20230206APPLICATION.pdf

GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 1 OF 9
Preston N. Carter, ISB No. 8462
Rebecca M. Fitz, ISB No. 11874
Givens Pursley LLP
601 W. Bannock St.
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
13988.14[16603975_6.docx]
Attorneys for Gem State Water Company, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF GEM STATE WATER COMPANY, LLC
FOR APPROVAL OF ACQUISITION OF
THE ASSETS OF THE WATER BUSINESS
OF VALIANT IDAHO, LLC
Case No. _________________
GEM STATE WATER’S APPLICATION
FOR APPROVAL OF ACQUISITION
Gem State Water Company, LLC (“Gem State Water”, “Company”), seeks the Idaho
Public Utilities Commission’s (“Commission”) approval of Gem State Water’s acquisition of the
assets of the water supply and distribution system (the “Water Business”) of various parties
associated with Valiant Idaho, Inc. and TIC Utilities, LLC (the “Selling Parties”), in accordance
with the Water System Asset Purchase Agreement dated as of December 9, 2022 (the
“Agreement”).1 Gem State Water also requests that one of its Certificates of Public Convenience
and Necessity (“CPCN”) be amended to incorporate the Water Business or, alternatively, that a
new CPCN be issued that will authorize service to the areas served by the Water Business.
Finally, Gem State Water requests that this Application be processed by modified procedure.
Please serve all notices and communications with regard to this Application upon:
1 The Agreement is among Gem State Water Company, LLC, (Buyer), Valiant Idaho, LLC (Seller), TIC Utilities,
LLC, (Operator) and William Haberman, as managing member of Seller (Owner).
RECEIVED
Monday, February 6, 2023 12:36:48 PM
IDAHO PUBLIC
UTILITIES COMMISSION
GSW-W-23-01
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 2 OF 9

Preston N. Carter
Rebecca M. Fitz
Givens Pursley LLP
601 W. Bannock St.
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]
Eric W. Nelsen
Senior Regulatory Attorney
NW Natural
250 SW Taylor St.
Portland, Oregon 97204
Telephone: [phone]mailto:
[e-mail]

BACKGROUND AND PROCEDURAL HISTORY
Gem State Water Company
1. Gem State Water, located in Coeur d’Alene, Idaho, is a regulated public water
utility providing water service in northern Idaho. Gem State Water is a wholly owned subsidiary
of NW Natural Water of Idaho, LLC (“NW Natural Water of Idaho”), which is in turn wholly
owned by NW Natural Water Company, LLC (“NW Natural Water”). A confidential
organizational chart is attached to the accompanying testimony of Justin Palfreyman, the
President of Gem State Water, NW Natural Water of Idaho, and NW Natural Water.
2. Gem State Water, NW Natural Water of Idaho, and NW Natural Water are
members of a family of companies held by Northwest Natural Holding Company (“NW Natural
Holdings”), which was created during a corporate reorganization of Northwest Natural Gas
Company and its affiliates in 2018. Northwest Natural Gas Company, now a direct subsidiary of
NW Natural Holdings, is a 164-year old natural gas utility serving customers in the Pacific
Northwest.
3. NW Natural Holdings and NW Natural Water have financial resources and access
to capital markets to sufficiently capitalize Gem State Water so that it can provide safe and
reliable water utility service and proactively address the infrastructure needs of the utility. See
Palfreyman Testimony at 2. Additionally, Gem State Water benefits from its parent companies’
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 3 OF 9
and affiliates’ core competencies in constructing and maintaining infrastructure, providing
exemplary customer service, and effectively managing regulated utilities. Id. at 3. NW Natural
Water and its subsidiaries have acquired water utilities in Idaho, Arizona, Oregon, Texas and
Washington. Id. These acquisitions and the continued operation of these water utilities were
seamless, with no disruptions to customers’ service. Id. at 4.
4. Gem State Water has acquired multiple water utilities in Idaho, and has provided
a seamless transition in ownership. This experience will carry over to Gem State Water’s
acquisition of the Water Business. Id.
The Selling Parties
5. The Selling Parties own a water supply and distribution system that serves
approximately 148 residential customers in or near Bonner County, Idaho. The area currently
served by the Selling Parties is in the general vicinity as the territory served by Gem State Water.
Id. at 4.
6. The Selling Parties serve a development sometimes known as The Idaho Club.
7. On April 11, 2022, the Commission sent Valiant Idaho, LLC/TIC Utilities, LLC a
letter inquiring as to its utility status.
8. The Water Business is not currently operating as a utility regulated by the
Commission.
9. If this Application is approved, the Water Business will operate as a regulated
public utility subject to the jurisdiction of the Commission.
THE TRANSACTION
10. Gem State Water and the Selling Parties entered into the Agreement, which is
attached to Mr. Palfreyman’s testimony.2 The Agreement and the actions it contemplates, are

