20230725Staff Comments.pdf

CLAIRE SHARP
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION OPOBOX83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.8026
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION )INTO WHETHER VP,INC.IS A PUBLIC )CASE NO.GNR-W-17-01UTILITYSUBJECTTOREGULATIONBY)THE IDAHO PUBLIC UTILITIES )COMMISSION )COMMENTS OF THE
)COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission ("Staff'),by and through its Attorney
of record,Claire Sharp,Deputy AttorneyGeneral,submits the followingcomments:
BACKGROUND
Beginning in 2017,the Idaho Public Utilities Commission ("Commission")received an
inquiry regarding the regulatory status of VP,Incorporated ("the Company"or "VP"),a private
water and sewer company located near Sandpoint,Idaho.The Company has not been regulated
by the Commission and does not possess a certificate of public convenience and necessity
("CPCN").The Commission directed the Staff,pursuant to its statutory authorityand
jurisdiction under the Idaho Public Utilities Law,specifically Idaho Code §§61-612 and 61-501,
to investigate whether or not the Company is operating as a public utility and if any steps should
be taken by the Company to comply with Idaho law.Order No.33929 at 1.
STAFF COMMENTS 1 JULY 25,2023
Ongoing litigation concerning ownership of the water system and service obligations
between the Company and Valiant Idaho,LLC,stalled Staff's investigation.Now,with the
recent development regarding Valiant Idaho,LLC's and TIC Utilities,LLC's sale of certain
water system assets,many of the legal issues have been resolved allowingfor the investigation to
resume.
In Order No.35700,the Commission directed the Company to respond to discovery
questions and inquiries made by Staff,and notified the Company that Staff would make a
recommendation to the Commission regarding the Company's status,a requirement of a CPCN,
and any further recommendations regarding the adequacy of service,and rate setting.
STAFF ANALYSIS
Staff recommends that the Company be regulated by the Commission.In order to do so,
Staff recommends the Commission order the Company to file a CPCN application containing
clearer boundaries of their service territory,evidence of separation from the Valiant Water
System,and complying documents.
Requirementsto be a Regulated Utility
Upon review of the Company's financial statements,Staff believes that the Company is a
corporation that operates a water system for compensation.A "public utility"is an entity that is
dedicated to serving the general public in its service area.Idaho Code §61-129(1).The term
"public utility"is defined to include "water corporations."A "water corporation"is "every
corporation"that owns,controls,operates,or manages a water system for compensation.Idaho
Code §61-125.
Exceptions for corporations that do not qualify as a public utility include nonprofits,
cooperatives,or any other public utility that operates for service at cost and not for profit.Idaho
Code §61-125.Staff could not find any evidence that the Company operated as any of these
exceptions;therefore,Staff recommends that the Commission order the Company to be
regulated.
STAFF COMMENTS 2 JULY 25,2023
System Description
VP owns and operates a private water system within the Hidden Lakes subdivision
located near Sandpoint,Idaho.'The potable water system provides service to 64 customers
within the subdivision.Groundwater for the system is sourced through two metered wells,
identified as wells #1 and #2.2 Individualwell pumps discharge water directly into the
distribution system which also includes two large in-ground concrete water storage tanks.The
two in-ground water storage tanks are set at higher elevations relative to the supply system
allowingthe tanks to act both as a reservoir for providing system capacity and for maintaining
pressure to the system through hydrostatic head pressure.The design allows well pumps to be
cycled on and off.The lower elevation tank is sized at 45,000 gallons and the upper tank is sized
at 12,000 gallons.3 System water is chlorinated using a dilute mixture of 12.5%sodium
hypochlorite.The Company states the system operators are licensed by the Idaho Division of
Occupational and Professional Licenses.4
Water System Separation
In Genesis GolfBuilders,Inc.,v.Pend Oreille Bonner Development,LLC,the court
ordered the public water systems of Valiant and VP to be physicallyseparated.Genesis Golf
Builders,Inc.,v.Pend Oreille Bonner Development,LLC,Case No.CV-2009-1810 (1st Dist.
Bonner)(2017)(order modifyinginjunctionentered April 28,2017).
