THE PUBLIC SERVICE COMMISSIONOF SOUTH CAROLINA

DOCKET NO. 2016-222-WS

IN RE: Application ofKiawah Island Utility, Inc. )for Adjustment of Rates and )Charges and Modifications to Certain )Terms and Conditions for the Provision )of Water and Sewer Service )

DIRECT TESTIMONYOF

BECKY DENNIS

2 Q. PLEASE STATE YOUR FULL NAME AND BUSINESS ADDRESS.

3 A. My name is Becky Dennis. My business address is 31 Sora Rail Road, Kiawah Island,

South Carolina.

5 Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY?

6 A. I am currently employed by Kiawah Island Utility, Inc. ("KIU") as the Director of

7 Operations, I began working here as an Operator Trainee/Clerk in 1978, then became General

8 Manager in 1993. In March of 2016 my title changed to Director of Operations when SouthWest

9 Water Company ("SouthWest") purchased the stock of KIU. My duties include complete

10 oversight of all the water and wastewater operations, regulatory compliance, customer service,

11 budgetary monitoring and approvals, plus hands on involvement, review and approval for R&M,

12 Capital Projects as well as support for all the services provided by KIU.

13 Q. PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND WORK

14 EXPERIENCE.

15 A. My work experience in the water and wastewater industry began with Charleston Water

16 Systems in 1977. I was among the first female operators at their Plum Island wastewater

17 treatinent facility, working as a Vacuum Filter Operator. My work experience at Kiawah Island

1g Utility has always meant wearing many hats. Hired as a clerk/operator trainee, my tasks involved

19 not only office and laboratory duties, but customer service, meter installations and repairs as well

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1 as operating a sand filter water treatment facility. At the time I was hired in 1978, we operated a

2 .500 MGD aerated lagoon wastewater treatment facility, which is currently rated at 1.7 MGD. I

3 have had the privilege to expand my experiences in water and wastewater, customer services,

4 business management, and tnany other areas that are too numerous to list. Growing with a company

5 and working each task of providing quality service and adequate supply to our ever-growing

6 customer base has been a personal responsibility that I cherish. I am licensed by the SC LLR as

7 an "A" Level Water Treatment, Biological Wastewater Treatment, and Wastewater Collection

g Operator as well as a "B" Level Water Distribution Operator. I have an Associate's Degree in

9 Business Management obtained &om Ashworth College.

10 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING?

11 A. The purpose of my testimony is to describe the natuie of capital and operational

12 improvements made by KIU, to explain proposed changes to our nonrecurring tariff charges, and

13 to answer some concerns raised by our customers before the Commission at the public night

14 hearing held on February 7, 2017.

15 Q. GIVE US AN OVERVIEW OF THE WATER SYSTEM PROVIDED BY THE

16 UTILITY AND THE CUSTOMERS SERVICED BY IT.

17 A. On December 31, 2015, KIU served approximately 4,000 water customers. Most of these

18 are residential customers. The utility services its water customers through approximately 67.5

19 miles of water pipelines on Kiawah Island. It pumped a total of 849 Million gallons of potable

20 water to its customers in 2015 with an average daily flow of 2.326 MGD. The peak day demand

21 was 4.914 million gallons, which occurred on May 29, 2015. The water system is operated under

22 South Carolina DHEC Permit No. 1010008.

23 Q. TELL US ABOUT THE WASTEWATER CUSTOMERS AND WASTEWATER

24 FACILITIES OF THE UTILITY.

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A. During the test year ending December 31, 2015 KIU served approximately 3,400 sewer

2 customers. Most of these are residential customers. KIU's sewer system is comprised of gravity

3 collecflon tnains, force mains, and treated effluent transfer mains, aggregating approximately

4 71miles, 52 sewage-pumping stations, and a wastewater treatment facility. The wastewater

3 treatment facility is located at the central plant at 31 Sora Rail Road (see photo at Exhibit BDI).

