19910827.docx

Minutes of Decision Meeting
August 27, 1991 - 1:30 p.m.
In attendance:
Commissioners Joe Miller, Ralph Nelson and Marsha Smith; and staff members Mike Gilmore, Scott Woodbury, Lori Mann, Bill Eastlake, Lynn Anderson, Gary Richardson, Stephanie Miller and Myrna Walters.  Also in attendance were:  Mary Hobson and Lynn Cundick from U. S. West.
At this time there was further discussion on Intervenor Funding - USW-T-91-2 & 6.
Commissioner Miller asked Lori Mann what her recommendation was?
Lori Mann said only classes she knows about are residential and business.
Discussed how to spread the $5,000 intervenor funding.
Commissioner Miller said he would do it for the residential and business customers - none to unregulated side - split between business and residential.  
**By revenues - have U. S. West make the calculation.
Commissioner Smith will dissent - 2 to 1 approved $5,000 for intervenor funding to ACLU.
14. Birdelle Brown's August 21, 1991 Decision Memorandum re:  Case No. POT-T-91-1 and INL-T-91-1.
Mike Gilmore's suggestion was a new case.
Commissioner Miller asked what would happen if time ran out on reconsideration?
Commissioner Smith said she was assuming if they disagree they will come to Commission for decision.
**Bev Barker was in attendance at this time.
Commissioner Miller asked - what about a new case requiring a settlement conference?
Commissioner Smith said get them together with their certificates.
Commissioner Miller asked Birdelle Brown how it was progressing?
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Birdelle Brown responded she could be ready within the next week.  Problem with old case is that the time limit is ending.
Commissioner Miller asked if it would be reasonable to require report in 60 days?
Staff agreed it would be reasonable.
Mike Gilmore will draft order.
8.  Eileen Benner's August 23, 1991 Decision Memorandum re:  Idaho USF - 1990/91 Results; U-1500-174
Eileen Benner gave an overview of USF results.  The fund is prospering.  It grew again this year.  No new disbursements or increases in disbursements in the last year, although Commission took action to reduce surcharge income, it didn't reduce it much at all.  Then the addition of interest income and a little bit of growth has added more funds than anticipated.  Reviewed the balances.  Said all carriers operating in Idaho know they are supposed to participate.  Explained exemptions.  Although there may be some that have not responded, they are not likely to contribute much money.  Think there is fairly good handle on those who are to pay.  Reporting has gotten better.  Still have problems with GTE misreporting.  There is an outstanding case on that.
Commissioner Miller asked about the $290,000 that Alyson Anderson just found?
Eileen Benner explained.  Said Alyson is trying to get more workpapers from Craig Phillips to show the overage.
Commissioner Miller asked what are the recommendations for surcharge for the upcoming period?
Eileen Benner said of the six companies receiving funds this year, five are in a position to decrease.  They are not in a position to get more funding, but doubt Inland will come in with rate case to shift revenue.  Don't see any other company coming in.
Commissioner Smith asked about Century?
Eileen Benner said they re not actively speaking to it.
Think it would be hard to get below the 1 mill surcharge.  Recommended going down to 1 mill and retaining 3 and 7 surcharges.  That will draw down about $297,000 here.
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Commissioner Nelson asked why it would be harder to assess 1/2 mill.
Eileen Benner explained some only have two digit pricing.
Commissioner Miller said the other option is to eliminate surcharge for a year.
Eileen Benner said she hated to lose touch with the companies.  It would also require rebilling.
Commissioner Miller said he was hoping to whittle down the surcharge further, but this recommendation is compelling.
Mike Gilmore said Title 62 rules will compel issuing an order.
Commissioner Miller said for purposes of the order, on the one hand could have a fairly full explanation of how the fund has gotten built up.  We did that at the start (built it up) so that when the surplus reached a certain level, invested at a safe rate, and that we are working to cut that back.  Want to have a good written record.  COuld be subject to criticism for build-up.  Need good explanation or we could be completely quiet about it.  Suppose the first strategy is the best.  
Commissioner Smith said she would like to enunciate drawing it down.  Would like to say something about the previous administrator.
Commissioner Miller said perhaps we shouldn't say that.  We hired him.
Commissioner Nelson said we could say - we anticipated funding requests that didn't materialize.
Commissioner Miller said something we can point to that articulates our policy and insulates us from criticism for letting it build up.
Discussed what U.S. West's position is on what the denominator should be.
Commissioner Miller asked Eileen Benner what her recommendation was on this?
