20220914Comments.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. II7I4
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 FOR
REED'S DAIRY
CASE NO. PAC.E-ZZ-II
COMMENTS OF THE
COMMISSION STAFF
. r .. 1;-' l, i I l :r-' u,
Street Address for Express Mail:
I1331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE,ID 837I4
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Michael Duval, Deputy Attorney General, submits the following comments.
BACKGROUND
On August 8,2022, Rocky Mountain Power ("Company"), a division of PacifiCorp,
applied to the Commission for approval of an Asset Transfer Agreement ("Agreement") between
the Company and the City of Idaho Falls ("City"). Under the Agreement, the City would
purchase "certain electric facilities currently owned and used by the Company to supply electric
service to Reed's Dairy." Application at l.
The Company and the City entered into a Service Allocation Agreement in 2017 to
reduce duplication of service and promote stability in their respective service areas. The
Commission approved the Service Allocation Agreement in Order No. 33943, Case No.
1STAFF COMMENTS SEPTEMBER 14,2022
PAC-E-17-12. Under the Service Allocation Agreement, the City will compensate the Company
for lost revenues arising from a Customer's departure. Just compensation for lost revenues is the
amount equal to I67Yo of each customer's electric bills from the most recent l2 months of active
provision of electric service. The City would also purchase poles, wires, cross arrns, insulators,
guys, and other facilities no longer needed or required by the Company to serve the customers.
The Company submitted its Application for approval under the Idaho Electric Supplier
Stabilization Act ("ESSA"), Idaho Code $$ 6l-332 et. seq., and the electric utility asset transfer
statute, Idaho Code $ 6l-328. The electric utility asset transfer statute, Idaho Code $ 6l-328,
requires the Commission to "conduct a public hearing upon the application." The Commission
will hold a public hearing on Monday, September 26,2022, at 1 1:00 am MDT.
Reed's Dairy has requested that its electric service be transferred to the City and has been
notified by the Company that it has entered into the Agreement to transfer service. The
Company and the City have agreed to transfer electric service and the City has agreed to
purchase the facilities described in Exhibit A of the Agreement, provided as Attachment No. I to
the Application.
The Company asserts that the transaction complies with ldaho Code $ 6l-328 and is in
the public interest. The Company asserts the City has the intent and ability to provide service to
Reed's Dairy.
The City has agreed to pay the Company 167% of the Reed's Diary's previous 12 months
electric bills, plus the value ofthe transferred assets, tax gross-up, separation costs, and legal and
transactional costs.
STAFF ANALYSIS
Staff reviewed the proposed transaction and believes that it supports the intent of the
ESSA and is consistent with prior Commission orders. Therefore, Staff recommends the
Commission approve the Company's Application.
In its Application, the Company explained how this particular transaction complies with
Idaho Code $ 6l-328(3) by: (a) promoting the public interest and harmony between electric
suppliers consistent with ldaho Code $ 6l-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 customer will continue to receive electric service from the City.
2STAFF COMMENTS SEPTEMBER 14,2022
Sale Price and Accounting Treatment
Under the Agreement, the City would provide electric service to one customer, Reed's
Dairy, currently being supplied electric service by the Company. The City would purchase
electric facilities from the Company to serve the customer. 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." Id. at 3. The total sale price for
the transaction would be $85,594 as shown in Table No. l. Staff verified that the sale price
listed in the Agreement includes the replacement book value of the existing assets, the
separatiorVestimator costs, the lost customer revenue, and the legal/transaction costs. The
method used to generate the values is consistent with the method incorporated in the 2017
Service Allocation Agreement. 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 $5,428
Separation Costs $280
Lost Customer Revenue s79,387
Legal /Transaction Costs $s00
Sale Price $85,594'
IDifference due to rounding above.
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/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
JSTAFF COMMENTS SEPTEMBER 14,2022
Agreement between the Company and the City. Legal/transaction costs include the costs of
accounting, finance, regulation, and legal expenses related to the sale.
CUSTOMER NOTICE AI\D PUBLIC COMMENTS
In accordance with Rule 125 of the Commission's Rules of Procedure (IDAPA 31.01.01),
no customer notice is required. As of September 13, 2022, no public comments have been
received.
STAFF RECOMMENDATIONS
Staffrecommends the Commission approve the Asset Transfer Agreement and authorize
the transfer of electric service for Reed's Dary between Rocky Mountain Power and the City of
Idaho Falls.
( * day of September2o22Respectfully submitted this
Technical Staff: Travis Culbertson
Chris Hecht
Kathy Stockton
i:umisc/commentVpace22. I I mdhcklscwh comments
Michael Duval
Deputy Attomey General
4STAFF COMMENTS SEPTEMBER 14,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14th DAY OF SEPTEMBER 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF', IN CASE
NO. PAC-E-22-11, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
TED WESTON
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I16
E-MAIL : ted.weston@.oacifi corp.com
idahodockets @pacifi corp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datareq uest@nacifi corp.c om
EMILY WEGENER
ROCKY MOUNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84116
E'MAIL : [e-mail]
IDAHO FALLS CITY POWER
BEAR PRAIRIE
140 SOUTH CAPITAL AVENUE
BOX 50220
IDAHO FALLS,ID 83405
J" /b,r
SECRETARY
CERTIFICATE OF SERVICE