Idaho Public Utilities Commission

Case No. FLS-W-09-01, Order No. 31022

March 11, 2010

Contact: Gene Fadness (208) 334-0339, 473-8791

Increase for Falls Water customers is 6 percent

Rates for customers of Falls Water Company near Idaho Falls will increase by about 6 percent effective April 1. With the increase, an average residential bill will be about $24.16 per month.

The Idaho Public Utilities Commission approved the increase after a six-month investigation. Falls Water, which serves about 3,600 customers north of Ammon and northeast of Idaho Falls, originally sought an average 14.4 percent increase.

Falls Water sought to increase its annual revenue requirement by about $143,500. The commission approved $92,728, for a total annual revenue requirement of $1,094,570.

To meet that revenue requirement, the company proposed to increase the minimum charge for metered customers from $14 to $18 per month, but decrease its commodity charge from 66.7 cents per 1,000 gallons used above 12,000 gallons to 60 cents. The commission approved an increase in the minimum charge to $16.10 per month for the vast majority of customers with ¾-inch or 5/8-inch meters and a commodity charge of 61 cents for every 1,000 gallons above 12,000 gallons.

The minimum charge increases gradually for customers with larger meters. Falls Water proposed to charge the same rate for all meter sizes, but the commission said that customers who impose a higher demand on the system should pay more. Only 4 percent of customers have larger meters.

The company’s last rate increase was in January, 2008. Since then, Falls Water has installed a new well, meters and transmitters and replaced a hydrant. It also moved into larger office and warehouse space.

“We recognize that for some customers, an increase will result in an economic hardship,” the commission said. “Recognizing the current economic climate of this region and the country, we also note that the commission has an obligation to Falls Water and its customers to set rates at a level sufficient to allow the company to recover its reasonable expenses and receive a reasonable return on its investments. This is necessary so the company can remain financially sound and capable of providing adequate, clean water to its customers.”

While the commission accepted the company’s rationale regarding its need for a larger office and warehouse, it cautioned Falls Water about its affiliate relationship with the owners of the office space, Rockwell Development, Inc. Commission staff investigated rental rates for office and warehouse space in the Idaho Falls area and found the lease agreement with Rockwell to be reasonable, but did not include proposed “escalators” that would have annually increased rental expenses in customer rates.

The commission also declined to include in rates the entire $160,000 in land acquisition costs for the combined siting of the new well and a future water storage reservoir. The commission accepted $80,000, which was the land acquisition cost for the new well, but said the remainder could not be included until the storage reservoir is in use and beneficial to customers. The company purchased the land from Rockwell Development.

“The commission is genuinely concerned by the number of affiliate transactions that Falls Water engages in without apparent regard to providing evidence of arm’s length bargaining,” the commission said.

The commission also noted the company is not in full compliance with the commission’s customer relations rules. It directed Falls Water to update within 60 days its main line extension rules, monthly billing statements, initial and final notices of termination and annual rules summary.

The commission’s order and other documents related to this case are available on the commission’s Web site at www.puc.idaho.gov. Click on the water icon, then on “Open Water Cases,” and scroll down to Case No. FLS-W-09-01.

Interested parties may petition the commission for reconsideration by no later than March 31. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.

Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.