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LISA D. NORDSTROM lUJj
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0314
IDAHO BAR NO. 5733
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UTili (itS COtlf"iISSIOH
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
OF ATLANTA POWER COMPANY'S RATES
AND CUSTOMER SERVICE.
ADDITIONAL COMMENTS OF
THE COMMISSION STAFF
CASE NO. ATL-O3-
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Lisa D. Nordstrom, Deputy Attorney General, and in response to the Notice
of Extended Comment/Protest Deadline issued in Order No. 29257 on June 4, 2003 , submits the
following additional comments.
BACKGROUND
On September 11 , 2000, the Commission received a petition from residents of Atlanta
Idaho, enumerating their concerns about the electric service being provided by Atlanta Power
Company. The petition requested "a formal investigation into the reliability of electrical service
for the Atlanta townsite." At the Commission s direction, Staff processed the customer petition
on an informal basis and worked with the Company and its customers. This resulted in several
improvements and a report detailing Staffs findings. On April 10, 2003 , the Commission issued
ADDITIONAL STAFF COMMENTS JULY 22, 2003
a Notice of Proposed Order in this docket, to which customers, Staff and the Company
responded by filing comments.
In its May I , 2003 Comments, Staff requested an opportunity to respond directly to
customers in writing regarding issues raised in the comments. Staff further asked that the
Commission schedule a public workshop in Atlanta so that Staff could discuss its response
and/or resolve any remaining customer concerns in person. Because a formal hearing takes
testimony but does not allow the Commission or Staff to respond to customer questions, the
Commission believed customers and interested parties would likely prefer the "question and
answer" workshop format to that of a formal hearing. Order No. 29257 at 1. The Commission
also found that many of the issues raised by Atlanta customers could be addressed in detail by
the Commission engineering, accounting and consumer assistance Staff familiar with this case.
Id. As a result, on June 4 2003 the Commission published a Notice of Public Workshop.
June 18 , 2003 , Staff sent the letter to Atlanta Power customers and interested parties responding
to customer comments and questions. (Attachment A)
JUNE 28, 2003 WORKSHOP
Approximately 40 individuals attended the June 28th workshop held in Atlanta. Lynn
Stevenson (owner and President), Dave Gill (part-time employee) and Jerry Jaramillo
(bookkeeper) were present on behalf of the Company. State Senator Fred Kennedy was also in
attendance.
Staff fielded questions on the various topics for approximately three and a half hours.
particular, participants discussed: I) the adequacy of the Company s recordkeeping; 2) the
amount of time it takes the Company to diagnose and fix outages; 3) non-compliance with
previous Commission Orders; 4) uniformity of voltage; 5) frequency of outages; 6) the need for a
backup diesel generator and possible funding; and 7) general maintenance of the system and
transmission lines. Atlanta Power personnel offered additional information on several of these
issues as well.
Staff observed that those in attendance were divided regarding their support of the
petition that initiated this case. Based on the crowd's applause at one point in the workshop,
Staff estimates that two-thirds of the crowd appeared NOT to support the positions of those who
ADDITIONAL STAFF COMMENTS JULY 22, 2003
signed the original Petition. Several others indicated they supported Atlanta Power and
appreciated having electricity given the remoteness of the area.
STAFF RESPONSE TO POST-WORKSHOP COMMENTS
Staff has worked with interested parties and customers to answer their individual
questions by telephone, in writing, and at the workshop. Based on the post workshop comments
it is clear that a couple individuals remain unsatisfied with Staffs responses, continue to demand
answers to previously answered questions, and/or misstate facts in their comments--even after
lengthy workshop discussions on June 28, 2003. To the extent we have already addressed these
issues and/or questions in our written response to Atlanta Power customers, Staff wishes to
incorporate our June 18 2003 response into the record as Attachment A rather than attempt to
answer each question again in these comments.
Staff notes that comments dated June 28 2003, which were subsequently revised and re-
submitted on June 29, 2003 , included a copy of a letter submitted to IPUC Staff before the
beginning of the June 28th workshop. It is Staffs belief that most of the issues described in the
letter were appropriately discussed and addressed during the three and a half hour workshop.
These comments frequently misstate Staff s findings, despite Staff s attempts during both
written! and verbae communication to inform these individuals of the facts gathered and
documented by Staff. Staff attempts to correct the most egregious examples of these
misstatements and offer additional recommendations in the paragraphs that follow.
Annual Reports
In comments dated June 29, 2003, certain commentors stated that "since the company
filed the annual report required to secure its rate increase, it has not filed another annual report.
This is not accurate because although its last rate increase was in 1993 , the Company filed
annual reports for the years through 1997 as previously noted in our audit and informal
investigation reports. These commentors also stated that IPUC "staff, including the attorney
confirmed that the P.u.C. does not require AP. to file annual reports." Not only did Staff not
1 Staffs written communications include Staffs audit report, Staffs report on the informal investigation and its
June 18 2003 letter (Attachment A).2 Staffs verbal communications include more than a dozen telephone calls during the last 2 years and a three and a
halfhour workshop discussing these same issues.
ADDITIONAL STAFF COMMENTS JUL Y 22, 2003
make this assertion, the Commission mandates that all regulated utilities file annual reports. In
its Proposed Order of April 10, 2003 , the IPUC proposed a date by which Atlanta Power was to
submit its delinquent annual reports. Due to the comments received in this case and the
extension of the comment-filing deadline, that Order has not been finalized. It remains Staffs
recommendation that the Company file its annual reports as required by the Idaho Code and as
proposed by the Commission.
Company Recordkeepin2: and Written Documentation
In the same comments dated June 29 2003 , the parties wrote "to use the P.u.c. staff
member s terminology, the rates are based on 'trust-me bookkeeping.'" No Staff member made
this statement at the workshop or any other time. This appears to be a characterization of the
commentors based on a misquote of Commission Order No. 24925 associated with Case No.
ATL-93-1. The Commission referred to a 1988 Order in which the Commission stated that
trust me" representations of utility management were not an acceptable basis for determining
whether expenses occurred. In fact, the Commission Order No. 24925 explicitly rejected "trust
" bookkeeping based solely on oral representations.
