20110526SC Opinion No 55.pdf

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IN THE SUPREME COURT OF THE STATE OF IDAII ltA ..D. r 26 p.
Docket No. 37293-2010 '1 3: 3/
THE BilLDING CONTRACTORS
ASSOCIATION OF SOUTHWSTERN
IDAHO,
Appellant,
v.
IDAHO PUBLIC UTILITIES
COMMISSION and IDAHO POWER
COMPAN,
Respondents.
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Boise, Apri 2011 Term
2011 Opinion No. 55
Filed: May 25, 2011
Stephen W. Kenyon, Clerk
Appeal from the Idaho Public Utilties Commission.
The order of the commssion is affirmed.
Michael C. Creaer, Givens Pursley LLP, Boise, argued for appellant.
Krstine A. Sasser, Deputy Attorney General, Boise, argued for respondent Idaho
Public Utilities Commssion.
Lisa D. Nordstrom, Boise, argued for respondent Idaho Power Company.
EISMA, Chief Justice.
Ths is an appeal from an order of the Public Utilties Commssion revising the
allowances and refuds available to developers of residential subdivisions. We affirm the order
of the Commssion.
I. FACTS AND PROCEDURAL mSTORY
On October 30, 2008, Idaho Power Company fied an application with the Idaho Public
Utilties Commission seeking to modify its line extension taiff which applies to requests for
electrical service that require the instalation, alteration, relocation, removal, or attchment of
Company-owned distribution facilties. The proposed modification would impact both the cost
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of relocating and removing the Company's distrbution facilties and the cost of extending
service to previously unserved locations.
On December 10, 2008, Buiding Contractors Association of Southwestern Idaho
("Building Contractors") filed a petition to intervene in the proceeding, which was granted. The
City of Nampa, the Kroger Company, and the Association of Canyon County Highway Distrcts
also requested and were granted permission to intervene. The latter thee intervenors were later
joined by the Ada County Highway Distrct, which intervened by filing a petition for
reconsideration. Ths appeal does not involve the issues that these four intervenors raised.
The centr issue in ths case is the amount that developers must pay when the Company
constrcts distribution facilties to serve the lots in a new subdivision. For simplicity, we will
only discuss charges related to installing single-phase residential service. The distribution
facilities include line extensions and termal facilties. For residential service, the cost of
stadard terminal facilties include the labor and material to instal one overhead service
conductor, one 25 kV A transformer to serve a 200 amperage meter base, and the power meter.
Typically, the developer does not ask for the power meters to be instaled. As homes are
constrcted in the subdivision, the homeowner requests to be connected to power, and the
Company instals the drop wire from the transformer to the home and the meter at no cost to the
homeowner.
Historically, the cost of constructing new distrbution facilities has been paid parially
from up-front capital contrbutions from developers and parially from electrc rates charged to
all customers. The up-front charge is either based upon the Company's estimate of the cost of
the paricular line extension job or specified in the applicable taiff for standard tasks or
materials. The Company's estimate was prepared before constrction, and the amount charged
the developer was rarely adjusted afer constrction to reflect the Company's actual cost for the
work done.
Under the prior taiff, the Company provided developers with a "line installation
allowance," "per-lot refuds," and a "vested interest refud" to offset a portiòn of the
developers' costs incured in having the Company constrct the distrbution facilties. The line
instalation allowance is the porton of the estimated cost of the line extension that is fuded by
the Company at no charge to the developer. Under the prior taff, it was equal to the Company's
cost of providing and instaling overhead single-phae transformers withn the subdivision. The
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developer had to pay the additional cost for underground facilties if those were requested. The
per-lot refuds were suis refuded to the developer when a permanent residence connected to
electrcal service and occupied a lot inside the subdivision with five years. The per-lot refuds
could be up to $800 each, and a single transformer could serve multiple lots depending upon
their geographic confguration. The vested interest refud was a sum the developer could
receive if another person outside the subdivision paid to connect to the line extension withn five
years.
