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BITTERROOT WATER COMPANYPO Box 2306

Hayden Lake, ID 83835

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(f)

Application for Water Rate Increase

To TheIDAHO PUBLIC UTILITIES COMMISSION

PO BOX 83720BOISE , ID 83720-0074

On-site Mana er:Ken Rickel

Office: 208-683-8105Mobile: 208-660-2560Fax: 208-683-4315

Financial Statement Pre aration:Susan Jacobson

Office: 866- 791- 5656Fax: 866-791-5757

BITTERROOT WATER COMPANY

Application for Water Rate Increase

Financial Schedules

Schedule 1 - Comparative Balance Sheets

Schedule 2 - Schedule of Operation and Maintenance Expenses

Schedule 3 - Summary of Earnings and Rate Base

Schedule 4 - Statement of Income at Present and Proposed Rates

Schedule 5 - Equity Detail

Schedule 6A - Pro Forma Adjustment ExplanationSchedule for Present Rates

Schedule 68 -- Pro Forma Adjustment ExplanationSchedule for Proposed Rates

Engineering Information

BITTERROOT WATER COMPANY. INC.COMPARATIVE BALANCE SHEETSnSCHEDULE 1

For Three (3) Latest Years Ending December 31, 2004

(B) Year 2003(C) Test Year

2004ACCOUNT DESCRIPTION (A) Year 2002

Assets1. Utility Plant2. Accumulated Reserve for Depreciation3. Net Plant (lines 1-2=3)4. Cash5. Other Working Funds6. Customer Accounts Receivable7. Accumulated Provision for Uncollectible Accounts8. Other Current & Accrued Assets9. Total Assets (lines 3+4+5+6-7+8)

801.045. 198.

312. (20. 56) (628. 76)

29,357. 780. 570.

Liabili~ies and Stockholder s Eauity10. Bonds

11. Advances from Associated Companies12. Other Long-term Debt

13. Notes Payable

14. Accounts Payable

15. Customer Deposits

16. Taxes Accrued

17. Interest Accrued18. Other Current & Accrued Liabilities19. Total Liabilities (lines 10-18)

688.

000.

49.

688. 049.

20. Capital Stock21. Undistributed Retained Earnings22. Other Owners Equity *23. Total Equity (lines 20+21 +22)

357. 341. 250.

250. 00) 729.00)

29,357. 091. 521.

29,357. 780. 570.24. Total Liabilities & Stockholder s Equity (lines 19+23)

* Show detail of the account on Schedule 5

BITTERROOT WATER COMPANY. INC.SCHEDULE OF OPERATION AND MAINTENANCE EXPENSES--SCHEDULE 2

For Three (3) Latest Years Ending December 31 2004

(C) Test YearOPERATING & MAINTENANCE EXPENSE ACCOUNTS (A) Year 2002 (B) Year 2003 2004

eration--Source of SuPumping & Water Treatment Expenses

Operation Labor 324.Purchased Water 688.Fuel or Power Purchased for Pumping 197. 903. 323.Supplies and Expense

Chemicals 984. 007. 66.Other 152. 369. 320.

1. Total Operation Expenses 333. 969. 033.

Maintenance--Source of Supply--Pumping & Water Treatment Expenses

Maintenance of Water Source Plant

Maintenance of Pumping Plant

Maintenance of Water Treatment Plant

Maintenance of Distribution Reservoirs & Standpipes

Maintenance of Mains

Maintenance of Meters 388. 536. 537.Maintenance of Hydrants

Maintenance of Other Plant 367. 400. 35.Repairs of Water Plant 256.45 785. 916.Other 939. 576. 180.

2. Total Maintenance Expenses 951. 298. 669.

Operation--Customer Accounts ExpenseMeter Reading Labor 697. 577 . 800.Accounting and Collecting Labor 541. 159. 627.Supplies and Expenses

Uncollectible Accounts 80. 61. 123.Other 108. 156. 150.

3. Total Customer Accounts Expense 427. 956. 700.

Operation--Administrative & General ExpensesAdmini!;)trative and General Salaries 82. 93. 324.Office Supplies and Other Expenses 698. 885. 994.Outside Services Employed 350. 379.Property Insurance 818. 557. 803.48Injuries and Damages

Employee Compensations and Benefits

Regulatory Commission Expenses 443. 114. 597.Miscellaneous General Expenses 667. 024. 316.Transportation Expenses 46. 911.45Other

4. Total Administrative and General Expenses 059. 101.43 16,947.

5. Total Operation & Maintenance Expenses (lines 1+2+3+4) 30,772. 325. 351.

* Show detail of the account on Schedule 5

BITTERROOT WATER COMPANY. INC.SUMMARY OF EARNINGS AND RATE BASEuSCHEDULE 3

For Three (3) Latest Years Ending December 31 , 2004

(A) Year 2002

Total Number of Customers

Number of Customers

1. Unmetered Sales to General Customers2. Metered Sales to General Customers3. Commercial Customers4. Private Fire Protection Service5. Public Fire Protection Service6. Other

Operatina .Reyenues8. Unmetered Sales to General Customers9. Metered Sales to General Customers10. Private Fire Protection Service11. Public Fire Protection Service12. Other

13.

