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South Dakota Public Utilities Commission Meeting
Thursday, September 5, 2002; 1:30 P.M.
State Capitol Building, Room 412
Pierre, South Dakota
MINUTES OF THE COMMISSION MEETING
Chairman Jim Burg called the meeting to order. Also present were Commissioner Pam Nelson; Commissioner Bob Sahr; Executive Director Debra Elofson; Commission Advisor Greg Rislov; Commission Counsel John J. Smith; Commission Attorney Rolayne Ailts Wiest; Staff Attorneys Karen Cremer and Kelly Frazier; Staff Analysts Dave Jacobson, Harlan Best, Heather Forney, Keith Senger, Martin Bettmann, Mary Healy and Michele Farris; and Administrative Secretary Mary Giddings.
Also present were Darla Pollman Rogers, Kadoka Telephone Co.; James J. Pahl, West River Electric Association; Audry Ricketts, SD Rural Electric Association; Bob Miller, SD Electric Utility Companies; Colleen Sevold, Qwest Corporation; Douglas M. Lee, Tamie Aberle, and Bruce R. Nelson, Montana-Dakota Utilities Co.; and Dave Gerdes, Montana-Dakota Utilities Co. and Midcontinent Communications.
At 1:40 p.m. Chairman Burg adjourned the meeting until the completion of the Commission hearing on docket CE02-001. Chairman Burg reconvened the Commission meeting at 3:30 p.m.
Joining the meeting by telephone were Linn Evans and Kyle White, Black Hills Power and Light; Jeff Davis, MidAmerican Energy Company; Mary Lohnes and Tom Simmons, Midcontinent Communications; Ron Spangler, Otter Tail Power Co.; Jeff Carmen and Larry Toll, Qwest Corporation; John Burke, Barker, Wilson, Reynolds & Burke Law Firm; Rick Hilderbrand, Kadoka Telephone Company; Darrell Gomarko, TELEC Consulting; Jeff Decker and Clyde Gross, NorthWestern Energy; Allen Nelson, Bangs, McCullen, Butler, Foye & Simmons Law Firm; and Paul Roberts, Clay-Union Electric Corporation.
Administration
1. APPROVAL OF THE MINUTES OF THE COMMISSION MEETING HELD ON AUGUST 15, 2002. (Staff: Mary Giddings.)
Chairman Burg moved to approve the minutes of the Commission meeting held on August 15, 2002. Commissioner Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Consumer Issues
1. STATUS REPORT ON CONSUMER UTILITY INQUIRIES AND COMPLAINTS RECENTLY RECEIVED BY THE COMMISSION. (Consumer Affairs: Mary Healy.)
Ms. Healy presented at update on inquiries and complaints received since the last Commission meeting.
2. IN THE MATTER OF DISMISSING DOCKETS CN02-002, CT02-016, CT02-023, CT02- 028 AND CT02-031.
Commissioner Nelson moved to dismiss the complaints and close the dockets in DOCKETS CN02-002, CT02-016, CT02-023, CT02-028 AND CT02-031. Chairman Burg seconded and Commissioner Sahr concurred. Motion passed 3-0.
Telecommunications
Electric
Chairman Burg noted that the first question raised by the petition is whether Black Hills Power, Inc. (Black Hills) is rendering or has extended electric service within West River Electric Cooperative's territory in violation of SDCL 49-34A-42. This question relates to the service that Black Hills has been providing to the Sewer Plant since installation of the second service at the Sewer Plant back in 1987. Since West River stipulated in the joint stipulation of the parties that it does not challenge the original service to the facility installed back in 1967, this original service is not included in the question. In his dissent, Commissioner Sahr stated: "I respectfully dissent from the majority opinion. While this is a challenging case and both parties did an excellent job advocating their respective positions, Black Hills Power, Inc. ("Black Hills Power") should provide the service to the City of Rapid City Waste Water Treatment Plant ("Plant") for both the 1987 addition and My position respects the will of the Rapid City voters, avoids wasting investment (and having consumers bear the remaining costs), minimizes safety concerns, and follows the applicable law.
1. Will of the City of Rapid City Voters
The majority opinion ignores the will of the Rapid City voters. In 1967, the voters selected Black Hills Power as the utility of their choice to serve the Plant. The vote logically should include expansions of the same facility occurring at the same location for the same purpose. Here, the voters wanted Black Hills Power, not West River Electric Association, Inc. ("West River"), to serve the Plant. The PUC should respect that decision.
2. Stranding and Wasting of Investment
The majority opinion unnecessarily strands and wastes Black Hills Power's investment and will prevent Black Hills Power's customers from recovering costs they have paid in advance. The South Dakota Supreme Court has given us guidance on how to interpret the 1975 territorial law, stating that the "policy underlying the Act" is:
[E]limination of duplication and wasteful spending in all segments of the electric utility industry.
