20010116.min.doc

MINUTES OF DECISION MEETING
JANUARY 16, 2001 - 1:30 PM

In attendance were Commissioners Dennis Hansen, Marsha Smith, and Paul Kjellander.

Commissioner Hansen called the meeting to order. The first order of business was APPROVAL OF MINUTES of the November 20, December 5, December 11, and December 18, 2000 Decision Meetings. Commissioner Hansen moved for approval of the minutes and the motion carried unanimously.

The second order of business was approval of items 2-7 on the CONSENT AGENDA. Commissioner Hansen asked if there were any questions regarding any of the items. Commissioner Smith stated she had no questions and moved for adoption of the Consent Agenda. A vote was taken and the motion carried unanimously.

The next order of business was MATTERS IN PROGRESS. Commissioner Hansen noted that item 9 would be held until the January 29, 2001 Decision Meeting.

Scott Woodbury's January 9, 2001 Decision Memorandum re: Golden Dawn/Barberton Petition for Installation of Individual Meters. Case No. UWI-W-01-01.

Mr. Woodbury reviewed his Decision Memorandum. He noted that Chuck McDevitt, the attorney for United Water, had indicated the Company requests an opportunity to file comments. Commissioner Smith stated she hoped that when we set up this case, it is not captioned as a complaint but rather as a Commission investigation into providing meters for this location.

Commissioner Kjellander asked how the cost of a meter is spread out over the course of a billing—i.e. over how many years is the $800 cost spread out? Mr. Woodbury said he didn't have the answer but would get it for him. There was no further discussion. Commissioner Hansen moved for approval of Staff's recommendation. A vote was taken and the motion carried unanimously.

Scott Woodbury's and Rick Sterling's January 11, 2001 Decision Memorandum re: Avoided Cost Variable Rate—Colstrip Requested Changes in Methodology. Case No. GNR-E-99-01.

Mr. Woodbury reviewed his Decision Memorandum. Commissioner Smith said she didn't have any objection to not having a workshop if it's likely that it's not going to lead to the desired outcome in having one proposal. She suggested that if we want to ask for more comments, we need to focus the comments by expressing a preference for one method or the other or outlining two methods, asking people to comment on the relative merits of each. She recommended that we can't, however, just say to everyone who filed comments "comment again" or we won't have anything clearer than what we have now. Mr. Woodbury stated that he should have articulated that the comments would be on the comments that were already filed. Commissioner Smith said that if the Commission doesn't express a preference or clearly lay out two alternatives and request comments, then what we are going to get back is the same thing we already have, which would be a waste of time in her view.

Commissioner Hansen asked if she was suggesting that we delay this matter. She replied that she was satisfied that using the FERC Form 1 would be adequate and that PURPA was set up to mimic avoided costs, and nothing in that has changed, so there would be no reason to change what the Commission originally intended to do. She stated her preference is for the Staff's proposal of using the FERC Form 1 with the fixed amount of $2 per megawatt hour to represent the variable O & M. We would then explain to people that this is our preferred approach and ask them for their comments. She added that if the developers who propose the indices can't live with that, then we'll know. She said another way to do it would be by proposed order.

Commissioner Hansen said he agreed wholeheartedly with Commissioner Smith.

Commissioner Smith moved that the Commission issue a proposed order adopting the Staff's methodology of using the FERC Form 1 as a source of information for calculating the fuel component of the Colstrip adjustment and using a fixed amount of $2 per megawatt hour to represent the variable O & M, allowing a standard 21-day comment period, after which time the Commission can review the comments and issue a final order. There was no discussion on the motion, a vote was taken, and it carried unanimously.

Scott Woodbury's January 12, 2001 Decision Memorandum re: Final Order No. 28205 Petition for Clarification. Case No. UWI-W-99-4 (United Water/Barber Water).

Mr. Woodbury reviewed his Decision Memorandum. He stated that Staff recommends that the Commission issue a Notice of Petition and provide the Company with an opportunity to respond. He noted the Company's attorney, Mr. McDevitt, was present and had indicated the Company certainly wants the opportunity to respond. He stated the alternative recommendation before the Commission is to issue an Order clarifying the order language and providing such other relief as may be required, such as calculation and refund credit of unauthorized charges.

Commissioner Kjellander stated he had one point of clarification and asked if the improvements outlined in the Order had been made. Mr. Woodbury replied the improvements have been made, although the meters were not installed until the end of April. Commissioner Kjellander made a motion that the Commission issue a Notice of Petition and provide the Company with an opportunity to respond.

Commissioner Smith said she didn't understand what the problem is. She said she had read the Order, which states, "United Water proposes a six-month transition period for Barber Water residential customers….We find the transition period to be a reasonable and responsible method of addressing customers concerns…During this period customers are to be provided within 30 days with billing information that will be useful in assessing the change that will occur when they are switched to United Water rates." She asked if that isn't what the tariff proposes.