Operating Expenses

14. Operation & Maintenance Expenses (Schedule 2 , line 5)

15. Depreciation Expense16. Amortization Expense17. Taxes Other Than Income Taxes

18. Income Taxes

19. Other

20.

21.

029.44

Total Operating Revenues

599.

35,629.

772.

17.

909.

Total Operating Expenses

Utility Operating Income (line 13-20)

33,699.

929.

* Show detail of the account on Schedule 5

22. Utility Plant in Service23. Working Capital24. Subtotal (line 22+23)25. Accumulated Depreciation

26. Customer Advances for Construction

27. Contributions in Aid of Construction28. Total Deductions (line 25+26+27)29. Rate Base (lines 24-28)

30. Return on Rate Base (lines 21 +29)

RATE BASE

(C) Test Year

2004 Actual

(3,614.02)

(B) Year 2003

101

101

161.

5,446.

38,607.

325.

244.

891.

164.

53,624.

(15,016.38)

(B) Pro-formaAdjustments

(C) Test Year

2004

115 116

115 116

619.

35,619.

351.

226.

655.

233.

(3,614.02)

(C) Pro.formaRate Base

(3,614.02)

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Sch

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BITTERROOT WATER COMPANY, INC.EQUITY DET AIL--SCHEDULE 5

Dee 31 Dee 31 , 03 Dee 31, 04

EquityOwner Draw-Ken Rickel 250. 250.Opening Bal Equity 800. 800. 800.Retained Earnings 115. 514. 584.Net Income 3,442.48 973. 614.

Total Equity 357. 091. 520.

Cla

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BITTERROOT WATER COMPANY, INC.Report for Water Utilities

Test Year Ending December 31 , 2004

ENGINEERING

1. Provide an updated system map which clearly shows the location of all facilities as described herein.

No changes have been made to facilities after acquisition. Map on file should be correct.

2. Water Supply:

Pump

Designation

Location

orner of

Brunner &

Clagstone

Water

Supply Sources

(Well , Spring,

Surface. etc)

Well

Rated

Capacity

(QQml

Actual

Annual

Production

(000 aallons)19, 551120

* If source of supply is pumped, provide additional pump information under Item 4.

3. System Storage:

StorageDesignation or

Location

rner of

Brunner &

Clagstone

Type of

Reservoir

(Elevated

PressurizedBoosted)

Type of

Treatment(None, Chlorine

Floride. Filter. etc)

Chlorine

Construction Reservoir Capacity to(Concrete, Wood Storage DistributionSteel) (gallons) (gpm)

Concrete 100 000 120Boosted

(Asterisk facilities added this year)

4. Pump information for all system pumps, including wells and boosters:

Pump

Designation or

Location

Well-Submersible

Booster #1

Booster #2

Type (a)

of Pump

HP Rating

Name-PlateEnergy Used

This Year (kwh)

(a) Submit pump curves unless previously provided or unavailable.

Asterisk facilities added this year.

5. What was total water diverted or pumped into system this year?

6. What was total water diverted or pumped into system during peak month?

7. What was total water diverted or pumped into system during peak day?

8. What were your total system losses this year?

9. Was your system designed to supply fire flows?

If yes , what is the current system rating?

10. How many times this year did you read customer meters?

During what months?

Actual Annual

Discharge

(000 gallons)

Metered

(Yes/No)

Yes

Rated Capacity

(gpm)

Discharge

Pressureor TDH

(psi)

120

19,550 709

796 612

N/A

Yes

Residential-1000 gpm

March , April , May, June, July, Aug, Sept

BITTERROOT WATER COMPANY, INC.Report for Water Utilities

Test Year Ending December 31, 2004

ENGINEERING

11. How many additional customers could be served with no system improvements

(except a service line and meter)?

How many of those potential additions are vacant lots?

12. What backbone plant additions or replacements are anticipated during the coming year

1) Add 15 HP Booster Pump - $5,000(includes piping and core drillingand what are their approximate costs?

