19901206.docx

Minutes of Decision Meeting
December 6, 1990 - 1:30 p.m.
In attendance:
Commissioners Joe Miller, Perry Swisher and Ralph Nelson; staff members Mike Gilmore, Lori Mann, Scott Woodbury, Keith Hessing, Terri Carlock, Tonya Clark, Marsha Smith, Jack Taylor, Syd Lansing, Gary Richardson, Stephanie Miller, Madonna Faunce, Bill Eastlake, Bob Smith, Lynn Anderson, Belinda Anderson, Birdelle Brown, Bev Barker and Myrna Walters.  Also in attendance were:  Morgan W. Richards, Mike McGrath and Skip Worthan, Dawna Oliason and another patron of the Eden/Hazelton area.
Items from the December 6, 1990 Agenda were discussed as follows.
9.  Regulated Carrier Division Agenda dated December 3, 1990.
Approved.
12. Terri Carlock's December 4, 1990 Decision Memorandum re:  Annual Report for Water Utilities.
Terri Carlock explained the one change.
Commissioner Miller asked if all the water companies fill these out?
Stephanie Miller said some only fill in part of it.
Approved.
13. Terri Carlock's December 5, 1990 Decision Memorandum re:  Hayden Pines Security Issuance, Case No. HPN-W-90-2.
Commissioner Miller said he understands it is conformance with what we previously authorized.
Terri Carlock said it was decided at last decision meeting.
Commissioner Swisher asked who Market Investments was?
Terri Carlock replied it is Ford's children.
Approved after brief discussion.
14. Terri Carlock's December 5, 1990 Decision Memorandum re:  Gem State Utilities Securities Issuance Case - GEM-T-90-2.
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Commissioner Swisher asked if everything listed here except BETRS was discussed at prehearing?
Terri Carlock explained why she is asking for the breakdown.
Commissioner Swisher asked if Terri Carlock wants that in-hand before Commissioners go ahead with this?
Terri Carlock said yes.
Commissioner Swisher asked if staff had a ballpark figure?
Terri Carlock said Randy Lobb did.  Said she thinks what they are doing is including more exchanges and the BETRS.
Decision:  Suspend until we get information.
Commissioner Swisher said Commissioners have his proxy if information comes in when he is gone.
**Get suspension order ready in case it is needed.
3.  Mike Gilmore's November 26, 1990 Decision Memorandum re:  IPUC Public Records Guidelines.
Commissioner Nelson asked who the chairmen of the Subcommittee are?
Mike Gilmore said both State Affairs' chairmen.
Commissioner Miller asked if they didn't suggest our things are on hold?  He took it that until they were ready to adopt a policy on these two points that ours were somewhere in limbo.
Commissioner Swisher said labor costs are not included.
Commissioner Nelson said he would suggest charge 2 cents a copy.
Commissioner Miller said our guidelines were just guidelines but everyone expects them to be promulgated.
Commissioner Nelson asked why we would go through the promulgation?
**Need comment period.
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Commissioner Miller suggested 5 cents a copy.
Approved by all Commissioners.
Question 4 - Do not copy copyrighted material for the public.
Question 5 - Leave it as an informal staff policy.
Mike Gilmore also suggested that there be a way established for payment of personal copying.  He will talk to Bill Winiger about this.
7.  Don Howell's November 28, 1990 Decision Memorandum re:  U S West's Motion for Extension of Time to Respond to Discovery, Case No. MTB-T-90-5.
Commissioner Miller suggested granting the stipulation motion.
Lori Mann will prepare the order.
1.  Lori Mann's November 23, 1990 Decision Memorandum re:  HPN-W-89-1; The Association's Response to the Schedule of Adjustments per Commission Order.
Lori Mann said one of the things not in the Memo is Jack Taylor's recommendation that the certificate be pulled.  
Commissioner Miller said he and Commissioner Nelson had a conference on that.
Commissioner Nelson said we did decide to not pull the certificate. Thought there wasn't enough  there to seriously introduce that.  Asked if it was on the record?
Commissioner Miller said he thought not.  Thought the problem was that there was no notice on that.
On question of revocation of certificate, would prefer leaving it unaddressed.
Commissioner Nelson said if there was something in the transcript about that, would deal with it.
Lori Mann asked about repeating everything in this order since this is another final order.
Commissioners agreed.
