Website: www.puc.idaho.gov
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.