20240815Reply Comments.pdf

RECEIVED
Thursday, August 15, 2024
IDAHO PUBLIC
UTILITIES COMMISSION
_ ROCKY MOUNTAIN 1407 W.North Temple,Suite 330
POWER. Salt Lake City,UT 84116
A DIVISION OF PACIFICORP
August 15, 2024
VIA ELECTRONIC DELIVERY
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Building 8 Suite 201A
Boise, ID 83714
RE: CASE NO. PAC-E-24-06
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER FOR
APPROVAL OF THE TRANSFER OF PORTIONS OF THE NORTH TEMPLE
PROPERTY AND ACCOUNTING ORDER
Attention: Commission Secretary
Pursuant to Commission Order No. 36191 providing public notice of the Company's Application,
authorizing the processing of the Application by Modified Procedure, and establishing the
procedural schedule please find Rocky Mountain Power's Reply Comments in the above
referenced matter.
Informal inquiries may be directed to Mark Alder, Idaho Regulatory Manager at(801) 220-2313.
Very truly yours,
a,1�0
Joe Steward 9x--)
Senior Vice President, Regulation

Joe Dallas (ISB# 10330)
PacifiCorp, Senior Attorney
825 NE Multnomah Street, Suite 2000
Portland, OR 97232
Email:joseph.dallas(a,pacificorp.com
Attorney for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. PAC-E-24-06
OF ROCKY MOUNTAIN POWER FOR )
APPROVAL OF THE TRANSFER OF ) REPLY COMMENTS OF
PORTIONS OF THE NORTH TEMPLE ) ROCKY MOUNTAIN POWER
PROPERTY AND ACCOUNTING ORDER )
Pursuant to Rule 202.01(d) of the Rules of Procedure of the Idaho Public Utilities
Commission("Commission") and the Commission's May 24, 2024, Notice of Application and of
Modified Procedure, PacifiCorp, d/b/a Rocky Mountain Power ("PacifiCorp" or "Company")
hereby submits reply comments in the above-referenced case.
I. BACKGROUND
1. On April 15, 2024, the Company applied for an order approving the Property
Transfer Agreement ("Transfer Agreement") between the Company and LHM DEV E, LLC
("LHM DEV E") and a determination that the property disposition is in the public interest. The
Transfer Agreement provides for the terms of conveyance of portions of real property located in
Salt Lake City, Utah, from the Company to LHM DEV E, which is referred to in the application
Rocky Mountain Power Reply Comments Page 1

and these Reply Comments as the "North Temple Property" or "NTP."' In the same application,
PacifiCorp also requested an accounting order that would authorize the recording of a regulatory
liability for any net proceeds arising from the Transfer Agreement for the benefit of customers.
This account would then offset future costs that may arise in a subsequent rate proceeding as
described in this Application.
2. On May 24, 2024, Commission Order No. 36191 provided public notice of the
Company's Application, authorized processing of the Application by Modified Procedure, and
established the procedural schedule allowing persons who would like to file written comments to
have until August 1,2024,and the Company having until August 15,2024,to file reply comments.
No parties filed for a petition for intervention in this case.
3. On August 1, 2024, Staff submitted comments recommending the following:
• Approve the Company's request for an accounting order allowing it to record proceeds
from the disposition of NTP Blocks as a regulatory liability;
• Approve a carrying charge equal to customer deposit rate to apply to the regulatory
liability;
• Approve the sale and transfer of the "NTP Blocks"2;
• Withold approval of the submitted Transfer Agreement; and
• Order the Company to provide a copy of the finalized Transfer Agreement in a future rate
proceeding when the Company seeks recovery of costs associated with the sale of the North
Temple Property.
' The Company filed its application pursuant to Idaho Code 61-328. The language of this provision indicates that an
electric utility is only required to seek commission approval for the sale,lease,assignment or other transfer of a utility
asset when the transfer involves property that is both(a)located in the state of Idaho,and(b)"used in the generation,
transmission,distribution or supply of electric power and energy to the public or any portion thereof. . .."However,
the Commission has approved property dispositions located outside the state of Idaho.See e.g., In the Matter of the
Application of PacifiCorp for Exempt Wholesale Generator Determinations Relating to the Skookumchuck Hydro-
Electric Plant,Case No. PAC-E-04-1, Order(April 2,2004);In the Matter of the Application ofAvista Corporation
for an Order Approving the Sale oflts Interest in the Skookumchuck Hydroelectric Plant and for Ewg Determinations,
Docket No. AVU-E-04-2 Order (April 28, 2004); In the Matter of the Application of Rocky Mountain Power for
Approval of a Transaction to Close the Deer Creek Mine and for a Deferred Accounting Order,Case No.PAC-E-14-
10,Order at 1-2(May 27,2015).
2 Although Staff makes reference to certain parcels of property identified in the Transfer Agreement,the term"NTP
Blocks"is not explicitly defined for the purposes of Staff recommendation. Commission approval of the transfer of
this undefined term is not sufficient to describe the nature of the underlying real estate transaction contained in the
Transfer Agreement.
Rocky Mountain Power Reply Comments Page 2

