20200929Final_Order_No_34793.pdf

ORDER NO. 34793 1

Office of the Secretary
Service Date
September 29, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On June 3, 2020, Idaho Power Company (“Company”) applied to the Commission for
an order approving the Company’s transfer of a 1.91-acre parcel of land in Owyhee County, Idaho
(the “Parcel”) to Owyhee County (the “County”). The Company submitted its Application
pursuant to Idaho Code § 61-328 and requested its Application be processed by Modified
Procedure.
On July 10, 2020, the Commission issued a Notice of Application, Notice of Modified
Procedure, and Notice of Hearing. Order No. 34721 established public comment and Company
reply deadlines and set an August 4, 2020 telephonic hearing. No members of the public testified
at the telephonic hearing. Staff filed comments to which the Company did not reply. No other
comments were filed.
Having reviewed the record, the Commission now approves the Company’s
Application as filed.
BACKGROUND
In 2008, the Company purchased 150 acres of land near Melba, Idaho that would later
become the site of the Hemingway Substation (“Substation”). The Company constructed a new,
unpaved access road on a portion of the 150 acres to provide access from Highway 78 to the
Substation. The Company’s access road travels parallel to and partly crosses the Wilson Cemetery
Road. Ever since the Company’s access road was constructed, visitors of the Wilson Cemetery
and adjacent property owners have been using the Company’s road rather than the existing Wilson
Cemetery Road. The Wilson Cemetery Road is now overgrown and impassable.
In July 2019, the County denied a building permit for one resident along the south of
Wilson Cemetery Road because the resident could not prove public access to their property. The
County would not grant a waiver or variance upon request. On February 14, 2020, to re-establish
legal access for the landowners south of Wilson Cemetery Road, the Company executed and
IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR AN
ORDER APPROVING THE TRANSFER OF
CERTAIN ASSETS ASSOCIATED WITH
THE HEMINGWAY SUBSTATION
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CASE NO. IPC-E-20-25

ORDER NO. 34793
ORDER NO. 34793 2

recorded a deed conveying the Parcel to the County subject to an easement reserving access for
the Company.
THE APPLICATION
The Company must obtain the Commission’s approval to sell or transfer ownership of
property in Idaho used in the generation, transmission, or distribution of electricity in Idaho. Idaho
Code § 61-328(1). The Company’s Application stated the transfer of the Parcel satisfies Idaho
Code § 61-328(3). That Section requires an applicant to prove (a) the transaction is consistent
with the public interest; (b) the cost of and rates for supplying service will not be increased by
reason of such transaction; and c) the applicant for such acquisition or transfer has the bona
fide intent and financial ability to operate and maintain said property in the public service .
Idaho Code § 61-328(3). The Application stated the Parcel originally cost $26,488, but its book
value with improvements is $41,394.1 The Company conveyed the Parcel to the County for ten
dollars. The Company will maintain access to the Substation via an easement described in the
deed. See Attachment 2.
THE COMMENTS
Staff reviewed the Company’s Application, Attachments, and Production Responses.
Staff recommended the Commission approve the Company’s Application. Staff noted the transfer
was a “reasonable way to solve the resident’s, County’s, and Company’s issues” regarding the
Parcel and avoided potential costly litigation, ultimately benefiting all parties.
While Staff recommended approval, it did so with reservation and an additional
recommendation. Due to the timing of the Company’s Application—after the transfer had been
completed—Staff recommend the Company develop and implement internal control measures to
improve the timing of similar applications in the future. Staff recommended that supporting
documentation be provided to the Commission when the Company has developed its new control
measures. In response to Staff’s Production Requests, the Company acknowledged that it is
developing internal control measures to improve timeliness and regulatory compliance for future
property transactions.
Staff also discussed the transaction’s accounting details and believed, although the
conveyance was for much less than net book value, that aggregated tangible and intangible benefits

1 On page 4 of the Application, the Company stated that the improvements had a net book value of $41,394, but later
reported to Staff that its original installed value, before accumulated depreciation, was $41, 394. The net book value
of the improvements is estimated at $33,936.
ORDER NO. 34793 3

allowed the transfer to meet the requirements of Idaho Code § 61-328(3). Staff stated that the
Company will save about $1,350 in grading expenses2 and $292 in property taxes annually
following the transfer. Besides the transaction’s tangible benefits, Staff acknowledged the
transaction has intangible and hard to quantify benefits of reduced legal liability and positive
relations with neighboring property owners. Regarding reductions in liability, Staff suggested that
allowing the public to use the road to access the cemetery could expose the Company to future
liability. Staff also hypothesized that if the Company did not transfer the Parcel, the Company
could become involved in a legal dispute involving the County and neighboring landowners who
were denied building permits. Ultimately, without transferring the Parcel, litigation regarding
liability or access could be costly to the Company.
Staff reviewed the accounting treatment of the transfer and expressed concerns about
the revenue requirement. Staff cautioned that while the Company had effectively removed the
Parcel’s book value from its books, customers would still pay the associated revenue requirement
until the Company’s next general rate case. Staff estimated customers would pay $9,750 per year
in revenue requirement without receiving significant consideration for the transfer. Staff offered
that an offsetting adjustment may be necessary in the Company’s next general rate case.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over the Company and the transaction under Idaho
Code §§ 61-119, 61-129, 61-328, and 61-501. The Commission has reviewed the record including
the comments submitted by Commission Staff.
We find it is reasonable under the circumstances for the Company to transfer the Parcel
to the County. We are encouraged that the Company is working to establish internal control
measures to ensure it promptly brings future transactions of this nature to the Commission in a
timely manner and consistent with Idaho Code § 61-328(3).
Finally, we expect to see the appropriate offsetting adjustments regarding this
transaction’s impact on the Company’s revenue requirement when the Company files its next
general rate case.

2 The Company said its budgeted annual maintenance expense for the entire access road before the transfer was $2,700.
Because the transfer halved the length of road the Company must maintain, this maintenance expense likely will also
decrease.
ORDER NO. 34793 4

ORDER
IT IS HEREBY ORDERED that the Company’s Application is approved.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within 21 days of the service date of this Order regarding any matter decided in
this Order. Within seven days after any person has petitioned for reconsideration, any other person
may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 29th
day of September 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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