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Home My WebLink About19910410.docx Minutes of Decision Meeting April 10, 1991 - 2:00 p.m. In attendance were: Commissioners Joe Miller, Ralph Nelson and Marsha H. Smith and staff members Brad Purdy and Myrna Walters. Topic of discussion was Idaho Power Case - IPC-E-91-5 - Request for Declaratory Ruling in Jay Hulet matter. Commissioner Miller said this is a difficult case because on the one hand you want to uphold certain principles but also don't want to force him (Hulet) out of business by enforcing those principles. Asked to discuss tariff issue first. Said there are two basic theories of why he has to pay full advances. (1) Didn't comply with the tariff and (2) Did he comply with the tariff that seasonal advance aren't required and even if he didn't, what is the overriding effect of the payments for 1990? Commissioner Nelson said what really hurt him on the tariff issue was: if he had paid the $50,000 in November, if he had paid that in November and he owed $23,000 and December refund had been $14,000, would have come in with the argument he had paid $510,000 of the $550,000. How close can he get - but he didn't. Commissioner Smith said he made an outstanding effort to be in compliance. Personally wouldn't be offended by using the bankruptcy order on establishing February 1 date as his final due date in which case under the terms of the tariff he timely paid all of his 1990 irrigation bills and would only be required to make a monthly deposit under Schedule 24. It superseded the terms of the tariff for him (the bankruptcy order). Commissioner Miller said if you held him to the terms of the tariff, then you would in effect, nullify the bankruptcy order. Commissioner Smith said it wasn't dismissed until January. In his mind it was in force until the dismissal, so it was timely. Don't think that does our tariff any disservice. Won't be the basis for others. Don't think it implies non-compliance of our tariff. Commissioner Miller said he thinks we should say he did comply with Schedule 24 in that the final bill is the final bill and it is not when the tax refund shows up. -2- Commissioner Smith said in his case the tariff language was superseded by the bankruptcy court order. Commissioner Miller said - do think if we use the Tariff 24 timetables and ignored the bankruptcy order, he didn't make it. If we don't give him the benefit of the bankruptcy timetable we would be attempting to override the bankruptcy order? Commissioner Nelson said - think we are okay on the addendum. Commissioner Miller said it was drafted by Idaho Power Company and Hulet got it from his lawyer. Commissioner Nelson said that was Brad's question - it became obvious that his lawyer looked it over. Commissioner Smith said - don't think we can relieve him of the obligations under the contract. Think it is a prudent provision while there is still the '88 amount outstanding but could note that the addendum was agreed to by the company and the customer, that Idaho Power and the customer are free to renegotiate the addendum and Idaho Power needs to look at its security and the probability of being paid the '88 obligation and if they insist on demanding $300,000 deposit, they are likely to not get anything. He will be out of business. Think a signal should be given to renegotiate. Commissioner Nelson said one of the problems with that is we came to the $160,000 as a reasonable estimate of the power bill because of water in the reservoir which he didn't have. It turns out that $160,000 wouldn't cover half the bill. He could come up with $100,000 and could come up with $65,000. Really figured that the low water bill would be $175,000 and we fudged that. When it was $424,000, the next year, didn't want anything to do with him. It was a negotiated seasonal advance based on current conditions rather than historic useage. Can't say it was a bad deal because they got paid, he got out of bankruptcy. Commissioner Smith said to tell them he did right by you last year, you should give him a chance this year. Commissioner Miller said the whole point of getting him through a bankruptcy was to get him self-sufficient and on his feet again. Now for us to render all that work to no avail by insisting on a legally-justified amount would tip him into the creek again. -3- Commissioner Smith said regardless of what Commission intended, he signed the addendum. He knew he had choices. He would have come back to the Commission. Don't think he really thought he had no choices. Commissioner Miller said don't think we can rewrite the contract or set it aside for duress. We can figure out what the contract means. Unless the Grindstone Butte contracts apply to all contracts. Changed the rate in FMC contract. Brad Purdy asked what effect bankruptcy had on the contract? Commissioner Smith said court said the dismissal of bankruptcy was conditioned on compliance with the addendum. (It was in the stipulation). **Read from the stipulation - debtor agreed they shall comply with agreement with Idaho Power Company. Agreed first with addendum and agreement of August 1990 that they would abide by them in order to dismiss bankruptcy. Commissioner Nelson said if they hadn't intended that they could comply with the addendum, shouldn't have gotten out of bankruptcy. Brad Purdy said their protection only extended as long as bankruptcy extended. Quoted from the order regarding Idaho Power Company. The Addendum is status quo. Commissioner Smith asked about the bankruptcy dismissal order. In her mind he agreed twice - in May of 1989 and August of 1990. There is no way we can relieve him of that but want to give Idaho Power a hand signal about whats reasonable under the circumstances to give them the best option to get back their '88 payments still owing. Won't do any good to have security interest in crops that are not grown. He made an effort in '90 to keep his bills current. Commissioner Nelson said Idaho Power was nervous about the $400,000 bill. Commissioner Smith said - think that is the best we can do for him. Clearly need to say our tariff means what it says. It is the addendum that gets him. Commissioner Nelson said that was an agreed-to provision at the meeting. Nobody objected to the seasonal advances in the following years. The negotiated point was the amount of the seasonal advance that year. -4- Commissioner Miller said even if