20230512Direct Rue_Exhibits.PDF

Preston N. Carter, ISB No. 8462
Morgan D. Goodin, ISB No. 11184
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
[e-mail]

Attorneys for Falls Water Co., Inc.

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF FALLS WATER CO., INC. FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE
IN THE STATE OF IDAHO

Case No. FLS-W-23-01

DIRECT TESTIMONY OF ADAM RUE
FOR FALLS WATER CO., INC.
RECEIVED
2023 May 12, 2:02PM
IDAHO PUBLIC
UTILITIES COMMISSION
RUE, Di
Page 1 of 16
Falls Water Co., Inc.
Q. Please state, your name, and business address. 1
A. My name is Adam Rue, Rates and Regulatory Program Manager for Northwest Natural 2
Gas Company d/b/a NW Natural (“NW Natural.”) My business address is 250 SW Taylor 3
Street, Portland, OR, 97204. 4
Q. By whom are you employed and in what capacity? 5
A. I am employed by NW Natural, which I joined in April 2022 as a Rates and Regulatory 6
Water Program Manager. 7
Q. Please summarize your educational background and qualifications. 8
A. I graduated from Portland State University with a Master’s in Economics with a focus on 9
energy, environmental, and utility economics. Prior to attending Portland State 10
University, I received a Bachelor of Arts from University of Oregon. 11
Q. What experience did you have prior to joining NW Natural? 12
A. Prior to joining NW Natural, I acted as Fiscal Services Supervisor at Eugene Water and 13
Electric Board (“EWEB”) where I was responsible for budgeting and financial planning, 14
power risk management, and water, electric, and fiber cost of service and rate design 15
proposals. I was employed by EWEB for 11 years and worked in a variety of roles in 16
Finance, Rates and Power Planning. 17
Prior to joining EWEB, I was employed by Southern California Edison and 18
American States Water working in both Finance and Rates and Regulatory functions. 19
Q. What is the purpose of your testimony in this processing? 20
A. My testimony provides an overview of the revenue requirement calculation and proposed 21
changes in rate design. 22
RUE, Di
Page 2 of 16
Falls Water Co., Inc.
Q. What Exhibits are you sponsoring? 1
A. The following exhibits accompany my testimony: 2
 Exhibit 3 Capital Structure 3
 Exhibit 4 Revenue Requirement, State and Federal Income Tax 4
 Exhibit 5 Proposed Rate Design and Cost of Service 5
Q. What level of increase is the Company seeking in this proceeding? 6
A. Falls Water Co., Inc. (“Falls Water”) is requesting an overall increase of 47.3%. The test 7
year is based on the calendar year 2022. The Company made proforma adjustments to the 8
operating expenses based on known and measurable changes through December 31, 9
2023. The testimonies of Company witnesses K. Scott Bruce and Jeremy Aird explain the 10
basis for the proforma adjustments. 11
Q. Please describe Exhibit 1 – Calculation of Rate Base. 12
A. The Exhibit 1 – Calculation of Rate Base reflects current test year end balances in 13
Column (A), as of December 31, 2022, in rows 1 – 17, followed by accumulated 14
depreciation, contributions and net plant in service, respectively. 15
The information provided in Columns (B) through (L) reflects the proforma 16
adjustments to plant in service for projects to be completed and placed in service during 17
the processing of this rate case application. Details of these projects can be found in the 18
testimony of Company Witness Bruce. 19
Q. Why did the Company include end of the Test Year balance for Plant in Service? 20
A. The Company understands that it will experience some amount of regulatory lag between 21
making investments and setting new rates. However, using the year-end balance, rather 22
than the average of monthly averages (“AMA”), for the investments made in the 23
RUE, Di
Page 3 of 16
Falls Water Co., Inc.
historical test year and projects completed throughout the processing of the rate case, is a 1
reasonable approach to mitigate the financial detriment of the lag for a small system such 2
as Falls Water. The Company's rate base is relatively small, and any investment for its 3
customers can have a significant financial impact to the Company. To that end, by only 4
recovering a small portion of the investment (especially, if the investment went in-service 5
towards the end of the year), the Company is in a difficult position of contemplating a 6
subsequent rate case to recover the costs of investments that have already been made and 7
benefitting customers. This also can lead to customer confusion because we are 8
describing to our customers the new assets that we have invested in the system that are 9
driving rate cases in this case, but ultimately those same assets would be drivers for a 10
subsequent rate case if an AMA approach were used. The Company believes the year-end 11
balances is appropriate in cases where the rate base is primarily not related to revenue 12
growth. 13
Q. What is the level of rate base the Company is requesting in the proceeding? 14
A. The Company is requesting rate base of $10,247,791. 15
