20200407Comments.pdf

STAFF COMMENTS 1 APRIL 7, 2020
MATT HUNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10655

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/HOLMES
STREET ASSET TRANSFER AGREEMENT
BETWEEN ROCKY MOUNTAIN POWER AND
THE CITY OF IDAHO FALLS
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CASE NO. PAC-E-20-01

COMMENTS OF THE
COMMISSION STAFF

STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Matt Hunter, Deputy Attorney General, submits the following comments.

BACKGROUND
On February 24, 2020, 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 three customers.
The Company filed its Application for approval under the Idaho Electric Supplier
Stabilization Act (“ESSA”), Idaho Code §§ 61-332 through 61-334C, and the electric utility
asset transfer statute, Idaho Code § 61-328. The Company requested that its Application be
processed under Modified Procedure, Rule 201 et seq. See IDAPA 31.01.01.201 through .204.
RECEIVED
2020 April 7,AM11:48
IDAHO PUBLIC
UTILITIES COMMISSION

STAFF COMMENTS 2 APRIL 7, 2020
Under the Agreement, the City would provide electric service to three of the Company’s
customers in Idaho Falls: The first on Holmes Avenue, the second on South 25th East, and the
third on Sunnyside Road. The City would buy electric facilities from the Company to serve
these customers. The City also would compensate the Company for the lost revenues arising
from the customers’ departure. The Agreement defines “just compensation for lost revenues” as
“the amount equal to 167% of the total of the respective customers’ electric bills from the prior
twelve-month period.” Application at 3.

STAFF ANALYSIS
Staff has reviewed the proposed transaction, believes it supports the intent of the ESSA
and 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 Idaho Code §61-328 (3) by: (a) promoting the
public interest and harmony between electric suppliers consistent with Idaho Code §61-332(2),
(b) fairly compensating the Company for its transferred assets and investment (i.e., no financial
impact to the Company’s existing customers), and (c) ensuring that the transferred customers
will continue to receive electric service from the City. Staff believes the proposed transaction
meets the statutory requirements and complies with the Commission’s previous orders.

Sale Price and Accounting Treatment
The total sale price of the assets being sold is $31,771 as shown in Table No. 1. Staff
verified that the sale price listed in the Agreement includes the fair market value of the existing
assets, the separation/estimator costs, the lost customer revenue, and the legal/transaction costs.
The method used to generate the sales price is consistent with the methodology incorporated in
the 2017 Service Allocation Agreement. See Case No. PAC-E-17-12, Order No. 33943. Staff
believes that the Company’s accounting treatment of the proceeds received from the sale of these
assets ensure other Company customers will not be harmed by this transaction.
The price of the existing assets was calculated by using the replacement value of each
asset being sold less depreciation. Depreciation 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 separation costs are
expenses incurred during the physical separation of the assets being sold from the Company’s

STAFF COMMENTS 3 APRIL 7, 2020
distribution system. The lost revenue was calculated using billing activity supplied by the
Company. Staff verified that the lost revenue calculation complies with the Service Allocation
Agreement between the Company and the City of Idaho Falls.
Legal/transaction costs include the costs of accounting, finance, regulation, and legal
expenses related to the sale. The Company’s legal/transaction costs are consistent with a pricing
guideline the Company has used for transactions with the City beginning in Case No. PAC-E-19-
02. The Company’s guideline is illustrated in Table No. 2 below.

Table No. 1: Sale Price
Sale Components Holmes
Avenue
South 25th East Sunnyside Rd Totals
Asset Valuation $4,499 $3,771 $4,827 $13,097
Separation Costs $1,730 $850 $1,708 $4,288
Lost Customer Revenue $2,823 $579 $6,485 $9,887
Legal /Transaction Costs $1,500 $1,500 $1,500 $4,500
Sale Price $10,551 $6,699 $14,521 $31,771

Table No. 2: Legal/Transaction Price Guideline
Legal Expense Price Guidelines Amount
Asset sale equal to or less than $2,000 75% 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
In response to a Staff Production Request, the Company explained that the customers
requested the transfer, so no additional notification was required.
As required by Idaho Code § 61-328(2), a public telephonic customer hearing was held
on March 24, 2020.
As of April 6, 2020, no written public comments have been submitted for this case.

STAFF COMMENTS 4 APRIL 7, 2020
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 three customers located on Holmes Avenue, S. 25th East, and E. Sunnyside Road.

Respectfully submitted this 7th day of April 2020.

_________________________________
Matt Hunter
Deputy Attorney General

Technical Staff: Kevin Keyt
Brad Iverson-Long
Mike Morrison

i:umisc/comments/pace20.1mhkskblmm comments
CERTIFICATE OF SERVICE
CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT I HAVE THIS 7th DAY OF APRIL 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-20-01, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:

TED WESTON
RICHARD GARLISH
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: [e-mail]
[e-mail]

DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
[e-mail]

IDAHO FALLS CITY POWER
BEAR PRAIRIE
140 S CAPITAL AVE
BOX 50220
IDAHO FALLS ID 83405

/s/ Reyna Quintero __
SECRETARY