20020930Comments.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO REVISE DEPOSIT REQUIREMENTS IN
SCHEDULES 24 AND 25 (IRRIGATION
CUSTOMERS).

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CASE NO. IPC-E-02-9

COMMENTS OF THE
COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Weldon B. Stutzman, Deputy Attorney General, and in response to the
Notice of Application and Notice of Modified Procedure issued in Order No. 29112 on
September 11, 2002, submits the following comments.

BACKGROUND
On August 20, 2002, Idaho Power Company filed an Application requesting approval to
revise the deposit requirements in Schedules 24 and 25 for electric service to irrigation
customers. Currently those schedules allow the Company to collect a deposit from customers
with no credit history, customers with a history of late payments, customers for whom an order
for relief has been entered under bankruptcy laws, or for whom a receiver has been appointed in
a court proceeding. The Company asserts its proposed revisions will be fairer to customers while
furthering the purpose of protecting the Company against losses from unpaid irrigation bills.

STAFF COMMENTS 1 SEPTEMBER 30, 2002

STAFF ANALYSIS
The Company is proposing two changes to irrigation deposit requirements that include
modifying the criteria used to determine who is required to post a deposit and the method of
calculating the deposit amount. Current tariff language requires that Schedule 24 and 25
customers who have two or more late payments of $100 or more during a twelve-month period
pay a deposit for the next irrigation season. Payments are late when they have not been received
at the time the following month’s bill is rendered, which gives customers approximately 30 days
to pay their bills without being “late”. The Company proposes that the deposit requirements be
changed so that a deposit is not required unless a customer is sent two or more “reminder
notices” for unpaid bills of $100 or more in the previous year. Reminder notices are mailed
approximately 45 days following the initial mailing of the bill if it is unpaid. This gives
customers an additional 15 days to pay their bills without incurring a deposit requirement in the
following year. A deposit is required from fewer customers under the proposed criteria.

STAFF COMMENTS 2 SEPTEMBER 30, 2002
The Company also proposes to change the method of calculating the deposit amount.
The current deposit amount is 1.5 times the customer’s highest monthly bill at that metering
point during the past year. The Company is required to adjust the deposit amount if the customer
tells the Company that a different crop with different water requirements will be irrigated from
that pump in the coming year. The Company contends that this method can be gamed to reduce
the deposit amount if the irrigator tells the Company that a less water intensive crop will be
supplied from that pump when it is not true. To avoid this situation, the Company proposes to
calculate the deposit amount based on the physical characteristics of the pumping installation and
the Company’s irrigation rates with an adjustment factor that makes total irrigation deposits
revenue neutral. Revenue neutral means that the Company collects the same total dollar amount
of irrigation deposits from the proposed customer group under the proposed methodology that it
would have collected from the same group under existing irrigation deposit methodology. The
new formula that produces the same total irrigation deposit revenue for the Company will not
necessarily require the same amount from each customer required to pay a deposit. Some will
pay more under the proposed methodology than they would have under the existing methodology
and some will pay less. The proposed step by step calculation process is identified on the bottom
half of Page 3 of the Company’s Application. Another way to view the proposed method for
calculating the amount of the deposit is that it is approximately 1.5 times a customer’s estimated

STAFF COMMENTS 3 SEPTEMBER 30, 2002
monthly in-season bill when the estimate assumes that the pump and motor operate at their full
rated capacity for one-half of the hours in a 30 day month. The Company’s proposed calculation
establishes a uniform methodology to determine the deposit amount, is difficult to game and
lends itself to automation.
The Commission Staff contacted the Idaho Irrigation Pumpers Association to obtain input
for these comments. The Pumpers Association indicated to Staff that it will be filing its own
comments in this proceeding.

STAFF RECOMMENDATION
The Commission Staff supports the Company’s proposed changes to irrigation deposit
requirements. The proposed changes will require deposits from fewer customers by tying the
deposit requirement to “reminder notices” rather than “late payments” which allows 15 more
days for payment. This will benefit customers who pay their bills monthly but who accumulate
all of the month’s bills before paying. A deposit is not necessary from this type of customer to
protect the Company from unpaid bills. The Company’s proposal also allows further automation
of the irrigation deposit process, which in the end should save the Company and its customers
money. Automation brings trade-offs. The process becomes less personal, but it is the automatic
nature of the deposit requirements decisions and calculations that capture the cost savings and
reduce the potential for gaming.

Respectfully submitted this day of September 2002.

_____________________________
Weldon B. Stutzman
Deputy Attorney General

Technical Staff: Keith Hessing
Beverly Barker

WS:uumisc/comments/ipce02.9wskh