20060901final_order_no_30122.pdf

Office of the Secretary
Service Date
September 1 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF KOOTENAI HEIGHTS WATER
SYSTEM, INC. FOR A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY
CASE NO. KHW-05-
ORDER NO. 30122
On August 22, 2005 , Kootenai Heights Water System, Inc. (Kootenai Heights
Company) filed an Application for a Certificate of Public Convenience and Necessity with the
Idaho Public Utilities Commission (Commission). On September 30, 2005, the Commission
issued a Notice of Application and Modified Procedure establishing a deadline for written
comments of November 10, 2005. Order No. 29877. On November 1 , 2005 , the parties
executed a Stipulation asking the Commission to suspend the written comment deadline so that
alternative organizational structures for the Company could be explored. The Commission
suspended the comment deadline, and directed the parties to report back to the Commission in 60
days. Order No. 29909.
On January 20, 2006, Commission Staff reported that the Company wished to
proceed with its original application. The Commission issued a Second Notice of Application
and Modified Procedure, setting a comment/protest deadline of March 9, 2006. Order No.
29960. Commission Staff conducted a review of the Company s Application and financial
information. Staff also conducted an on-site inspection of the system, and was the only party to
file comments. Staff recommended the. Company be granted a Certificate of Public Convenience
and Necessity. Staff also made several recommendations pertaining to the Company s rates
billing, charges, and customer rules.
With this Order the Commission issues a Certificate of Public Convenience and
Necessity to Kootenai Heights Water. Additionally, the Commission issues a Proposed Order
regarding the establishment of just and reasonable rates, charges, customer rules, and regulations.
THE COMPANY'S APPLICATION
The Company submitted various supplemental documents with its Application
including: a map of the proposed service area, a Water Service Agreement and Easement form
documents evidencing the incorporation ofthe Company, a copy of the contract with its Certified
Operator, a copy of a Clarification-Modification of the Plat for Kootenai Heights, and a letter
ORDER NO. 30122
from the Department of Environmental Quality (DEQ) evidencing conditional approval of the as-
built plans.
At the time of the Application the water system was in-service with six residential
customers connected to the system. Application at 2. The Company states that the system will
ultimately serve 11 residential customers. Id. The requested service area for the water system
consists of Lots 7-18 of Kootenai Heights, with the well located on Lot 10. Application at
The Company states that the cost to construct the system was $83 500 including the value of Lot
10. Application at 2. The average monthly consumption for the entire system was reported as
000 gallons, and the Company states that billing was to start on October 1 2005. Id. The
Application states that proposed rates and charges, rules and forms are all contained within the
Water Service Agreement submitted with the Application. Id.
The Water Service Agreement and Easement (WSA) states that the system was
developed to provide water "to certain Lots in Kootenai Heights and for further development of
additional land and lots in the sole discretion of the Water Provider." WSA at 1. The WSA
further provides that each lot shall pay a hook-up fee of $5 000, and that rates will be $40 per
month up to 10 000 gallons, and $4 per thousand gallons used over 10 000 gallons per month.
WSA at 2. Each customer will be metered, with the cost of the meter and its installation paid by
the Company. Id. The Agreement states that monthly rates will not be increased for the first five
years. WSA at 2-3. Additionally, the Agreement states that monthly bills will not be sent, and
the lot owner shall pay the monthly fee on the 1 5t day of each month. WSA at 3. Billings will be
sent to customers twice a year, on or about May 1 and October 1 , for the purpose of computing
and billing any excess water usage over the allowed 10 000 gallons per month. WSA at 3-
FINDINGS OF FACT
Kootenai Heights Water System consists of 11 residential lots with one lot used for a
well site and pump house. Floyd and Mickie McGhee are the developers of the property and the
officers and shareholders of Kootenai Heights Water System. The adjacent area is provided with
water service from the City of Kootenai, Idaho, which currently has a moratorium on allowing
water users located outside of its established boundaries from connecting to the city s water
system. There are no other domestic water suppliers close enough to provide water to the area.
The McGhees own additional property adjacent to the proposed service area, and plan to develop
this property in the future. Although not a part of this Application, if this property is developed
ORDER NO. 30122
the McGhees would consider combining the water systems of the anticipated development with
this system.
