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HomeMy WebLinkAbout20230201Comments.pdfCOMPANY’S REPLY COMMENTS PAGE 1 OF 19 Leslie Abrams-Rayner General Manager Gem State Water Company, LLC P.O. Box 3388 Coeur d’Alene, ID 83816 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ITS CASE NO. GSW-W-22-01 COMPANY’S REPLY TO THE COMMENTS OF THE COMMISSION STAFF Gem State Water Company, LLC (“Gem State Water” or “Company”), provides the following reply to the Comments of the Commission Staff of the Idaho Public Utilities Commission (“Staff”). GENERAL COMMENTS In the past several years, Gem State Water has acquired a number of small water systems that were in various states of disrepair. After years of minimal maintenance, investment and management under prior ownership, many of these systems were out of compliance with health regulations and posed significant safety and reliability risks to customers. The Company is working towards bringing these systems into compliance with regulatory requirements and, eventually, up to par with current best practices in the industry. As Staff notes, “many system deficiencies have been corrected by the Company since it assumed ownership.” Staff Comments at 3. However, Gem State Water agrees that the work is far from over: “All of the systems will require substantial future investments to become fully compliant and reliable.” Staff Comments at 3. Staff and Gem State Water share the goal of bringing these systems into compliance with regulations, increasing reliability, and implementing industry best practices. To accomplish this goal, and to support additional acquisitions within the State, the Company must be able to obtain RECEIVED 2023 January 31, 3:36PM IDAHO PUBLIC UTILITIES COMMISSION COMPANY’S REPLY COMMENTS PAGE 2 OF 19 reasonable rates, supported by the type of information and operations that are found in the water utility industry. Gem State Water appreciates the work Staff has put into this proceeding, and is thankful for Staff’s cooperation throughout the case. That said, Gem State Water respectfully disagrees with many of Staff’s proposed adjustments. Staff makes the following recommended adjustments in its comments.1 Areas of agreement between Gem State Water and Staff are noted. Areas of disagreement are then discussed in more detail in the following section. STAFF’S PROPOSALS 1. Allocation. Staff allocated its adjustments over the different water systems using the number of customers for each system. Staff Comments at 4. Gem State Water agrees that this is the appropriate method to allocate expenses.2 However, later in the comments, Staff uses this method to allocate a capital asset. Staff Comments at 11. Gem State Water did not propose, and does not agree, that this method should be used to allocate capital assets. This is discussed in more detail below. 2. Revenue Requirement. Staff recommends a total revenue requirement of $682,248 (Staff Comments at 4), which is approximately $294,000 less than requested by Gem State Water. Staff’s proposed reduction in revenue requirement includes the following: a. Salary. Staff recommends reducing overtime pay, an adjustment to actual salaries, reducing the workers’ compensation premium calculation, and adjusting the Company’s 401(k) matching expense to the actual expenses incurred during the test year. Staff Comments at 5. The Company agrees with the proposed adjustment to overtime pay, but does not agree with the other adjustments. b. Lease. Staff proposes to reduce the rental property and equipment expense account by $27,408, the difference in the pro forma lease amount requested and the actual lease amount. Staff Comments at 7. The Company agrees with this adjustment. 1 Staff did not recommend any adjustments to the Company’s proposals regarding non-recurring charges (see Staff Comments at 20-21), and the Company agrees with that resolution. 2 Gem State Water notes that Pelican Point Water Company (“Pelican Point”) has 515 customers and Gem State Infrastructure (“GSI”) has 47 customers; these numbers are inverted in Staff’s analysis. Staff Comments at 4. In addition, the Lynnwood Estates system has 24 customers rather than 47 customers as stated by Staff. Id. COMPANY’S REPLY COMMENTS PAGE 3 OF 19 c. Water Testing. Staff proposes to increase the Company’s water testing expenses by $3,741. Staff Comments at 7. The Company agrees with this adjustment. d. Depreciation. Staff proposes to reduce depreciation expense from $114,917 to $67,187 with three adjustments. Staff Comments at 7 and 11. The Company agrees with two of Staff’s proposals: 1) to extend the depreciable lives of certain plant assets to better align with National Association of Regulatory Utility Commissioners (“NARUC “) guidance and 2) with lowering depreciation expense to reflect moving certain pumps from plant to materials and supplies. The two agreed-upon adjustments amount to a $42,460 reduction in depreciation expense. The Company does not agree with the third adjustment of $5,270 regarding the Company vehicle (see Staff Comments at 11). e. Miscellaneous Expense. Staff proposes to remove certain expenses from the Company’s revenue requirement, asserting that these expenses purportedly were associated with the Pelican Point water system, which is in Washington. Staff Comments at 7-8. The Company does not agree with this adjustment. f. Geographic Information System (“GIS”). Staff recommends adjusting GIS-related expenses by capitalizing $8,101 of Operator 1’s salary, insurance benefits, worker’s compensation premium, and payroll taxes, and recovering that amount after the GIS project is complete and functional. Staff Comments at 8. The Company agrees with this adjustment. g. Gross Revenue Conversion Factor. Staff recommends using the current rates for the Commission assessment and the current tax rate. Staff Comments at 8-9. The Company agrees with this adjustment as applied to determine final revenue requirement. 