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Home My WebLink About19910107.docx Minutes of Decision Meeting JANUARY 7, 1991 - 1:30 P.M. In attendance: Commissioners: Joe Miller, Perry Swisher and Ralph Nelson and staff members: Mike Gilmore, Don Howell, Scott Woodbury, Tom Faull, Don Oliason, Lynn Anderson, Rose Schulte, Bob Smith, Bev Barker, Gary Richardson, Jack Taylor, Belinda Anderson, Syd Lansing, Birdelle Brown and Myrna Walters. Items from the January 7, 1991 Decision Meeting Agenda were discussed as follows. 2. Rose Schulte's January 3, 1991 Decision Memorandum re: Case No. IPC-E-90-14 - MERIDIAN GOLD vs. IDAHO POWER CO. Schedule and Location of Hearing for January 29, 1991. Commissioner Miller said he didn't have a problem with going to Salmon for a hearing, but on the other hand, this didn't start out as a rate case or private line dispute. If we are going to inject into the case the quality of service generally and have that for potential basis for decision, then we would need to have some good notice to the company of this interjection. Scott Woodbury said he talked to the company and to Don Oliason. Neither of them see quality of service being an issue with Meridian Gold case. Don Oliason said there wouldn't be time to investigate this before the hearing. Scott Woodbury said part of Meridian Gold's case is that Idaho Power should be upgrading anyway. This would buttress Meridian Gold's position. Commissioner Nelson said he thought Meridian Gold might be well-advised to wait if it helped their position. Bev Barker said another issue on the horizon is the North Fork people want power from Idaho Power. Commissioner Miller said he thought if this was separated out, the investigation should be started right away so it won't look like we are stiff-arming these people. Don Oliason said he thought it might be a good idea for Idaho Power to have a public meeting with these people first. Commissioner Swisher said this could be mentioned at the Meridian Gold hearing, though. -2- Commissioner Miller said even if we suggest a meeting, think we should open a case separate from Meridian Gold. Commissioner Swisher also thought a hearing there in good weather would be a good idea. Stephanie Miller said depending on what happens with Meridian Gold, won't that help the people of Salmon? Commissioner Nelson asked what the problem was? Don Oliason said he thought the distance plus severe weather were factors. Said Idaho Power has diesel generation in Salmon. Commissioner Miller said the other part of this, think we are right in not putting this whole question into the Meridian Gold case. With that out, should we have the hearing here or in Salmon? Don Oliason said the changes they propose are pretty technical. Think it would complicate the hearing to get these two issues together. Commissioner Miller said keeping service reliability out of the case is a for sure. But is there a reason to have it there if its strictly Meridian Gold? Rose Schulte spoke to the problems in the area. Said there have been storms in the summer - part of the substation is in Montana. Commissioner Swisher suggested for the convenience of the parties and to assure the hearing will be held, would hold the hearing in Boise. Commissioner Nelson said only way to go to Salmon is to do it later (delay the hearing until March). All the parties are in Boise for the Meridian Gold case. **Decision was: Meridian Gold hearing in Boise - separate case for quality of service issue. 3. Scott Woodbury's January 3, 1991 Decision Memorandum re: Case No. WWP-G-90-2 - Supplier Settlement Payments (Take or Pay). Commissioner Swisher said he hadn't seen the FERC filing, so he has no problem. -3- Scott Woodbury spoke to Potlatch's filing. Commissioner Miller asked about making a commitment for hearing date. Scott Woodbury said the 19th to 21st of February is a possibility. Decided on February 22. 4. Scott Woodbury's January 4, 1991 Decision Memorandum re: IPC-E-90-21 - Firm Energy Sales Agreements - Hazelton B and Wilson Lake/Idaho Power Company. Commissioner Swisher said to approve them. Approve 2 1/2 and approve 35 year and compliment company on its flexibility, so they can become flexible again. Discussed overpayment. Front end and overpayments are forgiven. Tom Faull spoke to how it would work for other QFs. Commissioner Nelson said this is too much "arms length". Scott Woodbury said they are trying to divest themselves of these. It is a qualification of the contracts. Commissioner Miller said it raises the question of whether a utility-held affiliate...where you don't have bidding, can it qualify in the service area? Even if the terms are not substantially different from other QFs, have no assurance that affiliate projects don't get ahead of other projects. This type of transaction would be illegal under the Holding Company Act. We approved the migration of the Company to get around the holding company, but don't think they have met those conditions. There is going to be a understanding between the parent and the affiliate. Commissioner Nelson said his problems goes more to the fact