In ths proceeding, the Company sought to change the line installation allowance to a
fixed sum of $1,780 for each single-phase transformer, to elimiate the per-lot refuds, and to
shorten the time period for the vested interest refuds to four years. Building Contractors sought
to increase the per-lot refuds to $1000 and to increase the time period for vested interest refunds
to ten years.
The line extension allowance for a residence that was not in a subdivision had been the
cost of stadard termnal facilties plus either $1,300 for an all-electrc house or $1000 for a
house that did not have electrc heat. The Company asked that the allowance for such residences
also be changed to $1780 per tranformer for single-phase service.
After considerig wrtten comments submitted by the pares, the Commission issued its
initial order on July 1, 2009. It granted the Company's request to change the line extension
allowance for all residences to a fixed sum of $1780 per single-phae transformer and to
eliminate the per-lot refuds. It rejected both paries' requests to alter the time period for
receiving vested interest refuds.
On July 13, 2009, Building Contractors filed a request for $28,386.35 in "intervenor
fuding" pursuat to Idaho Code § 61-617 A. That statute permits the Commission to require
certn regulated utilties to pay all or a portion of an intervenor's legal fees, witness fees, and
reproduction costs. Building Contractors stated that the request was untiely under Commission
rules due to "the inadvertent and untentional oversight by its legal counsel with respect to the
correct timing for submission of requests for intervenor. fuding," but it requested that the
untimeliness be excused. i On July 22, 2009, Building Contractors also filed a petition askig the
i The request also noted in a footnote that "Building Contractors recognizes that Idaho Code § 61 -6 i 7A limits the
amount awardable as intervenor fuding to $25,000." It apparently overlooked the fact that the $25,000 limit had
been increased to $40,000 effective July 1,2003. Ch. 41, § 1,2003 Idaho Sess. Laws 162, 162-63.
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Commission to reconsider its findings and conclusions regarding terminal facilties allowances,
per-lot refuds, and the time period for makg vested interest refuds.
On Augut 1, 2009, the Commssion granted Buildig Contractors's motion for
reconsideration with respect to the amount of the appropriate allowances, and it denied the
motion with respect to extending the period for vested interest refuds and eliminating the per-lot
refuds. On September 3, 2009, the Commission denied Building Contractors's request for
intervenor fuding because it was untimely. On November 9,2009, Building Contractors filed a
second request for intervenor fuding.
Building Contractors submitted additional evidence and arguent, and on November 20,
2009, the Commssion issued its final order. It denied Buildig Contractors' petition for
reconsideration and the second request for intervenor fuding. Building Contractors then
appealed.
II. ISSUES ON APPEAL
A. Does the line instalation allowance result in unawf discrimiation between new customers
in and outside subdivisions or between new and existing customers?
B. Is the line installation allowance supported by substtial and competent evidence?
C. Did the Commssion err in denying Building Contractors' requests for intervenor fuding?
D. Is Building Contractors entitled to an award of attorney fees on appeal?
III. ANALYSIS
A. Does the Line Installation Allowance Result in Unlawful Discrimination between New
Customers in and outside of Subdivisions or between New and Existing Customers?
Building Contractors alleges that the new line extension allowance of $1,780 per single-
phase transformer violates Idaho Code § 61-315, which provides in par, "No public utility shall
establish or maintain any uneasonable difference as to rates, charges, service, facilities or in any
other respect, either as between localities or as between classes of service."
Building Contractors argues that the new tarff "authorizes a $1,780 allowance per
transformer installed within a residential subdivision and a $1,780 allowance per customer
outside of residential subdivisions." (Emphases in original.) According to Building Contractors,
"This arangement patently treats customers inside and outside subdivisions disparately because
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in a subdivision a single transformer may serve multiple (up to ten) customers if those customers
are located in sufcient proximty to each other, whereas, in the case of a single customer
requesting service outside a subdivision, a transformer will only serve that one customer." Thus,
it asserts that the Company's investment per electrcal consumer in a residential subdivision
could be less than the investment per electrcal consumer outside of a subdivision.
