20160316Petition for Reconsideration.pdf

Peter J. Richardson (ISB No. 3195)
Greg Adams (ISB 7454)
Richardson Adams, PLLC
515 N. 27th Street
P.O. Box 7218
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]
peter@richardsonandoleary. com
Attomeys for the Industrial Customers of Idaho Power
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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR AN )
ORDER APPROVING THE TRANSFER i CASE No' IPC-E-ts-26
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JUSTICE FEDERAL BUREAU OF J OT IDAHO POWERINVESTIGATION. )
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The Industrial Customers of ldaho Power ("ICIP"), petitioner herein, pursuant to the
Idaho Public Utilities Commission's ("Commission") Rules of Procedure ("IPUC RP") 33 and
331, and Idaho Code Sectiot6l-626, respectfully petitions the Commission for reconsideration
of Order No. 33470 dated February 24,2016, issued in Case No. IPC-E-15-26, (the "Order").
L
LEGAL STANDARI)
IPUC RP 331.01 provides, "Petitions for reconsideration must set forth specifically the
ground or grounds why the petitioner contends that the order or any issue decided in the order is
unreasonable, unlawful, erroneous, or not in conformity with the law, and a statement of the
nature and quality of evidence or argument the petition will offer if reconsideration is granted."
Petition for Reconsideration of the ICIP - IPC-E-I5-26
See also I.C. $ 6l-626.
II.
GROUNDS FOR RECONSIDERATION
The Commission's Order is not in conformity with the law in that it: (1) obviates this
Commission's obligations under the ldaho Public Utility Laws; (2) inappropriately applies Idaho
Code Sections 6l-327 and 6l-328 to regulate a proposed sale, to a private entity not engaged in
providing electric service to the public, of utility-owned assets on the customer side of the meter;
and (3) it is arbitrary because it allows Idaho Power to engage in discriminatory treatment of its
customers in the determination of the sales price for such utility-owned assets.
III.
THE COMMISSION HAS THE OBLIGATION AND AUTHORITY TO SET
PRICES FOR THE SALE OF UTILITY ASSETS
The Commission has an ongoing obligation to insure that rates and charges Idaho Power
extracts for its service and facilities are fair, just and reasonable. Idaho Code Sections 6l-301
and6l-302 provide:
All charges made, demanded or received by any public utility . . . for any product or
commodity furnished or to be furnished or any service rendered to or to be rendered shall
be just and reasonable. Every unjust or unreasonable charge made, demanded or received
for such product or commodity or service is hereby prohibited and declared unlawful.
***
Every public utility shall fumish, provide and maintain such service, instrumentalities,
equipment and facilities as shall promote the safety, health, comfort and convenience of
its patrons, employees and the public, and as shall be in all respects adequate, efficient,
just and reasonable.
Idaho Power, by owning, providing and maintaining electrical facilities for its ratepayers'
Petition for Reconsideration of the ICIP - IPC-E-I5-26
convenience that are located beyond the meter, is without a doubt, providing service,
instrumentalities, equipment and facilities to its patrons.
The requirements in Idaho Code Section 61-301 for the provision of "adequate, efficient,
just and reasonable" service are augmented by Idaho Code Section 6l-502 which provides, in
part:
Whenever the commission . . . shall find that the rates, fares, tolls, rentals, charges or
classifications, or any of them demanded, observed, charged or collected by any public
utility for any service or product or commodity, or in connection therewith . . . or that the
rules, regulations, practices, or contracts of any of them, affecting such rates, fares, tolls,
rentals, charges or classifications, or any of them, are unjust. unreasonable. discrim-
inatory or preferential . . . the commission shall determine the just, reasonable or
sufficient rates, fares, tolls, rentals, charges, classifications, rules, regulations, practices or
contracts to be thereafter observed and in force and shall fix the same by order as
hereinafter provided.. .
Emphasis provided.
