19970814_1.docx

MINUTES OF DECISION MEETING
August 14, 1997 - 1:30 p.m.
In attendance were Commissioners Dennis Hansen, Ralph Nelson and Marsha H. Smith and staff members Don Howell, Tonya Clark, Scott Woodbury, Birdelle Brown, Terri Carlock, Rick Sterling  and Myrna Walters.  Also in attendance were Bart Kline, Attorney at Law; Peter Richardson, Attorney at Law; John McFadden, Attorney at Law; Conley Ward, Attorney at Law and JoAnn Butler, Attorney at Law and Jeannette Bowman of Idaho Power Company..
Commission President Dennis Hansen called the meeting to order.
Items from the Published August 14, 1997 Agenda were considered and acted upon as follows.
1. August 4, 1997 Decision Meeting Minutes and 2. August 8, 1997 Decision Meeting Minutes.
Commissioner Smith made a motion to approved Items 1 and 2, (Decision Meeting Minutes) as corrected. Motion carried unanimously.
On the Consent Agenda:
3. August 14, 1997 Regulated Carrier Division Agenda.
3A. Century Telephone’s Acquisition of Pacific Telecom Inc. dba Gem State Utilities.
3B. Brad Purdy’s August 12, 1997 Decision Memorandum re: Application of MCIMETRO Access Transmission Services, Inc. for a Certificate of Public Convenience and Necessity for Authority to Provide Local Exchange Service in the State of Idaho.
Commissioner Hansen made a motion to approve staff recommendation on all items on the Consent Agenda.
Commissioner Smith had a question on Item 3A, Acquisition of Pacific Telecom by Century Telephone. Wasn’t sure what was anticipated for response - letter from Legal, or something else?
Don Howell responded that the company indicated a letter from one of the attorneys on staff was sufficient.
With that, Commissioners Smith and Nelson voted to support Commissioner Hansen’s motion. It carried unanimously.
4. Scott Woodbury’s August 4, 1997 Decision Memorandum re: Case No. IPC-E-97-9 Reducing Contract Term for Qfs Less Than 1 Megawatt to Five Years. (Held from 8-8-97 Decision Meeting).
Scott reviewed the decision memo. Staff supports company. Staff also suggests that there may be a problem with the SAR and has recommended an index rate. Idaho Power agreed to that.  
Commissioner Smith said she was curious - if there is a hearing, what would it be about?
Scott Woodbury replied that Rosebud spoke to “contract in practice” of Idaho Power, whether contracts were over 5 years in length what if it had longer contract and also, it expressed concern that the Commission is allowing the company tp rate base plant at the cost of foregoing process from Qfs and perhaps the company should be holding off its higher priced resources and purchasing QF power. Didn’t really know where they want to go with a hearing.
Commissioner Nelson said if you were going to index price, you would want to go to hearing for that change in methodology.
Scott agreed. Staff comments indicated that there were some problems with the SAR methodology and are some problems with the methodology itself in moving to shorter contract term. Moving to that you would have rates determined within their surplus period. (That creates part of the problem).
Commissioner Hansen asked Scott if he saw an inconsistency with larger Qfs then smaller Qfs with shorter time?
Scott indicated staff does.
Commissioner Hansen said he got the impression that they both should be the same time period.
Scott Woodbury said the logic of the Commission regarding contract term is larger is applicable to smaller, problem being the different methodologies.
Commissioner Hansen asked Scott if he felt then that going to 5 year will make it more reasonable and more efficient for the utility company in a competitive environment moving into deregulation? Did he think 10 years tends to hamstring the companies moving into competitive environment?
Scott Woodbury replied the utilities view these contracts as non-voluntary contracts and stranded costs. Another point raised by Rosebud and Earth Power is that essentially if the Commission would approve that it would be putting the final nail in the coffin. They would not be able to go out into the marketplace and get funding for their projects with just 5 year funding.
Commissioner Hansen asked if it was a downside for the Qfs,  with the shorter term? Asked what the pleasure of the Commission was?   Said based on the competitive environment there is a concern about stranded costs and he has sympathy to the small QF customer being able to get into the system as they so decide and hate to see this put the nail in the coffin for the small people; however, with the concern of stranded cost and competitive environment, and the methodology is an area that will have to be looked at and probably changed and based on those reasons, would move that we approve moving to the 5 year using (developing) a new methodology in the calculation. So first question is: Whether to reduce the contract terms for the small Qfs to 5 years? Would move that we go with staff and go to 5 year. Asked for discussion.
Scott Woodbury said with respect to use  of the SAR methodology, the Commission could allow the company to use the SAR to calculate rates for 5 but make those subject to whatever the change is (arriving out of that case) - subject to change unless you believe that the SAR methodology was a good method and you want to continue with that. Concern is timing. Also a matter that he isn’t sure he put in the comments, in its contract with the utilities, that they be grandfathered in at present methodology.
Commissioner Hansen suggested taking one item at a time.
Commissioner Nelson said he would support the motion but it is more than just a hindrance to the power producers. Only people who can think of doing a project is someone who already has project on grandfathering. However, it is the responsibility of Congress to revisit PURPA and they have declined to do that and it has left the Commission with these difficult decisions. Any contract today becomes a stranded cost tomorrow if it is above cost. It is a battle yet to be fought.  Isn’t anywhere else where they are contracting for more than 5 years so we might as well move in that direction.