Idaho Code § 61-315 requires that there be no uneasonable difference as to charges
between classes of service. The class of service at issue here is constrcting new distribution
facilities to extend electrical service to a previously unserved location. Each person or entity
who asks the Company to provide new distrbution facilities is given the same amount as a line
extension allowance-$l, 780 for each single phase transformer installed. The amount of the
allowance is the same for line extensions in subdivisions and outside subdivisions. Under
Building Contractors' arguent, a developer should receive a credit of $1,780 per lot, which
could be up to $17,800 for one transformer if it could serve residences on ten lots. As the
Commission stated in rejecting Building Contractors' assertion that there should be a per-lot
allowance rather than a per-trsformer allowance, "Permitting a per customer allowance rather
than a per transformer allowance could lead to an allowance inside subdivisions that is greater
than the cost of the termnal facilties requied to provide service." The line instalation
allowance and the elimination of the per-lot refud do not violate Idaho Code § 61-315 with
respect to line extensions in and outside of subdivisions.
Building Contractors also contends that the new taiff violates Idaho Code § 61-315
because it discriminates between new and old electrcity customers as to the amount that the
Company will invest in their distribution facilities. In making that argument, Building
Contractors relies upon this Cour's opinons in Building Contractors Association of
Southwestern Idaho, Inc. v. Idaho Public Utilties Commission, 128 Idaho 534, 916 P.2d 1259
(1996) (herein called Boise Water), and Idaho State Homebuilders v. Washington Water Power,
107 Idaho 415, 690 P.2d 350 (1984). In the Boise Water case, the issue was "whether in
allocating the entire increased cost of resource supply to new customers via increased hook-up
fees the IPUC regularly pursued its authority to set nondiscriminatory rates." 128 Idaho at 538,
916 P.2d at 1263. The increased cost of resource supply was caused, in par, by new
requirements of federal law and the need to build a new water treatment plant. We held that the
increased hook-up fees for new customers violated Idaho Code § 61-315 "(t)o the extent that the
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new hook-up fees are based on an allocation of the incremental cost of new plant constrction
required by growth and by the Safe Drig Water Act." Id. at 539, 690 P.2d at 1264. In the
Homebuilders case, the Commission required that the power company impose upon customers a
"nonrecurng charge of $50 per instaled kilowatt of capacity on all customers whò installed
electric space heating, or converted to electrc space heating following March 1, 1980." 107
Idaho at 418, 690 P.2d at 353. The chage only applied to customers who had the option of
choosing either natual gas or electrcity for space heating. Id. at 416, 690 P.2d at 351. The
Commssion did so ''to send to Water Power's customers a price 'signal' which would more
accurately reflect the cost and availabilty of electrcity." Id. at 418, 690 P.2d at 353. We held
that "the Commission's order, which differentiates between customers using electrcity for space
heating prior to March 1, 1980, and customers who instal or convert to electrc space heating
after that date, is an invalid classification and violates the legislative prohibition agaist
discriminatory or preferential rates." Id. at 421,690 P.2d at 356.
In both the Boise Water and Homebuilders cases, the Commssion imposed a charge on
new customers in order to pay for the increased cost of providig water and electrcity
respectively to all of the utility's customers. The chage was not based solely upon the cost of
connecting the new customers to the utilties' distrbution systems. In Homebuilders, we
expressly stated that the case "presents no factors such as when a non-recurng charge is
imposed upon new customers because the service they require demands an extension of existing
distribution or communcation lines and a chage is imposed to offset the cost of the utilty's
capita investment." Id.
There is nothng in Idaho Code § 61-315 that requires an identical per customer capita
investment by the Company, even if that were possible to achieve. For example, the
Commission's staf prepared an analysis of the costs for providing electrcal service to five
subdivisions completed under the prior tarff. The subdivisions ranged in size from 3 lots to 101
lots. The allowance for terminal facilties, and therefore the amount the Company invested to
provide them, vared from $250.71 per lot in the 101-lot subdivision to $1159.33 per lot in the 3-
lot subdivision.