Participants also discussed the Company s lack of materials and supplies inventory at the
workshop. The parties that filed the June 29, 2003 comments seem to have erroneously
interpreted this as proof that their power rates are not fact-based. However, as discussed at the
workshop and in Staffs most recent audit report, the $7 000 in Company materials and supplies
inventory was not allowed in Staff s calculation of the Company s revenue requirement.
Furthermore, the case on which the Company s most recent rates are based (Case No. ATL-
93-1) did not allow this $7 000 for the purposes of rate making. Thus, these expenses are not
recovered by customer rates because they were not adequately documented.
As discussed at the workshop, the Company s recordkeeping has improved since Staffs
original audit of the Company s records in 1992. As Staff previously noted in its June 18 2003
letter, audit report and at the workshop, the audit verified transactions included within the
Company s expenses and assets by reviewing: 1) the Company s bank statements, 2) returned
checks and invoices for numerous years including the test and subsequent years, and 3)
information from organizations with which the Company had a financial relationship.
instances where invoices were not found, Staff evaluated whether such an expense actually
ADDITIONAL STAFF COMMENTS JULY 22, 2003
occurred and was reasonable. For example, the Company s 1998 and 1999 bank statements
contained two payments to Kinko s Copies that were represented as payments for the copying of
FERC license applications. Based upon observation of both a draft and final license application
and the number of copies distributed, these costs comprised approximately $350 of the revenue
requirement identified in the most recent audit. As also noted in the audit, these dollar amounts
would require written verification (such as invoices) to confirm these costs were they to be
recoverable in a rate case. The commentors stated that disallowing this type of expense would
result in lower power rates. Yet, because this expense occurred after the Company s most recent
rates were established, it did not impact the Company s rates.
The comments dated June 29, 2003 made many allegations regarding the high rates
Atlanta Power customers pay. As stated in the June 4, 1993 Order establishing their rates, the
facts underlying customer rates remain as follows:
. .. the level of rates for Atlanta Power is primarily a function of an extremely
small customer base, many of whom are only seasonal customers. The level
investment is not unreasonably high for a small electric company. Nor is the
annual revenue requirement. Weare obligated by statute to provide the Company
an opportunity to recover its operating costs and realize a reasonable return on its
investment. We cannot require the Company stockholders to fund utility
operations out of pocket or require the Company management and employees to
work for free or on the cuff.
Order No. 24925 at 13.
That said, Staff continues to believe that the Company still needs to improve its
recordkeeping. It remains Staff s recommendation that the Company maintain adequate
supporting documentation of transactions and file them in a manner that allows for subsequent
retrieval. Additional recommended improvements include, but are not limited to: 1) preparing
and maintaining Board of Directors ' meeting minutes; 2) performing a periodic inventory of
assets that includes preparation and maintenance of a list of assets (including materials and
supplies) on at least an annual basis; 3) issuing checks sequentially; and 4) entering payment
information at the time of check issuance and performing bank statement reconciliations each
month in a timely manner.
3 See also Staffs letter ofJune 18 2003, responses to Question Nos. 8-10.
ADDITIONAL STAFF COMMENTS JULY 22, 2003
Deliverv Volta2:e
At the workshop and in comments filed following the workshop, parties to this case have
discussed the distance from transformers to customer meters in relation to adequate delivery
voltages. At the workshop Staff stated that in its experience, 150 to 200 feet was the maximum
distance acceptable to the larger utilities regulated by the Commission. The Atlanta Power
system has one or more areas where multiple customers are served from one transformer. Some
Atlanta Power customers are more than 200 feet from the transformer. Mr. Stevenson correctly
pointed out at the workshop that what matters to customers is the amount of delivery voltage and
that his system is designed to deliver 110 volts to customers. He accomplishes this with good
quality copper conductors and appropriate transformer voltage settings. At the conclusion of the
workshop an outlet at the schoolhouse was tested and found to be just over 110 volts. It was
suggested at the workshop that customers could easily test voltage at their service locations.
voltage was found to be significantly below 110, customers were told they should contact the
Company who agreed to rectify the problem.
Reliability
With regard to backup generation, the Staff continues to believe that Atlanta Power
Company should not be required to purchase a system backup generator largely due to the cost
and its impact on customer rates. This recommendation is consistent with, and is largely based
, the results of the customer survey indicating that nearly all respondents were unwilling to pay
increased rates in order to purchase the backup generator. However, the community would
benefit if either the community or Atlanta Power Company could obtain a grant to finance the
generator. The community may want to take the lead in pursuing a grant since it would be the
primary beneficiary.
The Staff intends to continue working with Atlanta Power regarding plans for system
maintenance, restoration of service after an outage, and the effective use of the system status
phone number. Discussions concerning tree trimming this summer are presently ongoing.
ADDITIONAL STAFF COMMENTS JULY 22, 2003
Maximum Outa2:e Response Time
Although the comments filed on June 29 2003 stated that a 75-hour outage is not
uncommon, Staff is aware of only one 75-hour outage and considers it to be uncommon. These
comments also suggested that a maximum response time be established in an outage situation.
Staff notes that Atlanta Power maintains no full-time employees in an effort to keep rates
from being higher than they are. There have been and will be times in the future when Atlanta
Power s maintenance people will not be in town when an outage occurs or will be committed to
other jobs. For safety reasons, it is not reasonable to expect anyone to travel the roads that lead
to Atlanta in the dark. It is also difficult ifnot impossible to drive the system and check for
problems in the dark.
Because of these difficulties, Staff believes that any such outage response plan must have
a great deal of flexibility. With this in mind, Staff initially recommended such a plan in its
investigative report and the Commission included that plan in its Proposed Order. That plan
would allow the Company time to diagnose the problem and approximately a day for the
delivery of parts in Boise before a backup generator be brought in. Although a plan that shortens
outages would be ideal, Staff has been unable to identify one that is safe, feasible, and can be
implemented at little or no cost. If the Commission chooses to establish a maximum response
time, the Commission should also address what constitutes an "adequate response." Staff
believes that there could be a substantial difference of opinion on this matter.
