20100809Appellant BCA Reply Brief.pdf

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IN THE SUPREME COURT OF THE STATE OF IDAHO. .. in~o~B~ .
UTIUTIES COMMISSiON
THE BUILDING CONTRACTORS
ASSOCIATION OF SOUTHWSTERN IDAHO,
Appellant,
v.Docket No. 37293-2010
. IDAHO PUBLIC UTILlTES COMMISSION, and
ID1\OPOWER COMPAN, .
Respndents.
'-.- ". ..,
. MlçhaelC.èreamer, ISB.4030."
Michael P. Lawrence,ISB'Z288.. .
GIVENS PURSLEY LLP
601 W. Banock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Attorneys for Appellant Building
Contractors Association of
Southwest Idaho
Lisa D. Nordstrom
Baron L. Kline
Idaho Power Company
1221W.ldaho Sl
POBox 70
Boise, ID 83707-0070
Attorneys forRespondent
Idaho Power Company
Weldon Stutzan
Krstie A. Sasser
DeputyAttomeys General
Idaho..Public.Utilities
Comission
. 472 W..Washiiigton
POBox 83720
Boise, ID83 720-0074
Attorneys for Respondent
Idaho Public Utilties
Commission
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TABLE OF CONT
INTRODUCTION ...............................................................................................................1
ARGUMENT.......................................................................................................................4
A. Understding the interrlationship between line extension charges,
allowances, embedded costs, and rates is essential to understading ths case. ......4
B. The Commission-approved Rule H taff unawfly discriinates as between
new and existing customers and as between new customers who shar a
trsformer. ............. ........ ....... ..... ...... ...... ........ ................ ........ ......... .... ........ .... ..... '" 6
1. The new Rule H taff discriminates............................................................6
2. The new Rule H taff violates Homebuilders and Boise Water. ................8
C. The Commission's and Idaho Power's arguents are premised on factu
assumptions that are unupported by evidence in the record. ... ......... ............ ... .... 12
1. The record does not support the asserton tht growt was not paying
for itself...... ................. ..... ..... ... ....... ... ............ ....... ..... .......... .... ........ ........ ..12
2. There is no evidence of different circumstaces warantig the Rule H
modification. ..............................................................................................15
3. There is no basis for the assertion that per transformer allowances are
'just and reasonable." ...... ..... ... ........... ........... ..... ........ ...... .... ...... ... ......... ... 16
4. BCA is not advocating for a "widfall" to developers. ............................ 16
5. The record does not disclose tht the CompanY,s alleged rate pressure
is attbutable to line extension cost to serve new cusomers. ... ...... ... ..... 17
D. The Commission improperly denied BCA intervenor fuding for
paricipating in the proceedigs below...... ...... ................ .... ........ .... ..... ....... ...... ... 18
1. BCA' s intially untimely request for intervenor fuding was cued by
the Commssion's continuace of the proceedings. ..................................18
2. BCA materially contrbuted to the proceedings, and therefore, its fees
and costs in the proceeding are reasonable. ..... ..... ...... ..... ....... ............... .... 19
3. BCA has raised issues of concern to the general body of ratepayers. . ......22
E. BCA is entitled to its attorney fees and costs on appeal. .......................................24
1. BCA is entitled to attorney fees on appeal under I.C. § 12-117................24
a. I.C. § 61-617A does not preempt Section 12-117. ........................25
b. BCA requests the Cour revisit and modify its previous
deteration that I.C. § 12-117 does not allow for awards of
attorney fees and costs agait the Commission. ..........................25
2. BCA requests the Cour grant it attorney fees and costs on appeal
under the private attorney general doctre. ......... ........ ............ ....... ..........31
n.
CONCLUSION .................................................................................................................33
APPELLANT'S REPLY BRIF - i
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TABLE OF AUTHORITIES
Cases
A. W Brown Co., Inc. v.Idaho Power Co., 121 Idaho 812, 819, 828 P.2d 841,848 (1992)...26,27
Boise Water Corp. v. Public Utilties Comm'n, 128 Idaho 534, 916 P.2d 1259 (1996) 1,2,3,8,9,
10,15,20,24
Duncan v. State Bd of Accountancy, _ Idaho -- _ P.3d _' slip Ope at 6, 2010 WL
1632647 (Apr. 23, 2010) .....................................................................................................31,32
Electors of Big Butte Area v. State Bd ofEduc., 78 Idaho 602,607,308 P.2d 225,228 (1957) .29
Fischer v. City of Ketchum, 141 Idao 349, 356, 109 P.3d 1091, 1098 (2005). ...........................24
Grindstone Butte Mut. Canal Co. v. Idaho Power Co., 98 Idao 860, 574 P.2d 902 (1978)........28
Heller v. Cennarusa, 106 Idaho 571, 578, 682 P.2d 524, 532 (1984)...........................................31
Idaho State Bar Ass'n v. Idaho Public Utilties Commission, 102 Idaho 672, 676, 637 P.2d 1168,
1172 (1981)................................................................................................................................29
Idaho State Homebuilders v. Washington Water Power, 107 Idaho 415,690 P.2d 350 (1984) 1, 2,
3,8,9, 10, 11, 12,24
Idaho Underground Water Users Ass'n v.Idaho Power Co., 60 P.U.R.3d 194,404 P.2d 859
(1965).........................................................................................................................................28
Intermountain Gas Co. v. Idaho Public Utilties Commission, 97 Idaho 113,540 P.2d 775 (1975)
...................................................................................................................................................28
Kootenai Medical Center v. Bonner County Comm'rs, 141 Idaho 7, 105 P.3d 667 (2004) .........31
Mountain States-Natatorium Co. v. Erb, 200 P. 348,350 (1921) ..............................................28
Neighborsfor a Healthy Gold Forkv. Valley County, 145 Idaho 121, 138, 176 P.3d 126, 143
(2007)..........................................................................................................................................30
Owner-Operator Independent Drivers Ass 'n, Inc. v. Idaho Public Utilties Comm 'n, 125 Idao
401,871 P.2d 818 (1994) ....................................................................................3,25,26,29,31
Petition of Mountain States Tel. & Tel. Co., 76 Idaho 474, 480, 284 P.2d 681, 683 (1955) .26, 27,
28
Rammel! v. Department of Agriculture, 147 Idaho 415,210 P.3d 523 (2009)..............................30
Rosebud Enterprises, Inc. v. Idaho Public Utilties Comm'n, 128 Idao 609, 917 P.2d 766 (1996)
...................................................................................................................................................28
State v. Hagerman Water Right Owners, 130 Idaho 718, 725, 947 P.2d 391, 398 (1997) ...........32
Sweeney v. Otter, 119 Idaho 135, 140,804 P.2d 308, 313 (1990) ................................................29
UZtrawall v. Washington Mut. Bank, 135 Idao 832,836,25 P.3d 855, 859 (2001) ....................30
United States v. Jones, 336 U.S. 641,69 S.Ct. 787, 93 L.Ed. 938 (1949) ....................................28
Statutes
i.e. § 12-117 ..............................................................................3,24,25,26,28,29,30, 31, 32,33
I.C. § 12-121 ............................................................................................................................24,32
I.C. § 39-107 ..................................................................................................................................27
I.C. § 61-201 ..................................................................................................................................29
I.C. § 61-202..................................................................................................................................29
APPELLANT'S REPLY BRIF - ii
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I.C. § 61-617A.........................................................................................................................18,25
I.C. § 67-5201 ................................................................................................................................26
I.C. § 67-5201(2) ...........................................................................................................................26
I.C. 61-214.....................................................................................................................................29
Rules
IDAPA 31.01.01.000.....................................................................................................................26
IDAPA 31.01.01.164.....................................................................................................................18
Constitutional Provisions
Const. ar. 1, § 18...........................................................................................................................28
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Appellant The Building Contrctors Association of Southwestern Idao ("BCA") hereby
replies to arguments raised in Respondents' Briefs filed by the Idaho Public Utilities
Commssion ("Commission") and Idaho Power Company ("Idaho Power" or "Compan''). i
i. INRODUCTION
In each of their briefs, the Commssion and Idaho Power emphasize the stadard of
review recognzed by ths Cour that gives substatial deference to the Commission's techncal
expertise, its evaluation of evidence, and its fact finding. However, ths case has less to do with
issues of fact than it does issues oflaw-namely, whether the Commission's action violates
Idaho's laws prohibiting rate discrimination. It is the provice of ths Cour not the
Commission, to decide whether, as a matter oflaw, the Commission's Order 30955 imposes an
unawflly discriminatory rate and charge strctue agaist new customers.