that he is not having a problem with their result but with the ease in which they got there, unlike other people. Commissioner Miller said bidding provides a sequence of who gets first, second, third contract, etc. Here there is no protection. Scott Woodbury said the contract itself is quite similar to past contracts. Low water alternative was used for Sithe Energy. Major difference is the 35 year contract and the terms for escape. That is something that is being presented for the first time. -4- Commissioner Nelson asked - do we know of anyone in the que that has had these projects leap frog them? Tom Faull said nothing comes to mind. These projects have been there but under different ownership. Scott Woodbury said the only one they are negotiating is Swift Creek. Commissioner Nelson said he thought there should be some comment period to give these developers an opportunity to say if they are being treated fairly. Commissioner Miller said he would have a hearing on whether others were being stiff-armed and the procedures that company uses when they are dealing with them. Scott Woodbury said there are some time constraints. Commissioner Swisher said - would think that you are probably better off to approve the things and put in some cautionary language about self-dealing. If you do anything more it is an invitation to mischief. Commissioner Nelson said he thought it should be a proposed order with a comment period. Commissioner Miller said he thought it was an important question. Tom Faull said these are probably two of the best projects in Idaho. Asked if it would be possible to approve these and hold hearing in the future. Commissioner Miller said if you have hearing with real contracts and real dollars, this makes it a concrete issue to deal with. Commissioner Swisher asked about language in the second paragraph. It wouldn't work until they have sold half. Suggested saying approval is granted conditioned upon, and then if you need to speak to other things, it would be better to do that. Commissioner Miller said one rule we could have is no subsidiary in your service territory. That would be an absolute prohibition. Don't want to do that. Another rule would be for a subsidiary project in the service territory then you will always have to have an evidentiary hearing to establish at-lengths bargaining. That would give some kind of balance for abuse. They will know there has to be a hearing. -5- Scott Woodbury said it has already been set up in an order that there has to be justification. Commissioner Swisher said because it is a wholly-owned subsidiary, hold a hearing (it is in their own service area). Scott Woodbury asked if in the order we want to establish hearing schedule? Commissioner Nelson said he thought Commission should deal with either/or. Thought it should be the same for all utilities and all similar situations. If it is the first time it is presented (leave it open if there are identifiable situations). Commissioner Miller said he didn't think the order should be adversarial but say in this first circumstance it should be investigated. Commissioner Swisher said the order should say this is good stuff. This is using a resource the way it should be used in the public interest. **Will set hearing. **Marsha Smith and Randy Lobb were in attendance at this time. Extra Item - Motion to Dismiss - Wilderness Ranch/Mtn. Bell Case. Dismissed with prejudice. 5. Don Howell's Decision Memorandum re: Silver Star/Dravo Complaint - SIL-T-90-1. Commissioner Miller said first question is whether that part of the territory is served or unserved? That may have effect on whether the certificate should be amended to allow U. S. West to serve and if concluded under our state law that it should not, then does ARCO say differently? Commissioner Swisher said if you were to base it on the federal case, that federal law would always run and everyone could go into any service area and set up anything they want to and get a U. S. West exemption. Think that literal interpretation of the federal case is wrong. Commissioner Miller asked - what about question of whether it is served or unserved? -6- Don Howell said distances were calculated from different places. Commissioner Swisher thought 3 miles. Commissioner Miller said line extension number is 7800 feet. Commissioner Nelson said if you were in Missouri that would be an unserved area, but in Idaho it is generally served. Commissioner Miller said he thought the company showed intent to serve by the placement of their lines. Commissioner Swisher said he feels a company not doing business in Idaho has an obligation to pay as much attention to state law with respect to utility service, as other law. Think the guy cannot plow in U. S. West and say to hell with everybody else. Feel bad that we didn't get signal in-house sooner. Whistle should have been blown when the line was plowed in. Gave example of Wiggins having T-screen proposal before approval. Commissioner Miller said he thought critical part of this is, in Bates' dissent in the IPC/UPL case there is a statement that is a proper statement of law to the effect