Before the OREGON PUBLIC UTILITY COMMISSION SOUTHWEST ... · Docket UP 345 SouthWest/100 Bahr/5 1...

DOCKET:UP345

Beforethe

OREGONPUBLICUTILITYCOMMISSION

SOUTHWESTWATERCOMPANY

EXHIBIT100

DirectTestimony

March3,2017

Docket UP 345 SouthWest/100 Bahr/1

Q. Please state your name, title, and business address. 1

A. My name is Brian Bahr. My title is Director, Regulatory Affairs for SouthWest Water 2

Company. My business address is 1325 N. Grand Ave, Suite 100, Covina, CA 3

91724. 4

Q. Please briefly describe your educational background and professional experience. 5

A. I graduated from Brigham Young University with a BA in Accountancy and attained 6

the Certificate of Public Management from Willamette University. Prior to my 7

employment at SouthWest Water Company (SouthWest or Company). I was 8

employed by the Oregon Public Utility Commission (Commission) as a Senior Utility 9

Analyst. I also have experience working for Modern Seouf Plastics in Alexandria, 10

Egypt and for PricewaterhouseCoopers LLP in New York City. My professional and 11

educational experience encompass functions including accounting, audit, analysis, 12

regulation, and management. 13

Q. What is the purpose of your testimony? 14

A. The purpose of my testimony is to support the application of Oregon Resorts, LLC 15

(Oregon Resorts or Seller), requesting approval to sell all assets of Cline Butte 16

Water, LLC (CBW) to SouthWest. My testimony will first lay out the background and 17

relevant issues in this proceeding and then demonstrate that the acquisition meets 18

the general criteria for approval of a property sale as established by Commission 19

precedent. 20


Q. How is your testimony organized? 1

A. My testimony is organized as follows: 2 3

Background................................................................................................................................................34Relevant Rules and Statutes...................................................................................................................55Criteria for Approval of Transaction........................................................................................................86

The Purchaser is Financially Stable.................................................................................................107

The Terms of the Sale are Fair and Reasonable............................................................................118

The Utility will be Operated by a Professional Utility......................................................................139

The Purchaser will Maintain an Office with Regular Hours Dedicated to Customer Service...1510

The Purchaser Maintains a Website Accepting Payment Online and Providing Information for 11Customers............................................................................................................................................1712

The Purchaser Maintains Staff of Water Operation Professionals...............................................1713

The Purchasers Demonstrate a History of Operating Water Systems........................................1814

The Transaction will not Cause a Disruption in Service................................................................1915

The Transaction will be Seamless to Customers............................................................................1916

Summary...................................................................................................................................................201718

19


Background 1

Q. Please describe the events precipitating the filing of this testimony. 2

A. Oregon Resorts submitted to the Commission on October 21, 2016, an application 3

(Application) to sell all assets of CBW to SouthWest. CBW is a subsidiary of Cline 4

Butte Utilities, LLC (CBU), which is owned by Oregon Resorts. Cline Butte 5

Environmental, LLC (CBE), which provides wastewater services, is also owned by 6

CBU. Per Oregon Revised Statute (ORS) 757.061, CBW is regulated by the 7

Commission for rates and service, but CBE is unregulated. The Application was 8

filed pursuant to ORS 757.480 and in accordance with Oregon Administrative Rules 9

(OAR) 860-036-0710. The Application requests approval of the Asset Purchase 10

Agreement (APA) agreed to and signed on September 27, 2016, by Oregon Resorts 11

and SouthWest. 12

The Ridge at Eagle Crest Owners Association (RECOA) submitted a petition to 13

intervene on November 17, 2016. Though initially filed by the Commission as 14

comments, the petition was granted on January 9, 2017, at which time a Notice of 15

Contested Case was issued to the parties. SouthWest objected to RECOA’s petition 16

to intervene on January 19, 2017, pursuant to ORS 756.525 and in accordance with 17