6 During the test year (2015) the average daily flow was 0.511MGD with a maximum flow day of

7 1.069 MGD, which occurred on November 9th, 2015. The abnormally high flows associated with

g the 1,000-year flood of October 2015 are not included in the annual average numbers. They were

9 normalized to present a truer picture of flows during the test year. In addition to the 248.6 MGD

10 of combined effluent and well water, KIU added 44 MG ofpotable water to meet the golf course

demands in the test year. The Utility's wastewater facility's capacity is rated at 1.7 MGD and

12 operates under South Carolina DHEC Permit ¹ND0017361. (see Photo at Exhibit BD1)

13 Q. PLEASE EXPLAIN THE NEED FOR A SECOND WATER SUPPLY LINE

14 RECENTLY CONSTRUCTED BY KIU.

13 A. Until February of this year, there was one supply line to KIU, installed in 1978. At that time

16 the St. John's Water Company had one connection with Charleston Water Systems; St. John'

17 Water now has three connections. KIU's water supply is pumped &om Charleston Water,

18 approximately 45 miles away to St. John's Water, where the water is then re-pumped to Kiawah

19 Island. KIU is dependent on the integrity of both the St. John's Water lines feeding the Island, as

20 well as the Charleston Water supply lines to St. John's Water. Currently, all water for KIU is

21 pumped into the main facility on Sora Rail Road where it is distributed to the Island and also

22 pumped to the Down Island Tank for re-pump to the distribution system. By creating a second

23 feed to the Island directly into the Down Island station we will be enhancing the dependability of

24 water supply to Kiawah, equalizing pressures and delivery, and allowing KIU to upgrade the

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pumps at this station. However, the second water supply line has been sized so that ifKIU loses

2 the function of the original line, it will still be able to obtain its full water supply from St. John'

3 Water.

4 Q. WAS THE SECOND LINE CONSTRUCTED TO FACILITATE DEVELOPMENT

5 ON THE ISLAND?

6 A. No. The line was needed to ensure a reliable water supply. KIU is not purchasing

7 additional capacity from St. John's Water Company.

8 Q. PLEASE DESCRIBE THE HISTORY OF THE PROJECT?

9 A. The blueprint for this project started in 2000 when KIU began working with its engineers

10 to investigate alternate water supply sources for the Island. The study included an evaluation of

11 the addition of a line parallel to KIU's existing supply along the Kiawah Island Parkway, the

12 installation of a deep well and reverse osmosis facility near the Down Island Pump Station and the

13 installation of aquifer storage and recovery wells for emergency and peak shaving use. We also

14 looked at a second supply line to KIU either from the Charleston Water or St. John's Water. The

15 latter alternative was by far the best option to ensure redundancy of supply in comparison to

16 paralleling the existing single supply line to the Island, but there were obstacles in the way.

17 Charleston Water could not provide KIU with a direct feed because of its contract with St. John'

18 Water, and St. John's Water was not in a position to supply a secondary water supply line because

19 its distribution system's 8" water line could not deliver a sufficient supply ofwater at a secondary

20 supply point.

21 In July 2008, St John's upgraded its system by installing a 24" water line which opened up

22 the option for a secondary feed to KIU. In 2011, having received authority from St. John's Water

23 to install a second water supply line, KIU began the design process. Over the next two and a half

24 years KIU looked at as many as 12 different routes. During 2013 and 2014, KIU met many times

Page 4 of 20

with the property owners, their representatives, and the environmental community on John's Island

2 to discuss the various routes proposed for the water line. In September 2014, after numerous

3 meefings, a route was selected.

4 The chosen route increased the length of the subaqueous, horizontal directional drilled

5 fused PVC pipe Irom 5,300 feet to 6,900 feet. This route consists of three divisions: Division

6 One required the direct bury of both Ductile Iron and PVC pipe from the tie in with St. John'

7 Water to the drill site near the Kiawah River on St. John's Island. This division also included an

g 840 feet directionally drilled section. Division Two required a directional drill of 6,900 feet of

9 fusible PVC pipe under the Kiawah River. Division Three required the direct bury from the

10 landing site on Kiawah Island of the fused PVC pipe to the KIU Down Island Pump Station, This

route was chosen because of its minimal impacts to the environment. This division includes a

12 550 feet section of directionally drilled pipe.

13 Q. WAS THE PROJECTED COST OF CONSTRUCTING THE SECOND WATER

14 SUPPLY LINE AFFECTED BY THE LENGTHIER DIRECTIONAL DRILL?

15 A. Yes. In 2011, the construction estimate was $6.5 Million. At that time, technology did

16 not allow for directional drill ofdistances much greater than the 5,300 feet as originally proposed.

