20071010Answer.pdf

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IDAHO~POWER~
Lisa D. Nordstrom
Attorney II
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An IDACORP Company
October 9 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-07-
South Elmore Irrigation Company v. Idaho Power Company
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of the Answer of
Idaho Power Company in 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
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If~Lisa D. Nordstrom
LDN:sh
Enclosures
O. Box 70 (83707)
1221 W. Idaho St.
Boise. ID 83702
LISA D. NORDSTROM ISB #5733
BARTON L. KLINE ISB #1526
Idaho Power Company
P. O. Box 70
Boise , Idaho 83707
Telephone No. [phone]
FAX Telephone No. [phone]
E-mail: Inordstrom (g) idahopower.com
Attorneys for Idaho Power Company
Street Address for Express Mail
1221 West Idaho Street
Boise, Idaho 83702
RECE.
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ZGil1 OCT -9 PI, ti: 49
IDf\H;PUBLIC
UTiLITIES COiV1fillSSICL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
SOUTH ELMORE IRRIGATION
COMPANY
Petitioner
IDAHO POWER COMPANY
Respondent.
) CASE NO. IPC-07-
) ANSWER OF IDAHO POWER
) COMPANY
COMES NOW Idaho Power Company ("Idaho Power" or the "Company ) and , in
accordance with IPUC R.P. 057 , hereby submits this Answer to the Formal Complaint
submitted on August 21 , 2007 by South Elmore Irrigation Company ("South Elmore
the Petitioner in the above-entitled matter.Idaho Power hereby denies all of the
material allegations contained in South Elmore s Complaint except as specifically
admitted by Idaho Power in this Answer. Pursuant to Idaho Public Utilities Commission
ANSWER OF IDAHO POWER COMPANY -
IPUC") Rule of Procedure 057.02(a), any material allegation not specifically admitted
in this Answer shall be considered by the Commission to be denied.
FACTUAL BACKGROUND
South Elmore is one of Idaho Power s largest irrigation customers and , given its
physical location and energy needs , has complex metering requirements. The billing
error affected only one of 18 service points, known as the "Flying H" pumping station , on
just one of South Elmore s summary bills.
The Flying H pumping station is located adjacent to the Snake River in a narrow
deep canyon and was first installed in 1975. To meet South Elmore s energy needs, the
Flying H station uses two power transformers to provide power to the pumps that lift
water from the Snake River up the steep ravine wall to irrigate fields located on the
plains above.Because of the transformer configuration, two sets of current
transformers (CTs) and a set of auxiliary CTs were required to meter the energy used at
Flying H.
As part of the load research studies it conducts for each rate class , Idaho Power
installs load profile meters to record the interval usage data of customers included in the
load research samples. As part of the Company s normal load research sample update
process, after a new irrigation sample was selected and implemented in 2002, a load
profile meter was removed from South Elmore s Flying H pumping station and replaced
with a non-load profile meter on November 13, 2002. On November 18, 2002, a Meter
Technician ran a meter constant validation report on South Elmore s account in Idaho
Power s Customer Information System (CIS). The Flying H station showed a billing
constant (also known as a "meter multiplier" or "billing multiplier") of 12 000 and a
ANSWER OF IDAHO POWER COMPANY - 2
calculated constant of 6,000.The Meter Technician perceived this discrepancy to be
an error and changed the billing constant to 6 000 without conducting a site visit or
completing a verification order.
This differential between the billing constant and the calculated constant was in
fact correct. Because the CIS was not designed to hold or calculate auxiliary CTs , it did
not recognize the 2-to-1 ratio auxiliary CTs installed to tie the outputs of the two primary
transformers together. The Flying H station is the only installation on Idaho Power
system that uses auxiliary transformers, which were necessitated by South Elmore
large energy needs and isolated location. At the end of the 2007 irrigation season
Idaho Power plans to replace the 2-to-1 ratio auxiliary CTs with 1-to-1 ratio auxiliary
CTs to reduce the likelihood that a similar billing error could reoccur with the Flying H'
complex metering package.
Following the changed billing constant, South Elmore received bills for only half
of its usage at the Flying H pumping station from November 2002 to April 2007. Since
2002 South Elmore s energy use has varied from year to year due to a reduction in the
number of acres being irrigated. Idaho Power did not discover the billing error until May
, 2007, at which point the billing constant was corrected to 12 000. Due to the
increased awareness and improved verification processes resulting from the Company
CT metering verification effort , Idaho Power uncovered the error during the scheduled
May 2007 inspection of irrigation meters serving pumps larger than 500 horsepower.
