2017 Annual report section 1.pdf

IDAHO
PUBLIC
UTILITIES
COMMISSION
2017 Annual Report

Idaho Public Utilities Commission
Page 1

TABLE OF CONTENTS
COMMISSIONERS ....................................................................................................................... 5
FINANCIAL SUMMARY FUND 0229 ........................................................................................... 8
Fiscal Years 2013 – 2017 .............................................................................................................................. 8
COMMISSION STRUCTURE AND OPERATIONS ......................................................................... 9
Administration ................................................................................................................................................. 11
Legal ................................................................................................................................................................ 12
Utilities Division............................................................................................................................................... 12
Railroad .......................................................................................................................................................... 13
Pipeline Safety ............................................................................................................................................... 13
WHY CAN’T YOU JUST TELL THEM NO? .................................................................................. 14
2017 MAJOR EVENTS .............................................................................................................. 15
ELECTRIC .................................................................................................................................. 21
NATURAL GAS ......................................................................................................................... 32
WATER. .................................................................................................................................... 40
TELECOMMUNICATIONS. ........................................................................................................ 43
CONSUMER ASSISTANCE ........................................................................................................ 46
REGULATING IDAHO’S RAILROADS ........................................................................................ 47
REGULATING IDAHO’S PIPELINES ........................................................................................... 48
Idaho Public Utilities Commission
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Idaho Public Utilities Commission
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Idaho Public Utilities Commission
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Idaho Public Utilities Commission

Contact us: 208-334-0300
Website: www.puc.idaho.gov
Commission Secretary 208-334-0338
Executive Assistant 208-334-0330
Public Information 208-334-0339
Utilities Division 208-354-0367
Legal Division 208-334-0324
Rail Section and Pipeline Safety 208-334-0330
Consumer Assistance Section 208-334-0369
Outside Boise, Toll-Free Consumer Assistance 1-800-432-0369

Idaho Telephone Relay Service (statewide)
Voice: 1-800-377-3529
Text Telephone: [phone]
TRS Information: 1-800-368-6185

This report can be accessed online from the Commission’s Website at www.puc.idaho.gov. Click on “File Room,” in the upper-left-hand-corner and then on “IPUC 2017
Annual Report.”
Front cover photograph courtesy of Avista Utilities.

Idaho Public Utilities Commission
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Page 6
Idaho Public Utilities Commission
December 1, 2017

The Honorable C.L. “Butch” Otter
Governor of Idaho
Statehouse
Boise, ID 83720-0034

Dear Governor Otter:
It is my distinct pleasure to submit to you, in accordance with Idaho Code §61-214, the Idaho
Public Utilities Commission 2017 Annual Report. This report provides a detailed description
of the most significant cases, decisions and other activities throughout 2017. The financial
report on Page 8 offers a summary of the commission’s budget through the conclusion of
Fiscal Year 2017, which ended June 30, 2017.
It has been a privilege and honor serving the people of Idaho this past year.

Sincerely,

Paul Kjellander
President, Idaho Public Utilities Commission

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Idaho Public Utilities Commission

Idaho Public Utilities Commission
Page 8
Paul Kjellander serves as president of the Idaho Public Utilities Commis-
sion, having been appointed to his current six-year term in 2017 by Gov.
C.L. “Butch” Otter. His term expires in 2023.
It is Commissioner Kjellander’s second term in his second stint on the Com-
mission, having previously served from January 1999 until October 2007.
Gov. C.L. “Butch” Otter reappointed Kjellander in April 2011, following
his service as administrator of the newly created state Office of Energy
Resources (OER).
A member of the National Association of Regulatory Commissioners’
board of directors, Kjellander is chairman of the association’s Committee
on Telecommunications and serves as NARUC representative to the North
American Numbering Council. He previously served on NARUC’s Committee on Consumer Affairs
and its Electricity Committee.
Kjellander is an at-large member of the National Council on Electricity Policy, which is funded by
the US Department of Energy and managed by NARUC.
Kjellander is also a member of the Federal Communications Commission’s 706 Joint Board, and has
served as chairman of the FCC’s Federal-State Joint Board on Jurisdictional Separations.
During his time at OER, which is now known as the Office of Energy and Mineral Resources, Kjel-
lander created an aggressive energy efficiency program funded through the federal American
Recovery and Reinvestment Act of 2009. He also served on the board of the National Association
of State Energy Officials.
Before joining the Commission in 1999, Kjellander was elected to three terms in the Idaho House of
Representatives, where he served from 1994 to 1999. As a legislator, Kjellander served on a num-
ber of committees, including the House State Affairs, Judiciary and Rules, Ways and Means, Local
Government and Transportation. During his final term in office, Kjellander was elected chairman of
the House Majority Caucus.
Kjellander has also served as director of Boise State University’s College of Applied Technology
Distance Learning, program head of broadcast technology, station manager of BSU Radio Net-
work, director of the Special Projects Unit for BSU Radio and BSU Radio’s director of News and
Public Affairs.
He earned undergraduate degrees in communications, psychology and art from Muskingum Col-
lege in Ohio. He also has a master’s degree in telecommunications from Ohio University.
COMMISSIONERS
PAUL KJELLANDER

