970321.docx

DECISION MEMORANDUM
TO:COMMISSIONER NELSON
COMMISSIONER SMITH
COMMISSIONER HANSEN
MYRNA WALTERS
STEPHANIE MILLER
DAVID SCHUNKE
DON HOWELL
SCOTT WOODBURY
TERRI CARLOCK
TONYA CLARK
RANDY LOBB
DAVID SCOTT
FROM:BOB SMITH
DATE:MARCH 21, 1997
RE:STAFF RECOMMENDATION TO INITIATE A FORMAL INVESTIGATION
OF THE EARNINGS AND RATES OF HAYDEN PINES WATER CO.
Attached to this memorandum is a copy of a Staff audit report for this company.  The audit report results from what initially was intended to be a routine audit of the Company’s additions to plant in service for the years 1992 through 1995 and operating results for the year 1995.
During the course of the routine audit, of somewhat limited scope, Staff discovered enough questionable activity to merit much more detailed and thorough examination by the Commission.  The attached audit report details many of those questionable activities.
Based upon the audit work that has been completed and described in the attached report, Staff recommends that the Commission initiate a formal case to investigate in detail all of the Company’s financial, operational and managerial activities for the years 1992 through and including the year 1996.
Staff believes a formal case is necessary in order to provide proper notice that the Commission may decide to change the Company’s rates and charges for the provision of water service.
DECISION:
1.  Does the Commission wish to open a formal proceeding as recommended by Staff?
2.  Should the Staff move forward with a more comprehensive audit and defer the decision to open a formal case until that audit is complete?
3.  Some other approach?
________________________________
Bob Smith