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HomeMy WebLinkAboutIdaho Public Utilities Commission 2019 Annual Report.pdf ANNUAL REPORT 2019 IDAHO PUBLIC UTILITIES COMMISSION 11331 W. Chinden Blvd., Building 8 Suite 201-A Boise, ID 83714 PO Box 83720 83720-0074 208.334.0300 www.puc.idaho.gov Idaho Public Utilities Commission Page 1 Table of Contents COMMISSIONERS ................................................................................... 8 FINANCIAL SUMMARY FUND 0229* ........................................................... 11 Fiscal Years 2015 – 2019 ........................................................................ 11 COMMISSION STRUCTURE AND OPERATIONS ............................................... 12 Administration ................................................................................... 14 Legal .............................................................................................. 15 Utilities Division ................................................................................. 15 Railroad and Pipeline Safety Section ......................................................... 16 WHY CAN’T YOU JUST TELL THEM NO? ..................................................... 17 ELECTRIC ......................................................................................... 18 Avista ............................................................................................. 19 Idaho Power ...................................................................................... 23 Rocky Mountain Power ......................................................................... 27 WATER…………………………………………………………………………………………………………………………….29 TELECOMMUNICATION…………………………………………………………………………………………………..31 NATURAL GAS .................................................................................... 34 CONSUMER ASSISTANCE ........................................................................ 38 REGULATING IDAHO’S RAILROADS ........................................................... 39 REGULATING IDAHO’S PIPELINES ............................................................. 40 Idaho Public Utilities Commission Page 2 Idaho Public Utilities Commission Page 3 Idaho Public Utilities Commission Contact us: 208-334-0300 www.puc.idaho.gov Commission Secretary 334-0338 Public Information 334-0339 Utilities Division 354-0367 Legal Division 334-0324 Rail Section and Pipeline Safety 334-0330 Consumer Assistance Section 334-0369 Outside Boise, Toll-Free Consumer Assistance 1-800-432-0369 Voice: 1-800-377-3529 Text Telephone: 1-800-368-6185 TRS Information: 1-800-368-6185 This report and all the links inside 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 2019 Annual Report.” Front cover photograph courtesy of Idaho Power Company. Langley Gulch Plant in New Plymouth, Idaho. Idaho Public Utilities Commission Page 4 Idaho Public Utilities Commission Page 5 November 27, 2019 The Honorable Brad Little Governor of Idaho Statehouse Boise, ID 83720-0034 Dear Governor Little: It is our distinct pleasure to submit to you, in accordance with Idaho Code §61-214, the Idaho Public Utilities Commission 2019 Annual Report. This report is a detailed description of the most significant cases, decisions and other activities during 2019. The financial report on Page 10 is a summary of the commission’s budget through the conclusion of Fiscal Year 2019, which ended June 30, 2019. It has been a privilege and honor serving the people of Idaho this past year. Sincerely, Paul Kjellander President, Idaho Public Utilities Commission Kristine Raper Commissioner Eric Anderson Commissioner Idaho Public Utilities Commission Page 6 Idaho Public Utilities Commission Page 7 Idaho Public Utilities Commission Page 8 COMMISSIONERS P A U L K J E L L A N D E R Commissioner Paul Kjellander serves as President of the Idaho Public Utilities Commission, 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 Commission, 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 Utility Commissioners’ (NARUC) board of directors and executive committee, Kjellander serves as First Vice President of the association and is a member of the subcommittee on Education and Research. He previously served on NARUC’s Committee on Consumer Affairs and its Electricity Committee and is past Chair of the Committee on Telecommunications. Kjellander serves as President of the National Council on Electricity Policy, which is funded by the US Department of Energy and managed by NARUC. He is 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, Kjellander 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 1994-1999. As a legislator, Kjellander served on a number 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. Prior to his legislative service, Kjellander was director of Boise State University’s College of Applied Technology Distance Learning, where he earned tenured faculty status and served as program head of broadcast technology, station manager of BSU Radio Network, director of the Special Projects Unit for BSU Radio and as BSU Radio’s director of News and Public Affairs. Commissioner Kjellander earned undergraduate degrees in communications, psychology, and art from Muskingum College in Ohio, and earned a master’s degree in telecommunications from Ohio University. Idaho Public Utilities Commission Page 9 K R I S T I N E R A P E R Commissioner Kristine Raper was appointed to the Commission in February 2015 by Gov. C.L. “Butch” Otter. Her term expires in 2021. Prior to her appointment, Raper served for seven years as a deputy attorney general assigned to the Commission. Raper managed a caseload representing a myriad of regulatory and energy law matters, with a strong emphasis on the federal Public Utility Regulatory Policies Act (PURPA). Commissioner Raper has defended the Commission’s decisions at the Idaho Supreme Court, District Court and Federal Energy Regulatory Commission. In 2017, Raper testified before the Congressional Subcommittee on Energy regarding PURPA and its modern-day impacts. Commissioner Raper currently serves on the Electricity Committee of the National Association of Regulatory Utility Commissioners’ (NARUC). She is a member of the Body of State Regulators which contributes to matters involving the Energy Imbalance Market, a real-time energy market operated by the California ISO. Commissioner Raper earned an undergraduate degree in Criminal Justice from Boise State University. She earned her juris doctor degree from the University of Idaho College of Law. The Commissioner and her husband, Mark, share three children. Idaho Public Utilities Commission Page 10 E R I C A N D E R S O N Commissioner Eric Anderson was appointed to his current six-year term in January 2019 by Gov. Brad Little. It is his second term on the Commission, having been initially appointed in December 2015 by former Gov. C.L. “Butch” Otter. Commissioner Anderson serves on the National Association of Regulatory Utilities Commissioners (NARUC) Committee on Water as well as its Committee on International Relations. In November 2019 Commissioner Anderson was appointed Chair of NARUC’s Committee on Water. Before joining the Commission, Anderson served five terms in the Idaho Legislature, from 2004-2014, and was chairman of the House Ways and Means Committee in his final term in the state Legislature. As a member of the Idaho House of Representatives, Anderson served on a number of committees, including Environment, Energy and Technology, Commerce and Human Resources, Resource and Conservation, Business, and State Affairs. He also chaired a legislative Interim Subcommittee on Renewable Energy. Anderson received a bachelor of art degree in political science and government from Eastern Washington