Idaho Public Utilities Commission
Page 9
Kristine Raper was appointed to the commission on Feb. 19, 2015 by Gov.
C.L. “Butch” Otter. Her term expires in January 2021.
Commissioner Raper serves on the Electricity Committee of the National Asso-
ciation of Regulatory Utility Commissioners (NARUC) and is the incoming pres-
ident of the Western Conference of Public Service Commissioners.
Raper is a member of the Body of State Regulators for the California ISO’s
Energy Imbalance Market. She is also a member of the State-Provincial
Steering Committee.
Raper recently testified before Congress regarding Public Utility Regulatory
Policies Act (PURPA), defending Idaho’s decisions regarding the federal law.
Commissioner Raper has also testified on PURPA issues before the Idaho Supreme Court, District Court
and the Federal Energy Regulatory Commission, which enforces PURPA.
Raper previously served on the Member Advisory Committee of the Western Electric Coordinating
Council (WECC).
Prior to her appointment to the Idaho Public Utilities Commission, Raper served for seven years as a
deputy attorney general assigned to the Commission. During her time as an attorney for the Commis-
sion, Raper was involved in electric, gas, water and telecommunications cases, with an emphasis on
PURPA-related matters.
Before her service as a deputy attorney general, Commissioner Raper served for eight years as a
law clerk to R.D. Maynard of the Idaho Industrial Commission. There, Raper developed expertise in
state worker’s compensation law and unemployment matters appealed through the Idaho Department
of Labor.
Raper was born in Delaware and moved to Utah with her family in the early 1980s. She moved to
Boise in 1990 to attend Boise State University and earned a bachelor of science in criminal justice in
1995. She received her juris doctor from the University of Idaho in 2001.
The commissioner and her husband, Mark, share three children.
KRISTINE RAPER
COMMISSIONERS

Idaho Public Utilities Commission
Page 10
Eric Anderson was appointed to the Commission in December 2015. His term
expires in January 2019.
Commissioner Anderson serves on the National Association of Regulatory
Utility Commissioners’ Committee on Water as well as its Committee on In-
ternational Relations.
Before his appointment by Gov. C.L. “Butch” Otter, Anderson served five
terms in the Idaho Legislature, from 2004-2014. Anderson was chairman of
the House Ways and Means Committee in his final term in the state Legisla-
ture.
As a member of the state House of Representatives, Anderson served on a number of committees, in-
cluding Environment, Energy and Technology; Commerce and Human Resources; Resources and Con-
servation; Business; and State Affairs. He also chaired a legislative Interim Subcommittee on Renewa-
ble Energy.
Anderson received a bachelor of art degree in political science and government from Eastern Wash-
ington University in 1979.
A general contractor and real estate broker, Anderson served as director and vice president of
Sandpoint-based Northern Lights Inc., an electric cooperative in Sandpoint, prior to his appointment to
the Commission.
He has also served as a director of the Idaho Consumer-Owned Utilities Association, the National Ru-
ral Electric Cooperative Association and the Idaho Energy Resources Authority. He is a past member
and advisor to the Pacific States Marine Fisheries Council and the Pacific Northwest Economic Region’s
Executive Council.
ERIC ANDERSON
COMMISSIONERS

Idaho Public Utilities Commission
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Description FY 2013 FY 2014 FY 2015 FY 2016