Q. What is the basis for the Company’s proposed test year? 16
A. The Company used 2022 calendar year financials to establish the test year with known 17
and measurable changes identified as proforma adjustments. The test year results and 18
known and measurable adjustments to the results of operations appear in columns labeled 19
(A) and (B) through (F) of Exhibit 2, respectively, with the totals listed in column (G). 20
The witness supporting the respective testimony is named in column (H). 21
RUE, Di
Page 4 of 16
Falls Water Co., Inc.
Q. Please describe Exhibit 3, Capital Structure. 1
A. Exhibit 3 provides an overview of the proposed return on rate base for the revenue 2
requirement. The return on equity is provided in the testimony of Company witness 3
Harold Walker III. The Company has financed most of the recent investments with equity 4
and has an actual capital structure of 14% debt and 86% equity. However, the Company 5
is proposing an implied capital structure of 45% debt and 55% equity, which is consistent 6
with its currently approved capital structure from Order No. 34925 in Case No. FLS-W-7
20-03. This is also consistent with the recommendation of Company witness Harold 8
Walker III. 9
Q. What is the Company’s proposed Return on Equity? 10
A. The Company is requesting a 10.2% Return on Equity (ROE), which is consistent with 11
the Commission’s decision in its recent rate case (Order No. 34925 in FLS-W-20-03). 12
This results in a 7.71% overall rate of return. 13
Q. Is this recommendation consistent with the Company’s ROE consultant? 14
A. Yes. The Company engaged an ROE consultant to ensure a reasonable rate of return on 15
equity was established for Falls Water. Company witness Harold Walker III 16
recommends an 11.0% ROE with a range of 9.7% to 12.3%. 17
The Company believes the recommended ROE by Company witness Harold 18
Walker III is reasonable. Nevertheless, the Company is not seeking to increase its 19
authorized ROE in this case. Rather, as noted above, the Company is requesting to 20
maintain its current authorized ROE, which falls within the range of Mr. Walker III’s 21
recommendation. Falls Water has made several necessary investments in its system, 22
which have created upward pressure on rates. The Company needs to timely recover 23
RUE, Di
Page 5 of 16
Falls Water Co., Inc.
these investments, but it is not seeking to increase its return on those investments in this 1
case. 2
Q. Please describe Exhibit 4 - Revenue Requirement. 3
A. Exhibit 4 provides an overview of the calculation of the revenue requirement, which 4
incorporates information from other exhibits: 5
 Line 1 reflects the Rate Base from Exhibit 1 6
 Line 2 is the Rate of Return from Exhibit 3 7
 Line 3 calculates the required Net Operating Income 8
 Line 4 shows the Net Operating Income from Exhibit 2 after accounting for 9
Proforma adjustments. 10
 Line 5 calculates the difference between required and proforma revenue 11
requirement. 12
 Line 7 is the net to gross factor that is calculated in lines 12 – 21. The net to gross 13
factor calculates Federal and State income tax and other revenue impacted 14
components of the revenue requirement. This allows these costs to be 15
incorporated into the revenue requirement accurately. 16
 Line 8 calculates the incremental revenue requirement grossed up for taxes and 17
other factors. 18
 Lines 9 and 10 show the revenue at current rates from Exhibit 2 and incremental 19
revenue. 20
 Line 11 calculates the percent increase needed to meet the calculated revenue 21
requirement. 22
RUE, Di
Page 6 of 16
Falls Water Co., Inc.
Q. Are you sponsoring the Proforma adjustments to operations and rate base 1
additions? 2
A. The Proforma adjustments and capital additions testimony is sponsored by Company 3
witnesses K. Scott Bruce and Jeremy Aird. The testimony of K. Scott Bruce addresses the 4
proforma adjustments (B) through (M) of Exhibit 1 and adjustments (C) and (D) of 5
Exhibit 2. 6
The testimony of Jeremy Aird addresses the shared services allocation, which is 7
proforma adjustment (E) of Exhibit 2. 8
My testimony addresses the proforma adjustment for Account 666 – Rate Case 9
Amortization. This adjustment includes a one-year amortization of rate case expenses and 10
the groundwater mitigation from Order No. 35706. 11
Q. Does your testimony address any of the proforma adjustments for Exhibit 1? 12
A. Yes. The accumulated deferred income taxes (ADIT) generally represent the cumulative 13
difference between total income tax expense and income taxes paid (total income tax 14
expense = current income taxes + deferred income taxes). Prior to the last general rate 15
case (Case FLS-W-20-03), income tax expense included in ratemaking only allowed for 16
recovery of current income tax expense. As a result, ADIT balances prior to the last 17
general rate case were not recovered in ratemaking and were not included in rate base. 18
Beginning with the last general rate case, income tax expense included in ratemaking did 19
