20061023Comments.pdf

DONOVAN E. WALKER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5921
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, ID 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
VISTA CORPORATION TO APPROVE AN
AGREEMENT ALLOCATING TERRITORY
WITH NORTHERN LIGHTS, INc. CASE NO. A VU-O6- 7
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of
record, Donovan E. Walker, Deputy Attorney General, respectfully submits the following
comments in response to the Notice of Application and Notice of Modified Procedure in Order
No. 30134, issued on October 2, 2006.
BACKGROUND
On September 11 , 2006, A vista Corporation dba A vista Utilities filed an Application to
approve an agreement allocating service territory with Northern Lights, Inc. pursuant to the
Electric Supplier Stabilization Act (ESSA), Idaho Code ~~ 61-332 et seq.
According to the Application the parties have entered into an agreement pursuant to the
ESSA in order to allocate territory, avoid disputes between utilities, and to provide consumers
with the best possible service. Both utilities have existing service lines near a new development
(Development) in Sandpoint, Idaho, and both utilities are able and willing to supply electric
STAFF COMMENTS OCTOBER 23, 2006
service to consumers who may establish service entrances in the Development. The utilities
have agreed to an allocation of service territory to each utility as set forth in their Agreement.
The Agreement Allocating Territory, as well as a map of the designated service areas
(Exhibit B) and a legal description of the boundaries (Exhibit A), was filed with the Application.
According to the Agreement Avista and Northern Lights will each be entitled to extend their
electric facilities, to the exclusion of the other, within the territory allocated to each as outlined
on Exhibit B , and to provide service to customers who locate new electric service entrances
within such territory. The Agreement states that, within the territory allocated, each utility shall
provide line extensions and electric service pursuant to the provisions of their respective line
extension policies, rate schedules, and/or tariffs in force at the time such extensions or services
are requested. The Agreement further provides that a line extension installed within the
boundaries of the Development to serve an electric service located within the territory allocated
by the Agreement shall not be considered an "existing service line" and may not be used as a
future measuring point for the purpose of determining which utility is entitled to provide electric
service under the ESSA to new service entrances located in territory not allocated pursuant to the
Agreement. Additionally, the Agreement states that the utilities current electric service lines as
shown on Exhibit B, as well as any line extensions external to the boundaries defined in the
Agreement and outlined on Exhibit B which are required to reach existing infrastructures within
the Development and which are installed in accordance with the ESSA, may be used to
determine future electric service rights to new service entrances located in territory not allocated
pursuant to the Agreement. Lastly, the Agreement states that the boundaries set forth by the
Agreement and shown on Exhibit B will not be affected by any subsequent changes in lot lines
roadways, or other boundaries within the Development that occur after the date of the
Agreement.
Idaho Code ~ 61-333(1) provides that electric suppliers may contract for the purpose of
allocating territories, consumers, and future consumers. .. and designating which territories and
consumers are to be served by which contracting electric supplier." Under the ESSA, both
Avista and Northern Lights are defined as electric suppliers. Idaho Code ~ 61-332A(4). After
notice and opportunity for hearing, the Commission may approve agreements allocating service
territories and customers between electric suppliers only upon finding that the allocation is in
conformance with the purposes of the ESSA. Idaho Code ~ 61-333A(I). As set out in Idaho
Code ~ 61-332(2), the purpose of the ESSA is to: discourage duplication of facilities; prohibit
STAFF COMMENTS OCTOBER 23, 2006
pirating" of consumers; stabilize service territories and consumers; and promote harmony
between electric suppliers.
ANALYSIS
Staff has reviewed the territory allocation agreement entered into by Avista Utilities
(Avista) and Northern Lights, Inc. (Northern Lights) to ensure conformance with the ESSA. The
Application addresses two nonadjacent territories located in Sandpoint, Idaho, which
traditionally have been served by multiple electric service providers. The parties entered into an
agreement on July 24, 2006 to extend service into the two areas at the exclusion of each other
based on the location of existing facilities. One such area that A vista will serve is the Spring
Creek Development, which A vista has entered into a customer allocation agreement with
Northern Lights and submitted to the Commission for approval in Case No. A VU-06-06. This
property is located to the east of Boyer Avenue, a main thoroughfare in Sandpoint, and a logical
delineating feature for the two utilities service territories. As stated in the referenced case
Avista will be the closest utility to the Development once existing Northern Lights facilities are
removed at the request of the developer. The removal of Northern Lights facilities in the
proposed Development is necessary to build an access road for construction within the
Development. See Case No. A VU-06-06.
The second area addressed in the territory allocation agreement is located west of the
Development, situated between the Sandpoint Airport and the Great Northern Railway, and is
commonly referred to as Lot No.5. The allocation agreement states that Avista will serve all
future customers located within Lot No.5 along with the adjacent area to the south and east.
Northern Lights will provide electric service to customers located to the north of Lot No.
which encompasses an area where Northern Lights already has existing service facilities.