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Also in attendance at this time were:  Dan Poole and Jim Wozniak of U S West and Randy Lobb and Don Oliason from staff.
15. Lori Mann's December 3, 1990 Decision Memorandum re:  Eden/Hazelton/Murtaugh EAS Petition to Twin Falls; Case No. MTB-T-90-9.
Commissioner Miller said based on staff report and turnout at the meeting, think it is a problem we cannot ignore.
Commissioner Nelson said he thought Commission should go down there.
**Valley High School was suggested as a place for hearing.
Marsha Smith spoke as person who had worked on this before, asked if it wouldn't be a good idea to have working sessions before hearing with maps, charts, etc. to come up with a plan as a whole.  Seems to her that before hearing, some legwork needs to be done.
Commissioner Swisher said when we took the formation that came out of the Emmett procedure for Metropac pricing and then applied it to the concerns down there, the buy-up was so high that Commission thought for the price it was working well.  Must be meeting the people's needs since they are buying it.
Lynn Anderson said  it was meeting some of their concerns.
Commissioner Miller said he thought it might be better for the Commission to hear from the public and then direct the parties to work toward a way to devise a system.  Might be important for the Commission to hear from the public.
Commissioner Swisher asked about schools in Murtaugh.  Thought a hearing was a good idea in the area.  The introduction of the Murtaugh thing doesn't simplify it.
Commissioner Nelson said he liked Marsha Smith's proposal.  Perhaps U S West might find the $4.00 revenue neutral.
Commissioner Miller said he thought a public hearing should be held first.
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Commissioner Nelson said he still thought workshops were better first.
Commissioner Swisher proposed a meeting room for a small group.
Commissioner Miller said the reason he was thinking hearing first makes better sense - group is now better organized - asked the ladies present if the proposal is okay with them - workshops?
Ms. Oliason said she has concerns.  There are many different needs.  Have already had community meetings - cannot make the recommendation for the whole public without their vote.
Commissioner Miller asked if it was their preference to have a meeting first?
Ms. Oliason said they have a phone committee - they will be prepared this time.
Commissioner Nelson asked how many were on the committee?
Ms. Oliason said 14.
Commissioner Miller asked what they would prefer?
Ms. Oliason said they would do it either way.
Commissioner Swisher said he thought hearing would be best.
Lori Mann spoke to workshops first.
Ms. Eliason said her feeling is a workshop, but general public did want public hearing.
Commissioner Miller suggested hearing and the people working with staff and the phone company at the same time.
Lori Mann asked about the consensus of the surcharge?
Ms. Oliason said 90 some percent have surcharge.
**Decision was:  Open a case.  Find a hearing room.  Encourage parties to have discussions before the hearing so as many things as possible can be resolved.
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Commissioner Nelson said he thought it was important to get some things worked out before the hearing.
5.  Scott Woodbury's November 27, 1990 Decision Memorandum re:  IGC Request to Increase Composite Depreciation Rate.
Commissioner Nelson said he thought the first thing to be discussed is "negative depreciation".  We have approved it in enough other cases that we have a history of approving it.  As a methodology don't have a problem with it.
Commissioner Swisher said he thought the biggest problem as Commission, foundation was over time, here we are moving to new ground without foundation.  That is the toughest thing we have to do.  Agree it is justified.  Agree that the record shows we have done it with WWP and in a category at IPC.
Commissioner Swisher said he wanted to bring up again with IGC, the significance in seducing Mtn. Fuel across the border.  The success in Southern Utah convinced them to come into Preston.  Am mentioning it here very informally - the desirability of a company asking us to be able to do major extensions into new served areas with a special rate for rapid recovery.  We can't continue to talk about fuel switching as part of the generic resources in Idaho for the avoidance of new base load plant and continue dealing reactively with the gas company.  Was asked by person on Ten Mile Road what it would take to get gas there.  Drove down there and saw a greenhouse operation, a number of houses less than 3 years old in a rural area.  There is enough concentration there to justify getting service into that area but it seems it would also justify rapid recovery.  People wanting service would be willing to pay more until after amortization of the service costs.  Would merit looking into.  Think the inability to sell high-priced Canadian gas and slowdown of construction generally, stopped any thinking of that.  Now things have changed.  Think it would be applicable in other areas.  Think Commission would like to see proposals for extensive new areas.
