20020425-min.doc

MINUTES OF DECISION MEETING
APRIL 25, 2002 – 1:30 P.M.

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

Commissioner Kjellander called the meeting to order. The first item on the agenda was APPROVAL OF MINUTES FROM PREVIOUS MEETINGS: March 11, March 25, April 1 and April 8, 2002. There was no discussion and the minutes were approved.

The second order of business was approval of the CONSENT AGENDA, items 2—4. Regarding item 4, Commissioner Smith asked if IdaComm is a new, independent company or an affiliate of a company we already know. Wayne Hart replied that IdaComm is an affiliate of IdaCorp. There were no further questions or comments. Commissioner Kjellander moved for approval of items 2—4. A vote was taken and the motion carried unanimously.

The next order of business was MATTERS IN PROGRESS:

John Hammond’s April 22, 2002 Decision Memorandum re: In the Matter of the Formal Complaint of Lance and Karissa St. Onge Regarding a Qwest Communication Line Extension Decision. Case No. QWE-T-01-25.

Mr. Hammond reviewed his Decision Memo. Commissioner Smith noted she had been holding the order regarding this matter on her desk since October 5th, and she would be happy to move for dismissal of this case. There was no discussion on the motion. A vote was taken and it carried unanimously.

Scott Woodbury’s April 22, 2002 Decision Memorandum re: Case No. GNR-E-02-1, Investigation—PURPA QFs, Published Rate Eligibility and Contract Length.

Mr. Woodbury reviewed his Decision Memo. Commissioner Hansen commented that without question, the QF’s are at times more expensive than buying on the market, and twenty years is a long commitment time. He said we need more diversification in the generating resources and judging from the comments, the public wants us to make the playing field more fair, and the 1 MW, five-year contract length doesn’t give new QFs a fair chance to get started. He said he has come to support an increase in size from 1 MW to 10 MW and increasing the contract length to either 15 or 20 years.

Commissioner Kjellander said that in looking at Staff’s comments, it is noted that the bulk of the projects were done when we had the 35-year contract length, and then it dropped off to 8% at 20 years and only one contract was signed when it was lowered in 1996 to a five-year term, so perhaps there seemed to be some justification to push the contract length back to 20 years. He noted that with only 8% at the 20-year contract length, it doesn’t seem as if we are opening the gate too broadly, but at least we could see some activity with 20-year contracts. He said he could support 10 MW as well, but as far as the other issues that are out there, he said he didn’t feel ready to move forward today, even though he knew the interconnection issue would come back at us and perhaps we could deal with it after a more formal complaint has been lodged. He said his preference is not to consider all the other issues that have been raised outside of the two main issues we have been asked to deal with.

Commissioner Smith said she agreed and that we asked for comments on two issues and those are the issues we ought to decide. She said if the companies believe there are other urgent issues that need to be addressed more fully, we are certainly here and can initiate a process to do that. She noted that Staff had recommended 5 MW instead of 10 MW, and she asked if anyone could give her a brief reason why they did that. She said her other question is when we changed this previously, we anticipated that there would be federal legislation that would repeal the “must purchase” provisions of PURPA. She said the Senate Energy Bill was supposed to come off the Senate floor today and move to a conference committee, but she no longer recollected the number of amendments recently added, and she didn’t know if PURPA repeal was in the amendments.

Mr. Woodbury said there has been a bill for repeal of PURPA every year since it passed. Commissioner Smith said that she understood there would actually be legislation this year.

Rick Sterling said he could address the question about why Staff had recommended a 5 MW limit instead of something different. He said Staff looked at contracts that have been signed throughout the history of PURPA’s implementation in Idaho and figured approximately 80% of the projects have been 5 MW or less. He said there used to be a 10 MW limit for published rates and we still have a methodology for projects larger than 1 MW that could be used for larger projects. He said Staff felt that by choosing 5 MW most projects would fall under the rules of published rates and the other methodology could be used for larger projects, but it wouldn’t happen in a large number of cases and therefore wouldn’t be burdensome.

