20100115Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: NEIL PRICE

DATE: JANUARY 13, 2010

SUBJECT: IDAHO POWER COMPANY’S APPLICATION FOR AUTHORITY TO
SELL TO RAFT RIVER RURAL ELECTRIC COOPERATIVE, INC.
CERTAIN ELECTRIC DISTRIBUTION FACILITIES CURRENTLY
OWNED BY IDAHO POWER; CASE NO. IPC-E-09-31

On November 10, 2009, Idaho Power Company (“Idaho Power” or “Company”) filed
an Application with the Commission for authority, pursuant to Idaho Code § 61-328 and RP 52,
to sell to Raft River Electric Cooperative, Inc. (“Raft River”) certain electric distribution
facilities and appurtenant rights-of-way owned by Idaho Power in southern Twin Falls County,
Idaho.
On December 16, 2009, the Commission issued a Notice of Application, Notice of
Modified Procedure and Notice of Public Hearing. See Order No. 30963. The Notice
established a 21-day comment period and announced that a public hearing would be held on
January 12, 2010, in the Commission’s Hearing Room. Subsequently, the public hearing was
held and Commission Staff was the only party to submit written comments regarding the
Company’s Application.
THE APPLICATION
Idaho Power’s Application states that “Raft River is a non-profit cooperative
electrical corporation, incorporated under the laws of the state of Idaho, providing retail electric
service to its members in the states of Idaho, Utah, and Nevada.” Application at 2. Raft River is
headquartered in Malta, Cassia County, Idaho and serves customers in Idaho, Utah, and Nevada.
Id. “Raft River is not subject to regulation by the Commission.” Id.
DECISION MEMORANDUM 2
In the proposed transaction, Idaho Power has agreed to sell to Raft River the portion
of the Border 011 Feeder Line (“Feeder Line”), approximately 1.5 miles, located in the State of
Idaho. Id. In its Application, Idaho Power cites to the approval of its joint application in IPC-E-
00-17 wherein Raft River acquired the portion of the Feeder Line located in the State of Nevada
as part of the transaction pertaining to the sale of “certain Idaho Power electrical distribution
facilities in southern Owyhee County, Idaho.” Id.; see also Order No. 28631. The Feeder Line
is “used solely to serve Raft River and is classified as a dedicated distribution primary facility.”
Id. The wholesale transportation of energy across the Feeder Line to Raft River’s facilities is
subject to FERC jurisdiction. Id.
Idaho Power’s method of valuation for the Feeder Line, including appurtenant right-
of-way permits, “will be . . . the net book cost as valued on Idaho Power’s books and records
immediately prior to the closing date adjusted for income tax impacts.” Id. at 3. “Idaho Power
estimates that the sale price will be approximately $72,000.00, including a tax gross-up.” Id.
Idaho Power does not use the Feeder Line to serve any retail customers. Id.
On December 21, 2009, Idaho Power submitted a Motion to Amend its original
Application and modify the sale price of the facilities from $72,000 to approximately $44,000.
See Motion to Amend at 2. In the Company’s estimation, it would not be “unnecessary for the
Company to require a tax gross up to fairly price the facilities to be sold.” Id.
STAFF COMMENTS
Staff conducted an audit and investigation of Idaho Power’s Application. Staff
Comments at 3. Staff reviewed the Company’s documentation regarding the valuation of the
property to be sold to Raft River and “found the valuation to be reasonable.” Id. Staff believes
that, similar to the Commission’s ultimate finding in IPC-E-00-17, “the current proposed sale of
the Border 011 Feeder Line is also in the public interest as it better assigns the responsibility to
maintain the line to Raft River and its customers served by the line.” Id. Staff emphasized that
Idaho Power does not have any retail customers served by the Feeder Line and the “dollar
amount is immaterial to Idaho Power’s operations and will have very little impact on Idaho
Power customers.” Id. Moreover, Raft River has the requisite intent and financial wherewithal
to successfully “operate the property in the public service.” Id.

DECISION MEMORANDUM 3
STAFF RECOMMENDATION
Staff recommends that the Commission approve Idaho Power’s Application to sell the
Border 011 Feeder Line to Raft River. Id. at 4. Further, Staff recommends that the Company
file the following documents with the Commission: (1) the anticipated accounting entries related
to the transaction, no later than seven days prior to the closing date of the transaction; (2) closing
documents and related accounting entries, no later than seven days after the closing date of the
transaction; and (3) the pole attachment agreement between Idaho Power and Raft River, no later
than seven days after the closing date of the transaction. Id.
PUBLIC HEARING
On December 12, 2010, a public hearing was held pursuant to the requirements found
in Idaho Code § 61-328. A court reporter was present at the hearing and prepared an official
record of the proceeding.
Representatives of Idaho Power, Raft River and Commission Staff were present
during the hearing. Chairman Kempton offered a brief summary of the Company’s Application
and then provided the parties, as well as members of the audience, an opportunity to offer
comments pertaining to the Application. No comments were offered by the parties or the public
at large.
COMMISSION DECISION
Does the Commission wish to approve Idaho Power’s Application for authority,
pursuant to Idaho Code § 61-328 and RP 52, to sell to Raft River certain electric distribution
facilities and appurtenant rights-of-way owned by Idaho Power in southern Twin Falls County,
Idaho?

M:IPC-E-09-31_np2