PUBLIC UTILITY COMMISSION OF OREGON ROATS WATER SYSTEM, INC. STAFF EXHIBIT 100. Testimony in Support of the Stipulation

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1 CASE: UW 66 WITNESS: STEPHANIE YAMADA PUBLIC UTILITY COMMISSION OF OREGON ROATS WATER SYSTEM, INC. STAFF EXHIBIT 00 Testimony in Support of the Stipulation January 5, 07

2 Docket UW 66 Staff/00 Yamada/ INTRODUCTION Q. PLEASE STATE YOUR NAME, OCCUPATION, AND BUSINESS ADDRESS. A. My name is Stephanie Yamada. I am a Utility Analyst in the Telecommunications and Water Division of the Utility Program at the Oregon Public Utility Commission (Commission). My business address is 0 High St SE, Suite 00, Salem, Oregon Q. PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND WORK EXPERIENCE. A. Please see my Witness Qualification Statement attached as Exhibit Staff/0, Yamada/. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. The purpose of my testimony is to introduce and support the Stipulations entered into by the Stipulating Parties in Docket UW 66, Roats Water System, Inc. s request for a general rate revision. Q. WHO IS TESTIFYING IN THIS DOCKET? A. I am testifying as the Staff witness in UW 66. Q. WHO ARE THE PARTIES IN DOCKET UW 66? A. The parties in Docket UW 66 are Roats Water System, Inc. (Roats or Company), Commission Staff (Staff), and intervenors Pat McCabe (representing Woodside Ranch Homeowners Association), Avion Water Company, Inc. (Avion), James Pease, James Powell, William Burton, and Richard Rotondi (Intervenors), collectively referred to as the Parties.

3 Docket UW 66 Staff/00 Yamada/ Q. DID THE PARTIES REACH A SETTLEMENT IN UW 66? A. Yes. Roats and Staff (the Stipulating Parties) reached agreement on all issues in this docket. The agreement is outlined in the Partial Stipulation filed December 6, 06, and the Second Partial Stipulation filed December 9, 06. Q. DID YOU PREPARE EXHIBITS FOR THIS DOCKET? A. Yes. I prepared Exhibit Staff/00, consisting of 3 pages, Exhibit Staff/0, Yamada/, consisting of one page, Exhibit Staff/0, consisting of 5 pages, and Exhibit Staff/03 consisting of 8 pages. Q. HOW IS YOUR TESTIMONY ORGANIZED? A. My testimony is organized as follows: Issue Summary Recommendation... 3 Issue Roats' Description and Regulatory History... 4 Issue 3 Summary of Roats' General Rate Filing... 4 Issue 4 Customer Concerns... 0 Issue 5 Revenue Requirement Issues... 3 Issue 6 NonRevenue Requirement Issues... 4 Issue 7 Rate Spread and Rate Design... 7 Table Roats Current & Proposed Average Bills... 8 Table Proposed Miscellaneous Fees... 9 Table 3 Revenue Requirement Comparison... 3 Table 4 Stipulated Net Invested Utility Plant... Table 5 Stipulated Cost of Capital... 4 Exhibit 0 Witness Qualification... Yamada / Exhibit 0 Revenue Requirement... Yamada / Exhibit 0 Adjustment Summary... Yamada /3 On December, 06, Staff and Roats refiled the first Partial Stipulation to provide the Commission with a complete copy that reflects the corrections made via the errata filing on December 9, 06.

4 Docket UW 66 Staff/00 Yamada/ Exhibit 0 Cost of Capital... Yamada /5 Exhibit 0 Company Current and Proposed Rates... Yamada /6 Exhibit 0 Stipulated Rates... Yamada /7 Exhibit 0 Invested Plant... Yamada /8 Exhibit 0 Contributed Plant.....Yamada / Exhibit 0 Domestic/Irrigation Split... Yamada /4 Exhibit 03 Data Responses & Supporting Documentation... Yamada / ISSUE SUMMARY RECOMMENDATION Q. PLEASE SUMMARIZE THE STIPULATING PARTIES RECOMMENDATION IN THIS CASE. A. The Stipulating Parties recommend that the Commission adopt the Stipulations agreed to by the Stipulating Parties in UW 66. The first Partial Stipulation filed in this case resolves all issues, including revenue requirement, rate spread and rate design, with the exception of the implementation date for new rates. The Second Partial Stipulation reflects the agreement between Staff and Roats relating to the date that new rates should be implemented in this case. Roats case also includes the acquisition of the former Juniper Utility system (Juniper), which is anticipated to close on or before December 3, 06. In order to address the contingency that Roats proposed acquisition of the former Juniper system does not close as planned, the Stipulating Parties have agreed to two separate revenue requirements and rates one set inclusive of the Juniper acquisition and one set exclusive of the proposed acquisition. The Stipulating Parties further agreed the rates should be effective as soon as practicable after the Commission issues an order in UW 66.

5 Docket UW 66 Staff/00 Yamada/ ISSUE ROATS DESCRIPTION AND REGULATORY HISTORY Q. PLEASE DESCRIBE ROATS WATER SYSTEM, INC. A. Roats is a rate and serviceregulated investorowned water utility located in Bend, Oregon. The Company is organized as a Corporation. The system was constructed in 963 and began providing water service in 963. Roats currently serves approximately,56 residential and 87 commercial customers in the Bend area. Q. PLEASE PROVIDE A SUMMARY OF ROATS REGULATORY HISTORY. A. Roats has been providing water service since 963. Since that time, the Company has filed several rate cases, the most recent being UW 07, which was completed in 005. The Commission approved a rate increase of 4. percent In UW 07, resulting in annual revenues of $674,987. ISSUE 3 SUMMARY OF ROATS GENERAL RATE FILING Q. PLEASE DESCRIBE ROATS RATE APPLICATION. A. The Company filed its request for a general rate revision on March 5, 06. The Company s request was supported by a brief and testimony from William Roats, the President of Roats Water System, Inc. This testimony refers to the Company s filing as its Application. The Company s Application proposed annual domestic revenues of $,80,530 and annual irrigation revenues of $445,45, for a total revenue requirement of $,47,98. The Company In re Roats Water System, Inc., OPUC Docket No. UW 07, Order No. 058 (June 4, 005).

6 Docket UW 66 Staff/00 Yamada/5 proposed a 0.03 percent rate of return on a rate base of $3,856,886. Roats requested revenues represent an increase of 08 percent over test year 3 revenues of $,079,99. 3 While this seems like a significant increase, it is largely driven by the proposed acquisition of the Juniper system, which would result in an approximately 95 percent increase in customers. This proposed acquisition is discussed in greater detail in my testimony, below. Q. WHAT WERE THE PRIMARY DRIVERS FOR THE COMPANY S REQUEST FOR A RATE INCREASE? A. Roats has not filed a request for a general rate revision since 005, and the Company s costs have increased since that time. In its Application, Roats asserts that it requires a rate increase because current revenues are not covering the cost of providing service and allowing an opportunity for a reasonable return on the company s investments. Factors include additional 4 expenses and inflation on supplies and operating costs. 4 Additionally, Roats has proposed to acquire a portion of the former Juniper Utility system (Juniper) from the City of Bend. The acquisition would result in 8 new residential and 839 new irrigation customers, for a total of,660 new customers to Roats. Almost all of the Juniper customers to be acquired will be both residential and irrigation customers of Roats. As stated above, the,660 new customers 3 Although Roats Application shows test year revenues of $,360,77, the Company clarified in response to Staff s Data Requests 43 d, e, and f (mislabeled c, d, and e in Roats response) that this includes revenue collected from Juniper customers by the City of Bend. In response to Staff s Data Request 53 b, Roats clarified that its actual test year revenue was $,079,99. See Exhibit Staff/03 Yamada/. 4 Roats Water System, Inc. Initial Testimony at 5.

7 Docket UW 66 Staff/00 Yamada/6 3 4 represent an almost 95 percent increase in customers compared to Roats current customer count of,749. Roats Application states that the cost of serving the additional Juniper domestic customers must be included 5 and that Roats capital improvements and the addition of Juniper s domestic systems 5 need to be included in rate base. 6 Finally, as Roats does not currently provide irrigation service and therefore currently has no tariffed rate for irrigation service, Roats notes that rates for irrigation service must be established. 7 Q. PLEASE DESCRIBE THE JUNIPER UTILITY SYSTEM. A. Juniper was condemned by the City of Bend in 00. While Juniper consists of a dualpipe system which separately delivers domestic potable drinking water as well as nonpotable irrigation water, the City of Bend does not otherwise operate a separate irrigation system. As such, the City had planned to abandon the irrigation portion of the system and upgrade the domestic portion according to City of Bend standards. However, the cost to upgrade the Juniper domestic system to the City of Bend s standards was expected to be substantial. First, the abandonment of the irrigation system would force Juniper customers to irrigate using potable drinking water, which in turn would require the new singlepipe system to have the capacity to meet both the domestic and irrigation needs of former Juniper customers. Second, the Company states the PVC pipe with which the legacy Juniper system was constructed would need to be replaced with more expensive ductile iron pipe in 5 Roats Water System, Inc. Initial Testimony at 5. 6 Ibid. 7 Ibid.

8 Docket UW 66 Staff/00 Yamada/ order to meet the demand for pressure and flow required to provide both domestic water and irrigation demands through a one pipe system. As a result of discussions between Juniper customers, the City of Bend, and private water utilities serving the area, two Bend utilities agreed to acquire the Juniper system from the City. The acquisition would enable Juniper customers to keep their separate irrigation system while eliminating the need to convert the domestic system to ductile iron. Roats proposes to acquire the portion of the former Juniper system which serves Tillicum Village, Timber Ridge, Mountain High, and Blue Ridge, as well as other properties including The Pines Mobile Home Park and Crown Villa RV Park. A separate water utility, Avion Water Company, plans to acquire the portion that serves the Nottingham Square and Stonegate neighborhoods. Currently, Roats does not operate a separate irrigation system, nor does it have an established rate for irrigation service. As such, Roats will need to establish an irrigation tariff prior to serving its new irrigation customers. Roats will also need to establish a tariff for Mobile Home and RV Park rates, as it will begin serving two such parks upon its acquisition of Juniper and currently has no tariffed rates at which those customers can be appropriately charged. The Company s Application reflects the inclusion of the Juniper plant, customers, consumption, and costs in Roats proposed rates. Q. DID ROATS SEEK PUC APPROVAL FOR THE PURCHASE OF JUNIPER? A. No. Because Juniper is owned by a municipality not subject to the Commission s jurisdiction, Commission approval pursuant to ORS is not required for Roats to purchase Juniper. However, Roats plans to finance

9 Docket UW 66 Staff/00 Yamada/ the acquisition through a $,400,000 loan from the City of Bend. Pursuant to ORS , Roats must obtain an order from the Commission prior to taking out this loan for the acquisition of the Juniper property. Staff s analysis of Roats proposed financing was addressed in a separate docket, UF 498. Staff s recommendation to approve that financing Application was adopted by the Commission at its November 8, 06, public meeting. 8 Q. WHAT ARE THE CURRENT RATES AND WHAT RATE INCREASES DID ROATS PROPOSE IN ITS APPLICATION? A. Please see Staff/0, Yamada/6 for the Company s current and proposed rates as stated in its Application. Q. WHAT ARE THE EFFECTS OF ROATS PROPOSED RATES ON THE AVERAGE CUSTOMERS? A. The majority of Roats current residential and commercial customers (83 percent) take service through either 5/8 or 3/4 lines. For those customers, Roats proposed rates result in a percent increase in the base rate and a percent increase in the commodity rate. The customer notice that Roats submitted with its Application shows the following proposed changes to average monthly bills: TABLE ROATS CURRENT & PROPSED AVERAGE BILLS Class Line Size Current Average Roats Proposed Monthly Bill Average Monthly Bill Residential & Commercial 5/8 & 3/4" $36.47 $53.86 Residential & Commercial $59.88 $96.93 Residential & Commercial ½ $04.38 $74. Commercial $55.80 $6.3 8 In re Roats Water System, Inc., OPUC Docket No. UF 498, Order No. 643 (Nov. 8, 06).

10 Docket UW 66 Staff/00 Yamada/ Q. DID THE COMPANY REQUEST ANY OTHER TARIFF CHANGES? A. Yes. Roats requested approval of a Power Cost Adjustment tariff (PCA). The Company also proposed changes to what is currently Schedule 3, Miscellaneous Service Charges. Table 3 shows the current and proposed charges as filed in the Company s Application. TABLE PROPOSED MISCELLANEOUS FEES Miscellaneous Fees Current Proposed Connection for New Service (Standard ¾ inch) $450 At Cost Connection for New Service (Larger than ¾ inch) $450 At Cost Irrigation Hookup $450 At Cost TroubleCall (Normal office hours) $5 $50 TroubleCall (After hours) $50 $75 Disconnect Visit Charge now Field Visit Charge $30 $5 Backflow Prevention Device Repairs Labor $5 $50 Q. DID THE COMPANY REQUEST ANY CHANGES TO UTILITY PLANT? A. Yes. Roats requested the inclusion of plant additions through September 30, 05, and a service truck with a gross book value of $60,000 which had not yet been purchased at the time of Roats filing. Roats also requested that the Juniper assets planned to be acquired from the City of Bend be included in Utility Plant with a gross book value of $,46,580.

