20031008Final Order No 29349.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 SOUTH)
SIDE ELECTRIC, INc. FOR AN ORDER
APPROVING A SERVICE TERRITORY
AGREEMENT PURSUANT TO IDAHO CODE
~ 61-333(1).
CASE NO. GNR-O3-
ORDER NO. 29349
On June 20, 2003 , United Electric Co-op and South Side Electric filed an Application
for approval of their Service Territory 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.
United and South Side are both electric non-profit corporations organized under the laws
Idaho. United and South Side are defined as "electric suppliers" under the ESSA. Idaho Code
~ 61-332A(2 4).
In Order No. 29288 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.
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
ORDER NO. 29349
territories or consumers shall be filed with the Commission. Idaho Code ~ 61-333(1). This
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 ofterritories or consumers is in conformance with
the provisions and purposes of' the ESSA. Id., Idaho Code ~ 61-334B.
THE APPLICATION
United and South Side supply electric service to their respective consumers in
adjacent and contiguous service territories. Prior to the 2000 amendments of the ESSA, the
parties had "an oral understanding relative to the respective service areas" of each electric
supplier. Exhibit No. ~ 1.3. On May 30 2003 , they entered into a "Service Area Stabilization
Agreement" thereby reducing their respective understandings to writing. The Agreement
establishes separate service territories for each party. Each party is responsible for serving all
new customers in their defined service areas. Id. 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; Exhibit No.
The Agreement also states 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 execute
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), if the new customer can be served more efficiently and safely
fYom the existing service lines of the non-service area party or by the
extension of existing service lines of the non-service party. 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 its exercise of such discretion.
Id. at ~ 6.
The Application states that the Agreement was 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 their oral agreements predate
the 2000 and 2001 amendments to the ESSA, the parties now request that the Commission
approve their Service Area Stabilization Agreement.
ORDER NO. 29349
STAFF COMMENTS
The Staff recommended approval and noted that the Agreement appears to provide
the least-cost service option for customers. The Staff also commented that the Agreement
complies with the purposes of the ESSA by drawing boundaries that partially identify each
supplier s service territory.
Staff noted that paragraph 3 recognizes that each supplier may continue to serve its
existing customers. However, paragraph 6 also states there may be instances where it is efficient
to allow a new customer to be served by the other supplier. 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 ~ 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 fYom 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.
FINDINGS
Having reviewed the Parties
' "
Service Area Stabilization Agreement" and the Staff's
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
ORDER NO. 29349
promotes efficiency and harmony among suppliers. If the parties decide to substitute a different
electric supplier, we believe it is also appropriate that the affected new customer be apprised of
the substitution. When the parties enter into such agreement, it is appropriate for such an
agreement to be submitted to the Commission for its review.
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 fYom 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 ~ 61-617A.
ORDER
IT IS HEREBY ORDERED that the Application filed by United Electric Co-op and
South Side Electric to approve a "Service Area Stabilization Agreement" dated May 30, 2003 is
approved.
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.
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-03-10 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-03-10. 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. 29349
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this flt+---
day of October 2003.
ATTEST:
Commission Secretary
bls/O:GNRE0310 dh2
ORDER NO. 29349
DWL
MARSHA H. SMITH, COMMISSIONER