20230503Staff Comments.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION 39POBOX83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.11714
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )COMPANY'S APPLICATION FOR AN )CASE NO.IPC-E-23-07ORDERAPPROVINGTHETRANSFEROF)CERTAIN ASSETS ASSOCIATED WITH )COMMENTS OF THERITTERISLAND)COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission,by and through its Attorneyof
record,Michael Duval,Deputy AttorneyGeneral,submits the followingcomments.
BACKGROUND
On March 2,2023,Idaho Power Company ("Company")applied to the Commission for
approval of an Asset Transfer Agreement between the Company and the Idaho Department of
Parks and Recreation ("IDPR")("Application").As proposed,the Company would transfer
approximately 1.09 acres of land on Ritter Island ("Ritter Island")to the IDPR.
Ritter Island is located south of Hagerman,Idaho "near the Thousand Springs area of the
Snake River."Application at 2.The Company acquired approximately 1.09 acres of land on
Ritter Island in 1989 "as part of a Federal Energy Regulatory Commission ('FERC')required
mitigation package"with the Company.Id.At the time,the property owned by the Company
was part of a portion of land referred to collectivelyas the Thousand Springs Project ("TSP");
the TSP was owned by The Nature Conservancy ("TNC").The Company cooperated with TNC
STAFF COMMENTS l MAY 3,2023
in TNC's purchase of the TSP.Accordingly,TNC conveyed two homesites and certain
conservation easements to the Company.TNC later sold the TSP property to IDPR.The
Company retained its easements and homesites."In exchange for supporting Idaho Power's
[plan to buy lands around the mid-Snake hydro facilities to meet the FERC's aquatic habitat
migration requirements),IDPR asked Idaho Power to relinquish the two homesites it owns on
Ritter Island to IDPR,resulting in a win-win situation for Idaho Power and IDPR."Id.at 3.The
Company would still be able to utilize the conservationeasement while addressing its aquatic
habitat mitigation efforts.The Company states that the proposed conveyance was part of
negotiations that led to the relicensing of the Company's mid-Snake hydro facilities.
The Company submitted its Application for approval under the Idaho Electric Supplier
Stabilization Act,Idaho Code §§61-332 et.seq.,and the electric utility asset transfer statute,
Idaho Code §61-328.
STAFF ANALYSIS
Staff believesthe Company's conveyance of 1.09 acres to IDPR is reasonable and should
be approved by the Commission.The Company must obtain approval from the Commission
before it sells or transfers ownership of any property that is located in Idaho and used in the
generation,transmission,or distribution of electricity in Idaho.Idaho Code §61-328.
Under Idaho Code §61-328,the transfer or sale of assets must meet the following
criteria:
1.The transaction must be consistent with the public interest;
2.The cost and rates for supplying service must not be increased because of the
transaction;and
3.The Applicant for such acquisition or transfer has the bona fide intent and
fmancial ability to operate and maintain said property in the public service.
Staff believesthe proposed transaction is compliant with the three prongs of Idaho Code §61-
328(3)regarding asset transfers.
I The Company requested that its Application be processed under Modified Procedure,Rule 20 1 et seq.SeeIDAPA31.01.01.201 through .204.Typically,the use of Modified Procedure contemplates written submissionswithoutalivepublichearing.However,Idaho Code §61-328 states the Commission "shall issue a public noticeandshallconductapublichearingupontheapplication(emphasis added)."
STAFF COMMENTS 2 MAY 3,2023
Public Interest
The transfer of Ritter Island is in the public interest because the Company would
otherwise need to engage in costlier alternatives to obtain its mid-Snake hydro facility licenses.
Idaho Power will retain the ability to utilize the existing conservation easements to satisfy
increasing aquatic habitat mitigation requirements.Additionally,IDPR would become the sole
owner of Ritter Island allowingthe agency to obtain additional funding to expand its efforts on
the island.
Rates to Provide Service Will Not Increase due to the Transaction
The Company will remove the original cost of the land from Plant-In-Service with an
offsetting entry in the Donations account.The land will be removed from rate base and customer
rates will not be increased.
Bona Fide Intent
The IDPR is a governmental entity that will have the bona fide intent and financial ability
to operate and maintain the property for the public service.IDPR is currentlymaintaining all
land on Ritter Island except for the parcels currentlyowned by the Company.
Staff has reviewed the proposed transaction and believes that it supports the intent of the
electric utility asset transfer statutes.
Asset Valuation and Accounting Treatment
The IDPR would receive this conveyance at zero cost.The original cost of the 1.09 acres
of land was $504,985.48.To record the conveyance of the land,the original cost would be
removed from FERC Account 101,Electric Plant-in-Service,with an offset to FERC Account
426.1,Donations.The Company's proposed accounting treatment of the transfer removes the
book value of the land from the Company's books.
Staff questioned the Company about the costs for the potential extended litigation for
new licenses or acquiring other mitigation property,should this deal not be approved.The
Company explained that they researched purchasing other properties in order to satisfy the
mitigation requirements,and it would have cost at least $2 million to acquire other land.The
Company also explained that if no settlement can be reached,the other option besides purchasing
STAFF COMMENTS 3 MAY 3,2023
more land would be to implement run-of-river operations at the Mid-Snake hydro facilities,as
opposed to their current load followingprogram.Operating the facilities using run-of-river
operations will cost the Company $8.4 million more annually.
Public Comments and Public Hearing
As of April 18,2023,one customer comment has been submitted to the Commission.
The customer was concerned about an increase in rates due to the transfer.
A telephonic Public Hearing will be held on May 11,2023 at 11:00 AM.
STAFF RECOMMENDATION
Staff believes that the proposed transfer of Ritter Island meets all the requirements of
Idaho Code §61-328.Staff recommends that the Commission approve the Company's
Application and proposed accounting treatment for the transfer of Ritter Island from Idaho
Power to IDPR as proposed.
Respectfully submitted this day of May 2023.
Michael Duval
Deputy AttorneyGeneral
Technical Staff:Kevin Keyt
Laura Conilogue
i:umisc/comments/ipce23.07mdkskcomments
STAFF COMMENTS 4 MAY 3,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3'd DAY OF MAY 2023,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,INCASENO.IPC-E-23-07,BY E-MAILING A COPY THEREOF,TO THEFOLLOWING:
LISA D NORDSTROM MATT LARKINIDAHOPOWERCOMPANYIDAHOPOWER COMPANYPOBOX70POBOX70BOISEID83707-0070 BOISE ID 83707-0070E-MAIL:[e-mail] E-MAIL:mlarkin idahopower.comdocketsidahoower.com
SECRETARY
CERTIFICATEOF SERVICE