DE 97-154
Hampstead Area Water Company, Inc.
Order Approving Franchise and Permanent Rates
R E V I S E D O R D E R N O. 22,854
February 18, 1998
APPEARANCES: Stephen J. Noury for Hampstead Area
Water Company, Inc. and James L. Lenihan for the Staff of
the New Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
On July 28, 1997, Hampstead Area Water Company,
Inc. (Hampstead or the Petitioner) filed with the Public
Utilities Commission (Commission) a petition to establish a
franchise and permanent rates in a limited area known as the
Colby Pond subdivision (Colby Pond) located in the Towns of
Danville and Sandown. The Petitioner is seeking authority
under RSA 378 to provide water service to Colby Pond. Colby
Pond is planned for 141 single family residential homes. As
of the date of the final hearing in this matter, there was
testimony that 82 homes had been sold.
An Order of Notice was issued September 5, 1997
setting a prehearing conference for October 10, 1997 at the
Commission and setting deadlines for intervention and
objections thereto. No requests for intervention were
submitted in writing or orally at the prehearing conference.
On October 28, 1997, the Commission issued Order No. 22,770
which approved a procedural schedule and scheduled a hearing
on the merits of the petition for January 14, 1998.
II. SETTLEMENT AGREEMENT AS PROPOSED BY THE PARTIES
At the hearing on January 14, 1997, the Commission
Staff (Staff) and the Petitioner presented a Settlement
Agreement (Settlement) on the proposed franchise and
permanent rates. The Settlement supported granting the
franchise and set forth the following terms and conditions:
RATE BASE
Rate base is agreed to consist of net plant in
service of $218,559 and a working capital requirement of
$4,970. The total rate base is therefore agreed in the
amount of $223,529.
RATE OF RETURN
The Petitioner's capital structure consists of
100% debt at 8.5% interest as specified in a promissory note
from the Petitioner to Lewis Builders Development, which is
the owner and operator of the Colby Pond system. Therefore,
Staff and Hampstead agree to an overall rate of return of
8.5%.
OPERATION AND MAINTENANCE EXPENSE
Operation and maintenance expense has been agreed
upon in an annual amount of $24,186. The components of this
figure, as listed in Schedule 3 of Staff witness Thomas M.
Sculley's prefiled testimony submitted December 23, 1997,
consist of production expense of $11,821, transmission and
distribution expense of $5,015, customer accounting expense
of $3,200, office supplies and expense of $350, special
services of $3,000, and miscellaneous expense of $800.
TOTAL ANNUAL REVENUE REQUIREMENT
The total annual revenue requirement agreed upon
by the parties is therefore $51,155, ($32,155, total
operating costs, plus $19,000, net operating income) to be
applied to the full system build-out of an anticipated 141
single family homes.
RATE STRUCTURE
The rate structure, as agreed upon by Staff and
Hampstead, will consist of a quarterly customer charge and a
volumetric rate. The customer charge has been calculated by
dividing the annual depreciation and amortization charge of
$7,624 by the anticipated total customer base of 141 for a
quarterly charge of $13.52 per customer. The consumption
charge is calculated by allocating the remaining revenue
requirement of $43,530 over an estimated annual consumption
of 2,250 cubic feet per quarter per customer (2,250 x 4
quarters x 141 customers), or 1,269,000 cubic feet,
resulting in a consumption rate of $3.43 per hundred cubic
feet. An average annual bill would amount to approximately
$362.80.
EFFECTIVE DATE
The Petitioner and Staff recommended that these
rates be effective for service rendered on and after the
date of issuance of a Commission order in this franchise and
permanent rate proceeding.
III. COMMISSION ANALYSIS
We have reviewed the agreement between the parties
and heard testimony in support thereof. We find granting
the franchise to Hampstead Area Water Company to be in the
public good. We also find that the recommended rates
provide a reasonable return on property used and useful in
service to the public. Accordingly, the settlement is
approved.
Based upon the foregoing, it is hereby
ORDERED, that Hampstead Area Water Company is
granted authority pursuant to RSA 374:22 and 26 to operate
as a public water utility in a portion of the Towns of
Danville and Sandown described as follows:
Beginning at a point 3000' south of the centerline of Hersey
Road on the Danville and Sandown town line: thence, running
easterly, 3000' south of the centerline of Hersey Road, to a
point 200' east of the centerline of Route 111-A (Main St.):
thence, running northerly, 200' east of the centerline of
Route 111-A, to a point 200' north of the centerline of
Sandown Road: thence, running westerly, 200' north of the
centerline of Sandown Road in Danville and then of North
Danville Road in Sandown, to a point 200' northwest of the
centerline of Fremont Road: thence, running southwesterly,
200' northwest of the centerline of Fremont Road, to a point
200' west of the centerline of Odell Road: thence, running
southerly, 200' west of the centerline of Odell Road, to a
point 3000' south of the centerline of Hersey Road: thence,
running easterly, 3000' south of the centerline of Hersey
Road to the point of beginning;
and it is
FURTHER ORDERED, that for water service rendered
on or after the date of this order that the Hampstead Area
Water Company, Inc. may bill its Colby Pond customers a
quarterly fixed charge of $13.54 and a volumetric charge of
$3.43 per 100 cubic feet; and it is
FURTHER ORDERED, that the Petitioner file a
revised tariff annotated with the above Commission order
number within 10 days of the date of this order.
By order of the Public Utilities Commission of New
Hampshire this eighteenth day of February, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S.
Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary