HomeMy WebLinkAbout20010620.min.docMINUTES OF DECISION MEETING
JUNE 20, 2001 - 1:30 P.M.
In attendance were Commissioners Paul Kjellander, Marsha Smith, and Dennis Hansen.
Commissioner Kjellander called the meeting to order. The first order of business was approval of items 1-4 on the CONSENT AGENDA. There were no comments or discussion on any of the items and the Consent Agenda was approved.
The next order of business was MATTERS IN PROGRESS:
Scott Woodbury's Decision Memorandum re: Application for a Certificate (Idaho Code 61-526) or Alternative Determination of Exempt Status Mountain Home Generation Station. Case No. IPC-E-01-12 (Idaho Power).
Mr. Woodbury reviewed his Decision Memorandum. Commissioner Hansen commented that it is difficult to do a proper analysis of this proposal as a rate-based facility with the information the Commission has received from the Company. He said he wished the Company had provided better information and had been more helpful. He noted that for example, the Commission has no formal report to help estimate the reasonableness of this project, no basis to dispute the Company's capital cost estimate, and no assurance that lower bids might have been achieved. He stated that the regulated utility needs more generation at this time and he didn't believe there is a great risk to the customers by ratebasing this addition. He said he supported the project as a ratebase addition; however, he wanted to defer the amount to be ratebased. He said he didn't think it is second guessing the Company but is just a matter of having the proper information before the Commission to make that decision. He said the Company hadn't bothered to provide much information on the cost of the project or how it stacked up against alternatives, and until we receive such information, it is very difficult to approve an amount.
Commissioner Smith said she felt exactly the same way as Commissioner Hansen does. She said the Commission needs the same kind of assurance the PUC received in the Milner-Swan Falls cases. She said the Commission doesn't have enough information to put this amount of money into ratebase. She said she is willing to work with the Company in any kind of process it wants to use in order to get the information. She said she agreed with Commissioner Hansen that the Company needs more generation and this could be the way to get it—the price could be just right—but there's no way for her to know that given the limited information. She apologized to the Company if this delays them and she said that when the Commission decided to handle this case by modified procedure it was probably not the right choice. Mr. Woodbury stated that the Company was proceeding with construction and had broken ground. Commissioner Smith said the Company shouldn't be waiting on the PUC's decision and had obviously done its analysis and was proceeding, which is entirely appropriate. She said it may be we will applaud that decision and take the numbers and put it in ratebase, agreeing with what they have done, but she didn't have enough information right now to make that decision. She said whatever process is adequate to get us to that level of comfort is what we need to use.
Commissioner Kjellander asked Mr. Woodbury from a procedural standpoint if there were two parts—one being the certificate and the other the ratebase component. He asked if it would be possible to make a decision on the certificate without making a decision on the ratebase issue. Mr. Woobury replied that they can be separated. He said he spoke with Idaho Power's attorney, Mr. Kline, and asked him if what they were presenting to the Commission is an "either/or" type of proposal—either grant them the certificate ratebase amount and accounting treatment for costs requested or permanently exempt it. He said Mr. Kline had indicated the Company would have to look at the Commission's order and assess whether the risk they perceived was acceptable or not. Mr. Woodbury said that in reply to Commissioner Kjellander's question as to whether the PUC can give the Company a certificate to authorize construction and defer the ratebase amount, the answer is "yes," and the Company can always ask for reconsideration and provide us with its thoughts later. Commissioner Kjellander said that at a minimum, that would be the motion he would put on the table, which would be to go ahead and approve the certificate but to hold off on the ratebase issue until we get the appropriate procedure in place to provide the Commission some comfort.
Commissioner Smith noted that if the PUC grants a certificate, implicit in that there will be recovery of some amount and that it is appropriate and prudent for the Company to take this course of action. She stated that whatever amount of expense is deemed reasonable in that process would be ratebased, and that is what she takes the giving of a certificate to mean.
Commissioner Hansen said he thought the Commission would definitely be fair in ratebasing the proper amount, and to him, the only thing the Company has to worry about is providing the information and necessary documentation needed in order to make a good decision. He said he is for ratebasing it but we need better information before we do. He said he could approve ratebasing the facility now, and he didn't have a timeline as far as whether it would need to be completed before making the decision to ratebase it or not.
