Opinion ID: 1358783
Heading Depth: 1
Heading Rank: 1

Heading: the boardman boiler

Text: In the early 1970's, Idaho Power responded to increasing demand for electrical energy by contemplating construction of a coal-fired plant known as Pioneer. In conjunction with the Pioneer project Idaho Power entered into a contract with the Foster Wheeler Energy Corporation for the purchase of a boiler. However, because of controversy surrounding the Pioneer Plant application, a certificate of convenience and necessity was never issued, leaving Idaho Power faced with finding an alternate use for the already purchased boiler. The company was successful in arranging to have the boiler utilized at the Boardman plant. Because the boiler had been designed for Pioneer, it was larger and stronger than necessary for the Boardman facility. [1] Hence, Idaho Power's partners in Boardman [2] declined to pay any part of the cost differential between the Pioneer boiler cost, and the cost of an adequate boiler for the Boardman site. The difference amounted to approximately 2.3 million dollars. All of Idaho Power's investment in the Boardman plant was included in the instant rate base application. The Commission found that the excess boiler payments were not reasonably incurred because the boiler had been purchased prior to the issuance of a certificate of convenience and necessity, I.C. § 61-526, as amended in 1970. In its petition for rehearing, Idaho Power explained the boiler was acquired without a certificate because Idaho Power deemed that sound business judgment dictated that it act swiftly to take advantage of a good price which in turn would benefit its ratepayers. On that predicate, Idaho Power contended that the boiler expenditure was reasonably incurred. Our review of the Commission's determination is limited by the constraints of I.C. § 61-629. The Commission's finding that the full boiler cost was not reasonably incurred being substantiated by competent evidence, we are not at liberty to interfere. Washington Water Power v. Idaho Public Util., 101 Idaho 567, 617 P.2d 1242 (1980); Boise Water Corp. v. Idaho Public Util. Commission, 97 Idaho 832, 555 P.2d 163 (1976); Oregon Short Line R. Co. v. Public Utilities Comm., 47 Idaho 482, 276 P.2d 970 (1929). Where Idaho Power was not justified in making that expenditure, but was then able to lessen its potential loss in concluding the purchase of the boiler and then putting it to an alternate use, the Commission properly found it reasonable to compensate Idaho Power for that portion of the boiler's cost which would equate with the cost of a boiler adequate for the Boardman plant, but any excess should not be part of the rate base. [3] As was stated in Idaho Underground Water Users Ass'n.v. Idaho Power Co., 89 Idaho 147, 161, 404 P.2d 859, 866 (1965) property not employed in the public service should not be incorporated into the base to be used to compute the fair rate of return. Whether utility property should be included in the rate base is a factual determination, not a legal question. Id. The excess boiler payments for a larger-than-necessary boiler are similar to property not employed in public service, and the Commission committed no error in refusing to include in the rate base the total cost of the boiler purchased for the Pioneer project. [4]