20071001_2070.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:WELDON STUTZMAN
DATE:SEPTEMBER 24, 2007
SUBJECT:CASE NO. PAC-07-
APPLICATION OF ROCKY MOUNTAIN POWER FOR AN ORDER
AUTHORIZING A CHANGE IN DEPRECIATION RATES
On August 31 , 2007, Rocky Mountain Power, a division of PacifiCorp, filed an
Application requesting an Order authorizing a change in depreciation rates for electric property.
The Company seeks an effective date for the depreciation rate change of January 1 2008.
Rocky Mountain s Application states that its last depreciation rate application was
filed in October 2002, and in May 2003 the Company entered into a stipulation with the Staff
regarding the depreciation rates. The stipulation included a commitment that the Company
perform another depreciation study within five years. Accordingly, the Company retained a
depreciation consultant and prepared a depreciation study. The study proposes a reduction to the
current composite depreciation rate of2.91 % for the Company s electric utility plant, resulting in
a new composite depreciation rate of 2.69%.The effect of applying the recommended
depreciation rates to the Company s depreciable plant balances would result in a decrease in
depreciation expense of approximately $3.5 million to plant balances allocated to the Idaho
jurisdiction. The Company requests that its Application be processed by Modified Procedure.
Staff believes that processing the case by Modified Procedure may be appropriate
but also believes the comment period should come after Staff and other interested parties have an
opportunity to review the Company s Application and discuss specific depreciation rates with the
Company. Accordingly, Staff recommends that the Commission issue a Notice of Application
and Notice of Modified Procedure , but without establishing a comment period deadline. Staff
DECISION MEMORANDUM
also recommends the notice include a Notice of Opportunity to Intervene. After the intervention
period, Staff will convene workshops with the Company and other parties, which may result in
an agreement on depreciation rates. After conclusion of the workshops, a Notice of Comment
Period can be issued. Although this process may extend the case beyond January 1 , 2008, the
Commission Order approving any changes to depreciation rates can be made effective as of
January 1 2008 , even if the Order is issued after that date.
COMMISSION DECISION
Should the Commission issue a Notice of Application and Notice of Modified
Procedure, and Notice of Opportunity to Intervene, and then later issue a Notice of Comment
Period Deadline sometime after Staff and the Company have discussed depreciation rates in
workshops?
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Weldon Stutzman
bls/M:PAC-O7-14 ws
DECISION MEMORANDUM