As explained by the Commission: "Once new customers pay the nonrecurng
charge/line extension costs, they become existing customers and pay pursuat to the'same rate
schedule as all other existing customers in their class. As such, there is no distinction between
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new and existing customers in regard to nonrecuring rates and no rate discrimination." Building
Contractors has failed to show that the new taff violates Idaho Code § 61-315.
B. Is the Line Installation Allowance Supported by Substantial and Competent Evidence?
Building Contractors contends tht there is not substatial and competent evidence to
support the new taff. It argues that the Commission did not address the factors mentioned in
Homebuilders and Boise Water. In Homebuilders, we stated, "Any such difference
(discrimination) in a utilty's rates and charges must be justified by a corresponding
classification of customers that is based upon factors such as cost of service, quatity of
electricity used, differences in conditions of service, or the time, natue and pattern of the use."
107 Idaho at 420, 690 P.2d at 355. In Boise Water we similarly stated, "Any such difference in
rates and charges must be justifed by a corresponding classification of customers that is based
on such factors as cost of service, quatity of resource use, differences in the condition of service
or in the time, natue or pattern of the customers' use." 128 Idaho at 539, 916 P.2d at 1264.
Building Contractors alleges that there are no findings as to these factors and no evidence in the
record supporting other statements in the Commssion's orders. Whether there is substatial
evidence supporting the Commssion's findings depends upon what factu findings are
necessar to decide the issues in the proceeding.
The Commission performs legislative as well as judicial fuctions in its proceedings.
Rosebud Enters., Inc. v. Idaho Public Utilties Comm 'n, 128 Idaho 609, 618, 9 i 7 P .2d 766, 775
(1996). When exercising its legislative fuction, the Commission is not bound to decide futue
cases in the same way it had decided similar cases in the past. Intermountain Gas Co. v. Idaho
Public Utilties Comm 'n, 97 Idaho 113, 119,540 P.2d 775, 781 (1975). There need not be facts
in the record supporting the Commssion's policy determinations made in exercising its
legislative fuction. See Moon v. North Idaho Farmers Ass 'n, 140 Idao 536, 545, 96 P.3d 637,
646 (2004) ("The existence of facts supporting the legislative judgment is to be presumed."
(quoting United States v. Carotene Prods. Co., 304 U.S. 144, 152 (1938))).
This proceeding did not involve a difference in rates or charges between or among classes
of customers. Therefore, the factors listed above in Homebuilders and Boise Water were not
relevant. Rather, the Commssion made a policy change. Allowances and refuds are sums that
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the Commssion requies the Company to invest in distrbution systems for new customers.2 The
Commission had previoùsly set the allowances and refuds so that the Company would pay to
connect a new customer an amount approximating the average amount it paid to connect an
electrcity customer in the past. In a 1995 order, the Commssion stated, "We find 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." However, in this proceeding, the Commssion
changed that policy. "So long as reguatory bodies adequately explain their depare from prior
ruings so that a reviewing cour can determine that their decisions are not arbitrar or capricious,
orders based upon positions substtially different than those taen in previous proceedigs can
be upheld." Intermountain Gas Co. v. Idaho Public Utilty Comm 'n, 97 Idaho 113, 11 9, 540
P.2d 775, 781 (1975). In makng the policy change, the Commission stated that it "is àddressing
a fudamenta principle of utilty reguation: To the extent practicable, utility costs should be
paid by those that cause the utilty to incur the costs. If the 'cost-causers' do not pay, the electrc
rates for other customers will be higher."
Building Contractors states tht its appeal "is not premised simply on the fact tht the
(new line extension) allowance is smaller th previously required, or that new customers may
pay more to extend service than existing customers who accessed service when facilties costs
were lower." It concedes "that there will be a cost difference between what new customers pay
for line extensions as compared to old customers." It argues that the new taff "results in new
customers overpayig for distribution facilities, in Idaho Power over-earng on its investment to
serve those new customers, and in existing customers necessarly being subsidized in the rates
they pay." (Emphases in original.) Thus, it contends that the new tariff violates ths Cour's
opinions in Boise Water and Homebuilders.
