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MINUTES OF DECISION MEETING
February 18, 1992 - 1:30 p.m.
In attendance:
Commissioners Marsha H. Smith, Joe Miller and Ralph Nelson and staff members Mike Gilmore, Scott Woodbury, Brad Purdy, Tom Faull, Bev Barker, Eileen Benner, Tonya Clark, Terri Carlock, Gary Richardson, Syd Lansing, Stephanie Miller, Jim Long, Jack Taylor, Lynn Anderson and Myrna Walters.
The following are Minutes transcribed from notes taken at the February 18 Decision Meeting.
Items considered at this decision meeting are those listed on the February 18, 1992 Decision Meeting Agenda.
1. Eileen Benner's February 14, 1992 Decision Memorandum re: GTE-NW, Inc. Advice No. 92-1 - Grandfathering of Special Access Over Metallic Facilities.
Commissioner Nelson said it looked okay to him.
Other Commissioners agreed.
2. Terri Carlock's February 14, 1992 Decision Memorandum re: Rural Telephone Company - Authority to Issue $633,000 REA Debt - Case No. RUR-T-92-1.
Commissioner Smith asked if the financing was for additional facilities?
Terri Carlock responded yes - they started with used equipment and this is upgrade. Most of the customers are existing.
Commissioner Nelson asked if this wasn't some refinancing also, not all new?
Commissioner Miller said he presumed REA has already approved this.
Commissioner Miller asked Terri Carlock if she had looked into this as to why they need to refinance when they have only been there two years?
Terri Carlock responded. Said it was replacement and upgrading.
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Commissioner Nelson said while this is $633,000 in debt, it won't all be for new equipment.
Terri Carlock said some of it originally came from Martell Communications. That no longer exists. It would be REA money. The new facilities will be going in. The digital switch will be a big part of it, etc.
**Don Oliason was in attendance at this time.
Commissioner Nelson asked what their total equity was?
Terri Carlock responded it was $978,324.
Commissioner Nelson said if their equity is a million and their debt 8 million, and this affects it 2%, that is $150,000.
Terri Carlock said debt at the end of the year was $4,512,000.
Commissioner Nelson asked what the total increase in debt was?
Terri Carlock said additional payments are about 13% of last year's net income.
Commissioner Nelson asked if total capital structure was 5 1/2 million?
Terri Carlock said it was.
Commissioner Nelson said he didn't have any problem with that.
Terri Carlock explained her appraisal of the situation.
Commissioner Miller asked how much was new debt and how much was old?
Terri Carlock said new loan papers didn't have that. They had to pay off Martell before they could get that. Wasn't sure of those figures.
**Commissioners asked Terri Carlock to get those figures and the discussion would continue on RUR-T-92-1, later in the decision meeting.
3. Brad Purdy's February 11, 1992 Decision Memorandum re: Case No. IPC-E-91-2 -- A. W. Brown Complaint.
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Commissioner Miller, Chairman of the Case, reviewed the matter. Had hearing in January. It was a contested matter and Brad Purdy summarized the transcript and it is fairly ready for decision. Proposed way to work through this.
First matter considered was whether the company policy regarding the design of electrical systems was within the range of reasonable engineering judgment.
Commissioner Miller said if Commission concludes it is, then we don't need to get into the alternative system proposed by Mr. Jewell. If it is not, then we approach the reasonableness of the Jewell design. If Commission decides company policy is reasonable, won't need to get into that.
Said where he came out on the first question was: Notwithstanding deference to the company on design need questions, should look carefully at this... any foreign attachment to the system will impair reliability but even when you look at it carefully it is a reasonable engineering judgement supported by concerns for safety and supported by concerns for operational control recognizing that the system has to be under the control of the utility, no someone else and in light of the fact that the company will have the obligation to operate more than the system over its whole life. That made it a reasonable engineering judgement for the policy of the present design and interconnection system.
Commissioner Nelson said while he thought it wasn't absolutely necessary that the company own it, they had reasonable reasons for owning it.
Commissioner Smith said she concurred with that.
Commissioner Miller said if that is the case, whether the charges to the developer pursuant to that policy are appropriate or not appropriate, whether Brown's evidence was sufficient to conclude that Idaho Power costs were unreasonably high that his evidence that he could get the materials at a lower cost, persuaded us that Idaho Power costs were too high, or inappropriate.
