A RESOLUTION ALLOWING A CUSTOMER ALLOCATION AGREEMENT BETWEEN THE CITY AND UMATILLA ELECTRIC COOPERATIVE AND AUTHORIZING THE HERMISTON ENERGY SERVICES GENERAL MANAGER TO SIGN ON BEHALF OF THE CITY

Umatilla Electric Cooperative (UEC) requested a Service Territory Transfer of Hermiston Energy Services (HES) defined service territory on Umatilla County Tax Lot No. 4N2824-00-00600 to provide service to a UEC Member who has inquired about possible service.

The above tax lot straddles both UEC and HES service territories, with the vast majority of the lot residing in UEC's defined territory.

Hermiston Energy Services contracted with Stole Rives LLP to research how the Oregon Public Utility Commission (OPUC) would view a customer/member that straddles two defined service territories in the state of Oregon.

Our legal council (Stole Rives LLP) advised that regardless of action taken by HES, under OPUC's previous rulings, UEC would be allowed to serve the Member based on the following provisions established within the OPUC.

1. Determine If There Is a Unified Load: Where an electric service customer straddles the boundary between two service territories, the OPUC first assesses whether the Customer has a "unified customer load." This inquiry focuses on "ownership of facility operations, control of property, ownership of electric service facilities, the nature of the service agreements associated with the load, major regulatory documents, and significant contracts." In sum, the OPUC's overarching consideration is whether "operations are so integrated that service from two utilities would be impossible or impractical."
2. Apply Geographic Load Center Test.The OPUC's application of the geographic load center test predominately weighs the proportion of the load located in one service territory versus another.

As Applied to the Proposed Facility:

• Most of the identified tax lot is located within Umatilla Electric Cooperative's service territory.
• The majority of the facility building would be located in Umatilla Electric Cooperative service territory.
• As a threshold matter, the OPUC would likely consider the proposed Facility a unified load, and operations are typically integrated across the entire Facility such that service could not be split between two electric service providers.

Assuming a unified load, the application of the geographic load center test suggests that the UEC service territory has the right to serve the Facility.

Conclusion:

After verifying options, HES proposed, and UEC supported a Service Allocation Agreement (SAA) instead of a Service Territory Transfer. The SAA would retain HES's service territory, and the OPUC would respect the boundary. Even if a dispute were to arise regarding the provision of service, the OPUC would not seek to erode either service provider's territory.

HES also felt that a voluntary negotiated Service Allocation Agreement between HES and UEC permitting UEC to service its Members load fully would be a more streamlined approach with a faster conclusion with the OPUC. 

HES requested a Sunset clause as part of the Agreement. Accordingly, if the UEC Member does not commence construction of the Facility within thirty-six months from the Effective Date, this Agreement shall automatically terminate.  

Approve Resolution 2208

Deny Resolution 2208