In both Boise Water and Homebuilders, the charges at issue were not based solely upon
the cost of extending distrbution facilities to new customers. Building Contractors's arguent
that new customers are "overpaying" for distrbution facilties is not that they are paying more
than those facilities cost the Company to constrct. The overpaying argument is simply that with
the lower amount of Company investment in distrbution facilties resulting from the elimination
of per-lot refuds, the Company will receive from rates charged new electricity customers more
2 Building Contractors does not contend that there is any statute requiring the Company to invest in facilties to
connect new customers.
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than it invested in constrcting the distribution facilties necessar to connect those customers to
electrical service. Building Contractors asserts that under the former tariff the allowances and
refuds resulted in Company investment that was quite close to the "per customer embedded cost
of distribution," but the line extension allowances under the new taff "no longer swig around
any objective anchor tht futue customers, Commssions, or ths Cour can hold to." (Emphasis
in original.) There is no statutory requirement tht it do so.
"All charges made, demanded or received by any public utilty . . . for . . . any service
rendered or to be rendered shall be just and reasonable." I.C. § 61-301. The Commssion has the
authority to determine charges that are just and reasonable. I.C. § 61-502. In these proceedigs,
the Commission determed what would be a fai and reasonable allocation between the
Company and new customers of the cost of constrcting the distribution facilities necessar to
connect those customers to electrcal service. The Commssion found that "Idaho Power's
proposed fixed allowance of $1,780 for single-phase servce and $3,803 for three-phase service
represents a fair, just and reasonable allocation of line extension costs." Determining ~hat is fair
and reasonable is a discretionar determnation. See Quick v. Crane, 111 Idaho 759, 772, 727
P.2d 1187, 1200 (1986) ("(J)udicial discretion 'requies an actual exercise of judgment and a
consideration of the facts and circumstaces which are necessar to make a sound, fair, and just
determination, and a knowledge of the facts upon which the discretion may properly operate. ''').
Idaho Code § 61-629 provides, "The review on appeal shall not be extended fuer than
to determne whether the commission has reguarly pursued its authority, including a
determination of whether the order appealed from violates any right of the appellant under the
constitution of the United States or of the state of Idaho." "(I)n regularly pursuing its authority
the Commssion must enter adequate fidings of fact based upon competent and substatial
evidence" and "it must set fort its reasoning in a rational maner." Washington Water Power
Co. v. Idaho Public Utilties Comm 'n, 101 Idaho 567, 575, 617 P.2d 1242, 1250 (1980). Here,
the Commission's findings as to the Company's costs to constrct distribution facilities to
connect new electrcity customers were supported by substantial and competent evidence. There
is no contention that the sums tht will be charged to developers for distrbution facilities exceed
the Company's costs in providing those facilties. The evidence supports the Commission's
finding that it "is addressing distrbution costs not resource costs." The Commission also set
fort its reasoning in a rational maner for changing the allocation of those costs between the
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Company and developers. With respect to the change in line extension allowances and refuds,
the Commssion stated, "These chages relieve one area of upward pressure on rates. Moreover,
the Company's proposal is imparial to customer class, minmizes subsidization of termnal
facilties costs, and caries the added benefit of administrative simplicity." As explained by
Commission sta:
Each new customer that is added requires an investment in distribution plant and
terminal facilities. The new investment is undepreciated, while the investment
upon which the Company's revenue requirement (and rates) is calculated was
both lower on a per customer basis when originally made and is now parially
depreciated. Therefore, when the new plant investment is booked by the
Company, the resulting revenue requiement is higher per customer than it was
before the new customers were connected. The Company then has two
alternatives: increase rates to all customers to cover the increased revenue
requirement, or decrease the revenue requiement by shifting more of the
investment in new distribution/termal facilties to the customer for whose
benefit those facilities are built.
The Commssion regularly pursued its authority, and there is no contention that the order
appealed from violates any of Buildig Contractors's constitutional rights. We affirm the
Commission's order adopting the new taff.