17 Having constructed the second water supply line four years later in 2015, technological and

1g materials improvements permitted the longer directional drill route which satisfied the

19 environmental group on John's Island. Incorporating an additional 1,600 linear feet ofdirectional

2o drilling to the cost of the second water supply line, along with increased legal, engineering, and

21 easement costs, and the four-year delay, increased the construction costs to approximately $9.8

22 Million.

23 Q. WHAT IS THE STATUS OF THE SECOND LINE.

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1 A. The second line was put in service on February 6, 2017, when KIU received its permit to

2 operate from DHEC.

3 Q. ARE THERE EFFORTS UNDERWAY TO RESTORE AREAS AFFECTED BY

4 THE CONSTRUCTION?

A. Yes. The road has already been repaved. I'e attached pictures as Exhibit BD2. A

6 marsh access area that was mentioned by Art Morgenstem, a customer at the public hearing, willBD3

7 be restored soon (a picture of the unrestored access area is attached as Exhibit BH6L). A certified

g biologist has submitted restoration plans for approval to DHEC's Office of Ocean & Coastal

9 Resource Management and the U.S. Army Corps of Engineers. I expect planting to begin in

to March.

11 Q. HAS KIU WITNESSED THE BENEFITS OF THE SECONDARY WATER LINE?

12 A. Yes. On February 7-10, 2017 and again on February 14~, we had breaks on the initial supply

13 line feeding from the western side of the Island. With the redundant line in service we were able

14 to take the original line out of service for repairs and provide water to the entire Island by way of

15 the Down Island Pump station.

16 Q. DID KIU TRY TO MINIMIZE DISRUPTION TO CUSTOMERS WHO LIVE

17 ALONG THE CONSTRUCTION ROUTE OF THE SECOND SUPPLY LINE?

1g A. Yes, we worked closely with the owners along the route to minimize the impact to their

19 property. Several of the owners expressed concerns about the existing ufilities and landscaping in

20 areas where the line would be installed. We began meetings with the contractor, engineer and

21 Kiawah Island Community Association ("KICA") to see if it might be acceptable and feasible to

22 move the water line into the edge of the roadway. When it was determined that this could be

23 done satisfactorily the change was made which greatly minimized the impacts within the right of

24 way.

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1 After the work was completed, the entire road was re-paved instead of just the sections

2 within the construction activity, so there was no patchwork paving. Many of the owners on Marsh

3 Island Drive had complained about the condition of the road to KICA, which is responsible for

4 road maintenance on Kiawah, before the project began. Atter numerous discussions between

5 KICA, KIU, the contractor, and SouthWest management team, it was agreed that KIU would

6 instruct the contractor to pave the entire road. KICA felt it would be a show ofgood faith to have

7 this work finished before Thanksgiving, which we did.

8 On one occasion, the drilling contractor had a continuous pull which needed to occur during

9 a weekend, including part of a Sunday. KICA does not allow construction activity to occur on

10 Sundays as that is the only day residents have free ofconstruction noise. KICA granted us a one-

time special exception, and strongly suggested that we make some offer of compensation to the

12 impacted owners along the route. We purchased $ 150 gift cards for each household on Marsh

13 Island Drive so they could have a meal away from home on the day of the construction work.

14 Alter the construction was done and landscape restoration was completed, some of the

15 owners wanted to make changes to their pre-existing landscaping. The contractor met with each

16 impacted home owner and let them decide whether to have the restoration done by the contractor's

17 landscaper, or receive the funds set aside for their restoration and use them toward their own newly

18 designed plan. Some chose to accept the funds, while others just told the contractor to restore as

19 it was previously.

20 I communicated routinely with each owner along the route and kept them aware of the

21 schedules and expectations ofwork yet to come. For instance, on Feb 3" I sent this notice:

22

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26

Dear Marsh Island Residents,

It has been a little while since I sent you an update on the water line project. Flushingand testing continues with the anticipation of receiving the permit to operate within the

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next week. The landscape restorations are nearing completion except for therestoration of the Marsh. As required, the restoration plan for the marsh has beensubmitted to the offices of Ocean and Coastal Resource Management and the US ArmyCorps of Engineers for approvals. It is predicted that marsh plants will be ordered andinstalled in March, once OCRM and the COE sign off on the submitted plan.

