20180606Application.pdf

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LISA D. NORDSTROM
Lead Counsel
[e-mail]
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Enclosures
RECEIVED
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Lisa D. Nordstrom
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An IDACORP CompanY
P.O. 8ox 70 (83707)
1221 W. ldaho St.
Boise, lD 83702
June 6, 2018
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-18-10
Transfer and Sale of Certain Assets to Jayco, lnc
ldaho Power Company's Application
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
Very truly yours,
Dear Ms. Hanian:
LISA D. NORDSTROM (lSB No. 5733)
SHELLI D. STEWART (lSB No. 7459)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nord strom @ ida h opowe r. co m
sstewart@idahopower. com
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Attorneys for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ORDER APPROVING THE TRANSFER
AND SALE OF CERTAIN ASSETS TO
JAYCO, INC.
CASE NO. rPC-E-18-10
APPLICATION
ldaho Power Company ("ldaho Power" or "Company"), in accordance with ldaho
Code S 61-328, S 61-524, and Rule of Procedure 052, hereby respectfully makes
application to the ldaho Public Utilities Commission ("Commission") for an order, as soon
as practicable,l approving the sale and transfer of certain assets to Jayco, lnc. ("Jayco"),
located in Twin Falls County, ldaho.
ln support of this Application, ldaho Power represents as follows:
1 Jayco is in the process of expanding its facility and, until the asset sale closes, Jayco must follow
the protocol detailed in Section 5 of the Asset Purchase and Transfer of Title Agreement to install additional
facilities beyond the point of delivery. As such, Jayco desires an order from the Commission as soon as
practicable to avoid potential interruptions to its expansion.
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APPLICATION - 1
I. INTRODUCTION
1. ldaho Power provides electric service to Jayco at its manufacturing facility
located in ldaho Power's service territory pursuant to ldaho Power's Schedule 9, Large
General Service ("Schedule 9"). Pursuant to ldaho Power's Rule M, Facilities Charge
Service ("Rule M"), ldaho Power owns and operates transformers and other facilities
beyond the point of delivery ("POD') for the sole purpose of meeting Jayco's service
requirements. ldaho Power provides this optional service to Jayco in exchange for
Jayco's payment of a monthly facilities charge. The assets to be transferred to Jayco
("Asset" or "Assets") are more particularly described in Exhibit A to the Asset Purchase
and Transfer of Title Agreement ("Agreement") dated May 7, 2018, included as
Attachment 1.
II. ASSET SALE AGREEMENT
2. Jayco requested ldaho Power sell the Assets to Jayco in accordance with
Rule M, Section 3. As described in the Agreement, ldaho Power agrees to transfer and
convey the Assets to Jayco, and Jayco agrees to obtain title to and assume ownership,
operation, maintenance, and all liabilities associated with the Assets. Upon closing the
sale, Jayco will own allfacilities installed beyond the POD.
III. RULE M
3. Section 3 of Rule M governs the sale of Company-owned facilities beyond
the POD and states that all sales of facilities must meet the following provisions:
a. No mixed ownership of facilities. A customer purchasing Company-
owned facilities installed beyond the POD must purchase all facilities listed on the
Distribution Facilities lnvestment Report for that location.
b. The customer must provide the operations and maintenance of all
facilities installed beyond the POD after the sale is complete.
APPLICATION - 2
c. The customer must prepay engineering costs for sales
determinations taking greater than 16 estimated hours of preparation. Sales
determinations equalto or less than 16 estimated hours of preparation will be billed to the
customer as part of the sales agreement, or after the engineering is completed in
instances where the sale is not finalized.
4. ln addition, Section 3 of Rule M states: "The factors set forth in ldaho Code
S 61-328(3) will be considered as a guide for the sale of Company-owned facilities
installed beyond the Point of Delivery to the customer served by those facilities. All sales
shall be brought before the Commission, whether as an application or other informal
procedure." The factors set forth in ldaho Code S 61-328(3)-providing this guidance-
are as follows:
a. That the transaction is consistent with the public interest;
b. That the cost of and rates for supplying service will not be increased
by reason of such transaction; and
c. That the applicant for such acquisition or transfer has the bona fide
intent and financial ability to operate and maintain said property in the public service.
This transaction satisfies the above requirements. First, the Asset sale is
consistent with the public interest because the Assets only serve Jayco and the sale will
not affect the delivery and reliability of electric service to other customers. ln addition, the
sale price methodology ensures the cost of supplying service will not increase and rates
will not be impacted. Finally, as stated in the Agreement, Jayco acknowledges its bona
fide intent and financial ability to operate and maintain the Assets.
IV. CURRENT FACILITY CHARGE ARRANGEMENT
5. Currently, ldaho Power owns, operates, and maintains distribution facilities
located beyond the POD at Jayco's manufacturing facility. These distribution facilities are
APPLICATION - 3
installed solely to benefit Jayco and, in exchange for ldaho Power owning, operating, and
maintaining the same, Jayco pays ldaho Power a monthly facilities charge. The monthly
facilities charge is equal to (a) 1.41 percent of the initial investment cost of assets that are
less than or equal to 31 years old, or (b) 0.59 percent of the initial investment cost of
assets that are greater than 31 years old. These rates are reflected in ldaho Power's
Schedule 66, Miscellaneous Charges, and consist of the following components:
Facilities Charge Rate
S 31 years > 31 years
Rate of Return
Book Depreciation
lncome Taxes
Property Taxes
Other Taxes (Regulatory Fees)
Operations and Maintenance
Administrative and General
Working Capital
lnsurance
Annual Total
4.71o/o
3.23o/o
1.92o/o
0.56%
0.14o/o
3.58%
2.28o/o
0.14o/o
O.32o/o
0.00%
0.00%
0.00%
0.56%
0.14o/o
3.58%
2.28o/o
0.14%
0.32o/o
16.89%7.02o/o
Monthly Charge 1.41o/o 0.59%
6. The cost components listed above are the same cost components included
in the Company's base rate revenue requirement for like facilities. Descriptions of each
cost component are as follows:
a. Rate of Return. ldaho Power's cost of financing its original
investment in facilities. The rate of return uses a weighted average of the Company's
cost of debt and cost of equity. The facilities charge rate represents a levelized payment
stream to simplify the rate calculation and the administration of the facilities charge.