II. REPLY COMMENTS
4. The Company agrees with Staff's recommendation to approve the request for an
accounting order allowing the Company to record the net proceeds arising from the Transfer
Agreement. The Company also agrees with approving a carrying charge equal to the customer
deposit rate to apply to the regulatory liability. The Company does not object to Staff's
recommendation that the Company submit a finalized agreement in a future rate proceeding.
However, the Company disagrees with Staff's recommendation to withhold approval of the
submitted Transfer Agreement.
A. Staff's Concerns with Transfer Agreement
5. Staff is concerned about the Transfer Agreement's unknown constraints and
requirements regarding the new headquarters ("New NT03") and a new energy services building
("New ESB"), which Staff believes could pose a risk to ratepayers. The Transfer Agreement
involves construction benchmarks for the New NTO and New ESB, as well as the necessity of the
Master Development Agreement ("MDA") which is still under negotiation. Additionally, the
Transfer Agreement entails obligations for relocating/upgrading transmission lines and includes a
success fee linked to the developer's and the Company's success in meeting certain conditions.
B. Clarification of Company's Request in Application
6. The Company's application sought an order approving the Transfer Agreement
pursuant to I.C. § 61-328. The state code prohibits any public utility from the selling, leasing, or
assigning property without an order from the commission.4 While the Company did seek approval
3 Staff,in their comments,refer to the"New NTO"as the"New HQ".
4 I.C. §61-328.
Rocky Mountain Power Reply Comments Page 3

of the Transfer Agreement, that approval was within the context of the I.C. § 61-328 and the
Company's obligation to obtain approval prior to a property disposition. To be clear,the Company
is not seeking a prudency determination of any costs in this proceeding.5 The Company believes
that Staff's recommendation to approve the sale of the "NTP Blocks" is in alignment with the
intent of the Company's application as well as the authority required by I.C. § 61-328.
7. The Company's request for approval of the Transfer Agreement is consistent with
prior Commission practice. For instance, in Case No. PAC-E-21-01, PacifiCorp submitted an
application for an "order approving the Transfer Agreement between the Company and Klamath
River Renewal Corporation.` On July 8, 2021, the Commission issued an order stating, "the
Company's Application for approval of the Transfer Agreement is approved."7 By approving the
transfer agreement in this case, the Commission simply approved the disposition of property
outlined in that transfer agreement in accordance with the mandates in I.C. § 61-328. Staff's
alternative proposal to approve the sale and transfer of the undefined term "NTP Blocks"' is not
sufficiently descriptive enough to allow to the Company to proceed with the transaction given the
mandates in I.C. § 61-328. Accordingly, the Company respectfully requests the Commission to
issue an order approving the Transfer Agreement in accordance with I.C. § 61-328.
8. Alternatively, if the Commission agrees with Staff to not approve the Transfer
Agreement, in a departure with prior practice, the Commission should make it clear in its order
5 Application at 12("The Company acknowledges that the Commission's approval of deferred accounting treatment
does not constitute a prudence determination for the construction of any facilities described in this Application.
Recovery of any costs would be subject to a prudence review and a final decision on rate recovery in a future regulatory
filing.").
6 In the Matter of Rocky Mountain Power's Application for Approval of the Transfer of the Lower Klamath
Hydroelectric Project Generating Facility, Case No.PAC-E-21-01,Application at 1 (Jan. 14,2021).
In the Matter of Rocky Mountain Power's Application for Approval of the Transfer of the Lower Klamath
Hydroelectric Project Generating Facility, Case No. PAC-E-21-01, Order No. 35097 at 5 (July 8, 2021). The
Commission also approved an accounting order associated with the transfer, that would be amortized in future rate
cases.Id.
8 Supra fn.2.
Rocky Mountain Power Reply Comments Page 4

