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South Dakota Public Utilities Commission Meeting
January 5, 2010, at 9:30 A.M.
Room 413, Capitol Building
Pierre, South Dakota
MINUTES OF THE COMMISSION MEETING
Chairman Dusty Johnson called the meeting to order. Present were: Vice Chairman Steve Kolbeck: Commissioner Gary Hanson; Executive Director Patty Van Gerpen; Finance Manager Cindy Kemnitz, Staff Attorneys Kara Semmler and Karen Cremer; Staff Analysts Jon Thurber, Stacy Splittstoesser, Brian Rounds, Dave Jacobson, Tim Binder, Terri LaBrie Baker, and Bob Knadle; Grain Manager Jim Mehlhaff; and Consumer Affairs Supervisor Deb Gregg; and Administrative Secretary Demaris Axthelm.
Also present were: Kari Valley, Jim Wilcox, Al Krug, Deb Paulson and Anne Heuer, representing Xcel Energy; Dan Nelson representing Midcontinent Communications; Talbot Wicezorek, Gunderson, Palmer, Goodsell and Nelson, representing Alltel Communications; Dave Gerdes, May, Adam, Gerdes and Thompson, representing Midcontinent Communications and Xcel Energy; Steve Willard, South Dakota Electrical Utilities Commission; and Rod Bowar, Kennebec Telephone Company.
Joining the meeting by telephone were: Jennifer Moore and Rick Leuthauser of MidAmerican Energy; Meredith Moore, Cutler and Donahoe, representing, McCook Cooperative Telephone Company, Kennebec Telephone Company, Santel Communications Cooperative, Inc. and West River Cooperative Telephone Company; Talbot Wieczorek, Gunderson, Palmer, Goodsell and Nelson, representing Alltel Communications, Inc.; Jim Seurer and Kelley Dennison, Glacial Lakes Corn Processors; Andrew Moratzka, Mackall, Crounse and Moore, representing Black Hills Industrial Interveners; Lee Magnuson, Lynn, Jackson, Shultz and Lebrun, representing Black Hills Power Inc.; Monique Byrnes, Phone 1, Inc.; Al Krug and Bridgette McLaughlin, Xcel Energy and Bob Towers, Dave Peterson and Basil Copeland.
Administration
- Approval of the Minutes of the Commission Meetings Held on September 22, 2009, October 6, 2009, and October 20, 2009. (Staff: Demaris Axthelm)
Commissioner Hanson moved to approve the Commission Minutes of the September 22, 2009, October 6, 2009, and October 20, 2009, meetings. Motion passed 3-0.
Consumer Reports
- Status Report on Consumer Utility Inquiries and Complaints Received by the Commission. (Consumer Affairs: Deb Gregg)
Ms. Deb Gregg reported that the Commission received a total of 128 contacts since the last report was prepared for the December 8, 2009, Commission meeting. 31 contacts involved telecommunications services; 39 contacts involved electrical services; 11contacts involved natural gas services; 2 contacts involved gas and electric services, 10 contacts involved cell phone services; 1 contact involved the Keystone Pipeline, 22 contacts involved the Do Not Call Registry; 2 contacts were related to Wind Energy and 11 contact involved issues not regulated by the Public Utilities Commission. In 2009, 2,480 of the 2,536 complaints registered have been resolved.
Chairman Johnson stated that the Telecom Arbitration Dockets (TC07-112, TC07-114, TC07-115 and TC07-116) and EL09-009 would be moved to the end of the Agenda.
Electric
Mr. Rick Leuthauser of Mid American Energy referred to a letter sent to the Commission on November 20, 2009, that proposed to increase the proposed budget for 2009 by $48,000 and the proposed budget for 2010. These increases are due to an oversight in the original budget relating to advertising. Mr. Brian Rounds, Staff Analyst, stated that this was an issue that staff recommends approval for. However, the costs were already incurred prior to approval by the Commission, which is against Commission policy to approve expenses after the fact. Mr. Brian Rounds felt that this was an oversight by Mid American, but is concerned if approving the request will set precedence for others to do the same. Staff recommended that if the Commission approves the request to split the cost with shareholders.
Commissioner Hanson moved to split the costs with the shareholders 50/50 for the expenses that have been incurred. Motion passed 2-1. (Chairman Johnson dissented)
Ms. Karen Cremer, Staff Attorney, stated that this request was made to the Executive Director by staff to hire consultants and enter into contracts with the consultants. Ms. Cremer stated that she spoke with the attorney for the residential consumers coalition, he is in agreement to hire consultants. Mr. Lee Magnuson stated Black Hills Power has no objection to hiring outside consultants.
