20160606Comments.pdf

DAPHNE HUANG RECEIVED
DEPUTY ATTORNEY GENERAL
IDAHo puBLIC uTILITIES coMMISSIoN ?il16 -llii{ -6 PH h: 28
PO BOX 83720 .. j rn, i.r
[phone]
IDAHO BAR NO. 8370
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-59t8
Attorney for the Commission Staff
BEFORE THE TDAHO PUBLIC UTILITIES COMMISSION
rN THE MATTER OF rDAHO POWER )
COMPANY'S REQUEST TO TRANSFER TrTLE ) CASE NO. rPC-E-16-07
OF MOBILE HOME METER PEDESTALS' )) cowtMENTS oF THE
) cOvTMISSION STAFF
)
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Daphne Huang, Deputy Attorney General, submits the following comments.
BACKGROUND
On April 12,20l6,Idaho Power Company ("Idaho Power" or "Company") asked the
Commission to approve its transfer of 18 meter pedestals in the Mobile Manor mobile home
park, pursuant to ldaho Code $ 6l-328.
Before March 31, 1981, Idaho Power installed, owned, and maintained mobile home
pedestals2 as part of facilities for electric service to most mobile homes. Application at 1. After
March 3 1, 1981, new mobile homes have been served by pedestals owned and maintained by
customers per Idaho Power's Rule H, Section (2Xg). Id. at2. Any pedestals still owned by
I The caption has been corrected to reflect that the Company seeks approval to transfer mobile home meter
pedestals, but not all the pedestals in Mobile Manor.
2 Pedestals are comparable to meter bases attached to buildings, but are customer-owned. Application at2.
STAFF COMMENTS 1 JUNE 6, 2016
Idaho Power predate l98l and their replacement parts are no longer manufactured, but must be
made by Idaho Power. Id. To avoid the expense of maintaining and repairing these pedestals,
"and to promote consistency of ownership among customers, Idaho Power seeks to transfer title
of company-owned pedestals to the customer whenever possible." 1d
Idaho Power entered into a Transfer of Title Agreement,3 to transfer, convey and
assign l8 meter pedestals owned by Idaho Power in Mobile Manor mobile home park in
Bannock County, Idaho, to Kathleen C. Parrish. Agreement at 7-2. The Agreement provides
that Idaho Power will update the pedestals if and when the Commission approves the Agreement,
but that the Company "does not warrant the upgrades or the Pedestals to any degree." Id. at3.
Rather, the property owners agrees to accept the pedestals "AS IS" and "WITH ALL FAULTS."
Id. (capitalization original). Idaho Power does not "warrant the upgrades or the pedestals to any
degree." Applicationat2. "No money was or will be exchanged as a result of the transaction."
Id. at3.
STAFF ANALYSIS
The Commission has authority and jurisdiction to supervise and regulate every public
utility in Idaho. Idaho Code $ 61-501 . Specifically, the Commission has the power to
investigate a contract of an Idaho utility. Idaho Code $ 61-503. Idaho Power's Application
seeks approval of its Agreement with Ms. Parrish, under ldaho Code $ 6l-328. Application at 1.
However, the Commission has recently determined that Section 6l-328 does not apply to
transactions such as the transfer ofassets here.
ln2015, Idaho Power asked the Commission to approve a sale of its assets used solely by
the Federal Bureau of Investigation (FBI), to the FBL In its Order on Reconsideration in that
matter, the Commission determined,"Idaho Code $$ 61-327 and 61-328 do not apply where the
[utility's property being sold] is not already used to serve the public or a portion thereof." Order
No. 33514 at9. The Commission observed that "the public or a portion thereof' does not
contemplate situations in which utilities services are offered "to one person or corporation under
a contract." Id., citing Humbird Lumber Co. v. Idaho PUC,39 Idaho 505, 51I,228P.271,273
(1924). The facts in the FBI case are similar to those here, where Idaho Power seeks to transfer
3 Idaho Power has submitted a copy of the Agreement as an attachment to its Application.
STAFF COMMENTS JLINE 6,2016
its meter pedestals not used to serve the public or a portion thereof, to one person under a
contract.
In the FBI case, the Commission determined that the factors set forth in Section 67-328,
although they do not strictly apply, have proven effective for "protecting the public interest and
ensuring that ratepayers will not be harmed" by such transaction. Order No. 33514 at9, citing
Order Nos. 32624,29864,25241. The Commission therefore found it appropriate to consider
Section 61-328(3) "as guidance when evaluating a utility's proposal to transfer assets that
historically have been devoted to serving only a single customer." Order No. 33514 at 9.
Accordingly, Staff has applied Section 6l-328 as guidance here, to evaluate whether the public
interest is protected, and whether ratepayers are harmed.