Several of the residents along the water line route chose to use their own landscapersand are in the process of re-vegetating the right of ways in front of their homes. As youknow the road has been completely paved and clean-up has taken place. Some of thedebris currently along the roadway is not due to the construction activity, therefore it ismy understanding that it will be picked up according to the routine schedule for this typeof debris.

As stated many times during the construction activity, KIU appreciates your support forthis much needed redundant water line. We feel confident that you will soon experiencethe many benefits it brings, including enhanced reliability for both health and safetyneeds.

We look forward to continuing to provide you with quality service.

This is only one of example ofmany of the updates that I sent to our customers.

23

24 Q. DOES THE UTILITY OPERATE AND MAINTAIN STORAGE FACILITIES FOR

25 POTABLE WATER?

A. Yes. To provide reliable water service to its customers, KIU must operates water storage

27 facilities. It is imperative that KIU to maintain adequate supplies of water on the Island for

28 emergencies or loss of supply from either St. John's Water, or its supplier, Charleston Water. KIU

29 has three above-ground storage facilities totaling 4.5 million gallons and two underground Aquifer

30 Storage and Recovery (ASR) systems. In periods of low demand, we pump excess potable water

31 from St. John's into our two ASR wells. During peak season, the potable water in these wells is

32 accessed to enable KIU to meet potable water demands or when the supply line is out of service.

33 In the high demand season, especially in periods of low rainfall, our daily usage typically exceeds

34 what we can obtain from St. John's Water. KIU has also experienced interruptions in supply as

35 a result ofbreaks in the supply line to Kiawah Island. Our contract with St. John's caps the total

Page 8 of 20

1 amount that the Utility can receive on a given day to 3.6 million gallons per day. While KIU's

2 contract capacity with St. John's Water did not increase, the second water supply line is sized to

3 allow the full 3.6 million gallons per day capacity from St. John's Water to be pumped through it

4 to KIU's supply points.

s Q. PLEASE DESCRIBE THE CAPITAL IMPROVEMENTS MADE TO KIAWAH

6 ISLAND UTILITY, INC.'S WATER DISTRIBUTION SYSTEM AND SEWER SYSTEM

7 SINCE THE 2010 TEST YEAR ENDED.

8 A. In addition to the second water supply line, KIU has invested in the following capital

9 improvements totaling approximately $607,727 to ensure reliability, enhanced treatment of

10 wastewater and to begin the development ofa GIS system for all KIU inirastructure. Each project

11 listed below exceeds the cost of $ 5,000 and have been put in service afler the last rate case's test

12 year of 2010 (capital improvements of less than $5,000 were not listed).

13

14

1S

Replacement ofdiesel fuel tank

GIS system (over several years)

Effluent Screener

$ 12,637

$ 16,866

$ 75,039

16 Rhett's Bluff sewage pump station upgrade $ 45,543

17

19

Down Island Pump Upgrade

Materials Hopper for Effluent Screener

Maintenance Replacement Vehicle

$ 117,091

$ 6,390

$ 17,750

20 Flyway Dr. Sewage Pump station upgrade $ 40,015

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22

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Surfsong sewage pump station rebuild

Additional 7.5 hp aerators

Sewer Inspection Camera

Managers replacement vehicle

$ 21,698

$ 15,580

$ 9,982

$ 31,398

Page 9 of 20

Replacement Chlorine Mixer

Down Island PS Erosion Control

Deep Well Motor upgrade

Down Island Storage Tank Mixer

$ 8,310

$ 46,443

$ 12,418

$ 30,657

Water Plant Chart Recorder replacements $ 8,226

GIS mapping project

Kubota Excavator

Kubota 60" Zero Turn mower

TOTAL

$ 24,384

$ 58,300

$ 9,000

607 727

10

11 Q. WHAT EFFECT HAVE THE CAPITAL IMPROVEMENTS MADE TO THE

12 WATER AND WASTEWATER SYSTEM SINCE DECEMBER 2010 HAD ON KIAWAH

13 ISLAND UTILITY, INC.'S OPERATIONS AND SERVICE?

14 A. Each of the improvements listed above has contributed to the ability of KIU to provide

15 dependable, consistent services to our customers and to ensure compliance in relationship to our

ts water and wastewater operating permits. The GIS project is a work in progress and is handled in

17 various steps. Once completed it will allow more efficiencies in response time to emergencies, a

18 better means of assessing replacement needs, and enable KIU to work more in a proactive mode

19 instead of a reactive mode.

