20230407Final_Order_No_35728.pdf

ORDER NO. 35728 1

Office of the Secretary
Service Date
April 7, 2023

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
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CASE NO. GSW-W-22-01

ORDER NO. 35728

On July 21, 2022, Gem State Water Company, LLC (“the Company” or “Gem State”)
applied to the Idaho Public Utilities Commission (“Commission”) requesting authorization to
increase its rates and charges for water service. Commission Staff (“Staff”) submitted comments
to which the Company filed a reply; there were no other parties in the case.
On March 1, 2023, the Commission issued Order No. 35692 approving an annual revenue
requirement for the Company of $789,044 and a corresponding rate design. Order No. 35692 at
16, Attachment 2, “Gem State Water, Approved Rates.” The approved revenue requirement was
based on adjustments and calculations summarized in Attachment 1 to Order No. 35692. The
Commission directed the Company to submit conforming tariffs in compliance with the rates and
charges by March 15, 2023.
On March 13, 2023, the Company submitted a “Petition for Clarification or
Reconsideration” (“Petition”) explaining that, because “calculations related to taxes were not
adjusted” in Order No. 35692, the Company’s Commission’s approved revenue requirement was
incorrectly calculated. Petition at 1-2.
The Commission granted Staff and the Company’s joint motion to Extend the Deadline to
File Conforming Tariffs and for Procedural Relief on the record at its March 14, 2023, Decision
Meeting. Order No. 35708.
On March 16, 2023, Staff filed an Answer to the Company’s Petition (“Answer”)
confirming the Company’s analyses and recommending Order No. 35692 be modified consistently
with the Petition’s request.
With this Order, we clarify that the Company shall have an authorized revenue requirement
of $834,870, and provide corresponding Attachments, including a rate design, reflecting this
revenue requirement.

ORDER NO. 35728 2
COMPANY’S PETITION
In its Petition, the Company explained that there appeared to be an error in how taxes were
calculated in the Commission’s order. Thus, the Company claimed that the supporting attachments
setting forth a final revenue requirement and corresponding rate design were inconsistent with the
Commission’s other approved adjustments. To be consistent with the Commission’s other
adjustments, the Company stated that its taxes must “increase by approximately $45,773.” Petition
at 1. Accordingly, the Company requested that Order No. 35692 be “revised or clarified to reflect
a revenue requirement of $834,870” along with other corresponding adjustments to rate design,
Income Taxes, Total Other Expenses and Net Income. Id. at 2. The Company requested updates to
the attachments to Order No. 35692 as well as modifications on pages 7, 15, and 16 of the Order
“such that the references to [sic] 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%.’” Id. at 4.
STAFF’S ANSWER
Staff reviewed the Company’s Petition, including “Table 1: Rate Proof”, “Table 2: Update
to Attachment 1, page 1 of 2”, and “page 2 of 2”, and “Table 2: Update to Attachment 2.” After
analyzing the Company’s Petition and comparing it to the Excel model Staff used to formulate its
recommendation, Staff believed that a formula error in the Excel model resulted in the discrepancy
in Order No. 35692. Staff concurred with the Company’s analyses and conclusions and believed
that Order No. 35692 should be modified consistent with the Petition’s request.
COMMISSION DECISION
The Commission has jurisdiction over this matter and the issues in this case under Title 61
of the Idaho Code. Specifically, the Commission regulates “public utilities,” including “water
corporations” that serve the public or some portion thereof for compensation. See Idaho Code §§
61-125, -129, and -501. The Commission may clarify, rescind, alter or amend any final order on
its own motion or in response to another’s motion. IDAPA 31.01.01.325, 326.
We have reviewed the Company’s Petition and Staff’s Answer. Based on that review, we
find that an error in the Excel model upon which we relied in determining a final revenue
requirement resulted in a $45,773 miscalculation of the Company’s taxes. As a result, the final
revenue requirement that was reflected in Order No. 35692 was inconsistent with what was
intended. Therefore, we clarify that Order No. 35692 should reflect a revenue requirement of
‘$834,870’ on pages 7, 15, and 16. We further clarify that the reference to a rate increase on page

ORDER NO. 35728 3
7 should be “45.3%.” The two attachments to this Order, Attachment 1 and Attachment 2, reflect
our clarification of the revenue requirement and the corresponding adjustments to the Company’s
rate design and revenue requirement calculation. With the clarification to the revenue requirement,
the approved rate design attached to this Order (Attachment 2) results in a fixed charge/volumetric
charge ratio of 42%/58%.
ORDER
IT IS HEREBY ORDERED that Gem State shall have an annual revenue requirement of
$834,870, with expenses, rate base, rate of return, capital structure, and rate design as detailed in
the Attachments to this Order. The rates and charges authorized in this Order shall be effective for
service rendered as of March 1, 2023, and supplant the rates and charges previously authorized by
Order No. 35692.
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 with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 7th day of
April 2023.