Vice Chairman Kolbeck moved that the Executive Director be authorized to hire consultants and enter into contracts with consultants. Motion passed 3-0.
Grain Buyer
Mr. Jim Seurer, Mr. Roger Hanson, and Ms. Kelly Dennison were representing Glacial Lakes Corn Processors (GLCP). Ms. Kelly Dennison, CFO, stated that GLCP has submitted their most recent audited financial statements and that they are in full compliance with ARSD 20:10:12:14 and ARSD 20:10:12:15. Therefore, the request was made to remove the conditional status on their grain buyer license and grant them a class A grain buyers license without restrictions. Mr. Jim Mehlhaff provided a background on why GLCP was given a conditional license. Mr. Mehlhaff stated that GLCP has been cooperative and in compliance with the order previously issued in this docket. He further stated that he had examined their most recent audited financial statement and confirmed that GLCP were in compliance with all the licensing requirements and recommended that GLCP be granted a class A grain buyer license without conditions.
Vice Chairman Kolbeck moved Glacial Lakes Corn Processors be granted a Class-A grain buyer license without conditions. Motion passed 3-0.
Rule Making
1. RM09-002 In the Matter of the Adoption of Rules Regarding Renewable, Recycled, and Conserved Energy. (Staff Analysts: Brian Rounds, Tim Binder Staff Attorney: Rolayne Wiest)
Mr. Brian Rounds stated that on July 1st of each year utility companies are required to submit reports regarding renewable, recycled, and conserved energy objectives. The reason for the request is to open a docket that would allow staff to create rules for companies as to what is needed in the yearly reports to the Commission.
Chairman Johnson moved the Commission allow staff to open a rulemaking docket. Motion passed 3-0.
Telecommunications
1. In the Matter of the Failure of Certain Telecommunications Companies to Timely File the Gross Receipts Tax. (Finance Manager: Cindy Kemnitz)
Ms. Cindy Kemnitz stated that the following companies have failed to timely file their gross receipts tax as required by SDCL 49-1A: Wireless Companies that have filed but not paid: Ztar Mobile, Inc.; Long Distance Providers that have filed, but not paid: Global Capcity Group, Inc., Network US, Inc., Norstan Network Services, Inc. NNSI, Phone 1, Inc., Reduced Rate Long Distance, LLC, Talk America, Inc., Telecare, Inc. and NetLojix Telecom, Inc. and, Long Distance Providers that have not filed or paid: Hawk Relay, LLC, New Century Telecom, Inc. and VCI Company d/b/a Vilaire. Ms. Kemnitz further stated that two of the companies listed as having not paid gross receipts tax need to be removed from the list. Those companies are Reduced Rate Long Distance and Talk America, Inc. Ms. Kemnitz asked the Commission to issue an Order to Show Cause to all other remaining companies. Ms. Monique Burns, representing Phone 1, Inc., stated that the company no longer exists and there are no funds to pay any amounts due. Ms. Burns further stated that the Commission was provided notice on November 26, 2008, that the company was giving up their Certificate of Authority. It was determined that Ms. Burns would discuss with Ms. Kemnitz a resolution to the issue.
Chairman Johnson moved to issue an order to show cause as to why the Commission should not fine, or suspend or revoke the Certificate of Authority of each of the remaining non-compliant companies for failure to pay the requisite gross receipts tax, not including the two companies that have paid and Phone 1. Motion passed 3-0.
3. Request to Open Docket to Investigate Price Regulation for Switched Access Services Provided by Competitive Local Exchange Companies
Mr. Dave Gerdes representing Midcontinent Communications stated he is very interested in the subject of switched access rates and is very supportive of opening the docket.
Chairman Johnson moved to open a docket to investigate price regulation for switched access services provided by competitive local exchange companies. Motion passed 3-0.
