BEFORE THE

INDIANA UTILITY REGULATORY COMMISSION

IN THE MATTER OF THE PETITION OFGIBSON WATER, INC., A NONPROFITCORPORATION, FOR AUTHORITY TOISSUE LONG-TERM DEBT AND FORAPPROVAL OF A CHANGE IN RATES AND )CHARGES )

CAUSE NO.: 45080

AGREED MOTION TO ESTABLISH A SUBDOCKET

Petitioner, Gibson Water, Inc. ("Gibson Water"), and the Indiana Office of Utility

Consumer Counselor ("OUCC") (the "Parties"), by counsel, respectfully request, pursuant to

Indiana Code § 8-1-2-72, that the Commission open a subdocket in this Cause for the purpose

receiving evidence regarding the need to increase the amount of Gibson Water's authorized

borrowing due to higher than anticipated bids for the projects originally approved in this Cause.

In support of its request, the Parties state:

1. On April 24, 2018, Gibson Water filed a Verified Petition ("Petition") with the

Commission seeking authority to issue long-term debt and increase its rates and charges. In the

Petition (and attached prefilings), Gibson Water proposed to use the proceeds from long-term

debt ("Debt") issued to the United States Department of Agriculture Rural Development

("RD") and Indiana State Revolving Fund ("SRF") Loan Program to fund the construction of

certain water system improvements ("System Improvements").

2. On November 21, 2018, the Commission issued its Final Order authorizing

Gibson Water to borrow $3,581,000 to complete the System Improvements. In the Final Order,

the Commission specifically authorized Gibson Water to issue debt to RD in the amount of

$2,43 8,000 and the SRF Program in the amount of $1,143,000. A copy of the Final Order is

attached hereto as Attachment 1.

3. After the closing of evidence in this Cause, Gibson Water's largest customer,

Toyota Motor Manufacturing Indiana, Inc. ("Toyota"), informed Gibson Water that Toyota

required additional water to facilitate an increase in production and to operate new chiller or

cooling units.

4. To meet Toyota's increased demand for water, Gibson Water expedited the

bidding, financing, and construction of a portion of the proposed System Improvements.

Specifically, Gibson Water expedited the installation of a new master meter, meter vault, and

appurtenances and improvements to the existing booster station (collectively, "Expedited

Improvements"). (See Petitioner's Exhibit 4, Preliminary Engineering Report ("PER"),

Appendix F, Alternative 8, Items 5-6). In the PER, Gibson Water's professional engineer

estimated that the actual construction costs for the Expedited Improvements would be $247,500.

5. On November 15, 2018, Gibson Water received bids for the Expedited

Improvements in the amount of $750,850, which was $503,350 more than the engineer's original

estimate (in the PER).

6. On December 21, 2018, Gibson Water issued a portion of the Debt to the SRF

Program in the amount of $994,000 to fund construction of the Expedited Improvements. Gibson

Water estimates that the Expedited Improvements will be completed and operational in the next

week.

7. Based on the higher than anticipated construction costs for the Expedited

Improvements and the current bidding environment, Gibson Water anticipates receiving bids that

are higher than the original estimates for the remaining System Improvements. Consequently, the

borrowing authority of $3,581,000 as set forth in the original November 21, 2018 Order will not

be sufficient to cover the total anticipated cost of the System Improvements.

2

8. Gibson Water now believes that the total cost of the System Improvements (along

with associated soft costs) will be $4,649,000 (as compared to its original estimate of

$3,581,000).

9. In order to reduce issuance costs, Gibson Water would propose to fund the

remaining System Improvements by issuing debt to a single lender, RD, in the amount of

$3,655,000 (rather than in the original estimated amount of $2,438,000).

10. Gibson Water estimates that the additional amount of borrowing will require an

increase of $67,086 to its annual revenue requirement. This increase to the annual revenue

requirement would increase the 16.6% increase to an average residential customer bill approved

in the Commission's November 21, 2018 Order to approximately a 20.2% increase.

11. On August 14, 2019, Gibson Water filed a Motion to Amend Final Order in this

Cause, in which Gibson Water requested that the Commission exercise its authority under Ind.

Code § 8-1-2-72 to amend its final order to reflect the updated borrowing authority and revenue

requirement amounts. On August 23, 2019, Gibson Water filed an Agreed Motion to Establish

Procedural Schedule with a proposed procedural schedule for the Commission to receive

additional evidence in this Cause.

12. On August 27, 2019, the Presiding Officers denied the Motion to Amend Final

Order. In their Docket Entry, the Presiding Officers stated: "Consideration of the relief described

in the Motion requires a new petition to be filed or that a request be made to establish a

subdocket to present and hear the merits of such relief and issue a new order."

13. The Parties agree that the interests of administrative efficiency will best be served

by creating a subdocket in this Cause rather than filing an entirely new petition. The creation of a

subdocket will allow the Commission to expeditiously receive evidence, hold an evidentiary

hearing, and issue a new order. This will allow Gibson Water to obtain the funding it requires to

3

complete the necessary projects outlined in its prior testimony in this Cause and to continue

providing safe, adequate, and affordable water to its customers, including serving the additional

needs of Toyota.

14. In order to expedite this process, the Parties have attached to this Motion an

agreed procedural schedule (Attachment 2) and a proposed order creating the subdocket

(Attachment 3).

15. Gibson Water anticipates filing prefiled testimony and exhibits that are

substantively identical to the prefiled testimony and exhibits filed with its Motion to Amend

Final Order on August 14, 2019.

16. Undersigned counsel has also contacted (and shared a draft of this Motion with)

counsel for the Indiana Office of Utility Consumer Counselor ("OUCC") and the OUCC agrees

with the relief requested in this Motion.

THEREFORE, the Parties respectfully request that Commission create a subdocket in

this Cause to consider and approve Gibson Water's request to increase its total borrowing to an

amount not to exceed $4,649,000. Specifically, Gibson Water requests authority to issue long-

term debt in the amount of $994,000 to the SRF Program and $3,655,000 to RD so that it can

complete all of the previously approved System Improvements.

Respectfully Sub fitted

hristophe tty. No. 18499-49BOSE McKI & EVANS LLP111 Monument Circle, Suite 2700Indianapolis, IN 46204(317) 684-5000(317) 684-5173 Fax

Counsel for Petitioner, Gibson Water, Inc.

