20220208Comments.pdf

., I " ' . j :- I I' r,. lVTAYLOR BROOKS
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11542
IN THE MATTER OF FALLS WATER CO.,
INC. TO AMEND CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY NO. 236
-. nlr 4. 1i]'--"' "'a ', ;i u'
Street Address for Express Mail:
I 1331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, TD 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. FLS.W.2T.O3
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Taylor Brooks, Deputy Attomey General, submits the following comments.
BACKGROUND
On November 15, 2021, Falls Water Co., Inc. ("Company"), applied to modify its
Certificate of Public Convenience and Necessity No. 236 by enlarging and extending the
boundary of the area in which it is authorized to provide service. On December 8, 202l,the
Commission issued a Notice of Application and Notice of Modified Procedure-allowing
interested persons to comment on the Company's Application until February 8, 2022 and
allowing the Company to reply to those comments by February 17,2022. See Order No. 35250.
The proposed service area, known as Honey Bee Acres, is surrounded by the Company's
existing certificated area. The proposed area currently has two (2) small wells and sufficient
ISTAFF COMMENTS FEBRUARY 8,2022
water rights to provide water service to l8 connections. The Company stated that it is willing to
absorb the existing water system and assume ownership of the water system's assets.
All customers in the proposed area (and each household) have signed an easement
agreement consenting to having their homes connected to the Company's system.
The Company recommends that an eight-inch water main be installed and that t/o-inch
meters be installed for each connection. The Company represents that this will benefit existing
customers and homeowners by providing necessary looping to improve fire flows in the area
north of Iona Road and west of 45th East.
The Company represents that existing Company rate tariffs for t/o-inch meter customers
would be used once the customers of the Honey Bee Acres water system are connected to the
Company's water system. The Company also represents that this amendment is consistent with
public convenience and necessity.
Falls Water is a wholly owned subsidiary of Northwest Natural Gas Company. Northwest
Natural Gas Company is a 160-year-old natural gas utility that serves customers in the Pacific
Northwest. As part of a recent reorganization, Northwest Natural Gas Company formed the
Northwest Natural Holding Company, which holds companies including NW Natural Water
Company, LLC and its subsidiary, NW Natural Water of Idaho, Ll.C-which the Company is a
wholly owned subsidiary of. In 2018, the Commission approved NW Natural Water Company,
LLC's acquisition of Falls Water. See Order No. 34103.
STAFF ANALYSIS
Idaho law does not specifically address the acquisition of water companies, but in
previous water company acquisition cases, Staff relied on ldaho Code $ 6l-328, which
establishes standards related to the sale of electric utilities. Those standards require the
Commission to determine that:
a. The transaction is consistent with the public interest;
b. The cost of and rates for supplying service will not be increased by reason of such
transaction; and
c. The applicant for such acquisition or transfer has the bona fide intent and
financial ability to operate and maintain the system in the public service.
2STAFF COMMENTS FEBRUARY 8,2022
Having reviewed all relevant documentation related to the acquisition through the lens of
Idaho Code $ 6l-328 Staff recommends that the Commission approve the acquisition of Honey
Bee Acres by Falls Water and the modification CPCN No. 236 to include Honey Bee Acres'
existing service area.
Acq uisition Documentation Review
Staff reviewed the Application including the Easement Agreement ("Agreement"),
Honey Bee Acres service area legal description, responses to production requests, and Idaho
Department of Environmental Quality ("IDEQ") sanitary surveys. One of the objectives of the
document review is to determine if the assets being acquired and/or transferred will allow the
system to operate at least as reliably as it has been under the current owner by matching assets in
the Agreement to those contained in IDEQ's sanitary surveys. Staff confirmed that the legal
description of the Honey Bee Acres system is accurate and that the assets included in this
Agreement will allow the system to be operated at least as reliability as it has historically.
However, during its review of IDEQ documents, Staff identified positive tests for
coliform in 2018 and2020, which it determined could be a future issue since the Company plans
to interconnect its current system with the Honey Bee Acres system. In Production Request No.
6, Staff asked the Company about preventing future contaminations and/or the potential cross-
contamination to its current water system. The Company stated that heavy rainfall and the
potential of backflow from customers from a lack of backflow prevention were the probable
causes of the coliform issues. To address this issue, Honey Bee Acres has added l8 inches to the
top of its well casing to avoid heavy rainfall issues in the future. The Company also plans to
verifu backflow prevention when connecting Honey Bee Acre customers to the Falls Water
system to prevent cross-contamination.
The Transaction is Consistent with the Public Interest
Staff believes the transaction is consistent with the public interest because it will be
mutually beneficial for customers of both systems once the systems are interconnected. By Falls
Water acquiring the Honey Bee Acres system, Staff believes Honey Bee Acre customers will
benefit from replacing the aging water system infrastructure and enhanced customer services.
The upgrades recommended as part of this Application will also provide benefit to current Falls
JSTAFF COMMENTS FEBRUARY 8,2022
Water customers by providing necessary looping to improve fire flows in the area north of Iona
Road and west of 45th East.
Currently, Honey Bee Acres is operated by a homeowner within Honey Bee Acres
subdivision. This homeowner no longer wishes to be responsible for the water system and is not
able to find a customer willing to assume ownership and operational responsibility. Falls Water
has the ability to provide reliable service and enhanced customer services to Honey Bee Acres
customers by monitoring customer consumption and providing professional employees to
operate the system.
