20020128.min.doc

MINUTES OF DECISION MEETING
JANUARY 28, 2002

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—3 on the CONSENT AGENDA. There were no questions or comments from members of the Commission and the Consent Agenda was approved.

The next order of business was MATTERS IN PROGRESS:

Scott Woodbury’s January 25, 2002 Decision Memorandum re: Electric Service Schedule No. 34—BPA Exchange Credit. Case No. PAC-E-02-2.

Mr. Woodbury reviewed his Decision Memorandum. Commissioner Hansen commented that he is excited about this credit finally coming about. He said it totals about a 44% reduction in a residential customer’s bill, which will be a tremendous benefit. He said Pacificorp serves a lot of all-electric homes in southeastern Idaho, where the winters are severe. He said some residential customers have bills of $500-$600 per month, so this credit will be a tremendous savings for those customers over the next five years, and it is something this Commission has worked to achieve for the Idaho customers. He said he has been told it will be a tremendous relief for the farmers in that area, too, who in the past have complained that irrigation rates have been higher in their area, so this credit should be pleasing to them.

There was no further comment or discussion. Commissioner Hansen moved for approval of Pacificorp’s proposed Schedule 34-BPA Credit Refund for an effective date of February 1, 2002. A vote was taken on the motion and it carried unanimously.

Scott Woodbury’s January 25, 2002 Decision Memorandum re: Tariff Schedule 95—Optional Wind Power Rate. Case No. AVU-E-01-16.

Mr. Woodbury reviewed his Decision Memorandum. Commissioner Smith said she was pleased to make a motion to approve the optional wind power rate proposed by Avista. She said it is an option customers ought to enjoy. Included in the motion, she said the Commission should also ask Avista to give yearly updates on the program—i.e. on the buy-up and its expenses and the typical things that go into a report. A vote was taken on the motion and it carried unanimously.

John Hammond’s January 25, 2002 Decision Memorandum re: In the Matter of the Application of Idaho Power Company for an Order Approving the Costs to be Included in the 2002/2003 PCA Year for the Irrigation Load Reduction Program and Astaris Load Reduction Agreement. Case No. IPC-E-01-34.

Mr. Hammond reviewed his Decision Memorandum. Commissioner Smith asked about Staff’s position regarding recommendation #4 in its Comments, which was to allow interest to accrue on
the outstanding balances as established in the PCA calculations. She asked if the interest rate was 6% or some other number. Mr. Hammond said he thought the recommendation in this circumstance would be an interest rate of 6% because that was the interest rate for the amounts that have accrued in 2001, and anything going forward from January 1, 2002 would be at the lower rate. Keith Hessing said that in the past, Idaho Power has asked that the interest rate which was in place at the beginning of each PCA year be carried through the entire PCA year, and that method was approved by the Commission in one of the early PCA cases. He said the Commission has continued to do it that way in all PCA cases since then, and he thought Idaho Power expects the 6% rate to carry all the way through March.

Commissioner Smith said in the interest of being consistent, she didn’t think she had ever approved any kind of lost revenues for utilities, and that would be her position today. She said there was nothing in the filings that changed her mind in that regard. She stated that while she is willing to accept 6% in the interest of consistency, she will also in that interest not support the inclusion of any reduced or lost revenues requested by the company.

Commissioner Hansen said he felt the buy-back programs helped bail the company out of a situation caused by a combination of bad luck and poor planning on the company’s part. He said prudency required the buy-back programs so therefore he was opposed to including the lost revenues as an additional cost in the buy-back amounts in the PCA. He said if the company feels it has to recover every penny it may lose or that the lost revenue needs to be recovered a more appropriate route than the PCA is to file a rate case and let us look at the overall earnings. He said he was very much in agreement with Commissioner Smith, and he didn’t have a problem including the $41 plus million with Astaris and the $48 million on the irrigation buy-back program. He said he also didn’t have a problem with the intervenor funding the irrigators have asked for.

Commissioner Kjellander asked Mr. Hammond if the issue of lost revenue for the Astaris program was off the table from the very beginning. Mr. Hammond replied that was correct and there was no lost revenue or reduced revenue component in that filing. Commissioner Kjellander said he would like to be consistent with the programs, and if we didn’t allow lost revenue for one program up front, and that was agreeable for the Astaris program, then why would we want to allow it with a similar buy-back program that occurred during the same time of year and coincided with the other program. He said he concurs that lost revenue is not something he wanted to pass on to consumers at this point. Commissioner Kjellander made a motion to approve intervenor funding at a level of $7,314; approve a 6% interest rate to be applied to any of the outstanding deferral balances; approve the $41 plus million for the Astaris buy-back costs; approve $48 plus million for the irrigation buy-back costs, making it clear that lost revenues are not to be included; and allow the adjustment that needed to be made for the remainder of the period.. Commissioner Smith asked if the motion included the suggestion that buy back amounts include the period of time from the end of September through the end of 2001. Mr. Hammond replied that he is not in a position to forward any amounts that have been submitted. He said Staff is disputing the amounts in the Astaris program going forward from January because of the filing in the IPC-E-01-43 case. Commissioner Kjellander asked if we intended to keep the case open until those amounts are dealt with, and only deal with the first part through September. Commissioner Smith said the other option would be to just call this good for the upcoming PCA and take care of what is left in a year. Commissioner Kjellander said he would like to amend his motion to reflect that intent. There was no further discussion. A vote was taken and the motion carried unanimously.

Commissioner Smith said she had one more comment. She said she recalled that last year Idaho Power made an effort to come and meet with the Commissioners several times to inform them what the market price of power was doing and what they were doing to brainstorm ideas as to how to procure power supply for the coming year. She said this year the company has been noticeably absent, however, and she would like the Staff to contact the company and tell them we would like to have a meeting soon so the company can show us its analysis of the current market conditions, what the forward prices for contracts of power might be at this time, and what the company is doing about any opportunities that might exist in that regard. She said it might be more important to be attentive and vigilant at a time when there are low prices and good opportunities than it is when there are high prices and poor opportunities.

Commissioner Hansen said he agreed and would like to send the same message to some of the other utilities that they also need to give the Commission a review. Commissioner Kjellander also concurred.

Lisa Nordstrom’s January 25, 2002 Decision Memorandum re: Application to Approve a Customer Allocation Agreement Between Avista Utilities and Kootenai Electric Cooperative. Case No. AVU-E-02-01.

Ms. Nordstrom reviewed her Decision Memorandum. Commissioner Kjellander said it is clear in the statute that there “shall” be an opportunity for hearing, and the only way to accomplish that is to use modified procedure. He made a motion to process the case under modified procedure. A vote was taken and the motion carried unanimously.

Commissioner Kjellander then adjourned the meeting.

DATED this _____ day of February, 2002.

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COMMISSION SECRETARY

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