Indeed, in two prior cases in which the Commission sought to shift more of a utility
company's cost to new customers, ths Cour found that the Commssion had exceeded its
authority by authorizing ilegally discriinatory rates/charges, despite (predictably) the
Commission's arguents it had not. BCA submits that just as in Idaho State Homebuilders v.
Washington Water Power, 107 Idaho 415, 690 P.2d 350 (1984) ("Homebuilders") and Boise
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Water Corp. v. Public Utilties Comm 'n, 128 Idaho 534, 916 P.2d 1259 (1996) ("Boise Water")
the Commission's arguents fail here too.
i In this Reply, the Commission's Respondent's Briefis cited as "IPUC Brief' and the Company's
Respondent's Brief is cited as "IPCo Brief." BCA's initial Appellant's Brief is cited as "BCA Brief."
APPELLANT'S REPLY BRIF - 1
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Given the Commission's track record on the new customer/cost-shifting issue, and the
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propensity for such cost-shiftng to result in unawf discriination, BCA respectflly requests
this Cour tae a had look at the effect of the Commssion's Order 30955 on new customer
charges and recognze that the taff approved by the Commssion is discriminatory and
unjustified. Specifically, BCA urges the Cour to examine the discrinatory results that flow
from the Commission's abandonment of its own longstding principle governng line
extensions that required the Company to provide an allowance toward line extensions to serve
each new customer that approximated its per-customer embedded costs and required the new
customer to pay those line extension costs over and above the embedded cost-based allowance.
That principle was enunciated by the Commssion in the 1995 Rule H Tarff Case ("1995
Case") based on the Company's express assurance, and the Commission's fidig, that
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allowances pegged to embedded costs provide a level playig field as between existig and new
customers. By re-grading the playig field based on a single conclusory sttement that "different
circumstaces exist now than did in 1995," the Commssion rus afoul of ths Cour's decisions
in Homebuilders and Boise Water and the Commission's sttutory duty to set non-discriminatory
rates and charges that are just and reasonable.
In ths Reply, BCA also responds to Respondents' arguents conceng the
Commission's denial of BCA' s request for intervenor fuding. A plain readig of the statute and
rues governng intervenor fuding warants a finding that BCA timely filed its request followig
the filing of post-hearng briefs at the conclusion of the Commssion's proceeding. Moreover, it
J is arbitrar and capricious for the Commission to find that BCA did not represent the general
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body of users or consumers in ths case, when the Commission had previously rued preisely the
opposite in a similar proceeding and awarded BCA intervenor fudig. The Commssion also
abused its discretion in finding that BCA did not materially contrbute to the case and that BCA's
fees and cost for its paricipation on reconsideration were "uneasonable." BCA' s effort below
were focused on the same issues argued here on appeal to ensure the Commission abides by ths
Cour's anti-discrimination ruings in Homebuilders and Boise Water and its own ruling in the
1995 Case establishing allowances based on embedded costs to maintan equal treatment of
existing and new customers.
Finally, BCA responds to Respondents' arguent agaist awarding BCA attorney fees
on appeal as against the Commission under Idaho Code § 12-117 or, alternatively, under the
private attorney general doctrne. BCA presents facts and arguent supportng the modification
of the holding in Owner-Operator Independent Drivers Ass 'n, Inc. v. Idaho Public Utilties
Comm 'n, 125 Idaho 401,871 P.2d 818 (1994) ("OOIDA"), that the Commission may not be
assessed attorney fees on appea under I.C. § 12-117 because it is a "legislative agency." In the
alternative, BCA argues that it has met the requirements of an award under the private attorney
general doctre though its advocacy of the right of all new customers to pay non-discriminatory
rates and charges.
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ll. ARGUMENT
A.Understanding the interrelationship between line extension charges,
allowances, embedded costs, and rates is essential to understanding this case.
BCA described the interrelationship between allowances, charges, embedded costs and
rates in the BCA Brief at 8- 1 2. The discussion is sumarzed here for the Cour's convenience
and, hopefuly, for clarfication.
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At the outset, BCA agrees with the basic proposition that, to the extent "cost-causers"
(here, new customers requestig connection to the Idaho Power system) do not pay for a
component of their electrc servce (here, line extension costs), electrc rates for all customers
will be higher than they would otherwse be. IPCo Brief at 4; IPUC Brief at 19; Order 30955, p.
21; R. VoL. IV, p. 668. Ths is because the Company either recovers its line extension costs
though upfront charges or though rates, and what it does not recover though one mean it must
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recover though the other.
The line extension costs the Company is entitled to recover though rates are called its
"embedded costs"-that is, those line extension cost that are not paid upfront by customers
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connecting to the system, but rather are "embedded" in the rate strctue paid by all customers.
See IPCo Brief at 5 n. 2 ("'Embedded costs' are a snapshot of the cost of facilties recovered in
rates at a given point in time. Futue rate adjustments will reflect the change in curent costs
over time.") Thus, with respect to line extension costs, Idaho Power recovers though rates
charged to all customers, existng and new, its distbution costs that are embedded in the rates
because the Company, rather th the customers who requested servce, fuded such costs.
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With ths understading, the issue of "allowances" can be addressed. Allowances-
sometimes called "company-fuded allowances"-represent Idaho Power's investment, rather
than new customers' upfront investent, in distrbution facilties that the Company is authorized
to recoup though electric rates paid by all customers. IPUC Brief at 5 ("The allowances
credited to new customers are fuded by Idao Power, (are) included in the Company's rate base
and are eventuly recovered in the rates for all customers"); see also R. VoL. I, p. 168 (!UC
Sta Comments); see also R. VoL. I, p. 26. (definition of "Line Instalation Allowance" in
proposed version of 2009 Rule H Tariff included with Application).
If line extension allowances and embedded costs sound similar, tht is because they are;
they both represent Idaho Power's investment in distbution facilties to sere new cusomers
that the Company is authorized to recover though electric rates paid by all customers.
So long as allowances do not exceed embedded costs, the Company will recover its
allowance/investment though existing rates, with no resulting "upward pressue" on rates.
Idaho Power's mai witness, Mr. Gregory Said, testified to ths:
Q. (by Mr. Creamer) To the extent that the Company's investment in
distrbution facilties to serve new customers does not exceed its curent
embedded costs for distrbution facilties, then the Company's curent
rates are sufcient to recover the costs of the new facilties; would you
agree with that?
A. (by Mr. Said) For that paricular element of rates, yes. . . .
Q. Mr. Said, if the revenues that the Company receives for - from its
new customers are sufficient to recover the embedded costs tht the
Company has for line extensions and distribution facilties, then there is
no upward pressure on rates, is there?
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A. Again, for that component.
Tr., VoL. II, p. 121, LL. 1-8; p. 123, LL. 17-23 (Said Cross). BCA's main witness, Dr. Richad
Slaughter, agreed:
. . . embedded cost approximates the Company's per customer level of investent
in distrbution plant tht it can recover though existing rates. To the extent that
the Commission desires to relieve upward pressue on rates, then limiting the
Company's investment in distribution to serve new customers to its curent per
customer embedded costs for distrbution facilties providing the same service to
existing customers accomplishes ths.
Tr. VoL. II, p. 233, L. 2 through p. 234, L. 5.
