Case No. FLS-W-12-01

July 6, 2012

Contact: Gene Fadness (208) 334-0339, 890-2712

Public hearing is Tuesday in Falls Water rate case

The three commissioners who will decide the Falls Water rate case will be in Ammon Tuesday, July 10, to hear from customers of the water utility which serves about 3,900 customers north of Ammon and northeast of Idaho Falls.

The hearing begins at 7 p.m. in the Ammon City Hall at 2135 S. Ammon Road. There is no presentation by commission staff or the commissioners. The sole purpose of the hearing is to hear testimony from customers.

Falls Water seeks to increase its annual revenue by about $295,000, which could mean a 26.5 percent or higher rate increase for customers. According to commission staff calculations, the average Falls Water customer uses 20,000 gallons per month and more than 90 percent of customers are on a ¾-inch meter. The average monthly bill of that customer is now $20.98 per month and would increase to $29.23, or about a 39.3 percent increase if the company’s request were granted in full.

Commission staff, which operates independently of the commission, is recommending an increase of $15,832 in annual revenue, or about 1.4 percent above current annual revenue. The impact to a customer who uses the system average of just under 20,000 gallons per month would be about a 1.6 percent increase in rates from the current $20.76 per month to $21.10.

Major staff adjustments include reducing requested annual revenue by more than $700,000 to disallow expense Falls Water included for converting about 3,300 meters to automated meter reading devices (AMR). Staff claims the meter conversion is not economically justifiable, noting that the $8,315 per year estimated savings from reduced fuel and labor expense, it would still take the company almost 86 years to recover its investment.

Staff further maintains that Falls Water did not seek initial authorization from the commission to convert all its meters to AMR. The company’s capital investment in AMR is “extremely large” compared to its commission-approved rate base, staff said. “Because of the size of the investment, staff believes the company should have sought commission approval for the investment before launching the project. Having failed to do so, the company proceeded at its own peril.”

The commission did approve in the company’s 2009 rate case, automated meters for approximately 600 multi-family, commercial and residential accounts. That expense, about $126,300, is recommended to be included in rates.

Among several other adjustments, commission staff also recommends removal of about $80,700 in depreciation expense related to those meters and another $92,500 related to land and water rights.

You can read staff comments by going to 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-12-01. Click on the “Comments” link under Staff, dated June 15, or cut and paste the following link in your browser:

http://www.puc.idaho.gov/internet/cases/water/FLS/FLSW1201/staff/20120615COMMENTS.PDF

Falls Water argues the meters will allow for year-round meter reading (currently the company does not read meters during the winter months), reducing labor and fuel expense. Monthly reads also help the company more quickly discover and respond to leaks. Customers who experience excess water use during the winter due to leaks are not pleased with their corresponding April water bills on top of repair expense, the company claims. The company further argues that other utilities are converting to AMR systems.

You can read the Falls Water response to staff comments by going to the commission’s Web site and following the same steps above, and going to Company reply comments dated June 29, 2012. Or you can cut and paste the following address in your browser:

http://www.puc.idaho.gov/internet/cases/water/FLS/FLSW1201/company/20120629REPLY%20COMMENTS.PDF

The commission is free to reject, approve or modify the company’s request as well as those recommendations made by staff.

For those who do not want to provide oral testimony at the public hearing, the commission continues to take written comment through July 13. Comments are accepted via e-mail by accessing the commission’s Website and clicking on "Comments & Questions About a Case." Fill in the case number (FLS-W-12-01) and enter your comments.

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