19991191Order No 28193.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO IMPLEMENT A SPECIAL LINE INSTALLATION ARRANGEMENT WITH THE STARFLOWER DRIVE LINE EXTENSION ASSOCIATION. )
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CASE NO. IPC-E-99-11

ORDER NO. 28193

On October 4, 1999, Idaho Power Company filed an Application requesting authority to implement a special line installation arrangement with the Starflower Drive Line Extension Association (SDLEA). The SDLEA is an association of property owners with lots along Starflower Drive within the Little Donner Subdivision in Valley County, Idaho. The Association was formed to facilitate the extension of electrical facilities within an undeveloped subdivision and is comprised of members that own five of the potential eight servable lots. The Company and SDLEA request expedited treatment of this Application so that line extension construction can be completed before the onset of winter. Based upon our review of the Application and the Commission Staff’s analysis, we approve the Company’s Application as set out in further detail below.

THE APPLICATION
Under their arrangement, the parties contemplate that the Association shall be considered as a “subdivider” for purposes of the Company’s Rule H Line Extension Tariff. This tariff governs distribution line installations or alterations in new service attachments. Under the arrangement, the Association will advance the estimated line extension cost of $7,799, consisting of two parts: 1) a partially refundable portion of $1,932, for the cost of unusual topographical conditions and engineering and; 2) a fully refundable construction cost of $5,867. At the time service is provided to any of the eight lots, Idaho Power will reimburse the SDLEA $800 for each lot up to the total construction cost of $5,867. In addition, the Company will collect 1/8th of the construction charges attributable to unusual conditions for each of the three lots not under the ownership of SDLEA members, when permanent electrical service is provided to those three lots. The amount collected will then be reimbursed to the SDLEA. The arrangement and the potential for refunds will remain in effect for ten years following completion of the line installation.

THE LINE EXTENSION TARIFF
The Company’s existing Rule H Line Extension Tariff Section VI.C. prescribes rules for serving undeveloped subdivisions platted prior to January 1, 1997, as is the situation in this case. This tariff section provides for a refund of construction charges for a ten-year period and states that “connections within the undeveloped subdivision will be treated as individual applicants or additional applicants for payment, extension allowance, and refunding purposes.” The arrangement proposed by the Company groups the applicants (lot owners) together as if they were a single subdivision developer. Consequently, the calculation of construction payments, extension allowances, and refunds is based upon the rules established for a subdivision developer.
Under existing Rule H tariffs, a lot owner that desires immediate service pays 100% of the cost to extend facilities into the undeveloped subdivision. As other lot owners take permanent service within ten years, then the initial owner will obtain a partial refund of the construction charges. Refunds during the first ten years are based on the non-refundable contribution of the original applicant, plus the load and distance ratios of subsequent applicants with respect to the power line extended. Obviously, single lot owners are often reluctant to pay all line extension costs to obtain service given the possibility that other lot owners may simply wait ten years and then hook-up to the extended line at no charge. The agreement proposed by the Company and the SDLEA in this case spreads the initial line extension charges equally over members of the Association whether members take service immediately or not. The Association members will equally divide the $800 refund as each permanent service is connected to the line over the next ten years.
The proposed arrangement utilizes provisions from two distinct sections of Rule H. While the payment allowance and refund provisions are based on rules for developed subdivisions, the ten-year refund period is based on rules for undeveloped subdivisions. Additional provisions not found in the existing rules require proportional payment for engineering and special facilities from lot owners outside the Association to assure equitable allocation of non-refundable costs.
STAFF ANALYSIS
In its evaluation of the Company’s Application, the Staff noted that the arrangement in this case appears to be the result of negotiations among lot owners and Idaho Power to more equitably distribute line extension costs. The Staff noted that members of the Association (in addition to the three lot owners that are not members) concurred with the Company’s Application. Staff also observed that a similar arrangement was previously approved by the Commission in Case No. IPC-E-96-6.
Given the facts of this particular case, Staff recommended that the Commission approve the Company’s Application. Although the Staff recognized that the proposed arrangement is a deviation from existing tariffs, it asserted that the arrangement will not place any greater burden on the general body of ratepayers than the existing tariffs require. Staff determined that all costs and risks are borne by the parties requesting the line extension. Staff noted that although unusual condition charges are refundable under existing developed subdivision rules, such costs are not subject to refund under the proposed arrangement.
The Staff also recognized the Company’s desire to complete construction before winter. Staff recommended that the Commission dispense with the notice requirements typically applicable to applications because the Application: (1) does not result in an increase or change to any existing rates or charges; (2) does not result in a change to an existing contract; (3) all of the land owners within the subdivision support the Application; and (4) the need for immediate action.

FINDINGS
Based on our review of the Application and the Staff’s analysis, we find it is reasonable and appropriate to allow the Company to deviate from its Rule H Line Extension Tariff. Given the apparent agreement of the lot owners and the fact that SDLEA bears the costs and risks of development, we find there is good cause to deviate from strict adherence to Rule H. We approve the arrangement as conditioned below.
We further find that given the impending weather conditions, there is good cause for the Commission to approve this Application without processing this Application under Modified Procedure. Although we approve of the Company’s Application, we believe that the unusual condition charges included in the arrangement should be included in determining the final lot refund. Under the agreement, $400.50 of charges for unusual conditions are subject to refund from the three lots not part of the Association. This would leave $667.50 of unusual condition charges as non-refundable. Under the arrangement, the refund for the eighth lot was set at $267 ($800-$533). We find that the arrangement shall be modified to allow for a full $800 refund for the eighth lot as long as the full cost of unusual conditions has not been refunded.
Finally, we also find merit in modifying the Rule H tariffs to allow the Commission, after an application is filed, to approve of deviations on a case-by-case basis when the Company and its customers mutually agree that such deviation is reasonable and does not adversely affect other ratepayers. Such special arrangements may provide the Company with additional flexibility to meet the needs of its customers while not causing other ratepayers to bear unreasonable costs and risks.

O R D E R
IT IS HEREBY ORDERED that the Application of Idaho Power Company for approval of a special line extension arrangement with the SDLEA is approved as conditioned in the body of this Order.
IT IS FURTHER ORDERED that the charges for unusual construction encountered during construction be subject to refund and incorporated in the line extension arrangement as set forth in our findings.
IT IS FURTHER ORDERED that the Company modify its Rule H tariffs to allow for a mutually agreed upon special arrangement on a case-by-case basis and subject to the approval of the Commission.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. IPC-E-99-11 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this order or in interlocutory Orders previously issued in this Case No. IPC-E-99-11. Within seven (7) 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 _______ day of November 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

vld/O:IPC-E-99-11_dh

The engineering costs are not refundable.

ORDER NO. 28193 1

Office of the Secretary
Service Date
November 1, 1999