20070827min.doc

IDAHO PUBLIC UTILITIES COMMISSION

MINUTES OF DECISION MEETING

AUGUST 27, 2007 – 1:30 P.M.

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

Commissioner Kjellander called the meeting to order. The first order of business was approval of MINUTES FROM PREVIOUS MEETING on August 20th, 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 - 5. Commissioner Kjellander moved to approve the Consent Agenda. There was no discussion. A vote was taken on the motion and it carried unanimously.

The next order of business was MATTERS IN PROGRESS. Commissioner Kjellander stated that item 7 would be considered first:

Grace Seaman’s August 22, 2007 Decision Memorandum re: 2007 Idaho Universal Service Fund Annual Report and Recommendations.

Ms. Seaman reviewed her Decision Memo. Alyson Anderson, Administrator of the Idaho Universal Service Fund (USF), was present. Commissioner Kjellander asked Ms. Anderson if she could live with the recommendation proposed by Staff, which was option 3 outlined in the memo. Ms. Anderson replied in the affirmative. Commissioner Kjellander asked Ms. Anderson if she had any additional updates for the Commission, and she noted that beyond what was in her report, they were on schedule to do audits of the USF and ITSAP this Fall.

Commissioner Smith asked about the high bank charges, and Ms. Anderson explained that fees have gone up and she has had checks returned from some of the utilities for various reasons. Commissioner Kjellander asked Ms. Anderson to come up with some suggestions for lessening the negative impact of some of the bank charges, and Ms. Anderson agreed to do so. Commissioner Kjellander then moved to approve option 3 based on the fact that Ms. Anderson had no objections.

Commissioner Smith asked if the Commission would still be within the statutory guidelines requiring the ILECs to reduce their access charges if they are outside a certain range. Ms. Anderson replied that was what she had recommended under option 4. Ms. Seaman stated that under option 3, we would be outside the range but not by much. She said it is difficult to determine how much the access rates should be reduced in anticipation of the MTS long distance billed minutes the companies might submit, and staff concluded it was not enough to warrant the change at this time. Commissioner Kjellander clarified that Staff’s recommendation is well within the margin of error. Commissioner Smith stated she can live with it being within the margin of error, but the reason there is a range is because the Commission wants to minimize access charges in order to facilitate a choice of long distance companies. She suggested that next year we ought to make sure we are still within the range.

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

Don Howell’s August 10, 2007 Decision Memorandum re: Eagle Water Company’s Engineering Report and Application to Continue the Existing Surcharge, Case No. EAG-W-07-01.

Mr. Howell reviewed his Decision Memo. Commissioner Kjellander asked about the purpose of holding a status conference in light of the probable sale of Eagle Water to the City of Eagle. Mr. Howell replied that Staff would try to ascertain the purposes and reasonableness of the additional fees for the preparation of the engineering report. He said the last order in the case continued the surcharge until such time as the Commission terminates it, and it is Staff’s hope that if the transaction is completed then the surcharge account, which continues to grow, would just be a matter of execution between the company and the city, and then the city could set its new rates to recover whatever amount of money it deemed would be necessary. He stated that at a minimum, Staff recommended a Notice of Application with a longer deadline for intervention and a status conference if one is needed.

Commissioner Redford asked if there are any formal documents between the City and Eagle Water, i.e. Notice of Intent or preliminary understandings. Mr. Howell said it is his understanding there are but such documents were not provided as exhibits to the application so Staff has requested them through a production request. He said Ms. O’Leary, counsel for the company, was present and perhaps could shed more light on the question.

Molly O’Leary, counsel for Eagle Water Company, stated the company was more than willing to share with the Commission the Asset Purchase Agreement between the City of Eagle and Eagle Water Company. Commissioner Redford asked if it was just a proposed agreement and Ms. O’Leary replied that it is signed and the closing has been set for November, with a lot of due diligence to do in the interim, but it is a signed, executed agreement. Commissioner Redford asked if there is something in the application that addressed whether any shortfall in the surcharge account would be made up by the City of Eagle in its purchase price. Ms. O’Leary replied that what she attempted to express in the application was that Eagle Water has several capital improvements that have been done and some that need to be done as a result of the engineering report. She said one improvement has been done with private financing and several improvements are underway now that will be part of the sale. She said the cost of making the improvements will be recovered in the sale price, assuming the sale goes through, so those improvements were not included in the application. She said in preparing the application, normally she would have included the cost of the engineering report, the professional fees, etc, and the cost of all the other things that need to be done and have been done to improve the system, but the company didn’t feel it was appropriate to ask to recover those through the surcharge if in fact the sale closes and Eagle Water essentially recovers those costs through the sale of the company.

There were no further questions and Commissioner Kjellander moved to accept Staff’s recommendation with regard to the Notice of Application and establishing a deadline for intervention. A vote was taken on the motion and it carried unanimously.

The only remaining item on the agenda was under the category of FULLY SUBMITTED MATTERS and Commissioner Kjellander stated it would be deliberated privately. There was no further business and Commissioner Kjellander adjourned the meeting.

DATED this ______ day of August, 2007.

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ASSISTANT COMMISSION SECRETARY