Tariff Clarification
Customers have raised questions regarding when Atlanta Power may assess connection
and reconnection fees. The Commission increased connection and reconnection fees for
customers in Case No. ATL-93-1. Customers who closed accounts for more than 30 days
were assessed reconnection fees of $200. This rate was established as an incentive for seasonal
and permanent customers to stay connected during winter and contribute to the electrical system
costs. O. N. 24925 at 9. The connection fee for new customers and customers disconnected for
30 days or less is $25.
Staff is concerned that a former customer may apply for service under a different name
when requesting connection in order to avoid paying the high reconnection fees. Staff intends to
ADDITIONAL STAFF COMMENTS JULY 22, 2003
work with the Company to revise and clarify the conditions under which connection and
reconnection fees may be applied.
ST AFF RECOMMENDATIONS
As stated in our prior comments, Staff recommends that Atlanta Power continue
to bring in a leased generator for a multi-day outage rather than increase rates to
purchase a new one.
Staff recommends the community of Atlanta pursue state and/or federal grants to
fund the purchase of a backup generator.
Staff continues to recommend the Company file its past-due annual reports as
required by the Idaho Code and as proposed by the Commission.
Staff recommends that it work with the Company to revise the Company s tariff.
Specifically, Staff recommends clarification of the conditions under which
connection and reconnection fees would apply. Any proposed tariff revisions
resulting from Staff s discussions with the Company will be submitted to the
Commission for its r~yiew and approval prior to implementation.
;..;-
Respectively submitted this 1.Jday of July 2003.
Technical Staff: Keith Hessing
Patricia Harms
Carol Cooper
i:umisc:comments/atleO3.!lnkhphcc additional
ADDITIONAL STAFF COMMENTS JULY 22, 2003
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 22ND DAY OF JULY 2003
SERVED THE FOREGOING ADDITIONAL COMMENTS OF THE COMMISSION
STAFF, IN CASE NO. ATL-03-, BY MAILING A COpy THEREOF, POSTAGE
PREP AID, TO THE FOLLOWING:
LYNN STEVENSON
ATLANTA POWER COMPANY
PO BOX 100
FAIRFIELD ID 83327-0100
CONLEY WARD
GIVENS PURSLEY
PO BOX 2720
BOISE ID 83701-2720
~ Jo~s d~y
CERTIFICATE OF SERVICE
IDAHO
PUBLIC UTiliTIES
com miSSion
Dirk Kempthome, Governor
o. Box 83720, Boise, Idaho 83720-0074
Paul Kjellander, President
Marsha H. Smith, Commissioner
Dennis S. Hansen, Commissioner
June 18 2003
Atlanta Power Customers
Senator Fred Kennedy
Interested Persons
Atlanta Power Company
To address questions and concerns posed by several Atlanta Power Company customers
the Idaho Public Utilities Commission Staff will hold a workshop at the Atlanta Elementary
School on SATURDAY, JUNE 28, 2003 AT 1:00 P.
Staff has prepared the following response to written customer questions received by the
Commission thus far. We hope you will have the opportunity to review this document prior to
the workshop so that Staff can answer any follow-up questions you may have in person.
Following the workshop, the Commission will accept additional written comments in this
docket until Tuesday, July 22nd. Once this date has passed, the Commission will likely make a
final decision on the merits of the case. Individuals who are aggrieved by the Commission
final decision may seek reconsideration by filing a petition with the Commission within 21 days
of the final Order. Petitions for reconsideration must set forth the reasons why the decision is
erroneous and what argument the petitioner will offer if reconsideration is granted. Idaho Code
9 61-626.
We hope to see you at the public workshop. Should you need to contact us prior to the
public workshop, please call the Commission at (208) 334-0300 or toll free at (800) 432-0369,
Sincerely,
r?4Mcty dM-
Randy Lobb
Utilities Division Administrator
Idaho Public Utilities Commission Staff
Located at 472 West Washington Street, Boise, Idaho 83702
Telephone: (208) 334-0300 Facsimile: (208) 334-3762
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 1 of 20
PREFACE
Before we respond to the written questions of customers and interested parties, we
thought it might be helpful to provide some background information on the roles of the
Commission and its Staff. Following the preface, we organized Staffs responses by topic
address questions regarding procedure, accountinglbilling, service quality and non-compliance
Issues.
Purpose of the Idaho Public Utilities Commission:Under state law, the Idaho Public
Utilities Commission (IPUC) regulates Idaho s electric, gas, telecommunications and water
investor-owned utilities and makes decisions that are in the public interest. The Commission
must assure customers adequate service and set just, reasonable and sufficient rates.
The Commission does not regulate publicly owned, municipal or cooperative utilities. In
setting rates, the Commission must consider the needs of both the utility and its customers.
Customers must be ensured of paying a reasonable rate, and utilities must be allowed to recover
their legitimate costs of serving their customers and earning a fair rate of return. Commission
operations are funded by fees assessed on the utilities and railroads it regulates.
Authority vested with the Commission:The IPUC has quasi-legislative, quasi-judicial
and 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 similar to court orders and may have its decisions
appealed to the Idaho Supreme Court. In its executive capacity, the Commission enforces state
laws affecting the utility and rail industries.
Commission Composition:The governor appoints the three commissioners who are
confirmed 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.
Role of the Commission Staff:To help ensure its decisions are fair and workable, the
Commission employs a staff that includes engineers, rate analysts, attorneys, accountants
investigators, and economists. Other than being a possible customer of a regulated utility, these
Staff professionals have no stake in the outcome of the cases in which they participate. Like the
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 2 of 20
PAGE 1 of 19
Commissioners, Staff members are not allowed to hold any stock, interest or position in utilities
regulated by the Commission.
The Staff analyzes each petition, complaint, rate increase request or application received
by the Commission. In formal Commission proceedings, 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. Although Staffs professional
experts make recommendations, the three Commissioners ultimately decide the outcome of each
case.