11 Docket UW 66 Staff/00 Yamada/ ISSUE 4 CUSTOMER CONCERNS Q. DID THE CUSTOMERS EXPRESS ANY CONCERNS DURING THE RATE CASE? A. Yes. Staff received several letters, s, and telephone calls from individual customers. Concerns that were expressed by customers during this case are outlined below. Juniper Acquisition One of the most common concerns expressed to Staff was that the acquisition, operation, and maintenance costs of the Juniper system would place undue strain on current Roats customers. Many customers felt that, if not for the Juniper acquisition, Roats would not require any rate increase at this time. To address this concern, Staff explained that Roats required PUC approval for the financing that would enable it to acquire Juniper. Furthermore, PUC approval of Roats requested financing would require that current customers not be harmed by the acquisition. Staff directed customers to Docket UF 498, where Staff s analysis of Roats Financing Application could be found. Customer Notice With its Application, Roats submitted a customer notice outlining its proposed rate increases. Upon viewing Roats Application on the PUC website, a number of customers notified Staff that they had not received the notice that Roats submitted with its Application. Staff contacted Roats, and the Company confirmed that the notice was posted in the Bend Bulletin rather than being

12 Docket UW 66 Staff/00 Yamada/ mailed to each customer individually. OAR (3) allows utilities the option to provide notice of rate increases via a newspaper advertisement, bill insert, or direct mailer. Staff explained to customers that the notice provided by Roats was consistent with the Commission s rules regarding noticing requirements. Many customers urged that the Commission should consider revisiting these rules, as notices published in the newspaper are easily overlooked. Amount of Increase Roats Application stated that the Company s rate proposal resulted in an overall increase of 3.5 percent. Several customers contacted Staff with concerns that Roats proposal would result in a much higher rate increase than the 3.5 percent quoted in Roats Application. Staff raised the issue with Roats, and the Company confirmed that the 3.5 percent figure represents the increase from test year revenues of $,360,77 as shown on the Application to Roats requested domestic revenue of $,80,530. Roats also confirmed that the test year revenue shown in the Application included $80,358 that was collected from Juniper customers by the City of Bend at City of Bend rates during Roats selected test year. As such, the 3.5 percent figure may not accurately reflect the overall bill increases that current Roats customers will experience. Instead, Staff advised customers to calculate their own bill impacts using their specific line size, consumption, and the proposed rates that Roats provided in its Application. Given the media attention and customer

13 Docket UW 66 Staff/00 Yamada/ engagement in this proceeding, Staff believes that Roats customers were adequately apprised of the Company s request in this case. Commodity Rate The majority of customers who contacted Staff during this case were residents of Woodside Ranch, which is a subdivision of approximately 7 residents within Roats current service area. One area of particular concern for Woodside Ranch residents was Roats proposed commodity rate of $.35 per 00 cubic feet (cf) of water used. Homes in Woodside Ranch are typically built on relatively large plots of land, with large surrounding yards. Furthermore, as the subdivision borders Deschutes National Forest, many Woodside Ranch residents feel it necessary to keep their yards green and wellirrigated as a measure for protecting their homes against fire damage. However, as Woodside Ranch is not served by an irrigation system that is separate from Roats domestic system, residents of this subdivision have no choice but to irrigate using potable domestic water, which is significantly more expensive than irrigating with nonpotable irrigation water. A number of residents expressed the concern that increasing the commodity rate to $.35 would have a particularly significant impact on customers in Woodside Ranch. In order to address this concern, Staff and Roats agreed to a residential and commercial allocation of 3.5 percent to the variable rate and 67.5 percent to the base rate. The resulting commodity rate is $0.95 per 00 cf of water used, which is an increase of approximately 4 percent from the current commodity rate of $0.76

14 Docket UW 66 Staff/00 Yamada/ per 00 cf, but approximately 30 percent lower than Roats initial request of $.35 per 00 cf. Distribution of Water A number of Woodside Ranch residents expressed concern that water pumped from wells within Woodside Ranch would be used to serve other Roats customers outside of Woodside Ranch. Staff informed these customers that the adjudication and enforcement of water rights and deeds is outside of the Commission s purview in this case ISSUE 5 REVENUE REQUIREMENT ISSUES Q. PLEASE SUMMARIZE THE REVENUE REQUIREMENTS AGREED TO BY THE STIPULATING PARTIES. A. The agreedto revenue requirements inclusive and exclusive of the Juniper acquisition are shown in Table 3. TABLE 3 REVENUE REQUIREMENT COMPARISON Revenue Requirement With Juniper Without Juniper Domestic $,594,974 $,399,633 Irrigation $406,74 $0 Total Company $,00,698 $,399, Q. WHAT ISSUES DID STAFF INVESTIGATE? A. Staff s investigation and analysis of Roats general rate filing included a comprehensive examination of the Company s revenues, expenses, proposed adjustments, rate spread and rate design, rate base, capital improvements,

15 Docket UW 66 Staff/00 Yamada/ cost of capital, capital structure, quality of service, capacity, and customer concerns. Specific expense issues included the costs of operating and maintaining both the existing Roats system as well as the Juniper domestic and irrigation systems, costs of hired and contracted labor, and building rental costs. Staff further investigated customer concerns expressed during the case. Finally, Staff reviewed the cost allocations between the Roats domestic and irrigation systems as they will exist upon completion of the proposed acquisition. Q. PLEASE DISCUSS THE STIPULATING PARTIES AGREEMENT REGARDING ROATS EXPENSES. A. Staff examined Roats expenses with consideration of the prudence and reasonableness of each expense and in accordance with the rules and statutes that apply to rateregulated water utilities. Several expenses were eliminated, reallocated, or transferred from one account to another. All of the agreedupon adjustments are shown in Exhibit Staff/0, Yamada/3. However, the following is a brief explanation of the most significant adjustments. Salaries and Wages Roats test year wage expense as reported in its Application was $94,570 for employees and $7,00 for officers, for a combined total of $3,670. Roats proposed wage expense as shown in its Application is $90,470 for employees and $49,666 for officers, or a combined total of $440,36. Test year wages

16 Docket UW 66 Staff/00 Yamada/5 3 were adjusted to reflect actual wages shown on Roats payroll summary. 9 Roats corrected test year wage expense is $8,00 for officers and $6,660 for employees, for a combined total of $344, In its Application, Roats requested the addition of a new employee with an annual salary of $75,000. Roats also requested a. percent wage increase for seven existing employees, including officers. Based on wage information 0 for comparable positions from the American Water Works Association (AWWA) and the Oregon Employment Department, Staff determined that the proposed wages for the new employee and six of the seven existing employees were justified. These adjustments resulted in a total Employee Salaries & Wages expense of $,70. However, this amount was reduced by $6,77, to $95,547, to fully remove the wages associated with Roats Cross Connection Control program from rates, as discussed later in my testimony. Including the aforementioned. percent wage increase, the Stipulating Parties agreed to a total Officer Salaries & Wages expense of $66,30, for a combined Salaries & Wages expense of $46,847. Employee Pension and Benefits Roats test year Pension and Benefits expense, as reported in its Application, was $75,469. Roats proposed Pension and Benefits expense was $9,37. Based on documentation provided by Roats, the test year expense was 9 See Exhibit Staff/03, Yamada/37, Roats response to Staff Data Request 44 a. 0 See Exhibit Staff/03, Yamada/8

17 Docket UW 66 Staff/00 Yamada/6 adjusted to $73,76. This amount was increased to reflect an.7 percent increase in the Company s health insurance rates and a 4 percent increase in 3 the Company s dental insurance rates. The cost of benefits for Roats new employee and for one existing employee who did not previously receive employee benefits was also included. The Stipulating Parties agreed to an annual Pension and Benefits Expense of $4,704. Purchased Water The Company had no Purchased Water expense in the test year. Roats Application shows a proposed Purchased Water expense of $9,353 for domestic service and $4,740 for irrigation service, for a combined Purchased Water expense of $7,093. Roats proposed domestic Purchased Water expense consists of the cost to purchase bulk water from the City of Bend to serve customers in The Pines and Crown Villa. Based on Pines and Crown Villa consumption information provided by Roats as well as the City of Bend s new bulk water rate, which increased from $.8 to $.86 per 00 cf effective July, 06, the Stipulating Parties agreed to a domestic Purchased Water expense of $8,570. Roats proposed irrigation Purchased Water expense consists of the cost to purchase irrigation water from Arnold Irrigation District (Arnold) to serve the Juniper irrigation customers. With its Application, Roats submitted documentation showing that the City of Bend paid Arnold $38,030 for irrigation water to serve Juniper customers throughout the 06 irrigation See Exhibit Staff/03, Yamada/9, Roats response to Staff Data Request 68. See Exhibit Roats Initial Testimony, Page 5

18 Docket UW 66 Staff/00 Yamada/7 season. 3 However, this amount included the cost to serve irrigation customers in Nottingham Square, which is not included in the portion of the Juniper system that Roats will acquire. Roats and Staff agreed to decrease the irrigation Purchased Water expense by 5 percent, to $3,35, to remove the cost of serving the Nottingham Square neighborhood. The Stipulating Parties agree to a final Purchased Water expense of $60,895, consisting of $3,35 for irrigation customers and $8,570 for domestic (i.e., The Pines and Crown Villa) customers. Purchased Power As shown on its Application, Roats test year Purchased Power expense was $7,3. The test year expense was adjusted to $8,076 based on actual bills submitted by the Company. The power costs associated with the portion of the Juniper system to be acquired by Roats were then added to the test year amount. Roats submitted documentation showing that the City of Bend s power costs associated with this portion of the Juniper domestic and irrigation systems 6 averaged $98,6 over three fiscal years from 0 to The Stipulating Parties agreed to a Purchased Power expense of $43,790 for domestic service and $7,40 for irrigation service, for a combined Purchased Power expense of $6,9. 3 See Exhibit Staff/03, Yamada/4. 4 See Exhibit Staff/03, Yamada/58, Roats response to Staff Data Request.

19 Docket UW 66 Staff/00 Yamada/ O&M Materials/Supplies Roats Application shows a test year O&M Materials/Supplies expense of $6,76. However, based on actual receipts and invoices provided by the Company, Roats test year expense in this account was adjusted to $4,30. The O&M costs associated with the portion of the Juniper system to be acquired by Roats were then added to the test year amount. Roats submitted documentation showing that the City of Bend s O&M Materials/Supplies costs associated with this portion of the Juniper system averaged $79,505 for the domestic system and $9,7 for the irrigation system over three fiscal years 0 from 0 to The Stipulating Parties agreed to an O&M Materials/Supplies expense of $,89 for domestic service and $9,7 for irrigation service, for a combined total of $3,046. Contract Services Accounting Roats test year Contract Services Accounting expense as reported in its Application was $5,89. Roats proposed expense was $6,88. Roats submitted documentation consisting of invoices for accounting services totaling $5,94 in the test year. However, these invoices included charges for services relating specifically to the Juniper acquisition. The Stipulating Parties agreed to capitalize $3,88 of Roats test year accounting costs, resulting in a Contract Services Accounting expense of $, Ibid.

20 Docket UW 66 Staff/00 Yamada/ Contract Services Legal Roats Contract Services Legal expense as reported in its Application was $9,374 in the test year, with a proposed expense of $0,3 in this account. While the test year amount was confirmed in invoices submitted by the Company, a charge of $,9 was included twice. The duplicate charge was removed, resulting in a revised test year amount of $8,55. Of this amount, the Stipulating Parties agreed to remove and instead capitalize $7,408 in legal expenses relating specifically to the Juniper acquisition, as these expenses are more appropriately capitalized. The resulting Contract Services Legal expense is $748. Contract Services Labor As shown in its Application, Roats Contract Services Labor expense was $,0 in the test year. Roats requested an increase of $09,9, for a total of $0,934 in this account. The requested increase consisted of the City of Bend s labor costs attributable to the irrigation system, averaging $99,87 over 6 three fiscal years, plus a 0 percent increase for uncertainty. 6 The Stipulating Parties agreed to remove the requested 0 percent increase and agreed to include the entire average City of Bend expense, resulting in an annual Contract Services Labor expense of $00,849. Rental of Building/Real Property As shown in its Application, Roats test year Building Rental expense was $97,400. In its Application, Roats initially requested a total of $0,57 in this 6 UW 66 Roats Initial Testimony at.

21 Docket UW 66 Staff/00 Yamada/0 account. However, the Company subsequently revised its request to $6,036 to match the monthly amount of $0,503 that was previously approved by the 3 Commission in UI The Stipulating Parties agreed to allow this increase, resulting in a total expense of $6,036 in this account. Cross Connection Control As shown in its Application, Roats test year expense in this account was $,495, and corresponding Cross Connection Control revenues totaled $48,988. Roats proposed to increase the expense amount to $4,745 and to eliminate the corresponding revenue allocation. As some of the customers in the portion of the Juniper system that Roats will acquire may receive backflow testing as part of agreements with their homeowners associations, and therefore would not need to participate in Roats Cross Connection Control Program, it was not possible to estimate confidently the number of Juniper customers that would utilize Roats Cross Connection Control Program, and in turn impossible to accurately forecast the necessary Cross Connection Control expense. Therefore, the Stipulating Parties agreed to remove all expenses and revenues associated with the Cross Connection Control Program from the rates set in UW 66. To ensure that the removal of the Cross Connection Control Program would have no net impact on the revenue requirement, the Stipulating Parties agreed to remove the entire test year Cross Connection Control expense of $,495 as well as $6,77 from Employee Salaries and Wages. The resulting Cross Connection Control expense is $0. 7 Order No. 3066, issued on February 6, 03.

22 Docket UW 66 Staff/00 Yamada/ Q. PLEASE DISCUSS THE AGREEDUPON CHANGES TO ROATS PROPOSED PLANT. A. As shown in its Application, the Company s test year Utility Plant in Service was $5,847,599, and Roats proposed no adjustment to this amount. This amount included the assets that Roats plans to acquire from the City of Bend at an original cost of $,46,580. Roats proposed Accumulated Depreciation of $,70,03, resulting in Net Invested Utility Plant of $3,677,568. Based on depreciation schedules 8 provided by the Company, Roats test year Utility Plant in Service was adjusted to $4,789,909, which includes $,706,78 in Contributions in Aid of Construction (CIAC). The Stipulating Parties also agreed to include the Juniper assets that Roats plans to acquire at $,400,000, an engineering study relating to the Juniper purchase totaling $,484, and accounting and legal costs relating to the Juniper purchase totaling $0,596. The Stipulating Parties further agreed that $04,096 in capital assets that were put into service during Roats 0506 fiscal year, ending September 30, 06, were prudent. After these adjustments, Roats total Utility Plant in Service is $6,36,085. The Stipulating Parties agreed to Accumulated Depreciation of $,45,49, which includes depreciation on inservice assets through September 30, 06, totaling $,869,936, six months depreciation on the Juniper assets totaling $4,, and depreciation on CIAC assets totaling 8 See Exhibit Staff/03, Yamada/97, Roats response to Staff Data Request 04.

