HomeMy WebLinkAbout20041029Idaho Irrigation Pumpers Assoc.pdfRandall C. Budge
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
O. Box 1391; 201 E. Center Street
Pocatello, Idaho 83204-1391
Telephone: 208-232-6101
Fax: 208-232-6109
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UTILI li LS eci i !SSION
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 FOR ELECTRIC SERVICE TO
IRRIGATION CUSTOMERS
Case No. IPC-O4-
COMMENTS OF IDAHO
IRRIGATION PUMPERS
ASSOCIATION, INC.
Comes now the Idaho Irrigation Pumpers Association ("Irrigators ), through
counsel, and submit the following comments on Idaho Power Company s Application to
revise the deposit requirements under Schedules 24 and 25 for electric service to
irrigation customers.
The Company s Application seeks to add a new "Tier 2" deposit for irrigation
customers who have an outstanding balance of over $1 000 on December 31 , customers
who have been discharged from bankruptcy and customers who have had receivership
proceedings. The deposit is based on a formula that in essence collects more than the
customer s bill for the next irrigation season in advance. The current "Tier 1" requires a
deposit of 1.5 times the estimated monthly bill be paid by customers that have had two or
more reminder notices for nonpayment in a 12-month period, or who have had service
terminated for nonpayment.
The Irrigators strongly support fiscally sound and reasonable deposit policies for
all utility customers in order to minimize uncollectible accounts. Sound deposit rules are
good for the Company and ultimately good for all ratepayers The Irrigators also
recognize that the unique seasonal nature of irrigation customers may warrant a deposit
requirement different from other customers. Accordingly, two years ago, in Case No.
IPC-02-, the Irrigators did not oppose Idaho Power s request to strengthen the
deposit requirements for Irrigation customers. However, the Irrigators do not support the
new "Tier 2" irrigation deposit proposal for the reason that it unfairly singles out
irrigation customers for considerably more stringent deposit requirements as compared to
the deposit requirements of other customers who are also driving an increase in the
Company s write-offs.
Several simple comparisons can be made to show how unfair the proposed deposit
rules are in comparison to other customer classes. As the Commission knows, Irrigation
customers come in all sizes, from the very small to the very large. The Commission has
Utility Customer Relations Rules (UCRR) for residential and small commercial
customers. Why should small Irrigation customers be required to follow far more
stringent deposit rules than customers of similar size that happen to be either Residential
or Small Commercial customers?
Assuming that the Company s proposed Irrigation deposit rules are only to be
applied to Large Irrigation customers, they are still unfair to Irrigation customers when
compared to deposit rules for Large Commercial or even Special Contract customers.
Rule L (found in IPCO's General Rules and Regulations) states that for existing Large
Commercial and Special Contract:
A deposit may be required for failure to pay the amount due on or before
the date the bill is delinquent or the risk of future loss is evident based on
the Customer s current commercial credit rating. (Emphasis added)
By contrast, in the existing and proposed deposit rules for Irrigation customers it
states that: "Customers... will be required to pay a deposit. . ." (Emphasis added). There
is a major distinction between "may be required" and "will be required"
The Irrigators do not dispute that an Irrigation customer that has an outstanding
balance greater than $1000 as of December 31 is a late paying customer, nor that
customers with prior bankruptcies or receiverships have experienced past financial
problems. However, a year-end balance that is small or one paid before the next
irrigation season does not automatically translate to a credit risk. Nor do past
bankruptcies or receiverships indicate across the board payment problems.
Of greater concern regarding the proposed Tier 2 Irrigation Deposit Rules is the
required deposit for these Irrigation customers would be four (4) times the highest
estimated monthly bill. By contrast, Rule L states that for Large Commercial and Special
Contract customers that "the amount of the deposit shall not exceed two times" the
maximum or estimated bill. Thus, under the proposed rules in this case, Irrigators would
be subject to a required deposit of four (4) times the highest monthly bill, while Large
Commercial and Special Contract customers may not even be required to post a deposit
and if they are so required, that deposit can range from anywhere between zero and only
two times the highest monthly bill.
As part of its justification for the proposed deposit rules for Irrigation customers
Idaho Power points to its recent write-offs for Irrigation customers. The following
figures are cited:
Irrigation
Write-off
$426 139
$413 712
$516 582
2002
2003
2004 as of July
Unfortunately, the Company did not provide any historic data than this to show if
these values represent the status quo, reflect a major shift (up or down), or if the current
deposit rules for Irrigators adopted in the last case made any difference.
A look at FERC Form 1 data for the last several years reveals that there has been
a major increase in Account 904 (Uncollectible Expense).
IPCo Un collectibles
:E $2
1998 1999 2000 2001 2002 2003
1 In its analysis Idaho Power appropriately excluded a single write-off of $668 724 that would have greatly
skewed the results and thus the analysis of the problem.
This large shift in Uncollectible Expense is a company-wide problem and not
something that is specific to the Irrigation class.
As stated at the outset, the Irrigators agree with strong deposit requirements.
However, deposit rules should be fairly and uniformly applied to all customers as
possible with appropriate allowances to account for uniqueness of some customer classes.
The Company s proposal appears to be an attempt to isolate and apply considerably more
stringent deposit requirements to irrigation customers without addressing the overall
problem caused by other customer classes.
Accordingly, the Irrigators make these recommendations: 1) Reject at this time
the "Tier 2" deposit proposal proposed by the Company; 2) Modify the existing Tier
deposit requirement to increase the deposit to 2 months by changing the multiplier from
1.5 to 2; and 3) Initiate further proceedings (in this case or a separate case) to examine
and modify the deposit requirements for all customers driving an unacceptable increase in
the Company s Uncollectible Expense.
RESPECTFULLY SUBMITTED this day of October, 2004.
RACINE, OLSON, NYE, BUDGE
& BAILEY, CHARTERED
By
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CERTIFICATE OF SERVICE
JV\
I HEREBY CERTIFY that on this 'Z "'(day of October, 2004, I mailed
a true and complete copy of the foregoing document, postage prepaid, to each of the
following:
Commission Secretary
Idaho Public Utilities Commission
O. Box 83720
Boise, Idaho 83720-0074
Monica B. Moen
Maggie Brilz
Idaho Power Company
O. Box 70
Boise, Idaho 83707
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