hvww991.swb.doc

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 1895

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE PROPOSED SALE OF THE HAPPY VALLEY WATER SYSTEM. )
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CASE NO. HVW-W-99-1

COMMENTS OF THE COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on September 17, 1999, submits the following Comments in the above-referenced case.
The Commission received a letter from Mr. Ivan Dunnick on behalf of his sons, Jon and Richard Dunnick, owners of Happy Valley Water Service. The letter requested approval for the sale of the water system to Mr. Joseph and Mrs. Donna Brammer. The letter further requested that the request be handled under Modified Procedure.
The Dunnicks hold Certificate Number 339 for the Happy Valley Water system located in Kootenai County, Idaho, approximately five (5) miles due west of Hayden. The system serves 25 residential customers on lots ranging in size from five (5) to ten (10) acres each. The history of this system is rather convoluted with ownership and possession of the system changing hands four (4) times in less than a year while the Commission was investigating the system to determine its status as a public utility. The Dunnicks became owners of the system by repossession when the previous owner defaulted on a loan for which the water system had been pledged as collateral. The Dunnicks never intended to purchase or operate a water utility.
During the term of their ownership, the Dunnicks have been quite cooperative and have abided by all of the Commission’s rules and regulations. Customers appear to be satisfied with the operation of the system since the Dunnicks took over. The Consumer Assistance Division of the Commission has received no complaints relating to the Dunnicks operation of the system. Prior to control of the system by the Dunnicks, numerous complaints regarding billing, outages and heavy-handed management were received by the Consumer Assistance Division.
Mr. and Mrs. Brammer are residents of the subdivision within which the Happy Valley Water system provides service. Mr. Brammer has been helping with onsite maintenance and repair of the system, checking the pump on a daily basis, collecting water samples and for all practical purposes has functioned as the local contact for the customers. The Dunnicks live in Bonners Ferry.
Staff has had several telephone conversations with both the Dunnicks and the Brammers regarding this Application. The Brammers seem to understand the role this Commission plays in the regulation of water utility companies and are willing to accept responsibility for the water system under the Commission’s oversight. Mr. Ivan Dunnick is confident the Brammers will be good operators of the system. Staff will provide the Brammers information on the Future Water System Operator Certification Program, as well as contacts at the Division of Environmental Quality.
Staff has informed the Brammers that their purchase price of $17,000 will not be recognized as an additional investment (rate base) upon which this Commission would allow an equity return. The Brammers have acknowledged their understanding of this limitation. They only expect to earn part-time wages on the operation of the system. The Brammers have indicated that they believe the current water rates may be too low and have indicated they may seek to increase the rates in the future. The current rates are $27 per month plus $0.70 per thousand gallons for all consumption in excess of 20,000 gallons per month.
Mr. Dunnick has informed Staff that final sale documents have been placed in escrow with a proposed closing date not later than November 1, 1999. The escrow instructions indicate that should the sale not close by November 1, 1999, the agreement is void. Mr. Dunnick is quite anxious for the Application to be processed expeditiously. Staff will provide copies of the following Commission documents to the Brammers upon approval of the sale:
Utility Customer Relations Rules
Guidelines for Filing a Rate Case for Small Water Companies
Small Water Company Accounting
Procedures and forms for filing the annual report

STAFF RECOMMENDATION
Staff is supportive of this sale and recommends that the Commission authorize the transfer of the Happy Valley Water System from the Dunnicks to Mr. and Mrs. Brammer. Staff recommends that a new Certificate of Public Convenience and Necessity be issued to the Brammers and that the Dunnick’s Certificate be cancelled.

Dated at Boise, Idaho, this day of September 1999.

________________________
Scott Woodbury
Deputy Attorney General

Technical Staff: Bob Smith

SW:RES:gdk:i:word/umisc/comments/hvww991.swb

STAFF COMMENTS 1 SEPTEMBER 29, 1999