19930405.docx

Minutes of Decision Meeting
April 5, 1993 - 1:30 p.m.
In attendance were Commissioners Marsha H. Smith, Joe Miller and Ralph Nelson and staff members Mike Gilmore, Scott Woodbury, Brad Purdy, Terri Carlock, Marge Maxwell, Don Howell, Tonya Clark, Mary Friddle, Randy Lobb, Beverly Barker and Myrna Walters.
Items from the April 5, 1993 Published Agenda were discussed as follows.
1.  Regulated Carrier Division Agenda dated April 5, 1993.
Approved.
2.  Discussion of Union Pacific Railroad Company Notice of Intent to Abandon and Discontinue Service between Nampa and Stoddard in Canyon and Ada Counties, Idaho - ICC Docket No. AB-33(Sub No. 79).
After brief discussion, Commissioners decided a hearing should be held.
3.  Marge Maxwell's March 26, 1993 Decision Memorandum re:  Sunbeam Water Company.
Commissioner Nelson said he would move we not do anything at this time.
Commissioner Miller said he thought Marge Maxwell should be complimented for getting things moving and getting Mr. Parrish's attention and if she needs to come to the Commissioners she can.
No formal action will be taken at this time.
4.  Brad Purdy's March 31, 1993 Decision Memorandum re:  Case No. IPC-E-91-4--Idaho Power's Motion in Opposition to Petition to Intervene by Rosebud Enterprises.
Commissioner Nelson said if we allow intervention, need specific language about issues considered in this hearing and say any attempt to use this to argue avoided costs is out of place.
Commissioner Miller said he questioned using this hearing to determine what the correct price is but Rosebud has the right to question the Twin Falls investment if the Twin Falls investment is at or near avoided cost when the utility won't offer a similar rate to Rosebud which is in effect a question of whether Twin Falls is at the proper cost.
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**Gary Richardson was in attendance at this time.
Mike Gilmore said he would think that Idaho Power Company would be careful with their objection.  If you want to get reversed on an appeal, limit the participation.
Commissioner Miller said it might be hard to keep a fence around the issues but the Rosebud rate and Twin Falls matter are separate.  Asked if Commission didn't allow intervention in a similar case?
Brad Purdy said he thought the A. W. Brown case was similar.
Commissioner Smith said the Commission has always had the policy of wide open intervention but this doesn't mean we unduly expand the issues.  The issues should be those in the case.
Brad Purdy said he would recommend spelling out in the order that Commission would entertain generic consideration but that any thing directly related to rate issues for Rosebud should be deferred to another docket.
Okayed.
**Don Oliason and Bill Eastlake were in attendance at this time.
5.  Scott Woodbury's April 1, 1993 Decision Memorandum re:  Case No. IPC-E-92-28 - FAS 106.
Was determined that this was a "fully submitted" case and should be moved to the bottom of the agenda.
6.  Randy Lobb's April 2, 1993 Decision Memorandum re:  Hayden Pines Water Quality Improvement Program:  Status Report and Assessment.
Commissioner Nelson said Commission ordered Hayden Pines to get an engineer's recommendation.  Kimball has been retained but they haven't been paid any money to do the job.  Commission has gotten many complaints.  Would like to consider the Commission hiring their own engineer and do an analysis for us of what has been done and what could be done.  At this point this is the only thing we can do in the near future that would satisfy the customers.  The decision at Avondale has raised new concerns.  Because of the time factor, would like to be perceived as doing something positive.  Don't have much confidence in telling Bud to tell Kimball to do something would do anything.  Understand there
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is a chemical engineer in Moscow who could do a quick and dirty review and then see if we needed him further.  If we could give the perception of doing something independent, if the result is they are going to get "brown water" for sometime, want a chemical engineer to say that.
Randy Lobb said one of the problems that we have had is that it hasn't been done in an efficient manner.  If you don't have someone who knows the program and instituting it, would still have a problem.  Don't think we are in a position yet to order Bud to do something specific.  Don't think we are going to get there by going through Bud Ford.
