20160129Comments.pdf

BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.007 4
(208) 334-03s7
IDAHO BAR NO. 7956
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION TO APPROVE
ASSET PURCHASE AGREEMENT
BETWEEN ROCKY MOUNTAIN POWER
AND THE CITY OF IDAHO FALLS.
RECEIVEO
?015 JAH 29 Pll 2: 05
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC.E-15-15
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Brandon Karpen, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued on January 8,2016, submits the following
comments.
BACKGROUND
On December 8, 2015, Pacificorp dba Rocky Mountain Power filed an Application
requesting authority to sell/transfer to the city of Idaho Falls certain service territory and
associated electric facilities currently owned and utilized by the Company to provide electric
service to the Fielding cemetery, a City owned facility. In the Application, Rocky Mountain and
STAFF COMMENTS JANUARY 29,2016
Idaho Falls ("the Parties") request that the Commission approve the proposed Asset Purchase
Agreement which the Panies shall subsequently execute.
This Application falls under the Electric Supplier Stabilization Act (ESSA), Idaho Code
$$ 61-332 et seq. The purposes of the ESSA are to: (1) promote harmony between electric
suppliers; (2) prohibit the "pirating" of consumers; (3) discourage duplication of electric
facilities; (4) actively supervise the conduct of electric suppliers; and (5) stabilize service
territories and consumers. To fulfill these goals, the ESSA restricted competition for existing
utility customers. Furthermore, the ESSA requires that the transfer of service area be
accomplished only "upon the payment ofjust compensation, as defined in [Idaho Code $] 7-
7ll;' Idaho Code $ 6l-333B.t
By way of background, in conformance with the provisions of the ESSA, in August 2005,
the Company and the City entered in to the Idaho Falls Allocation Agreement (the "2005
Agreement"). This 2005 Agreement was intended "to reduce duplication of service and promote
stability of their respective service areas." Application at 2; Exhibit 1. It specifies, among other
things, "that the Company would not provide electric service to any new customers within the
City's boundaries and the City would not provide electric service to any new customers outside
of its municipal boundaries." Id. The Commission approved the 2005 Agreement in Order No.
29895 pursuant to the provisions of (ESSA).
The 2005 Agreement prescribes the procedure for the transfer of customer services
between the Parties so long as the customer being served provides written request to transfer of
service, the power suppliers agree to the transfer, and the new electric supplier agrees to pay for
lost revenues and any facilities utilized by the other party to serve that customer. The 2005
Agreement further quantifies just compensation as 16l percent of the prior past twelve months
customer billing. The terms of the proposed Asset Purchase Agreement now before the
Commission appear to conform to the 2005 Agreement.2
Now before the Commission is a proposal to transfer service area and a single customer
between the Parties. More specifically, the Parties have agreed to a transfer of the cemetery
service area and the certain related assets (poles, wires, cross arrns, insulators, insulators, guys
and other facilities used to serve the area) from the Company to the City. The Fielding cemetery
I ldaho Code 7-7ll is part of ldaho's eminent domain code. The Supreme Court of Idaho has held that "just
compensation is based on fair market value." RoclE Mountain Pov,er v. Jensen, 154 ldaho 549 (ldaho 20 I l).
2 Staff is aware that the 2005 Agreement was terminated by the City in 2015.
STAFF COMMENTS JANUARY 29,2OIO
has provided written a request to this transfer of electric service from Rocky Mountain to Idaho
Falls, and the Parties have agreed to the transfer.
The Application contains the Parties' Asset Purchase Agreement, which the Parties claim
conform to the provisions of the earlier 2005 Agreement. The purchase price of the assets in the
Asset Purchase Agreement is specified as the current replacement cost less any accumulated
depreciation, as previously set in the 2005 Agreement. In addition, the Parties agree that
compensation based on 167 percent of the prior past twelve months customer billing will be paid
to Rocky Mountain Power. Finally, the sale price will include specified funds to be paid to the
Company for any legal or transaction costs. The agreed-upon total purchase price is $49,321.61.
Exhibit D.
STAFF ANALYSIS
Pursuant to the ESSA, the Commission is authorized to approve, conditionally approve,
or deny the sale or transfer of any public utility property. The Commission is charged with
reviewing such transactions to determine consistency with purposes of the ESSA. Idaho Code $
6l-334B. As previously stated, the purposes of the ESSA are to: (1) promote harmony between
electric suppliers; (2) prohibit the "pirating" of consumers; (3) discourage duplication of electric
facilities; (4) actively supervise the conduct of electric suppliers; and (5) stabilize service
territories and consumers. The ESSA further contains a requirement of 'Just compensation" in
such transactions.
In the Staff s view, the proposed transaction and calculation ofjust compensation
conforms to the terms of the 2005 Agreement, which the Commission has previously approved
as conforming to the requirements of the ESSA. Order No. 29895 (finding that the "[2005]
Agreement avoids duplication of services, stabilizes service territories and customers, and
promotes harmony between PacifiCorp and Idaho Falls Power," and "... comports with the
purposes of the ESSA and Idaho Code sec 61-333B."). Further, because the City of Idaho Falls
is the customer making the request in order to serve their own cemetery, the sale of assets is
consistent with the public interest.
Moreover, even when viewing the transaction outside the scope of the 2005 Agreement,
the proposal continues to comply with the purposes of the ESSA: promoting harmony between
the two power suppliers, discouraging pirating, eliminating potential duplicative services, and
STAFF COMMENTS JANUARY 29,2016
stabilizing territory with proper Commission oversight. Finally, the purchase price of the assets
appears just and within fair market value, and will prevent any increase in rates for remaining
Rocky Mountain Power customers.
STAFF RECOMMENDATION
Staff reviewed the Application to determine if the proposed transaction is consistent with
the ESSA. Staff believes that the Asset Purchase Agreement promotes harmony between the
City and Rocky Mountain and does not create "pirating" of consumers. Staff has reviewed the
proposed compensation, finds the calculation identical to methodology previously approved by
the Commission and believes it to be adequate to cover any Rocky Mountain stranded
investment and any other damages or costs that may be associated with the loss of the Rocky
Mountain customer to Idaho Falls Power. Staff has determined that the compensation is
reasonable and in conformance with Idaho Code $$ 61-333, 61-3338, and 6l-3348. Staff also
believes that the Commission's review of this contract demonstrates active supervision. At the
time these comments were prepared, the Commission had only received one public comment in
support of the Application.
In sum, the parties have demonstrated that the agreement conforms to the provisions of
the ESSA. Existing Rocky Mountain customers are not harmed by this transaction. Therefore,
Staff recommends the Commission approve the Customer Allocation Agreement.
Respecttully submitted *iffivof January 2016.
i:umisc:comments/pacel5. I 5bk comments
STAFF COMMENTS JANUARY 29,2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29TH DAY OF JANUARY 2016,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC,E-15-I5, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
DANIEL E SOLANDER
ROCKY MOI.JNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 841 16
E-MAIL: ted.weston@pacifi corp.com
Daniel. solander@f acifi corp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@pacifi com. com
JANICE FLOWERS
IDAHO FALLS CITY POWER
140 S CAPITAL AVE
BOX 50220
IDAHO FALLS ID 83405
CERTIFICATE OF SERVICE