provide for total income tax expense (both current and deferred). The ADIT activity since 20
the last rate case (i.e., the change in deferred taxes) is provided in Exh. 1_(C)_Deferred 21
Income Tax and included in the determination of rate base in this filing. 22
RUE, Di
Page 7 of 16
Falls Water Co., Inc.
Q. Does your testimony address any proforma adjustments for Exhibit 2? 1
A. Yes. Exhibit 2 Adjustment (B) removes non-recurring items. This adjustment includes 2
the removal of the item in Account No. 414 Gain (Loss) on Property as well as interest 3
expense and income. The interest expense is incorporated in the cost of capital testimony. 4
Q. Please describe the adjustments to Account No. 666 - Rate Case Amortization. 5
A. First, the costs of the rate case is reflected in Exhibit 2, Adjustment (D), line 47. This 6
includes costs for external consultants and legal. The amount associated with rate case 7
expenses appears in Exhibit 2_(H) on line 7. 8
Second, the rate case amortization also includes the costs associated with the 9
current deferral balance as of December 31, 2022, and the anticipated 2023 costs, for 10
groundwater mitigation assessment. The amount associated with groundwater mitigation 11
from Order No. 35706 appears in Exhibit 2_(H) on the line numbered 12. 12
The rate case expense is amortized over a single year and the deferral associated 13
with Order No. 35706 in FLS-W-22-01 is amortized over two-years. 14
Q. Why does the Company propose a single year amortization of the rate case expense? 15
A. The Company has significant capital expenditure planned in 2023 that will likely not be 16
completed during the processing of this rate case application but for which we intend to 17
file for cost recovery in the near term. 18
Q. Why does the Company propose a two-year amortization of the deferral account? 19
A. The Company intends to recover costs incurred in 2022 associated with the groundwater 20
mitigation, as well as costs incurred in 2023. Therefore, the Company is proposing 21
recovery of these two years of costs over a two-year period. The Company also requests 22
the deferral continue until fully recovered at a later time over the two-year period. 23
RUE, Di
Page 8 of 16
Falls Water Co., Inc.
Q. Is the Company proposing any rate design changes in the application? 1
A. Yes. The Company is proposing to consolidate rates and is modifying its rate design to 2
encourage conservation of water. In FLS-W-22-01, the Company provided an overview 3
of drought conditions in the Bonneville-Jefferson Ground Water District and the impact 4
to groundwater rights and the mitigation plan. It is in the best interest of Falls Water 5
customers to engage in conservation efforts to the extent possible. Further, it is 6
reasonable for higher use customers to pay incrementally higher cost for higher volumes 7
that cause the Company to incur mitigation assessments. 8
Q. Did the Company prepare a cost-of-service analysis for the application? 9
A. The Company did not prepare a cost-of-service analysis study for this application, for 10
several reasons. 11
First, the customers' rates for Falls Water are differentiated by meter size, rather 12
than by defined classes, such as residential, commercial, or industrial. The different 13
customer types exist, but they are not currently differentiated in that manner in terms of 14
rate design. Therefore, the Company proposes to increase basic charges on an equal basis 15
for all meter sizes. 16
Second, the application includes several factors, such as rate consolidation, 17
increasing block rates, and adjustments to gallon thresholds in the respective usage 18
blocks and those included in the minimum charge. The proposals for consolidation and 19
increasing block rates are not based on the results of a cost-of-service study. 20
Finally, the Company has historically filed under modified procedures, and this 21
will be the first filing with testimony and formal application processing. To balance rate 22
case objectives and external rate case costs, the Company believes it is in the best interest 23
RUE, Di
Page 9 of 16
Falls Water Co., Inc.
of customers to forego a cost-of-service analysis in this proceeding. Layering an 1
additional component of testimony and incorporating the results of a cost-of-service 2
analysis into the recommended revenue requirement would not materially inform the 3
application presented by the Company. 4
Q. Please describe the overall rate design proposals that you referenced earlier. 5
A. There are three rate design proposals in the application. First, the Company is proposing 6
consolidation of the Morning View, Taylor Mountain, and Falls Water systems’ rates into 7
a single ratemaking area. Second, the Company is asking the Commission to approve 8
increasing tiered rates for three different usage bands. Finally, the Company is proposing 9
to establish a rate for secondary irrigation systems. 10
Q. Please describe the Company’s proposal for consolidating rate schedules. 11
A. The Company currently serves three different rate schedules for Falls Water, Taylor 12