3. Rate Base. Staff proposes to reduce plant-in-service by $275,107 and to reduce accumulated depreciation by $1,118. The Company does not agree with most of the adjustments that make up this proposed reduction. a. Prudency of Capital Projects. Staff proposes to remove $182,464 from rate base, in part because Staff indicates that some investments were not adequately described. Staff Comments at 9-10. The Company does not agree with these adjustments. b. Company Vehicle. Staff proposes to remove $9,058 from the purchase price of a recently acquired Company vehicle, and allocate the allowable cost of the vehicle across different systems using the number of customers of each system. Staff Comments at 10-11. The Company does not agree with these adjustments. c. Well Pump Depreciation Adjustment. Staff proposes to reduce plant-in-service by $55,753 and add $55,753 to the materials and supplies inventory account, and to COMPANY’S REPLY COMMENTS PAGE 4 OF 19 reduce depreciation expense by $2,230 and add $1,118 in accumulated depreciation. Staff Comments at 11. The Company agrees with these adjustments. d. Contributions in Aid of Construction (“CIAC”). Staff proposes to add a total of $243,300 to CIAC and place $6,889 in total amortization expense in Account 407, which would reduce depreciation expense by $6,889. Staff Comments at 12. The Company disagrees with these adjustments. e. Working Capital. Staff proposes working capital of $69,726, based on the 1/8 method. Staff Comments at 12-13. The Company agrees with this recommendation as to the methodology, which should be applied to the final expenses as proposed by the Company in these Reply Comments and, therefore, produce a higher working capital amount than proposed by Staff. 4. Rate of Return. Staff proposes a Return on Equity (“ROE”) of 9.5%, using a hypothetical capital structure of 55% equity/45% debt. This results in a weighted average cost of capital of 7.41%. Staff Comments at 13-16. The Company does not agree with Staff’s proposed ROE. 5. Rate Design. The Company agrees with Staff’s proposals regarding rate design and will work with staff to implement them on the final revenue requirement. See Staff Comments at 16-20.3 AREAS OF DISAGREEMENT – DETAILED DISCUSSION 1. Response to Recommendation No. 2 – Revenue requirement. Salary – Employee Time and Hiring Availability.4 Staff proposed to entirely remove the expense associated with a part-time seasonal employee because 1) the Company was not able to hire for this position in the summer of 2022 and 2) a significant part of this employee’s responsibility is to read meters, so the need for the employee purportedly will decrease as radio- read meters are installed. Staff Comments at 6. 3 Staff recommends that “the irrigation rates for current irrigation customers be approved as filed and only be applied during the spring and summer months.” Staff Comments at 16. The Company interprets “the spring and summer months” to mean the period between April 1 and September 30, which will be easier to administer than the April 15th through October 15th period referenced in the Company’s response to Staff’s data request GSW-W-22-01 IPUC DR 31 (which is Attachment 1 to these Reply Comments, for ease of reference). 4 Gem State Water agrees with a certain Staff proposal related to salaries, as noted above. The agreed-upon adjustment amounts to $3,932, which reflects the decrease from 40 to 30 hours for a part-time office administrative assistant ($3,653) plus the associated decrease in payroll taxes ($279). COMPANY’S REPLY COMMENTS PAGE 5 OF 19 The Company does not agree with this adjustment. It is true that the Company was not able to hire this position for the summer of 2022. This was due to the unusually tight labor market, and the Company’s relatively low wages.5 The Company needs to fill this position in the summer of 2023 (i.e., within a few months of new rates becoming effective), as the work that would have been done by this employee in the summer of 2022 was largely deferred but still needs to be accomplished. Part of this employee’s time will be spent reading meters. But only a part. The employee is also needed to perform safety functions such as confined space entry, to perform team lifts as necessary for maintenance, to serve as a climbing spotter as another employee climbs elevated storage tanks, to perform maintenance on the Company’s grounds, to perform maintenance for meter access, to perform valve exercising, and for other similar tasks. Without a part-time seasonal employee, these tasks are either not done or are performed by the existing field worker, which pulls that existing field worker away from other responsibilities. As the need for meter-reading decreases over time, the Company anticipates that the other job responsibilities will grow to a corresponding degree. Accordingly, Gem State Water requests that the salary and insurance benefits for a part-time, seasonal worker be included as the Company proposed in the Application. Workers’ Compensation Premium. Staff proposed to adjust workers’ compensation rates such that the rate for field workers does not apply to office employees. Staff Comments at 6. The Company agrees with that particular adjustment. Staff also removed workers’ compensation premiums for the part-time seasonal employee and the overtime adjustment. (This is not 5 This presents a sort of chicken-and-egg problem: small water companies are often unable to hire or retain employees due to their low wages, which is partly driven by an inability to secure the rates necessary to provide competitive pay. If the Company’s inability to hire is then used as justification to further reduce rates, this perpetuates rather than resolves the underlying problem. As the Commission has recognized, “[a]ttracting and retaining skilled employees will be to the long-term benefit of customers.” Order No. 34925. COMPANY’S REPLY COMMENTS PAGE 6 OF 19 specifically discussed in the body of Staff’s comments, but is part of the calculation shown in the attachment to Staff’s calculations.) The Company requests that workers’ compensation for this employee be included at the rate for field workers; this position involves field work and is needed for the reasons set forth above. Therefore, the Company agrees with $884 of Staff’s adjustment, as shown in Confidential Attachment 2 to these Reply Comments. 401(k) Match Contributions. As noted above, the Company generally agrees with Staff’s approach to allow recovery of 401(k) contributions (see Staff Comments at 6), but disagrees with Staff’s $4,685 reduction to payroll expense. As shown on Confidential Attachment 3 to these Reply Comments, employees’ actual 401(k) contributions are roughly 3.8% of payroll. The Company therefore requests $9,083 in 401(k) contributions, to reflect the actual contribution rate rather than the $9,561 requested in the Application, which results in a $478 reduction to payroll expense. Depreciation expense. Staff proposed three adjustments to depreciation expense (Staff Comments at 7 and 11), which reduce the proposed Company depreciation expense of $114,917 to $67,187, or a reduction of $47,730. As noted above, the Company agrees with two of these adjustments: 1) to extend the depreciable lives of certain plant assets to better align with NARUC guidance, and 2) to move two pumps from plant-in-service to materials and supplies. The agreed-upon adjustments reduce depreciation expense by $42,460 and increase accumulated depreciation by $1,118. Staff’s third proposed adjustment would