20190415Comments.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 - SANDY DOWNS.
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Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-59T8
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. PAC.E-19.02
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
On February 4,2019, Rocky Mountain Power ("Company") filed an Application
requesting authority to transfer to the City of Idaho Falls ("City") the rights and obligations to
serve two customers at or near Sandy Downs in Idaho Falls.
The Company submits its Application for approval under the Idaho Electric Supplier
Stabilization Act ("ESSA"), Idaho Code $$ 61-332 through 6l-334C, and the electric utility
asset transfer statute, Idaho Code $ 6l-328. With this Application, the Company asks the
Commission to approve the Company's Asset Purchase Agreement with the City of Idaho Falls
("Agreement").
The Company filed its Application pursuant to the Allocation Agreement authorized by
the Commission in Order No. 33943. The Company and the City have agreed to transfer future
electric service to two service locations from the Company to the City. The City has agreed to
ISTAFF COMMENTS APRIL 15,2OI9
pay the Company the value of the assets plus 167 percent of the transferred customers' previous
twelve months electric bills. The total sale price is $59,513.
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 $59,513, as calculated in Table 1 below, is the correct price and
includes the value of existing assets, an income tax gross up, lost customer revenue, separation
costs, and legal/transaction costs. The method used to calculate the values, are consistent with
the methodology prescribed in the 2017 Service Allocation Agreement and approved in
Commission Order No. 33943. Staff believes the Company's accounting treatment of funds
derived from the sale will assure that other customers are not harmed.
Table 1: Calculation of Sales Price
Sale Component Sales Price
Sale of existing assets $8,913
Tax gross up $2,117
Lost customer revenue $43,283
Separation costs s3,700
Legalltransaction costs $1,500
Total sales price $59,513
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
2STAFF COMMENTS APRIL 15,2OI9
167 percent of revenues from the 12 most recent months of service for each customer in the
affected area.
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. Separation costs are expenses incurred to physically separate the assets being sold
from the Company's distribution system.
Legal/transaction costs include the costs of estimation, accounting, finance, regulation,
and legal expenses related to the sale. The Company has issued a pricing guideline for
legal/transaction costs, see Table 2 below.
Table 2: Legaffiransaction Price Guideline
Price Guideline Cost
Asset sales where the assets being sold are less
than $10,000 $ 1,500
Asset sales where the assets being sold are greater
than $10,000 $2,500
Customer Notification
The Company will not send out a notice to customers. The Company explained that the
facilities being served by the assets being transferred are all city-owned facilities and there will
be no other customers affected by the change. Idaho Falls Power will serve power to the City of
Idaho Falls. There were no public comments submitted.
STAFF RE,COMMENDATION
Staff recommends the Commission approve the Asset Purchase Agreement provided as
an attachment to the Company's Application.
JSTAFF COMMENTS APRIL 15,2OI9
srvRespectfully submitted this day of April2019.
Edward
Deputy General
Technical Staff: Travis Culbertson
Rick Keller
Kevin Keyt
i :umisc/comments/pace I 9.2ejkkrktnc comments
4STAFF COMMENTS APRIL I5,2OI9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF APRIL 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC.E-19-02, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
DANIEL E SOLANDER
ROCKY MOLINTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 841 16
E-MAIL: [e-mail]
Daniel. solander@pacifi corp. com
IDAHO FALLS CITY POWER
BEAR PRAIRIE
I4O S CAPITAL AVE
BOX 50220
IDAHO FALLS ID 83405
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
datareque st @,pac i fl corp. c om
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CERTIFICATE OF SERVICE