b. Book Depreciation. The straight-line annual depreciation of assets
based on a levelized 31-year basis.
c. lncome Taxes. The tax ldaho Power pays on the amount of revenue
received from the equity portion of the rate of return.
APPLICATION - 4
d. Property Taxes. The property tax ldaho Power pays associated with
the Company's distribution facilities
e. Other Taxes (Requlatorv Fees)The fees ldaho Power pays to the
Commission and the Public Utility Commission of Oregon. A portion of these fees is
based on the Company's distribution investment, which includes facilities installed beyond
the Company's POD.
f. Operations and Maintenance. ldaho Power's costs to operate and
maintain its distribution facilities. This component represents an average operations and
maintenance rate for all distribution equipment.
g Administrative and General. An amount based on total
administrative and general expenses as a percentage of total plant investment.
h. Workinq Capital. The carrying cost of inventory. The working capital
is based on the cost of capital to finance the distribution facilities inventory and the
property taxes that the Company pays on its inventory.
i. lnsurance. lnsurance premiums resulting from facilities installed
beyond the Company's POD. lnsurance covers property, casualty, and worker's
compensation.
V. SALE PRICE METHODOLOGY
7. ldaho Power has developed a methodology for determining its sale price for
customers electing to purchase Company-owned facilities beyond the POD under Rule
M, Section 3. The methodology ensures ldaho Power's other customers are not
negatively impacted by the transaction.
8. ldaho Power provided the methodology and resulting sale price to Jayco,
and answered Jayco's inquiries prior to execution of the Agreement; Jayco does not
APPLICATION - 5
contest the same. ldaho Power's methodology consists of the following five components
that collectively establish the sale price of the Assets:
a. Net Book Value. Remaining book value based on a 31-year asset
life. The net book value of the Assets is $17,574.
b. True-up of Past ized Rate of Return. When a customer seeks
to exit a facilities charge arrangement prior to the end of the 31-year period when the
Assets would be fully depreciated, the Company must "true-up" the difference between
the non-levelized revenue requirement included in base rates and the levelized revenue
received to date under the facilities charge arrangement to address the intra-class
subsidy that would exist upon approval of the Agreement.2 Customers will receive the
benefit as a reduction in rate base amounts because ldaho Power will record the true-up
as a credit to Federal Energy Regulatory Commission ("FERC") Account 108,
Accumulated Provision for Depreciation. The true-up of past levelized rate of return
associated with the Assets is $7,252.
c. Near-term Rate of Return lmpact Resultinq from the Sale of Assets.
When a facilities charge customer requests and ldaho Power agrees to provide facilities
beyond the POD in exchange for the customer paying a monthly facilities charge, ldaho
Power invests its capital in assets serving only that one customer; the Company could
have chosen instead to invest its capital in other utility infrastructure, seeking to include
2 ln the Company's non-levelized determination of class-specific base rate revenue requirements,
the Company determines the total revenue required for recovery on all distribution facilities-related
investments (including those investments beyond the POD), as well as the associated operating,
maintenance, and administrative expenses. This determination is made for each class of customers, and
the Company's revenues from providing facilities charge services are directly assigned as a revenue credit,
or reduction, to the revenue requirement of the associated class of customers. As a result, any differences
between the non-levelized revenue requirement and the levelized revenue requirement associated with the
rate of return exist as intra-class subsidies between customers paying facilities charges and customers not
paying facilities charges within each customer class. The true-up of past levelized rate of return is intended
to address these intra-class subsidies.
APPLICATION - 6
that investment in rate base to earn a return at its authorized rate of return over the life of
the assets. When a customer buys an asset that is subject to the facilities charge, the
return the Company would have earned through the facilities charge is forgone and the
Company has limited opportunity to reinvest those funds in other assets and earn its
authorized rate of return until such reinvestment is recognized in a future general rate
case. This component of the sale price partially mitigates the financial impact to the
Company and represents the net present value of three years of the forgone revenue
associated with the levelized rate of return element of the facilities charge. The Company
believes three years is a conservative proxy to use as the amount of time that may pass
between general rate case filings. The near-term rate of return impact resulting from the
sale of the Assets is $3,758.
d. Near-term Operational lmpact Resultinq from the Sale of Assets.
During a general rate case, the revenue requirement for the Schedule g customer class
includes a revenue credit, or reduction, equal to the amount of facilities charge revenue
expected to be collected from Schedule 9 customers. Because the Company will not
have an opportunity to recalculate the revenue requirement and reset rates until the next
general rate case, it calculates a near-term operational impact resulting from the sale.