4

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing has been served upon the following counsel

44,of record via electronic mail this day of September, 2019:

Indiana Office of the Utility Consumer CounselorPNC Center, Suite 1500 South115 West Washington StreetIndianapolis, IN 46204infonmapticain.gov

BOSE MCKINNEY & EVANS LLP111 Monument Circle, Suite 2700Indianapolis, IN 46204(317) 684-5000 Telephone(317) 684-5173 Facsimile

3710005_1

5

ATTACHMENT 1

t .4 ,

re 4

t! 4414 •

77-

STATE OF INDIANA

INDIANA UTILITY REGULATORY COMMISSION

IN THE MATTER OF THE PETITION OF )

GIBSON WATER, INC., -A NONPROFIT ) CAUSE N0.45080

CORPORATION, FOR AUTHORITY TO )

ISSUE LONG-TERM DEBT AND FOR )

APPROVAL OF A CHANGE IN RATES ) APPROVED: NOV 21 2018AND CHARGES

ORDER OF THE COMMISSION

Presiding Officers:David L. Ober, CommissionerCarol Sparks Drake, Administrative Law Judge

'DoVc1

On April 24, 2018, Gibson Water, Inc. ("Gibson Water" or "Petitioner") filed a Verified

Petition with the Indiana Utility Regulatory Commission ("Commission") in the above-captioned

Cause seeking authority to increase its rates and charges and issue long-term debt. That same day,

Gibson Water prefiled_the direct testimony and exhibits of the following witnesses:

• John W. Wetzel, P.R, President of Midwestern Engineers, Inc. ("Midwestern") and

a Senior Project Engineer with Midwestern;• Steveienldns,-Manager for Gibson Water; and• Scott A. Miller, C.P.A., Partner in H.J. Umbaugh & Associates, Certified Public

Accountants, LLP ("Umbaugh").

On August 24, 2018, the Indiana Office of Utility Consumer Counselor ("OUCC") prefiled

the testimony and exhibits of the following witnesses:

• Richard J. Corey, Utility-Analyst in the OUCC's Water/Wastewater Division;

• Carl N. Seals, Utility Analyst in the OUCC's Water/Wastewater Division; and

• Edward R. Kaufman, Assistant Director of the OUCC's Water/Wastewater

Division.

On September 14, 2018, Gibson- Water filed a notice confirming Petitioner's intent to not

file rebuttal testimony and its acceptance of certain adjustments and reporting requirements the

OUCC proposed in its prefiled testimony. These include adjustments for the normalization of

residential and- commercial customer growth, eliminating expenses for various celebrations during

the test year, and reporting requirements related to Petitioner's debt service reserve.

An evidentiary hearing was held in this Cause on October 5, 2018, at 9:30 a.m. in Hearing

Room 222 of the PNC Center, 101 West Washington Street, Indianapolis, Indiana. Gibson Water

and the OUCC were present, by counsel, and their respective evidence was admitted without

objection.

Based upon the applicable law and the evidence, the Commission finds:

1. Statutory Notice and Commission Jurisdiction. Notice of the public hearing inthis Cause was given and published by the Commission as required by law. Petitioner is a publicutility as defined in hid. Code § 8-1-2-1(a), and as such, the Commission has authority under Ind.Code § 8-1-2-125 to approve Gibson Water's rates and charges for water service and under hid.Code §§ 8-1-2-78, -79, and -83 to authorize Petitioner to issue long-term indebtedness. TheCommission, therefore, has jurisdiction over Petitioner and the subject matter of this Cause.

2. Petitioner's Characteristics. Gibson Water is a nonprofit utility supplying treatedwater within rural and urban areas in Gibson County, Indiana. Petitioner serves approximately1,750 retail customers and also provides wholesale water service to the Town of Haubstadt,Indiana, ("Haubstadt") and retail service to the Toyota Manufacturing Facility ("Toyota") nearPrinceton, Indiana. Gibson Water purchases its entire supply of water from the City of Evansville,Indiana, ("Evansville") pursuant to a Water Purchase Agreement ("WP Agreement") dated July13, 1977. Petitioner uses transmission facilities, elevated storage tanks, land, land rights,equipment, distribution mains, and other property to provide water service. Gibson Water's

existing base rates and charges were established by the Commission's February 26, 1986 Order in

Cause No. 37829 (the "37829 Order"). Since the 37829 Order, 11 wholesale tracking factor

adjustments have been approved corresponding to increases in the wholesale rate from Evansville.

The most recent tracking factor a dj astadjustment wag approved on February 2R, 2018.

3. Relief Requested. Gibson Water requests approval in this Cause to adjust its rates

and charges for water service on an across-the-board basis. Petitioner proposes to increase its

annual revenue requirement by 17.2% or $318,866, for a total net annual revenue requirement of

$2,172,473. Petitioner also requests authority to issue long-term- debt in order to make needed

capital improvements.

4. Test Year. The test year for determining Gibson Water's actual and pro forma

operating revenues, expenses, and operating income under present and proposed rates is the 12

months ended August 31, 2017, adjusted for changes that are fixed, known, and measurable for

ratemaking purposes and that occur within the 12 months following the end of the test year.

5. Gibson Water's Direct Evidence.

A. John W. Wetzel, P.E. Mr. Wetzel testified concerning Gibson Water's

current water supply, distribution system, and Petitioner's anticipated capital and periodic

maintenance needs. Mr. Wetzel stated that Midwestern has provided engineering services for

Gibson Water since the 1970's when the initial Gibson Water construction project brought potable

water to many Gibson County rural_ areas. He testified that Gibson Water's service area covers

approximately 150 square miles and includes-approximately 1,750 retail customers. Gibson Water

also provides wholesale water service to Haubstadt and retail service to Toyota pursuant to-two-

separate water service agreements. Mr. Wetzel-testified that Haubstadt is served through a master

meter located near the intersection of U.S. Route 41 and County Road 925 South, and Haubstadt

uses an average of approximately 124,000 gallons per day ("GPD") and is Gibson Water's second

largest user. He testified the Commission approved the wholesale Water Supply Contract between

Gibson Water and Haubstadt on November 4, 2010, in Cause No. 43918.

Mr. Wetzel also discussed Gibson Water's service to Toyota. He testified that Toyota'sfacility is located on the east side of U.S. Highway 41 between Fort Branch and Princeton, and

Toyota is Gibson Water's largest customer, consuming an average of 0.7 million gallons per day

("MGD"). Mr. Wetzel stated the Water Supply Service Contract between Gibson Water and

Toyota was approved by the Commission on March 26, 1997, in Cause No. 40755.

Mr. Wetzel testified that Gibson Water purchases its entire supply of potable water from

Evansville. Under the WP Agreement, Evansville will supply Gibson Water with a volume not to

exceed 2.5 MGD of potable water. The term of the WP Agreement is 50 years from the date of

Evansville's initial delivery of water to Gibson Water. Mr. Wetzel testified that Gibson Water also

has emergency interconnections with the Towns of Fort Branch and Owensville, Indiana.

According to Mr. Wetzel, Fort Branch and Owensville each operate groundwater wells and a

treatment plant to serve their respective communities. Petitioner's interconnections with Fort

Branch and Owensville are only to be used in an emergency, and no water was sold or received

via these emergency interconnections in 2016 or 2017.

