20021125Staff Report.pdf

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IDAHO
PUBLIC UTiliTIES
com miSSion
HE C E PJr
~ernPtho"ffi GovernorF!LED
o. Box 837_0-0074
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Ma~~:!ii~tf. K~J~ ~'7'A1',sslonerU()~~hI9 !S~"'WSeh1,l~~MfMssioner
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November 25 2002
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ill 83720-0074
RE:Staff Report in Case No. GNR-Ol-
Dear Jean
In Order No. 29123 (Case No. GNR-Ol-l), the Commission directed Ponderosa Terrace
Estates Water System and Commission Staff to submit a report no later than November 25 2002
detailing changes to the number of customer in each class and the impact these changes will have
on Ponderosa s revenues.
The report notes that significant disagreement exists between Staff, the Company and customers
regarding interpretation of the Commission s Orders on seasonal disconnections. Staff
respectfully requests the Commission consider clarifying its previous Orders on this issue so that
Staff may properly advise the Company and its customers.
Respectfully submitted
'-1.eJ\k~
Lisa Nordstrom
Deputy Attorney General
cc:Robaer Cobott
Located at 472 West Washington Street , Boise, Idaho 83702
Telephone: [phone] Facsimile: [phone]
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STATUS REPORT
PONDEROSA TERRACE ESTATES
WATER SYSTEM
(PTE)
November 25, 2002
Michael Fuss
Staff Engineer
Idaho Public Utilities Commission
As Ordered in Order No. 29123
Customer Inventory
In Order No. 29123, the Commission directed Ponderosa Terrace Estates Water System
and Commission Staff to submit a report no later than November 25 2002 detailing changes to
the number of customers in each class and the impact these changes will have on Ponderosa
revenues. Order No. 29123 at 7. On October 30 2002, Staff met with the owner, Mr. Robaer
Cobott, and performed a site visit updating the customer inventory and revenue projection for the
Ponderosa Terrace Estates Water System (Attachment A). Order No. 29086 implemented a
grace period that allowed Ponderosa System customers to change customer class without cost
until October 15 2002. The inventory was performed after the conclusion of the grace period to
provide the most relevant customer information going forward. The following is a summary of
that information.
Customers Annual Revenues
Customer Class May 22,2002 Oct 30,2002 May 22,2002 Oct 30,2002 $ Change % Change
Full-Time 368 640 728 17%
Part-Time 336 880 (3,456 55%
Active Service 900 700 (1 ,200 12%
Inactive Service
Total 604 220 384 \24%
Customers with Private Wells 100%
Number of Customers With
Outstandin Balances Unknown Unknown
Since the original inventory was completed in May 2002, two Full-Time and two Part-
Time customers have installed their own wells and are no longer on the system. Six (6) Part-
Time and four (4) Active Service customers chose to either leave the system or disconnect their
service indefinitely. Staff is unaware if these customers desire to move completely off the
system to the Inactive customer class or anticipate reconnecting at some time in the future.
Either way, these ten customers do not currently contribute to the Company s revenue. The
customer changes as of October 30, 2002, indicate an anticipated annual revenue shortfall of
approximately $6 384 (24%) of the $26 604 revenue requirement. In addition to the anticipated
revenue shortfall, the Company reports that sixteen (16) of the paying customers are more than
one month behind in payments.
STAFF REPORT NOVEMBER 25 , 2002
While meeting with Mr. Cobott, Staff discussed the fact that revenues would be less than
the original projections. Mr. Cobott realized there would be revenue impacts due to the changes
in customer classes. He stated that he is watching expenses but he does not want to change rates
at this time. He believes that another change in rates could cause even more customers to leave
the system and further affect the Company s revenues.
Operations Update
Although the on-call operator, Larry Fairfax, is still working for the Company, customer
service has not significantly improved. On several occasions it has taken the Company
numerous days to respond to Staff s inquiries. Staff is also aware that the owner is out -of-town
for the months of November and December. Staff suggested that the Company change the
message on the Company s answering machine to include an additional contact number for
customers, but as of this date no changes were made.
On or about the 1 st of November a significant water leak occurred on the system. The
leak was found and repaired but only after the tanks had emptied and customers were out of
water for a couple of days. Despite this disruption in service, Staff is encouraged that Ponderosa
was able to repair the leak and the wells had sufficient capacity to refill the tanks and continue
operation.