Commissioner Miller asked what the price tag might be for that?
Randy Lobb said it would depend on who it is and how involved.  Don't think it has cost Ford much at this point.  Asked what Commissioners want from an engineer?  Said Montgomery would cost more than a chemical engineer.  Didn't personally know a mechanical engineer he would be confident in.  Would tend toward Montgomery with various expertise.
Commissioner Nelson asked if we were talking $3,000 or $10,000?
Randy Lobb said it would be more.
Commissioner Miller said we would need to have a contract or RFP that correctly spells out the Commission's expectations.  Once that is spelled out, price it and get one or more firms to give bids for the work laid out.
Randy Lobb said one of the problems is we don't even really know what will be required for a final solutions.
Commissioner Nelson asked if it couldn't be done in stages?
Randy Lobb said he thought we had the preliminary investigation - generally know all the options.  Seems to him something more is in order at this point.
Commissioner Miller said one approach would be to have Randy Lobb draft, and Commissioners look at, specifics of what he would want if he could hire an engineer.  We could look at it and on his advice, decide if we want to spend money on it or not.  Is a little murky to him what we would want the guy to do.
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Commissioner Nelson said he thought that was a good idea.  Guessed he was just very frustrated at whats happened and the perception of the customers.  Think the customers need some assurance that eventually they will see benefits.  They haven't seen any in 6 months.
Randy Lobb said he thought the real benefit is people will see a person not associated with Bud Ford.  Think it may be "bad news".  Could put together a list of things he would want an engineer to look at.
Commissioner Smith asked Randy Lobb if he knew someone to put a "ball park" figure on the proposal?
Randy Lobb said he did.
Commissioner Smith said she also thought staff should keep asking for what they have requested from Mr. Ford.
7.  Mike Gilmore's April 1, 1993 Decision Memorandum re:  Case No. 31-2601-9301--The Readoption and Reformatting of Master-Metering Rules for Electric Utilities.
No substantative changes.
Approved sending them out for comment.
8.  Mike Gilmore's April 1, 1993 Decision Memorandum re:  Case No. 31-3101-9301--Readoption and Reformatting of Rules for Gas Service.
Approved sending them out for comment.
9.  Mike Gilmore's April 1, 1993 Decision Memorandum re:  Case No. 31-6301-9301--Readoption and Reformatting of Policies and Presumptions for Small Water Companies.
Approved sending them out for comment.
10. Mike Gilmore's April 2, 1993 Decision Memorandum re:  Case No. 31-0101-9301--Readoption and Reformatting of Rules of Procedure.
Commissioner Smith questioned Rule 10 - wanted to leave out Industrial Commission.  Also had change on Page 9 - third paragraph.
Approved sending them out for comment, as corrected.
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5.  Scott Woodbury's April 1, 1993 Decision Memorandum re:  Case No. IPC-E-92-28 - FAS 106.
Commissioner Nelson said he thought that to the extent possible, should be consistent with the WWP order recently issued, in this matter.  Commented the deferral Idaho Power has asked for is actually less than what WWP asked for.
**Will reiterate what Order No. 24673 said.
Two years was acceptable.
CAP - No objection or other suggestion.  Okayed Company recommendation of $6 million.
Establishment of the FAS-71 regulatory asset.
Asked about guidelines to be under FAS-71?
Would it be appropriate to say that while we intend to adopt amortization period within the FAS 106 guidelines, will leave it open until the next rate case.
Terri Carlock said - thought that was the preferred way.  Say it will be within these guidelines.
Commissioner Nelson said what he didn't know...there is a present value argument that he didn't think was fully considered in this case.
Would want to hear that argument more strongly if someone thought it should be 10 years rather than 20.  Thought in the case there was just a reference made to a loss..then in his mind thought that somehow the time value of money was considered in this.  Isn't it part of the ratebase?  Time value of money is accounted for.  That was suggested and argued and don't know if there was much of a record on that.