Section 61-328 sets forth the following considerations: that (a) the transaction is
consistent with the public interest, (b) the cost of and rates for supplying service will not be
increased by reason of the transaction, and (c) the applicant acquiring the property has the bona
fide intent and financial ability to own and maintain the property in the public service. The third
factor does not apply because the property is not and would not be maintained in the public
service, upon the transfer to Ms. Parrish. See Order No. 33514; Application at 3. Staff s review
considers the hrst two factors from Section 61-328.
1. Consistent with the public interest
The Company contends the transaction is "consistent with the public interest because it
allows Idaho Power to treat similarly-situated customers in a like manner" by ensuring Ms.
Parrish the owner of these lots will own these pedestals as do other mobile home owners who
established service after 1981. Application at 3. Staff notes the Commission has found that
utilities are free to contract, and the Commission has no authority to infringe on utilities' right to
contract unless doing so is contrary to the public interest. Order No. 33514 at7, citing Afton
Energtv. IdahoPowerCo.,111Idaho925,928,729P.2d400,403(1986). UponStaflsreview
of the Application and additional information provided by the Company, Staff has no basis to
conclude Idaho Power's Agreement with Ms. Parrish is contrary to the public interest.
Also, Idaho Power intends to upgrade the 18 meter pedestals before transferring title, at
no cost to Ms. Parrish. Application at2-3. The Company states, "The up-front costs of updating
the pedestals will be more than offset by the elimination of long-term maintenance and repair
STAFF COMMENTS JUNE 6,2016
costs of continued utility ownership." Id. "lB)ecause the transaction reduces Idaho Power's
costs of maintenance, the Company's expenses will decrease in the long term." Id.
Staff has reviewed the Operation and Maintenance (O&M) expenses associated with the
meter pedestals installed prior to March 3 1, 1981, including the 18 meter pedestals at issue here.
In 1993, the Company spent $41,000 ayeat to maintain its 8,949 meter pedestals. By 2012,
some components were no longer available, so replacement parts had to be fabricated to maintain
the equipment. The Company estimates the cost to upgrade each meter pedestal is $1,700, while
the actual value of the meter pedestal being transferred is about $454.45.
Although there is a cost to Idaho Power to upgrade the meter pedestals, the Company
would no longer be responsible for any future operating or maintenance expenses. Staff believes
the upgrades are necessary to ensure Ms. Parrish is able to maintain the equipment after taking
ownership of the meter pedestals, and is reasonable and appropriate to avoid the future cost - to
Idaho Power and its customers - of replacing the meter pedestals. Upon Staff s review, and in
accordance with Order No. 33514, Staff believes the Agreement here is consistent with the
public interest.
2. No increase to cost and rates
The Company's proposed accounting treatment will retire the existing pedestals in plant-
in-service of $ 1,850 by reducing the plant and reducing accumulated depreciation. This is
typical accounting treatment when plant is retired. The upgrades (approximately $1,700 per unit
or $31,000) will also be removed from plant in service and accumulated depreciation. These rate
base amounts net to zero and therefore do not affect current rates charged to other customers.
Companies are required to periodically submit depreciation studies to the Commission
for review and approval. Retiring plant before and after its estimated life (which is used to
calculate depreciation expense) is part of the evaluation to determine if depreciation rates should
be revised going forward. When the plant is not fully depreciated, the group depreciation rate for
all pedestals will increase slightly over the average remaining life of the group due to the early
retirements. The amounts in this case would not materially impact depreciation expense rates
proposed as a result of the Company's depreciation studies. The annual depreciation expense no
longer incurred due to the proposed transfer is less than $50 and does not impact rates charged to
other customers.
STAFF COMMENTS JI.INE 6,2016
RECOMMENDATION
Staff believes the agreement between Idaho Power and Ms. Parrish is appropriate on
consideration of the relevant factors rn ldaho Code $ 6l-328. Staffthus recorlmends that the
Commission approve the transfer of the l8 meter pedestals as proposed by the Company.
Respecttully submitted this fifr day of June 2016.
Technical Staff: Rick Keller
Paticia Harms
i:umisc:comments/ipcel 6.7djhr$h comments
STAFF COMMENTS JUNE 6,2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 6TH DAY OF JUNE 2016, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
NO. IPC-E-16-07, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
JULIA A. HILTON
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-mail: [e-mail]
dockets@idahopower. com
PETER J RICHARDSON
GREGORY M ADAMS
RICHARDSON ADAMS PLLC
PO BOX 7218
BOISE ID 83702
E-mail : [e-mail]
gre g@richardsonadams. com
MATT LARKIN
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-mail: [e-mail]
DR DON READING
6070 HILL ROAD
BOISE ID 83703
E-mail: [e-mail]
CERTIFICATE OF SERVICE