20021025Order No 29136.pdf

Office of the Secretary
Service Date
October 25, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA UTAH POWER &
LIGHT COMPANY FOR APPROVAL OF
CHANGES TO ITS ELECTRIC SERVICE
SCHEDULES.
) CASE NO. PAC-O2-
) ORDER NO. 29136
BACKGROUND
On January 7, 2002, PacifiCorp dba Utah Power & Light Company (PacifiCorp;
Company) filed an Application with the Idaho Public Utilities Commission (Commission)
requesting approval of proposed electric service schedules. The Company s Application had
four parts: 1) a proposed Schedule 34 - Bonneville Power Administration (BP A) Exchange
Credit distribution; 2) a proposed electric service schedule adjusting rates to bring customer
classes closer to cost-of-service (CaS); 3) a proposed Power Cost Surcharge; and 4) a proposed
Rate Mitigation Adjustment (RMA) designed so that no customer classes would have an increase
during the two-year period of the surcharge.
The Company s Application was processed in two parts. The first dealt with the
BP A credit and was processed using Modified Procedure, i., pursuant to written submission
rather than hearing. IDAPA 31.01.01.201-204. The second part dealt with the Company
request to recover through a Power Cost Surcharge $38 million in excess net power supply costs
accrued during the period November 2000 through October 2001 and to implement other
proposed changes.
The BP A credit was approved in Interlocutory Order No. 28946 and became
effective February 1 2002. The BPA credit is a distribution of exchange benefits negotiated by
Northwest utilities and state regulatory Commissions in a May 2001 Settlement Agreement with
the BP A.As contemplated by the 1980 Pacific Northwest Electric Power Planning and
Conservation Act, the credit passes the benefits of the Federal Columbia River Power System to
PacifiCorp s qualifying residential and small farm customers in eastern Idaho.
On April 11 , 2002, a Stipulation and Settlement was filed by PacifiCorp, Monsanto
Company, the Idaho Irrigation Pumpers Association and the Commission Staff regarding all
ORDER NO. 29136
other issues. The proposed settlement: 1) limited recovery of excess power costs to $25 million;
2) accelerated the remaining two years of the PacifiCorp/ScottishPower merger credit to reduce
the excess power costs by $2.3 million; 3) established a Power Cost Surcharge designed to
recover excess power supply costs of $22.7 million over a two-year period; 4) restructured the
irrigation tariff schedules to provide firm power; and 5) adjusted revenue responsibility to bring
the irrigators closer to cost of service.
On June 7, 2002, the Commission in final Order No. 29034, reaffirmed its previous
authorization of the BP A Exchange Credit distribution. The Commission also approved the
proposed Stipulation and Settlement; and, for failure to provide the individual customer notice
required by Rule 102 of the Commission s Customer Information Rules, the Commission in its
Order directed PacifiCorp to provide each customer with a one-time credit of $20.00 (or a total
of$1 087 720). IDAPA 31.21.02.102.
Petitions for Reconsideration of final Order No. 29034 were filed by Stanley Searle
Tim Shurtz and PacifiCorp. Reference Idaho Code ~ 61-626; IDAPA 31.01.01.331-333.
PacifiCorp also filed an Emergency Petition for Stay of the Civil Penalty imposed by
Commission Order No. 29034. Reference IDAPA 31.01.01.324
, .
333; Idaho Code ~ 61-626.
On July 24, 2002, the Commission in interlocutory Order No. 29136 denied the
reconsideration petitions filed by Mr. Shurtz and Mr. Searle and granted PacifiCorp s Petitions
for Reconsideration and Stay. In this Order on Reconsideration and for reasons set forth below
we rescind that portion of our Order No. 29034 directing the Company to provide a $20 credit to
customers. Instead, we find it reasonable for the Company to pay a $10 000 civil penalty into the
State of Idaho General Fund for failure to comply with Customer Information Rule 102.01.
Idaho Code, Title 61, Chapter 7; IDAPA 31.21.02.102.01.
Petition for Reconsideration -- PacifiCorp
PacifiCorp requested reconsideration of that portion of the Commission s Order
No. 29034 that required the Company to provide each customer a credit of $20 (for a total
087 720) within 90 days of the service date of the Order for failure to comply with the
individual notice requirement of Rule 102 of the Commission s Customer Information Rules.
