20100217final_order_no_31007.pdf

Office of the Secretary
Service Date
February 17 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO SELL TO P ACIFICORP
THE GOSHEN SERIES CAPACITOR BANK. CASE NO. IPC-09-
ORDER NO. 31007
On November 13 , 2009, Idaho Power Company filed an Application requesting
authority to sell to PacifiCorp the Goshen Series Capacitor Bank. The Goshen Series Capacitor
Bank ("the Bank") is a 345 kV, 3-phase, 60 Hz, 2 equal segment, outdoor series capacitor bank.
The Bank is part of the larger Jim Bridger transmission system that is owned jointly by Idaho
Power and PacifiCorp. The Company requested that its Application be processed by Modified
Procedure.
On January 5, 2010, the Commission issued a Notice of Application and Notice of
Modified Procedure. A comment deadline of January 21 , 2010, was established and a public
hearing was set for January 26, 2010. Staff was the only party to file comments. No person or
party testified at the public hearing. After reviewing the Application and Staffs comments, we
approve Idaho Power s request to sell PacifiCorp the Goshen Series Capacitor Bank.
THE APPLICATION
On July 31 , 2009, Idaho Power and PacifiCorp entered into an Asset Purchase
Agreement for the sale of the Goshen Capacitor Bank from Idaho Power to PacifiCorp. Idaho
Power requests Commission approval of the sale pursuant to the requirements of Idaho Code
61-328.
Idaho Power asserts that the requested transaction meets the requirements of Idaho
Code ~ 61-328. Idaho Power further maintains that the sale is in the public interest because it
allows the Company to receive value for an asset that is no longer required by the Company and
facilitates an upgrade to PacifiCorp s transmission system, which is interconnected with Idaho
Power s transmission system. Idaho Power further asserts that customers' rates will not increase
1 It includes the control cabinets in a control building, a battery bank
, three platfonns that house the Series
Capacitors, metal oxide varistors, optical current transducers, and reactors. It also includes two independent pole
bypass circuit breakers, two combination air brake/grounding switches and one bypass switch.
ORDER NO. 31007
as a result of this transaction. The sales price for the Bank is $6 698 610. Idaho Power states
that the purchase price is equal to the net book value of the asset, resulting in no after-tax gain or
loss to either Idaho Power or PacifiCorp.
ST AFF COMMENTS
The Goshen Series Capacitor Bank that Idaho Power proposes to sell to PacifiCorp
has an estimated book value of $6 698 610. Staff reviewed the valuation information provided
by the Company and found the valuation to be reasonable. Staff recommended review and
verification of the final sales price once the transaction is complete and closing documents are
available.
Pursuant to Idaho Code ~ 61-328 , the Idaho Public Utilities Commission is charged
with the responsibility to review the sale of electric public utility property to ensure that (1) the
transaction is consistent with the public interest, (2) the cost of electricity and service rates will
not be increased because ofthe transaction, and (3) the buyer ofthe electric utility s property has
both the intent and the financial ability to operate the property in the public service.
Staff believes that the current proposed sale of the Goshen Series Capacitor Bank is
consistent with the public interest for two primary reasons. First, the sale allows Idaho Power to
receive revenues equal to the book value for an asset that is no longer used in Idaho Power
system. It removes the asset from Idaho Power s rate base without a write-off or loss. Second
the Goshen Series Capacitor Bank will be used as part of an upgrade to PacifiCorp
transmission system that will purportedly improve regional transmission as a whole, extend the
life of the existing transmission network and improve grid power flow.Idaho Power is
interconnected to the PacifiCorp transmission network. Staff believes use of these facilities as
part of the upgrade is more economical than what otherwise would have occurred and will
benefit both Idaho Power and PacifiCorp customers.
The Company states in its Application that customers' rates will not increase as a
result of this transaction. Staff agrees that there will be no major direct impact to customer rates
that occurs as a result of this transaction; the purchase price is equal to the net book value of the
asset, resulting in no after-tax gain or loss to either Idaho Power or PacifiCorp. However, Staff
believes that the small reduction in rate base and reduction in the overall cost of maintenance and
repair that results from the transfer of this asset to PacifiCorp may result in a minor reduction in
Idaho Power customers' rates.
ORDER NO. 31007
Lastly, PacifiCorp is a regulated utility under the jurisdiction of six state
commissions, including Idaho. As part of this regulatory oversight, Staff affirms that PacifiCorp
has the bona fide intent and financial ability to operate and maintain the property in the public
servIce.
Based on the foregoing, Staff recommended that the Commission approve the sale of
the Goshen Series Capacitor Bank from Idaho Power to PacifiCorp. Staff further recommended
that Idaho Power file with the Commission (1) the anticipated related accounting entries no later
than seven days prior to the closing date of the transaction and (2) the actual closing documents
and related accounting entries no later than seven days after the closing date of the transaction.
FINDINGS AND CONCLUSIONS
The Commission has reviewed the filings of record in Case No. IPC-09-
including the Application and comments. Before authorizing such a transaction, the Commission
must find that: (1) the transaction is consistent with the public interest; (2) the cost of and rates
for supplying service will not be increased by reason of such transaction; and (3) PacifiCorp has
the bona fide intent and financial ability to operate and maintain the property in the public
servIce. Idaho Code ~ 61-328.
We conclude that the sale of the Goshen Series Capacitor Bank by Idaho Power to
PacifiCorp meets the standards set out in Idaho Code ~ 61-328. We further find the terms and
conditions of the parties' Agreement enabling the sale of the capacitor bank to be just , reasonable
and in the public interest. Consequently, we approve the sale of the identified facilities. We
direct Idaho Power to file with the Commission the anticipated related accounting entries no later
than seven days prior to the closing date of the transaction and the actual closing documents and
related accounting entries no later than seven days after the closing date of the transaction.
ORDER
IT IS HEREBY ORDERED that the Application of Idaho Power requesting authority
to sell to PacifiCorp the Goshen Series Capacitor Bank is approved.
IT IS FURTHER ORDERED that Idaho Power file with the Commission the
anticipated related accounting entries no later than seven days prior to the closing date of the
transaction and the actual closing documents and related accounting entries no later than seven
days after the closing date of the transaction.
ORDER NO. 31007
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 17th
day of February 2010.
AI. ~,JI . KE PTO PRE ENT
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MARSHA H. SMITH, COMMISSIONER
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MACK A. REDFORD, COMMISSIONER
ATTEST:~n~. J D. Jew I
Commission Secretary
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ORDER NO. 31007