20080523Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
DATE:MAY 20, 2008
SUBJECT:CASE NO. A TL-08-02 (Atlanta Power)
GENERAL RATE CASE AND REQUEST FOR EMERGENCY
SURCHARGE
On May 1 , 2008, Atlanta Power Company (Atlanta Power; Company) filed an Application
with the Idaho Public Utilities Commission (Commission) requesting a general rate increase in the
Company s basic tariff rates for electric service together with a request for an emergency surcharge.
Atlanta Power operates pursuant to Certificate of Convenience and Necessity No. 236. Atlanta
Power is located in Elmore County and provides electric service to approximately 75 residential and
commercial customers in Atlanta.
Emergency Surcharge
Atlanta requests that the Commission declare an emergency and approve a surcharge on
existing rates of 54.2% effective June 1 2008.
By way of background, Atlanta Power states the following:
By Order No. 30417 dated August 29 2007 in Case No. ATL-07-, the
Idaho Public Utilities Commission authorized the Company to defer on its
accounting records, the extraordinary costs incurred in the year 2007
associated with the failure of Atlanta Power s hydroelectric turbine. That
Order recognized that the Company would be filing additional applications
seeking recovery of the deferred extraordinary costs.
By Order No. 30511 dated March 3 , 2008 in Case No. ATL-08-, the
Idaho Public Utilities Commission authorized the Company to incur debt in
the amount of $110 000. The Order recognized the need for the Company to
acquire cash to pay the extraordinary costs deferred pursuant to Order No.
DECISION MEMORANDUM
30417. Atlanta Power has determined that its loan repayment obligations
including loans from the Company s owners, require monthly payments of
088.66 per month for the first 12 months and $2 206.01 per month for an
additional 72 months. To fully recover these repayment obligations over the
term of the two notes comprising the $110 000 incurred indebtedness
Atlanta Power contends that the Company requires a surcharge on current
rates of 54.2% for the first year and 38.71 % for the remaining six years (or a
surcharge of 33.74% for the first year and 24.1 % for the remaining six years
at the tariff rates proposed in the Company s Application).
General Rate Case
Atlanta Power is requesting an increase in its electric rate schedules to increase revenues
by 60.62%. The Company s current rates were approved by the Commission in Order No. 24925
effective June 15 , 1993. Nearly 15 years have elapsed since those rates were established. Escalating
those rates to produce the rates proposed in this Application, the Company states, produces an annual
growth rate of only 3.2%.The Company is proposing numerous changes in the way it bills
customers for their electric consumption.
The Company proposes that the Schedule 1 residential base rate be increased from $81
per month to $83 per month (an increase of2.5%), the 500 kWh free allowance be eliminated and all
consumption billed at $.10 per kWh, an increase of 100% from the current $.05 per kWh rate.
The Company also proposes that the Schedule 2 commercial base rate be increased from
$144 per month to $165 per month (14.6% increase), the 500 kWh free allowance be eliminated and
all consumption being billed at $.20 per kWh, an increase of 11.1 % from the current $.18 per kWh
rate.
The Company further proposes to eliminate its Schedule 3 seasonal (weekend or part-time
use) customer rate schedule. Customers under this rate would be moved to applicable residential or
commercial rate schedules. The current seasonal residential base rate would change from $35 per
month to $83 per month (137%) and the commodity rate would decrease by 52% from $.21 per kWh
to $.10 per kWh. The seasonal commercial base rate would increase from $65 per month to $165 per
month (154%) and the commodity rate would decrease by 5% from $.21 per kWh to $.20 per kWh.
The Company proposes to modify the language in its Rule 12b (Limitation of Use) to
clarify that the $10 per month charge approved by the Commission is only for temporary connections
of recreational types of vehicles (campers motor homes and trailers) connected to the service of a
regular customer s electrical connection. All such piggyback connections served through another
DECISION MEMORANDUM
customer s meter for a period greater than 30 days annually under the Company s proposal will be
treated as additional residential or commercial service. The effect of this clarification and language
is to increase the charge for such a connection from $10 to $82 (820%) per month if connected to a
residential service and to $165 (1,650%) if connected to a commercial service.
Atlanta Power proposes to change its Schedule 4 reconnection charges for residential
customers who voluntarily or involuntarily disconnect from the system for a period of more than 30
days from $200 to $335 (approximately 4 times the monthly base rate). Similarly, the Company
proposes to change the reconnection charge for commercial customers who voluntarily or
involuntarily disconnect from the system for a period of more than 30 days from $200 to $660
(approximately 4 times the monthly base rate). These changes, the Company contends, are necessary
to discourage customers from seasonally disconnecting from the system causing a loss of revenue to
the Company and resulting in upward pressure on rates to keep the Company viable.
Atlanta also proposes to add new fees that are not currently approved by the Commission.
The Company requests that the Commission approve a new $20 fee to reprocess and collect for
checks returned by any bank for any reason. The Company also requests that the Commission
authorize it to collect late fees of 12% per annum (1 % per month) on past due accounts.
COMMISSION DECISION
Staff recommends that Atlanta Power s requested emergency surcharge and increase in
rates and charges be suspended for a period of 30 days plus 5 months from the proposed June 1 , 2008
effective date. Idaho Code ~~ 61-622 and 61-623. Regarding the Company s request for emergency
surcharge, Staff recommends that an expedited schedule of Modified Procedure and a June 5, 2008
comment deadline be established. The full agenda decision meeting dates for June are June 9 and
June 30. Does the Commission agree with Staffs recommended procedure?
Scott Woodbury
Deputy Attorney General
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DECISION MEMORANDUM