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HomeMy WebLinkAbout20090722Petition for Reconsideration, etc.pdfMichael C. Creamer, ISB #4030 Conley E. Ward, ISB # 1683 GIVENS PURSLEY LLP 601 W. Banock St. Post Offce Box 2720 Boise, Idaho 83701-2720 Telephone: 208-388-1200 Facsimile: 208-388-1300 I 0495-1161752 IJDO RECE '""l,; 2069 JUL 22 PH~: 10 IDAHO PUBliC . ¡ UTILITIES COMMISSION Attorneys for Interenor Building Contractors Association of Southwester Idaho BEFORE THE IDAIO PUBLIC UTILITIES COMMISSION CASE NO. IPC-E-08-22 IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPAN FOR AUTHORITY TO MODIFY ITS RULE H LINE EXTENSION TAR RELATED TO NEW SERVICE ATTACHMENTS AN DISTRIBUTION LINE INSTALLATIONS BUILDING CONTRACTORS ASSOCIATION OF SOUTHESTERN IDAHO'S PETITION FOR RECONSIDERATION AND/OR IN THE ALTERNATI FOR CLARFICATION AND PETITION FOR STAY Building Contractors Association of Southweste Idaho ("Building Contractors"), by and though its attorneys of record, Givens Puley LLP, and pursuat to Idaho Code § 61-626 and IDAP A 31.01.01.331, 325 and 324 respecively, petitions the Idaho Public Utilties Commission ("Commssion") for reconsideration of its Order 30853 ("Order") in the aoove- captioned matter with respet to those Commission findigs and conclusions regarding terinal facilities allowances, pe-lot refuds and the tie perod in which vested interest refuds may be made. The Order approves an inherently discriminatory rate strctue for line extensions by imposing unequa charges on customer receivig the same level and conditions of serice. Ths BUIDING CONTRCTORS ASSOCIATION OF SOUTHWSTERN IDAHO'S PETmON FOR RECONSIDERATION AND/OR IN mE ALTERNATIV FOR CLARICATION AND PETITION FOR STAY-Pagl discrination exists both as betwee existng customers and new customer and as among new customer depending only upon whether they receive serce inside or outside of a subdivision and the number of new customers to be sered by the requested facilties. The Order does not acknowledge any grounds for not extending the vested-interest refud peod from five to ten year other than that Staff opposes it. In its 1997 order concerng Idaho Power Company's ("Company") line extension ta:t the Commission approved a ten-year refud for platted, undevelope subdivisions beause it recognzed the unque circumstances affecting those developments. The curent economic climate also presents unque circustances which, if they contiue for any extended perod, quite likely will result in a windfall to the Company and its existig customer and an additional uneimbured line extension cost to developer. Building Contrctors request a hearng at which pares may cross-examine those persons who filed testimony and examine member(s) of the Commission Staff with priar responsibility for preparng Staffs Comments. If reconsidertion is not granted~ then for judicial ecnomy, Building Contractors request in the alterative that the Commssion clarfy the Orer to: 1) clearly confirm that the Commssion now is rejecting its heretofore, longstanding policy that new customers ar entitled to a Company level of investment equa to that made to sere existig customer in the sae class; 2) to confirm that the Commission recgnzes and intends the disparty in Company investment (and customer charges) as between existing and new customer and as among new customer inside and outside of subdivisions crated by the Order; and 3) to enumerate the Commssion's reasoning for its momentous change in policy. Becuse imposition of the Order wil have immediate and significat fiancial impacts on cerain Building Contractors' membernamely those membe who are, or wil be, requesting BUIDING CONTRCTORS ASSOCIATION OF SOUTHSTERN IDAHO'S PETmON FOR RECONSIDERATION AND/OR IN mE ALTERNATIV FOR CLARCATION AND PETmON FOR STAY-Page 2 line extensions durng the pendency of this matter-Building Contractors also request a stay of those portons of the Orer affecing the cuent teral facilities allowance, customer refuds and vested interest refuds. GROUNS FOR RECONSIDERATION In its 1997 Order 26780 in Case No. IPC-E-95-18, the Commission considered the sae Company line extenion taff at issue today. There, the Company sought to "shift more of the cost of new serce attachments and distrbution line installations or altertions from the system revenue requirement to new customer requesting the constrction." Order 26780 