19900831Position Statement.pdf

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BRA M. PURDY
DEPUTY ATlORNEY GENERA
IDAHO PUBLIC UTILITIES COMMISSION
STATEHOUSE
BOISE ID 83720-0001
[phone]
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90 AUG 31 ArlID 51
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Street Address for Express Mail:
472 W WASHINGTONBOISE ID 83702-5983
Attorney for Commssion Staff
BEFORE THE IDAHO PUUC UT COMMSSON
IN TH MA1-lER OF TH APLICATION )
OF IDAHO POWE COMPAN FORA )CERTCATE OF PULIC CONV- )IECE AN NECESS.FOR TH )RATE BASG OF TH MI )HYROELC PROJEm', OR IN )TH ALTERNATI, A DETRMATION )OF EXMP STATUS FOR TH MI )HYROELCTC PROm'. )
)
CAS NO. IP-E-90
STATE OF STAFPOSION ON LE ANJUICTONAL ISS
On April 25, 1990, the Idaho Power Company (Idaho Power; Company)
filed an Application seeking a certifcate of public convenience and necessity for the
rate basing of the proposed Milner Dam hydroelectric project or, in the alternative,
for a determination by the Commssion that the project would be exempt from
regulation. The Commission Staff of the Idaho Public Utilities Commssion makes
the following statement of position concerning the legal and jurisdictional issues
presented by Idaho Power's Application in this proceeding.
The Milner Dam has been in existence since the early 1900s. It was
constructed to provide irrigation to the outlying farm areas of the Magic Valey. It
has never been used for the production of electricity. Accordingly, Idaho Power's
proposed construction of hydroelectric facilities at the Milner site constitutes a new
STATEMENT OF STAFF POSITION
ON LEGAL AND JURISDICTIONALISSUES -1-
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facility. The Company must, therefore, obtain a certificate of public convenience
and necessity prior to construction of this project pursuant to Idaho Code §61-526.
Idaho Power has couched its Application in the alternative. That is, it
,
seeks either a certificate of public convenience and necessity to construct the
Milner project and include it in rate base or a determination by the Commission
that the project is exempt from regulation so that the Company may sell the power
generated at wholesale rates to outside buyers. Staff asserts that Idaho Code
§61-526 requires a certificate of public convenience and necessity before the
Company may begin construction of the project regardless of whether it is rate
based at its completion. Because statute authorizes the granting of the certificate
for the present or future public convenience and necessity, if the Milner project need
not be initially rate based for the present public convenience and necessity. The
certificate could authorize a later application for rate basing for the future public
convenience and necessity. In the interim, the Company could operate the facilìty
"off the reguated utility books" with reasonable terms for future ratebasing spelled
out in the certificate order.
Staff also points out that I.C. §61-526 is silent about rate basing new
construction. It does not guarantee that a project that is granted a certificate will
be rate based upon completion. This can only be determed after a subsequent
prudency review of the Company's expenditures and the then present need for the
facility. A project could be authorized for current construction for future
ratebasing, with the utility excluding the project from retail rates in the interim.
Authorizing construction and authorizing rate basing of plant are distinct issues.
If the Commssion determines to exempt Milner from inclusion in retaîl
ratebase, Staff asserts that a certificate must still be issued. The certificate should
STATEMENT OF STAFF POSITION
ON LEGAL AN JURISDICTIONALISSUES -2-
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simply state that the project received exempt ratemaking status under specified
conditions for a specific period of time.
Staff has not yet formulated a~ opinion as to whether Milner should be
rate based. On its face, the gist of the Company's Application appears sound.
Regardless of the different constructions Staff and the Company may give to I.C.
§61-526, Staff commends the Company for its rather progressive technique of
presenting the Commssion with two significant options in this case.
It is appropriate for the Company to seek, in effect, a declaratory ruling
from the Commission on whether Milner is an appropriate project to rate base upon
completion. The need for the rebuild of this aging dam is undeniable. The
Company is pursuing a project with good potential at the appropriate time.
The amount of investment to be included in rate base, should the
Commssion choose this option, should not be decided in this case. In the event
that the plant is put into rate base, and once it is in service, the Staff proposes that
the amount to be included in rate base should be the lesser of these three figures:
a. The plant costs reasonably incurred in construction of the
hydroelectric facilities put in place at Milner Dam;
b. The avoided costs of Idaho Power, appropriately calculated to take into
account the difference between the Milner plant's expected usefu life and the
contractual commitment of a cogenerator or small power producer; or
c. Idaho Power's proposed rate base cap.
RESPECTFULLY submitted,
3r~) ¡n. PLdi"
Brad M. Purdy ,
6" Jl0Li
BP:vldf-211
STATEMENT OF STAFF POSITION
ON LEGAL AND JURISDICTIONALISSUES -3-
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CERATE QF SEVICE
I HEREBY CERTIFY THT I HAVE THIS 31st DAY OF AUGUST,1990, SERVED THE FOREGOING STATE OF STAF POSION ON
LEGAL AN JUSDICTONAL ISS, CASE NO. IPC-E-90-8, ON ALL
PARTIES OF RECORD BY MALING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
LARY D. RIPLEY, ESQ.
LEGAL DEPARTMENT
IDAHO POWER COMPAN
P. O. BOX 70
BOISE, ID 83707
STEVEN L. HERNDON, ESQ.
LEGAL DEPARTMENT
IDAHO POWER COMPAN
P. O. BOX 70
BOISE, ID 83707
HAOLD C. MILES
IDAHO CONSUMER AFFAIRS, INC.
316 -15THAVENUE SOUTH
NAMPA, ID 83651
R. SCOTT PASLEY
ASSISTAN GENERAL COUNSEL
J. R. SIMPLOT COMPAN
P. O. BOX 27
BOISE,ID 83707-0027
DAVID H. HAWK, DIRECTOR
ENERGY NATURA RESOURCES
J. R. SIMPLOT COMPAN
P. O. BOX 27
BOISE,ID 83707-0027
1CERT/142
CERTIFICATE OF SERVICE
GRA E. TANER, ESQ.
DAVIS, WRIGHT, TREMANE
1300 SW FIFT AVE
SUITE 2300
PORTLAD, OR 97201
PETER J. RICHADSON, ESQ.
DAVIS WRIGHT TREMA
400 JEFFERSON PLACE
350 N. NINT STREET
BOISE, ID 83702
JAMES N. ROETH, ESQ.
PILLSBURY, MAISON &; SUTO
P. O. BOX 7880
SAN FRCISCOJ CA 94120
R. MICHAL SOUTHCOMBE, ESQ.
CLEMONS, COSHO &; HUMPHREY,
815 W. WASHINGTON STREET
BOISE, ID 83702-5590
OWEN H. ORNORFF
ORNORFF &; PETERSON
1087 W. RIVR ST., SUITE 230
BOISE,ID 83702-7035
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