University in 1979. A general contractor and real estate broker, Anderson also served as director and vice president of Sandpoint- based Northern Lights Inc., an electric cooperative. He has also served as a director of the Idaho Consumer-Owned Utilities Association, the National Rural 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. Idaho Public Utilities Commission Page 11 FINANCIAL SUMMARY FUND 0229* Fiscal Years 2015 – 2019 Description FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Personnel Costs $3,563,500 $3,835,900 $4,070,200 $3,962,400 $3,990,800 Communication Costs $23,500 $28,700 $23,400 $25,000 $23,100 Employee Development Costs $99,200 $98,700 $81,400 $98,800 $95,400 Professional Services $8,500 $8,600 $11,900 $49,000 $35,800 Legal Fees $538,400 $569,100 $482,100 $573,500 $602,600 Employee Travel Costs $152,500 $159,200 $173,900 $204,300 $219,700 Fuel & Lubricants $5,600 $2,900 $4,900 $6,400 $7,700 Insurance $4,300 $2,000 $3,500 $4,500 $3,900 Rentals & Leases $308,600 $223,800 $147,000 $274,400 $76,100 Misc. Expenditures $84,400 $104,300 $114,900 $697,900 $1,663,500 Computer Equipment $73,600 $52,200 $44,700 $9,400 $5,300 Office Equipment $16,500 $8,100 $4,200 $2,100 $0 Motorized/Non-Motorized Equip $32,500 $0 $0 $0 $0 Specific Use Equipment $0 $1,700 $4,500 $2,600 $1,300 Total Expenditures $4,911,100 $5,095,200 $5,166,600 $5,910,300 $6,725,200 Fund 0229-20 Appropriation $5,595,600 $5,766,500 $5,902,700 $6,039,300 $8,556,700 Fund 0229-20 Encumbrances $32,000 $49,200 $93,800 $393,200 Unexpended Balance $684,500 $639,300 $686,900 $35,200 $1,438,300 *This summary represents assessment funded expenses only. It does not include federal or other funds. Idaho Public Utilities Commission Page 12 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 utilities. 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, corruption or incompetence. The three-member commission was established by the 12th Session 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. Statutory authorities for the commission are established in Idaho Code Titles 61 and 62. The IPUC has quasi-legislative and quasi-judicial as well as executive 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 written orders that are similar to court orders and may have its decisions appealed to the Idaho Supreme Court. In its executive capacity, 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 administrative tasks. Chairmanship of individual cases is rotated among all three Commissioners. Idaho Public Utilities Commission Page 13 The commission conducts its business in two types of meetings – and . Decision meetings are typically held once a week, usually on Tuesday. Formal are held on a case-by-case basis, sometimes in the service area of the impacted utility. These hearings resemble judicial proceedings and are recorded and transcribed by a court reporter. There are and . At technical hearings, formal parties who have been granted “intervenor status” present testimony and evidence, subject to cross-examination by attorneys from the other parties, staff attorneys and the commissioners. At public hearings, members of the public may testify before the commission. In 2009, the commission began conducting telephonic public hearings 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. A court reporter is present to take testimony by telephone, which has the same legal weight as if the person testifying were present in the hearing room. Commissioners and attorneys may also direct questions to those testifying. 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 Tuesdays 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 commission 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 Meeting Law, commissioners may also privately deliberate fully submitted matters. PUC hearing room PUC headquarters 11331 W. Chinden Blvd. Building, 8 Suite 201-A, Boise, Idaho 83714. Idaho Public Utilities Commission Page 14 Commission Staff OUR MISSION - Determine fair, just and reasonable rates and utility practices for electric, gas, telephone 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 commission staff is organized in three divisions – administration, legal and utilities. Administration The Administrative Division is responsible for coordinating overall IPUC activities. The division includes the three commissioners, a policy strategist, a commission secretary, an executive administrator, and support personnel. The are executive level positions reporting 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 strategy, providing assistance and advice on major litigation before the commission, public agencies and organizations. Contact Stephen Goodson, policy strategist 334-0354. The , 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, at 334-0338. The has primary responsibility for the commission’s fiscal and administrative operations, preparing the commission budget and supervising fiscal, administration, public information, personnel, information systems, rail section operations and pipeline safety. The executive director also serves as a liaison between the commission and other state agencies and the Legislature. Contact Maria Riley-Barratt, executive director, at 334-0337. The is responsible for public communication between the commission, the general public and interfacing governmental offices. The responsibility includes news releases, responses to public inquiries, coordinating and facilitating commission workshops and public hearings and the preparation and coordination of any IPUC report directed or recommended by the Idaho Legislature or Governor. Contact Adam Rush, public information officer, at 334-0339. Idaho Public Utilities Commission Page 15 Legal Five 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 federal courts and before other state or federal regulatory agencies. Contact Karl Klein, legal division director, at 334-0320. Utilities Division The Utilities Division, responsible for technical and policy analysis of utility matters before the commission, is divided into four sections. 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, presenting 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 and consumer groups. Contact Terri Carlock, utilities division administrator, at 334-0356. The of seven auditors audits utility books and records to verify reported 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. Revenues, expenses and investments are analyzed to determine the amount needed for the utility to earn the recommended return on its investment. Contact Donn English, accounting section program manager, at 334-0362. The of four engineers reviews the physical operations 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 establishes 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 services and frequently help resolve customer complaints. Contact Mike Louis, engineering section program manager, at 334-0316. The of five utility analysts determines the cost effectiveness of all Demand Side Management (DSM) programs including energy efficiency and demand response. They identify potential for new DSM programs and track the impact on utility revenues. They review utility forecasts of energy, water and natural gas usage with focus on residential self-generation and rate design. Contact Stacey Donohue, technical analysis program manager, at 334-0363. Idaho Public Utilities Commission Page 16 The oversee tariff and price list filings, area code oversight, Universal Service, Lifeline and Telephone Relay Service. They assist and advise the commission on technical matters that include advanced services, 911 and other matters as requested. Contact Daniel Klein, telecom analyst 334-0352. The includes three division investigators