C. Did the Commission Err in Denying Building Contractors's Requests for Intervenor
Funding?
On July 13, 2009, Building Contractors requested intervenor fuding in the sum of
$28,386.35. On September 3,2009, the Commssion denied that request as untimely under the
Commission's rues of procedure. After the Commission had parially granted Building
Contractors's request for reconsideration, Building Contractors filed a second request for
intervenor fuding on November 9, 2009. The amount it requested was $60,965.25, which
included the sum denied in its first request. The Commission rued that because the first request
had been denied because it was untimely filed, it would not consider those sums. It also held that
due to the granting of the reconsideration, the second request was timely filed as to the
$32,578.90 incured durg the reconsideration phase of the proceedings.
Idaho Code § 61-617A(2) provides:
The commission may order any regulated electrc, gas, water or telephone
utility with gross Idaho intrastate anua revenues exceeding thee millon five
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hundred thousand dollars ($3,500,000) to pay all or a portion of the costs of one
(1) or more paries for legal fees, witness fees, and reproduction costs, not to
exceed a tota for all intervening paries combined of fort thousand dollars
($40,000) in any proceeding before the commission. The determination of the
commission with regard to the payment of these expenses shall be based on the
following considerations:
(a) A finding that the paricipation of the intervenor has materially
contrbuted to the decision rendered by the commission; and
(b) A finding that the costs of intervention are reasonable in amount and
would be a signficant financial hardship for the intervenor; and
(c) The recommendation made by the intervenor differed materially from
the testimony and exhibits of the commission sta; and
(d) The testimony and paricipation of the intervenor addressed issues, of
concern to the general body of users or consumers.
The Commission has discretion in determinig whether to award expenses to an
intervenor under Idaho Code § 61-617 A(2). Idaho Fair Share v. Idaho Public Utilties Comm 'n,
113 Idaho 959, 963, 751 P.2d 107, 111 (1988) (overruled on other grounds by J.R. Simplot Co.
Inc. v. Idaho State Tax Comm 'n, 120 Idaho 849, 862, 820 P.2d 1206, 1219 (1991). Because the
factors are connected by the word "and," the Commission must find that all four listed factors
exist in order to award expenses under the statute.
~A;~fit~$~ ,Mt ~gr:~ing Contractors's paricipation did not materially
cO~~~~~~~~d~~:~ommission. It stated that Buildig Contrctors's
arguents were essentially~~~e¡,~ had presented in a 1995 proceeding and that the
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Commission did not find them persuaive then. Building Contractors argues that it presented
evti aod atgJweots in this proceediog,. but it has not shown how the Commission erred in
co~ßS !4at _~l!li~y~!!e.~Cl_æ:~nts did not materially contrbute to the decision
rendered by the Commission. Active paricipation in the proceeding is not suffcient to show
material contrbution to the ultimate decision. Building Contractors argues tht the Commission
misinterpreted this factor as providing that "a par only is entitled to intervenor fuding if they
prevail on an issue." (Emphasis in original.) Building Contractors does not point to any portion
of the Commssion's ruling so indicating, and we likewise have been unable to find any such
language in the Commission's decision. Building Contractors has not shown that the
Commission abused its discretion in denying the requested intervenor expenses.
D. Is Building Contractors Entitled to an Award of Attorney Fees on Appeal?
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Building Contractors requests an award of attorney fees on appeal pursuat to Idaho
Code § 12-117 and the .private attorney general doctre. To be awarded attorney fees under
either of those provisions, the par must be the prevailing par on appeal. Viking Constr., Inc.
v. Hayden Lake Irr. Dist., 149 Idao 187, _' 233 P.3d 118, 131 (2010). Because Building
Contractors is not the prevailing par on appeal, it is not entitled to an award of attorney fees on
appeal. We therefore need not address whether, had it prevailed, attorney fees could have been
awarded under either the statute or the doctrne.
iv. CONCLUSION
We afrm the order of the Public Utilities Commission, and we award respondents costs
on appeal.
Justices BURDICK, J. JONES, W. JONES, and HORTON CONCUR.
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