20170831Reply to Staff Comments.pdf

MountalnI,IIATEBI,rIOBI(S i)
:3r Pt{ h: I
[:
813t12017
ldaho Public Utilities Commission
PO Box 83720
Boise, lD 83720-0074
Case No. GPW-W-17-01
Regarding: Comments of the Commission Stoff- Grouse Point Water Company Response
On behalf of Grouse Point Water Company, LLC (Company), Mountain Waterworks respedfully submits
this Response to the ldaho Public Utilities Commission for review. The Company's responses will include
the header and page number associated with the Staff Comment/Recommendation, along with the
Company's official response to Staff Comment/Recommendation.
Staff Analvsis-Page 2-Staff Comments-August 17, 2017
The Company agrees with Staff Recommendations of a three-tier inclining block rate structure, with the
proposed block rate charges:
o $2.50 per 1,000 gallon usage rate for the first 8,000 gallons
. 53.75 per 1,000 gallon rate for the next 12,000 gallons
. 55.00 per 1,000 gallon rate for all usage in excess of 20,000 gallons
Howevel the Company does not agree with Staff Comments that the SgZ.OO monthly base customer
charge is sufficient to fully collect the Company's actualfixed expenditures.
ln reference to Staff Comments of utilizing a pro-forma test year based on 2015 expenses, the Company
believes that the 2015 test year underestimates the annual cost of operation and maintenance
expenditures primarily associated with the costs of professional fees, specifically contract operation of
the water facilities. The four-year average of the actual costs of professional fees totals 58,555. This
compares to the average cost of professional fees in 2015 of 57 ,287, resulting in a difference of S1,378
annually. Due to the low number of customer connections and the lack of economy of scale in
comparison to larger systems, the cost of contract operation may vary significantly from year to year.
Therefore, the Company believes that a four-year average approach will better estimate the true costs
associated with the operation and maintenance as compared with a single pro forma test year.
The Company agrees with Staff Recommendations on an LL% return on equity.
Uranium Contamination, Water Qualitv. and the New Well-Page S-Staff Comments-August
L7,20L7
The Company is unaware of a customer complaint that temporarily caused his family to abandon their
home. No such complaint has ever been received by the Company nor has the Contract Operator, the
Company's Representative, or the Company's Bookkeeper been made aware of such a claim. lf possible,
the Company requests a detailed explanation and information regarding the custome/s address, along
with the time(s) and date(s) associated with the temporary abandonment.
Please be advised that when the new well was placed into service in 2009, taste and odor issues
associated with the new water supply were observed and the Company changed its treatment
methodology from chlorine to hydrogen sulfide. It is the Company's understanding that most taste and
odor issues have been mitigated through this treatment.
Boise I Coeur d'Alene I Lewiston I McCall
208.780.3990 - [e-mail]
www.mountainwtr.com
'i-iu
i,ilsstol'i
Mountalnl,lIATENI,lIORKS
The Fire Wel!-Page 6-Staff Comments-August 17,2017
The Company takes exception to Staff Comments that the Company does not test the pressure switch
(on/off controls) for the fire pump in the event of an emergency. The Company, through its Contract
Operator, routinely tests all electrical pump controls, pumping equipment, and valving to ensure a fail-
safe operation of the fire protection system, as the Company previously stated in the Third Production
Request No. 47a, No. 48b, and No. 49 (submitted to IPUC Staff on June 30, 20L7l,.
Electrical Power Consumption-Pase 7-Staff Comments-August 17, 2017
The Company does not test, maintain, or inspect the fire hydrant. Whitney Fire District is responsible for
testing, maintenance, and inspection of the Company's fire hydrants, as the Company previously stated
inthe Third Production Request No. 47a and No. 47b. Therefore, it is the assumption of the Company
that fire protection has been maintained by the Company with routine testing of the fire pumping
facilities and maintenance of the fire hydrants by of the Whitney Fire District.
The Company agrees with Staff Recommendations of requesting the Boise City Fire Department to
conduct annual fire testing for an annual 5500 fee. The Company also agrees with Staff
Recommendations that the Company must coordinate fire flows so that flushing of the fire hydrant does
not impact customers either from a taste or an odor perspective and to ensure that water mains are
flushed with low uranium levels after the test.
The Company does not agree with Staff Comments that 5500 is sufficient to offset actual operation and
maintenance expenditures the Company will realize for these annual fire hydrant expenditures. ln Staff
Comments (Page 10), system demands of 80kW are expected during testing of a full fire flow event. The
ldaho Power demand charges associated with this event would add additional ldaho Power costs. Total
increases in ldaho Power costs in the amount of 5480, which is a demand charge at the rate of
S0.Og/t<W, would be in addition to the power costs. The 5480 doesn't include ldaho Power energy
charges or basic load capacity charges.
ln addition the Company agrees with Staff Recommendations that the System's Contract Operator shall
be present while flow testing occurs. The Company estimates that the time to observe testing,
document the pump run times, calculate volume of water used, and to flush the system is approximately
5260 (5 hours at the contract hourly rate of S45).