Idaho Power contacted South Elmore in June of 2007 to explain and apologize
for the billing error. As explained in the June 11 , 2007 letter attached to South Elmore
Complaint, the total dollar amount of the rebilling for energy use that was not billed
ANSWER OF IDAHO POWER COMPANY - 3
between the three-year period OS/26/2004 through 04/26/2007 is $916 702.24. If all of
the billings over the four-year period during which the error occurred had been
corrected , the total dollar amount of the rebilling would have been approximately
344 000.
Idaho Power has offered to work with South Elmore on a payment plan that
extends the payment period beyond the thirty-six (36) months within the parameters set
by UCRR 204.03. It is Idaho Power s hope that spreading the amount owed over a
longer time period would help minimize South Elmore s hardship in paying the rebilled
amount.
RESPONSE TO ALLEGATIONS
Except as specifically admitted by Idaho Power in this Answer, Idaho Power
Company hereby denies all of the material allegations contained in South Elmore
Complaint filed with the Commission on August 21 , 2007. The numbers listed in the
following paragraphs correspond to numbering used by South Elmore in its Formal
Complaint.
Idaho Power admits the allegations contained in Paragraphs 2 , 5 , 6, 7 , 8, 10 , 11
15,, and 18 of the Complaint.
II.
Idaho Power admits that an incorrect billing constant was inadvertently entered
into the Company s billing system in 2002 that resulted in Idaho Power inaccurately
billing South Elmore for only half of its actual usage at the Flying H pumping station.
However, Idaho Power denies the allegation in Paragraph 13 that it lacks authority to
ANSWER OF IDAHO POWER COMPANY - 4
issue a corrected billing to South Elmore for the months of May 2004 through April
2007.
The Company s billing practices are governed by the Commission and its Rules
specifically Utility Customer Relations Rules 204 and 313 (IDAPA 31.21.01.204 and -
313), which the Commission promulgated pursuant to the legislative authority vested in
it by Idaho Code 9 61-507. These rules encompass more than meter failures and
malfunctions , requiring that the utility also prepare a corrected billing for bills that were
inaccurately prepared.South Elmore actual energy usage is known , and the
inaccuracy in its billing was the result of Idaho Power s application of the wrong billing
multiplier. Thus, Idaho Power s issuance of a corrected billing for the three (3) years
prior to the error discovery are in keeping with these Rules and established
Commission practice.See Order Nos. 28212 , 28298 and 30431 (finding utilities
properly rebilled customers for the maximum three-year period after use of an incorrect
billing multiplier was discovered).
III.
Idaho Power admits the allegation in Paragraph 17 insofar as Idaho Code 9 61-
642 concerning overcharges does not authorize Idaho Power to back bill South Elmore
for three (3) years of undercharged usage. However, Idaho Power denies asserting in
its June 11 th letter to the Complainant that the Company relied on Idaho Code 9 61-642
for its rebilling authority. A careful reading of the letter indicates that the Company did
not mention the Idaho Code at all , referring generally to its tariffs and Commission rules
as requiring it to prepare corrected billings in these types of instances. Idaho Power
ANSWER OF IDAHO POWER COMPANY - 5
continues to believe that its tariffs and the Commission rules form the basis of its
rebilling authority.
The Company presumes this allegation refers to Utility Customer Relations Rule
(UCRR) 204's cross-reference to Idaho Code ~ 61-642, which was recently argued by
Jerrene Phillips (the complainant in Case No. IPC-07-1) as providing inadequate
authority for the Commission to promulgate rules allowing for a three-year back billing
period. As it argued in that docket, Idaho Power disagrees with this assertion.
In Idaho Code ~ 61-501 , the Idaho Legislature empowered the Commission "
supervise and regulate every public utility in the state and to do all things necessary to
carry out the spirit and intent of the provisions" of the public utilities law. To that end
the Utility Customer Relations Rules (IDAPA 3121.01 et seq.) were adopted under the
general legal authority of the Public Utilities Law, Chapters 1 through 7 of the Idaho
Code and the specific legal authority of Idaho Code Sections 61-301 , 61-302, 61-303
61-315 , 61-503 , 61-507 , and 61-520. See UCRR
No Idaho statute needs to specifically address the underbilling of customers
because the Idaho Legislature purposely authorized the Commission to prescribe rules
and regulations to govern public utilities that perform a service or furnish a commodity.
