20070518Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL
DATE:MAY 17 2007
SUBJECT:BG&CM RAILROAD OBJECTION TO ITS ANNUAL REGULATORY
FEE FOR CALENDAR YEAR 2007, CASE NO. BGR-07-
On May 7 , 2007, BG&CM Railroad filed a timely objection to its annual regulatory
fee for calendar year 2007. BG&CM operates portions of the previous Camas Prairie Railroad'
Grangeville branch line (Cottonwood to Spalding). In its objection, the Railroad stated that it
had over-reported its gross intrastate operating revenue for calendar year 2006. Instead of
reporting its gross intrastate operating revenue, the Railroad had inadvertently included some
intrastate operating revenues from another railroad. Consequently, BG&CM asserts that it had
over-reported its gross intrastate revenue by more than $427 422. Objection at I.
BACKGROUND
A. The Commission s Regulatory Fees
The Commission s operating funds are derived by assessing regulatory fees upon
utilities and railroads subject to the Commission s jurisdiction. Each year, the Legislature
authorizes the Commission to expense funds necessary to regulate and supervise utilities and
railroads. Idaho Code 99 61-1001 and 62-611. Idaho Code 9 61-1003 provides that on or before
April I of each year, each railroad corporation shall report its gross operating revenues from its
intrastate railroad business in Idaho for the proceeding calendar year. When all the railroads
have reported their total intrastate revenues, this cumulative figure is divided by the amount the
Commission expends regulating railroads. For example, for fiscal year 2008 (July 1 , 2007
through June 30, 2008), the expenditure amount attributed to regulating railroads is $142 000.
Order No. 30304. The railroads reported gross intrastate operating revenues totaling
DECISION MEMORANDUM
$14 071 803 for calendar year 2006. Thus, the proportionate share of each railroad's regulatory
fee is calculated by multiplying .7623 percent (.007623) times its gross operating revenues. Id.
The maximum assessment fee for each railroad shall not exceed one percent (1.00%) of its gross
revenues, and the minimum fee shall be no less than $50. Idaho Code 9 61-1004.
Once the railroad assessment is determined, the Commission notifies each railroad of
its regulatory fee no later than May 1 of each year. The regulatory fee may be paid to the
Commission in equal semi-annual installments due May 15 and November 15. Idaho Code 961-
1005. Any railroad may object to its regulatory fee "on or before the time specified for payment
of the first installment of the assessment made against it." Idaho Code 9 61-1007.
B. The Railroad's Objection
As mentioned above, BG&CM asserts that it over-reported its gross operating
revenue. In its initial certification dated March 5 2007, the Railroad reported that its Idaho gross
intrastate revenue for the calendar year 2006 was $667,422. In its objection, the Railroad
maintains that its actual intrastate gross operating revenue for calendar year 2006 was $240 000.
The Railroad alleges that it inadvertently reported the combined operating revenues from two
railroads. Consequently, the cumulative total of intrastate operating revenues for all the railroads
was allegedly over-reported by 3.0%.
Calculated at the over-reported amount, BG&CM's 2007 regulatory fee was
087.76. Keeping the assessment at the established rate (.007623) but adjusting for the lower
gross operating revenues, would result in a 2007 assessment of $1 829., or about $3 250 less
for railroad operations.
STAFF RECOMMENDATION
The Commission s fee assessment statutes contemplate that a railroad's objection to
its regulatory fee "shall proceed" on an expedited basis. Idaho Code 9 61-1007 requires that the
Commission hold a hearing regarding the fee objection within 20 days of the date the objection is
filed with the Commission. Moreover, the Commission shall make and issue its findings and
Order within 20 days after the hearing. Consequently, the Commission must expeditiously
consider the Railroad's objection.
In this case, BG&CM alleges that it misreported its intrastate operating revenues.
When a similar objection was made in 2002, the Commission directed that the Staff verify the
DECISION MEMORANDUM
correct amount of reported intrastate operating revenue. Consequently, Staff recommends that it
follow the same procedures and expeditiously verify the reported revenues of BG&CM.
Staff further recommends that the Commission set this matter for a telephonic
hearing on May 29, 2007 at 10:00 a.m. (MST) (before the Moscow abandonment telephonic
hearing). Staff also requests that the parties be allowed to offer "live" testimony in lieu of
prefiled testimony.
COMMISSION DECISION
1. Does the Commission direct the Staff to verify the reported 2006 operating
revenues for BG&CM Railroad?
2. Should this matter be set for a telephonic hearing without prefiled testimony?
3. Anything else?
Don Howell
blslM:BGR-O7-
DECISION MEMORANDUM