20230802Reconsideration_Order_No_35875.pdf

ORDER NO. 35875 1
Office of the Secretary
Service Date
August 2, 2023
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF ISLAND PARK
WATER COMPANY’S FAILURE TO
COMPLY WITH IDAHO PUBLIC UTILITIES
COMMISSION REPORTING AND FISCAL
REQUIREMENTS
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CASE NO. ISL-W-23-01

ORDER NO. 35875

INTRODUCTION
The Idaho Public Utilities Commission (“Commission”) Staff (“Staff”) investigated Island
Park Water Company (“Island Park” or “Company”) and Dorothy McCarty (“McCarty”) following
Staff’s report that the Company failed to provide adequate or timely responses to Staff’s audit
request and the allegations of improper customer billing, improper handling of customer
complaints, threats of retaliation against customers, and failure to provide safe and reliable
services—all in violation of Idaho Code §§ 61-301 and 61-302.
On June 14, 2023, Commission Order No. 35817 found that the Company failed to submit
timely and complete responses to Audit Request (“AR”) Nos. 3, 4, 7, 9 and 10, and was subject to
a penalty of $2,000 for each violation, amounting to a penalty of $10,000. The Commission also
found the Company: (1) improperly handled customers’ complaints, amounting to a penalty of
$24,000; (2) improperly billed its customers, amounting to a penalty of $144,000; (3) retaliated
against customers, amounting to a penalty of $46,000; and (4) failed to provide safe and reliable
service to customers for each of the seven water systems, amounting to a penalty of $210,000. The
Commission also directed the Company to refund customers who were charged in excess of the
tariff.1
PETITION FOR RECONSIDERATION
On July 5, 2023, the Company petitioned the Commission to reconsider enforcement of
Order No. 35817 to allow time to resolve matters between the Company and the Idaho Department
of Environmental Quality (“DEQ”) (“Petition”). The Company argued the Commission’s Order

1 The Company made several refunds on June 22, 2023. However, the Commission is concerned that additional
customers are entitled to refunds. The Commission committed to prosecute “any additional substantiated occurrences
of improper customer billing as allowed under Commission authorities.” Order No. 35817 at 24. The Commission
directed IPWC to “cooperate with Staff’s ongoing audit of its billing practices by providing copies of customer bills,
and to immediately cease and desist from billing in excess of its tariff.” Id.

ORDER NO. 35875 2
functions as a “taking” and will render the Company insolvent. The Company’s Petition also raised
concerns with fairness, insolvency, undercapitalization, and a heavy-handed approach from the
Commission.
STAFF’S REPLY TO PETITION FOR RECONSIDERATION
On July 13, 2023, Staff filed a reply to the Company’s Petition. Staff argued the
Commission should reject the Company’s Petition for failing to show that the Commission’s Order
was unreasonable, unlawful, erroneous, or not in conformity with the law as required by
Commission Rule of Procedure 331.01, IDAPA 31.01.01.331.01. Staff contended the true inequity
in the matter has been to the customers who have been without safe and reliable water for months,
or potentially years.
Staff’s reply also criticized Ms. McCarty for transferring potentially valuable properties
from the Company to herself after the Commission had levied penalties against the Company and
argued that the transfers were fraudulent. Staff argued Ms. McCarty should be held personally
liable for the penalties because her self-dealings pierced the Company’s corporate veil.
Staff proposed delaying enforcement of the penalties levied in Order No. 35817 for a
limited time if the Commission established a path forward requiring the Company to provide safe
and reliable water service to its customers on an expedited basis or if the Company agrees to the
transfer operation and management responsibilities—or the actual Company—to an individual or
entity that can bring the water systems into compliance with the Commission’s rules and
regulations.
COMMISSION FINDINGS AND DECISIONS
Island Park operates a “water system” as a “water corporation” as defined by Idaho Code
§§ 61-124 and 61-125 and is a public utility subject to the jurisdiction of the Commission under
Idaho Code § 61-129. The Company operates under Certificate of Public Convenience and
Necessity No. 317. Island Park’s service area comprises seven separate water systems located in
Fremont County, Idaho.
The Commission has the authority to grant or deny reconsideration pursuant to Idaho Code
§ 61-626(2). Reconsideration allows any interested person to bring to the Commission’s attention
any question previously determined, and it affords the Commission an opportunity to rectify any
mistakes or omissions. Washington Water Power Co., v. Kootenai Environmental Alliance, 99
Idaho 875, 879, 591 P.2d 122, 126 (1979). Commission Rule of Procedure 331.01 provides:
ORDER NO. 35875 3
Petitions for reconsideration must specify (a) why the order or any issue decided in
it is unreasonable, unlawful, erroneous or not in conformity with the law, and (b)
the nature and quantity of evidence or argument the petitioner will offer if
reconsideration is granted.

