20020528-min.doc

MINUTES OF DECISION MEETING
MAY 28, 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 order of business was approval of items 1-3 on the CONSENT AGENDA. There were no questions or comments and Commissioner Kjellander moved for approval of the items. A vote was taken and it carried unanimously.

The next order of business was MATTERS IN PROGRESS:

Commissioner Kjellander stated he would like to move item 4 to Fully Submitted Matters. There were no objections.

John Hammond’s May 24, 2002 Decision Memorandum re: Status of Possible Stipulation and Settlement Agreement in Case No. IPC-E-01-43—Investigation into the Load Reduction Rates Paid by Idaho Power to FMC Corporation/Astaris, LLC.

Mr. Hammond reported that he was hoping to have an agreement signed but there were logistical problems. He said there is an agreement in principle between Idaho Power’s staff and Astaris/FMC but there have been problems getting various people to sign off on the document. He said he is hoping to have it done by the next Decision Meeting.

Lisa Nordstrom’s May 24, 2002 Decision Memorandum re: In the Matter of the Investigation Into Whether Ponderosa Terrace Estates Water System, Inc. is a Public Utility Subject to Regulation by the Idaho Public Utilities Commission. Case No. GNR-W-01-1.

Ms. Nordstrom reviewed her Decision Memorandum. She said the decision before the Commission is whether or not to fully implement the previous order and the rates therein or to modify them in some respect.

Mr. Robaer Cobott, the owner of Ponderosa Terrace Water System, who was participating in the meeting via teleconferencing, stated he would like to make some comments. He said he didn’t know how the PUC expects an owner-operator to survive on $80 per week, or 4 hours per week at $20 per hour. He said that is not acceptable and cannot work. He said his most recent fax to the Commission informed us that the person who oversees the water system and lives on the property has quit, not wanting to be a party to the restrictions put on by the PUC. Mr. Cobott said that means he has to make a 60-mile roundtrip at least once per day, if not more, up to the property to do all the testing that is needed and required by DEQ. He said even without the testing, he couldn’t imagine that the PUC would subject an owner to four hours at $20 per hour when he has in the neighborhood of $200,000 invested in the property over many years, plus all the work that has gone into it, and the PUC is telling him he is only worth $80 per week. He said that is not right.

Mr. Cobott said he is also concerned that the PUC gave a 12% return on his investment. He stated he had to refinance his home at over 11% interest in order to get the money to put in a secondary well, which he was not required to put in because he was grandfathered in, but DEQ forced him to put it in before he knew he was grandfathered in. He stated he could have used that money to put in meters and control the water problem, but he didn’t have that option. He said he had never heard of the PUC until last year, but since then he heard that the PUC works out arrangements with operators who can’t afford to put in a new well. He said in all his contacts with DEQ, they had never mentioned the PUC. He stated that the profit structure he built in has been disallowed, his wages were cut, and the thing that is irritating is that no one conferred with him. He said every item should be discussed and worked out between the parties.

Mr. Cobott said he made a trip to Boise and took all his information, and he went over everything with Staff. He said the PUC makes the determination on what it’s going to do and he has no say or chance for rebuttal. He said he has put in rebuttals but nothing has been done or even said. He said one example is that he owns the property the water system is on—approximately 6 acres or a little more—and there is no lease agreement and that was never a problem until the PUC got involved. He stated he has to pay real estate taxes, which is another expense associated with the property, but he is not allowed anything for that. He said it seems like everything goes toward the consumer or landowners and he is not privy to anything, while landowners get information from the PUC before he does. He said landowners make derogatory statements about his company and about him, but no one comes to him and asks him about the comments or tries to get his rebuttal on them. He said it is not right that whatever the landowners say is the gospel. He said he should have equal representation. He noted that in his letter dated May 21 he outlined quite a few different things that he feels should be included, but none of them were even mentioned with the exception of the water testing.