This component partially mitigates the financial impact to the Company and represents
the net present value of three years of the forgone facilities charge revenue associated
with costs related to the regulatory fees, operations and maintenance, administrative and
general, and working capital that are incurred to service and maintain the Company's
distribution facilities. The near-term operational impact resulting from the sale of the
Assets is $4,903.
e. Net Tax Gross-up. For income tax filing purposes, assets are
depreciated at an accelerated rate compared to the straight-line depreciation method
APPLICATION - 7
used for financial reporting purposes. The accelerated tax depreciation results in the
taxable value of the Assets being lower than the net book value of the Assets, which
results in a taxable gain on the sale of the Assets. The net income taxes associated with
the gain, after removing the deferred tax adjustment, are grossed up to cover all income
taxes that Idaho Power would pay on this transaction. The net tax gross-up resulting from
the sale of the Assets is $5,091.3
9. The total sale price of the Assets is $38,578. ldaho Power will also collect
$426 in estimated work order closing costs, representing labor costs to update the
Company's asset records and facilities maps, for a total amount of $39,004. As set forth
in Section 3 of the Agreement, the sale price is subject to change if ldaho Power replaces
any of the Assets before closing the transaction. The sale price may also change
depending on the actual closing date; a change in price would be based on the Asset sale
closing after the beginning of a new calendar year. The price change would reflect the
reduction in net book value of the Assets due to an additional year of depreciation, the
impact of an additional year on the true-up of the past levelized rate of return, and
associated impacts on the net tax gross-up.
10. The Agreement also contains provisions requiring Jayco to compensate the
Company $5,578 for costs associated with a pole and three switches used to house and
operate the primary metering package located at the facility ("pole and switches"). ldaho
Power will need to retain ownership of the pole and switches because the meter is the
facility's POD. The pole and switches are not being sold to Jayco; instead, Idaho Power
3 The net tax gross-up resulting from the sale of the Assets includes the updated tax amount from
the recent Federal Tax Reform. ldaho Power provided the sale price to Jayco prior to ldaho legislation
reducing the state tax rate, which resulted in an overall reduction of the composite tax rate. The sale price
in the signed Agreement includes a composite tax percentageol25.977%; however, the updated composite
tax percentage is 25.740%. ldaho Power will refund $97 to Jayco for the difference in the composite tax
percentage. ldaho Power has discussed the tax reform impact on the sale price of the Assets with Jayco
and Jayco supports the resolution of receiving a refund.
APPLICATION - 8
will continue to own, operate, and maintain the pole and switches. Pursuant to Rule M,
the pole and switches were originally installed for the sole benefit of Jayco and Jayco has
since paid a facilities charge each month to ldaho Power based on a percentage of ldaho
Power's initial investment. However, because Jayco will no longer pay this facilities
charge upon closing of the sale, ldaho Power must recover from Jayco the book value of
the pole and switches, as well as the true-up of the past levelized rate of return (as more
fully described above), to ensure other customers are not impacted by the transaction.
Because Idaho Power will continue to own, operate, and maintain the pole and switches
after the sale is complete, the amounts related to the pole and switches are presented
separately from the Assets that will be owned, operated, and maintained by Jayco after
the Asset sale closes. The accounting treatment related to the pole and switches is
further detailed below.
VI. ACCOUNTING TREATMENT
11. ldaho Power will record this transaction in accordance with generally
accepted accounting principles using the accounting treatment below. Account numbers
and descriptions are from FERC's Uniform System of Accounts:
a. Removing the Original Cost of the Assets from ldaho Power's
Accountinq Records. ldaho Power will remove the assets from its accounting records as
follows:
Debit 108 - Accumulated Provision for Depreciation $32,736
o Credit 101 - Electric Plant in Service $32,736
b. Recotelinq the Gain on the Sale. ldaho Power will record the gain on
the sale of the Assets as follows
APPLICATION - 9
o Debit 131 - Cash $39,004
o Credit 421 - Miscellaneous Non-Operating lncome
(Nearterm rate of return impact of $3,758, near-
term operational impact of $4,903, net gross-up for
tax of $5,091 , plus work order closing costs of $426.)
$14,178
a Credit 108 - Accumulated Provision for Depreciation $24,826
(Remaining net book value of $17,574 plus true-up
of past levelized rate of return of $7,252.)
c.Recording the lmoact of the Asset Sale on ldaho Power's lncome
Taxes. ldaho Power will record the impact of the Asset sale on ldaho Power's income
taxes as follows:
a Debit 409 - lncome Taxes $5,091
a
a
Credit 236 - Taxes Accrued
Debit 282 - Accumulated Deferred lncome Taxes $2,247
$5,091
a Credit 410 - Provision for Deferred lncome Taxes $2,247
d. Recordinq the Pole Switches Payment. ldaho Power will record
the recovery of its investment in the pole and switches as follows
Debit 131 - Cash $5,578
Credit 108 - Accumulated Provision for Depreciation
(Remaining net book value of $3,707 plus true-up of
past levelized rate of return of $1,385.)
$5,092a
Credit 421 - Miscellaneous Non-Operating lncome $486
(Net gross-up for tax of $486.)
e. Recordinq the lmpact of the Pole and Switches Pavment on ldaho
Power's lncome Taxes. ldaho Power will record the impact of the pole and switches
payment on ldaho Power's income taxes as follows:
Debit 409 - lncome Taxes $486
o Credit 236 - Taxes Accrued $486
APPLICATION - 1O
12. The values used for ldaho Power's income tax journal entries are subject to
change depending on federal statutes in effect at the time of the sale, and the actual
impact to income taxes.
VII. MODIFIED PROCEDURE
13. ldaho Power does not believe a hearing is necessary for the Commission's
consideration of this Application and respectfully requests processing under Modified
Procedure (i.e., by written submissions rather than hearing). RP 201 et seg. lf, however,
the Commission determines a technical hearing is required, ldaho Power will present
testimony in support of the Application.