23 Docket UW 66 Staff/00 Yamada/ 3 $545,555. As shown below, the resulting Net Invested Utility Plant that is included in rate base is $,739, TABLE 4 STIPULATED NET INVESTED UTILITY PLANT Utility Plant in Service $6,36,085 Accumulated Depreciation $,45,49 Net Utility Plant $3,900,594 CIAC $,706,78 Accum. Amortization of CIAC $ 545,555 Net Contributed Plant $,6,7 Net Invested Utility Plant $,739, Q. PLEASE DISCUSS THE PRUDENCE OF ROATS PROPOSED ACQUISITION OF JUNIPER. A. As discussed above, Staff conducted a comprehensive review of the Juniper acquisition both in this case and in Docket UF 498, the Company s application to finance the purchase. In both cases, Staff concluded that, due to the purchase, Roats current customers would experience significant benefits over a 0year period. Staff s public meeting memo, including recommendations adopted by the Commission at its November 8, 06, public meeting, contains a detailed discussion of Staff s analysis. 0 Staff therefore finds that the 3 Company s acquisition of the Juniper Utility system is prudent. 9 See complete invested & contributed plant depreciation schedules in Exhibit Staff/0, Yamada/83. 0 In re Roats Water System Inc., OPUC Docket No. UF 498, Order No. 643 (Nov. 8, 06).

24 Docket UW 66 Staff/00 Yamada/ Q. PLEASE COMPARE THE COMPANY S PROPOSED RATE BASE AND THE AGREEDUPON RATE BASE. A. The Company s proposed rate base as shown in its Application was $3,80,4 for the domestic system and $36,745 for the irrigation system, for a combined total of $3,856,886. As discussed above, utility plant was adjusted to include new assets from Roats 0506 fiscal year, and the Stipulating Parties agreed, for purposes of this case, to remove CIAC from rate base. The Stipulating Parties agreed to a rate base of $,860,040 for the domestic system and $3,39 for the irrigation system, for a combined total of $,89,43. As there is no book value associated with the Juniper irrigation plant, irrigation rate base consists only of working cash. Q. WHAT COST OF CAPITAL DID THE COMPANY REQUEST IN ITS APPLICATION? A. Roats requested a 0.03 percent cost of capital, which included an.5 percent Return on Equity (ROE). Q. PLEASE SUMMARIZE THE COST OF CAPITAL AGREED TO BY THE STIPULATING PARTIES. A. Assuming the Juniper acquisition closes, the Stipulating Parties agreed to a 7.89 percent cost of capital for the domestic system and a 9.5 percent cost of capital for the irrigation system, for an overall cost of capital of 7.9 percent. The first Partial Stipulation in this case also makes clear that the issue of CIAC may be addressed in a future rate case. The Stipulating Parties agreed to a 9. percent overall cost of capital absent the Juniper acquisition. See Exhibit Staff/0 Yamada/.

25 Docket UW 66 Staff/00 Yamada/ The derivation of the combined domestic & irrigation cost of capital is shown in Table. TABLE 5 STIPULATED COST OF CAPITAL Amount Cost Weighted Cost Debt $,560, % 3.53% Equity $,33, % 4.38% Total $,89,43 7.9% Q. WHAT COST OF EQUITY DID THE PARTIES STIPULATE TO IN THIS PROCEEDING? A. As shown in Table 3, the Stipulating Parties agreed to a 9.5 percent ROE in this docket. Q. WHAT COST OF DEBT IS BEING USED IN THIS PROCEEDING? A. As shown in Table 3, the cost of debt is 6.55 percent. Roats debt consists of a $60,000 loan from W.K. Roats at 7 percent interest as well as the proposed $,400,000 loan from the City of Bend at 6.5 percent interest ISSUE 6 NONREVENUE REQUIREMENT ISSUES Q. PLEASE EXPLAIN HOW THE RATES WILL BE IMPLEMENTED. A. The Stipulating Parties agreed on the following timelines for implementing new rates in this case: If the Juniper Utility system acquisition closes prior to the rate effective date, Roats agrees to charge newly acquired domestic customers pursuant to its current tariffs until new rates, inclusive of the Juniper acquisition, become effective. For standard irrigation service, and

26 Docket UW 66 Staff/00 Yamada/ irrigation and domestic service for The Pines and Crown Villa, Roats agrees to make an advice filing with the Commission requesting standard irrigation rates for Juniper customers and domestic rates and irrigation for The Pines and Crown Villa be approved, subject to refund, equivalent to the with Juniper rates agreed to by the Stipulating Parties. If the sale has not closed by the rate effective date, Roats agrees to charge current customers stipulated rates without the Juniper acquisition. If the sale closes after the rate effective date but before September, 07, Roats agrees to file compliance tariffs to implement stipulated rates inclusive of the Juniper acquisition within three business days of the date of the closure. If Roats proceeds with the purchase but it does not close prior to September, 07, Roats agrees that it will file a new general rate case in order to include the Juniper acquisition in rates no later than three months following the closing date of the sale Q. DID THE STIPULATING PARTIES AGREE TO A RATE IMPLEMENTATION DATE? A. The Stipulating Parties agreed that approved rates should be implemented as soon as practicable upon a final Commission order approving rates in this proceeding. Roats will begin to incur operating costs and revenues associated with the Juniper property as of the close of the acquisition.

27 Docket UW 66 Staff/00 Yamada/ Q. DID THE STUPULATING PARTIES AGREE TO A POWER COST ADJSUTMENT TARIFF? A. Yes. The Stipulating Parties agreed to a power cost adjustment tariff that will apply as an addition to the standard domestic commodity rate per 00 cf of water used. The power cost adjustment rate will be set to zero until the Company files an updated tariff sheet triggered by an increase in power cost rates charged by one or more of its electricity suppliers. Changes to the power cost adjustment rate will be computed as follows: Power Cost [ per 00 cf ] [ Supplier Supplier Allocator % ] [ Increase or] Decrease % For the purpose of applying this equation, the Stipulating Parties agreed to a Power Cost of $0.8 per 00 cf, computed by dividing Roats domestic power costs of $43,790 by Roats domestic consumption (excluding The Pines and Crown Villa) of 50,99,98 cf. Based on the portion of Roats power expense supplied by each company, the Stipulating Parties agreed to Supplier Allocators of percent for Pacific Power and.3 percent for Central Electric Cooperative (CEC). The Supplier Increase or Decrease Percentage will reflect the overall percentage rate increase (or decrease) put in place by the respective supplier.

28 Docket UW 66 Staff/00 Yamada/ ISSUE 7 RATE SPREAD AND RATE DESIGN Q. PLEASE EXPLAIN WHY THE REVENUE REQUIREMENT FOR IRRIGATION IS SEPARATED FROM THE REST OF THE REVENUE REQUIREMENT. A. In its Application, Roats submitted separate revenue requirements for its proposed domestic and irrigation operations. During the rate case, Roats further expressed a desire to maintain separate domestic and irrigation revenue requirements. As such, Staff agreed to and developed an irrigation revenue requirement to display revenues, expenses, and rate base information relating to Roats irrigation operations separately from the rest of Roats domestic operations. Q. PLEASE EXPLAIN THE ISSUE OF COST ALLOCATION TO IRRIGATION. A. As stated in Roats response to Staff s Data Request 7, [t]he irrigation system is physically separate from the domestic system. Irrigation is a standalone 5 system with its own plant and expenses. 3 To expand on this statement, as the Juniper domestic and irrigation systems that Roats plans to acquire from the City of Bend are physically separated from one another, many of the expenses relating to the systems can easily be separated as well. For example, while the domestic Juniper system will be served mainly with water pumped by Roats, Roats will purchase water from Arnold Irrigation District to serve the Juniper irrigation customers. As such, the Purchased Water expense for irrigation can be directly assigned to irrigation, eliminating the need to 3 See Exhibit Staff/03, Yamada/8, Roats response to Staff Data Request 7.

29 Docket UW 66 Staff/00 Yamada/ estimate cost allocations between the two systems. Displaying the domestic and irrigation revenue requirements separately more clearly shows these distinctions between the two systems. Q. PLEASE EXPLAIN HOW SHARED EXPENSES ARE ALLOCATED BETWEEN THE DOMESTIC AND THE IRRIGATION REVENUE REQUIREMENTS. A. While the majority of costs can be directly assigned to either domestic or irrigation operations as described above, other costs must be allocated to irrigation on an estimated percentage basis. For example, a portion of Roats Building Rental expense must be allocated to irrigation operations, as no portion of this cost is directly attributable to irrigation. The Stipulating Parties agreed to four different methods for allocating nondirectlyassignable costs to irrigation. These methods are discussed in further detail below. Specific methods used for each account can be found in Exhibit Staff/0, Yamada/45. Percentage of Customers With the addition of,660 Juniper domestic and irrigation customers to Roats current customer count of,749, Roats will have a total of 3,409 customers following its acquisition of Juniper. 839 customers, or approximately 4.6 percent of the total, will be irrigation customers. As such, certain expenses were allocated 4.6 percent to the irrigation revenue requirement, particularly for accounts consisting of fixed expenses that span an entire year. For

30 Docket UW 66 Staff/00 Yamada/ example, 4.6 percent of the Property Tax expense was allocated to irrigation, while the remaining percent was allocated to domestic service. Percentage of Customers, Adjusted for Irrigation Months The irrigation allocation in a number of expense accounts was adjusted to reflect the fact that irrigation service is only offered for approximately seven months each year. To achieve this, the irrigation customer percentage discussed above was multiplied by seven twelfths, resulting in an allocation of 4.36 percent to irrigation. Percentage of Salaries As some expenses vary depending on employee salaries, some expense accounts were allocated according to the overall percentage of employee labor that will be dedicated to irrigation operations. Roats Application proposed to use contract labor for the irrigation system; as such, Roats employees are planned to work exclusively on the domestic system. However, the duties of Roats officers apply to both irrigation and domestic services. Therefore, for certain accounts, the 4.36 percent irrigation allocation discussed above was further adjusted according to the proportion of officer salaries to total salaries. As approximately 57.7 percent of total salaries and wages are attributable to officers, this method results in an allocation of approximately 8.8 percent to the irrigation revenue requirement. No Allocation to Irrigation Finally, for some accounts, no portion of the expense was allocated to irrigation. The Training and Certification expense, for example, was allocated

31 Docket UW 66 Staff/00 Yamada/ entirely to domestic service. Operation of an irrigation system does not require domestic water distribution certifications; only the domestic customers would benefit from Roats Training and Certification expense, and so no portion was assigned to irrigation. Q. WHAT RATES DID THE PARTIES STIPULATE TO IN UW 66? A. The Stipulating Parties stipulated to the rates shown in Staff/0, Yamada/7. Q. WHAT ARE THE RATE COMPONENTS? A. Domestic rates are comprised of a base rate that is charged regardless of water use and a commodity rate that is charged per 00 cf of water used. As irrigation water is unmetered, irrigation rates consist of a flat monthly fee. The standard commodity rate for residential/commercial customers (excluding those in The Pines/Crown Villa) is $0.95 for each 00 cf of water used. Base rates differ due to the size of the meter. Larger meters will have increasingly higher base rates. Q. ARE THE RESULTING RATES FAIR AND RESONABLE? A. Yes. Q. PLEASE EXPLAIN THE DIFFERENCE BETWEEN ROATS PROPOSED RATES/RATE DESIGN AND THE STIPULATED RATES/RATE DESIGN. A. The stipulated 3/4" and 5/8 base rate, which applies to the majority of current Roats customers, is approximately 9 percent lower than the rate proposed in Roats Application. The stipulated standard variable rate is approximately 30 percent lower than the rate proposed in Roats Application. Additionally, the Stipulation includes an irrigation rate for customers in The Pines and Crown

32 Docket UW 66 Staff/00 Yamada/ Villa which is separate from the standard irrigation rate. Although Roats did not initially request a separate irrigation rate for The Pines and Crown Villa in its Application, the Stipulating Parties agreed that, due to the small size of these lots, a lower irrigation rate was appropriate. Furthermore, following its initial Application, Roats requested that base rates be established for standard domestic 3, 4, and 6 service. Though there are currently no customers at these line sizes in either Roats current service territory or the areas it proposes to acquire, the Stipulating Parties agreed to establish rates for these line sizes. Finally, while the rates proposed in Roats initial Application were inclusive of the Juniper acquisition, the Stipulating Parties agreed to two sets of rates one which includes the Juniper acquisition, and one which does not, in consideration of the timing differences between when rates may be implemented in this case and when the acquisition may close, as discussed below. Q. PLEASE EXPLAIN THE DEVELOPMENT OF RATES BOTH INCLUSIVE AND EXCLUSIVE OF THE JUNIPER ACQUISITION. A. Due to a lack of certainty about the exact date upon which the transaction between Roats and the City of Bend would close, the Stipulating Parties agreed that rates should be developed to address the possible scenario of the sale not closing as expected. To determine rates without Juniper, all expenses, revenues, and plant associated with Juniper was removed from the Juniperinclusive revenue requirement. The specific adjustments to the revenue requirement can be found in Exhibit Staff/0, Yamada/. The two sets of rates

33 Docket UW 66 Staff/00 Yamada/ can be found in Exhibit Staff/0, Yamada/7. As the Juniper acquisition would nearly double Roats customer count, distributing costs over more customers (economies of scale) the rates inclusive of the Juniper acquisition are lower than the rates exclusive of it. Unless otherwise noted, any discussion of the new rates throughout this testimony refers to the set which is inclusive of the Juniper acquisition. Q. DOES THAT CONCLUDE YOUR TESTIMONY? A. Yes.