FY 2017

Personnel Costs $3,491,500 $3,528,900 $3,563,500 $3,835,900 $4,070,200
Communication Costs $31,300 $31,000 $23,500 $28,700 $23,400
Employee Development Costs $55,600 $53,200 $99,200 $98,700 $81,400
Professional Services $9,700 $12,300 $8,500 $8,600 $11,900
Legal Fees $551,600 $519,700 $538,400 $579,400 $482,100
Employee Travel Costs $123,600 $141,100 $152,500 $159,200 $173,900
Fuel & Lubricants $4,700 $2,700 $5,600 $2,900 $4,900

Insurance $3,100 $4,400 $4,300 $2,000 $3,500
Rentals & Leases $276,100 $584,600 $308,600 $223,800 $147,000
Misc. Expenditures $117,000 $104,700 $84,400 $104,300 $114,900
Computer Equipment $29,200 $66,400 $73,600 $52,200 $44,700
Office Equipment $13,000 $11,900 $16,500 $8,100 $4,200
Motorized/Non-Motorized
Equip $0 $0 $32,500 $0 $0
Specific Use Equipment $0 $0 $0 $1,700 $4,500

Total Expenditures $4,706,400 $5,060,900 $4,911,100 $5,095,100 $5,166,600

Fund 0229-20 Appropriation $4,916,800 $5,061,700 $5,595,600 $5,766,500 $5,902,700

Unexpended Balance $210,400 $800 $684,500 $671,400 $736,100
FINANCIAL SUMMARY FUND 0229*
Fiscal Years 2013-2017
* This summary represents assessment-funded expenses only. It does not include federal or other funds.

Idaho Public Utilities Commission
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COMMISSION STRUCTURE AND OPERATIONS
Under state law, the Idaho Public Utilities Commission supervises and regulates
Idaho’s investor-owned utilities – electric, gas, telecommunications and water –
assuring adequate service and affixing just, reasonable and sufficient rates.
The commission does not regulate publicly owned, municipal or cooperative utili-
ties.
The governor appoints the three commissioners with confirmation by the Idaho
Senate. No more than two commissioners may be of the same political party. The commissioners serve
staggered six-year terms.
The governor may remove a commissioner before his/her term has expired for dereliction of duty, cor-
ruption or incompetence.
The three-member commission was established by the 12th Ses-
sion of the Idaho Legislature and was organized May 8, 1913
as the Public Utilities Commission of the State of Idaho. In 1951
it was reorganized as the Idaho Public Utilities Commission. Stat-
utory authorities for the commission are established in Idaho
Code titles 61 and 62.
The IPUC has quasi-legislative and quasi-judicial as well as ex-
ecutive powers and duties.
In its quasi-legislative capacity, the commission sets rates and
makes rules governing utility operations. In its quasi-judicial
mode, the commission hears and decides complaints, issues writ-
ten orders that are similar to court orders and may have its deci-
sions appealed to the Idaho Supreme Court. In its executive ca-
pacity, the commission enforces state laws and rules affecting
the utilities and rail industries.
Commission operations are funded by fees assessed on the utilities and railroads it regulates. Annual
assessments are set by the commission each year in April within limits set by law.
The commission president is its chief executive officer. Commissioners meet on the first Monday in April
in odd-numbered years to elect one of their own to a two-year term as president. The president signs
contracts on the commission’s behalf, is the final authority in personnel matters and handles other ad-
ministrative tasks. Chairmanship of individual cases is rotated among the commissioners.