VIII. COMMUNICATIONS
14. Communications and service of pleadings with reference to this Application
should be sent to the following:
Lisa D. Nordstrom
Shelli D. Stewart
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
I nordstrom@ idahopower. com
sstewart@ idahopower. com
d ockets@ id ahopower. com
Zach Harris
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise,
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IX. REQUEST FOR RELIEF
15. As detailed above, Idaho Power respectfully requests the Commission
issue an order approving the sale and transfer of Assets to Jayco as soon as practicable
to allow Jayco to continue expansion of its facility without interruption.
DATED at Boise, ldaho, this 6th day of June 2018.
LISA D M
Attorney for ldaho Power Company
APPLICATION - 11
VERIFICATION
STATE OF IDAHO
County of Ada
LISA D. NORDSTROM, being duly sworn, deposes and states that she is an
attorney for ldaho Power Company, that she has read the foregoing Application and
knows the contents thereof, and that the same are true to the best of her knowledge and
belief.
SA NORDST
SUBSCRIBED AND SWORN TO before me, a notary public of the state of ldaho,
this 6th day of June 2018.
Ly fr.
ry Public ldaho
Residing at: Boise, ldaho
My commission expires 12t2.f
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APPLICATION - 12
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-I9-10
IDAHO POWER COMPANY
ATTACHMENT 1
ASSII]'I, PURCITASE
AND TRANSFER OIT TITLE AGREEIVIENI'
This ASSET PTRCHASE ANI)-I-RANSFLR OIi'l'IT1,E AGIIF:I'IMFN'I'("Agreement")
is entered to be effeotive as of thc Tqclay offfi 2018 ("Flffcctivc Datc"), by ana bctwccn
IDAHO POWER COMPANY, an [daho corpoi'a-tiofi ("Idaho Power"), and JAYCO, [NC., an
lndiana corporation doiug business in 'lwin Falls, Idaho ("Jayco"). Idaho Power and Jayco may
be referred to herein individually as a "Party" or, collectively, as the "Pal'ties,"
ILB,cmar.s
A. Idahcr Power is an investor-olvned electric utility engagcd in the gencration,
tt'ansmission, and distribution of electricity to its customers in sr:uthenr Idaho and easlem Orrgon;
B. Jayco is an Idaho Power customer that operates and maintains a manufacturing
facility locatcd at 51 I l{ankins Road Soutlr, Twin Falls, Idaho 83301 ("Manufacturing Facility");
Cl. Idaho Power currently owns, opcrates, and maintains facilities beyond the Point of
Delivery at Jayco's Manufbcturing Facility that were installed to sololy benefit the Manulacturing
F'acility (a.s mole particulady dcsctibcd in this Agreement, the "Asscts").
D. ldaho Power desires to transfer and convcy thc Assets to Jayco. and Jayco dcsires
to obtain titlo to and assume ownership, maintenance, operation, ancl all liabilities associatcd witlr
the Assets pursuant and sub.iect to the tetms and conditions olthis Agrecment.
E. Pursuant to Rule M (Facilities Charge Service) of Idaho Power's 'l-ariff ("Rule M")
and Idaho Code $ 6l-328,Idaho Power is required to obtain authorization atrd order {'rom the ldaho
Public tJtilities Corunission ('IPUC") approving Idaho Porver's sale of the Assets to Jayco (the
"Sale"). 'l'he transfer of the Assets contemplated by this Agreement is contingent on Idaho Power
receiving apploval of the Sale and accounting treatment of the Salc from the IPUC, without any
changes or conditions to Idaho Power's request and subject to the tcrrns and conditions set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and undertakings set [orth
herein, and other good and valuable consicleration, the sufliciency of which is hcrcby
acknowlcdged, Idaho Power and Jayco agree as follows:
l) Recitals. The above-stated Recitals are inoorporated by this reference and made a
part of this Agreement.
2) Assets. The Assets to be transferred to Jayco pursuant to this Agreernent (antl upon
approval of thc IPUC) ale set forth in Exhibit A attached heteto and made part of this Agreement.
3) Purchase Price. Jayco shall pay to ldaho Power the total amount of'$44,582,00,
which includes the price of the Asscts and other costs necessary to cornplete the purchase as
[00231405.DO(X; 3)Jayco Inc. - Asset Purchase and Trausfer of ]'itle Agreernent Page I olll
desclibe herein ("Purchase Pdce"). A summary breakdown ol'the Purchase Price is attached
hereto a^s lixhibit B and made part of this Agreement.
'l'o effecftrate the transfer of Assets as contemplated by the Parties, Idaho Power will
relocate Jayco's I']oinr of Delively to thc primary meter. As suolr, a pole and thtcc switches that
were otiginally [ocated beyond the Point of Delivery will be loeated prior to thc Point of Delivery
following the Asset transfer ("Pole and Switches"). Point of Delivery is defined by Rule H (New
Service lttachments and Distribution Line Instqllalion,s or Alteratictn,y) of tdaho Power's Tariff
("I{ule H"), Becausc the Pole aud Switches will be on Idaho Powcr's side of the Point of Delivery
following thc Asset transfer, the Pole and Switches ars not being sold to Jayco; instead, Idaho
Powet will continue to own, operate, ald maintain the Pole and Switchss. 'l'he chalges associated
with thc Pole and Switches, set forth in Exhibit B, are based on Idaho Power recovering its initial
investment cost for the Pole and Switches and includes the net book value, a true-up of the past
levelized rate of rctun, ancl associated taxes.r Iipon Closing the Satc (defiucd in Section 6 of this
Agreement), Idaho Power will make tlre nece.ssary adjustments to change thc Point of Delivery
ancl ccase collection ofthe facilities charge and any other charges associated with the Polc and
Switches from Jayco.