34 CASE: UW 66 WITNESS: STEPHANIE YAMADA PUBLIC UTILITY COMMISSION OF OREGON STAFF EXHIBIT 0 Witness Qualification Statement January 5, 07

35 Staff/0 Yamada/ WITNESS QUALIFICATION STATEMENT NAME: EMPLOYER: TITLE: Stephanie Yamada Public Utility Commission of Oregon Utility Analyst, Telecommunications and Water Division. ADDRESS: 0 High St SE, Suite 00, Salem, OR, 9730 EDUCATION: EXPERIENCE: Bachelor of Science, Accounting, University of Oregon Employed with the Oregon Public Utility Commission since 03. I am currently a Utility Analyst for the Telecommunications and Water Division.

36 CASE: UW 66 WITNESS: STEPHANIE YAMADA PUBLIC UTILITY COMMISSION OF OREGON STAFF EXHIBIT 0 Exhibits in Support of Testimony January 5, 07

37 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Combined Domestic & Irrigation Revenue Requirement Staff/0 Yamada/ Acct No. REVENUES Test Year Proposed Company Adjustments Proposed Company Totals Total PUC Adjustments PUC Proposed Results With Juniper Adjustments to Remove Juniper PUC Proposed Results Without Juniper 460 Unmetered Water Sales $ $ $ $ $ $ $ 46. Residential Water Sales (Domestic) $ 790,675 $ 96,977 $,087,65 $ 65,548 $,353,99 $ (7,458) $,35, Commercial Water Sales (Domestic) $ 5,57 $ 84,704 $ 30, $ (97,85) $,370 $,7 $ 34, Fire Protection (Domestic) $ 4,00 $ 4,797 $ 8,997 $ 0,407 $ 9,404 $ $ 9,404 JUNIPER Residential $ 0,793 $ 8,99 $ 303,7 $ (303,7) $ $ $ The Pines (Domestic) $ 49,65 $ 8,648 $ 68,99 $ (68,99) $ $ $ Crown Villa (Domestic) $ 9,94 $ 3,74 $ 3,638 $ (3,638) $ $ $ 465 JUNIPER Irrigation $ $ 399,443 $ 399,443 $ 7,8 $ 406,74 $ (406,74) $ JUNIPER Irrigation Common Areas $ $ 46,008 $ 46,008 $ (46,008) $ $ $ 47 Miscellaneous Revenues $ 539 $ (539) $ $ $ $ $ 47 Cell Tower/Rent from Util. Property $ $ $ $ $ $ $ 475 Cross Connection Control Revenue $ 48,988 $ (48,988) $ $ $ $ $ 0 Juniper Surcharge $ $ $ $ $ $ $ TOTAL REVENUE $,360,77 $ 887,704 $,47,98 $ (46,83) $,00,698 $ (60,064) $,399,633 OPERATING EXPENSES 60 Salaries and Wages Employees $ 94,570 $ 95,900 $ 90,470 $ 5,077 $ 95,547 $ $ 95, Salaries and Wages Officers $ 7,00 $ 3,566 $ 49,666 $ 6,635 $ 66,30 $ $ 66, Employee Pension & Benefits $ 75,469 $ 5,768 $ 9,37 $ 3,466 $ 4,704 $ $ 4, Purchased Water $ $ 7,093 $ 7,093 $ (0,98) $ 60,895 $ (60,895) $ 6 Telephone/Communications $,79 $,8 $,97 $ (798) $,499 $ $, Purchased Power $ 7,3 $ 9,660 $ 36,98 $ (0,790) $ 6,9 $ (98,6) $ 8, Fuel for Power Production $ $ $ $ $ $ $ 67 Other Utilities $,03 $ 03 $,35 $ (96) $,039 $ $, Chemical / Treatment Expense $ $ $ $ $ $ $ 69 Office Supplies $,09 $, $ 3,30 $ (4,589) $ 8,73 $ (794) $ 7, Postage $ 977 $,8 $,798 $ (,08) $,770 $ (878) $ O&M Materials/Supplies $ 6,76 $ 88,833 $ 5,009 $ (,963) $ 3,046 $ (70,73) $ 4,34 6 Repairs to Water Plant $ 4,848 $ 74 $ 5,590 $ (737) $ 4,854 $ $ 4, Contract Svcs Engineering $ 35 $ 3 $ 346 $ (3) $ 35 $ $ Contract Svcs Accounting $ 5,89 $,59 $ 6,88 $ (4,064) $,754 $ $, Contract Svcs Legal $ 9,374 $ 937 $ 0,3 $ (9,564) $ 748 $ $ Contract Svcs Management Fees $ $ $ $ $ $ $ 635 Contract Svcs Testing $ 5,463 $ (,535) $,98 $ $,98 $ $, Contract Svcs Labor $,0 $ 09,9 $ 0,934 $ (0,085) $ 00,849 $ (99,87) $,0 637 Contract Svcs Billing/Collection $ 9,53 $ 6,86 $ 35,539 $ (,70) $ 33,369 $ (6,753) $ 6, Contract Svcs Meter Reading $ $ $ $ $ $ $ 639 Contract Svcs Other $ 8,84 $ 884 $ 9,75 $ (,38) $ 8,487 $ $ 8, Rental of Building/Real Property $ 97,400 $,857 $ 0,57 $ 5,779 $ 6,036 $ $ 6, Rental of Equipment $ $ $ $ $ $ $ 643 Small Tools $ 948 $ 95 $,043 $ (3) $ 90 $ $ Computer/Electronic Expenses $ 3,659 $ 366 $ 4,05 $ (366) $ 3,659 $ $ 3, Transportation $ 36,4 $ 7,8 $ 43,370 $ (,90) $ 40,45 $ $ 40, Vehicle Insurance $ 8,7 $,000 $ 9,7 $ (335) $ 8,78 $ $ 8, General Liability Insurance $ 0,89 $,739 $ 3,630 $ 5,957 $ 9,587 $ $ 9, Workers' Comp Insurance $ 5,906 $ 4,433 $ 0,339 $ (36) $ 0,03 $ $ 0, Insurance Other $ 85 $ $ 85 $ (85) $ $ $ 666 Amortz. of Rate Case $ $,800 $,800 $ 6,667 $ 9,467 $ $ 9,467 Gross Revenue Fee (PUC) $ $ 6,744 $ 6,744 $ (738) $ 6,005 $ (,806) $ 4, Bad Debt Expense $ $ $ $ $ $ $ 67 Cross Connection Control Program $,495 $,50 $ 4,745 $ (4,745) $ $ $ 673 Training and Certification $,570 $ 658 $,8 $ 60 $,88 $ $, Consumer Confidence Report $ $ $ $ $ $ $ 675 Miscellaneous Expense $ 3,39 $,333 $ 4,66 $ 5,67 $ 0,333 $ (8,043) $,90 OE Public Relations/Advertising $ 89 $ 9 $ 08 $ (9) $ 89 $ $ 89 OE Wheeling Fee $,589 $,59 $ 3,848 $ (36) $ 3,486 $ $ 3,486 OE3 Meter Change Out $ 8,475 $ (5,650) $,85 $ 6,998 $ 9,83 $ (9,83) $ OE4 $ $ $ $ $ $ $ OE5 $ $ $ $ $ $ $ TOTAL OPERATING EXPENSE $ 853,33 $ 704,090 $,557,3 $ (0,438) $,536,786 $ (467,666) $,069,9 OTHER REVENUE DEDUCTIONS Depreciation Expense $ 36,08 $ $ 36,08 $ (49,56) $ 86,555 $ (4,) $ 7, Amort of Plant Acquisition Adjustment $ $ $ $ $ $ $ 407 Amortization Expense $ $ $ $ $ $ $ 408. Property Tax $ 4,759 $,738 $ 37,497 $ (,5) $ 34,985 $ (,368) $ 3, Payroll Tax $ 3,89 $ 5,70 $ 47,909 $ 488 $ 48,397 $ $ 48, Other $ $ $ $ $ $ $ 409. Federal Income Tax $ $ 54,99 $ 54,99 $ (,5) $ 53,470 $ (,844) $ 50, Oregon Income Tax $ $ 7,594 $ 7,594 $ (4,87) $,73 $ (55) $, Extraordinary Items Income Tax $ $ $ $ $ $ $ TOTAL REVENUE DEDUCTIONS $,036,6 $ 85,33 $,86,95 $ (88,379) $,77,97 $ (506,65) $,66,30

38 Staff/0 Yamada/ NET OPERATING INCOME $ 34,5 $ 6,57 $ 386,686 $ (57,904) $ 8,78 $ (95,449) $ 33,33 UTILITY RATE BASE. Utility Plant Invested by Company $ 5,847,599 $ $ 5,847,599 $ (,38,96) $ 4,609,303 $ (,4,080) $ 3,87,3 7 + Contributions in Aid of Construction $ $ $ $,706,78 $,706,78 $ $,706,78 Excess Capacity $ $ $ $ $ $ $ Equals: Total Utility Plant $ 5,847,599 $ $ 5,847,599 $ 468,486 $ 6,36,085 $ (,4,080) $ 4,894,005 Accum. DepreciationInvested Plant $,70,03 $ $,70,03 $ (300,095) $,869,936 $ (4,) $,855,76 Accum. DepreciationCIAC $ $ $ $ 545,555 $ 545,555 $ $ 545,555 7 Contributions in Aid of Construction $ $ $ $,706,78 $,706,78 $ $,706,78 8 Accumulated Deferred Income Tax $ $ $ $ $ $ $ 7 + Accum. Amortization of CIAC $ $ $ $ 545,555 $ 545,555 $ $ 545,555 Equals: Net Invested Utility Plant $ 3,677,568 $ $ 3,677,568 $ (938,0) $,739,367 $ (,407,859) $,33,508 Plus: (working capital) $ $ 5 Materials and Supplies Inventory $ 50,000 $ $ 50,000 $ (5,000) $ 5,000 $ $ 5,000 WrkCash Working Cash (Total Op Exp /) $ 7,094 $ 58,4 $ 9,38 $ (,53) $ 8,065 $ (38,97) $ 89,093 TOTAL RATE BASE $ 3,798,66 $ 58,4 $ 3,856,886 $ (964,454) $,89,43 $ (,446,83) $,445,60 Rate of Return 8.53% 0.03% 7.9%.3% 9.%

39 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Staff/0 Yamada/3 Adjustment Summary (JuniperInclusive) Acct No. REVENUES Company Proposed PUC Adjustments PUC Proposed Results Explanation of PUC Proposal 460 Unmetered Water Sales $ $ $ 46. Residential Water Sales (Domestic) $,087,65 $ 65,548 $,353,99 Added Juniper, The Pines & Crown Villa to Account Commercial Water Sales (Domestic) $ 30, $ (97,85) $,370 Reduced overall expenses 46 Fire Protection (Domestic) $ 8,997 $ 0,407 $ 9,404 Added public fire revenue JUNIPER Resi Timb, Tillic, Blue, Mtn (D$ 303,7 $ (303,7) $ Moved to Acct 46. Residential Water Sales The Pines (Domestic) $ 68,99 $ (68,99) $ Moved to Acct 46. Residential Water Sales Crown Villa (Domestic) $ 3,638 $ (3,638) $ Moved to Acct 46. Residential Water Sales 465 JUNIPER Irrigation $ 399,443 $ 7,8 $ 406,74 Combined Common Area Irrigation into Account 465; reduced overall expenses JUNIPER Irrigation Common Areas $ 46,008 $ (46,008) $ Moved to Acct 465 Irrigation Water Sales 47 Miscellaneous Revenues $ $ $ 47 Cell Tower/Rent from Util. Property $ $ $ 475 Cross Connection Control Revenue $ $ $ 0 Juniper Surcharge $ $ $ TOTAL REVENUE $,47,98 $ (46,83) $,00,698 OPERATING EXPENSES 60 Salaries and Wages Employees $ 90,470 $ 5,077 $ 95,547 Added excluded employees; reduced by $6,74 to remove CrossConnection effect. 603 Salaries and Wages Officers $ 49,666 $ 6,635 $ 66,30 Corrected wage allocation to Officers; included.% increase for 3 officers. 604 Employee Pension & Benefits $ 9,37 $ 3,466 $ 4,704 Reflects 06 insurance increases; added benefits for two employees. 60 Purchased Water $ 7,093 $ (0,98) $ 60,895 Removed cost of irrigation for Nottingham Square. 6 Telephone/Communications $,97 $ (798) $,499 Reduced to actual bills; removed late fees, duplicates, & 0% increase 65 Purchased Power $ 36,98 $ (0,790) $ 6,9 Includes Bend's 3year average cost; 0% increase removed. 66 Fuel for Power Production $ $ 67 Other Utilities $,35 $ (96) $,039 Based on actual bills; removed 0% increase 68 Chemical / Treatment Expense $ $ 69 Office Supplies $ 3,30 $ (4,589) $ 8,73 Documented actuals less than reported; removed unnecessary purchases. 69. Postage $,798 $ (,08) $,770 Consists of $977 test year expense plus adjustment for new customers. 60 O&M Materials/Supplies $ 5,009 $ (,963) $ 3,046 Test year cost plus City of Bend's 3year average cost. 6 Repairs to Water Plant $ 5,590 $ (737) $ 4,854 Used documented test year actuals 63 Contract Svcs Engineering $ 346 $ (3) $ 35 Removed 0% increase 63 Contract Svcs Accounting $ 6,88 $ (4,064) $,754 Removed 0% increase and capitalized costs associated with Juniper acquisition 633 Contract Svcs Legal $ 0,3 $ (9,564) $ 748 Removed 0% increase and capitalized costs associated with Juniper acquisition 634 Contract Svcs Management Fees $ $ 635 Contract Svcs Testing $,98 $ $,98 No Adjustment 636 Contract Svcs Labor $ 0,934 $ (0,085) $ 00,849 Test year actuals plus City of Bend's 3year average irrigation labor cost. 637 Contract Svcs Billing/Collection $ 35,539 $ (,70) $ 33,369 Increased to account for new customers; removed 0% increase. 638 Contract Svcs Meter Reading $ $ 639 Contract Svcs Other $ 9,75 $ (,38) $ 8,487 Removed 0% increase & costs outside of test year 64 Rental of Building/Real Property $ 0,57 $ 5,779 $ 6,036 Increased to UI 36 approved amount. 64 Rental of Equipment $ $ 643 Small Tools $,043 $ (3) $ 90 Removed0% increase, duplicates, and expenses not in test year. 648 Computer/Electronic Expenses $ 4,05 $ (366) $ 3,659 Removed 0% increase 650 Transportation $ 43,370 $ (,90) $ 40,45 Removed 50% of requested increase for new vehicle 656 Vehicle Insurance $ 9,7 $ (335) $ 8,78 Test year actuals plus adjustment for new vehicle (DR 8) 657 General Liability Insurance $ 3,630 $ 5,957 $ 9,587 Test year actuals. 658 Workers' Comp Insurance $ 0,339 $ (36) $ 0,03 Test year actuals plus adjustment based on pay increases & new employee. 659 Insurance Other $ 85 $ (85) $ 666 Amortz. of Rate Case $,800 $ 6,667 $ 9,467 $37,866 over four years. 667 Gross Revenue Fee (PUC) $ 6,744 $ (738) $ 6,005 Calculated from revenue. 670 Bad Debt Expense $ $ 67 Cross Connection Control Program $ 4,745 $ (4,745) $ Removed. 673 Training and Certification $,8 $ 60 $,88 Test year actuals plus agreedupon adjustment. 674 Consumer Confidence Report $ $ 675 Miscellaneous Expense $ 4,66 $ 5,67 $ 0,333 Added bank charges that were previously excluded. OE Public Relations/Advertising $ 08 $ (9) $ 89 Test year actuals; removed 0% increase OE Wheeling Fee $ 3,848 $ (36) $ 3,486 Test year actuals; removed 0% increase OE3 Meter Change Out $,85 $ 6,998 $ 9,83 $58,938 over six years. Includes adjustment for additional costs not known previously. OE4 0 $ $ OE5 0 $ $ TOTAL OPERATING EXPENSE $,557,3 $ (0,438) $,536,786 OTHER REVENUE DEDUCTIONS 403 Depreciation Expense $ 36,08 $ (49,56) $ 86,555 Includes invested assests through 9/30/6 + 6 months on Juniper. 406 Amort of Plant Acquisition Adjustment $ $ $ 407 Amortization Expense $ $ $ 408. Property Tax $ 37,497 $ (,5) $ 34,985 Actuals plus adjustment for Juniper acquisition 408. Payroll Tax $ 47,909 $ 488 $ 48,397 Test year actuals plus proportional increase for salary increases & new employee.