Avista s existing facilities enter from the south and west of Lot No., as shown in Exhibit B
accompanying the Application. The proposed boundary coincides well with the existing service
area of the two utilities, as Northern Lights has existing service immediately to the west and
north of its proposed territory and A vista to the south. The general service territory descriptions
for the two areas accompany the Application as Exhibit A.
Staff has addressed the service territory allocation associated with the Development in its
comments to Case No. A VU-06-, and recommends that the territory and subsequent
customer allocation agreement is in conformance with the provisions of the ESSA. Both utilities
STAFF COMMENTS OCTOBER 23 , 2006
mutually agree that Avista will be the closest utility to the Development once Northern Lights
removes its existing structures to facilitate construction. Staff has no opposition to the customer
allocation agreement as filed in Case No. A VU-06-, nor the accompanying territory
agreement proposed in this case. Both utilities, by means of the July 24 2006 agreement
acknowledge the provisions of the ESSA, specifically Idaho Code ~ 61-332(2). Staff finds that
the territory allocation addresses permanent territory boundaries within the proposed area that
will not be subject to alteration should lot lines, roadways or other boundaries within the
Development change in the future.
The area encompassing and north of Lot No.5 also serves as a logical boundary for the
respective service territories for the two utilities. The agreement takes advantage of the location
of existing facilities and sets forth definitive boundaries for service of new customers within this
zone. Northern Lights maintains service generally within the north and west areas of Sandpoint
while Avista serves mainly to the south and east of Northern Lights, as shown in the map labeled
Exhibit B accompanying the Application.
With that said, Staff does note that the Application is lacking in documentation
supporting the efficiency of the service territory allocation. Without documentation of the
impact in acquiring the territories or the criteria that Avista uses in deeming that the ESSA
provisions are satisfied, Staff must assume that the proximity of existing service facilities equates
to cost effective and efficient expansion. The fact that service within the allocated territories will
be served with exclusivity does not assure that duplication of facilities or inefficient expansion
agreements will be avoided in the future as Sandpoint and the surrounding area continues to
grow. Staff would strongly urge Avista to be more explicit with the plans and criteria it intends
to use when allocating customers and service territories among itself, Northern Lights, and
Kootenai Electric.
Starting with the sale of the Northern Idaho service territory from Pacific Power & Light
Company to Avista, then known as Washington Water Power Company, Case Nos.
PPL-94-1/WWP-, the Commission has sought a guiding plan for future service by Avista
and Northern Lights, as well as Kootenai Electric. Order No. 25753. The resulting map
demonstrated the patchwork distribution of service territories in Northern Idaho, which has and
continues to grow since 1994. The scale of the map included as Exhibit B of this filing does not
provide any reasonable assurance that efficient service territory expansion is occurring within the
city limits of Sandpoint, much less the greater area. When asked by Staff whether a larger map
STAFF COMMENTS OCTOBER 23 , 2006
representing the greater Sandpoint area exists and what sort of guiding plan it has toward service
expansion, A vista responded that efforts to draw up an overall expansion agreement have not
been successful with Northern Lights. Staff believes that until the utilities agree upon such a
plan, ratepayers may be at risk for inefficient investments in infrastructure, whether intended or
unintended.
STAFF RECOMMENDATION
Staff recommends the Commission approve the service territory allocation agreement as
filed by Avista. Avista and Northern Lights have demonstrated that the agreement is in
conformance with the provisions and intent of the ESSA, specifically those found in Idaho Code
~ 61-332(2). While more documentation would be preferred demonstrating the cost efficiency of
the agreement, the map supplied as Exhibit B demonstrates that it is in the public interest that the
respective utilities service the respective territories outlined in this filing given the location of
existing facilities. Furthermore, Staff would recommend the Commission actively support an
expansion agreement plan between Avista, Northern Lights, and Kootenai Electric for Northern
Idaho. Such agreement would provide that the electric infrastructure is developed in an
economically efficient manner, expedite future cases involving new service territory allocation
and assure that the provisions of the ESSA are upheld without collateral impact on existing
customers.
Respectfully submitted this (331d1lY of October 2006.
Donovan E. Walker
Deputy Attorney General
Technical Staff: Dave Schunke
Bryan Lanspery
i :umisc/comments/avueO6. 7 dwdesbl
STAFF COMMENTS OCTOBER 23, 2006
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 23 RD DAY OF OCTOBER 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-06-, BY E-MAILING A COpy THEREOF AND BY MAILING A COpy
THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
BRIAN HIRSCHKORN
MGR PRICING/ RATES & REG
A VISTA CORPORATION
PO BOX 3727
SPOKANE W A 99220-3727
LINDA GERVAIS
REGULATORY ANALYST
A VISTA CORPORATION
1411 EMISSION AVE
SPOKANE W A 99220
SECRETARY
CERTIFICATE OF SERVICE