HomeMy WebLinkAbout20230313GSW Petition for Clarification_Reconsideration.pdfCOMPANY’S PETITION FOR CLARIFICATION OR RECONSIDERATION
PAGE 1 OF 6
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
IN THE MATTER OF GEM STATE
WATER COMPANY LLC’S
APPLICATION FOR AN ORDER
AUTHORIZING AN INCREASE IN ITS
RATES AND CHARGES FOR WATER
SERVICE IN THE STATE OF IDAHO
CASE NO. GSW-W-22-01
COMPANY’S PETITION FOR CLARIFICATION
OR RECONSIDERATION
Pursuant to Rule 331 of the Commission’s Rules of Procedure, IDAPA 31.01.01.331, Gem
State Water Company, LLC (“Gem State Water” or “Company”) files this Petition for
Clarification or Reconsideration of Final Order No. 35692, entered March 1, 2023 (“Final
Order”).
On page 7 of the Final Order, the Commission approved an annual revenue requirement of
$789,004. This revenue requirement is based on adjustments that are summarized in Attachment 1
to the Final Order. The adjustments contained within Attachment 1 impact the calculations related
to the Company’s taxes. However, the calculations related to taxes were not adjusted in the Final
Order. The taxes need to be updated and flow through other adjustments because removing
expenses from the revenue requirement impacts the net income that is subject to tax. If the taxes
are not adjusted with the flow through calculation, then the Attachment 1 revenue requirement
calculation applies the gross up factor to the incorrect net income amount and incorrectly
calculates the incremental revenue requirement. As explained in more detail below, when
modified for consistency with the adjustments reflected on Attachment 1, the Company’s taxes
will increase by approximately $45,773. Accordingly, the Company respectfully requests that the
RECEIVED
2023 March, 13 9:52AM
IDAHO PUBLIC
UTILITIES COMMISSION
COMPANY’S PETITION FOR CLARIFICATION OR RECONSIDERATION
PAGE 2 OF 6
total revenue requirement be increased to account for the taxes that flow from the adjustments
contained within Attachment 1.
The following Table 1, Rate Proof, demonstrates the return on equity from the Final Order,
which does not reflect the tax adjustment. This results in an ROE of 5.0%. Because the Final
Order establishes an ROE of 9.5% and a WACC of 7.41, see Final Order at 15, the Company
believes the tax adjustment was an oversight and we ask the Commission to clarify or modify the
Final Order.
Table 1: Rate Proof
Final Order Company Adjusted to
Reflect Proper Tax
Calculations
Revenue at Current Rate $574,600 $574,600
Incremental $214,405 $260,270
Revenue at Proposed Rates $789,005 $834,870
% Increase 37.3% 45.3%
Total Expense $598,560 $598,560
Net Operating Expense $190,445 $236,310
Interest
1/
$30,090 $30,090
Depreciation $66,898 $66,898
Other Tax $42,414 $42,506
Pretax Income $51,043 $98,816
State Income Tax $2,960 $5,615
Federal Income Tax $10,097 $19,152
Net Income $37,985 $72,049
Rate Base (x Equity Portion)
2/
$756,693 $756,693
RORB 5.0% 9.5%
1/ Interest Expense for Rate Proof (cost of debt of 4.86 x debt in capital structure 45% x Rate Rase
of $1,375,819)
2/ Equity portion of Rate Base of Rate Base $1,375,819 x 55% Equity in Capital Structure x 9.5%
ROE
Therefore, the Company requests that the Final Order be revised or clarified to reflect a
revenue requirement of $834,870.
COMPANY’S PETITION FOR CLARIFICATION OR RECONSIDERATION
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Additionally, for the sake of clarity and to ensure consistency, the Company requests that
Attachment 1, page 1 of 2, be updated as follows, with the changes shown in red:
Table 2: Update to Attachment 1, page 1 of 2
Current Order Requested
Correction
1 Rate Base 1,375,818 1,375,818
2 Rate of Return 7.41% 7.41%
3 Net Operating Income Requirement 101,948 101,948
4 Net Operating Income Realized (57,289) (91,353)
5 Net Operating Income Deficiency 159,237 193,301
6 Gross Up Factor 1.34645 1.34645
7 Total Incremental Revenue
Requirement
214,404 260,270
8 Revenue at existing rates 574,600 474,600
9 Total revenue requirement 789,004 834,870
10 Percent Increase Required 37.3% 45.3%
Attachment 1, page 2 of 2, should be adjusted on the line marked Income Taxes from
$(74,409) to $(40,346), which flows through to the Total Other Expense and Net Income lines as
follows, with changes in red:
Table 2: Update to Attachment 1, page 2 of 2
Current Order Requested
Correction
Income Taxes (74,409) (40,346)
Total Other Expenses 33,329 67,393
Net Income (57,289) (91,353)
The Company proposes the following revised Attachment 2, which is consistent with the
Staff recommendations and the Final Order, but incorporates the adjustments described above and
the total revenue requirement of $834,870 instead of $789,004.
COMPANY’S PETITION FOR CLARIFICATION OR RECONSIDERATION
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Table 2: Update to Attachment 2
Water System Meter
Size
Fixed
Charge
Volume
Included (gal)
Price for
Excess
Fixed
Monthly
Charge
Price for
Excess
Spirit Lake East 1-Inch 35.00 7,500 2.52 37% 8%
Spirit Lake East 1 1/2-
Inch
70.00 15,000 2.52 174% 8%
Spirit Lake East 2-Inch 112.00 30,000 2.52 338% 8%
Bar Circle “S”
Water
1-Inch 35.00 7,500 2.52 28% 45%
Bar Circle “S”
Water
1 1/2-
Inch
70.00 15,000 2.52 155% 45%
Bar Circle “S”
Water
2-Inch 112.00 30,000 2.52 308% 45%
Diamond Bar
Estates
1-Inch 41.00 7,500 2.40 0% 107%
Lynnwood Estates 1-Inch 35.00 15,000 2.40 0%
First Block 15,001 –
10,000
140%
Second Block 100,001 –
200,000
20%
Third Block Over 200,000 -20%
Bitterroot Water
Co.
1-Inch 35.00 7,500 2.40 67% 39%
Rickel Water Co. 1-Inch 35.00 7,500 2.40 17% 118%
Troy Hoffman
Water Corp.
1-Inch 35.00 7,500 2.40 27% 114%
Happy Valley
Water
1-Inch 35.00 7,500 1.65 30% 136%
Happy Valley
Water
1 1/2-
Inch
70.00 15,000 1.65 159% 136%
Happy Valley
Water
2-Inch 112.00 30,000 1.65 315% 136%
Finally, the Company requests that pages 7, 15, and 16 in the Final Order be modified such
that the references to revenue requirement of “$789,004” and “37.3%” increase be changed to a
revenue requirement of “$834,870” and a rate increase of “45.3%.”
COMPANY’S PETITION FOR CLARIFICATION OR RECONSIDERATION
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DATED March 13, 2023.
GEM STATE WATER COMPANY, LLC
By Leslie Abrams-Rayner General Manger Eric W. Nelsen Senior Regulatory Attorney NW Natural Representing Gem State Water Company, LLC
COMPANY’S PETITION FOR CLARIFICATION OR RECONSIDERATION
PAGE 6 OF 6
CERTIFICATE OF SERVICE
I certify that on March 13, 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
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, ID 83714
jan.noriyuki@puc.idaho.gov
/s/
Eric W. Nelsen