Mr. Wetzel explained that the water Evansville supplies comes through a master meter pit

located near 1-64 and U.S. Highway 41 and then flows through a 16-inch main to a booster station

located along County Road 1250 South. This 16-inch main is the sole feeder main from Evansville

into Gibson Water's system. The booster station then pumps the water north, primarily through a

20-inch transmission main to two elevated storage tanks located on the Toyota site. These two

tanks have a total capacity of 1.8 million gallons-("MG"). Mr. Wetzel stated-the-distribution system

also- contains a third- storage-tank, which is a 03 MG standpipe. The third tank is located north of

the other two tanks, approximately three miles east of Princeton. All three tanks have the same

overflow elevation (approximately 669 feet).

Mr. Wetzel stated that Petitioner's distribution system contains approximately 190 miles

of 2-inch through 20-inch water mains. The entire system operates on one pressure zone due to all

the tanks having the same overflow elevation, but according to Mr. Wetzel, system operating

pressure varies dramatically throughout Gibson Water's service area due to the large amount of

small diameter piping and significant variations in ground elevation. The smaller diameter_ piping

causes reduced pressure during peak demand periods. Mr. Wetzel testified that inadequate

operating pressures have been observed at a number of locations within the distribution system

network during high demand periods. He stated that most of the areas experiencing low pressure

are remote locations relative to existing storage, pumping, or large transmission main facilities and

are plagued by undersized and/or unlooped mains that are incapable of sustaining adequate

pressure during peak demand. periods. From his perspective, the pressure issues require attention.

Mr: Wetzel testified that much of Petitioner's pipe is 40- year old ductile iron or PVC

piping. He testified the typical useful life expectancy of ductile iron or PVC main piping is

estimated at 70 to 80 years; therefore, Petitioner's existing distribution system network is suitable

for continued • operation, assuming normal maintenance activities, with significant useful life

remaining.

Mr. Wetzel testified there have been no significant improvements to the booster pumping

station since its renovation in 1996. He stated that 20 years of growth in the customer base, plus

increasing flow demands from Toyota and other industrial and commercial users, have taxed the

station. Mr. Wetzel testified that Petitioner's pump station building and the pumps have been well

3

maintained, but the pumps are now beyond their useful life of 15 to 20 years and need to be

replaced. The pump station building, however, is suitable for continued service. Accordingly, Mr.

Wetzel recommended replacing the booster station pumps.

Mr. Wetzel testified the three elevated water storage tanks are generally in good condition

and provide storage approximately equal to one and a half (1.5) days based upon the current

average daily demand for Gibson Water's system. He stated that with proper maintenance and

regular inspection, the tanks should provide many more years of continued service.

Mr. Wetzel testified that Gibson Water expects significant growth in the demand for water

due to a combination of moderate population growth (3.6% growth in Gibson County over the 20

year planning period) and a significant Toyota future plant expansion that is now in the planning

stage. He testified that .with the associated production and labor force expansion, an increase of

8% was added to the current industrial demand, resulting in a projected peak day water demand

for plan year 2037 of approximately 2.924 MG (a 14% increase over 2017 peak day demands).

Based on the system's current pressure issues and the projected future demand, Mr. Wetzel

recommended making the improvements outlined in a Preliminary Engineering Report ("PER").

Mr. Wetzel described the PER (i.e., Petitioner's Exhibit 4) in some detail. The PER includes

recommendations and probable costs for system enhancements which will, according to witness

Wetzel, enable Gibson Water to meet regulatory requirements under all operating conditions. Mr.

Wetzel testified that the PER serves two purposes: (1) provides a planning document required by

many federal and state agencies to obtain financial assistance to construct -drinking water projects;

and (2) justifies why the Commission should-authorize Gibson Water to incur debt and adjust its

rates and charges as requested in this Cause.

Mr. Wetzel-testified about the capital improvements recommended in the PER. He stated

the PER was used to identify the distribution system improvements needed to eliminate low

residual pressure conditions in portions of Petitioner's system during periods of high demand. Mr.

Wetzel testified that improvement and reinforcement of the system is essential to improve carrying

capacity and hydraulic gradients, particularly in high elevation areas. Also, a single 16-inch

transmission main currently carries all the water from the meter pit connection with Evansville.

This is the sole feed from Evansville into Gibson Water's system, so if there is a problem with the

main, Petitioner has no supply source after exhausting its storage facilities. Mr. Wetzel reviewed

the engineering analyses that went into the PER and identified the recommended capital project

alternatives. These include water main extensions to ensure Gibson Water's ability to adequately

meet projected maximum daily and peak hourly demands and installation of a parallel transmission

main from the interconnection with Evansville to improve system capacity and redundancy. Mr.

Wetzel testified the additional 16-inch main is essential for service to be provided if the- existing

main-has a problem and also includes upgrades to Gibson Water's high service pumping equipment

withinthe booster station. He opined that in-his professional opinion, each of the proposed capital

improvements identified in the PER is reasonable and necessary to Gibson Water to provide safe,

efficient service and ensure the system's ability to meet projected maximum day_demand for plan

year 2037.

Mr. Wetzel testified that Gibson Water is also seeking authority to incur long-term debt

in an amount sufficient to cover the cost of constructing the proposed improvements identified in

the PER. Gibson Water, therefore, seeks authority to issue approximately $3,581,000 in long-term

debt to cover the probable construction costs of the PER recommendations as well as a 10%4

construction-contingency and estimated non-construction costs. Mr. Wetzel testified that GibsonWater plans to borrow from the United States Department of Agriculture Rural Development

("RD") and the Indiana State Revolving Loan Fund ("SRF") Program to finance these

improvements. Specifically, Gibson Water is requesting authority to issue a 40-year note in an

estimated amount of $2,438,000 to RD and a 35-year note in an estimated amount of $1,143,000

to SRF to cover the probable construction cost of the PER recommended alternatives along with

the construction contingency and estimated non-construction costs. According to Mr. Wetzel, RD

has approved the PER and funding for the improvements identified with similar approval

anticipated from the SRF Program.

Mr. Wetzel testified that Gibson Water also seeks amounts for periodic maintenance as

discussed in the pre-filed testimony of Mr. Miller. Mr. Wetzel stated the items and amounts

contained in Mr. Miller's accounting report for periodic maintenance are consistent with the

expenses Gibson Water will incur. Mr. Wetzel described the review process Gibson Water engaged

in to determine the appropriate amount for periodic maintenance. He testified the items and

amounts detailed in the Umbaugh Accounting Report are appropriate, reasonable, and accurately

reflect the type and amount of expenses Gibson Water will experience for periodic maintenance.

B. Steve Jenkins. Steve Jenkins testified in support of Gibson Water's

proposed rate adjustment and request for authority to issue. long-term debt. As Petitioner's

manager, Mr. Jenkins stated he is familiar with the utility's day-to-day operations and its system.

