19910221.docx

Minutes of Decision Meeting
February 21, 1991 - 10:00 a.m.
In attendance:
Commissioners:  Joe Miller, Ralph Nelson and Marsha H. Smith.
Staff members:  Scott Woodbury, Keith Hessing, Brad Purdy, Mike Gilmore, Terri Carlock, Dave Schunke and Myrna Walters.
First matter discussed was Item 2 from the February 21, 1991 Agenda.
2.  Brad Purdy's February 15, 1991 Decision Memorandum re:  UPL-E-90-1 (Further discussion).
Amount of Annual Reduction.
Company pointed out in their petition for reconsideration that Order 23508 made several reference to the net annual reduction being $2,551,043.  Staff agrees with Company; Order 23508 erroneously picked up the reduction amount contained in the original application.  But the correct amount was used by staff in making their analysis and recommendations throughout the case.
Correction will be made to reference to the incorrect amount.
Customer Minimum versus Customer Charge.
Page 2 of Order No. 23508 contained a misstatement using customer "charge" rather than customer "minimum".  
Error will be corrected by reconsideration order.
Additional Merger Related Reduction.
UP&L referred to statement made on page 26 of Order No. 23508 relating to the effect that the "additional merger related reduction in the spring of 1991" would have on Schedule 10 rates.  Staff agreed with Company that the reference to the additional merger-related reduction should be deleted.
Commission will make correction in reconsideration order.
Rate Spread.
Commissioner Nelson said the staff worksheets helped him a lot.
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Commissioner Miller commented it was a good job by engineering staff.
Said what about question of Schedule 6 - that 8 and 9 end up lower than 6 which is apparently a bad idea?
Commissioner Nelson said he thought he would like to do something but didn't want to change 23.  We lumped 6 and 23 together as being the same.  They aren't the same.  Schedule 23 is still well above cost of service.  Who is paying the largest rate of return?
Dave Schunke said both 6 and 23 at least before order were in the 30% range and order brought them down to 15/16%.  Both were approximately equal.  You should expect the actual rate of 23 to be higher than 6 because 23 is small commercial and 6 would be large commercial customers.
**Bob Smith was in attendance at this time.
Commissioner Miller asked about staff's idea of reducing all schedules by 16.29% - as opposed to 20% that we did.
**Discussed Dave Schunke's recommendation.
Low load factor customers can make choice of what schedule to be on.
Mike Gilmore gave example of when you can change schedules.
Commissioner Miller said on the whole, thought Dave Schunke's proposal got us out of the woods.
Commissioner Nelson said he thought that this solution where we reduce 8 and 9 by 10; and 6 and 23 by 16.29 was good.
Dave Schunke explained the company's argument on 8 and 6.  Had a concern there might be lost revenue by switching.
Discussed number of customers on Schedule 8.
Discussed migration from one schedule to another.
Commissioner Miller said he would go with Dave Schunke on rate spread change.
Commissioners Nelson and Smith agreed.
Commissioner Smith asked how we were going to explain our mistake:  what would be our reason?
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Keith Hessing gave his opinion of what happened.  Those classes that Commission didn't give anything to and those that Commission gave everything to, there is a lot of difference in class of service.
Dave Schunke said he tried some language in the staff response.  Twenty percent was justified for that class but what happened in trying to bring 6 and 23 into line, focusing on that group, they actually passed 8 and 9 and disturbed relative position between classes.  Twenty percent was not a mistake but relative relationship was affected.  
Commissioner Smith said Commission did not thoroughly consider the relative relationship between classes.
Dave Schunke said we didn't have all the billing numbers on the customers.  It was only after company submitted this additional information that we became aware of the disparity.
Commissioner Miller said whenever you make as significant changes as we did in this case there will be little consequences that aren't thought of.
Item 3 - Scott Woodbury's February 20, 1991 Decision Memorandum re:  IPC-E-90-21--Firm Energy Sales Agreements w/Unregulated IPCO Affiliate  Hazelton B - Wilson Lake.
Commissioner Smith asked if there was anything that needed to be considered besides approval of the contracts?
Commissioner Nelson said he didn't think there was anything in the hearing that would cause us to not approve these contracts.  Was a good idea to open the investigation and bring in the concerns and it was reassuring that there really weren't that many.
Commissioner Miller said he thought it was good to just conduct the inquiry to assure that these types of transactions are carefully examined and everyone else in the world knows they will be examined and the threat of examination provides useful in deterring improper conduct.  Did have a little more radical view of it.  Thought we should condition our approval upon Joe Marshall resigning from the board of IdaWest.
Commissioner Nelson said he thought it was a common practice for the CEO to be on both boards in similar situations.  Don't know if it should be difference since they are a regulated utility.
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Commissioner Miller said he thought he ultimately approves the terms on both sides (from IPC and IdaWest).  If the agreement is fair it wouldn't matter if he is on both sides of it.
Commissioner Nelson said he thought they had instituted some safeguards.  They will not look at projects over 10 megawatts.  You are not negotiating price, the terms negotiated are limited.  You are negotiating standard contract.  Also feel that since we didn't find that anything wrong happened in these negotiations, don't think it would be reasonable to say Joe Marshall should resign if we can't find anything wrong.
Commissioner Miller said he thought it gave the appearance of conflict on the 35 versus 20.  Timing of it was very awkward.
Commissioner Nelson said he agreed it was awkward.  There was a lot of discussion of it in the avoided cost case though.  It was not a new subject.
Commissioner Smith said she thought the testimony was that the 35 year contract had been offered to other than IdaWest.
