Website: www.puc.idaho.gov
Commission denies Spirit Lake East petition
The Idaho Public Utilities Commission has denied a
northern Idaho water company’s petition to reconsider and amend an earlier
order that granted the company a modest increase, but decreased its return on
equity from 12 percent to 6 percent.
Further, the commission ordered Spirit Lake East Water
Company to complete an analysis by May 21 of how and when the company will
address major leaking in its water system and provide for a new back-up
generator. Failing to do so may result in the commission imposing other
remedies authorized by state statute against the company, including the
possibility of daily fines.
An April 3 order by the commission found the company,
which has about 287 customers in Kootenai and Bonner counties, is failing its
statutory obligation to provide “adequate, efficient just and reasonable
service.” The commission sliced the company’s rate of return in half and
disallowed the cost of a back-up generator, which failed to operate properly,
from being included in rates paid by customers.
On April 14, Spirit Lake East filed a petition asking the
commission to reconsider its decision to not include the cost of a back-up
generator in rates and to amend the order to say that the return on equity be
raised from 6 percent to 12 percent if a new owner buys the company. On Monday,
the commission denied the company on both requests and noted that it had not
complied with the commission’s earlier order to file an action plan within 14
days that included specific commitments, including dates for starting and
completing projects to repair system leaks and provide a back-up generator.
Spirit Lake East said it acquired a back-up generator from
its major shareholder, Spokane-based Hanson Industries. The company maintained
it could not provide the commission an exact cost because Hanson acquired it
and other items from Kaiser Aluminum as part of Kaiser’s Chapter 11 bankruptcy
proceeding. Spirit Lake East said a value of $12,360 was assigned to the
generator. The commission said business transactions with affiliate companies, such
as Hanson Industries and Spirit Lake East, are carefully scrutinized to assure
ratepayers that only necessary and reasonable expenses are included for
recovery in rates. In this instance, there was “no evidence in the record
demonstrating that Spirit Lake actually paid anything for the generator,” the
commission said.
Regarding the return on equity, the commission said it
should be clear to the company that a return on equity of 12 percent will be
considered only when necessary improvements are made to the system “whether the
improvements are made by Spirit Lake or a new owner of the system.”
A copy of the commission’s most recent order in this case, along with other documents related to the case, is available on the commission’s Website at www.puc.idaho.gov. Click on the water icon, then on “Open Water Cases,” and scroll down to Case No. SPL-W-06-01.