Commissioner Kjellander stated since the Company was already moving ahead, the issue of whether or not they have a certificate in their pocket today isn't stalling the project, and the Commission can deal with it all in one fell swoop when it comes up. He noted the price of gas that was mentioned in the Decision Memo was in the $5 range, and he was just curious if the pricing was based on spot market prices or if the Company was already locked into some kind of long-term, forward contract. Mr. Woodbury said he didn't have an answer to that question. Commissioner Kjellander said that raises some other questions as the Commission looks towards a PCA component of this issue later.
Commissioner Hansen moved for approval of the Mountain Home project as a ratebase addition, deferring the amount to be ratebased until the Commission receives the proper information requested and needed to make that decision.
Commissioner Smith said her reluctance is that part of the information she wants is what else did the Company look at, how did it pencil out compared to this, and what's the long-term forecast for this alternative as opposed to the other things they looked at, or should have looked at. She said she is hesitating, although she knows the Company is short, and that the Commission can probably find an appropriate amount for this project to be included in rate base.
Commissioner Kjellander said all we have been hearing about natural gas-fired plants is that combined cycle plants are the direction to be moving in towards efficiency and yet this one comes in not being a combined cycle plant. He said that issue is on the table, too, and whether the Company's proposal is just a knee-jerk reaction. He said he might not be as scittish if it weren't for the fact that FERC has thrown a tremendous burp into some of the projects in trying to respond to the energy crisis over the last few months. He stated his hesitation isn't necessarily with the Company but with the industry as a whole.
Commissioner Hansen said he wanted to elaborate on the reasoning in his motion. He said this is a small plant and in his mind the Company really needs to get a signal to move on it, especially if it is going to be able to utilize the generation in the near future to meet forecasted need. He said he wondered if the Company would be reluctant to move ahead as swiftly if the Commission puts off approval. He said even if the plant serves its purpose for just one to two years, in the documentation he has looked at, the turbines could probably be sold. He said he doesn't see a super risk to the ratepayers but he does see a problem dilly-dallying along and missing out on some time, which is why he made the motion.
A vote was taken on the motion and it carried unanimously.
Don Howell's June 18, 2001 Decision Memorandum re: Idaho Power's Request to Establish the Minimum Energy Cost Amount ("the Trigger") Before Issuance of Energy Cost Bonds. Case No. IPC-E-01-19.
Mr. Howell reviewed his Decision Memorandum. Commissioner Smith asked if the Commission approves the Company's Application, would the PUC then be committed to allowing the Company to issue bonds if the amount is $127.7 million or above. Mr. Howell replied that once the trigger is established, if the Company believes it has a request that would exceed the trigger amount, then they in the first instance could file an application for energy costing bonding, but they don't have to. Commissioner Smith confirmed that if the Company files an application for energy costing, the Commission doesn't have to approve it. Mr. Howell replied that is correct and there is a lot of discretion at the second stage of such a proceeding. He said the Commission could deny the energy costing bond, or adjust the years. He stated that Staff believes the best time to examine the potential savings and benefits is at the time the Company files the energy bond application. He said the analysis Staff provided is just a rough analysis based on current costing amounts and doesn't in any way tie the Commission's hands.
Commissioner Kjellander confirmed that the trigger is not automatic and the Commission will have ample opportunity to review the request, once the trigger is hit and the application is made by the Company. Mr. Howell replied there is nothing automatic about the trigger.
Commissioner Smith said she has extreme reluctance with regard to this mechanism. She said her initial view of the filing was that the posed amount was way too low, but since it doesn't bind the Commission to securitize that amount, should the trigger be reached and an application be filed, she could support approving the Company's application as fulfilling one of the statutory requirements that we establish this minimum amount. She commented that everything is dependent on the circumstances at the time as to what the numbers actually turn out to be, but the trigger amount still seemed kind of low to her. She made a motion to approve the Company's application.
Commissioner Kjellander asked how often the company is required by statute to come in and adjust the trigger. Mr. Howell replied that a trigger can last no more than five years, but that doesn't mean the Company could not come in and file a subsequent application to adjust the trigger up or down, as circumstances dictate.
A vote was taken on the motion and it carried unanimously.
Having concluded the items on the agenda, Commissioner Kjellander adjourned the meeting.
Dated this _____ day of September, 2001.
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COMMISSION SECRETARY
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