that when you have a utility serving a certified area the fact that another utility can serve it cheaper is irrelevant. Commissioner Swisher said if that was so, UPL customers would be served by IPC. Commissioner Miller said Dravo contends they can get everything cheaper. Commissioner Nelson said Silver Star's first bid was terrible. When $90,000 bid was provided, there should have been an explanation as to why the cost was that high. There was never any mention that they gave them an alternative. Commissioner Swisher asked if there was anything the Commission can do to cut a deal between the two companies? The cable is in the ground. COmmissioner Nelson suggested how about 3694 a year, figured upon value for 15 years, pay Silver Star damages and stay with U. S. West. Commissioner Swisher thought that was setting a bad precendent. -7- Commissioner Miller said his thought on that was, think we are going to conclude ARCO wouldn't make us do anything different. If we were pre-empted, then that would be the time to come up with an exit fee or go with staff proposal of dividing up line. At this stage of the proceeding, getting down to the ARCO case question, there is the so-called federal law of interconnection. If you apply it to this case, means state certification is worthless. Commissioner Swisher explained what the Texas Commission said. It was too sweeping an order. We haven't said that. It is important to keep in mind that state laws on certification should be used. Commissioner Nelson said his proposal makes Silver Star whole. Would put it to Dravo as an option. Commissioner Miller said he thought they clearly made a conscientious decision to put in the line and invest that money. They had to have known it was a risk even though there is some degree of waste, you could even speculate that they made the investment so it would have something to do with the Commission decision. Commissioner Swisher said they paid attention to the mine property lines. Don't like them not paying attention to phone line placement. Their disregard for other people's boundaries in light of their devout attention to how those mines were served ... Commissioner Nelson said he thought evidence was pretty clear after the first bid, Silver Star got stonewalled. Think Silver Star is in the right in this case. Commissioner Miller said on ARCO point, this developed out of a completely different situation. Has nothing to do with competition, with access to inter versus intra state. That rule of federal right has never been used in this type of case. Seems to be a much different situation. Commissioner Swisher spoke to the opinion of the Louisiana case being stronger. Commissioner Miller said exit fee is somewhat attractive but would not do it right now. If we get reversed by the Supreme Court or FCC, then that would be one way to look at it. In Cambridge case there was an argument made that Cambridge was entitled - whether the modification of the service area required compensation. Court ruled there should be no damages. -8- Commissioner Nelson said one of the problems with saying Dravo you have to hookup to Silver Star is they may be fighting for two years before they get service. If we give Dravo a choice, they could still fight us if they don't like the deal. Said what he is trying to do is make Silver Star whole. Marsha Smith said if you believed it was an unserved area, why would you suspect something else? If you only know the surface, not the facts, you might have a different idea than if you heard the case. Didn't think you can keep Silver Star whole. Commissioner Miller said he thought Conley Ward's brief was good on how to quantify Silver Star's revenue. Discussed the FX line. Commissioner Swisher said Commission could do something specific with respect to the FX line. Could we provide Dravo with FX to Soda Springs for no cost? Justification for that could be the high bid. Don Howell said Dravo bid $76,000 and $34,000. If you allow Dravo to use cable there will be no FX. One thing the Commission directed parties to do was to see if they could settle. They were not able to make a settlement. Commissioner Miller said the problem he has with any economic impact is that it gives the pirating utility ability to force involuntary sale. Commissioner Swisher said nobody was getting an award for prudence in this. Company was not prudent. Dravo wasn't prudent. Maybe that is a way to approach it. Agree that Dravo is in the service territory of Silver Star. Everything that falls out from that makes for an appeal or a trip to the FCC. If it weren't for them - could deal with the prudence question. Couldn't things be worked out with Silver Star - reason Dravo needs FX line and somehow Silver Star is held to account for that, would like Silver Star to win but would like them to pay penalties. Don Howell quoted the ARCO decision. Commissioner Miller said until someone tells us we are wrong, have reason to not concede at this point in the game. Don Howell explained how the FX line is tariffed. So each FX would cost $206 per month. Number went from 0 to 4 and points in