Mr. Dave Jacobson, Staff Analyst, stated the applicant has provided an irrevocable letter of credit in order to remove the prepaid restriction from its Certificate of Authority (COA). Staff recommends approval of the COA with one condition. The condition is that subject to a continuous $25,000 surety bond or other security acceptable to the Commission and to the condition that the issuer's notice to the Commission of its non-extension of the irrevocable letter of credit (ILOC) provided by Lattice to secure its obligations to customers for pre-paid services, including pre-paid calling cards, shall constitute a reasonable basis for the Commission to believe that Lattice is insolvent or has defaulted or is threatening to default on one or more obligations to South Dakota customers for which Lattice has been pre-paid and to draw on the full amount of the ILOC, unless Lattice, at least ten days prior to the termination date, either (i) provides a replacement bond or other security in equal amount in form satisfactory to the Commission or (ii) certifies to the Commission that it has ceased collecting pre-payments and satisfactorily demonstrates that it has no outstanding pre-paid service or refund obligations to South Dakota customers and will not incur such pre-paid obligations without the approval of the Commission.
Commissioner Hanson moved to approve the application of Lattice Incorporated to remove prepaid restrictions from its prior Certificate of Authority with the conditions stated by Staff. Motion passed 3-0.
Ms. Terri LaBrie Baker stated that the reason for the withdrawal of the filing is due to revisions. Staff does not object to the withdrawal.
Vice Chairman Kolbeck moved to grant the request to withdraw without prejudice. Motion passed 3-0.
Ms. Kara Semmler stated the agreement was properly filed, properly executed and does not appear to contain discriminatory provisions. No comments were filed and Ms. Semmler recommended approval of the agreement.
Chairman Johnson moved to approve the interconnection agreement. Motion passed 3-0.
6. In the Matter of the Petition for Arbitration Pursuant to the Telecommunications Act of 1996 to Resolve Issues Relating to an Interconnection Agreement in Dockets TC07-112, TC07-114, TC07-115, and TC07-116
Chairman Johnson stated that each of the issues would be handled individually. The first issue, wherein the Commission directed the RLECs to take out certain components of the switch through a previous order, was handled properly.
Chairman Johnson moved to find the petitioners correctly eliminated costs. Motion passed 3-0.
The second issue was Forecast Demand. Vice Chairman Kolbeck stated Alltel's projections on demand were better forecasted than the petitioners. Commissioner Johnson the petitioners did not give a strong case as to why their projections should be accepted.
Vice Chairman Kolbeck moved to adopt Alltel's revisions to each of the petitioners latest cost studies reflecting levelized demand over a seven year forecast period for transport electronic costs. Motion passed 3-0.
Chairman Johnson moved to accept Alltel's revisions to transport outside plant demand by projecting demand for 12 fibers in service for a 24 fiber cable. Motion passed 3-0.
Discussion took place on what type of rate equivalency method should be adopted by the Commission.
Vice Chairman Kolbeck moved to accept the path method used by the petitioners. Motion failed 1-2 (Chairman Johnson and Commissioner Hanson dissented).
Chairman Johnson discussed the need to find common ground between the path method and broadwith method to determine a rate equivalency method. Based on the testimony at hearing, Chairman Johnson developed a method by which both parties can be satisfied.
Chairman Johnson moved to adopt a rate equivalency method where by 15% of voice trunks are considered equivalent to a DS0 special circuit, the other 85% of voice trunks would be consistent with Alltel's rate equivalency method. Motion passed 3-0.
Chairman Johnson moved to reject Alltel's request to exclude the Switch Processor Costs. Motion passed 3-0.
Electric
Ms. Karen Cremer stated that staff recommended the Commission grant the Joint Motion of Approval of the Settlement Stipulation and adopt the Settlement Stipulation without modification. Ms. Kari Valley, representing Northern States Power Company d/b/a Xcel Energy, provided a brief overview of the drivers that lead to the request to a rate increase and how a settlement was reached with Commission staff. A transcript of this docket can be found at http://puc.sd.gov/commission/dockets/electric/2009/el09-009/010510trans.pdf.
Commissioner Hanson moved that the Commission grant the joint motion for approval of the settlement stipulation and approve the rates, terms and conditions stipulated therein. No vote was taken as Chairman Johnson amended the motion.
Chairman Johnson amended the motion to remove those costs related to the Renewable Development Fund. Amended Motion passed 3-0.
Chairman Johnson again amended the original motion to remove the known and measurable increase adjustments that were made to per books for the 2009 nonunion wage increases that happened during the 2009 calendar year from the settlement stipulation. Amended Motion failed 1-2. (Vice Chairman Kolbeck and Commissioner Hanson dissented).
There being no further business, at the hour of 12:38 p.m., the South Dakota Public Utilities Commission Meeting adjourned. The next Commission meeting is scheduled for January 19, 2010.
/S/Demaris Axthelm
Demaris Axthelm
Administrative Secretary
March 9, 2010
