28883.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

SHADOW MOUNTAIN ESTATES LLC.,

Complainant

vs.

IDAHO POWER COMPANY,

Respondent. )
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CASE NO. IPC-E-01-29

ORDER NO. 28883

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.
DESCRIPTION OF THE COMPLAINT
Shadow Mountain Estates LLC owns property located at 2295 American Legion Blvd. in Mountain Home. 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 1999.
In accordance with its Tariff 26 General Rules and Regulations – 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 “multi 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 agrees that it did not meet Idaho Power’s requirement as a subdivision at the time it requested line extension facilities be installed, but believed it would be treated as a subdivision if it met the definition in the future.
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. Shadow Mountain believes that now its development is platted as a subdivision by Elmore County, it meets Idaho Power’s definition as a subdivision. Consequently, it contends that it should be entitled to refunds as a subdivision. 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 because 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 have been unable to reach a compromise. 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. On September 27, 2001, the Commission Staff filed comments. On October 5, 2001, Idaho Power filed a response to Staff comments.
IDAHO POWER ANSWER
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 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 (71) 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 (71) 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, Rule H, the Company contends, 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’S POSITION
Staff believes that arguments can be advanced for both positions. Staff sees Idaho Power in this dispute as relying strictly on its tariff and attempting to apply the tariff in a non-discriminatory way. Staff contends, however, that the issue in this complaint is not clearly addressed in the tariff. In Staff’s opinion, a change in the status of a development after a line extension has been installed was never contemplated when Rule H was drafted.
In Staff’s opinion, the portion of Rule H cited above by Idaho Power in its defense is being misinterpreted. It recognizes that changes will be made in the tariff from time to time, and that the version of the tariff in effect at the time the line extension is made should apply. Its purpose is simply to preclude rules from being applied retroactively. Staff does not believe the passage cited by Idaho Power refers to the status of the customer at the time the application is made, or for that matter, that it even contemplates some future change in a customer’s status.
Staff notes that only two lots in the development were ever occupied, and then only for a short time. Now, all of the lots are intended to be sold and if sold, may be occupied by permanent dwellings, that will be electrically heated. Staff contends that from the standpoint of recovery of the utility’s investment and assurance of a future revenue stream, the development is no different than a subdivision. If Idaho Power does not provide refunds as lots become occupied, then Staff believes that the Company will over-recover its investment in facilities and become unjustly enriched. If Idaho Power does provide refunds, it will still recover its investment through the revenue received from new customers over time.
Staff acknowledges that Idaho Power’s accounting procedure is different for a subdivision than for a multiple occupancy project, and that to change the classification of the development now would create some accounting difficulties for Idaho Power. However, Staff does not believe these difficulties are unmanageable.
Staff recommends treating any lot sold and permanently occupied after June 11, 2001, 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 five-year time period for eligibility for refunds start as of the date when the line extension was originally completed, December 8, 1999.
IDAHO POWER RESPONSE
Idaho Power disagrees with Staff’s position on Rule H “change in status.” Rule H states that “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.” Contrary to Staff’s contention, the Company believes that this rule has not been promulgated simply for the purpose of establishing that rules would not be applied retroactively based upon principles of contract law. The rule has been promulgated and uniformly administered for many years, the Company states, to avoid the contention (either by the Company or its customers) that changed circumstances could cause a change in the application of the Company’s installation rules. The basic purpose for the language in question, the Company contends, is to ensure that Idaho Power personnel will apply the Company’s line installation rules on a non-preferential, non-discriminatory basis. Rule H, the Company contends, is not ambiguous and the Company believes that it should be administered as written.
Staff’s interpretation that the rule is silent, and thus allows for a change in the status of a development after a new distribution line has been installed, is not only erroneous, the Company contends, but such an interpretation is also bad policy that would lead inevitably to the application of the Company’s line installation rules differently in similar situations. Once the rule is subject to a particular individual’s interpretation no matter how well meaning the interpretation, the uniform application of the rule, the Company states, will be lost. The only way to ensure uniform administration of the rule, it believes is to ensure that changed circumstances will not cause a change in the application of Rule H, either to the detriment or benefit of the Company or a developer.
The purpose for requiring contributions under Rule H, the Company states, is to reduce the Company’s investment that it can claim as rate base. The reduction in rate base results in a lower revenue requirement for Idaho Power and thus lowers rates for Idaho Power’s customers. Idaho Power’s rates, the Company states, are not based upon an investment subdivision by subdivision, but are based on the Company’s overall investment in facilities. Staff’s statement, if taken literally, that the Company can over recover its investment in facilities and become unjustly enriched under Rule H, the Company contends, is not accurate. The Commission’s decision in this case, the Company contends, should not be based on the concept of over-recovery or unjust enrichment.
Idaho Power believes that the Rule H provisions should apply based on the status of the Applicant at the time the Application for a line installation is made, the financing has been determined, and the line has been constructed, and the requirement should not be changed based upon any subsequent change in the Applicant’s status after these events have occurred.

Commission FINDINGS
The Idaho Public Utilities Commission has reviewed the filings of record in Case No. IPC-E-01-29, including the respective positions of Shadow Mountain, Idaho Power and the Commission Staff. The dispute revolves around the interpretation of Idaho Power’s line extension rules and eligibility for refunds. We find that there are no disputed facts.
The Idaho Power Rule H—Line Distribution language in dispute is the following:
All applications will be governed and administered under the Rule or Schedule in effect at the time that the application was received and dated by the Company.
The Complainant, Stuart Greene, contends that Idaho Power should recognize Shadow Mountain’s change in status from “multiple occupancy” project to platted “subdivision” as to eligibility for refunds.
The Company contends that eligibility for refunds is determined by an applicant’s status at the time of application and construction of the line installation. The Company believes that eligibility for refunds is fixed at time of application and cannot be changed by subsequent changes in status.
The Commission finds the language of Rule H to be clear and unambiguous. The obligations and responsibilities of the Company and the applicant are determined at the time of the application for service. At the time of application for service, Shadow Mountain was not a platted and approved subdivision and was not eligible for refunds. Shadow Mountain seeks to change its eligibility status for refunds nearly two years following completion of the construction of the line extension. This does not comport with the intent of the Company’s line extension/refund eligibility rules. Rules are established to provide certainty for the customer, the Company and the Commission. To allow reclassification of land development projects years after the application has been processed and accounting treatment has been established would introduce an unacceptable level of uncertainty and administrative difficulty into the line extension rules. The Commission therefore finds that Shadow Mountain is not eligible for line extension refunds for the initial 71 lots. Reference Idaho Power Tariff Rule H, Sheet No. H-11, Existing Agreements; Rule H, Sheet No. H-2, Definitions-Subdivision.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company, an electric utility, and the issues presented in complaint Case No. IPC-E-01-29 pursuant to the authority granted in Idaho Code, Title 61 and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED and the Commission does hereby determine that Shadow Mountain Estates LLC is not eligible for the line extension refunds requested of Idaho Power Company in its Complaint filing in Case No. IPC-E-01-29.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this _______ day of October 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:IPC-E-01-29_sw2
Rule H applies to requests for electric service . . . that require the installation, alteration, relocation, removal or attachment of Company-owned distribution facilities.

ORDER NO. 28883 1

Office of the Secretary
Service Date
October 25, 2001