20200311Comments.pdf

MATT HLiNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10655
RTCEIVED
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Street Address for Express Mail:
1 133I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attomey for the Commission Staff
BEF'ORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF FALLS WATER CO.,
INC.'S APPLICATION TO AMEND
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY NO.236
CASE NO. FLS.W-19.02
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Matt Hunter, Deputy Attorney General, and in response to the Notice of
Application and Modified Procedure issued in Order No. 34517 onDecember 27,2019, in Case
No. FLS-W-19-02, submits the following comments.
BACKGROUND
On December 2,2019, Falls Water Co., Inc. ("Falls Water" or "Company") filed an
Application with the Commission to amend the Company's certificate of public convenience and
necessity ("CPCN") to add thirteen areas contiguous to its current certificated service area. One
of the thirteen contiguous areas is the area in and around the Honey Bee Acres ("Honey Bee")
water system (Area 12). The Company requested Commission approval to connect Honey Bee's
water system to its existing water system and to include it in the Company's certificated service
area. The Company also requested the Commission's approval of a memorandum of
understanding ("MOU") with the City of Idaho Falls ("Idaho Falls") meant to assist with long-
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1STAFF COMMENTS MARCH II,2O2O
range planning for the Company's and Idaho Falls's water systems. The proposed MOU with
Idaho Falls sets boundaries between the two systems.
The Company's Application defines fourteen areas affected by proposals in this case, the
thirteen contiguous areas referenced above plus Area 14, an area that has been annexed by Idaho
Falls. See Attachment A. The Company stated that it currently seryes customers in Areas I
through 8 and in Area 13 and that it expects to serve Areas 9 through 1l in the future.
Area 12 (Honey Bee) is a separate water system surrounded by the Company's certificated
territory. The Company stated that a Honey Bee representative contacted the Company about
connecting the Honey Bee system to the Company's system. The Company stated it proposed to
install a new larger main for Honey Bee that will provide better flow and pressure for its
customers and for customers in Honey Bee. The Company stated that it agreed to connect Honey
Bee customers to the new main and to install meters. The Honey Bee system is not currently
metered. The Company stated Honey Bee customers' existing service lines will remain in place
and, because of the investment it would make to serve Honey Bee customers, the Company would
not be paying Honey Bee owners for assets transferred from the Honey Bee system to the
Company's system.
Area14 has been annexed by Idaho Falls. As part of its Application, the Company
requested Commission approval to remove Area 14 from the CPCN and to sell Area 14's water
system assets, a l2-inch water main and 6-inch lateral, to Idaho Falls. The Company requested
that it be relieved of the duty to provide service to one small commercial customer currently
served by the assets to be sold.
Staff believed an expedited transfer of Area 14 assets to be in the interest of the Company
and its customers. On February 4,2020 Staff proposed that the Commission bifurcate Case
No. FLS-W-19-02 to allow the Company's asset transfer transaction with Idaho Falls to be
considered separately. On February 5,2020,the Commission opened Case No. FLS-W-20-01
and issued a Notice of Application and Notice of Modified Procedure in Order No 34543. On
February 25,2020,the Commission approved the sale of the 12-inch water main and 6-inch
lateral to Idaho Falls, and approved the Company's request to be relieved of the duty to provide
service to the small commercial customer served by the assets to be sold. Order No. 34561.
STAFF COMMENTS MARCH II,2O2O2
STAFF ANALYSIS
Based on a review and analysis of the Application, the Company's responses to
production requests, and discussions with Company representatives, Staff recommends the
Commission:
a. approve the proposal to amend the Company's CPCN to add Areas 1 through 11,
and Area 13 (all of which are contiguous to its current certificated service area);
b. reject the proposal to include Honey Bee (Area 12) in the Company's certificated
service area; and
c. approve the proposal to remove Area 14 from the Company's certificated service
area because this area has been annexed by Idaho Falls'
Expanded Service Territory
Staff s review of the Company's proposal to add service territories to its CPCN had two
key objectives:
1. to determine if the documentation supplied in the Application accurately represents
the intended expansion; and
2. to ensure that the expansion does not overlap or otherwise interfere with other
water utilities' territories or expansion plans.
Staff believes the maps and legal descriptions submitted by the Company accurately
represent the thirteen areas where the Company plans to expand service and Area 14,the atea
annexed by Idaho Fatls. Idaho Public Utilities Commission Rules of Procedure (RP) 112.02
(Description of Construction or Expansion) and RP 112.03 (Map) define the requirements for
describing the expansion of service territories. Staff reviewed the maps and legal descriptions in
the Application confirming placement, distances, and borders for each of the thirteen areas where
the Company plans to expand service. Staff is satisfied that the service territory descriptions
presented in the Application accurately represent the proposed service territory expansion and
satisfr the requirements under RP 112.02 and RP 112.03.