Eileen Benner said initially when U. S. West first mentioned it, as long as we are applying benchmark the same each year, it wouldn't matter if it could have been a little higher or lower by using different minutes for calculation.  As long as we all agreed on what we included and divided it
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by minutes of use and came up with revenue per minute, and use that as benchmark, felt that taking it to get closer to actual was not necessary.  On the other hand, performing the calculation as U. S. West prefers is a little more accurate way to state the rate per minute but billing and collecting variance, don't think the fund will be harmed by leaving it as is or will not be harmed by changing it but will have to go to the trouble of changing this year's funding levels.  But it is fairly easy to do.  Have had trouble coming up with decision to do it or not.  Think long term is reason minutes are decreasing is that more and more carriers are going to using special access and more and more business customers are doing that.  For instance, Mtn. Bell's access revenue is more than toll revenue.  It is just one of those things that is in the industry.  Am not sure our calculation is not accurately reflecting that.  These are the reasons rates are going down.  That is how U. S. West wants to do it.  Eventually it means lower access rates which will help expenses go down.
Commissioner Smith asked if it made us look better?
Commissioner Miller asked other than structural change, would there be anyone who would be hurt by U. S. West's method?
Eileen Benner said she couldn't think of anything right now.
Ron Lightfoot also said no.  Objective was just to get more accurate picture of rate per minute.  Can't visualize how someone would be hurt.
Commissioner Miller asked if it had been discussed with the independents?
Eileen Benner said only the industry board.  Didn't have monetary affect to report.  Reaction was it was generally okay.
Commissioner Smith asked who board representatives are?
Eileen Benner listed the representatives.
Commissioner Nelson said he was wondering if applying it to the small companies, if it wouldn't be more appropriate to use what is more appropriate for them - CCL?
Eileen Benner responded - in general it is mostly higher CCL.  It all comes down to whatever you do to allow lower rate, means access picks up lower amount and USF picks up difference.  Southern Idaho alone is 69%.
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**Approximately 15% of access minutes are U. S. West.
Commissioner Miller said he didn't think we need a highly formal process, but wonder if we shouldn't run by the industry board in a more comprehensive way to assure there aren't any strong objections to it.  If not, would be ready to do that.
Eileen Benner said we have numbers now.  The effect wasn't known until a couple of days ago.
Commissioner Smith said she thought anything we can do to alleviate any upward pressure on toll rates is positive.
Mike Gilmore said the rules say our order is to be out by September 1.  Doesn't sound like there is time to cycle it through by then.
**Surcharge level will be set by September 1.
Eileen Benner said she didn't see why you have to address this in an order at this time.  There is going to be a reduced statewide toll and lessened toll access.  Just changing the method and making it a little lower, would spur you to contact companies.
Mike Gilmore said unless some company fell below 125% of statewide average and lost their funding.
Eileen Benner said this does not cause anyone to come in.  We never speak to the difference.
**Need to know about Albion, Cambridge, Rockland.
Mike Gilmore repeated what the statute says about the 125%.  Cambridge is the only company that wouldn't meet the new funding threshold.  All the others require more money.
Commissioner Miller asked - what do we do with Cambridge?
Eileen Benner said - leave it alone.
Commissioner Miller said just in practice having people fall in and out each year is not what we had in mind.
Mike Gilmore asked about Inland?
Decision:  Do order setting surcharge.  Wait to hear back from informal industry board on calculation method.  That is all Commission really has to do.  There will be a cushion.  Total revenue is 5.6 million.  $400,000 of that is 8/9%.  Order will grant petition for reconsideration and wait for industry board review.
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**Number will be the one Eileen Benner checks out.
Commissioner Smith asked why they set these this way?
Eileen Benner explained.
Birdelle Brown asked about the Inland tariffs.  They would like to change the local rates per this tariff, is it all right?
**Decision was rates are okay - minute entry should be done approving local rates, without access rates; effective on one days notice.
9.  Lori Mann's August 23, 1991 Decision Memorandum re:  WWP's Resource Management Report; Case No. WWP-E-91-2.
Commissioner Nelson said he thought a letter to Redmond was the proper procedure.
Commissioner Miller said there was a public hearing on the comments.  What is the effect of reviewing the report?  Washington, Oregon and Idaho all do it differently.  Think Oregon order carrys with it a degree of approval in that there is some understanding that expenditures under the plan have some presumption of prudence.  Washington didn't have findings.
Bill Eastlake said Washington companies have formal requirement to file.
Think it is too long a step to go from barely looking at it to formal approval.  Think we have stepped up the ladder.  Seriousness with which we treat requirement for report, think maybe next time around (2 years from now) might be time to do something more formal.  Quality has improved each year.  Unless we have something more than a order, legislative mandate, wonder if much more formal than acceptance is called for.  Don't think we have legislative authority to do anything much with this.  Think we can analyze it harder and make suggestions and possibly two years from now, could say resubmit.  Am real comfortable with just acceptance now.
