20031008Final Order No 29345.pdf

Office of the Secretary
Service Date
October 8, 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
UNITED ELECTRIC CO-, INc. AND THE
FARMERS' ELECTRIC COMPANY, LTD FOR
AN ORDER APPROVING A SERVICE
TERRITORY AGREEMENT PURSUANT TO
IDAHO CODE ~ 61-333(1).
CASE NO. GNR-O3- 7
ORDER NO. 29345
On June 20 , 2003 , United Electric Co-op, Inc. and the Farmers ' Electric Company,
Ltd. filed an Application for approval of their "Service Area Stabilization Agreement" pursuant
to the Idaho Electric Supplier Stabilization Act (ESSA), codified at Idaho Code 99 61-332
seq. United is the successor co-op entity following the consolidation of Rural Electric Company
and Unity Light & Power. Both parties are classified as electric "suppliers" under the ESSA.
In Order No. 29284 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
the Agreement and the Staff comments, we approve the Application as conditioned below.
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 9 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 961-332A(5).
Idaho Code961-333(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 961-333(1). This
section further provides that the Commission may, after notice and opportunity for hearing,
ORDER NO. 29345
approve or reject contracts between 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 9 61-334B.
Idaho Code 9 61-334B(1) also allows the Commission to grant an exception to the
anti-pirating provision of the ESSA found at Idaho Code 9 61-332B. Before granting such an
exception, the Commission must find "that granting a request is consistent with the purposes of'
the ESSA.
THE APPLICATION
On April 23 , 2003 , United and Farmers entered into their Stabilization Agreement.
In the Agreement, the parties established separate territories for each party. Each party is
responsible for serving all new customers in their defined service areas. Exh. 1 at ~ 2. To the
extent that either party is currently providing service to consumers within the service area
assigned to the other party, the existing suppliers shall continue to serve their current customers.
Id. at ~ 3; Exh. 2. Exhibit 2 to the Agreement contains the names of Farmers and United
consumers that are located in the territory of the other party or who are in close proximity to the
territory ofthe other party. As recited in paragraph 10, the parties will use good faith efforts to
exchange the customers that are located in the defined territory of the other supplier. Absent an
exchange, the parties agree that the customer may continue to be served until such time as events
allow for the exchange of such customers. Id. at ~ 10.
The parties also recognize there may be instances where it is more efficient for a new
customer in one service territory to be served by the other supplier. In such cases, the parties
may enter
into a written agreement to permit the service of a new customer by (the
party whose distribution system is located in the service area of the other
(supplier J. . .Such agreement shall be in writing, authorized by the
respective governing board of each party, and when executed shall be
appended to this Agreement. The entering into such agreement
discretionary with either party and neither party shall have the right of action
against the other for the exercise of such discretion.
Id. at ~ 6.
The Parties assert that their Agreement comports with the purposes of the ESSA.
More specifically, their Agreement provides for stability of services to consumers, eliminates
ORDER NO. 29345
duplication of facilities, and promotes the public safety in their respective service territories.
Application at ~ 3.
STAFF COMMENTS
The Staff recommended approval of the Agreement.The Staff stated that the
Agreement appears to provide the least-cost service option for customers and complies with the
ESSA by drawing boundaries that partially identify each service supplier s territory. Staff stated
that the Agreement comports with the purposes and provisions of the ESSA. United indicated to
Staff that it normally obtains the consent of the customer before switching suppliers.
Staff also addressed one other issue contained in paragraph 5 of the Agreement. This
paragraph provides that the prevailing party in any legal action arising under the Agreement be
entitled to recover reasonable attorney s fees. Staff explained that prior to the amendments to the
ESSA enacted in December 2000 and February 2001 Idaho Code 9 61-334B provided that any
supplier whose rights under the ESSA are in jeopardy, may bring suit in district court. Idaho
Code 9 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 99 61-334A(2-3);
61-334B(3). In other words, the resolution of disputes was removed from the jurisdiction ofthe
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 9 61-617 A.
FINDINGS
Having reviewed the Parties
' "
Service Area Stabilization Agreement" and the Staffs
supporting comments, we find it is reasonable to approve the Application and Agreement. We
find the Agreement is consistent with the purposes of the ESSA. More specifically, we find that
it promotes harmony among the electric suppliers, discourages duplication of facilities, and in
particular, stabilizes the territories and consumers served by these two electric suppliers. There
were no opposing comments.
The Parties also contemplate that there may be instances where it is more efficient for
a new customer located in a 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 Stabilization
Agreement. Agreement at ~ 6. We find this provision is appropriate and reasonable because it
promotes efficiencies and harmony among suppliers. As is the case with the exchange or
ORDER NO. 29345
transfer of existing customers from one supplier to the other (discussed below), we believe it is
also appropriate that the affected new customer be apprised of the proposed substitution. When
the parties enter into such agreement, we believe it is appropriate for such an agreement to be
submitted to the Commission for its review and approval.
Because no customer transfer or exchange has taken place per paragraph 10 and
Exhibit 2, granting an exception from the anti-pirating provisions of the ESSA is premature. If
and when a transfer of customers between the parties is contemplated, we find that it is
appropriate for the affected customers to be notified and for the application to state whether they
consent to the proposed transfer from one supplier to another. We believe that informing
customers is an appropriate condition prior to formally considering whether an exception from
the anti-pirating provision is warranted. See Idaho Code 9 61-334B(I), (2).
Staff also made one other comment that merits discussion. The Staff observed that
paragraph 5 of the Agreement 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 9 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 9 61-617A.
ORDER
IT IS HEREBY ORDERED that the Application filed by United Electric Co-op and
the Farmers' Electric Company to approve a "Service Area Stabilization Agreement" dated April
2003 , is approved as conditioned.
IT IS FURTHER ORDERED that if the parties enter into a written agreement to
substitute one supplier for the other pursuant to paragraph 6 , that such an agreement shall be
submitted to the Commission for its review.
IT IS FURTHER ORDERED that before filing an application to transfer customers
and for an exception to the anti-pirating provision of the ESSA, affected customers shall be
notified of the suppliers' desire to exchange suppliers. An exception application shall disclose
whether the affected customers consent to the transfer.
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- 7
ORDER NO. 29345
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 99 61-
626, 61-334B(3).
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
-r'"
day of October 2003.
PAUL KJ ER, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
ll
Commission Secretary
bls/O:GNREO307 dh2
ORDER NO. 29345