20070416Reply comments to Avimor reply comments.pdf

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IDAHO
~POWERCID
An IDACORP Company
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Monica B. Moen
Attorney II
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April 16, 2007
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise , Idaho 83720-0074
Re:Case No. IPC-06-
IN THE MATTER OF THE APPLICATION OF IDAHO POWER
COMPANY FOR APPROVAL OF AN AGREEMENT BETWEEN
A VIMOR, LLC IDAHO POWER TO PROVIDE ELECTRIC
TRANSMISSION AND SUBSTATION FACILITIES TO THE
A VIMOR MULTI-USE DEVELOPMENT
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho Power
Company s Reply Comments to the Reply Comments of Avimor for the above-referenced
matter.
I would appreciate it if you would return a stamped copy of this transmittal letter in
the enclosed self-addressed, stamped envelope.
Very truly yours
Monica B. Moen
MBM:sh
Enclosures
O. Box 70 (83707)
1221 w.ldahoSt.
Boise, ID 83702
MONICA MOEN , ISB # 5734
BARTON KLINE, ISB # 1526
Idaho Power Company
1221 West Idaho Street
P. O. Box 70
Boise , Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
Attorney for Idaho Power Company
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OF AN AGREEMENT
BETWEEN AVIMOR , LLC AND IDAHO
POWER TO PROVIDE ELECTRIC
TRANSMISSION AND SUBSTATION
FACILITIES TO THE AVIMOR MULTI-USE
DEVELOPMENT
) CASE NO. IPC-06-
IDAHO POWER COMPANY'
REPLY COMMENTS TO THE
REPLY COMMENTS OF A VIMOR
LLC
COMES NOW , Idaho Power Company ("Idaho Power" or "the Company") and
herewith submits the following comments to the Idaho Public Utilities Commission ("IPUC" or
the "Commission ) in response to the April 2 , 2007 Reply Comments of Avimor, LLC
Avimor") in response to the IPUC Staff's written comments.
INTRODUCTION
On April 2 2007, pursuant to Commission Order No. 30270, Avimor filed its
Reply Comments in response to the IPUC Staff's written comments which were filed on
December 15, 2006. Idaho Power's comments address matters raised by Avimor concerning
(1) reimbursing Avimor s costs of the transmission and substation facilities from charges
REPLY COMMENTS OF IDAHO POWER COMPANY -
made to non-Avimor developments; (2) the accrual of interest on unrefunded amounts paid
by Avimor; (3) the proposed 20-year refund period; and (4) equal protection claims.
II.
REPLY COMMENTS
(1) Reimbursement of Avimor s Development Costs bv non-Avimor
Developments Idaho Power has previously advised Avimor that it has no objections to
Avimor s proposal that the Company be authorized by the Commission to require non-Avimor
developments that connect to the proposed transmission and substation facilities to pay a
lump sum to Idaho Power prior to the connection. The non-Avimor connection charges
would be based on the estimated number of customer hook-ups and the metered demand as
represented by the developments to Idaho Power.Contributions from non-Avimor
developments would be collected from those developments by Idaho Power for a time period
not to exceed Avimor s eligible refund period (ten years as requested by Idaho Power below).
Upon Idaho Power s receipt of the contributions from non-Avimor developments, the
Company would pass those sums to Avimor up to the amount of Avimor original
investment.
(2)Accrual of Interest on the Unrefunded Amounts Paid bv Avimor
Idaho Power objects to Avimor s proposal that interest accrue on the unrefunded balance of
the payments Avimor makes to fund the.facilities required to provide service to Avimor. The
amounts paid by Avimor to Idaho Power will be immediately expended by the Company to
pay for the transmission and substation facilities requested and required by the Avimor
development. As a result, Idaho Power will receive no financial windfall from the advance
paid by Avimor; instead , its Return on Equity (ROE), in the short run , will be negatively
REPLY COMMENTS OF IDAHO POWER COMPANY - 2
impacted since the capital to construct the proposed facilities will not generate any additional
revenue until the Company s next rate case when the new investment is included in the
Company s rate base. Each time Idaho Power invests in additional infrastructure, the
Company s ROE is negatively impacted since rates charged Company customers are not
immediately affected.
Idaho Power s position on this issue is consistent with the treatment of Rule H
attachments and installations. With the exception of interest paid on a Rule H line extension
due to a delay in the start of construction by Idaho Power, no interest accrues on the sums
paid by an applicant for a Rule H facility. The applicant, in that circumstance, is only entitled
to receive a maximum of 100 percent of the refundable portion of the cash payment made to
the Company.
There is no cogent reason to treat the refund of advance payments made by
Avimor for required electrical facilities any differently than the refund obligations of the
Company pursuant to the Commission-approved Rule H tariff. Therefore , Idaho Power
respectfully requests that the Commission deny Avimor s proposal that the amounts paid by
Avimor for the required electrical facilities accrue interest on the unrefunded balances.
(3)20-vear Repavment Period Idaho Power also objects to Avimor
proposal that the period in which Idaho Power would be obligated to refund payments made
by Avimor be extended from ten years , as set out in the agreement between Idaho Power
and Avimor, to 20 years. The ten-year repayment period originally agreed to by the parties is
already a concession on the part of the Company. With the exception of subdivisions platted
prior to January 1 , 1997, subdivision developments are only entitled to a five-year repayment
period under Rule H.