In describing Gibson Water's existing facilities, Mr. Jenkins stated much of the system

dates back to the 1970's when Gibson Water began providing service. He testified there have been

a number of improvements over the past 30 years including, most notably, the installation of new

facilities-in 1996 to -serve Toyota. According to Mr. Jenkins, many portions of Petitioner's system

are to the point where capacity and reliability are jeopardized, especially during peak usage. Given

the aging water infrastructure and the capacity and reliability issues, Mr. Jenkins opined that

Gibson Water needs to make a series of improvements to ensure it has sufficient capacity and

reliability for retail customers and, in particular, for its wholesale customer, Haubstadt, and for

Toyota.

Mr. Jenkins testified that Mr. Wetzel's testimony and the PER accurately describe the

improvements Gibson Water needs_ to make to ensure safe and adequate service. Specifically, he

noted the system experiences low pressure, especially during the summer peak usage months, and

operational issues because dead-end lines need to be looped. He testified that with the looping of

lines, Gibson Water will have the ability to isolate and fix main breaks while maintaining service

on either side of a break. Mr. Jenkins also stated that he believes it is extremely important for

Gibson Water to _install a parallel transmission main from its- Evansville interconnection. Re

expressed concerned that because the sole main is- under -Interstate 64 it could require days, if not

weeks, to repair a break given the difficulty of accessing the line. Mr. Jenkins testified that

considering the age of this transmission main, Gibson Water's need for more water across its

system, and the redundancy the parallel main will provide, it is critical for Petitioner to complete

this parallel main project.

Based on his familiarity with Gibson Water's finances, Mr. Jenkins testified that Gibson

Water needs an adjustment to its rates and charges to maintain its existing infrastructure and ensure

safe, adequate, and reliable service. Mr. Jenkins testified that Gibson Water will also need a rate

5

adjustment to cover the anticipated principal and interest payments on its long-term debt from RD

and the SIG Program.

C. Scott A. Miller. Mr. Miller testified that Umbaugh was retained to

determine the rates necessary to support Petitioner's pro forma revenue requirements, make

recommendations regarding changes in Petitioner's schedule of rates and charges, and assist with

structuring the long-term indebtedness to be used to fund Gibson Water's proposed improvement

projects. Mr. Miller sponsored a March 23, 2018 Accounting Report on Proposed Rates and

Charges ("Accounting Report") his firm prepared for Gibson Water.

Mr. Miller testified that Gibson Water last adjusted its rates in 1986. Since then, 11

wholesale tracking factor adjustments have been approved corresponding to increases in

Evansville's wholesale rate, with the most recent approval being on February 28, 2018. Mr. Miller

testified that the primary driver for the rate adjustment being proposed is the need to upgrade

Petitioner's distribution system as Mr. Wetzel describes. Mr. Miller stated Petitioner lacks

sufficient funds to cover the cost of the projects Mr. Wetzel identifies and that incurring long-term

indebtedness will provide the necessary funds and also spread the cost of the improvements over

the useful life of the assets.

Mr. Miller testified that. Gibson Water currently has no outstanding debt, but Petitioner is

seeking authority in this Cause to effect financings with RD and the SRF Program. He testified the

issuance of long-term_notes via the RD program will provide Gibson Water with customer and

territory protection in accordance with 7 U.S.C. § 1926(b). According to Mr. Miller, because

Gibson Water has a concentration and reliance on industrial water sales, this results in some

exposure to its non-industrial customer base should the industrial sales dramatically diminish. Mr.

Miller testified the protection afforded-by the RD program will lessen this exposure by preventing

portions of Petitioner's system from being forcibly annexed or cherry picked by another utility or

municipality.

Mr. Miller reviewed the Accounting Report (Petitioner's Ex. 7), stating the test year used

in- support of the requested adjustment to Petitioner's rates and charges was the 12 months ended

August 31, 2017. Based on his analysis, Mr. Miller testified an overall increase of 17.2% is

justified.

Mr. Miller testified the estimated project costs for the proposed capital improvements are

based on the PER engineering estimates. He generally described the projects as main extensions

and upgrades, an upgrade to the existing booster station, and installation of a parallel transmission

main. Mr. Miller testified that Gibson Water intends to fund the projects-using a two-pronged

approach_that includes a 40-year loan through RD-in the estimated amount of $2,438,000 and a

35-year loan through the SRF Program in the estimated amount of $1,143,000. Mr.. Miller stated

the estimated amortization schedules for the proposed notes are included in the Accounting Report.

He testified that Gibson Water originally intended to fund the entire loan through RD, but during

the pre-approval process RD informed Gibson Water that Petitioner needs to borrow

approximately one million dollars of the loan funds from a third-party lender to which RD will

provide a federal loan guarantee. In lieu of a third-party bank or similar lender, Mr. Miller testified

Petitioner has received an indication from the SRF that it is willing to fund the balance of the

project not funded by RD, and RD has consented to this arrangement.

6

Mr. Miller stated that to allow for a 3-5-year amortization period for project components,

Gibson Water allocated the entirety of Mr. Wetzel's PER Alternatives 2 and 3, representing

complete segments of water main (including construction and non-construction costs), to SRF for

funding. He anticipates Alternatives 2 and 3 will qualify for the 35-year amortization period under

the- SRF Program. The balance of the PER projects are allocated to RD for funding.

Mr. Miller testified that the proposed RD note is expected to be paid monthly over 40 years

beginning one month after closing, which is assumed to be December 1, 2019. Interest for the RD

loan was assumed at 3.50%, resulting in an annual debt service payment of approximately

$113,400. Principal and interest related to the proposed SRF note is expected to be paid

semiannually over 35 years beginning January 1, 2019. Interest on the SRF note was assumed at

2.75%, resulting in an annual debt service payment of approximately $51,200.

Mr. Miller described how he arrived at the estimated interest rates. He stated the RD

interest rate will be the lower of the interest rate contained in the Letter of Conditions or the

program interest rate in effect at closing. Petitioner received the Letter of Conditions on March 19,

2018, and it contains an interest rate of 3.50%. Because of the current increasing interest rate

environment, Mr. Miller stated it is unlikely, but possible, the actual RD interest rate may be lower

at the time of closing. Mr. Miller testified the SRF Program's interest rate will not be known until

closing occurs. Using the SRF Program's traditional criteria, he estimated the interest rate will be

approximately 2.75%.

Mr. Miller acknowledged the project costs used in the Accounting Report are based on-

engineering _estimates, not actual construction bids. Given the uncertainty of the actual

construction- costs and actual interest rates, Mr. Miller stated the total cost of the proposed

financing is unknown. Mr. Miller testified that Gibson-Water, therefore, anticipates that once the

actual construction bids are received, Petitioner will be able to appropriately size the proposed

borrowings. In addition, upon closing with RD and the SRF the actual interest rates and annual

debt service requirements will be known; consequently, Mr. Miller testified it will be appropriate

at that time to perform a true-up calculation on Petitioner's rates and charges.