reduce the value of Gem State Water’s new truck by $9,058, and allocate 33% of the vehicle’s reduced value to Pelican Point and 3% of the vehicle’s reduced value to GSI. Staff Comments at 11. The Company disagrees with this two-part adjustment, as explained in more detail below in the section related to rate base. As applied to COMPANY’S REPLY COMMENTS PAGE 7 OF 19 depreciation, the Company would agree to allocate 3% of the vehicle’s value to Pelican Point (see footnote 2 of the Company’s Reply Comments regarding the appropriate percentage), which would reduce the depreciation expense proposed by the Company by $374, rather than Staff’s proposed reduction of $5,270. Miscellaneous expenses. Staff proposes removing $40,749 from miscellaneous expenses, based on Staff’s understanding that these expenses were a double-counting of expenses for the Pelican Point water system in Washington. Staff Comments at 7-8. There appears to have been a miscommunication on this point. These expenses were double-counted as to Pelican Point, and therefore need to be included as expenses for Gem State Water. Stated another way, Gem State Water erroneously charged approximately $80,000 in certain overhead expenses to the Pelican Point water system. Gem State Water should have charged approximately half of this—$40,749—to Gem State Water. When it discovered this error, the Company removed half of the total charge from Pelican Point and moved it to Gem State Water. The $40,749 included within Gem State Water’s expense does not reflect a charge to Gem State Water customers for expenses associated with the Washington system; it properly reflects a charge to Gem State Water customers for expenses associated with the Gem State Water system. Please see Attachment 4 to these Reply Comments for the transaction-level detail, which shows the original double-booking to Pelican Point and the reversal of half of the total charge. Details were provided in the Company’s textual response to Staff’s Production Request No. 55, which is provided as Attachment 5 to these Reply Comments. 2. Response to Recommendation No. 3 – Rate Base. Staff proposes to reduce Plant-in-Service by $275,107 and to remove $1,118 from accumulated depreciation. Staff Comments at 9. From the Company’s perspective, this is a major COMPANY’S REPLY COMMENTS PAGE 8 OF 19 adjustment: it amounts to over 20% of the net Plant-in-Service. Large inappropriate reductions to rate base—particularly when combined with a low ROE and a hypothetical capital structure that does not reflect the actual 100% equity structure of the Company—calls into question the economic viability of operating or acquiring small water systems within the State. Specific areas of disagreement are noted below. Prudency of Capital Projects. Staff proposes removing $182,464 of the capital investments made since the last rate cases in 2010 for the Bar Circle “S” system and 2013 for the Spirit Lake East system but before Gem State Water’s acquisition of those systems, based upon lack of documentation of certain investments. Staff Comments at 9-10. In many instances, prior owners did not operate the systems as they should have. This includes prior owners’ failure to retain documentation of certain capital investments. The Company recognizes that prior owners did not retain documentation that the Company will maintain from this point forward. But the Company submits that it should not be punished for the mishaps of prior owners. All that said, after receiving Staff’s Comments, Ms. Abrams-Rayner spent hours contacting all the pump and drilling contractors in the area, identified the contractors that performed the work in 2010, 2016 and 2017, and successfully obtained documents, including invoices, that verify and support the capital investments for the Bar Circle “S” system. These documents are summarized on the first page of Attachment 6 to these Reply Comments, and the invoices and related documents are provided in the subsequent pages of Attachment 6 to these Reply Comments. To explain in a bit more detail, for the Bar Circle “S” system, Staff proposed removing $162,310 (see Staff Comments at 9-10) due to lack of invoices for investments made before Gem State Water’s acquisition of that system. Gem State Water has obtained the invoices, included within COMPANY’S REPLY COMMENTS PAGE 9 OF 19 Attachment 6 to these Reply Comments, that amount to $166,518 invoiced for the well, backup generator and other related assets. Despite similar best efforts by Ms. Abrams-Rayner, Gem State Water has not been able to track down the invoices supporting the Spirit Lake East system investments totaling the $20,155 proposed to be disallowed by Staff (see Staff Comments at 10). For the reasons provided earlier in this section of its Reply Comments, Gem State Water respectfully asks that it should not be punished for legacy mistakes. Gem State submits that all of the investments proposed to be disallowed by Staff are adequately supported given the unique circumstances of this case, and understands that recovery of future capital investments will need to be—and will be—supported by documentation consistent with best practices in the water utility industry. Company Vehicle. Staff proposes to reduce the price of a Company vehicle by $9,058, based on three truck prices from Edmunds and Carfax. Staff Comments at 10-11. The Company does not agree. First, Staff’s proposal is based upon the initial invoice amount. The final purchase price included a cash discount of $1,402.6 The Company agrees that the price of the vehicle should be decreased by this amount. Second, the cost of the vehicle included an extended warranty and service contract. The Company submits that these costs (i.e., $2,660 for the service contract and $4,475 for the extended warranty) are reasonable to protect the value of the asset and not overpay for future services of the 6 This cash discount was offered when the Company picked up the vehicle, which occurred after the Company filed the Application in this case. The final price of the vehicle is noted on the receipt attached as Attachment 7 to these Reply Comments, which was also provided in response to a production request. The receipt also identifies the costs of the extended warranty and the service contract and includes the cash discount of roughly $1,400. COMPANY’S REPLY COMMENTS PAGE 10 OF 19 truck. The extended warranty and service contract are not reflected in the prices of the vehicles identified by Staff online. Third, the online search was not conducted in a way to find comparable prices. The Company purchased its truck in May 2022. Staff’s online searches appear to have occurred in October or November 2022.7 The online search appears to have identified vehicles as