20210914Comments.pdf

ERICK SHANER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 5214
IN THE MATTER OF ROCKY MOUNTAIN
POWER'S APPLICATION FOR APPROVAL
OF THE ASSET TRANSFER AGREEMENT
BETWEEN ROCKY MOUNTAIN POWER
AND THE CITY OF IDAHO FALLS _ 733
CUSTOMERS
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Street Address for Express Mail:
I I331 W CHINDEN BLVD, BLDG 8, SUITE 20 I -A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. PAC.E-2I.17
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its attorney of record,
Erick Shaner, Deputy Attomey General, submits the following comments.
BACKGROUND
On July 20,2021, 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 will buy Company-owned electric facilities that
the City needs to provide electric service to 733 customers in Idaho Falls ("Customers").
The Company filed its Application under the Idaho Electric Supplier Stabilization Act
("ESSA") 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. Typically, Modified Procedure contemplates a case would
be processed through written submissions without a live hearing. However, the electric utility
STAFF COMMENTS SEPTEMBER 14,2021
asset transfer statute, Idaho Code $ 61-328, requires the Commission to "conduct a public
hearing upon the application."
The Company is a public utility in the state of Idaho under Idaho Code $ 6l-129. The
City owns and operates an electric power system and indicates that it has a bona-fide intent and
financial ability to provide services to the Customers.
The Company and the City entered into 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.
Over time, the City has annexed multiple areas where the Company provided electric
service. Subsequent to these annexations, the Commission has approved numerous transfers of
facilities and customers pursuant to the Agreement. These transfers have proven to be
administratively burdensome and the City requested that the Company provide an inventory of
all customers and assets within the City's municipal boundaries. Application at 4. Upon
completion of an inventory, the Company and the City negotiated a transfer agreement.
STAFF ANALYSIS
Staff reviewed the proposed transaction and believes that it supports the intent of the
ESSA and is consistent with prior Commission orders.
In its Application, the Company provided explanations of how this particular transaction
complies with ldaho Code $61-328(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 the Commission's previous Orders.
Sale Price and Accounting Treatment
Under the Agreement, the City would provide electric service to 733 customers currently
being supplied electric service by the Company. The City would purchase 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
2STAFF COMMENTS SEPTEMBER14,2O2I
bills from the prior twelve-month period." Id. at 3. The total sale price for the transaction would
be $4,152,35 1 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 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 other Company customers will not be harmed by this transaction.
Table No. 1: Calculation of Transaction Price
Sale Components Totals
Asset Valuation $ 1,148,200
Separation Costs s90, I 56
Lost Customer Revenue $2,617,996
Legal /Transaction Costs $16,000
Estimator/Inventory/Engineer/Adm in. Costs $280,000
Sale Price $4,152,351
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 separatior/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. Staff verified that the lost revenue calculation complies with the Service Allocation
Agreement between the Company and the City. Legal/transaction costs include the costs of
accounting, finance, regulation, and legal expenses related to the sale.
3STAFF COMMENTS SEPTEMBER 14,2021
CUSTOMER NOTICE AND PUBLIC COMMENTS
The Company's customer notice was included with its Application. Staff reviewed
the document and determined that it meets the requirements of Rule 125 of the Commission's
Rules of Procedure (IDAPA 31.01.01). The notice was mailed to the relevant customers on
August 3,2021, providing a reasonable opportunity to file timely comments with the
Commission by the September 14,2021, comment deadline. As of September l3,202l,the
Commission has received no comments from customers.
STAFF RECOMMENDATION
Staff recommends the Commission approve the Asset Transfer Agreement and authorize
the transfer of electric service for 733 customers between Rocky Mountain Power and the City of
Idaho Falls.
Respectfully submitted this /4 4 day of September 2o2l
-L- r,r-'2--7?
Erick Shaner
Deputy Afforney General
Technical Staff: Kevin Keyt
Michael Eldred
Kathy Stockton
Curtis Thaden
i:umisc:commentVpace2l. I Teskkmekls comments
4STAFF COMMENTS SEPTEMBER I4,2O2I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF SEPTEMBER 2021,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. PAC-8.21-17, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
TED WESTON
EMILY WEGENER
ROCKY MOLINTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I 16
E-MAIL : ted.weston@pacifi corp. com
emily.we gener@pacifi corp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@pacifi com.com
IDAHO FALLS CITY POWER
BEAR PRAIRIE
I4O S CAPITAL AVE
BOIX 50220
IDAHO FALLS ID 83405
'Jo /%r(
SECRETARY'/-
CERTIFICATE OF SERVICE