20200803Comments.pdf

MATT HUNTER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03 l8
IDAHO BARNO. 10655
IN THE MATTER OF ROCKY MOUNTAIN )
POWER'S APPLICATION BOR APPROVAL OF )
THE PIONEER ROAD / RUSTIC LANE / lTth )
SOUTHASSETTRANSFERAGREEMENT )
BETWEEN ROCKY MOUNTAIN POWER AND )THECITYOFIDAHOFALLS )
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Street Address for Express Mail:
I1331 W CHINDEN BLVD, BLDG 8, SUITE 201.A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC-E-20-06
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Matt Hunter, Deputy Attomey General, submits the following comments.
BACKGROUND
On May 22,2020, PacifiCorp dba Rocky Mountain Power ("Company") filed an
Application requesting the Commission's approval of the Asset Purchase Agreement
("Agreement") between the Company and the City of ldaho Falls ("City").t The Application
requests authority to transfer from the Company to the City the rights and obligations to serve ten
( 10) customers.
The Company filed its Application for approval under the Idaho Electric Supplier
Stabilization Act ("ESSA"), Idaho Code $$ 61-332 through 6l-334C, and the electric utility
I A copy ofthe Agreement is attached to the Application (Attachment A)
STAFFCOMMENTS 1 AUGUST 3,2O2O
asset transfer stattrle, Idaho Code $ 6l-328. 'fhe Company requested that its Application be
processed under Moditied Proccdure, Rule 201 etseq. See IDAPA 31.01.01.201 through.204'
Under the Agreement, the City would provide electric service to ten of the Company's
customers in Idaho Falls: five customers on Rustic Lane, one customer on Pioneer Road, and
four customers on 17th South. The City would purchase electric faoilities 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 detines'Just compensation for lost
revenues" as "the amount eqtal to 167yo of the total of the respective customers' electric bills
from the prior twelve-month period." Application at 3.
STAFF ANALYSIS
Staffhas reviewed the proposed transaction and believes that it supports the intent ofthe
ESSA and the electric utility asset transfer statute and is consistent with prior Commission
orders.
In response to Stafls Production Request, the Company provided cxplanations detailing
how this particular transaction would comply with ldaho Code $ 61-328 (3) by: (a) promoting
the public interest and harmony betu'een electric suppliers consistent with ldaho Code $ 61-
332(2), (b) fairly con.rpensating the Company fbr its transfened assets and investment without
financial impact to existing customers. and (c) ensuring that the transi'erred customers will
continue to receive electric service from the City. Staffbelieves the proposed transaction meets
the statutory requirements and complies with the Commission's previous orders
Sale Price and Accounting Treatment
The total sale price ofthe assets being sold is $37,612 as shown in Table No. 1. Staff
verified that the sale price lisled in the Agreement includes the thir market value ofthe existing
assets, the separation/estimator costs, the lost customer revenue, and the legal/transaction costs.
The mcthod used to generate the values are consistent with the methodology incorporated in the
2017 Service Allocation Agreement.2 The Company's proposed accounting treatment ofthe
proceeds received from the sale ofthese assets ensure other Company customers will not be
harmed by this transaction.
2 The Service Allocation Agreement was approved in Case No. PAC-E-17-12, OrderNo. 33943 (December 5,2017)'
STAFF COMMENTS 2 AUGUST 3,2020
The price of the existing assets was calculated by using the replacement value ofeach
asset being sold less accumulated depreciation. Depreciation was determined using straight-line
methodology, consistent with prior Conrmission orders. The replacement value was determined
using the Company's Retail Construction Management System. The separation/estimator costs
are expenses incurred during the physical separation ofthe assets being sold from the Company's
distribution system. The lost revenue was calculated using billing activity supplied by the
Company. Staffverified that the lost revenue calculation complies with the Service Allocation
Agreement between the Company and the City.
Legal/transaction costs include the costs ofaccounting, finance, regulation, and legal
expenses related to the sale. The legal/transaction costs in this case are inconsistent with the
Company's pricing guidelines provided in Case No. PAC-E-19-023 and clarilied in PAC-E-19-06.4
Staffbelieves that updating legal/transaction cost guidelines in the next update to the Service
Allocation Agreement between the Company and City would be beneficial. In the tables below,
the Company's cunent legal/transaction price guideline (as described in Case Nos. PAC-E-19-02
and PAC-E-19-06) may be compared to the sale price calculation in this case.
Tablc No, 1: Sale Price
Sale Components Pioneer Road Rustic Lane I 7th South Totals
Asset Valuation $486 $6,915 $ l ,781 $9, r 82
Separation Costs $r,28 7 $2,640 $4,076 $ 10,003
Lost Customer Revenue $286 $7,s43 $7,s00 ql i 1rq
Legal /'l'ransaction Costs $ 100 $1,500 $ I ,s00 $3,100
Sale Pricc $4,158 st 8,597 $14,857 $37,612
Table No. 2: Legal/Transaction Price Guideline
Legal Expense Price Guidelines Amount
Asset sale equal to or less than $2,000 7 5%o 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
3 See Company response to Production Request No. 7 in Case No. PAC-E- l9-02.
a ln a Data Request in Case No. PAC-E-19-06 the Company clarified that lbr an asset sale of$2,000 or less, the
Legal/Tmnsaction Cost is 75% ofthe asset valuation less income taxes.
3STAFF COMMENTS AUGUST 3,2O2O
CUSTOMER NOTICE, PRESS RELEASE AND PUBLIC COMMENTS
In response to a Staff Production Request inquiring how customers had been notified of
the proposed transaction, The Company explained that some of the impacted customers
requested the transfer. Those that had not requested the transfer were contacted directly to notiff
them of the transfer.
As required by 1dafi o Code $ 6l-328(2), a public telephonic customer hearing was held
on July 7, 2020.
As of August 3, 2020, 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 on Rustic Lane, Pioneer Road,
and 17s South between Roclry Mountain Power and the City of Idaho Falls.
"ft|Respectfully submitted this ) day of August 2020.
ter. Deputy Attomey General
Technical Slaff: Kevin Keyt
Travis Culbetson
Michael Eldred
i:umisc/commentypaoe20.6mhlktncme comments
4STAFF COMMENTS AUGUST 3,2O2O
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3d DAY OF AUGUST 2020,
SERYED THE FOREGOING COMMENTS OF THE COMI/flSSION STAFF, IN
CASE NO. PAC.E-20-06, BY E.MAILING A COPY TTIEREOF, TO TI{E
FOLLOWING:
TED WESTON
EMILYWEGENER
ROCKY MOI.JNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I16
E-MAIL: [e-mail]
emily.we gener@ pacifi corp.com
IDAHO FALLS CITY POWER
BEAR PRAIRIE
140 S CAPITAL AVE
BOX 50220
IDAHO FALLS ID 83405
DATA REQUEST RESPONSE CENTER
E-MAILONLY:
datareouest@ ificom.com
SECRET Y
CERTIFICATE OF SERVICE