20031015_651.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
WORKING FILE
FROM:DON HOWELL
KATHY STOCKTON
DATE:OCTOBER 10, 2003
RE:IDAHO POWER LETTER REGARDING THE SALE OF 3 BUILDINGS
NO LONGER IN USE, CASE NO. IPC-03-
BACKGROUND
On March 17, 2003, Idaho Power Company filed a letter with the Commission regarding
the sale of surplus buildings. In the letter, Idaho Power states that it "is in the process of
disposing of three buildings which the Company no longer uses in its utility operation, i., the
Homedale Operations Center Building; the Cambridge Operations Center Building; and the
Homedale Office Building." The Company stated that it does not believe that the sale ofthese
buildings falls within the provisions of Idaho Code ~61-328. This statute prohibits an electric
utility from selling property used in the generation, transmission, distribution or supply of
electric power "except when authorized to do so by order ofthe public utilities commission.
Idaho Code ~61-328(1). The Company seeks a ruling that Idaho Code ~61-328 is not applicable
to these transactions.
STAFF COMMENTS
Use of the Properties
In response to Staff s audit requests, Staff has learned the following: The Cambridge
Operations Center was first used in 1984; the Homedale Operations Center was first used in
1985; and the Homedale Office was first used in 1986. These three properties are currently
included in Idaho Power s rate base, Order No. 25880. After the Company acquired these
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buildings, the Cambridge and Homedale Operations Centers were used as materials storage
facilities. Both properties were also used as construction and maintenance operations centers.
The Homedale Office served as a local business office for the Company. It appears to Staff that
all three properties were used for the supply of electric power and energy to the public.
Abandonment of the Properties
The Cambridge Operations Center was abandoned in March 2001. The Homedale
Operations Center was abandoned in September 2000; and the Homedale Office was abandoned
in April 2001. Although these properties are not currently in use, when they were in use their
primary function was in support of delivering electric power to the public. Because these
buildings were used in the distribution of electric service and are currently in the Company
ratebase, Staff believes that Idaho Code ~61-328 is applicable. Consequently, the Commission
must authorize the sale of these properties.
If the Company is allowed to sell properties based upon the rationale that these properties
are no longer being used for utility purpose, the Company could abandon any property it wants
to sell and claim the Commission does not have jurisdiction. Moreover, there exists the
opportunity for the potential abuse of abandoning particular properties for an indeterminate
amount of time so as to circumvent the Commission s authority over properties that were used in
the production, transmission, generation, or supply of power and energy to the general public.
STAFF RECOMMENDATION
Staffis not opposed to the sale of these buildings, in fact if the buildings are no longer
used and useful for utility purposes, it is prudent to sell the properties. Staff has learned that the
Company is entering the process of leasing some of the property with an "option to buy" clause.
These properties are no longer used and useful in utility purposes, Staff recommends they be
removed from rate base. Staff further recommends that the rate base treatment be determined in
the forthcoming rate case. Upon sale of the properties, Staff recommends that regulatory
treatment for the sale be determined at that time.
It is Staff s opinion that Idaho Code ~61-328 applies in this case. Given such, the
Commission has jurisdiction over the sale of these buildings. Staff recommends the Commission
issue an order affirming jurisdiction and authorize the Company to dispose of the buildings.
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Staff further recommends that the Company keep the Commission apprised of the disposition of
these buildings. Although Idaho Power does not believe these properties necessarily fall under
Idaho Code ~61-328, it is comfortable with the process proposed and recommendations made by
Staff.
COMMISSION DECISION
1. Based upon the facts presented, does Idaho Code ~61-328 apply in this case?
2. Does the commission approve of the disposal of these buildings?
3. Should the company be directed to advice the Staff of the disposition of these
facilities?
4. Shall the ratebase treatment of the disposal be address in the upcoming rate case?
5. Upon sale of the properties, should the regulatory treatment for the sale be determined
at that time?
Don Howell
DH:KS:udmemos/ipc building
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