Lori Mann reviewed what Commission did on Boise Water.
Commissioner Miller said he wondered if we want to approve?  Suggested acknowledging receipt and saying it complies with original order and wondered if we want to point out any areas that we thought should have special emphasis in next report.  Basically, just take Bill Eastlake's comments.
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Commissioner Nelson said it wouldn't hurt to say it was a large improvement from the first effort.
Commissioner Smith said she would suggest saying it is a valuable tool for them and for us.
Bill Eastlake spoke to what Washington did.
**Issue notice that report has been received and case can be closed.  **Also letter to Redmond.
11. Mike Gilmore's August 20, 1991 Decision Memorandum re:  Commission Investigation Whether Idaho Code 67-2302 applies to payment for utility services - Case No. GNR-U-91-1.
First question was:  Does the Commission have jurisdiction to investigate whether provisions of utility tariffs providing for interest payments on bills owed by statute and local government are consistent with the provisions of Idaho Code Section 67-2302?
Commissioner Smith said yes.
Commissioner Miller said he thought 701 and 702 support the Commission's jurisdiction.  Don't think there is any question that the late charges are within 502 and sending out late notices.  Larry Ripley's cites were persuasive.
Question 2 - If the Commission has jurisdiction to address the relationship between utility tariffs providing for payment of interest from all customers (including those who are state and local governments) fewer than 60 days after billing and the provisions of Idaho Code Section 67-2302, are such tariffs inconsistent with the statute?
Commissioner Miller said he thought he could come to the conclusion that 2302 is a prompt payment section and was not designed to give government agencies a 60 day break and our rule the way it is is fine and it is not inconsistent with the statute and tariffs in compliance with that rule are applicable.
Commissioner Smith said she would like to find no conflict.  Can get there too.  Does 2302 authorize interest?
Commissioner Nelson said - can't find that 2302 authorizes payment on less than 60 days.  This being the latest statute passed, think it would take precedence.  Am having a lot of trouble getting to the point where he thought interest can be charged to the state on shorter than 60 days.  Think we should say so and Idaho Power should get that statute changed.
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Mike Gilmore said in researching, found no statute regarding interest.
Commissioner Miller said in practice, didn't find out how much of a problem this really is.  Interest is not charged until the next billing at which time they are usually paid anyway.
Commissioner Nelson said the taxing districts know approximately what the bill is.  It would be within their power to say I authorize you to pay any utility bills up to x number of dollars.
Mike Gilmore said he didn't know if counties can authorize bills until they are actually presented.
Commissioner Nelson said it is only a problem if they make it a problem.  If we do determine that they have 60 days before interest, we would have to say if there is any discrimination it is the legislature that decided, not the Commission.  We are just operating within the statutes and the legislature has decided to exempt state agencies for 60 days.
Bev Barker said right now there are exemptions in the tariffs for customers who change payment dates.
Commissioner Smith said she thought Commission has to affirm the tariff is a contract.
Mike Gilmore said historically Ripley has argued a tariff is not a contract.  Think it is contract made in law.
Commissioner Nelson said without saying that agencies should be able to take 60 days, should say that the utilities can't charge late payment fees.
Commissioner Miller suggested Commission could find the statute and our rule are not inconsistent on everything but for the late payment provisions and then say that in our opinion it does not appear state agencies have to pay late payment charges until 60 days.
Commissioner Nelson asked what would happen if utility wants to ask for deposit?
Mike Gilmore said they could ask.
Commissioner Miller said Commission could adopt Mike Gilmore's theory that this case was improvidently opened.  Somehow think the agencies are wrong but getting there is the problem.
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Commissioner Smith said it is a prompt payment statute.  So if you want to find there is no conflict but they don't have to pay late payments for 60 days, that is okay.  Is the application of late payments mandatory?
Our rule does not speak to late payments charges.  There is no conflict with the rule.
**Just find no conflict with the rule.
Mike Gilmore explained the issue we defined was tariff, not rule.
Commissioner Nelson asked - aren't we really throwing up our hands?  Would say:  We find no conflict with tariffs and statute except that we do find that the state agencies can't be charged interest or late payment charges within 60 days of the billing date.
Bev Barker asked if tariffs have to be changed?
Commissioner Nelson said he didn't think so.
Mike Gilmore said they were trying to provide a date after which late payments could be tacked on.
Commissioner Nelson said he thought that was 60 days.