The Commission has broad powers to regulate the provision of utility services, including the
provision of utility-owned facilities on the ratepayer side of the meter, pursuant to Idaho Code
Section 61-503, which provides:
The Commission shall have power . . . to investigate a single rate, fare, toll, rental,
charge, classification rule, regulation, contract or practice, or any number thereof, or the
entire schedule or schedules ofrates, fares, tolls, rentals, charges, classifications, rules
regulations, contracts or practices, or any thereof, of any public utility, and to establish
new rates, fares, tolls, rentals, charges, classifications, rules, regulations, contracts or
practices...
Emphasis provided.
There is no question that the provision of facilities beyond the ratepayer's meter by ldaho Power
is part and parcel of the provision of utility service. The Commission has exercised its
jurisdiction over the provision of such services through the promulgation of Rule M and
Schedule 66. However, the Commission has only partially fulfilled its statutory obligation to
regulate Idaho Power's provision of such service through the promulgation of Rule M. That rule
Petition for Reconsideration ofthe ICIP - IPC-E-15-26
sets detailed provisions for determining most of the contract terms and practices in the provision
of such services. However, Rule M does not address the determination of the price or terms
the sale of such facilities that are used solely by the ratepayer taking such service.
While it may be argued that tdaho Power has no obligation to sell its facilities beyond the
customer's point of delivery, when it chooses to do so, it is acting in its capacity as a regulated
utility and is clearly engaging in'ocontracts or practices . . . affecting such rates, fares, tolls,
rentals, charges or classificationso'and such "contracts or practices" are clearly covered by the
Idaho Public Utilities Laws including Idaho Code Sections 6l-301, 501 and 503. If the provision
of such services were not part and parcel of the regulated services tdaho Power is engaged in,
then Rule M would be of no effect. In essence, when the Commission allows Idaho Power to
unilaterally determine the price for the sale of utility-owned assets on the customer side of the
meter, it is leaving the ratepayer to fend for him- or herself in exactly the unequal bargaining
position that the Public Utilities Laws of the State of ldaho were designed to prevent. A
customer who disagrees with the price unilaterally set by ldaho Power is left with no choice but
to either terminate the service all together, which itself requires the payment of a fee to Idaho
Power, or pay whatever price tdaho Power chooses to charge to sell the assets.
Under the terms of Rule M, a customer who chooses to terminate service only need pay
Idaho Power for the "non-salvable cost" of the facilities. Rule M at\2. However, under Idaho
Power's unilateral business practices, that same customer who wishes to purchase such facilities
must pay Idaho Power its expected future profits and lost potential revenues on those facilities.
Whether or not such charges for lost revenues and profits are'Just, reasonable or sufficient" is
never put to the Commission for determination. Indeed, the Commission has explicitly declined
to make its statutorily obligated findings with regard to the sufficiency of the price. In this case,
Petition for Reconsideration of the ICIP - IPC-E-15-26
the Commission declared:
As we have previously observed, the Commission lacks authority to force a particular
sale between a utility and a customer. Order No. 32940 ("Idaho Code $ 6l-328 does not
provide the Commission with the authority to compel a utility to sell property.")
Consistent with our prior Orders, we are reluctant to prescribe precise rules dictating how
parties should negotiate and agree to a purchase price. Id. Rather, we will evaluate
applications for the sale of facilities on a case-by-case basis. See Order No.32426 at 33.
Order No. 33470 at 6.
The crux of the ICIP's Petition for Reconsideration is the Commission's finding that "we are
reluctant to prescribe precise rules dictating how parties should negotiate and agree to a purchase
price." Id. The ICIP does not address whether the Commission has the authority to force a
particular sale, but only that when a utility proposes to engage in such a sale that the Commission
has the obligation to set fair,just and reasonable rates, fares, tolls and contracts inherent in those
sales.
The 'catch-22' facing ratepayers is apparent in the order relied on in the above cited
passage. In Order No. 32940, the Commission addressed a similar question as to whether it
should set the purchase price for utility-owned assets on the customer side of the meter. In
declining to do so, the Commission declared:
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 sinele-
handedly shut down negotiations. However, Simplot is not left without a remedy. We
encourage ldaho 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.
Order No. 32940 at 6. Emphasis provided.