Mr. Cobott said he can’t be up on the property 24-7 and that is why he had an employee who lived on the property, and when there is 3-4 feet of snow and it’s ten degrees at 11:00 p.m, he can’t get to the property. He stated his employee lived right on the property and was only yards away from the well houses. He said his employee should be paid something he can live with and not have deductions, such as taking away payment for his electricity. He said he wants the system to work and he wants to work with the PUC because it has brought up some good points, but it has to be fair and just, and right now it is not. He said if the PUC’s decision comes out the way the latest paperwork is written, he won’t accept it, and if he elects to stay in business, the first thing he will do is give himself a raise. He said he won’t be humiliated by a salary of $80 per week, which is ludicrous, when it is a 60-mile roundtrip to get to the property. He said all he asks is for a reasonable resolution. He said he feels he is being taken advantage of and the Commission is pro landowners because he and his expenses have not been considered. He stated the PUC doesn’t even have the common decency to talk to him about a problem, to work it out and come to a decision.

Mr. Cobott said he was told that when the new rates go into effect on June 1st, it’s a new ball game and everything starts from zero. He said he wanted to know what happens to all the customers who owe him money, and there are a lot who owe him because they have refused to pay or are slow in paying or he allowed them to get behind because they have families. He said it isn’t fair to the customers who have paid, and it isn’t fair for him to have to go without any money and start with zero balances, so something has to be worked out. He said there are landowners who have received statements for five months, and one of the comments was, “Do we have to pay this bill?” He said these people think they have the PUC in their hind pocket and they don’t have to do anything. He stated that out of 18-20 full-time residents, there are only about half who have paid the $20. He said he wanted to know if he can turn them off after June 1st, because something has to bring them to the realization that they don’t get something for nothing and they have to pay for it.

Mr. Cobott said he wants his salary of $1,000 per month because some weeks he might only have to work 10 hours, and other weeks he might work 30 hours or only 4 hours, and he wants all the items listed in his May 21st letter. He said he wants them to be looked at and discussed, but so far no one will talk to him. He stated that the only person who has acted fairly between landowners and himself is Michael Fuss. He said Michael at least talked decently, showed respect, and recognized some of the problems.

Commissioner Hansen said he wanted to follow up on Mr. Cobott’s question concerning those customers who are not keeping their bills current. He asked Mr. Cobott if he sends out billings to all his customers on a monthly basis. Mr. Cobott replied that he has found he has to send out monthly billings or he won’t get paid, with the exception of November 28th, where he disagreed with the Commission’s ruling of $20 per month for resident use, and he didn’t want to be a party to that or accept that amount, so he refused to send out statements. He said he did send out statements in May, billing the customers for five months at $20 per month. He said the customers knew they have to pay because they have been paying for years, and the PUC sent them a letter stating they had to pay $20 per month, but not one of them sent in any money. He stated he received more money from non-residents than he did from the resident owners, and some were behind prior to November 28th. He said he shouldn’t have to start those people with a zero balance, when all the others paid during that period.

Commissioner Smith said that in order to provide Mr. Cobott with ample opportunity to express his concerns it would be wise for the Commission to hold a public hearing on this matter. She proposed that in the interim, the Commission could implement Staff’s recommended rates as outlined in #3 of the Decision Memo, subject to refund, which means if the Commission chooses a different number later, higher or lower, the rates are adjusted back to the date of the order, so no time is lost. She said it seemed to her we need to get off the $20 rates and on to the higher rates in the interim while waiting for a hearing to be held. She said that in regard to the unpaid accounts, those customers owe the Commission-ordered rate for the months it was in effect, but if they were not billed, then they get an extended period of time to pay the bill—i.e. if they weren’t billed for five months, then they have five months to pay it back. She said they do owe the money, however, and they should be made aware of that. She emphasized that we really need to have a hearing and hear the concerns so the Commission can make a reasonable decision. She said if the Commission is ready for a motion, she would so move.