OAR 860-001-0300. According to OAR 860-001-0300(5), “The petitioner may file a 18

reply to an objection within 7 days of the filing of the objection.” RECOA filed a reply 19

to SouthWest’s objection on February 1, 2017, which is 13 days after the objection 20

was filed. SouthWest objected to RECOA’s reply on the grounds that it wasn’t timely 21

filed; however, the reply filing was allowed by Administrative Law Judge (ALJ) Power 22

in his ruling on February 17, 2017. 23


SouthWest’s objection to RECOA’s petition to intervene requested the ALJ not 1

allow RECOA to intervene in the proceedings, or in the alternative, to limit the scope 2

of the issues to be addressed in this proceeding. SouthWest’s objection was based 3

on a concern that RECOA raised issues and concerns outside of the scope of the 4

Commission’s jurisdiction, and irrelevant to a property sale. Oregon Resorts also 5

filed a Motion for Order Limiting Issues and Imposing Conditions of Participation on 6

January 24, 2017, per ORS 756.525(2) and OAR 860-001-0090. ALJ Power ruled 7

on SouthWest’s objection and Oregon Resorts’ motion on February 17, 2017, 8

affirming RECOA’s status as an intervenor and declining to impose conditions on 9

RECOA’s participation. ALJ Power, however, cautioned that “RECOA would be well 10

advised to recognize the substantial merit to many of the concerns expressed by 11

SouthWest and Oregon Resorts. In its review of this proposed transaction, the 12

Commission may only exercise the authority provided by statute—namely those 13

provision set forth in ORS 757.480.” 14

A prehearing conference was held on January 27, 2017, and the ALJ Prehearing 15

Conference Memorandum adopting schedule was issued on January 31, 2017. The 16

adopted schedule is as follows: 17

Event Date Applicants’ Direct Testimony March 3, 2017 Parties’ Settlement Conference March 10, 2017 Staff and Intervenor Responsive Testimony April 7, 2017 All Parties’ Rebuttal/Cross Answering Testimony April 28, 2017 Simultaneous Prehearing Briefs May 12, 2017 Hearing (tentative) May 25, 2017 or May 26, 2017 Simultaneous Posthearing Briefs June 16, 2017 Simultaneous Final Briefs June 30, 2017 Commission Decision (requested date) July 31, 2017


Relevant Rules and Statutes 1

Q. What are the rules and statutes relevant to this proceeding? 2

A. Oregon Resorts submitted the Application to sell the assets of CBU to SouthWest on 3

October 21, 2016, in accordance with OAR 860-036-0710 and pursuant to ORS 4

757.480. OAR 860-036-710(1) states: 5

Any rate-regulated water utility seeking to sell, transfer, or merge 6must apply to and obtain approval of the transaction from the 7Commission prior to such transaction. Application requirements 8are found in OAR 860-036-0715. 9

OAR 860-036-710(2) requires that customers be noticed of the proposed sale no 10

less than 60 calendar days from the closing date of the transaction. This 11

requirement was fulfilled by a notice sent out to customers on October 4, 2016. 12

As stated by Oregon Resorts in its Motion for Order Limiting Issues and Imposing 13

Conditions of Participation, filed on January 24, 2017, under ORS 757.480, the 14

Commission applies a public interest “no harm” standard in considering whether to 15

approve the transaction. RECOA, in its Combined Response to SouthWest’s Motion 16

to Reconsider and Oregon Resorts’ Motion to Limit Issues, filed on February 1, 17

2017, questioned the legitimacy and applicability of the “no harm” standard. 18

However, in the same document, RECOA also appeared to substantiate the “no 19

harm” standard as the appropriate threshold for consideration in this case (underline 20

added):1 21

RECOA has intervened to ensure the water customers will not be 22harmed by this transaction… 23

1 SeeRECOA’sCombinedResponsetoSouthWest’sMotiontoReconsiderandOregonResorts’Motionto

Limitissues,atpage4.