far away as Salida, Colorado and Tacoma, Washington, rather than local listings. Staff does not state how many listings were reviewed, and whether the identified listings reflect the lowest prices, average prices, or other information that would be needed to truly determine whether the listings can be used as a reliable indicator of value. Finally, the listings do not contain sufficient information to identify the condition of the vehicle. Simply put, three internet listing, conducted six months after the actual transaction, in different geographical areas, during the volatile used-vehicle market in 2022, do not accurately reflect the price of the used vehicle that was purchased. The Company paid a fair price for the vehicle at the time and place it was purchased, using the information known and available to it at the time. The Company was able to secure a favorable discount on price at the time of purchase (compared to the initial quote used in the Application) and therefore the amount should only be adjusted by $1,402 to reflect actual cost. Additionally, Staff proposes to allocate the reduced price of the truck to Pelican Point and GSI based on the number of customers of each system. Staff Comments at 11. The Company 7 Staff does not state the date on which the internet searches were completed, but the provided screenshots indicate that the searches occurred in October or November 2022. The screenshot for Truck 1 states that a down payment “was $0 on October 19, 2022.” For Trucks 2 and 3, the graph that purports to show a “price drop” includes October and November 2022. The graphs also show significant price drops in recent months, further supporting the contention that the prices for used vehicles in October or November 2022, using nationwide internet quotes, does not equate to a reasonable price for local vehicles in May 2022. COMPANY’S REPLY COMMENTS PAGE 11 OF 19 proposes this allocation for expenses, which is appropriate and a common practice in the industry. However, allocation of capital assets should reflect the use of the capital asset. The vehicle was purchased to support Gem State Water’s regulated operations. It has been overwhelmingly used for that purpose and has made only four trips to Pelican Point and is not used for GSI.8 These four trips were an anomaly that the Company does not expect to be routine in the future. All four trips were completed by the Gem State Water employee who delivered chlorine to Pelican Point and read meters while he was there. Chlorine is now being delivered directly to Pelican Point, so these trips should not be necessary in the future. That said, it is possible that sporadic trips to Pelican Point for other reasons could occur in the future. The four trips to Pelican Point would amount to approximately 3% of the truck’s use to benefit Pelican Point. The Company submits that the price of the vehicle should be allocated to Gem State Water; however, out of recognition that trips to Pelican Point may sporadically occur, would not object to allocation of 3% of the total vehicle price, which amounts to $2,615, to Pelican Point. The Company intends this year to purchase an additional vehicle that will be primarily used for GSI, which will limit incidental use of the vehicle at issue in this case by GSI or Pelican Point. Contributions in Aid of Construction (CIAC). Staff proposes adjustments to CIAC of $243,300, including $173,250 to the Bitterroot/Rickel Water system and $70,050 to Spirit Lake East system. Staff Comments at 12. The Company disagrees with these adjustments to CIAC and addresses the Bitterroot/Rickel Water system and Spirit Lake East system below. 8 Please see Confidential Attachment 8 to these Reply Comments for the time-card entries supporting those four trips to Pelican Point. COMPANY’S REPLY COMMENTS PAGE 12 OF 19 Bitterroot/Rickel Water (CIAC) The Bitterroot and Rickel Water systems were combined in 2018 under Order No. 34027 and acquired by Gem State Water in April 2020 under Order No. 34616. At the time of the acquisition, and as reported in the 2020 Annual Report for combined Bitterroot/Rickel Water system (please see Attachment 9 to these Reply Comments), the Net Utility Plant was $26,147 and no CIAC was reflected. The net plant has further depreciated to $16,363 since Gem State Water’s acquisition and represents the plant in the rate case application. Please see Attachment 10 to these Reply Comments for further details. Staff proposes that the Commission take the CIAC amounts from the 2018 Annual Report and apply $173,250 of CIAC against $26,147 of Net Utility Plant (see Staff Comments at 12), which would result in negative Net Utility Plant of $156,887 for the combined Bitterroot/Rickel Water system. Staff does not state why it refers to the 2018 Annual Report, which reflects a large amount of CIAC, rather than the 2020 Annual Report, which reflects none. Because these were prior to the acquisition, the Company does not have insight into the different amounts in the annual reports. Although there were CIAC amounts in prior annual reports filed by former owners, Gem State Water believes that such CIAC amounts should not be reflected in this rate case and, if so reflected, they should also include a reasonable amortization of the CIAC. In addition, an adjustment that results in such a large negative rate base, for such a small system, is unreasonable, punitive, and would have a large negative impact on the Company’s overall return on this small water system. Under the circumstances, the Company submits that, at most, it would be prudent and reasonable to offset rate base by the percentage of CIAC to rate base, or 57%. This would result in net CIAC liability for the Bitterroot and Rickel Water systems of $9,327. COMPANY’S REPLY COMMENTS PAGE 13 OF 19 Spirit Lake East (CIAC) Gem State Water acquired the Spirit Lake East system in July 2019 under Order No. 34372. The Net Plant in Service at the time of acquisition was $183,444. Staff proposes to impute $70,050 in CIAC against Net Plant in Service. Staff Comments at 12. Spirit Lake East’s annual reports from 1995 to 2014 show $70,050 in CIAC. However, the CIAC was removed in the 2015 Annual Report, as a result of the prior bookkeeper’s conversations with Staff and due to the lack of documentation or explanation in that amount of CIAC. As with the combined Bitterroot/Rickel Water systems, Staff proposes to take this CIAC amount from historical annual reports, without amortizing it, and without explaining why it is appropriate to use the annual reports from the 1995- 2014 timeframe rather than the annual reports from the 2015-2022 timeframe. Without some indication as to the accuracy of the CIAC amount, or indication that the 1995-2014 annual reports