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DECISION MEMORANDUM TO: COMMISSIONER KJELLANDER COMMISSIONER SMITH COMMISSIONER HANSEN JEAN JEWELL RON LAW LOU ANN WESTERFIELD BILL EASTLAKE LYNN ANDERSON RANDY LOBB DON HOWELL DAVE SCHUNKE LISA NORDSTROM TONYA CLARK BEV BARKER GENE FADNESS WORKING FILE FROM: DON HOWELL DATE: MAY 3, 2002 RE: THE APPLICATION OF THE CITY OF HEYBURN AND UNITED ELECTRIC CO-OP, CASE NO. GNR-E-02-3 On May 6, 2002, United Electric Co-op, Inc. filed an Application notifying the Commission of United's purchase of the City of Heyburn's municipal electric system. The Application is made pursuant to the Idaho Electric Supplier Stabilization Act (ESSA) and specifically Idaho Code § 61-333. BACKGROUND Idaho Code § 61-333 provides that all agreements which allocate territory or customers between electric suppliers such as United and the City be filed with the Commission. Section 61-333(1) provides that electric suppliers may contract in writing "for the purpose of allocating territories, consumers and future consumers between the electric suppliers and designating which territory and consumers are to be served by which contracting electric supplier." This section further provides that all such contracts shall be filed with the Commission. Id. After notice and opportunity for hearing, the Commission shall approve or reject contracts between municipalities and cooperatives. This section and Idaho Code § 61-334(1) restricts the Commission's jurisdiction over cooperatives and municipalities to that authorized in the ESSA. For example, the Commission neither sets the rates nor prescribes the customer service rules for co-ops and municipalities. As set out more fully in Idaho Code § 61-332, the purposes of the ESSA are to: (1) promote harmony among and between electric suppliers; (2) prohibit the "pirating" of consumers served another supplier; (3) discourage duplication of electric facilities; (4) stabilize the territory and consumers served by the suppliers; and (5) actively supervise certain conduct of the suppliers. THE TRANSFER AGREEMENT United is a cooperative electric supplier within the meaning of the ESSA. United provides services to its members in Minidoka and Cassia Counties. Its principal office is located in Heyburn. The City of Heyburn is an Idaho municipal corporation and is a electric supplier within the meaning of the ESSA. The City has owned and operated its electrical distribution system for many years and serves approximately 1300 customers. Heyburn has determined that it would be in the best interest of its citizens to transfer the City's electric system to United. Following the transfer, Heyburn would cease to provide service to its customers and United would provide service to all of Heyburn's current and future customers. The parties have reached an agreement in principle and are currently negotiating the final agreement. The parties assert that the Agreement is in the public interest. More specifically, the Application states that the Transfer Agreement promotes harmony among and between electric suppliers and discourages duplication of facilities. In addition, the Agreement stabilizes the territories and consumers served by electric suppliers. Heyburn and United have had a territory agreement for a number of years. A copy of the territory map is attached to the Application. Given the limited scope of this transaction and the agreement of the parties, United believes that this matter may be appropriately handled under Modified Procedure. In order to finalize this transaction in an expedited basis, United requests that the comment period be shortened to 14 days from the date of the Commission's Notice. STAFF RECOMMENDATION Pursuant to the ESSA and specifically Idaho Code § 61-333, the Staff recommends that the Commission process this Application by Modified Procedure. Section 61-333 pertains to "allocating territories, consumers, and future consumers." Given the fact that this Application concerns two entities over which the Commission exercises limited jurisdiction and the fact that the parties have requested expedited review, the Staff further recommends that the Notice of Modified Procedure utilize a 14-day comment period. COMMISSION DECISION Does the Commission wish to process the Application by Modified Procedure with a 14-day comment period? Donald L. Howell, II bls/M:GNRE023_dh