STAFF RESPONSE TO CUSTOMER QUESTIONS
PROCEDURE
Question No.1: The original petition requested a "formal investigation.Why did
the Commission proceed informally and without an explanation?
Staff Response to Question No.1: Idaho law permits the Commission to use its
discretion to determine whether formal or informal procedure is appropriate for a particular case.
See IDAPA 31.01.01.022. Commission Rule 22 encourages the use of informal proceedings to
settle or determine cases. The informal nature of such proceedings do not diminish their
importance, but merely offer a different method of obtaining the evidence necessary for the
Commission to make an informed decision. Informal proceedings do not generally substitute for
formal proceedings, do not exhaust administrative remedies, and do not prejudice the right of
interested persons to present the matter formally to the Commission. See ID AP A 31.01.01.024.
A significant advantage to using informal procedure is that it allows the Commission
Staff to gather information, give advice or assistance, and propose possible resolutions without
burdening ratepayers with the additional expense that typically accompanies formal procedure.
Because they make rulings much like judges do in court, the Commissioners cannot directly
answer customer questions regarding pending cases. Consequently, the Commission scheduled
the public workshop in Atlanta to allow customers the opportunity to have their questions
answered by Staff.
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 3 of 20
PAGE 2 of 19
Question No.2: Why did it take over 27'2 years for Staff to complete its
investigation?
Staff Response to Question No.2: In response to the customers' petition, Staff
proposed to audit the Company, identify potential improvements and associated costs, and
survey customers. The audit required more time than originally estimated because records had to
be located, organized and verified. Most significantly, an unexpected spike in western electric
wholesale market prices dramatically increased Staff s overall workload and delayed completion
of the investigation. Staffs workload also included cases with statutory deadlines that took
precedence over other cases. Although the result of the Atlanta Power investigation was
substantially delayed, the Staff continued to work with Atlanta Power Company on three areas of
concern and made progress in resolving them as described in Staffs report of March 6 2003.
Question No.3: Why were customers only given 30 days to respond to the Proposed
Order?
Staff Response to Question No.3: The Commission determined that 21 days would be
sufficient to review and comment on the proposed Order. See IDAPA 31.01.01.312. If
reviewers needed more time to file comments, they could request additional time in writing as
Atlanta Power Company did on May 7, 2003. The Commission has liberally granted such
requests in the past. In any event, Commission Order No. 29257 has extended the comment
period in this case to July 22 2003.
Question No. 4a: Why were only six customers of record identified as having signed
the original petition?
Staff Response to Question No. 4a: Staff compared names on the petition with
Company customer records and matched six names as appearing on both lists.
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 4 of 20
PAGE 3 of19
Question No. 4b: Is there a certain number of people who must complain for the
PUC to regulate the utility?
Staff Response to Question No. 4b: All Idaho investor-owned electric utilities are
regulated by the Idaho Public Utilities Commission according to statute regardless of the number
of complaints filed against the utility.
Question No. 4c: Can a single person file a formal complaint regarding service?
What regulation or law prohibits a person from protesting to the regulatory agency about
the lack of electricity that has been paid for?
Staff Response to Question No. 4c: Customers do not pay for electricity that they do
not receive because electricity that is not used is not recorded on the customer s meter. Any
person may file a complaint against regulated utilities regarding service. Idaho Code 9 61-612
states that any person may file a written complaint that sets forth "any act or thing done or
omitted to be done by any public utility including any alleged violation of the law or
Commission Order or rule. However, this statute prevents the Commission (except upon its own
motion) from entertaining complaints from non-governmental entities as to the "reasonableness
of any rate or charges unless the complaint is signed by at least 25 current or prospective
consumers or purchasers.
Question No.5: Why was it stated in Staff's response to Senator Kennedy that the
delay was caused by difficulty reaching the people in Atlanta?
Staff Response to Question No.5: Staff s letter to Senator Kennedy stated
, "
The delay
in completing the investigation was at least in part due to the difficulty in reaching both
customers and the Company to conduct the survey and obtain financial ,and operational
information." Staffs customer survey was designed as a telephone survey initially. An effort to
contact a few customers on two different occasions ended with no contacts. Following that a
mailing list was obtained from Atlanta Power and a written survey form was prepared. The
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 5 of 20
PAGE 4 of 19
change in plans required additional time and lengthened the process.
ACCOUNTING/BILLING
Question No. 6a: Why has Atlanta Power been allowed to continue its improper
accounting practices since June 4, 1993?
Staff Response to Question No. 6a: Commission Staff has worked with Atlanta Power
Company for the last decade to improve its accounting practices. The Commission recognizes
that regulatory compliance has a financial cost that can be particularly burdensome for utilities
that have few ratepayers over whom these costs can be spread. Moreover, Atlanta Power is a
small utility with no full-time employees and limited resources. Consequently, Atlanta Power
does not possess the same level of accounting proficiencies and resources as do larger, publicly
traded utilities that employ a staff dedicated to regulatory compliance. See also Staff response to
Question No. 19a regarding compliance with Commission Orders.
Question No. 6b: Why has Atlanta Power not been required to file all annual
reports since 1997?
Staff Response to Question No. 6b: With regard to annual reports Idaho Code S 61-
405 makes allowances for small-scale utilities that "serve a small community of persons" by .
allowing the Commission to prescribe "an abbreviated or modified" format. This statute would
allow the Commission to modify Atlanta Power s annual reporting requirement to provide the
name of the utility, the address of its office, a list of its officers, the number of customers, the
number of kilowatt hours sold, and the Company s estimated revenue. The Commission Staff
already acquired this information for 1998 and 1999 as part of its investigation. No benefit
would be gained from having the utility (and customers) expend resources filing pre-2000
reports when those resources that could be better applied to filing annual reports for 2000 2001
and 2002. In recognizing this fact, the Commission seeks to maximize customer resources (by
avoiding unnecessary accountant fees) while maintaining comprehensive regulatory oversight.