2 The Agreement has been filed as “Confidential” under the Commission’s rules.
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 4 OF 9
referred to as the “Transaction.” The Agreement is conditioned upon the Commission’s approval.
Agreement ¶ 6(b).
11. If approved, under the Agreement, Gem State Water will acquire the Selling
Parties’ assets related to the Water Business (“Water Business Assets”). Palfreyman Testimony
at 5. The Water Business Assets, which are listed in Schedule 2 of the Agreement, include all
real property and personal property used to operate the Water Business, including all water
rights. Id.
12. The Selling Parties do not have Commission-approved tariffs. A schedule of the
current rates and other charges related to the Water Business will be provided to Staff and the
Commission as part of this proceeding.
13. Gem State Water is not requesting any change to rates, rate structure, or other
charges in this Application. Any future changes will be based on prudently incurred capital
expenditures and other accepted ratemaking principles. Palfreyman Testimony at 5.
14. If the Transaction is approved, Gem State Water will work with Commission
Staff to update its tariffs to reflect its addition of the Water Business Assets and the retention of
the existing rates and other charges for current customers of the Selling Parties and Gem State
Water. Id.
15. Gem State Water intends to work with Commission Staff before and during future
rate proceedings to consider consolidation of rates, rate structure, and other charges as
reasonable and appropriate for current Gem State Water and the Selling Parties customers. Id.
16. Gem State Water submits that the Transaction is in the public interest. Through
this Transaction, the Selling Parties will come into compliance with Idaho law. The Transaction
will provide access to capital that is not currently available to the Selling Parties. Gem State
Water and its parent companies will offer expertise in operating regulated utilities. Gem State
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 5 OF 9
Water also will maintain the existing rates and other charges and will maintain or improve the
level of services currently provided.
17. Gem State Water, NW Natural Water of Idaho, NW Natural Water, and their
affiliates have financial resources and access to capital markets to sufficiently capitalize Gem
State Water so that it can provide safe and reliable water utility service and proactively address
the infrastructure needs of the Water Business Assets now owned by the Selling Parties. Id. at 2.
18. Additionally, the water system currently owned by the Selling Parties will benefit
from Gem State Water’s, and its affiliates’, core competencies in constructing and maintaining
infrastructure, providing exemplary customer service, and effectively managing regulated
utilities. Gem State Water has the ability to make needed improvements to the water systems. Id.
at 4.
19. If the Transaction is approved, Gem State Water employees will assume the roles
previously undertaken by the Selling Parties’ owner and associated contractors. Id. As Gem State
understands it, the Water Business was previously operated by contractor. Gem State has signed
an operations agreement to operate the system pending regulatory approval of the Transaction.
20. Gem State Water employees, who are based near the Selling Parties’ current
locations, have the business experience and water system expertise to operate and maintain the
Water Business Assets. Id.
21. If the Transaction is approved by the Commission, Leslie Rayner, the licensed
water system operator for Gem State Water, will serve as the licensed water system operator for
the water system currently operated by the Selling Parties. Ms. Rayner holds license number
DWD3-21515 (Class 3), and her business address is 250 Northwest Blvd., Suite 203, Coeur
d’Alene, Idaho 83814. Id.
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 6 OF 9
22. If the Transaction is approved, Gem State Water will assess what, if any, capital
investments are needed. Such capital investments may include installation of meters and/or other
projects.
REQUEST TO AMEND CPCN
23. Gem State Water has recently acquired several water systems and has the
following CPCNs: (a) CPCN No. 319 (Bitterroot); (b) CPCN No. 296 (Bar Circle); (c) CPCN