that it is approving the sale and transfer of property as outlined in the Transfer Agreement in
accordance with I.C. § 61-328.
C. Terms of Transfer Agreement
9. Intrinsic to complex, multi-phase, multi-year real estate transaction (such as the
NTP transaction encompassed through the Transfer Agreement), there are many conditions which
both parties must meet for the successful completion of the agreement.
10. Staff has concerns about requirements related to the New NTO and the New ESB.
However, the Company is not asking for Commission approval of the New NTO or the New ESB.
Both of these potential projects are beyond the scope of the current case and were only mentioned
within the application for the purposes of providing context to the Commission. The Company's
request is for property disposition approval pursuant to I.C. § 61-328, which Staff recommends
approving.9 The Transfer Agreement is similar to other complex real estate agreements where
certain conditions must be met. For example, most large-scale assemblage developments are
dependent on probable,but not guaranteed, cooperation with the municipalities, counties,utilities,
finance partners, etc. that are needed in the course of the development. It is common for these
elements to be pursued in good faith after an initial agreement is signed.
11. Staff also has concerns about the relocation of the transmission lines which will
require easements. The Company is in the design process for the relocation routes of certain
transmission lines that are part of the site. These routes will not have any easement costs for the
NTP site itself, however there are necessary relocation costs, essential to making the property
available for disposition, which will be captured by the proposed regulatory balancing account.
9 Staff Reply Comments at p.6,"1 Approve the sale and transfer of the NTP Blocks;".
Rocky Mountain Power Reply Comments Page 5

12. Finally, Staff is concerned with the unknown components of the MDA and the
reference to a Master Plan which includes property outside the Company's ownership. The MDA
provides protections for the Company by requiring development in alignment with the legacy of
the neighborhood and the Gadsby plant operations. The MDA is only tangentially related to the
Transfer Agreement and is not a part of the Company's application and the Company is not seeking
approval of the MDA with this application.
III. REQUEST FOR RELIEF
13. The Company believes that Staff's comments recommending approval of the sale
and transfer of the NTO Blocks is the same approval the Company sought in its application.10 As
noted in the application,the PacifiCorp is not seeking a prudence determination,or any rate change
associated with the construction of the New NTO or the New ESB .Rather the Company is seeking
property disposition approval pursuant to the mandates contained in I.C. § 61-328. PaciECorp is
aware that the underlying real estate transaction is complex and the Company looks forward to
working collaboratively with Staff in a future rate proceeding to reach a prudence determination
for the construction of any facilities described in its application. Based on the foregoing, the
Company respectfully requests the Commission:
(1) Issue an order approving the Transfer Agreement as proposed in the application in
accordance with I.C. § 61-328. In the alternative, issue an order approving the sale
and transfer of property as outlined in the Transfer Agreement in accordance with
I.C. § 61-328.
10 Staff Comments at 4("Staff is not opposed to the sale of the Blocks of NTP and recommends the Commission
approve the sale and transfer of the NTP Blocks").
Rocky Mountain Power Reply Comments Page 6

(2) Issue an order approving an accounting order as proposed in the application
allowing the recording of the net proceeds arising from the Transfer Agreement as
regulatory liability,and further approve a carrying charge for the regulatory liability
equal to the customer deposit rate.
(3) Issue an order requiring the Company to provide a copy of the finalized Transfer
Agreement in a future rate proceeding when the Company seeks to amortize the net
proceeds recorded under the above forementioned accounting order.
DATED this 15th day of August 2024.
Respectfully submitted,
ROCKY MOUNTAIN POWER
Joe Dallas (ISB# 10330)
PacifiCorp, Senior Attorney
825 NE Multnomah Street, Suite 2000
Portland, OR 97232
Email:joseph.dallas&pacificorp.com
Attorney for Rocky Mountain Power
Rocky Mountain Power Reply Comments Page 7