Idaho Public Utilities Commission
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The commission conducts its business in two types of meetings – hearings and decision meetings. Decision
meetings are typically held once a week, usually on Monday.
Formal hearings are held on a case-by-case basis, sometimes in the service area of the impacted utility.
These hearings resemble judicial proceed-
ings and are recorded and transcribed by a
court reporter.
There are technical hearings and public
hearings.
At technical hearings, formal parties who
have been granted “intervenor status” pre-
sent testimony and evidence, subject to
cross-examination by attorneys from the
other parties, staff and the commissioners.
At public hearings, members of the public
may testify before the commission.
Many public hearings are conducted in cities and towns that are part of the service territory of the utility
seeking a rate increase. In less contested rate cases, the commission will sometimes conduct hearings tele-
phonically to save expense and allow customers to testify
from the comfort of their own homes. Commissioners and
other interested parties gather in the Boise hearing room and
are telephonically connected to ratepayers who call in on a
toll-free line to provide testimony or listen in to those testify-
ing.
The commission also conducts regular decision meetings to
consider issues on an agenda prepared by the commission
secretary and posted in advance of the meeting. These
meetings are usually held Mondays at 1:30 p.m., although by
law the commission is required to meet only once a month.
Members of the public are welcome to attend decision
meetings.
Typically, decision meetings consist of the commission’s review of decision memoranda prepared by com-
mission staff. Minutes of the meetings are taken. Decisions reached at these meetings may be either final or
preliminary, but subsequently become final when the commission issues a written order signed by a majority
of the commission. Under the Idaho Open Meetings Law, commissioners may also privately deliberate
matters that have been fully submitted.
IPUC hearing room
IPUC headquarters at 472 W. Washington St.
in downtown Boise
COMMISSION STRUCTURE AND OPERATIONS

Idaho Public Utilities Commission
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COMMISSION STAFF
OUR MISSION

 Determine fair, just and reasonable rates and utility prac-
tices for electric gas and water consumers.
 Ensure that delivery of utility services is safe, reliable and
efficient.
 Ensure safe operation of pipelines and rail carriers within
the state.
To help ensure its decisions are fair and workable, the Commission employs a staff of about 50 people – engineers,
rate analysts, attorneys, accountants, investigators, economists, secretaries and other support personnel. The Commis-
sion staff is organized into three divisions – administration, legal and utilities.

The staff analyzes each petition, complaint, rate-increase request or application for an operating certificate received
by the Commission. In formal proceedings before the Commission, the staff acts as a separate party to the case, pre-
senting its own testimony, evidence and expert witnesses. The Commission considers staff recommendations along with
those of other participants in each case - including utilities, public, agricultural, industrial, business, environmental
and consumer groups.
Administration
The Administrative Division is responsible for coordinating overall IPUC activities. It includes the three
commissioners, a policy analyst, a commission secretary, an executive administrator, an executive assis-
tant, public information officer and support personnel.
The policy analyst is an executive level position that reports directly to the commissioners with policy
and technical consultation and research support regarding major regulatory
issues in the areas of electricity, telecommunications, water and natural gas.
Strategists are also charged with developing comprehensive policy strate-
gy, providing assistance and advice on major litigation before the commis-
sion, public agencies and organizations.
Contact Stephen Goodson, Policy Analyst, [phone].
The commission secretary, a post established by Idaho law, keeps a precise
public record of all commission proceedings. The secretary issues notices,
orders and other documents to the proper parties and is the official custodian of documents issued by
and filed with the commission. Most of these documents are public records.
Contact Diane Hanian, Commission Secretary, [phone].
The executive administrator has primary responsibility for the commission’s fiscal and administrative op-
erations, preparing the commission budget and supervising fiscal, administration, public information,

Idaho Public Utilities Commission
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personnel, information systems, rail section operations and pipeline safety. The executive administrator
is the primary contact for matters concerning Information Technology, Fiscal and Human Resources. He
also serves as a liaison between the commission and other state agencies and the Legislature.
Contact Joe Leckie, Executive Administrator, [phone].
Legal
Five deputy attorneys general are assigned to the commission from the Office of the Attorney General
and have permanent offices at IPUC headquarters. The IPUC attorneys represent the staff in all matters
before the commission, working closely with staff accountants, engineers, investigators and economists
as they develop their recommendations for rate case and policy proceedings.
In the hearing room, IPUC attorneys coordinate the presentation of the staff’s case and cross-examine
other parties who submit testimony. The attorneys also represent the commission itself in state and fed-
eral courts and before other state or federal regulatory agencies.
Contact Karl Klein, Legal Division Director, [phone].
Utilities Division
The Utilities Division, responsible for technical and policy analysis of utility matters before the commis-
sion, is divided into five sections.
Contact Randy Lobb, Utilities Division Administrator, [phone].
The Accounting Section of six auditors and one supervisor audits utility books and records to verify re-
ported revenue, expenses and compliance with commission orders. Staff auditors present the results of
their findings in audit reports as well as in formal testimony and exhibits. When a utility requests a
rate increase, cost-of-capital studies are performed to determine a recommended rate of return. Reve-
nues, expenses and investments are analyzed to determine the amount needed for the utility to earn
the recommended return on its investment. Contact Terri Carlock, Utilities Division Deputy Administra-
tor and Accounting Section Supervisor, [phone].
The Engineering Section of three engineers, two analysts and one supervisor reviews the physical oper-
ations of utilities. The staff of engineers and analysts develops computer models of utility operations
and compares alternative costs to repair, replace and acquire facilities to serve utility customers. The
group calculates and analyzes the price of acquiring cogeneration and renewable generation facilities
and identifies the cost of serving various types of customers. They evaluate the adequacy of utility ser-
vices and frequently help resolve customer complaints.
Contact Mike Louis, Engineering Section Supervisor, [phone].
The Technical Analysis section of four utility analysts and one supervisor reviews utility Integrated Re-
source Plans, capital investments and forecasts of energy, water and natural gas use. They examine the
prudency and cost-effectiveness of all Demand Side Management (DSM) programs , which include en-
ergy efficiency and demand response. They also identify potential for new DSM programs, track the
impact on utility revenues and focus on residential self-generation.
Contact Stacey Donohue, Technical Analysis Section Supervisor, [phone].
COMMISSION STAFF

