20020308_ln.doc

DECISION MEMORANDUM

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

FROM: LISA NORDSTROM

DATE: MARCH 8, 2002

RE: APPLICATION TO APPROVE A CUSTOMER ALLOCATION AGREEMENT BETWEEN AVISTA UTILITIES AND KOOTENAI ELECTRIC COOPERATIVE, CASE NO. AVU-E-02-1.

On January 22, 2002, Avista filed an Application for approval of an Agreement Allocating Customer between the Avista and Kootenai Electric Cooperative. The Application notes that this filing is made pursuant to the Idaho Electric Supplier Stabilization Act (ESSA), Idaho Code § 61-332 et. seq. and Order No. 28681, which approved the service territory agreement between Avista and Kootenai last spring in Case No. AVU-E-01-2.
In December 2000 and February 2001, the Idaho Legislature amended portions of the ESSA. In particular, Idaho Code § 61-333 was amended to provide that all service agreements which allocate territory or customers between electric suppliers (such as Avista and Kootenai Electric) be filed with the Commission. Idaho Code § 61-333(1) now 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) (2001). As set out more fully in Idaho Code § 61-332, the purposes of the ESSA are to: (1) promote harmony among and between electric suppliers; (2) prohibit the “pirating” of consumers served by another supplier; (3) discourage duplication of electric facilities; (4) stabilize the territory and consumers served by the suppliers; (5) actively supervise certain conduct of the suppliers.
THE AGREEMENT ALLOCATING CUSTOMER
The Agreement Allocating Customer (Agreement) submitted for the Commission’s review was executed on January 22, 2002. This Agreement was reached because a consumer, Mr. Kari Doerfler, wanted electric service extended to a service entrance located on his residential property. Both Kootenai and Avista have existing service lines within 1,320 feet of the service entrance. Kootenai’s service line is nearest the service entrance thus has the right to serve Mr. Doerfler pursuant to the ESSA. Idaho Code § 61-332C(3). However, Mr. Doerfler requested that Avista extend a line from its facilities to his service entrance because a line extension from Kootenai’s existing service line would be substantially more expensive.
Pursuant to the provisions of Idaho Code § 61-333, Avista and Kootenai have entered into an agreement allowing Avista to extend its facilities to the service entrance. Agreement at 2. Avista and Kootenai also agree that Avista shall provide service Mr. Doerfler and his successors at the service entrance. Id. The Agreement also provides the following limitation: “Avista’s line extension to Mr. Doerfler’s service entrance shall not be considered ‘an existing service line’ under the ESSA for the purpose of determining which electric supplier shall provide electric service for a new service entrance.” Id.
The Agreement states that it is subject to the approval of the Idaho Public Utilities Commission and if rejected, shall be void ab initio. Id. If the Commission approves the Agreement, it shall be binding upon the parties, their successors and assigns. Id.
STAFF COMMENTS
Staff filed the only comments received by Commission in this case. Staff reviewed the service conditions that led to the Agreement Allocating Consumer between Avista and Kootenai and recommended approval of the Agreement based on the least cost analysis conducted by the two utilities. Comments at 2.
Staff noted that although Kootenai’s facilities are closer than Avista’s, Kootenai’s nearest facility is not sufficient to provide service to the Doefler residence. Id. Kootenai estimated the cost of the additional construction and easement acquisition necessary to serve the Doerfler residence to be in excess of $15,000. Id. In keeping with its line extension rules, Avista’s estimated cost to serve is $8,065. Id. Consequently, Staff agreed with both utilities and Mr. Doerfler that the best solution in this case is for Avista to provide the service.
COMMISSION DECISION
Does the Commission wish to approve the Customer Allocation Agreement between Avista and Kootenai?

Lisa D. Nordstrom

M:AVUE0201_ln2
DECISION MEMORANDUM 3