IPUC Staff Comments.pdf

LISA D. NORDSTROM
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5733

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 APPLICATION OF
AVISTA CORPORATION, DBA AVISTA
UTILITIES, FOR AN ORDER APPROVING A
SERVICE TERRITORY AGREEMENT
BETWEEN AVISTA UTILITIES AND
CLEARWATER POWER COMPANY.

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CASE NO. AVU-E-01-03

COMMENTS OF THE
COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Lisa D. Nordstrom, Deputy Attorney General, and submits the following
comments in response to the Notice of Application/ Notice of Modified Procedure.
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. The amendments to the ESSA provide that all service
agreements that allocate territory or customers be filed with the Commission. In particular, Idaho
Code § 61-333 was amended to provide 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).

STAFF COMMENTS 1 MARCH 8, 2001

HB 1 was effective on December 8, 2000 and was scheduled to sunset on March 1, 2001. Last
month HB 142 was enacted by the Legislature and signed by the Governor on February 28, 2001.
HB 142 removed the sunset provision from the ESSA and became effective on February 28, 2001.
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

STAFF COMMENTS 2 MARCH 8, 2001
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.

STAFF ANALYSIS
The standard of review to be employed by the Commission for service territory agreements
is set out in the amended section 61-333(1) of the ESSA. This section states that 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." (Emphasis added). The purposes of the
ESSA are contained in §61-332 and include the following five points:
• promote harmony among and between electric suppliers furnishing electricity
within the state of Idaho,
• prohibit the "pirating" of customers consumers of another electric supplier,
• discourage duplication of electric facilities,
• actively supervise certain conduct of electric suppliers as it relates to this act, and
• stabilize the territories and customers consumers served with electricity by such
electric suppliers.
Thus, the traditional "public interest" standard usually employed by the Commission is not
applicable.
The agreement for which Avista seeks approval was negotiated for the purpose of settling a
dispute over contested service territory in a relatively small area near the city of Moscow. The
agreement has been in effect for nearly eight years. No further service territory disputes have
occurred to Staff’s knowledge, either in this particular area or in any other area where the two
utilities’ service territories are adjacent. Although the agreement is not a comprehensive one that
encompasses the entire service territories of both utilities, it has served to resolve the only known
conflict between the utilities. Staff believes the agreement has served a valuable purpose and has
clearly met the purposes of the ESSA as amended.
A much broader agreement would not have served any real purpose except in the vicinity
where the past dispute has occurred. Similarly, requiring that a broader agreement be negotiated to
address future potential conflicts could be counterproductive until more customer growth occurs

STAFF COMMENTS 3 MARCH 8, 2001

STAFF COMMENTS 4 MARCH 8, 2001
and more is known about the specific circumstances where electric systems are adjacent to each
other. The ESSA already includes general provisions for selecting electric suppliers for new
customers. Staff believes these general provisions have provided and will continue to provide
adequate guidance in most cases.

STAFF RECOMMENDATION
Staff recommends that the July 12, 1993 settlement agreement between the Washington
Water Power Company (now known as Avista) and Clearwater Power Company be approved. Staff
believes the agreement is in conformance with the provisions and purposes of the ESSA.

Respectfully submitted this day of March 2001.

___________________________
Lisa D. Nordstrom
Deputy Attorney General

Technical Staff: Rick Sterling

LN:RPS:jo:umisc/comments/avue0103.lnrps