Reference IDAPA 31.21.02.102.
The Company contended that reconsideration is warranted because: (1) Rule 102
does not apply to this proceeding which is neither a general nor a tracker rate case; (2) even if
ORDER NO. 29136
Rule 102 applies and bill stuffer-notice as prescribed therein was required, the Commission
finding that it could impose a remedy pursuant to Idaho Code, Chapter 61 , Title 7 for violation of
that rule was contrary to the law and, accordingly, any remedy imposed there under unlawful; (3)
even if Rule 102 applies, the Commission failed to afford the Company a full and fair
opportunity to be heard regarding the circumstances surrounding the alleged violation and
determination of the appropriate penalty (if any), violating the Company s constitutional and
statutory due process rights; (4) the Commission misinterpreted the penalty provisions of Idaho
Code ~ 61-701 et seq. when it found the maximum penalty applies on a per customer basis; (5)
the Commission exceeded its authority under Idaho Code ~ 61-701 et seq. when it required
payment of the penalty to customers instead of to the Idaho State Treasury; and (6) the penalty
imposed is excessive in comparison to the violation and contrary to Commission precedent.
PacifiCorp requested that the Commission grant reconsideration of Order No. 29034
for the limited purpose of rescinding its findings related to Rule 102 and withdrawing the civil
penalty imposed by the Order. PacifiCorp s emergency petition for stay was limited to that
portion of Order No. 29034 imposing the $1 087 720 civil penalty. Reference Idaho Code ~ 61-
626(3); IDAPA 31.01.01.333.
Commission Order No. 29079
Regarding PacifiCorp s Petition for Reconsideration, the Commission found the
Company s due process argument to be persuasive. The Commission granted the Company an
opportunity to address the individual notice requirement of Rule 102 , our finding that the
Company failed to comply with the rule, and the related remedy that was imposed. u.s.
Constitution, Amendment XIV; Idaho Constitution, Art. 1 ~ 13; Idaho Code, Title 61 , Chapter 7.
The issues presented were both fact and law. Accordingly, reconsideration was granted and an
evidentiary hearing was held.
Because the Commission granted PacifiCorp s Petition for Reconsideration, the
Commission also granted PacifiCorp related Motion for Stay of that portion of the
Commission s Order No. 29034 which directed the Company to provide a $20 credit to
customers within 90 days from the service date of the Commission s Order. Reference
31.01.01.324 (Stay of Orders); .331 (Petitions for Reconsideration).
ORDER NO. 29136
HEARING ON RECONSIDERATION
The evidentiary hearing on PacifiCorp s Reconsideration Petition was held on
September 10, 2002, in Boise, Idaho. The following parties appeared by and through their
respective counselor pro se.
PacifiCorp
Timothy 1. Shurtz
(telephonically)
James F. Fell
pro se
Commission Staff Scott D. Woodbury
The Commission has reviewed the filings of record in Case No. PAC-02-
including its final Order No. 29034 and the underlying transcript of the earlier proceedings. We
have also reviewed and considered the Petition of Reconsideration filed by PacifiCorp, the
transcript of proceedings on reconsideration and the Company s post-hearing brief.
Reconsideration provides an opportunity for an aggrieved party to bring to the
Commission s attention any question previously determined or omitted in a matter. Likewise
reconsideration provides the Commission with an opportunity to rectify any mistake or omission.
Washington Water Power Co. v. Kootenai Environmental Alliance 99 Idaho 875, 591 P.2d 122
(1979).
Customer Information Rule 102 (IDAPA 31.21.02.102)
The Commission s Utility Customer Information Rule 102 reads as follows:
102. NOTICES TO CUSTOMERS OF PROPOSED CHANGES IN
RATES (RULE 102).
