20150707Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHo puBI,rc urrlrrrEs coMMISSToN ;l'i -illt- -l lli 2: 30
PO BOX 83720
BOISE, IDAHO 83720-0074 , .- ' -
[phone]
IDAHO BAR NO. 6864
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
FALLS WATER CO.,INC. TO AMEND ITS ) CASE NO. FLS-W-15-01
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY. )) cotvtMENTS oF THE) covtMrssroN srAFF
)
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Neil Price, Deputy Attomey General, and in response to the Notice of
Application and Notice of Modified Procedure in Order No. 33298 issued on May 8, 2015,
submits the following comments.
BACKGROUND
On March 16,2015, the Commission received an Application from Falls Water Co., Inc.
("Falls Water" or "Company") to amend and revise its existing Certificate of Public
Convenience and Necessity (CPCN) pursuant to ldaho Code $ 6l-526 and Rule 112 of the Idaho
Public Utilities Commission Rules of Procedure.
Falls Water filed its Application in response to Commission Order No. 32663 issued on
October 12,2012 requiring Falls Water to amend its CPCN to include customers currently being
served by the Company that are outside of its original service area.
STAFF COMMENTS JULY 7,2015
Falls Water submitted the following documents in support of its Application: (1) legal
descriptions ofthe proposed six area groups to be added to their current service area (See
Application Exhibit A, Exhibit B-1 through Exhibit 8-6); (2) Memorandum of Understanding
(MOU) with the City of Ammon (See Application, Exhibit C); and (3) system maps (See
Company Response to Staff Request No. 2).
Falls Water asks the Commission to modiff the Company's current CPCN (i.e., Seventh
Amended CPCN No. 236) to reflect that the Company is servicing subdivisions outside its
currently certificated area.' If approved, this would be the Eighth Amended CPCN No. 236.
STAFF ANALYSIS
In response to the Company's request, Staff comments address the following issues: (1)
Articles of Incorporation with amendments to provide water service within the State of Idaho; (2)
the MOU with the City of Ammon; and (3) expansion of territory for authorized water services.
Articles of Incorporation with Amendments
Staff reviewed the Articles of Incorporation with amendments for Falls Water. Staff
found that the Company is organized under the laws of the State of Idaho. The Company has
maintained its business formation and is in "good standing" according to the Idaho Secretary of
State as of June 2015.
City of Ammon Memorandum of Understanding
Falls Water's proposed new service territory is adjacent to the City of Ammon which has
its own public water system. The Company attached a MOU with the City of Ammon
delineating an agreed upon service boundary between the City of Ammon's water system and its
own water system.
The MOU was signed by the Mayor of Ammon and the Representative of Falls Water in
May and June of 2006. The MOU was reviewed by Staff and found to contain (1) a mapped
boundary at the Stone Arbor Subdivision with two main line interconnection points; (2) a
surveyed description of the south boundary line; and (3) a mapped boundary near the South
I Previous CPCN amendments have been predicated upon and issued pursuant to Order No. 5220, dated May 7,
1959; Order No. 6861, date May 14, 1963; Order 13249, dated July 5, 1977; Order No. 13522, dated November 7,
1977; Order No. 14963, dated September 24, 1979; Order No. 20649, dated August 6, 1986; Order No. 24122, dated
January 30,1992; and OrderNo.27616, datedJuly 7,1998.
STAFF COMMENTS JULY 7,2015
Ammon Road and the John Adams Parkway, where the two service areas were coordinated such
as to maintain the integrity of each system.
Amended Certificate of Public Necessity
The Company's Application seeks to enlarge and extend the boundary of the territory in
which it is currently authorized to provide water service. Service has expanded since the
Seventh Amended CPCN No. 236 due to various developments and construction of water service
lines.
Staff reviewed the legal descriptions and maps provided for the expanded service
boundaries in detail and found that they were consistent with existing developments.
Falls Water plans to provide service to the new areas through water mains and service
lines installed by various developers through its standard o'Main Extension Contract" as provided
for through its tariff on file with the Commission.
Staff reviewed the Company's tariff and notes that Appendix A of the current tariff
includes the Uniform Main Extension Rule for Water Utilities Based on Order 7830 (Case No.
u-1s00-22).
Contribution in Aid of Construction
IDAPA 31.36.01.103. Presumption of Contributed Capital, states: "In issuing certificates
for a small water company or in setting rates for a small water company, it will be presumed that
the capital investment in plant associated with the system is contributed capital, i.e., that this
capital investment will be excluded from rate base."
The Company's Application identifies that certain portions of the proposed acquisitions
include Plant in Service installed and paid for by other developers. Those portions of the
acquisitions meet the requirements for contributed capital and should be recorded as
Contributions in Aid of Construction (CIAC). In Case No. FLS-W-12-01, Staff s audit of Falls
Water Company included an audit of the General Ledger Accounts for Plant in Service. During
the audit, Staff found these General Ledger accounts clearly identify entries for CIAC. These
entries record each item of Plant in Service, the acquisition date, the amount and amortization of
CIAC. Staff also tested the supporting documentation for certain CIAC entries. No exceptions
were found. Staff believes the General Ledger Accounts, accounting procedures, and supporting
STAFF COMMENTS JULY 7,2015
documentation of Falls Water Company, will be adequate to account for CIAC for the proposed
additions.
CONCLUSION AND RECOMMENDATIONS
Staff agrees that expanding Falls Water's service area to include the additional territory is
consistent with the public convenience and necessity as required by Idaho Code $ 6l-526. The
MOU between the Company and the City of Ammon denotes an agreed upon service boundary
between the two water systems. The MOU appears to contain adequate provisions necessary to
maintain the integrity of each system and avoid problems with localized area water flows and
pressures.
The proposed territories are currently served by the Company or, if undeveloped, are
situated in locations adjacent to, or surrounded by, territories served by the Company. Staff thus
concludes that the requested service territory would not interfere with the operations of any other
water utility corporation under the Commission's jurisdiction, in compliance with Idaho Code
$ 61-s26.
Staff recommends an amended CPCN according to the revised legal descriptions as
submitted by the Company in its Application.
Respecttully submiued this
"bday
of July 2015.
-ffi
Neil Price
Deputy Attorney General
Technical Staff: Johanna Bell
John Nobbs
Chris Hecht
i:/umisc/comments/flswl 5. lnpjbjncwh comments
4STAFF COMMENTS JULY 7,2015
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 7.h DAY OF JULY 2015, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAF'X" IN CASE NO.
FLS-W-Is.OI, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
K SCOTT BRUCE
FALLS WATER CO INC
2180 N DEBORAH DR
IDAHO FALLS ID 8340I
E-MAIL: scottl @fallswater.com
CERTIFICATE OF SERVICE