Jayco aclarorvledges and confirms that: (a) Jayco has reviewed and futly understands the
componctrts ofthe Purchase Price; (b) Jayco does not contest such amount; and, (c) the Purchase
Pricc is agreed upon between the Parties as of ths Effectivo l)ate hercof.
Jayco understands and acknowledges the Purchase Pricc is subject to change if Idaho
Power is rcquired to replace any of the Assets during such time as thc Parties arc awaiting approval
fiorn the IPIIC. Untess Jayco requests otherwisc, ptu'sllantt<.r Rule M of Idaho Power's Taliff,
ldaho Power is required to replace failed equipment owned by ldaho Power installed beyorrd the
Point of Delivety. As sucir, until Closing (defined in Section 6 of this Agleement) occurs, [daho
Powcr rrrtrst replace any failed Assets and the price of the suh.stitute cquipment will bc roflected in
the Purchase Price pursuant to the same methodology used to calculatc thc current Purchase Price.
4) Obligations and Conditions Prcccdcnt to Ckrsing; Certain Covenants. The
<-rtrligations and conditions listed below must be satisfied ol waived in writing before the Parties
are lequired to affect the transf'er and sale of the Assots as contemplated by this Agreement (such
cvent, "Closing").
a. IPUC Approval. Within 30 days lbllowing execntion of this Agleement,
Idaho Power shall file an application for approval of the Sale aud accounting
treatrnent oIthe Sale with the IPUC, thc contents of which shall be in Idaho Power's
discretiorr so long as not inoonsistent with the matcrial tcrms of this Agreemetrt.
Upon receipt of a final, non-appealable order from the IPIJC pertaining to the Sale,
ldaho Power shall provide Jayco with a copy of the same, and:
1 Pursuant to Rule M, the Pole and Switches were originally installed for the solc bcncfit of layco, and Jayco has since
paid a nxlrtthly facilitics charge to ldaho Power based on a percentage of ldaho Power''s initial investment cost-
Because Jayco will no longer pay a rnonthly facilities charge, Idaho Power mnst recover its initial investment cost of
the Polc and Switches, which includes the net book value, a tuue-up ofthe past levelized rate ofreturr, aod associated
taxes, tht'ough a lrrntp sum paymcnt from Jayco.
{ 002:1 1405.DOrlX; lt}J ayco tno. Assct Purchase and Tlansler ol'I itle Agrf€ment Page2olll
i. If the IPUC approves the Sale and accounting tt'eatment of the Sale
consistent in all material respects with the respective applications subrnitted
tothe IPIIC by Idaho Power, lhe Parties shallproceed with the Sale of the
Assets pursuant to the terms and conditions of this Agreenrent.
ii. tfthe IPUC approves the Sale and accounting treatment of the Sale
subjcct to adclitional tenns ancl conditions bcyontl those .set fbrth in the
application subrnitted to the IPUC by Idaho Power (as permitted by Idaho
Code $ 6l-328), the Partios may either: i) mutually agree to incorporate the
additional tenns and conditions into this Agreement and proceed with the
Sale; or ii) not mutually agree to incorporate the additional terms and
conditions into this Agreement, in which case either Pa$y shall have the
right to terminate this Agreement by noticc to the other Party, and upon such
termination this Agreement shall be null and void and of no furflrer effect
and neithel Party shall have any further obligations under this Agreement.
iii. If the IPUC denies, or refuses to consider or approve, the Sale or the
accounting treafinent of the Salc oonsistent in all matelial respects with the
application submitted to the tPtIC by Idaho Power, either Party shall have
the right to terminate this Agreement by notice to the other Pa(y, and upon
such termination the terms of this Agreement shall be null and void and of
no further effect and neither Parry shall have any further obligations under
this Agreernent.
Jayco agrees to support Idaho Power's applications to the IPUC for approval
ofthe Sale.
b, Lien Release. The Assets are subject to a licn created by a Mortgage and
Deed of Trust, dated October l, 1937, between Iclalro Power and Deutsche Bank
Tlust Company Anrericas (thc "Mortgage"), Following receipt of a signed
resolution adopted by Idaho Povver's Board ol'Directors, Idaho Power shall file a
custonlary lien release applicalion with the Mortgage [rustee, requestiug release of
the Assets fi'orn the lien of the Mortgage in accordance with the terms of the
lVlortgage. Relea"se of the lien by the Moftgage h'ustee shall be a condition
precedent to the Closing and to the obligations of the Parties to consummate the
Sale as contemplated by this Agleement, [n the event no sush release shall have
tirncly occuu€d within 60 days of ldaho Powei' filing an application fbr release,
eithet Party sl:all have the right to terminate this Agreement by notice to the other
Pafty and, upon such telmination, the terms of this Agreetncnt shall be null and
void and of no furthel effect, and neither Party shall have any further obligations
undcr this Agreement.
5) Installation of Additional Facilities. Rule M of ldaho Power's Tariff does not
allow mixed ownership of facilities bcyond the Point of Delivcry. As such, Jayco understands and
{0023 1405.1)OCx; 3}Jayco Inc. - Asset Purchase and Trausfer olTitle Agreenreut Page 3 ofI I
aclcnowledges that if it desir:es installation of additional tacilities bcyond the Point of Delivery
prior to Closing ("Additional l:acilities"), Jayco has the following options:
a. Iclaho Power purchases, installs, and maintains the Additional F'acilities.