On the other hand, an allowance that exceeds embedded cost will tend to cause "upWard
pressure" on rates because the allowance/investment is greater than the amount the Company can
recover though existing rates. Conversely, an allowance that is less than embedded cost will
result in excess earings to the Company on its distrbution investent because the new
customer double pays for a porton of his!her distbution facilties-once upfront and once
though rates. Tr. VoL. II, p. 245, LL. 20-25. (Te amount of double payment would be equa to
the difference between the allowance provided and the embedded cost recovered though rates.)
B. The Commission-approved Rule H tariff unlawfully discriminates as between
new and existing customers and as between new customers who share a
transformer.
1. The new Rule H tariff discriminates.
Here, the Commission has pegged allowances to an arbitrar stadard based on the cost
of terminal facilties rather than to the portion of line extension costs embedded in rates as it had
been previously. IPUC Brief at 17 ("The 1995 allowance was tied to an estimate of what new
customer distrbution costs were embedded in rates."); Order 30955 at 22 ("allowances should be
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based upon the cost of stadard terminal facilties. . . ."). The Commission and Idaho Power
assert that "(b)ecause the (new Rule H taff allowace is calculated on a per transformer basis
and not a per customer basis, the allowance inside and outside subdivisions provides the same
Company investment." IPUC Brief at 12; IPCo Briefat 9; Order at 21; R. VoL. IV, p. 668. Ths
statement is tre insofar as it states the obvious-that a per tranformer allowance provides the
same Company investent per transformer regardless of where that transformer is located. The
problem is that Idaho law is not concered with discrimination amongst transformers; rather, it
prohibits discrimination between customers.
Under the per transformer allowance methodology, the only new customers who receive
a ful allowance are those who do not share a trformer with another customer. The many new
customers who share transformers (i.e. who reside within subdivisions) will not receive the ful
benefit of a per transformer allowance. Ths is discriminatory as between new customers.
Moreover, the new customer who receives an allowance that is less than embedded costs
(i.e. the new customer who shares a transformer), but pays the same rate as an existing customer
who received an allowance equal to embedded costs, is being discriminated against as compared
to the existing customer. This is because the new customer is being double-biled for a portion
of her cost to connect to the system while the existig customer was not?
2 BCA recognizs that it might be pennissible (i.e. non-discriminatory) for the Company to provide a less-
than-embedded cost allowance to new customers if there were some after-the-fact tre-up or if the new customers
also paid a different rate than existing customers (i.e. a rate that did not include the portion of other customers'
distribution facilty costs embedded in existing rates). But either of these could be a diffcult accounting process.
See Tr. VoL. II, p. 245, LL. 22-25.
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Neither Idaho Power nor the Commssion dispute tht customers shag transformers
(up to ten) will receive a lesser allowance (I.e. lesser Company investment). IPCo Brief at 20
("subdivision developers with lots that share a transformer will receive a pro rata shae of the
transformer allowance."); IPUC Brief at 25 ("Because customers share a transformer, Idao
Power incurs lower costs to connect customers to its system"). They instead argue that ths
disparty is waranted because it guantees "the same Company investent" and because a per
lot allowance would give subdivision developers a "windfalL." IPCo Brief at 19; see also IPUC
Brief at 25. Ths arguent is a red herrg.
The importt point is that, to be non-discriminatory, each customer in a class payig the
same rate should receive the same level of Company allowance/investment because that puts
them on a level playing field in terms of the charges they thereafer pay to receive the sae
service. To alleviate its concern over "windfalls" to developers, the Commission should provide
a per customer, not per transformer, allowance and work out an appropriate system of allowances
and refuds as it did under the 1995 Rule H taff. See BCA Brief at 8-9 (discussing how refuds
and allowances worked under the prior Rule H tarff. The fact is, there were no "speculative
lots," IPCo Brief at 24, to create a windfall under the prior Rule H taiffs refud provisions
because developers received no refunds witil new cuSomers connected to the system. Id
2. The new Rule H tariff violates Homebuilders and Boise Water.
The Commssion and Idaho Power argue that Homebuilders and Boise Water do not
apply to ths case. Ths is not surrising since, in both those cases, ths Cour held that
Commission-approved charges were unawflly discriminatory despite the Commssion's and
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applicat-utilties' urging to the contrar. But the Commission and Idaho Power are mistaen;
this Cour's analyses in those cases are directly relevant to the new cusomer charges at issue
here. In addition, those cases require the Commission to set non-discriminatory rates and
charges uness there is suffcient justification for such disparty. Here, the Commission has
failed to adhere to these precedents.
The BCA Brief~ at 27-31, discusses why the newly-approved Rule H taff violates
Homebuilders and Boise Water. In sumar, they prohibit unlawflly discriminatory charges
and require the Commission to justify any difference in rates and charges though a
"corresponding classification of customers that is based on such factors as cost of service~
quantity of resource use, differences in the condition of service or in the tie, natue or pattern
of the customers' use." Boise Water, 128 at 539, 916 P.2d at 1264; Homebuilders, 107 Idaho at
420,690 P.2d at 355 (substatively same languge as quoted). The Commission did not make
such a justification, nor could it on this record because there are no significant diferences
between new and existig customers, or between new customers who share or do not share
tranformers, when considering these factors. See Tr. VoL. II, p. 123, L. 24 - p. 125, L. 10
(Company witness Said confrming no differences between new and existing cusomers in ters
of cost of service).
There is no dispute that the Company's line extension charges under the new Rule H
taff are different than under the taff approved in the 1995 Case. There also is no dispute that
the net effect of the change in line extension charges is that new customers will receive a smaller
Company-fuded allowance than existing customers received. But rather than justify this
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disparty between customers based on the Homebuilders/Boise Water factors, the Commission
and Idaho Power simply assert "no discrimination is present 'when a non-recurng charge is
imposed upon a new customer' . . . ." R. VoL. iv, pp. 669-70 (Order 30955), and therefore "the
Commission does not need to justify the difference in new customer Company investment based
upon the factors enumerated in Homebuilders . . . ." IPCo Brief at 17. Respondents are
mistaen.
The Homebuilders decision does not create a blanet exemption from its holding for
those charges that are deemed non-recurrng and related only to distrbution facilties. The
Homebuilders passage cited by the Commssion3 merely recites what that cae is not about. To
the extent Homebuilders recognzes that certn non-recurg charges related to distrbution
facilties are exempt from the prohibition on discrimiation, it does not wholly exempt such
chages. Rather, the passage in Homebuilders describes a sitution where a "charge is imposed
to offset the cost of the utilty's capital investment." Implicit in ths statement are the concepts
tht such a charge (1) is needed because the cost is not already recoverable though rates, and (2)
is commensurate with the cost and does not produce excess eargs in distrbution facilties. To
the extent the cost aleady is being recovered though rates (i.e. that portion of the cost is
embedded in rates), also imposing a non-recuring chage for that cost amounts to double-billng
(which is unjust and UÍeasonable) and discrimination.
3 For the Cour's convenience, the passage is reproduced here in full:
The instat case presents no factors such as when a non-recurg charge is imposed upon new
customers because the service they require demands an extension of existg distribution or
communication lines and a charge is imposed to offset the cost of the utility's capital investment.
,j Homebuilders, 107 Idaho at 421,690 P.2d at 356.
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In addition, there is no basis for Idaho Power's and the Commission's apparnt position
that non-recurng charges for distbution facilties are inherently non-discriminatory. Even
without the inextcable link between charges/allowances and rates, discrimnation occurs under
the Commission's per transformer methodology because customers sharng tranformers receive
less of an allowance and ultimately are charged more than customers who do not.