who resolve conflicts 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 Terri Carlock, utilities division administrator, at 334-0356. Railroad Safety Section The oversees the safe operations of railroads that move freight in and through Idaho and enforces state and federal regulations safeguarding the transportation of hazardous materials by rail in Idaho. The commission’s rail safety specialists inspect railroad crossings and rail clearances for safety 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 authority to grant or deny line abandonments. Contact Wayne Andrews, rail section manager, at 334-0317. Pipeline Safety Section The oversees the safe operation of the intrastate oil and natural gas pipelines in Idaho. The commission’s 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 factors and to implement practices to avoid accidents. All reportable accidents are investigated and appropriate reports filed with the U.S. Department of Transportation in a timely manner. Contact Darrin Ulmer, pipeline safety program manager, at 334-0331. Idaho Public Utilities Commission Page 17 WHY CAN’T YOU JUST TELL THEM NO? One of the most frequently asked questions the PUC receives after a utility files a rate increase application 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 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, utilities 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 unreasonable for customers. In setting rates, the commission must consider the needs of the utility and its customers. The commission 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 distribution 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 economic development and prosperity. Unlike unregulated businesses, utilities cannot cut back on service as costs increase. As demand for electricity, natural gas and water grows, utilities are statutorily required to meet that demand. In Idaho recently, and across the nation, a continued increase in demand as well as a number of other factors have contributed to rate increases on a scale we have not witnessed before. It is not unusual now for Idaho’s three major investor-owned electric utilities to file annual rate increase requests. In light of these continued requests for rate increases, 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 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 independently of the commission, will also file its own comments that result from its investigation of the company’s request. The three-member commission will also conduct technical and public hearings. Once testimony from the company, commission staff and intervening parties is presented and testimony from hearings and written comments is taken, all of 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 decision. If the utility has met its burden of proof in demonstrating that the additional expense it incurred was 1) to serve customers and 2) , the commission must allow the utility to recover that expense. The commission can -- and often does -- deny recovery of some or all the expense utilities 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. Following reconsideration, utilities or customer groups can appeal the commission’s decision to the state Supreme Court. In the end, the commission’s job is to ensure that customers are paying a reasonable rate and are receiving adequate and reliable service and that utilities are allowed to recover their prudently incurred expenses and earn a fair rate of return. Idaho Public Utilities Commission Page 18 ELECTRIC Avista Utilities 2018 Average Number of Customers/Avg. Revenue/kwh* 340,310 Residential Customers/$0.10180 42,618 Commercial Customers/$0.09990 1,318 Industrial Customers/$0.06209 Idaho Power Company 2018 Average Number of Customers/Avg. Revenue/kwh* 418,906 Residential Customers/$0.1030 80,261 Commercial Customers/$0.0767 113 Industrial Customers/$0.0567 Rocky Mountain Power 2018 Average Number of Customers/Avg. Revenue/kwh* PacifiCorp/Rocky Mountain Power 60,959 Residential Customers/$0.1112 8,425 Commercial Customers/$0.0895 5,544 Industrial Customers/$0.0733 *The information above shows each regulated electric utility’s average number of customers per customer class and the average revenue per kilowatt-hour (kWh) for 2018. Idaho Public Utilities Commission Page 19 Avista Regulators deny Avista-Hydro One deal The Idaho Public Utilities Commission denied the proposed merger of Avista Utilities and Hydro One. In its order, the Commission said the transaction is prohibited by Idaho Code § 61-327, which limits the ability of an electric utility to sell assets in certain situations. Although Hydro One is an investor-owned utility, the Province of Ontario is its largest shareholder with 47 percent of outstanding shares. The Province also maintains unique governance agreements with Hydro One, granting it significant control and influence over the utility. That lack of independence “dictates our decision to reject the proposed merger,” the Commission said in its order. “Hydro One is not purely a private, publicly traded corporation,” the Commission said. “Rather, the management of Hydro One is subject to the Province’s political pressure, legislative power, and special governance agreements.” The companies filed their joint application for Commission approval in September 2017. The proposal called for Avista to become a wholly owned subsidiary of Hydro One, the largest electric transmission and distribution utility in Ontario. Avista would have continued to operate out of its headquarters in Spokane under the same name, with existing staffing levels and management team. In April, all parties to the case at the time entered into a proposed settlement agreement that contained provisions intended to protect Avista and its customers from financial risk associated with the transaction. Among 73 commitments outlined in the proposed settlement were nearly $16 million in rate credits for Idaho customers over five years and more than $5 million to fund energy efficiency, weatherization, conservation and low-income assistance programs over a 10-year period. More than 600 public comments were submitted in the case, nearly all in opposition to the proposed merger, and testimony was accepted at three public hearings held in Avista’s service territory in mid June. A technical hearing set for late June was postponed until November after Hydro One’s chief executive officer retired and its entire board of directors resigned under political pressure from the premier of the Province of Ontario shortly after the premier took office in June. In mid-November, an amended settlement proposal was submitted to the Commission. It contained 79 commitments intended to “address the impact of the management changes and the potential for Provincial involvement in the affairs” of Hydro One and Avista. In its order, the Commission commended both the extensive public participation and the significant efforts made by the parties to the case to reach a settlement intended to protect Avista’s property and customers. Idaho Public Utilities Commission Page 20 Despite those efforts, the Commission emphasized that its decision is guided and constrained by Idaho Public Utilities Law. “The prohibitions of Idaho Code § 61-327 cannot be nullified with generous settlement terms and robust ring- fencing provisions,” the Commission said. Idaho Code § 61-327 prohibits the transfer of assets from a regulated electric utility to an entity that is “owned or controlled, directly or indirectly, by … any other state.” Idaho Code § 61-327 more specifically bars the transfer if the entity is “acting in concert or arrangement” with “any other state.” Although the applicants argued that “any other state” should