HomeMy WebLinkAbout20030310min.docMINUTES OF DECISION MEETING
MARCH 10, 2003 – 1:30 P.M.
In attendance were Commissioners Paul Kjellander, Dennis Hansen, and Marsha Smith.
The first order of business was APPROVAL OF MINUTES FROM PREVIOUS MEETINGS on February 3, February 10, February 18, and February 19, 2003. Commissioner Kjellander made a motion to approve the minutes, a vote was taken, and the minutes were approved.
The next order of business was approval of the CONSENT AGENDA, items 2-4. Commissioner Smith stated that regarding item 2, the recommendation made by Staff was to put the matter out for comment. She asked if that was because it’s standard operating procedure or could the Commission approve the contracts without comment. Mr. Woodbury replied that Staff wanted to comment on the case. There were no further questions or comments. Commissioner Kjellander moved for approval of items 2-4. A vote was taken and the motion carried.
Lisa Nordstrom’s March 6, 2003 Decision Memorandum re: Atlanta Power Investigation.
Ms. Nordstrom reviewed her Decision Memo. Commissioner Hansen said he would like to compliment the staff for a good job. He said he questions the value of requiring Atlanta Power to file all past annual reports that are still due. He stated he questions how accurate the reports would be going back to 1998 and what the value would be to the Commission, as well as what it would cost the company to hire a CPA or accountant to go back and put the reports together. He said he thought it would be of value to have a current annual report filed but questions the value of going back to create reports for the other years, especially if they have not been keeping very good accounting records anyway. He said he personally likes the idea of sending a letter to the customers advising them of the survey results and Staff’s finding regarding back-up generation and the status of preventative maintenance. He said if that doesn’t satisfy the customers we could move beyond that.
Commissioner Smith said that since this has gone on for two years the way to close this is to have something issued by the Commission, and she was thinking of doing a proposed Order saying the Commission has received the audit and recommendations of the Staff and that we intend to adopt them, which would mean there wouldn’t be any new back-up generation purchased that would cause extraordinary increases in rates, and we’d give the customers two or three weeks to file comments. She stated that because the customers have actually filed a petition and because it has taken two years to complete the report and it’s a good product, we ought to let them know where the Commission stands, and that the Commission intends to adopt the recommendations of the Staff and what that means for them. She said establishing a comment period would give us the opportunity to get feedback and adjust the Order if necessary. She said she agreed that requiring the Company to file annual reports retroactively would be an exercise in fabrication.
Commissioner Kjellander asked if Staff was looking for something specific from past annual reports or if it was merely to fulfill a requirement of Commission rules. Ms. Carlock replied that annual reports are used for trend analysis, which Patricia Harms did while she was on site auditing, and whether or not the annual reports would conform to what she has established might be a question. She noted the Commission usually works forward from that point, however. Commissioner Kjellander stated that it sounded like she was saying the annual report might not be as valuable a tool at this point as it may have been before we started the investigation. Ms. Carlock said the purpose of requiring the Company to get the reports up-to-date would be so we would have them on file if someone else were looking for the information.
Commissioner Hansen said he liked Commissioner Smith’s idea and he could support it. Commissioner Kjellander asked if Commissioner Smith could put her proposal in the form of a motion. Commissioner Smith moved that the Commission issue a proposed order including the Staff audit and audit results, noting that the order was being issued with the intention of adopting Staff’s recommendations, and establishing a 21-day comment period on the proposed order. A vote was taken on the motion and it carried unanimously.
Commissioner Kjellander extended the Commission’s gratitude on Staff’s efforts and diligence on the Atlanta Power investigation.
Lisa Nordstrom’s March 6, 2003 Decision Memorandum re: Non-Compliance of Ponderosa Terrace Estates Water System.
Ms. Nordstrom reviewed her Decision Memo. Commissioner Kjellander asked if there was some way to make sure the notice gets served appropriately to Mr. Cobott. He said he recalled in the past that some of our notices had been thrown in the trash or ignored completely. Ms. Nordstrom said it would be her recommendation that we contact the sheriff of Bonner County and have his office serve it directly to Mr. Cobott.
Commissioner Smith asked who we could have conduct the show cause hearing. Ms. Nordstrom replied that it would need to be either the Commissioners or a hearing examiner. Commissioner Smith said it would be her recommendation that we find a hearing examiner to conduct the hearing. Commissioner Kjellander stated that it would be a good idea to have an independent third party conduct the hearing given the fact that Mr. Cobott seems to think the PUC is not necessarily in a position to regulate him. Commissioner Kjellander moved for approval of Staff’s recommendation, emphasizing he would like to see someone, such as a sheriff, deliver the notice personally to Mr. Cobott so he begins to understand the severity of some of the concerns being raised by his actions. A vote was taken on the motion and it carried unanimously.
Scott Woodbury’s March 5, 2003 Decision Memorandum re: Schedule 72—Irrigation Load Control Credit Rider. Case No. PAC-E-03-3 (PacifiCorp).
