20201106Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.007 4
[phone]
IDAHO BAR NO. 9917
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OF THE BISH'S RV ASSET TRANSFER
AGREEMENT BETWEEN ROCKY
MOUNTAIN POWER AND THE CITY OF
IDAHO FALLS
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Street Address for Express Mail:
I I331 W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE,ID 837I4
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. PAC.B,-20-I2
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 September 23,2020, Rocky Mountain Power ("Company"), a division of PacifiCorp,
asked the Commission to approve its asset transfer agreement ("Agreement") with the City of
Idaho Falls ("City"). Under the Agreement, the City would buy Company-owned electric
facilities that the City needs to provide electric service to Bish's RV in Idaho Falls ("customer"
or'oBish's RV").
The Company filed its Application under the electric utility asset transfer statute, Idaho
Code $ 6l-328. The Company requests that its Application be processed under Modified
Procedure, Rule 201 et seq. See IDAPA 31.01.01.201 through.204. Typically, Modified
Procedure contemplates a case would be processed through written submissions without a live
ISTAFF COMMENTS NOVEMBER 6, 2O2O
hearing. However, the electric utility asset transfer statute, Idaho Code $ 6l-328, requires the
Commission to "conduct a public hearing upon the application."
The Company and the City signed a service allocation agreement in2017 to reduce
duplication of service and promote stability in their respective service areas. The Commission
approved the Service Allocation Agreement in Case No. PAC-E-17-12, Order No. 33943.
Under the Agreement, the City would provide electric service to Bish's RV. The City
would buy electric facilities from the Company to serve this customer. The City also would
compensate the Company for the lost revenues arising from the customer's departure. The
Agreement defines'Just compensation for lost revenues" as "the amount equal to 1670/o of the
total of the respective customers' electric bills from the prior 12-month period."
Besides compensating the Company for lost revenues, the City would pay the Company
for the value ofthe transferred assets, tax gross-up, separation costs, and legal/transactional
costs. The total sale price for the transaction would be $78,268.
STAFF REVIEW
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 its Application, the Company provided explanations of how this particular transaction
complies with ldaho Code $61-325 (3) by: (a) promoting the public interest and harmony
between electric suppliers consistent with ldaho Code $61-332(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. Staff believes the proposed transaction meets the statutory requirements
and complies with previous Commission orders.
Sale Price and Accounting Treatment
The total sale price of the assets being sold is $78,268 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 these values was consistent with the Service Allocation Agreement
approved in Order No. 33943. Staff believes that the Company's accounting treatment of the
2STAFF COMMENTS NOVEMBER 6, 2O2O
proceeds received from the sale of these assets ensures the Company's 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 the straight-line method,
consistent with previous Commission 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 of the assets being sold from the Company's
distribution system. The lost revenue was calculated using billing activity supplied by the
Company. The above-mentioned components of the sale price were verified by Staff to conform
to the terms of the Service Allocation Agreement and previous Commission orders.
Legal/transaction costs include the costs of accounting, 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-19-02 and cladfied in PAC-E-I9-06.
Staff believes that including legal/transaction cost guidelines in the next update to the Service
Allocation Agreement would be beneficial. The Company's current legal/transaction price
guideline is illustrated in Table No. 2 below.
Table No. 1: Sale Price
Table No.2: LegaUTransaction Price Guideline
J
Sale Components Totals
Asset Valuation $14,179
Separation Costs $ 1,362
Lost Customer Revenue $60,727
Legal /Transaction Costs $2,000
Sale Price $78,268
Legal Expense Price Guidelines Amount
Asset sale equal to or less than $2,000 7 5o/o of the sale price
Asset sale greater than $2,000 but less than $ I 0,000 $1,500
Asset sale equal to or greater than $10,000 $2,500
STAFF COMMENTS NOVEMBER 6, 2O2O
CUSTOMER NOTICE, PRESS RELEASE AND PUBLIC COMMENTS
In its Apptication, the Company explained that the customer requested its electric service
be transferred to the City. The Company notified the customer that it entered into an agreement
with the City to transfer service. Staff believes that no further customer notification is required.
A public telephonic customer hearing was held on October 27,2020 at 3:00 PM MST, as
required by ldaho Code $61-328 (2). No members of the public called to offer testimony.
As of November 6, 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 Bish's RV between Rocky Mountain Power and the
City of Idaho Falls.
Respectfully submittea tnir6fi day of November 2020'
Deputy Attorney General
Technical Staff: Kevin KeYt
Travis Culbertson
i:umisc/comments/pace20.l 2dhtttckk comments
STAFF COMMENTS NOVEMBER 6, 2O2O4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 6th DAY OF NOVEMBER 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC.E-20-12, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
TED WESTON
EMILY WEGENER
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: [e-mail]
emilY.we gener@E'cifi 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 com. com
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SECRETARY -
CERTIFICATE OF SERVICE