01. Customer Notice of General Rate Cases and Tracker Rate Cases.
Each gas, electric, and water utility that applies for a general or tracker rate
change shall give to each customer a statement (customer notice) announcing
the utility s application. If the utility is requesting a rate increase, the
customer notice shall include a brief explanation of the utility s need for
additional revenue and the dollar amount requested. The notice shall give the
proposed overall percentage change from current rates as well as the proposed
percentage increase in revenue for each major customer class. The customer
notice shall make it clear that the application is a proposal, subject to public
review and a Commission decision. It shall also inform customers that a copy
of the utility s application is available for public review at the offices of both
the Commission and the utility. (7-93)
ORDER NO. 29136
02. Timing of Notice for Trackers. Tracker adjustments occasioned by
Federal action may be brought to the attention of customers in compliance
with this rule after approval by the Commission. All other tracker cases
remain subject to the requirements of advance notice contained in this rule.
(7-93)
03. Distribution of Customer Notices. The customer notices referred to in
Rule Subsection 102.01 may be mailed to customers as bill stuffers over the
course of a billing cycle or may be contained in additional comment pages to
the customer s monthly bill. If additional comment pages are used, the
information required by this rule is to be clearly identified, easily understood
and pertain only to the proposed rate change. (7-93)
04. Press Release. In instances covered by Rule Subsection 102., the utility
shall also send a press release containing, at minimum, the same information
presented in the customer notices to all newspapers, radio, and television
stations listed on the Commission s news organization list for that utility. The
press releases shall be mailed or delivered simultaneously with filing of the
application. A copy of the press release shall be filed with the application.
(7-93)
05. Purposes and Effects of this Rule. The purposes of Rule Subsections
102.01 through 102.04 of this rule are to encourage wide dissemination to
customers of information concerning proposed rate changes for utility
services. It is not a purpose of these paragraphs to create due process or other
procedural rights in customers by expanding, contracting, or otherwise
modifying the notice and due process rights of customers under the Public
Utilities Law and the Commission s Rules of Procedure, IDAPA 31.01.01.000
et seq. Accordingly, Rule Subsections 102.01 through 102.04 of this rule
create no individual procedural rights in any customer for notice that would
give rise to a due process or other procedural claim cognizable by the
Commission, but failure to comply with Rule Subsections 102.01 through
102.04 of this rule can be grounds for returning an application forincompleteness. (7-93)
In Order No. 29034, we noted that "some customers indicated they learned of the
Commission s hearings only serendipitously and did not get informed until it was too late
study, prepare and testify." Order p. 22. PacifiCorp has 55 000 customers in southeast Idaho.
Thirty written comments were filed in this case. (Exh. 28.) There were 20 witnesses at the
hearings who signed up to testify. (Exh. 29.) A total of 10 people attended 2 meetings of the
Consumer Advisory Group. (Exh.33.) The Company s focus on meetings with customers was
ORDER NO. 29136
on canal and irrigation customers (Exh. 33). It is not enough, as the Company contends
, "
that
there were a fair number of folks that were aware of the issues.Tr. pp. 543. We cannot
conclude from the number of comments and the number of participants that even a fair minority,
let alone a majority of customers, were aware ofthe Company s filing.
Our concern then as now, is with the adequacy and sufficiency of public notice-
especially notice to customers of impending changes to rates and charges. The importance
Company notice of rate change applications is underscored by the fact that neither the
Commission nor the Company have control over when, how and in what manner press releases
are reported by the media. Tr. pp. 582, 583.
In Order No. 29034, we stated
In crafting this credit regarding notice failure (Rule 102), the Commission
intends to send a strong signal to the Company that it needs to be more
responsible in its communication with customers. Not only must it comply
with regulatory requirements, but it should strive to ensure that a consistent
message is conveyed in its filings with this Commission, in its media and
marketing efforts, and in its efforts to influence public officials.
Order p. 24.
The Company s Application in this case included a number of significant rate issues
at one time. PacifiCorp itself characterizes its filing as "unusual" and an "anomaly.Tr. pp.
505, 570. The Company reasons that its filing was not a "tracker" because a power cost
adjustment tracks costs over a set period of time and is then trued up. Its filing, it states, sought
only to recover excess power costs accrued during a defined period oftime with a surcharge. Tr.
pp. 545, 546. We find that the Company s filing had elements of both a general rate case (cost
of service study and related realignment) and a tracker (requested recovery of $38 million in
deferred excess power costs). The filing also sought to implement a significant increase in the
BP A residential exchange credit and contained a rate mitigation adjustment (RMA) to assure that
no customer class would receive an increase during the surcharge period.
