20190801Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
RECEIVED
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rit,{!-:c i-,uELlC. I.iI:Ei COMMISSION
Street Address for Express Mail
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION FOR
APPROVAL OF THE SUNNYSIDE ASSET
TRANSFER AGREEMENT BETWEEN ROCKY
MOUNTAIN POWER AND THE CITY OF
IDAHO FALLS
CASE NO. PAC-E-19-09
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On June 24,2019, PacifiCorp dba Rocky Mountain Power ("Company") filed an
Application requesting the Commission's approval of the Asset Purchase Agreement
("Agreement") entered into by the Company and the City of Idaho Falls ("City"). The
Application requests authority to transfer from the Company to the City the rights and
obligations to serve one (1) customer on Sunnyside Road in Idaho Falls, Idaho.
The Company filed its Application for approval under the Idaho Electric Supplier
Stabilization Act, Idaho Code $$ 6l-332 through 6l-334C, and the electric utility asset transfer
statute, Idaho Code $ 6l-328. The Company requested that its Application be processed under
Modified Procedure, Rule 201 et seq. See IDAPA 31.01.01.201 through.204.
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STAFF COMMENTS AUGUST 7,2019I
The subject agreement was entered into pursuant to the 2017 Service Allocation
Agreement authorized by the Commission in Order No. 33943. In the transaction, the Company
and the City have agreed to transfer future electric service of one (1) customer from the
Company to the City. The City has agreed to pay the Company l67Yo of the transferred
customer's most recent 12-months electric bills, plus the book value of the transferred assets, tax
gross-up, separation costs, and legal/transactional costs. The total sale price in the contemplated
transaction is $9,440.
STAFF ANALYSIS
Staff has reviewed the proposed transaction and believes it supports the intent of the
ESSA, the electric utility asset transfer statute, and is consistent with prior Commission orders.
In response to Stafls Production Request, the Company provided explanations detailing
how this particular transaction would comply with ldaho Code $ 6I-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 Sunnyside Road location is a residential property with a single meter. In response to
Staff s Production Request, the Company explained that the Sunnyside Road property is the last
location in the immediate area served by the Company. This means that other properties near the
Sunnyside Road property are being served by the City of Idaho Falls.
The last 12-months of billing activity at the Sunnyside Road meter totaled $2,285.20.
The lost revenue calculation determined by the Company is $3,816.28. Staff verified that the
transfer revenue calculation using this billing activity complies with the Service Allocation
Agreement between the Company and the City of Idaho Falls.r
I Service Allocation Agreement - Definition 6 Compensation - "ln 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
fiom the most recent twelve ( l2) months of active provision of electric service, which must be within the past five
(5) years immediately preceding the time of transfer."
2 AUGUST 1,2079STAFF COMMENTS
Sales Price and Accounting Treatment
The total sale price of the assets being sold is $9,440, see Table I below. Staff verified
that the sale price contemplated in the Agreement includes the fair market value of the existing
assets, the separation costs, the lost customer revenue and the legal/transaction 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 702 E. Sunnyside Road
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 methodology,
consistent with prior Commission Orders. The replacement value was determined using the
Company's Retail Construction Management System. The lost customer revenue was calculated
using the 2017 Service Allocation Agreement, as discussed previously.
The Separation costs are expenses which will be, or have been, incurred during the
physical separation of 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 the pricing guideline used for the
determination of the legal/transaction costs. This is illustrated in Table 2 below.
J
Sale Components
Asset Valuation s3,762
Separation Costs $362
Lost Customer Revenue $3,8 I 6
Legal /Transaction Costs $ 1,500
Total Sale Price $9,440
STAFF COMMENTS AUGUST 1,2019
Totals
Table l: LegaWransaction Price Guideline
CUSTOMER NOTICE, PRESS RELEASE AND PUBLIC COMMENTS
The Company stated that the customer requested the transfer, so notification was not
necessary.
A public telephonic customer hearing was held on July 30,2019, at2:00 PM MST.
As of July 30,2019, no written public comments have been submitted for this case.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Asset Purchase Agreement between
Rocky Mountain Power and the City of Idaho Falls, authorizing the transfer of electric service
for the customer on Sunnyside Road.
Respectfully submitted this day of August 2019
Dayn
Deputy Attorney General
Technical Staff: Kevin Keyt
Johan Kalala-Kasanda
Rick Keller
i :umisc: comments/pace I 9.9dhkskrkjk comments
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Legal Expense Price Guidelines Amount
Asset sale equal to or less than $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
STAFF COMMENTS AUGUST I,2OI9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS lST DAY oF AUGUST 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-19-09, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
DANIEL E SOLANDER
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: ted.weston@pacifi corp.com
Daniel. solander@pacifi corp. com
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
-t- ,rler^
SECRETARY 7:
CERTIFICATE OF SERVICE