Mountain and Morning View water systems. The proposal is to consolidate the rates into 13
one tariff. 14
Q. Please explain the benefits of consolidation. 15
A. The benefits of consolidation include reducing administrative burden by reducing the 16
number of rate schedules, enhancing customer service and ease of doing business, and 17
mitigating the rate impact of large investments. 18
The consolidated rates provide an operational benefit by reducing system level 19
tracking of time and materials and accounting for the allocation of costs to each system. 20
Costs are tracked at the system level and the broader Company level. As stated in IPUC 21
Order No. 35692, “the partial consolidation of systems as put forth in the Commission’s 22
approved rate design offers administrative efficiency and is a necessary step towards 23
RUE, Di
Page 10 of 16
Falls Water Co., Inc.
attaining uniform rates….” The Company believes a similar benefit exists for the 1
customers of Falls Water. 2
The consolidated rates allow for improved customer service and responsiveness 3
by reducing the complexity of the tariff structure. Reducing the number of tariffs and 4
rates improves understanding of tariffs and rates for both customers and staff, which in 5
turn should further enhance the customer experience. 6
The larger customer base also mitigates rate volatility for the respective, smaller 7
systems. Water utilities are highly capital intensive, and a relatively large capital 8
investment can significantly impact rate base and associated revenue requirement. 9
Additionally, facilities, technology and other shared investments impact all customers, 10
rather than a single system. As stated in IPUC Order No. 35692, “[a]lthough at the 11
system level, some customers may be affected differently than other customers on other 12
systems as a result of the decision in this Order, in the long term, consolidating systems 13
by implementing uniform rates and charges will help spread the costs of system-wide 14
improvements among a larger body of customers more equitably. This will ultimately 15
benefit all Gem State customers now and in the future.” The Company believes a similar 16
benefit would result in consolidation of Falls Water customers’ rates and charges. 17
Q. Please describe the tiered rate design being proposed by the Company. 18
A. The current rate design for Falls Water customers includes a minimum gallon allotment, 19
which depends on meter size and a uniform quantity charge for all usage above the 20
minimum allowed. The current Commodity Charge for Falls Water customers is $0.917 21
per 1,000 gallons for volumes above the minimum allotment. 22
RUE, Di
Page 11 of 16
Falls Water Co., Inc.
The Taylor Mountain customers currently also receive a minimum allotment, but 1
they have three additional tiers for four total blocks of usage. The Morning View system 2
has two tiers with increasing blocks. The Taylor Mountain volumetric rates are shown on 3
the table below. 4
Table 1: Current Volumetric Taylor Mountain Rates 5
Tier Volumes Rate
Tier 1 First 15,000 gallons
(0 to 15,000 gallons)
$0.00
Tier 2 Next 60,000 gallons
(15,001 to 75,000 gallons)
$0.71
Tier 3 Next 50,000 gallons
(75,001 to 125,000 gallons)
$1.00
Tier 4 Over 125,000 gallons $2.00
The Morning View volumetric rates are shown on the table below. 6
Table 1: Current Volumetric Taylor Mountain Rates 7
Tier Rate
Tier 1 $0.17
Tier 2 $0.53
The proposal is to consolidate the rates of all the systems and establish three tiered rates. 8
The respective block volumes vary by meter size. 9
Table 2: Proposed Volumetric Rates 10
Tier Rate
RUE, Di
Page 12 of 16
Falls Water Co., Inc.
Tier 1 $0.00
Tier 2 $0.69
Tier 3 $1.55
Q. What considerations impacted the proposed volumetric charge? 1
A. The primary consideration for the proposed volumetric charge was to encourage 2
conservation and address the water supply issues in the region. 3
Q. Please describe the Minimum Charge being proposed by the Company. 4
A. The Falls Water monthly Minimum Charge ranges from $18.75 for customers with 5/8-5
inch and 3/4-inch meters to $77.35 for customers with 4-inch meters, as shown on the 6
table below. 7
Table 2: Current Monthly Minimum Charges for Falls Water Customers 8
Meter Size Monthly Minimum Charge
5/8 and 3/4 – inch $18.75
1 – inch $26.40
1 1/2 – inch $34.05
2 – inch $43.30
4 – inch $77.35
The monthly Minimum Charge for Former Customers of Taylor Mountain is $20.00 per 9
month. 10
The monthly Minimum Charge for Former Customers of Morning View is differentiated 11
by lot size as shown in the table below. 12
RUE, Di
Page 13 of 16
Falls Water Co., Inc.
Table 3: Current Monthly Minimum Charges for Former Morning View Customers 1
Lot Size Minimum Charge
1/4 – acre $55.00
1/2 – acre $65.00
1 - acre $70.50
The Company is proposing to consolidate these different monthly minimum charges as 2
shown in the table below. 3
Table 4: Proposed Monthly Minimum Charges 4
Meter Size Monthly Minimum Charge
5/8 and 3/4 – inch $27.60
