19991115Final Order No 28206.pdf

Office of the Secretary
Service Date
November 16,1999
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF APPLICATION OF )STONERIDGE UTILITIES COMPANY FOR A )CASE NO.GNR-W-98-1
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY AND RELATED RATES.)ORDER NO.28206
On July 22,1998,Stoneridge Utilities Company (Stoneridge),a combined
water/sewer company,filed an Application with the Idaho Public Utilities Commission
(Commission)for a Certificate of Convenience and Necessity to provide water service to a golf
resort communitynear the town of Blanchard in Bonner County,Idaho.Reference Idaho Code
§§61-526,61-528;Commission Rules of Procedure,IDAPA 31.01.01.111.The Company's
initial filing was incomplete.Proceedings were informally stayed pending further investigation.
The Commission by this Order finds that Stoneridge is operating as a public utility
subject to Commission jurisdiction,issues a related Certificate of Public Convenience and
Necessity,requires the Company to separate its water and sewer operations,establishes approved
rates and charges,and requires adoption of general service provisions.
The Stoneridge project (real estate development,golf course,water system,sewer
system,etc.)is owned and operated as a sole proprietorship by Mr.Keith Garner of Salt Lake
City Utah.The project is composed of an eighteen-hole golf course,approximately 200 home
sites,a complex of time-share condominiums and several commercial establishments associated
with the golf course.The time-share condominiums have all been sold and there are currently29
residences constructed on the 200 building lots.
On August 25,1999 followingcompletion of its investigation into Stoneridge's filing,
the Commission Staff filed a Report with the Commission Secretary containing its analysis and
recommendation in Case No.GNR-W-98-1.Staff's Report incorporates an audit report setting
forth the results of Staff's analysis,a description of the water supply system,an analysis of
customer water consumption,a revenue requirement analysis,recommendations regarding
customer relations,and suggested rate design.Also filed with the Commission was related
correspondence from Stoneridge regarding the content of the report.Staff notes that nothing in
Stoneridge's comments has persuaded it to alter its recommendations.
ORDER NO.28206 1
STAFF RECOMMENDATIONS
Staff's report recommends that Mr.Garner be granted a certificate to operate as a
public water utility to serve the Stoneridge project.
The Application did not specify the level of rates desired.During its investigation,
Staff was informally provided a document that indicated Stoneridge desired to increase rates as
follows:
Time-Share Complex $2,750 per month (increase from $883.50)
Residential Unspecified (currently$8.00 per month)
Golf Course Irrigation $700 per month (currently-0-)
Golf Pro Shop/Restaurant $90 per month (currently-0-)
Golf Course Recreation Center $500 per month (currently-0-)
Project Maintenance Bldg.$30 per month (currently-0-)
Sales Office Bldg.$30 per month (currently-0-)
Rental Condominiums $100 per month (currently-0-)
Staff recommends a gross annual revenue requirement for the Stoneridge water
system of $37,062 with metered rates as follows:
Residential customers
Customer Charge $14 per month per meter
Commodity Charge $0.30/1,000 gallons for all consumption.
Time Share Complex
Customer Charge $200 per month (for five meters @ $40 per
month per meter)
Commodity Charge $0.30/1,000 gallons for all consumption.
Commercial Customers
Customer Charge $20 per month per meter
Commodity Charge $0.30/1,000gallons for all consumption.
Golf Course Irrigation
Customer Charge $1,200 per month
Commodity Charge $0.30/1,000 gallons for all consumption.
ORDER NO.28206 2
Staff notes that up to this time many meters on the Stoneridge water system were
either inoperable,absent or unread.Staff has used data from what recent meter data was
available together with old data from a 1994 engineering report provided by Stoneridge to
develop its proposed rate design.Stoneridge,in informal comments to Staff's Draft Report,does
not agree with Staff's recommendations,but has offered no alternative.Stoneridge does indicate
that meters are being installed and repaired,and that consumption figures will be available in the
future.
Staff,in developing its revenue requirement,assumed that Stoneridge has no rate
base.Staff bases this assumption on the Commission's Rule No.103 for Small Water
Companies.Reference IDAPA 31.36.01.103.Under Rule 103 a developer-installed system and
related capital investment in plant is considered contributed property.It is presumed that the
developer of a real estate project recovers the cost of the water system through the increased
value of lots when sold.Stoneridge believes that capital recovery of the investment in the water
system ($355,063 -unverified by Staff)is appropriate.The history of ownership of the
development includes several sales,foreclosures and bankruptcy repossessions.Mr.Garner,the
current owner,has been involved off and on since 1978 when he purchased the development out
of foreclosure from Chicago Title Company.Stoneridge's comments to Staff's Draft Report
have not convinced Staff that Stoneridge does not stand in the shoes of the developer.
As set forth in Staff's Report,Staff recommends the following:
1.Staff recommends that the Commission process the case under Modified
Procedure without hearing.Reference Commission Rules of Procedure,IDAPA 31.01.01.201-204.
2.Staff recommends that a company,separate and apart from all otheractivitiesofthedeveloper,be established for the water system.
Stoneridge objects to this recommendation.