between. -9- Commissioner Swisher said if we could say to Silver Star, you win, you've got the company and you get the revenues, but do something about the FX line - Silver Star was less than imaginative about it. Don Howell explained the bids. Commissioner Swisher said he wanted to give it to Silver Star because it is in their territory but they were imprudent. Commissioner Nelson said you're not wrong but what is the solution? Commissioner Swisher said he is trying to do something for Dravo. Birdelle Brown suggested a proposal. Lynn Anderson said let them use the cable they put in as their FX line at a lower rate. Could call it a special case and give it a different price. Commissioner Swisher said when the cable is in the ground and we walk away from it, think they will do something different. Randy Lobb suggested allowing them to keep the cable and charge them what it would have been. Don Howell said what U. S. West saves is all that toll access. They are saving tons of money on toll access. Randy Lobb said you are only talking Wayan to Soda Springs. Only number they don't know is minutes from Wayan to Soda Springs. Commissioner Miller said case gets easier when you think about the cable as being irrelevant because it was installed by Dravo at a time they knew Silver Star believed they had the right to serve. It was a conscientious, risk-taking decision. It would either work out okay or not. Said in his opinion they made a decision and it didn't work out, but given the circumstances, is not up to us to make an economic adjustments. Makes it much easier for him. Commissioner Nelson said there was discussion on when they were actually served on September 15. Then their attorney got it. You know there was a complaint file. They ignored it. From that standpoint have no sympathy for Dravo. They put cable in the ground after complaint was filed. -10- Marsha Smith explained the Cambridge case. Didn't have authority over this company. Commissioner Swisher said information didn't get to the people to stop them. Am willing to go ahead and leave the cable in the ground. Am not reactive in these situations, this was preventable. Commissioner Miller said nobody knew they were putting in that cable. First time Silver Star knew was at the prehearing. Commissioner Swisher said he had no problem with leaving the cable there. Don Howell said - so under Commissioner Miller's proposal, first go to whether the area is served and use Cambridge language and say since this was served - so you never get to the issue of determining public interest because the area was served and Silver Star was ready, willing and able and law says that? Commissioner Miller said we could say public interest does not require alteration of the certificate. Commissioner Nelson said there should be someway of using that facility in the ground and making Silver Star whole. Commissioner Miller suggested the only question left is the exit fee. Commissioner Swisher said what bothered him about independent telephone companies in Idaho, is that someday something is going to happen and all the little independents will be fair game. That won't be in the public interest. Discussed Silver Star's position on ARCO. Commissioner Miller said this wouldn't apply here. Don Howell asked about Monsanto? Commissioner Miller said he was satisfied Dravo is not a telephone company. Don Howell asked about using that line for telemetry? Commissioner Swisher said to not even address it. Don Howell quoted what staff said about this. -11- Commissioner Miller said Commission needs to decide whether or not to give them an option. Commissioner Swisher suggested giving them a choice. Commissioner Miller suggested laying out a general principle of delaying effective date of the order and if the parties could negotiate, based on U. S. West /Dravo paying to Silver Star an amount to make them whole, number would be subject to PUC approval. Matter will be held at this time. Adjourned - to reconvene on Tuesday, January 8, 1991 - 9:30 a.m. JANUARY 8, 1991 - 9:30 a.m. Decision Meeting In attendance were: Commissioners Joe Miller, Perry Swisher and Ralph Nelson and staff members Don Howell, Mike Gilmore Brad Purdy, Gary Richardson, Bob Smith, Tom Faull, Stephanie Miller, Don Oliason, Lori Mann and Myrna Walters. Don Howell made a proposal to the commissioners regarding Silver Star/Dravo. Commissioner Nelson said it is good for Silver Star and does no harm to U. S. West. Commissioner Swisher said his initial reaction was positive and it is still positive - if you think Dravo's lawyer would be receptive. Said Commissioner Miller has concern that this is an invitation to further mischief. Commissioner Nelson said there is no penalty to Dravo. Commissioner Swisher said he thought they would view the payment to Silver Star as a penalty. Commissioner Miller said until someone tells us we are preempted, think we should stick with our statute. Didn't think Commission should have ignored the right of the certificate holder by trying to compensate him for loss of certificate rights. If he wants to sell part of it, he is entitled. It is the