20060628_1593.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:WAYNE HART
DATE:JUNE 16, 2006
RE:CHANGES TO IDAHO POWER'S RULE H; ADVICE 06-02.
On June 1 2006 , Idaho Power submitted a tariff advice to change the terms of Rule H
regarding the prepayment of engineering charges for construction projects that are expected to
use less than 16 hours of engineering time. The current language of Rule H requires prepayment
of the estimated engineering charges for all projects, regardless of the size of the project. This
results in a delay while this payment is processed and requires customers to make two payments
one for engineering and a subsequent payment for the actual work. This change would allow the
engineering charges to be deferred and collected at the same time as the remaining charges for
the project. The Company requested an effective date of July 1 , 2006.
Prior to 1995 , the tariff language gave the Company discretion to require prepayment of
the engineering charges for construction projects, and noted that prepayment was typically
required oflarge or complex projects. At the Company s request in IPC-95-, this was
changed to require prepayment in all cases. At that time service specialists in the field were
allowed to process such payments, and this processing did not result in a significant delay to the
projects. However, in August 2005 the Company implemented a centralized processing policy
and all payments are now forwarded to the Cash Remittance Department. This requires a
minimum of 5 days and, while this does not delay most projects, it does result in delay for some
projects and this is not desirable to the customer or the Company.
DECISION MEMORANDUM - 1 -JUNE 16, 2006
STAFF ANALYSIS
The Company indicates that it processes approximately 4000 engineering fee payments a
year. In 2005 over 85% required less than 16 hours of engineering time, and 93% of these
proceeded to construction. The Company claims
, "
the process efficiency of not processing
approximately 3,420 payments represents at least 2000 man hours when the time of all involved
employees is added together.
F or those proj ects that proceed to construction, Staff finds the proposed change to be
beneficial and positive. However, for those projects that do not proceed to construction, Staff is
concerned about the Company s ability to collect the costs incurred in engineering the cancelled
project, and the risk that a customer may incur charges far in excess of their expectations when
they ask the Company to proceed with engineering a project.
The Company assured Staffthat customers would be provided with an advance estimate
of the costs of engineering the project and adequate information about the anticipated costs of the
projects to make an informed decision prior to the start of the engineering work and prior to the
customer incurring any charges.
Staff believes that the procedures identified by the Company for implementing this policy
are likely to provide customers with adequate information prior to the customer incurring any
charges. Staff finds that the efficiency improvements promised by the change justify the risk that
customers may incur unexpected charges. If subsequent evidence indicates customers are
incurring unexpected charges, the Commission may address this issue again.
The Company also indicated that failure to pay for the engineering work will not
jeopardize any existing service provided to the customer. However, customers failing to pay
bills for engineering work may be turned over to a collection agency. In addition, any customer
with unpaid bills for engineering work who requests new or additional engineering work will
need to pay the old bills prior to the Company proceeding with any new engineering work. Staff
finds this process to be reasonable.
STAFF RECOMMENDATION
Staff recommends the Commission approve Idaho Power s proposed changes to Rule H
as contained in Tariff Advice No. 06-02.
DECISION MEMORANDUM - 2 -JUNE 16 2006
COMMISSION DECISION
Does the Commission wish to approve Idaho Power s Tariff Advice No. 06-02?
i:udmemos/IPC Rule H
DECISION MEMORANDUM - 3 -JUNE 16, 2006