The relevant part of the Order states:
d.VP and Valiant shall cooperate to allow Valiant,and its agents,engineers,contractors,and/or employees,to disconnect and separate,as efficiently and costeffectivelyasreasonablypossible,the water system for the real properties within TheIdahoClub's PUD ("PUD Water System"),which shall thereafter be operated andmaintainedbyValiant,from the water system for the real properties that are not withinTheIdahoClub's PUD ("Hidden Lakes'Water System"),which shall thereafter beoperatedandmaintainedbyVP;
e.Valiant and VP shall cooperate to disconnect and separate the PUD Water SystemfromtheHiddenLakes'Water System in such a manner that it will cause as little
i Note:The Company also within the Hidden Lakes subdivision owns and operates the sewer system.2 Idaho Department of Water Resources Well ID 269850 and 338799.
3 See response to Production Request No.10(d).
4 See response to Production Request No.11(b).
STAFF COMMENTS 3 JULY 25,2023
disruption as is reasonably possible in water services to existing residents/customers,properties,and/or any other recipients;Id
In addition to the Court Order,The Idaho Department of Environmental Quality ("DEQ")
requires the systems to be physicallyseparated from each other.'On March 30,2023,the owner
of the of the VP system asserted that valves separate the systems.See Response to Staff
Production Request No.3.Staff questioned if valves are sufficientseparation in terms of DEQ
requirements and learned that valves are not considered to be adequate physical separation.6 VP
has not provided evidence that the systems have been physicallyseparated in compliance with
the Court Order and DEQ requirements.
Given that no evidence of physical system separation has been provided,Staff
recommends that the Company provide evidence and DEQ acknowledgement of physical
separation of the systems within its application for a CPCN.
CPCN
If the Commission rules that VP.should be operated as a regulated water utility,Staff
recommends that the Company be ordered to apply for a CPCN and to provide a legal
description of its proposed service territoryand a comprehensive list of the assets needed to
serve its customers.
Staff believes the current water system as described above is more than adequate to
provide service to its existing customers.However,through discovery,the Company included a
plan developedin 2018 to expand the system includingadditional capital investment and service
to future customers not being served at that time.See Response to Staff Production Request No.
14.Staff believes that some of this plan was constructed but is unclear whether it is being used
by VP or if it is part of the assets being sold to Gem State Water as part of the Valiant TIC sale.
See Case No.GSW-W-23-01.Because of these uncertainties,Staff recommends that the
Company provide a comprehensive list of all of its assets and infrastructure used to serve its
current customers and a system map and legal description of its proposed service territory
s IDAPA 58.1.08 542 FACILITY AND DESIGNSTANDARDS-DISTRIBUTION SYSTEM 02.D.and IDAPA543FACILITYANDDESIGNSTANDARDS:CROSS CONNECTIONCONTROL6IDAPA58.1.08 542 FACILITY AND DESIGNSTANDARDS-DISTRIBUTION SYSTEM 02.D.and IDAPA543FACILITYANDDESIGNSTANDARDS:CROSS CONNECTIONCONTROL
STAFF COMMENTS 4 JULY 25,2023
showing the location of its infrastructure,current customers,and any potential expansion within
its proposed territory.
Staff requested a legal description of the service area attributed to the VP water business.
In response,the Company referenced subdivision additions and parcel numbers for the Hidden
Lakes subdivision.See Response to Staff Production Request No.2.Staff believes the
Company's response is inadequate for legallydescribing the service area for the purpose of a
CPCN.
Staff is also aware of legal issues related to asset ownership with the Valiant and TIC
water system,"which is currentlyan unregulated water utility operating adjacent to VP.Prior to
the Commission issuing a CPCN to VP,the Commission must be assured there is no overlap
between the two water systems or any other systems operating in the area.The Company must
provide validation that the proposed service territorydoes not overlap with any other non-
Company owned water utilities operating adjacent to the VP system.Once the required
information has been provided and validated,one of the main requirements for issuing a CPCN
required by Idaho regulated utilities will be satisfied.