Idaho Power also is wrong in its argument that "(s)o long as all potential new
customers/applicants are treated in a like maner as a 'customer class,' there is no unawf
discrination." IPCo Brief at 18. The suggestion implicit in ths statement-which is made
express in the sentence following-is that new cusomers and existing customers are different
classes of customers that "are not similarly situated." Id. BCA recognzes tht "(n)ot all
differences in a utility's rates and charges as between different classes of customers constitute
unlawf discrimination. . . ," id (quoting Homebuilders; emphasis added). However, "(a)ny
such difference (discrimination) . . . must be jusfied by a corresponding classification of
customers that is based upon factors such as cost of service, quantity of electrcity used,
differences in conditions of service, or the time, natue and pattern of the use." Homebuilders,
107 Idaho at 420,690 P.2d at 355. The Commission did not justify any difference in rates or
customer classification between existing and new customers using the Homebuilders factors, nor
could it based on the record. See Tr. VoL. II, p. 123, L. 24 - p. 125, L. 10 (Company witness Said
confrming no differences between new and existig customers in terms of cost of service). The
Commission-in Order 30955 and on appeal-and Idaho Power simply argue that the
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Commission need not analyze the Homebuilders factors because ths case involves a non-
recurng chage for distbution facilties that is exempt from Homebuilders.
C.The Commission's and Idaho Power's arguments are premised on factal
assumptions that are unsupported by evidence in the record.
1. The record does not support the assertion that growth was not paing (pr
itself
Idaho Power argues here, as it did before the Commission, that the Rule H modification
was necessar to make "growt pay for itself." See IPCo Brief at 3 ("growt should pay its
way"); see also R. VoL. I, p. 61 (Rule H taff modifications "will tae a step toward growt
paying for itself'). Implicit in ths asserton is an assumption that, under the previous Rule H
taff, the Company was not recovering its costs for individua line extensions from persons
requesting them. However, the record contans no actual evidence of ths. Despite ths, the
Commission on appea concludes that "under the old methodology, revenues generated afer
connecting new customers were inadequate to cover the costs associated with servng those
customers." IPUC Brief at 17. Signficantly, the words "costs associated with servng those
customers" is not the same as "costs associated with extending service to those customers." On
the evidence in the record, the Commission's statement is correct only if one includes generation
and transmission costs in the calculus of "costs associated with serving these customers."
Otherwse, there is no evidence in the record to support a contention tht Idaho Power was
unable to recover its lie extension costs to extend service under the prior Rule H taff and
existing rates.
APPELLAN'S REPLY BRIF - 12
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i Logically, evidence of this alleged inabilty to recover its costs for line extensions would
'JJ consist ofIdaho Power's financial data. However, the Company did not (and stil does not) point
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to any such data because it apparently does not maintan it. Discovery requests from BCA and
Commssion Sta seeking such information produced Company responses that vared from "the
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considered incomplete." Tr. VoL. II, p. 111, L. 4 - p. 113, L. 6. Hence, ths information is
missing from the record; instead, Idaho Power prof erred only the bare allegation that "growt is
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not paying its way" though testimony offered by Mr. Said. Tr. VoL. II, p.101, LL. 1-18.
The Commssion Sta noted in its Comments filed with the Commssion:
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. . . Idaho Power has done no analysis to prove that growt is not payig for itself,
nor has the Company done any analysis to determne specifically what amounts of
allowances can relieve upward pressure on rates. . .. The Company concludes
that a reduction in Company investment in new distrbution pla.t is necessar and
proposes a reduction in allowances based strctly on policy without supportg
analysis.
R. VoL. I, p. 168. The Company subsequently has offered no additional evidence to correct ths
deficiency. Absent any data by which one could actually analyze the "critica" issue of what
allowance would be appropriate to relieve an unproven "upward pressure" on rates attbutable to
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line extension costs, it is hard to see how the Commission could fmd that Idaho Power justified
its proposed taiff modification.
In juxtapose to the lack of evidence in the record showig that growt was not paying for
itself under the prior Rule H taff, there is evidence that, heretofore, new customers (including
subdivision developers) have made significant capital contrbutions in aid of constrction to
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make up the difference between the tota costs of new distrbution facilties and the porton of
those costs that the Company already was authorized to recover from the new customers though
existing rates (i.e., the embedded distrbution cost). Tr. VoL. II, p. 241. And, as Dr. Slaughter
testified, whether by design or coincidence, the combination of allowances and refuds (both of
which the Company recovered though rates) and contrbutions (paid up-front by the new
customer connecting to the system) under the prior Rule H Tarff appeared to have allowed the
Company to recover its costs of individual line extesions from the persons requestng them
because the Company's investment/allowances approximated curnt embedded costs. Tr. VoL.
II, p. 243, L. 20 - p. 244 L. 3. As a result, the prior Rule H taff charges/allowances presumably
were "just and reasonable" and not merely "promotional" as Idaho Power suggests at page 15 of
its Brief.
The only analyses in the record performed to determine an appropriate allowance (i.e. an
allowance that the Company could recover though its existng rates) was performed by
Commission Sta and by BCA's expert, Dr. Richard Slaughter. The Company made no effort to
produce a different analysis in rebutt. The Company simply stated that Stas and BCA' s
numbers were too high because they included improper components. 4
4 BCA cautions that, at this point, the issue is not which components of the Company's distrbution plant
should be included in embedded costs for determining allowances. The issue is whether, going forward, embedded
costs wil be the controlling factor in determining the critically importt amount of the allowance. See R. VoL. iv,
p. 640 ("(wJhether the allowance is applied in exact proportions toward the tenninal facilties component, the line
extension component, or both, is not critical. The amount of the allowance is critical, however.").
APPELLAN'S REPLY BRIF -14
2. There is no evidence of diffrent circumstances warranting the Rule H
modification.
ri In Order 30955 and in Respondents' briefs on appeal the reason proffered for changing
rri the Rule H methodology was that "different circumstaces exist now th did in 1995." IPUC
Briefat 18 (citing Order 30955 at 21). Order 30955 did not elaborate on what the different
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circumstaces might be and neither in the proceeding below nor on appeal has Idaho Power
explained what different circumstaces warant the Commission's abandonment of its conclusion
in the 1995 Case that new customers were entitled to allowances equal to embedded costs in
order to put them on a level playig field with existing customers.
Based on the record and the briefs the apparent different circumstace precipitating the
Rule H modification is that Idaho Power used to have "surlus generation and surlus
transmission," but it now fids itself "generation and transmission constaied." IPCo Brief at
15. However, it is not appropriate for the Company to banoll additional trsmission and
generation facilties by increasing new customer distrbution facilty charges (via decreasing
allowances below embedded cost). Boise Water, 128 Idaho at 539,916 P.2d at 1264 ("(t)o the
extent that the new hook-up fees are based on an allocation of the incrementa cost of new
(generation and transmission) plant constrction required by growt. . . solely to new customers,
the fees unlawfly discriminate between old and new customers. . . . ").
The only pennissible way for Idaho Power to fud additional generation and transmission
facilities, which are considered system-wide, is by increasing rates for all customers.
APPELLANT'S REPLY BRIF - 15
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3. There is no basis fpr the assertion that per transfprmer allowances are
"just and reasonable. "
The Commission ~ s abandonment of a per customer approach for setting line extension
allowances and charges in favor of a per tranformer approach precludes a rational anlysis about
what charges are 'Just and reasonable" to Idaho Power and its customers. Under the per
transformer approach, the only thg to be determined is the average cost of single-phase and
thee-phase transformers. Ths completely bypasses what the Commssion identified in its 1995
Order as the "critical" issue-namely, what amount of allowance represents a level of investment
in line extensions that the Company can recover though existing rates paid by the new customer
without imposing such costs on existng customers who did not cause them to be incured? The
answer to that question was supplied by the Company and agreed with by the Commission in the
1995 Case: it is an allowance based on the Company's embedded distrbution cost, because tht
treats existing customers and new customers equally.
4. BCA is not advocating fpr a "windfall" to developers.
By assuming ab initio that an "appropriate allowance" is one equa to the cost of termal
facilties rather than one that the Company will recover though rates, the Commission and Idao
Power can then argue that providing per lot (i.e. per customer) refuds in subdivisions may result
in a "windfall" to subdivision developers because developers could receive more in refuds than
the Company invested in the terminal facilties. That line of reasoning overlooks the fact that
developers rarely, if ever, receive allowances/refuds that make up for their own capita
contrbutions toward distribution facilties. Under the per trsformer approach, it is Idaho
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Power (and its existing customers) who will reap a windfall though rates. See BCA Brief at 12-
13 (discussing excess revenue generated by below-embedded cost allowances).
