Idaho Public Utilities Commission

Case No. IPC-E-08-22, Interlocutory Order No. 30883

August 24, 2009

Contact: Gene Fadness (208) 334-0339, 890-2712

 

Builders, highway districts contest commission order

 

The Idaho Public Utilities Commission will reconsider portions of an order it issued last July that increased and updated the charges Idaho Power Company assesses new customers and developers for new line installations and service attachments. The proposed changes, all part of the “Rule H tariff” also would allow Idaho Power, in some instances, to seek reimbursement when private development forces the utility to relocate an existing distribution line in a public right-of-way.

 

After the order was issued, the Building Contractors Association of Southwestern Idaho, the Ada County Highway District, the Association of Canyon County Highway Districts and the City of Nampa petitioned the commission for reconsideration. In an order issued last week, the commission said it would reconsider some of the contested issues.

 

Last October, Idaho Power sought commission approval of changes to the Rule H tariff, which has not been significantly changed since 1995. Idaho Power’s proposed changes increase line installation charges and remove some refunds developers are now receiving. “We are asking the IPUC to accept these changes to the tariff to shift a greater portion of the cost of new construction for services from our existing retail customers to those developers and new customers requesting the construction,” said Ric Gale, Idaho Power’s vice president of regulatory affairs, at the time the company made its application.

 

After taking comments from interested parties, the commission in July ruled that, effective Nov. 1, developers of subdivisions and multiple-occupancy projects will receive from Idaho Power a $1,780 allowance for each single-phase transformer installed within a new development and a $3,803 allowance for each three-phase transformer. The same allowance is provided for each single-phase and each three-phase service customer outside a subdivision. Developers will be responsible for any costs above the allowance.

 

The increased allowance was adopted in place of an $800 per lot refund developers now get as customers move on to the lots and begin receiving electric service. However, developers can still get “vested interest refunds” for additional line installations inside a subdivision that were not part of the initial line installation.

 

 

Building contractors’ objection

 

The building contractors said the allowance adopted by the commission “approves an inherently discriminatory rate structure” by imposing unequal charges for new customers receiving the same level of service as existing customers. They allege that the disparity between the allowance provided to customers outside of subdivisions ($1,780 and $3,803 per customer) and those inside subdivisions ($1,780 and $3,803 per transformer) is unfair.

 

The contractors allege that increased line installation and distribution expense are a result of inflation, not new growth. Idaho Power claims its 21 percent increase in rates over five years “has outpaced pure inflation, demonstrating that growth is not paying for itself.”

 

Idaho Power also asked that the time allowed for developers to sell lots and qualify for lot refunds be shortened to four years from the current five years. The building contractors said the refund period should be extended to 10 years due to the slowing economy. The commission opted to leave the refund period at five years.

 

In its petition for reconsideration, the building contractors said the commission did not state any grounds for not extending the refund period. The contractors said a 1997 order approved a 10-year refund for platted, undeveloped subdivisions “because it recognized the unique circumstances affecting those developments.” The current economic climate also is unique and could result in a windfall to the company and existing customers if developers don’t get reimbursed for line extensions beyond five years, the contractors said.

 

The commission granted reconsideration to the building contracts on the issue of allowances but denied reconsideration on the issue of the $800 per-lot refund.

 

The contractors must file testimony on the matter by Sept. 11, with response testimony filed by no later than Sept. 25. After that time, the commission may schedule a technical hearing.

 

 

Highway districts’ objection

 

The highway districts and the City of Nampa are opposing a new section of the tariff, which addresses who is responsible for the costs of utility line relocation.

 

When utility line relocation is requested by local or state government for transportation or other public improvements, Idaho Power and its customers pay for the relocation. Idaho Power maintains it has no issue paying for utility relocations for public benefit, but objects to having its customers pay for what it deems to be private or third-party benefit. “Idaho Power customers in Pocatello do not benefit from roadway improvements for a new shopping center in Nampa, but they currently pay for relocation costs in excess of the public benefit in their rates,” states Idaho Power’s response to the petition for reconsideration.

 

New language in the tariff, called Section 10, would give Idaho Power an opportunity to seek reimbursement for utility relocation requested by third party beneficiaries for private development.

 

The highway districts claim they have “exclusive authority and jurisdiction” over public rights-of-way, including the exclusive power to determine who pays for utility relocation. Further, they claim the order’s definitions of “local improvement districts” and “third party beneficiary” are overly broad and vague.

 

Idaho Power said the highway districts’ authority to require relocation does not give the districts sole discretion to decide if the utility will receive any subsequent reimbursement from third parties benefitting from facilities relocation. The commission does have authority, Idaho Power said, to regulate how utilities will recover the expense of facility relocation in rates, including the ability to require beneficiaries of relocation to contribute to the cost. “Such contributions benefit the rate paying public by reducing upward pressure on rates,” Idaho Power said.

 

The commission said Section 10 does not interfere with highway district jurisdiction and does not give Idaho Power or the commission authority to impose relocation costs on a public road agency. However, the commission said, highway agencies “cannot restrict the commission from establishing reasonable charges for utility services and practices.”

 

Given the complexity of the constitutional and jurisdictional arguments posed by the districts and Idaho Power’s acknowledgement that some terms should be clarified, the commission directed Idaho Power to update the language and include a clarification of definitions. Idaho Power is to file an amended Section 10 by Aug. 28 and the highway districts may then respond by no later that Sept. 11. Idaho Power must respond by Sept. 21. Oral arguments may then be scheduled.

 

Documents related to this case can be found on the commission’s Web site at www.puc.idaho.gov. Click on “Idaho Power Rule H filing” under “Hot Items” in the upper right-hand corner of the page.