20130913Supplement to Motion.pdf

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JENNIFER M. REINHARDT-TESSMER
Gorporate Gounsel
[e-mail]
September 12,2013
VIA HAND DELIVERY
Jean D. Jewel!, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-17
J. R. Simplot Company's Petition - ldaho Power Company's Supplement to
Its Motion to Dismiss
Dear Ms. Jewell:
Enclosed forfiling in the above matter are an original and seven (7) copies of ldaho
Power Company's Supplement to lts Motion to Dismiss.
JRT:csb
Enclosures
1221 W ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
Sincerely,
nifer M. Reinhardt-Tessmer
LISA D. NORDSTROM (lSB No. 5733)
JENNIFER M. REINHARDT-TESSMER (lSB No. 7432)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom@ idahopower. co m
irei n ha rdt@ id aho power. co m
Attorneys for ldaho Power Company
IN THE MATTER OF THE PETITION OF
J.R. SIMPLOT COMPANY FOR A
DETERMINATION OF PRICE
REGARDING THE PURCHASE AND
ACQUISITION OF CERTAIN ASSETS
OWNED BY IDAHO POWER COMPANY.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-13-17
IDAHO POWER COMPANY'S
SUPPLEMENT TO lTS MOTION TO
DISMISS
ldaho Power Company's ("ldaho Powe/' or "Company") Motion to Dismiss filed
on August28,2013, was crafted specifically to respond to the J. R. Simplot Company's
("Simplot") Application and Request to Determine Price ("Application"11 filed pursuant to
l.C. S 61-328 for "approval of its purchase and acquisition of certain assets owned by
the ldaho Power Company . . . and to set a price for said purchase." Application, p. 1.
ln light of the confusion expressed in Simplot's Answer to ldaho Powe/s Motion to
Dismiss for Lack of Subject Matter Jurisdiction ("Answe/'), the Company respectfully
t The Commission processed Simplot's Application as a Petition under its Rules of Procedure in
Order No. 32870.
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS. 1
submits this Supplement with the goal of clarifying Rule M and the testimony in Case
No. IPC-E-11-08 (its last general rate case).
I. IDAHO POWER'S MOTION TO DISMISS !S CONSISTENT WITH ITS
PRIOR POSITION IN CASE NO. IPC-E.I1.08.
Simplot's Answer is conspicuously void of any authority supporting the position
Simplot originally took in its Application-that l.C. S 61-328 permits a customer to
unilaterally confer jurisdiction on the ldaho Public Utilities Commission ("Commission")
to determine the purchase price of utility-owned assets. lnstead, Simplot takes a new
approach, asserting that jurisdiction is automatically conferred on the Commission to
determine a sale price of Company-owned assets through Rule M and ldaho Power's
testimony in the last rate case. !n so doing, Simplot misconstrues and inaccurately
portrays ldaho Power's position in that case, the scope of the Commission's Order
therein (Order No. 32426), as well as Rule M.
First, nothingtlp the last rate case (including ldaho Power's testimony therein)
conferred jurisdiction on the Commission to order an involuntary sale of ldaho Power's
property. ln Order No. 32426, the Commission found that "there ought to be an
opportunity for the customer to purchase the assets on a case-by-case basis," and
acknowledged ldaho Powe/s willingness to sell in "certain situations" pursuant to Rule
M, which covers the sale of Company-owned facilities beyond the point of delivery. See
Order No. 32426, p.32. The Commission clearly stated that a proceeding to determine
the value of such facilities would be necessary pursuant to !.C. S 61-328. ld. "[W]e
envision that the sale of facilities will occur on a case-by-case basis and that the
purchasing price will be based upon the value of the facilities to be transferred to the
customers." /d., p. 33. This is as far as the Commission went on the issue. ln fact, at
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 2
the time of the Commission's Order, ldaho Power had not yet determined a
methodology for a valuation of Company assets for such a sale. See Youngblood Tr.,
p. 253, ll. 17-20 ("The Company is not proposing any specific pricing methodology in
this case, just the proposal to change its tariffs in order to provide an option for
customers to purchase the facilities.") (emphasis added).