are more accurate than the recent ones, the Company submits that it is not appropriate to adopt $70,050 as the CIAC for the Spirit Lake East system’s current ratemaking purposes. In addition, imputing the $70,050 against the Net Plant in Service would reduce Rate Base by nearly 40% for that system. This would significantly impact the economics of that system. At the very least, even if the Commission were to adopt CIAC from 1995-2014 annual reports, the CIAC amounts need to be amortized. Based on the annual reports, it appears that the CIAC amounts have not been amortized since 1995. If the Commission is inclined to include some CIAC amount to offset net plant in service, the CIAC amount needs to be amortized. Amortization calculations are attached as Attachment 10 to these Reply Comments and result in a CIAC adjustment of $16,160 for the Spirit Lake East system. COMPANY’S REPLY COMMENTS PAGE 14 OF 19 Summary of CIAC The Company’s position is to reject the Staff CIAC recommendations. As an alternative to rejecting these positions, the Company would request imputing a reasonable level of accumulated amortization of the CIAC to reflect amortization as far back as the Company has been able to document the CIAC. Therefore, the Company would apply a CIAC of $173,250 for the Bitterroot/Rickel system, partially offset by $163,923 accumulated amortization, for a net Rate Base impact of $7,036, and would apply a CIAC of $70,050 for the Spirit Lake East system, partially offset by $53,890 of accumulated amortization, for a net Rate Base impact of $16,160. The Company would accept the annual amortization of $6,889 of Other Amortization Expense if amortization of CIAC is imputed for the systems. 3. Response to Recommendation No. 4 – Rate of Return. Staff proposes a range of return on equity (ROE) from 4.75% to 9.89% and recommends an ROE of 9.5%.9 Staff further recommends applying this ROE to the hypothetical capital structure proposed by the Company, which is 45% debt/55% equity. (The Company is, in fact, 100% equity.) This would result in a weighted average cost of capital of 7.41%. The Company disagrees with the proposed ROE and the methodology used to derive it. Much can be said of Staff’s analysis. Gem State Water is particularly concerned with Staff’s reference to the ROE that Gem State Water’s affiliated out-of-state natural gas utility, Northwest Natural Gas Company, dba NW Natural (“NW Natural”), settled on in its last two Oregon gas rate cases. It is not clear to Gem State Water that Oregon gas rate cases provide an appropriate guide for an ROE authorized by this Commission. 9 Staff recommended an ROE of 9.9% in the most recent rate case for Falls Water Company. See Staff Comments in Case No. FLS-W-20-03 at p. 10 (filed June 30, 2020). This is somewhat puzzling—Gem State Water is significantly smaller than Falls Water Company, which would support a higher ROE rather than a lower one. COMPANY’S REPLY COMMENTS PAGE 15 OF 19 Second, NW Natural is a large natural gas company. The two cases cited by Staff resolved natural gas rate cases. And the ROE for those cases was only one component of those large natural gas rate cases. The ROE found in a settlement of an Oregon rate case, for a large natural gas company, is not a proper guide for the ROE of a small water company in Idaho. Rather, Gem State Water should—and, arguably, must—be treated similar to other small water companies in Idaho.10 Third, the Commission recently decided that it was not proper to base the ROE for an Idaho small water company on ROEs for out-of-state natural gas utilities. “The appropriate point of comparison to determine the authorized ROE for smaller water companies is first to other water companies, while also acknowledging Falls Water’s operating and financial benefits from its parent company.” Order No. 34925 at 5. The Commission has consistently determined that ROEs of between 11% and 12% are appropriate for small water companies in Idaho. See Case No. GPW-W-017-01, Order No. 33910 at 8 (Oct. 13, 2017) (approving 11% return on equity on the basis that it “reflects a fair return in line with similar utilities.”); Case No. DIA-W-15-01, Order No. 33578 at 11 (Aug. 29, 2016) (“We find the agreed 12% rate of return to be fair and just and consistent with that which we have allowed in other small water company cases, and thus approve it.”); Case No. SPL-W-13-01, Order No. 32904 at 8 (Oct. 11, 2013) (“The Commission finds that a 12% return on equity and 11.42% overall rate of return is fair, just and reasonable return for the Company. This ruling is entirely consistent with past Commission precedent for small water companies and particularly for 10 The Commission cannot discriminate against utilities based on the ownership status of their parent companies. See In re PacifiCorp, Case NO. PAC-E-99-1, Order No. 28213 (1999) (noting that the U.S. Constitution’s Commerce Clause and treaties “prohibit discriminat[ion] against service providers who are citizens of other states or foreign countries”). COMPANY’S REPLY COMMENTS PAGE 16 OF 19 water systems comparable to Spirit Lake.” (citing Case TRH-W-10-01, Order No. 32152; BCS-W- 09-02, Order No. 30970; and Case No. CCH-W-12-01, Order No. 32662)); Case No. TRH-W-13- 01, Order No. 32958 at 4, 10 (Dec. 21, 2013) (authorizing 12% return on equity for small water company, based in part on Staff’s recommendation that “the 12% return on equity (ROE) is consistent with the Commission-authorized ROE for many small water companies”). The Commission has also recognized the benefits of NW Natural Water’s acquisition of small water companies: “The business model utilized by NW Natural Water Company when acquiring small water companies in Idaho is a model we want to encourage for providing safe and reliable service to water customers at reasonable rates. We find that a 10.2% ROE appropriately balances this smaller water utility’s need to earn a fair return on its property used and useful in providing water service while maintaining fair rates for customers.” Order No. 34925 at 5. The Company also notes that Veolia Water Idaho (“Veolia Water”) filed its most recent rate case on September 30, 2022, VEO-W-22-02, and its expert consultant is recommending a 10.8% ROE. See Direct Testimony of Harold Walker, III at p. 36, Case No VEO-W-22-02. Gem State Water’s requested ROE of 10.2% is within the range of reasonableness, especially given its smaller size compared with Veolia Water. Gem State Water could have hired an expert ROE consultant for this rate case, but decided that it was more in the public interest to not incur such rate case expense to be amortized over a period of time and recovered from customers. Staff states that Gem State Water’s calculation of ROE is “limited.” Staff Comments at p. 13. It is true that Gem State Water did not hire an outside consultant to provide testimony on ROE. This is consistent with Gem State Water’s attention to restraining costs. The Commission has not indicated that hiring a consultant for ROE is required for small water companies, and it does not COMPANY’S REPLY COMMENTS PAGE 17 OF 19 appear that Staff has done so in other cases. Gem State Water submits that it has properly supported its request for ROE based upon Order No. 34925. One final note: Staff states that the proposed hypothetical capital structure “does not justify special treatment in the ROE calculation.” Staff Comments at 13. Gem State Water does not suggest as much. The Commission’s orders with respect to small water companies would suggest that an ROE of 11-12% is warranted, and that this return could be based upon the true capital structure of 100% equity. The Company raises the hypothetical capital structure simply to note that the Company’s request—10.2% ROE with a hypothetical capital structure—is reasonable, and indeed quite modest. This is not determinative, but it is relevant. Gem State Water respectfully submits that the approach taken by the Commission in Order No. 34925 should be taken here, and that the ROE for Gem State Water should be 10.2%. A 10.2% ROE is fair to both the Company’s investors and its customers and will enable the Company to successfully operate and attract capital. Gem State Water believes that, if anything, it should receive a slightly higher ROE due to Gem State Water’s smaller size and upward movement in interest rates in recent months and years. However, Gem State Water would not object to an ROE of 10.2%, and to applying this ROE to the proposed hypothetical capital structure. SUMMARY Below is a table summarizing Staff’s proposals and the Company responses for the convenience of the Commission. The numbers reflected in the Staff Adj refer to (reductions) or additions to the Application; the numbers in the Company Response reflect the agreement with (reductions) or additions, “TBD” for flow through adjustments that depend on other contested positions, or blank for proposing to maintain the Company’s original position in the Application. COMPANY’S REPLY COMMENTS PAGE 18 OF 19 CONCLUSION For these reasons, Gem State respectfully requests that the Commission approve an increase to rates and charges consistent with the Company’s costs as set forth above. DATED January 31, 2023. Gem State Water Company By Leslie Abrams-Rayner General Manager Eric Nelsen Senior Regulatory Attorney NW Natural Representing Gem State Water Company Note Item Staff Adj Company Response Comment 1 Salary Overtime (6,255) (6,255) 2 Employee Time (lower hours and reduced FTE)(27,169) (3,653) 3 Insurance Expense (related to reduced FTE)(8,568) - 4 Workers Comp (1,660) (884) 5 401(k) Match (4,685) (478) 6 Geographic Information System ("GIS")(7,657) (7,657) 7 Payroll Tax (3,028) TBD Flow through of other adjustments 8 Lease (27,408) (27,408) 9 Water Testing 3,741 3,741 10 Depreciation (align with NARUC rates)(40,230) (40,230) 11 Depreciation (move from Plant in Service to M&S)(2,230) (2,230) 12 Depreciation (Vehicle cost)(5,270) (374) 13 Depreciation (Annual Amortization)(6,889) - Note CIAC section for alternative position 14 Miscellaneous Expense (40,749) - 15 Gross Revenue Conversion Factor (1,066) TBD Flow through of other adjustments 16 Rate Base (Prudency of Capital Projects)(182,466) (20,155) 17 Rate Base (Company Vehicle)(36,888) (2,615) 18 Rate Base ("CIAC")(243,300) - Note CIAC section for alternative position 19 Rate Base (Working Capital)(15,051) TBD Flow through of other adjustments 20 ROE (3,684) TBD Flow through of other adjustments COMPANY’S REPLY COMMENTS PAGE 19 OF 19 CERTIFICATE OF SERVICE I certify that on January 31, 2023, a true and correct copy of the foregoing was served upon all parties of record in this proceeding via electronic mail as indicated below: Commission Staff Via Electronic Mail Idaho Public Utilities Commission 11331 W. Chinden Blvd., Bldg. 8, Suite 201-A Boise, ID 83714 /s/ Eric W. Nelsen Rates & Regulatory Affairs GSW-W-22-01 Gem State Water Company, LLC Application for an Order Authorizing an Increase in its Rates and Charges for Water Service Data Request Response Request No.: GSW-W-22-01 IPUC DR 31 31.Please answer the following questions regarding irrigation meters: a.Who installs the irrigation meters (original connection)? b.Who maintains the irrigation meters? c.Who tests to insure accurate readings? d.What months are they in-use? Response: a.There are no records as to whom initially installed the irrigation meters (original connection). Gem State Water is requiring the new connections to purchase meters and the Company installs them. Meter loops and infrastructure were preinstalled by the Company at Diamond Bar. b.The irrigation meters are maintained by Gem State Water staff. c.The irrigation meters are tested by Gem State Water staff to ensure accuracy. d.The irrigation meters are installed and activated April 15th and turned off/removed October 15th. GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 1 / Page 1 of 1 CONFIDENTIAL ATTACHMENT NO. 2 TO THE COMPANY’S REPLY TO THE COMMENTS OF THE COMMISSION STAFF ATTACHMENT FILED UNDER SEPARATE COVER CASE NO. GSW-W-22-01 CONFIDENTIAL ATTACHMENT NO. 3 TO THE COMPANY’S REPLY TO THE COMMENTS OF THE COMMISSION STAFF ATTACHMENT FILED UNDER SEPARATE COVER CASE NO. GSW-W-22-01 Gem State Water Company, Company Response to Staff Report, Attachment 4 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 4 / Page 1 of 1 Rates & Regulatory Affairs GSW-W-22-01 Gem State Water Company, LLC Application for an Order Authorizing an Increase in its Rates and Charges for Water Service Data Request Response Request No.: GSW-W-22-01 IPUC DR 55 55. Please provide supporting documentation for every expense booked to the miscellaneous expense account for the test year. Please include invoices, workpapers, journal entries, and any additional documentation to support these expenses. Response: The transaction level details of the Account 675 Miscellaneous Expense are provided in GSW-W-22-01 IPUC DR 55 Attachment 1. Account Amount Type Description 699 Overhead Allocation $40,749.32 Journal Entry Allocation of overhead costs to Pelican Point (PP) was inadvertently recorded twice. See GSW-W-22-01 IPUC DR 55 Attachment 2 (first charge is shown on rows 4-67 and the duplicate is shown on rows 70 – 133). The duplicate charge was then reversed against account 699 instead of all the credits in the journal entry. Accounting Adjustment ($6,538.28) Deposit Largely offset from Acct. 426 below 620.82 Bank & Vendor Fees $7,080.36 Invoice & JE Bank, merchant services