1 – inch $38.90
1 1/2 – inch $50.15
2 – inch $63.75
4 – inch $113.90
Q. How is the change from lot size to meter size implemented for the Morning View 5
customers? 6
A. The Morning View customers are currently differentiated by lot size (i.e., 1-acre, 1/4 -7
acre, etc.). However, the meter size is also tracked for each customer. Therefore, the new 8
rates will be calculated based on meter size for all customers. This will result in lower 9
bills for these customers. 10
RUE, Di
Page 14 of 16
Falls Water Co., Inc.
Q. What considerations impacted the proposed minimum charge? 1
A. The proposed minimum charge is intended to consolidate the rate schedules for the three 2
different systems. Most of the customers are currently served under the Falls Water rate 3
schedule and therefore the proposal aligns most closely with that schedule. The relative 4
overall revenue requirement recovery is consistent with the current rates at roughly 65% 5
fixed and 35% variable with a modest shift to 63/37. This approach provides revenue 6
stability for the utility and bill stability for customers throughout the year while also 7
allowing for volumetric billing determinants to send customer conservation price signals. 8
This approach is also consistent with the approach approved by the Commission in Order 9
No. 34925 and Order No. 35692. 10
Q. What are the benefits of the rate design proposals of the Company? 11
A. The overarching themes for the rate design proposals are: first, consolidation to 12
streamline operations and provide efficiency and other benefits mentioned above; and 13
secondly, the trend in water supply constraints provides a strong motivation to incentivize 14
conservation through rate design. The increasing block tiers and reductions in the 15
volumes in the minimum charge are intended to address those conservation issues. 16
Q. Are there any other rate design changes? 17
A. Yes. As discussed in the testimony of Company witness K. Scott Bruce, the Company is 18
requesting approval of a tariff for secondary irrigation systems. This aligns with meeting 19
the mitigation efforts. The secondary irrigation tariff enables the Company to charge new 20
development for maintenance of secondary irrigation system infrastructure, which allows 21
the Company to better utilize agriculture irrigation water rights and mitigates the impact 22
and demand for potable water. 23
RUE, Di
Page 15 of 16
Falls Water Co., Inc.
Q. Please describe how the Company developed the tariff for secondary irrigation 1
systems. 2
A. The secondary irrigation is not currently in effect, and thus does not have an actual cost 3
basis. Therefore, the Company is proposing to develop the rate for secondary irrigation 4
based on cost estimates. The proposed rate is $16.85 per month flat rate. 5
The cost estimates can be found in Exhibit 5 (A). The costs included in the 6
secondary irrigation rate include the annual lot assessment from the Progressive Irrigation 7
District, Power Costs, and Annual Maintenance. The proposal is based on estimated costs 8
and will be revised as customers join and receive secondary irrigation services. 9
Q. Will the secondary irrigation systems rely on treated, potable groundwater? 10
A. No. The secondary irrigation systems will utilize irrigation, canal water from the 11
Progressive Irrigation District. 12
Q. Why is the Company and not the irrigation district responsible for maintaining this 13
system? 14
A. The Progressive Irrigation District has expressed no interest in maintaining the system. 15
However, the Company believes the utilization of secondary irrigation systems is in best 16
interest of current and future customers and the overall water supply of the region. 17
Q. Will the Company meter these secondary irrigation systems? 18
A. Initially the secondary systems will not be metered but the Company may elect to meter 19
such systems at some point in the future. 20
Q. Describe the equal pay plan the Company is recommending. 21
A. The Company is intended to provide customers with level bills to assist customers with 22
bill fluctuations throughout the year. Based on feedback from customers, this program 23
RUE, Di
Page 16 of 16
Falls Water Co., Inc.
will help a segment of the customer base with budgeting monthly expenses. The prior 12-1
month period will establish a baseline and every year the equal pay amount will be re-2
calibrated. 3
Q. Have you prepared the revenues under proposed and present rates? 4
A. Yes. 5
Q. Please describe Exhibit 5 - Rate Design. 6
A. Exhibit 5 illustrates the billing units, current and proposed rates, and the current and 7
proposed revenue. 8
Lines 1 through 27 show the revenue at current rates for Falls Water, Taylor 9
Mountain, and Morning View. 10
Lines 28 through 34 show the consolidated proposed rates and revenue projection 11
at proposed rates. 12
Q. Does this conclude your direct testimony? 13
A. Yes. 14
Preston N. Carter, ISB No. 8462
Morgan D. Goodin, ISB No. 11184
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
[e-mail]