be interpreted narrowly, to include only other states within the United States, the Commission disagreed. “The Applicants’ narrow concept of state would yield the absurd result of prohibiting purchases by entities owned by other states of the United States, while allowing such transactions if the entity is owned by a foreign country,” the Commission said. Hydro One was a Crown Corporation owned entirely by the Province of Ontario until 2015, when it was partially privatized. Today, the Province is not only Hydro One’s largest shareholder but it also maintains a unique governance agreement with the company that prohibits any other shareholder from owning more than 10 percent of Hydro One’s common shares, in addition to a 2018 letter agreement that spells out how Hydro One will be governed and the Province’s role in its governance. While the applicants assert that these agreements are intended to protect Hydro One’s independence from the Province, the Commission said the resignations of the utility’s CEO and board in June indicate otherwise. “It is abundantly clear that the Province does not have to own 51 percent of Hydro One in order to effectively control the company,” the Commission said. “Based on the recent events surrounding the Province’s intrusions into Hydro one corporate affairs, any other conclusion would be unreasonable and ignorant in light of the uncontested facts and evidence. Consequently, we find that Hydro One has acted in concert with the Province of Ontario, formally and informally, directly and indirectly.” The Idaho Commission was one of five state regulatory entities required to approve the merger. The Washington Utilities and Transportation Commission denied the proposal in early December. Had the merger been approved, Avista would have gone from being one of the smallest regulated electric utilities in North America to being a part of one of the largest, with more than $25.4 billion in assets. Avista provides electric service to approximately 378,000 customers (130,000 in Idaho) and natural gas service to about 342,000 customers (approximately 82,000 in Idaho). Hydro One has approximately 1.3 million customers. Avista customers to see slight increase in annual rate calculation Avista customers will pay slightly more for electricity this fall after state regulators approved several rate adjustments. Idaho Public Utilities Commission Page 21 Combined, the changes approved by the Idaho Public Utilities Commission will result in a 3.1 percent increase to residential rates on October 1. Residential electric customers in Idaho using an average of 898 kilowatt hours (kWh) per month would see their monthly bills increase from $82.57 to $85.12, an increase of $2.55 per month. Two of the changes are to annual rate adjustment mechanisms: the Fixed Cost Adjustment is set to increase by 1.7 percent, while the Power Cost Adjustment will increase by 2.91 percent. The third adjustment results from Bonneville Power Administration’s (BPA) Residential Exchange Program (REP). Customers will receive a credit on their power bill of 1.6 percent. Each year the Commission reviews these annual rate calculations to determine whether customer rates should increase or decrease. Here is a closer look at each of these changes: Commission accepts Avista’s long State regulators have accepted Avista Utilities’ 2018 natural gas Integrated Resource Plan, a 185-page document that outlines the company’s plans for meeting customer demand over the next 20 years. Avista is required to file a natural gas Integrated Resource Plan (IRP) with the Idaho Public Utilities Commission every other year. The IRP is intended to demonstrate the utility’s plan to provide safe, reliable and economic natural gas service to its customers in the most cost-effective manner in a number of scenarios, covering various weather and market conditions. Commission acceptance does not signal approval or endorsement of “any particular element of the plan, nor an approval of any resource acquisition or proposed action included in the IRP.” Instead, Commission acceptance serves as acknowledgement that the company has met its requirement to file the plan. Avista’s 2018 IRP notes that while there has been an increase in the supply of natural gas in the US, and subsequent low costs have led to increasing interest in natural gas, the utility does not anticipate growth in demand among its traditional residential and commercial customers throughout the planning period. Lower prices could lead to increased demand for natural gas among Large Industrial customers, however. The IRP anticipates that the total number of customers will grow from 348,000 today (approximately 83,000 customers are in northern Idaho) to 412,000 in 2037, at an average annual pace of 1.3 percent, with the average daily demand increasing at a rate of 0.02 percent each year. Avista plans to rely on a diversified portfolio of supply resources, including storage, firm capacity rights on six pipelines and contracts for the purchase of natural gas from multiple supply basins to meet that demand. Idaho Public Utilities Commission Page 22 Analysis conducted for the IRP found no resource deficiencies through the 20-year planning period in all conditions except the High Growth and Low Price scenario. Under the Expected Case scenario, existing resources were found to be sufficient to meet demand through 2037. The IRP also cites that the potential for efficiency and conservation, or Demand Side Management (DSM), to offset expected load growth. That differs from the company’s 2016 IRP, which found that low natural gas prices rendered DSM programs cost- ineffective. The public played a role in the development of the IRP, including four meetings of the utility’s Technical Advisory Committee (TAC), which consists of customers, representatives from peer utilities, Commission staff and others. In its order, the Commission commended the company’s ongoing efforts to keep customers informed, through the TAC and other avenues. “We encourage the company to continue in its efforts to engage affected and interested persons,” the Commission said. Parties to an Avista rate case have proposed a settlement that reduces the utility’s annual electric base revenues in Idaho. If approved by the Idaho Public Utilities Commission, the settlement would decrease annual base electric revenues by $7.18 million, or 2.84 percent, effective Dec. 1, 2019. Avista’s original proposal called for an increase in electric base revenues of $5.3 million, or 2.1 percent. The Commission held a public workshop and public hearing for Idaho customers of Avista at 6 p.m. (PST) on November 7, 2019, in Coeur D’Alene, Idaho. A technical hearing held on November 22, 2019, in the Commission’s hearing room. Technical hearings allow intervening parties to present testimony and evidence. A public telephonic hearing was held on November 22, 2019, which allowed Avista’s Idaho customers an additional opportunity to provide testimony that will be made part of the formal case record. The Spokane-based company said the primary driver for its original request is an increase in net plant investment (including return on investment, depreciation and taxes, and offset by the tax benefit of interest) from that currently authorized. In addition, net power supply expense is reduced from the currently authorized level, offsetting the Company’s overall increase as originally requested. Idaho state law requires that regulated utilities be allowed to recover their prudently incurred expenses and earn a reasonable rate of return, which is established by the Commission. The burden of proof is on the utility to demonstrate that additional capital investment was necessary to serve customers and, if