09182001.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
BILL EASTLAKE
GENE FADNESS
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
TONYA CLARK
RICK STERLING
DAN GRAVES
BEVERLY BARKER
WORKING FILE

FROM: SCOTT WOODBURY

DATE: SEPTEMBER 18, 2001

RE: CASE NO. IPC-E-01-29 (Idaho Power)
COMPLAINT BY SHADOW MOUNTAIN ESTATES LLC
ELIGIBILITY FOR LINE EXTENSION REFUNDS

On July 30, 2001, the Idaho Public Utilities Commission (Commission) received a letter from Stuart Greene, agent for Shadow Mountain Estates LLC, (Greene; Shadow Mountain) requesting that a formal complaint be initiated against Idaho Power Company (Idaho Power; Company) regarding Shadow Mountain’s eligibility for line extension refunds.
BACKGROUND
The Commission Staff was first contacted by Mr. Greene on May 7, 2001. At that time, Greene complained that Idaho Power was refusing to consider his residential development in Mountain Home, Shadow Mountain Estates, to be eligible for individual lot refunds under Rule H, of Idaho Power’s line extension rules. Staff discussed the complaint at length with both Greene and Idaho Power and determined that while Greene’s complaint may have merit, it was moot until a subdivision plat was actually approved for the property in question. Greene assured Staff at that time that approval of a subdivision plat by the city of Mountain Home was imminent. However, approval of the plat was not obtained until June 11, 2001. Staff’s further investigation of the complaint resumed upon receipt of Greene’s July 30 letter indicating plat approval had been obtained.
DESCRIPTION OF THE COMPLAINT
Shadow Mountain Estates LLC owns property located at 2295 American Legion Blvd. in Mountain Home, Idaho. The property was originally approved by the city of Mountain Home as a manufactured home leasehold community. Initially, 71 lots were developed. Because the lots were intended to be leased rather than sold, the property was platted as one lot with 71 individual meters. Idaho Power billed Shadow Mountain a total of $97,905. Shadow Mountain paid the full amount and the line extension needed to serve each of the lots was installed.
In accordance with its Rule H, Idaho Power classified the project as a “multiple occupancy” project instead of a “subdivision” because as platted, the project met the Rule H definition of “multiple occupancy” but not “subdivision.” The ramifications of the multiple occupancy classification were a lower allowance and the inability to qualify for $800 per lot refunds as each lot became permanently occupied. Shadow Mountain argued that the line extension facilities to be installed would be identical regardless of whether the property was platted as one lot or as 71 lots. Despite its objection, Shadow Mountain accepted that the development did not meet the definition of subdivision contained in Rule H and therefore was not entitled to an $800 refund for each lot that became permanently occupied.
Shadow Mountain understood that the project, as platted, was being treated as a multiple occupancy project and admits that platting was discussed with Idaho Power’s representative. Shadow Mountain contends however, that there were never any discussions with Idaho Power that if the property was changed to a platted subdivision, that it had to be done in a specified time frame to be eligible for the $800 per lot refunds. Shadow Mountain apparently believed that if the status of the property was changed in the future to meet Idaho Power’s definition of a subdivision, that it would then become eligible for refunds as a subdivision.
Shadow Mountain has now platted the original 71 lots, along with an additional 56 lots, as a subdivision in which all lots will be sold. Although a line extension request has not yet been made for the new phase of 56 lots, Idaho Power agrees that the new lots will be eligible for refunds since a subdivision plat has been recorded. Both Idaho Power and Shadow Mountain also agree that there is no difference between either the electrical facilities to be installed or in the nature or expected energy usage of the customers in the initial phase and in the new phase.
Both parties disagree about how the complaint should be resolved and neither is willing to compromise. Except for approval of a subdivision plat, nothing has changed since the initial complaint was filed to change either party’s position. Negotiations between the parties and Staff have reached an impasse.
On August 28, 2001, the Commission caused a summons to issue in Case No. IPC-E-01-29. On September 14, 2001, Idaho Power filed its Answer.
IDAHO POWER RESPONSE
Key to the resolution of the complaint filed by Shadow Mountain, the Company contends, are the line installation tariffs that were in effect at the time of the construction of the line installation. The pertinent period is May 26, 1999 through December 8, 1999 (the period from the time of the original line installation inquiry to when construction of the line was completed). The pertinent provisions of Rule H are as follows:
Rule H, Sheet No. H-2, Definitions
Subdivision is the division of a lot, tract, or parcel of land into two or more parts for the purpose of transferring ownership or for the construction of improvements thereon, that is lawfully recognized and approved by the appropriate governmental authorities.

Rule H, Sheet No. H-11, Existing Agreements
VIII. Existing Agreements
This rule shall not cancel existing agreements, including refund provisions, between the Company and previous Applicants, or Additional Applicants. All Applications will be governed and administered under the rule or schedule in effect at the time the Application was received and dated by the Company.

The relevant facts in this dispute, the Company contends, are not contested. In May 1999 representatives of Shadow Mountain inquired as to a line installation for a proposed development and whether the proposed development would be eligible for subdivision lot refunds. After investigation, a representative of Idaho Power advised Shadow Mountain that the proposed development would not be eligible for subdivision lot refunds. The reason given to Shadow Mountain was that the proposed development was clearly not a subdivision (Rule H, Definition—Subdivision) and therefore was not eligible for subdivision lot refunds.
In late spring/early summer of 2001, Shadow Mountain advised the Company that it was replatting the original development as well as some additional property as a 127 lot subdivision. It is Idaho Power’s position that at the time service was installed to the original 70 spaces for a cost of $97,905, that part of the development was not a subdivision and the Company’s Rule H clearly provides that the time for determination of eligibility of subdivision lot refunds is from when the application for service is made to the Company. Service was provided on December 8, 1999. Shadow Mountain’s request for subdivision lot refunds for the original 70 spaces, the Company contends, is not appropriate. Pursuant to the Company’s tariffs, the Company’s rules in effect at the time arrangements for service are requested and provided is controlling. That rule clearly provides that the subdivision lot refunds are not available except for subdivisions. Shadow Mountain’s development did not meet that requirement. Idaho Power recommends that Shadow Mountain’s complaint be denied.
STAFF ANALYSIS
Commission Staff believes a fair resolution of the complaint is to treat any lot sold and permanently occupied after the date of subdivision approval as a subdivision lot eligible for an $800 per lot refund. Any lots previously leased and occupied by a permanent dwelling would not be eligible for a refund. Staff also proposes that the time period for eligibility for refunds start as of the date when the line extension was originally completed.
COMMISSION DECISION
Shadow Mountain Estates has filed a complaint seeking line extension refunds. Idaho Power contends that Shadow Mountain is not entitled to refunds citing its line extension rules as authority for denial. Staff recommends a compromise. Does the Commission wish to grant or deny the relief requested by Shadow Mountain?

Scott D. Woodbury

bls/M:IPCE0129_sw

DECISION MEMORANDUM 4