20031008Final Order No 29347.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-OP, INc. AND
RIVERSIDE ELECTRIC COMPANY, L TD FOR
AN ORDER APPROVING A SERVICE
TERRITORY AGREEMENT PURSUANT TO
IDAHO CODE ~ 61-333(1).
CASE NO. GNR-O3-
ORDER NO. 29347
On June 20, 2003 , United Electric Co-op and Riverside Electric Company filed an
Application for approval of their "Service Area Stabilization 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 parties are classified as electric "suppliers" under the Electric Supplier
Stabilization Act (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 ~ 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. 29347
section further provides that the Commission may, after notice and opportunity for hearing,
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 ~ 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 ~ 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 21 , 2003, United and Riverside entered into their Stabilization Agreement.
The Agreement establishes separate service territories for each party. Each party is responsible
for serving all new customers in their defined service areas. Exhibit 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 supplier shall continue to serve these pre-existing customers. Id. at ~ 3.
The Agreement also states that there may be instances where it is more efficient for a
new customer located in one of the established service territories 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 (the)
party whose distribution system is located in the service area of the other
(supplier). . .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 is
discretionary with either party and neither party shall have the right of action
against the other for the exercise of such discretion.
Id.at~7.
The parties also agree that Riverside may construct an "express feeder" within
United's territory.The parties agree that construction of the express feeder "shall not be
construed as to allow Riverside to hook up new customers in that area, but is limited to the
construction, operation and maintenance of an express feeder. . . . The construction, maintenance
and operation of any express feeder shall be subject to United specifications for clearance and
other construction." Exhibit 1 at ~ 4.
Exhibits 2 and 3 to the Agreement contain the names of Riverside and United
customers that are located in the territory of the other party or who are in close proximity to the
ORDER NO. 29347
territory of the other party. As recited in paragraph 11 , 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 by the existing supplier
until such time as events allow for the trade of such customers. Id. at ~ 11.
The Application states that the Agreement was established to settle and establish
service territories between the parties, to provide stability and safety in service to consumers, and
to eliminate the duplication of services. Application at ~
STAFF COMMENTS
Staff recommended approval of the Agreement. Staff stated that it appears that the
Agreement provides the least-cost service option for customers and complies with the ESSA by
drawing boundaries that partially identify each supplier s service territory. The allocation
customers and territory comports with the purposes and provisions of the ESSA. Staff also noted
that the Agreement provides that customers residing within the other supplier s service territory
may continue to be served by their existing supplier. See Exhs. 2 and 3.
The Staff observed that paragraph 11 of the Agreement states that Exhibits 2 and 3
contain the name of customers which the two utilities agree to exchange. Staff reported that the
exchange of the three customers identified in Exhibit 2 has not taken place. United told Staff
that it normally obtains the consent of the customer before switching suppliers. Staff believes
that customer consent should be obtained as a condition before authorizing a switch in suppliers.
With this condition, granting an exception to the anti-pirating provision of the ESSA appears
reasonable when considering the purposes of the ESSA." Staff Comments at 3.
Staff also addressed one other issue contained in paragraph 6 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 ~ 61-334B provided that any
supplier whose rights under the ESSA are in jeopardy, may bring suit in district court. Idaho
Code ~ 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
ORDER NO. 29347
Commission does not have authority to award attorney s fees other than intervenor funding
pursuant to Idaho Code ~ 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 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 ~ 7. We find this provision is appropriate and reasonable because it
promotes efficiencies and harmony among suppliers. As is the case with the exchange or
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 11 and
Exhibit 2, an exception from the anti-pirating provisions of the ESSA is not necessary at this
time. 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 in advance of the proposed transfer. We
further find that it is appropriate that the parties seek to obtain the consent of the customers who
are to be transferred 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 ~ 61-334B(I), (2).
Staff also made one other comment that merits discussion. The Staff observed that
paragraph 6 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 authorizes the Commission to
resolve these disputes. See Idaho Code ~ 61-334A. Without reforming the contract, we note that
ORDER NO. 29347
the Commission does not have authority to award attorney fees other than as provided by Idaho
Code ~ 61-617A.
ORDER
IT IS HEREBY ORDERED that the Application filed by United Electric Co-op and
Riverside Electric Company to approve a "Service Area Stabilization Agreement" dated April
, 2003 is approved as conditioned above.
IT IS FURTHER ORDERED that if the parties enter into a written agreement to
substitute one supplier for the other pursuant to paragraph 7, that such an agreement shall be
submitted to the Commission for its review.
IT IS FURTHER ORDERED that before filing an application for a transfer of
customers and for an exception to the anti-pirating provision of the ESSA, that the affected
customers be notified of the suppliers' desire to exchange customers. The 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-
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 ~~ 61-
626, 61-334B(3).
ORDER NO. 29347
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this t+-
day of October 2003.
~:.~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
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ORDER NO. 29347