20131205final_order_no_32940.pdf

Office of the Secretary
Service Date
December 5,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF )
J.R.SIMPLOT COMPANY FOR A )CASE NO.IPC-E-13-17
DETERMINATION OF PRICE REGARDING )
THE PURCHASE AND ACQUISITION OF )
CERTAIN ASSETS OWNED BY IDAHO )ORDER NO.32940
POWER COMPANY.)
On July 16,2013,J.R.Simplot Company filed an Application with the Commission,
pursuant to Idaho Code §6 1-328,for approval of Simplot’s purchase and acquisition of certain
assets owned by Idaho Power Company.Simplot’s Application states that Idaho Power provides
electrical service to Simplot’s potato processing facility in CaIdwell,Idaho (the Plant)pursuant
to Idaho Power’s Schedule 19.Simplot seeks to purchase some of the Idaho Power-owned
facilities beyond the point of delivery.
Simplot requested that the Commission process its Application by Modified
Procedure.Staff recommended the filing be processed as a Petition,in order to compel Idaho
Power to respond.Idaho Power responded on August 28,2013,by filing a Motion to Dismiss
for Lack of Subject Matter Jurisdiction.On September 6,2013,Simplot filed an Answer to
Idaho Power’s Motion to Dismiss.By this Order,we grant Idaho Power’s Motion to Dismiss.
THE PETITION
Simplot asserts that it is closing its existing Plant and constructing a modern,state of
the art potato processing facility immediately adjacent to the existing Plant.In closing the Plant,
Simplot would like to purchase some of the Idaho Power-owned facilities.
Simplot states it and Idaho Power agree that the net book value of the facilities that
Simplot wants to purchase is approximately $119,725.However,the parties have been unable to
agree on a purchase price.Simplot has offered to purchase the facilities for $85,910.Idaho
Power has offered to sell the facilities for $272,928.
Simplot asserts,pursuant to Idaho Code §61-328 and Order No.32426,a
Commission proceeding is necessary before a utility can sell or transfer ownership of any of its
distribution facilities.Simplot further alleges it is the Commission’s responsibility to determine
the facility’s value and whether the transaction is in the public interest.Filing at 2.
ORDER NO.32940 1
Simplot maintains it is willing to bear the responsibility of operating,maintaining
and replacing the facilities.Simplot further asserts the sale and purchase of the Idaho Power
facilities will have “absolutely no adverse impact (either on rates or service)on Idaho Power’s
other ratepayers.”Filing at 7.
After reviewing Simplot’s filing as well as the applicable statutes and rules,Staff
recommended the Commission construe Simplot’s filing as a Petition and,pursuant to IPUC
Rule of Procedure 57,require Idaho Power to answer the petition within 21 days of the issuance
of the Commission’s Notice of Petition.
IDAHO POWER’S MOTION TO DISMISS
Idaho Power states that Simplot wishes to purchase Idaho Power assets which Idaho
Power is not willing to sell on Simplot’s terms.The Company argues that Idaho Code §61-328
(under which Simplot brings its Petition)confers “permissive jurisdiction upon the Commission
to approve or deny a sale only when invoked by the utility;it does not permit a customer to
unilaterally call upon the Commission to determine a sale price of the utility’s assets.”Motion at
2.Based on this reasoning,Idaho Power asserts that “without Idaho Power’s willingness to sell
its property at an agreed upon price,the Commission lacks subject matter jurisdiction.”Id.
Idaho Power argues that “Simplot’s Application attempts to use I.C.§61-328 to
further its own private business interests (at the expense of other Idaho Power customers)by
requesting the Commission to override Idaho Power’s proffered sale price,which the Company
has already determined is representative of the property’s fair sale value.”Motion at 9.Idaho
Power further contends that Simplot’s request contravenes the intent of Idaho Code §61-328,is
contrary to the public interest,and would constitute an unlawful taking under the Fifth
Amendment.
SIMPLOT’S ANSWER
Simplot maintains that it engaged in good faith negotiations with Idaho Power to buy
certain facilities and filed its Application with the Commission consistent with Idaho Power’s
tariff and prior Commission Orders.Answer at 3.Simplot explains that Idaho Power’s Rule M
(governing the purchase of utility-owned facilities installed beyond the point of delivery)was
created by the Company during its last general rate case in response to industrial customer
complaints that Idaho Power’s facilities charges were too high.“Faced with these arguments,
Idaho Power supported a sale process overseen by the Commission instead of outright transfer of
ORDER NO.32940 2
facilities to the customer or some other modification to the removal process.”Id.at 5.Idaho
Power proposed,and the Commission adopted,Rule M which anticipated that,if the Company
and customer cannot agree on a price,either party could ask the Commission to determine the
appropriate price.Id.at 6.