so, that the expenses were prudently incurred. Idaho Public Utilities Commission Page 23 The proposed settlement calls for several reductions to the company’s original proposal. For Avista’s electric operations, those changes include a $2.2 million decrease to the Company’s proposed 2019 revenue requirement tied to a reduction in return on common equity, a reduction of nearly $744,000 through the elimination of officer incentive pay and salary increases and a reduction in non-officer incentives and salary increases, and a reduction of approximately $6.4 million due to reduced power supply costs. The proposed settlement agreement was reached between the parties to the case after a settlement conference in late September. Those parties include the Commission Staff, Clearwater Paper Corporation, Idaho Conservation League, Inc., Idaho Forest Group, LLC, the Community Action Partnership Association of Idaho, Inc. and Walmart, Inc. If approved by the Commission, the proposed settlement would decrease Avista’s annual base electric revenues by $7.18 million, beginning on December 1, 2019. The revenue decreases are based on a 9.5-percent return on equity, down from a 9.9-percent return on equity in Avista’s original proposal. For a residential electric customer using an average of 900 kilowatt-hours per month, the proposed settlement would lead to a decrease of $0.86, or 1.0 percent decrease per month for a revised monthly bill of $84.45. Idaho Power Idaho Power customers to see slight rate decrease Idaho Power customers will pay less for electricity this summer after state regulators approved several rate adjustments. Combined, the changes approved by the Idaho Public Utilities Commission to a 0.65 percent decrease to residential rates on June 1. That equates to a savings of 59 cents per month for the typical residential customer who uses 950 kilowatt-hours (kWh) per month. Two of the changes are to annual rate adjustment mechanisms and largely offset each other: The Fixed Cost Adjustment is set to increase by 3.64 percent, while the Power Cost Adjustment will decrease by 3.49 percent. Another change, a 0.11 percent increase, allows Idaho Power to recover costs associated with the accelerated retirement of the North Valmy coal-fired power plant. The fourth rate adjustment is a decrease to the Energy Efficiency Rider, from 3.75 percent of base rate revenues to 2.75 percent. Here is a closer look at each of these changes: The North Valmy-related surcharge is a 0.11 percent increase for residential customers, or 10 cents more on the monthly bill of the typical residential customer who uses 950 kWh per month. Idaho Public Utilities Commission Page 24 The increase primarily reflects changes in costs (approximately $1.2 million) associated with the company’s exit from operations at the 522-megawatt, two-unit facility that have been incurred since 2016. That is when Idaho Power began tracking the incremental costs and benefits of the plant’s early retirement – Unit 1 will close this year, 12 years earlier than originally planned, and Unit 2 will close in 2025, a decade earlier than planned. The surcharge also includes costs outlined in the North Valmy Project Framework Agreement that Idaho Power reached in early 2019 with the plant’s co-owner, NV Energy. The terms and conditions of the project framework agreement are consistent with those outlined in a Commission-approved 2017 settlement agreement that allowed Idaho Power to recover about $13 million annually until 2028, when Valmy is fully depreciated. That led to a base rate increase of 1.17 percent that took effect in June 2017. The company contends the early closure of the plant will ultimately provide significant cost savings for its customers - $17.2 million when compared to its prior plans for the facility. The Fixed Cost Adjustment (FCA) mechanism increased by 3.64 percent for residential customers on June 1. That equates to an additional $3.49 per month for the typical residential customer who uses 950 kWh per month. The FCA is an annual rate adjustment tool that separates or decouples energy use from the company’s revenue, thereby removing the utility’s disincentive to invest in and promote energy efficiency and conservation that can lead to a decline in energy sales. If fixed costs recovered from customers are less than the fixed costs authorized by the Commission, customers in the Residential and Small General Service classes see a surcharge on their bill. If the company collects more in fixed costs than is authorized, customers in those classes receive a refund. In 2018, Idaho Power’s efficiency programs provided 183,378 megawatt-hours of incremental energy savings – enough to power almost 16,000 homes for a year. A year ago, the Commission approved an FCA decrease of 3.61 percent. The Power Cost Adjustment (PCA) mechanism decreased by 3.49 percent for residential customers, effective June 1. That equates to a monthly savings of $3.35 for the typical residential customer who uses 950 kWh per month. The PCA is a cost-recovery tool that passes on to customers the benefits and costs of providing energy to Idaho Power’s customers. Like the FCA, it is adjusted each spring to reflect the actual power-supply costs incurred by the company over the previous year. Those costs can vary significantly from year to year based on hydroelectric generation, market prices for energy, fuel costs, and other factors, and they typically represent one-fourth to one-third of the company’s annual costs of providing service. Idaho Public Utilities Commission Page 25 The PCA has two main components: a forecast and true-up. The forecast projects the company’s anticipated power-supply costs, and the true-up balances those forecasted costs with the actual costs incurred by the company over the previous 12 months. In its application, Idaho Power said last year’s power-supply costs were lower than projected, primarily due to water conditions that were better than expected and lower-than-expected natural gas costs. Forecasted power- supply costs for the coming year are also less than they were last year, mainly due to an expected increase in the sale of surplus energy. A year ago, the Commission approved a PCA decrease of 1.29 percent. The Energy Efficiency Rider funds the implementation and analysis of the utility’s Demand-Side Management (DSM) programs, so-called because they target customer demand for energy rather than the supply. Lowering the demand helps the company avoid costs associated with building new power plants and purchasing energy on the wholesale market. As of June 1, this surcharge is assessed at 2.75 percent of the energy charges on a customer’s bill, down from 3.75 percent. That equates to a decrease of 83 cents per month on the bill of the typical residential customer who uses 950 kWh per month. Idaho Power said the new rate will better align its DSM programs’ funding with expenditures reflected in its most recent projections. The change does not impact the company’s DSM programs, which include 16 energy efficiency programs, educational initiatives, and three demand response programs designed to shift customer energy use from periods of peak demand. Idaho Public Utilities Commission Page 26 Idaho Power, Simplot renew contract for power at Pocatello plant The Idaho Public Utilities Commission has approved the renewal of an energy sales agreement between Idaho Power and J.R. Simplot Company. The agreement is for electricity generated at Simplot’s fertilizer plant near Pocatello and spans three years. Simplot’s plant contains a cogeneration facility, which produces electricity from the excess heat or steam that is the byproduct of a manufacturing process. Cogenerators qualify for contracts under the