he is correct when he alleged that that term was added after negotiations here, fact is he still signed it. He hasn't show us duress. Even if he did, couldn't set aside the contract. Commissioner Nelson said the Addendum itself follows Tariff 24. Commissioner Smith said it is much more liberal than most irrigators actually. Every farmer has a hard luck story every year. Commissioner Miller asked how much does Hulet say he can do this year? Commissioner Smith said all he said was he couldn't do $300,000. Commissioner Nelson said if we gave Idaho Power some leeway to negotiate that contract, we really didn't want to know what he could pay. He does have tenant farmers. Commissioner Smith said his lawyer brought up at the end that it was ... a policy to not turn an irrigator off in the middle of the season. Larry Ripley responded why the pumps aren't turned off in mid-season. A whole farm economy is relying on a crop being grown. Cannot cut them off mid season. His lawyer suggested paying month by month and cutting him off if he didn't pay. Brad Purdy said Hulet has paid $50,000. Said amount they want is excessive. Commissioner Smith said Idaho Power will go by nameplate rather than past experience. Think the ones he claimed got excessive high ones, if he cut off those locks, he could run those. Meter is on. There are three meters that serve a river pump and out of his reservoir. For those three, Idaho Power demanded what he thought was unreasonably high. Asked him what was stopping him? Brad Purdy said there is the question of what is a proper seasonal advance. Commissioner Smith said the first year it is nameplate and after 2 or 3 years they will talk to you. This guy should have plenty of history. Commissioner Nelson said he guesses there is no question of why he didn't grow wheat rather than sugar beets. Don't know how those setaside payments are made. -5- Commissioner Miller asked - is there anything we can do about the fact that when the '88 agreement was made he was farming two places and now he is only operating one. Realize that is why Idaho Power would come down to $300,000. Is there anything there - there is obviously going to be less revenue than when agreement was made. Less revenue to fund repayment. Commissioner Smith commented there would be less expenses also. Brad Purdy said maybe you could order company to substantiate their deposit amount. Maybe they could come down. Commissioner Smith said maybe all you can tell them is they can ask for advance but they could be fools to cut off their nose to spite their face. Also tell Mr. Hulet if he thinks the advance is unreasonable, talk to our Consumer people about it. Commissioner Miller said rather than issue a written order, maybe one way to do this would be to have them come in tomorrow and announce it from the bench and that would give us an opportunity to go through the findings in favor of the company but then put in our observations that insistence upon an unreasonable methodology for advance would be to the company's detriment and it would be a mistake to insist on a payment that would have the effect of causing them to loose the amount of the last three payments (approximately $240,000). Commissioner Nelson said he was not sure that what they are asking is unreasonable or whether or not he could come up with it. He did have the option to stay in bankruptcy. Being in bankruptcy probably "grates the hell out of him". He knew he didn't comply with the tariff. Commissioner Miller asked why he went into bankruptcy, was it solely because of his Idaho Power bill? Commissioner Nelson said he didn't know for sure. He did tell us a few years ago he took the Idaho Power money and paid it on a mortgage. Idaho Power is mad about that. They paid a private mortgage-holder rather than Idaho Power. Commissioner Miller said he can understand their position but there seems to be significant effort to keep paid up (keep his bills current). Rather than stiff-arming him would have bought him dinner and said good job. -6- Commissioner Nelson said he thinks there is animosity built up. He did what every irrigator is expected to do, he paid his bills - he did what we all do, paid his bills. Brad Purdy said he did what he had to do under the bankruptcy order. Commissioner Nelson said he just knew every year is going to be better. Don't know if we want to send too strong a message to Idaho Power. Commissioner Miller said he thought the advantage in getting them all in, is to have Hulet there and let him know what the rules are. Commissioner Nelson said maybe it would be important for Adamson to hear she signed the addendum, he got his client out of bankruptcy. Commissioner Miller said maybe if they are in the same room, they can come to some accord. If we had them in, can tell them if parties aren't able to come to an understanding and if Idaho Power insists on that full amount, it will jeopardize their ability to collect the past amount. Only thought in getting them in is, would like to see them work something out and question the timing. If we get them here and are looking at them ....... Brad Purdy said company agreed to turn on the pumps for $50,000. Harrington said that was a mistake. Commissioner Nelson said if we get them in, will there be anyone in the room who can negotiate? Commissioner Smith said on timeliness, we could fax the order to the parties. Either way is fine with her - call them back in or issue an order. Don't know what Adamson charges Hulet. That may be a concern. Commissioner Nelson said it would at least open a door for negotiating if we bring them in. Commissioner Smith said could see how this good the language is in the order and then decide. Points to discuss are: tariff, addendum and bankruptcy. -7- Commissioner Miller said if we can get the order out tomorrow and can agree on how strong the language should be on negotiating the contract, order would be sufficient. Say contract is privately negotiated and they can renegotiate. Commissioner Smith said he has made good on his payments. That should be worth something. Suggested saying you can hold the line on a first year customer but what about a customer who last year made a good effort and the only way you can get the money is if he stays your customer. Meeting adjourned at 2:45 p.m. DATED at Boise, Idaho this day of May, 1991. PRESIDENT COMMISSIONER COMMISSIONER ATTEST: Commission Secretary 0038M