5. The record does not disclose that the Company's alleged rate pressure is
attributable to line extension costs to serve new customers.
BCA does not dispute that Idaho Power faces increased costs in providing electrcal
servce to its customers; however, the record does demonstrte that the Company's alleged
failure to recover its line extension costs to serve new customers contrbutes to increased costs or
rates.
The Company in testimony, Tr. VoL. II, p. 101, LL. 1-6, and Idaho Power in its brief,
IPCo Brief at 14, refer to several recent rate cases as evidence that new customers were not
paying their way. But in those cases, the Company sought to increase its revenues to fud
generation and tranmission facilties, or for other reasons not related to distbution. See IPC-E-
03-13 (2003) (Danskin gas peakg plant, re-licensing of mid-Snake, Shoshone Falls, and C.L
Strke hydro plants, revise depreciation rates for electrc plant in service, adjustments to account
for expiration of firm wholesale power supply contracts); IPC-E-05-14 (2005) (recovery for
increased cost of income taes); IPC-E-05-28 (2005) (recogne expiration of temporar increase
for income ta settlement); IPC-E-07-08 (2007) (increase retu on equity to 11.5%); IPC-E-08-
01 (2008) (include Danki plant in rate base); IPC-E-08-lO (2008) (general revenue deficiency);
IPC-E-08- 1 0 (2008) (revise Rule H to change charges for underground facilties to reflect actu
costs). Except for the 2008 filing to increase its charges for instaling underground facilties, the
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natue of these caes do not suggest tht new customers are not paying their way with respct to
the cost of line extensions servng them.
D. The Commission improperly denied BCA intervenor funding for
partcipating in the proceedings below
The Commission's grounds for denyig BCA's intervenor fuding are inconsistent with
the plain language of its rue implementing Idao Code § 61 -617 A and with prior Commssion
decisions concerning the nature of BCA as a par in similar proceedings. Its findings in this
regard also are inconsistent with the record of proceedings below.
1. BCA 's initially untimely request for intervenor fynding was cured by the
Commission's continuance ofthe proceedings.
Under the Commission's Rule 164, IDAPA 31.01.01.164 implementing I.C. § 61-617A,
a pary requesting intervenor fuding must file its request "withn foureen days afer the las
evidentiar hearng in a proceeding or the deadline for submitting briefs, proposed orders or
statements of position, whichever is last." (Emphases added).
The Commssion issued its initial Order 30853 parially approving Idaho Power's Rule H
Tariff Amendment Application on July 1, 2009. R. VoL. ll, p. 313. Twelve days later, BCA filed
its initial request for intervenor fuding. R. VoL. II, p. 327. Admittedly, that filing was made
more than foureen days afer the May 1, 2009 deadline for fiing response comments established
in the Commission's Notice of Extension of Comment Deadline, Order No. 30746. R. VoL. I, p.
147. On July 22,2009, BCA filed its Petition for Reconsideration. R. VoL. II, p. 358.
Signficantly, BCA's Petition was granted in par on Augut 19,2009 by Interlocutory Order No.
30883 wherein the Commission directed the paries to file testimony and indicated that it would
APPELLAN'S REPLY BRIF -18
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set the matter for a technical hearng. R. VoL. il, p. 408. Thus, as of August 19, 2009, both a
hearg date and new filing deadlines were estblished in the Commission's proceeng.s
Consequently, May 1,2009 no longer was the las deadline in the proceeding. Because ths las
deadline in the proceeding had not yet arved, BCA's initial request for intervenor fuding no
longer was late, but rather it became prematue.
The Commssion issued its Order denying BCA' s intial intervenor fuding request on
September 3, 2009, R. VoL. III, p. 428, I.e. afer its order continuing the proceeding. BCA
reasonably believed that the operative language of Rule 164 would be applied consistently to
establish a new deadline for requesting intervenor fuding for its parcipation in the entire
proceeding based on the continued hearing schedule. BCA, therefore, did not seek
reconsideration of the Commssion's September 3, 2009 Order. Instead, BCA timely fied a
renewed request for intervenor fuding on November 9, 2009, which was within 14 days of what
became the last briefing deadline in the proceeding (post-heag briefs due October 27,2009).
2. BCA materially contributed to the proceedings. and therefòre.' its fees and
costs in the proceeding are reasonable.
The Commission's position that BCA did not materially contribute to the Commission's
decision and that its costs were uneasonable both hinge on the same arguent-naely, that
BCA focused on issues the Commission believes were irelevant to the intant proceeding. In its
Petition for Rehearng, which the Commssion parally granted, and in the techncal hearg,
S Ultiately, the heag date was set, a heaing was held on October 20,2009, and at its conclusion the
Commission established yet another deadline, October 27,2009, for submitting post-hearing briefs. Tr. Vol. 2, p.
300.
APPELLAN'S REPLY BRIF - 19
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BCA focused on the Commission's own rationae for the embedded cost methodology of
establishing appropriate line extension allowances. The Commission argues that BCA lost that
arguent in 1995 and so was simply rehashig a losing arguent in this case. IPUC Brief at 31.
But the Commission is mistaen.
In 1995, BCA urged the Commission to mainta or increase the allowance and/or per lot
refuds that were in effect prior to the Company's 1995 filing. R. VoL. IV, pp. 631,639. BCA
clearly did not get everying it wanted in that case, and the Commssion disagreed with BCA's
arguent that the Boise Water precedent should bear on an analysis of the proposed taff
amendments. R. VoL. IV, p. 636 (Order 26780). However, at Idaho Power's urging, the
Commission determned then that new customers are entitled to have the Company provide a
level of investment equa to that made to serve existing customers in the same class, R. VoL. IV ~
p. 639, which provided BCA's members with at least some significant foothold in preventing a
wholesale shifting of costs to new customers. BCA appropriately sought to hold that ground in
this case.
The Commssion also now inists that BCA' s paricipation fell outside the scope of the
techncal hearng it ordered, which the Commssion now argues was limited ''to the issue
whether the new 'allowance amount is reasonable based upon the cost of new distrbution
facilties (i.e., the stadard terminal facilties). '" IPUC Brief at 31, citing Order No. 30955. That
mischaracterizes what the Commission ordered when it granted BCA reconsideration. It also is
inconsistent with what BCA sought reconsideration of.
APPELLAN'S REPLY BRIF - 20
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Interlocutory Order 30883, which granted reconsideration to BCA, corrctly recognized
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that "BCA seeks reconsideration 'to establish an appropriate value of curent Company
embedded costs for distbution facilties, a method to tre up those costs over tie, and a fair
method for line extension costs, allowances and refuds to be paid going forward. '" R. VoL. ILL,
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p. 407. The Commission decision in that Order then states that
BCA may address what allowance is reasonable based on the cost of new
distribution facilties. Pursuant to Rule 332 we adopt the following schedule for
the limited reconsideration of how the allowances in Order No 30853 were
calculated and whether the calculation ha a reasonable basis . . . we grant limited
reconsideration on the issue of the initial allowance. BCA will have an
opportty to present evidence of whether the allowance amount is suffcient. . .
More specifically, reconsideration is granted on the issue of allowaces and
denied on the issues of per-lot refuds and vested interest refuds.