Simplot argues that the Commission’s broad grant of authority over all “rates,fares,
tolls,rentals,charges or classifications”pursuant to Idaho Code §6 1-502 provides ample
authority for the Commission’s jurisdiction to decide this matter.Simplot adds that Idaho Code
§61-503 allows the Commission to set the price for Simplot’s purchase.Further,Simplot argues
that “the commission shall have power to ascertain the value of the property of every public
utility in this state and every fact which,in its judgment,may or does have any bearing on such
value.”Idaho Code §6 1-523,Answer at 9.
Simplot denies that the pending Application amounts to a contract dispute between it
and Idaho Power.Simplot maintains that it is “seeking to invoke the provisions of the Company-
proposed Rule M —a tariff duly approved by this Commission.”Answer at 12.Simplot argues
that,because tariffs have the force of law,Idaho Power is bound by the terms of Rule M.
Simplot reasons that Idaho Power’s position requires a customer to “continue paying Idaho
Power’s monopolist rate for the facilities charge or agree to Idaho Power’s unilateral sale price.”
Answer at 13.
Simplot further contends that Idaho Power’s claim of lack of subject matter
jurisdiction is an impermissible collateral attack on the Commission’s final Order that approved
Rule M and the process for determination of a sales price.Moreover,Simplot asserts that
principles of judicial estoppel bar Idaho Power from gaining an advantage by taking one
position,only to seek a subsequent advantage by taking an incompatible position.Answer at 15.
Simplot also argues that the doctrines of laches and res judicata bar Idaho Power’s Motion.
On September 9,2013,Simplot filed a Motion asking the Commission to take official
notice of portions of the testimony and exhibits in Case No.IPC-E-11-08.Simplot contends that
“[i]n order to respond to the legal issues raised by Idaho Power’s Motion the Commission will
need to fully understand the genesis of Rule M and Idaho Power’s positions with regard to
customer purchases of facilities owned by Idaho Power on the customer side of the meter.”
Motion at 3.
ORDER NO.32940 3
IDAHO POWER’S “SUPPLEMENTAL”FILING
“In light of the confusion expressed in Simplot’s Answer to Idaho Power’s Motion to
Dismiss,”Idaho Power filed a supplemental brief on September 13,2013.Supplement at I.
Idaho Power asserts that nothing in the last rate case conferred jurisdiction on the Commission
to order an involuntary sale of Idaho Power’s property.”Id.The Company points out that the
Commission “clearly stated that a proceeding to determine the value of such facilities would be
necessary.”Id.at 2.However,Idaho Power argues that “at no point in the rate case,nor in Rule
M,did Idaho Power agree to a process whereby it could be forced,against its will,to sell its used
and useful property—particularly at a price the Company has determined would be to the
detriment of other customers and its shareholders.”Id.at 4.
Idaho Power maintains that,“if Simplot truly believes that Idaho 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.”Id.at 5.
DISCUSSION AND CONCLUSIONS
Idaho Power is an electric corporation and public utility pursuant to Idaho Code §
61-119 and 61-129.The Commission has jurisdiction over public utility matters generally
pursuant to Title 61 of the Idaho Code and the Commission’s Rules of Procedure.IDAPA
31.01.01.000 ci’seq.Specifically,pursuant to Idaho Code §61-328 and 61-523,the
Commission has jurisdiction to ascertain the value of utility property and to approve the sale of
utility property.
As a preliminary matter,Simplot asked the Commission to take official notice of
several portions of the testimony and exhibits in Case No.IPC-E-1 1-08.The Commission may
officially notice its own orders,notices,rules,certificates and permits.IDAPA
31.01.01.263.01(a)(1).Accordingly,the Commission hereby takes official notice of the notices
and Orders issued in Case No.IPC-E-1 1-08.The testimony and exhibits contained in the prior
case exist as a matter of public record.Contrary to Simplot’s assertions,we cannot find that the
testimony and exhibits offered are “commonly known and beyond dispute.”Motion at 3.While
the existence of the documents is undisputed,the testimony and exhibits reflect the argument and
opinion of parties in a previous Commission case.The content of the documents is not binding
as a matter of law.Accordingly,we deny Simplot’s Motion.However,to the extent that the
ORDER NO.32940 4
testimony and exhibits are used in a Commission Order to reach a finding and/or conclusion,the
matters are officially noticed.