Matter of Certain Territorial Boundaries (Mitchell Area), 281 N.W. 2d 65 (1979); Matter of the Petition for Declaratory Ruling of Northwestern Public Service Company with Regard to Electric Service to Hub City, 1997 S.D. 35, 560 N.W. 2d 925 (1997).
It is particularly troubling that the Commission is taking away service Black Hills Power has provided since 1987 and is awarding it to West River.
This case is bad precedent for the PUC. Black Hills Power's investment was designed to provide sufficient capacity to serve future growth at the Plant. The PUC should encourage forward-looking investment in infrastructure when it yields efficiency and cost-savings for the ratepayer. The company's ratepayers paid for this partially used investment with the anticipation of future load growth and related revenues. While Black Hills Power may arguably be made whole by the ratepayers, the ratepayers have not been made whole.
On the other hand, West River has been able to make use of its investments in the area. West River's own witness stated additional growth is expected in the region and plans are in the works to add capacity to serve the area even if West River is not approved to provide the expansion.
3. Safety Concerns
The majority opinion unnecessarily intermixes the eastern and western power grids. While the chance of catastrophe may be remote, the consequences would be dire. Lives could be lost, property destroyed, investment wasted, public service disrupted, and the environment damaged. There is one surefire way to avoid these problems: permit Black Hills Power to continue serving the entire Plant.
4. SDCL 49-34A-42
SDCL 49-34A-42 reads, in part: "Each electric utility has the exclusive right to provide electric service at retail at each and every location where it is serving a customer as of March 21, 1975Y"
All of the service area in question was part of the "location" served by Black Hills Power as of March 21, 1975. Here, we have a wastewater treatment plant constructed for a growing city. It is logical to assume a plant built in the 1960s will grow over time. The growth is for the same purpose and is occurring on a part of the property adjacent to the existing service. The land's physical characteristics also support that it is one location (as one witness stated the property is "120 acres of flat hay field"). As evidenced by witnesses and aerial photos, the property contains no significant natural or man-made features dividing it into separate parcels.
Case law also supports this interpretation. As stated in Hub City:
It is presumed that the legislature intended provisions of an act to be consistent and harmonious [citations omitted] [and] . . . that the legislature did not intend an absurd or unreasonable result [citations omitted].
Hub City, Id.
The facts at hand, coupled with the "elimination of duplication and wasteful spending" principle and the "[avoidance of] absurd or unreasonable results" principle, all favor Black Hills Power continuing to provide the service to the 1987 addition and providing the service to the planned expansion. I urge the Commission to reconsider its decision in light of the will of the Rapid City voters, the wasted investment, the safety risk, and a more reasoned interpretation of the law."
Chairman Burg moved that the Commission rule that the provision of electric service by Black Hills Power, Inc. (Black Hills) to the Rapid City Waste Treatment Facility is the rendering of electric service at retail within the territory of West River Electric Cooperative in violation of SDCL 49-34A-42 and that West River Electric Association, Inc. has the right to provide electric service to service number two. Because West River Electric Cooperative has had at least official record notice of the existence of this service since the filing by Black Hills for approval of a contract with deviations covering this second service back in 1993, Chairman Burg further moved that this ruling apply prospectively only and that the effective date on which West River's right to serve service number 2 shall commence ninety (90) days from the date of the final decision in this case to allow the city and the parties to construct the necessary facilities and make an orderly transition of such service. Commissioner Nelson seconded and Commissioner Sahr dissented. Motion passed 2-1.
Chairman Burg noted that the second question raised by the petition is whether West River has the right to provide future electric service to the Rapid City Waste Treatment Facility located within West River's assigned service area. It related to the right to provide service to the planned additional three to four services that will be added in connection with Rapid City's planned expansion of the Sewer Plant.
Chairman Burg moved that the Commission rule that West River Electric Cooperative has the right under SDCL 49-34A-42 to provide future electric service to the Rapid City Waste Water Treatment Facility including service to service number 2 which Black Hills Power, Inc. is currently serving in accordance with our previous ruling and services number 3 through 6 which are currently planned by the city. Commissioner Nelson seconded and Commissioner Sahr dissented. Motion passed 2-1.
Ron Spangler, representing Otter Tail Power Company, explained the contract with deviations. Ms. Farris explained the 10-year contract and recommended that it be approved with an effective date of October 1, 2002.
Chairman Burg moved to approve the contract with deviations with an effective date of October 1, 2002. Commissioner Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Jeff Davis, representing MidAmerican Energy, explained the tariff revisions.
Chairman Burg moved to approve the tariff revisions. Commissioner Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Paul Roberts, representing Clay-Union Electric Corporation, explained the request for approval for the transfer of an electric service customer to the City of Vermillion. Clay-Union Electric has agreed to release Rollie and Sue French's electric service to the City of Vermillion. All parties are in agreement to the electric service exchange. Ms. Farris recommended that the service change be approved.
Commissioner Nelson moved to approve the service change. Commissioner Sahr seconded and Chairman Burg concurred. Motion passed 3-0.
Natural Gas
Jeff Decker, representing NorthWestern Energy, formerly NorthWestern Public Service, explained the contract with deviations. Mr. Jacobson recommended approval.
