HomeMy WebLinkAbout20010328.min.docMINUTES OF DECISION MEETING
MARCH 28, 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 February 14 and February 20, 2001 Decision Meetings. Commissioner Hansen made a motion to approve the minutes and the motion passed unanimously.
The second order of business was approval of item 2 on the CONSENT AGENDA. Commissioner Smith moved for approval of the Consent Agenda item, noting Mr. Dunbar has done a good job and we're fortunate to have his services as contract administrator. A vote was taken on the motion and it passed unanimously.
The next order of business MATTERS IN PROGRESS:
Doug Cooley's March 26, 2001 Decision Memorandum re: Revisions to Idaho Rural Exchange Carrier (IREC) Tariff Adjusting the Equal Access Recovery Charge (EARC).
Mr. Cooley reviewed his Decision Memorandum. He stated the Commission has received a letter from AT&T objecting to the adjustment of the Equal Access Recovery Charge (EARC). He stated that Staff feels AT&T has made some valid points in its objections. Commissioner Hansen asked why the companies didn't start charging the EARC a year ago. Mr. Cooley replied that it could have been a technical or paperwork oversight on behalf of the companies or the consultant.
Commissioner Smith stated she wanted to clarify that the companies have an approved tariff on file in order to collect the charge but the charge was never billed to the underlying carriers. Mr. Cooley replied that she was correct and they are now asking for a one-year true-up. He said EAS has played a factor but the charges simply weren't collected. Commissioner Smith stated that in her mind, true-ups are for unanticipated things. She asked if someone dropped the ball and if so, who is responsible. She suggested the matter be held so the companies could respond to Staff and explain what happened.
Commissioner Kjellander asked if it was possible to get responses back from the companies within a week. Mr. Cooley replied that he will try, noting re-calculations will need to be done to determine how much of the oversight was attributable to EAS and how much was due to company error. Commissioner Hansen stated that without further objection, the matter will be held until the next Decision Meeting on April 4th.
John Hammond's March 22, 2001 Decision Memorandum re: In the Matter of the Application of Avista Corporation dba Avista Utilities for an Order Approving an Electric Energy Buy-Back Program for Pumping Schedules 31 and 32 Customers. Case No. AVU-E-01-4.
John Hammond reviewed his Decision Memorandum. Commissioner Hansen stated he wanted to clarify that when reference is made to 14 customers if that figure is just an estimate of how many will actually be participating in the program. Mr. Hammond confirmed that 14 is just an estimated number and he was uncertain how the company arrived at that figure.
Commissioner Kjellander stated that language in the contract provision gives him concern and the company's response didn't help to alleviate his concerns. He said the way the language reads, if an irrigator enters into a good faith agreement with the company, the company could later decide not to pay the irrigator. He said he questions what would be wrong with contracting to a given amount to alleviate the language issue. Randy Lobb replied that the company is concerned about free riders and the company is just trying to make sure it will pay customers only for energy they would have used.
Commissioner Smith noted that at the beginning of the season, irrigators have an idea of how much water is available to them. She said it doesn't make sense for the company to pay a customer based on the amount of water they had the year before when the amount is going to be different this year. Commissioner Hansen said he is concerned that irrigators will be left holding the bag if they don't get as much water as they thought they would. Commissioner Smith said it depends on the philosophy, which is really to cut back on energy usage. She questioned why the ratepayers should pay the irrigators for something that wouldn't have been used anyway.
Commissioner Kjellander noted the program should be fair and expressed concern that too much discretion is left up to the company. Mr. Lobb stated that most of the irrigators are groundwater pumpers, not surface irrigators, and decisions will need to be made on a case by case basis. Commissioner Kjellander asked if there is any indication what the breakdown is between surface and groundwater pumpers. Mr. Lobb replied that he didn't have those figures. Commissioner Kjellander asked representatives of Avista—Brian Hirschkorn and Jason Fletcher, who were participating by conference call—if they knew how many of its customers were surface irrigators and how many were groundwater pumpers. Mr. Hirschkorn replied that they didn't have a count and confirmed the language at issue was added to offer the company protection against free riders. Mr. Fletcher said the company did contact several farmers and got mixed responses as to the breakdown in the service territory. He acknowledged more farmers pumped from wells than from surface water. Mr. Hirschkorn stated that from the information they received from the account representative, the majority are deep well irrigators. Commissioner Kjellander asked the company if it would have any difficulty bringing any contract changes caused by mandated water curtailment to the Commission to be reviewed on a case by case basis. Mr. Hirschkorn replied that would not be a problem. Commissioner Kjellander made a motion to approve the program with the provision that if the company determines it should not pay an irrigator for a contracted amount due to curtailment of water by a governmental mandate, the matter will be brought before the Commission on a case by case basis.
