Idaho Public Utilities Commission

Case No. IPC-E-08-22, Order No. 30955

December 2, 2009

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

 

Commission rules on building contractors’, highway districts’ petitions

 

The Idaho Public Utilities Commission is granting in part and denying in part petitions for reconsideration filed by area highway districts and, in the same case, denying a petition for reconsideration by the Building Contracts Association.

The petitions pertain to an order issued last July that approved increases and updates in Idaho Power’s “Rule H tariff,” which lists the charges that developers and new customers must pay for new line installations and service attachments. Idaho Power said it sought to update the tariff in an effort to shift a greater portion of the cost of new construction from existing customers to developers and new customers requesting the construction.

 

The changes also allow Idaho Power to include new language in the tariff dealing with who pays for the relocation of utility facilities when private development forces the utility to relocate an existing distribution line in a public right-of-way.

 

The Building Contracts Association objected to the new fees for line installations and service attachments for new customers, claiming they discriminate against new customers.

 

The Ada County Highway District, the City of Nampa and the Association of Canyon County Highway Districts objected to new language in the tariff that, they said, intruded on their authority to determine who pays and when payments are made for utility facility relocation in public rights-of-way. Idaho Power proposed language that would have required developers, rather than Idaho Power customers, to pay for utility facility relocation in advance of the project’s completion when the developer is a private entity and not a transportation agency requiring relocation for public benefit.

 

 

Building Contractors’ objection

 

In its July order, the commission ruled that 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.

The commission agreed with Idaho Power that the new allowance should be based on the actual cost of most commonly installed facilities, rather than basing the allowance on the number of customers (lots), as was the case in the previous Rule H tariff. Basing the allowance on customers rather than the actual cost of the installed facilities could lead to allowances inside subdivisions that are greater than the cost of the facilities, the commission said.

In its order, the commission said it is “addressing a fundamental principal of utility regulation: To the extent practicable, utility costs should be paid by those who cause the utility to incur the costs. If the ‘cost-causers’ do not pay, the electric rates for other customers will be higher.”

The Building Contractors maintain the updated allowance “approves an inherently discriminatory rate structure” by imposing unequal charges for new customers receiving the same level of service as existing customers. The contractors say inflation, not customer growth, is the actual source of increased costs to extend utility facilities.

The commission denied the Building Contractor’s petition in its entirety.

 

Highway districts’ objections

 

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 said 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,” Idaho Power stated in its response to the highway districts petition for reconsideration.

 

The highway districts alleged that the new language requiring third-party reimbursement intrudes in the highway districts’ exclusive jurisdiction and is unconstitutional because it obligates local government entities, such as Local Improvement Districts (LIDs) to pay for utility relocation costs.

 

They highway districts also objected to Idaho Power’s classification of LIDs, which are created by local governments to pay for physical improvements, as “third-party beneficiaries” that can be required by Idaho Power to pay for utility relocation when a private party benefits.

Idaho Power did not contest public road agencies’ authority to require relocation of utility facilities at the utility’s expense when there is a public benefit. Idaho Power argued that once the utility complies with the relocation it can seek reimbursement from third parties benefitting from the relocation. Idaho Power said only the Public Utilities Commission has the authority to determine how utility costs should be allocated.

In its findings, the commission disagreed with the company’s contention that LIDs are always third-party beneficiaries and thus must always be required to pay for utility relocation. The commission said it is reasonable for an LID to include relocation costs, but it declined to include language that compels reimbursement from LIDs.

The commission also denied Idaho Power’s request to require advance payment from third parties who benefit from utility facility relocation. The highway districts said such a requirement could unduly interfere with a project’s timetable if the third party did not make timely payment.

The commission said Idaho Power has other alternatives to ensure it receives reimbursement including its ability to participate in project development meetings at the onset of the project and its ability to terminate service is the developer refused to pay. In fact, the commission added a new section to the tariff that requires Idaho Power to participate in project design or development meetings to be in a better position to eliminate or minimize relocation costs to the maximum extent reasonably possible. That new section, the commission said, complies with a law passed by the Idaho Legislature this year with the intent of eliminating or minimizing the cost of utility relocation where possible.

The commission declined to grant the highway districts’ request that the new language be eliminated because the commission lacked jurisdiction. “The commission affirms that highway agencies have the authority to determine when Idaho Power must relocate its distribution facilities and whether any other party is responsible for paying for the road improvement costs,” the commission said. “However, once the highway agency determines that a private party (e.g., a developer) must shoulder all or a portion of the road improvement costs, then it is the Commission that establishes the costs for utility relocation.” The commission said that relocation of utility facilities is a utility service that is subject to commission jurisdiction.

The commission’s order on reconsideration is final. Any party seeking to appeal must now do so to the state Supreme Court.

The commission’s order is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” in the upper left-hand corner, then on “Recent Orders and Notices,” and scroll down to Case No. IPC-E-08-22.