Commissioner Nelson said on the face of it, there were good issues reported, but don't think Brown got past the face of it. Burden of proof was on him and he didn't ever give Commission documentation that would show his figures were those we could rely on.
Commissioner Smith said the question was raised, but it was never answered. Did Idaho Power Company charge too much,
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but to answer it you would have had to have comparable equipment. It was difficult to say that he was overcharged.
Commissioner Miller said - or that even if it was the same stuff, the circumstances under which he got his price quotations didn't seem to be highly reliable. They were largely quotations obtained over the phone without any corresponding written confirmation that would allow you to affirm the amount of the quotation and that it was for the right thing.
Commissioner Smith said it wasn't the over the phone that bothered her. She didn't ever feel comfortable that what he got prices for was what was actually used.
Commissioner Miller reviewed the illustration A. W. Brown used and equipment he brought forth. Wasn't able to help Brown on the overcharge for the interconnection piece of the claim.
Brad Purdy asked if the Commission was saying that philosophically you agree with Idaho Power Company's theory or argument that they should be able to provide the design of an interconnection and they should be the one to provide the equipment? They said theoretically the developer could do that. Can he still go in and get the equipment?
Commissioner Miller said outside of this case, don't think we have a history of this.
Commissioner Nelson said apparently it occurs with Utah Power & Light Company but there was nothing on the record to show that this occurs and what UPL thinks of it. Is really disappointed that we didn't get a better presentation of the issues by A. W. Brown. They were interesting issues but probably won't be brought up again.
Commissioner Miller said on the facts of this case, that the Idaho Power company system resulted in unfair charges or harm to the developer, there is no proof that doing it another way would prove any better result. But do we want to address it in rulemaking for the answer for the rest of the world?
For this case only, could conclude that a competitive bid approach wouldn't have gotten any better result or that Idaho Power Company was unfair to him.
Commissioner Smith said - but we don't want to foreclose this in the future.
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Commissioner Miller said that would be a change from the way it is now.
Commissioner Smith said - want to say this is just this case.
Brad Purdy said order could say under the facts of this case, there isn't evidence Brown would have gotten a better deal anywhere.
Commissioner Miller said there was testimony about Magic Valley project problems.
Scott Woodbury said you don't want to foreclose the parties from negotiating but in this case, the company submitted bids and there was no disagreement at the front end. Had he raised an issue at that point, perhaps the resolve could have been reached.
Mike Gilmore said - or they could have filed a complaint.
Commissioner Smith said Mr. Brown did say he felt at the time he didn't have a choice. He was in a hurry to get on line.
Scott Woodbury said he just waited 5 years.
Commissioner Miller said we really don't have any thorough discussion of the decision. It was voluntary. He might have had private concerns but they weren't expressed, at least according to the record.
So, don't know if we need to directly answer "whether there is evidence sufficient to relieve him of the contract".
Brad Purdy said he would hate to get into that area. Can decide it on the other issues and leave that alone.
Commissioner Miller said - could say it that way. Having decided the way we did, don't have to get into the contractual matter.
Commissioner Smith asked - does that mean we are leaving out Question 3?
Commissioner Miller said that was what Brad Purdy was suggesting.
Brad Purdy said they indicated early on, they said they would bring up the contract.
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Commissioner Miller said to him the explanation of the company on the extra pole made sense. Maybe the pole was a sub-issue. The company explanation of why they did it and why it was necessary made sense.
Brad Purdy explained what Brown thought they could do. Also explained Idaho Power's response.
Scott Woodbury said it seemed to him that Brown was saying the Commission is obliged to determine reasonable overall charges but would think in this instance, Commission didn't want company bringing all charges to QFs to the Commission. Should get into the contract saying the charges will be deemed reasonable per se. That gets Commission back to the contract issue. That is what he was asking the Commission to determine. He sat on his rights. He paid it without protest.
Brad Purdy said he also alleges a conspiracy. You could extend your analysis into those area.
Commissioner Nelson said it is not on the record but this isn't his first project. We have a whole bunch here that is on the record.
Commissioner Miller asked - can't Commission just find that the charges for the pole portion are reasonable and his factual challenge to the reasonableness...or should we say once a contract is entered into, is to preclude reasonableness of costs?