3.Staff recommends that a Certificate of Public Convenience and Necessity
be issued to Mr.Garner operating as Stoneridge Water System.
4.Staff recommends that the Commission direct Stoneridge to file adetailedmetesandboundslegaldescriptionoftheserviceareawiththe
Commission.
5.Staff recommends that a separate accounting system be established for
the water system activities and that detailed receipts of time records bemaintained.Stoneridge believes that its existing accounting system for
ORDER NO.28206 3
the Stoneridge development is adequate and indicates that it will beginmaintainingadequaterecords.
6.Staff recommends that the Commission accept Staff's recommended rate
design.
7.Staff recommends that Stoneridge be directed to provide a copy of theCommission's Notice to all customers.
8.Staff recommends that the Company provide customers with a scheduleindicatingthemagnitudeoftheratechangeatdifferentlevelsofconsumption.
9.Staff recommends that Stoneridge be directed to read all meters on aregularmonthlybasis.
Following its review and consideration of the Company's Application and
Commission Staff's report,analysis and recommendations in Case No.GNR-W-98-1 the
Commission in Notice issued September 21,1999,found Staff's proposed recommendations
regarding issuance of Certificate,corporate structure,certificated area of service,accounting,
operations,proposed revenue requirement and rate design to be fair,just and reasonable and
proposed adopting same.The Commission further made a preliminary finding that Modified
Procedure was appropriate and established an October 29,1999,comment deadline.Notice of
Modified Procedure and Staff's recommendation in this case was mailed to all customers on
October 6,1999.Commission Staff and the Stoneridge Recreation Club Condominium
Association,which was previouslygranted intervention,were the only parties to file comments.
Staff adopts its previouslyfiled report.Staff further indicates that Stoneridge has
supplied Staff with a copy of all forms and notices to be used in providing information or notice
to customers.Staff suggested minor changes to meet Commission requirements that the
Company has accepted.The Company,Staff states,has also agreed to adopt the General Rules
and Regulations for Small Water Utilities in its entirety.
The Stoneridge Recreational Club Condominium Association in its comments agrees
with Staff's recommendations.
ORDER NO.28206 4
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record,including Staff's
investigative report and recommendations and the related comments of the Company and the
StoneridgeRecreation Club Condominium Association.
Based on the established record,a review of Idaho Code Title 61,and the nature and
manner of control exercised by Stoneridge in the operation and management of the Stoneridge
water system,we find it necessary to assert formal regulatory jurisdiction over the water system
operated by Stoneridge Utilities Company and to issue Certificate of Public Convenience and
Necessity No.365 to Keith Garner dba Stoneridge Water System,a public water utility,to
provide water service to the Stoneridge golf resort community located near the town of
Blanchard in Bonner County,Idaho.In so doing we require that a company,separate from and
apart from all other activities of the developer,be established for the water system.We further
require that Stoneridge file a detailed metes and bounds legal description of the service area with
the Commission to be incorporated into its Certificate.
As a regulated utility,the Stoneridge Water System is required to adopt the
Commission's Utility Customer Relations Rules,Utility Customer Information Rules,and an
accounting system consistent with the information required by the Commission's Annual Report
for Small Water Companies.A separate accounting system is to be established for the water
system activities and detailed receipts of time records are to be maintained.
We also find it fair and reasonable,based on Staff accounting,engineering and
related financial data,to approve an annual revenue requirement for the Stoneridge Water
System of $37,062 and to establish tariff rates for metered service as recommended by Staff.
The water utility is directed to file tariff sheets reflecting authorized rates,including non-
recurring charges and general service provisions.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction and authority over Keith
Garner dba Stoneridge Water System,a water utility,and the issues raised in this Application,
pursuant to Title 61 of the Idaho Code and the Commission's Rules of Procedure,IDAPA
31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above,IT IS
HEREBY ORDERED and the Commission does hereby issue Certificate of Public Convenience
ORDER NO.28206 5
and Necessity No.365 to Mr.Keith Garner dba Stoneridge Water System,Bonner County,
Idaho.Mr.Garner is directed to furnish a more precise legal description of the served area for
the Certificate file.
IT IS FURTHER ORDERED and the Commission does hereby establish rates and
charges as set out above.Mr.Keith Garner is required to file tariff sheets consistent with this
Order.
IT IS FURTHER ORDERED and Mr.Keith Garner is required to adopt and
implement the Commission's Consumer Relations Rules,the Commission's Utility Customer
Information Rules,and an accounting system consistent with the information required by the
Commission's Annual Report for Small Water Companies.
IT IS FURTHER ORDERED and the Company is required to inform its customers of
the Commission approvedrates and policies.
IT IS FURTHER ORDERED and Mr.Keith Garner is required to make written
petition or application to the Commission prior to any proposed change in ownership of the
Stoneridge Water System.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
ORDER NO.28206 6
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho,this
day of November 1999.
ENNIS S.HANSE ,PRESIDENT
MARSHA H.SMITH,COMMISSIONER
PAUL KJELL DER,COMMISSIONER
ATTEST:
Myrna J.Walters
Commission Secretary
b1s/O:gnrw981 _sw
ORDER NO.28206 7