40 408.3 Other $ $ $ 409. Federal Income Tax $ 54,99 $ (,5) $ 53,470 Calculated Oregon Income Tax $ 7,594 $ (4,87) $,73 Calculated Extraordinary Items Income Tax $ $ $ TOTAL REVENUE DEDUCTIONS $,86,95 $ (88,379) $,77,97 NET OPERATING INCOME $ 386,686 $ (57,904) $ 8,78 Staff/0 Yamada/4 UTILITY RATE BASE Utility Plant Invested by Company $ 5,847,599 $ (,38,96) $ 4,609,303 Adjusted/corrected Plant & CIAC schedules. 7 + Contributions in Aid of Construction $ $,706,78 $,706,78 Adjusted/corrected Plant & CIAC schedules. Excess Capacity $ $ $ Equals: Total Utility Plant $ 5,847,599 $ 468,486 $ 6,36,085 Accum. DepreciationInvested Plant $,70,03 $ (300,095) $,869,936 Adjusted/corrected Plant & CIAC schedules. Accum. DepreciationCIAC $ $ 545,555 $ 545,555 Adjusted/corrected Plant & CIAC schedules. 7 Contributions in Aid of Construction $ $,706,78 $,706,78 Adjusted/corrected Plant & CIAC schedules. 8 Accumulated Deferred Income Tax $ $ $ 7 + Accum. Amortization of CIAC $ $ 545,555 $ 545,555 Adjusted/corrected Plant & CIAC schedules. Equals: Net Invested Utility Plant $ 3,677,568 $ (938,0) $,739,367 Plus: (working capital) $ 5 Materials and Supplies Inventory $ 50,000 $ (5,000) $ 5,000 Reduced to match Annual Report. WrkCash Working Cash (Total Op Exp /) $ 9,38 $ (,53) $ 8,065 Calculated based on operating expenses. TOTAL RATE BASE $ 3,856,886 $ (964,454) $,89,43 Rate of Return 0.03% 7.9%

41 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Staff/0 Yamada/5 Cost of Capital Utility Proposed Rate of Return Test Year Rate of Return Staff Proposed Rate of Return 0.03% 8.53% 7.9% Debt Type Debt Balance Capital Structure Cost Weighted Cost Domestic W.K. Roats $ 60, % 7.00% 0.39% Domestic City of Bend $,400, % 6.50% 3.5% TOTAL DEBT $,560, % 3.53% Equity Type Equity Balance Capital Structure Cost Weighted Cost Domestic Working Cash $ 95, % 9.50% 0.3% Domestic Other $,04, % 9.50% 3.96% Irrigation Working Cash $ 3,39.% 9.50% 0.% TOTAL EQUITY $,33, % 4.38% TOTAL DEBT + EQUITY $,89,43 0% 7.9% Rate of Return

42 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Staff/0 Yamada/6 Roats' Current vs. Proposed Rates Rate Roats Current Roats Application Increase/ Decrease ($) Increase/ Decrease (%) Resi/Comm 3/4" and 5/8" Base Rate $ 6.80 $ $ % Resi/Comm " Base Rate $ 3.6 $ $ % Resi/Comm /" Base Rate $ $ 57.3 $ % Resi/Comm " Base Rate $ $ $ % Resi/Comm Commodity Rate $ 0.76 $.35 $ % The Pines/Crown Villa Base Rate None $ 7.58 N/A N/A The Pines/Crown Villa Commodity Rate None $.8 N/A N/A 4" Private Fire $ 5.00 $.74 $ (.6) 45% 6" Private Fire $.00 $ 6.04 $ (4.96) 45% 8" Private Fire $ 5.00 $ 8.39 $ (6.6) 44% 0" Private Fire $ 5.00 $ 3.40 $ (.60) 46% " Private Fire None $ 5.36 N/A N/A Public Fire None $ 0.37 N/A N/A Irrigation Standard None $ 47.3 N/A N/A

43 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Staff/0 Yamada/7 Stipulated Rates Rate Including Juniper Excluding Juniper Resi/Comm 3/4" and 5/8" Base Rate $ $ 40.4 Resi/Comm " Base Rate $ 48.7 $ Resi/Comm /" Base Rate $ $ Resi/Comm " Base Rate $ 74.6 $ 89.3 Resi/Comm 3" Base Rate $ $ Resi/Comm 4" Base Rate $ $, Resi/Comm 6" Base Rate $,67.5 $,0.77 Resi/Comm Commodity Rate $ 0.95 $ 0.95 The Pines/Crown Villa Base Rate $ 7.58 N/A The Pines/Crown Villa Commodity Rate $.86 N/A 4" Private Fire $ 5.34 $ " Private Fire $ 0.67 $ " Private Fire $ 7.07 $ " Private Fire $ 4.54 $ 4.54 " Private Fire $ $ Public Fire $ 0.46 $ 0.68 Irrigation Standard $ N/A Irrigation Pines/Crown Villa $ 3.6 N/A

44 Staff/0 Yamada/8 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Invested Plant C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR Acct No. Account Description 30 Organization Date Acquired Utility Plant Orig Cost LESS CIAC OtherBasi s Adj Total Adj Plant NARUC Asset Life Annual Deprec Final Month of Deprec Before Accumulated Deprec. Remain Plant Ending 05 Beg Franchises 303 Land and Land Rights Structures and Improvements Structures & wellw Jun 967,040, May 00 8, ,040 (0) 0 UW07 Other struc/imprv (Various dates) Jun 98 6,368 6, May , UW07 Pumphouse Jun 98,89, May , UW07 3door garage Jun 984 8,88 8, May , UW07 Finish work garage Jun 985,939, May ,939 (0) 0 UW07 Valve housing Jun May (0) 0 UW07 Pinebrook pumphouse Jun 988 9,990 9, May , UW07 Pinebrook backup plant Jun 989 6,580 6, May ,57 3,3 886 UW07 Pinebrook pumphouse Jun 989 6,470 6, May , Pinebrook landc/fence Jun 990,500, May , Cyclone fencing Jun 994 3,750 3, May ,657,093 5 UW07 Shop building/cyclone fencing Jun 997 5,54 5, May ,373,69 85 UW07 Chain link fence Jun 997,000, May UW07 Parker buildings Jun 003,00, May Structures & Improvements Jun 007,644, May ,97 88 Shop Yard Improvements Jun 00,496, May ,34 50 Telementary Jun 00 30,95 30, May ,46 7, Data Processing Center Remodel Jun 00 30,09 30, May ,6 6, Telementary Jun 0 37,009 37,009 50,057 May ,46 33, Storage Bldg Jun 0 8,446 8, May ,53 8 Equipment Lot Jun 0 0,33 0, May ,8 9, Telementary Jun 04,40, May ,57 4 Structure/Improve Jun 04 6,35 6, May , Collecting and Impounding Reservoirs 306 Lake, River and Other Intakes 307 Wells and Springs UW07 Wells & Springs various Jun 975 7,34 7, May 000, ,958, UW07 Fees new well Jun May (0) 0 UW07 Pinebrook well Jun 987,074, May ,898 9,75 4 UW07 Pinebrook well pipe Jun 990,376, May , UW07 Woodside well Jun 99 8,05 8,05 50, May ,605 4, UW07 Brookswood well Jun 993,496, May ,567, Infiltration Galleries and Tunnels 309 Supply Main 30 Power Generation Equipment 3 Pumping Equipment Pump Equip Jun 98 4,93 4, May ,93 (0) 0 uw07 Pump equipment Hamilton Jun 98 9,857 9, May 00, , uw07 Pump Jun May (0) 0 uw07 Pump equipment Hamilton Jun 983 5,80 5, May , uw07 Pump equipment Backup Jun 984,449, May ,449 (0) 0 uw07 Woodside booster pump Jun 985,773, May , uw07 Woodside pump Jun 987,7, May ,7 (0) 0 uw07 Pinebrook pumps Jun 988 6,763 6, May , uw07 Woodside pump new well Jun 99 5,56 5, May ,556,556,556,556,556,556,556,556,556,03 0 5, uw07 Brookswood pump set Jun 994 5,879 5, May ,588,588,588,588,588,588,588,588,588,5 0 5,879 (0) 0 uw07 Pump (homeplace) Jun May (0) 0 uw07 Pump (Pinebrook) Jun 00,30, May ,30 (0) 0 uw07 Pineridge pump circuit box Jun May (0) 0 uw07 Motor (well #) Jun 00,483, May , uw07 Micometer Jun May Pump Equip (DRW) Jun ,57 43,57 0,58 May ,36 4,36 4,36 4,36 4,36 4,36 4,36 4,36 4,36 4,36 43, Well Panels Jun 005 8,795 8, May , DRW Pump Equip Jun May Pump Equip (DRW) Jun 005 3,090 3, May ,090 (0) Pump Equipment Jan 006 4,5 4,5 0 6 Dec , Pump Equipment Jun 03,86, May , Water Treatment Equipment 330 Distribution Reservoir and Standpipes UW07 distrib mains/standpipes Jun 974 3,000 3, May , UW07 Water tank Pinebrook Jun 983 7,83 7, May ,83 (0) 0 UW07 Water tank Woodside Jun 984 3,55 3, May ,55 (0) 0 Pinebrook 300k Reservoir Jun ,695 95,695 30,94 May ,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 3,90 83,736,958 3,90 UW07 Jt venture storage tank Sep ,3 373,3 30 7,466 Aug ,,444,444,444,444,444,444,444,444,444,444,444 39,99 33,39,444 WSR Storage Tank Jun May WSR Loop Prv Jun 03,66, May ,4,4 409 WSR Storage Tank Jun May TRANSMISSION/DISTRIBUTION UW07 Other equipment Jun 98 4,468 4, May 03,97,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659,659, ,468 (0) 0 UW07 Services Woodside Jun 98,400, May , UW07 mainline plus / in meters below = Jun 98,056,056 5 May ,056 (0) 0 UW07 services (/ in meters below = 337) Jun May (0) 0 UW07 mainline (/ in meters below = 55) Jun 984,63, May ,63 (0) 0 UW07 Mainline Murphy Road Jun 986 6,60 6, May ,60 (0) 0 UW07 Murphy Road valves Jun May UW07 Pinebrook transfer main Jun 988,09, May , UW07 " transf main Badges to Pineb Jun ,74 35, May ,357, UW07 Pinebrook to Badges " main Jun ,38 77,38 40,548 May ,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935,935 50,789 6,593,935 UW07 " Reed Lane crossing Jun 990 8,059 8, May ,080,979 0 UW07 " Powers Road crossing Jun 99 7,809 7, May ,349 7, UW07 Badges/Parrell " (qual constr) Jun 99 75,87 75,87 40,56 May ,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895,895 44,063 3,754,895 UW07 Powers Road extension w/county reimb Jun ,349 (54,73) 9,076 40,467 May ,6 8, UW07 Benham Road Jun 993 6,769 6, May ,763 3, UW07 Parrell Road " main Jun 994 4,000 4,000 40,840 May ,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 75,438 66,563 3,550