Debate about the “no harm” standard proffered by SouthWest and 1Oregon Resorts is also premature and is a standard for 2approval… 3

Note that RECOA states its intentions, not that its members should benefit, but 4

that they will not be harmed. And while asserting that deliberation over the “no 5

harm” standard was premature, RECOA did concede that the “no harm” standard is 6

a standard of approval. Indeed, not only is it ‘a’ standard of approval, but rather ‘the’ 7

standard of approval used by the Commission. This has been affirmed repeatedly 8

by the Commission, as evidenced by Commission orders in water utility property 9

sale dockets over the past three years, shown in the table below. 10

Table A. “No Harm” Standard Precedent 11Docket Order “No Harm” Standard stated in Order UP 341 16-329 The Commission approves the sale of water utilities under

ORS 757.480(5), applying a no harm standard. UP 336 16-033 The Commission approves the sale of water utilities under

ORS 757.480(5), applying a no harm standard. UP 329 15-244 The Commission historically applies a "no harm" standard to

property transactions of this type. UP 320 15-153 Under ORS 757.480(5), the Commission generally applies a

public interest "no harm" standard" in considering whether or not to approve the transaction.

UP 319 15-202 Under ORS 757.480(5), the Commission generally applies a public interest "no harm" standard in considering whether or not to approve the transaction.

UP 304 14-281 ORS 757.480 and ORS 757.485 require approval of the sale by the Commission but do not explicitly express a standard. The Commission has interpreted these statutes as requiring a no harm standard. See Order No. 01-778.

UP 300 14-236 ORS 757.480 and ORS 757.485 require approval by the Commission, but do not explicitly express a standard. The Commission has interpreted these statutes as requiring a no harm standard. See Order No. 01-778.

Though the Commission has the discretion to impose conditions or require 12

certain criteria be met as prerequisites for the approval of a property sale, these 13

conditions were imposed to ensure that customers were not harmed by the 14


transaction. Thus, there should be no doubt whatsoever that the “no harm” standard 1

has been consistently used by the Commission as the basis for approval of property 2

sales of water utilities, and should continue to be the standard by which this 3

transaction is evaluated in this proceeding as well. 4


Criteria for Approval of Transaction 1

Q. Please describe the issues generally evaluated by the Commission for property sale 2

applications. 3

A. In every order issued by the Commission since the year 2000 approving the sale of 4

a water utility, the Commission has analyzed the following four categories of issues: 5

1. Scope and Terms of the Asset Purchase Agreement; 6

2. Transfer Pricing and Allocation of Gain; 7

3. Public Interest Compliance; and 8

4. Records Availability, Audit Provisions, and Reporting Requirements. 9

The Scope and Terms of the Asset Purchase Agreement section generally 10

addresses whether any unusual or restrictive conditions are found in the asset 11

purchase agreement, and whether the seller has the right to sell the property. In 12

several cases, it also included evaluation of the financial stability of the purchaser 13

and its ability to operate the contemplated water system, and also whether an 14

acquisition adjustment was requested to record the difference between the purchase 15

price and the net book value as goodwill. 16

A discussion of the purchaser’s financial stability is more commonly found in the 17

Transfer Pricing and Allocation of Gain section of analysis. Not in all, but in some 18

orders this section included statements addressing how the purchase price was 19

determined (negotiated by independent parties based on market value) and stated 20

that the transaction would not have a financial impact on customers. Note that there 21

was not a single order or Staff report that included a discussion of rates and 22

potential rate impacts of the transaction, other than in relation to deregulation of the 23

utility, consolidation of independent rate regulated entities, or in noting that 24


customers would not experience any immediate rate impacts due to the sale. Rates 1

and rate impacts of water utility acquisitions have clearly been addressed by the 2

Commission in general rate proceedings, not in applications for approval of property 3

transaction. 4

The Public Interest Compliance category appears to be a “catch-all” category, but 5

generally includes elements of financial stability and operational ability, including 6

customer service, of the purchaser. The Records Availability, Audit Provisions, and 7

Reporting Requirements section states that the Commission reserves the right to 8

review financial aspects of the transaction in future rate proceedings. Through these 9

four categories of issues, the Commission evaluates whether customers will be held 10

harmless by the property sale transaction. 11

Q. Please describe the Commission’s “no harm” standard used in evaluating property 12

sales. 13

A. The Motion for Order Limiting Issues and Imposing Conditions of Participation filed 14

by Oregon Resorts on January 24, 2017, accurately describes the “no harm” 15

standard the Commission uses to evaluate property sales: 16

In the context of water utility transactions, the Commission has 17accepted various factors as demonstrating that “no harm” to 18customers has occurred and the transaction is therefore in the 19public interest. (citation omitted) These have included considering 20whether: 21