Id., pp. 408-410. The Commission's subsequent Notice of Techncal Hearg, Order No. 30900,
notified the paries that
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The Commission found it appropriate to grant reconsideration on the limite issue
of the amount of appropriate allowances. BCA was directed to address what
allowance is reasonable based on the cost of new distrbution facilties. 6
R. VoL. Ill, p. 503.
BCA pre-filed its testimony more than a month prior to the techncal hearg
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demonsatig tht an appropriate allowance is based on embedded costs and supporting an
amount of$1,232. R. VoL. LLI, p. 443, L. 15 though p. 444,1. 2. No par moved to exclude
ths testimony as irelevant, and at the hearng no objection was made to BCA's testimony as
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6 "Distribution facilties" or "distribution plant" historically have included terminal facilties and line
extensions. See Order 26780, R. Vol. 3, p.639-640 (allowances are calculated based on the total embedded cost of
distribution facilties, which is made up of two components-one portion for terminal facilties and one portion for
line extensions). The Commission apparently now has redefined distrbution facilties to include only "terminal
facilties. "
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being beyond the scope of reconsideration. Nor could they have reasonably done so. BCA's
testimony and cross-examintion on reconsideration went directly to the issue of "the amount of
appropriate allowances" in light of the increasing costs of new distrbution facilties. It 'is only
after the fact that the Commssion argues that it intended the techncal hearng to be limited to
whether a single-phase transformer cost $1,780.7 BCA's paricipation thoughout this
proceeding focused on material and relevant issues, and the Commissions finding in ths regard
and its shifting position on the scope of reconsideration is arbitrar, capricious and unupported
by the record.
3. BCA has raised issues of concern to the general bo4y o(ratepaers.
The Commission argues that BCA' s costs and fees were incured simply to benefit its
members. IPUC Brief at 33. But rate discrimiation, and whether the Commssion gives due
consideration to the potential discriminatory effect of the rates it approves, afects all ratepayers.
Ths is tre because utilty cost reimbursement is a zero sum game, and where there is
discrimiation in rates, one customer or class of customers is unairly burdened while another
necessarly is unaily benefitted. The general body of ratepayers and the public's confdence in
their governng bodies are benefitted when pares such as the BCA step forward to argue for
rates that are 'Just and reasonable" and non-discriminatory, and when necessar, pursue those
arguents though our legal system. The Commission's position ignores the importce to all
7 No technical hearg would have been required on that issue. BCA never disputed the Company's or
StaWs estimates of the cost of terminal facilties. BCA argued that the only appropriate allowance was one based, at
a minimum, on the Company's embedded distribution costs, regardless of whether it was provided as an up-front
allowance, a per-lot refud or some combination of both, and that a "per-trformer" allowance in lieu of a ''pr-
customer" allowance tied to embedded distrbution costs resulted in discrimination.
APPELLANT'S REPLY BRIF - 22
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ratepayers that no discrete class of customers be subject to preferential or discriminatory rates
without suffcient justification.
The Commission also has ignored its own fidings concerning BCA when it awarded
BCA intervenor fuding in the 1995 case, which involved the same cost-shiftg taff
amendments sought by the Company here. Order 26780, R. VoL. IV, p. 644 (finding that BCA
raised issues of concern to general body of ratepayers). The Commission does not explai why
BCA's advocacy for a fair allowance for new customers (or the developers who build their
homes) in ths case is of any less importce to the general body of ratepayers than it has been
previously. The Commssion's finding in this respect is arbitrar and capricious.
It is surrising that Idaho Power now argues that there is no apparent class of customers
from which Idaho Power could collect a charge to reimburse it for an intervenor fuding award
to BCA. In Order 26780 in the 1995 Rule H Tarff case, afer finding that BCA had raised issues
of concern to the general body of ratepayers and was entitled to intervenor fuding, the
Commission adopted Idaho Power's proposal ''to collect a subdivision lot charge of $11 per lot
to be effective as of the date of this Order, to reimburse the Company for the intervenor fuding
award (to BCA). . . . to be removed afer being in effect for one year." R. VoL. IV, p. 644.
Finally, aside from getting its math wrong concerning the percentage of all Company
ratepayers tht new customers added in 2009 might represent,8 the Commission ignores the
122,581 new customers who took servce between 1995 and 2008, R. VoL. 2, p. 239, under the
8 At page 34 of its brief, the Commission assert that "new customers represented less than .005 of a
percent (2,258 + 489,923 = .0046)." However, .0046 is equal to 0.46%, or roughly haIfa percent, not ".005 ofa
percent" (which is five one-thousandths of a percent).
APPELLANT'S REPLY BRIF - 23
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embedded cost methodology BCA seeks to preserve here. The Commission's arguent, of
coure, also ignores all potential new customers going forward who would otherwse be entitled
to the treatment BCA has advocated.
E. BCA is entitled to its attorney fees and costs on appeal.
The standad of review of the Commission's action here is whether it reguarly pursued
its authority to set rates or violated any constitutional rights of the appellant in establishing the
Company's Rule H allowances and charges. I.C. § 61-629; Boise Water, 128 Idaho at 538, 916
P.2d at 1263. Its authority to set rates may only be exercised in such a way as to fix non-
discriminatory, and non-preferential rates and charges. Homebuilders, 107 Idaho at 419,690
P.2d at 354. The stadard for an award of attorney fees is whether the non-prevailing par acted
with a reasonable basis in fact or law, I. C. § 12- 1 17, or whether an action was pursued, brought
or defended frvolously, uneasonably or without foundation. I.C. § 12-121. If the Commission
has exceeded its authority, then it ha acted without a reasonable basis in fact or law. Fischer v.
City of Ketchum, 141 Idaho 349, 356, 109 P.3d 1091, 1098 (2005).
1. BCA is entitled to attorney fees on appeal under 1 C. § 12-117.
Respondents each argue that attorney fees and costs are not available under I. C. § 12- 1 17
because (1) it is preempted by the statute providing for intervenor fuding in proceedings before
the Commission; and (2) it does not apply to the Commission based on this Cour's prior
determnation that the Commission is not a "state agency." BCA disagrees with respect to the
first point because the intervenor fuding statute does not apply to appellate proceedings
reviewing Commission decisions. On the second point, Respondents offer little arguent
APPELLAN'S REPLY BRIF - 24
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agaist BCA's request that the Cour revisit its determation tht the Commssion is a
"legislative agency" rather than a "state agency" subject to i.C. § 12-117.
a. i.e. § 61-617A does not preempt Section 12-11 7.
Respondents both argue that I.C. § 61-617A preempts I.C. § 12-117. IPUC Brief at 37 n.
12; IPCo Brief at 26-28. BCA disagrees. The plain language of section 61-617A authorizes the
Commission to award intervenor fuding to paries "in any proceeding before the Commission."
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1 Ths statute, then, has nothing to do with awards of fees or costs on appeal of a Commission
1 decision to the Supreme Cour. Accordingly, I.C. § 61-617A does not involve, let alone preempt
any other Idaho statute or law by which the Supreme Cour can award fees or cost on appeal.
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b. BCA requests the Cour revisit and modify its previous
determation that I.C. § 12-117 does not allow for awads of
attorney fees and cost against the Commission.
BCA recognzes that this Cour has rejected awarding attorney fees agait the
Commission under I.C. § 12-117 on the ground that the Commission is a "legislative agency,"
and therefore, not a "state agency" subject to Section 12-117. (BCA Brief at 43, citig Owner-
Operator Independent Drivers Ass 'n, Inc. v. Idaho Public Utilties Comm 'n, 125 Idaho 401, 871
P.2d 818 (1994) ("OOIDA")). BCA neverteless has requested an award under I.C. § 12-117,
BCA Brief at 41-42, an respectfuly asks the Cour to revisit its previous decisions.
BCA submits that reconsideration and reversal of OOIDA is waranted based on a review
of the statutory definition of "state agency," the cases leading up to the OOIDA decision, and the
statutes creating the Commission. Aside from the rationale used by the OOIDA Cour all
indications are that the Commission is a "state agency" that should be subject to I.C. § 12- 117.
APPELLAN'S REPLY BRIF - 25
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The definition ofa "stte agency" subject to Section 12-117 is found in I.C. § 67-5201.
i.e. § 12-11 7(4)(c). Under that defintion, "agency" mean "each state board, commssion,
deparent or offcer authorized by law to make rules or to determine contested cases. . . ." I.C.
