20190117Comments.pdf

EDWARD JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10446
IN THE MATTER OF THE APPLICATION FOR
APPROVAL OF THE ASSET PURCHASE
AGREEMENT BETWEEN ROCKY MOUNTAIN
POWER AND THE CITY OF IDAHO FALLS -
YELLOWSTONE HIGHWAY
[TilCEIVEI)
?lll! JltFi I 7 Plt 12: 55
Ltr,
,'iISSION
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. PAC-E.18.11
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Edward Jewell, Deputy Attorney General, submits the following comments.
BACKGROUND
OnNovember 8,2018, Rocky Mountain Power ("Company") filed an Application
requesting approval of the Asset Purchase Agreement entered into by the Company and the City
of Idaho Falls ("City") to supply electric service to locations near Yellowstone Highway in Idaho
Falls. On December 4,2018, the Commission issued OrderNo. 34199, Notice of Application,
Notice of Modified Procedure, and Notice of Telephonic Hearing.
The Company submits its Application for approval under the Idaho Electric Supplier
Stabilization Act (ESSA), Idaho Code $$ 6l-332 through 6I-334C, and the electric utility asset
transfer statute, Idaho Code $ 6l-328. With its Application, the Company asked the
Commission to approve the Company's Asset Purchase Agreement with the City of Idaho Falls
("Agreement").
ISTAFF COMMENTS JANUARY I7,2OI9
The Company filed its Application pursuant to the Service Allocation Agreement
authorized by the Commission in Order No. 33943. The Company and the City have agreed to
transfer future electric service of eight customers from the Company to the City. The City has
agreed to pay the Company the value of the assets plns 167%o of the transferred customers'
previous 12 months electric bills. The total sale price is $31,934.
STAFF ANALYSIS
Staff analyzed the asset sale and determined that it conforms to the provisions of the
ESSA and prior Commission orders. Staff determined that funds from the sale are sufficient to
offset the undepreciated rate base of assets being transferred to the City and that the Company's
accounting treatment assures that the value of these assets are removed completely from rate
base.
Sales Price and Accounting Treatment
The sales price of $31,934, as calculated in Table I below, includes the value of existing
assets, an income tax gross up, lost customer revenue, separation costs, and legal/transaction
costs. These costs, and the method used to calculate them, are consistent with the methodology
prescribed in the 2017 Service Allocation Agreement and approved in Commission Order No.
33943. Staff believes that the Company's accounting treatment of funds derived from the sale
will assure that other ratepayers are not harmed.
Table 1: Calculation of Sales Price
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Sale Component Sales Price
Sale of existing assets $ 8,848
Lost customer revenue $ 17,335
Tax gross up $ 2,865
Separation costs $ 1,387
Legal/transaction costs $ 1,500
Total sales price $31,934
STAFF COMMENTS JANUARY 17,2OI9
The existing asset price was calculated using the replacement value of each asset less
depreciation. Replacement value was determined using the Company's Retail Construction
Management System, and depreciation was determined using a straight-line methodology
consistent with prior Commission orders. Lost customer revenue was calculated using 167
percent of revenues from the 12 most recent months of service for each customer in the affected
atea.
The income tax gross up corrects for the difference in straight-line depreciation used by
the Commission to determine asset value and accelerated depreciation used for income tax
purposes. The separation costs are expenses incurred to physically separate the assets being sold
from the Company's distribution system, and the legal/transaction costs include the costs of
estimation, accounting, finance, regulation, and legal expenses related to the sale.
Customer Notification
The Company explained that the customers will be notified by either outbound call
campaign from their call center or a hand delivered door notice for those that do not respond to
the call campaign. The Company fuither explained that Idaho Falls Power will also send written
correspondence regarding the transfer of services. One public comment in support of the transfer
was submitted on December 10, 2018.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Asset Purchase Agreement provided
as an attachment to the Company's Application.
Respectfully submitted this t-?t^^day ofJanuary 2019.
Edward J
General
Technical Staff: Kevin Keyt
Michael Eldred
Travis Culbertson
i:umisc/comments/pacel8. I lejkskmetnc comments
JSTAFF COMMENTS
Deputy
JANUARY 17,2019
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS ITTH DAY OF JANUARY 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-18-11, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
DANIEL E SOLANDER
ROCKY MOLTNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 841 16
E-MAIL: ted.weston@pacifi corp.com
Daniel. solander@oacifi corp. corn
IDAHO FALLS CITY POWER
BEAR PRAIRIE
140 S CAPITAL AVE
BOX 50220
IDAHO FALLS ID 83405
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@pacifi corp. com
SECRE
CERTIFICATE OF SERVICE