Opinion ID: 2448440
Heading Depth: 2
Heading Rank: 1

Heading: Does the Line Installation Allowance Result in Unlawful Discrimination between New Customers in and outside of Subdivisions or between New and Existing Customers?

Text: Building Contractors alleges that the new line extension allowance of $1,780 per single-phase transformer violates Idaho Code § 61-315, which provides in part, No public utility shall establish or maintain any unreasonable difference as to rates, charges, service, facilities or in any other respect, either as between localities or as between classes of service. Building Contractors argues that the new tariff authorizes a $1,780 allowance per transformer installed within a residential subdivision and a $1,780 allowance per customer outside of residential subdivisions. (Emphases in original.) According to Building Contractors, This arrangement patently treats customers inside and outside subdivisions disparately because in a subdivision a single transformer may serve multiple (up to ten) customers if those customers are located in sufficient proximity to each other, whereas, in the case of a single customer requesting service outside a subdivision, a transformer will only serve that one customer. Thus, it asserts that the Company's investment per electrical consumer in a residential subdivision could be less than the investment per electrical consumer outside of a subdivision. Idaho Code § 61-315 requires that there be no unreasonable difference as to charges between classes of service. The class of service at issue here is constructing new distribution facilities to extend electrical service to a previously unserved location. Each person or entity who asks the Company to provide new distribution facilities is given the same amount as a line extension allowance$1,780 for each single phase transformer installed. The amount of the allowance is the same for line extensions in subdivisions and outside subdivisions. Under Building Contractors' argument, a developer should receive a credit of $1,780 per lot, which could be up to $17,800 for one transformer if it could serve residences on ten lots. As the Commission stated in rejecting Building Contractors' assertion that there should be a per-lot allowance rather than a per-transformer allowance, Permitting a per customer allowance rather than a per transformer allowance could lead to an allowance inside subdivisions that is greater than the cost of the terminal facilities required to provide service. The line installation allowance and the elimination of the per-lot refund do not violate Idaho Code § 61-315 with respect to line extensions in and outside of subdivisions. Building Contractors also contends that the new tariff violates Idaho Code § 61-315 because it discriminates between new and old electricity customers as to the amount that the Company will invest in their distribution facilities. In making that argument, Building Contractors relies upon this Court's opinions in Building Contractors Association of Southwestern Idaho, Inc. v. Idaho Public Utilities Commission, 128 Idaho 534, 916 P.2d 1259 (1996) (herein called Boise Water ), and Idaho State Homebuilders v. Washington Water Power, 107 Idaho 415, 690 P.2d 350 (1984). In the Boise Water case, the issue was whether in allocating the entire increased cost of resource supply to new customers via increased hook-up fees the IPUC regularly pursued its authority to set nondiscriminatory rates. 128 Idaho at 538, 916 P.2d at 1263. The increased cost of resource supply was caused, in part, by new requirements of federal law and the need to build a new water treatment plant. We held that the increased hook-up fees for new customers violated Idaho Code § 61-315 [t]o the extent that the new hook-up fees are based on an allocation of the incremental cost of new plant construction required by growth and by the Safe Drinking Water Act. Id. at 539, 916 P.2d at 1264. In the Homebuilders case, the Commission required that the power company impose upon customers a nonrecurring charge of $50 per installed kilowatt of capacity on all customers who installed electric space heating, or converted to electric space heating following March 1, 1980. 107 Idaho at 418, 690 P.2d at 353. The charge only applied to customers who had the option of choosing either natural gas or electricity for space heating. Id. at 416, 690 P.2d at 351. The Commission did so to send to Water Power's customers a price `signal' which would more accurately reflect the cost and availability of electricity. Id. at 418, 690 P.2d at 353. We held that the Commission's order, which differentiates between customers using electricity for space heating prior to March 1, 1980, and customers who install or convert to electric space heating after that date, is an invalid classification and violates the legislative prohibition against discriminatory or preferential rates. Id. at 421, 690 P.2d at 356. In both the Boise Water and Homebuilders cases, the Commission imposed a charge on new customers in order to pay for the increased cost of providing water and electricity respectively to all of the utility's customers. The charge was not based solely upon the cost of connecting the new customers to the utilities' distribution systems. In Homebuilders, we expressly stated that the case presents no factors such as when a non-recurring charge is imposed upon new customers because the service they require demands an extension of existing distribution or communication lines and a charge is imposed to offset the cost of the utility's capital investment. Id. There is nothing in Idaho Code § 61-315 that requires an identical per customer capital investment by the Company, even if that were possible to achieve. For example, the Commission's staff prepared an analysis of the costs for providing electrical service to five subdivisions completed under the prior tariff. The subdivisions ranged in size from 3 lots to 101 lots. The allowance for terminal facilities, and therefore the amount the Company invested to provide them, varied from $250.71 per lot in the 101-lot subdivision to $1159.33 per lot in the 3-lot subdivision. As explained by the Commission: Once new customers pay the nonrecurring charge/line extension costs, they become existing customers and pay pursuant to the same rate schedule as all other existing customers in their class. As such, there is no distinction between new and existing customers in regard to nonrecurring rates and no rate discrimination. Building Contractors has failed to show that the new tariff violates Idaho Code § 61-315.