Mr. Cobott asked what is involved with a hearing. Commissioner Kjellander explained that with a hearing, what typically happens is testimony is filed by all the parties to the case. Commissioner Kjellander advised Mr. Cobott that he would be allowed to submit his comments, and he should contact Mr. Fuss and the PUC’s legal counsel to get more details as to what is required. He said typically the PUC travels to a location near the water system, which in this case would be Sandpoint, where we tried to have a hearing in December when a lot of this was initially brought up. Commissioner Kjellander stated that if there are any witnesses, they are sworn in and their testimony is put into the record, and the Commissioners would have an opportunity to cross examine that testimony. He said there is typically a public hearing so customers would have an opportunity to comment as well, and he would also have an opportunity to cross-examine during the same proceedings. Commissioner Kjellander explained it is a formal process, and it is put on the record just as if it is in a court room, and a court reporter is there. He stated that if Mr. Cobott doesn’t like the decision reached after the hearing, then he can seek reconsideration, and if he doesn’t like the decision made at that point, then he can appeal directly to the state Supreme Court, which is why there are transcripts and an official record. Commissioner Kjellander recommended that Mr. Cobott seek the assistance of Commission Staff to help him decide the approach he wants to take. He stated the Commission Staff would not represent him, however, and to the extent that he felt he needed legal counsel, that would be something he would have to pursue on his own. Commissioner Kjellander said that he recalled that Mr. Cobott had stated in one of his letters that he had thrown out previous orders the Commission has issued in this case. Commissioner Kjellander advised Mr. Cobott to please take orders seriously, and when he speaks with Mr. Fuss, to ask him if he can put together a record of the orders for his files so he can see what has occurred so far in this case.

Mr. Cobott said he is a pretty simple individual and he goes by facts, black and white, and as far as he is concerned, he isn’t getting a fair deal. He said that during the meeting today, he had asked about his wages and numerous other things, and now the Commission is avoiding making a decision and instead going to a hearing. He asked why the decision couldn’t be made today, and he wondered what he was supposed to do about all his questions and about the bills. Commissioner Kjellander replied that the Commission also has to make decisions based on fact, and we have to develop a factual record because our decisions can be directly appealed to the Supreme Court, and that’s why we need to go through the hearing process. He said the Commission can’t arbitrarily pick a number out of the sky. He said what the Commission is doing with the proposal for an interim rate is to at least get things established and then there would be a true-up period—i.e. if after the hearing, the Commission finds the rate should be more or less, then the rates would be trued-up, based on the final finding. Commissioner Kjellander said he just wanted Mr. Cobott to know that to the extent Mr. Cobott can be made whole, based on the factual record, that is what the Commission will attempt to do.

Commissioner Smith explained to Mr. Cobott that a hearing would be his opportunity to bring evidence that he believes supports his requested salary and his requested expenses. She said if the Commission had to make a decision today, all it has is his statement that he believes it is not fair. She stated the hearing will provide him with an opportunity to bring additional information or evidence that he thinks the Commission should consider when it makes that decision, be it what other water managers in his position make, for example, or what expenses of other comparable water companies are, and the hearing is his opportunity to bring the Commission that kind of information and evidence.

