28538.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF CAPITAL DEVELOPMENT, INC. REQUESTING WAIVER OF IDAHO POWER COMPANY’S RULE H.
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CASE NO. IPC-E-00-11

ORDER NO. 28538
On July 25, 2000, the Commission received a letter from Capital Development, Inc. (“Capital”) requesting a waiver of Idaho Power Company’s Rule H regarding the five-year refund period associated with line extensions. In its letter, Capital claimed that unique circumstances delayed build-out within the Shamrock West residential subdivision and limited the number of refunds the developer could receive under Idaho Power’s existing Rule H. According to Capital, the first three homes built in the subdivision were destroyed by arson. Capital alleges that for approximately thirty (30) months the effect of this destruction and other factors caused the loss of potential lot sales, project financing and builders to construct homes. Capital also points to unusual and or unexpected fees from various governmental entities, relocation of above ground power lines and bank repossession as further reasons for delay in the sale of lots. Based on these circumstances, Capital has requested a 12 to 18 month extension of the five-year refund period under Rule H to allow a more equitable recovery of costs.
In an effort to resolve this matter expeditiously Staff asked Idaho Power to submit a response. On August 28, 2000, the Company sent a written response opposing deviation from the existing tariffs for two reasons. First, the Company is concerned that Capital purchased the financially troubled development at a discount after the arsons and other financial difficulties had already occurred. Idaho Power believes that extension of the refund period could be viewed as a windfall to Capital because these losses were already factored into the purchase price. Second, Idaho Power does not want to deviate from its tariff because once a waiver is granted based on a particular set of circumstances, it is presented with additional tariff deviation requests each with a slightly different set of facts. The Company believes this causes controversy and customer dissatisfaction. Nevertheless, Idaho Power states that it will not object should the Commission allow an extension of Capital’s refund period.
Staff noted that neither Capital Development, Inc. nor Idaho Power Company objected to processing and resolving this case based solely on Staff’s Decision Memorandum. Based on the record of this case the Commission will grant Capital’s request.
Staff Recommendation:
A review of the facts shows that most are undisputed. Idaho Power completed the original line extension for Shamrock West subdivision on December 9, 1994, and the five-year refund period specified in its tariff began at that time. The arsons occurred between August 1995 and November 1995 and continued to be a concern until the arsonist was caught in the act around June 1996.
The disputed facts deal with exactly when Capital became involved in Shamrock West and what affect if any the arson had on subsequent financial arrangements. Staff found that based on the date of the signed contract, Capital could not have obtained an interest in the development at a discount because the arsons had not yet occurred. Consequently, Capital had a legitimate financial interest in Shamrock West prior to the arson and was therefore subject to the resulting hardship from lost refunds. No other subsequent financial agreements between Capital and other parties to the Development have been identified, so the opportunity for it to obtain a windfall from additional financial involvement cannot be assessed.
Idaho Power’s tariffs regarding refund periods is well understood and has been consistently applied. Refunds are provided from Idaho Power to the developer for each new customer connected to the Company’s system over the five-year refund period. No refunds are provided after five years regardless of build-out status within the subdivision or facility cost recovery by the developer. Therefore, the question becomes, should a refund period extension ever be granted, if so, is it warranted based on the facts of this case and how long should the extension be. Staff agreed with the Company that deviation from existing tariffs could result in numerous additional requests, which if denied, can cause customer confusion and dissatisfaction. However, Staff found that this situation is clearly distinguishable from other economic hardships such as permit delays, depressed markets or unanticipated costs associated with development. Here the arsonist purposely delayed and disrupted construction within the new subdivision. No party has denied the detrimental effects of these acts on the sale of lots, construction of homes and distribution of refunds in Shamrock West.
In Staff’s judgment, the logical mitigation for such an illegal delay/disruption tactic is an extension of the refund period. While it is impossible to determine the exact delay caused by the arson, Staff believes it is reasonable to extend the refund period by one year. This extension period corresponds with the minimum requested by the developer and generally reflects the time period from the first arson until the arsonist was captured. The extension will allow the developer the opportunity to collect refunds that could have been acquired but for the action of the arsonist. In addition, Staff found that Capital established a financial interest in the project prior to the arson. Accordingly, it has a legitimate claim on lost refunds even though the specifics of financial agreements, if any, subsequent to the arson are not known. Therefore, Staff recommended that the line extension refund period for Shamrock West Subdivision be extended from December 9, 1999 to December 9, 2000 in recognition of the impact of the arson. Finally, because of the extreme nature of events in this case Staff recognized that this Order should be limited to the facts herein.
COMMISSION FINDINGS
Based upon our review of Capital’s request, Idaho Power’s opposition and the Staff’s recommendation, the Commission finds that a limited waiver of Idaho Power’s Rule H tariff should be granted. Accordingly, the Commission will extend the refund period from December 9, 1999 to December 9, 2000.
O R D E R
IT IS HEREBY ORDERED that Capital’s request for a waiver of Idaho Power’s Rule H tariff shall be granted. The Commission will extend the five-year refund period until December 9, 2000.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) issued in this Case No. IPC-E-00-11 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. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code §§ 61626 and 62-619.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of October 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

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ORDER NO. 28538 -1-

Office of the Secretary
Service Date
October 10, 2000