Idaho Code ~ 61-507. Under authority established by the Legislature, the Commission
conducted a rulemaking to effectively legislate a back bill requirement/limitation while
fulfilling its statutory mandates. Commission rules promulgated within the authority
conferred by law , and in accordance with the Administrative Procedure Act (APA), have
the full force and effect of law and must be regarded as such. South Elmore makes no
explanation of how UCRR 204 is contrary to the "spirit and intent" of the Public Utilities
ANSWER OF IDAHO POWER COMPANY - 6
Laws described in Idaho Code 9 61-501 or otherwise outside the Commission
substantive rulemaking authority over the actions of Idaho s regulated utilities.
As the Company argued in Case No. I PC-07 -, Idaho Power believes the
cross-reference to Idaho Code 9 61-642 is meant to demonstrate the symmetrical
nature of UCRR 204.02 and the statute. The cross-reference denotes the reciprocal
time limits on customers to file complaints against utilities (Idaho Code 9 61-642) and
for utilities to seek payment from customers (UCRR 204.02). Thus, the cross-reference
to Idaho Code 9 61-642 does not limit the Commission s authority on this matter, but
rather informs and explains it. The Commission itself stated on page 5 of Order No.
30431 :
(t)he rule reference to statute is not a statement of
authority, is not inconsistent with either the Commission
authority to promulgate that particular rule , or with the terms
of the statute and rule itself, and does not render Rule 204
void and invalid.
Consequently, Idaho Code 9 61-642 has no effect on the outcome of this Complaint
given the facts of this case.
IV.
With regard to Paragraphs 19-, Idaho Power denies them in whole or in part.
While the Company agrees that electric utility customers should largely be able to
expect that the utility will accurately measure and bill for electric usage , errors cannot be
completely eliminated in any business that is not fully automated.Although the
Company aspires to perfection, portions of Idaho Power s billing system (including the
physical changing of meters and the input of billing constant data into the billing system)
remain subject to human error. It is unreasonable to expect that errors will never occur
ANSWER OF IDAHO POWER COMPANY - 7
or that customers should be fully excused in these instances from paying for energy
known to have been actually consumed , thus receiving a windfall at the expense of
other customers.
Idaho Power works diligently to minimize its number of billing errors and has a
greater than 99% billing accuracy rate 1 on the approximately 479 000 bills it generates
each month. Although South Elmore alleges that electric suppliers have little incentive
to establish reasonable procedures to guarantee that its meters are properly calibrated
or that its bills are computed accurately, Idaho Power disagrees. Given the frustration
errors cause customers , the negative impact errors have on the Company s image, and
the significant employee resources required to correct them , Idaho Power has
significant incentive to minimize errors - including the approximately $427 000 it was
unable to collect from South Elmore for energy consumed beyond the three-year rebill
period. To that end , Idaho Power implemented new checklists and revised procedures
for its meter technicians earlier this year to reduce the opportunity for errors to occur. In
fact, it was due to the increased awareness and improved verification processes
resulting from the Company s self-imposed CT metering verification effort that the South
Elmore billing error was discovered.
Idaho Power neither admits nor denies Paragraphs 1 , 3, 4 and 9 of the Complaint
as these assertions concern South Elmore s business operations and management
structure.
1 Idaho Power s bill accuracy rate is better than 99% for 2006 and year-to-date in 2007. The Company
did not separately track billing errors prior to 2006.
ANSWER OF IDAHO POWER COMPANY - 8
CONCLUSION
Idaho Power respectfully requests that South Elmore s Complaint be dismissed
and that, pursuant to the provisions of the Commission Utility Customer Relations
Rules 204.03 and 313, South Elmore be ordered to pay Idaho Power Company
$916,702.24 for electrical service received for the three-year period between May 26
2004 and April 26 , 2007.
RESPECTFULLY SUBMITTED this 9th day of October 2007.
ANSWER OF IDAHO POWER COMPANY - 9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 9th day of October 2007 , I served a true and
correct copy of the within and foregoing Answer of Idaho Power Company upon the
following party by the methods indicated below and addressed to the following:
Donovan Walker
Deputy Attorney General
Idaho Public Utilities Commission
O. Box 83720
Boise , ID 83720-0074
Hand Delivered
S. Mail
Overnight Mail
Electronic Mail
FAX
Peter J. Richardson
Richardson & O'Leary PLLC
O. Box 7218
Boise , ID 83702
Hand Delivered~ U.S. Mail
Overnight Mail
Electronic Mail
FAX
Terry Ketterling, Secretary
South Elmore Irrigation Company
O. Box 396
Mountain Home , ID 83647
Hand Delivered
~ U.S. Mail
Overnight Mail
Electronic Mail
FAX
ANSWER OF IDAHO POWER COMPANY - 10