§ 67-5201(2) (emphasis added). The Commission is, of course, a "commission. .. authorized by
law to make rules," see, e.g., IDAPA 31.01.01.000 (stating legal authority to make rues of
procedure). Thus, a plain reading of the sttutes appear to subject the Commission to I.C. § 12-
117.
However, in the 1994 OOIDA decision, ths Cour held that the Commssion does not fall
with the plain meaning of "state agency" under I.C. § 12-117 and I.C. § 67-5201 because I.C. §
67-5201 "specifically excludes from the definition of 'stte agency' agencies of the legislative
branch." OOIDA, 125 Idaho at 408,871 P.2d at 825. The Cour cited A. w: Brown Co., Inc. v.
Idaho Power Co., 121 Idaho 812, 819, 828 P.2d 841,848 (1992), but offered no fuer
explanation before deeming the Commssion a "legislative agency" (for the first tie in any
reported Idaho case). A closer review of A. W. Brown and its predecessors, however, shows that
the "legislative agency" monier is not a good fit.
It appears that the term "legislative agency" was based on the following language
originating in a 1955 case quoted by the A. W. Brown Cour:
The fuction of rate makng is legislative and not judicial. The commission as the
agency of the legislative deparent of governent exercises delegated legislative
power to make rates.
Petition of Mountain States Tel. & Tel. Co., 76 Idaho 474, 480, 284 P.2d 681,683 (1955)
("Mountain States"). The A. W. Brown Cour quoted this language in holding that the
APPELLAN'S REPLY BRIF - 26
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Commission need not act pursuant to the AP A when it is engaged in a legislative fuction such
as rate-setting, because, pursuant to Section 67-5201, the AP A "specifically does not apply to
'those in the legislative or judicial branch. '" A. W Brown, 121 Idaho at 819, 828 P.2d at 848.
BCA recognizes that rate makng is considered to be a legislative fuction (sometimes
called "quai-legislative"), and that the Commission "exercises delegated legislative power to
make rates." Mountain States, 76 Idaho at 480,284 P.2d at 683. However, like all statutorily
created agencies, all of the Commission's powers, whether they be promulgating rues,
determining contested cases or implementing legislative or executive directives, are delegated by
the legislatue. But ths in and of itself should not make the Commission a so-called "legislative
agency."
Many state agencies exercise what is most often considered quai-legislative
"ruemakng" authority or quasi-judicial authority~all bestowed by the Legislatue-but they
are considered to be "executive" or "independent" agencies, not legislative agencies or judicial
agencies. See, e.g., I.C. § 39-107 (creation of Board of Enviromnenta Quality and delegation of
authority to make rues). In this light, it is not apparent what the Mountain States Cour meant
when it called the Commission ''te agency of the legislative deparent of governent."
Mountain States, 76 Idaho at 480,284 P.2d at 683.
There was no citation to other precedent in Mountain States for ths proposition. A
review of the appellate briefs fied in Mountain States (obtaed from the Idaho Supreme Cour's
APPELLAN'S REPLY BRIF - 27
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archives9) reveals merely that the Respondent in that case mentioned-in the context of
addressing the Supreme Cour's stadard of review on appeal-that public utilty commissions
engage in the "legislatve fuction" of rate-makng and that such agencies are delegated
"legislative power" to set rates. Brief of Respondent and Cross-Appellant at 9-10, Mountain
States, 76 Idaho 474, 284 P.2d 681 (1955) (No. 8194). As far as BCA can discern, the "agency
of the legislative deparent" languge originated in the Mountain States decision without any
supportng authority and the benefit of the pares' full briefing of the point. 10 Viewed in ths
light, the "agency of the legislative deparent of governent" languge was a passing remark
that should not be constred as a definitive determination that the Commission is par of the
legislative branch of governent.
Ths Cour has repeatedly recognized, however, that the Commission is not merely a
"legislative agency" but that it also has ajudicial fuction. See, e.g., Rosebud Enterprises, Inc. v.
Idaho Public Utilties Comm 'n, 128 Idaho 609, 917 P .2d 766 (1996) ("regulatory bodies pedorm
legislative as well as judicial fuctions in their proceedings"); Idaho State Bar Ass'n v. Idaho
9 BCA has copies of the Mountain States briefs and wil gladly provide them to the Cour or the pares
upon request.
10 None of the other cases citing the Mountain States language shed light on its meaning. See Grindstone
Butte Mut. Canal Co. v, Idaho Power Co., 98 Idaho 860, 574 P.2d 902 (1978); Intermountain Gas Co, v. Idaho
Public Utilties Commission, 97 Idaho 113,540 P.2d 775 (1975); Idaho Underground Water Users Ass'n v.Idaho
Power Co., 60 P.U.R3d 194,404 P.2d 859 (1965). The Cour in Intermountain Gas also cited United States v.
Jones, 336 U.S. 641, 69 S.Ct. 787, 93 L.Ed. 938 (1949), but only for the proposition that "ratemakg essentially (isJ
legislative in the first instace," which BCA concedes. But so is rulemaking. In a 1921 case not cited in Mountain
States-Natatorium Co. v. Erb, 200 P. 348, 350 (1921)-e Cour stated that "the commission is an ar of thelegislative authority," but this statement was made in the context of explaining that the Commission is "not a cour
of justice, within the meaning of Const. ar. 1, § 18," and thus also does not shed light on whether the Commission is
a "state agency" subject to I.C. § 12-117.
APPELLAN'S REPLY BRIF - 28
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Public Utilties Commission, 102 Idaho 672, 676, 637 P.2d 1168, 1172 (1981) ("proceedigs
before the Commission are quasi-judicial"). i i
The sttutes creating and governng the Commission support a conclusion that it is more
"executive" or "independent" than "legislative." By statute, the Commssion's members are
appointed by the Governor (with senate approval), LC. § 61-201, and they are subject to removal
by the Governor, I.C. § 61-202, and the Commission reports anually to the Governor. I.C.61-
:(J 214. See also Sweeney v. Otter, 119 Idaho 135, 140,804 P.2d 308, 313 (1990)("The legislatu
m must ratify certn executive appointees such as the . . . members of the Idaho Public Utilities
Commssion").
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In their Respondent's Briefs, neither Idaho Power nor the Commission expends much
effort defending the proposition that the Commission is a "legislative agency" rather than a state
agency. Idaho Power merely rests on the OOIDA decision and does not offer any arguent
against BCA's suggestion that the Cour revisit its determination on ths point. IPCo Brief at 28.
For its par in addition to citing one of the pre-OOIDA cases discussed above (A. W Brown), the
Commission then argues that the OOIDA interpretation must be correct because the Legislatue's
post-OOIDA amendments to I.e. § 12-117 did not address it. IPUC Brief at 37-38.
It is tre that ths Cour has recognzed the canon of statutory interpretation that a
legislatue is presumed to have full knowledge of existing judicial decisions when it amends a
II BCA notes that this Cour has recognized "(i)t is not always possible to draw a shar line of distiction
between legislative, judicial and executive powers or fuctions, nor does it appear necessar to the pmpose of the
constitutional separation of powers, to do so," Electors of Big Butte Area v, State Bd of Educ, , 78 Idaho 602, 607,
308 P.2d 225,228 (1957).
APPELLAN'S REPLY BRIF - 29
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statute, see, e.g., Ultrawall v. Washington Mut. Bank, 135 Idaho 832, 836,25 P.3d 855, 859
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(2001), but BCA believes the use of this canon would be misplaced here. The recent amendment
ofI.C. § 12-117 was made specifically and expressly in response to ths Cour's 2009 decision in
Rammell v. Department of Agriculture, 147 Idaho 415, 210 P.3d 523 (2009), that the sttute did
not allow for awards of attorney fees in administative proceedings. 12 There is no indication that
the amendment was intended to address any other cases or issues. It is speculation to suggest
that the Legislatue's 2010 amendment is a concurence with a 1994 interpretation by this Cour
since it is equaly likely that the Legislatue simply was focused on the exigencies raised by the
Rammell decision described in the H.B. 421's Statement of Purse.