Nevertheless, because Simplot cannot find support for its unilateral Application in
l.C. S 61-328, Simplot's Answer focuses on one sentence in the testimony offered by
Mr. Youngblood on behalf of ldaho Power, which Simplot grossly mischaracterizes. ln
his testimony, Mr. Youngblood stated that if a sales price cannot be mutually agreed
upon, "the Company or the customer may initiate a proceeding before the Commission
in order to determine the appropriateness of the price." ld., p. 254, ll.3-5 (emphasis
added). Despite Simplot's unfounded argument that this statement somehow conferred
open-ended jurisdiction on the Commission to determine future sales prices, Mr.
Youngblood was actually describing a situation in which both the customer and the
Company would willingly go before the Commission for approval or rejection of ldaho
Power's proffered sale price (in accordance with the plain language of l.C. S 61-328); he
was not stating that the Commission could determine the price without Idaho Power's
willingness to sel!. To be clear, Mr. Youngblood stated that the Commission could
determine the "appropriateness of the price," not "an appropriate price." ld. ln fact,
when asked to describe the Company's proposal for tariff language to provide
customers with a buyout option, Mr. Youngblood described the proposed Rule M,
stating that "the Company has provided a new option for customers who may request to
purchase Company-owned facilities beyond the point of delivery." ld., p.251,',1.20-23.
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 3
Mr. Youngblood went on to state that "all sales must be approved by the Commission"
and meet the provisions of !.C. S 61-328, specifically noting that "the Company would
make a filing with the Commission for each proposed sale asserting that such sale
would be in the public interest." ld., p.251,11.24-25 and p. 253, ll. 11-13. Mr.
Youngblood's repeated references to a customer's "request" to purchase the facilities,
and ldaho Power's "option" to sell, mirrors the actualwording of Rule M, which provides,
in pertinent part, "Eligible Customers may request that the Company design, install own,
and operate transformers and other facilities This service is provided at the
Customer's request and at the option of the Company . . . ." See ldaho Public Utilities
Code No. 29, Tariff No. 101, Original Sheet No. M-1. At no point in the rate case, nor in
Rule M, did ldaho Power agree to a process whereby it could be forced, against its will,
to sel! its used and useful property-particularly at a price the Company has determined
would be to the detriment of other customers and its shareholders.
Further, even if the Commission interprets ldaho Power's testimony in the
manner proposed by Simplot, such testimony cannot confer jurisdiction on the
Commission where such jurisdiction is lacking. See Lemhi Telephone Co. v. Mountain
Sfafes Tel. & Tel. Co., 98 ldaho 692, 696 (1977) quoting Arrow Transp. Co. v. ldaho
Public Utilities Comm'n,85 Idaho 307,379 P.2d 422 (1963) (The Commission "has no
inherent power; its powers and jurisdiction derive entirely from the enabling statutes and
'nothing is presumed in favor of its jurisdictions."') Nowhere in Rule M does it state that
a customer can unilaterally invoke the Commission's jurisdiction to determine the sale
price of a utility's facilities. To the contrary, Rule M provides that all sales of facilities
must comply with l.C. S 61-328 and be approved by the Commission. As noted by the
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 4
Commission in the rate case, under ldaho Power's Rule M, "customers may ask to buy
Company-owned facilities installed beyond the delivery point" and the Commission must
approve all sales. Order No. 32426, p. 25 (emphasis added). As set forth at length in
ldaho Power's Motion to Dismiss, the Commission's jurisdiction under l.C. S 61-328 is
permissive and approval of a proposed sale brought by the utility or jointly by a utility
and a customer is very different than a customer unilaterally petitioning the Commission
to determine a sale price of the utility's property, which is not provided for in the plain
language of l.C. S 61-328.
