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HomeMy WebLinkAbout19910304.docx Minutes of Decision Meeting March 4, 1991 - 1:30 p.m. IN ATTENDANCE: Commissioners Joe Miller, Ralph Nelson and Marsha H. Smith; staff members Scott Woodbury, Lori Mann, Don Howell, Brad Purdy, Belinda Anderson, Birdelle Brown, Terri Carlock, Stephanie Miller, Don Oliason, Randy Lobb and Gary Richardson and Myrna Walters.  Also in attendance was Dawna Eliason. Items from the March 4, 1991 Agenda were discussed as follows. 1.  Regulated Carrier Division Agenda dated March 4, 1991. Approved unanimously. 2.  Don Howell's March 1, 1991 Decision Memorandum re:  Rail Union's Request for Subpoenas, Case No. UP-R-90-3. Commissioner Smith moved approval of issuance of subpoenas by the Chairman. Commissioner Nelson asked what criteria should a petitioner show to get a subpoena? Don Howell responded.  In this instance these are the agents for three of the locations. Commissioner Smith said in the past have had cases where subpoenas were issued and it was for someone who had knowledge but didn't want to appear without a subpoena.  Some want them so it doesn't appear they are coming on anyone's behalf. Don Howell said Mular told him that these guys will be supporting union testimony.  Reason he wants to be subpoenaed is so no action can be taken against them. **Decided all you have to do to get a subpoena issued is to say - I want one. Commissioner Miller explained how the District Court does it.  Said his attitude is if they want them they get them and if someone wants them quashed they can say so. **Subpoenas will be issued, as requested. 12. Lori Mann's March 1, 1991 Decision Memorandum re:  Eden-Hazelton-Murtaugh Extended Area Service Petition; Case No. MTB-T-90-9. -2- **Bev Barker, Bob Smith, Tom Faull and Lynn Anderson were in attendance at this time. Commissioner Miller commented - we had broken this case up.  First was the hearing regarding toll plans and if we came to a yes answer, would devise some other proceeding to get to revenue shortfall, etc. Question first before Commission is:  do we feel testimony justifies EAS or some other toll plan? Commissioner Nelson commented he thought it was decisive. Commissioner Miller said testimony Lori Mann summarized is sufficient.  Asked how many witnesses there were? Lori Mann responded over 30. Commissioner Miller said he thought commissioners were unanimous on the basic question.  Asked staff what sort of ideas they had as to how we should proceed from here?  Would like detail on the revenue losses being required to be made up and how much will be recovered through EAS.  EAS would be first choice rather than new package. Lori Mann said there is $262,000 in revenue in these routes.  That is the revenue amount - approximation. Commissioner Nelson asked how many customers there would be getting EAS into Twin Falls? Lori Mann said 1,200 into Twin. Commissioner Miller said he wondered if we shouldn't proceed next to workshops by the parties to work on a plan.  Commission would like to see more than one idea.  Would be better if we saw preferred recommendation.   Commissioner Smith asked if there would be a rate group change? Belinda Anderson said yes.  Thought it was $1.00 a residence; $2.50 business.  Twin Falls wouldn't change. **Commissioners agreed to proceeding along those lines. Commissioner Nelson said he didn't think the solution reached here would be as good as one from a workshop. -3- Commissioner Miller asked how much time would be needed to work through the process? Belinda Anderson said she thought it could be done in three weeks. Commissioner Miller said then once the workshop recommendations are presented, should there be another hearing down there? Commissioner Nelson said he didn't know how useful that would be. Commissioner Smith asked if it was something Commission could do on modified? Decision was:  Take 4 weeks.  Have a workshop report to the Commissioners in 4 weeks.   Commissioner Miller said the remaining question is the petition to intervene of Dawna Eliason.  Don't know if commission needs to grant it.      Discussed whether or not you are entitled to intervene further if you are a petitioner. Commissioner Miller said he thought we should treat them as we started out, as a petitioner.  Return the petition to intervene. 3,  Belinda Anderson's March 1, 1991 Decision Memorandum re:  U S West Advice No. 91-2-S to change release numbers on the pages and to add a TSP reference. Commissioner Miller asked about staff putting in the sentence in the decision memo about not requiring public input. Belinda Anderson said they would remember to do that in the future - it had dropped off. Filing was approved. 4.  Eileen Benner's March 1, 1991 Decision Memorandum re:  Application to handle "O" emergency calls from Advanced Communications Technology (ACT); GNR-T-91-2. Commissioner Miller said he was wondering if this exempt process is turning out to be unnecessary?  Usually grant it but maybe having them jump through the hoops is okay, but will discuss it with the rules.  Asked if going through the exemption process is a good thing? -4- Eileen Benner responded don't even feel comfortable with them saying it but at least we are having them say that. **Will be further discussion on this. 5.  Eileen Benner's March 1, 1991 Decision Memorandum re:  Gem State Advice No. 91-1, Carrier Access Tariff blocking provisions. Commissioner Miller asked Eileen Benner if it looked okay? Eileen said yes - explained the filing. Approved. **Items 6, 7 and 8 from the March 4, 1991 Agenda were held - in Mike Gilmore's absence. 9.  Don Howell's February 26, 1991 Decision Memorandum re:  Contel and U S West Motion for Extension of Time to Answer, Case Nos. CON/USW-T-91-1. Commissioner Miller asked if all parties should be given until May 1 to respond? Commissioner Smith asked about the March 8 date? Don Howell said the real gist is May 1 to file numbers. **Granted parties until May 1 to file response. 