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 6 of 20
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-PAGE 5 of 19
Question No. 7a: How can Staff accurately audit the Company when the Company
has not complied with previous Orders?
Staff Response to Question No. 7a: Staff is able to audit the Company by reviewing its
records including its bank statements, returned checks, and invoices. Because some records were
not located at the Company s office, Staff obtained financial information directly from some
organizations with which the Company had a financial relationship.
Question No. 7b: Why isn t Staff willing to perform its statutory and regulatory
duties?
Staff Response to Question No. 7b: Staff has performed its statutory and regulatory
duties by gathering facts in the current investigation by means of a Company audit and customer
survey. Staff has made recommendations to both the Company and the Idaho Public Utilities
Commission for their consideration. Furthermore, Staff continues to respond to customer
questions and concerns by telephone, letter, and in person at the public workshop on June 28
2003
Question No. 8a: Atlanta Power earned $3,000 more than it should have in 1999
using improper methods. Why were there over-earnings in 1999? If 1999 was a "test
year " how do other years compare?
Staff Response to Question No. 8a: Staffs most recent audit of the Company compared
the revenues earned in 1999 using the current rate structure established in 1993 with the
Company s expenses and allowed return on investment for 1999. Revenues exceeded expenses
and return on investment by approximately $3 000. However, no provision existed for backup
generator rental costs in those expenses. Based upon invoices reviewed for such rentals
generator rental and fuel costs in a year can be more than $3 000. Additionally, there were no
accounting expenses incurred for filing annual reports in the 1999 expenses. Both these
expenses are normal operating expenses and if incurred, would significantly reduce and probably
eliminate the Company s excess of revenue over expenses.
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
Attachment A
Case No. ATL-03-
Staff Comments
7/22/03 Page 7 of 20
PAGE 6 of19
Staff s most recent audit tested Company records for the year 1999. The previous audit
of test year 1997 calculated a revenue shortfall of approximately $10 000. A "revenue shortfall"
occurs when the amount of revenue collected by the Company falls short of the Company
expenses and allowed return on investment for the year audited. It can also be referred to as an
earnings deficit.
Staffs most recent audit also recommended improvements to the Company
recordkeeping. The improvements include performing a periodic inventory of assets, issuing
checks sequentially, performing bank statement reconciliations in a timely manner, and obtaining
and retaining documentation supporting each financial transaction.
Question No. 8b: How much has Atlanta Power over-charged its customers from
1999 to 2003? All overpayments made should be refunded to customers so the town could
use the money to fund its own new generator.
Staff Response to Question No. 8b: The context of this question appears to imply that
the over-recovery estimated in the audit of test year 1999 results from overcharges to the
Company s customers. This is not the case. Over-recovery of normalized costs (average
expenses and allowable return on investment) when approved rates are correctly charged does
not constitute an overcharge. Over- or under-recoveries are kept or absorbed by the Company as
explained in Staff response to Question No. 10. Over- or undercharges result from the improper
application of Commission-approved rates or the application of an incorrect rate and can be
corrected back in time for a period of up to three years. No overcharges were identified during
the audit.
Question No.9: How and why can the PUC support the high rates charged without
proper documentation?
Staff Response to Question No.9: The most recent Order from the Idaho Public
Utilities Commission that established rates for the Atlanta Power Company was Order No. 24925
in Case No. ATL-93-1 dated June 4, 1993. The Commission, based upon the evidentiary
record at that time, established the Company s rates. Rates are established to provide a regulated
utility with sufficient revenue to pay its expenses and earn a return on the cost of investor-
supplied property (i., investment) used in providing service to the public. The Company
Attachment A
Case No. ATL-03-
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ST AFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
revenue, expenses and investment in property change over time. Staff s most recent audit
compared the revenues earned in 1999 using the current rate structure established in 1993 with
the Company s expenses and allowed return on investment for 1999. To confirm transactions
included within the Company s expenses and assets, the audit included review of the Company
bank statements, returned checks, invoices for numerous years including the test and subsequent
years, and information from organizations with which the Company had a financial relationship.
The audit results noted in Staff response to Question No. 8a show that current rates come very
close to recovering current costs. Therefore, it is Staff s position that a general rate case to
increase or decrease current rates is not presently justified.
Question No. 10: Has the Schedule 5 temporary surcharge of 4.5 cents/kWh been
removed from customer rates (O.N. 24925 & 23367)? If not, can any overpayments
resulting from its continuation after the loan was paid off be returned to customers?
Staff Response to Question No. 10: Schedule 5 'of Atlanta Power s tariff was cancelled
June 15 , 1993 when the Commission approved new rates in Atlanta Power s general rate case.
At that time any remaining Kirby Dam costs were included in the Company s general rates
which will stay in place until the Commission revises them in a future case. Those rates are still
in effect today. The theory is that utility costs that expire are generally replaced by new costs
that are also recoverable from customers. To verify that this theory is holding true, the
Commission Staff audits each regulated utility from time to time as it recently did during the
informal review of this complaint. As noted previously, the audit results show that current rates
come very close to recovering current costs. Therefore, it is Staffs position that a general rate
case to increase or decrease current rates is not presently justified. Although many if not all of
the costs to be recovered through the Schedule 5 temporary surcharge have been paid in full
other costs associated with a new hydro generator and Federal Energy Regulatory Commission
(FERC) relicensing have taken their place.
Laws governing permanent rates established by the appropriate regulatory authority
prohibit customer refunds or surcharges for under- or over-collections of amounts paid or
collected through the proper application of approved rates in past time periods. In short, this
retroactive ratemaking" is not legal. In the current context this means that, hypothetically
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STAFF RESPONSE TO CUSTOMER
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even if the Staff s audit showed that Atlanta Power had over-recovered $20 000 in the 1999 test
year, refunds could not be ordered. Likewise if the Company had under-collected its costs by
$20 000 the under-collection could not be recovered from customers either. If either one of these
hypothetical situations occurred, new rates to recover the correct amount would possibly be
established and put in place going forward.