Staff investigated other water utilities near the Company's system to determine if planned
capital expansion projects could overlap service areas. The Company's existing service territory
and planned expansion abuts the City of Ammon's municipal water system service area. Staff
compared the City of Ammon's Capital Improvement Plan to the Company's planned service
3STAFF COMMENTS MARCH II,2O2O
territory and determined that there was no overlap. In response to Staff production requests, the
Company provided a memorandum of understanding which outlines the future boundary for water
service area between the Company and the City of Ammon. Additionally, the Company provided
a map and legal description describing the boundary between the systems. This coordination
between entities benefits the Company and its customers by reducing the risk that future growth
by the City of Ammon will impede utilization of the Company's infrastructure, including water
mains and laterals near the boundary between the water systems.
Staff supports adding Areas I through 1 I and Area 13 to the Company's certificated
service area. Also, Area 14 should be removed from the Company's certificated service area
because it was annexed by Idaho Falls.
Honey Bee (Area 12)
The Company's request to include Area 12 in its certificated service area is premature and
should be rejected. The Company has indicated in discussions with Staff that it has not executed
an agreement with the owners of Honey Bee outlining the terms and conditions for connecting
Honey Bee customers and for the transfer of assets. Without a signed agreement, Staff cannot
ascertain whether the Company's stated plan to connect Honey Bee customers in exchange for
Honey Bee's assets is fair to both Honey Bee customers and the Company's existing customers.
Until an agreement can be finalized such that all parties authorized to execute agreements on
Honey Bee's behalf have agreed to terms and conditions that would affect ownership or water
service, Staff believes that including Area12 in the Company's certificated service area should be
denied. As long as Honey Bee continues to serve the area as a separate entity, Staff believes Falls
Water does not have an exclusive right to serve the area.
MOU with ldaho Falls
In Section VI of its Application, the Company describes an MOU that it intends to sign
with the City of Idaho Falls. The Idaho Falls MOU is included as Exhibit D of the Company's
Application. In the same section, the Company states, "To the extent approval is required, Falls
Water seeks the Commission's approval of the MOU." Because the Idaho Falls MOU does not
deal with the transfer of customers, assets, or other issues that have an identifiable impact on
rates, Staff believes that it is unnecessary for the Company to seek Commission approval of the
Idaho Falls MOU.
4STAFF COMMENTS MARCH II,2O2O
The Idaho Falls MOU primarily addresses future boundary considerations between the
Company and Idaho Falls in order to avoid unnecessary duplication of infrastructure. Although
the Idaho Falls MOU anticipates transfer of a small section of the Company's service territory and
a single customer to Idaho Falls, it does not prescribe the terms under which this transfer will
occur. The attendant asset sale and customer transfer were addressed and approved by the
Commission separately in Case No. FLS-W-20-01, Order No. 34561. Staff supports amending
the Company's CPCN to reflect the removal of Area 14 from the Company's certificated service
area.
Company Documents
The Company will need to update documents to reflect any Commission-authorized
changes to its CPCN. Staff recommends the Company work with Staff to make any necessary
revisions within three months of issuance of the final order in this case.
STAFF RECOMMENDATIONS
Staff recommends the Commission:
a. approve the proposal to amend the Company's CPCN to add Areas 1 through 11,
and Area 13 (all of which are contiguous to its current certificated service area);
b. reject the proposal to include Honey Bee (Area 12) inthe Company's certificated
service area;
c. approve the proposal to remove Area l4 from the Company's certificated service
area because this area has been annexed by Idaho Falls; and
d. order the Company to work with Staff to file documents conforming to changes to
the CPCN following issuance of the final order in this case.
5STAFF COMMENTS MARCH II,2O2O
Respecttully zubmitted this tf day of March2020
Matt Hunter
Deputy Attorney General
Technical Staff: Bentley Erdwurm
Michael Eldred
Chris Hecht
Rick Keller
Michael Morrison
Kathy Stockton
i :umisc,/comments/fl sw I 9.2mhklscwhbcmerkmm comments
6STAFF COMMENTS MARCH II,2A2O
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Attachment A
Case No. FLS-W-19-02
Staff Comments
03lrr/20
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I lth DAY OF MARCH 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. FLS.W-19.02, 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
ERIC W NELSEN
SR REGULATORY ATTORNEY
NWNATURAL
220 NW 2ND AVE
PORTLAND OR 97209
E-MAIL : eric.nelsen@nwnatu{al.com
CERTIFICATE OF SERVICE