20041227Application.pdf

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PATRICK A. HARRI NGTON , ISB # 3423
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
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dTILIT!E.:3 CiJr'l ISSION
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER REGARDING
TREATMENT OF THE SHOSHONE-
BANNOCK TRANSMISSION RIGHT-OF-WAYEASEMENT GRANT
CASE NO. IPC-
ACCOUNTING ORDER
In accordance with RP 052 , application is hereby made to the Idaho Public
Utilities Commission ("Commission ) by Idaho Power Company ("Idaho Power" or
Company ) for an accounting order authorizing the Company to amortize the cost of
the Shoshone-Bannock Tribe ("Tribe Transmission Right-of-Way Easement Grant
Easement G rant") through December 31 , 2027 as set forth herein.
In support of this Application Idaho Power represents as follows:
Idaho Power is an Idaho corporation , whose principal place of business is
1221 West Idaho Street, Boise, Idaho 83702.
APPLICATION FOR ACCOUNTING ORDER , Page
II.
Idaho Power operates a public utility supplying retail electric service in
southern Idaho and eastern Oregon. Idaho Power is subject to the jurisdiction of this
Commission in Idaho and to the jurisdiction of the Oregon Public Utility Commission in
Oregon.Idaho Power is also subject to the jurisdiction of the Federal Energy
Regulatory Commission ("FERC"
III.
While Idaho Power believes that this case should be processed under
modified procedure (RP 201 et. seq.
),
Idaho Power stands ready for immediate
consideration of this Application if it is the Commission s determination that a hearing
should be held.
IV.
Idaho Power has been negotiating with the Tribe since 1996 to renew four
right-of-way easements for five transmission lines 1 (the "Transmission Lines ) that cross
the Tribe s Fort Hall reservation near Pocatello, Idaho. After extensive negotiations , in
November of 2004 , the Tribe agreed to grant new right-of-way easements to Idaho
Power for the Transmission Lines (the Easement Grant"), for a cash payment of
145 000, and scholarship payments of $15 000 per year. The term of the Easement
Grant would extend through December 31 , 2027 (approximately 23 years), and would
also cover the period between 1996 and the present , during which time Idaho Power
continued its permitted use of the easements after their original expiration dates. Idaho
Power s $7 145 000 payment would be paid in three annual installments, and would be
The five transmission lines are the Brady-Fremont 138 kV line No.409, the Pocatello-Don segment of the
Brady-Fremont line No. 409, the Brady-Kinport 230 kV transmission line No. 705, the Kinport-Don 138 kV
transmission line No. 521, and the Don-Goshen 161 kV transmission line No. 602.
APPLICATION FOR ACCOUNTING ORDER , Page 2
divided between the Tribe and the individual "allottees" who have ownership rights over
portions of the reservation lands crossed by the Transmission Lines. Idaho Power
$15 000 scholarship payments would be paid each year during the term of the
Easement Grant, to the college of choice of the scholarship recipients designated by the
Tribe.
Idaho Power, the Tribe and the Bureau of Indian Affairs are currently working
through the process of finalizing the Easement Grant, including obtaining the requisite
consents from the allottees. The parties hope to complete the grant of the New
Easements by the end of 2004 or early 2005.
The accounting that Idaho Power is proposing for the amortization of the
Easement Grant asset is more particularly described as follows:
The total amount of the negotiated Easement Grant is $7 490,000 , which
represents $7 145 000 in total cash payments and $345,000 in total scholarship
payments over the 23-year life of the Easement Grant. The current monthly accrual of
the Easement Grant is $22 738. The Company will continue to book this monthly
accrual until the Commission grants its approval of the Company s proposed accounting
treatment of the Easement Grant. Assuming the Commission would grant its approval
on December 31 2004, the Company would have already expensed $869 355 to FERC
Account #567 - Transmission Rents in recognition of the right-of-way expenses
incurred from the stated expiration dates of the original easements through the end of
2004. On January 1 , 2005, the remaining Easement Grant net asset amount would be
APPLICATION FOR ACCOUNTING ORDER, Page 3
620 645. Idaho Power proposes that the total remaining Easement Grant net asset
amount be amortized over the term of the Easement Grant.
If the Commission has not granted the Company s Accounting Application
by December 31 , 2004, the Company will continue to expense $22 738 per month to
FERC Account #567 with the net asset amount decreasing by the same amount each
month.However, upon the Commission approval of the Company s proposed
Accounting Application , the Company is proposing to capitalize the total remaining net
asset amount of the Easement Grant into FERC Plant Account #302 - Franchises and
Consents.
Standard transmission right-of-ways are usually booked as assets
FERC Plant Account #350 - Transmission Plant, Land & Land Rights.However , this
particular Easement Grant is different because it contractually ties the transmission
right-of-way to a specific time period.Rather than becoming commingled with the
accounting treatment of other more traditional transmission right-of-ways , the Company
contends it is important to specifically identify this asset and give the Easement Grant
its own unique amortization schedule corresponding to the specific terms of the right-of-
way agreement. Therefore, the Company is proposing to capitalize this asset in a
unique subaccount in FERC Plant Account #302. There is a precedent for this type of
separate accounting treatment. Idaho Power currently has a time-specific distribution
plant right-of-way agreement with the Tribe that is being accounted for in a similar way.
After the net asset transfer of the Easement Grant to FERC Plant Account
#302 as described herein , the Company proposes to amortize the net asset over the
APPLICATION FOR ACCOUNTING ORDER , Page 4
remaining number of months until December 31 , 2027 with the following entry each
month:
Account #404 - Amortization of Limited Term PlantDEBIT:
CREDIT:Account #111 - Accum Provision for Amortization
Idaho Power respectfully requests confirmation by the Commission that
the net amount of the Easement Grant be amortized through 2027 with these expenses
recoverable in rates.
VI.
Communications with respect to this Application should be sent to the
following:
Patrick A. Harrington , Attorney
Idaho Power Company
O. Box 70
Boise , Idaho 83707-0070
pharrinqton
(g)
idahopower.com
Jeannette C. Bowman, Sr. Analyst
Idaho Power Company
O. Box 70
Boise , Idaho 83707 -0070
jbowman
(g)
idahopower.com
NOW, THEREFORE Idaho Power respectfully requests that the
Commission issue its order authorizing Idaho Power to amortize expenses associated
with the Shoshone-Bannock Easement Grant in the manner described in Paragraph
above.
1/-1-11DATED at Boise, Idaho , this 2L day of December, 2004.
APPLICATION FOR ACCOUNTING ORDER , Page 5