20010129.min.doc

MINUTES OF DECISION MEETING
JANUARY 29, 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 items 1-5 on the CONSENT AGENDA. Commissioner Hansen asked if there were any questions or discussion on any of the items. There were no questions, so he moved for approval of the Consent Agenda items with Staff's recommendations. A vote was taken and the motion carried unanimously.

The next order of business was consideration of the items under MATTERS IN PROGRESS:

John Hammond's January 25, 2001 Decision Memorandum re: In the Matter of the Application of Pacificorp dba Utah Power & Light Company for a Deferred Accounting Order. Case No. PAC-E-00-5.

Mr. Hammond reviewed his Decision Memorandum. Commissioner Hansen stated he didn't have any problem granting the Application for the deferred accounting order requested by Pacificorp, and he would deny any motion to dismiss the Application. He stated he didn't think there was reason to dismiss it. He said he didn't have a problem proceeding under modified procedure, but in granting the approval, it should be subject to the conditions listed by the Staff. Commissioner Hansen stated he wanted to make it clear that the Commission's approval did not mean the Commission was approving future cost recovery of any deferred cost but was only allowing Pacificorp the opportunity in the future to present these costs if they are incurred, and at that time, the Commission would determine if they are prudent, justified, and reasonable. He said some of the concerns brought up by Monsanto and the Irrigators are issues that will be addressed down the road in another proceeding. He stated he had one other item of concern, which was Pacificorp's proposal to initiate discussion with the Commission Staff to develop a mechanism for recovery of the deferred account and determine when it would be employed. He noted that all discussions on the matter must be open to all parties, which is what the Staff recommended, so that Monsanto, the Irrigators and any other parties could participate in discussions—it shouldn't just be a Staff and Pacificorp discussion. He added that he didn't have any problem with the deferral starting at the first of November when Pacificorp requested.

Commissioner Kjellander stated he agreed with everything Commissioner Hansen said. He noted there was a reference in the Decision Memo to using data from an Oregon rate case. He said that in approving this deferral, he wanted it to be clear that we don't intend to approve any kind of statement whereby the data from an Oregon rate case would be incorporated into anything we have done to this point. Ms. Carlock stated the approval would not dictate use of the Oregon data, and the Oregon data was used because the most recent information for Idaho was so old it didn't reflect current costs, while Oregon's rate case did reflect current costs. She explained the data was used for the deferral aspect in hopes it would be reflective of current conditions and those particular calculations she anticipated dealing with in the discussions for the next case. Commissioner Kjellander asked her if there was any alternative to using the Oregon data. Ms. Carlock replied she did not see a feasible alternative at this time. Commissioner Kjellander stated it would be a "wait and see" issue, and she replied that part of it will be.

Commissioner Smith stated that she also agreed with what had been said and it sounded like they were all on pretty much the same track. She said she would approve the Application with the deferral period commencing on November 1st. She added that it was also important to implement Staff's recommendation that if we have not addressed these issues in any kind of a case or specified how the deferred costs will be recovered, they should begin to be amortized on January 1 of 2003, which essentially gives us two years within which to have a proceeding to determine how they will be recovered. She stated that if we haven't done that within the time period then they need to be amortized off the books. She stated her only other concern was Staff's recommendation # 7: "Schedules showing that the portion of the deferral allocated to Idaho for Monsanto or Nu West will not be collected from other Idaho customers." She said she is confused by how that is stated. To her, it was just a deferred accounting mechanism that made no judgments whatsoever about what amount will be recovered, what rates it will be recovered through, if at all, and who would pay those rates. She said she assumed it would be an issue that ought to be brought up in the rate case as to which customer classes are responsible for which part of the deferral, and maybe it should be requested that Pacificorp keep it separate on its books so it can be argued out later, but she didn't think this would be a determination of who is going to pay. Ms. Carlock replied that #7 was a request for the company to maintain information so discussions could be held at a later date for the next case. She said there was no indication of trying to make a determination at this point. With that clarification, Commissioner Smith stated she could support the Application and made a motion to process the Application with the noted start date of November 1 and with the other conditions noted by Staff.