Commissioner Miller said he thought the concept was well accepted in the accounting world.  If we fail to adopt we are a small majority.  From a conceptual point of view it is okay.  Generally tend to look at depreciation in financial sense of investment rate to the shareholders.  Seems there is a danger of returning more than was invested by the shareholders of the company.  Consequently there is need
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for caution in amount of depreciation allowed.  Also tend to accept a greater amount of Eastlake's testimony that the variability in company's numbers was that question of reliability of the final 3.9%.  So Eastlake's testimony coupled with need for caution, and guarding for over return to investments would lead him to think the company's number is too high but have difficulty finding another number.
Commissioner Nelson said that is where he is.  Feel that is an awfully large amount of negative salvage.  Can't believe going forward you are going to incur that much, rather would say if you add x amount of pipeline you would incur that amount of negative salvage over the pipeline.   
Commissioner Miller said he didn't have any idea where it would come out for final number but have Bill Eastlake's exhibit showing how much the variance is in the accounts.  Don't know what would happen if we said don't allow greater than minimum.  Spoke to working backwards from Bill Eastlake's exhibit.
Bill Eastlake said if you put all the numbers in a hopper and weighted them and then applied it across the board ... we did average for another alternative.
Syd Lansing said he understands what Commission is trying to say.  If it were done account by account the ratio would stay the same.
Commissioner Swisher said he thought staff and company agreed revisiting was important (every three years).
Commissioner Nelson said if their position turns out to be right there would be an adjustment upward more frequently.
Commissioner Miller said as proposed there would not be a rate impact.
Commissioner Swisher said this won't be the only problem.
Commissioner Nelson said what it is going to come down to is a composite rate and what comes in and goes out would just be a hard number.  Wouldn't be adding or subtracting for salvage.
Stephanie Miller - assumed he was saying we never  thought of it as a current cost and we recover ... but if you want to recover from specific ratepayer, isn't it fair to say that is ... if you are going to count it for ratemaking purposes?
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Commissioner Nelson said - think it is different in the current expenses.  If it is being reviewed every 3 years, it is almost a current expense.
Commissioner Miller said he thought this question came up on cross on Terzic.  
Scott Woodbury said company is saying cost of plant includes removal costs.  Why are we defining cost of plant any differently?
Stephanie Miller said it will automatically  be considered.  Spoke to how IGC figures depreciation.  Salvage is factored in for hookups.
Commissioner Nelson said he thought we were getting ahead of ourselves on this.
Point #2.  
Commissioner Nelson said it is not a future expenditure.  It is where it is put in the accounts.  They shouldn't be incurred.
Commissioner Miller said it is an expense appropriately borne by those using the asset.
Point #3.  
Commissioner Nelson said there was quite a bit of testimony on this.  Was satisfied that company is aggregating that out.  Asked Commissioner Miller what his feeling was on this?
Commissioner Miller said in the transcript Dickey's recommendation is:  It runs contrary to standard accounting practices.  Was trying to find if Syd Lansing rebutted that.
Scott Woodbury said he did not.
Commissioner Nelson said it is a place where it could be subject to abuse.  Should direct the company that all appropriate costs for new plant should go in as new plant.
Scott Woodbury said he thought audit was important but Syd Lansing didn't think segregation was occurring.  Company says they are doing it.
Commissioner Nelson said he sees it as an on-going matter for auditing.
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Commissioner Swisher suggested saying to the company that the record should  be kept open so that an audit can be done.  Should be sufficiently aggregated.  (Ability of staff to know what happened in that year).  Would suggest that the order say it in Lansing language so they understand it - accountant-ease should be used.
Commissioner Nelson said he thought the company should be putting those in capital costs rather than removal costs.
Commissioner Swisher said some years you will have a terrific amount, some not.
Point #4.
Commissioner Swisher said he sees separate as income tax exposure.
Commissioner Nelson said if this is working right, there is no normal year, but in a normal year you should be expending what you take in.  Expense is being funded as it incurs .  Am having a little trouble seeing that a trust account would be anymore than an in and out/up and down account.
Scott Woodbury said it is not necessary that the funds be in a separate account to have an accounting for it.
Commissioner Nelson said you determine because of negative salvage you were going to collect $5,000,000, you should put $450,000 in an account and as you use it, you tap into that account, it would be a clearing account.
Scott Woodbury said it would be an auditing account.