Staff has just recently learned that another leak occurred during the week of November
18. The Company is working on diagnosing and repairing the leak. However, Staff cannot
confirm that repairs were made and is continuing to monitor the situation.
Potential for New Customers
The aforementioned changes in the customer classes have resulted in fewer customers on
the system. Although some existing customers have disconnected, the potential remains for
additional customer connections. These connections could result in up to $30 000 in hook-up
fees that would be available to upgrade the system. Such investment could provide the
additional supply and other system improvements that Ponderosa will need to serve its
customers.
Staff also observed a new cabin under construction and was informed that a new renter
just moved into one of the other permanent cabins in the subdivision. While we do not know
STAFF REPORT NOVEMBER 25 2002
their method of water service, it appears that some customers are now willing to invest into
developing their lots.
Other Issues
Staffhas received a number of inquiries indicating that there is some confusion regarding
the implementation ofthe Commission s Orders and the Company s treatment of seasonal
disconnections.! The Company, customers and Staff disagree on the following issues:
Are customers who disconnect during the winter required to continue to make the
full monthly payments while seasonally disconnected?
Is there a maximum length of time allowed for seasonal disconnects?
Can a customer involuntarily become a member of the Inactive Customer class
through nonpayment or a lengthy disconnection? If so, are these customers
required to pay the $2 500 hook-up fee prior to reconnection?
What kind of documentation is required to move a customer to the Inactive
Customer Class from any other customer class?
Is a $2 500 hook-up fee or only the $35 reconnection fee required before restoring
service after a seasonal disconnect?
Can a lot be charged the $2 500 hook-up fee more than once?
The Company apparently believes that all Full-Time, Part-Time or Active Service
customers that are connected to the system must pay the monthly rate year-round whether they
use water or not. The Company further believes that if the customer is not paying the monthly
charge, the customer can be disconnected if the Company follows the appropriate disconnection
procedures. Once disconnected, either by choice or for failure to pay monthly bills, the customer
becomes a member of the Inactive Customer class. The Company believes that the customer
would then have to pay the $2 500 hook-up fee plus the $35.00 reconnection charge to restore
servIce.
Staff agrees that all Full-Time, Part-Time or Active Service customers that are connected
to the system are required to make monthly payments. Staff also agrees that the Company can
I See letters from Lyle Peterson (Attachment B), Len & Patty Plotzki (Attachment C) and Nora DaWgren
(Attachment D).
STAFF REPORT NOVEMBER 25 , 2002
disconnect customers for non-payment. However, Staff believes that a customer will retain their
customer class status while disconnected and must pay only the $35 reconnection fee to
reactivate the service. The $2 500 hook-up fee is a one-time fee per lot that is targeted for well
improvements. Additionally, this hook-up fee can only be charge to customers in the Inactive
Service class as of October 16, 2002.
Because Staff and the Company do not agree on the treatment of seasonally disconnected
customers, Staff respectfully requests clarification of Order No. 29086.
Concluding Remarks
The grace period is over and customers are now in the service class in which they will
likely remain for the foreseeable future. The Company s revenue will likely be much less than
projected in the certification case. The Company is aware of the likely revenue shortfall and is
closely watching expenses. The Company has the potential for twelve (12) new connections that
may include $2 500 in hook-up fees for each new connection. Should these fees be generated
they could provide a significant amount of revenue for system improvements. A new customer
is renting one of the part-time cabins and a new cabin is under construction, which indicates that
at least one customer is willing to improve his lot. Staff believes the system may become more
financially viable with additional time and improved customer service.
Staff Recommendations
Staff recommends maintaining rate stability and not changing rates at this time.
Staff requests that the Commission clarify Order No. 29086 regarding the seasonal
disconnection issues identified above.
STAFF REPORT NOVEMBER 25, 2002
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O. Box 8370
Boise, ill. 83720-0074
mAi"Hii F)U~UL
Uif,iU T lES CtJ~!f:1WSSJ;,
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Case No. GNR-Ol-
Commissioner
I feel compelled to make a last communication to you regarding the above case. As I have said before I
would like for the P. T.E. water system, Inc. to survive and be a positive influence in the Ponderosa Estates
subdivision. Unfortunately this doesn t seem to be the CUITent situation and maybe it is not possible.