Commissioner Kjellander noted that Eric Olsen, who represents the irrigators, was participating via teleconference. Mr. Woodbury noted that Bob Lively of PacifiCorp was present, also, in the Hearing Room. Mr. Woodbury reviewed his Decision Memo. He stated that the Company had filed a reply to Staff’s comments that morning setting forth its position with respect to recovery of the opportunity cost and having it included in the calculation of the interruptible rate. He said the Company was present to answer questions or explain the schedule that accompanied its reply. He said he was not certain as to whether a delay would be constructive if we were to hold the matter over for two weeks as the irrigators suggested. He said the issues might still be the same if Staff doesn’t come around to a different view as to whether or not what we’re talking about is lost revenue and whether that adjustment should be appropriate at all. He said Staff opposes that type of adjustment based upon prior Commission orders dealing with lost revenue, one of which involved Idaho Power and an irrigator buy-back program.
Commissioner Smith asked each of the parties--the irrigators and PacifiCorp--whether they believed it would be a problem if the Commission held the matter until the next meeting and if holding the matter would provide any opportunity for discussions that might be fruitful or whether there would be any change at all. Eric Olsen replied that a delay would help them get their hands around the information a little better, although they were in general agreement with the Staff position that there may be no lost opportunity cost. He said they have additional questions that would help them further evaluate the pricing methodology of the interruptibility credit.
Commissioner Kjellander asked Mr. Olsen when the irrigation season started in his region. He replied that it starts in late May or early June, or early May, depending on the weather. Commissioner Kjellander stated that one of the problems the Commission ran into in another irrigation load reduction program was the timing in getting the program put in place and getting the irrigators apprised in time to participate effectively. He asked if extending the decision another two weeks would cause any problems. Mr. Olsen replied that potentially it would put the irrigators against a time constraint, but he thought there was still sufficient time to implement the program.
Mr. Lively of PacifiCorp stated that the Company will probably not be able to come to any kind of agreement over the treatment of lost revenues given the extended time period. He said the respective positions are pretty well understood, and he wasn’t sure extra time would bring them to a conclusion. He said timing regarding implementation of the program does become an issue. He said this program has an additional step involved in receiving back the notice of intent from irrigators and from that step they implement a load control service agreement with the irrigators, so time does become a factor in getting the program implemented if there is further delay.
Commissioner Smith said that in looking at the examples that came with the reply comments, if the Commission adopts the program with the changes recommended by Staff, what would be the likelihood that PacifiCorp will actually interrupt any irrigators. Mr. Lively replied that if the Commission adopts the Staff’s recommendation, the credit for irrigators would be higher than what the company would propose, and that would likely attract more irrigators to participate in the program and the Company would operate the program as planned, but simply with a higher credit available to the irrigators, but it is certainly not the Company’s preference.
Commissioner Hansen asked Mr. Lively if PacifiCorp would back off and not offer the program if the Commission were to adopt Staff’s recommendation, which would exclude lost revenue in the calculation. Mr. Lively replied that was not what he was saying. He said the Company would operate the program and interrupt as it has proposed, but simply with a different level of credit offered to irrigators for participation in the program.
Mark Tallman of PacifiCorp’s Commercial and Trading Group then addressed the Commission. He said the program that was designed this year is a little different than programs designed in the past in that the decision criteria used to interrupt is not necessarily based on what is going on in the marketplace at the given time. He said the Company designed the program so that the Company will interrupt, and it is just a question of how often and the rules of interruption. He said the question is also whether it costs the company more in terms of the credit to have the interruption program than if the Company did not have the program at all. He said as designed, it would be higher following Staff’s recommendations than if the Company had no program. Mr. Tallman said that following Staff’s recommendation to pass through 80% of the projected market would result in costs to PacifiCorp that are higher than if the Company just went ahead and served the load without the program.
Commissioner Smith asked if for the summer assessment the interruptions were included in the calculations and if they were necessary for serving the load this summer. Mr. Tallman replied that the interruptions were necessary because the Company is resource deficit so there are less resources than there is load, and in order to bring the Company back in balance, it will have to make purchases from the marketplace. He said the program is not necessary for reliability reasons but it is a prudent, wise path to take because they are trying to design a program that passes the value of the curtailment through to the participants. Mr. Tallman said it is designed to gain as much value from the participants as if the Company had to go out and serve the load at a loss. He said at the present time the market cost is projected to be above the revenue the Company would receive from the customers for serving the load, so to the extent the Company has to buy from the marketplace at a cost that’s higher than the revenue it receives, then on an incremental basis, it’s a negative. He said the example in their Exhibit is designed to show what would happen if the Company just serves the load versus what would happen if they implement the program.
Commissioner Smith asked if the irrigators will be paid the credits regardless of the amount of interruption. Mr. Lively said the program is designed to schedule interruption throughout the irrigation season, and the Company has proposed two interruptions of six hours each per week, and those will be scheduled throughout the irrigation season for participants, and for their participation, they will receive payment in the form of a credit.
Commissioner Hansen asked if the Commission could “go at ease” for a several minutes. There were no objections and the Commissioners left the meeting for a few minutes. The meeting was then reconvened. Commissioner Kjellander made a motion to hold the matter over until Friday, March 14th, to give the Commission the opportunity to go over the documents and look at additional information. A vote was taken on the motion and it carried unanimously.
The final item on the agenda was under FULLY SUBMITTED MATTERS and Commissioner Kjellander stated that the Commission would deliberate on it privately. He then adjourned the meeting.
DATED this _____ day of March, 2003.
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COMMISSION SECRETARY
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