10. Don Howell's February 27, 1991 Decision Memorandum re:  Informal Meeting with GTE Re:  Interlata Toll Discount Plans, GTE-T-89-7. Decided on a date for the informal meeting. Don Howell asked Commissioners if they wanted the informal meeting on the record? Commissioner Miller said yes.  Generally get the company's point of view on Lynn Anderson's memo.  Get a general assessment of the company's point of view. Commissioner Smith asked if the hearing is going to just take the morning? Don Howell replied GTE is prefiling tomorrow - will have a better feel for the length of the hearing then. -5- Decision was:  Sandpoint at 2.  Next day have an evening hearing at St. Maries - afternoon of the 20th in Post Falls. 11. Scott Woodbury's February 27, 1991 Decision Memorandum re:  Avoided Cost Reconsideration - IPC-E-89-11; WWP-E-89-6; PPL-E-89-3/UPL-E-89-5. Page 23 of the Decision Memo. I.  Does the Commission wish to reaffirm its maximum published contract length of 20 years and the attendant use of 20-year untilted rates? Commissioner Miller said he was concerned after rehearing, think that the 20 year untilted is pretty hard to defend.  The argument that it has the effect of shifting costs that really occur in years 15 thru 35 is pretty perspective and notwithstanding Tom Faull's value, think it probably is above avoided cost in the sense that the way he articulated it, is that it in effect....is guessing wrong on the lesser contracts.  Guess that if that is true, it is not so much an avoided cost, it is a QF contracting cost question.  So came to the conclusion that for that reason the 20 year untilted would be difficult to defend. Commissioner Nelson said he agreed.  Thought the IPC termination answered a lot of questions of inadequate forecasting.  If you had a disaster on your hands you could get out of it.  Would make that option available for the QF. Commissioner Miller asked Tom Faull if the 35-year with options was a little better than our 20-year untilted? Commissioner Nelson said to satisfy the QF industry, need to state that the onus will be on the utility and forego the overpayment penalty. Scott Woodbury said to the extent that you fail the QF should have the option to terminate, asked what Commissioners thought of PPL's argument .. the fact that costs are projected to escalate. Commissioner Nelson said he thought that was a good point.  Would have to have the information to answer that.  How much overpayment liability is there for cancelling that contract?  At 30 years there may be so little overpayment liability that it is almost a cinch they would want out. -6- Scott Woodbury said he thought there was a lot of case precedent supporting the 20 year contract length.  Think you can reaffirm 20 years and say QF option to terminate seems to be reasonable for extending that to 35 years much as they did IdaWest.  It is something they put before the Commission to justify moving off 20 years.  CEM had option to negotiate which was 25 year rate for 35 years.  That is something to think about. Tom Faulls said Willmorth made the point of over payments. Do think there should be liquidated damages over and above the overpayment damages. Commissioner Nelson said the likelihood that the QF wanted out would be overwhelming, especially at the end of 25 years where they are just receiving an energy rate.   Tom Faull spoke to the overpayment at 25 years.  Think we are already protecting them.  If inflation is a good number, think they are protected. Commissioner Miller said there are all the other protections.   Scott Woodbury said he didn't think there was a record to move off the 4.5% inflation. Commissioner Nelson said - should say we are comfortable with that, assuming that we would have to be wildly wrong in order to get out of these contracts. Tom Faull suggested 6 months of the contractual energy .... that would be a fairly substantial buy-out amount. Commissioner Miller said we are thinking of sticking with 20 year tilted as base case but saying that the 35 year longer contract with these various options are a possibility for the parties. Tom Faull said he thought adding the option is a justification for moving away from the 25. Commissioner Miller said he thought the thrust of the matter when we went to the 25 year contract was that we didn't understanding the tilting problem.  Didn't understand that problem would occur.  Thought there was a 35 year rate for 20 years.  That is not the case.  That realization dawned on us after 20 year decision was made.  Then we got all the way through the avoided case numbers and from the end result basis, the numbers came out low which lead us to Tom Faull's idea of untilted rate.  That is what happened. -7- **Bill Eastlake was in attendance at this time. Tom Faull said - also at the time the 20 year limit was placed, that the effect of the K factor was not as clearly understood as it could have been.  With that in place you almost have the same thing as now except hydro wouldn't have to come in and have a special hearing.   Commissioner Miller said he thought we should start thinking about too much of a penalty for thermal projects. Tom Faull said that is why he recommended unlevelized.  That fits thermal better.  They would be able to live with lower front end rate.  Think what you will find is if you published levelized and unlevelized you get both. Commissioner Nelson said then we get out of security provisions with unlevelized? Commissioner Miller asked - would any thermal be bigger than 20 mws? Tom Faull thought not. Commissioner Miller said there are now those bigger than 10 mw projects. Tom Faull said thermal wouldn't have to go larger. Commissioner Miller said just thinking of the food processing examples of thermal. Tom Faull said those would be larger than 10. Decision:  Admit error. Commissioner Nelson asked if QF wants out will there be liquefied damages? Commissioner Miller said he didn't know how specific we should be on the perimeters on the "opt-out" question. Say utility can't terminate during the time the project financing is an obligation of the company.  