2) Increase size of main well pump -

$10 000

13. What is your best guess as to the year system capacity (supply, storage or

distribution) will next have to be expanded? 2005

Feet of Mains

Size

In Use at

Beginning of

YearInstalled

During Year

Abandoned

During Year

In Use at

Close of

Year

000

500

000

500

WATER STATISTICS

NUMBER OF CUSTOMERS GALLONS SOLDThis Year Last Year This Year Last Year

Metered

Residence 116 115 523 875Commercial

Industrial

Flat Rate

ResidenceCommercial

Industrial

Private Fire Protection

Public Fire Protection

Street Sprinkling

Municipal -- Other

Other Water Utilities 353 1,744

TOTALS 117 116 876 23,619

BITTERROOT WATER COMPANY

Application for Water Rate Increase

Sam Ie Customer Re orts

Customer Billing Invoice

Customer Billing Statement

Disconnect Notice - 7 Day Reminder

Disconnect Notice - 24 Hour Final Notice

Summary of Customer Rules and Regulations(includes and explanation of rate schedules)

Bitterroot Water Companv~ Inc.

O. Box 2306Hayden Lake, ID 83835

InvoicePhone #

208-660-2560 or 208-683-8105

Date Invoice #

5/412005 71625

Joe & Sally Customer12345 Water Barrel PlaceAthol, ID 83801

Property Address METER # Terms Due Date

758992271 20 days 5/24/2005

MONTH SERVICE METER READING

271180

GAL USED RATE AMOUNT

April BASIC SERVICE 9860 20. 20.

Thank you!Total $20.

O. Box 2306Hayden Lake, ID 83835

tatemenDATE

5/4/2005

Bitterroot Water Company.. Inc.

Joe & Sally Customer12345 Water Barrel PlaceAthol, ID 83801

For questions/comments , please call

208-660-2560 or 208-683-8105

TERMS DUE DATE AMOUNT DUE AMOUNT ENC.

20 days 5/24/2005 $20.

DATE TRANSACTION AMOUNT BALANCE12/31/200405/04/2005

Balance forward

!NY #71625. Due OS/24/2005. 20. 20.

CURRENT30 DAYS

PAST DUE31-60 DAYSPAST DUE

61-90 DAYSPAST DUE

OVER 90 DAYS AMOUNT DUEPAST DUE

20. $20.

Please conserve water usage on the hottest days.Watering midday only evaporates, the best times are early morning and later evening!

Bitterroot Water Co., Inc.PO Box 2306Hayden Lake, ID 83835

Telephone: 208-683-8105 OR 208-660-2560Fax: 208-683-4315

April 10, 2005

Joe & Sally Customer12345 Water Barrel PlaceAthol, ID 83801

REMINDER-NOTICE OF WATER TERMINATION

DELINQUENT AMOUNT:CURRENT AMOUNT:TOT AL AMOUNT DUE NOW:

$ 20.

$ 20.

Our records show that your account is past due. If we do not receive the full payment stated above by theclose of business seven (7) days from the date of this letter, we will move to terminate your water service.The Idaho Public Utilities Commission prescribes these rules.

Bitterroot Water Company will delay termination of service to a residential customer for (30) thirty daysdue to medical complications. A medical certificate from a licensed physician or Public Health Officialwill be accepted. It must state that termination of water will aggravate an existing condition or create amedical emergency. The person diagnosing the condition must state the person affected and theirrelationship to the customer and contain the name, title and signature of the person that is certifying theserious illness or medical emergency.

If you disagree with the termination, you may file a complaint with our office in writing and request ameeting. The company will review your complaint and send you written results. If you are not satisfiedyou may ask the Idaho Public Utilities Commission to review the matter by contacting them at:

IP UC Consumer AssistanceO. Box 83720

Boise, ID, 83720-0074208-334-0369 or 7-800-432-0369

Bitterroot Water Company will not terminate service while the dispute is under review.

BITTERROOT WATER COMPANY IS WILLING TO MAKE PAYMENT ARRANGEMENTSFOR YOUR BALANCE DUE. However, you must make payment arrangements before water servicehas been terminated. If service is terminated, payment in full plus a reconnection charge of$25.00 willneed to be collected before water service can be restored.

If your payment and our letter have crossed in the mail, please accept my apologies and thank you.

Xen'RickerGeneral Manager

Bitterroot Water Co., Inc.o. Box 2306

Hayden Lake, ill 83835Phone 208-683-8105 or 208-660-2560

Fax 208-683-4315

April 17, 2005

Joe & Sally Customer12345 Water Barrel PlaceAthol, ID 83801

FINAL NOTICE OF WATER TERMINATION

DELINQUENT AMOUNT: $ 20.CURRENT AMOUNT: $ 20.