Attorneys for Falls Water Co., Inc.

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF FALLS WATER CO., INC. FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE
IN THE STATE OF IDAHO

Case No. FLS-W-23-01

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
EXHIBIT 3 TO ACCOMPANY THE
DIRECT TESTIMONY OF ADAM RUE
Falls Water Company, Inc.
Capital Structure and Overall Rate of Return
Cost of Capital as of December 31, 2022
(A)(B)(C)(D)
Line No.Description Amount
Percent of Total
Capital Cost Component
1 Long Term Debt - Loan # DW-9923 $27,256
2 Less: Prepayment on principle $18,764
3 Outstanding Loan Amount $8,491 0.09%3.25%0.00%
4 Long Term Debt (Well #9 & Water Right) - # DW-9931 $410,245
5 Less: Prepayment on principle $82,090
6 Outstanding Loan Amount $328,156 3.35%3.25%0.11%
7 Long Term Debt MV - Loan # DW-1302A $376,783 3.85%1.25%0.05%
8 Mortgage on Office at 2180 N Deborah Dr $624,834 6.38%3.49%0.22%
9 Long Term Debt to adjust Debt/Equity Ratio $3,070,257 31.34%5.495%1.72%
10 Paid in Capital $4,507,537 46.01%10.20%4.69%
11 Common Equity $880,656 8.99%10.20%0.92%
12 Total $9,796,714 100.00%7.71%
Total Debt $4,408,521 45.00%5.495%2.47%
Total Equity $5,388,193 55.00%10.20%5.61%
$9,796,714 8.08%
Effective cost of debt on rate base 2.10%
Case No. FLS-W-23-01
A. Rue, Falls Water
Exhibit No. 3
Page 1 of 1
Preston N. Carter, ISB No. 8462
Morgan D. Goodin, ISB No. 11184
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
[e-mail]

Attorneys for Falls Water Co., Inc.

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF FALLS WATER CO., INC. FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE
IN THE STATE OF IDAHO

Case No. FLS-W-23-01

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
EXHIBIT 4 TO ACCOMPANY THE
DIRECT TESTIMONY OF ADAM RUE
1 Rate Base 10,247,791$
2 Required Rate of Return 7.71%
3 Net Operating Income Requirement 790,562$
4 Net Operating Income Realized (68,718)$
5 Net Operating Income Deficiency 859,280$
6 Rate of Return prior to Rate Change -0.67%
7 Net Operating Income Deficiency 859,280
8 Gross up Factor 1.366675
9 Total Incremental Revenue Requirement 1,174,356
10 Revenues at existing rates 2,485,103$
11 Total Revenue Requirement 3,659,459$
12 Percent Increase Required 47.3%
Falls Water Company, Inc.
Net to Gross Multiplier
13 Total Gross Revenues 1.0000000
14 Less Uncollectibles ( percentage)-
15 Less 2023 Regulatory Fees (percentage)0.0001995
16 Less Bank Service Charge Fees (percentage)0.0165667
17 Net Revenue 0.983234
18 State Income Tax Rate 5.800%0.057028
19 Federal Income Tax Base 0.926206
20 Federal Income Tax Rate 21.000%0.194503
21 Net Operating Revenue 0.731703
22 Net Income to Gross Revenue Multiplier 1.36667
23 Composite Fed and State Tax Rate 25.58%
FALLS WATER COMPANY
CALCULATION OF REVENUE REQUIREMENT
Case No. FLS-W-23-01
A. Rue, Falls Water
Exhibit No. 4
Page 1 of 1
Preston N. Carter, ISB No. 8462
Morgan D. Goodin, ISB No. 11184
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
[e-mail]

Attorneys for Falls Water Co., Inc.

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF FALLS WATER CO., INC. FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE
IN THE STATE OF IDAHO