II. IDAHO POWER DOES NOT HAVE A MONOPOLY ON THE SUPPLY OF
ELECTRICAL EQUIPMENT BEYOND THE POINT OF DELIVERY.
Simplot's Answer appears to confuse ldaho Power's sale of electricity (and the
Commission's ability to regulate the sale thereof) with ldaho Power's sale of electrical
equipment to customers for private use beyond the point of delivery. ldaho Power does
not have a monopoly on the supply and sale of electrical facilities, nor does it wish to act
as a common distributor of such equipment. Further, the Commission's role in
regulating the sale of equipment beyond the point of delivery is limited to ensuring that
such sales are reasonable and consistent with the public interest in order to protect
customers and resources. See Statement of Purpose RS10362, 2000 ldaho Laws Ch.
224 (H.8.815). lf Simplot truly believes that ldaho Power's proffered sale price (which
the Company has determined is the price at which the sale will not adversely impact
other customers and its shareholders) is, in fact, "exorbitant," Simplot has the option of
purchasing the equipment from a third-party.
By way of background, Simplot made the voluntary request that ldaho Power
(and accordingly, its customers) front the capital to install Company-owned facilities
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 5
beyond the point of delivery for Simplot's private business use. This permitted Simplot
to avoid the capital investment into purchasing such facilities, in exchange for payment
of a monthly facilities charge. Thereafter, Simplot determined it wanted to purchase its
own equipment rather than pay a monthly charge, and so Simplot requested a sales
price determination from ldaho Power.
As was contemplated in Case No. IPC-E-11-08, ldaho Power put considerable
thought into a facility sale price methodology that will keep its other customers and
shareholders reasonably whole. Having done so in good faith, the Gompany remains
willing to sell the facilities in question to Simplot at the price ldaho Power previously
quoted. However, ldaho Power cannot agree to sell the facilities to Simplot at a
proposed price that will not fully reimburse ldaho Powe/s customers and shareholders
for their investment. ldaho Power has a duty to its customers and shareholders to
ensure it receives afair sale price for those facilities. Again, if Simplot believes the sale
price is not fair, it can request that the Company remove the currently installed facilities
pursuant to Rule M and purchase the equipment elsewhere.
Iil. coNcLUSroN
It is unprecedented for ldaho Power to offer to sell facilities beyond the point of
delivery for the convenience of the non-utility customer rather than for operational
reasons. The Company is in the admittedly difficult position of attempting to
accommodate a single customer's interests while also ensuring the Company's general
body of customers and shareholders recoup their investment in operating property
located beyond the point of delivery. As the Company envisioned when it proposed
Rule M language governing the sale of Company-owned facilities beyond the point of
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 6
delivery, the Commission will ultimately have an important role in the Company's sale of
facilities by ensuring the sale price is reasonable and in the public interest, in
accordance with the plain language of !.C. S 61-328. At such time, ldaho Power will
explain how it calculated its proposed sale price and consider feedback from the
Commission and its Staff regarding the appropriateness thereof. However, as
explained in ldaho Powe/s Motion to Dismiss, I.C. S 61-328 does not permit a customer
to unilaterally confer jurisdiction on the Commission to determine a price of Company-
owned assets.
Respectfully submitted this 12th day of September 2013.
FER M: REINHARDT.TESSMER
for ldaho Power Company
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 7
CERTIFICATE OF SERVICE
! HEREBY CERTIFY that on this 12th day of September 2013 I served a true and
correct copy of IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO
DISMISS upon the following named parties by the method indicated below, and
addressed to the following:
Gommission Staff
Kristine A. Sasser
Deputy Attorney General
ldaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
J. R. Simplot Company
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
X Hand Delivered
_U.S. Mail
Overnight Mail
FAXX Email [e-mail]
Hand DeliveredX U.S. Mai!
_Overnight Mail
_FAXX Email [e-mail]
o req @ richa rd sonadams. com
IDAHO POWER COMPANY'S SUPPLEMENT TO ITS MOTION TO DISMISS - 8