Case No. IPC-E-06-23, Order No. 30322

May 24, 2007

Contact: Gene Fadness (208) 334-0339




Commission denies Idaho Power-Avimor agreement


The Idaho Public Utilities Commission today denied a Special Facilities Agreement between Idaho Power Co. and Avimor, LLC, the developer for a major housing project north of Boise.


The agreement called for Avimor to advance Idaho Power $4.3 million to allow the utility to build 3.4 miles of a 138-kV transmission line and a substation. Avimor would receive a refund of its entire $4.3 million if, within 10 years, 685 permanent residential services had been connected or electrical demand at the development exceeded 6,850 kilwowatts.


The commission said the agreement creates an undue risk that existing customers will have to pay for the transmission line and substation. “The risk needs to remain with the developer,” the commission said, particularly since the expanded transmission and distribution is necessitated solely by the Avimor project.


Idaho Power historically has not required an advance from residential developers to extend transmission and distribution facilities, but the company said the agreement was needed here because of the speculative nature of the development.


The commission agreed that an advance is necessary, but the amount Idaho Power would eventually have to refund Avimor, at about $6,277 per customer, was too high. The amount currently included in base rates for transmission and investment is $350 per customer. For newer developments, the customer investment is about $1,000. All the refunds paid by Idaho Power to Avimor would be considered investment and ultimately included in the calculation of customer rates. That led to concern by the commission that the difference between the investment included in current rates and the estimated investment for the Avimor facilities would require a subsidy by existing customers, causing upward pressure on rates.


Noting those concerns, Avimor revised its application to allow it to receive refunds of $3,900 per customer, requiring 1,103 customers to connect to the facilities within 10 years before it received a full refund from Idaho.


Even Avimor’s revised application was still far above the amount currently included as investment in customer rates, the commission said. The commission said the per customer refund amount should be $1,000 rather than $3,900. “At that rate, 4,300 customer connections places a greater risk on the developer, where it properly belongs, for the success of its project,” the commission said.


If 4,300 customers are not connected within 10 years, Avimor will not receive a full refund of transmission and substation costs. The commission further stated that Idaho Power collect contributions from other developers who may connect to the facilities. The commission also rejected a proposal by Avimor that interest accrue on the unrefunded amounts paid by Avimor. 


The commission commended Avimor for incorporating energy efficiency measures into the community development. Avimor plans to construct 585 homes in the first phase of the project that meet standards 30 percent more energy efficient than traditional construction. Further, it plans to build a treatment plant capable of recapturing 300,000 gallons of wastewater for irrigation purposes. “Avimor correctly notes that the commission has, for a number of years, encouraged Idaho Power to implement energy conservation programs, and the Avimor project as planned is consistent with the commission’s objectives,” the commission said.


A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site. Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-06-23.


Interested parties may petition the commission for reconsideration by no later than June 14. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.


Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.