Question No. 11 a: Has the note to IDWR for $57,000 for installation of a hydraulic
gate on top of the dam been paid off?
Staff Response to Question No. lIa: Yes, it has.
Question No. lIb: There was no footnote in the Order to remind Atlanta Power
that rates should be adjusted upon satisfaction of the note to IDWR.
Staff Response to Question No. lIb: Although Staff recommended in O.N. 24925 that
rates be adjusted upon satisfaction of the note to Idaho Department of Water Resources, the
Commission did not order it. Therefore, there have been no overpayments because the rates
were made permanent. This was not an oversight but rather recognition of expected cost
replacement as described in Staffs response to Question No. 10.
Question No. 11 c: What are the true costs of generating power at Kirby Dam?
Staff Response to Question No. lIc: The Company s costs for providing power to
customers include operation, maintenance and general administrative expenses plus depreciation
and taxes. Rates are based on these annual costs and an allowable rate of return on the
Company s investment in assets to provide service. In Staffs audit of the year 1999, the
combination of these annual costs (called a company s "revenue requirement") equaled
approximately $57 000.
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Case No. ATL-03-
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STAFF RESPONSE TO CUSTOMER
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Question No. 12: Atlanta Power s rates are very high and seem to be excessive
compared to other hydro-powered companies.
Staff Response to Question No. 12: Atlanta Power s rates in terms of average
cents/kWh are high relative to all electric utilities with which the Staff is familiar, regardless of
whether their main source of power is hydropower. The main reason for the high rates is that
there are only 65 customers to share the Company s costs. Thus, few share the fixed costs of
providing service and economies of scale cannot be captured. As pointed out in customer
comments, Atlanta Power s rates may be the highest in the nation. However, it does not follow
that the highest rates in the nation should lead to the best service quality in the nation as some
would imply. It simply means that the cost per kilowatt-hour of providing the existing level
service is the highest in the nation. A higher level of service would likely increase customer
rates.
Question No. 13a: Atlanta Power did not take care ofthe backup generator it had
and left it out in the weather with no preventive maintenance.
Response to Question No. 13a: The backup generator was used when Atlanta Power
acquired it. It was surplus military equipment and designed to withstand weather conditions
without a separate enclosure.
Question No. 13b: Why should customers have to pay to buy a new one when
Atlanta Power didn t take care of the first one?
Staff Response to Question No.13b: Generators get old and wear out. Once this
occurs, they can be rebuilt for a price so that they can continue to supply service. Newer
generators are more fuel efficient and can be more economical to operate. It is an economic
decision to rebuild, purchase or lease a generator.
Question No. 13c: How many hours did the old generator have on it and how many
hours did the PUC expect it to last?
Staff Response to Question No. 13c: The PUC Staff does not know how many hours
the old generator operated either before or after it was purchased by Atlanta Power. However
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
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there was a period during which it was expected to operate. When its costs were first included in
rates, it was assigned an estimated remaining life of fifteen years. That estimated economic life
ended in 2001 when the generator was fully depreciated. All costs associated with the generator
were removed from the 1999 test year in the Staff audit discussed in Staff response to Question
No.8a.
SERVICE QUALITY
Question No. 14a: Why weren t customers personally notified of the phone number
for customers to call for information when there is an outage?
Staff Response to Question No. 14a: The telephone number was included in the
Commission s proposed Order that was sent to all customers on April 10, 2003. The number is
208-864-2228.
Question No. 14b: What good is a tape-recorded message machine when scheduled
maintenance occurs if customers don t know when to call the number?
Staff Response to Question No. 14b: It is a simple matter to call the number. In Idaho
Power Company s service territory in Boise, most planned outages are published in the
newspaper. Customers must read the newspaper to be aware of scheduled outages. Although it
is possible to notify customers individually, there is an associated cost. In general, increased
utility costs are paid with increased utility rates. The telephone information system implemented
by Atlanta Power also works well for people who do not live in Atlanta and who want to know
the status of the power system before they travel to Atlanta. The telephone messaging system is
a low cost solution to some customer communication concerns for a utility with no full time
employees.
Question No. 15a: Who is the third person that lives in Atlanta who can assist with
system problems?
Staff Response to Question No. 15a: It is Staffs understanding that recently a third
person, Randy Nye, who lives in Atlanta and has done work for Atlanta Power on a contract
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STAFF RESPONSE TO CUSTOMER
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basis, will assist with system problems. Lynn Stevenson, who does not live in Atlanta, and Dave
Gill, who does live in Atlanta, do most of Atlanta Power s maintenance and repair.
Question No. 15b: Has this person been adequately trained and do they have
authority to really fix problems?
Staff Response to Question No. 15b: To minimize training costs that would be passed
on to customers, experience is gained on the job. Whether or not a person is authorized to repair
a particular problem depends on the problem because different problems may require different
kinds of expertise.
Question No. 16a: The fact that nearly a third of Atlanta Power customers own
generators is not an excuse for Atlanta Power to provide poor service to paying customers.
Customers need and deserve a backup generator due to the system s extended outages.
Staff Response to Question No. 16a: A cost-effective solution to the problems voiced
by Atlanta Power customers in the customer survey, is for individual customers to own their own
small generators. This would reduce concerns about food spoiling in the refrigerator due to loss
of electricity, pipes freezing due to lack of electric heat, whether Atlanta Power will operate the
diesel-powered backup generator all night, or when the system may be fixed. Approximately
one-third of Atlanta Power s customers have adopted this solution. Other Atlanta Power
customers that use propane for refrigeration and backup lighting and heat essentially gain the
same peace of mind without a backup generator.
Atlanta Power s current rates pay for a central power supply system with a single hydro-
powered generator that occasionally fails, no full-time employees, a few part-time employees
and a distribution system with some components that are more than 100 years old. All of these
factors that contribute to reliability problems can be improved for a price -- a price that the
beneficiaries of the improvements, Atlanta Power customers, should and would be required to
pay. Atlanta Power s rates are already high and customers, almost without exception, are
opposed to higher rates. The Staff is working with the Company to facilitate low-cost
improvements that by customer mandate do not include a system backup generator.