at 3. The reason given by the Company for the proposed change was to "keep all customer on a level playing field (by ensurng) everone pays the average rate base embedded in rates," and because "the anticipated revenues from the new customer are not suffcient to cover the costs of new distrbution facilties." Order 26780 at 5 (suarzing Company position). The Commssion Staff agreed with the Company's position that "the Company's investment in facilities for each new customer should be equal to the embedded costs of the same facilties used to calculate rates, and those costs in excess of embedded costs should be borne by the customer requesting serice. . . ." Order 26780 at 5 (sumarzing Staff position). Building Contractors opposed the proposed tarff amendments. The Commission specifically concluded that new cutomer are entitled to have the Company provide a level of investment equal to that made to sere existing customers in the same class. Recover of those costs in excess of embedded costs must also be provided for and the impac on rates of existig customer is an importt par of our considertion. BUIDING CONTRCTORS ASSOCIATION OF SOUTSTERN IDAHO'S PETITION FOR RECONSIDERATION AND/OR IN mE ALTERNATIV FOR CLARICATION AND PETITION FOR STAY-Page 3 Order 26780 at 13 (emphasis added). The Commission also acknowledged that "requirig the payment of all costs above embedded investment from new customers could have severe economic effects." Id. Today the Company proposes a change to the Rule H tarff allowances and refuds simply to reduce Company expense and an alleged but undemonstrated upward pressure on rates without any pretene of maintaining a level playing field or crediting revenues from new customer. If that wer the purse, all that would be necessar is a relatively simple tre-up of embedded distrbution costs, curent materals, labor and overhead costs and an allocation as beteen the terinal facilties and line extensions. See Order 26780 at 13 (whether the allowance is applied in exact proportons toward the terinal facilities component, the line extension component, or both, is not crtical, but the amount is). With little comment and no concession to prior precedent or policy or the disparte effect the Orer wil have on new customers, the Commission has approved a flat $1,780 ternal facilties allowance and discontinued pe-lot refuds with subdivisions. Consequently~ although the estimated per customer embedded cost for distrbution ranges between $1,002 (2008IPCo GRC cost of serce study) and $1,232 (Staff estimate), the Company investment in distrbution for new cutomer wil var from $1,780 for a customer requesting serce to a single location outside a subdivision to as low as $149 for a customer receiving identical serce with a sixty-lot subdivision. Ths is because the $1,780 terinal facilties allowance approved by the Commission, beng the only allowance reognized, must be apprtoned among the new customer who share those terinal facilities (i.e., the tranformer), and a transformer seres anywhere from one to ten customer. BUIDING CONTRCTORS ASSOCIATION OF SOUTSTERN IDAHO'S PETITION FOR RECONSIDERTION AN/OR IN mE ALTERNATIVE FOR CLAICATION AND PETITION FOR STAY-Page 4 Staff overlooked ths fact when it stated its supprt for line extension rules that "provide a new customer allowance that can be support by electrc rates paid by that customer over time,"l when it deemed the $1 A44 cost of overhead terinal facilties (i.e., tranformer) to be "fairly close" to the Company's averge investment of$1,232 for existing customer, and then, for simplicity's sake, recommended that overhead ternal facilties become the surogate for appropriate Company investment pe new customer. In other words, Staff mistakeny categorized a $ 1,780 "per transformer" allowance as a "per new customer allowance, which it clearly is not. The effect ths mischaracterzation has on the Company investment pe new cutomer (or converely, on the charge to a new customer to recve serce) is ilustrted in the following table, which is derved from data provided in Attachment 9 to Staffs Comments. Comparison of Existing Rule H with Company and Staff Proposals Subdivision example 1 2 3 4 5 Design Number 61114 67186 60197 24482 27729 No. of Lots 3 10 32 60 101 Average embedded cost (Staff comments at 5 )$ 1,232.44 $ 1,232.44 $ 1,232.44 $ 1,22.44 $ 1,22.44 Total design