT'i ~ariffNo. 3 p.U.C.1. No. Canceling p.D.C.1. No. ¡Name ot Utilty Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. R-3 RESIDENTIAL MULTI-FAMILY RATE:$18.00 PER BILLING CYCLE (APPROXIMATELY 30 DAY PERIOD) MINIMUM CHARGE $0.601 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 SEPARATELY OR LIVING UNITS CANNOT BE SOLD SEPARATELY. RATES WILL BE BASED ON A PER BUILDING METERED BASIS. Issued:Effective: Issued by FALLS WATER COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce Pd.1 e 3 oP £I EX ¡.rBiío, ariffNo.4 D.U.C.I. No. Canceling D.u.e.I. No. Name of Utility Original Sheet No. FALLS WATER COMPANY, INC. SCHEDULE NO. C-2 METERED COMMERCIAL SERVICE READ YEAR-ROUND RATE:$18.00 PER BILLING CYCLE (APPROXIMATELY 30 DAY PERIOD) MINIMUM CHARGE $0.601 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 COMPANY, INC.By Title GENERAL MANAGER K. Scott Bruce ra.j If t/ dt'S