20050131_1080.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:JANUARY 27, 2005
RE:CASE NO. ATL-03-1 (Atlanta Power)
INVESTIGATION OF RATES/CUSTOMER SERVICE
Customer Petitions - Informal Review
On September 11 , 2000, the Commission received petitions from residents of Atlanta
Idaho, enumerating their concerns about the electric service provided by Atlanta Power Company.
The petitions were signed by six customers of record and many of their family and friends. The
petitions requested "a formal investigation into the reliability of electrical service for the Atlanta
townsite.In a Decision Memorandum dated October 4, 2000 , Staff proposed to "audit the
Company, compile outage information, identify potential improvements and associated costs, and
survey customers concerning their desire to improve service reliability and the amount they are
willing to pay to do so.The Commission accepted Staffs proposal to begin processing the
complaints on an informal basis and to proceed with the review as outlined above.
Staff worked with the Company and its customers during a two-year informal review
period that culminated in several improvements and a Staff Report (2003 Report) attached to a
Decision Memorandum dated March 6, 2003. The 2003 Report presented the results of Staff s
review and made further recommendations to the Commission. Staff s audit showed that based on
a 1999 test year, the Company over-earned by approximately $3 000 or 5.6%. No allowance for
purchase or rental of a backup generator or related fuel costs to run a backup generator were
included in this calculation. Staff s audit also revealed that Company record keeping needed to be
improved, that the Company was five years delinquent in filing Commission required annual
reports and that the Company was also behind in making payments on several of its financial
obligations. Staff recommended that these problems be corrected.
DECISION MEMORANDUM
The 2003 Report also discussed the results of a questionnaire that Staff sent to all
Atlanta Power customers. Fifty of sixty customers of record responded. The questionnaire
queried customers concerning the three main problem areas that Staff identified from the petitions.
The problem areas were identified as: (1) the lack of an on-site backup generator, (2) the lack of a
local person to back up Dave Gill, the in-town maintenance person, in the event of an unplanned
outage and (3) poor communications between the Company and its customers concerning outages.
The majority of survey respondents agreed that they would like to see improvement in these areas.
Staff worked with the Company regarding the issues identified by customers. As a
result another person, who lives in Atlanta, was identified to assist with system maintenance and a
telephone messaging system was installed to notify customers of planned outages and to inform
customers of the progress of system repairs. With regard to the backup generator customers
responding to the questionnaire agreed that having one would be beneficial but they were not
interested in paying higher rates to have it. Atlanta Power residential rates for "permanent"
customers are some of the nations ' highest. ($81 per month plus 5~ per kWh for all kWh over 500
kWh per month) Staff recommended continuation of the status quo, meaning that the Company
not invest in an on-site backup generator but that it lease one and bring it to Atlanta once an
extended outage had been identified.
Formal Investigation
Following Staffs March 6, 2003 Decision Memorandum the Commission opened Case
No. ATL-03-1 and on April 10, 2003 , issued a Notice of Proposed Order and Notice of
Comment Deadline. The Proposed Order was based on recommendations contained in the 2003
Decision Memorandum and Report.The proposed Order would have found that it was not
appropriate for Atlanta Power Company to purchase a backup generator and increase customer
rates to pay for it because customers were not interested in paying increased rates to have one.
The Order would also have found that substantial progress had been made in obtaining a backup
maintenance person to Dave Gill and that substantial progress had been made in communicating
outage information to customers. These findings would have provided the basis necessary for the
Commission to close the case.
The Proposed Order and a summary of Staff s 2003 Report were mailed to all Atlanta
Power customers. This resulted in customer comments containing many more questions and
concerns raised primarily by the original petitioners and prompted by the new information made
DECISION MEMORANDUM
available to customers. Along with these new concerns, customers pointed out that they still did
not have an on-site backup generator, that the third person identified to help with outages had not
received any training and that the telephone messaging system was working poorly. At this point
in time some of the customers involved their State Senator, Fred Kennedy.