STAFF RESPONSE TO CUSTOMER
QUESTIONS; CASE NO. ATL-03-
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Question No. 16b: Customers pay a service fee every month. Is that the case in any
other part of the U.
Staff Response to Question No. 16b: It is common in the United States for electric
utility customers to pay a monthly fixed charge in addition to an energy-based charge. That
monthly fixed charge can be called a "service fee " a "customer charge " a "customer minimum
charge" or a number of other things. It provides revenue to the utility company to pay a portion
of its costs of providing service to customers. Atlanta Power s monthly fixed charge is very high
for small, residential customers as compared to other utilities. The rate is designed this way
because the great majority of system operating costs do not vary with energy usage. These costs
remain the same whether or not customers use energy. Therefore, customers pay them even
when no energy is consumed.
Question No. 17a: Is the PUC going to place a time limit on how long Atlanta Power
customers can be without power before a backup generator is required to be in operation?
Staff Response to Question No. 17a: In its report to the Commission, the Staff
proposed that Atlanta Power bring in a backup generator for a system problem after the problem
has been diagnosed and only when repair parts will take longer than a day to obtain. This
recommendation does not limit the time required to diagnose the problem. It also does not limit
the number of times a problem can be diagnosed and the parts ordered for next day delivery
when the installed parts do not completely solve the problem. It is Staffs observation that this is
the way Atlanta Power currently operates. If ordering parts takes a day and bringing in a
generator takes a day, the Company s time and the ratepayers' dollar is better spent waiting for
parts.
Atlanta Power has incentive to keep its system operating because the Company makes
money by selling electricity. Staff made this recommendation to the Commission even though
Atlanta Power customers may be without power for a time because forty-nine of fifty Atlanta
Power customers who responded to Commission Staff s survey indicated that they were not
willing to pay increased rates to cover the costs of a system backup generator. That is a clear
mandate from the people who would have to pay increased rates to cover the costs. Unlike
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purchasing a new generator, renting a backup generator when needed will minimize costs and
help keep rates lower.
Question No. 17b: Will the PUC enforce this time limit?
Staff Response to Question No. 17b: Ifthe Commission were to establish a time limit
for bringing in a backup generator in an outage situation, it would do so because it believed that
having the time limit was in the public interest. In this particular case, it would arguably be in
the public interest if customers wanted a leased generator brought in within a specified amount
oftime and if the Company was reimbursed for its costs of so doing. The Commission may
enforce such a time limit by levying fines and/or seeking civil or criminal judicial remedies if
doing so remained in the public interest. A fine mayor may not cause the utility company to
bring in a backup generator.
NON-COMPLIANCE WITH ORDERS AND RULES
Question No. 18; Why does Staff continue to allow Mr. Stevenson to say he will do
something and then not follow through or allow him to be seriously late in doing so?
Staff Response to Question No. 18: The Commission Staff has no authority to order
Atlanta Power Company to do anything. The three Commissioners of the Idaho Public Utilities
Commission make the regulatory decisions and issue Orders. See also Staff response to
Question No. 19.
Question No. 19a: Why is the PUC so reluctant to enforce its own regulations when
Atlanta Power continues to violate Commission Orders?
Staff Response to Question No. 19a: It is true that Atlanta Power Company has not
done some of the things that the Commission has ordered it to do. It is also true that the
Commission has not tried to enforce its Orders by imposing fines on Atlanta Power Company.
However, the Commission is actively supervising the Company by having Staff work with
Atlanta Power to resolve identified customer concerns.
STAFF RESPONSE TO CUSTOMER
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The Commission s primary responsibility is to make regulatory decisions that are in the
public interest. When Atlanta Power Company chose to not comply with portions of
Commission Orders the Commission was forced to make a decision: fine Atlanta Power
Company to encourage compliance or not fine the Company. Fining the Company would have
two possible outcomes - either the Company pays the fine and comes into compliance with the
Commission s Orders or it goes out of business altogether. Staff believes that the Commission
, has not found it in the public interest to have Atlanta Power Company go out of business for its
noncompliance thus far and that there is a real possibility that would be the result. If Atlanta
Power ceased to operate, Staff does not believe there are alternative central power providers or
any other economically viable power alternatives that can serve Atlanta. Therefore, the
Commission has chosen to not impose fines but to allow its Staff to work with Atlanta Power
Company to bring about system improvements. This process, which has been going on for much
longer than the last two and one-half years, provides incentive to Atlanta Power Company in two
ways. First, the costs of complying with Commission Orders may be recovered through rates
and second, if acceptable progress does not occur the Commission can still fine Atlanta Power
and let the chips fall where they may.
Question No. 19b: Outages have been unnecessarily lengthy and local Atlanta
Power employees are not always available to resolve problems or they have other priorities.
What ma~es Staff believe that Atlanta Power will follow any Order that is issued?
Staff Response to Question No. 19b: Atlanta Power Company is a business with people
and money resources that are much more limited than other large electric utilities regulated by
the Commission. Staff believes that, subject to the availability of time and money, Atlanta
Power will make business decisions that are in its own best interest. Staff believes that the
service improvements ordered by the Commission make good business sense and that over time
Atlanta Power can be convinced to do them because it is in the Company s best interest to
minimize costs, improve reliability at a reasonable cost and operate more efficiently.
ST AFF RESPONSE TO CUSTOMER
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Question No. 20: When a company, according to Staff's records, is willing to incur
late fees and interest of more than $35,000, it appears that they could and would pay a
$10,000 fine for noncompliance with your Orders.
Staff Response to Question No. 20: Staffs audit did not identify $35 000 oflate fees or
interest related to past due amounts. Staffs audit identified approximately $26 000 of unpaid
interest associated with past due amounts for legal costs and services to acquire a FERC license.
Like other late fees, these costs are excluded from the Company s revenue requirement (see Staff
response to Question No. 11) for the purposes of establishing rates. It is Staffs understanding
that the Company reached an agreement with its legal counsel to waive the interest on its past
due amounts. Additionally, the imposition of a fine would not guarantee the desired result. See
Staff response to Question No. 19.
