20050906_1315.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL
DATE:SEPTEMBER 6, 2005
SUBJECT:THE APPLICATION OF IDAHO POWER COMPANY AND SUN
ALLEY COMP ANY SEEKING APPROV AL TO SELL AND
TRANSFER CERTAIN UTILITY PROPERTY TO SUN VALLEY, CASE
NO. IPC-05-
On May 2, 2005, Idaho Power Company and Sinclair Oil dba Sun Valley Company
Sun Valley ) filed an Joint Application requesting that the Commission approve the sale and
transfer of certain distribution property to Sun Valley pursuant to Idaho Code 9 61-328. The
distribution facilities proposed to be transferred are located on the grounds of the Sun Valley
Resort. On July 13 , 2005 , the Applicants amended their Application and requested that the
Commission grant Idaho Power a waiver of the Company s master metering tariff found in
Section 4 of Rule E. Idaho Power s master metering tariff is nearly identical to the
Commission s Master Metering Rule 103 , IDAPA 31.26.01.103. Rule 103 prohibits utilities
from removing individual service meters in shopping centers where the tenants control their own
electric space heating, water heating or air conditioning appliances.
On August 2 , 2005 , the Commission issued its Notice of Application and Notice of
Modified Procedure. The only comment was submitted by the Commission Staff.
THE APPLICATION
Idaho Power and Sun Valley executed a Memorandum of Understanding (MOU)
regarding the proposed sale and transfer of certain distribution facilities that serves portions of
the Sun Valley Resort including the Lodge, the Inn, stores in the mall area, and the skating rinks.
The parties assert that the transfer of the facilities will enable Sun Valley to more efficiently
operate and manage its facilities within the resort complex. The parties have agreed that Sun
DECISION MEMORANDUM
Valley will pay the sum of $135 533 to Idaho Power. This amount includes Idaho Power s cost
of removing meters and reconfiguring the system (estimated at 500). The parties have agreed
to adjust the transaction price if the actual reconfiguration costs are different than the estimate.
The Application states that the transaction will be revenue neutral to Idaho Power and the rates
of other customers will not be affected by the sale.
Sun Valley asserts it has advised all of its affected tenants of the proposed
transaction. If the meters are removed and the service lines are reconfigured, electric service to
the tenants will be provided under the master-meter arrangement between Idaho Power and Sun
Valley. Sun Valley intends to recover the costs of electric service provided to tenants in the Sun
Valley Mall be means of a "monthly charge included as part of the lease arrangement between
Sun Valley and the individual tenants." Amended Application at 2-
Idaho Code 9 61-328 prohibits Idaho Power from selling any distribution facilities
without the written authorization of the Commission. Before authorizing such a transaction, the
Commission must find that: (1) the transaction is consistent with the public interest; (2) the
transaction will not cause the cost of or rates for supplying electricity to increase; and (3) Sun
Valley has the intent and financial ability to maintain the transferred facilities so its tenants will
continue to receive electric service.
WAIVER REQUEST
Both Idaho Power s tariffs and the Commission s Master-Metering Rule 103 prohibit
the conversion of individual tenant meters to a master meter application. In particular, Rule 103
provides that no space contained within "commercial buildings and shopping centers shall be
master-metered for electric service after July 1 1980 if the (space J . . . contains an electric space
heating, water heating or air-conditioning (appliance J that is not centrally controlled over which
the unit's tenants individually control electric usage." IDAP 31.26.01.103.
Given this prohibition against new master-metering arrangements, the parties request
that the Commission grant a waiver of the Company s tariff and Rule 103. To comply with the
spirit of the master-metering rule, Sun Valley asserts that within 60 days of the transfer, it will
retrofit the individual thermostats for each tenant so that each thermostat will be centrally controlled
by Sun Valley.
DECISION MEMORANDUM
ST AFF COMMENTS
Turning first to the sales transaction, the Staff did not object to the sale and transfer
of the distribution facilities. Staff noted that the sale agreement provides for Sun Valley to
compensate Idaho Power for the cost of removing its meters and reconfiguring the wiring. Staff
calculated that Idaho Power will experience a net decrease in operating income of approximately
184 per month, or $50 208 per year.This reduction in annual revenue is de minimus
(approximately 0096% of its jurisdictional revenue). The sales price is revenue neutral from
Idaho Power s standpoint, i., Idaho Power will realize neither a gain nor a loss on the sale.
Consequently, ratepayers will not be harmed by the sale of the distribution facilities.
Staff also noted that this Application stated that the transfer will allow Sun Valley to
more efficiently operate and manage its facilities within the resort complex. Because Sun Valley
is currently maintaining the electric system to serve its other tenants within the mall area, Staff
believes that Sun Valley should be able to adequately maintain these facilities. In addition, Staff
noted that Sinclair Oil Company is owner of the Sun Valley Company, and "appears to have the
financial resources to ensure continued services to its tenants." Staff Comments at 6.
Turning to the master-metering issue, Staff determined that Idaho Power serves 19
tenants in the Sun Valley Mall through 20 individually metered service points. However, only
four of these tenants receive bills directly from Idaho Power - Sun Valley is the customer of
record for the remaining locations. Staff mailed a copy of the Commission s Order No. 29837
and advised the tenants that they may file comments in this case. As noted above, only the Staff
filed comments.
Staff does not oppose granting Idaho Power a waiver of the master-metering rule
based on the facts of this particular case. As noted above, only 4 of the 19 tenants directly pay
Idaho Power for their service. Sun Valley intends to allocate electric costs to its tenants by
adjusting the lease amount. Although the four customers will no longer receive historic usage
data on their monthly bills, all of the 19 tenants will have indirect incentive to be conscious of
their usage since the cost of electricity will affect lease rates.
In summary, Staff recommended that the Commission approve the Amended
Application. Staff also recommended that the Commission grant Idaho Power a waiver of the
Commission s Master-Meter Rule 103 and Idaho Power s master meter tariff found in Section 4
DECISION MEMORANDUM
of Rule E. Staff believes that the Applicants have satisfied the three-part test of Idaho Code
61-328.
COMMISSION DECISION
1. Does this transaction meet the requirements of Idaho Code 9 61-328 (public
interest, no increase in rates, and Sun Valley able to maintain service lines)?
2. Does the Commission wish to grant the Amended Application of Idaho Power and
Sun Valley? Does the Commission wish to add any conditions or comments?
3. Does the Commission wish to grant a waiver of its Master-Metering Rule 103 and
Idaho Power s tariff?
4. Does the Commission wish to address any other issues?
Don Howell
bls/M:IPCEO516 dh2
DECISION MEMORANDUM