The take-it-or-leave-it solution for determining the sales price for utility-owned facilities
on the customer side of the meter is no solution at all. It leaves the customer with the non-choice
Petition for Reconsideration ofthe ICIP - IPC-E-15-26
of accepting ldaho Power's price or termination (for a fee) of such service. This Commission
has a statutory obligation to step up to the plate and establish parameters for determining the
price for the sale of utility assets located on the customer's side of the meter when the utility
chooses to make such sales. [t has the clear authority, and indeed the obligation, to do so
pursuant to the Idaho Public Utilities Law, to prevent discriminatory and preferential treatment
and ensure just and reasonable charges.
IV.
IDAHO CODE SECTION 6T.328IS INAPPLICABLE TO THE SALE OF UTILITY
ASSETS TO CUSTOMERS
The Commission assumes that Idaho Code Sections 61-328 is applicable to the sale of
utility-owned assets to customers. However a careful reading of the statute suggests otherwise.
Significantly, this section of the Idaho Public Utilities Law contemplates the sale of utility assets
that will be used to serve the public and not a single, sole, individual entity. Paragraph 3(c) of
that section requires that the Commission find:
That the applicant for such acquisition or transfer has the bona fide intent and the
financial ability to operate and maintain said property in the public service.
It cannot be seriously contended that the sale of a utility asset that will be used for the sole
benefit of a sinele customer to the exclusion of all other customers is being placed in the "public
service." This incongnrous result is buttressed by the additional finding the Commission must
make pursuant to Paragraph 3(a) which requires a finding that the sale will also be in the "public
interest." The requirement that the sale be both "in the public interest" and that the asset be
placed in "public service" are not redundant. They are separate statutory requirements. It may
be argued that the sale of an asset that is used for private purposes by a single customer somehow
furthers the public interest, but it cannot at the same time, and with respect to the same sale, be
Petition for Reconsideration of the ICIP - IPC-E- I 5-26
argued that such an asset has also been placed in the "public service."
Idaho Code Section6l-327 provides additional support for the ICIP's contention that
Section 628 does not apply to the sale of assets to private customers of a utility. That section
prohibits the sale of any utility asset that will be placed in the public service to any entity
(including a governmental entity such as the FBI) unless that entity is either rate regulated by this
Commission or is a cooperative or municipal utility organized under the laws of the State of
Idaho:
No title to or interest in any public utility . . . property located in this state which is used
in the generation, transmission, distribution or supply of electric power and energy to the
public or any portion thereof, shall be transferred or transferable to, or acquired by,
directly or indirectly, by any means or device whatsoever, any government or municipal
corporation, quasi-municipal corporation, or governmental or political unit, subdivision
or corporation, organized or existing under the laws of any other state; or any person,
firm, association, corporation or organization acting as trustee, nominee, agent or
representative for, or in concert or arrangement with, any such govemment or municipal
corporation, quasi-municipal corporation, or governmental or political unit, subdivision
or corporation; or any company, association, organization or corporation organized or
existing under the laws of this state or any other state whose issued capital stock, or other
evidence of ownership, membership or other interest therein, or in the property thereof, is
owned or controlled, directly or indirectly by any such government or municipal
corporation, quasi-municipal corporation, or governmental or political unit, subdivision
or corporation; or any company, association, organization or corporation, organized
under the laws of any other state, not coming under or within the definition of an electric
public utility or the jurisdiction, regulation and control of the public utilities commission
of the state of ldaho under the public utilities laws of this state; provided, nothing herein
shall prohibit the transfer of any such property by a public utility to a cooperative
electrical corporation organized under the laws of another state, which has among its
members mutual nonprofit or cooperative electrical corporations organized under the
laws of the state of Idaho and doing business in this state, if such public utility has
obtained authorization from the public utilities commission of the state of Idaho pursuant
to section 6l-628,Idaho Code.
The import of this l95l statute was explained by the ldaho Supreme Court in ldaho Power Co. v.