Case No. FLS-W-23-01

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
EXHIBIT 5 TO ACCOMPANY THE
DIRECT TESTIMONY OF ADAM RUE
(A)(B)(C)(D)(E)(F)(G)(H)(I)(J)(K)(L)
Meter
Size
Customer
Count
Max
Gallons at
Min Charge
Min Charge
Volumes (in
1,000 gallons)
Excess Charge
(in 1,000
gallons)
Total
Volume (in
1,000
gallons)
Monthly
Min Charge
Excess
Charge (per
1,000 gal)
Fixed Charge
Revenue
Volumetric
Charge
Revenue Total Revenue Average Usage Current Excess
Current Bill
(Average
Usage)First Block Second Block Third Block
Proposed
Bill (Average
Usage)
1 Falls Water 3/4"4,375 12000 394,506 623,883 1,018,389 18.75 0.917 984,375 572,101 1,556,476 19 7 25.17$ 8 11 0 35.19 40%12000 1.00
2 Falls Water 1"1,570 17000 167,375 214,268 381,643 26.40 0.917 497,376 196,484 693,860 20 3 29.15$ 11 9 0 45.11 55%17000 1.42
3 Falls Water 1.5"36 22000 3,633 12,376 16,009 34.05 0.917 14,710 11,349 26,058 37 15 47.81$ 15 22 0 65.33 37%22000 1.83
4 Falls Water 2"68 28000 10,937 54,958 65,895 43.30 0.917 35,333 50,396 85,729 81 53 91.90$ 19 38 24 127.17 38%28000 2.33
5 Falls Water 4"4 49000 1,989 1,631 3,620 77.35 0.917 3,713 1,496 5,208 75 26 101.19$ 33 42 0 142.88 41%49000 4.08
6 Falls Water 6,053 578,440 907,116 1,485,556 1,535,506 831,825 2,367,332
7 Taylor Mountain 3/4"47 20 11,280 11,280 21 24.26$ 8 13 36.57 51%
8 Tier 1 15,000 4,532 - - 20
9 Tier 2 60,000 5,825 0.71 4,136 4,136 6 4.26
10 Tier 3 50,000 717 1 717 717
11 Tier 4 125,000 491 2 982 982
12 Taylor Mountain 1"102 20 24,480 - 24,480 23 25.68$ 11 12 47.18 84%Overall Increase 47.26%
13 Tier 1 15,000 10,494 - - 20
14 Tier 2 60,000 14,695 0.71 10,433 10,433 8 5.68
15 Tier 3 50,000 2,201 1 2,201 2,201
16 Tier 4 125,000 1,129 2 2,258 2,258
17 Taylor Mountain 2"2 20 480 480 250 362.60$ 19 38 193 389.12 7%
18 Tier 1 15,000 360 - - 15 -
19 Tier 2 60,000 1,184 0.71 841 841 60 43
20 Tier 3 50,000 615 1 615 615 50 50
21 Tier 4 125,000 3,833 2 7,666 7,666 125 250
149 46,076 - - 36,240 29,849 66,089
3/4 - Inch 1 - Inch 3/4 - Inch 1 - Inch
22 Morning View First Block Second Block Total First Tier Second Tier
23 1/4 Acre 27 10,000 1,846 1,020 2,866 55 0.17 0.53 17,820 854 18,674 8 56.36 9 56.53 27.6 -51.0%38.90 -31.2%
24 1/2 Acre 64 40,000 4,476 9,240 13,716 65 0.17 0.53 49,920 5,658 55,578 14 67.38 19 68.23 31.74 -52.9%44.42 -34.9%
25 1 Acre 40 45,000 3,371 15,541 18,912 70.5 0.17 0.53 33,840 8,810 42,650 43 77.81 37 76.79 68.09 -12.5%60.28 -21.5%
26 131 9,693 25,801 35,494 101,580 15,322 116,902
1,567,126 1,673,326 876,997 2,550,323
66%34%
Meter
Size Bill Count First Block Second Block Third Block
Total
Volume (in
1,000
gallons)
Monthly
Min Charge First Block
Second
Block Third Block
Fixed Charge
Revenue
Volumetric
Charge
Revenue Total Revenue First Block
Second Block
(Next)
Third Block
(Over)
27 Combined 3/4"4,453 311,378 292,685 435,150 1,039,213 27.60 - 0.69 1.55 1,474,834 876,435 2,351,269 8,000 16,000 24,000 27.61
28 Combined 1"1,772 140,286 87,145 208,966 436,397 38.90 - 0.69 1.55 827,170 384,027 1,211,197 11,000 22,000 33,000 38.88
29 Combined 1.5"36 2,787 1,720 11,502 16,009 50.15 - 0.69 1.55 21,665 19,015 40,680 15,000 30,000 45,000 50.14
30 Combined 2"70 8,272 6,091 57,524 71,887 63.75 - 0.69 1.55 53,550 93,365 146,915 19,000 38,000 57,000 63.76
31 Combined 4"4 1,418 1,014 1,188 3,620 113.90 - 0.69 1.55 5,467 2,541 8,008 33,000 66,000 99,000 113.90
32 6,335 464,141 388,655 714,330 1,567,126 2,382,685 1,375,383 3,758,069
63%37%47.4%
47.3%
-0.1%
Proposed Rates Revenue at Proposed Rates
Average Bill Calculation
Falls Water Company
Calculation of Present and Proposed Rates
Current Rates Revenue at Current Rates
Case No. FLS-W-23-01
A. Rue, Falls Water
Exhibit No. 5
Page 1 of 1