Commissioner Smith noted that Staff had not made any recommendation regarding the amount of interest the company will pay. Based on Staff's comments and the company's reply, it was decided no interest will be paid by Avista because unlike Idaho Power's program, no monies will be withheld from the irrigator. A vote was taken on Commissioner Kjellander's motion and the motion carried unanimously.
John Hammond's March 23, 2001 Decision Memorandum re: In the Matter of the Application of Pacificorp dba Utah Power and Light for Approval of Its Proposed Electric Schedule No. 72. Case No. PAC-E-01-4.
Mr. Hammond reviewed his Decision Memorandum. Commissioner Hansen stated the Idaho Irrigation Pumpers Association had filed comments regarding the case. He asked if they would like to make any additional comments. He noted there were also irrigators present who would have the opportunity to make comments.
William Taylor, president of the Idaho Irrigation Pumpers Association, said he would like to comment in order to personalize their concerns. He stated they have two concerns: physical disconnection of pumps and the rate being offered. He said if the company disconnects pumps, farmers will not have any flexibility and would be penalized for incidental use of a pivot. He said his association would prefer to follow a procedure similar to what was allowed in the Idaho Power case where power is not physically disconnected. Mr. Taylor said regarding the rate, his association believes that .15 per kWh is a reasonable price. He said we won't see much participation at the .12 per kWh price.
Commissioner Kjellander asked Mr. Taylor if his association has done any calculations as to how many kWhs would be saved if the price were .15 rather than .12 per kWh. Mr. Taylor deferred to Mark Mickelsen, a farmer and member of the Idaho Irrigation Pumpers Association. Mr. Mickelsen replied that he has information from his own farm and with the help of the company, he calculated that based on the averages of the last five years, he could shut off six pumps if the price were .15 per kWh but at .12 per kWh, it would only make economic sense for him to shut off one pumping station. Mr. Mickelsen said he calculated that shutting off one pump would save about 1 million kWh and shutting off six pumps would save 4 million kWh. Mr. Taylor said they calculated that if the price is .12 per kWh, only those with wells over 600 feet will participate in the program. At .15 per kWh, it becomes viable to shut off pumps on wells over 400 feet deep. Commissioner Hansen asked Mr. Taylor if the company adequately explained the program to the irrigators. Mr. Taylor replied they received sketchy answers in some cases, and they were told the company has other options to save energy. Mr. Mickelsen said he had continual contact with one person at the company. He said one on one the company did a good job, but he felt they did a poor job as far as getting the information to a lot of people.
Commissioner Smith said she thinks that absolutely the pumps should be left on. She asked if they thought it would be a fair trade off if the company left the pumps on but went ahead and charged a monthly customer charge. Mr. Taylor said that would be fair. Commissioner Smith asked him when they had to decide about participating in the program. He said they are right down to the wire, waiting for the PUC's determination. Mr. Mickelsen agreed that farmers have to make decisions now.
Commissioner Hansen asked if anyone else was present who wanted to make comments.
Boyd Foster said he farms in several counties served by UP&L and wanted to point out that that at a price of .15 per kWh, he could set aside 20% of his property and still have a positive profit margin in one aspect of his operation. He said he wouldn't lay off any employees. He said he was in favor of the .15 price and felt at that price, the program would benefit his operations and the community he lives in. Commissioner Hansen asked him what crops he would be eliminating. He replied it would be potatoes, grain, and hay, and potatoes needed to be reduced anyway. Commissioner Kjellander asked him if he had done any calculations at .13 and .14 per kWh. He replied he had not, but at .12 he wouldn't apply for any acres, whereas at .15 he figured he would apply for 2,000 acres.
Blair Walker commented next. He said he farms in the same area and knows that some are concerned that businesses would be adversely affected. He said he polled 10-15 companies and they are all in favor of the program because it could heal up farmers' financial problems from last year. He said at a price of .15 per kWh, he felt he could still apply chemicals to the ground and run tractors, but not at .12.
Lynn Tominaga, the Executive Director of the Idaho Irrigation Pumpers Association, said the association mails to 6,800-6,900 well owners. He said the association is concerned that there is a difference in price between what farmers receive under Idaho Power's program and what they receive under Utah Power's program. He questioned the fairness and prudency of Utah Power's program. He noted that certainty is the main thing for farmers.