45 Staff/0 Yamada/9 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Invested Plant C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR Acct No. Accumu Date Utility Plant LESS OtherBasi NARUC Annual Final Month Before lated Deprec. Remain Plant Account Description Acquired Orig Cost CIAC s Adj Total Adj Plant Asset Life Deprec of Deprec Ending 05 Beg UW07 Hwy 97 crossing Badger Jun 994 8,74 8, May ,649 4,093 9 UW07 Parrell Road completion Jun 995 6,748 6, May ,49 3,39 69 UW07 Murphy Road line extension Jun 997,80, May ,947, UW07 Parkway/Moose/Blakely Jun ,8 35, May ,449 0, UW07 Parkway Project Jun 003,500, May ,5 7, UW07 Blakely/Powers Jun 003 8,694 8, May ,956 6, UW07 Blakely/Powers Jun ,67 56,67 50,3 May ,3,3,3,3,3,3,3,3,3,3,3,638 43,59,3 UW07 Benham Road Jun 004,78, May , UW07 Parrell Road Jun ,858 63,858 50,77 May ,77,77,77,77,77,77,77,77,77,77,77 4,368 49,490,77 UW07 Porter/James Jun 004 4,778 4, May ,947 8, UW07 Stonehaven # Jun ,754 37, May ,495 9, UW07 Stonehaven # Jun ,6 30, May ,786 3, UW07 South Village Jun ,08 59,08 50,8 May ,8,8,8,8,8,8,8,8,8,8,8 3,93 45,788,8 / of water line Jun 005,498, May ,56 9, Coulter 005 costs Jun 005 4,46 4, May , Reed Lane East Jun ,769 44, May ,78 35, Blakely Rd Extension Jun ,87 30, May ,70 5,6 66 DRW Project Jun ,747 99,747 50,995 May ,995,995,995,995,995,995,995,995,995 8,453 8,93,995 DRW Project Jun 007 0,4 0, May ,690 8,55 05 Fincham/Parrell Extension Jun 007 3,853 3, May ,936 9, Blakely Rd Extension Jun 007 3,88 3, May , Badger " (quality contr.) Jun 007,308, May ,866 9, Capitalized Labor Jun 007,03, May ,04 0,88 44 Pioneer Crossing Jun 008,45, May ,657 9,769 9 COB Transfer Jun 008 7,375 7, May ,069 6, Badger Rd Jun 008,47, May Shop Yard Line Extension Jun 009 5,65 5, May ,50 03 Toyota Jun 009 5,935 5, May ,93 9 Telementary System Jun 009,95, May ,864 0, Toyota Jun 00,337, May ,09 47 Mt Bachelor MC Jun 0 49,643 49, May ,7 46, Brookswood Roundabout Jun 0 8,433 8, May ,98 7, Services 334 Meters and Meter Installations UW07 Meters (Various dates) Jun 98,765,765 5,38 May 00 4, , UW07 Meter installation (Various dates) Jun 98 4,558 4, May 00, , UW07 Meters Woodside Jun 98 4,705 4, May , UW07 Meters Homeplace Jun 98,77, May ,77 (0) 0 UW07 Meters $= w/$056 in mains Jun 98,055, May ,055 (0) 0 UW07 Meters $337 = w/$669 in mains Jun May (0) 0 UW07 Meters $55 = w/$63 in mains Jun 984,6, May ,6 (0) 0 UW07 Meters Murphy Road Jun 986,43, May ,43 (0) 0 UW07 Meters Woodside Jun 987,877, May , UW07 Head gate meters Jun 988,0,0 5 0 May ,0 (0) 0 UW07 Residential meters Woodside Jun 988,300, May ,300 (0) 0 UW07 Woodside meters Jun 989 4,0 4,0 5 May ,0 (0) 0 UW07 Woodside meters Jun 990,40, May , UW07 Woodside meters Jun 99,500, May , UW07 Master Fire Hydrant meter Jun Jun Master Fire Hydrant meter Jun May Meters AMR Jun 0 59,363 59,363 5,87 May ,375,375,375,375 9,498 49,865, Hydrants Hydrants (Various dates) Jun 98,500, May , Cross Connection Control (utility owned) 339 Other Plant 340 Office Furniture and Equipment Desk Jun May Shelves & counters Jun 995,55, May ,55 (0) 0 Desk & Chairs Jun 005,040, May File Cabinets Jun May Map File Cabinet Jun May Office Equipment Jun May Furniture Jun May Safe Jun 0,96, May ,353, Shelving Jun 04,605, May Transportation Equipment UW07 Chevrolet pickup Jun 994 5,58 5,58 5 3,647 May ,7 5,06 5,06 5,06 5,06, , UW07 Service truck Jun 995 4,385 4, May ,385 (0) 0 UW07 Dodge 4x4 dualy pickup Jun 998 3,778 3, ,540 May ,648 6,356 6,356 6,356 6,356 3, , UW07 Frieghtliner truck Jun 999 5,000 5,000 5,43 May ,50 3,000 3,000 3,000 3,000, , UW07 Rock tub Jun 999 3,500 3, May , UW07 93 Dodge pickup Jun 00 6,000 6, May ,00,00,00, , UW07 99 Ford Plumbing truck Jun 00 5,000 5,000 5,43 May ,50 3,000 3,000 3,000 3,000, , UW07 90 Ford ton Jun 00 7,500 7,500 5,500 May ,458 3,500 3,500 3,500 3,500, ,500 (0) 0 UW07 95 Dodge ton Jun 00,463,463 5,780 May ,039,493,493,493,493, , UW07 Rando water truck May 004,575, ,5 Apr ,50 3,5 3,5 3,5 3,5 3,5 3,5, , F350 Jun 005 5,000 5,000 5,43 May ,50 3,000 3,000 3,000 3,000, , Dump Truck Jun 006,000,000 5,74 May ,000,400,400,400,400, , Ford Truck Jun 008 8,750 8,750 5,50 May ,750,750,750,750, ,750 (0) 0 00 Dakota Jun 008 5,355 5, May ,07,07,07, ,355 (0) 0 Polaris Ranger meter reading vehicle Jun 009 0,999 0,999 5,57 May ,00,00,00,00,83 0 0, th Wheel Utility Trailer Jun 0 7,500 7,500 5,07 May ,500,500,500,500 6, F800 Jun 0,655,655 5,665 May ,33,33,33 7,964 3,69,33 Peterbuilt Truck & Transfer 0 yr serv lif Jan 05 50,000 50, ,000 Dec ,43 7,43 4,857 7,43 Service Truck w/equipment Jun ,000 May Tools, Shop, and Garage Equipment UW07 Tools Jun May UW07 Tools Jun May UW07 Saw Jun May UW07 Shop Vac Jun May

46 Staff/0 Yamada/0 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Invested Plant C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR Acct No. Accumu Date Utility Plant LESS OtherBasi NARUC Annual Final Month Before lated Deprec. Remain Plant Account Description Acquired Orig Cost CIAC s Adj Total Adj Plant Asset Life Deprec of Deprec Ending 05 Beg UW07 Backhow bucket Jun May UW07 Excavator bucket Jun 996 3,400 3, May ,400 (0) 0 UW07 Hot tap drill Jun 997,95, May ,95 (0) 0 UW07 Wacker Jun 999,945, May , UW07 Portable water tank Jun 000,700, May , UW07 Laser level Jun 000,600, May ,600 (0) 0 UW07 Weed trimmer Jun May UW07 Ackley tool Jun 00,000, May ,400,400,400,400, , UW07 Trench shoring Jun 00 3,670 3, May , UW07 Backflow tester Jun May (0) 0 UW07 Equipment bucket Jun 00 3,834 3, May ,834 (0) Camera/Vaccuum Jun 006,378, May , tool box/lawn mower Jun May Air Compressor Jun 0,469, May , Laboratory Equipment 345 Power Operated Equipment UW07 Hydraulic hammer/couples Jun 994,45,45 5,43 May ,485,485,485,485, , UW07 Dump truck & svc body Jun 995 0,764 0,764 5,076 May , 4,53 4,53 4,53 4,53, ,764 (0) 0 UW07 Hitachi excavator Jun ,800 48, ,880 May ,847 9,760 9,760 9,760 9,760 6, , UW07 Utility trailer Jun 997 5,95 5, May ,039,039,039, ,95 (0) 0 UW07 Scoop forks Jun 998,380, May , UW07 CAT 46C backhoe loader Jun ,970 53, ,397 May ,48 0,794 0,794 0,794 0,794 7, ,970 (0) 0 UW07 5x0 Flatbed tilt trailer Jun May (0) 0 UW07 30 CAT excavator Jun ,500 76, ,650 May ,463 5,300 5,300 5,300 5,300 0, , UW CAT loader Jun 000 3,850 3, ,85 May ,96 6,570 6,570 6,570 6,570 4, ,850 (0) 0 UW07 Econoline trailer Jun 00 3,700 3, May , UW07 Muval trailer Jun 00 3,000 3,000 5,300 May ,600,600,600,600, ,000 (0) 0 UW07 Cement mixer Jun May (0) 0 UW07 Breaking hammer Jun ,000 30, ,000 May ,750 6,000 6,000 6,000 6,000 4, , UW07 Trimmer Jun May UW07 Compressor Jun May UW07 Cutoff saw Jun May Mini Excavator Jun 005 4,800 4, ,80 May ,497 6,4 6,4 6,4 6,4 6,4 6,4 3, ,800 (0) 0 Trailer World Trailer Jun 006 5, (68) 5, May , Allu Trailer Jun 006 4,000 4,000 7,400 May ,000,000,000,000,000,000, , Heater/Pump House Jun 007,346, May , Welder Jun 03,4,4 7 4 May VAC Truck Jun 03 40,300 40, ,030 May ,38 5,757 5,757 5,83 4,468 5, Communication Equipment Radios Jun 994,754, May , Cell phone (45) way radio (63) Jun May Radios Jun May rd Party Interfact Jun 007,500, May , Data Logger & Accessories Jun May ELECTRONICS/COMPUTER uw07 Office equipment Jun May uw07 Office equipment Jun Jun uw07 Office equipment Jun Jun uw07 Misc equipment Jun Jun uw07 General equipment Jun Jun uw07 Equipment Jun Jun uw07 Mita copier Jun 986,4, Jun ,4 0 0 uw07 Computer & software Jun 99 4,36 4, Jun , uw07 Laptop computer Jun 993,85, Jun , uw07 Printer Jun Jun uw07 Copier Jun 995,443, Jun , uw07 Video camera Jun Jun uw07 Autocad computer software Jun Jun uw computer Jun 995,075, Jun ,075 (0) 0 uw07 Miscrosphere computer Jun 997 3,00 3, Jun , uw07 Pentium computer Jun 998,008, Jun , uw07 Computer printer Jun Jun uw07 Autocad computer software Jun Jun (0) 0 uw07 Computer Jun 00,6,6 5 3 Jun ,6 0 0 uw07 Dell computer Jun 004,394, Jun , uw07 Dell computer Jun 004,67, Jun , uw07 Dell computer Jun Jun Computer Jun 005,538, May , Hand held meter reader Jun 005,630, May , Web Remote Jun May Toshiba Laptop Jun May Copier Jun 008,93, May , Meter Reading Devices Jun May Computer Jun May Hydrant Software Jun May (0) 0 Computer Monitor Jun May SEMS Program Jun 0 6,750 6,750 3,350 May ,50,50, , Work Station Jun May SEMS Program Jan 05,400, Dec , Miscellaneous Equipment UW07 Air Cooler Jun May ACH Lockbox Jun 007,000, May , Hydrant Program Tools Jun 007,65, May , Service Line Puller Kit Jun 007,004, May , Gas Rammer Jun 008,00, May ,00 (0) 0 Compressor Jun 008 5,650 5, May , Pro Screen Jun 008 3,699 (0,000) 3, May , Industrial Shelving Jun 008,035, May ,035 (0) 0 Compactors Jun 008,00, May ,00 (0) 0 Mantis Cultivator Jun May gal fuel tank Jun 009,63,63 7,53 May ,80,80,80,80,80,80,6,35,35 Gas Rammer 4 cycle Jun 009,06, May ,84 Wes Entry Misc Plant Jan 05,00, Dec ,080 0

47 Staff/0 Yamada/ Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Invested Plant C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR Acct No. Account Description Date Acquired Utility Plant Orig Cost LESS CIAC OtherBasi s Adj Total Adj Plant NARUC Asset Life Annual Deprec Final Month of Deprec Before Accumulated Deprec. Remain Plant Ending 05 Beg ,57,468 (0,068) (54,73) 3,083,7 0 8,366 8,456 9,047 9,899,4 4,0 9,000 9,73,69 3,805 7,7 38,667 45,57 53,8 58,9 64,395 74,508 85,883 85,999 89,74 9,03 9,7 87,69 85, 79,797 79,866 8,369 78, 78,859 80,796 76,736 80,5,783,38,99,746 7,80 Assets added Parrell/Sage Trans/Dist Jun 05 3,33 3, May ,33 63 Parrell/Sage Trans/Dist Jun 05 4,5 4, May ,5 90 Murphy/Parrell Trans/Dist Jun 06 68,45 68,45 50,369 May ,45 34 Engineering Study Jan 06,484, Jun ,484 5 Services relating to Juniper purchase sta Jan 06 0,596 0, May , Juniper Juniper Acquisition Jun 06,400,000,400, ,000 May ,400,000 4,000 4,609,303 8,366 8,456 9,047 9,899,4 4,0 9,000 9,73,69 3,805 7,7 38,667 45,57 53,8 58,9 64,395 74,508 85,883 85,999 89,74 9,03 9,7 87,69 85, 79,797 79,866 8,369 78, 78,859 80,796 76,736 80,5,783,38,85,9 86,555 Total Accumulated Depr 9/30/06,869,936