Question No. 21: How could FERC have issued a 30-year license without first
consulting with the PUC regarding the credibility of the current license holder?
Staff Response to Question No. 21: The FERC informs the public at large of its cases
and decisions by publishing notification in the Federal Register. All interested parties are
expected to learn of the federal government's activities by reading the Federal Register. The
IPUC knew of the Kirby Dam relicensing process, but had no reason to oppose the license
renewal because it was and still is in the public interest to have a central power supplier in
Atlanta.
Question No. 22: Is there a conflict in Atlanta Power Tariff No.5, page 4 of 4,
Schedule 4 with IDAPA 31.21.01 Rule 011?
Staff Response to Question No. 22: There is no conflict with Rule 11 of the Utility
Customer Relation Rules (UCRR),which addresses conflict with utility tariffs. This rule
provides that customers ' rights (e.g. right to file a complaint, receive notification prior to
disconnect, etc.) cannot be denied or restricted by utility tariffs.
The definition of a customer in UCRR 005.02 is provided for purposes of interpreting the
Utility Customer Relations Rules. This definition does not necessarily apply to any utility tariffs
or interpretation thereof. The Commission may approve a utility tariff that provides for a
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definition of customer that differs from that contained in the UCRR. Atlanta Power Tariff No. 5
page 4 of 4, Schedule 4 was part of the overall rate design approved by the Commission in Case
No. ATL-93-1. The Commission intentionally approved the reconnection charge of$200 as
an incentive for seasonal and permanent customers to stay connected to the electrical system
during the winter months. Absent the year-round income, rates would have been set even higher
than they were. The Commission has not received any complaints in the past three years
regarding the reconnection charge in Schedule 4.
Question No. 23: Is it true that customers should not be asked or required by
Atlanta Power to fund new transformers?
Staff Response to Question No. 23: When new residential or small business customers
are connected to the Atlanta Power system, the Company must provide the transformer.
However, the Company s costs to provide the new transformer may be recovered in the
Company s general rates.
Question No. 24: Please provide a list of all PUC Orders that have not been
complied with.
Staff Response to Question No. 24: The Commission does not maintain a list of Orders
that utilities have not complied with. All Commission Orders are available for public review
should someone desire to assess overall compliance.
Question No. 25a: Please provide a list of Atlanta Power investors and stockholders.
Staff Response to Question No. 25a: There is no requirement that specific investor or
shareholder information be reported to the Idaho Public Utilities Commission. As a result, this
information is not available.
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Question No. 25b: Is there some kind of conflict of interest that is impeding the
PUC from doing its duties as a regulatory agency?
Staff Response to Question No. 25b: The Commissioners are not allowed to have
conflicts of interest that would impede or influence the exercise of their regulatory duties. Idaho
Code ~ 61-207 requires Commissioners to take and subscribe to an oath that they will have no
interest"
. . .
directly or indirectly in any public utility embraced within the provisions of this act;
or any of its stocks, bonds, mortgages, securities or earnings.
Question No. 26: When will the next review of the Company occur and what is the
follow-up procedure to ensure that Atlanta Power accomplishes everything the
Commission requires?
Staff Response to Question No. 26: Based upon the nature of this investigation, Staff
will continue to monitor and review Company activities and will report back to the Commission
as circumstances warrant.
Question No. 27: What is the timeline for Atlanta Power to do a preventive
maintenance plan, and will the PUC enforce it?
Staff Response to Question No. 27: No current timeline exists. Preventative
maintenance is one of the areas that the Staff will continue to work with the Company to
accomplish. Preventive maintenance, as well as other improvements, is subject to Atlanta Power
resource availability. If the Commission required and obtained a preventive maintenance plan
from Atlanta Power Company, it would attempt to enforce the plan if and when it found such
actions to be in the public interest.
Question No. 28: With regard to Atlanta Power Tariff No. 1 , Sheet No. 12 Master
Metering Standards, Atlanta Power appears to discriminate in favor of some customers
and against others on a regular basis.
Staff Response to Question No. 28: Staff believes that this question concerns rooms
that are available for rent in Atlanta Power s service territory. The question is whether or not
such rooms should be metered through a single meter (master metered) or whether each room or
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dwelling unit should be individually metered. The difference is that if the rooms are individually
metered, each room will pay a service fee that would bring more revenue to Atlanta Power
Company. The Commission s master metering rules draw a distinction between dwelling units
available for rent on monthly (or longer basis) and dwelling units available to rent for a shorter
period of time. It is Staff s understanding that the units in question are available for rent by the
day and week, as well as by the month. Atlanta Power has not required that the units be
individually metered, which is consistent with the treatment of motels in Boise that rent by the
day, week or month. The Company s interpretation and practice is not discriminatory as long as
it does not require individual metering of other similarly situated customers.
ALTERNATE SOLUTION
Question No. 29: For the $60,000 that townspeople pay for electricity per year, the
town can do better. If we had access to the lines in town, we could use a modern diesel
generator that received proper maintenance and generate our own power. Such a
generator could provide 24-hour power, seven days a week, for less than it currently costs
to generate hydropower through Atlanta Power.
A new generator would cost between $30,000-$35 000. Fuel would cost about $2 per
gallon, and the generator would use about 1 VI gallons per hour. At a cost of about $17 000-
$20,000, $10,000 would remain for miscellaneous expenses as well as labor to service and
operate the equipment.
Staff Response to Question No. 29: The 150 kW Cummins generator that Atlanta
Power leases and brings in from time to time consumes 7 to 9 gallons per hour of diesel fuel
depending upon the actual load placed on the generator. The annual cost of fuel for such a
generator operated year-round is (7 gal/hr)*(8760 hr)*(2 $/gal) = $ 122 640/year. This cost is
twice the annual revenue that Atlanta Power collects from its customers. Rates would have to
increase to twice what they currently are to pay just the cost of fuel. This would not include the
many other non-fuel costs that must also be paid each year.
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