Commissioner Nelson said if Depreciation is Account 300 and Reserve for Depreciation is 310, you would have an expense account that would be removal account that would be credited with debit to reserve for depreciation.  Asked if removal costs would go into expense account first?
Madonna Faunce explained what staff wanted - separate accounting for that.
Skip Worthan said that is a non-problem.
Commissioner Miller spoke to fact that internally generated cash is value to the utility and can in fact fund activity that would need funding.  It is also important to be sure we are not allowing excessive depreciation because you are allowing shareholders to cover more investment than they made if you are not careful.
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Commissioner Nelson said that would call for review sooner than 10/11 years.  Right now we are experiencing large growth.  Depreciation should be reviewed more often.
Mike McGrath said he agreed with 3/5 years.
Stephanie Miller said a lot of it has been for depreciation that brings in revenue.
Commissioner Nelson said just the expansion signifies that the rates have to be examined more than every 10 years.
Scott Woodbury asked about 5 years of historical data?  During any period of review, the company could retire no plant, how does that skew the issue?
Commissioner Miller suggested saying we are concerned about variability of data and we are making adjustment for that.  In the future that will have to be addressed.  It is something the parties will have to address when we do the next case.
Scott Woodbury asked if company should do deprecation study every 3 years?
Commissioner Nelson said he thought it would be appropriate to revisit this in three years was the way to say this.
**Didn't necessarily mean every 3 years after that.
Scott Woodbury asked if the company should do it?
Question of composite versus account by account basis.
Commissioner Nelson said he saw nothing wrong with composite.
Stephanie Miller said the way company books it, they can do composite or do it account by account.  Mix is going to change from one year to the next.
Terri Carlock said it makes a difference when you retire salvage.
Stephanie Miller said it doesn't make a whole lot of difference.  It does make a difference how the order is written.  It is just the way the order is written that helps staff and company know how to book it.
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Commissioner Miller asked Stephanie Miller about the number?
Stephanie Miller said they can look at total of plant for mains.  The rate that went into that composite for that particular item.  We will apply 5% to it.
Commissioner Nelson said that ratebase amount wouldn't change.
Stephanie Miller said the booking and investment in plant will change between now and when next ratebase amount is established.
Skip Worthan said it is what is being booked each year.  Currently company is using composite rate.  Could continue to do that.
Commissioner Nelson said he though using individual rates is the way to go.  This is book depreciation.
Decision was:  Account by account basis.
2.  Lori Mann's November 26, 1990 Decision Memorandum re:  Creation of a Standard for Responding to service Outages; Case 31.D-R-90-1.
Commissioner Miller asked about U. S. West.  Said he would say just file comments and get on with it.
Stephanie Miller  explained that when staff talked to the phone companies  they didn't know if this is the most practical rule.
Commissioner Nelson said he came out of this not wanting a generic rule.  Don't know if 24 hour rule would be appropriate for everyone.
Commissioner Miller suggested saying if we are going to do a workshop, U. S. West should have their comments on the table first.
**Staff is to file comments.
4.  Keith Hessing's November 27, 1990 Decision Memorandum re:  Northwest Regional Electric Energy Curtailment Plan (Share the Shortage Concept)("One Short-All Short")
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Commissioner Miller asked if the Idaho utilities are participating?
Keith Hessing said they are participating in some way.  WWP was there.  IPC wasn't at the meeting he attended.  Said the assumption throughout meeting is that the states are 100% behind this.  Was not sure of Idaho.
Commissioner Miller said he told them that he didn't feel he could commit the State of Idaho to a plan.  It was beyond the PUC.  As he reads load curtailment statute, have authority to order it if the health and welfare of the Idaho citizens is at issue, health and welfare of other states did not allow us to issue an order of curtailment.  Thought Marsha Smith and Keith Hessing should follow this process.  If at the end of it you can see benefits to the state, then we could make the decision to get more involved.
Commissioner Swisher said we did have actual disasters.  There was the Teton Dam.  If there had been a big plant there would have been national emergency.  If Brownlee went out it would not be.  Don't even think it is worth amending statute - already have some problems we don't need.  Can see this as more than sharing the risk.  That determination should be made by the legislators.
Don Oliason said this whole thing started in 1977.  Montana was not enthused about it.  It was at that time written because there was a drought and lots of utilities had to figure out what to do if it got worse.  This Task Force hasn't established what could happen.  Don't see how you can have a curtailment plan if you don't define what problems could be.
