20070529min.doc

IDAHO PUBLIC UTILITIES COMMISSION

MINUTES OF DECISION MEETING

MAY 29, 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 May 21, 2007. Commissioner Kjellander moved for approval of the minutes. A vote was taken on the motion and it carried unanimously.

The next order of business was approval of the CONSENT AGENDA, items 2 – 5. There was no discussion. Commissioner Kjellander moved for approval of the consent agenda items. A vote was taken on the motion and it carried unanimously.

The next order of business was MATTERS IN PROGRESS:

Don Howell’s May 16, 2007 Decision Memorandum re: Eagle Water Company’s Request for Another Extension to File Its Engineering Report and Implementing Application, Case No. EAG-W-05-02.

Mr. Howell reviewed his Decision Memo. He noted the legal counsel for Eagle Water, Molly O’Leary, was present and available for questions. Commissioner Kjellander expressed his frustration with Eagle Water Company’s request for another extension. Commissioner Redford stated he had no problem granting the extension of time but not the surcharge, and he suggested perhaps the Commission could get the company’s attention by stopping the surcharge.

Commissioner Smith asked for more information about the surcharge and the previous deadlines the company has missed. Mr. Howell replied that initially when the company calculated what an engineering report would cost the Commission allowed the company to recover that cost, estimated to be $112,000, including legal expenses. He said the company has reported each time it has asked for an extension that it has exceeded the initial cost estimate of the engineering report and in the most recent petition, the company asserts it has incurred engineering expenses of $121,000. Mr. Howell said he assumes that amount will continue to grow until the final engineering report has been submitted. He said the company has been allowed to collect the surcharge because if in fact at such time the Commission addresses the merits of the engineering report, at least there will be a source of funding to pay off expenses that have been incurred. He recapped the due dates and extensions the Commission has already granted.

Commissioner Smith asked Ms. O’Leary if this was the final request for an extension and if the Commission will have the report by July 1st. Ms. O’Leary responded by quoting from an e-mail Eagle Water had received from DEQ giving a positive review of the draft report and listing five minor items the company needs to address, which focus mainly on the redundancy requirement for the main booster pump in Eagle Springs subdivision. She said the company could easily make the July 1 deadline. Commissioner Smith asked why the Commission should continue the surcharge if the company has collected $135,500 but has spent only $121,000 as of May 1st. Ms. O’Leary replied that not all engineering, legal and accounting bills have been received and the costs will probably exceed what has been collected. Commissioner Smith asked about staff turnover at DEQ and whether there was a possibility that the DEQ staff could change and thus delay approval of the report again. Ms. O’Leary replied that she hoped that would not be the case and the company shared the Commission’s frustration with the delays.

Commissioner Smith made a motion to grant the extension until July 1st and the continuation of the surcharge. Commissioner Redford seconded the motion and Commissoner Kjellander stated he would live with it.

Commissioner Kjellander commented to Ms. O’Leary that the Commission has a lot of issues related to water companies and given her experience, the Commission might want to bring her into some of the discussions to look at ways the Commission can work more closely with the other agencies involved with the regulation of small water companies. He said perhaps there is a way the Commission can work more efficiently to get at the end result, which is to make sure that customers have reliable, safe drinking water. Ms. O’Leary stated Eagle Water would welcome that opportunity and if we all can learn from this experience to the benefit of the public it would be a welcome outcome. She said she wanted to note for the record that there have not been any water pressure problems for two years and the company had been providing good service.

There was no further discussion. A vote was taken on the motion and it carried unanimously.

Donovan Walker’s May 25, 2007 Decision Memorandum re: PacifiCorp’s Application for Approval of Reductions in BPA Residential Exchange Credits, Case No. PAC-E-07-10.

Commissioner Kjellander noted that Eric Olsen, who was representing the Idaho Irrigation Pumpers Association, was participating by telephone. Mr. Walker reviewed his Decision Memo.
Commissioner Redford stated that while he was sympathetic to the irrigators, he questioned if there had been ample opportunity for the residential customers to comment. Mr. Walker said the company’s rationale for its proposal is the residential customers have been receiving credits on their bills since the beginning of the year, and because the irrigation season is just beginning, there hasn’t been an opportunity for those benefits to be passed on to the irrigation customers. Randy Lobb stated that residential customers received the full credit during the winter heating season and irrigators haven’t seen any credit because their season is just starting, so Staff believes it is appropriate under an emergency condition to pass whatever credit is left to the irrigators rather than continue to give credit to residential customers who have already seen a large chunk of the credits during the winter season.

Commissioner Kjellander commented that he appreciated the utilities’ forthrightness in getting with the Commission as soon as they were aware of the potential impact, for giving updates along the way and for their efforts going forward to find a solution on a more permanent basis. Commissioner Kjellander asked Mr. Olsen if the association had contacted a good cross-section of different types of growers when surveying its members. Mr. Olsen replied that they polled growers controlling approximately 100,000 irrigated acres and they were all in favor of this type of credit distribution.

Commissioner Kjellander made a motion to approve expedited treatment as recommended in the proposal with an effective date of June 1st, using the treatment recommended by the company and supported by the irrigators and Staff. Commissioner Smith advised that in press releases and other communication, the Commission characterize these credits as benefits to customers, not benefits to utilities. She said she had noticed that the industry in other states has been characterizing the credits as benefits for the investor-owned utilities, when in fact they are passed directly through, penny for penny, to the customers. She said the Act intended these benefits for all customers who live in the Northwest, regardless of who provides their electricity. She urged everyone to be precise in identifying the benefits as being for customers, not for the investor-owned utilities. There was no further discussion. A vote was taken on the motion and it carried unanimously.

Randy Lobb’s May 23, 2007 Decision Memorandum re: Avista Corp. Tariff Advice to Revise the Residential and Small Farm Energy Rate Adjustment Credit, Schedule 59.

Mr. Lobb reviewed his Decision Memo. In response to a question from Commissioner Smith, Mr. Lobb clarified that Avista is claiming a total balance of $917,000 in over-refunded exchange credit as of the end of April. Commissioner Smith asked if administrative efficiency in billing was the reason Staff was recommending the surcharge start immediately. She questioned why Staff wouldn’t be more comfortable zeroing it out until they had a chance to audit and take comments, and then implement the surcharge. Mr. Lobb replied they would have to implement two rate changes in that case and there is no reason to suspect at this time there is anything wrong with the rate the company has established.

Commissioner Smith moved to adopt Staff’s recommendation for Avista to cease the credit and implement the surcharge subject to refund with a 30-day comment period. There was no further discussion. A vote was taken on the motion and it carried unanimously.

Commissioner Kjellander stated that the remaining agenda items 9 – 13 under the category of FULLY SUBMITTED MATTERS would be deliberated privately. He then adjourned the meeting.

DATED this ______ day of May, 2007.

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COMMISSION SECRETARY