Terri Carlock said if it was a large dollar amount, a longer time might be better.  Explained the situation.  Don't think we loose anything by deferring regulatory treatment approval without reference to any income tax treatment.
Did it for WWP.
Commissioner Miller said - say prefunding vehicle is available. Now that we know that we have a preference and using those and would encourage subsequent appliers.
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Commissioner Nelson asked about life insurance?  Inclusion of VEBA?
Wasn't opposed.
Should company be prepared to address the desirability, selection, etc.?
Scott Woodbury said - we required that of WWP.
Think company and staff should be ready to speak to this.
Should company be required to demonstrate prudence and reasonableness of the Company's overall benefit package?
Thought in WWP we said funding was preferable.
Terri Carlock said the difference is pre-funded amount.  That wasn't an issue in WWP.
Commissioner Nelson asked - isn't all they are doing is early adoption?  Are you prepared to argue that that is wrong?  If they come out and say we are going to require this and early adoption is encouraged, are we doing to question that?
Commissioner Smith said she thought the company should be commended for going ahead and starting.
Commissioner Nelson said they are the only company in the Northwest that did that.
Terri Carlock said the staff's perception is funding is good so the ratepayers would be better off in all circumstances we would think of.
Deferred income tax accounting.
Both company and staff recommended that.
Approved.
Page 12 - Discussed the independent actuary.
Commissioner Nelson said the criticism today is that is underfunded.  Personally is not comfortable attacking actuary assumptions.  Over time they have to be correct.
Commissioner Miller asked - do you want to put a requirement on the company now to bring that forward and justify it or recognize it is an issue.
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Commissioner Nelson said he would like to not require analysis.
Terri Carlock said when the companies went into it they were expecting to have to prove it in a rate case later. Where they haven't asked for preapproval of the dollar amount, they should have to do that in the rate case.
Commissioner Nelson suggested saying:  we will examine the overall reasonableness in the next rate case.
Terri Carlock said they don't want to have to put their package out before everyone if they don't have to.  They don't want to put it in the initial filing.  
Commissioner Miller asked Terri Carlock if it was okay to look at the information and decide if they want to bring it up?  Could just direct the company to provide adequate timely information sufficient to make a judgement on it.
Scott Woodbury said he thought the company agreed to providing that information.  Think we went beyond what they presented.
**Say it is a rate case issue.
Earnings Test.
Terri Carlock said she thought it was based on after the fact normalized.
Commissioner Nelson asked why the staff objected to including conservation issues?
Terri Carlock said her only concerns was the amount might be getting too large.
Commissioner Miller said he wondered if we had to go into detail on this?  Can't we say after the fact normalized?
Commissioner Nelson said if we start getting into rate case items, we are going to have a mini-rate case.
Commissioner Miller suggested just reiterating that normalization is the right way to do it.
Commissioner Nelson said to say go ahead and we will true up if it comes out wrong.  Asked if they needed authority to book this?
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Terri Carlock said you would be giving them the authority here to book it.  Amount doesn't have to be spelled out.
Commissioner Nelson asked - do we have to say anything else?
Syd Lansing said as long as it is known that it would be accepted if they have a normal rate of return, it would be approved.
Terri Carlock said the policy is what the Commission needs to pre-approve.
Commissioner Miller said that will take care of that part of it.
Commissioner Smith asked - we are already using the authorized rate of return like in WWP?
Yes.
Tax Ramifications.
Terri Carlock said Commissioners went with overall rate of return.
Commissioner Nelson said to keep earnings test as simple as we can.
Commissioner Miller said ;using normalized earnings as basis of the test is a good ratebase protection approach and accomplishes what we want to accomplish.
Terri Carlock asked about the earnings test?
Asked if Commissioners were allowing them to forecast and then true-up?   Using the '92 study?  
Commissioner Nelson asked - that is what we did with WWP?
Terri Carlock said yes.
Approved staff's recommendation.
Meeting adjourned.
Dated at Boise, Idaho, this 11th day of May, 1993.
Myrna J. Walters
Commission Secretary
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