cost per lot $3,524 $1,512 $1,576 $1,209 $1,433 Total allowance (Company)1 Eligible for Refud (Staff $3,560 $1,780 $7,120 $8,900 $17,800 Company investment per lot Staf $1,187 $178 $222 $149 $176 Company $1,187 $178 $222 $149 $176 Existing Ru1e H $1,959 $1,279 $1,159 $1,061 $1,050 i I.e., at least equa to embeded costs, wheter tht be $ i, i 00 or $ i ,232. BUIDING CONTRCTORS ASSOCIATION OF SOUTHESTERN IDAHO'S PETITION FOR RECONSIDERTION AND/OR IN mE ALTERNATIV FOR CLARFICATION AND PETITION FOR STAY-PageS Developer (Customer) investment per lot Staff $2,337 $1,334 $1,354 $1,060 $1,257 Company $2,337 $1,334 $1,354 $1,060 $1,257 Existing Rule H $1,565 $233 $417 $148 $383 Total developer investment plus embeded cost per lot Sta $3~69 52,566 $2,586 $2,292 $2489 Company $3,569 52,566 52,586 $2,92 52,489 Existing Rule H $2,797 $1,465 $1,649 $1,380 $1,615 Over-recovery of cost Staf $45 $1,055 $1,010 $1,084 $1,056 Company $45 $1,055 $1,010 $1,084 $1,056 Existing Rule H ($727)($46)$73 $172 $182 Soure: Sta Attchment 9, Page 2 of 4; Staff comments at 5. Company investent per lot is total design cost per lot less developer (customer) investment per lot As the above table shows, depnding on the subdivision example used, per cutomer Company investment in multiple-lot subdivisions rages from $149 to $1,187. Only the theelot subdivision example prouces a pe customer Company invesent approximatig its averge embeded cost. Consequently, the Order raises the new customer' investment in distrbution to make up the difference, excet for new customer outside subdivisions who apparently wil receive a windfall as compared to existig customer and new customer withn subdvisions.2 2 The data in th above table also shows tht th approved new taff reults in the Company collecti frm "new customer," though their contrbutions to lie extenion costs and rates, almost 200% of its line extenion costs. If upward pressure on rates exists, it must be attbutble to inreasd generation and trmission costs, which new customers now will be payig, in par thugh. their li extenion chaes. Ths ru afoul of Idaho State Homebuilders v. Washington Water Power, 107 Idao 415,690 P.2d 350 (1984) and Boise Water Corp. v. Public Utilities Comm 'n, 128 Idao 534, 916 P.2d 1259 (1996) BUIDING CONTRCTORS ASSOCIATION OF SOUTHWSTERN IDAHO'S PETITION FOR RECONSIDERTION AND/OR IN THE ALTERNATIV FOR CLAICATION AND PETITION FOR STAY -Page 6 The extent of the increased cost to new customer withn subdivisions depends priarly on the number of platted lots receiving electrcal serice. What should be of parcular interest to the Commission is the fact that the shift in costs to the new customers approved by the Orer actuly ca result in the Company's recovered costs et¡çeeing the actu new distrbution facilities cost. Ths is ilustrated in the char below which compares total new customer investment to total facilities costs in a sixty-lot subdivision based on data from the above table. Copany C" R.. ,. lo(.io) $2.50 $50 -Tot Cost - Recver Cost $2,00 $1.5 $1.00 $- 1995 Rule H Or 3053 That result should not be surrising since, as even Staffhas obsered . . . Idaho Power has done no analysis to prove that growt is not paying for itself, nor has the Company done any analysis to deterine speifically what amounts of allowances and refuds can alleviate upward presure on rates. . . The Company concludes that a reduction in Company investment in new distrbution plant is necessar and proposes a reduction in allowances based strctly on policy without supporting analysis. BUIDING CONTRACTORS ASSOCIATION OF SOUTHWESTERN IDAHO'S PETITION FOR RECONSIDERATION AND/OR IN THE ALTERNATIV FOR CLARICATION AN PETITION FOR STAY-Page 7 Staf Comments at 3. In other words, the Company's proposed allowance is a shot in the dark that is as likely to miss a "grwt pays for itself' target as hit it. The Commssion perhaps did not apprehend the distiction between "per trformer" investment and "per new customer investment" when it found in the Order that . . . the overall distrbution allowance provided to developer, whether in the form of a subsequent refud or an upfront reducton in developer contrbution (i.e., allowances), is properly based on the amount of distrbution investment that can be supported by new customer rates. The Company has reasnably calcuate that amount in its upfront, per lot distrbution allowance. Any