TOTAL AMOUNT DUE NOW:

YOUR WATER SERVICE WILL BE TERMINATED BY 5:00 P.M. TUESDA Y~ APRIL IS IF WE DO NOT HEAR FROM YOU REGARDING YOUR

BALANCE OF $40.00.

Please call our office immediately to continue water service.BITTERROOT WATER COMPANY IS WILLING TO MAKE PAYMENT

ARRANGEMENTS FOR THE BALANCE DUE

Once water service has been terminated, the balance plus a reconnection fee of $25.00 isdue. WATER WILL NOT BE TURNED BACK ON UNTIL THESE FEES ARE PAID INFULL.

Termination of service will be postponed thirty (30) days from the date of a certificate by alicensed physician or public health official stating that termination of service will aggravateor create a medical emergency for a permanent resident of your household. You must makepayment arrangements prior to the end of the 30 days.

Please contact Bitterroot Water if you have a complaint. Your service will not be terminatedprior to the resolution of such a filed complaint. You may file a complaint concerning thisaction with the Idaho Public Utilities Commission as follows:

IP UC Consumer AssistanceO. Box 83720

Boise, ID, 83720-0074208-334-0369 or 1-800-432-0369

If your payment and our letter crossed in the mail, please accept our apologies and thank you.

Xen 'Ric lie General Manager

BlnERROOT WATER CO., INC.o. Box 2306

Havden lake, II 83835

Ken Rickel, General ManamPhone: 208-683-8105 or208-660-2560

FAX: 208-683-4315

To Our Customers:

This is a summary of the rules for termination of service for all Bitterroot Water Company customers asdetermined by the Idaho Public Utilities Commission (IPUC), as of March 1 , 1997. These rules cover therights and responsibilities of the Customer and the Water Utility. An explanation of our rate schedule hasalso been included.

If you have any questions concerning this information, please contact:

Bitterroot Water CompanyPO Box 1261Hayden Lake, ID 83835208-683-8105 or 208-660-2560208-683-4315 (fax)

IPUCPO Box 83720

Boise , ID 83720-0074208-334-0300800-432-0369

RULES FOR TERMINATION OF SERVICE

TERMINATION WITH PRIOR NOTICE

With proper customer notice Bitterroot Water Company may deny or terminate water service for one of thefollowing reasons:

1. Non-payment of a past due bill or payment of a past due bill with an NSF check.

2. Failure to honor the terms of a payment arrangement.3. Obtaining service by false identity.4. Refusing to allow access to the water meter or shut off valve.5. Willfully wasting service through improper equipment or otherwise.6. Failure to apply for service.

TERMINATION WITHOUT PRIOR NOTICE

Bitterroot Water Co. may deny or terminate water service without notice for one of the following reasons:

1. A situation exists that is immediately dangerous to life, physical safety or property.

2. To prevent a violation of federal, state or local safety or health codes.

3. Service is obtained, diverted or used without the authorization of Bitterroot Water Co.4. Bitterroot Water Co. , has diligently attempted to notify you of termination and has been unable

to contact you.

5. If ordered by any court, The IPUC or any other duly authorized public authority.

(continued on next page)

Bitterroot Water Com panv

Rules , Page 2

NOTIFICATION AND BILLING

1. Meters will be read between the end of the month to the fifth of each month (weather providing).Bills will be sent out by the fifth with payment due 20 days from the billing date. The monthlywater rate is, $20.00 for the first 15 000 gallons and. 75 cents per 1000 gallons after the first

000 gallons. This rate went into effect September 1 , 1999.

2. A billing may be considered past due 25 days after the billing date. A written notice oftermination must be mailed to the customer at least (7) seven days before the proposedtermination date.

3. At least (24) twenty-four hours before the service is terminated, a notice will be left at theproperty advising you of the steps needed to have services restored.

4. When the twenty-four hour period has ended, another attempt will be made to contact you inperson or by phone before service is terminated.

5. No additional notice of termination is required if upon receipt of a termination noticeThe customer makes a payment arrangement and subsequently fails to keep that

arrangement

The customer tenders payment with a dishonored check, either at a Water Company

collection visit to terminate service or by mail.

PAYMENT ARRANGEMENTS AND SPECIAL CIRCUMSTANCES

If you cannot pay your billing in full or you receive a notice of termination, please call our office.Payment arran2ements can be made to avoid termination of service

Termination of service will be postponed thirty (30) days from the date of a written certification froma licensed physician or public health official stating the name of the person who is ill and their relationship tothe customer. The certification must show the name, title and signature of the person certifying thatthe termination of service will aggravate or create a medical emergency for a permanent resident ofyour household.