certificate holder's option. We should not impose it on him. Commissioner Nelson asked if you put it out as a proposed order, can't they respond? Commissioner Swisher said we would also have to say in the proposed order the language Commissioner Miller suggested, Silver Star has won the battle. -12- Don Howell suggested calling the attorneys together and have them look at the proposal. Then have them bring it to the Commission if they agree. Commissioner Nelson said that is acceptable to him - put it out as a proposed settlement, to the parties. Commissioner Swisher agreed. Think that triggers the part is into knowing the Commission is standing fast on their certificate position. Don Howell said Dravo should know what the initial comments were. Timeline wise, thought we should set deadline of Friday to bring this in. If not, will do our order. Commissioner Miller said he thought it should be done before Commissioner Swisher leaves. Commissioner Swisher said he thought Commissioner Miller wanted people to know there was no justification for laying that cable. Thought strategically parties could be told in a proposed order that if they could come up with a settlement, it would be considered. Don Howell will call the parties, tell them the consensus of the decision on the certificate is unanimous and then tell them about the proposed settlement. This would be a way to avoid litigation. Parties will be contacted. Next discussed was Item 1 from the January 7, 1991 Decision Meeting - Mike Gilmore's December 31, 1990 Decision Memorandum re: Idaho Power's Swan Falls Application--Case No. IPC-E-90-2 and Brad Purdy's Decision Memorandum on Idaho Power's Milner Application--IPC-E-90-08. Started with Swan Falls. Commissioner Swisher said he would like to hear once more from the attorneys, Packwood's range was so wide, seems to him the big decision is we are giving some kind of go ahead to the company, would like to hear once more about that range. Suppose it has to do with the condition of the rock in the Canyon. Tom Faull said Packwood's range is more of the use of which water year. 25% contingency reflects the unknown. Commissioner Miller said they are further along on Milner. -13- Jack Taylor brought Commission up to date on Idaho Power's recent filings. They don't have a whole lot left for contingency (that is in Milner). Said there are a lot of unknowns on Swan Falls. Commissioner Miller said Swan Falls is not really an issue of certificate. Assume we should not deny reconstruction. Question is: When we issue the order it is either a certificate or in the nature of a certificate, what do we say the significance of the order is? Commissioner Nelson said he thinks it did say prudent costs have been incurred but are not making decision on the 0osts at this time. Commissioner Miller said they wills be recognized in revenue requirement is a better way of saying it. That leaves open the point of whether we will do ratebase, rate of return, value of electricity, avoided cost, whatever. Do think additionally it means costs incurred at this time are prudent; that decision to proceed is prudent; that the costs will be recognized revenue requirement except to the extent that construction practices and construction costs were prudent or some intervening event could make them imprudent. Mike Gilmore said he thought to say costs to date are prudent for Swan Falls is the correct thing to say. Commissioner Swisher said he thought the order should speak to the amount and depth of disclosure in the testimony of Packwood and Willmorth; the candor of the knowns and unknowns. It was new for the Commission to get that much information this early. Commissioner Miller said he was thinking that rather than say a certificate has a fixed number, the degree of assurance of cost recovery carried by a certificate, can vary. If it is a 3,000 megawatt nuclear plant with 10 year construction phase, in that circumstance don't think a certificate should carry much assurance at all but when you have a Snake River hydro project that is relatively small to the system and where in this case the company has been forthright and candid with those construction estimates, and when the lead time is short and when the staff analysis seems to indicate it is close to avoided cost and those things are basically knowable now, in these particular circumstances the idea of a certificate carrying a higher degree of assurance is not offensive to him. Commissioner Swisher said it is not a flight into the unknown. -14- Commissioner Miller said everybody did a lot of work on "what does a certificate mean" and it is not there to be found. That leads to even being more fact specific. Does not say a certificate does mean this or does not mean this. Commissioner Swisher asked what we want to say about some of these contingencies? Say we don't disagree with ICA but also that we don't issue the FERC license. Agree with Harold Miles' thoughts on facilities but agree that is a FERC requirement. Questioned as they work with Salmon runs on the system, the possibility of anadromous fish coming back into the regional