The Parties arnend this Agrcernent with an updated Purchase Price to include the
Additional Facilities, and Idaho Power updates its application and/or re-applies fbr
apptoval of the Saie to the IPIJC to include the Additional Facilitics at the updated
Purohase Pricc. Upon receipt of the IPUC's decision, the above Sections 4(a)(i),
(ii) or (iii) would determine the next steps of the Parties; OR,
h. Jayco purchases, installs, ancl maintains the Additional Facilities. Jayco
shall obtain written approval fi'orn ldaho Power priol to purchasing and installing
Additional Far.rilities in order that Idaho Power can verify cornpatibility with its
electu'ical system, and said written approval wiil not be unreasottably withheld by
Idaho Power. In the eyent the IPUC fails t<.r approve the Sale (as discussed in the
above Sections 4(a)(ii) ar:d (iii)), Jayco agrees to sell the Additional Facilities to
ldaho Power at thc oliginal purchase price as soon as practicable follolving receipt
ot'the IPIIC's decision. l-hc Additional Facilities will then be adderl to Jayco's
facilities charge purcuant to Rule M. If Jayco fails to obtain writtcn approval prior
to installing Additional Facililies, and those Additional Facilities are not staudard
to Idaho Poler's systcm, Iclaho Power will not purchase the facilities fi'om Jayco.
lnstead, Idaho Power will rcmove and rcplace the Additional Facilities, at Jayco's
cxpense, with thosc standard to its system and Jayco will be required to pay for the
replaoernent fbcilities tluough its Rule M facilities charge.
6) Closing. 'lhe Pafties agree that Closing shall occur as promptly as reasonably
practicable fbllowing satisfhction of all oonditions preccdent sct fbrlh in Section 4 of this
Agrcement. At Closing: (a) tdaho Powcr shall receive fi'om Jayoo an auxornatic transfer of funds
for the full Purchase Price (a.s spccificd in Section 3 above); (b) Idaho Power shall provide .Iayco
any keys, or other items in Idaho Por.ver's possession, reccived by Idaho Power as part of thc
oliginal purchase and necessary for access of, and specific to, thc Assets; (c) Idaho Power shall
provide Jayco with maps of the location ol the Assets, and any other operational manuals in ldahcr
Powcr's possession, received as part of the original ;rurchase of the Assets; (d) the Parties shall
execute a bill of sale in the lbrm of Exhibit C heleto. On or after Closing, Idaho Power shall cease
collection of altdistribution facilities investrnent ('DI;I") rate charges and any otlter chalgcs for'
the Assets. Upon Closing, this Agreement wili climinate the Assets subject to DFI chargcs and
will release Idaho Power's resllonsibility fbrthe care, custody, and contlol of thc Assets,
7) Transfer of Assets. Idaho Powel shall grant, balgain, sell, assign, tt'ansfcr, convey,
and dcliver to Jayco, its successors and assign.s, all of [daho Power's light, title, and intcrest of
evcry kind and character whatsoever in and to the Assets, effective as of Closing.
S) Operlrtiou and Maintenauce. Jayco understands and acknowledges that pursuant
to the requirements of Rule M of Idaho Power's Tariff and Idaho Code $ 6l-328, Jayco lras the
bona fide intent and financial ability to operate and maintain the Assets, and Jayco shall bc tully
{002.}I405.DOCX;3}Iayco Inc. - Asset Purchase and l'r'ansfcl olTitle Agreement l'age4olll
fesponsible for such operation and maintenance of the Assets, and all liabilities associated
therewith, after Closing,
9) Title to Assets. Idaho Power, flor itself and its successors, hcreby represents to
Jayco and its successors and assigns that as ofthe Effective Date hcreof: a) Idaho Power has good,
valid and marketable title to the Assets; b) the Assets are free and clear of all lions, encumbrances,
claims, mortgages, security interests, pledges, charges, liabilitics and other restrictions of any kind
or nature whatsoover (contingent or otherwise), other than those of or created by Jayco. and other
than the lien created by the Mortgage ; c) the lien of the Mortgage on the Assets wiil not apply from
and after the Closing; and, d) ldaho Power has all necessary corporate power and authority to sell
the Assets to Jayco (assurning approval of thc Sale from the IPLIC pulsuant to Idaho Code $ 6l-
328).
f0) Necessary Documents. Idaho Power covenants and agtees with Jayco, its
successors and assigns, to L1o, execute, acknowledge, and delivsr, or cause to be clone, executed,
achnowledged, and dcliverecl, any acts, instrurnents, papers, and docurnents as lnay be leasonably
neccssary to cary out and eflectuate ttre intent ancl purpose of this Agreernent.