COMWLAINT PROCEDURES

If at any time you have a complaint concerning the termination of service, policies and practices orany other matter regarding our service please contact Bitterroot Water Company, in person, or by telephoneor in writing. Your complaint will be investigated promptly and thoroughly. You will be notified orally orin writing the results of the investigation and we will make every effort to resolve the complaint.

If you are dissatisfied with the proposed resolution of your complaint, you may ask the IPUC toreview the matter. Your request may be done orally or in writing. Your service will not be disconnectedwhile the complaint is being investigated by the Bitterroot Water Company or the IPUC.

(continued on next page)

Bitterroot Water Company

Rules , Page 3

RESTRICTION OF TERMINATION OF SERVICE

Service cannot be disconnected on Friday after 2:00 pm. or on a Saturday, Sunday or any legalholidays recognized by the State of Idaho , or after 2:00 pm. on any day immediately before any legalholiday. Service may only be terminated between the hours of 8:00 am and 4:00 pm. The employee sent tothe premises to terminate service will identify him/herself to you and state the purpose of the visit. Thisperson is authorized to accept payment in full.

HOOK-

. The Bitterroot Water Company reserves the right to deny hook-ups during the winter months due toadverse weather conditions. New hook-ups will be scheduled as soon as weather conditions permit.

HOOK-UP CHARGES & MONTHLY FEES

A one time hook-up charge of $750.00 will be paid in advance for any new service hook-up. Theextra costs of any out of the ordinary circumstances requiring additional equipment or special constructiontechniques involved in the installation of a new service connection will be agreed to in advance and put intowriting by the customer and the company. Only one residence per hook-up is allowed, one stock tankwill also be permitted. No irrigation of property will be permitted.

The monthly water rate is $20.00 for the first 15 000 gallons of usage and .75 cents per 1000 gallonsafter the first 15 000 gallons. Meters will be read between the 1 st and the 5th of the month. Payment is due infull (20) twenty days after the billing date and a bill may be considered delinquent (25) twenty-five daysafter the billing date. Arrangement can be made to pay in advance monthly, quarterly, semi-annually orannually.

Any customer check returned to Bitterroot Water Company due to insufficient funds will be subjectto a $25.00 NSF fee , which will be added to the customer s account. The customer will be contacted byRickel Water Company staff to make payment arrangements, as the current balance and the NSF fee are dueimmediate ly.

RECONNECTION FEE

If water service has been terminated, any balance due plus a reconnection fee of ($25.00) twenty-five dollars must be paid in full before service can be restored.

NO ONE EXCEPT AN A UTHORIZED AGENT OF THE BITTERROOTWATER CO MP ANY SHALL TAMP ER WITH, INTERFERE WITH,

REPAIR, CONNECT TO OR REPLACE ANY OF THE BITTERROOTWATER COMPANY' S PROPERTY, EXCEPT IN THE CASE OF

EXTREME EMERGENCY.

BITTERROOT WATER COMPANY

Application for Water Rate Increase

Pro osed Press Release

And

Customer Customer Notice(To be included with monthly billing)

Bitterroot Water Company Requests An Increase in Rates CitingRising Power and System Improvement Costs

CONTACT: Ken Rickel , President(208) 208-683-8105 or 208-660-2560

Bitterroot Water Company has filed a request with the Idaho PublicUtilities Commission for a rate increase in the base water rate from$20 per month to $45 per month to help offset the increasing costsassociated with the operation , maintenance and capital improvementsto the water system. There would be no increase in the charge forgallons used in excess of the 15 000 base amount allowed.

The company last filed for a rate increase in 1998 while serving 54customers. The system has now expanded to serve 116 customers andis considered to be at capacity based on the number and size of thelots now included in the subdivision. Further growth would be basedon subdividing existing lots.

In the last 12 months , the system has been systematically reviewedand upgraded to maintain compliance with increasingly toughergovernment standards for water quality. The increased operatingexpenses are largely out of the company s control. Rising power costsplay the biggest role in recent operating expense increases.

The rate proposal is subject to public review and will be reviewed andapproved by the Idaho Public Utilities Commission. A copy of theapplication is available for public review at the Bitterroot WaterCompany Office and the office of the Idaho Public Utilities Commission.

Bitterroot Water Company, organized in 1995, is an independentowner-operated water utility whose purpose is to supply water fordomestic, commercial , industrial and fire protection purposes. TheCompany is subject to the regulations of the Idaho Public UtilitiesCommission as well as various Federal and State regulatory agenciesconcerning water quality standards.