I purchased two lots in this subdivision to use as a seasonal retreat 10 years ago. Since that time I have built
a small cabin on one of the lots. I am a retired engineer, have degrees in Civil Engr. from OSU & SMU.
When I was working I held current Professional Engr. Licenses in the States of Oregon, Washington and
Texas. I worked for over 40 years in the design, construction, etc. of roads, structures, water systems, etc.
in the field of Civil Engineering. Now during this 10-year period that I have owned the lots, I saw no
preventive maintenance, upgrading, etc. of this water system until the bacterial infestation of the water
caused the DEQ to require some remedial processes be done. A comment in the Tucker Engr. report may
be applicable here. This probably led to the infusion of a cWorinator in the water system and corrupted the
cost of furnishing water to customers. The 2nd well, as I understand it, was required because a 2nd source
of water must be available for use by the Water Co: CUITent DEQ regulation and again increased the cost
water to customers.
I will again express my opinion that the only way this Water System can exist is if you arbitrarily assign a
base water rate fee to all lots in the subdivision, whether using water or not (active, inactive, full time, part
time) and then an additional fee for full & part time users (your definitions). I realize this is not part of your
CUITent inventory of customer bases, but believe you can arbitrarily do it as you have in other orders. Other
areas have set conditions similar to this just as they set the basic use of this type of water as potable and not
for inigation (1/W' water per 1/2 acre per day) as the Tucker Engr. report -estimates. You have arbitrarily
assigned a $26 600 amount for the Water Co., which I think is high. Since some full time users have
akeady dropped out of the system, the cost reduces and this could be $24 000 or less. Say 80 lots & parcels
remain, you could arbitrarily just order $25/mo. per lot period, or you could order 60 lots (active & inactive)
$20/mo. and 20 lots (full time & part time) ($ $40/mo.. This is a reasonable solution and might help the
utility and customer to a stable situation. Any new hook up would pay your ordered $2500 or even set it
higher as long as this Water Co. understands that this money is for improving an already depreciated water
line system and for additional water sources if required. My suggestion may be okay or it may already be
too late. It would also help if the Water System was more involved in being a good infonnation source and
less confrontational to the customers regarding what is happening in construction, maintenance, etc. within
the system and letting the customer know what he can do to be helpful.
There are still 80 or so properties that would probably like to have a reasonable relationship with the Water
Co. These properties cuITently have a minimum tax assessed value of $1 0, 000 which means over 1 million
dollars in value is at stake in this system surviving. The CUITent cost estimates for Well Syste!Jls to these lots
run fi.-om $3000 to $15000 depending on well depth. The lot value basically remains the same well or water
system, but the economic impact on the Water System & property owner can be high. Perhaps you can be
of assistance to the property owners and also keep the Water System from the "Death Spiral" you
mentioned.
Attachment B
Case No. GNR-Ol-
Staff Report
11/22/02 Page 1 of
I mentioned earlier when I had bought these lots. I bought them with view of improving them and making
the area better, I and two of my neighbors contracted with Pacific Power & Light in 1993 to bring
underground power lines from Ponderosa Rd up to our properties. This basically opened up the whole.
subdivision for electric power, which it did not have before that. We also guaranteed GTE for a number of
customers and GTE placed telephone cables throughout the whole subdivision. We did this at our expense
and increased the value of every property in the subdivision.
I hope you can change your current position to help the Water Co. and customers to exist together and not
force those still willing to reside in the area to go to a private well system. I will not bother you again and
truly hope you will communicate with the Water Co. & customers and reach the proper conclusion
benefiting all involved in this case.
Thank you
../;
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Lyle & Marge Peterson
932 E Marine View Dr.
Everett, WA. 98201
Attachment B
Case No. GNR-Ol-
Staff Report
11/22/02 Page 2 of
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Attachment C
Case No. GNR-Ol-
Staff Report
11/22/02
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CaseNo,GNR-01-a~q 7U ~. ~jlt?2 2fJg-.Y,5 ft,Staff Report tJ
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CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 25TH DAY OF NOVEMBER 2002
SERVED THE FOREGOING STAFF REPORT, IN CASE NO. GNR-Ol-, BY
MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
ROBAER COBOTT
PONDEROSA TERRACE ESTATES
WATER SYSTEM
2626 WRENCO LOOP RD
SANDPOINT ill 83864
.Jo
SECRET
CERTIFICATE OF SERVICE