No. 293 (Spirit Lake East); (d) CPCN No. 390 (Happy Valley Water Systems, Inc.); (e) CPCN
No. 280 (Troy Hoffman Water Corp., Inc.); (f) CPCN No. 413 (Diamond Bar Estates); and (g)
CPCN No. 293.
24. As described above, Gem State Water intends to provide service to the customers
currently being served by the Selling Parties. Accordingly, Gem State Water respectfully
requests that CPCN No. 293 be amended to serve the area of the Water Business. Alternatively,
Gem State Water requests that the Commission grant a new CPCN to Gem State Water that
authorizes service to the area served by the Water Business.
25. The amendment of the CPCN, or issuance of a new CPCN that covers the area
served by the Water Business, is necessary to effectuate the Transaction and to realize the public
benefits discussed above. The amendment of the CPCN is generally in the public interest for the
same reasons as the Transaction.
ADDITIONAL INFORMATION
26. Additional information that may facilitate the Commission’s consideration of the
Transaction is identified below.
27. Transaction-related costs related to the acquisition have been incurred by NW
Natural Holdings, not by Gem State Water, related to activities including due diligence,
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 7 OF 9
environmental consultants, research, legal, travel and negotiations. The costs will not be passed
to Gem State Water and will not be included in any rate case filings. Id. at 5.
28. If the Transaction is approved, accounting, financial, and customer records will be
kept in the local office of Gem State Water, 250 Northwest Blvd., Suite 203, Coeur d’Alene,
Idaho 83814. Gem State Water’s local office also will be the location for former Selling Parties
customers to pay bills, make requests, and otherwise correspond with Gem State Water. Id. at 4.
29. The Selling Parties bill its customers on a quarterly basis throughout the year.
Gem State Water intends to maintain this schedule for the time being. Id.
30. Gem State Water provides 24-hour response to repairs or water quality issues.
Customers can call the Gem State Water office phone number, [phone], and the call will
be forwarded to an answering service after hours or whenever the line is not able to be answered
during office hours. Id.
31. Gem State Water will publish a notice to customers in the local newspaper,
regarding the Transaction and the Application, although no notice is required because Gem State
Water is not proposing any changes to rates. Id. at 7-8; IDAPA 31.01.01.125. Gem State Water
also intends to mail a notice to each customer, and to file in this proceeding verification when
such notice is sent.
32. With the Idaho Club development, Gem State Water anticipates adding new
customers as The Idaho Club development expands. Id at 5.
MODIFIED PROCEDURE
33. Gem State Water believes a hearing is not necessary to consider the issues
presented in this Application and respectfully requests that it be processed by modified
procedure, using written submissions rather than a hearing, under the Commission’s Rules of
Procedure 201 through 210.
GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 8 OF 9
CONCLUSION
Gem State Water respectfully requests that the Commission enter an order:
1. Authorizing this matter to be processed by modified procedure.
2. Approving the Transaction, finding: that it is consistent with the public interest,
that the cost and rates for supplying service will not be increased by reason of the Transaction,
and that Gem State Water has the bona fide intent and financial ability to operate and maintain
the Water Business Assets in the public service.
3. Amending a CPCN currently held by Gem State Water, CPCN No. 293, to
include the area served by the Water Business Assets, or alternatively granting a new CPCN to
Gem State Water that will authorize service to the area currently served by the Water Business.
4. Granting such other relief as the Commission deems just and reasonable.
DATED February 6, 2023
GIVENS PURSLEY LLP
By
Preston N. Carter
Rebecca M. Fitz
Givens Pursley LLP
Attorneys for Gem State Water Company LLC

GEM STATE WATER’S APPLICATION FOR APPROVAL OF ACQUISITION PAGE 9 OF 9

CERTIFICATE OF SERVICE
I certify that on February 6, 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

[e-mail]

Preston N. Carter