IDAPA 31.01.01.331.01 (emphasis added).
Any person may petition the Commission to clarify an order under Commission Rule of
Procedure 325, IDAPA 31.01.01.325. A petition for clarification may be combined with a petition
for reconsideration. Id.
During the pendency of this case before the Commission, the DEQ filed a request for
preliminary injunction against the Company and Ms. McCarty, individually, in the Seventh
Judicial District in Bonneville County. DEQ also requested a temporary restraining order against
the Company. On July 13, 2023, the court granted DEQ’s request for a temporary restraining order
and set a show cause hearing for July 27, 2023, to determine whether the temporary restraining
should not continue as a preliminary injunction pending the final determination of the case. On
July 26, 2023, DEQ and the Company filed a joint stipulation that allows the DEQ access to the
Company’s water systems for sampling purposes and gives the DEQ responsibility for providing
public notice to customers. The Company agreed it would not contest being placed into
receivership, which would be done in coordination with the Commission. The probable
receivership of the Company represents a significant development in the matter and could impact
future proceedings before the Commission and any enforcement actions the Commission pursues
against the Company, and Ms. McCarty, individually.
With respect to the Company’s arguments on reconsideration, the Commission is not
persuaded. The Company’s discussions with DEQ do not demonstrate that Order No. 35817 was
unreasonable, unlawful, erroneous, or not in conformity with the law as required by IDAPA
31.01.01.331.01. The Company agreed that DEQ disallowed their systems from March 15, 2023,
to March 29, 2023, and the Commission’s Order is further supported by substantial and competent
evidence on the record, including the testimony from customers about the Company’s failures to
provide safe and reliable water, the failure to properly handle customer complaints, the improper
billing practices, retaliation against customers, and the failures to respond to Staff’s audit requests.
Further, the Commission is not persuaded that alleged insolvency that could result from
the penalties assessed in Order No. 35817 demonstrates the Commission’s Order was
unreasonable, unlawful, erroneous, or not in conformity with the law. The penalties were
ORDER NO. 35875 4
appropriate under the factual circumstances and were an appropriate exercise of the Commission’s
statutory authority under Idaho Code Title 61. Idaho Code §§ 61-701 et seq.
The Commission is also not persuaded that Ms. McCarty’s personal circumstances show
that the Commission’s Order No. 35817 was unreasonable, unlawful, erroneous, or not in
conformity with the law as required by Commission Rule of Procedure 331.01. The health of the
Company’s owner should not impact the service received by the customers. Ms. McCarty is
responsible, as the owner of the Company, to arrange for a competent manager and operator in the
event she is unable to perform those duties. The record clearly shows she is and has been unable
to operate the system according to the standards set by this Commission and the DEQ. We are not
convinced at this time that her health issues should justify our reconsideration of Order No. 35817.
The Commission is also not persuaded that the Company’s affidavits, and arguments on restrictive
covenants, and water permit usages, were overlooked. The Commission considered and weighed
these arguments and found the Company’s position unpersuasive. To the extent the covenants of
the various subdivisions include restrictions, it is not this Commission’s prerogative to determine
because we set rates and establish tariffs for, in this case, the water service to those customers. It
is beyond our authority to interpret covenants that apply to homeowners who also happen to be
customers of the Company. Therefore, the Commission denies the Company’s request for
reconsideration.
As discussed above, the Commission notes that the Company has stipulated with DEQ to
being operated under a receivership. If a receivership is established, the Commission could pursue
enforcement of the penalties assessed in Order No. 35817 through the receiver, and against Ms.
McCarty, individually, in the district court proceeding. The Commission maintains its statutory
authority to enforce the penalties against the Company, and pursue its claim against Ms. McCarty,
in her individual capacity. The Commission also has authority to reduce, suspend, or compromise
penalties to protect the public interest. See Idaho Code § 61-712B. Based on Staff’s arguments in
its reply to the Company’s Petition and the ongoing proceedings between DEQ and the Company,
the Commission finds it reasonable to hold the penalties assessed by Order No. 35817 in abeyance,
pending further proceedings in the District Court and the potential of establishing a receiver to
operate the Company before a transaction occurs. Therefore, Commission grants Staff’s request to
delay enforcement of the penalties levied against the Company pending the outcome of the district
court proceeding.
ORDER NO. 35875 5
ORDER
IT IS HEREBY ORDERED that the Company’s Petition is denied.
IT IS FURTHER ORDERED that Staff’s request to delay enforcement of the penalties is
granted.
THIS IS A FINAL ORDER DENYING RECONSIDERATION. Any party aggrieved by
this Order or other final or interlocutory Orders previously issued in this case may appeal to the
Supreme Court of Idaho within forty-two (42) days pursuant to the Public Utilities Law and the
Idaho Appellate Rules. Idaho Code § 61-627; I.A.R. 14.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 2nd day of
August 2023.

ERIC ANDERSON, PRESIDENT

JOHN R. HAMMOND JR., COMMISSIONER

EDWARD LODGE, COMMISSIONER
ATTEST:

Jan Noriyuki
Commission Secretary

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