Chairman Burg moved to approve the contract with deviations. Commissioner Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Jeff Davis, representing MidAmerican Energy Company, explained the revision. Mr. Jacobson recommended that it be approved.
Commissioner Nelson moved to approve the tariff revisions. Commissioner Sahr seconded and Chairman Burg concurred. Motion passed 3-0.
Pipeline Safety
Dave Gerdes and Bruce Nelson, representing Montana-Dakota Utilities Company (MDU), explained the request for a waiver of 49 CFR Part 192, Paragraph 192.59(a)(1) (ASTM D2513) Plastic Pipeline Materials. A shipping error resulted in MDU receiving pipe that had not been properly qualified and some of that pipe was installed. Since its installation, Chevron performed extensive testing and demonstrated the pipe does in fact meet the minimum requirements of ASTM D2513. MDU requests permission to allow the pipe to remain in service. The waiver must go to the Federal Department of Transportation Regulations for approval. Mr. Bettmann noted that the pipe would be monitored for problems.
Chairman Burg moved to approve the stipulation waiver. Commissioner Sahr seconded and Commissioner Nelson concurred. Motion passed 3-0.
Telecommunications
Chairman Burg moved that the Commission make the following decision regarding Checklist Items 3, 7, 8, 9, 10, and 12: Subject to its findings regarding the applicable OSS test results, the Commission finds that Qwest is in substantial compliance with checklist items 7, 8, 9, 10, and 12. In order for the Commission to find that Qwest is in substantial compliance with Checklist Item 3, Qwest shall delete the language regarding the potential waiver by this Commission of the 45-day rule. In addition, Qwest shall incorporate the negotiated language from Utah regarding revisions to Section 10.8.2.27 and Exhibit D to the SGAT which address a CLEC's access to Qwest's right-of-way agreements. Qwest shall make a compliance filing with these revisions, including a redlined version of the changes.
Chairman Burg further moved that the Commission make the following decision regarding Checklist Items 1, 11, 13, and 14: Subject to its findings regarding the applicable OSS test results, the Commission finds that Qwest is in substantial compliance with checklist items 1, 11, 13, and 14. Commission Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Ms. Farris noted that on August 15, 2002, the Commission granted Staff's recommendation to deny the certificate of authority application. It was later discovered that Gold Line Telemanagement Inc. had requested that it be allowed to withdraw their application for a certificate of authority he withdrawal request had been misfiled. Ms. Farris recommended that the denial be reconsidered and that the Commission honor the withdrawal request.
Chairman Burg moved to reconsider its decision to deny a certificate of authority to Gold Line Telemanagement Inc. Commissioner Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Commissioner Nelson moved to honor the request to withdraw the application for a certificate of authority. Commissioner Sahr seconded and Chairman Burg concurred. Motion passed 3-0.
Darla Pollman Rogers, representing Kadoka Telephone Company, explained the proposed switched access rates. Mr. Best noted that Kadoka Telephone Company is in compliance and recommended that the switched access rates be approved. John Burke, representing S&S Communications, stated that S&S Communications did not object to approval of the switched access rates.
Commissioner Nelson moved to approve the switched access rates. Commissioner Sahr seconded and Chairman Burg concurred. Motion passed 3-0.
Mr. Frazier recommended that the amendment be approved.
Commissioner Nelson moved to approve the agreement. Chairman Burg seconded and Commissioner Sahr concurred. Motion passed 3-0.
Mr. Frazier recommended that the agreement be approved.
Commissioner Nelson moved to approve the agreement. Chairman Burg seconded and Commissioner Sahr concurred. Motion passed 3-0.
Mr. Frazier recommended that the agreement be approved.
Commissioner Nelson moved to approve the agreement. Commissioner Sahr seconded and Chairman Burg concurred. Motion passed 3-0.
Mr. Frazier recommended that the agreement be approved.
Commissioner Nelson moved to approve the agreement. Commissioner Sahr seconded and Chairman Burg concurred. Motion passed 3-0.
Ms. Farris recommended that a certificate of authority to 3U Telecom, Inc. be granted with a waiver of ARSD 20:10:24:02(08); restrictions from offering prepaid calling cards, accepting advance payments and customer deposits; and with an effective date of September 30, 2002.
Commissioner Nelson moved to grant a certificate of authority to 3U Telecom, Inc. with a waiver of ARSD 20:10:24:02(08); restrictions from offering prepaid calling cards, accepting advance payments and customer deposits; and with an effective date of September 30, 2002. Chairman Burg seconded and Commissioner Sahr concurred. Motion passed 3-0.
Ms. Forney noted that the Department of Transportation had withdrawn its application for a declaratory ruling and recommended that it be honored.
Chairman Burg moved to grant the withdrawal and close the docket. Commissioner Nelson seconded and Commissioner Sahr concurred. Motion passed 3-0.
Meeting adjourned.
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Mary R. Giddings
Administrative Assistant
