20190618Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
IN THE MATTER OF THE APPLICATION
F'OR APPROVAL OF THE PROFESSIONAL
WAY.BROADWAY ASSET PURCHASE
AGREEMENT AND TRANSFER OF
SERVICE BETWEEN ROCKY MOUNTAIN
POWER AND THE CITY OF IDAHO FALLS.
RECEIVED
?fl19 JUl,l lB Plt lr: 35
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Street Address for Express Mail
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIBS COMMISSION
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CASE NO. PAC.E.T9.O6
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On May 10,2019, Rocky Mountain Power ("Company") filed an Application requesting
approval of the Asset Purchase Agreement ("Agreement") entered into by the Company and the
City of Idaho Falls ("City";.r The Application requests authority to transfer from the Company
to the City the rights and obligations to serve five (5) customers at Professional Way and one (l)
customer at Broadway.
The Company filed its Application for approval under the Idaho Electric Supplier
Stabilization Act ("ESSA"), Idaho Code $$ 6l-332 through 6l-334C, and the electric utility
asset transfer statute, Idaho Code $ 6l-328.
I A copy of the Agreement is attached to the Application.
STAFF COMMENTS 1 JUNE I8,20I9
The subject Agreement was entered into pursuant to the 2017 Service Allocation
Agreement authorized by the Commission in Order No. 33943. In this transaction, the Company
and the City have agreed to transfer future electric service of six (6) customers, at two (2)
locations, from the Company to the City. The City has agreed to pay the Company 167oh of the
six (6) transferred customers' previous l2 months electric bills, plus the value of the transferred
assets, tax gross-up, separation costs, and legal/transactional costs. The total sale price in the
contemplated transaction is $3 1,75 1.
STAFF ANALYSIS
Staff has reviewed the proposed transaction and believes that it supports the intent of the
ESSA, the electric utility asset transfer statute, and is consistent with prior Commission Orders.
In response to Staff s Production Request, the Company provided explanations detailing
how this particular transaction would comply with ldaho Code $ 6l-328 (3) by: (a) promoting
the public interest and harmony between electric suppliers consistent with ldaho Code $ 6l-
332(2), (b) fairly compensating the Company for its transferred assets and investment without
financial impact to existing customers, and (c) ensuring that the transferred customers will
continue to receive electric service from the City. The proposed transaction meets the statutory
requirements and complies with the Commission's previous Order.
The Professional Way property is located in the developed Sunnyside Industrial and
Professional Park. The metered accounts are all located on a single lot of the development. The
Professional Way property is surrounded on three (3) sides by other developed properties still
served by the Company. The fourth side abuts a railroad track and a highway; this is likely the
direction from which the City service would be provided. This means that the Professional Way
property is the only property in the immediate area served by the City, which could potentially
have negative impacts on overall resource allocation and efficiency.
The Broadway meter is positioned in a vacant lot and is currently inactive. The last l2
months of billing activity for this location occurred almost three (3) years ago, between August
2016 and July 2017. Staff verified that the revenue calculation using billing history provided by
2STAFF COMMENTS JUNE 18,20I9
the Company complies with the 2017 Service Allocation Agreement.2
Sales Price and Accounting Treatment
The total sales price of the assets being sold is $31,751, see Table 1 below. Staff verified
that the sales price contemplated in the Agreement includes the fair market value of the existing
assets, the separation costs, the lost customer revenue, and the legal/transactional costs. The
method used to generate the values are consistent with the methodology incorporated in the 2017
Service Allocation Agreement. Staff believes that the Company's accounting treatment of the
proceeds received from the sale of these assets assure no customers will be harmed from this
transaction.
Table 1: Calculation of asset sale for Professional Way and Broadway
Sale Components Professional Way Broadway Totals
Asset Valuation $ I 6,435 $266 $ 16,701
Separation Costs $2,122 $767 $2,889
Lost Customers Revenue $9, I 64 $329 $9,493
Legal/Transactional Costs $2,500 $ 168 $2,668
Total Sale Price $30,221 $1,530 $31,751
The price of the existing assets was calculated by using the replacement value of each
asset being sold minus depreciation. This was determined using straight-line depreciation
methodology, consistent with prior Commission Orders. The replacement value was determined
using the Company's Retail Construction Management System. Lost customer revenue was
calculated using the 2017 Service Allocation Agreement, as discussed previously.
The Separation costs are expenses which have been incurred during the physical
separation of the assets being sold from the Company's distribution system. Legalltransactional
costs include the costs of estimation, accounting, finance, regulation, and legal expenses related
2 Service Allocation Agreement - Definition 6 Compensation - "In addition, the Acquiring Utility will pay the other
utility an amount equal to one hundred sixty seven percent (167%) of the Existing Consumer's revenue collected
Ilom the most recent twelve (12) months of active provision of electric service, which must be within the past five
(5) years immediately preceding the time of transfer."
JSTAFF COMMENTS JLTNE 18,2019
to the sale. The Company has issued the pricing guideline used for the determination of the
legal/transaction costs, see Table 2 below.
Legal Expense Price Guidelines Amount
Asset sale less than or equal to $2,000 7 5Yo of the sale price
Asset sale greater than $2,000 but less than $ 10,000 $ 1,500
Asset sale equal to or greater than $10,000 $2,500
CUSTOMER NOTICE, PRESS RELEASE AND PUBLIC COMMENTS
The Company stated that customers requested the transfer for the Professional Way
facilities, so a customer notice was not necessary atthat location. Additionally, since there is no
customer at the Broadway location, notification was not deemed necessary.
A public telephonic customer hearing was held on June ll,2019 at2:00 PM MST. No
members of the public participated in person or telephonically. As of June 17,2019 no written
public comments have been submitted for this case.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Asset Purchase Agreement and
authorize the transfer of electric service for the customers located at Professional Way and at
Broadway between Rocky Mountain Power and the City of Idaho Falls.
Respectfully submitted this l81\" day of June 2019.
F.r
Dayn Hardie
Deputy Attorney General
Technical Staff: Johan Kalala-Kasanda
Kevin Keyt
Rick Keller
i :umisc/comments/pace I 9.6jkkkrk comments
4STAFF COMMENTS JUNE T8,2OI9
Table 2: LegaWransaction Price Guideline
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS l8th DAY OF JUNE 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO, PAC-E-I9-06, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
DANIEL E SOLANDER
ROCKY MOI-]NTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I 16
E-MAIL: ted.weston@pacifi corp.com
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:
datareq ue st@paci fl corp. c om
YS
CERTIFICATE OF SERVICE