Mr. Cobott asked what third party would be present at the hearing that is not affiliated with the PUC or himself. He asked if it is just the PUC and himself at the hearing, then who would make the rulings or decisions—i.e. who would be the neutral party who makes the decision at the hearing. Commissioner Kjellander replied that the Commissioners are the independent party that makes the decision. He explained that Staff is a separate entity from the Commissioners. He said the Commissioners serve as judges in a quasi-judicial capacity, and if he doesn’t like the Commission’s decision, there is recourse for reconsideration and appeal, which is why the Commission has to develop a factual record. Commissioner Kjellander stated that just because Staff recommends something, it doesn’t mean that the Commissioners will decide it is the appropriate route to take, and the Commissioners and Staff are separated in that context. Mr. Cobott said all he wants is a fair shake, he wants his story heard, and he wants this thing to work more than ever. Commissioner Kjellander said it is his intent through the hearing that when it is over with, he will hopefully feel he has had a fair shake, which is why we hold hearings. Mr. Cobott asked how soon it would be until the hearing could be held. Commissioner Kjellander said that it would be scheduled as soon as possible, and if there are interim rates in place, we will be moving forward, with the recommendation for the true-up upon completion of the case, and with the intention that both the company and customers will be treated fairly. Mr. Cobott confirmed that the Commission will be implementing Option 3 on the Decision Memo for the interim rates, and he asked what is meant by a true-up provision. Commissioner Kjellander explained that a true-up would be used if it is determined ratepayers should be paying more, then the Commission will have to establish a way in which the rates go higher for that time frame and that he as the company owner would be “made whole,” and conversely, if it is determined the rates should be less, the true-up would work in the opposite direction. Mr. Cobott said he would just have to go along with it and see, although he was really reluctant. He said he didn’t know where money was going to come from to pay the electric bill, as he was only getting in about $120-$180 per month.

Commissioner Kjellander asked for a vote on the motion made earlier by Commissioner Smith. A vote was taken and it carried unanimously.

Lisa Nordstrom’s May 24, 2002 Decision Memorandum re: In the Matter of the Application of Intermountain Gas Company for Authority to Decrease Its Rates for Service. Case No. INT-G-02-03.

Ms. Nordstrom reviewed her Decision Memorandum. She said the question before the Commission is whether or not the matter should be processed under modified procedure and also to provide guidance regarding customer notification and effective dates. Commissioner Hansen said he thought it should be processed under modified procedure with a July 1st deadline for the order to be issued, which would be a benefit to the customer. He suggested we re-schedule a Decision Meeting for June 27th with a comment deadline of June 26th. Commissioner Smith said she concurred with Commissioner Hansen, and she didn’t expect a customer uprising asking that rates not be lowered, but the sooner we can get the decrease in place the better. Commissioner Kjellander asked if there are any potential contested issues tied to the case that might require additional comments. Ms. Nordstrom replied that there could be one relating to the over-collection of dollars through the WACOG to be used to stave off a potential rate increase in the second year of the PGA, which is a departure from past PGA collection practices, and it may be controversial. Commissioner Kjellander asked her if the brief timeline for comments would pose a problem. Ms. Nordstrom replied that customers could receive a greater decrease if the Commission decides to pass it through in one year instead of allowing over-collection, but it’s primarily a policy decision and she didn’t think customers would have that much input on it.

Commissioner Hansen made a motion to process the case under modified procedure, with a June 26th comment deadline followed by a Decision Meeting on June 27th and issuance of an order by July 1st. Commissioner Kjellander asked when the last of the bill stuffers would be mailed, and Ms. Nordstrom replied that they would be mailed on June 25th. Commissioner Kjellander clarified that customers would then only have one day to file comments. Ms. Nordstrom said that Michael Huntington was present at the meeting and he could address the question. Mr. Huntington said the dates are approximate and he didn’t have the exact dates. A vote was taken on the motion and it carried two to one, with Commissioner Kjellander being opposed to the motion.

Scott Woodbury’s May 22, 2002 Decision Memorandum re: Case No. UWI-W-02-2 (United Water) Application to Amend Certificate Lockwood Subdivision (Eagle Area).

Mr. Howell reviewed the Decision Memorandum. Commissioner Smith stated she had a question for the developer, Land Consultants. She said she was concerned they had written a letter expressing a preference for Eagle Water, where it seemed the utilities and staff were recommending United Water. She asked Mark Butler of Land Consultants if they had a preference. Mr. Butler replied that based on the information provided by staff, they were in support of the recommendation to go with United Water. Commissioner Smith made a motion to approve the certificate request of United Water to serve the proposed Lockwood Subdivision. A vote was taken on the motion and it carried unanimously.

There was no further business before the Commission and Commissioner Kjellander adjourned the meeting.

DATED this _____ day of May, 2002.

___________________________________
COMMISSION SECRETARY

6