On reconsideration, PacifiCorp states that prior to filing this case, the Company
developed a communication plan. As stated by the Company, a "communication plan is
intended to fully and clearly inform customers of the rate filing.Tr. p. 468. PacifiCorp
inquired and sought advice of its legal counsel shortly after filing as to whether Rule 102 notice
was required. It was advised that the Company s filing was neither a general rate case nor a
ORDER NO. 29136
tracker rate case. Exh. 26, p. 2. The attorney, John Eriksson, qualified his answer by noting that
it has some similarities to a general rate case" and also queried "I don t know if the Company
has plans to send out a bill stuffer explaining to customers what the filing is about. You might
check with Dave Eskelsen.Exhibit No.26 p. 2. Mr. Eskelsen, in the Corporate
Communication Department responds "sounds like we are not 'required' to do a (billing insert) .
. . I assume a billing insert or bill message would be up to us but seems logical." Exh. 26, p. 1;
Tr. p. 597.
Making a determination that Rule 102 did not apply, Mr. Doug Larson, the
Company s Vice President of Regulation, decided not to do a bill stuffer. Tr. pp. 474; 514. Mr.
Larson states that sometimes multiple communications are understood by customers as multiple
rate changes, and thus the purpose of the communication is compromised. Tr. pp. 476; 567.
Customers should not be kept uninformed merely because a case is complex and
difficult to describe and the notice may be misunderstood. It is the Company s responsibility to
craft a clear description of the filing so that customers can distinguish between what is proposed
and what is approved. The stated purpose of Customer Information Rule 102 is "to encourage
wide dissemination to customers of information concerning proposed rate changes for utility
services. Rule 102.4. The extraordinary magnitude of the BP A credit and the power cost
surcharge in this case should have triggered a decision to provide an informational notice to
customers, whether or not the Company s regulatory department believed it was required by the
rules. Situations where advance individual notice of a proposed change in rates is not required
are rare. The lack of individual notice in this case, we find, was contrary to the public interest.
As a general practice, we find that when a company perceives some definitional
ambiguity or a similarity to cases where notice is required, it should err on the side of providing
notice. From a customer relations standpoint, we find that it is always wise to liberally construe
the requirement for information and notice. It is clear that the Company envisioned a hearing
would be held in this case regarding its proposed power cost surcharge, cost of service
realignment and rate mitigation plan. Advance notice gives customers ample time to become
informed about the proposal and meet the deadline for intervening or filing comments. Notice
provided only after a rate change, while informational regarding changes in billing, denies
customers the opportunity to participate and express their opinion in any meaningful way.
ORDER NO. 29136
after-the-fact notice accomplishes something quite different than an advance notice does. They
are not equivalent.
We find that the Company and its legal counsel misinterpreted the requirements of
Customer Information Rule 102. Weare not persuaded by their argument of ambiguity. In
attempting to discern a strict legal requirement, the Company lost sight of the purpose of the
notice requirement. In foregoing up front notice, we find that the Company failed to provide
customers with an early opportunity to become informed and participate.The Company
intention in this case is evidenced by its statement "we chose to focus the individual notice on
the approved change because that change would not be subject to adjustment, as filed changes
are." Tr. p. 476.
Weare unpersuaded that other notice provided through press releases and media
coverage and one-on-one meetings with customer groups can provide sufficient actual notice or
be a substitute for written notice placed in the hands of the customer in his or her monthly billing
statement. It is that opportunity provided to a customer, regardless of whether it is acted upon
that is critical to our decision. PacifiCorp serves 55 000 customers in southeast Idaho.
PacifiCorp made the communication decision that it would provide its customers with notice
only after the Commission issued its Order.
The Company s after-the-fact notice regarding the BPA credit was a bill message:
A new Bonneville Power Administration credit takes effect February 1 , 2002
for residential and qualifying commercial and irrigation customers. The BP
credit will continue for five years. Exh. 34, p. 2.