Commissioner Miller said he guessed Commissioners all agree it is a prompt payment statute and it is not designed to permit agencies to take 60 days to pay.  In no way was it intended that agencies could delay payment by using the prompt payment statute.  Commission approved tariff requiring payment within a lesser period is not in conflict but the statute seems to say that state agencies are not obligated to pay late charges.
**Agreed to that.
Adjourned at 3:30 p.m., to reconvene at 10:30/11 - Wednesday, August 28.
MINUTES OF DECISION MEETING - AUGUST 28, 1991 - 11:30 a.m.
In attendance were:  Commissioners Joe Miller, Ralph Nelson and Marsha H. Smith.  Also in attendance were staff members Scott Woodbury, Stephanie Miller and Myrna Walters.
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Topic of discussion was Item 15 from the August 26, 1991 Agenda - Scott Woodbury's August 22, 1991 Decision Memorandum re:  Case No. WWP-G-90-2 - Supplier Settlement Payments.
Commissioner Miller said first question is:  whats the fair result?  Suggested starting with discussion of whats fair.
Commissioner Nelson said he has come down to the opinion that while this is not a gas charge, it is a buyout  of a contract and its related to the gas charge.  It comes down to the point that we have allowed Washington Water Power a certain rate of return and they take risk beyond that point except we pass thru cost.  They are not at risk for the cost of the gas.  Think where we are not going to agree is that from his point of view this was part of the cost of gas.  While this wasn't an anticipated cost at the time, it is a cost of the gas.  One of the options Northwest Pipeline had was to put a volumetric surcharge on their throughput.  That would have recovered the entire take or pay cost ultimately from the ratepayer.  That would have been a cost for gas.  They saw the handwriting on the wall of transportation and opted to pay the 25% because they made the decision they were never going to get their cost back on volumetric surcharge because of the volume of gas going through.  If Northwest Pipeline had chosen that, we wouldn't have been in this case.  To counter the argument of ratepayers not being at risk, we have already put them there.  If gas goes up he pays, if it goes down he benefits.  The parties that are going to be asked to pay a big chunk of money (like Potlatch) have benefitted from transportation over the past several years.  If we can determine the amount of take or pay because of PGE, it should be a company cost.  Balance of it should be passed thru.
In 1987 when WWP ran pipe out of Pacific Gas Transmission and started taking gas from them and reduced take from Northwest, that reduced take or pay costs.  WWP benefitted in that we didn't make them recover all the benefits of that exchange.  There are some benefits there that were not passed through to the ratepayer that should be passed on to the ratepayer.  Think that is a calculation that can be made.  If not, we might have to make an assumption.  We know how much they took from Pacific.
Commissioner Miller said if Pacific wasn't there they would have taken it from Northwest.  Northwest was closed at the time.  It would have been transportation gas, sales gas.
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Commissioner Smith asked Commissioner Nelson if he would pass it all through to the end user except for the PGT gas?
**Discussed the figure on Page 10 of the Decision Memorandum - $387,827, 25% of the total - 1.2 or 1.3 million is the total to be recovered.
Commissioner Nelson asked - didn't we determine the total savings was approximately 3 million?  They have paid back 1 million of that?
Scott Woodbury said in the order sharing benefits, Commission said you established rate of return was this, you didn't make it, we will allow you to keep some of the benefits for that.
Commissioner Nelson said that was a settlement.
Scott Woodbury said you can distinguish between those that were sharing of benefits and now we are dealing with the costs of those benefits.
**Gary Richardson was in attendance at this time.
Commissioner Smith said if you have already decided WWP can keep 2/3rd, aren't you now asking them to give part of that back?
Scott Woodbury said what we are down to is costs.
Stephanie Miller said - couldn't figure out any way to cleanly calculate a number.  The benefits are supposedly this new order.  If the only benefit was from 1980 whatever to 1985, the whole idea is the benefits are hopefully lower rates long term.
Commissioner Nelson said - but those do all get passed thru.
Commissioner Miller said he would have to have Commissioner Nelson repeat his thoughts.  He is thinking purchased gas cost is what current ratepayers pay now, they will use that during period it will be in effect.  It is for gas not purchased a number of years ago, not one single therm will flow as a result of paying this cost.  No current ratepayers will receive any gas because they are paying this additional money.  Is hard to see it as purchased gas cost.  Don't think FERC thought it was current cost.  They thought we could stick some of it on the LDC.  It seems that this sort of a risk is one that we compensate the company for in the rate of return.
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Commissioner Nelson said Northwest Pipeline had Options A and B.  If they had taken Option A, would you have disallowed the volumetric surcharge or would you have taken that out of the gas tracker?