Mr. Woodbury replied that the comments filed by staff and reply comments filed by the Company all looked at the start point for the six-month transition to be the date that the master meters were installed. Commissioner Smith confirmed that the master meters were installed last April. Mr. Woodbury replied they were installed toward the end of April and not the beginning of January. Commissioner Smith said that if the master meters were installed in April, then it seemed to her that more than six months had passed. Mr. Woodbury confirmed that is correct, but the Company changed its pricing mechanism July 1st. He said the dispute is over what the Commission intended by its Order language—if the Commission intended that the six-month period would begin from the date of the Commission's Order or if it begins when the tariffs were filed for an effective date of January 1st. He said it was the customers who brought it to the Staff's attention that the Company did not complete its metering, and the Company admits it did not complete its metering until the end of April. Mr. Woodbury stated it is the customers' contention that the Company jumped the gun and started billing them at United Water's rates too soon, and that's the thrust of the dispute—when the six-month period was supposed to begin—at the end of April or at the beginning of January.

Commissioner Smith noted the Order doesn't say anything about meters being installed or work being done or not. She said she was looking at the Commission's findings on page 8 of Order No. 28205. She said it looks to her like it needs more work. Mr. Woodbury said that if she were to look at the Commission's Order language with respect to capital improvements, on page 7, where the Commission states, "We expect United Water to perform the identified capital improvements (install master meters, telemetering, automated control systems; repair storage reservoirs; rehabilitate wells) prior to any switch of Barber Water residential customers from present rates to United Water tariffs." Mr. Woodbury said that work was not completed until the end of April, and they were switched July 1st, which was after the work was done. He said the completion of the work was to be the initiation of the six-month period. Commissioner Smith pointed out that the Order doesn’t say that, but rather the six-month period was for people to have bill comparisons so they would have a period of time to look at what they were being charged currently and what their United Water rates would be. She said that is how it reads to her, but if we need people to file comments so we can clarify our Order, we can do that. Mr. Woodbury said it is the Company that is requesting the opportunity to file a response, and Staff has already filed its Petition for Clarification. Commissioner Smith said she had not yet seen a copy of Staff's Petition.

Commissioner Hansen stated they had a motion before them and asked if there was any further discussion on the item or the Motion. Being none, a vote was taken, and it passed unanimously.

Don Howell's January 11, 2001 Decision memorandum re: Eastern Idaho Railroad's Petition for a Refund of Its Annual Assessments for Years 1999 and 2000. Case No. EIR-R-01-1.

Mr. Howell reviewed his Decision Memorandum. Commissioner Hansen asked him if the Staff's audit verified that fees should have been $3700+ rather than the $40,0000. Mr. Howell said that was correct, and that initially when the Railroad protested its fee in May of 2000 it reported substantially less intrastate revenue than the Staff subsequently arrived at after it performed its audit, but based upon Staff's best belief on what constitutes gross intrastate operating revenue to the Railroad, the recalculated fee for 2000 should be $3,754.71. Commissioner Hansen asked what the Staff is really being directed to do as far as filing a formal Answer. Mr. Howell replied that what the Staff contemplates is a formal Answer addressing all the allegations contained in the Railroad's letter, particularly on page 2 of its letter dealing with how the Commission treats other Companies who may perform switching and car repairs and whether the Commission even has the ability to assess a regulatory fee under the Staggers Act 1980. Mr. Howell said that in order to flesh those issues out as well as the factual timeline involved, Staff believes it would be most appropriate to handle it as a formal case and to treat the letter as a Petition and file a formal Answer.

Commissioner Smith asked if Staff has undertaken audits of other railroads we regulate. Mr. Howell replied that as part of Staff's preparation of the audit report, it determined there was some inconsistent reporting involving primarily the short-line operators—how they reported and what types of revenue they reported under intrastate revenue. He said Staff has subsequently determined what revenues should be reported, and based on what that calculation is as defined in our audit report, the staff then re-calculated Eastern Idaho Railroad's fee. Mr. Howell stated that if instead of paying $37,000 the Railroad only owes $4,000, then that would of course affect all of the railroads' assessments for the 2000 year and that would be addressed in our Answer.

Commissioner Hansen made a motion to approve Staff's recommendation. A vote was taken and the motion passed unanimously.

Terri Carlock's January 12, 2001 Decision Memorandum re: Avista Application for Authority to Issue, Sell, Deliver and/or Guarantee Debt Securities. Case No. AVU-U-00-3 (Reopened).

Ms. Carlock reviewed her Decision Memorandum. Commissioner Hansen asked what would happen if the bond ratings dropped two notches below the existing level. Ms. Carlock replied that the Company would have to file a show cause as to why the authority should not be revoked. She stated that if the Company had a certain amount outstanding at that point the Commission could cancel any additional amounts that were not used. The Company would have to file a response explaining the decrease and what they proposed. Commissioner Hansen asked her if in her personal opinion it would have that type of affect on the bond rating. She stated that regarding the increase in the authority, she did not think there would be any affect. She said the reason for the restriction is to allow them not to come back in every time they change a term within the authority for $700 million, which is the only provision. She said that normally they would have to come in once every two-five years to renew it, and this will allow them to keep it in existence unless the bond rating goes down.

Commissioner Hansen asked if there were any other questions. There were no further questions or discussion. He made a motion to accept Staff's recommendation for approval of an additional $200 million debt authority to total $700 million. A vote was taken and the motion passed unanimously. The meeting was then adjourned.

Dated at Boise, Idaho this _____ day of February, 2001.

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COMMISSION SECRETARY

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