If we do that, the cogenerator could just keep refinancing. Commissioner Nelson said he didn't think he would include refinances.  Would speak only to original financing. Tom Faull said he didn't think he would limit it to the period of original financing.  Seems that would be beyond anything we would care to do. -8- Commissioner Miller spoke to Peseau's point - how much of an effect that will have on financing? Commissioner Nelson said that would really surprise him. Tom Faull said there was testimony about a 5-year cushion.  Might want to push it to 25 but not beyond that. Commissioner Nelson asked about the 5-year cushion? Commissioner Miller asked how it would work? Tom Faull explained.  It was drought-related.  Don't know if it is true that the financial community needs that or not. Commissioner Nelson asked if the Tuttle project would qualify for 35 years now? Tom Faull said at probably would now.  Explained that the Tuttle project has a clawback clause.  They have a fairly large liability in addition to the drought. Commissioner Miller said we could leave the perimeters pretty vague at the time. Commissioner Nelson asked if Commission would be making determination on the validity of the reasons for getting out of the contract? Commissioner Miller said Idaho Power's proposal was any cancellation would be subject to Commission approval.  We will have this subsequent review and there should be appropriate notice and leave it to the parties as proposed to Commission saying what those specifics should be. Commissioner Nelson said they should work it down to each company having a standard contract.  Don't know that we should set those terms in advance. Commissioner Miller agreed to III - Commission should publish non-levelized rates to be available in lieu of levelized rates at the QF's option.  Said he didn't think we can take up the K factor in this case. Commissioner Nelson said it was not a question in the rehearing. Scott Woodbury said Pete Richardson attempted to raise it. -9- Only change is change in utilities low surplus balances and is that a reason for moving off 20 years?  Think that is the only factor that comes into play. Commissioner Miller said concern has been creating preference for hydro and not thermal.  Don't want to charge off and open up a new review of the '292 case but would like to think about discussing informally if we have the right to policy there.  Think there is some potential to thermal out there and don't know whether we want a policy that makes that difficult to get. Tom Faull said with the unlevelized rates being published, will see what happens. Commissioner Miller asked about some informal discussion with utilities and industry and informally discuss it to see what the possibilities are.  Am concerned about that.  Want to make sure we have the right policies in place. Commissioner Nelson asked about revisiting biennially?  Thought that would mean a constant case. Scott Woodbury said it would not be looking at underlying methodology. Commissioner Miller asked if we can in this case, change a role we established in another case, this is a reconsideration in the avoided cost case, the review is in the RMR case. Tom Faull said it was in the generic case. Commissioner Nelson suggested two years from the close of this case. Tom Faull suggested saying it will be on the Commission's own motion and will be limited as to issues. **Parties have option at anytime to come to the Commission. Commissioner Miller asked if our biennial review anticipated that it would spring to life automatically? Scott Woodbury suggested having the utilities file reports every 2 years to see how they are doing. Commissioner Miller said maybe we should say we will monitor these developments over the next period of time and later decide if we need to have biennial review (leave the time up in the air). -10- Commissioner Smith said the longer we can defer it the better off we are. VII - Does Commission want to specifically state that the "time value" of front-end-loading in utility revenue requirement treatment of the SAR is mathematically accounted for in the "tilting" computations? Discussed time value of front-end-loading. Commissioner Miller said he didn't know if we have ever said we have seen this argument many times and don't keep trying to make it or should we just let them make it? Tom Faull suggested it might be useful to get the word out that you do know the difference and they are compensated for it. Commissioner Miller said Peseau and Slaughter always start their testimony with this.  Perhaps we can say we have heard this testimony several times before. Commissioner Nelson said if we are so far off that the QF wants to see to some other area for enough money, don't know if we need right of first refusal, don't know if Idaho Power would want it for that.  Think first thing to be negotiated would be a wheeling contract. Commissioner Miller brought up fuel escalation cost. Commissioner Nelson said they should only have a contract for as long as they can guarantee the fuel source and come back when that is up and negotiate if they have a viable project. Tom Faull said he thought that was reason to look at K factor. Commissioner Nelson said if they go with unlevelized rate you don't have to worry about that. Commissioner Miller said we have never suggested waiving the K factor. Tom Faull said he thought anybody could do it anything.  Think the QFs have to specifically be told you can come in if you want. Commissioner Miller said he thought he would be silent on that at this time.  See what feed back Commission gets after this order goes out. -11- Meeting adjourned.         DATED at Boise, Idaho this       day of April, 1991.                           PRESIDENT                           COMMISSIONER                           COMMISSIONER ATTEST:                               Commission Secretary 0027M