The Company s after-the-fact notice regarding the Settlement was a bill message:
Recent action by the Idaho Public Utilities Commission re-set prices for Idaho
customers effective June 8. In some cases, bills now show two additional line
items: a temporary surcharge to recover excess power costs; and a rate
mitigation adjustment ordered by the IPUc. Typical bills in Idaho are still on
average, 17 percent lower than in 2001. Exh. 34, p. 4.
Without commenting on the sufficiency of the after-the-fact notices, we cannot know how many
customers failed to act or participate in the Commission s proceedings or hearings in this case
because they were not provided up front Rule 102.01 bill stuffer notice.
In assessing its Application and the requirement of notice, PacifiCorp argues that
taken together all of the components of the filing, on a net basis (w/rate mitigation plan) "did not
ORDER NO. 29136
propose a rate increase for any customer class." Tr. pp. 474; 545. We do not find the net result
of the Company s filing to be determinative of whether notice is required.
The Company states "we sought and followed the advice of counsel regarding legal
notice requirements, we developed and followed a customer communication plan for this filing,
we issued press releases and met with customer groups, and there was significant public
comment on this filing and participation in the public hearings.Tr. p. 478. No one has
claimed, the Company contends, that because of the lack of individual notice, a material issue
did not get raised or considered. Tr. p. 478. This Commission will not countenance an attempt
by the Company to establish a principle that it may disregard Commission rules if it can later
demonstrate a lack of injury or harm to the public. It is not incumbent on the Commission to
find as alleged in PacifiCorp s Petition page 24 "that customers had been inadequately noticed
by other means or that actual injury had occurred as a result of the violation.It cannot be
concluded from the comments and participation in this case that the public understood the
Company s filing. The overall tenor of written comments submitted in this case instead if
anything indicates that the public was confused as to what was at issue. (Exh. 28.That
confusion, we find, might have been diffused by use of a well crafted upfront Rule 102 bill
stuffer.
Rule 102 Violation - Civil Penalty
In Order No. 29034 we required the Company to provide a $20 credit to each of its
customers (a total of $1 087 720) for failing to comply with the individual notice requirement of
Rule 102 ofthe Commission s Customer Information Rules. IDAP A 31.21.02.102. We ordered
a credit and not a payment to the State General Fund because we strongly believe that in the
Company s failure to give notice, it is the customer that is the aggrieved party. It is the customer
who by lack of notice is deprived of the opportunity to participate. On reconsideration, we re-
examine the statutory underpinnings for the relief that we fashioned in light of the Company
actions. Based upon our review, we amend the portion of Order No. 29034 that directed the
Company to provide a $20 credit to each customer. The Public Utilities Law does not permit the
Commission to assess a civil penalty but we may initiate a proceeding in district court for the
court to impose such a penalty payable to the general fund. Consequently, we find that a civil
penalty payable to the general fund of the Idaho State Treasury is reasonable in this instance.
Idaho Code ~~ 61-701; 61-706, 61-712.
ORDER NO. 29136
The Company contends that if there was a violation of Rule 102, it was the result of a
good faith misreading of the rule, not the result of indifference to the Commission s rules or
customer communications. Tr. p. 478. The Company should set a higher standard for its
customer communications than lack of indifference. Every filing by the Company presents an
opportunity to improve its customer relations. On reconsideration the Company has provided
evidence to the Commission that has allayed some of our concerns that PacifiCorp was
indifferent to customer concerns. That being said, however, we nevertheless believe that the
Company under values "notice" and that much can be done by PacifiCorp to establish better
communication pathways with its customers.
In our Order granting reconsideration we commented on the Company
communication with customers, and its presence and accessibility to customers, and directed the
Company to review its practices and physical facilities and reduce or eliminate obstacles that
may inhibit effective communication with customers and report actions taken to us. Although
requested in July, the Commission still awaits PacifiCorp s Report.