Although its customers typically own,operate,and maintain facilities and equipment
beyond Idaho Power’s point of delivery,some customers ask the Company to assume these
obligations.A customer could request that Idaho Power install and maintain distribution
facilities for a variety of reasons,e.g.,because the customer lacks the capital or expertise to fund,
design,install,and maintain necessary facilities or because the customer does not want the
responsibility of maintaining such facilities.In Case No.IPC-E-1 1-08,the Industrial Customers
of Idaho Power (ICIP)argued that the facilities charges assessed by Idaho Power were
unreasonable,excessive and improperly calculated.Don Sturtevant,Corporate Energy Manager
for Simplot,testified on behalf of ICIP that Simplot “would like to opt-out of the facilities
charge,and take on the responsibility for electrical distribution facilities on Simplot property.”
Case No.IPC-E-1 1-08,Tr.at 473;Order No.32426 at 29.In response to ICIP’s position,Idaho
Power proposed that the Commission adopt a new tariff —Rule M.Rule M would allow
facilities customers the opportunity to request to purchase Company-owned facilities installed
beyond the delivery point.
Ultimately,the Commission found persuasive “the testimony offered by the ICIP and
other witnesses that customers ought to be provided with an option to purchase distribution
facilities dedicated to their specific use and located on their premises.”Order No.32426 at 32.
The Commission stated that,“if a customer wants to bear the responsibility of operating,
maintaining and replacing such facilities,then we believe there ought to be an opportunity for the
customer to purchase the assets on a case-by-case basis.”Id.The Commission approved Rule M
and it became effective on January 1,2012.
Pursuant to Rule M,Simplot asked to purchase the Company-owned facilities
installed beyond Idaho Power’s point of delivery.However,Simplot and Idaho Power were
unable to agree on a reasonable price.In response to failed negotiations,Simplot filed the
present case requesting the Commission to set a price for the distribution facilities that Simplot
wishes to purchase.
As previously stated,the Commission has jurisdiction,pursuant to statute,to ascertain
the value of utility property and to approve the sale of utility property.However,implicit in the
Commission’s authority is the utility’s willingness to sell.Idaho Code §61-328 does not
ORDER NO.32940 5
provide the Commission with the authority to compel a utility to sell its property.Consequently,
we grant Idaho Power’s Motion to Dismiss based on the Commission’s lack of jurisdiction to
compel the Company to sell its property.A valuation of the property by the Commission is
meaningless if the Company is unwilling to sell at anything less than its stated price.
Oftentimes the effect of a proposal cannot be accurately measured until after approval
and implementation.Such is the case here.Rule M does little,if anything,to advance the
interests of Idaho Power’s distribution facilities customers if Idaho Power can single-handedly
shut down negotiations.However,Simplot is not left without a remedy.We encourage Idaho
Power and Simplot to continue negotiations.We believe that there is enough flexibility in the
valuation of the distribution facilities for both parties to move further toward an agreeable price.
If negotiations fail,Simplot can choose to accept the sales price offered by Idaho Power or it
may choose to purchase its own distribution facilities.Either approach would satisfy Simplot’s
ultimate goal —eliminating its current obligation to pay Idaho Power’s facilities charges.
Alternatively,Simplot can ask the Commission to review whether the cost and calculation of
Idaho Power’s facilities charges is fair,just and reasonable to the Company’s customers.
ORDER
IT IS HEREBY ORDERED that Simplot’s Motion that Official Notice be taken of
testimony and exhibits is denied.
IT IS FURTHER ORDERED that Idaho Power’s Motion to Dismiss for Lack of
Jurisdiction is granted.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (2 1)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.
ORDER NO.32940 6
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of December 2013.
PAUL KJELLAN ER,PRESIDENT
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MACK A.REDFORD,COMMISSIONER
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MARSHA H.SMITH,COMMISSIONER
ATTEST:
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JIh D.Jewell]
Cbmmission Secretary
O:IPC-E-1 3-17ks2
ORDER NO.32940 7