19910111.docx

Minutes of Decision Meeting
January 11, 1991 - 9:40 a.m.
In attendance:
Commissioner Joe Miller, Perry Swisher and Ralph Nelson; staff members Mike Gilmore, Gary Richardson, Randy Lobb, Stephanie Miller, Bill Eastlake and Myrna Walters.
Topic of discussion for this Decision Meeting was:  Mike Gilmore's January 7, 1991 Decision Memorandum re:  Boise Water Line Extension Case-BOI-W-89-3.
Began on Page 39 of the Decision Memo - with the list of questions.
1.  Individual residential line extensions.
(a)
Commissioner Nelson said he was a little disappointed that it wasn't 50 feet (its 30 feet), but agreed with the $500 compromise.
All three commissioners approved this.
(b)  Commissioner Miller said he thought everyone agreed to do this also (residential extender getting refund).  Asked Randy Lobb how that will be calculated.
Randy Lobb went over calculation.
Commissioner Swisher said he didn't see 5 years as being realistic.  There is a good likelihood construction will slow down in Boise in 1991.  If that happens, it is history of Boise that those cycles can be a decade apart.  Don't think 5 years protects the equity right to a refund on the part of the first extender.
Commissioner Nelson said he would give 10 years to the contractors.
Commissioner Miller asked if 10 years should be used for all of the time frame questions?
Commissioner Nelson said he thought it should be used.
Stephanie Miller will check.  Thought there was something else Commission came up with on WWP.  It was written into steps to be taken to try to find customers.
Mike Gilmore suggested wording could be put in about keeping current addresses.
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**Back to 1 and 2.
May want to collect full amount if you are going to allow the $500.  If you are not going to give him any allowance at all you may want to give him half front footage.
Commissioner Nelson said if a line already went by the house, you wouldn't charge him anything to hook up?
 Randy Lobb said he thought $500 was more appropriate for full line extension for the original customer.
Commissioner Nelson said he wouldn't give the additional guy his $500 allowance because then the original extender had chance to get back only half.
Mike Gilmore suggested wording for this.
Commissioner Nelson gave everybody $500 allowance and then charged them for the full amount of their load.
Randy Lobb said they won't get back more than the original line extension.  You have a lot of subsequent applicants waiting around for someone else.  It is an incentive for the first person.
Commissioner Swisher said if you do it that way he may try to solicit others.
Randy Lobb said he thought an allowance at that point would be appropriate then.
Commissioner Swisher said he thought there should be language for that.
Randy Lobb said their tariffs currently speak to "group".
Commissioner Swisher said original party (developer) who has to pay but would reduce his up front costs by getting these other developments going.
Mike Gilmore said he thought it was fairly uncommon.
Commissioner Miller asked what the simplest way to do it was?
Randy Lobb said half the footage.  That is consistent with commercial.  Seems to him the original person should get the $500.
Mike Gilmore said he would freeze at 1/2 of the unit cost and no allowance.
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(c)  Company agreed to this.
(d)  Tax gross up.
Mike Gilmore explained what he thought Tom Power was saying.
Commissioner Miller asked if you have to work back?
Mike Gilmore said this is what contribution was required.
Commissioner Miller said somehow it has to be grossed up.  When you get to the gross up how do you take into account the future tax benefits?
Mike gilmore asked do you take it into account?  Don't think companies are doing that.
Stephanie Miller said the major ones aren't.  UP&L and IPC don't gross up at all, pay the taxes and it becomes an offset over the life of the asset.  PPL just eats it.
Stephanie Miller said Boise Water was required to just pay the taxes and recover later under the order.
Mike Gilmore said if we order a gross up, they can go ahead and pay the tax and slowly recover.  Boise Water didn't speak to this.
Stephanie Miller said Power said you could come up with a gross up number and that in effect would give the developers the benefit of this tax depreciation.
Mike Gilmore said ratepayers as a whole carry that timing difference.
Randy Lobb said we never really discussed tax on line extensions.  Only discussed it in connection with hookup fees.  Each company pays taxes and get benefit.  They pay taxes, they get benefit, there is no other associated effect.
Commissioner Nelson asked if this would be a difficult computation?
Stephanie Miller said you have to make an assumption.  The easy way to do it is make a general assumption about the life and decide on gross up again and know that is not really right on.  Said in original one Archie Holbert had made a proposal.  Think you could calculate a number that Boise Water could use and it could be assumed to cover reasonable number of conditions.
Commissioner Nelson said he thought you would have to make a current value calculation.
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Stephanie Miller said Archie Holbert used 1.38.
Mike Gilmore asked about recalculating?
Commissioner Miller asked Stephanie Miller to go back to Archie Holbert's proposal and see if it could be updated.
Randy Lobb asked about clarification.  Does this give an indication that you are going to do this for small water companies?
Commissioners said no.  Small water companies don't have capital to carry differences.
2.  Escrow System.
(a)
Randy Lobb said he just proposed adjustments to the current system.  Didn't see any reason to throw the whole thing out.
Decision was:  Yes it should be continued.
Mike Gilmore asked about off-site extensions?  Said right now it is excluded.
Randy Lobb said there should not be any refund provisions there because it is in escrow.  Explained including off-site in escrow.
Commissioner Nelson said he was in favor of raising that escrow to cover some backbone plant.
Commissioner Miller said if we go to hookup charge, it would help with that.
Randy Lobb said hookup is for everyone.  Backbone would be different.
