20031015Final Order No 29355.pdf

Office of the Secretary
Service Date
October 15 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
UNITED ELECTRIC CO-OP, INC. AND THE
CITY OF BURLEY FOR AN ORDER
APPROVING A SERVICE TERRITORY
AGREEMENT PURSUANT TO IDAHO CODE
~ 61-333(1).
ORDER NO. 29355
CASE NO. GNR-O3-
On June 20, 2003, the United Electric Co-op and the City of Burley filed an
Application for approval of their Territory Service Agreement pursuant to the Idaho Electric
Supplier Stabilization Act (ESSA), codified at Idaho Code ~~ 61-332 et seq. United is the
successor co-op entity following the consolidation of Rural Electric Company and Unity Light &
Power. Both United and the City supply electric service to their respective consumers in
adjacent and contiguous service territories.
In Order No. 29289 the Commission issued a Notice of Modified Procedure soliciting
public comment on the parties ' Agreement. The Commission Staff submitted the only comment
and recommended the Commission approve the Application. After reviewing the Application
Agreement and the Staff comments, we approve the Application.
THE ESSA
The purpose of the ESSA is to promote harmony among and between electric
suppliers furnishing electricity within Idaho. More specifically, the ESSA: (1) prohibits the
pirating" of consumers already served by another supplier; (2) discourages duplication of
electric facilities; (3) actively supervises certain conduct of electric suppliers; and (4) stabilizes
the territories and consumers served by such electric suppliers. Idaho Code ~ 61-332. Under the
ESSA, an "electric supplier" is any public utility, cooperative, or municipality supplying or
intending to supply electric service to a consumer. Idaho Code ~ 61-332A(5).
Idaho Code~ 61-333(1) provides that any electric supplier may contract with any
other electric supplier 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, all agreements or contracts for the allocation of service
territories or consumers shall be filed with the Commission. Idaho Code ~ 61-333(1). This
ORDER NO. 29355
section further provides that the Commission may, after notice and opportunity for hearing,
approve or reject contracts. . . between municipalities and cooperatives." 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' the ESSA. Id.; Idaho Code g 61-334B.
Idaho Code ~ 61-334B(1) also allows the Commission to grant an exception to the
anti-pirating provision of the ESSA found at Idaho Code g 61-332B. Before granting such an
exception, the Commission must find that granting such a request is consistent with the purposes
of the ESSA.
THE APPLICATION
The parties asked the Commission to approve their "Territory Service Agreement"
dated May 21 , 1985, and two subsequent "amendments" dated November 19, 19961 and May 6
2003 , respectively. The 1985 Agreement and its subsequent amendments establish service
territories for each party and each party shall serve all new customers in their respective service
areas. Agreement at ~~ 4 and 5. The Agreement and the amendments also recognize that the
parties serve customers located in the other party s service area and service to these customer
shall continue. Id. at ~ 6, Exhibit 2, ~ 4.
The 1996 amendment provides that the City shall have the right to install its own
streetlights, pumps and other facilities for the delivery of city services located within United'
service territory. Exhibit 2, ~ 8. United also agrees to deliver electrical service to the City
facilities within United's service area. Paragraph 7 of the 1998 amendment states that the parties
shall use their best efforts to exchange two customers: Norco (then served by United) and Ag-
West (then served by the City). Id. at ~ 7.
The 1996 amendment also recognizes that there may be instances where it is more
efficient for a new customer located in one service territory to be served by the other electric
supplier. In such cases, the parties may enter into a written agreement "to permit the service of a
new customer by a party whose distribution system is located in the service area of the other
(supplier), ifthe new customer can be served more efficiently and safely" by the other party. Id.
I The first amendment (identified as Exhibit No.2) is actually a "Service Area Agreement" entered into between
Rural Electric Company and the City of Burley. As previously mentioned, United is the successor to Rural Electric.
This Agreement superseded a Service Area Agreement between Burley and Rural Electric dated June 6, 1988.
ORDER NO. 29355
at ~ 5. If the parties enter into such an agreement, it shall be appended to the Agreement and its
amendments. Id.
The parties assert that their Agreement comports with the purposes of the ESSA. The
Application states that the Agreement and the amendments were negotiated to settle and
establish service territories between the parties, to provide stability and safety in service to
consumers, and to eliminate duplication of services. Application at ~ 3. Because the agreements
predate the 2000 and 2001 amendments to the ESSA, the parties now request that the
Commission approve the Agreement. Exhibit 3, ~ 3
STAFF COMMENTS
The Staff recommended approval of the 1985 Agreement and the subsequent
amendments. Staff commented that the agreements between the parties appear to provide the
least-cost service option for customers. In addition, the agreements comply with the ESSA by
drawing boundaries that partially identify each supplier s service territory. Staff believes that the
Agreement and the amendments comply with the purposes and provisions of the ESSA.