additional distrbution cost refud to the developer would exceed the distrbution investment that new customer rates could support. Therfore, the Commssion finds it fai, just and reaonable to accept the Company's pe lot distrbution allowance and elimate lot refuds. Order at 12. The Company's and Staffs $1,780 terinal faciliies allowance patently is not a per lot distrbution allowance. If the Company's investment of $1,780 in distrbution facilties to sere a single new customer outside a subdivision can be recovered through rates charged to that new customer (which for puroses of this Petition, Building Contrctors concee), then on what fact or legal basis can new customer within subdivisions be charged as much as $1,631 more for eleccal serice than existig customer and the single new customer outside a subdivision? '. From a factul stadpoint, the Commission has acknowledged Staffs "concer that Idaho Power had not provided any analysis to deterine specfically what amounts of allowances and refuds would alleviate upward pressure on rates," and that "to properly establish an allowance, a refud and the potential for additional customer contrbution, a detailed analysis of distrbution investment embeded in existing electrc rates must be conducted." Order at 4. Despite Staffs concer~ and the lack of any subsequent analysis by the Company, the Order, nevereless, finds that "(tJhe Company has reasonably calculated (the amount of distrbution investment that can be BUIDING CONTRCTORS ASSOCIATION OF SOUTHWSTERN IDAHO'S PETmON FOR RECONSIDERATION AND/OR IN mE ALTERNATIV FOR CLARICATION AND PETITION FOR STAY -PageS supported by new customer rates) in its upfront, per lot distrbution allowance." Order at 12 (emphasis added). The lack of substatial evidence to suprt ths finding, and the fact that the Company is not proposing a "per lot distrbution allowance" render the Commission's decision in ths regard arbitrar and capricious. See Oregon Short Line R.R. v. Idaho Public Utiites Comm 'n, 47 Idaho 482, 276 P. 970 (1920) (order based on fiding made without evidence, or upon a finding made upon evidence which clearly does not support it, is an arbitrar act against which the cours afford relief). A legal basis for the disparty in pe new customer Company investment (and converly, per new customer line-extension charges) is equally lacking. Idaho State Homebuilders v. Washington Water Power, 107 Idaho 415,690 P.2d 350 (1984) and Boise Water Corp. v. Public Utilties Comm 'n, 128 Idaho 534, 916 P.2d 1259 (1996) hold that any differences in rates and charges must be justified by a corresponding classification of customer that is based on factors such as cost of serce, quatity of electrcity used, differences in conditions of serce or the tie, natue or patter of use. Neither the Company's nor Staffs comments nor the Commission's Order touch on these factors. The curent disparty in pe cutomer Company investment and converely per new customer line extenion charges will not pass ths test. Parcularly not when the Commission acknowledges that new customer are entitled to a level of Company investment in distrbution that can be supported by rates (i.e., the same level of investment as received by existing cutomer), and paricularly not when the resultig varable level of Company investment is driven solely by whether the new customer is situted inside or outside a subdivision or withn a relatively larger or smaller subdivision. BUIDING CONTRCTORS ASSOIATION OF SOUTSTERN IDAHO'S PETION FOR RECONSIDERATION AND/OR IN THE ALTERNATIV FOR CLAICATION AN PETmON FOR STAY-Page 9 Grted, not all "discrimination" in rates and chages is improper, but where the Commission establishes the kind of discrmination present here, it must demonstrate that the differences in rates and charges are based on one or more of the factors enumerated in Homebuilders. Its decision also must be based on substantial, competent evidence and the Commssion must explain the reasning it employed. Boise Water Corp., 128 Idaho at 537 (citing Washington Water Power v. Idaho Public Utiities Comm 'n, 101 Idaho 567, 617 P.2d 1242 (1980). None of the enumerated factors have be acknowledged by the Order, let alone used to rationalize the new disparate line extension charges and allowances, or to explain why the highy varable Company investent/new customer charge is consistent with the