2O Q. PLEASE DESCRIBE KIU'S CUSTOMER SERVICE OPERATIONS.

21 A. KIU has a staff of 15 with I 1 working in the maintenance and 4 primarily office support.

22 Every staff member is focused on providing quality service to our customers whether to make

23 repairs in a timely manner with minimal impact to our customers or assist with a concern. We

24 pride ourselves with going above and beyond routine customer service. For instance, when we

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read the meters for our monthly billing we strive to read in teams of two. If the readings are

2 beyond the normal range of usage, we have the reading double checked by the second reader. If

3 the reading is higher and the meter is running, they take the time right then to determine if there is

4 anything visible on the property (irrigation, broken line, hose bib left open) that may be

5 contributing to the high usage.

6 Generally, without approval of the owner, we do not shut the meter off because we do not

7 know what components are, or may be water dependent. (HVAC systems, water heaters, pools,

8 etc.). By gaining approvals we prevent potential liability associated with any damage to an

9 owner's property. The office staff will send another staff member (other than the two initial

ttI readers) to verify the reading and see if there has been additional activity on the meter, and

11 ultimately will contact the homeowner or its property manager to inform them of the high reading.

12 Over the years, we have seen and documented some of the following reasons for excessive

13 usage: faulty toilet components, broken irrigation heads, water left running on outside hoses, stuck

14 pool fill valves, faulty fill valves on outside fountains, irrigation timers defaulting to settings that

15 increase irrigation schedules. KIU offers, at no expense to the owner, assistance to conduct

16 irrigation tests on owners'ystems to determine how much water is being used during an irrigation

17 cycle. If an owner requests to have their meter tested, KIU will switch out the ineter and send the

18 pulled meter to an independent testing facility. Once the results are received we provide a copy

19 to the owner. In my nearly 39 years at Kiawah Island Utility I have never received a test report

2o that indicated the meter over-registered.

21 Additionally, we spend considerable time encouraging our customers to become more

22 involved in the operation of their irrigation systems and to perform periodic testing themselves to

23 ensure that control settings align with watering needs. KIU has a duty operator on Island 24 hours

24 a day, seven days a week which allows for prompt responses in the event of einergencies. All of

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the KIU staffunderstands that the majority of our residents do not live on the Island full time and

2 therefore work diligently to be a valuable resource for them during their absences. KIU prides

3 itself in providing reliable, personalized customer service.

4 Q. DO YOU ANTICIPATE THE NEED FOR OTHER SUBSTANTIAL CAPITAL

5 IMPROVEMENTS IN THK NEAR FUTURE?

6 A. Yes, I would note the following improvement over the next two years:

7 ~ Continuation of sewage pump station rebuilds or enhancements. I anticipate two 2 projects

8 per year (costs vary depending on the condition and size of the pumps, wet well and control

9 panels)

to ~ Installation of automated screening on the influent flow coming into the plant for

11 processing. This is currently done manually and technology has improved to allow for

12 more debris removal prior to flowing into the treatment cells.

13 ~ Upgrade 50 hp pump at the Down Island Pump Station to a 100 hp variable speed pump

14 which will contribute to leveling out Island-wide system pressures.

15 ~ Replace obsolete 40 hp service pump at the Sora Rail facility with a 75-100 hp variable

16 speed pump.

17 ~ Add control modification to the Waste Treatment Cell ¹I aerators to allow for better

18

19 ~ Completion of the GIS systein implementation will require hiring outside resources to help

20 with data retrieval and input as well as adding field equipment to allow for usefulness by

21 KIU staff to ensure better accuracy and functionality.

22 Q. IS KIU ASKING TO CHANGE ANY PROVISIONS IN ITS WATER AND SEWER

23 TARIFFS OTHER THAN THE MONTHLY CHARGES FOR SEWER SERVICE, AND

24 THE BASE FACILITIES AND COMMODITIES CHARGES FOR WATER SERVICE?

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A. Yes. Pursuant to 26 S.C. Code Ann. Regulations R. 103-703 and R. 103-503, the

2 Applicant proposes to modify certain non-recurring charges to include:

3 ~ The creation of a service fee for non-routine and non-emergency calls;

4 ~ The creation of a charge for restoration of service after discontinuance of service for not

5 receiving monthly statements;

6 ~ Increases in its charges to restore service atter disconnection, delinquent notification fee,

7 and return check fee.