Scott Woodbury said it was Auger Falls.
Commissioner Smith said she wouldn't be comfortable with putting that condition in it.  Appearance of a problem was there, but there wasn't really evidence of it.  Probably means closer scrutiny of IdaWest contracts.  Wouldn't be adverse to saying in the order that his continued position on both boards will cause the appearance of conflict and there will be close scrutiny of IdaWest contracts as long as that exists.
Commissioner Nelson said he would like to look at that language.  
Commissioner Miller said to also say besides saying affiliate contracts will be reviewed, but also speak to .. on the one hand looking out for ratepayers' interest and on the other hand look out for shareholders.
In PURPA, utility is to be indifferent.
Scott Woodbury suggested that in instances where a exchange between companies is to take place that he withdraw from discussion and abstain from voting.
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Commissioner Nelson said he didn't think he would put that burden on him.  That would be difficult to implement.  
Commissioner Smith said she didn't think we can tell him when and when not to vote.
Scott Woodbury is to work on language.
Scott Woodbury asked about IEPI's suggestions on Page 11 of the Decision Memo?
Commissioner Miller said he didn't think there was anything in the record.
Commissioner Nelson said it puts all the developers on notice that IdaWest is out there.
Commissioner Nelson said we do have to look at this banking problem.
Commissioner Miller said he thought Scott Woodbury solved it in saying we don't count on these contracts until they are interconnected.
Scott Woodbury said he didn't say that.  Repeated his statement.  The reason for the trigger is to get a hold on all the power you are contracting for.  If you want to defer until point of connection, you could project out there.
Commissioner Miller asked if you count these contracts as part of the trigger deal now before they are interconnected and PURPA qualified?  
Scott Woodbury said how are they any different in company entering into contracts for power, you don't know whether those are going to materialize.  You are making that determination when you sign that contract.
Commissioner Nelson asked - don't you think you have to oversee the ongoing process to see that things are progressing as scheduled?  You can expect things to happen after a contract is signed.  You have a canal company here really interested in getting it developed.
Scott Woodbury said have a problem with delaying recalculation until interconnection just because of what it does to the triggering mechanism we have set.  Don't think it is good to defer, what it does is .. some get higher rate.
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Commissioner Miller said if IPC and its affiliates sign these contracts and we move the trigger recalculation, other utilities can't get the same rate and you have caused the rates to go down to others on the basis of projects that don't yet exist.
Scott Woodbury commented - projects exist.
Commissioner Smith said that would be true regardless of what they sign with.
Commissioner Nelson said take IdaWest out of it.  Auger Falls plans to sign within 30 days.
Commissioner Miller said they will be certified.
Commissioner Nelson said they will have certification by FERC, will have contract and be close on financing.
Commissioner Smith said it doesn't mean they are close to generating.
Commissioner Miller said with Auger Falls, it is the date of contract, that is the way we set it up.  Am just concerned with using affiliates, if you use date of signing, you move the trigger around.
Scott Woodbury said you always have uncertainty of whether the project will develop.  When you get to the contract stages, the bad ones are weeded out.  Think this banking idea is a real "red herring".  It benefits nobody except the other QFs who are able to keep the rates higher.
Commissioner Nelson said suppose if we found that there were projects that were being banked, we could void them?
Scott Woodbury said - step on them hard.  IPC has indicated that if Commission wants to require PURPA certification before signing they are willing to do that.
Commissioner Miller said we haven't really required that.
Scott Woodbury said there is some language in the '85 case but think that is what the Commission requires because we have to draw lines.  Think that is reasonable in complaint actions.  Have to look at particular events as contributing to qualification but think for a utility it can, if it voluntarily enters into a contract it has made a determination of the risk and feels comfortable with the release of the relationship.
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Commissioner Miller said okay.  
Agreed to Scott Woodbury's language.
Commissioner Miller said he didn't know if we even need to comment on these being the base for future contracts.  Think it just happens.
Commissioner Nelson said if the next developer thinks he is not getting a good deal based on prior contracts, he can come over here.  Think the days of the unsophisticated developer is gone.
EXTRA ITEM -
Birdelle Brown's February 20, 1991 Decision Memorandum re:  Telecommunication Service Assistance Program Report to Legislature.
Commissioner Miller asked Commissioner Smith if she was happy with the report?
Commissioner Smith spoke to the allegation that penetration had dropped.  Staff acknowledged that the number was so uncertain that they didn't use it.  So on Table I there is a gap.  Thought there was too much speculation here.  Felt better about not predicting something.  Better to tell them we don't know yet rather than give them a wrong number.  That was her biggest concern.  Also wanted to know why the final figure on 1 didn't match final figure on 2.  That is because of rounding.  Rounding error of all these companies is pretty significant.  Explained the difference.  Spoke to higher administrative costs if they can justify them.  Said they do some limited centralized information.
Commissioner Nelson asked - if cost to U. S. West is 6.5 and they are rounding up to 7, it could add up.
U. S. West is at least 55% of this program so every program is $30,000.  Half a cent would be $15,000.  Estimated 5 million bills a year going out.
Mike Gilmore asked if Commission wanted that spelled out?
Commissioner Nelson suggested a footnote on Table 2 explaining the difference being due to a rounding of approximately 1/2 cent per monthly bill.
Commissioner Miller said he thought it might be worth noting.
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**Put on the explanation of the difference.
Commissioner Miller commented if Commissioner Smith was happy with the report, put it out.
Meeting adjourned.
        DATED at Boise, Idaho this       day of March, 1991.

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