The system consists of one four-inch, five horsepower well pump, with an eight-inch
casing, pumping from a depth of approximately 200 feet. There are three 100-gallon hydro-
pneumatic tanks to maintain pressure in the system. All equipment is located on the well lot (Lot
# 1 0). There is no other water storage in this system. Individual water meters have been installed
for each customer. We find that the well capacity, as shown from well records and pump data, as
well as the three pneumatic storage tanks will be sufficient to serve the present customer base.
The Company has hired a certified operator to manage the water company and appears to have
the financial ability to maintain adequate service.
The Department of Environmental Quality (DEQ) approved the existing system in
January 2005, contingent upon full compliance with five items set out in the approval letter. As
of the time that Staff filed its comments, a DEQ engineer had advised that all but one of the five
requirements had been met, and the remaining requirement would require several more months
of testing to determine compliance. Additionally, the Panhandle Health District reviewed and
inspected the system in February 2005. The system was found to be in substantial compliance
with IDAPA 58.01.08, and nine required improvements, and two suggested improvements , were
communicated to the Company s certified operator.
We find it appropriate and necessary to issue a Certificate of Public Convenience and
Necessity to Kootenai Heights Water System, Inc. The Company has existed since
approximately January 2005 , and has been offering water service to the public since at least
August 2005. Kootenai Heights has filed a map of the system and a legal description of its
requested service area. It does not appear that there are any other water companies, cooperatives
or municipalities that are willing and/or capable of providing water service to its customers. The
Company meets the two-part test of Idaho Code 9 61-129 of selling water service to the public
for compensation within the State of Idaho. There is a need for water service and Commission
Staff recommended that it be granted a Certificate of Public Convenience and Necessity.
We find that Kootenai Heights Water System, Inc. is operating as a public utility
pursuant to Idaho Code 99 61-124, 61-125 , 61-129, and should be granted a Certificate of Public
Convenience and Necessity pursuant to Idaho Code 961-526.
ORDER NO. 30122
Kootenai Heights did not file a proposed tariff with its Application, nor has it
submitted copies of its proposed bill statements, disconnection notices, or other documents
necessary to conduct its day-to-day business. The Company has not supplied any cost data or
support for its proposed rates, charges, rules, and regulations in the record for this case. The
Company did not provide evidence that it had notified its customers of its Application to the
Commission.The Commission has received no public comments.To ensure notice and
opportunity to comment to both the Company and to the customers, the Commission will issue a
Proposed Order regarding the establishment of initial rates, charges, rules, and regulations that
are just and reasonable. IDAPA 31.01.01.312.
UL TIMA TE FINDINGS OF FACT AND CONCLUSIONS OF LAW
Kootenai Heights Water System, Inc. is a water corporation providing water service
to the public within the State of Idaho Idaho Code 99 61-124, 61-125 , and is operating as a
public utility. Idaho Code 9 61-129.
The Commission has jurisdiction over Kootenai Heights Water System, Inc. and this
matter as authorized by Title 61 of the Idaho Code, and more particularly Idaho Code 99 61-501
61-502 61-503 61-520, and 61-523.
The Commission should authorize and approve just and reasonable initial rates
charges, customer rules, and regulations regarding the provision of water service by Kootenai
Heights Water System, Inc. to its customers. Idaho Code 99 61-301 61-302 61-303 61-502
61-503, and 61-623.
ORDER
IT IS HEREBY ORDERED that Kootenai Heights Water System, Inc. is granted a
Certificate of Public Convenience and Necessity.
IT IS FURTHER ORDERED that a separate Proposed Order regarding just and
reasonable rates, charges, rules, and regulations shall be issued. The Commission Secretary shall
mail a copy of this Order, as well as the Proposed Order, to the Company and to each of its
customers. A 21-day comment period regarding the Proposed Order will commence on the
service date of the Notice of Proposed Order pursuant to the Commission s Procedural Rule 312.
IDAP A 31.01.01.312.
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
ORDER NO. 30122
matter decided in this Order.Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code 9 61-
626.
DONE by Order of the Idaho Public Utilitie Commission at Boise, Idaho this 3/
day of August 2006.
MARSHA H. SMITH, COMMISSIONER
DENNIS S. HAN E , COMMISSIONER
ATTEST:
ht-d1J a D. Jewell
mmission Secretary
O:KHW-05-01 dw4
ORDER NO. 30122