UMPA have presented to the task force is their future obligations or what they believe they are at
risk for. The Division's conclusion, at this point, is that UAMPS and UMPA have taken a reasonable
approach to the stranded costs issue. He provided task force members with printed copies of his
slide presentation.
5. Rural Electric Cooperative Stranded Costs -
A. Representatives of Rural Cooperatives
Mr. Grant Earl, General Manager, Moon Lake Electric Association (Moon Lake), informed
the task force that Utah rural electric cooperatives continue to support the objective of the task force
which is to preserve and enhance Utah's low electric rates. If the task force considers changes to the
system, the Moon Lake would suggest caution in going forward in order to ensure that any program
of customer choice truly benefits all customers over the long run and does not enhance the profit of
a few. To preserve the precepts chosen by owners of Utah rural electric cooperatives, Mr. Earl
suggested the following guidelines in the task force's deliberations: 1) the concept of exclusive
service area and service area boundaries must be maintained with respect to distribution services;
2) electric cooperatives should be permitted to determine, when a power supplier is initiated, what
additional services, if any, will be competitive; 3) competitive service should be limited only to
power supply; 4) minimum protection of customers must be provided in choosing not to change
power suppliers; 5) safety and reliability; 6) electric cooperatives should be allowed to continue to
set their rates for distribution and meter billing services; and 7) electric cooperatives should be given
the opportunity to recover costs from any customer choosing an alternative power supplier so there
is no adverse effect on the rates to the remaining customers. He indicated that the Moon Lake
believes stranded costs eligible for recovery should include the following areas: 1) generation
facilities; 2) power contracts; 3) certain transmission distribution facilities that are bypassed by large
customers; and 4) transition costs of preparing for and implementing consumer choice. The
Association also believes that stranded costs eligible for recovery should first be offset by every
reasonable effort to mitigate such costs and the specific form of and time period for recovery of
eligible stranded costs should be left to the discretion of electric cooperatives.
Mr. Carl R. Albrecht, General Manager, GarKane Power Association (GarKane), indicated
that GarKane has specific costs which could become stranded under deregulation: 1) all-
requirements contract with Deseret Generation and Transmission ("Deseret"); 2) a participation loan
with Deseret; 3) an IPP contract; 4) Garkane Hydroelectric Plants; 5) federal power contracts; and
6) data processing investment. These costs are the numbers for which Garkane's ratepayers are
responsible for. He stated that under deregulation, as customers choose new generation suppliers,
the rest of the customers are left with higher rates to pay the bills which remain under contractual
obligations. In the rural area, competition does not mean freezing rates to accumulate dollars to be
ready when competition comes. He encouraged the task force to remember the distinct difference
between public power entities and investor-owned utilities and the fact that they operate differently.
He provided task force members with printed copies of his remarks.
Mr. Curt Winterfeld, Deseret Generation and Transmission Cooperative ("Deseret"),
presented an overview of Deseret's loads and resources; a description of treatment of cooperatives
and publicly-owned utilities in other Western states; Deseret's financial obligations; an analysis of
Deseret's potential stranded cost; special concerns of cooperatives; and recommendations for
treatment of cooperatives' stranded cost issues. He provided task force members with printed copies
of his slide presentation.
B. Division
Mr. Lowell Alt, Division of Public Utilities, said the regulation of electric cooperatives ("co- ops") is different than the investor-owned utilities. The Public Service Commission (PSC) has
regulation authority over the co-ops, but it is limited by the statute that basically exempts the co-ops
from rate regulation. He indicated that co-ops do not have rate cases; they raise their rates whenever
they want as long as they follow some guidelines of notification, keep their tariff on file with the
PSC, and keep their members informed.
Mr. Artie Powell, Division of Public Utilities, presented an overview of the RDI's report of
Deseret Generation and Transmission and selected co-ops. He indicated that some of the Division's
observations are: 1) Garkane and Moon Lake present at-risk numbers; 2) market price is the key
factor; and 3) cost projections. He stated that the Division's conclusions are: 1) stranded cost
estimates are sensitive to assumptions and unreliable; 2) settling on estimates at this point unfairly
shifts risk to customers; and 3) it is possible to move forward without strandable cost numbers. He
presented task force members with printed copies of his slide presentation.
6. Selected Municipal and Industrial Electricity Usage Data - Sen. Blackham distributed some information on the aggregation issue indicating the kilowatts per year usage on selected
industries and municipalities. He indicated that this information will help the task force members
see the possibility of entities aggregating together to increase their buying power.
Sen. Peterson asked if the information indicating the kilowatts per year usage on the selected
industries and municipalities could be figured for the past five years so the task force members could
see historical trends in the amount of usage.
7. Task Force Discussion -
Rep. Ure indicated that there have been some motions made at the Utah League of Cities and Towns' Board meetings that directly affect issues regarding aggregation and the task force needs to
take those motions into consideration when discussing the aggregation issue. Rep. Evans requested
that the task force ask someone from the Utah League of Cities and Towns to come to one of its
meetings to explain what those motions have been.
8. Adjourn - Rep. Ure moved to adjourn the meeting at 1:00 p.m. The motion passed unanimously. Reps. Becker and Haymond were absent for the vote.