__________________________________________
ERIC ANDERSON, PRESIDENT

__________________________________________
JOHN R. HAMMOND, JR., COMMISSIONER

__________________________________________
EDWARD LODGE, COMMISSIONER
ATTEST:

Jan Noriyuki
Commission Secretary
I:\Legal\WATER\GSW-W-22-01\orders\GSWW2201_final order_rn.docx
1 Rate Base 1,375,818
2 Rate of Return 7.41%
3 Net Operating Income Requirement 101,948
4 Net Operating Income Realized (91,353)
5 Net Operating Income Deficiency 193,301
6 Net Operating Income Deficiency 193,301
7 Gross up Factor 1.34645
8 Total Incremental Revenue Requirement 260,270
9 Revenues at existing rates 574,600
10 Total Revenue Requirement 834,870
11 Percent Increase Required 45.3%
CALCULATION OF REVENUE REQUIREMENT
Attachment 1, page 1 of 2
Revenue Requirement Calculation
Company Bldg Company Chemical
Removing
Inventory from Depreciation GIS Labor
Adjustment
to Plant In
Adjustment
to Income
Income
400 · Operating Revenue
461.1 · Metered Residential 572,799 572,799
464 · Other Water Sales Revenue 1,801 1,801
Total 400 · Operating Revenue 574,600 - - - - - - - 574,600
Total Income 574,600 - - - - - - - - - 574,600
Expense
601.1-6 Labor - Operation & Maintenance 127,673 (25,695) (6,037) 95,942
601.7 Labor - Customer Accounts 18,694 (1,965) 16,729
601.8 Labor - Administrative & General 92,662 (5,763) 86,899
604 · Employee Benefits 65,329 (14,913) (1,620) 48,796
610 · Purchased Water 5,086 5,086
615-16 · Electrical Power & Fuel for Power 88,731 88,731
618 · Chemicals 791 791
620.1-6 · M&S - O&M 15,891 15,891
620.7-6 · M&S - A&G 50,385 50,385
620.7 · Postage - -
620.8 · Office - -
620.81 · Telephone Expense - -
620.82 · Bank service charges - -
620.83 · Office Utilites Expense - -
631.1-34 · Contracting Services - Professional 72,849 72,849
635 · Contracting Services - Water Testing 1,923 3,741 5,664
636 - Contracted Services - Other 9,148 9,148
641-42 · Rental of Property & Equipment 59,319 (27,408) 31,911
650 · Transportation Expense 6,572 6,572
656 · Insurance Expense 14,146 14,146
675 · Miscellaneous 49,021 49,021
Total Expense 678,221 (48,337) (27,408) - 3,741 - - (7,657) - - 598,560
Net Ordinary Income (103,620) 48,337 27,408 - (3,741) - - 7,657 - - (23,960)
Other Income/Expense
Other Expense -
403 · Depreciation Expense 114,917 (2,650) (2,230) (40,230) (2,909) 66,897
408 · Taxes -
408.11 · Property Taxes 21,322 21,322
408.12 · Payroll Taxes 18,469 (2,584) (444) 15,442
408.13 · Other Taxes 4,077 4,077
Total 408 · Taxes 43,868 (2,584) - - - - - (444) - - 40,841
Income Taxes (74,409) 34,063 (40,346)
408.10 · Regulatory Fee - -
409.10 · Federal Income Tax - -
409.11 · State Income Tax - -
Total Other Expense 84,376 (2,584) - (2,650) - (2,230) (40,230) (444) (2,909) 34,063 67,392
Net Other Income (84,376) 2,584 - 2,650 - 2,230 40,230 444 2,909 (34,063) (67,392)
NET Income (187,996) 50,921 27,408 2,650 (3,741) 2,230 40,230 8,101 2,909 (34,063) (91,353)
Plant in Service Total
301 - Organization - -
