ORDER NO. 95-1166

ENTERED NOV 7 1995

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UW 48

DISPOSITION: STIPULATION APPROVED/

INVESTIGATION CLOSED

In November 1993 more than 20 percent of the customers of Long Butte Water System, Inc. (Long Butte), filed a petition with the Commission requesting the Commission to take the company under its regulating powers.

On December 1, 1994, the Commission issued Order No. 94-1747

opening an investigation of Long Butte. The order noted that Long Butte is a public utility as defined under ORS 757.005(1)(a)(A) and that ORS 756.515 authorizes the Commission to investigate the rates and service or any other matter relating to any public utility subject to the Commission’s jurisdiction. The order directed PUC staff to investigate the rates and service of Long Butte.

A prehearing conference in this matter was held on January 25, 1995,

at which issues and parties were identified. Following a period for investigation and gathering of information, a public comment meeting and evidentiary hearing were held

in Bend, Oregon, on October 17, 1995, before Allen Scott, a Hearings Officer for the Commission. Paul Graham, Assistant Attorney General, appeared on behalf of PUC staff. Pat Hodge appeared on behalf of Long Butte. Two customers appeared.

The record was kept open until October 31, 1995, for receipt of written comments from customers. Two were received. Terence P. Weber, a residential customer of Long Butte, filed a comment expressing support for the stipulation and noting the he has been satisfied with the service and rates currently in effect. Another written comment was filed by Rick and April Stigman, Dan and Connie Reif, and Erv and Doris Stigman. It asserted that the monthly charges are high and also noted that hook up fees have increased sharply. It also voiced complaints about the potential cost of installing fire hydrants. The letter also made assertions about the failure of Mr. Hodge to clean up debris from construction and about his supposed movement of dirt from a road easement onto private property. The Commission also received telephone calls from two customers, Sherry Mitchell and Eric Kristensen, who claimed that the rates are too high.

Based on the preponderance of the evidence, the Commission makes the following:

FINDINGS OF FACT

Stipulation

Prior to the hearing in this matter, staff and Long Butte entered into a stipulation resolving all issues in the case. The stipulation was signed at the hearing on October 17, 1995. Staff offered testimony in support of the stipulation.

The findings below are based upon staff’s testimony and the stipulation.

Rates and Rate Design

Staff’s review of Long Butte’s results of operations, rates, and rate

design resulted in a revenue requirement that (using Long Butte’s current rate design) generates a base rate of $23.52 and a variable usage rate of $1.45 per 100 cubic feet of water. Long Butte’s current rates include a base rate of $23 and a variable usage rate of $1.42 per 100 cubic feet of water. The company’s current rate design receives approximately 37 percent of its revenue from the variable usage rate and 63 percent of its revenues from the base rate. This is very close to staff’s targeted spread of 40 percent of revenues from the variable usage rate and 60 percent of revenues from the base rate.

The stipulation recommends that Long Butte’s rates and rate design remain the same as the current rates and rate design.

Discriminatory Fees

Staff reviewed allegations of alleged discriminatory main line development fees charged by Pat Hodge Construction (an affiliated interest). Staff concluded that the company is not engaging in discriminatory activity regarding the mainline development fees.

Affiliated Interest Applications

Staff reviewed two affiliated interest applications between Long Butte and Pat Hodge Construction. The first is for approval of a contract with Pat Hodge Construction to install meters for Long Butte at a cost of $300 each. Staff concluded that this is a reasonable meter installation fee based on staff’s experience with other investor-owned water utilities in the area. The second affiliated interest application is a contract with Pat Hodge Construction for emergency maintenance repairs to the water system at $25 per hour for labor, plus actual cost of materials. Staff concluded that this charge is a reasonable charge for the service.

Customer Service

Staff and Long Butte agreed to miscellaneous fees, rules, and regulations based upon ORS Chapter 757 and the Commission’s Administrative Rules.

Conclusion

Staff recommends approval of the stipulation and the tariffs attached to it. Staff also recommends approval of both affiliated interest contracts discussed above.

OPINION

Long Butte is a public utility as defined in ORS 757.005(1)(a)(A).

ORS 756.515 authorizes the Commission to investigate the rates and service or any matter relating to any public utility subject to the Commission’s regulatory jurisdiction if "the Commission believes that any rate may be unreasonable or unjustly discriminatory, or that any service is unsafe or inadequate, or is not afforded, or that an investigation of

any matter relating to [the] public utility . . . should be made." The Commission has reviewed the stipulation and supporting testimony and the remainder of the record in

this case and concludes that there is no basis for believing that Long Butte’s rates are unreasonable or unjustly discriminatory or that any service is unsafe, inadequate, or not afforded.

We have also reviewed the tariffs submitted by Long Butte and find that the rates are just and reasonable. We have also reviewed the affiliated interest applications and conclude that they should be granted.

The Commission concludes that the stipulation between staff and Long Butte is appropriate and should be adopted.

ORDER

IT IS ORDERED that:

1. The stipulation attached as Appendix "A" to this order is adopted.

2. The affiliated interest applications described in this order are approved.

3. The tariffs submitted by Long Butte Water Company are effective with service rendered on and after December 1, 1995.

Made, entered, and effective____________________________________.

A party may request rehearing or reconsideration of this order within 60 days from the date of service pursuant to ORS 756.561. A party may appeal this order pursuant to ORS 756.580.