Mr. Miller reviewed the mechanics of the proposed financings. He stated that RD now

requires borrowers to obtain a short-term construction loan through the Indiana Bond Bank. He

testified the proceeds from this short-term loan are used to pay all the costs associated with closing

on the loan and constructing the proposed facilities. Once construction is completed and final costs

are known, RD will then close on the permanent loan in an amount sufficient to pay off the Indiana

Bond Bank loan and any associated issuance costs. Petitioner will, therefore, use the funds from

. the Indiana Bond Bank to complete construction of the facilities, and when_ construction is

complete, RD will close -on the permanent loan. Mr. Miller stated that Petitioner anticipates a

November 2018 closing on the interim construction loan with the Indiana Bond -Bank and the

permanent SRF Program loan. Petitioner anticipates completion of the proposed improvements by

December 1, 2019, at which time it will close on the permanent loan with RD.

Mr. Miller discussed the adjustment for pro forma expenses and revenues- contained in the

Accounting Report. These include adjustments to payroll expense, employee benefits, purchased

water, insurance, consulting services, periodic maintenance, and operating expenses for capital or

non-recurring items. He explained the calculation of normalized annual- operating revenues to

account for additional revenues from new customers during the test year as well as additional

7

revenues from the most recent Evansville tracker. Mr. Miller -testified that Gibson Water's total

annual net revenue requirements are estimated at $2,172,473, after deducting test year

miscellaneous income and interest earnings. To provide sufficient revenues to meet the annual

revenue_requirements, Mr. Miller stated Gibson Water needs to increase its rates by approximately

17.2% across-the-board which will result in an increase of $318,866 to its pro forma revenues.

Mr. Miller testified ,the revenue requirements include an amount for replacements and

improvements based on annual expenditures for capital additions during 2014, 2015, and 2016. He

believes this amount is sufficient to allow Petitioner to effectively address the capital needs within

its system after completing the proposed improvement projects. Mr. Miller also testified as to the

mechanics of incorporating the most recently approved Evansville tracking factor into Gibson

Water's rates and charges.

Mr. Miller testified that Petitioner cannot obtain the funding necessary to complete the

proposed capital improvements without changing its current rates and charge because the net

revenues at pro forma present rates are insufficient to make the estimated debt service payments.

In his opinion, the proposed financing plan using both RD and the SRF Program funding provides

reasonable and cost-effective funding to construct the capital improvements. He testified the rates

proposed in the Accounting Report are fair, just, non-discriminatory, reasonable, and necessary

for Gibson Water to-meet its projected revenue requirements.

6. OUCC's Direct Evidence.

A. Richard J. Corey. Mr. Corey testified regarding the OUCC's proposed

adjustments to Gibson Water's revenue requirement. Generally, he recommended adjustments to

Petitioner's test year customer growth and that certain non-allowed expenses -be removed. Based

on these adjustments, Mr. Corey recommended the Commission approve an across-the-board rate

increase for Gibson Water of 16.6% which he testified will produce an annual increase in

Petitioner's water revenues of $308,420.

Mr. Corey testified that he_ did not accept Petitioner's normalization methodology for

customer growth during and subsequent to the test-year, particularly Petitioner's normalization of

industrial and agricultural revenues. He testified it is not appropriate to normalize industrial and

agricultural revenues in the manner Petitioner proposed because these customers' consumption

varies widely from customer to customer; therefore, Petitioner's growth should not be calculated

based simply on total customer billings and consumption. Mr. Corey testified the appropriate

method for adjusting for industrial an& agricultural customer growth is to identify specific

customers gained or lost during and after the test year and make specific-adjustments related to

that customer's actual or expected usage. He stated there has been no change in the- number of

Petitioner's industrial, public authority, educational, and resale customers during the test year,

eliminating the need to perform customer growth analysis on these groups. Mr. -Corey also

disagreed with Petitioner assuming a typical residential usage of 4,300 gallons. From his

perspective 4,300 gallons is not representative of the various customer classes included in

Petitioner's residential customer count analysis.

Mr. Corey testified that he accepted Petitioner's proposed Evansville tracking factor

normalization adjustment; consequently, he recommended a net increase of $168,458 to test year

operating revenues of $1,700,780 for the revenue normalization adjustment which yields pro forma

8

operating revenues of $1,869,238. He testified these adjustments reflect residential and

commercial customer growth during the test year as well as post-test year and are calculated-based

on the data in Petitioner's workpapers and information obtained during the OUCC' s site visit.

Mr. Corey recommended an increase to test year residential operating revenues of $2,737

per year and proposed a post-test year residential growth adjustment increase of $7,870 per year.

Mr. Corey testified that Petitioner proposed several operating expense adjustments totaling an

increase of $370,423. He stated the OUCC accepted all of Petitioner's expense adjustments except

$3,185 that Petitioner paid for various celebrations during the test year. Mr. Corey testified that

while the OUCC does not wish to discourage such activities, these costs provide no benefit to

ratepayers and should be disallowed as an operating expense.

Mr. Corey testified that Gibson Water requested $126,143 for extensions and

replacements based on Petitioner's average annual capital additions for 2014 through 2016. He

testified the OUCC accepts Petitioner's requested amount for extensions and replacements. Mr.

Corey testified the OUCC also accepts Petitioner's proposed debt service of $164,618 and debt

service reserve of $16,535. With all of this taken together, Mr. Corey recommended the

Commission authorize a L6.6% increase in operating revenues on an across-the-board basis to

provide Gibson Water the opportunity to collect $2,177,283 in net revenues. Based on Mr. Corey's

Schedule 1, this results in a monthly rate for a customer using 5,000 gallons increasing from $-38.98

to $45.43.

B. Carl N. Seals. Mr. Seals testified regarding Gibson Water's proposed

capital improvement projects and periodic maintenance adjustment. He recommended the

Commission approve the projects described in the PER, as well as Gibson Water's- requested

authorization for financing. He also recommended the Commission accept Gibson Water's

proposed periodic maintenance adjustment.

Mr. Seals provided an overview of Gibson Water's system and its characteristics. He

testified that Petitioner operates as a distribution system only and does not produce its own water.

Mr. Seals stated Gibson's system includes one meter pit interconnecting it to Evansville, -one

pumping station, three storage tanks, 120 hydrants, and approximately 187.5 miles of main, with

diameters- ranging from 2-inch to 20 inch. He testified that- Gibson Water sells an average of 1.3

MGD and has total storage capacity of 2.1 MG. Mr. Seals testified that Gibson Water easily meets

the Ten State Standard recommendation that total water storage meet average day demands. He

testified that based on Petitioner's Monthly Report of Operations to the Indiana Department of

Environmental Management,- Gibson Water showed a peak day on June_14, 201-6, of 2.98 MG. Mr:

Seals stated this is significant in that the WP Agreement with Evansville is for a maximum of 2.5

MGD, causing Petitioner to rely upon its storage under such scenarios.