i) The purchaser is financially stable; 22 ii) The terms of the sale are fair and reasonable; 23 iii) The utility will be operated by a professional water company; 24

iv) The purchaser will maintain an office with regular hours 25dedicated to customer service; 26


v) The purchaser maintains a website accepting payment online 1and providing information for customers; 2

vi) The purchaser maintains staff of water operation 3professionals; 4

vii) The purchasers demonstrate a history of operating water 5systems; 6

viii) The transaction will not cause a disruption in service; and 7 ix) The transaction will be seamless to customers. 8

In this proceeding the sole question for the Commission is 9whether SouthWest’s acquisition of CBW will harm customers of 10the utility. If not, the Commission must approve Oregon Resorts’ 11application. 12

In addition to the factors listed above, the Commission has also addressed 13

others in determining whether the “no harm” standard has been met with regard to 14

approving water utility property sales. These other factors are related to the ones 15

enumerated by Oregon Resorts and are addressed within those sections below. 16

Cumulatively, these factors considered in past cases are instructive to the 17

Commission’s interpretation of its “no harm” standard. 18

SouthWest has stated, and demonstrated, that its purchase of CBW does not 19

harm customers. This is evidenced in the Application, in responses to 35 20

Information Requests from Staff, informal discussions with Staff, as well as in the 21

observable policies and practices of the company. 22

Q. Please address the components of the Commission’s “no harm” standard. 23

A. The individual components of the Commission’s “no harm” standard are addressed 24

below. 25

The Purchaser is Financially Stable 26The purchaser of a water utility must have the financial wherewithal not only to effect 27

the transaction, but also to provide capital to the utility as needed. As evidenced by 28


the SouthWest’s strong credit rating, the Company’s size, geographic diversity, and 1

ownership structure clearly provide the necessary financial stability to purchase 2

CBW. As stated in the Application: 3

[SouthWest] currently serves over half a million residential and 4business customers with approximately 138,000 active 5connections in five states: Alabama, California, Oklahoma, South 6Carolina, and Texas. 7

… 8

SouthWest is owned by an open-ended, perpetual life investment 9fund with a long-term “hold” investment strategy. The investment 10strategy of the fund places emphasis on mature entities and low 11volatility. Its investors, which include pension funds and other 12entities looking for stable, long-term investments, share this long-13term “hold” investment philosophy. 14

… 15

SouthWest has a long history of effectively owning and operating 16water systems and has annual revenues of $143.6 million and a 17net book value in excess of $367 million… 18

SouthWest is rated by Standard & Poor’s rating agency as BBB with positive 19

outlook. SouthWest’s strong credit ratings, evaluated and assigned by an objective 20

third party, demonstrate that the Company is undoubtedly financially stable, and is 21

therefore an attractive purchaser of CBW. 22

The Terms of the Sale are Fair and Reasonable 23To determine whether the terms of a sale are fair and reasonable, the Commission 24

generally addresses the terms and conditions of the sale/purchase agreement, 25

including the sale/purchase price. A sale price is determined fair and reasonable if it 26

is based on market value and reasonably negotiated between the seller and buyer.2 27

The terms of the sale, as specified in the APA, are fair and reasonable because they 28

2 SeeOrderNo.13-085,AppendixAatpage3.


do not include any unusual or restrictive terms or conditions and were reasonably 1

negotiated between the seller and buyer, as described in the Application: 2

On September 27, 2016, the Buyer and Seller signed the APA, 3with the effective date of the transaction being not less than 60 4days after the signing date, subject to approval from the 5Commission. The transaction is a privately-negotiated, non-6auction sale between the Buyer and Seller. 7

Though the Commission in rare cases has allowed the purchaser of a water 8

utility to record a premium, (also referred to as goodwill or acquisition adjustment),3 9

the Commission has at least as often approved a water utility property sale in part 10

because no acquisition adjustment was requested.4 SouthWest notes that it is 11

neither requesting, nor has it requested, any acquisition adjustment for the purchase 12

of CBW. 13

The Commission has also analyzed transactions to ensure that the Seller is able 14

and willing to effect the transaction.5 In Order No. 16-033, the Commission stated: 15

