20020320_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 20, 2002

RE: APPLICATION TO APPROVE AN AGREEMENT ALLOCATING TERRITORY BETWEEN AVISTA UTILITIES AND KOOTENAI ELECTRIC COOPERATIVE, CASE NO. AVU-E-02-2.

On February 5, 2002, Avista filed an Application for approval of an Agreement Allocating Territory 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 the Notice of Application and Modified Procedure issued on February 20, 2002, the Commission solicited comments regarding Avista’s Application. Order No. 28957. No comments were received other than those submitted by Commission Staff.
STATUTORY OVERVIEW
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 TERRITORY
The Agreement Allocating Territory (Agreement) submitted for the Commission’s review was executed on December 29, 2001. This Agreement was reached because Keystone Partners, LLC and Pleasant View Investments, LLC (Developer) requested that Avista and Kootenai install facilities to provide three-phase electric service to consumers who may construct service entrances within the Developer’s real property. Agreement at 1. The Developer owns an interest in real property known as “Expo at Post Falls,” “Expo at Post Falls Fourth Edition,” and “Expo at Post Falls Fifth Edition” in Kootenai County, Idaho as depicted on the plat map labeled “Exhibit A” that accompanies the Application. Id.
Both Kootenai and Avista have existing service lines on or near the Developer’s real property. Id. Furthermore, both are able and willing to supply electric service to consumers who may establish service entrances on the Developer’s property. Id. Pursuant to the provisions of the ESSA, Avista and Kootenai have entered into an agreement allocating territory within the confines of the Developer’s real property. According to the Agreement, the parties entered into the Agreement to avoid unnecessary duplication of facilities, avoid disputes as to which utility is entitled to provide service to new service entrances, and provide the best possible service to consumers who locate their electric service entrances on the Developer’s real property. Id.
As depicted in “Exhibit A,” the Agreement divides the Developer’s real property into territories labeled “Kootenai Electric Service Area” and “Avista Service Area.” The Agreement allows Avista and Kootenai to extend their facilities, to the exclusion of the other, within the territory allocated to it in “Exhibit A.” Id. at 2. Within their respective territories, Avista and Kootenai shall each provide line extensions and service to consumers pursuant to the provisions of their line extension policies, rate schedules, or tariffs in force at the time such extension or service is requested. Id.
Avista and Kootenai also agree that any line extension which serves a service entrance located within the territory allocated by this Agreement shall be considered an “existing service line” for the purpose of determining which electric supplier is entitled to provide electric service to a new service entrance located in territory not allocated pursuant to the provisions of this Agreement. 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. at 2-3. If the Commission approves the Agreement, it shall be binding upon the parties, their successors and assigns. Id. at 3.
STAFF COMMENTS
According to Staff, the “Expo at Post Falls” is a multi-phased development project located between Avista and Kootenai’s existing service areas that is being developed over several years. Comments at 2. Avista’s existing facilities are located to the south and Kootenai’s existing facilities are located to the west and north. Id. Staff stated that the individual line extension policies of Avista Utilities and Kootenai Electric would have allowed either utility to serve the entire project. Id. While the phases and timing of the development were not finalized at the outset of the project, it became apparent that the development timing was not conducive to one utility serving the project from start to finish. Id.
To avoid potential conflicts, Avista Utilities, Kootenai Electric and the Developer came to a general understanding for the entire project’s electric service. Id. The Territory Allocation Agreement described in this Application formalizes the general understanding for the Fifth Addition phase of the project. Id. Staff explained that as individual phases of the development become more defined, any necessary Territory Allocation Agreement will be formalized and executed. Id.
Staff concludes that the Agreement complies with the ESSA by drawing a line between customers and clearly defining which utility will serve each customer within this phase of the development. Id. at 3. Given that it satisfies the five goals listed in Idaho Code § 61-332, Staff recommends that the Commission approve the Territory Allocation Agreement. Id.
COMMISSION DECISION
Does the Commission wish to approve the Agreement Allocating Territory between Avista and Kootenai?

Lisa D. Nordstrom

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