Falls Water Co., Inc. Proposed Rate Tariff for Duel Pipe Irrigation Customers
Annualized
Lots Costs
Annual per lot Assessment from Progressive Irrigation District 100.00$ 200 20,000.00$
Power Costs to provide irrigation water 12,968.64$ 12,968.64$
Annual Maintenance Costs to Charge/Drain system.7,476.00$ 7,476.00$
Annualized Costs to serve 200 customers from April 1 to October 31 40,444.64$
Annual Cost per customer 202.22$
Monthly Cost per customer (Flat Rate for 12 months)16.85$
Case No. FLS-W-23-01
A. Rue, Falls Water
Exhibit No. 5-A
Page 1 of 1
Developed Acres 80
Lots per acre 2.5
GPM per Acre 9 gpm
Scenario:
80 Acre Development
# of Lots 200
GPM for development 720 gpm
The pump needed would be about 75 hp
The maximum operation dates of the pressurized irrigation system are from April 1st to October 31st each year.
USING 2022 ROCKY MOUNTAIN POWER RATES
75 hp motor at this well.Well #1 - Schedule 6
17
Usage Usage/Other Demand Demand Total Monthly Highest
Month KWH Charge KW Charge Billing Billings
1/31/2020 3687 222.94$ 7 85.89$ 308.83$
2/29/2020 3674 222.29$ 7 85.89$ 308.18$
3/31/2020 2775 177.43$ 36 441.72$ 619.15$
4/30/2020 19350 1,004.55$ 66 809.82$ 1,814.37$ 1,814.37$
5/31/2020 34673 1,769.20$ 64 871.68$ 2,640.88$ 2,640.88$
6/30/2020 19213 997.72$ 64 871.68$ 1,869.40$ 1,869.40$
7/31/2020 34969 1,783.97$ 64 871.68$ 2,655.65$ 2,655.65$
8/31/2020 28199 1,446.13$ 65 885.30$ 2,331.43$ 2,331.43$
9/30/2020 4898 283.37$ 65 885.30$ 1,168.67$ 1,168.67$
10/31/2020 2423 159.86$ 56 762.72$ 922.58$ 922.58$
11/30/2020 3088 193.05$ 6 73.62$ 266.67$
12/31/2020 3393 208.27$ 7 85.89$ 294.16$
Totals 160342 8,468.77$ 507 6,731.19$ 15,199.96$ 13,402.98$
USING 2022 ROCKY MOUNTAIN POWER RATES
75 hp motor at this well.Well #1
17
Usage Usage/Other Demand Demand Total Monthly Highest
Month KWH Charge KW Charge Billing Billings
1/31/2021 3249 201.08$ 7 85.89$ 286.97$
2/28/2021 3286 202.93$ 7 85.89$ 288.82$
3/31/2021 2471 162.26$ 7 85.89$ 248.15$
4/30/2021 2412 159.31$ 63 773.01$ 932.32$ 932.32$
5/31/2021 3707 223.94$ 65 885.30$ 1,109.24$ 1,109.24$
6/30/2021 36143 1,842.55$ 63 858.06$ 2,700.61$ 2,700.61$
7/31/2021 38262 1,948.30$ 64 871.68$ 2,819.98$ 2,819.98$
8/31/2021 23225 1,197.92$ 65 885.30$ 2,083.22$ 2,083.22$
9/30/2021 25031 1,288.04$ 66 898.92$ 2,186.96$ 2,186.96$
10/31/2021 12629 669.16$ 67 912.54$ 1,581.70$ 1,581.70$
11/30/2021 11948 635.18$ 62 760.74$ 1,395.92$
12/31/2021 3333 205.27$ 7 85.89$ 291.16$
Totals 165696 8,735.95$ 543 7,189.11$ 15,925.06$ 13,414.04$
USING 2022 ROCKY MOUNTAIN POWER RATES
75 hp motor at this well.Well #1
17
Usage Usage/Other Demand Demand Total Monthly Highest
Month KWH Charge KW Charge Billing Billings
1/31/2022 3161 196.69$ 7 85.89$ 282.58$
2/28/2022 5537 315.26$ 9 110.43$ 425.69$
3/31/2022 3802 228.68$ 7 85.89$ 314.57$
4/30/2022 7908 433.57$ 66 809.82$ 1,243.39$ 1,243.39$
5/31/2022 17684 921.42$ 66 898.92$ 1,820.34$ 1,820.34$
6/30/2022 32857 1,678.58$ 65 885.30$ 2,563.88$ 2,563.88$
7/31/2022 27361 1,404.32$ 65 885.30$ 2,289.62$ 2,289.62$
8/31/2022 24179 1,245.53$ 66 898.92$ 2,144.45$ 2,144.45$
9/30/2022 15237 799.31$ 66 898.92$ 1,698.23$ 1,698.23$
10/31/2022 2810 179.17$ 11 149.82$ 328.99$ 328.99$
11/30/2022 4594 268.20$ 65 885.30$ 1,153.50$
12/31/2022 12354 655.44$ 66 898.92$ 1,554.36$
Totals 157484 8,326.15$ 559 7,493.43$ 15,819.58$ 12,088.89$
3 year average of highest monthly billings on a 75 hp pump:12,968.64$
Case No. FLS-W-23-01
A. Rue, Falls Water
Exhibit No. 5-B
Page 1 of 1
Average Annual
Manhours Days Total Hrs Wage Rate Cost
Daily Check in 1 214 214 26.70$ 5,713.80$
Spring Startup 33 1 33 26.70$ 881.10$
Fall Winterize 33 1 33 26.70$ 881.10$
Annual Labor Costs 7,476.00$
Case No. FLS-W-23-01
A. Rue, Falls Water
Exhibit No. 5-C
Page 1 of 1