State of ldaho, l04Idaho 575,589 (1983):
The PUC asserts that if Idaho Power has subordinated water rights used in the generation
of electricity, it has violated LC. $$ 6l-327 and 6l-328. I.C. $ 6l-327 provides generally
that property in this state used in the generation or transmission of electricity shall not be
Petition for Reconsideration ofthe ICIP - IPC-E-I5-26
transferred in any manner to out-of-state orgarizations, governmental entities, or any
entity not subject to regulation by the PUC. I.C. $ 6l-328 provides that any transfer of
such property must be approved by the PUC after public hearings. I.C. $ 6l-329 states
that property transferred in violation of those sections shall escheat to the state and the
attomey general must institute court proceedings to adjudicate such an escheat, and I.C. $
6l-329 sets forth criminal penalties for violation of the preceding sections.
Thus it appears that the statutory scheme relied upon by the Commission in this matter is not
designed to, nor does it contemplate, the sale of utility assets to individual customers of the
utility. The Commission has no authority under Idaho Code Section6l-328 to structure a sale of
utility assets to an entity not subject to the Commission's regulatory authority. This section does
not, however, contemplate sales of utility assets that are not placed in the public service, such as
individual private customers.
V.
THE COMMISSION'S TREATMENT OF SALE OF UTILITY-OWIIED ASSETS ON
THE CUSTOMER SIDE OF THE METER IS DISCRIMINATORY AND ARBITRARY
The Commission has historically approved the sale of utility-owned assets on the
customer's side of the meter at net book value of those assets. See In the Matter of the
Applicotion of Idaho Power Company for Authority to Sell to Paci/iCorp the Goshen Series
Capacitor Bank Order No. 31007 at 2, February 17,2010:
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's system.
See also, Sinclair Oil Company, dba, the Sun Valley Resort in Docket No. IPC-E-05-16, Order
No. 29864, September 12,2005. Allowing Idaho Power to unilaterally determine the sales price,
and charge for lost revenues and profits, is not only a departure from historic Commission
precedent, it is an arbitrary abdication of the Commission's duties to affirmatively set the rates
Petition for Reconsideration ofthe ICIP - IPC-E-15-26
and terms of service for utilities it regulates. The Commission has not explained why it has
suddenly departed from its traditional book value approach to the sale of utility assets by now
allowing Idaho Power to unilaterally set a sales price that far exceeds book value. Arbitrary
changes of Commission policy with no explanation or rationale are contrary to the Commission's
obligations to set fair, just, reasonable and non-discriminatory rates. The Commission should
open an investigation to set uniform and non-discriminatory rules for setting the sales price of
utility-owned assets located on the customer side of the meter.
VL
METHOD OF RECONSIDERATION
RP 331(3) requires that petitions for reconsideration state the method by which
reconsideration is requested. The ICIP requests reconsideration by submission of legal briefs
and does not believe further evidentiary hearings are necessary.
vII.
PRAYER FOR RELIEF
WHEREFORE, the Industrial Customers of ldaho Power respectfully request the
Commission issue its order granting reconsideration of its decision not to initiate a proceeding to
establish parameters for determining the price for the sale of Idaho Power-owned assets subject
to Rule M such that customers and Idaho Power will know, in advance, of the possible dollar
impact of their embarking on negations for the sale/purchase of such assets.
RESPECTFULLY SUBMITTED this l6n day of March 2016
Richardson Adams, PLLC
Peter J. Ri
Industrial Customers of Idaho Power
Petition for Reconsideration of the ICIP - IPC-E-15-26
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the l6th day of March,20l6, a true and correct copy of the within
and foregoing PETITION TO RECONSIDERATION BY THE INDUSTRIAL CUSTOMERS
OF IDAHO POWER in Docket No. IPC-E-15-26 was served electronically and by HAND
DELIVERY, tO:
Lisa Nordstrom
Shelli D. Stewart
Idaho Power Company
l22l West Idaho Street
Boise, tdatro 83707 -0070
lnordstrom@ idahopower. com
sstewart@ idahopower. com
Tami White
Idaho Power Company
l22l West Idaho Sfreet
Boise, Idaho 83707 -0070
twhite@idahopower. com
Jean Jewell
Idaho Public Utilities Commission
472West Washington St.
Boise,Idaho 83702
[e-mail]. gov
Daphne Huang
Idaho Public Utilities Commission
472West Washington St
Boise, Idaho 83702
daphne.huane@nuc. idaho. gov
CJ^,r,: (',-o,n\:
Nina Curtis
Admini strative Assi stant