2001719_dh.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
BILL EASTLAKE
LYNN ANDERSON
TONYA CLARK
LYNN ANDERSON
RANDY LOBB
DAVE SCHUNKE
RICK STERLING
BEV BARKER
GENE FADNESS
WORKING FILE
FROM:
DATE:
JULY 19, 2001 RE: LLP POWER GENERATION’S PETITION FOR DECLARATORY ORDER, CASE NO. GNR-E-01-1

On June 22, 2001, LLP Power Generation, LLC (LLP) filed a Petition seeking a declaratory Order from the Commission. More specifically, LLP requested the Commission determine whether LLP’s leasing of diesel-powered locomotive engines located in Idaho to third parties to generate power for the regional wholesale market would subject LLP to the Commission’s regulatory jurisdiction. On June 29, 2001, the Commission issued a Notice of Petition and a Notice of Modified Procedure. The Commission requested interested parties to comment on the Petition no later than July 13, 2001. The Commission Staff and LLP both filed comments recommending the Commission issue the requested Order.
THE PETITION
LLP is a limited liability company owned by Locomotive Leasing Partners which is owned by GATX Capital Corporation and the Electro-Motive Division of the General Motors Corporation. LLP is the owner of diesel-powered railroad locomotives and it desires to lease to other individuals or entities (lessees). The lessees will, in turn, site the locomotives at various locations in Idaho to generate power for sale in the wholesale market. LLP states that each locomotive is capable of supplying approximately 1.8 MW.
LLP states that its sole activity will be the leasing of the locomotives to others. Under the terms of the leases, LLP intends to exercise no control over issues such as siting, permitting, interconnection/transmission agreements, or the operations of the locomotives to generate power. Consequently, LLP requests that the Commission find that it would not be a public utility subject to public utility regulation under Title 61. LLP also requests that the declaratory ruling not be limited to a particular transaction or set of facts but a “general Order determining that this type of activity does not subject the lessor to public utility regulation.” Petition at 2, ¶ 6.
THE COMMENTS
Commission Staff. On July 11, 2001, the Commission Staff submitted comment in this matter. Based upon the facts presented in LLP’s Petition, the Staff concluded that LLP should not be subject to the Commission’s regulation. The Staff noted that Idaho Code § 61-129 sets out a two-part test for determining when an electrical corporation is considered to be a “public utility” and therefore subject to the Commission’s jurisdiction. First, a public utility must provide utility services directly or indirectly to the public or some portion thereof. Staff Comments at 2, citing Idaho Code § 61-129. Second, the utility service must be provided for compensation. Id.
Relying on two Idaho Supreme Court cases, the Staff concluded that LLP’s leasing of locomotive engines does not constitute the provision of utility services to the “public.” The Staff observed that LLP stated that its sole activity will be the leasing of locomotive equipment to others. These lessees will, in turn, site the locomotives at various locations in Idaho to generate power for sale in the regional wholesale market.
The Staff did take one exception to LLP’s Petition. In particular, the Staff recommended that the requested declaratory Order not be a “general Order” of general applicability but be limited to the set of facts contained in LLP’s Petition. Staff Comments at 3.
LLP. LLP filed its comments on July 13, 2001. LLP noted that the Supreme Court in Rosebud Enterprises v. Idaho PUC recognized that the Commission possesses broad authority and jurisdiction to engage in a case-by-case analysis of various public utility statutes. 129 Idaho 609, 917 P.2d 766 (1996). Relying on the same two Supreme Court Cases cited in the Staff’s comments, LLP stated that “as a simple lessor of the locomotives, it is not serving the public generally or holding itself out to serve the public generally and therefore not within the definition of a public utility.” LLP Comments at 3. LLP does not represent itself as a provider of utility service. Consequently, LLP’s leasing of locomotives to others does not constitute the provision of electric utility service to the public.
LLP also pointed out that the Commission has issued similar declaratory Orders to Idaho Power in instances where Idaho Power was leasing fiber optic cables. In three separate cases, Idaho Power petitioned the Commission to issue declaratory Orders that the leasing of fiber optic (dark) cable would not subject Idaho Power to the Commission’s jurisdiction under Title 62. As LLP noted, “in each instance the Commission issued an Order that Idaho Power, as the lessor, was not subject to regulation under [Title 62].” Id.
LLP indicated that time is of the essence and asked the Commission to expeditiously consider this matter and issue its decision.
COMMISSION DECISION
Does the Commission believe that the leasing of diesel railroad locomotives to third parties for the generation of power subjects LLP to the Commission’s regulatory jurisdiction under Title 61?
Does the Commission desire to issue a “general” Order that this type of activity does not subject the lessor to public utility regulation or should the declaratory Order be limited to the facts set forth in the Petition?
Does the Commission wish to address any other matter?

vld/M:GNR-E-01-01_dh2

DECISION MEMORANDUM 3