Mr. Seals testified th-at over the last five years, Petitioner's water loss values ranged from

-4.9% to 0.6%. Mr. Seals stated-the negative values -of water loss- suggest Evansville's point of

connection may be under-registering actual sales volumes to Gibson Water. If so, this would

obscure water loss and impede Petitioner's ability to respond appropriately. Mr. Seals further

testified that Petitioner's-distribution system is fairly young, so losses due to leaks (excluding those

caused by poor installation) may be expected to be small.

9

Mr. Seals testified that-Gibson Water is proposing the following five capital improvement

projects to its distribution system:

(1) County Road 225 West Water Main Extension (Alternative 2);

(2) State Route 68 Water Main (Alternative 3);

(3) County Roads 200 South and 350 West Water Mains (Alternative 6);

(4) State Road 64 Water Main Extension (Alternative 7); and

(5) Parallel Booster Station Supply Main plus Booster Pump Replacement

(Alternative 8).

Mr. Seals described each of these capital improvement projects and the costs associated with each

as presented in the PER. He testified the total cost of the proposed capital improvement projects,

including 10% construction contingencies and non-construction costs, is $3,581,000. Mr. Seals

testified that Gibson Water intends to fund- these projects with loans from the SRF Program and

RD. Mr. Seals opined that the proposed capital improvement projects are reasonable and necessary

for Petitioner's continued provision of reliable service.

Mr. Seals also reviewed Gibson Water's proposed adjustment for periodic maintenance.

He stated the proposed adjustment encompasses supervisory control and data acquisition systems,

pump maintenance, tank maintenance, and replacement of large meters. Mr. Seals testified the

proposed periodic maintenance expenses appear to be reasonable for continued maintenance and

operation of these critical assets, and he accepted the pro forma maintenance expense amounts.

Mr. Seals commented that it appears-Gibson Water is not reporting any system usage in its Annual

Report on page W-6, particularly with respect to flushing. He testified that while Petitioner reports

having flushed 36 hydrants -in 2017, no volumes are reported in-the- Annual Report. He noted that

reporting flushing-amounts may exacerbate Petitioner's negative water loss, but this may be

addressed by requesting recalibration of Evansville's meter serving Petitioner.

Mr. Seals recommended the Commission accept Gibson Water's capital improvement plan

for purposes of approving Gibson Water's requested authorization for financing. He also

recommended the Commission accept Gibson Water's proposed periodic maintenance

adjustments.

C. Edward R. Kaufman. Mr. -Kaufman testified regarding -Gibson Water's

request to issue long-term debt. He recommended the Commission approve this request, subject to

certain reporting requirements. Mr. Kaufman also recommended restrictions be placed on

Petitioner's debt service reserve to ensure the funds are available, if needed.

Mr, Kaufman provided an overview of Petitioner's requested authorization to issue a 40-

year loan through RD for $2,438,000 and a 35-year loan through the SRF Program for $1,143,000.

Mr. Kaufman testified that Petitioner has established the reasonableness of its proposed

borrowings from RD and the SRF, but Petitioner has not established that the borrowing_terms from

any other lender are appropriate or reasonable; consequently, he testified the OUCC's position is

that financing approval in this Cause should only extend to the borrowings Gibson Water proposes

from RD and the SRF. In the event of a proposed debt issuance by another entity, Mr. Kaufman

testified Petitioner should secure the Commission's approval through filing a new Cause or a

modification of the final order in this proceeding. He opined that before any such alternative debt

10

issuance, the OUCC should have an opportunity to review the terms of the proposed debt issuance

to ensure they are reasonable.

Mr. Kaufman testified there will be a gap between the time Petitioner receives an order in

this Cause and when its proposed debt is issued. He proposed that in the event of such a gap,

Petitioner use the funds collected in rates for its 2018 debt issuances to offset the amount Petitioner

needs to borrow or apply these funds to its debt service reserve. He recognized, however, that if

Petitioner closes on its debt within two months after an order is issued in this Cause, any funds

collected for debt could be considered immaterial, so Petitioner need not apply such funds as

otherwise recommended.

Mr. Kaufman also recommended that Petitioner be required to true-up its proposed annual

debt service once the interest rates on its proposed debt are known. Mr. Kaufman stated the precise

interest rates and annual debt service will not be known until the debt is issued. Accordingly, he

recommended Petitioner's rates be trued-up to reflect the actual cost of the debt. He also

recommended Petitioner file a report within 30 days of closing on each of its long-term debt

issuances explaining the teams of the new loan, the amount of debt service reserve, and an itemized

account of all issuance costs. Mr. Kaufman testified this 'true-up report should include a revised

tariff, amortization schedule, and also calculate the rate impact in a manner similar to the OUCC's

schedules. He proposed the OUCC have 14 days after service of the true-up report to challenge

Petitioner's proposed true-up and that Petitioner-then have an additional 14 days to file a response

to the OUCC's challenge. Thereafter, Mr. Kaufman testified-the Commission should resolve the

issue through a process the Commission deems appropriate. Mr. Kaufman also recommended that

any unused financing authority expire 360 days after the final order is issued in this-Cause. .

Mr. Kaufman testified that he agreed with Petitioner's debt service reserve. While

Petitioner did not propose conditions on debt service reserve, Mr. Kaufman recommended: (i) the

debt service reserve be placed in a restricted account; and (ii) Gibson Water notify the Commission

and the OUCC within five business days if Petitioner spends any funds from its debt service

reserves for any reason other than to make the last payment on its current or proposed debt

issuances. He testified this notification or report should_ state how much Petitioner spent-from its

debt service reserve, explain why Petitioner spent funds from its debt service reserve, provide the

cite to any applicable loan documents that allows Gibson Water to spend funds from its debt

service reserve, describe Petitioner's plans to replenish its debt service reserve, and explain any

cost-cutting activities Petitioner has implemented to forestall spending funds from its debt service

reserve.