11) Authority' to 'l'ransfer. Iclaho Power wan'ants and represcnts to Jayco that ldaho
Power is duly and validly authorized and cnrpowered to make, cxeoute, and deliver thi.s Agreement
and to enter into the covenants, promises, arrd undertakings of Idaho Power in this Agreement, in
accordauce with the temrs and subject to the conditions set forth in this Agreement. Jayco warrants
and represents to Idaho Power that Jayco is duly and validly authorized and empowcted to make,
exccutc, and deliver this Agreement and to entel into the covenants, promises, and undeflakings
of Jayco in this Agreement, in accotdance with the terms and subject to the conditions set lbrth in
tltis Agreement,
12) Unwarrauted "As fs" Condition. The Parties agree that to the cxtcnt required by
any applicable law, tlie disclaimers of walranties contained in this paragraph are "conspicuous"
disclaimers for the pulposes of any applicable [aw, nrle, or ordcl. Jayco waive.s any claims,
dcmands, and rights of action against Idaho Power, its officers, directors, employee.s, and parent
company arising frotn or relating to thr; Assots or the Sale other than the riglits of Jayoo undel this
Agreement, including the right to entbrce this Agreement. JAYCO ACKNOWLIIDGES ANI)
AGREES THAT IT HAS HAD THE OPPOR'I'UNITY 1'O CAREFULLY EXAMINE ANI)
INSPECT TI{E ASSI]TS. AND/OR 1'IIA]' I'I' HAS CAREFTILLY EXAMINED AND
INSPEC]ED TFIL ASStrTS, AND ACCI]PI'S THE ASSE'I'S IN THEIR "AS [S" ANI)..W[[ERE IS" CONI)ITION AND "WITH AI,I, FAUI,'I'S," AND WTTHOUT
REPRESENTATION OR WARITANTY, EXPRESS OR TMPT,TFID, (ALL Of WiltCLr tr)nlrO
POWE,R HEREBY DISCLAIMS AND NDGATES) AS TO FITNT.]SS FOR ANY PAI{I'ICULAR
PURPOSE, CONIIORMI'I'Y TO MODELS OR SAMPLES OR MA'I'ERIALS,
MTIRCHANTABILITY, D[,]SIGN, QUALITY, CONDITION, OPERA'IION, COIvIPLIANCFI
WII'H SPE,CIFICATION, ABSENCE OF LATENT DEFECTS, OR COMPLIANCE WITTI
LAWS AND REGUT.A',|TONS (TNCLUDING, WITHOIIT LIMITATTON, THOSU RELAI'ING
TO HEAITH, SAFE,I.Y, AND THE ENVIRONMEN,I), TO'I.I ID IJXTENT APPLICAI}I-E AND
PERMITTED BY I,AW,
{0021 l405.DOCX; liJayco Inc. - Asset Purchase and liansfcr of'l'itle Agreeurent Pag,e 5 oll l
13) Relcase and Indemnification. Effective as of Closing, Jayoo rcleases Idaho
Power, its parent company, affiliates, and successors, and their respective ernployees, officels,
dilcctot's, rcpresentatives, insuters, and/or agents, current or tbrmcr, fiom, for', and against any and
all olairns, actions, clarnages, losses, penalties, and expenses, including but not lirnited to
reasonable attoLneys' lecs and disbulsements, of any kind ot nature whatsoever arising out of Idahcr
Power's acts ol omissions or the acts or ornissions of Jayco or any thfu'd party related to the transfer
of thc Assets heleundcr.
To the extent perrnitted by applicable law, Jayco shall release, indemnify, defend,
leirnburse, aud hoid harmlcss Idaho Power, its parent company. affiliates, and successors, and their
rcspective etnployees, offioers, directors, representatives, insurers, and/or agents, ourtent ot
former, (collectively, the "Indemnilees"), l}om, tbr, and against zury and all allegations, suits,
claim.s, demands, actions, ploceedings, juclgments, penalties, liabilities, dantage.s, inltu'ies, losses,
costs, or expenses of any hind or naturc whatsocver without limitation, (collectively. "Damages"),,
arising on or after the Closing that lelate, directly or indireotly, in lvhole or in part, to Jayco's
acquisition and use of the Assets. 'lhis release includes but is not limited to attorneys' fees and
relatcd costs; property danrage or loss; business damages; loss of use of real and/or personal
property; damages for dcath personal injury, and/or loss to physical or emotioual wcll-being and
health; strict liability; and/or liabilities or obligations under any applicable federal or state law,
iucluding, without limitation, all environmental laws.
14) Hazardous Materials ancl Indenrnilication. Jayco ackuowledges that the Assets,
including, but not Jirnitcd to, electronic equiprneirt and components, may contain hazardous
materials, These rnaterials may includc, but ale not lirnited to, PCIls, lead in solder, battcries, and
CRT glass, silver in some batteries and connections, and mercury in some batterles and mercury
switches. Disposal of these components ancl olcch'onic wasto in general, may be legulated. Jayco
is responsible lbl compliance with all applicaFrle envirorunental lalra, rules, and regulations
associated with those and all other hazardous nraterials containetl in or used in conneotion with the
Assets from and afterthe Closing.
Jayco shall indemnifly, defend, reimburse, and lrold hannless the Indemnitees from" for,
and against any and all Darnages that any or all of the Indemnitees may hereafter suff.'er, incur, be
respousible for, or pay r:r-rt for liabilities or obligations undcr any law, ordinance, or regulation
relating directly or irrdirectly to lhose and all other hazardous materials contained in or used irr
connection with tlre Assets, arising dilectly or indirectly, in whole or in pat'|, out of Jayco's
acquisition and use of the Assets fi'om and after the Closing.
l5) Assignment, 'l'his Agrcemcnt shall only bc assignecl with thc prior writtcn consont
of the Parties, Any purporled assignment without such pr.iol wt'ittcn cousont shall bc null and void.
16) Miscellaneous, To the extent that any provision ol this instrLrnrcnt is held to be
invalid, illegal, or unenforrceable, it shall be deemed to be modifiecl to the nrinimum extent
necessary to be valid and enfolceable. If it cannot be so modified, it will be deleted and the deletion
will not afibct the validity or enforseability of any other provision of the Aglcement unless.,
hecause of the deletion, the lights of eithcr Party are materially diminished or the obligations and
huldens of either Party ale rnaterially increased to be rrnjust ol ineqtritable. Any inconsistency
{0023 1405.t)OCx; 3}Jayco Inc. - Asset Purchase ancl Translbl ol'['itle Agreemenl Pag,e6olll
between the term.s of this Agrcement and any other Agreemert to which ldaho Power and Jayco
are a party on the Effective Date, as to the matters set forth in this Agrcement, shall be resolved in
favor of the terms of this Agreement, the tcrms r:f which shall govem. This Agreement arrd the
covenants, agreements, undertakings, warranties, and rcprcsentations containcd herein shall inure
to the benefit ofthe successors and assigus of ldaho Powcr and Jayco.