Idaho Public Utilities Commission
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The Telecommunications section includes two analysts who oversee tariff and price list filings, area code
oversight, Universal Service, Lifeline and Telephone Relay Service. They assist and advise the commis-
sion on technical matters that include advanced services, 911 and other matters as requested.
Contact Carolee Hall, Telecommunications Analyst, [phone].
The Consumer Assistance section includes five division investigators and one supervisor who resolve con-
flicts between utilities and their customers. Customers faced with service disconnections often seek help
in negotiating payment arrangements. Consumer Assistance may mediate disputes over billing, deposits,
line extensions and other service problems. Consumer Assistance monitors Idaho utilities to verify they
are complying with commission orders and regulations. Investigators participate in general rate and
policy cases when rate design and customer service issues are brought before the Commission.
Contact Beverly Barker, Consumer Assistance Administrator, [phone].

Railroad Section
Our rail inspector oversees the safe operations of railroads that move freight throughout Idaho and en-
forces state and federal regulations safeguarding the transportation of hazardous materials by rail in
the state. The Commission’s rail safety specialist inspects railroad crossings and rail clearances for safe-
ty and maintenance deficiencies. The Rail section helps investigate all railroad-crossing accidents and
makes recommendations for safety improvements to crossings.
As part of its regulatory authority, the commission evaluates the discontinuance and abandonment of
railroad service in Idaho by conducting an independent evaluation of each case to determine whether
the abandonment of a particular railroad line would adversely affect Idaho shippers and whether the
line has any profit potential. Should the commission determine abandonment would be harmful to Idaho
interests, it then represents the state before the federal Surface Transportation Board, which has au-
thority to grant or deny line abandonments.
Contact Joe Leckie, Rail Section Manager, [phone].
Pipeline Safety
The three-member Pipeline Safety section oversees the safe operation of the intrastate oil and natural
gas pipelines in Idaho.
Pipeline safety personnel verify compliance with state and federal regulations by on-site inspections of
intrastate pipeline distribution systems. Part of the inspection process includes a review of record-
keeping practices and compliance with design, construction, operation, maintenance and drug/alcohol
abuse regulations.
Key objectives of the program are to monitor accidents and violations, to identify their contributing fac-
tors and to implement practices to avoid accidents. All reportable accidents will be investigated and
appropriate reports filed with the U.S. Department of Transportation in a timely manner.
Contact Joe Leckie, Pipeline Safety Program Manager, [phone].
COMMISSION STAFF