In closing, Mr. Kaufman-testified Petitioner should be authorized to issue up to $2,438,000

of long-term debt from RD and up to $1,143,000 from. the SRF Program. He recommended the

following be included in the Commission's findings-in this-Cause:

(i) For each of Petitioner's two prop-osed-debt issuances, Petitioner should

temporarily reserve the funds collected in rates for its 2018 debt issuance and use

these funds to offset/reduce the amount Gibson Water borrows; provided, however,

that if the approved debt is issued within two months after Gibson Water files a

revised tariff with the Commission reflecting the rates approved in this Cause, the

funds collected will be considered immaterial and need not be applied to

Petitioner's proposed debt issuance or debt service reserve; •

11

ii) Within 30 days of closing on an approved long-term debt issuance,

Petitioner shall file a report with the Commission and serve a copy-of the-report on

the OUCC explaining the terms of the new loan, including an amortization

schedule, the amount of debt service reserve, and detailing all issuance costs. The

report should also include a revised tariff and calculate the rate impact in a manner

similar to the OUCC's schedules. Petitioner's rates shall be trued-up, if necessary,

to match its actual cost of debt service; and

(iii) If Petitioner spends any funds from its debt service reserves other

than to make the last payment on its approved debt issuance, Gibson Water shall

provide a report (as described above) to the Commission and the OUCC within five

business days.

7. Gibson Water's Rebuttal Evidence. In lieu of rebuttal evidence, Gibson Water

filed a Notice of Intent to Not File Rebuttal Testimony ("Notice"). In the Notice, Gibson Water

accepted the following_ OUCC proposals: (1) adjustments for the normalization of residential and

commercial customer growth; (2) elimination of certain expenses for various celebrations during

the test year; and (3) reporting requirements with respect to Gibson Water's debt service reserve.

Gibson Water did not file rebuttal testimony.

R. Commission Discussion and Findings. The evidence Gibson Water and the

OUCC presented, as discussed above, along with Petitioner's Notice of Intent to Not File Rebuttal

Testimony in which Gibson Water accepted certain adjustments and reporting requirements the

OUCC proposed, provide the Commission with sufficient information and facts from which to

find that the public interest will be served by approving Gibson Water's petition, subject to the

OUCC's modifications- and _proposed reporting requfrements. The evidence demonstrates that

Gibson Water's requested relief, as amended by the OUCC' s adjustments and recommendations,

is reasonable and in the public interest; therefore, the Commission approves Petitioner's request

to adjust its rates and charges and incur long-term debt from RD and the SRF Program consistent

with our findings below.

A. Rates and Revenue Requirement. The Commission finds that based upon

the evidence, Gibson Water's current rates and charges, which provide annual adjusted revenues

of $1,861,243, are insufficient to satisfy Gibson Water's annual pro forma net revenue requirement

of $2,177,283 and that Gibson Water should be authorized to increase its rates and charges for

water service on an across-the-board basis to produce annual revenues of $2,177,283, which

represents an overall- increase of $308,420 in annual revenues and -a 16.6% increase to current

rates, consistent with the OUCC's recommendation.

Gibson Water's net revenue requirements are itemized below:

12

Revenue RequirementsOperating Expenses $ 1,870,216Extensions and Replacements 126,143Working CapitalDebt Service 164,618-Debt Service Reserve 16,535

Total Revenue Requirements $2,177,512Less: Revenue Requirement Offsets

Interest Income (229)

Total Net Revenue Requirements $2,177,283

Less: Revenues at Current Rates subject to increase (1,861,243)Other revenues at current rates (7,995)

Net Revenue Increased Required $308,045

Add: Additional IURC Fee 375

Recommended Increase $308,420

Recommended Percentage Increase 16.6%

B. Debt and Conditions on Debt/Debt Service Reserve. Based upon Gibson

Water and the OUCC's testimony, Petitioner is also authorized to issue, long-tenu debt of up to

$2,438,000 through RD and long-term debt of up to $1,143,000 through the SRF Program for-the

projects identified in the PER, subject to the following conditions:

(i) For each of its approved debt issuances, Petitioner will temporarily reserve the

funds collected in rates for its 2018 issuances and use those funds to offset/reduce

the amount Gibson Water borrows (or debt service reserve). If the proposed debt is

issued within two months after Petitioner files a revised tariff with the Commission

reflecting the rates approved in this Cause, the funds collected will be considered

immaterial and need not be applied to Petitioner's-proposed debt issuance (or debt

service reserve).

(ii) Within 30 days of closing on an approved long-term debt issuance with RD or the

SRF Program, Petitioner shall-file a report with the Commission under this Cause

and serve the OUCC with a copy explaining the terns of the new loan,_ including

an amortization schedule, the amount of debt service reserve, and itemizing all

issuance costs. The report shall include a revised tariff, and Petitioner shall also

calculate the rate impact in a manner similar to the OUCC's schedules. Petitioner's

rates shall be trued-up, if necessary, to match its actual cost of debt service.

(iii) If Petitioner spends any funds from its debt service reserves for any reason other

than to make the last payment on its approved debt issuances, Petitioner shall

13

provide a report (as described in Mr. Kaufman's testimony and Paragraph No. 6.C.

above) to the Commission and the OUCC within five business days.

C. Alternative Regulatory Program ("ART'"). If Petitioner elects to

participate in the Small Utility ARP in accordance with the procedures the Commission approved

in Cause No. 44203, the eligible operating expenses to which the Annual Cost Index will be applied

are $1,562,530. This amount excludes $308,061 approved for purchased water. Extensions and

replacements of $126,143 are also eligible expenses to which the Annual Cost Index will be

applied. All other components of Petitioner's revenue requirement will remain unchanged.

IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORY

COMMISSION that:

1. Gibson Water is authorized to increase its rates and charges for water service as

provided in Finding No. 8.A. of this Order.

2. Prior to implementing the rates approved, Gibson Water shall file the tariff and

applicable rate schedules under this Cause for approval by the Commission's Water/Wastewater

Division. Such rates and charges shall be effective on or after the Order date subject to Division

review and agreement with the amounts reflected.

3. Gibson Water is authorized to issue-long4erm debt of up to $2,438,000 through RD

and Fong-term debt of up to $1,143,000 through the SRF Program as provided in Finding No. 8.B.

in order to perform the capital improvement projects identified in the PER.

4. With the issuance of the approved-long-term debt, Petitioner is subject to all the

reporting and other conditions set forth in Finding No. 8.B.

5. This Order shall be effective on and after the date of its approval.

HUSTON, KREVDA, OBER, AND ZIEGNER CONCUR; FREEMAN ABSENT.:

WOV MBAPPROVED:

I hereby certified that the above is a true

and correct copy of the Order as approved.

Secretary of the Commission

14

ATTACHMENT 2

PROPOSED SUBDOCKET PROCEDURAL SCHEDULE

1. Gibson Water will immediately file its prefiled testimony and exhibits after the creationof a subdocket and/or Cause Number for consideration of the relief requested in theattached Motion.

2. The OUCC will file its prefiled testimony and exhibits on September 18, 2019.

3. Gibson Water will file any rebuttal testimony and exhibits on September 25, 2019

4. The Parties would request that the Commission set an evidentiary hearing on or aboutNovember 1, 2019. The parties anticipate an evidentiary hearing of no more than two (2)hours.