Staff also confirmed that the customer exchange involving Norco and Ag-West was
completed in the summer of 2002. Under these circumstances, Staff stated that granting
exception" to the anti-pirating provision of the ESSA appears reasonable. See Idaho Code g 62-
334B(1 ).
Staff also addressed one other issue contained in paragraph 13 of the 1996
amendment. This paragraph provides that the prevailing party in any legal action arising under
the parties ' agreements be entitled to recover reasonable attorney fees. Staff explained that prior
to the amendments to the ESSA enacted in December 2000 and February 2001 Idaho Code
g 61-334B provided that any supplier whose rights under the ESSA are in jeopardy, may bring
suit in district court. Idaho Code g 61-334A now provides an aggrieved customer or supplier
may file a complaint with the commission" and the Commission shall resolve the matter. See
Idaho Code ~~ 61-334A(2-3); 61-334B(3).In other words, the resolution of disputes was
removed from the jurisdiction of the Courts and is to be submitted to the Commission. Under the
Public Utilities Law, the Commission does not have authority to award attorney s fees other than
intervenor funding pursuant to Idaho Code ~ 61-617 A.
ORDER NO. 29355
FINDINGS
Having reviewed the parties
' "
Territory Service Agreement " its two amendments and
the Staffs supporting comments, we find it is reasonable to approve the Application and the
agreements. We find the 1985 Agreement and the amendments are consistent with the purposes
of the ESSA. More specifically, we find that they promote harmony between the electric
suppliers, discourage duplication of facilities, and in particular, stabilize the territories and
consumers served by these two electric suppliers. There were no opposing comments.
We further find that the exchange of the two customers is consistent with the
purposes of the ESSA. Given the facts that the customers did not object, all costs associated
with the exchange were borne by the parties, and the transfer has already taken place, it is
appropriate to grant an exception. Consequently, we find that it is reasonable to grant an
exception to the anti-pirating provision of Idaho Code ~ 61-332B. See Idaho Code gg 61-
334B(1); 62-333(1).
The parties also contemplate that there may be instances where it is more efficient for
a new customer located in one service territory to be served by the other electric supplier. In
such instances, the parties will execute a written agreement and append it to their Territory
Agreement and the amendments. Exhibit 2 at ~ 5. We find this provision is appropriate and
reasonable because it promotes efficiencies and harmonies between suppliers. We further find it
appropriate that the affected new customer be apprised of the proposed substitution of supplier.
When the parties enter into such an agreement, the agreement shall be submitted to the
Commission for its review and approval.
Staff also made one other comment that merits discussion. The Staff observed that
paragraph 13 of the 1996 amendment provides that the prevailing party in any legal action is
entitled to recover reasonable attorney fees. As Staff noted, the 2000 and 2001 amendments to
the ESSA remove resolution of ESSA disputes from the district courts and authorize the
Commission to resolve these disputes. See Idaho Code ~ 61-334A. Without reforming the
contract, we note that the Commission does not have authority to award attorney fees other than
as provided by Idaho Code g 61-617 A.
ORDER
IT IS HEREBY ORDERED that the Application filed by United Electric Co-op and
the City of Burley to approve their "Territory Service Agreement" dated May 21 , 1985, and two
ORDER NO. 29355
subsequent "amendments" dated November 19, 1996 and May 6, 2003 , respectively, are
approved as conditioned above.
IT IS FURTHER ORDERED that the Commission grants the parties an exception to
the anti-pirating provision of the ESSA pursuant to Idaho Code g 61-334B for the exchange of
the two customers.
IT IS FURTHER ORDERED that if the parties enter into a written agreement to
substitute one supplier for the other pursuant to paragraph 5 of the 1996 amendment, that such an
agreement shall be submitted to the Commission for its review. The agreement shall disclose
that the affected customer has consented to the substitution of the supplier.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case No. GNR-03-
may petition for reconsideration within twenty-one (21) days of the service date of this Order
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this Case No. GNR-03-Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code g g 61-
626, 61-334B(3).
ORDER NO. 29355
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /'1~
day of October 2003.
AUL K.J LL ER, PRESIDE1\rf--
~~/
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~il
Commission Secretary
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ORDER NO. 29355