In addition to the information related to establishing the service territory,Staff
recommends the Commission direct the Company to provide complete design documentation
and installation drawings for the VP system to assure the system was installed using industry
standard practices,and that the installed system complies with local ordinance as part of the
CPCN application.Staff requested this information,but the information provided in response
was incomplete.To understand whether the system can reasonablyprovide reliable service,the
Company must provide complete documentation of the system's design and installation.
Tariff
The system is not currentlyoperated as a regulated utility.The Commission website
provides a water company information packet includinga Model Tariff previouslyapprovedby
the Commission for use with small water companies who may not have the skill and expertise
necessary to create their individualdocuments.The Model Tariff includes a template for Rate
2 See Production Request No.2.
*See GSW-W-23-01 Gem State Water's Application for Approvalof Acquisition of the Assets of the WaterBusinessofValiantIdaho,LLC.
STAFF COMMENTS 5 JULY 25,2023
Schedules for both recurring and non-recurring charges.The General Rules and Regulations
portion of this template should be kept as written.Any additional rules adopted by the Company
and approved by the Commission shall be appended to the end of this Tariff as an attachment.
Staff will assist the Company to create a Tariff includingRules and Regulations based on the
most recent Model Tariff to ensure compliance to the final order and the Commission's rules and
regulations.
Customer Notification and Documentation
Certificate of Public Convenienceand Necessity
When the Company submits its application for the CPCN,Staff recommends that the
Company also provide a direct notice to customers,either through a separate mailing,a message
on bills,or as an insert sent with customer billing.Though not required under Rule 111 and 125
of the Commission's Rules of Procedure,IDAPA 31.01.01.111 and .125 The notice allows
customers to participate in the process.Staff is willing to assist the Company in creating a notice
and press release.
Documentation
Included in the Commission's Water Company Informationpacket,which is available on
the Commission website,are templates for billingdocuments and collection notices,including
the initial and final notices prior to disconnection.Staff is willingto work with the Company to
update its billingand collection documents and ensure all Company documents meet the
requirements of the Utility Customer Relations Rules ("UCRR").
Available templates also include an Explanation of Rates and the Annual Rules Summary,as
required under Rule 700 of the UCRR,IDAPA 31.21.01.700.Theyalso include a summary of
all rates and charges approvedby the Commission regarding billing,collection,and availability
of payment arrangements.These annual mailings provide informationto the customer that is
further explained in the UCRR.Staff recommends that the Company work closely with Staff to
ensure the documentation is included with the application for a CPCN.
Customer Comment
As of July 25,2023,no customer comments have been received.
STAFF COMMENTS 6 JULY 25,2023
STAFF RECOMMENDATION
Staff recommends the Company be regulatedby the Commission and the Commission:
Order the Company to submit an application within 60 days requesting a CPCN to
provide water service to its customers as a regulated utility within the State of Idaho.
Order the Company within its application,to submit evidence of physical separation
from Valiant Water.
Order the Company within its application,to submit a full and complete legal
description of the VP service area which validates that its service area does not
overlap with any non-Company owned water business which may border the
Company's service area.Only after this validation is complete should the
Commission issue a CPCN.
Order the Company within its application,to provide complete design documentation
and installation drawings for the VP water system.
Order the Company to include in its application a tariff containing proposed rates and
Explanation of Rates and Annual Rules Summary.
Respectfully submitted this 25th day of July 2023.
Deputy AttorneyGeneral
Technical Staff:Joseph Terry
Rick Keller
Chris Hecht
Kevin Keyt
i:umisc/comments/gnrwl7.01jtrkchkkcomments
STAFF COMMENTS 7 JULY 25,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 25th DAY OF JULY 2023,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,INCASENO.GNR-W-17-01,BY E-MAILING A COPY THEREOF,TO,THEFOLLOWING:
RICHARD A VILLELLI SUSAN WEEKSVPINCORPORATED1626LINCOLN WAYPOBOX1785COEURD'ALENE ID 38314SANDPOINTID83864-0903 E-MAIL:sweeks jvwlaw.netE-MAIL:[e-mail]
ŠE0RÉ AR
CERTIFICATEOF SERVICE