ATTACHMENT 3

STATE OF INDIANA

INDIANA UTILITY REGULATORY COMMISSION

IN THE MATTER OF THE PETITION OFGIBSON WATER, INC., A NONPROFITCORPORATION, FOR AUTHORITY TOISSUE LONG-TERM DEBT AND FORAPPROVAL OF A CHANGE IN RATES AND )CHARGES )

CAUSE NO.: 45080

PROPOSED ORDER CREATING SUBDOCKET

Presiding Officers:David L. Ober, CommissionerCarol Sparks Drake, Senior Administrative Law Judge

On April 24, 2018, Gibson Water, Inc. (Gibson Water) filed its Petition seeking authorityto issue long-term debt and for approval of a change in its rates and charges. Gibson Water alsofiled the testimony and exhibits constituting its case-in-chief on April 24, 2018.

August 24, 2018, the Indiana Office of Utility Consumer Counselor (OUCC) filed thetestimony and exhibits constituting its case-in-chief, which made certain minor adjustments toGibson Water's requested relief, but was otherwise supportive of the requested relief. OnSeptember 14, 2018, Gibson Water filed its Notice of Intent to not File Rebuttal Testimony, inwhich it indicated is acceptance of the OUCC's adjustments.

The Commission held an evidentiary hearing in this Cause on October 5, 2018, inHearing Room 222, 101 West Washington Street, Indianapolis, Indiana. Gibson Water and theOUCC both appeared by counsel and participated in the hearing. The prefiled testimony andexhibits of both parties were admitted into the record without objection.

On November 21, 2018, the Commission issued its Final Order approving GibsonWater's requested relief.

On August 14, 2019, Gibson Water filed a Motion to Amend Final Order, requesting anincrease to the amount of Gibson Water's authorized borrowing due to higher than anticipatedbids for the projects originally approved in this Cause. On August 23, 2019, Gibson Water filedan Agreed Motion to Establish Procedural Schedule.

On August 27, 2019, the Presiding Officer's denied Gibson Water's Motion to AmendFinal Order and instructed Gibson Water to file a new petition or the request the creation of a

subdocket in this Cause. On August 28, 2019, the Presiding Officers denied Gibson Water'sAgreed Motion to Establish Procedural Schedule as moot.

On September 3, 2019, Gibson Water and the OUCC filed a Joint Motion to EstablishSubdocket in this Cause. The Joint Motion included a proposed procedural schedule for thesubdocket.

Based on the applicable law and the evidence presented, the Commission finds:

1. Notice and Jurisdiction. Notice of the hearings in this Cause were given andpublished by the Commission as required by law. Gibson Water is a public utility as defined inInd. Code § 8-1-2-1(a). Under Ind. Code § 8-1-2-125 the Commission has authority to approveGibson Water's rates and charges for water service, and under Ind. Code §§ 8-1-2-78, -79, and -83, the Commission has authority to authorize Gibson Water to issue long-term indebtedness.Further, Ind. Code § 8-1-2-72 authorizes the Commission to alter or amend any order made bythe Commission, upon notice and after opportunity to be heard. (See, e.g., Cause No. 44317,Petition of Evansville, Indiana, Supplemental Order dated September 11, 2013; Commissionamended final Order issued seven months prior.) Therefore, the Commission has jurisdictionover Gibson Water and the subject matter of this Cause.

2. Petitioner's Characteristics. Gibson Water is a nonprofit utility supplyingtreated water within rural and urban areas in Gibson County, Indiana. Gibson Water servesapproximately 1,750 retail customers and also provides wholesale water service to the Town ofHaubstadt, Indiana, and retail service to the Toyota Manufacturing Facility near Princeton,Indiana. Gibson Water purchases its entire supply of water from the City of Evansville, Indiana,pursuant to a Water Purchase Agreement dated July 13, 1977. Gibson Water uses transmissionfacilities, elevated storage tanks, land, land rights, equipment, distribution mains, and otherproperty to provide water service.

3. Creation of a Subdocket. As alleged by Gibson Water in its Motion to AmendFinal Order and in the Joint Motion to Establish a Subdocket, subsequent to the close of evidencein this Cause, both just prior to and after we issued our Final Order approving Gibson Water'soriginal requested relief, a substantial change in circumstances occurred, which directly impactsthe relief approved in the Final Order. First, Toyota approached Gibson Water with a need foradditional water supply to facilitate an increase in production and to operate new chiller orcooling units. As a result of this request, Gibson Water expedited the bidding, financing, andconstruction of a portion of the system improvements that it proposed to complete in this Cause.Second, Gibson Water received bids for the expedited improvements that were substantiallyhigher that its engineer's original estimate in the preliminary engineering report prepared forGibson Water.

Based on the higher than anticipated construction costs and the current biddingenvironment, Gibson Water now believes that the borrowing authority approved in this Causewill not be sufficient to cover the total anticipated cost of its proposed system improvements.Gibson Water and the OUCC now seek to present additional evidence of the revised requiredborrowing amount and request that we approve the additional funding and coincident increase to

revenue requirement necessary to cover the debt service and reserve costs., and to that end haverequested that we amend our Final Order in this Cause to reflect the updated amounts.

Although Ind. Code § 8-1-2-72 allows the Commission to rescind, alter, or amend anyorder made by the Commission at any time, upon reviewing Gibson Water's Motion to AmendFinal Order, the Presiding Officers determined that it would be more appropriate for theCommission to consider the new requested relief through a new filing or the creation of asubdocket.

Having reviewed the Joint Motion to Establish a Subdocket, including the proposedprocedural schedule, we agree that the creation of a subdocket to address these new issues willpromote administrative efficiency and allow the Commission to expeditiously receive evidence,hold an evidentiary hearing, and issue a new order addressing Gibson Water's updated request.Therefore, Cause No. 45080 Si is created for the purpose of addressing Gibson Water's requestfor additional borrowing authority.

The Procedural Schedule for Cause No. 45080 Si shall be as follows:

• Gibson Water and the OUCC will file a settlement agreement addressing the requestedrelief in the subdocket and testimony and exhibits supporting the settlement on or beforeSeptember 13, 2019.

• The Parties request that the Commission set an evidentiary hearing for the subdocket onOctober 7 or 8, or November 1, 2019.

IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORYCOMMISSION that:

1. A subdocket to this Cause, Cause No. 45080 51, is created for the purpose ofaddressing Gibson Water's request for additional borrowing authority.

2. The Procedural Schedule set forth above is hereby adopted for Cause No. 45080 Si.

3. This Order shall be effective on and after the date of its approval.

HUSTON, FREEMAN, KREVDA, OBER, AND ZIEGNER CONCUR:

APPROVED:

I hereby certify that the above is a trueand correct copy of the Order as approved.

Mary M. BecerraSecretary of the Commission