20180103Decision Memo.pdf

DECISION MEMORANDTJM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DAP}INE HUANG
DEPUTY ATTORNEY GENERAL
DATE: DECEMBEx-1L,}0I7
SUBJECT: IDAHO POWER'S APPLICATION TO APPROVE ASSET SALE T0
CITY OF MERIDIAN, CASE NO. IPC-E-17-17
On December 6, 2017,Idaho Power Company applied to the Commission for an
order approving its transfer of certain assets to the City of Meridian under ldaho Power's Rule
M,rand ldaho Code $$ 6l-328 and 6l-524. Rule M governs the sale of Company-owned assets
or facilities that are * as here * beyond the 'opoint of delivery." The point of delivery (POD) is
the point at which the customer's pow€r-usage is measured, and '-beyond the POD" refers to the
customer side, rather than the utility side, of the POD. Order No. 33470 at l. The issues before
the Commission are whether to issue Notice of the Application, and how to process the case.
IDAHO POWER'S AGREEMENT WITH CITY OF MERIDIA}I
Idaho Power is selling assets that serve the City's wastewater treatment facility.
Application at 2. Idaho Power and the City agree the City will purchase the assets and 'bbtain
title to and assume ownership, operation, maintenance, and all liabilities associated with the
[a]ssets." Id. The Company and City agree the sale will satisff Rule M, which requires:
a. No mixed ownership of facilities.
b. The City will provide the operations and maintenance of all facilities
installed beyond the POD after the sale is complete.
c. The City will prepay engineering costs for sales determinations taking
greater than l6 estimated hours of preparation.
I ldaho Power's Rule M Facilities Charge Service can be found on the Commission's website at:
Irttp:,'uwrl,-.nltc.idaho.ggv'fileroomtariff'electric/ldnholt20Pouer{o20Cgmpan}.Brlf.
IDECISION MEMORANDUM
d. The transaction is consistent with the public interest the cost of and rates
for supplying service will not be increased by reason of such transaction;
and the City has the bona fide intent and financial ability to operate and
maintain the property in the public service.
Id. at2-3.
According to ldaho Power's filing, the total sale price of the assets to which the
Company and the City agreed is $761,693. Exhibit B at 16, to Application.
PROCEDURAL ISSUE
Idaho Power requests that its Application be processed under modified procedure, and
requests an order "as soon as practicable to avoid potential intemrptions to its expansion."
Application at I (n.l ), 10-l l. However, Idaho law appears to require notice and a public hearing
in requests for Commission approval of an electric utility's sale of assets used to supply power to
"the public or any portion thereof." Idaho Code $ 6l-328. Subsection (l) provides, no electric
public utility operating property in Idaho used "in the generation, transmission, distribution or
supply of electric porryer and energy to the public or any portion thercof," shall transfer the
property except on authorization from the Public Utilities Commission. Idaha Cade $ 6l-328(l).
Under subsection (2), "The [CJommission shall issue a public notice and shall conduct a public
hearing upon the application." Idaha Code $ 6l-328(2). Idatro Power rcferences Section 6l-
328, but does not address the public hearing requirement under subsection (2).
Idaho Power's Rule M used to require, besides the four factors set Forth above, that
the proposed asset sale satis$ the factors in ldaho Code $ 61-328. ,See Final Approved Tariff
$lJed7116116) in Case No. IPC-E-15-26. The Commission considered Rule M in ldaho Power's
2015 request to approve the Company's sale of assets to the Federal Bureau of Investigation
(FBI). Case No. IPC-E-I5-26. There, the Commission found thc sale satisfied Rule M and the
requirements in ldaha Code $ 6l-328(3), but on reconsideration, determined ldaho Code $ 6l-
328 "does not govem the sale of the property herc because that property is serving only the FBI
and not the public or a portion thereof." Order Nos. 33470 at 5, 33514 at I (also affirming
approval of the sale). The Commission found that "although Section 6l-328 does not strictly
apply to transfers of utility assets used by a single customer, it is appropriate to use Section 62-
328(3) as guidance in similar future transaction." Order No. 33514 at ll. The Commission
directed ldaho Power to update its Rule M, which now provides, "The factors set forth in ldaho
Code $ 6l-328(3) will be considered as a guide for the sale of Company-owned facilities
1DECISION MEMORANDUM
installed beyond the [POD] to the customer served by those facilities." .See Order No. 33514 at
9.
In November 2A16, the Commission considered Idalro Power's request to approve its
sale of assets to McCain Foods. Case No. IPC-E-16-31. In its final order, the Commission noted
"the assets at issue meet McCain's service requircments alone, and are not devoted to the public
service." Order No. 33691 at I (internal quotations omined). The Commission applied Rule M,
and "consider[ed] the factors set forth ia ldaho Code $ 6l-328 for guidance," and appncved the
sale. /d. at2-4.
The procedural issue here is whether the statute requires a public hearing for Idaho
Power's sale of assets to the City of Meridian.
STAFF RECOMMEI\IDATION
Staff has begun its review and believes it can sufficiently advise the Commission
tluough wrinen comments with a deadline of January 25,2018. To this end, Staffagrees with
Idaho Power that modified procedure is appropriate. However, Staff believes the statutory
language describing the supply of power to "the public or any portion thereof'could be read to
include the supply of power to the City for its wastewater treatment facility. As a result, the
statute could be read to require a public hearing for this case. In an abundance of caution, to
ensure compliance with ldaho Code $ 6l-328(2), Staff recommends that the Commission set a
public customer hearing, to take place during the proposed comment period.
COMI\fiSSION DECISION
Does the Commission wish to issue a Notice of Application, Notice of Deadline for
Comments of January 25,2018, and Notice of Public Hearing as described above?
Something else?
Deputy Attorney General
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3DECISION MEMORANDUM