Commissioner Smith replied that in her 20 years of farming experience, it seemed certainty is something that can't be achieved. She noted that Utah Power's system has east-west constraints, making it different from Idaho Power's system. Mr. Tominaga stated that the company should consider anything it can to lower the cost it will have to pay for electricity. He noted the company has mentioned it could resort to a temporary generating system, but he questioned if that wouldn't be more expensive than buying back power at .15 per kWh.
Another farmer, Stephanie Michaelson commented next. She said she is concerned that Utah Power is only willing to buy-back power in June, July, August and September, but the company will have to start shutting them off in May, and they won't be compensated for May. She said she is in favor of the buy-back program but feels there are a couple of issues that still need to be addressed.
Commissioner Hansen asked if there was anyone from Pacificorp who would like to make comments. Bruce Griswold, Director of Energy Contracts, spoke on behalf of the company. He said the company had responded to Staff's data requests and has already explained why they raised the price from .08 to .12 per kWh. Commissioner Hansen asked why the company is so insistent that the pumps be disconnected. Mr. Griswold replied that through discussions on the matter, the company has had a change of heart in that regard. Commissioner Hansen asked about Mrs. Michaelsen's concern regarding use of pumps in April and May. Mr. Griswold replied that their program is designed to coincide with peak usage, which in southeast Idaho is June through September. He said he would have to go back and look to see if it is worth paying .12 per kWh in the off-peak months. Commissioner Kjellander asked how may kWh the company hoped to get at the price of .12. Mr. Griswold replied they assumed they would be getting 20% participation at that price, or about 30-40 megawatts. He said most of the communication with the farmers was done at the local level through informational meetings. He acknowledged the company is learning as it goes and this is a new program for them so there is no documentable information.
Commissioner Kjellander noted the company's deferral account is still growing and if the company doesn't achieve any load reduction from this program, they will have to buy on the open market to serve load projections. He questioned if the company doesn't get participation at .12 per kWh, then how much more will it cost to serve the native load customers. Mr. Griswold replied that the whole concept is to develop programs and ideas to encourage customers to curtail their load. He said the company is trying to strike a balance to encourage participation without paying too much, and they have based their calculations on the value of curtailment to the system in order to avoid adding additional dollars to their deferral accounts. Commissioner Hansen asked what the company projects the market to be in June, July and August. Mr. Griswald replied they expect it to be around $300 plus in July. Commissioner Hansen asked him if he thought it is prudent to reject $150 to irrigators and then go out and buy at $300 on the open market. Mr. Griswold replied that the company looks at all hours, not just the peak hours. He said it has taken the market price and devalued it to protect against free ridership. Commissioner Smith asked if the company is short of product. Mr. Griswold said there will probably be hours where they are long and some where they are short. He said it is his understanding there is adequate supply for Idaho but they could run short in Utah. Commissioner Smith said knows there are similarities and differences between Idaho Power and Utah Power. She noted Idaho Power is 60% hydropower, but Utah Power is mostly thermal. Mr. Griswold replied that drought is not the driver in their case. Commissioner Smith confirmed the amount of the customer charges for each option and confirmed that the program will be short-term.
Commissioner Kjellander asked if the company could get significant savings from Idaho if it would help with the projected shortages in Utah. He questioned if the company wouldn't want to get every available kWh out of Idaho. Mr. Griswold responded that they would like to achieve as much as possible as is appropriate to their system. Commissioner Kjellander asked him if .15 per kWh is too high, and he replied that it is. He said the company takes the market price and devalues it to bring it to a level that's appropriate for their system. Commissioner Smith commented that system savings is not as valuable as market power. Mr. Griswold responded that there are other reasons curtailment power isn't as valuable as market power since it's not as dispatchable.
Commissioner Hansen thanked the company and commenters for a good discussion. He said that by all indications, the company is still looking at the program as an experiment and he noted the company stated it can address problems. He said he would like to see documentation as to why the company can't offer .15 per kWh in order to make the program a viable alternative. He said he needed numbers, not philosophy, to show why .12 is the maximum the company can pay. He said the company also needs to get back with the PUC about the issue of disconnection of pumps. Commissioner Hansen said that by delaying the decision, he hates to put the irrigators in a bind but he doesn't want to make a decision until the company can address the issues and come back to the Commission.
