20070305min.doc

IDAHO PUBLIC UTILITIES COMMISSION

MINUTES OF DECISION MEETING

March 5, 2007 – 1:30 P.M.

In attendance were Commissioners Paul Kjellander, Marsha Smith and Mack Redford.

Commissioner Kjellander called the meeting to order. The first order of business was approval of MINUTES FROM PREVIOUS MEETING on February 26, 2007. Commissioner Kjellander moved for approval of the minutes. A vote was taken on the motion and it carried unanimously.

The second order of business was approval of the CONSENT AGENDA, items 2 – 3. Regarding item 2, Commissioner Smith stated it should be the Commission’s goal to synchronize the filing of the IRPs of all the electric utilities within the same time frame and require them to consult with each other as they prepare their IRPs so we can get a more regional perspective on resource needs and possible synergies in the decisions they make regarding what resources they are going to acquire. She said this is the goal of the Northern Tier Transmission Group and CREPC, and it is time to start getting some coordination among the utilities in the preparation and filing of their IRPs to see whether or not there are savings, efficiencies or synergies they can decide on amongst themselves in the preparation of their plans. There was no further discussion. Commissioner Kjellander moved for approval of the Consent Agenda. A vote was taken on the motion and it carried unanimously.

The next order of business was MATTERS IN PROGRESS:

Don Howell’s March 1, 2007 Decision Memorandum re: Eagle Water’s Status Report and Petition for an Extension of Time in Which to File Its Capital Improvements Application, Case No. EAG-W-05-2.

Mr. Howell reviewed his Decision Memo. Commissioner Smith questioned Mr. Howell about DEQ’s involvement in reviewing and approving the engineering report. She clarified with Mr. Howell that the draft final report was filed in February, and DEQ’s comments on that report will be incorporated into the final engineering report. Mr. Howell referred to the timeline on the last page of the Decision Memo, confirming the Commission has been reviewing this matter for a year. Commissioner Smith asked how long it will take DEQ to look at the report once it is resubmitted to DEQ. Mr. Howell said he did not know and asked the counsel for Eagle Water, Molly O’Leary, if she could answer that question.

Ms. O’Leary, speaking on behalf of Eagle Water, said she shared the Commission’s frustration with this chain of events involving DEQ and Eagle Water’s engineering report. She explained that Eagle Water has until March 15th to get the engineering report resubmitted to DEQ, at which time DEQ has 30 days to get back to Eagle Water with any additional comments it may have. She said it has been a series of submissions, comments back, resubmissions, comments back, resubmissions, during the course of which DEQ has changed the standard that all of Eagle Water’s computer modeling is based on, and the latest word is they are back to where they started a year ago.

Commissioner Kjellander asked what that means to the Commission. Ms. O’Leary clarified that it means nothing to the Commission in terms of timing but the delay has been caused by changing the standards, so they had to remodel and resubmit, and now they are back to where they started a year ago in terms of the peaking demand model that they thought was appropriate all along, and DEQ has re-agreed with that position. She said they are hoping that this will be the final resubmission on March 15th, and they have been working with DEQ to make sure that whatever comments it has will be targeted with this final submission.

Commissioner Smith commented that as hopeful as we all have been, there could be a scenario where Eagle Water files on March 15th and then 30 days later, DEQ does not approve it, but merely submits additional comments or changes its methodology or does something else, whereupon Eagle Water would have to resubmit something else in another 30 days. She said it seemed there will never be a time certain when the 30 days the Company is asking for starts to run because DEQ could fail to give approval.

Ms. O’Leary agreed that theoretically this could happen and in light of that she submitted the petition asking for an extension for 30 days from DEQ’s approval date because of the fact that Eagle Water has had to come back to the Commission too many times already. She said she thought it would be easier procedurally for everyone involved if it could be clocked to 30 days after DEQ’s final approval. She said once Eagle Water gets DEQ’s approval and knows exactly which system improvements it has to put in, then it will have the applications ready to go within days.

Commissioner Smith asked if there is anything the Commission can do to help get the answer out of DEQ. Ms. O’Leary replied that perhaps an inquiry to Peter Bair at DEQ might be helpful.

Commissioner Smith commented that it is unacceptable to her to have this uncertain deadline, which really isn’t a firm deadline, because it depends on DEQ action. She said it is better to set a date certain, and if the company has to come back and give another report, so be it, but at least it won’t slide off our radar screen. She said the customers have been waiting long enough.

Commissioner Redford stated he had some fundamental questions. He noted that in August 2005, because of various complaints about water pressure, the Commission ordered Eagle Water to use all deliberate speed to increase the water pressure and requested an engineering study to address the chronic low pressure and to project its water supply needs for the future. He asked if any remedial actions to increase the water pressure have been done while the engineering report is being prepared. Ms. O’Leary replied that the company made changes to the booster pump servicing Eagle Springs subdivision, which addressed the pressure problems. She said the company got through last summer, which was an extremely hot summer, without any water pressure problems. She said the company would love to have this engineering report finished and have all the other improvements in place by now, but in the meantime, the changes were made to the booster pump to meet the immediate needs, and the company has also added a well to its system because it couldn’t wait for this report to get finished. Commissioner Redford asked if there have been any further complaints about low water pressure. Ms. O’Leary replied that it is her understanding there have not been further complaints. Ms. O’Leary stated that as of the last draft of the engineering report, there were still a couple of junctions that experienced low water pressure under test circumstances, but on a day-to-day operational basis, there is not a low pressure problem. Commissioner Redford confirmed that in response to the Commission’s order to use all deliberate speed, that issue has been resolved, and what we are really talking about is the roadmap for the company’s future needs. He asked if the company is getting complaints from people about any other issues. Ms. O’Leary replied she is not aware of any complaints.

Commissioner Kjellander commented that what Commissioner Smith said about having staff get together with DEQ makes sense to him, too. He said he also hoped that staff will come up with some kind of cooperative working arrangement with DEQ so the Commission is involved earlier in the process because at the end of the day, it is the customers who are in a world of hurt if we don’t get this corrected. He said it is his hope we can use this specific case in front of us to maybe identify when it is we should be getting engaged so we don’t have these two state agencies out there pointing fingers at each other, and we can quickly get these things moving forward so the services can be upgraded and we don’t end up with a crisis.

Commissioner Smith asked Ms. O’Leary about the moratorium DEQ placed on Eagle Water preventing any new hook-ups and how long it has been in place. Ms. O’Leary replied that the moratorium has been in place six to nine months. She said there was a blanket moratorium in place but the company was able to convince DEQ that was inappropriate because Eagle Water’s system is zoned and the pressure problems were in an isolated area. She said DEQ has now backed off the zone approach, perhaps due to a change in administration at DEQ, and again made it a system-wide moratorium. She said the company has every reason to want to move this along as fast as it can because of the moratorium. Commissioner Smith asked if perhaps the reason there were no pressure problems is because no new customers could be added. Ms. O’Leary replied that she didn’t think so, and that the pressure problems for Eagle Water have always come in the summer and have always been in that one area because of the elevation issue. She said that prior to the moratorium, the Gladstone subdivision has come online and St. Luke’s construction has been underway, and that has not presented any problems to the system.

Commissioner Smith made a motion that the Commission continue to allow Eagle Water to collect the current surcharge and extend the deadline for filing the application to May 1st, 2007. There was no further discussion. A vote was taken on the motion and it carried unanimously.

There was no further business before the Commission and Commissioner Kjellander adjourned the meeting.

DATED this ______ day of March, 2007.

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COMMISSION SECRETARY