20230419Comments of Commission Staff.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION 9 ŸB i O
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BARNO.11714
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN )
POWER'S APPLICATION FOR APPROVAL )CASE NO.PAC-E-23-02
OF THE ASSET TRANSFER AGREEMENT )
BETWEEN ROCKY MOUNTAIN POWER )COMMENTS OF THE
AND THE CITY OF IDAHO FALLS -)COMMISSION STAFF
BELLIN ROAD #1 )
STAFF OF the Idaho Public Utilities Commission,by and through its Attorneyof record,
Michael Duval,Deputy AttorneyGeneral,submits the followingcomments.
BACKGROUND
On February 9,2023,Rocky Mountain Power,a division of PacifiCorp ("Company"),
and the City of Idaho Falls ("City")(together the "Parties")applied to the Commission for
approval of an Asset Transfer Agreement ("Agreement")between the Company and the City
("Application").'The Application outlines a process whereby the City would purchase certain
electric facilities currentlyowned and used by the Company at a location in the immediate
vicinity of Bellin,Road,Idaho Falls,Idaho.As proposed,the Company would transfer service
of one customer ("Customer")to the City.
A less redacted copy of the Applicationwas filed on February 21,2023.
STAFF COMMENTS 1 APRIL 19,2023
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 approvedthe service allocation agreement in Case No.PAC-E-17-12,Order
No.33943.The Customer has requested that their electric service be transferred to the City.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 Confidential
Attachment No.1 to the Application.Under the Service Allocation Agreement,the City
compensates the Company for lost revenues arising from the Customer's departure in the amount
equal to 167%of each customer's electric bills from the most recent 12 months of active
provision of electric service.The City will pay separation costs and legal/transactional costs
based on the amount of the transaction.The City will also purchase poles,wires,cross arms,
insulators,guys,and other facilities no longer needed or required by the Company to service the
customers.
The Company submits its Application for approval under the Idaho Electric Supplier
Stabilization Act,Idaho Code §§61-332 et.seq.,and the electric utility asset transfer statute,
Idaho Code §
61-328.2
A Customer requested that its "electric service be transferred to the City ....The
Company and the City have agreed to transfer electric service and the City has agreed to
purchase the facilities described in Exhibit A."Application at 3.
The Company asserts that the transfer complies with Idaho Code §61-328 and is in the
public interest.The Company asserts the City has the intent and ability to provide electric
service to the Customer.
The City has agreed to pay the Company 167%of the Customer's previous 12 months
electric bills,plus the value of the transferred assets,tax gross-up,separation costs,and legal and
transactional costs.The total sale price in the contemplated transaction is $13,631.Exhibit A.
2 The Company requested that its Applicationbe processed under Modified Procedure,Rule 20 1 et seq.See
IDAPA 31.01.01.201 through .204.Typically,the use of Modified Procedure contemplates written submissions
without a live public hearing.However,Idaho Code §61-328 states the Commission "shall issue a public notice
and shall conduct a public hearing upon the application (emphasis added)."
STAFF COMMENTS 2 APRIL 19,2023
STAFF ANALYSIS
Staff reviewed the proposed transaction and believes that it supports the intent of the
Electric Supplier Stabilization Act ("ESSA")and is consistent with prior Commission orders.In
the Application,the Company explainedhow this transaction complies 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
that rates for supplying service will not be increased for existing customers;and (c)ensuring that
the transferred customers will continue to receive electric service from a provider (the City)that
has the bona fide intent and the financial ability to properly maintain this public service for the
Customer.Staff believes the proposed transaction meets the statutory requirements and complies
with the Commission's previous orders.
Sales Price and Accounting Treatment
Under the Agreement,the City would provide electric service to one residential customer
on South Bellin Road (exempt from public review under Idaho Code §74-109(3)and Idaho
Public Utilities Commission's Rule of Procedure 67),currentlybeing supplied electric service by
the Company.The City would purchase electric facilities from the Company to serve the
customer.The City would also 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 $13,631 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 separation 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 assures other customers will not
be affected by this transaction.
STAFF COMMENTS 3 APRIL 19,2023
Table No.1:Calculation of Transaction Price
Sale Components Totals
Asset Valuation $7,580
SeparationCosts $2,780
Lost Customer Revenue $1,772
Legal &Transaction Costs $1,500
Sales Price $13,632
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
distribution system.The lost revenue was calculated using billingactivity supplied by the
Company.Staff verified that the lost revenue calculation complies with the Service Allocation
Agreement between the Company and the City.Legal and transaction costs include the costs of
accounting,finance,regulation,and legal expenses related to the sale.
CUSTOMER NOTICE AND 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 April 18,2023,no public comments have been received.
STAFF RECOMMENDATIONS
Staff recommends the Commission approve the Asset Transfer Agreement and authorize
the transfer of electric service for the residential customer on South Bellin Road,between Rocky
Mountain Power and the City of Idaho Falls.
STAFF COMMENTS 4 APRIL 19,2023
Respectfully submitted this day of April 2023.
Michael DuvaÏ
Deputy AttorneyGeneral
Technical Staff:Ty Johnson
Travis Culbertson
Jolene Bossard
Rick Keller
i:umisc/comments/pace23.2mdtjtncjbrkcomments
STAFF COMMENTS 5 APRIL 19,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19th DAY OF APRIL 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.PAC-E-23-02,BY E-MAILING A COPY THEREOF,TO THE
FOLLOWING:
MARK ALDER DATA REQUEST RESPONSE CENTER
JOE DALLAS E-MAIL ONLY:
ROCKY MOUNTAIN POWER [e-mail]
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL:[e-mail]
[e-mail]
IDAHO FALLS CITY POWER
BEAR PRAIRIE
140 SOUTH CAPITAL AVENUE
BOX 50220
IDAHO FALLS ID 83405
ECRE ARY
CERTIFICATE OF SERVICE