REPLY COMMENTS OF IDAHO POWER COMPANY - 3
A repayment obligation beyond ten years is administratively burdensome
particularly as the number of non-standard developments like Avimor who require service
extensions continues to increase. Furthermore , the contracts negotiated between Idaho
Power and developments such as Avimor are generally not uniform.As a result, the
individual management and attention required to correctly enforce the nuances of each
agreement over a 20-year period generates administrative efforts that can be onerous since
the Company is simply not staffed to manage long-term loan and reimbursement provisions
with its multiple customers. Therefore, Idaho Power respectfully requests that Avimor
proposal to extend the reimbursement period from ten to 20 years be denied and that the
Commission endorse a refund period not exceeding ten years.
(4)Avimor s EQual Protection Claims Avimor s assertion that "(i)f the
Commission. . . chooses to follow Staff's recommendation (and only permit recovery of
000 per connected customer), such a decision would be discriminatory towards Avimor" is
unsubstantiated. Avimor argues that refunds for the cost of electrical infrastructure required
of its development should be calculated identically to the refunds established for the Hidden
Springs development in 1998 and to do otherwise would "possibly amount to a violation of
the Equal Protection Clause of the United States Constitution." Avimor Reply Comments at
10.
Idaho Power is not herein commenting on the amount of refund per connected
customer that Avimor should be entitled to recover. However, the Company argues , contrary
to Avimor, that a Commission decision determining a refund amount different than the
amount recovered by the Hidden Springs development would not result in discriminatory
action in violation of either Idaho Law or the Equal Protection Clause of the United States
REPLY COMMENTS OF IDAHO POWER COMPANY - 4
Constitution.
Section 61-315 of the Idaho Code (2002) prohibits either preferential or
discriminatory treatment of ratepayers by public utilities. Avimor relies upon that statute and
two Idaho Supreme Court cases that addressed the issue of disparate treatment of similarly-
situated utility customers for the proposition that the Commission is prohibited from
authorizing a customer connection refund for Avimor less than that permitted under the 1998
Hidden Springs agreement. Avimor s arguments are flawed for the following reasons.
In Idaho State Homebuilders v. Washington Water Power 107 Idaho 415 690
2d 350 (1984), the Idaho Supreme Court determined that "(a) utility is forbidden to treat a
customer preferentially through its rates and charges , or to maintain unreasonable
differences in its rates and charges as between classes of service.Homebuilders 107
Idaho at 419, 690 P .2d at 354. In Building Contractors Ass n of Southwestern Idaho v. Idaho
Pub. Util. Comm 128 Idaho 534 916 P.2d 1259 (1996), the Idaho Supreme Court opined
that there was no difference in the cost of service between customers based upon the timing
of their connections to the municipal water system and that to charge different rates on the
basis of the timing of the connections
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the fees unlawfully discriminate between old and new
customers in violation of section 61-315 of the Idaho Code.Building Contractors 128 Idaho
at 539 690 P.2d at 1264.
These two cases are not applicable to the matter presently before the
Commission. The Homebuilder's Court specifically stated that the case presented "no factors
such as when a non-recurring charge is imposed upon new customers because the service
they require demands an extension of existing distribution or communication lines and a
charge is imposed to offset the cost of the utility s capital investment." Homebuilders 107
REPLY COMMENTS OF IDAHO POWER COMPANY - 5
Idaho at 421 690 P.2d at 356 (emphasis added). Contrary to the facts in Homebuilders
Idaho Power is imposing a non-recurring charge on Avimor to offset the cost of the utility
capital investment required to respond to the unique circumstances of the Avimor
development. Hence, the matter presently before the Commission is not in violation of the
holdings in either Homebuilders or Building Contractors.
III.
CONCLUSION
Based on the foregoing, Idaho Power respectfully requests that
(1 )Idaho Power be permitted to charge non-Avimor developers who use the
transmission and substation facilities paid for my Avimor and to use those charges
to reimburse Avimor for a period not to exceed Avimor s refund period and up to
the amount contributed by Avimor for the cost of the transmission and substation
facilities;
(2)
(3)
No interest accrue on the unrefunded balances due Avimor; and
The refund period be limited to not more than ten years.
Respectfully submitted this 16th day of April 2007.
(;B.
MONICA B. MOEN
Attorney for Idaho Power Company
REPLY COMMENTS OF IDAHO POWER COMPANY - 6
CERTIFICATE OF MAILING
I HEREBY CERTIFY that on the 16th day of April 2007, I served a true and correct
copy of the within and foregoing document upon the following named parties by the
method indicated below, and addressed to the following:
Duane Black
Executive Senior VP & C.
SunCor Development Company
80 E. Rio Salado Parkway, Suite 410
Tempe, AZ 85281
(X) U.S. Mail , Postage Prepaid
) Hand Delivered
) Overnight Mail
) Facsimile
) Email
William J. Batt
John R. Hammond
Batt & Fisher
S. Bank Plaza, 5th Floor
101 S. Capitol Blvd.
P. O. Box. 1308
Boise, Idaho 83701
(X) U.S. Mail , Postage Prepaid
) Hand Delivered
) Overnight Mail
) Facsimile
(X) Email wib
(g)
battfisher.com
irh (g) battfisher.com
Weldon Stutzman
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, Idaho 83702
) U.S. Mail, Postage Prepaid
(X) Hand Delivered
) Overnight Mail
) Facsimile
(X) Email
Weldon.stutzman (g) puc.idaho.qov
MONICA B. MOEN
REPLY COMMENTS OF IDAHO POWER COMPANY - 7