2001212_ln.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
RANDY LOBB
DAVE SCHUNKE
DON HOWELL
RICK STERLING
BEV BARKER
TONYA CLARK
WORKING FILE

FROM: LISA NORDSTROM

DATE: FEBRUARY 12, 2001

RE: APPLICATION TO APPROVE A SERVICE TERRITORY AGREEMENT BETWEEN AVISTA AND CLEARWATER POWER COMPANY, CASE NO. AVU-E-01-3

On February 1, 2001, Avista filed an Application for approval of a service territory agreement between the Company and Clearwater Power Company. The Application notes that the Idaho Legislature amended portions of the Idaho Electric Supplier Stabilization Act (ESSA) in special session on December 8, 2000. In its special session, the Legislature enacted House Bill No. 1 (HB 1) which provides that all service agreements which allocate territory or customers be filed with the Commission. In particular, HB 1 amended Idaho Code § 61-333 and provides in pertinent part that
the commission, shall after notice and opportunity for hearing, review and approve or reject [such] contracts . . . between cooperatives and public utilities. . . . The commission shall approve such contracts only upon finding that the allocation of territories or consumers is in conformance with the provisions and purposes of this act.

Idaho Code § 61-333(1)(amended 2000).

HB 1 was effective on December 8, 2000 and will sunset (unless extended) on March 1, 2001. See HB 1, § 22. Legislation (HB 142) has been introduced in the Idaho House of Representatives to remove the sunset provision.
In its Application, Avista asserts that the service territory agreement is in conformance with the purposes of the ESSA. In addition, the Application also notes that “this agreement was negotiated in order to avoid litigation and settle a service territory issue between the parties.” Application at 2.
THE SETTLEMENT AGREEMENT
The settlement agreement submitted for the Commission’s review was executed on July 12, 1993. This agreement was reached after Clearwater filed a complaint against Washington Water Power Company (now known as Avista) in the Second Judicial District and later in the United States District Court in 1992. Clearwater alleged that Washington Water Power had violated the Electric Suppliers Stabilization Act by providing electrical service to an area commonly known as the Vista Addition and Vista Addition Subdivision (“Vista”) in the city of Moscow. After Washington Water Power filed a counterclaim, the parties settled the dispute under Idaho Code § 61-333, which authorizes contracts among electric suppliers to resolve or allocate territories between electrical suppliers.
In the settlement agreement, Washington Water Power and Clearwater split the electrical service customers in the area in and around the city of Moscow. First, Washington Water Power would have the exclusive right to continue to serve the area known as Vista. Agreement § 1. Second, Washington Water Power would exclusively serve the areas numbered 3 and 14 on Latah County Assessor map 10A. Id. § 2. However, Clearwater retained the exclusive right to serve those lots fronting the north boundary of the Robinson Lake Road right-of-way not to exceed 300 feet north of the road. Id. § 2. Third, Clearwater would exclusively serve the area number 2 and that portion of number 15 north of Robinson Lake Road on the attached map. Id. § 3. Fourth, Clearwater agreed to remove within 90 days the existing distribution service line on the southern boundary of the Vista subdivision from the end point east to the last distribution service pole then in use. Id. § 4. Finally, Washington Water Power agreed not to provide new service or new connections to Syringa Trailer Park, except for any new accounts or upgrades of existing accounts. Id. § 5. In doing so, Washington Water Power agreed that it would not provide new connections from the Syringa Trailer Park service line to the north of the common line between sections 10 and 15 of Range 5W, Township 39N. Id. § 5.
Although neither party admitted liability, they intended this Agreement to settle a disputed court case. Id. § 6. This settlement agreement does not contain provisions that address breach of the contract or other standard contract conditions. It should also be noted that at least one exhibit referred to in the agreement was not filed with the Commission. Brian Hirschkorn of Avista is working to provide Staff with the missing exhibit.
STAFF RECOMMENDATION
Pursuant to the recently enacted amendments to the Electric Supplier Stabilization Act found at Idaho Code § 61-333, the Commission Staff recommends that the Commission process this Application by Modified Procedure. Staff recommends that the Commission issue its notice of Modified Procedure requesting comments within the standard 21-day comment period.

Lisa D. Nordstrom

M:AVUE013_ln
DECISION MEMORANDUM 1