131206_IPCSimplot.pdf

Idaho Public Utilities Commission
Case No. IPC-E-13-17, Order No. 32940
December 6, 2013
Contact: Gene Fadness [phone], 890-2712
Website: www.puc.idaho.gov

PUC dismisses Simplot complaint against Idaho
Power

State regulators are granting an Idaho Power Company motion to dismiss a complaint by J.R.
Simplot Co. The potato processor wants to buy the Idaho Power distribution facilities at its
current Caldwell plant and use them at a new plant its building nearby.

Because Simplot and Idaho Power do not agree on a purchase price, Simplot asked the Idaho
Public Utilities Commission to determine a fair price. Idaho Power, seeking dismissal of the
case, said the commission does not have jurisdiction to determine a sale price when the utility
is unwilling to sell.

Most distribution facilities serve a large number of customers. But some large industrial
customers, like Simplot, have distribution facilities located on their property, dedicated
specifically to the use of one large customer. These larger customers pay a facilities charge to
have their utility install and maintain distribution plant because the customer lacks the
expertise or capital to fund, design and install the facilities or because the customer doesn’t
want the responsibility of maintaining them.

During Idaho Power’s last rate case, some industrial customers claimed that Idaho Power’s
facilities charge is excessive and sought commission authority to opt out of paying the charge
and, instead, take on the responsibility of maintaining the distribution facilities. In response, the
commission approved a new tariff that allows customers to do so.

Both Idaho Power and Simplot agree the net book value of the distribution facilities at the
Caldwell plant is about $120,000. Simplot offered to buy the facilities for $85,910 and Idaho
Power offered to sell for $272,928.

Idaho Power claims that Simplot’s offer furthers Simplot’s business interests at the expense of
other customers.

Idaho Code § 61-328 requires a utility to obtain commission authorization before it can sell or
transfer ownership of generation, transmission or distribution property. Because customers
pay through rates for utility equipment, the commission must determine if it is in the public
interest when a utility seeks to buy or sell property and if rates will be impacted. However,
Idaho Power claims the statute does not permit a customer to “unilaterally call upon the
commission to determine a sale price of a utility’s assets” when the utility is not seeking to buy
or sell property.
Simplot argues that Idaho Power’s position requires a customer to “continue paying Idaho
Power’s monopolist rate for the facilities charge or agree to Idaho Power’s unilateral sale
price.”

The commission agreed with Simplot that the new tariff allowing customers to assume control
of distribution plant “does little, if anything, to advance the interests of Idaho Power’s
distribution facilities customers if Idaho Power can single-handedly shut down negotiations.”

“Oftentimes, the effect of a proposal cannot be accurately measured until after approval and
implementation,” the commission said. “Such is the case here.”

However, the commission said that while it cannot compel Idaho Power to sell the distribution
plant, it can urge the parties to continue negotiation. “We believe that there is enough
flexibility in the valuation of the distribution facilities for both parties to move further toward
an agreeable price,” the commission said. If negotiations fail, Simplot may choose to purchase
its own distribution facilities. Further, Simplot can ask the commission to review whether the
cost and calculation of Idaho Power’s facilities charge is reasonable, the commission said.

The commission’s order and other documents related to this case are available on the
commission’s Web site at www.puc.idaho.gov. Click on “Electric” and then on “Open Cases”
and scroll down to Case No. IPC-E-13-17.

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