Idaho Public Utilities Commission
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One of the most frequently asked questions the PUC receives after a utility
files an application for a rate increase is, “Why can’t you just tell them no?”
Actually, we can, but not without evidence.
For more than 100 years, public utility regulation has been based on this reg-
ulatory compact between utilities and regulators: Regulated utilities agree to
invest in the generation, transmission and distribution necessary to adequately
and reliably serve all the customers in their assigned territories. In return for that promise to serve, utili-
ties are guaranteed recovery of their prudently incurred expense along with an opportunity to earn a
reasonable rate of return. The rate of return allowed must be high enough to attract investors for the
utility’s capital-intensive generation, transmission and distribution projects, but not so high as to be un-
reasonable for customers.
In setting rates, the Commission must consider the needs of both the utility and its customers. The Com-
mission serves the public interest, not the popular will. It is not in customers’ best interest, nor is it in the
interest of the State of Idaho, to have utilities that do not have the generation, transmission and distribu-
tion infrastructure to be able to provide safe, adequate and reliable electrical, natural gas and water
service. This is a critical, even life-saving, service for Idaho’s citizens and essential to the state’s econom-
ic development and prosperity.
Unlike unregulated businesses, utilities cannot cut back on service as costs increase. As demand for elec-
tricity, natural gas and water grows, utilities are statutorily required to meet that demand.
The Commission walks a fine line in balancing the needs of utilities to serve customers and customers’
ability to pay.
When a rate case is filed, our staff of auditors, engineers, analysts and attorneys will take up to six
months to examine the request. During that period, other parties, often representing customer groups,
will “intervene” in the case for the purpose of conducting discovery, presenting evidence and cross-
examining the company and other parties to the case. The Commission staff, which operates inde-
pendently of the Commission, will also file its own comments that result from its investigation of the com-
pany’s request. The three-member Commission will also conduct technical and public hearings.
Once testimony is presented from the company, commission staff and intervening parties, and testimony
is taken from hearings and written comments, that information is included in the official record for the
case. It is only from the evidence contained in this official record that the Commission can render a deci-
sion.
If the utility has met its burden of proof in demonstrating that the additional expense it incurred was 1)
necessary to serve customers and 2) prudently incurred, the Commission must allow the utility to recover
that expense. The Commission can — and often does — deny recovery of some or all the expense utili-
ties seek to recover from customers if the Commission is confident it has the legal justification to do so.
Utilities and parties to a rate case have the right to petition the Commission for reconsideration. If re-
consideration is not granted, the Commission’s decision can be appealed to the state Supreme Court.
WHY CAN’T YOU JUST TELL THEM NO?

Idaho Public Utilities Commission
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2017 MAJOR EVENTS
Idaho gets second area code
Idaho’s transition to a new area code and mandatory 10-digit dialing came to a close in September.
The process of introducing the state’s second area code began in fall 2015, when the Commission ap-
proved a plan calling for mandatory 10-digit dialing in August 2017 and for providers to begin as-
signing the 986 area code to new customers in September 2017.
The need for Idaho’s second area code was prompted by warn-
ings that the state was on track to exhaust its supply of available
telephone numbers by mid-2018.
The Commission had staved off the need for a new area code in
2001 by implementing various numbers conservation plans that
successfully delayed the need by 15 years.
The demand for telephone numbers has increased significantly
since then, however, due primarily to the proliferation of cell phones, the Internet, Voice over Internet
Protocol and other emerging technologies.
The Commission decided in November 2015 that the state should assign the new area code statewide
to all new phone numbers effective Sept. 5, 2017. Referred to as a “geographic overlay,” this ap-
proach was one of two options for implementation of the new area code and was the unanimous recom-
mendation of the state’s telecommunications providers.
The other option, a “geographic split,” would have assigned the new area code to all numbers in half
of the state, requiring all customers in the area assigned the new area code to change their telephone
numbers. That would have caused significant disruptions to businesses in the area with the new area
code, the Commission determined.
While the “geographic overlay” option meant that everyone could keep their existing phone number, it
also meant that Idahoans would have to dial 10 digits (area code plus prefix plus four digit number)
for all calls within the state.
To ensure residents were prepared for this change, the Commission established a 16-month transition
period highlighted by the introduction of voluntary 10-digit dialing in November 2016.
Ten-digit dialing became mandatory for all calls on Aug. 5, 2017, and providers began assigning the
986 area code on Sept. 5, 2017.
Commissioner Raper testifies before Congress regarding PURPA
Commissioner Kristine Raper spoke at a hearing before the House Energy and Commerce Committee’s
Subcommittee on Energy in September about the need to reform the Public Utility Regulatory Policies
Act of 1978 (PURPA).
PURPA was intended in part to promote the development of renewable energy by requiring utilities to
buy power from qualifying renewable facilities. While PURPA supporters say the law has helped spur