Commissioner Miller said it seemed to him either way you do it you are adding payment for gas nobody ever bought.  Whichever method, wouldn't change the nature of what this is.  It is a buydown of a liability.
Commissioner Nelson said exactly, but if you go with Option A you don't have an order speaking to 25, 35 and 50.  You say Northwest is going to put a 10¢ a therm charge on all gas it flows through.  That will be part of the cost of gas for the next whatever the volume is, for the next 18 months, whatever.
Scott Woodbury said had Northwest gone with volumetric surcharge, they would have been challenged by LDCs regarding prudence of contracts.
Commissioner Nelson said one of the reasons they went with Option B is they negotiated with LDCs.
Scott Woodbury said none of the customers opposed B.  There were lots of risks in Option A.
Commissioner Smith said we are talking about WWP, not whether the pipeline got the money.  FERC said company would have to deal with this.
Discussed what WWP's choice means to the customers.
Commissioner Smith reviewed what Commissioner Nelson said.
Commissioner Miller said he thought his reaction was the form in which this money is recovered isn't the deciding thing.  The importing thing is the purpose of the underlying charge, the form of it ... why would that be the determination on critical issue.
Commissioner Nelson said it is the way he got down to rationalizing it as part of the price of gas.
Commissioner Miller said his thinking is it is not part of the tracker.
Commissioner Smith asked Commissioner Nelson if it was  his theory is this is another factor in the price of gas and it should be passed thru?
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Commissioner Nelson said it is an unusual cost but it was necessary in order to obtain the price of gas that the customers are enjoying today.
Commissioner Smith said - and to the extent that Potlatch changed to transportation gas, can contribute to the assessment WWP got so it is not unfair.
Commissioner Nelson said they got a benefit (by going to cheaper gas) that the company is now being asked to partially reimburse producers for.
Commissioner Miller said he thought it was questionable whether the take or pay charges of Northwest were the thing that made the new market structure possible.  The new lower priced gas exists because we had to buy our way into this new regime, Potlatch has a reasonable argument that this was going to occur regardless of take or pay and take or pay was not a way we got this.  This was just a marketing way of getting rid of excess capacity and you would have gotten to ... and were other things at work to get you to cheaper gas.
Commissioner Nelson said but WWP signed these contracts to get lower gas for Potlatch and Potlatch is then able to decide whether they want that gas and just bypassed and gone on and on.  They did do that.  It would have been a stickier issue.
Commissioner Miller said there are all the other gas ratepayers that....still don't know what he thinks about Potlatch but is thinking we are representing primarily the residential and small businesses and they don't have a choice in this and they didn't cause this.
Scott Woodbury said he supposed the restructuring created the emergencies.
Commissioner Nelson quoted WWP testimony.  WWP contended it was for current costs.
Scott Woodbury said staff tried to investigate this.  It was hard to get into Northwest Pipeline numbers.
Stephanie Miller said there wasn't this huge liability for past loads, but it was primarily contract reparation.
WWP contributed to their own deficiency by taking from PGE.
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Commissioner Miller asked Commissioner Smith if this helped her?
Commissioner Smith said she now understands Commissioner Nelson's position.  Asked Commissioner Miller what his was?
Commissioner Miller said his position is on some equitable basis these costs should be borne by WWP and not all by ratepayers.  That is the fair result.  The general approach that has been adopted for working this cost out of the system has been you separate it as widely as possible.  When this cost occurred as a result of forces that nobody is at fault for, the rationale is a cost separating through the entire industry and producers have a portion of it.  Interstate pipelines have a portion of it.  Retail ratepayers have already eaten 50%.  On just that equitable basis, didn't seem right that the only part of the industry that doesn't have any responsibility is the LDC leg, particularly in this case where WWP got those PGT benefits.  
Scott Woodbury said he was not clear that their producers would have to eat any of it.  It seems from FERC, but haven't read anywhere where they ate 25%.  They were saddled with take or pay.
Commissioner Smith asked what staff position was?
Stephanie Miller said - think what staff said was:  Basically agreed with the company but they were incorrect when they said they did not receive benefit.  Staff would think it should be flowed through to ratepayers.
Commissioner Nelson said - just in trying to develop something here - if you took the 25% - 10% would be about $500,000 either way - 1.2 million is the direct bill.  If you want to be a number on benefit from PGT that company should pick up would say $500,000.
Meeting adjourned.
Signatures on next page ...................
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        DATED at Boise, Idaho this       day of October, 1991.

PRESIDENT

COMMISSIONER

COMMISSIONER
ATTEST:

Commission Secretary
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