Commissioner Kjellander said he agrees with most of the points and also believes the PUC needs solid information. He said to approve the program now would be like a roll of the dice. He said he sees two customer classes—interruptible and non-interruptible. He stated he is looking at .13 per kWh for interruptible customers and .15 for non-interruptible customers because they pay more for power. Commissioner Kjellander said he would also like to know what the kWh benefit of conservation would be, recognizing why Utah Power is different from Idaho Power. He asked if the company could pull together the data and bring this to closure.
Commissioner Hansen proposed the matter be held for one week in order to have the company address the remaining questions. There were no objections and the company was asked to return in one week.
John Hammond's March 26, 2001 Decision Memorandum re: In the Matter of Idaho Power Company's Irrigation Buy-Back Program—Requests by Irrigation Customers to Participate in the Program. Case No. IPC-E-01-3.
John Hammond reviewed his Decision Memorandum and Supplemental Decision Memorandum. Commissioner Kjellander asked Maggie Brilz about the program. She explained that one of the requirements is that there must have been consumption in the year 2000 because the company was concerned about the free rider issue. She said numerous customers contacted them asking for exceptions and they were very consistent in not granting any. Concerning Double Eagle, she said it wouldn't have changed their evaluation of the customer if they had received the additional information that was recently supplied to the Commission.
Commissioner Hansen asked if anyone wanted to make a statement.
Darrell Funk, president of Double Eagle, spoke about his petition and stated the reasons he thought the company should make an exception in his case.
Paul Porter, an irrigation customer from Melba, spoke and stated the problem with the program is that it locks out everyone below 100,000 kWh. He said he didn't think it is fair that smaller irrigators aren't allowed to participate.
Stuart Mininger, an irrigation customer from Grandview, spoke about his petition and reiterated his reasons for making the request.
Commissioner Hansen stated he was certainly sympathetic to their comments but he was concerned about granting variances to the program. He said he thought the company did a good job of explaining the program and felt we need to be consistent and abide by the rules the company has laid out.
Commissioner Smith stated the program was supposed to be non-discriminatory. If the company decided to make an exception and calculate usage more than five years out for one customer then the only fair thing to do would be to re-open the program and let others re-bid. She said although it seems harsh in individual circumstances, we have to be consistent in order to be non-discriminatory.
Commissioner Kjellander said he reluctantly went along with what had already been said. He noted he wished there were a way to pull Mr. Funk in without opening the flood gates.
Commissioner Hansen made a motion to deny all four requests. A vote was taken and the motion carried unanimously.
John Hammond's March 26, 2001 Decision Memorandum re: In the Matter of the Application of Idaho Power Company and Astaris LLC for Approval of a Letter Agreement Amending the Electric Service Agreement Between the Parties. Case No. IPC-E-01-9.
Mr. Hammond reviewed his Decision Memorandum. Commissioner Hansen asked if anyone present cared to make any additional comments. Pete Richardson replied he had already submitted comments on behalf of the Industrial Customers of Idaho and had nothing more to add.
Larry Ripley of Idaho Power stated the derivative expired the following day and the company is at risk for millions of dollars. He said what is left to decide is whether or not the load reduction should go through the PCA. He said the matter simply cannot wait.
Commissioner Smith said that from the first she believed that it should go through the PCA and she had no problem with approving that part of the request, but she had a big problem with the derivative.
Commissioner Kjellander suggested that the PCA question could be decided and they could postpone a decision on the derivative.
Commissioner Hansen asked if Idaho Power had enough contracts to meet native loads and if there was a need to worry about blackouts. Mr. Ripley replied that there are no reliability issues and there is sufficient load but they will have to pay for it and the problem is the cost. Commissioner Hansen asked him why he thought it prudent to go two years with the agreement. Mr. Ripley replied that the company regards Astaris' load reduction as dispatchable and the company is assured Astaris will never consume more than 70 megawatts. He said Astaris' load is much more beneficial to Idaho Power's retail load than the irrigation program, and it is cheaper for the company. Commissioner Hansen noted that the company offered irrigators and Schedule 22 customers 50-50, but Astaris is getting a much higher benefit. He questioned why they were treating Astaris differently. Mr. Ripley replied that with Astaris they have a take or pay contract and Idaho Power will pay Astaris to reduce its load but there will be no lost revenue, so it's as close to a dispatchable load as you'll ever get. He said the value to the system is greater than the individual loads of irrigators. He added it was purely an economic business decision to lock up the agreement with Astaris for two years because it is an incredible deal.
Commissioner Kjellander made a motion to approve the letter agreement, leaving out the derivative issue and not including it in the approval. A vote was taken on the motion and it passed unanimously. The meeting was then adjourned.
Dated this ____ day of April, 2001.
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COMMISSION SECRETARY
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