Idaho Public Utilities Commission
Page 19
the development of wind and solar energy, critics contend developers of renewable energy are manip-
ulating the law, resulting in higher electric rates.
Complaints in recent years prompted the House Energy and Com-
merce Subcommittee to review the law.
A series of hearings called “Powering America: Reevaluating PUR-
PA’s Objectives and Its Effects on Today’s Consumers,” were part
of that review process.
In her testimony, Raper urged lawmakers to take steps to fix PUR-
PA’s flaws.
State regulators should have more authority to determine what
constitutes a qualifying facility under the law, Raper testified. Today that responsibility is exclusively
under the jurisdiction of the Federal Energy Regulatory Commission.
Avista Utilities proposes merger with HydroOne
In September, Avista requested regulatory approval of its proposed merger with HydroOne Limited,
which provides electric service to more than 1.3 million customers in Ontario.
The Commission is one of several regulatory entities that must approve the $5.3 billion deal. Others
include regulatory agencies in Washington state, Oregon, Montana and Alaska, and the Federal Ener-
gy Regulatory Commission.
The merger also must comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and it
must be authorized by the Committee on Foreign Investment in the United States, an inter-agency gov-
ernmental board charged with reviewing the national security implications of foreign investments in US
companies.
If the merger is approved, Avista would become a wholly-owned subsidiary of HydroOne but would
keep its name and continue to operate out of its current headquarters in Spokane as a “standalone util-
ity” with its existing employees and management team.
Combined, the two companies would be one of the largest regulated utilities in North America, with
more than $25.4 billion in assets.
In its application requesting Commission approval, Avista said its customers would see immediate bene-
fits of receiving service from a larger utility, including a proposed rate credit of $31.5 million that
would be distributed over a 10-year period.
Long-term benefits of the merger include increased purchasing power and reduced costs associated
with efficiencies that emerge as best practices and business processes are developed and technology
shared, according to the company.
Based in Toronto, HydroOne is the largest electric utility in Ontario. It lacks generation resources but
maintains a network of nearly 19,000 miles of transmission lines and 77,000 miles of distribution lines.
2017 MAJOR EVENTS

Idaho Public Utilities Commission
Page 20
Avista’s generation resources include eight hydropower facilities, five natural gas plants and a biomass
facility. The company has ownership interest in two coal-fired plants and maintains more than 20,800
miles of transmission and distribution lines. It provides electric service to approximately 130,000 Idaho-
ans and natural gas service to more than 80,000 in northern Idaho.
The Commission will analyze the proposed merger in order to determine whether it is in the interest of
Idaho residents. Idaho Code 61-328 states that an electric utility may transfer property only if the
Commission finds that:
 Rates will not increase because of the transaction.
 The buyer has the intent and financial ability to operate and maintain the property in the public
service.
 The transaction is consistent with the public interest.
The Ontario government owns 49.9 percent of HydroOne’s shares
but “it does not hold or exercise any managerial oversight over
Hydro One,” according to the application.
If the merger is approved, Avista would no longer be a publicly-
traded company and would instead have one owner, HydroOne.
The companies have requested Commission approval of the mer-
ger by mid-August 2018.
Intermountain Gas rate case resolved
In April, the Commission approved a rate increase for Intermountain Gas customers, the company’s first
general rate case since 1985.
The Commission’s 46-page order called for a 1.58-percent increase effective May 1.
The company’s proposal had called for rates to increase by an average of 4.06 percent but was re-
vised to an average 3.7-percent increase after a three-day technical hearing.
The Commission’s decision also called for the elimination of seasonal rates for residential customers,
adoption of a demand charge for two customer classes – large volume and transportation, and ac-
ceptance of Intermountain’s proposal to create demand side management programs to help customers
reduce natural gas consumption in order to decrease the amount of gas the company would have to
buy from wholesale suppliers.
Intermountain petitioned the Commission to reconsider its decision on May 18, citing four concerns.
Two of Intermountain’s concerns pertained to weather data used to project energy usage, and there-
fore revenue. In its order, the Commission found that Intermountain Gas’ methodology for using weather
data to forecast energy usage among its customers was not reproducible.
That made it impossible to determine whether the company’s model accurately projected the amount of
energy it would need to purchase, and the amount of revenue required to recover those expenses
2017 MAJOR EVENTS