**Agreed to raise that but asked what the calculation would be?
Randy Lobb said he used water supply.  Boils down to what seems reasonable.
Commissioner Nelson said he would accept the backbone.  Suggested requiring an additional 5%.
Randy Lobb said he didn't know what the actual number should be.
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Said this only occurs  when you hook up the customers.  If most are hooked up in the first year, the developer would pay it.
**Bev Barker and Dave Schunke was in attendance at this time, as well as Al Fothergill.
Randy Lobb said if most hook up at the latter part, those costs wouldn't be incurred for perhaps 4 years.  Depends on how many customers, how soon they hookup, etc.
Commissioner Nelson asked if revenue requirement should be raised to cover installation and some for backbone plant?
Randy Lobb said yes.  Developers are not required to provide meters until customers hookup.
Commissioner Nelson said it all comes from the ultimate homebuilder.
Mike Gilmore said if it didn't fill up, the ratepayers would pay.
Commissioner Nelson said instead of fooling with escrow, would rather put hookup fee on it.
Commissioners Miller and Swisher agreed with Commissioner Nelson.
Commissioner Miller said we are saying the water supply charge is appropriate rather than collect that in the escrow, collect it from the customer when they hookup.
Commissioner Nelson said this would only apply to new site hookups.
Randy Lobb said it may take some adjustment.  Are going to have to take that revenue requirement to hookup fee customer would pay if you want those two to be equal.  Customer should only be required to cover revenue requirement.
Mike Gilmore asked Randy Lobb - if Commissioners accept hookup fee for all customers, then the backbone contribution would be increased?
**Does not apply to the original extender.
Commissioner Nelson said want something understandable.  Asked Randy Lobb about his recommendation?
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Commissioner Miller said he thought they were recovery of two separate costs - escrow and hookup.
Commissioner Nelson asked if his hookup fee covered cost of escrow?
Mike gilmore said they are different.  Hookup is charged everyone.  Additional escrow was separate and apart form that.
Commissioner Miller said by recovering these directly from the customers we don't accomplish Randy Lobb's recommendation on having escrow recover more than it does.
Mike Gilmore said it was also to send a message to the developers .
Randy Lobb said if you include it in the escrow and get it back from the customers, you could accomplish the same thing.
**Went with Randy Lobb's proposal.
(i)  Don't take them out of escrow system.
**Discussed 5 year escrow.  Agreed on that.
(b)  No.
(c)  Commissioner Miller asked Randy Lobb about this?
Randy Lobb said he thought it would be difficult to change that.
Leave as is.
(d)  Elevation.
Commissioner Miller asked about Hepler saying this was a diminutive amount?
Randy Lobb said with regard to pumping costs, it wouldn't recover much money.
Commissioner Miller indicated this might not be as significant to the overall system.
Randy Lobb said should speak to the higher electricity costs.
Commissioner Miller asked if his testimony wasn't disputed?
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Randy Lobb explained his testimony.  Spoke to booster pumps in the foothills.  If you are at the very top, costs will be more than at the bottom.  Said company established the service levels.  Basis for the analysis was booster pumps.
Commissioner Nelson said he thought something needed to be down in the foothills.  Cost per customer there is a lot higher.
Commissioner said he would go along with Randy Lobb's recommendation,  View it as somewhat of an experiment.  See over time if it works.
Commissioner Swisher said he has changed his view on foothill development.
Also agreed.
Gowen -  Wonder if it is worth the bother.  After discussion, decided to not include it.
3.  Commercial, industrial and municipal extensions.
(c)  In this context labor in lieu of estimate was okay.
Agreed.
Refund method:  10 years.
(a)  Yes.
**Back to refund to customer - Stephanie Miller explained how WWP tariff was worded on this.
**Commissioners want same wording here.
Commissioner Nelson suggested 90 days after refund was supposed to be made if they couldn't find the person, then give it back to person who paid it in.  Use the word "reasonable".
(6)  Commissioner Miller asked Randy Lobb what is recommendation was on this?
Randy Lobb said same as the company.
(d)  No.
(e)  No.   
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(4)  Labor in Lieu of Cash.
(a)  Should be in the tariffs.
(b)  Insurance.
Commissioner Miller said he was willing to defer to the company on this.  It is a rate setting issue.  Based on that, would use company judgement.
Commissioner Nelson said if they require that of their own contractors, then the competing contractors have an advantage by not having to get insurance.
Commissioner Swisher said it is a virtual lockout now.
Randy Lobb said he didn't look at bonding and that could be more significant.  Tried how to point out the area of difference in industry standards.  Didn't try to make a judgement.
Dave Schunke explained the bonds.  Both of them are usually held beyond the completion of the project to allow for people to present their claims.
Commissioner Nelson asked if they were doing commercial, aren't they bonded?
Commissioner Miller said - want a system of utility grade that is going to work.  Assuring that we are dealing with contractors who are solvent is a good idea.  Want someone reliable.
(b)  No.
5.  Hook-up fees.
Agreed with staff proposal.
Randy Lobb asked about the tax gross up?
Commissioner Miller said he wants present value gross up.
Agreed.
6.  Staff Review.
Commissioners said no.
7.  Refunds.
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Mike Gilmore explained.
Give company the okay for these.
Commissioner Swisher said - better say in the order that we are doing it based on payment under protest so it takes care of others.
Discussed briefly the Request for Intervenor Funding submitted by ICL.
Commissioners okayed request.
Meeting adjourned.
        DATED at Boise, Idaho this       day of January, 1991.

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COMMISSIONER

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