302 - Franchises and Consents - -
303 - Land & Land Rights 14,545 14,545
304 - Structures & Improvements 40,438 40,438
305 - Collecting & Impounding Reserviors 120,672 120,672
307 - Wells 1,365,304 - - 1,365,304
309 - Supply Mains 84,319 84,319
310 - Generators 140,880 140,880
311 - Pumps & Accessories 410,891 (55,753) 355,138
320 - Purification Systems 1,504 1,504
330 - Distribution Reserviors & Standpipes 7,195 7,195
331 - Trans. & Distrib. Mains & Accessories 140,252 140,252
332 - Services - -
334 - Meters 129,431 129,431
335 - Hydrants 4,405 4,405
339 - Other Plant and Misc Equip 117,626 (18,552) (20,155) 78,919
340 - Office Equipment 120,834 120,834
343 - Tools & Equipment 11,523 11,523
345 - Power Operated Equipment 42,352 42,352
346 - Communications Equipment 5,728 5,728
347 - Miscellaneous Equipment 3,168 3,168
348 - Other Tangible Property 2,655 2,655
- -
Total Plant in Service 2,763,722 - - (18,552) - (55,753) - - (20,155) - 2,669,262
Less Accumulated Depreciation (1,428,485) 1,118 17,245 (1,410,122)
Net Plant in Service 1,335,237 - - (18,552) - (54,635) - - (2,910) - 1,259,140
Less Contributions in Ad of Construction
Gross Contributions (12/31/2021)9,307 9,307
Less Accumulated Amortization (12/31/2019)- -
Net Contributions in Aid of Construction 9,307 - - - - - - - - - 9,307
-
Net Plant in Service 1,325,930 - - (18,552) - (54,635) - - (2,910) - 1,249,833
Working Capital (1/8 of Operation and Maintenance Expense)84,778 (6,042) (3,426) - 468 - - (957) - - 74,820
Materials and Supplies - 55,753 55,753
Deferred Taxes (4,587) (4,587)
Total Rate Base 1,406,120 (6,042) (3,426) (18,552) 468 1,118 - (957) (2,910) - 1,375,818
Attachment 1, page 2 of 2
Revenue Requirement Summary
Water System Meter Size
Spirit Lake East 1-Inch 35.00 7,500 2.5200 37%8%
Spirit Lake East 1 1/2-Inch 70.00 15,000 2.5200 174%8%
Spirit Lake East 2-Inch 112.00 30,000 2.5200 338%8%
Bar Circle "S" Water Company 1-Inch 35.00 7,500 2.5200 28%45%
Bar Circle "S" Water Company 1 1/2-Inch 70.00 15,000 2.5200 155%45%
Bar Circle "S" Water Company 2-Inch 112.00 30,000 2.5200 308%45%
Diamond Bar Estates 1-Inch 41.00 7,500 2.4500 0%111%
Lynnwood Estates Subdivision 1-Inch 35.00 15,000 2.4500 0%
First Block 15,001 - 100,000 - 145%
Second Block 100,001 - 200,000 - 23%
Third Block over 200,001 - -18%
Bitterroots Water Company, Inc 1-Inch 35.00 10,000 2.4500 67%42%
Rickel Water Company 1-Inch 35.00 10,000 2.4500 17%123%
Troy Hoffman Water Corporation, Inc 1-Inch 35.00 7,500 2.4500 27%119%
Happy Valley Water Systems, Inc 1-Inch 35.00 15,000 1.4500 30%107%
Happy Valley Water Systems, Inc 1 1/2-Inch 70.00 15,000 1.4500 159%107%
Attachment 2, page 1 of 2
Rates
Line
No.Water System Meter Size Allotted Basic Allotted Basic
1 Irrigation Service - Diamond Bar 1 Inch -$ - 7,500 $ 35.00
2 Irrigation Service - Diamond Bar 1-1/2 Inch -$ - 20,000 $ 70.00
3 Irrigation Service - Diamond Bar 2 Inch -$ - 32,000 $ 112.00
PRESENT Commission Approved Rate Structure
Attachment 2, page 2 of 2
Rates