Idaho Public Utilities Commission
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through customer rates, the Commission said. As a result, the Commission used a weather normalization
model developed specifically for this case and decreased the associated revenue requirement by ap-
proximately $2 million.
Intermountain’s reconsideration petition said the Commission’s analysis overstated revenue.
The utility also expressed concern with the Commission’s decisions to disallow $1.38 million in expenses
paid to Intermountain’s affiliate, MDU Resources, and $704,000 in nonexecutive incentive compensa-
tion.
In granting Intermountain’s reconsideration petition, the Commission directed the interested parties to
explore settlement opportunities. The parties, which included the company, commission staff and the
Northwest Industrial Gas Users, forged a settlement agreement in September that called for a compro-
mise on the four concerns that Intermountain had cited.
The settlement approved by the Commission allowed the compa-
ny to recover an additional $1.2 million in expenses related to
affiliated expenses and incentive compensation, representing a
50/50 split of the dollar amounts related to these two issues,
and to recover an additional $6,065 in annual base rate reve-
nues related to weather modeling. The settlement also establish-
es a procedure for determining the weather normalization meth-
odology employed in future rate cases.
The settlement agreement resulted in a 1.36-percent rate in-
crease across all customer classes. That equates to an additional 37 cents on the monthly bill of the av-
erage residential customer.
IPUC rules on Idaho Power preparations for entry into Energy Imbalance Market
In February, the Commission approved Idaho Power’s request to authorize a deferral account to track
the costs incurred associated with joining the California ISO’s Energy Imbalance Market (EIM).
The Commission believed it was premature to find that the utility’s participation would benefit customers
in the long term, however.
The EIM that Idaho Power plans to join in April 2018 balances the supply and demand for energy via
automated dispatch services at five-minute intervals from generation resources across the region.
Idaho Power’s current configuration features hourly dispatch services from its own generation and re-
serve resources.
Idaho Power contends that moving from an hourly market to a five-minute imbalance market will allow
it to balance supply and demand more efficiently and cost-effectively.
The potential annual savings could be between $4 million and $5 million, Idaho Power said; the upfront
costs of joining the EIM were estimated at approximately $11 million.
The Commission adopted Idaho Power’s proposal to spread the initial costs over a 10-year period but
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Idaho Public Utilities Commission
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said the costs cannot be recovered from ratepayers until they are known rather than estimated. Those
costs also must be found to be prudently incurred before they are included in rates.
In its order, the Commission also asked the company to provide more evidence of customer benefits.
Idaho Power had proposed providing a quarterly benefits report provided by the EIM administrator,
the California Independent System Operator. The Commission asked for such a report but further di-
rected the company to provide a report one year after joining the EIM that outlines the costs and bene-
fits of participation.
Commission approves settlement related to early closure of coal plant
In June , the Commission approved a settlement related to the early retirement of a coal-fired plant in
Nevada.
The settlement allows the company to accelerate the recovery of its
investment in the North Valmy Power Plant through base rates, lead-
ing to a rate increase of 1.17 percent.
That equates to an additional $1.20 on the monthly bill of the typical
residential customer using 1,000 kilowatt-hours (kWh) per month.
The company had originally proposed raising rates by 3.1 percent to
recover its investment in Valmy. That would have led to a $3.08 in-
crease to the monthly bill of the typical residential customer using
1,000 kWh per month.
The settlement agreement calls for shuttering Valmy’s Unit 1 in 2019, and Unit 2 in 2025.
Unit 1 went into service in 1981 and Unit 2 came online in 1985. Each had a 50-year life expectancy,
and their depreciation was embedded in Idaho Power’s base rates with the expectation that the units
would operate until 2031 and 2035, respectively.
The rate increase is expected to generate nearly $13.3 million in annual revenue until 2028, when
Valmy is fully depreciated – down from $28.5 million in Idaho Power’s original proposal.
Idaho Power maintains that closing the plant early will ultimately save customers money. The company
said a significant decrease in market prices for electricity had made it uneconomic to operate the 522-
megawatt plant except during extremely cold or hot weather, when the demand for energy surges.
Idaho Power said costs associated with the plant’s operation have increased significantly since 2011.
2017 MAJOR EVENTS