The sellers are the sole owners of and have title to all shares of 16Sun Mountain. The seller owns all of the shares free and clear of 17all encumbrances and there are no limitations or restrictions on 18the seller's right to transfer the assets pursuant to the sales 19agreement. 20

Oregon Resorts, in the Application, asserts complete ownership of the property 21

contemplated for sale to SouthWest, “Cline Butte is a wholly-owned subsidiary of 22

Oregon Resorts . . . .” Oregon Resorts agreed to sell the property through a non-23

auction, private negotiation with SouthWest. To SouthWest’s knowledge, there are 24

3 SeeOrderNo.11-438,AppendixAatpage6.4 SeeOrderNo.13-418,AppendixAatpage3,andOrderNo.13-417,AppendixAatpage3.5 SeeOrderNo.16-033,AppendixAatpage2;OrderNo.16-329,AppendixAatpage2;OrderNo.14-236,

AppendixAatpage1;OrderNo.15-153,AppendixAatpage2;andOrderNo.13-417,AppendixAatpages1-2.


no limitations or restrictions on Oregon Resorts’ right to transfer the assets to 1

SouthWest pursuant to the APA. 2

The property affected by the sale is also described in the Application: 3

Property affected by the sale will include all assets, real or 4personal, owned or titled in the name of Cline Butte and used in 5the provision of water to the customers at the Ridge at Eagle 6Crest Owners Association, which includes approximately 1,700 7home sites and two 18-hole golf courses. There are four deep-8water wells, one booster station, and one storage reservoir that 9supply Cline Butte customers with water across approximately 101,200 acres. A listing of Cline Butte assets included in the sale is 11included as Section 2.1 of the Sellers’ Disclosure Schedule, 12included with the APA as Confidential Exhibit A. 13

The terms of the sale, as delineated in the APA, were reasonably negotiated 14

between the seller and buyer and are fair and reasonable. 15

The Utility will be Operated by a Professional Utility 16Being an entity dedicated to providing safe and reliable utility service at reasonable 17

rates is typically viewed by the Commission as a positive factor in ownership of a 18

utility.6 The Application describes SouthWest’s background as a successful owner 19

and operator of water utilities: 20

[SouthWest] currently serves over half a million residential and 21business customers with approximately 138,000 active 22connections in five states: Alabama, California, Oklahoma, South 23Carolina, and Texas. SouthWest has been in the water and 24wastewater business since the early 1900s. Throughout its 25history, SouthWest has provided high quality customer service, 26community citizenship, and environmental stewardship. 27

SouthWest has a long history of effectively owning and operating 28water systems and has annual revenues of $143.6 million and a 29net book value in excess of $367 million, thereby positioning 30

6 SeeOrderNo.15-153,AppendixAatpage2;OrderNo.15-202,AppendixAatpage2;andOrderNo.13-

417,AppendixAatpage2.


SouthWest to effect successful ownership, provide the customers 1of Cline Butte with excellent customer service, and make the 2necessary investments to ensure safe, clean and reliable water 3and wastewater services to the current residents and future 4generations. 5

… 6

SouthWest has extensive experience in all facets of water system 7operation including: 8

• Ensuring safe water quality to customers 9• Providing excellent customer service 10• Designing and constructing infrastructure improvements and 11

replacement 12• Maintaining and operating reliable water systems 13• Partnering with local agencies to help serve their residents 14• Managing a financially sound utility 15

SouthWest’s primary responsibility is to ensure that all water 16produced, stored, and distributed to customers is safe and 17exceeds all regulations. SouthWest’s professional operators have 18years of experience operating a range of complex water systems 19with various types of water sources. Our technicians monitor the 20system and ensure compliance and timely filing of regulatory 21permits, annual reports and the Consumer Confidence Report 22(CCR). They are also integral to our service mindset by taking 23calls and visiting customers to discuss any concerns they have 24with water quality. 25

… 26

In addition to the Company’s financial viability to acquire Cline 27Butte, SouthWest is also advantageously equipped to acquire the 28water systems from an operations standpoint. Suburban, which 29will provide general management to Cline Butte, has a strong 30executive leadership team with years of experience of operating 31regulated water utilities and impressive levels of industry 32expertise and experience, including certifications in relevant 33professional fields such as engineering, water treatment, and 34water distribution. 35