Public Utility Regulatory Policies Act (PURPA), which was enacted in 1978 “to lessen the country’s dependence on foreign oil and to encourage the promotion and development of renewable energy technologies as alternatives to fossil fuels.” PURPA requires regulated utilities to buy energy from qualifying facilities at a rate established by state commissions. That rate is referred to as the avoided cost rate because it is based on the cost the utility avoids by not having to generate the energy itself or purchase from another source. In Idaho, cogeneration facilities up to 10 average megawatts (aMW) are eligible for contracts at the published avoided cost rate based on the cost of energy at a proxy resource, a combined-cycle combustion turbine. This rate is updated annually to reflect the most recent natural gas forecasts. The avoided cost rate in this case is adjusted seasonally and for heavy- and light-load hours. It ranges from $36.07 per megawatt-hour (MWh) to $73.92 per MWh. Simplot’s cogenerator is capable of producing up to 15.9 MW, but it is operated so as not to exceed 10 aMW per month under normal conditions. The agreement calls for Idaho Power to accept inadvertent energy that exceeds that amount without reimbursement. Idaho Power has received the output from the plant since 1991, most recently under an energy sales agreement that ended Feb. 28. The agreement approved by the Commission includes capacity payments for the entire three-year term since it is the renewal of an agreement receiving capacity payments when it expired. The agreement was modified slightly from prior contracts for output at the cogeneration facility in that it contains a generation forecasting provision that requires the facility to provide its monthly generation forecast five days ahead of the month estimated rather than a full month ahead. This change represents a compromise among the parties to the case and could provide the utility with more accurate generation forecasting, the Commission said in its order. “We will continue to evaluate Agreements submitted to us on a case-by-case basis and will evaluate the reasonableness of the provisions in those Agreements in light of the data and information presented to us,” the Commission said in its order. Idaho Public Utilities Commission Page 27 Rocky Mountain Power Regulators OK Rocky Mountain Power expenses tied to efficiency programs State regulators have approved Rocky Mountain Power’s $8.5 million investment in efficiency programs in 2016 and 2017. The decision by the Idaho Public Utilities Commission does not impact rates. Instead, it allows the utility to recover the expenses related to its efficiency programs through funds generated by an efficiency rider paid by Rocky Mountain Power customers. The rider appears on bills as “Customer Efficiency Services” and is set at 2.7 percent of the monthly bill amount. Costs deemed ineffective are borne by the company’s shareholders rather than customers. Rocky Mountain Power, a division of Pacificorp, provides electric service to approximately 77,000 customers in eastern Idaho. The utility offers a host of efficiency programs, also referred to as Demand Side Management or DSM since they target the demand for energy rather than the supply. In addition to reducing power supply expenses for all customers and eliminating or postponing the need to build new generation, DSM programs provide incentives to encourage participating customers to lower their power bills by either using less energy or shifting their usage to off-peak times. The programs, which include Low Income Weatherization, Home Energy Saver and Non-Residential Energy Efficiency/wattsmart Business, are subjected to a battery of tests designed to determine whether the savings they realize is greater than their cost. The utility also must demonstrate that the programs benefit all customers, not just those that participate in them. Rocky Mountain contends its DSM programs saved 15,830 megawatt-hours (MWh) in 2017 and 19,450 MWh in 2016. Its DSM-related expenses totaled $4,038,931 in 2017, and $4,500,332 in 2016. Regulators approve decrease to Rocky Mountain Power efficiency surcharge Rocky Mountain Power customers will see slightly lower bills after state regulators approved a change to the surcharge that funds the utility’s efficiency and conservation programs. The decision by the Idaho Public Utilities Commission lowers the Schedule 191-Customer Efficiency Services Rate Adjustment from 2.7 percent of a customer’s total monthly bill to 2.25 percent. That equates to a decrease of about $5 annually for the average residential customer using 800 kilowatt-hours per month. The change took effect March 1. Idaho Public Utilities Commission Page 28 Efficiency and conservation programs, also referred to as Demand Side Management or DSM, are designed to encourage customers to use less energy or shift their usage to off-peak times. In addition to helping participants save money by using less energy, DSM programs can help keep rates low for all customers by reducing a utility’s power-supply expenses and eliminating or delaying the need to build new generation resources. Rocky Mountain’s DSM programs include Low-Income Weatherization, Home Energy Saver, Home Energy Reports and Non-Residential Energy Efficiency/wattsmart Business. The utility requested approval to decrease the rider after its DSM-related expenses came in lower than projected in 2016 and 2017. In its order approving the change, the Commission said it will help align revenues and expenditures, and “represents a reasoned and gradual approach that continues to encourage cost-effective DSM programs while reducing customer bills.” The Commission initially approved recovery of the costs associated with Rocky Mountain’s DSM programs through the Schedule 191 rider in 2006. To monitor collections and expenses, the Commission implemented an annual reporting process that includes a review of the programs’ cost effectiveness. Since 2016, when the rider was last adjusted, from 2.1 percent to 2.7 percent, its revenue has exceeded projections while expenses have fallen short of projections. This has led to over-collection of approximately $2.1 million, the company said. Lowering the collection rate is expected to begin decreasing the over-collected balance and align expenses with revenues over a three-year period. In its application, Rocky Mountain Power said that, while DSM-related expenses were lower than expected, energy savings associated with the programs exceeded the target established in the company’s 2017 Integrated Resource Plan by 5,696 megawatt-hours, about 17 percent, over a two year period. Rocky Mountain Power provides electric service to approximately 77,600 customers in eastern Idaho. Idaho Public Utilities Commission Page 29 WATER Regulated water companies Company Customers Nearest city/town CDS Stoneridge Utilities, LLC 358 Blanchard Diamond Bar Estates Water Company 46 Rathdrum Eagle Water Company, Inc. 4,200 Eagle Falls Water Company, Inc. 5,500 Ammon Grouse Point Water 24 Kuna Happy Valley Water System 27 Athol Island Park Water Company 362 Island Park Kootenai Heights Water System, Inc. 11 Kootenai Mayfield Springs Water Company 76 Kuna Morning View Water Company, Inc. 108 Rigby Picabo Livestock Company 28 Picabo Ponderosa Terrace Estates Water System, Inc. 22 Sandpoint Resort Water Company 422 Sandpoint Bitterroot Water System, Inc. 158 Coeur d'Alene Rocky Mountain Utility Company, Inc. 101 Rigby Schweitzer Basin Water LLC 439 Sandpoint Spirit Lake East Water Company 301 Coeur d'Alene Suez Water Idaho Inc. 96,000 Boise Sunbeam Water Company 22 American Falls Teton Water and Sewer Company, LLC 285 Driggs Troy Hoffman Water Corporation 147 Coeur