Commissioner Nelson said with this record it might be easier to say that Brown didn't meet his burden of showing that the charge was unreasonable.
Scott Woodbury gave an example.
Commissioner Nelson said in this case you don't have the option of going out of state.
Scott Woodbury said but he is going out in the market.
Brad Purdy said he was always cautious in suggesting to the Commissioners what issues to resolve.
Commissioner Nelson said he was not anxious to set precedence here.
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Commissioner Smith said we never knew what Idaho Power Company charged him to put in poles.
**Discussed the bill.
Commissioner Miller said even though you feel sorry for the guy, it is true we did everything to let him prove a case.
**Discussion then went back to Item 2 - RUR-T-92-1.
Terri Carlock asked to start over on this matter - said what the reserve is for is the tie-in primarily, with what they call East Shoup. The total amount of the $633,000 will be held in a reserve REA account. Will not be drawn on now. They put in the original Shoup from internal funds. They want to continue with upgrade and East Shoup. That would be 20/30 additional customers in Shoup. They would like to continue doing that with internal funds if they can. If they don't have the money, they will draw on this. Additional at this point will be nothing right now. It is more like a line of credit with REA. They have been using their own money and they have been able to get this REA money. They have money already available they haven't drawn on. They are not included in the capital account. Have a schedule of those REA loans. Have a breakdown on costs for the $633,000, as to where the money is set aside for. It won't change their capital structure at this time.
Matter was then approved.
4. Scott Woodbury's February 11, 1992 Decision Memorandum re: Case No. U-1006-287 - IPC-E-92-5 - IPCO Request for Termination of Firm Energy Sales Agreement with Twin Eagle.
Commissioner Nelson said he would approve this. Twin Eagle can ask for reconsideration.
Commissioner Smith asked Scott Woodbury what he was saying?
Scott Woodbury said those are facts you can use to justify your decision. Question whether we want to just notice it or say by date certain, come forward or Commission can say the agreement will be terminated. The Company will accept what the Commission orders them to do. Maybe we don't have to do anything but authorize company to take this out of their resource stack and say we consider the contract terminated.
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Commissioner Miller said he was a little concerned about the adequacy of notice to Twin Eagle. All we have is a certificate of service from the company.
Scott Woodbury said could do some notice with return receipt requested.
Mike Gilmore suggested it could be done as a complaint and issue a summons.
Commissioner Miller said Commission approves the termination of a contract right someone has with the company, should have adequate notice.
Commissioner Smith asked - would it save a step if Commission did it as a proposed order?
Scott Woodbury said he thought it was a good way of going about it in this case.
Mike Gilmore said with a proposed order you are already assuming the company does not want a contract. You are assuming as fact, everything Idaho Power Company has alleged.
Commissioner Miller said it seemed before you cut off a contract, the contractee is entitled to notice.
Proposed order lends credence to Idaho Power.
Commissioner Smith said it might appear it is prejudged.
**Was decided to go with summons.
5. Scott Woodbury's February 14, 1992 Decision Memorandum re: Case No. IPC-E-92-6 - Avoided Cost Trigger Filing.
Commissioner Miller asked if the QF community has been heard from?
Scott Woodbury said the company filed copies of application with the QFs.
Commissioner Miller asked what they wanted?
Scott Woodbury said we wanted facts that were undisputed...the only issue is staff/company dispute as to whether temporary off-system firm sales should be included in the load schedule.
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Commissioner Smith asked if there was anything here that couldn't be handled by comment?
Commissioner Miller said it appeared to him there was only the one issue.
Commissioner Smith said it would be good to get comments on it.
Scott Woodbury said he thought the impact was insignificant.
**Decision was to go modified procedure.
Company wants March 15 effective date.
Commissioner Miller asked - what did you think of interim rates without the disputed adjustment.
Scott Woodbury asked which rates - with or without the Seattle exchange rate?
Commissioner Smith said with.
Commissioner Nelson said that is how he would do it.
Commissioner Miller said but without the others.
Okayed.
Tom Faull said if Commission includes Seattle City Light and overlooked short term sales you are at the second schedule.
Mike Gilmore asked if two weeks makes that much difference?