principle that new customers are entitled to a level of distrbution investment that can. be supprted by rates. Almost by definition, the Order in ths regard is arbitr and capricious, exceeds the Commssion's authority, and violates the new customer's right to non-discrminatory rates and charges under Homebuilders and Boise Water Corp. For the foregoing reasons, Building Contrctors repectfully request the Comission's reconsideration of Order 30853, and that the Commission provide for an evidentiar hearing at which the pares' witnesses may be examed and/or crss-examined on thei pre-filed testimony and all matters within the scope of sae, the purose of which would be to establish an approprate value of cuent Company embeded costs for distrbution facilties, a metod to tre up those costs over time, and a fair method for line extension costs, allowances and refuds to be paid going forward. GROUNS FOR REQUEST FOR CLARFICATION Commission Rule 325 allows a petition for clarfication to be combined with a pettion for recnsidertion or to be stated in the alterative. Building Contrctors seek clarfication in BUIDING CONTRCTORS ASSOCIATION OF SOUTSTERN IDAHO'S PETmON FOR RECONSIDERATION AND/OR IN mE ALTERNATIV FOR CLARICATION AND PETITION FOR STAY - Page 10 the alterative. If reconsideration is not granted beause the Commission stands by the decision and reulting disparate charges for new customers, Buildig Contractors request that the Commission clarfy for the record that the Commssion now is rejecting its heretofore longstanding policy that new cutomer are entitled to a Company investment in distrbution facilties equal to that made to sere existing customer in the same class, and that the Commission recognzes and intends the disparty in Company investment (and customer charges) as beteen exsting and new customer and as among new customer inside and outside subdivisions created by the Order. Building Contrctors also believe the Commssion should enumerate its justification for the depar from existing policy and for the discrinatory effect on Company customer. Building Contrctors believe ths clarfication is necssary to clearly defie the basis for, and scope of, the new policy. This will be important to Building Contractors and its members not only in the context of ths proceeding but also future Company applications to amend its Rule H tarff. GROUNS FOR PETITION FOR STAY Building Contrctors have submitted evidence by way of Exhibit 203, sponsore by Dr. Slaughter and prepared by NAH based on research conducted in the Boise-Nampa Metropolita Statistical Area. Exhbit 203 and Dr. Slaughter's testimony docuented the advere economic effects of increased housing costs on the numbe of households that can afford to purchase a home and, by implication, the advere effects on new customer and Building Contrctors' member of reducing the Company's investment in distrbution facilities below embedded costs. For the sixty-lot subdivision example in the above table, assuing a Company embeded cost of $ i ,002, ths imposes an approximately $5 i,oo additional cost to the developer. For the one hundred lot example, the additional cost is nealy $83,000. Ths in a BUIDING CONTRCTORS ASSOCIATION OF SOUTHWSTERN IDAHO'S PETITION FOR RECONSIDERATION AN/OR IN THE ALTERNATIV FOR CLAICATION AND PETmON FOR STAY -Page 11 maret where development capital is scarce and expensive, and the alleged impact of customer growt on rates has dropped signficantly. Building Contractors submit that the advere impact on its membe and the public of imposing the line extension tarff on ters approved by the Order far outweigh any prejudice to the Company and its existig customers that would occur if the Commission's Order were stayed peding a fial decision on this Petition. Requests for line extensions likely are being or wil be submitted to the Company in the next few months and would be subject to the lower Company contrbution and higher developer contrbution. Building Contrctors therefore respectfuly request the Commssion grant a stay of the effective date of those portions of the Company's Rule H taff relating to the calculation and payment of allowances and refuds, includig vested interest refuds, pending a final decsion on the merts. CONCLUSION Idaho Power Company's requested line extension tarff amendments and Order 30853 appoving them are far more than an adjustment of