48 Staff/0 Yamada/ Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Contributed Plant C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR Acct No. Account Description 30 Organization Date Acquired Utility Plant Orig Cost Total Adj Plant NARUC Asset Life Annual Deprec Final Month of Deprec Before Accumulated Deprec. Remain Plant Ending 05 Beg Franchises 303 Land and Land Rights Structures and Improvements Structures (CIAC $8,4.8) Jun 967 8, May 00, , Structures & Improvements Jun , May ,004,004,004,004,004,004,004 7,80 4,95,004 Shop Yard Structures & Improvements Jun , May ,378 37, Structure/Improve Jun 05 43, May ,446,446 4,945, Collecting and Impounding Reservoirs 306 Lake, River and Other Intakes 307 Wells and Springs DRW New Well Jun 005 8, May ,659,659,659,659,659,659,659,659,659,659 7,009 65,960,659 WSR #7 Jun , May ,000 30, Infiltration Galleries and Tunnels 309 Supply Main 30 Power Generation Equipment 3 Pumping Equipment uw07 Pump Equipment CIAC Portion $4,69.98 Jun 98 4,70 4, May 00, , uw07 Saffronics & New pump Jun 00, May ,893 4, Pump (DRW) Jun 005 3, May ,8 3,8 3,8 3,8 3,8 3,8 3,8 3,8 3,8,4 3, Pump well #9 Jun 008 0, May ,075,075,075,075,075,075,075 5,04 5,705,075 DRW Pump Equip Jun 04 3, May ,333,333 4,665 98,660, Water Treatment Equipment Water Treatment Plant date unknown Distribution Reservoir and Standpipes 33 TRANSMISSION/DISTRIBUTION UW07 Transmission and distribution mains Jun , May 03 63,33 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3,79 3, , UW07 Services Jun 965 3, May 05 3, , Other equipment Jun 98 4, May 03 6, , UW07 Mains Parrell Road Jun 98 5, May 03, ,344, Blakely Heights Jun 00, May ,70 7,506 8 Reed Lane West Jun , May ,76,76,76,76,76,76,76,76,76 5,877 69,943,76 PRIME project Jun , May ,80,80,80,80,80,80,80,80,80 5,9 4,53,80 Benham Road Extension Jun 006 5, May ,840,5 307 Deerfield Line Extension/Parrell Rd Jun 006 0, May ,8,8,8,8,8,8,8,8,8 0,55 90,378,8 Murphy Rd Job Jun 00 7, May ,939 5, Main Line Parkway Jun 0 75, May ,505,505,505,505 6,396 68,854,505 Murphy Rd Interchange Jun 04 8, May , Borden Rd Jun 04 8, May ,6 377 Shire Pipe Installation Jun 04 0, May , Supplies Jun 05 8, , Services 000 Hookups Jun 000, May , Hookups Jun 00 3, May ,873 8, Hookups Jun 00 3, May ,5, Hookups Jun 003 9, May ,800 6, Hookups Jun 004 7, May ,075 0, Hookups Jun 005 5, May ,059,059,059,059,059,059,059,059,059,059 0,853 4,090, Hookups Jun May Hookups Jun 007 9, May ,97 6, Hookups Jun 008 8, May ,74 6, Hookups Jun 009, May , Hookups Jun 00 5, May ,9 0 0 Hookups Jun 0 6, May , Hookups Jun 0 3, May ,08 9, Hookups Jun 03 7, May , Hookups Jun 04 7, May , Hookups Jun 05 0, May , Meters and Meter Installations Meters Jun 0 67, May ,677 6,7 6,7 6,7,8 45,975 6,7 335 Hydrants 336 Cross Connection Control (utility owned) 339 Other Plant 340 Office Furniture and Equipment 34 Transportation Equipment 0 Dodge Pickup Jun 03 50, May ,505 0,007 0,007 7,59,56 0, Tools, Shop, and Garage Equipment

49 Staff/0 Yamada/3 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Contributed Plant C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR Acct No. Account Description Date Acquired Utility Plant Orig Cost Total Adj Plant NARUC Asset Life Annual Deprec Final Month of Deprec Before Accumulated Deprec. Remain Plant Ending 05 Beg Laboratory Equipment 345 Power Operated Equipment Peterson Cat forks/broom Jun 006 7, May ,6 0 0 Trailer World Trailer Jun , May Communication Equipment 347 ELECTRONICS/COMPUTER 348 Miscellaneous Equipment Pro Screen Jun 008 0,000 3,699 7 May ,857,857,857,857,857,857,857 0,000 0, ,75, , 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,84 6,44 6,73 5,797 6,884 7,6 9,088 6,7,58 8,430 4,04 5,009 5,866 8,9 4,98 58,430 59, ,555,6,7 56,69 TOTALS,706,78 0

50 Roats Water System Inc. Docket # UW 66 Test Year: Oct, 04 to Sept 30, 05 Staff/0 Yamada/4 Domestic/Irrigation Split Allocation Methods Method Basis for Allocation Domestic Irrigation Specific costs assignable to dom/irrig Direct Direct Irrigation customers as % of total customers 75.39% 4.6% 3 Irrigation customer %, adjusted for 7 out of months 85.64% 4.36% 4 Portion of salaries attributable to irrigation 9.7% 8.8% 5 No Allocation to Irrigation 0% % OPERATING EXPENSES Staff Proposed Allocated to Domestic Allocated to Irrigation Domestic Allocation Irrigation Allocation Allocation Method 60 Salaries and Wages Employees $ 95,547 $ 95,547 $ Direct 603 Salaries and Wages Officers $ 66,30 $ 8,069 $ 38,3 86% 4% Employee Pension & Benefits $ 4,704 $ 05,08 $ 9,495 9% 8% 4 60 Purchased Water $ 60,895 $ 8,570 $ 3,35 Direct 6 Telephone/Communications $,499 $ 9,848 $,65 86% 4% 3 65 Purchased Power $ 6,9 $ 43,790 $ 7,40 Direct 66 Fuel for Power Production 67 Other Utilities $,039 $,747 $ 93 86% 4% 3 68 Chemical / Treatment Expense $ $ 69 Office Supplies $ 8,73 $ 7,477 $,53 86% 4% Postage $,770 $,56 $ 54 86% 4% 3 60 O&M Materials/Supplies $ 3,046 $,89 $ 9,7 Direct 6 Repairs to Water Plant $ 4,854 $ 4,854 $ 00% 0% 5 63 Contract Svcs Engineering $ 35 $ 70 $ 45 86% 4% 3 63 Contract Svcs Accounting $,754 $ 0,93 $,83 86% 4% Contract Svcs Legal $ 748 $ 640 $ 07 86% 4% Contract Svcs Management Fees $ 635 Contract Svcs Testing $,98 $,98 $ Direct 636 Contract Svcs Labor $ 00,849 $,0 $ 99,87 Direct 637 Contract Svcs Billing/Collection $ 33,369 $ 8,578 $ 4,79 86% 4% Contract Svcs Meter Reading $ 639 Contract Svcs Other $ 8,487 $ 8,487 $ 00% 0% 5 64 Rental of Building/Real Property $ 6,036 $ 07,94 $ 8,094 86% 4% 3 64 Rental of Equipment $ 643 Small Tools $ 90 $ 780 $ 3 86% 4% Computer/Electronic Expenses $ 3,659 $ 3,34 $ 55 86% 4% Transportation $ 40,45 $ 34,643 $ 5,807 86% 4% Vehicle Insurance $ 8,78 $ 7,5 $,6 86% 4% General Liability Insurance $ 9,587 $ 6,775 $,8 86% 4% Workers' Comp Insurance $ 0,03 $ 9,358 $ 845 9% 8% Insurance Other $ $ $ 666 Amortz. of Rate Case $ 9,467 $ 8,08 $,359 86% 4% 3 Gross Revenue Fee (PUC) $ 6,005 $ 4,785 $,0 Direct 670 Bad Debt Expense 67 Cross Connection Control Program $ $ $ 673 Training and Certification $,88 $,88 $ 00% 0% Consumer Confidence Report $ 675 Miscellaneous Expense $ 0,333 $ 7,44 $,99 86% 4% 3

51 Staff/0 Yamada/5 OE Public Relations/Advertising $ 89 $ 89 $ 00% 0% 5 OE Wheeling Fee $ 3,486 $ 3,486 $ Direct OE3 Meter Change Out 6 Yr Amort $ 9,83 $ 9,83 $ Direct OE4 $ $ OE5 $ $ TOTAL OPERATING EXPENSE $,536,786 $,48,080 $ 388,706 OTHER REVENUE DEDUCTIONS Depreciation Expense $ 86,555 $ 86,555 $ Direct 406 Amort of Plant Acquisition Adjustment $ $ $ 407 Amortization Expense $ $ $ 408. Property Tax $ 34,985 $ 6,375 $ 8,60 75% 5% 408. Payroll Tax $ 48,397 $ 44,39 $ 4,006 9% 8% Other $ $ $ 409. Federal Income Tax $ 53,470 $ 5,50 $,967 Direct 409. Oregon Income Tax $,73 $,367 $ 356 Direct Extraordinary Items Income Tax $ $ $ TOTAL REVENUE DEDUCTIONS $,77,97 $,369,70 $ 403,647

52 CASE: UW 66 WITNESS: STEPHANIE YAMADA PUBLIC UTILITY COMMISSION OF OREGON STAFF EXHIBIT 03 Exhibits in Support of Testimony January 5, 07

53 UW 66/Roats OPUC Data Request 43 d, e, f Staff/03 Yamada/ OPUC Data Request 43 d, e, f Page 8 of the testimony that Roats filed with its Rate Case Application contains a table showing Roats revenues, including a column labeled Balance Per Test Year. Regarding the values in this column, d. Please provide documentation showing that Roats Water System, Inc. collected $0,793 in revenue attributable to JUNIPER RESI Timber Ridge, Tillicum, Blue & Mtn Hi during the test year period of October, 04 to September 30, 05. e. Please provide documentation showing that Roats Water System, Inc. collected $49,65 in revenue attributable to The Pines during the test year period of October, 04 to September 30, 05. f. Please provide documentation showing that Roats Water System, Inc. collected $9,94 in revenue attributable to Crown Villa during the test year period of October, 04 to September 30, 05. Response to OPUC Data Request d, e, f Roats does not own the Juniper system yet, so obviously, Roats has not collected any revenue from Juniper. The revenue listed in the test year column is what the City of Bend collected from Juniper. The revenue requirement form is not conducive to including test year revenue from another entity; therefore, Juniper revenue was listed in the test year. This allowed a transparent allocation of the cross connection revenue to the customers as shown in the proposed company adjustments.

54 UW 66/Roats OPUC Data Request 53 b Staff/03 Yamada/ OPUC Data Request 53 b In its Rate Case Application, Roats states that the company is requesting an overall increase of 3.5 percent. Regarding the proposed increase of 3.5%, b. Please provide Roats desired percentage increase over test year revenues after removing revenue attributable to Juniper, The Pines, and Crown Villa from Roats test year. Response to OPUC Data Request 53 b To remove the revenues for Juniper from the test year, you zero out the income from Juniper, The Pines, and Crown Villa as shown below: WITHOUT WITH JUNIPER JUNIPER Revenue REVENUES Balance per Test Year Sensitive Adjustments Unmetered Water Sales 0 0 Residential Water Sales 790, ,675 Commercial Water Sales 5,57 5,57 Fire Protection 4,00 4,00 JUNIPER RESI Timber Rdge, Tillicum, Blue & Mtn Hi 0,793 0 The Pines 49,65 0 Crown Villa 9,94 0 Miscellaneous Fees Income (pass Cross Connection Control Revenu 48,988 48,988 Totals,360,77,079,99 To determine the percentage increase, take $,079,99 and the proposed revenues of $,80,530 and calculate as follows: ($,80,530$,079,99)/ $,079,99 = 66.9%. However, this reflects the total proposed revenue including Juniper, The Pines, and Crown Villla, (including expenses and return); but does not reflect the additional income that was collected during the test year from Juniper customers.

55 UW 66/Roats OPUC Data Request 44 a Staff/03 Yamada/3 OPUC Data Request 44 a Page 9 of the testimony that Roats filed with its Rate Case Application contains a table showing Roats operating expenses. Regarding the values in the Balance Per Test Year column, a. Please provide documentation showing that Roats Water System, Inc. had $94,570 in expenses attributable to Employee Salaries and Wages during the test year period of October, 04 to September 30, 05. Please include documentation showing amounts paid to each individual throughout the test year period. Response to OPUC Data Request 44 a Actual employee salaries and wages should be $6,660. Roats mistakenly understated employee salaries and wages. See Attachment: payroll documentation in the amount of $6,

56 :09 PM 05/5/6 ~A.,,\~~\Q. $. \.)...) f'\b~s. s...~m,~.s. o~?.;c.~ 4~~6\l_'> ROATS WATER SYSTEM INC Payroll Summary October 04 through September 05 Carder, Greg A Hours Rate Oct '4 Sep 5 Hours Cutsforth, Trent D Rate Oct '4 Sep 5 Hours Martin, Lisa M Rate Oct '4 Sep 5 Martinez, Jennifer L.A Hours Rate Oct 4Siij)5 Employee Wages, Taxes and Adjustme... Gross Pay Bonus Salary Holiday Hourly Pay Hourly Sick Hourly Vacation Overtime Sick Hours Vacation Hourly Rate Weekend Duty # Payroll Advance Total Gross Pay,38.5, ,47 3, , , ,67 5,67 30, , , , Deductions from Gross Pay 40k Emp. Payroll Advance Deduction Total Ded4ctlons from Gross Pay Adjusted Gross Pay,47 3, , ,67, ,67.76 Taxes Withheld Advance Earned Income Credit Federal Withholding Medicare Employee Social Security Employee OR Withholding Medicare Employee Addi Tax OR Wkr's. Assessment Emp., ,47.55, , , ,700.94, Total Taxes Withheld 5,457.38, Q,33.80 Deductions from Net Pay Miiier 40 k Repay Total Deductions from Net Pay Net Pay,47 7, ,3.6, ,94.96 Employer Taxes and Contributions FUTA Medicare Company Social Security Company OR Unemployment Company 40k Co. Match 40 k Profit Sharing OR Special Payroll Tax OR Wkr's. Assessment Co , , Total Employer Taxes and Contributions,59.99, , Page