Access to attorney fees against the Commission where it has exceeded its authority and
acted arbitrarly fulfills I.C. § 12-1 ITs purse of "serv(ing) as a deterrent to groundless or
arbitrar action and to provide a remedy for persons who have borne unair and unjustified
financial burdens defending against groundless charges or attemptig to correct mistes
agencies should never have made," Neighborsfor a Healthy Gold Forkv. Valley County, 145
Idaho 121, 138, 176 P.3d 126, 143 (2007), BCA respectfly requests ths Cour reverse its
12 The Statement of Purose for H.B. 421 (the bil that amended I.C. § 12-117 in 2010) states:
In 1989, the Idaho Supreme Cour constred Idao Code Section 12-1 17 to permit awar of costs
and attorney fees to prevailing paries not only in cour cases, but also in administrative cases.
Under the statute, such awards are only made if the non-prevailing par has pursued or defended
the case without a basis in fact or law. On June 1,2009, in the case ofRanell v. Deparent of
Agricultue, the Supreme Court reversed its 1989 decision and ruled that attorney fees could not
be awarded in administrative cases. Ths bil wil restore the law as it has existed since 1989, and
it wil become effective on May 3 I, 2009 so that those administrative caes which were pending
when the Raell decision was issued wil not be adversely affected by the Supreme Cour
ruling.
Statement of Purose, R.S. 19257 (2010),
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APPELLAN'S REPLY BRIF - 30
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previous decisions finding the Commission is not a "state agency" subject to I.C. § 12-117, and
award BCA its costs and attorney fees on appeal as the prevailing pary.
2. BCA requests the Court grant it attorney fees and costs on appeal under
the private attorney general doctrine.
As BCA asserted in its Appellanfs Brief, it is entitled to an award of attorney fees under
the private attorney general doctre because its appeal in ths case satisfies that doctrine's thee
requirements: (1) great strengt or societal importce of the public policy vindicated by the
litigation; (2) the necessity for private enforcement and the magntude of the resultat burden on
the plaintiff; and (3) the number of people stading to benefit from the decision. Heller v.
Cennarusa, 106 Idaho 571, 578, 682 P.2d 524,532 (1984). BCA incorporates by reference its
Appellanf s Brief s arguents on ths point.
The Cour should.reject the Commssion's arguent that "the private attorney general
doctrine is not available to award attorney fees against the state." IPUC Brief at 25. First, the
case cited by the Commission for ths proposition, Kootenai Medical Center v. Bonner County
Comm'rs, 141 Idaho 7, 105 P.3d 667 (2004), did not hold that the doctrne was inapplicable to
the "state," but rather that it was inapplicable to "state agencies" that are subject to I.C. § 12-1 17.
fd. at 10- 1 1, 105 P .3d at 670-71. If ths Cour continues to subscribe to its holding in OOIDA,
that the Commission is not a state agency subject to I.C. § 12-117, the private attorney general
doctrne should be available to BCA.
Similarly, the Cour should reject the Commission's argument that the private attorney
general doctrine is inapplicable in ths situation because ths Cour has held that the private
APPELLANT'S REPLY BRIF - 31
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attorney general doctrne arses from the authority ofI.C. § 12~121 and that Section 12-121 has
been held to "not . . . authorize an award of attorney fees on appeal of an agency rung." IPUC
Brief at 35 (citing State v. Hagerman Water Right Owners, 130 Idaho 718, 725, 947 P.2d 391,
398 (1997); Duncan v. State Bd of Accountancy, _ Idaho _' _ P.3d _' slip op. at 6,
2010 WL 1632647 (Apr. 23, 2010)). The cited cases held that the private attorney general
doctrne (which is grounded in I.C. § 12-121) is not available against a "state agency" that is
subject to Section 12-117. Thus, if the Commission is not considered a "state agency" subject to
I. C. § 12-117, then the statute does not preempt the private attorney general doctrne.
BCA disagrees with the Commission asserton tht BCA's pursuit of ths litigation does
not benefit the public. IPUC Brief at 36. While it is tre that BCA represents its members, many
of whom are in the real estte development profession, their efforts wil benefit a significant
portion of the public (I.e. any residential customer who connects to Idaho Power's electrcal
system). Contr to the Commission's and Idaho Power's assertions, this is a signficant
number of people. Idao Power's 2009 planng projections estimate 10,000 new customers per
year, or roughy 200,000 new customers, though 2029. Idaho Power, Our Energy Futue:
Responsible Planing (htt://ww.idahopower.com/AboutUs/CompanyInormation/ourFute/
responsiblePlang.cfm) (last visited Aug. 3, 2010)Y
13 In ths same publication, Idaho Power assert that yearly "demand for electricity durg peak-load hours
is expected to increase by . . . enough electricity to power 31,800 average homes." In other words, while Idaho
Power expects to adq 10,000 new customers each year, electricity demand wil increase by more than the times
that many homes. Apparently, new customers are not the primar drivers of increased utilty costs but, instead,
increased use by existing customers causes increaed demands on the system.
APPELLAN'S REPLY BRIF - 32
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BCA also believes it unikely that the stte's Attorney Genera (which reresents the
Commission) or an individual cusomer would tae up ths issue agains the Commission and
Idaho Power. In short ifBCA did not chapion the rights ofIdao Power's new customers,
there is litte chance that anyone would.
BCA has dilgently pursued ths matter in good faith despite substtial financial
hardship because of the exteme importce of the issues, and because the Commssion has,
without a reasonable basis, approved a discriminatory line extension charge stctue. It is
inerently in the general public's interest for discriminatory practices to be challenged. If the
Cour determnes that the Commission is insulated from awards of attorney fees when the public
challenges one of its decisions, BCA submits it is then even more importt for ths Cour to tae
a hard look at the Commission's actions.
BCA thus respectfuly requests the Cour award it attorney fees and costs either by
reversing its prior ruling regarding the applicabilty of I. C. § 12-117 to the Commission, or under
the private attorney genera doctre.
ILL. CONCLUSION
For the foregoing reasons, Order 30955 should be set aside and the Company's
Application denied with respect to the amended line extension charges, allowances, and refuds.
In addition, BCA is entitled to intervenor fuding to the ful extent allowed by statute. BCA
respectfully requests its attorney fees and costs on appeal.
APPELLAN'S REPLY BRIF - 33
GNENS p. ~LEY~~$ú
Michael C. Creamer
Attorneys for Appellant The Building Contractors
Association of Southwestern Idao, Inc.
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DATED ths 6th day of Augut, 2010.
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CERTIFCATE OF SERVICE
I hereby certfy that on ths 6th day of August, 2010, I caused to be served a tre and
correct copy of the foregoing by the method indicated below, and addressed to the followig:
Weldon Stutzan
Krstine A. Sasser
Deputy Attorneys General
Idaho Public Utilties Commission
472 W. Washigton
PO Box 83720
Boise,ID 83720-0074
krs.sassercmpuc.idaho. gov
iz U.S. Mail, postage prepaid
o Express Mail
o Hand Delivery
o Facsimile
o Electronic Mail
Lawrence G. Wasden
Attorney General
Statehouse
PO Box 83720
Boise, ID 83702-0010
iz U.S. Mail, postge prepaid
o Express Mail
o Hand Delivery
o Facsimile
o Electronic Mail
iz U.S. Mail, postage prepaid
o Express Mail
o Hand Delivery
o Facsimie
o Electronic Mail
Lisa D. Nordstom
Baron L. Kline
Idaho Power Company
1221 W. Idaho St.
POBox 70
Boise,ID 83707-0070
Inordstromtßidahopower.com
bkline(iidahopower.com
Jean D. Jewell
Commssion Secreta
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
iz U.S. Mail, postage prepaid
o Express Mail
o Hand Delivery
o Facsimile
o Electronic Mail
Vf4d~Michael C. Creaer
APPELLANT'S REPLY BRIF - 35