Having concluded once again that PacifiCorp failed to comply with Customer
Information Rule 102., we must reconsider what action (if any) is appropriate. PacifiCorp
contends that the remedy for violation of Rule 102 is a return of the Application and that any
penalty imposed pursuant to Idaho Code, Title 61 , Chapter 7 is unlawful. We disagree. The
Commission is not restricted to a simple return of the Application. That might have been an
appropriate remedy were the failure discovered early on, but in this case the failure was not
discovered until during the evidentiary hearing at the conclusion of the case. Idaho Code, Title
, Chapter 7 Enforcement and Penalty states
61- 706 - Any utility which violates or fails, omits or neglects to obey,
observe or comply with any . . . rule direction, demand or requirement. . . is
subject to a penalty of not more than $2 000 for each an every offense.
are asked to consider whether the penalty imposed ($20 per customer or
087 720) is unduly punitive and excessive. Tr. p. 477. In considering the facts presented on
reconsideration, we do find that it is inconsistent with our treatment of other Rule 102 violations.
Weare persuaded on the facts of this case that the mathematical consequence of assessing the
penalty on a per customer basis leads to an excessive fine and unreasonable result. Based on the
ORDER NO. 29136
record developed on reconsideration, we find that the facts do not warrant seeking a civil penalty
as large as initially imposed.
We find it appropriate to seek a civil penalty for violation of Rule 102. We do not
dispute the Company s contention that the "level of communication that has gone on in this
proceeding is far and away the most extensive effort that we (the Company) has ever done to
communicate with customers.Tr. p. 543. We conclude only that in failing to provide
individual Rule 102 notice, the Company s efforts fell short ofthe goal.
While the Company contends that the Commission should regard the Company
failure to provide Rule 102 notice as simply a good faith mistake, it is troubling that the
Company appears to discount the value of individual notice, and the value of getting information
with the monthly bill. Tr. p. 527. We do not agree with the Company s contention that the lack
of individual notice had no effect on the level of customer participation at our hearing. It is also
mistaken, we find, to conclude that "those who chose not to participate did so because they were
comfortable with what they had seen." Tr. p. 543.
Rule 102.02 requires that notice be provided to each customer. Idaho Code ~ 61-706
provides that the maximum civil penalty for each violation of our rules shall be no greater than
000. In our initial Order we found that each instance of failure to provide notice to a
customer was a separate offense. On reconsideration, we find each billing month that passed
without individual Rule 102 notice of the Company s Application to be a missed opportunity and
a separate and distinct offense. Reference Idaho Code ~ 61-707.
Accordingly, we find it reasonable to seek a civil penalty of $2 000 for each month
the Company violated its Rule 102 notice requirement. There were five months from the month
of the Application in January to the month of the hearing in May for a total civil penalty of
$10 000. We further find the amount of fine assessed to be just and reasonable and to be
commensurate with the nature of the rule violation and the history of fines assessed on other
utilities.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and
PacifiCorp, dba Utah Power & Light Company, an electric utility, pursuant to the authority and
power granted under Title 61 , Idaho Code and the Commission s Rules of Procedure, IDAPA
31.01.01.000 et seq.
ORDER NO. 29136
ORDER
In consideration of the foregoing and as more particularly described above IT IS
HEREBY ORDERED and the Commission does hereby affirm its prior dismissal of the Petitions
of Reconsideration filed by Mr. Tim Shurtz and Mr. Stanley Searle. Interlocutory Order No.
29079.
IT IS FURTHER ORDERED and the Commission on reconsideration amends its
prior direction to PacifiCorp to provide each customer with a one-time credit of $20. Instead the
Commission finds it reasonable to seek a civil penalty for the Company s failure to comply with
Customer Information Rule 102.01. The Company may submit a check in the amount of
$10 000 payable to the State of Idaho General Fund to the Commission Secretary within 21 days
of the date of this Order. IfPacifiCorp does not voluntarily make this payment, the Commission
shall commence an action in Idaho District Court to recover this civil penalty as authorized by
law. Idaho Code ~ 61-712.
THIS IS A FINAL ORDER ON RECONSIDERATION. Any party aggrieved by this
Order or other final or interlocutory Orders previously issued in this Case No. PAC-Ol-l may
appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code ~ 61-627.
ORDER NO. 29136
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of October 2002.
~T-
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MARSHA H. SMITH, COMMISSIONER
IS S. HANSEN, COMMISSIONER
ATTEST:
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ORDER NO. 29136