Commissioner Hansen asked if Pacificorp or Randy Budge would like to make any comment that hadn't been addressed or discussed. Mr. Budge stated that the conditions proposed by Staff satisfied the concerns they had on the matter. He said he had the same question regarding item #7 that Commissioner Smith had raised as to why that point would necessarily be a part of the order, but given the explanation that was given, they would certainly have no problem with it. There was no further discussion. A vote was taken and the motion passed unanimously.

Scott Woodbury's January 26, 2001 Decision Memorandum re: Power Cost Adjustment (PCA) Methodology Proposed Modifications. Case No. AVU-E-01-1.

Mr. Woodbury reviewed his Decision Memorandum. Commissioner Smith said she had one comment—don't drag this one out. She said it sounded like Staff was gearing up to take a leisurely review over a period of months. Mr. Woodbury replied that in their discussions with the Company, Staff has indicated they recognize their situation and it's not their intention to stretch this out. Commissioner Smith said her other question is technical—the Company hasn't proposed a rate to be effective on a certain date, so she was wondering what it is they would suspend, because usually it is just rates that become effective. Ms. Carlock replied that the Company is requesting approval to change its methodology for January 1st, so they would actually book it that way. Commissioner Smith said they can't change their methodology unless we issue an order approving a change, regardless of whatever date they have asked for. She stated a suspension happens when a company files a tariff with a rate to be effective on a certain day and to prevent that from happening after 30 days it has to be suspended. Ms. Carlock said she thinks that is what the Company is anticipating, and there are some tariff provisions that might change as a result. Commissioner Smith asked how long it will take to look at the information we need. Ms. Carlock replied they have received some of the information already and there is some additional information that is in route. She said they anticipate discussions with the Company and any other parties that might be involved in the case, which is why they would like to find out what parties might be interested and then deal with it as quickly as possible. She stated that in her personal view, she would like to have it completed by the end of April at the latest, but she didn't know how that would work with the Company.

There was no further discussion. Commissioner Hansen made a motion to accept Staff's recommendations. A vote was taken and the motion passed unanimously.

Scott Woodbury's January 9, 2001 Decision Memorandum re: Power Cost Adjustment (PCA) $5,708,000 Surcharge (4.763%). Case No. AVU-E-00-09.

Mr. Woodbury reviewed his Decision Memorandum. Commissioner Hansen stated he would like to make a comment that even with the increases it should be noted that Avista's rates are among the lowest rates of any investor-owned utility in the nation and the public needs to be aware of that.

Commissioner Smith made a motion to approve the PCA and take the suggestion made by the City of Wallace that we ask Avista to explain to us what measures it's taking to tighten its belt and also reinforce in the Order that the PCA doesn't include any of the expenses that the public is most offended by, such as the previous CEO's benefits and salary and Avista's corporate image advertising. She noted that although Commissioner Hansen is correct about Avista having some of the lowest rates in the country, it will be of little comfort to customers and for us this is the first of many unprecedented rate increases in this industry.

Commissioner Hansen said one other recommendation made by Staff is that the company be required to provide energy conservation information in a pamphlet or flyer in the billing. Commissioner Smith said she would agree with the recommendation if the company can do it economically, because customers seem to be offended that the Company spends so much money putting bill stuffers in.

Commissioner Kjellander said he would like to add that one of the other points of confusion Avista customers seem to have is they don't understand the difference or relationship between the unregulated entities of the Company and the regulated side. He noted that after hearing Avista's explanation in one of the workshops up North, it did not do a very good job of articulating the differences. He said he hoped Avista can find a way to help customers understand there is a regulated and unregulated side, and when an unregulated side reports profits, why that doesn't come back to benefit the regulated side of the industry. He said he hoped the Company in its efforts to try to improve its relationship with its customer will take some time to articulate those differences.

There was no further discussion on the motion. A vote was taken and the motion passed unanimously. Having completed the agenda, the meeting was then adjourned.

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

_________________________
Jean D. Jewell
Commission Secretary