Commissioner Kjellander asked if the bar were raised to 10 MW, would fears be raised for the Staff in any way based on the investigation Staff did? Mr. Sterling responded that Staff would not necessarily be concerned, but it is a combination of project size and contract length that have to be considered. He said the longer the contracts are and the bigger the projects are the more risk there is that our published rates won’t accurately reflect actual avoided cost rates over a 20-year period. He stated a larger project simply means there are more kilowatt hours presumably being sold at prices that are perhaps not as accurate as we would like to see them.

Commissioner Smith moved that the Commission change the contract length to 20 years and size to 5 MW, and that the Commission not address other issues that were raised in the comments unless specifically requested to do so, in which case it would be done in the future in a separate proceeding. A vote was taken on the motion and it carried unanimously.

Scott Woodbury’s April 23, 2002 Decision Memorandum re: Case No. GNR-W-02-1 (Algoma Water) Sale of Water Company.

Mr. Woodbury reviewed his Decision Memo and recommended approval of the sale in line with the recommendations set out in the Decision Memo. Commissioner Kjellander moved to approve the sale of Algoma Water Company. A vote was taken and it carried unanimously.

Scott Woodbury’s April 22, 2002 Decision Memorandum re: Case No. UWI-W-02-1 (United Water) Complaint v. Eagle Water Company et al – Application for Order to Show Cause.

Mr. Woodbury reviewed his Decision Memo. He noted that after this item had been put on the agenda, the Commission received a letter from Land Consultants, Inc., the developers of Lockwood Subdivision, located on the southeast corner of Floating Feather Road and Ballantyne Lane, which is clearly within the buffer zone established by the Commission. He said Land Consultants has had conversations with Eagle Water Company with respect to extension of service and they have requested a Commission decision as to whether they should submit their constructions plans to Eagle Water or United Water. Mr. Woodbury said the Commission’s order indicates service within the buffer zone should be preceded by an application by the respective utilities.

Commissioner Smith said that Land Consultants is a separate issue and is not part of the complaint that was filed, which appears to be the extension of services by Eagle Water into an area that was clearly certificated to United Water. She said we should issue an Order to Show Cause immediately to let them know that the fine is $2,000/day. She said she wouldn’t remodel the complaint of the parties listed as respondents. She said if Countryside Estates wishes to be removed, and it is appropriate they be removed, they can advise us if they wish to be removed. She said we have no idea what their role in this was, what they knew or if they realized they were in a certificated area of United Water and what representations were made to him, so it would be good to hear from them. She stated that May 8th was the first available date to have a hearing and it would be good to get this settled as soon as possible. She said if Eagle Water is willing to admit that it has made some kind of error and is willing to work out with United Water the transfer of any facilities that may have been installed in error in another utility’s certificated area, they are certainly free to reach an accommodation and file it with us, which could shorten the process and reduce the potential penalties.

There were no further comments. Commissioner Kjellander moved that the Commission issue an order for a Show Cause Hearing for May 8, 2002 at 10:00 a.m., leaving the case caption as it is. A vote was taken on the motion and it carried unanimously.

Commissioner Smith stated that with regard to the Land Consultants, she has a lot of sympathy with their dilemma, which is that they have approval and have their construction plans ready to be filed next week. She said that the Commission deliberately left the buffer zone and at the time the certificated areas were created, the Commission went through lengthy proceedings and spent an enormous amount of time deciding what was appropriate. She said the Commission left the buffer zone because it didn’t know how future development would come about and who would be in the best position to most economically and efficiently serve that area. She stated that before it can be determined whose area it is, you have to know the answers to the questions: how much is it going to cost each company to serve in terms of investment and does each company have adequate supply for the proposed project. She said once the Commission has this information, then it would know the answer to the question of who should serve.

There were no further comments, and having no further items on the agenda, Commissioner Kjellander adjourned the meeting.

DATED this _____ day of April, 2002.

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COMMISSION SECRETARY

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