system above Brownlee is real. EPA is now down in Hagerman Valley determined to take action. They are not going to leave that fish situation as is. If they do, if there is some chance of getting the water from Hagerman down to Brownlee in better shape than it is in now, one of the options is to have no more anadromous fish. Fisheries might come back. Thought Commission should give some indication to the other agencies that accommodation for change in fisheries is something we acknowledge. Idaho Power is not at risk if they are bound by deals struck on this. Think it is a responsible thing to do. Jack Taylor said that is one of the contingent items in the 25%. Mike Gilmore asked if this should be pointed out to Idaho Power? Commissioner Swisher said to say this regulatory agency did not present a barrier in that. **Do not order it but recognize it as a real contingency. Tom Faull said he is still uncomfortable with glossing over the design issue. Would recommend that Commission not spend a lot of time or money on prudence of design, but it bothers him. Commissioner Swisher asked what should be said about design? Tom Faull said to either say we don't have enough information to say design is adequate and therefore we are going to look back at it or say in the future they need to submit all FERC submittals through this office and we will look at it. -15- Commissioner Swisher said it is essential that the design be brought to the Commission. Commissioner Nelson thought it would be good to get more involved at FERC. Tom Faull said he didn't see a need to spend a lot of time to go back but think in the future we are at risk on all the companies that do hydro if we don't get involved earlier on in the licensing project. Commissioner Miller said he didn't think we want to be basically in the business of designing hydro facilities. Commissioner Nelson said if we had intervened earlier we could have at least told FERC it was overdesigned. Tom Faull said he thought FERC wanted them as big as possible, to maximize output from the river. We should not be getting into the detailed design but should be looking over the shoulder on the concept. Pretty much as we did in this case but should have been in earlier. MILNER - Commissioner Nelson said he didn't think there was any real serious testimony that it was a poor project or that it shouldn't have been built. Commissioner Miller said you could take Tom Faull's hard line approach that it is deferrable. It isn't needed like you need Swan Falls. Then you could ask for more strict cost effectiveness test then. Based on Idaho Power's avoided cost, it is not cost effective. May be cost effective for somebody else, and whoever that is should build it. Test in cost effectiveness for Idaho Power. That is one way Commission could look at it. Commissioner Nelson said he was not sure the rebuild of the dam is defendable. It is not cost-effective to wait for generation then. Think it has to either be rebuilt or torn down. Didn't know if Commission had much testimony about how much more it would cost in 10 years. COmmissioner Swisher said before the company and canal companies got together and struck this deal, that at the onset of PURPA there were projects that would have generated quite a bit of power. If you looked at a prior project and then looked at this, it looks like a good deal for the canal companies. -16- Commissioner Miller said the other side of the package is it may be a good deal for the ratepayers (looking at royalties as a whole). Tom Faull said there is no real reason to tie it together. Commissioner Miller said there is a potential for ratepayer benefit on the second. Guess the dam rehab and the benefit of that to the region is a distinguishing factor as opposed to this being a new stand-alone hydro project. Commissioner Swisher said that is why both of these projects are in a sense indispensable to the management of the Snake. Commissioner Miller said Milner is beneficial enough. Commissioner Swisher said with respect to the customers of those utilities we regulate, the availability of that hydro to meet Idaho Power's load is a plus. Commissioner Miller said in terms of the import, words that go along with certificate, would use Swan Falls language. There is no fixed or universal meaning to certificate. Has to do with what you have in front of you, assurance of cost recovery, this isn't a large nuclear, it is a small hydro. Brad Purdy asked if Commission is saying that the investment to date is prudently-incurred? Mike Gilmore said he thought Idaho Power was conceding that these costs are different from Swan Falls. Commissioner Swisher said he didn't think Commission had to go that far in this order. Commissioner Miller asked - so we haven't done a full audit of Milner? Jack Taylor said no - explained the extent of his evaluation. Commissioner Swisher asked Jack Taylor what his evaluation was of what Keane said about royalties with regard to canal companies? Jack Taylor said he didn't get into that. Commissioner Swisher asked if ratepayers are going to have to make up the difference between royalties and