Clearly, there can be no question that SouthWest is a professional water 1

company well equipped to effectively and efficiently own and operate CBW. 2

The Purchaser will Maintain an Office with Regular Hours Dedicated to Customer 3Service 4A dedicated customer service department is an essential component of any water 5

utility. Customer service agents are needed to perform a variety of functions, 6

including fielding calls, resolving customer concerns, and dispatching field 7

employees. Currently, CBW doesn’t have an active customer service department; 8

customer needs are typically served by field employees directly. As detailed in the 9

Application, SouthWest will provide CBW customer service through its California 10

business segment, Suburban Water Systems (Suburban), which has a customer 11

service department with an exceptional record: 12

SouthWest also provides its customers with courteous, and 13responsive customer service. One of the primary benefits 14customers will enjoy from SouthWest’s ownership will be in 15having access to a dedicated call center. In each month of 2016, 16Suburban’s call center has exceeded California Public Utilities 17Commission customer service key performance measure of 80 18percent of customer calls answered within 30 seconds. The call 19center is staffed by knowledgeable, friendly employees well-20equipped to interact with customers to answer questions, provide 21information, and resolve issues when appropriate. 22

SouthWest’s response to Staff Information Request No. 24, regarding customer 23

service metrics provided to the California Public Utilities Commission (CPUC) for 24

2015 and tracked internally for 2016, evidences an outstanding customer service 25

department. In 2015, Suburban’s customer service department achieved seven of 26

the eight performance measures tracked by the CPUC, as shown in the following 27

table. 28


Table B. Suburban Water Systems 2015 Customer Service Metrics 1Customer Service Performance Measure Goal Actual

% Calls Answered in 30 Seconds > or = 80% 74% Call Abandonment Rate < or = 5% 2% % Bills Rendered within 7 Days > or = 99% 99.7% % of Inaccurate Bills Rendered < or = 3% 0.22% % of Payment Posting Errors < or = 1% 0.12% % Meters Not Read < or = 3% 0.08% % Customer Requested Work Orders Missed < or = 5% 4.87% % of Complaints to Utility from Consumer Affairs Branch < or = 0.1% 0.002%

In 2016, Suburban’s customer service department improved its percentage of calls 2

answered in 30 seconds and achieved greater than 80 percent not just overall on the 3

year, but in each individual calendar month. Below is a table displaying this trend in 4

2016; note that the number of calls in each month ranged between 652 and 925. 5

Table C. Suburban Water Systems 2016 % Calls Answered in 30 Seconds 6January 89% February 88% March 91% April 85% May 88% June 88% July 89% August 86% September 83% October 87% November 83% December 83%

In several recent cases, the Commission approved the sale of a water utility with 7

the condition that, “The purchaser should maintain a local operator, a 24/7 toll free 8

pager for emergencies, and a toll-free office number.”7 SouthWest affirms that the 9

local water operator employees in good standing will be retained, CBW customers 107 SeeOrderNo.14-236,AppendixAatpage1;OrderNo.15-153,AppendixAatpage3;andOrderNo.13-

417,AppendixAatpage1.


will be able to report emergencies 24/7, and the customer service center has a toll-1

free number at which customers can reach customer service agents. SouthWest 2

believes that its focus on customer service not only improves customer satisfaction, 3

but is a vital function of any water utility. 4

The Purchaser Maintains a Website Accepting Payment Online and Providing 5Information for Customers 6From the Application: 7

Paperless billing and the ability to make payments online using 8bank cards is a convenience many customers value greatly. 9Customers of Cline Butte will benefit from access to paperless 10billing and online payment options provided through ownership by 11SouthWest. Paperless billing and online payment options are two 12ways in which SouthWest is making efforts to increase customer 13satisfaction. In addition, customers will have access to information 14provided on SouthWest’s website, including history of the 15company, contact information, rates and tariffs, conservation 16information, job opportunities, and other helpful information. 17