The Company's belief is that this approximate cost is a conservative approach due to the volume of the
water supply with hieh uranium concentration in excess of the US Environmental Protection Agency's
(USEPA) maximum contaminant levels for this radionuclide being flushed. Therefore, the Company is
requesting to receive the full costs of performing the recommended annual flow testing of S1,240 in the
following annual flow testing costs:
o Boise Fire Department-S500
o ContractOperator-S260o ldaho Power-S480
Boise I Coeur d'Alene I Lewiston I McCall
208.780.3990 - offi [e-mail]
www.mountainwtr.com
2
Ilflountaln
Electrical Power Consumption-Paee 7-Staff Comments-August 17, 2017
The Company believes that the average annual ldaho Power cost of 54,206, as calculated by the
Company over the four year pro forma test period, is appropriate for testing of annual power utilization.
The Company believes that it will not receive benefits, due to the economy of scale of this small 24-
customer connection system, for the per-unit electrical energy cost as it will remain higher than
compared with other public drinking water systems with more customers.
Company customers utilize in-home use at approximately 280 gallons per day, as compared to other
water systems with larger irrigation demands of up to 1,000 gallons per day. The low usage of the Water
System will require more frequent pump on/pump off operations. This pump on/pump off operation will
result in higher electrical costs on a per-customer basis.
The Staff Recommendation of S1,960 (Page 10) will barely cover the costs of ldaho Power's energy
charge (kwh) of the following known energy charges from a copy of the Company's ldaho Power Bill
from February t8,2Ot5 (lncluded in the Company's Application-Operation and Maintenance2015):
o ServiceCharge-$15.00o Non Summer Demand Charge-$zz.oo
o Basic Charge-S19.38o Annual Adjustment Mechanism-521.92
. Energy Efficient Services-S13.28
ln addition, the energy charges as calculated non-power pumping equipment such as:
o Building Heater. System Ventilationo Chemical Feed Pumps
o lnterior Lighting
o Exterior Lightingo Control Valve Solenoidso Other Non-Pump Electrical Equipment
The Staff uses a 2012 estimate of power consumption as an example of an efficient variable pumping
speed where the annual power costs in 2012 was 53,773. Therefore, the Company believes that it
cannot recover sufficient revenue to cover power expenditures in future years, thus putting stress on
the Company and creating conditions for potential loss in future sustainability and viability of the
Company.
Boise I Coeur d'Alene I Lewiston I McCall
208.780.3990 - offi [e-mail]
www.mountainwtr.com
3
I/IIATENInIONKS
MountalnI,I,ATE BIllO R KS
Amortization of Rate Case Expenses-Paee l4-Staff Comments-August 17,2017
The Company agrees that the Rate Case Expenditures for 2015 were routine accounting expenses and
not Rate Case filing expenses.
However, in discussions with Staff early in the process, the Company projected its Rate Case filing costs
for 2077, and these were balloon costs based on the filing date of February, 2017. While the length of
this rate case filing was extended beyond initial projections, along with a total of seven (7) official
requests (including four (4) Audit Requests and three (3) Production Requests) sought after by Staff,
costs for 2017 significantly increased due to time invested by the Company's Representative, Contract
Operator, Bookkeeper, Financial Consultant, and Consulting Engineering firm. Thus, follow-up
conversations with Staff resulted in the understanding that estimated costs could be reevaluated once
actual costs were known.
The Company disagrees with the Staff Recommendations of an annual Amortization of Rate Case
Expenses equaling SgOO/year as a reasonable cost associated with filing expenses. The cost of filing for
dissimilar IPUC regulated water utilities should not be assumed to be comparable to Grouse Point.
Additionally, the larger costs associated with this filing is primarily due to the time period between rate
case filings, with the last filing in 2003.Thus the Company is requesting full recovery of expenditures
associated with the Rate Case filing (to date) for the Water Company, as provided in the attached
detailed Rate Filing Expense Schedule, dated 08/3112017. lt should be noted that the Company is not
requesting recovery of additional unknown costs associated with this Rate Case filing.
Rate Design-Paee 15-Staff Comments-Ausust 17. 2017
The Company appreciates the detailed and technical analysis to develop the proposed rate design. The
Company supports Staff Recommendations with minimal modifications to the revenue requirement as
defined in this Response document.
Customer Comments-Page 21-Staff Comments-August 17. 2017
The Company recommends the following wording modification on Page 21 of Staff Recommendations:
"...stoff thus recommends thot the Commission order the Compony to file o new rote case within one
yeor of odding ony new customers..." to the following:
"....stolf thus recommends that the Commission order the Compony to file a new rdte case within one
year of ony new customers in excess oI the existing 24 customers in adive service...
Boise I Coeur d'Alene I Lewiston I McCall
208.780.3990 - office@mounta i nwtr.com
www.mountainwtr.com
4
Total Application Exp€nse Amortized-7 Years
Grouse Point Water Company
Rate Filint Expense Schedule
2075-2017
workshert c
4,318s
Costs to Date
Professional Fees-Attorney s 36 L,320
Professional Fees-Accountant/Bookkeeoins s 111 5 600 5 532
1,500 L,238 3,575Professional Fees-Personal Representative
Professional Fees-Engineer 4,739 16,934
Printins Costs and ExDenses 5 s s 145
Public Outreach
Filing Fees and Associated Expenses
Total Rate Case Filim ErDense $t,647 s 7,297 $2L,245
2015 2016 2017 Actual Costs Total CostsExpense Catetory