This Agreetleut rnay be signed in any number of counterparts, each of which shall bc an
original, with the same eff'ect as if the signatutes thereto and hereto wcre upon the same instrunrcnt.
This Agreement constitutes the entire Agreement berween the Parties and supersedes any pdor
understandings, Agreements, or representations by or bctween the Parties, written or oral, in auy
wry related to the subject mattsr of this Agresment. This Agreement may not be amended except
by written Agreement executed by thc parties to be charged with thc amendment.
17) Governing LadVenue. This Agecmcnt shall be interpreted, applied, and
euforced in accordance with the laws of the State of Idaho, notwithstanding its choice of law
pt'ovisiuns. Venue for any enforcernent or interpretation or other proceeding shall be in Ada
County, Idaho.
f8) Hcadings and Titles. AII the headings, titlcs, subheadings, and subtitles herein are
inscrtcd as a matler of convenience ancl rel'erence only. They in no way define, limit, extond, or
de.soribe the scope or intent of this Agreement.
[,9 i gn a tu r e s ta .foll o w J
{0023 I 405.DOCX; 3 }Jayco [nc. - Assel Pulchase and 'l ranslcr olTitle Agrcorn€nt Page ? oill
lN WITNESS WI{EREOF, the undersigrred have executed this Agreement to be effEctive
as of the Effective Date.
IDATIO POWER COMPANY
Signature:
Printed Name:
Titlc:
Tr* N- Atn,^ae
3*,ou*trEIL
JAYCO,INC
Signature:
Priuted Narnc:
&*"
Title:1qt,ie urc6 PQFro-^r,+ frcrLrTres
hfi
tubfic
m0
The
State of: lndiene
County ol: El6at
(002ll405,DOCX;3)Jayco lrrc. - Asse( Putchase antl'liansltr ofTitlc Agrccrnent Pagc 8 ofll
EXHIBIT A
ASSETS
Dcscription
Pad - tiquipment.2007 $ 19s.79
UG Prirnary Cable - 15kV 2007 $ 1,715.63
Transfonner - Padmount 3PII (500-1499) kVA,2007 $ 24,727,71
i0021 l405.DOCX; :!|Jnyco Inc. - Asset lulchasc attd Trausfel ofTitle Agreernent Pago9olll
Year
UXIIIBIT B
SUMMARY BREAKDOWN OF PIIRCHASI.] PRICIi
Tntal Purchasc Pricc s 39,00d
Net book value $ r7,574
$7,2s2True up of past levelized late of return
$ 3,758
$ 4,903
Neartelm rate of rettun impact resulting frorn sale of a.ssets
Neal'-term operational impirct lesultirrg from sale of assets
$ 33,487
$ s.091
$ 38,578
'l'otal l'urchase Price - belbrc tax
Net gross-up (br tax
Tolal I'utchasc Pricc .ufter'tax
s 426Work order closing oosts
$ 3,707Ilole and Switchcs net book value
$ 1,385Pole and Switches true-up past leveliz.ed rate ol'l'etum
l'otat Pricc * beforc tax $ s,092
Net gross-up I'ol tax $ 486
$ 5,5711I'ole and Sryitchcs'I'otal
{0021l405.DOCx; 3}Jayco lnc. - Asset Pu|chase and Tr'ansfer o[Iitlc Alfrcemetrt I'age l0 of I (
'.Arrrounls
IDXAMPLE ONLY _ DO NOT EX.ECU'IU
EXHIBIT C
BILL OF SALtr
This BILL OI'SALE is entered to bc ctleotive ou 20 l8
("Eff'ective Date"), by and between Idaho Power Company, an Idaho colporation ("ldaho
Power"), ancl Jayco, Inc., an Indiana corporation doing brrsiness in Twin Falls, lrlaho ("Jayco").
Idaho Por.ver and Jayco rnay be referred to herein individually as a "Party" or, collectively, as the
"Parties." Idaho Power' has agreed to sell to .layco, and .Iayco has agreed to purchase lrorn ldaho
Power, for the consideration and upon the terms and conditions set forth in the Asset Purchase
and Transfer of Title Agreernent, dated 2018 ("Purchase
Agreernent"), the Assets set fbrth in Exhibit A to the Pr.rLchase Agt'comcnt.
Pursuant to the requirements of ltule M of Idaho Power's Tariffl ldaho Code $ 6l-328,
ldaho Power has obtained authorization and otder from the Idaho Public Utilities Cornmission
approving Idaho Power's sale of the Assets (set forth in Exhibit A to the Purchase Agteernerrt)
pursuant to the terms and condi[ions of the Pulohase Agreement.
ldaho Power hereby transf'crs title to the Assets and acknowledges payment fbr thc Assets,
in the amoLrnt of $44,582, is governed by and shall be made in accordance with the tetms and
conditions of the llurchase Agreement.
IN WITNESS WHEREOF, the undelsigned have executed this BIi,t, OF SALE to be
etTective as of the I,ffectivc Date.
IDAHO POWER COMPANY
Signature:
Printed Narne:
'fitle:
JAYCO,INC.
Signature:
Printed Name:
Title:
{0023 1405 D(X'x; '!)Jflyca Inc. -. Asset Purchase antl 'l'nnsfer of Title Agreenrenl Page ll ofll