rates and charges to address one factor puttng upward pressue on utility rates. The taff amendments, as approved, constitute a marked change in Commission policy by which new customers heretofore have been "entitled to have the Company provide a level of investent equa to that made to sere existing cutomer in the same class." Under Order 30853 new customer are entitled only to a Company investment equal to whatever the quotient is when the revised terinal facilities allowance is divided by the number of new customers sered. In other words, under Order 30853 Company investment (and new customer charges) now bear no relationship to embedded costs, increaed facilties costs, inflation, or alleged upward pressure of growt on rates attbutable to distrbution facilties BUIDING CONTRCTORS ASSOCIATION OF SOUTSTERN IDAHO'S PETION FOR RECONSIDERATION AND/OR IN THE AL TERNATIVFOR CLARICATION AND PETITION FOR STAY -Page 12 serg new customers. Nor do the resulting varable rates and charges new customer pay as betee themselves and existing or other new customer have any relationship to factors such as actal cost of servce, quantity of electrcity used, or differences in conditions of serce or the tie, natue or patter of use. The resut is an unawful, aritrar and discrminatory charge that is not based on any rational customer classification. The Order should be reconsidered. If reconsideration is dened, Building Contractors is at least entitled to clarfication of the basis for, and scope of, the Commission's decision-neither of which are curently included in the Order and par of the admistrative record. In the meantime, to avoid the likely advere economic impacts of the appoved tarff provisions on those Building Contractors members who may be requesting line extensions, the tarff provisions dealing with allowances and refunds should be stayed pending a final Commssion order. Restfuly submitted ths 2200 day of July, 2009. GIVENS PURSLEY LLP B~d&;; Michael C. Creaer Attorneys for Intervenor Building Contractors Association of Southwestern Idaho BUIDING CONTRCTORS ASOCIATION OF SOUTHWESTERN IDAHO'S PETIION FOR RECONSIDERATION AND/OR IN THE ALTERNATIV FOR CLARICATION AN PETITION FOR STAY -Page 13 CERTIFICATE OF SERVICE I hereby cerify that on the 2200 day of July, 2009, a tre and correct copy of the foregoing was sered upon the following individual(s) by the means indicated: Origial and Seven Copies Filed: Jean D. Jewell, Secretar Idaho Public Utilities Commssion 472 West Washington Street P.O. Box 83720 Boise, Idaho 83720-0074 Servce Copies: Lisa D. Nordstrom Baron L. Kline Idaho Power Company POBox 70 Boise, il 83707-0070 Inordstromcgidahopower.com bklinecgidahopower.com Scott Sparks Gregory W. Said Idaho Power Company POBox 70 Boise,ID 83707-0070 ssparkscgidahopower.com gsaidcgidahopower.com Krstine A. Sasser Deputy Attorney General Idaho Public Utilities Commssion 472 W. Washigton PO Box 83720 Boise, ID 83720-0074 krs.sasserCfuc.idaho.gov U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Electnic Mail U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Electrnic Mail U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Electonic Mail U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Electronic Mail BUIDING CONTRCTORS ASSOCIATION OF SOUTSTERN IDAHO'S PETITION FOR RECONSIDERATION AND/OR IN mE ALTERNATIV FOR CLARICATION AND PETITION FOR STAY - Page 14 Mattew A. Johnson Davis F . VanderVelde White, Peterson, Gigray, Rossman, Nye & Nichols, P .A. 5700 E. Franlin Rd., Ste. 200 Nampa, ID 83687 mjohnson(fwhitepeteron.com dvanderelde(fwhitepeteron.com Attorneys for The City of Nampa and The Association of Canyon County Highway Districts Michael Kurt Kur J. Boehm Boehm, Kurz & Lowry 36 E. Seventh St., Ste. 1510 Cincinnati, OH 45202 mk(!KLlawfi.com Kboehm(fBKLlawfirm.com Attorneys for The Kroeger Co. Kevin Higgins Energy Strategies, LLC Parkside Towers 215 S. State St., Ste. 200 Salt Lake City, UT 84111 khiggins(fenergystrat.com Representing The Kroeger Co. U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Electronic Mail U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Electronic Mail U.S. Mail, postage prepaid Express Mail Hand Deliver Facsimile Eleconic Mail BUILDING CONTRCTORS ASSOCIATION OF SOUTHWSTERN IDAHO'S PETITION FOR RECONSIDERATION AND/OR IN THE ALTERNATIV FOR CLARICATION AN PETITION FOR STAY - Page 15