debt service if canal companies fail to meet that? Idaho Power is back-up. That means if they do not equal, ratepayers are obligated. Keen thought that was a pretty small risk. -17- Bill Eastlake explained this was on only 11 million, not 60 million. Tom Faull said it would be less than that. Commissioner Swisher said then it no problem. Commissioner Miller suggested as alternative request for certification of exemption, Stephanie Miller's testimony raised the issue of using that type of system over time. Thought that was persuasive. Thought choices should be either issue a certificate or don't. But don't know since we are not going to use this certificate exemption, whether we want to put in our order, discussion of that. Company will then know our concerns. Asked Marsha Smith if it would be smart to have everything in an order? Marsha Smith said she thought it would be smart. If the Commission can agree on expression of uncertainties so you could respond to the legislators. Said that was her initial reaction. Commissioner Nelson said he thought Stephanie Miller's comments were good. Commissioner Miller asked what their depreciation cost was? Stephanie Miller explained. Said from what she read, you not only need to take into account the cost of the thing, need to take into account some additional factors in depreciation. One of the commissions had made a big deal about economic obsolescence. Commissioner Miller said all states trying to use reproduction rather than actual have run into problems. Stephanie Miller explained that there is some sort of way of eliminating the error, they come up with what fair is not necessarily reproduction cost. Commissioner Miller asked Stephanie Miller about operating Milner as a subsidiary, close subsidy is a concern? Stephanie Miller said when we originally talked to them about this issue, they were talking about separate subsidiary and contract. When we got to the hearing it was clear one of the options was build it as utility facility and dedicate it to FERC or Oregon. Problem is what would you do in 20 years? If they bring it into Idaho with inflated costs, it will be paid for twice. Thought dedicating it to Oregon was totally unreasonable. -18- Commissioner Swisher said that would take it and keep it. Think we should be as stiff as Miller was in her testimony about this. Commissioner Miller said we should say we have reservations about exemption as outlined in this case, if you are thinking of proposing it for any future projects. Commissioner Nelson said he thought the practical concerns are the ones. Stephanie Miller said she thought we should say it is not a statutory concern. Commission could issue certificate for future and then look at costs. Commissioner Swisher said despite all the invitations in this case, this Commission could not bind a future Commission for an amount certain and system of recovery. Don't think it would hold up. Tom Faull said if they did put reconstruction into legislation, it would be very costly. Commissioner Miller said he was a little bit cautious about including language about binding future Commission because on the other side of the question when we say what a certificate means, the Commission should be able to say it now and have it be ordered. Commissioner Swisher said company has concern about change of personnel changing something. Stephanie Miller said Commission always has obligation to be fair. Commissioner Miller said he would just as soon avoid discussion of that. Asked if we couldn't say we think we have the legal authority to do what the company asks on certification of exemption, by certificate for future. Then could go along with what company asks but say these are the concerns whether you call it a certificate of exemption or certificate of convenience and necessity. Commissioner Swisher said in our order, language Ripley is looking for is what we should include. Think we can express our concerns but still say to the Company what they are looking for. Think in framing the order that that sort of language (Wisconsin language) in both cases we are doing something with certification that we have not done before. The costs that are selected by the financial community on a utility like Idaho Power in the absence of the right language, are unfair. Think we can help remedy it by this method. -19- Mike Gilmore said he thought Ripley gave Commission the wording "recover in rates". Commissioner Miller suggested the part of the transcript to be quoted - Pages 74/75. **Use revenue requirement language of Ripley. Mike Gilmore asked about docking the rate of return problem of Reading. Commissioner Miller said we have never laid out what we think this means so there is no possibility of later misunderstanding. Commissioner Swisher said he thought it was important to remind the company of this. Decided language about getting certificate first should be included in the order. **Also decided to approve their contract with the irrigators. Meeting adjourned. DATED at Boise, Idaho this day of January, 1991. PRESIDENT COMMISSIONER COMMISSIONER ATTEST: Commission Secretary 13M