8 Q. PLEASE EXPLAIN THE NEED FOR A SERVICE FEE FOR NON-ROUTINE AND

9 NON-EMERGENCY CALLS.

10 A. KIU receives an increasing volume of calls from "property managers" or other "service

11 providers" who have turned water off to a unit and don't wish to drive back to Kiawah Island to

12 turn the water back on. KIU keeps a log of clients that have services turned

offb KIU and can

13 easily identify those clients. When a service has been tumed offby property managers, it takes a

14 considerable amount ofstaff time to respond to these non-emergency calls to turn on the customer'

15 water. KIU cannot always readily determine the location of the customer's shut off valves. In

16 these and similar instances where KIU is called to respond for non-emergencies, we are asking to

17 recover the cost of the manpower and equipment required to locate the shut offvalves and turn the

1g water on, to wit, labor at $25.00/Hr. and truck rental at $ 16.00/Hr. KIU does not make repairs on

19 the customer's side of the meter.

20 Q. PLEASE DESCRIBE THE NEED FOR THE CREATION OF A SEPARATE

21 CHARGE FOR RESTORATION OF SERVICE AFTER DISCONTINUANCE OF

22 SERVICE AND INTERRUPTION OF MONTHLY STATEMENTS.

23 A. While this charge is a current tariffed KIU charge, we believed that it would be more clear

24 to state the charge separately in our tariff to avoid confusion. It is KIU's experience that certain

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1 customers do not wish to be provided service or to be billed for service when they are absent from

2 their homes for long periods of time. KIU will temporarily stop service and stop sending

3 customers a monthly statement at the customer's request. The minimum charge for this service is

4 the equivalent of three months of basic facilities charges which becomes due when service is

5 restored. In 2015, KIU had six such requests. If the tariff change is approved, the opportunity

6 for a customer to request discontinuance of service for the purpose of not receiving a monthly

7 statement, would be made more clear.

8 Q. PLEASE EXPLAIN THE NEED FOR THE PROPOSED INCREASE IN THE

9 CHARGES TO RESTORE SERVICE AFTER DISCONNECTION.

1o A. KIU has requested to increase the reconnection fee for services disconnected for violation

of the rules and regulations, nonpayment, or fraudulent use of services &om $50.00 to $70.00.

12 Considerable staff time is involved prior to disconnecting a service. We spend two months trying

13 to collect the outstanding balance to avoid disconnection of service. Often this involves several

14 phone calls prior to sending the certified letter which includes the must pay date to avoid service

15 disconnection. Staff time and equipment costs are required twice, once to shut off the service and

16 then again to reconnect service. This is done alter scheduling time when the owner or a

17 representative is available to meet at the dwelling to verify that the home lines and fixtures have

18 not been lefi in an open position. The costs associated with the reconnection fee are as fofiows:

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20

21

22

23

24

25

26

27

28

HourlyTotal Labor Costs

rate x 25.00

Use ofvehicle $ 16.00/hr.(FEMA rate for PU Truck)

Accounting/Customer Service time 1.0 hourField time 1.50 hourTotal Staff Time 2.50 Hours

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T I involve in 'nQ. PLEASE EXPLAIN THE NEED TO INCREASE THE DELINQUENT

NOTIFICATION FEE.

6 A. The increase from $ 10 to $20 is based on both increased costs for USPS certified letters

7 and staff time required to complete the collection process. This includes staffspending significant

8 time trying to satisfy the outstanding balances to avoid having to send the "Certified Disconnect

9 Letter", which is when the "Delinquent Notification Fee" is charged. The cost of a certified letter

10 in 2011 was $5.75; today it is $6.74. Current rates applied to staff services are $25.00 per hour.

Typical time spent on each client is not less than 60 minutes.

