IPUC approves Algoma rate increase
Staff Writer | December 2, 2023 1:00 AM
SAGLE — The Algoma Water System has been given the green light to increase the residential and commercial rates it charges to provide water service.
"The commission has reviewed the record in this case and finds that the company’s request to increase rates by 100% is reasonable," Idaho Public Utilities Commission officials said in a final order in the case. "The company’s current rate structure is insufficient to sustainably meet its obligations required to provide safe and reliable service going forward."
The decision follows an October hearing by the Idaho Public Utilities Commission during a visit to Bonner County.
In seeking the rate increase, Algoma Water officials told the commission that additional revenue is needed to cover expenses and costs associated with maintaining and operating the system.
Under the approved plan, rates will double, with residential customers paying $54 per month and commercial customers paying $89 per month. The total amount of revenue produced is $19,596.
Algoma provides water service to 22 residential and five commercial customers in the Sagle area, with two commercial and three residential connections available.
The water system last sought a rate change in 2008.
The commission received two comments on the rate hike, both against the proposal, calling it "very aggressive and excessive." One asked that the company be required to create an action plan for future improvements and follow up with customers as work proceeds.
While the commission is "sensitive to customers who will see their water rates increase by 100%," the methods are consistent with those used by other small water companies, IPUC officials said in the final order.
In a report approving the application, the commission noted that the increased rates will allow Algoma to provide safe and reliable service while providing it a chance to earn an 11% return on equity.
The company was also ordered to develop a system operations plan and, beginning in January 2024, maintain logs of regular water pressure readings and the amount of water pumped each month.
"Without a proactive maintenance plan, water delivery to customers may be interrupted or delayed during a major system malfunction," commission staff said in the report.
While an audit of Algoma's electricity expenses was conducted and seemed reasonable, IPUC staff said they were unable to determine system pumping efficiency because the company had no record of the total gallons of water pumped.
"Staff cited the electricity costs as one of the greatest expenses for small water companies and explained that pumping efficiency is one of the best ways to determine if a company is producing least-cost water," according to IPUC officials in the report.
The commission ordered the company to repair or replace its well house meter and to begin monitoring water use.