d'Alene Idaho Public Utilities Commission Page 30 State regulators stay case involving proposed sale of Eagle Water Company to Suez Water Idaho The Idaho Public Utilities Commission has approved the suspension of a case involving the proposed sale of Eagle Water Company to Suez Water Idaho. The Commission stayed the case pending a final resolution of civil litigation involving Eagle Water. Eagle Water and Suez filed a joint application for Commission approval of the proposed sale in late 2018. The proposal calls for a purchase price of $10 million as well as significant rate increases for the approximately 4,200 customers of Eagle Water. In late February, the city of Eagle filed a Complaint for Declaratory and Other Relief against Eagle Water in 4th District Court. The city’s complaint states that an Inertie Agreement it reached with Eagle Water in 2008 granted the city “notice and opportunity to match any bona fide offer Eagle Water received for the purchase of any part or all of its system.” In early March, the parties to the case agreed that a postponement was in order in light of the litigation. On March 21, Suez filed an Unopposed Motion for Stay with the Commission. The Commission’s order approving the motion calls for the applicants to provide the Commission and other parties to the case with quarterly reports on the litigation’s status. The Commission also retained full jurisdiction over the application. Since Eagle Water is a regulated utility, as is Suez, the sale of its system to Suez, the city of Eagle or any other entity is subject to Commission approval. Idaho Public Utilities Commission Page 31 TELECOMMUNICATIONS Regulated telecommunications companies Company Location Albion Telephone Corp. Albion Cambridge Telephone Co. Cambridge CenturyLink* Boise CenturyTel of Idaho, Inc.* Salt Lake City, UT CenturyTel of the Gem State* Salt Lake City, UT Citizens Telecommunications Company of Idaho* Beaverton, OR Columbine, dba Silver Star Communications Freedom, WY Direct Communications Rockland, Inc. Rockland Fremont Telecom, Inc. Missoula, MT Frontier Communications Northwest,Inc.* Beaverton, OR Inland Telephone Co. Roslyn, WA Midvale Telephone Company Midvale Oregon-Idaho Utilities, Inc. Nampa Pine Telephone System, Inc. Halfway, OR Potlach Telephone Company* Kendrick Rural Telephone Company Glenns Ferry * These companies are no longer rate regulated; however, they are still regulated for customer service. Idaho Public Utilities Commission Page 32 Commission suspends ITSAP surcharge, leaves unchanged TRS assessment State regulators have suspended a surcharge that helps low-income Idahoans maintain access to local dial-tone service for medical and other emergencies. It’s the third consecutive year the Idaho Public Utilities Commission has suspended the surcharge used to fund the Idaho Telecommunications Service Assistance Program (ITSAP), which provides qualified applicants with a monthly discount of $2.50 for landline and cell phone service. The Commission determines the surcharge annually, while the state Department of Health and Welfare administers the program. To be eligible for ITSAP assistance, the applicant must be the head of a household and meet eligibility criteria determined by the Department of Health and Welfare. In addition to ITSAP, a federal program, Lifeline, provides $9.25 per month to help qualifying low income residents access phone and broadband service. The number of Idaho residents receiving financial assistance through ITSAP has fallen significantly in recent years, from an average of 27,539 per month in 2010 to an average of 1,787 per month in 2018. From 2017 to 2018, the number of recipients dropped 30 percent. As participation has declined, so has the amount of the monthly surcharge, from 13 cents for each line in 1998, to 3 cents in 2014. The Commission lowered it to 1 cent in 2016, and has suspended the surcharge every year since then. As a result, Idaho residents will not see the surcharge on their phone bills in 2019. In a related case, the Commission decided to also leave unchanged the funding mechanisms for the Idaho Telecommunications Relay Service (TRS), which assists individuals with hearing and speech impairments. TRS allows those individuals to use telephones via a relay center that converts, or relays, oral conversations to text-type, and vice versa. The relay center also provides speech-to-speech, Spanish-to-Spanish, video and Internet relay services. TRS is funded by an assessment on residential and business lines of 2 cents per month, in addition to a charge on intrastate long-distance calls $0.0002 per minute. Use of the service is declining due to cell-phone texting and the availability of similar Internet based services. In 2018, the relay center handled 10,698 minutes of traffic, a 12-percent decrease from calendar year 2017. USF Surcharge modified Faced with declining revenue as Idahoans increasingly abandon land line phone service, in August 2017 the Commission raised a monthly surcharge on land lines and questioned the sustainability of the Idaho Universal Service Fund (IUSF). Idaho Public Utilities Commission Page 33 The fund was established in 1988 to ensure all Idahoans have access to local telephone service at reasonable rates. This is accomplished by taking revenue collected from a surcharge on land-line users and long-distance call minutes, and distributing it to telecommunications carriers that meet eligibility requirements. Over the last several years, however, revenue has been insufficient to cover distributions. The trend prompted the Commission to raise the monthly surcharge on each residential line to 25 cents, up from 12 cents, and to 44 cents for each business line, up from 20 cents. The change took effect Sept. 1, 2017. The cost for each minute of a long-distance call also increased, from ½ cent per minute to 0.9 cents per minute. The changes have allowed the fund to meet its obligations for the 2019 fiscal year, and has momentarily stabilized the fund. The Commission made a minor change to the rates associated with the IUSF. The Commission recently lowered the per minute surcharge of a long-distance call from 0.9 cents to 0.7 cents, and determined that the IUSF surcharges should be maintained at 25 cents per residential line, and 44 cents per business line. The Idaho Public Utilities Commission establishes the surcharges each fall, and they remain in effect for a 12- month period beginning Oct. l. The IUSF was created through the Idaho Telecommunications Act of 1988 in order to ensure all Idahoans have access to phone service at reasonable rates. Disbursements from the fund allow rural telephone companies to keep their rates at no more than 25 percent above rates in more urban areas. Idaho Public Utilities Commission Page 34 NATURAL GAS Consumption decreased and prices were relatively stable in FY20191 In Idaho, natural gas is supplied to customers by Avista Corporation, Dominion Questar Gas, and Intermountain Gas Company. Idaho is fortunate to be located between two large natural gas basins: The Rocky Mountain Basin (Rockies) and the Western Canadian Sedimentary Basin (WCSB). These basins are connected through the Williams Northwest Pipeline and the TransCanada Gas Transmission Northwest pipelines allowing the utility companies serving Idaho to take advantage of capacity and of pricing at both basins. Individual Idaho Gas Utility Profiles FY 2019 Statistics Total Residential Commercial Industrial Transportation2 Avista Corporation Customers 85,475 76,338 9,041 88 8 Dominion Questar Gas Customers 2,241 1,989 252 0 0 Intermountain Gas Customers 368,601 335,050 33,424 23 104 1 The Idaho Public Utilities Commission’s fiscal year is July 1st through June 30th. 2 Transportation is nonutility owned gas transported for another party under contractual agreement. Idaho Public Utilities Commission Page 35 Consumption Overall consumption of natural gas in Idaho decreased 1.8 percent. All segments consumed less natural gas than the previous year with the exception of gas for electric generation which increased approximately 8.5 percent. Idaho Public Utilities Commission Page 36 Demand The Northwest Gas Association (NWGA) forecasts demand for natural gas in the Northwest to grow at a Compound Annual Growth Rate (CAGR) of approximately 1.1% per year over the next ten years3. Forecasted growth in power generation, commercial, and residential is higher while industrial growth is forecasted at approximately the same rate as the prior year. A number of factors could impact demand for natural gas:  Retirement of coal fired generation and increased use for generating electricity.  The potential for natural gas as a transportation fuel.  LNG and petrochemical production and exports.  Energy policies, regulations, and legislation. Prices Recently, prices at the Henry Hub have been hovering under $3.00 (per thousand cubic feet) and are anticipated to remain close to this level for the foreseeable future. Henry Hub natural gas spot prices are projected to be $2.67 in 2019 and $2.61 in 20204. 3 Northwest Gas Association 2018 Pacific Northwest Gas Market Outlook 4 EIA Forecast October 8, 2019 Idaho Public Utilities Commission Page 37 Production Alta Mesa Holdings LP is currently the only natural gas producer in Idaho. Production numbers were not available for 2019. Alta Mesa operations overview: • The Company has seventeen wells located in the Payette, Idaho basin. • Six wells are producing natural gas, condensate, oil, and other liquids. • The Company’s processing facility is located at Willow Creek near Payette. Natural gas is piped to the Williams Northwest Pipeline system and liquids are transported out of state for processing. Summary Idaho residential, commercial, electric power producers, and industrial users of natural gas continue to benefit from low natural gas prices and plentiful supply. -by Kevin Keyt, IPUC Staff Analyst Idaho Public Utilities Commission Page 38 CONSUMER ASSISTANCE Commission issues annual consumer assistance report The Consumer Assistance staff responded to 1,001 complaints and inquiries in fiscal year 2019, 90 percent of which were from residential customers. The chart below illustrates the complaints and inquiries by industry. The chart below summarizes the types of issues reported to the Commission. While the Consumer Assistance staff is able to respond to most inquiries without extensive research, about 75 percent of complaints required investigation by the staff. Approximately 42 percent of investigations resulted in reversal or modification of the utility’s original action. Payment terms were negotiated in 27 percent of the investigations. Idaho Public Utilities Commission Page 39 REGULATING IDAHO’S RAILROADS The Commission conducts inspections of Idaho’s railroads to determine compliance with state and federal laws, rules and regulations concerning the transportation of hazardous materials, locomotive cab safety and sanitation rules, and railroad/highway grade crossings. Hazardous material inspections are conducted in rail yards. In 1994, Idaho was invited to participate in the Federal Railroad Administration’s State Participation Program. The commission has a State Program Manager and one FRA certified hazardous material inspector. The commission inspects railroad-highway grade crossings where incidents occur, investigates citizen complaints of unsafe or rough crossings and conducts railroad-crossing surveys. The commission also plays a role when rail lines are abandoned. More than 900 miles of railroad track in Idaho have been abandoned since 1976. Federal law governs rail line abandonments, and the federal Surface Transportation Board (STB. formerly the Interstate Commerce Commission) decides the final outcome of abandonment applications. Under Idaho law, however, after a railroad files its federal notice of intent to abandon, the Idaho commission must determine whether the proposed abandonment would adversely affect the public interest. The commission then reports its findings to the STB. In reaching a conclusion, the Commission considers whether abandonment would adversely affect the service area, impair market access or access of Idaho communities to vital goods and services, and whether the line has a potential for profitability. Railroad Activity Summary Rail Safety Category Totals Idaho Railroad Track Miles 1710/996 Class I * Hazmat Inspections 283 Rail Cars inspected 9124 Railcar Violations 57 Railcar Defects 807 Railroad Grade Crossings Inspected 525 Crossing Accidents Investigated 2 Crossing Complaints Investigated 6 Crossing Complaints Validated 2 Locomotives Inspected 7 Locomotive defects 0 *Source: ITD `(2017) Idaho Public Utilities Commission Page 40 REGULATING IDAHO’S PIPELINES Idaho Code 61-515 empowers the Commission to require every utility to “maintain and operate its line, plant, system, equipment, apparatus, and premises in such a manner that promote and safeguard the health and safety of its employees, customers and the public.” Pursuant to 49 U.S.C Section 60105, Chapter 601, the Commission is a certified partner with the U.S. Department of Transportation Pipeline Hazardous Material Safety Administration. The federal/state partnership provides the statutory basis for the pipeline safety program and establishes a framework for promoting pipeline safety through federal delegation to the states for all or part of the responsibility for intrastate natural gas pipeline facilities under annual certification. Under the certification, Idaho assumes inspection and enforcement responsibility with respect to more than 8,300 miles of intrastate natural gas pipelines over which it has jurisdiction under state law. With the certification, Idaho may adopt additional or more stringent standards for intrastate pipeline facilities provided the standards are compatible with federal regulations. The Idaho Commission has a state program manager and three trained and certified pipeline safety inspectors who conduct records audits and field installed equipment inspections on all intrastate natural gas pipeline operators under its jurisdiction. Pipeline Summary Activity Regulating Idaho’s Pipelines Compliance Enforcement Actions Notice of probable violation 17 Notice of amendment 0 Warning letters 0 Idaho Public Utilities Commission Page 41 This report satisfies Idaho Code 61-214; this is a “full and complete account” of the most significant cases to come before the commission during the 2019 calendar year. (The financial report on Page 11 covers Fiscal Year July 1, 2015 through June 30, 2019.) Anyone with access to the Internet may also review the commission’s agendas, notices, case information and decisions by visiting the IPUC’s Web site at: www.puc.idaho.gov. Commission records are also available for public inspection at the commission’s Boise office, 11331 W. Chinden Blvd., Monday through Friday, 8 a.m. to 5 p.m. The Idaho Public Utilities Commission, as outlined in its Strategic Plan, serves the citizens and utilities of Idaho by determining fair, just and reasonable rates for utility commodities and services that are to be delivered safely, reliably and efficiently. During the period covered by this report, the commission also had responsibility for ensuring all rail services operating within Idaho do so in a safe and efficient manner. The commission also has a pipeline safety section that oversees the safe operation of the intrastate natural gas pipelines and facilities in Idaho.