Staff Workshop - June 28, 2003
In yet another Decision Memorandum dated May 19 2003 , Staff summarized the most
recent events and proposed to the Commission that Staff be allowed to respond to new questions
and concerns in writing and to follow that with a Staff workshop in Atlanta designed to address
any remaining questions. The Commission accepted Staff s recommendations and issued Order
No. 29257 establishing a date for a public workshop and providing an extended date for written
comments. The written questions and answers were mailed to all Atlanta Power customers and
Senator Fred Kennedy prior to the workshop. Staff conducted the workshop in Atlanta on
Saturday, June 28 , 2003. It lasted until all questions were answered, approximately three and one-
half hours. The workshop was attended by Company representatives, customers, Senator Kennedy
and Commission Staff. One of the customers' major concerns discussed during the workshop was
the overdue annual reports. The concern was that without the annual reports the Commission did
not have the necessary information to properly regulate and set rates for the Company. Following
the wQrkshop the Company agreed to prepare and file all overdue annual reports. Another idea
discussed at the workshop was the possibility of Atlanta Power, or the community of Atlanta
obtaining grant money to purchase a backup generator.
Change in Ownership/Management
On September 3 , 2003 , Lynn Stevenson, the president of Atlanta Power Company,
passed away. Before his death he did the following:
1. Submitted all overdue Annual Reports to the Commission on August 8
2003 ;
2. Entered into financing (Case No. ATL-03-2) that paid past due dam
licensing legal fees in full; and
3. In September and October of 2002 paid two loans that were in arrears.
After Lynn Stevenson s death, Israel Ray, a shareholder in the Company, was elected President.
Informally, Staff inquired of the Commission as to whether this would be a good time to close the
complaint case and allow the new president to build his own record. The Commission s response
DECISION MEMORANDUM
was that many of the problems identified in the case still existed and that Staff should work with
the new President for a period of time to see if outstanding issues could be resolved.
Resolution of Issues/Present Condition
More than a year has passed under the new administration. Israel Ray purchased Lynn
Stevenson s interest in Atlanta Power Company from Lynn s heirs. Israel Ray is the majority
stockholder and remains president of the Company. Under his leadership progress has been made
in many of the remaining areas of concern. In the accounting and financial areas:
1. The 2003 annual report has been filed.
2. As a condition of the stock acquisition agreement between the estate of
Lynn Stevenson and Israel Ray regarding the Company, the estate released
the obligation due Lynn Stevenson from the Company. This obligation was
approximately $60 000.
There have also been improvements in the physical system.
1. A hole in the bladder that operates the spillway gates that control water flow
to the turbine has been repaired.
2. Four of the wicket gates that control water flow through the turbine have
been repaired.
3. Broken or badly warped cross arms have been replaced.
4. A transformer support structure has been replaced.
5. One or more new transformers have been installed to better regulate system
voltage.
The engine in the Company s old-line truck has been replaced.
7. A new line truck has been purchased that can be operated by a single person
from the bucket.
8. The Company s inventory of poles and other supplies has been increased.
Also, Dave Gill's availability has changed. He is available in Atlanta for immediate
system repairs most of the time. Customer relations have been improved and, at the suggestion of
some customers, outage information is being passed on through telephone calls or through notice
provided to the two eating and social establishments in town.
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Last year, Staff became aware of federal grant funding available for communities with
extremely high home energy costs. Staff informed Israel Ray, Atlanta Power Customers and
Senator Fred Kennedy of the availability of this funding. Israel Ray applied for funding that
would have connected the Atlanta Power system to Idaho .Power' s system. Such connection, with
an associated power supply agreement, would reduce the need for a backup generator in Atlanta
and would allow Atlanta Power to provide power to a cyanide leach gold mining operation
proposed in the area. Also included in the grant application, as a secondary and less costly option
was the request for money to purchase a backup generator. The Company did not receive grant
money but may apply again this year if the federal program is funded.
STAFF RECOMMENDATION
Staff recommends that this investigation docket be closed. Staff recommends no
change in rates at this time. A system like Atlanta Power with no full time employees and a single
source of generation will continue to suffer some extended outages. However, Israel Ray, the
Company s president and general manager, has demonstrated a commitment to improving
customer relations and to the financial and physical health of the Company which in turn benefits
ratepayers. Under his management annual reports are current and system reliability and power
quality have been improved. These actions have addressed the principal areas of customer
complaint. This is not to say that the improvements have completely satisfied all customers. Staff
intends to continue to work informally with the Company and its customers to improve the
system.
COMMISSION DECISION
Staff notes the progress made by Atlanta Power in customer service, physical plant
and improvements made in reliability and financial and regulatory accounting. Staff recommends
that this investigatory docket be closed. Does the Commission agree?
Scott Woodbury
Technical Staff: Keith Hessing
Patricia Harms
Carol Cooper
M:ATLEO301 sw kh
DECISION MEMORANDUM