Commissioner Smith said Commission told Idaho Power Company that if they got in prima facie case we would do interim rates.
Commissioner Miller said in the interim, if there are any contract being negotiated, the parties are sophisticated enough to leave that open until we decide.
6. Beverly Barker's February 12, 1992 Decision Memorandum re: Master Metering & Submetering in Fiesta Park.
Commissioner Smith asked Bev Barker for an explanation of what happened?
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Bev went over the happenings. Had park owner with problem of people staying longer than two weeks in the temporary portion of their court. Was hard to jimmy the power rates.
Commissioner Nelson asked who was "non electric"?
Bev Barker said they can have propane heat and cooking.
Said what the court owner came up with is the idea of submetering. First portion is permanent mobile homes that are metered. He bought some meters for the temporary hook-ups for submetering. Explained the two week cut-off. Is finding more and more people are staying 2 to 6 months. Submetering to him made sense. He went ahead and did it. We got inquiries from three customers. They called Idaho Power company. Noticed the difference in quoted rates. His argument that it is happening in other parks made it a larger issue than just that park.
Commissioner Nelson said if he is paying Schedule 9 rate, it depends on how much juice he drops whether or not he comes out better.
Bev Barker explained what he would pay under residential.
Commissioner Nelson said as a general rule, like the submetering for these temporaries. It would reduce the trouble factor by a bunch.
Commissioner Miller said he wondered if we can resolve this. Since we don't have a formal case, just grant him an exemption since it is already done or grandfather as long as he charges a residential rate and not launch into an investigation of every mobile home court. Could we solve it quietly?
Bev Barker said she thought the first concern is the rate they are charging to the individual user. Owner says he will only charge them the residential rate.
Commissioner Smith asked how many are grandfathered?
Bev Barker said all of the existing parks are grandfathered. Have a list from 1990 of grandfathered parks. Approximately 60 parks in Idaho Power service territory are grandfathered. That doesn't include totally RV parks.
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Commissioner Smith asked if there was a problem if we take this as grandfathered and they charge residential?
Bev Barker said if Commission grants this, might encourage other parks to submeter.
Commissioner Smith asked is that good or bad? Primarily in her mind is not having new parks going in under submetering or master metering. That is why she wanted to draw the line at "grandfathered? New park is different.
Commissioner Nelson said a new park is going to cater to permanent residents.
Mike Gilmore said he thought it was easy to say they were grandfathered in 1980.
Commissioner Smith said she would like it to say this happened 12 years ago and it can't happen now.
Bev Barker said another part of the concern we had there is a potential for courts expanding. In this case we are saying submetering. If the park decided to expand to this mid-term customer, is it grandfathered?
Commissioner Nelson said in a new court anyone who comes in for more than 2 weeks has to contact Idaho Power Company.
Mike Gilmore said it is for more than a month.
Bev Barker gave the example of the court in Cascade.
Commissioner Smith said it seemed to her the only problem with this guy is that he charged the wrong rate.
Bev Barker said what we are trying to determine is whether or not he is grandfathered under the master metering rule.
**Okay - he is grandfathered.
Bev Barker said Idaho Power Company doesn't want to compensate the owner for reading because he installed the submeters.
Commissioner Nelson asked if he was doing the billing?
Bev Barker said he was.
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Commissioner Nelson said if he is grandfathered and he has the meters there, the number of meters can change.
Bev Barker said they do vary from month to month in any court.
Commissioner Nelson said the total compensation would vary from month to month. Don't have a problem with that.
Sam Taylor of Idaho Power Company said it isn't the $1.15 that is an issue, it is the expanding beyond 1980 and problems involved in master metering. Company is concerned with abuse. There are a lot of things that can occur beyond that meter that can cause problems that caused the original rule to be issued.
Commissioner Smith said this isn't even an official case, seems like what staff and company are asking is a change of his status. He was grandfathered in 1980. He has the option to extend the scheduling.. Then he has the ability to get paid $1.15 each but he must charge the residential rate. If the company or staff feels that the rules need to be looked at, that is a whole new case.
**Tell him to charge the residential rates and he is entitled to the $1.15 per month.
Meeting adjourned at 2:40 p.m.
Dated at Boise, Idaho, this 21st day of February, 1992.
Myrna J. Walters
Commission Secretary
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