NW Natural Water Company, LLC, in conjunction with its parent companies, is actively
seeking to expand its operations in Idaho. NW Natural Water Company, LLC and associated
companies have shown commitment to their growth plan through the acquisition of other water
systems in Idaho, such as Falls Water (FLS-W-I8-01), Spirit Lake East/Lynnwood Water (SPL-
W-19-01), Bar Circle S Water/Diamond Bar Estates (BCS-W-19-01/DIA-W-19-01), Taylor
Mountain Water (FLS-W-19-01), Happy Valley Water and Bitterroot Water (GSW-W-I9-01),
and Troy Hoffman Water (GSW-W-21-01). The acquisitions of water systems by NW Natural
Water Company, LLC should provide benefits through operational efficiencies and economies of
scale as it acquires more systems.
The Cost and Rates for Supplyins Service
Falls Water is proposing Honey Bee Acres customers use existing Falls Water rate tariffs
for a3/a-inch meter once they are connected to the Falls Water system. Prior to connecting to the
Falls Water system, Honey Bee Acres customers would maintain their current $30 per month flat
rate per connection. Staff is not able to determine an accurate impact on the Honey Bee Acres
customers by changing to Falls Water rate tariffs because the current Honey Bee Acres system
does not have consumption meters for individual customers.
Nevertheless, Staff requested the average monthly bill for Falls Water residential
customers in202l to help determine the effect on Honey Bee Acres customers. The Company
reported that the average Falls Water residential customers bill with 3/o-inch meter during 2021
was $29.67. Honey Bee Acres customers who use the same or less amount of water than the
average Falls Water residential customer will not see an increase in their costs. However, higher
use Honey Bee Acres customers have the potential to see an increase in their water cost under
4STAFF COMMENTS FEBRUARY 8,2022
the Falls Water volumetric rate tariffs. However, since Honey Bee Acre customers have agreed
to the acquisition and connection to the Falls Water system, Staff believes the potential for an
increase in rates is reasonable. Additionally, once metered and connected to the Falls Water
system, Honey Bee Acres customers will have the ability to control their bill by monitoring and
adjusting consumption levels.
Falls Water has the Bona Fide Intent and Financial Abilitv to Operate and Maintain
the System in the Public Service
The Company has demonstrated its bona fide intent and financial ability by the operation
of its current system and the recent acquisition of other water systems. Falls Water has
committed in its Application to have an adequate source of supply to provide service in a safe
and reliable manner to the amended service area.
Water systems routinely require repair, replacement, and extension of infrastructure to
provide reliable and ample water service to customers. Financing this infrastructure at a
reasonable cost is a challenge for smaller water systems. Falls Water, through its parent
company, Northwest Natural Holdings, has the necessary access to capital markets to proactively
address Honey Bee Acres infrastructure needs in a timely manner and at a competitive cost.
CUSTOMER NOTIFICATION AI\D PRESS RELEASE
Rules 125 of the Commission's Rules of Procedure does not require customer notification
unless the Company is requesting a rate change. IDAPA 31.01.01.125. The Company's
Application states that once the improvements are complete it would begin to bill the customers
at the current residential rate for %-nch meters identified in the Company Tariff.
The Application included a copy of the sales agreement, dated h:rire26,2020, and signed
by all customers in the neighborhood. Staff was able to veriff that all customers that signed the
agreement still own the property within the neighborhood, so are aware of the transaction.
Because of the uncertainty as to whether the rates would increase, Staff requested the
Company generate a customer notice and send a copy of the notice as well as the Explanation of
Rates and the Annual Rules Summary to all Honey Bee Acres customers, which are required to
be sent on an annual basis. The notice dated January 10,2022, a copy of which was summitted
5STAFF COMMENTS FEBRUARY 8,2022
to the Commission by the Company, suggests that rates are similar. Staffalso believes that the
agreement and subsequent customer notice satisff the requirements of Rule 125.
No customer comments have been submitted to the Commission as of February 7,2022.
COMPAT\IY TARIFF
The Application states that once the improvements are complete, it would begin to bill
the customers at the current residential rate for t/q-inch meters identified in the Company Tariff.
The customers will be billed in accordance with the existing rates for Honey Bee Acres until that
time. Staff recommends that the Company revise its tariff to include the Honey Bee Acres rates
on a separate schedule to expire when work is complete.
STAFF RECOMMENDATIONS
Staff recommends the Commission:
l. Approve the acquisition of Honey Bee Acres Water Co. by Falls Water Company,Inc.
2. Approve the proposed amendment to CPCN No. 236 to include the Honey Bee
Acres service area.
3. Order Falls Water to work with Staffto create a separate schedule following
issuance of the final order in this case.
Respectfully submitted this 8t\ day of Feb ruary 2022.
Technical Staff: Michael Eldred
Travis Culbertson
Kathy Stockton
Chris Hecht
i:umisc/commens/flsw2l.3tbmetncklscwh comments
6STAFF COMMENTS FEBRUARY 8,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8ft DAY oF FEBRUARY 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. FLS-W-2I.03, BY E.MAILING A COPY THEREOF, 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
250 SW TAYLOR ST
PORTLAND OR 97204
E-MAIL : [e-mail]
CERTIFICATE OF SERVICE