fees, and vendor fees net of allocation to GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 5 / Page 1 of 2 GSW-W-22-01 IPUC DR 55 NWN Response Page 2 of 2 Pelican Point and Gem State Infrastructure 426 Uncategorized $7,729.91 Invoice & JE Offset to adjustment above and emergency generator set rental for storm booked to uncategorized expense. GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 5 / Page 2 of 2 Invoices Recon of billings to the assets: GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 1 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 2 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 3 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 4 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 5 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 6 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 7 of 17 We are very thankful for your business and would appreciate a review on Google 54399 N. Old US Hwy 95 Athol, ID 83801 (208) 687-0798 info@horsleydrilling.com www.horsleydrilling.com I B Robert Turnipseed Double T Estates, LLC PO Box 1870 Hayden, ID 83835 S Bar Circle "S" Water System N. Circle "S" Trail Rathdrum, ID 83858 I D T D E 2233 03/17/2016 $0.00 03/17/2016 03/17/2016 DESCRIPTION QTY/#OF FEET RATE/PER FOOT AMOUNT 0.00 14" Steel Casing Installed for Surface Seal 65 110.00 7,150.00 65' Surface Seal 1 3,100.00 3,100.00 10" Casing Installed 340 88.00 29,920.00 20' Stainless Steel Sand Screen, K-Packer, Head Pipe, Tail Pipe and Pulling back of the 10" Steel Casing. 1 5,100.00 5,100.00 Idaho State Permit Tag # D0069915 1 200.00 200.00 PAYMENT 45,470.00 BALANCE DUE GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 8 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 9 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 10 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 11 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 12 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 13 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 14 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 15 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 16 of 17 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 6 / Page 17 of 17 Rates & Regulatory Affairs GSW-W-22-01 Gem State Water Company, LLC Application for an Order Authorizing an Increase in its Rates and Charges for Water Service Data Request Response Request No.: GSW-W-22-01 IPUC DR 62 62.Please provide supporting documentation for the truck purchased in 2022. Please include in your response a copy of the invoice, the year, make and model, mileage, and fuel type. Also include the intended use of the asset, estimated yearly mileage, and primary users. Please include any cost benefit analysis for the truck. Response: See GSW-W-22-01 IPUC DR 62 Attachment 1 for the invoice for the 2022 truck purchase in the amount of $85,746.94. The original estimate of $87,149.64 used in the application is included as GSW-W-22-01 IPUC DR 62 Attachment 2. The truck is diesel fuel and a 2019 Ford F-350 with 36,095 miles. The considerations that went into the decision to purchase the truck were provided in response to GSW-W-22-01 IPUC DR 3 and reflect the management decision to own the utility truck rather than rely on employee reimbursements. GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 1 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 2 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 3 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 4 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 5 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 6 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 7 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 8 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 9 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 10 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 11 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 12 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 13 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 14 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 15 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 16 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 17 of 19 GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 18 of 19 Date:05/24/2022 9:58 AM Salesperson: DanielForslofBradHathawaDanielForslofBradHathawaDanielForslofBradHathawaDanielForslofBradHathawa Manager: PaulKloe ferPaulKloeferPaulKloeferPaulKloefer FOR INTERNAL USE ONLY BUSINESS NAME GemStateWaterGemStateWaterGemStateWaterGemStateWater Home Phone: (208 929-1045208929-1045208929-1045208929-1045 CONTACT LeslieandColeRa nerLeslieandColeRanerLeslieandColeRanerLeslieandColeRaner Address : 719N7THST719N7THST719N7THST719N7THST COEURDALENE,ID 83814-3034COEURDALENE,ID 83814-3034COEURDALENE,ID 83814-3034COEURDALENE,ID 83814-3034 KOOTENAICOKOOTENAICOKOOTENAICOKOOTENAICO Work Phone: (208 667-0726208667-0726208667-0726208667-0726 E-Mail :leslie emstate-water.comleslieemstate-water.comleslieemstate-water.comleslieemstate-water.com Cell Phone: (208 929-1045208929-1045208929-1045208929-1045 VEHICLE Stock # : 158091158091158091158091 New / Used :VIN : 1FT8W3DT1KEG172431FT8W3DT1KEG172431FT8W3DT1KEG172431FT8W3DT1KEG17243 Mileage : 35977359773597735977 Vehicle : 2019FordF-3502019FordF-3502019FordF-3502019FordF-350 Color : SILVERSILVERSILVERSILVER Type : XL4x4SDCrewXL4x4SDCrewXL4x4SDCrewXL4x4SDCrew W3DW3DW3DW3D TRADE IN Payoff :VIN :Mileage : Vehicle : Color : Type : Selling Price 74,995.00 COMMERCIAL WARRANTY 5 YR 5,495.00 COMMERCIAL MAINT 5 YR 1,935.00 Total Purchase 82,425.00 Trade Allowance Trade Difference Doc Fee 199.00 Tax 4,511.64 Non Tax Fees 14.00 Trade Payoff Cash Deposit Balance 87,149.64 Customer Approval: Management Approval: By signing this authorization form, you certify that the above personal information is correct and accurate, and authorize the release of credit and employment information. By signing above, I provide to the dealership and its affiliates consent to communicate with me about my vehicle or any future vehicles using electronic, verbal and written communications including but not limited to eMail, text messaging, SMS, phone calls and direct mail. Terms and Conditions subject to credit approval. For Information Only. This is not an offer or contract for sale. GSW-W-22-01 Gem State Water Reply Comments Attachment 7 / Page 19 of 19 CONFIDENTIAL ATTACHMENT NO. 8 TO THE COMPANY’S REPLY TO THE COMMENTS OF THE COMMISSION STAFF ATTACHMENT FILED UNDER SEPARATE COVER CASE NO. GSW-W-22-01 GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 9 / Page 1 of 1 Staffs Schedule Company's 2021 Last Original Booked Staff Adj. Accum. CIAC Amort. Period Amort. Expense Years