20191105Comments.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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Street Address for Express Mail:
1I33I W CHINDEN BLVD, BLDG 8, SUITE 20I-A
BOISE, ID 837I4
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
FOR APPROVAL OF THE LINCOLN ROAD
ASSET TRANSFER AGREEMENT BETWEEN
ROCKY MOUNTAIN POWER AND THE
CITY OF IDAHO FALLS COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Dayn Hardie, Deputy Attomey General, submits the following comments.
BACKGROUND
On September 25,2019, PacifiCorp dba Rocky Mountain Power ("Company") filed an
Application requesting the Commission's approval ofthe Asset Purchase Agreement
("Agreement") entered into between the Company and the City of Idaho Falls ("City").
The Company filed its Application for approval under the Idaho Electric Supplier
Stabilization Act ("ESSA"), Idaho Code ti 6l-332 et seq., and Ihe electric utility asset transfer
stante, ldaho Code $ 6l-328. The Company requested that its Application be processed under
Modified Procedure, Rule 201 et seq, See IDAPA 31.01.01.201 tkough .204.
The Company filed its Application pursuant to the 2017 Service Allocation Agreement
authorized by the Commission in Order No. 33943. Under the current transfer agreement, the
Company and the City have agreed to transfer the future electric service ofone customer from
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STAFF COMMENTS NOVE,MBER 5.20I9
Attomey for the Commission Staff
CASE NO. PAC-E-Ig-I3
1
the Company to the City. The City has agreed to pay the Company 1670/o of the rransf'erred
customer's most recent l2-months electric bills, plus the value of the transfened assets, tax
gross-up, separation costs, and legal/transactional costs. The total sale price in thc contemplated
transaction is $l 4,686.
STAFF ANALYSIS
Staffhas 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 Stafl 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 betrveen clectric suppliers consistent with ldaho Code
$ 6l-332(2), (b) fairly compensating the Company for its transl'erred assets and investment
without financial impact to existing customers, and (c) ensuring that the transferred customers
will continue to receive electric sen'ice lrom the City. The proposed transaction meets the
statutory requirements and complics with the Commission's prcvious Order.
In response to Staff's Production Rcquests, the Company provided a detailed drawing
that identifies all Company owned property that will be transferred if the sale is approved. The
Company owned property included in the requestcd sale consists olcable, riscr conduit, a 75
KVA transformer, three current transformers, and a meter. Based on a drawing provided by the
Company, the East Lincoln Road location (2190 E. Lincoln Road) is a city park owned by the
City ofldaho Falls. The City ofldaho Falls requested this transfer because it supplies electric
service within the city and owns the afl'ected property.
The East Lincoln Road property's last 12-months of billing activity considered in the
Agreement totaled $2,1 20. The lost revcnue calculation determined by the Company is $3,541 .
Staffverified that the transfer revenue calculation using this billing activity complies with the
Service Allocation Agreement between the Company and the City.r
I Service Allocation Agreement - Definition 6 Compensation - *ln addition. the Acquiring Utilhy rvill pay the other
utilit! an amount equal to one hundred sixty seven percent (167%) ofthe Existing Consumer's revenue collected
Iiom the most recent l2-months ofactive provision ofelcctric service, which must be within the past five (5) years
immediately preceding the time oftransfer."
1S IAFI] COMNIllNTS NOVEMBER 5,20I9
Sales Price and Accounting Treatment
The value of assets being sold is $7 ,721 , as reflccted in Table l, below. Staff verified
that the sales price proposed in the Agreement includes the fair market value of the existing
assets, the scparation 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. Staffbelicves that the Company's accounting treatment ofthc
proceeds received from the sale ofthese assets assure no customers will be harmed fiom this
transaction.
Table I : Calculation ofasset sale Jbr 2I90 E. Lincoln Road
The valuation ofthe existing asscts was determined by using the replacemcnt value of
each asset being sold minus deprcciation. This was determined using the straight-line
depreciation methodology, consistent with prior Commission orders. 'lhe replacement value was
determined using the Company's Rctail Construction Management System. Thc lost customcr
revenue was calculated using the 2017 Service Allocation Agreement, as discussed previously.
Thc separation costs are expenses which have been incurred during the physical
separation ofthe assets being sold from the Company's distribution system. Legal/transaction
costs includc the costs of estimation, accounting, finance, regulation, and legal expenses related
to the sale. The Company issued the pricing guideline used for the determination of the
legal/transaction costs in PAC-E-I9-02 and PAC-E-I9-06. This is illustrated in Table 2 below:
Sale Cornponcnts Totals
Asset Valuation $1.721
Separation Costs $ r ,924
Lost Customer Revenuc s3,541
$ 1.500
Total Salc l'rice $i1.t,686
STAFF COMMENTS NOVEMBER 5,20I9
Legal /Transaction Costs
3
Table 2: Legal/Transaction Price Guideline
Amount
Asset sale equal to or less than $2,000 7SYo of the sale price
Asset sale greater than $2,000 but less than $ 10,000 $ i ,s00
Asset sale equal to or greatcr than $ 10,000 $2,500
CUSTOMER NOTICE, PRESS RELEASE AND PUBLIC COMMENTS
The Company stated that the customer (City of Idaho Falls) requested the transfer, so
notification was not necessary.
A public telephonic customer hearing was held on October 29, 2019, at 2:00 PM MST.
As of November 5, 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 ofelectric service for the customer located on 2190 East Lincoln Road
between Rocky Mountain Power and the City of Idaho Falls.
tr.ll^
Respectfully submitted this J day of November 2019.
yn te
Deputy Attomey General
Technical Staff: Kevin Keyt
Rick Keller
Brad Long
i;umisc/commentVpacel9.l3dhkskblrk comments
4STAFF COMMENTS NOVEMBER 5.20I9
Legal Expense Pricc Guidelines
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 5TH DAY OF NOVEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC.E.19.13, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
IDAHO FALLS CITY POWER
BEAR PRAIRIE
I40 S CAPITAL AVE
BOX 50220
IDAHO FALLS ID 83405
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
ues . conl
CERTIFICATE OF SERVICE
TED WESTON
DANIEI- E SOLANDER
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 841 I6
E-MAIL: ted.weston@pacifi corp.com
Daniel.solander@pacifi cory.com
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SECRFTAY