12 Q. PLEASE DESCRIBE THE NEED TO INCREASE THE RETURN CHECK FEE.

13 A. KIU proposes to increase the return check fee in the amount authorized by S.C. Code Ann.

14 Section 34-11-70. Doing so would allow KIU to raise the return check fee in conformity to state

15 law.

16 Q. DOES KIU CHARGE "AVAILABILITY FEES" ?

17 A. No.

18 Q. DOES ANYONE ELSE ON KIAWAH ISLAND CHARGE AVAILABILITY FEES?

19 A. In the past, Kiawah Island Resort Associates, KIU's former owner, charged a quarterly

20 availability fee. Later, KRA began charging a "building incentive fee" instead. It is my

21 understanding, as was testified to in the last rate applicafion, that these fees are used to fund the

22 Architectural Review Board.

23 Q. DOES KIU HAVE ANY ROLE IN SETTING KRA's AVAILABILITY FEES?

24 A. No.

25 Q. DOES KIU RECEIVE ANY PART OF KRA's AVAILABILITY FEES?

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A. No.

2 Q. HOW HAVE AVAILABILITY FEES AND BUILDING INCENTIVE FEES BEEN

3 TREATED IN PAST RATE CASES?

4 A. Building incentive fees have not been included in KIU's revenues, rate base, or treated as

5 contributions in aid of construction since the 1990s. The South Carolina Supreme Court

6 affirmed this approach, finding that the Commission has no jurisdiction over fees set by a

7 developer

8 Q. WERE AVAILABILITY FEES EVER TREATED DIFFERENTLY?

9 A. Yes, until 1991, the Commission treated availability fees charged by KRA as contributions

10 in aid of construction ("CIAC"). But availability fees have had no part in KIU's rates since then.

11 Q. WHY DOESN'T KIU PROPOSE TO CHARGE THE DEVELOPERS

12 AVAILABILITY FEES?

13 A. Availability fees are not an effective way for KIU to raise revenue. Owners of

14 undeveloped lots already may pay availability or building incentive fees to developers. For KIU

1s to charge availability fees would mean that those lot owners, who are not customers of the utility,

16 would pay fees for the benefit of existing customers.

17 Q. HOW DOES KIU INCUR COSTS TO BRING A NEW CUSTOMER ONLINE?

18 A. KIU charges a tap fee. Also, the developer contributes any new distribution lines needed

19 to make the new customer's connection to the utility at no charge. The developer*s contribution

20 is booked as CIAC, and therefore results in no cost to the customers.

21 Q: DOES KIU CHARGE IMPACT FEES?

22 A: No, impact fees have never been a part ofour rate structure.

23 Q: WHY NOT?

24 A: KIU is required to provide service to every area within our established service area, which

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1 is the entire Kiawah Island. Every developer follows the same procedure. Each one pays for

2 and installs all of the new water and sewer distribution infrastructure in undeveloped areas on

3 Kiawah, and donates it to KIU when it is put in service. This allows KIU to increase its customer

base without costs to any customer already being serviced by KIU. The costs associated with new

5 infrastructure off-set utility expense for expansion of service to new areas within our regulated

6 service area.

7 Q: DOES KIU CHARGE TAP FEES?

8 A. Yes. Our tap in fees are structured so that as the capacity through each service increases,

9 the fees increases. The standard 5/8" meter will provide 20 gallons per minute (gpm), which we

10 consider a residential equivalent unit (REU). When the service size increases due to the

11 individual needs of the customer, the fees increase in proportion to the increase above the REU.

12 A '/4" meter has a capacity of 30 gpm, and its fees (tap and base fees) are 1.5 times greater than the

13 5/8" meter. A I" service provides 50 gpm, and its fees are 2.5 times the standard REU, a I /~"

14 provides 100 gpm, and therefore its fees are 5 times the minimum. This works well because those

15 customers requiring increased capacities are paying their proportional share of plant capacity.

16 This process follows thmugh no matter which class of customer is requesting service.

17 Q. DOESTHIS CONCLUDEYOURTESTIMONY?

18 A. Yes, it does.

Page 17 of 20

BD1EXHIBIT BBR-

QP

Klawah Island Utility Inc

Page 18 of 20

EXHIBIT BD-2

ROAD REPAIRS

Before

After

Page 19 of 20

EXHIBIT BD-3

MARSH ACCESS AREA

I,'e ~WP4I

' v..fl',

Page20 of20