Staff's involvement:  Don't pull out but use caution.
Keith Hessing said he thought they are hoping for a model conservation program and each state finetuning it.
6.  Don Howell's November 27, 1990 Decision Memorandum re:  Tariff Advice 283, GTE-T-90-2.
After brief discussion, Commission decided to let them withdraw.  
**Don't do anything on Post Falls until they resubmit.
8.  Lori Mann's November 30, 1990 Decision Memorandum re:  Commission's Policy Concerning Contributions in Aid of Construction--Case No. U-1500-176.
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This came up because of Eagle Water.
Commissioner Swisher said he thought an order of clarification should be issued.
Randy Lobb didn't know if that would take care of Eagle Water, though.  Spoke to contributions and percentages.
Commissioner Miller asked if there were any comments on this in the case earlier?
Stephanie Miller said she thought the water companies ignored it.
Commissioner Nelson said he thought it was reasonable to charge based on the bracket you are in.
Commissioner Miller said what if you used whatever bracket you used in the prior year, in the next year.
Randy Lobb said in Eagle, they were at 15%.  This year they are 15% but they could be pushed into a higher bracket next year.  Is suggesting highest number and refund the difference at the end of the year.
Commissioner Nelson said he thought the refund would have to be made before the end of the year.
Stephanie Miller said she thought they should know by November.
Commissioner Miller asked if there was any point in asking the utilities how to solve this?
Stephanie Miller said if we figure it out we should send out accounting letters on this.  Said in Hayden Pines, Commission decided you had to start with the assumption they were going to make their authorized rate and not get the benefit of losing money in that year.
Commissioner Nelson said developer could get benefit from this.
Stephanie Miller spoke to Eagle Water's rate case being settled by Minute Entry.  Only have staff recommendation on rate base.
Mike Gilmore said he thought commission should authorize looking at last annual report of small water companies to get this.
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Decision:  Do it as a proposed order, give them notice of clarification.
Mike Gilmore suggested thinking about how to send message to these people.
10. Petition from Tamarack Village Homeowners Association requesting PUC to investigate community water systems.
Commissioner Miller asked if it was a utility in any sense of the word?
Stephanie Miller responded.
Decision was:  Issue summons.
Jack Taylor should call them to see about where the people live.
11. Letter to Commission from Greg Graham re:  Idaho Power Line Extension.
Commissioner Nelson asked about the allowance?
Stephanie Miller said it is better now then a few years ago.
Commissioner Miller said he thought someone should write to Mr. Graham saying we have considered it and can't help you.
Mike Gilmore will respond.
16. Lori Mann's December 5, 1990 Decision Memorandum re:  Idaho Power's Conservation Program for Manufactured Homes; Case No. IPC-E-90-17.
Approved manufactured homes program.
Amortization period:  Staff recommended 30 years.  Thirty years was the time frame in DEAP.
Discussed 20 years.
Decision:  20 year amortization.
17. Lori Mann's December 5, 1990 Decision Memorandum re:  Fone America's Exemption Request on Emergency Dialing from AOS Payphones:  Case No. FAI-T-90-1.
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Granted request for exemption.
Extra Item -
Utah Power Rate Decrease Case - UPL-E-90-1.
Mike Gilmore recommended leaving the decrease as it is.
COmmissioner Miller asked about the rates being different from company proposed.  Asked if we can put out a quiet order extending the temporary decrease now in force.
Mike Gilmore said he could do an order.
Another extra item.
Tonya Clark asked about dates for railroad agency closure hearings.
Set some tentative dates.
Back to IGC.
Bill Eastlake explained the numbers.  Went into each individual account.  
Commissioner Nelson said he would have no trouble with the numbers.
Commissioner Miller asked Syd Lansing about the calculations?
Commissioner Nelson said this reflects a move to company's proposal with other numbers.
Okayed by Commissioners.
**Commissioner Swisher asked about language in this order inviting the company to come forward and propose ways of reaching new service areas.
Meeting adjourned.
Continued on next page ....
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Signature page for December 6, 1990 Minutes.
        DATED at Boise, Idaho this       day of January, 1991.

PRESIDENT

COMMISSIONER

COMMISSIONER
ATTEST:

Commission Secretary
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