Idaho Public Utilities Commission

Case No. EAG-W-09-01, Order No. 30734

February 27, 2009

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

Commission approves Eagle Water charge, but will review expenses

State regulators are allowing Eagle Water Company to assess its customers a 48 percent surcharge on consumption of more than 600 cubic feet per month. The surcharge is to pay down a near $1 million loan needed to meet expenses for a number of capital improvement projects that have been completed or are near completion.

However, the Idaho Public Utilities Commission is also beginning a process to review the company’s improvements to determine their prudency. The surcharge, which became effective Feb. 23, is subject to refund if the commission finds the expenses were not prudent or necessary to serve customers.

The surcharge replaces a 42.5 percent surcharge that expired last October. At that time, Eagle Water petitioned the commission to continue that surcharge, but the commission denied the request noting that the proposed extension of the former surcharge was for new expenses that had yet to be reviewed. The former surcharge paid for an engineering study that preceded the capital improvement projects included in the new surcharge.

The commission gave the company authority to borrow up to $995,000 from the Idaho Banking Company at 6.75 percent over seven years and to access the remaining balance of about $120,000 in the former surcharge fund. Monies collected from the surcharge will go to pay down the loan.

Eagle Water Co. serves about 3,000 residential customers and 415 business customers in Eagle and the surrounding area. It is not the same as the City of Eagle Water, a municipal water system.

The new surcharge increases customers’ commodity charge from 45 cents for every 100 cubic-feet of water used beyond 600 cubic-feet (about 4,500 gallons) to 67 cents. The $7.84 per month for the first 600 cubic-feet of use remains the same.

Capital projects completed include the rebuilding of one well and the construction of a seventh well. Improvements still in progress include construction of a new eighth well and a new motor and generator for the new booster station. According to Eagle Water, the capital improvement projects will total $1.53 million plus another $98,100 for legal and engineering expenses.

The improvements will provide the company with enough back-up water so that it will no longer need to pay the City of Eagle’s municipal water system $10,000 per month for providing back-up support during emergencies. The state Department of Environmental Quality placed Eagle Water Co. under a moratorium that prohibited the company from adding new customers until the system’s capacity was increased. The moratorium was lifted when Eagle Water entered into an agreement with the City of Eagle to provide back-up water in times of emergency.

The commission set a March 9 deadline for parties wanting to intervene in the case to examine Eagle Water’s capital improvement projects and related expenses. Intervenors must file with the commission in order to present evidence, cross-examine witnesses or participate in settlement discussions. The commission will also establish a written comment period for customers and other interested parties who want to comment on Eagle Water’s application.

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Water Cases” and scroll down to Case Number EAG-W-09-01.