57 :09 PM 0556 ROATS WATER SYSTEM INC Payroll Summary October 04 through September 05 Martinez, Julla A Hours Rate Oct '4 Sep 5 Hours Miller, Michael A Rate Oct '4 Sep 5 Hours Oconnor, Ryan D Roats, Shirley E. Rate Oct ' 4 Sep 5 Hours Rate Oct '4 Sep 5 Employee Wages, Taxes and AdJustme... Gross Pay Bonus Salary Holiday Hourly Pay Hourly Sick Hourly Vacation Overtime Sick Hours Vacation Hourly Rate Weekend Duty # Payroll Advance 48 4, , , , , , Total Gross Pay 48, ,05.00 Deductions from Gross Pay 40k Emp. Payroll Advance Deduction,.9 5,50 3,00 Total Deductions from Gross Pay 7,6.9 3,00 Adjusted Gross Pay 48 4,068.40,04 35, , , Taxes Withheld Advance Earned Income Credit Federal Withholding Medicare Employee Social Security Employee OR Withholding Medicare Employee Addi Tax OR Wkr's. Assessment Emp fi.57 3, fi0.59,653.59, , , , Total Taxes Withheld , ,84.87 Deductions from Net Pay Miller 40k Repay, Total Deductions from Net Pay, Net Pay 48 3,584.60,04 3, , , Employer Taxes and Contributions FUTA Medicare Company Social Security Company OR Unemployment Company 40k Co. Match 40k Profit Sharing OR Special Payroll Tax OR Wkr's. Assessment Co , , , ,6 3.4 Total Employer Taxes and Contributions 4. 6, , Page

58 :09 PM 05/56 ROATS WATER SYSTEM INC Payroll Summary October 04 through September 05 Hours Roats, Stacie A Rate Oct '4 Sep 6 Roats, Willlam C. Hours Rate Oct '4 Sep 5 Hours Roats, William K. Topllff, Robert G Rate Oct '4 Sep 5 Hours Rate Oct '4 Sep 5 Employee Wages, Taxes and Adjustme. Gross Pay Bonus Salary Holiday Hourly Pay Hourly Sick Hourly Vacation Overtime Sick Hours Vacation Hourly Rate Weekend Duty # Payroll Advance , , ,36. 94, ,0 Total Gross Pay , Deductions from Gross Pay 40k Emp. Payroll Advance Deduction, ,50 3,00 Total Deductions from Gross Pay 6, ,00 Adjusted Gross Pay , , , ,08 Taxes Withheld Advance Earned Income Credit Federal Withholding Medicare Employee Social Security Employee OR Withholding Medicare Employee Addi Tax OR Wkr's. Assessment Emp , , , ,68, , , Total Taxes Withheld , , Deductions from Net Pay Miiier 40 k Repay Total Deductions from Net Pay Net Pay , ,8.75 5, Employer Taxes and Contributions FUTA Medicare Company Social Security Company OR Unemployment Company 40k Co. Match 40k Profit Sharing OR Special Payroll Tax OR Wkr's. Assessment Co , , , , , Total Employer Taxes and Contributions ,796. 0, Pagel

59 :09 PM 05/5/6 ROATS WATER SYSTEM INC Payroll Summary October 04 through September 05 Hours Vancil, Richard I Rate Oct '4 Sep 5 Vaughan, Kenneth R Hours Rate Oct '4 Sep 5 Hours TOTAL Rate Oct '4 Sep5 Employee Wages, Taxes and Adjustme... Gross Pay Bonus Salary Holiday Hourly Pay Hourly Sick Hourly Vacation Overtime Sick Hours Vacation Hourly Rate Weekend Duty # Payroll Advance 35, , , , ,740.49, , , , Total Gross Pay , , ,760.9 Deductions from Gross Pay 40kEmp. Payroll Advance Deduction 50, ,00 Total Deductions from Gross Pay 80, Adjusted Gross Pay 35, , , ,00.66 Taxes Withheld Advance Earned Income Credit Federal Withholding Medicare Employee Social Security Employee OR Withholding Medicare Employee Addi Tax OR Wkr's. Assessment Emp , ,996.6, , Total Taxes Withheld ,93.85 Deductions from Net Pay Miller 40k Repay, Total Deductions from Net Pay, Net Pay 35, , ,64.5 0, Employer Taxes and Contributions FUTA Medicare Company Social Security Company OR Unemployment Company 40k Co. Match 40 k Profit Sharing OR Special Payroll Tax OR Wkr's. Assessment Co ,99.9, , ,639.54, Total Employer Taxes and Contributions ,7.4 Page4

60 Roats Contract Labor for Irrigation Duties per data request response: Repairs, Maint., and monitor Irrigation System City of Bend required: hours/day approx. 584 hours annually Ave wage= $4.50 I seasonal 67 months/yr I 7 days/week AWWA Compensation Survey 04: Job D40 Water Distribution Operator Senior Operates & maintains a water distribution system. Is fully qualified to perform the most complex functions and may direct the work of other operators. Holds a high level water distribution certificate. Pacific NW region average salary range: Min Mid Max Per Oregon Employment Dept. (OLMIS): $54,44 $59,9 $66,479 Wage Range 06 For Water and Wastewater Treatment Plant and System Operators : I I 50th! ; i: Area i 0th I 5th!p fl I 75th! 90th AverageAverage! ;Percentile!Percentile) (:;~~a~)e!percentile!percentile I Hourly i Annual i ;~ rc isoth,. iar IIOth!5th Ip t.l!75th!90th!average!average!. ea 'p. p. ercen e 'p. 'p. 'H 'A, ; 0 '.! ercent e I ercentl e :( d. )! ercentl e : ercentl e : our y nnua '. : regon $ 8 $ 4, me ian $3 i$ 6 I$ $ ' i.70 i. t$6.53 : 0.9 I 3.00 I 6.87 I 55,875 I ~~~; '. : ;. ~~ ~; ~~~] I I l50th! i I : ' ia,0th i5th ip t.l!75th i90th!average!average I, rea 'p. ip. ercen e 'p. Ip. IH 'A ' ic tr 0 : ercent e r ercent e [( d. ) r ercentl e i ercent e, our y i nnua i i en a reg.on)~~~~= $~6 /$~~.;;n l9.90 $33.40 $6. l~=4,30 / $8.80 x 584 hours= $74,49 $3.96 x 584 hours= $8,585 $33.40 x 584 hours= $86,306 $3.78 x 584 hours= $83,0 (City of Hillsboro job) Average of 3 highest paid positions: $84,004 $8.80/hr $3.96

61 UW 66/Roats OPUC Data Request 68 Staff/03 Yamada/9 OPUC Data Request 68 Roats provided documentation for employee health, dental & vision, and life insurance totaling $ $64,744 in the test year. Please provide documentation for all requested increases to this amount. Response to OPUC Data Request 68 See attached documents for increases. Documentation for expenses are included in the test year test year data Health Insurance.

62 Agent Setvices 475 Fallbrook Blvd./Uncoln, NE 685 Bus: Ameritas~ fulfilling life April, 06 WILLIAM ROATS ROATS WATER SYSTEM INC 6i 47 HAMILTON LN BEND.OR Group# Edge Plus July 0, 06 marks the renewal date of your Ameritas group dental insurance plan. Your covered employees' specific utilization and cost of dental care are considered in determining your renewal rating. Effective July 0, 06, your monthly dental rates wui be as follows: Plan Employee Employee + Dependent Employee + or More Dependents Current Rates $69.44 $35.97 $00.0 Renewal Rates $7. $4.4 $08.0 Your eligible employees may enroll during the open enrollment period, which normally coincides with the policy anniversaiy date. You may begin enrolling these employees now for an effective date of July Ot, 06. Thank you for choosing Ameritas. We are happy to help you, your employees and their families maintain overall health while controlling health care costs. Yo.ur coverage will renew automatically with no further action required by you. If you need assistance, please call us toll free at or contact your broker. Agent Services Ameritas Life Insurance Corp. cc: WIX AGENCY LLC

63 .Healtb_Ner Life Insurance Company P.O. Box 903 Van Nuys, CA Group Bill Date Prepared: 605 ROATS WATER SYSTEM, INC. lu Iii llifiiiii l I h lllllf lul llfllnlf ROATS WATER SYSTEM, INC. CASEY ROATS 647 HAMILTON LN BEND OR GROIJP ID U6395A PAYMENT DUE DATE COVE~ED PERIOD /97/0ES Please Make Check Payable to: Health Net of Oregon PO BOX Los Angeles, CA Please include your Group ID on your check and return the entire bill with your payment. For billing information call: (888) Return bank items are subject to a $35.00 fee.. BILL INFORMATION LAST PERIOD AMOUNT DUE ACTIVITY SINCE LAST BILL Amount Received Amount Applied through 605 Manual Adjustments Balance Forward CURRENT BIU (See Bill Recap Section for Details) Current Period New Charges Adjustments to Membership Administration fee Total New Charges 5, , , , , Please Pay this Amount '~$_5_,6_53_._5o~j AMOUNT ENCLOSED Health Net Taxpayer ID# Page of4

64 ARNi LD IRR IGATION DI STRICT 9604 Buck Canyon Rd., Bend, OR 9770 Phone (54) Fax (54) ASSESSMENT NOTICE City of Bend c/o Patrick Griffiths 575 NE 5th St Bencl, OR 9770 Votitll! Zone(s) Accblbr: 48 Due Date: 3/3/06 Headgate Taxlot Hdgt Users # Delv Acres MAIN AA 0 80AB 0 80AO MAIN AA CC DCO AB 0 8 BB 0 8 IBC NORTH AA J 809AO CO A Total Factor= lf.p.ay~~g by Ma.ii ~l_e!l~~ Ret:u~n St_u_b_ ~~t'.~ay_~~~t_.... _ _ To cut down on mailing costs, please provide us with your address so that we may you newsletters and notices. Address Return to Arnold lrr(qation District 9604 Buck Canyon Rd., Bend, OR 9770 Acctnbr 48 Name City of Bend Due Date: 3/3/06 Prevs Bal $ CurrentAssessment $38,09.5 Other Chg $ Interest $ Amount Paid $ Balance Due $38,09.5

65 ARNi LD IRR IGATION DISTRICT 9604 Buck Canyon Rd., Bend, OR 9770 Phone (54) Fax (54) Delivery Address 0505 Murphy Rd Desc Factor Rate Charge Capital Improvement $.9 $7,68.6 Construction $44. $5,350.8 Debt Retirement $7.8 $,7.36 Maintenance Fees $7.83 $6,04.84 Operations for Hdgt# MAIN $4.5 $. Operations for Hdgt# MAIN $4.5 $. Operations for Hdgt# NORTH $4.5 $4.5 Owner Account.000 $6.78 $6.78 Tax Lot Fees $65.60 $3, Water Right Protection Effort $5.00 $,74 Total Assessed $38,09.5 Previous Balance $ Total Due $38,09.5 To cut down on mailing costs, please provide us with your address so that we may you newsletters and notices. Address Return to Arnold Irrigation District 9604 Buck Canyon Rd., Bend, OR 9770 Acctnbr 48 Name City of Bend Due Da te: 3/3/06 PrevsBal $ Current Assessment $38,09.5 Other Chg $ Interest $ Amount Paid $ Balance Due $38,09.5

66 ARNi LD IRR IGATION DISTR ICT 9604 Buck Canyon Rd., Bend, OR 9770 Phone (54) Fax (54) Annual charges shall be due and payable on January, 06 and shall be deemed delinquent ifnot paid by March 3, 06. The District shall withhold delivery of water from any tract ofland until the charges for the current year and any prior year(s), including interest, lien and collection costs and fees, are paid in full. Any charge not paid in full when due shall accrue interest at the statutory rate of /3 percent per month until paid dating back to January, 06. Water will not be delivered until payment is received in full. Payment is due whether or not water is used or received. ASSESSMENT EXTENSION PAYMENT PLANS WILL NOT BE AVAILABLE THIS YEAR. Please see attached insert for explanation. The Secretary of the District shall cause a late payment notice to be mailed to each parcel for which delinquent charges are owed. Said notice shall be provided and mailed to landowner on or after June, 06 advising the landowner that an administrative fee of$50 will be added to the unpaid balance if not paid by June 30, 06. For each account remaining delinquent and unpaid as of August 3, 06 a second notice will be mailed to each parcel for which delinquent charges are owed. Said notice shall be provided on or after September, 06. The land owner will be advised that the unpaid charges are accruing interest and that a Notice of Claim of Lien for any unpaid and accrued charges will be prepared and recorded if all charges are not paid by September 30, 06. For each account remaining delinquent and unpaid as of October, 06, the Secretary shall refer to the District's legal counsel to prepare and record in the County Clerk's office, a Notice of Claim of Lien for the amount of the unpaid charges, the delinquent charge, the administrative fee, cost of preparing, recording and releasing said Lien and any legal fees. On October, 06 for each account remaining delinquent and unpaid from September 30, 05, the Secretary of ~he District shall refer to the District's legal counsel for collection, including foreclosure as provided by law, each ien that remains unpaid. If you have questions or concerns about your assessment, you may present them to the Board of Directors for changes or relief at the Board of Equalization on January, 06, at 3:00 pm at 9604 Buck Canyon Road in Bend. We now have various payment options;. Pay with check by mail.. Pay with cash, check or credit/debit card in office. 3. Pay over phone with credit/debit card. 4. Pay online with credit card orecheck. Visit our website at to make your oayment online. Please Note: Customer is responsible for additional fees for making payment with a debit or credit card orecheck. See fees below. Echeck payment $.95 flat fee Debit or Credit card $3.00 per every $00 To cut down on mailing costs, please provide us with your address so that we may you newsletters and notices. Address _ Return to Arnold Irri.qation District 9604 Buck Canyon Rd., Bend, OR 9770 Acctnbr 48 Name City of Bend Due Date: 3/3/06 Prevs Bal $ Current Assessment $38,09.5 Other Chg $ Interest $ Amount Paid $ Balance Due $38,09.5