20090601min.doc

IDAHO PUBLIC UTILITIES COMMISSION

MINUTES OF DECISION MEETING

June 1, 2009 – 1:30 P.M.

In attendance were Commissioners Jim Kempton and Marsha Smith. Commissioner Mack Redford was absent and excused.

Commissioner Kempton called the meeting to order. The first order of business was approval of MINUTES FROM PREVIOUS MEETING on May 26, 2009. A vote was taken to approve the minutes as written.

The second order of business was approval of the CONSENT AGENDA. Commissioner Kempton announced that items 2, 3, 5, 6 and 7 would be considered together, item 4 would be considered separately, and item 6 would be moved to MATTERS IN PROGRESS to be considered with the issues in item 8. Commissioner Kempton made a motion to consider agenda item 6 along with item 8 and it passed unanimously.

4. G. Galinato/T. Carlock’s May 27, 2009 Decision Memorandum re: Application of Bar Circle “S” Water Corp. for Authorization to Borrow Funds to Make Water System Improvements, Case No. BCS-W-09-01.

Regarding Staff’s first recommendation, a unanimous vote was taken to approve the Company’s request to borrow $55,000 from the Community Bank in Post Falls, Idaho.

Regarding Staff’s second recommendation, a unanimous vote was taken to require the final loan documents to be filed with the Commission.

The next order of business was MATTERS IN PROGRESS:

8. Bryan Lanspery’s June 1, 2009 Decision Memorandum re: Compliance Filing for AMI Rates/Approval of Advanced Metering Infrastructure Tariff, Case No. IPC-E-09-07.

Mr. Lanspery reviewed his Decision Memo. Donovan Walker, attorney for Idaho Power Company, responded. He stated that what Mr. Lanspery said was generally correct, but Idaho Power believed the submitted tariffs comply with the Order, although there is obviously a disagreement over what the uniform portion of the increase should be. He explained that the Company applied a uniform percentage increase in each customer classes’ energy charge, which is the way these increases have always been done in the past. He said the Company didn’t view the specific language in the Order as a departure from past methods. He said each of the schedules has some varying percentage increase but their averages come out to what was authorized by the Order, and the revenue collected is the same either way. He said it is really the difference in holding the increase in the energy charge as a constant, or holding the overall percentage increase for each class as a constant, as Staff has suggested. He explained that if each class schedule is held to the constant, then what you have to do is vary the corresponding classes’ energy charge so that each class then has a different percentage increase applied to energy, and it’s really an interpretation of which method applies a uniform increase to the customer classes. He said the bottom line is that the ultimate revenue and the average across all the classes remains the same under either method, and in that sense it is really neutral to the Company. He stated that since receiving the Order on Friday, the Company had been busy late into the night and all through the weekend entering these rates into the computerized customer information system (CIS) so rates can be effective today, and if the Company’s proposed rate spread were rejected and it had to go back and recalculate it, the Company would need additional time to re-enter everything into the CIS and get it changed. He said there is a possibility of not being able to do it immediately and losing some revenue in the interim period. He reiterated that the Company thinks it has complied with the language in the Order and that the Company remains consistent with what it has done in the past with other incremental rate increases. He asked that the Commission approve the Company’s tariffs as submitted.

Commissioner Kempton asked Mr. Walker if, when using Idaho Power’s proposed method, there is any significant adjustment that would affect one of the classes more than the other in terms of a percentage increase. Mr. Walker replied that the individual percentages vary from a high of 2.08%, which is the uniform percentage that was applied to the energy charges in Schedule 3, Residential, Energy Watch, and Traffic Control Lighting, and a low of around 1.60%, for Schedules 9S and 24S, large general secondary and irrigation secondary. He said based on preliminary numbers when calculating it the alternate way—i.e. keeping the overall percentage at 1.83%, then the energy charge varies from a low of 1.83% to a high of 595% for Schedule 41 – Street Lighting because of the particular way the energy charge is distributed among the different rate designs in those classes. He said Irrigation is 2.30% and Large General is 2.20% so they still remain over the average increase as they did under the other method.

Commissioner Smith said she appreciated Staff trying to meet the Commission’s requirements in the Order. She asked if the 1.83% for each of the affected classes was something that was specifically advocated for by Staff in a different way from what the company proposed. Mr. Lanspery stated it was his understanding that the Company applied its method of applying the 2.08% across the board in the same fashion when it first filed its application, and it was his understanding that Staff submitted a proposal with its revenue requirement that was more in line with the uniform rate spread, which is what we see in the 1.83%, but it was a different value at the time, so that is where some of the confusion comes in. He said the language Staff used would lead one to believe that it’s a uniform rate increase as opposed to an average overall rate increase. Commissioner Smith asked if this is one of those cases where the percent differs because the underlying rate is different, like we see in the PCA. Mr. Lanspery replied there is a difference when you are generating revenue from classes that have rates that are twice as much as another rate class, including a uniform percentage increase versus a varying one, so the numbers, with the exception of Street Lighting, are within a range that hovers around that 1.83% average. He said there isn’t a huge amount of revenue impact between one methodology and the other, but Staff’s concern is the way it read the Order—i.e. the Commission advocated a particular way of spreading it, and Staff doesn’t believe the Company’s filing adheres to that. Commissioner Smith asked if Staff sees any great difference between its method and the way the Company has actually done it, and if there is a reason to take the extra time and incur costs to have the Company fix it to reflect what Staff is advocating.

Mr. Lanspery conferred with Staff and announced that at this point in time, Staff didn’t believe it to be such a significant issue as to hold up approval of the tariffs, although that doesn’t mean Staff wouldn’t look into it again in the future. Commissioner Smith said it seemed like something Staff and the Company could probably talk through in advance. Mr. Lanspery stated that is another reason Staff can support it because the shifting between customer classes is marginal.

Commissioner Kempton said it brings up a good point regarding how we have done it in the past. He stated that instead of making a decision, the Commissioners would confer with Staff and then ask Staff to contact the Company before the end of the day. He noted the Commission is sensitive to the additional work the Company would be required to do in order to move toward the Staff’s position.

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

DATED this ______ day of June, 2009.

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ASSISTANT COMMISSION SECRETARY

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