Motion to change this to a 5-year term for small Qfs carried unanimously.
Next item was the methodology.
Commissioner Hansen asked if there was a motion to either continue current or make change?
Commissioner Nelson said he thought the Commission would have to have a hearing to change the methodology, so he would continue the current methodology.  
Commissioner Hansen quoted the decision memo regarding the market index.
Scott Woodbury said what is before the Commission on modified procedure is not just the application but the comments of the parties and staff suggested a problem with methodology company is assuming will continue.  
Commissioner Smith said it seemed to her that all that could be considered is what was noticed  on modified procedure. Change in methodology was not part of the company’s application. If staff thinks it is inappropriate it should be on the agenda.
Commissioner Hansen said based on those comments, we have finished this decision memo.
Scott asked about WWP’s request that the effective date be deferred to allow it to file a similar case so it is not disadvantaged in having to continue with 20 year contracts while Idaho Power has only the obligation for 5 years.
Commissioner Smith asked if that was in the notice?
Scott said the Commission had indicated that the other companies could file cases.
5. Falls Water Company Application for Rate Increase. Case No. FLS-W-97-01.
Commissioner Nelson questioned the “sinking fund”.
Staff reviewed the funding of that.
Commissioner Smith said she wanted to congratulate the staff on their speedy handling of this case. It was filed in May and it is done in August. That is a good example of a small water company needing money and it getting handled promptly. Did have a question on the residential/non-residential rate, couldn’t they just include churches in the commercial rate?
Rick Sterling replied. The problem before was that these charges were billed as being either one or two times residential. so staff recommended that these customers be metered as commercial customers.
Commissioner Nelson made a motion to approve the entire case, as agreed to by staff and Falls Water Company. It is a 21.64% increase in revenue requirement.
Commissioner Hansen had one question - is the Commission changing the delinquent charge?
Scott replied that Company had requested withdrawal of that and they will use Commission rules on disconnection instead.
Motion passed unanimously.
6. Brad Purdy’s August 7, 1997 Decision Memorandum re: Case No. FIL-T-97-1 Filer Mutual Telephone Company’s Motion for Interim Universal Service Funding.
Don Howell reviewed the decision memo, in Brad Purdy’s absence.
Company and staff are recommending that the Commission consider the interim increase at an oral argument and prehearing conference.
Commissioner Smith asked what the issues to be discussed would be at the oral argument?
Terri Carlock responded - said there are some issues such as rates and how they match with statewide average and also some accounting adjustments that Madonna found and company agreed to. Also rate of return for a co-op is an issue.
Commissioner Smith suggested just going to a hearing.
Discussed timing.
Terri Carlock responded regarding staff timing.
Commissioner Smith said if staff could be ready in 30 days, it would be her preference to do just one hearing.
Terri Carlock said then the company could file rebuttal.
Conley Ward spoke for the company. Said if those are the only issues, company would do rebuttal live and would be ready 5 days after staff filed.
Commissioner Nelson asked if it was an issue, is anyone discussing less than 100% in the interim?
Terri Carlock said she thought the question was what that level might be preliminarily. View of the staff is it is not as much as company has asked for.
Commissioner Nelson asked if there wasn’t a request before the Commission for interim relief?  Are we then deferring that and going for permanent?
Commissioner Smith said that would be her preference.
Staff is agreeable to that.
Terri Carlock explained that the accounting adjustments have been addressed and discussed with the company. Could do it fairly quickly rather than address the interim.
Commissioner Nelson said he had a real problem with not addressing the interim if that is what we are asked to do? We have to address the application. Can understand Commissioner Smith’s concern but in order to do that will have to turn them down on interim.
Commissioner Smith said she would then make a motion to deny interim, establishing a hearing date within 45 days of the date of the order.
Commissioner Nelson said his thought was in lieu of that, would move that the Commission grant interim on 75% basis until it could be determined.
Discussed the 75%.
Joe Miller, Attorney appearing for MCI, commented that if the Commission is going to address interim first as opposed to moving to speedy determination of final, he would support the notion of oral argument on whether or not to grant interim first so all parties can be heard. Have to confess he has added confusion because he didn’t file reply comments because there was a request for oral argument and it was his understanding from staff that there was going to be an oral argument on that.  Don’t want to hold up the proceedings but do have some thoughts about whether or not this is an appropriate use of USF money. If interim is granted without that consideration it would be hard to take that money back or deny the application for permanent reasons. So from his own point of view, if the Commission is going to proceed with interim, want oral argument; if it is on permanent, would be prepared to proceed to hearing.
Commissioner Hansen asked Commissioner Nelson if he had further comments.
Commissioner Nelson said he would try to quickly hold an oral argument on whether to give interim funding from USF, partly because Commission is going to have a hard time scheduling a hearing.
Commissioner Smith commented: think within 45 days from today, we can hold a hearing on the permanent. Her other comment was: Don’t know if an oral argument will be enough to answer questions to vote on interim.
Voted on Commissioner Nelson’s substitute motion: 1 Aye; 2 Nays.
Then voted on main motion - passed unanimously.
Meeting adjourned.
Dated at Boise, Idaho, this 19th day of August, 1997.
Myrna J. Walters
Commission Secretary