of Amort. Accum. Net CIAC Average Rate Case Contributions CIAC to CIAC Amort. in years Schedule Since rate case Amort.12/31/2022 Troy Hoffman (12,859)             (9,307)                 ‐‐35 367 12,859       ‐                2011 SLE (70,050)             ‐(70,050)             ‐35 2,001                 10 20,014       (50,036)       (50,036)               2001 2005/1997 BR/RW (173,250)           ‐(173,250)           15,019               35 4,950                 20 99,000       (74,250)       (16,363)               (256,159)           (9,307)                (243,300)           15,019               7,319                 131,873     (124,286)    (66,399)               Tracking Back CIAC to oldest Annual Report we have: 1994 SLE ‐ 1994 Annual Report (64,850)             35 1,853                 27 50,027       (14,823)       27.3% 1995 SLE ‐ 1995 Annual Report Additions (5,200)                35 149 26 3,863         (1,337)          SLE ‐ 1995 Annual Report Total (70,050)             35 2,001                 53,890       (16,160)       Spirit Lake East & Lynnwood 7/31/19 7/31/19 2021 Proposed Staffs Adjusted Maximum Adjusted Spirit Lake East Lynnwood Combined Test Year Staff Adj.Rate Base CIAC Adj Acquired Rate Base Day 1: Plant in Service 1,143,905         123,815             1,267,719         1,272,651         1,272,651              1,272,651           Accum. Deprec.(960,460)           (77,255)             (1,037,715)        (1,072,725)        (1,072,725)             (1,072,725)         Net PP&E 183,444            46,559               230,004            199,926            ‐199,926                  ‐               199,926              CIAC ‐‐‐(70,050)             (70,050) (70,050)       (70,050)               Accum. Amort. CIAC ‐‐‐‐ 53,890        53,890                 Net Plant in Service 183,444            46,559               230,004            199,926            (70,050)             129,876                  (16,160)      183,766              Bitterroot & Happy Valley 7/31/19 7/31/19 2021 Proposed % of Staffs Adjusted CIAC Adjusted Bitterroot Happy Valley Combined Test Year Staff Adj. Gross Plant Rate Base Adjustment Acquired Rate Base Day 1: Plant in Service 289,771             11,564               301,335             299,238             299,238 299,238              Accum. Deprec.(263,624)           (11,565)             (275,189)           (282,875)           (282,875)                (282,875)             Net PP&E 26,147               (0) 26,147 16,363               ‐16,363 ‐               16,363                CIAC ‐(173,250)           ‐57% (173,250)                (173,250)    (173,250)             Accum. Amort. CIAC ‐‐ 163,923      163,923              Net Plant in Service 26,147               (0) 26,147 16,363               (173,250)           (156,887)                (9,327)         ‐57%7,036                   Combined Day 1: Plant in Service 1,433,675         135,379             1,569,054         1,571,889         ‐1,571,889              ‐               1,571,889           Accum. Deprec.(1,224,084)        (88,820)             (1,312,904)        (1,355,600)        ‐(1,355,600)             ‐               (1,355,600)         Net PP&E 209,591            46,559               256,150            216,289            ‐216,289                  ‐               216,289              CIAC ‐‐‐‐(243,300)           (243,300)                (243,300)    (243,300)             Accum. Amort. CIAC ‐‐‐‐‐‐ 217,813      217,813              Net Plant in Service 209,591            46,559               256,150            216,289            (243,300)           (27,011) (25,487)      190,802              In our diligence we looked at the previous few years of Annual Report filings with the IPUC.  In those filings there was no CIAC listed, so none was recorded when we acquired these systems.  Staff's proposed  adjustments go back to the last filed rate case CIAC position, gross.  The schedule also reflects that these balances should be amortized over 35 years.  The CIAC pre‐dates our ownership, but we did as much research as  we could to try to get a listing of the assets that were contributed as CIAC.  This would allow us to ascertain if the asset is still part of rate base, or if it has been disposed of as well as aligning the amortization of the  CIAC Liability with the PP&E Asset.  We have not been able track this listing down.  The oldest annual report we have been able to track back to is 1994 where the system had $64,850 of CIAC and an additional $5,200  added in 2015 that together tie to Staff's proposed adjustment.  We are not sure how much further the origination of all of the CIAC goes, but believe we should at a minimum amortize the balances from these start  dates.  In doing so Staff's adjustment goes from $70,050 down to $16,160.  We feel there is a very real chance this should have been amortized even further if we had documentation going back further, but  unfortunately do not have support to back this up, but feel like any adjustment greater than $16,160 for Spirit Lake & Lynnwood CIAC would be improper.  As previously outlined, for our purchase diligence we looked at the previous few years of Annual Report filings with the IPUC.  In those filings there was no CIAC listed, so none was recorded when we acquired these  systems.  Staff's proposed adjustments go back to the last filed rate case CIAC position, gross.  The schedule also reflects that these balances should be amortized over 35 years.  The CIAC pre‐dates our ownership, but  we did as much research as we could to try to get a listing of the assets that were contributed as CIAC.  This would allow us to ascertain if the asset is still part of rate base, or if it has been disposed of as well as aligning  the amortization of the CIAC Liability with the PP&E Asset.  We have not been able track this listing down.  In the case of Bitterroot and Happy Valley, the initial book value recognized when we purchased the systems  was only $26,147.  We have then amortized that balance to $16,363 for our test year filing of $16,363.  If we used Staff's adjustment we would have negative rate base of $156,887, which would be unreasonable.  We  would propose that if we are to recognize CIAC, since we don't have supporting schedules that we evaluate the CIAC balance as a proportion of the Gross Plant in Service [CIAC $173,250 / Plant $301,335 = 57%].  If we  then extrapolate and apply that percentage to our filed rate base acquired, it would show that the net CIAC liability should be $9,327.   A B C D D C GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 10 / Page 1 of 2 Pictures of hard copies of annual reports found for Spirit Lake East: A B GSW-W-22-01 Gem State Water Reply to Staff Comments Attachment 10 / Page 2 of 2