SouthWest understands the value to customers of having an online presence and 18

is dedicated to providing information to customers as efficiently and effectively as 19

possible as technology continues to progress. SouthWest’s website can be 20

accessed at www.SWWC.com. 21

The Purchaser Maintains Staff of Water Operation Professionals 22From the Application: 23

The day-to-day operations of Cline Butte will be managed locally 24by current employees. General management, accounting, human 25resources, and customer service support will be provided to Cline 26Butte by Suburban, the largest subsidiary of SouthWest. 27Suburban’s main office is located in southern California, making it 28geographically situated to be best able to accommodate the 29general management and customer service functions for Cline 30Butte. 31

… 32


In addition to the Company’s financial viability to acquire Cline 1Butte, SouthWest is also advantageously equipped to acquire the 2water systems from an operations standpoint. Suburban, which 3will provide general management to Cline Butte, has a strong 4executive leadership team with years of experience of operating 5regulated water utilities and impressive levels of industry 6expertise and experience, including certifications in relevant 7professional fields such as engineering, water treatment, and 8water distribution. 9

By retaining the local water utility operating employees, SouthWest will ensure that 10

customers of CBW will continue to receive safe and reliable water provided by a staff 11

of water operation professionals. 12

The Purchasers Demonstrate a History of Operating Water Systems 13As stated previously, the day-to-day operations of Cline Butte will be managed 14

locally by current employees. In other words, the employees in good standing 15

currently operating the system will continue to operate the system once acquired by 16

SouthWest. Their experience and knowledge of CBW will ensure that the system 17

will continue to be operated reliably, effectively, efficiently, and safely. General 18

management of CBW will be the responsibility of Suburban, which was incorporated 19

as a water utility in California in 1954, but has continuously operated for over 100 20

years. This longevity has been achieved through adherence to the Company’s 21

mission statement of taking pride in its stewardship of valuable water resources and 22

providing safe and reliable water services and management. From the Application: 23

Generally, customers of SouthWest benefit through its dedication 24to being responsible stewards of water resources, maintaining 25positive relationships with customers through exceptional 26customer service, and participating in events and activities to 27strengthen and better the communities in which it serves. 28SouthWest is committed to providing its customers with 29


dependable, high-quality water that meets all federal and state 1health and safety standards. 2

The Transaction will not Cause a Disruption in Service 3There will be no disruption of service as ownership of CBW transitions to 4

SouthWest. By maintaining the current local employee operating team, continuity of 5

service will be ensured. Additionally, the Transition Services Agreement, which is 6

included in the APA as Exhibit H, provides for a smooth transition of ownership so 7

that there will be no disruption of service to customers. 8

The Transaction will be Seamless to Customers 9In Order No. 16-033, the Commission relied upon the following statement in 10

approving an application to sell a water utility: 11

The current staff is remaining with the Company, there will be no 12interruption of service, and the rates will remain the same. The 13sale should be a seamless transition for customers. 14

As stated previously, the current local employees of CBW in good standing will 15

be retained, there will be no interruption of service, and SouthWest is not 16

requesting any changes to current rates. From Section G of the Application: 17

This transaction will not cause harm to the public as customers 18will not be materially affected by this transaction. SouthWest is 19committed to providing safe, reliable, high-quality service at 20reasonable rates. 21

A seamless transition to customers will be ensured through the retention of 22

current local employees in good standing, adherence to the Transition Services 23

Agreement, and the commitment of SouthWest to making the transition as 24

seamless as possible. 25


Summary 1

Q. Please summarize your testimony. 2

A. In evaluating whether to approve a property sale application, the Commission relies 3

on certain criteria to determine that the transaction will not harm customers. In the 4

Application, in response to Staff’s Information Requests, in this testimony, and in its 5

observable practices and policies, SouthWest has abundantly demonstrated that it 6

meets all the criteria put forward by the Commission to approve this property sale. 7

The Company has the financial and operational ability to purchase and operate the 8

system, and customers will not be harmed by its acquisition. The Commission 9

should approve Oregon Resorts’ application to sell CBW to SouthWest. 10

Before the OREGON PUBLIC UTILITY COMMISSION SOUTHWEST ... · Docket UP 345 SouthWest/100 Bahr/5 1...

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