20041004_957.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:BEVERL Y BARKER
DATE:SEPTEMBER 30, 2004
RE:APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO
REVISE DEPOSIT REQUIREMENTS FOR IRRIGATION CUSTOMERS
(IPC-04-20).
COMPANY PROPOSAL
On September 17, 2004, Idaho Power filed an Application requesting authority to revise
deposit requirements under Schedules 24 and 25 for electric service to irrigation customers. The
Company requests an effective date of October 18 2004, and that its Application be handled
under Modified Procedure. Idaho Power sent letters to its current irrigation customers to advise
them of its filing with the Commission.
The Company indicates that in recent years, it has experienced an increase in unpaid
irrigation bills (accounts receivable) at the end of each year and a corresponding increase in bad
debt (net write-offs). At the same time, the number of service points has been increasing while
the number of persons responsible for those agreements has been decreasing. This consolidation
of accounts into the hands of fewer customers also raises the level of risk to which Idaho Power
is exposed.
In order to minimize its exposure to bad debt, Idaho Power proposes to revise its deposit
policy for irrigation customers by collecting a higher deposit from those customers who pose a
higher credit risk. Customers asked to pay a deposit will continue to have the option of
providing an irrevocable Letter of Credit from a financial institution. A customer who owes an
outstanding balance of over $1000 on December 31 will be required to pay a "Tier 2" deposit
based on a formula that in essence collects the customer s bill for the next irrigation season in
DECISION MEMORANDUM - 1 -SEPTEMBER 30, 2004
advance. A customer who has been discharged from bankruptcy or who has had receivership
proceedings terminated will also be required to pay a Tier 2 deposit. The Tier 2 deposit will be
applied to each monthly bill as it becomes due throughout the season.
A customer who owes less than $1000 on December 31 but who has received two or
more reminder notices of $100 or more during a 12-month period or customers whose service is
disconnected due to non-payment during the out-of-season period will be required to pay a lower
deposit amount. A customer required to pay a Tier 2 deposit one year will be required to pay a
Tier 1 deposit the following year. Idaho Power will apply the formula it currently uses for
calculating deposit amounts to Tier 1 deposits.
STAFF RECOMMENDATION
Staff recommends that the Company s Application be processed under Modified
Procedure and that the proposed effective date be suspended. In order to give customers an
adequate opportunity to comment on the Application and give the Company sufficient time to
provide individual notice to affected customers of the Commission s ultimate decision, Staff
recommends a 21-day comment period. As indicated previously, Idaho Power has already
notified its irrigation customers of this proposal.
COMMISSION DECISION
Does the Commission wish to process this Application under Modified Procedure?
Should the proposed effective date be suspended and a 21-day period be established to allow for
public comment?
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DECISION MEMORANDUM - 2-SEPTEMBER 30, 2004