20061128notice_of_application_order_no_30190.pdf

Office of the Secretary
Service Date
November 28, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR CASE NO. IPC-06-
APPROVAL OF AN EXECUTORY SALE
AND TRANSFER OF UTILITY PROPERTY NOTICE OF APPLICATION
PURSUANT TO A TRANSFORMER
SHARING AGREEMENT NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 30190
On November 14, 2006, Idaho Power Company filed an Application requesting that
the Commission approve a Spare Transformer Sharing Agreement ("Transformer Agreement"
with nearly 50 of the nation' s other electric utilities. The Transformer Agreement provides that
in the event of a deliberate act of terrorism disabling one or more utility substations, the
participating utilities may be called upon to provide/sell spare electric transformers to the
affected utility. Application at 1-2. In essence, the Transformer Agreement creates an industry-
wide pool of spare electric transformers that can be transferred from one utility to another utility
in the event of a coordinated terrorist attack upon the nation s electric infrastructure. The
Company requests that this Application be processed under Modified Procedure.
BACKGROUND
On July 18, 2006, the Edison Electric Institute (EEl) on behalf of more than 40
participating utilities filed an application with the Federal Energy Regulatory Commission
(FERC) seeking authorization for jurisdictional public utilities to engage in the future transfers of
transformers. Order on Application for Blanket Authority for Transfers of Jurisdictional
Facilities and Petition for Declaratory Order 116 F.E.R.C. R. 61 280 at ~ 3 (September 22
2006), hereinafter the Declaratory Order.In its FERC application, EEl indicated that 43
entities have executed the Transformer Agreement. EEl stated these participating utilities own
more than 60% of the interstate bulk-power transmission system. Id. EEl asserted that the
Transformer Agreement is "a prudent approach to making efficient use of the industry s existing
spare transformers and fairly allocating the responsibility to acquire a limited number of
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30190
additional spares, while minimizing duplicative purchases of the these costly assets.Id. at ~ 4
citing Application at 8-
EEl submitted its FERC application under Section 203 of the Federal Power Act. 16
C. ~ 824b. This section requires that FERC approve the disposition of jurisdictional
transmission facilities when the value of such facilities exceeds $10 million. Although the cost
of many transformers is less than $10 million, EEl expressed concern that the jurisdictional
threshold may be met when a public utility disposes of a large transformer or when several
smaller transformers collectively cost more than $10 million. Declaratory Order at ~ 18.
On September 22, 2006, FERC approved the request for blanket authorization of the
Transformer Agreement. The FERC applauded the efforts of EEl and the participating utilities
to pool and share spare transformers. FERC noted that:
Without the (Transformer) Agreement, utilities would have to purchase
substantially more transformers to achieve the same recovery capability,
incurring substantially higher costs, or experience the inherent time delay
associated with finding, negotiating for, ordering, transporting, and testing a
replacement transformer. Furthermore, the Agreement establishes the
obligation to share spare transformers with Participating Utilities if there is a
Triggering Event. Accordingly, we find that the sharing arrangement in the
Agreement is prudent.
Declaratory Order at ~ 39.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that under the Transformer Agreement, each
participating utility is required to maintain, and if necessary, acquire a specific number of
transformers in each voltage class in which it participates. The Agreement requires participating
utilities to sell their spare transformers to another participating utility in its voltage class if there
is a triggering event. Idaho Power anticipates that it will commit 400 megavolt-amperes (MV A)
of spare transformers to the sharing pool in its 230 kV -138 kV equipment class. Application at ~
YOU ARE FURTHER NOTIFIED that Idaho Power asserts that it will lower its
overall future costs to maintain spare transformers in its inventory, thereby benefiting ratepayers.
By participating in the Transformer Agreement, Idaho Power receives the benefit of access to
J A "triggering event" is defined as an act of terrorism that destroys or disables one or more substations and results
in a declaration of a state of emergency by the President. Agreement at 9 1.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30190
transformers in a national emergency without the added costs and risks of buying and carrying
large surpluses of spare transformers in its inventory. Id. at ~ 6.
YOU ARE FURTHER NOTIFIED that although Idaho Power believes the risk of
having to sell a spare transformer under the Agreement to be very low, the possibility of such a
sale would require this Commission s approval under Idaho Code ~ 61-328. This section
provides in pertinent part that no electric utility may sell or transfer "any property located in this
state which is used in the generation, transmission, distribution or supply of electric power and
energy to the public or any portion thereof. . . except when authorized to do so by order of the
public utilities commission." Before authorizing such a transaction, the Commission must find
that: (1) the transaction is consistent with the public interest; (2) the costs of and rates for supply
and service will not be increased by reason of such transaction; and (3) the transaction will not
adversely effect the financial ability of Idaho Power to operate and maintain its facilities. Idaho
Code ~ 61-328(3). The Commission may condition its authorization with such terms and
conditions as in its judgment the public convenience and necessity may require. Idaho Code
61-328(4).
YOU ARE FURTHER NOTIFIED that Idaho Power states that because the possible
transfer and sale of transformers is executory, "appropriate bookkeeping entries will be made at
the time of any future transfer and sale" of transformers. Application at ~ 9. At this time the
Company does not seek approval of any ratemaking treatment for the Transformer Agreement
fees and any new inventory required by the terms ofthe Agreement. Id.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure IDAP A 31.01.01.201 through .204. The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission within
twenty-one (21) days from the service date of this Notice. The comment must contain a
statement of reasons supporting the comment. Persons desiring a hearing must specifically
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30190
request a hearing in their written comments. Written comments concerning this Application
shall be mailed to the Commission and the Applicant at the addresses reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Lisa D. Nordstrom
Barton L. Kline
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
E- Mail: lnordstrom~idahopower.ocm
bkline~idahopower.com
472 W. Washington Street
Boise, ID 83702-5983 Ric Gale
Vice President Regulatory Affairs
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
E-mail: rgale~idahopower.com
These comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov.Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to Idaho Power at the e-mail addresses listed
above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application and supporting exhibits have
been filed with the Commission and are available for public inspection during regular business
hours at the Commission offices. The Application and exhibits are also available on the
Commission s Website at www.puc.idaho.gov under the "File Room" icon and then "Electric
Cases.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30190
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code ~ 61-328. The Commission may enter any final Order consistent with its authority
under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAP A 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that this matter be processed under Modified Procedure
pursuant to the Commission s Rules 201 through 204, IDAPA 31.01.01.201-204. Persons
interested in submitting written comments in this case must do so no later than twenty-one (21)
days from the service date ofthis Order.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this J.~
day of November 2006.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
J n D. Jew
mmlSSlOn Secretary
bls/O:IPC-06-27 dh
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30190