20081103_2392.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL

DATE: OCTOBER 28, 2008

SUBJECT: CASE NO. IPC-E-08-19
IDAHO POWER COMPANY’S PETITION FOR APPROVAL OF
CHANGES TO POWER COST ADJUSTMENT

On October 14, 2008, Idaho Power Company filed a Petition requesting the
Commission issue an Order authorizing the Company to modify its Power Cost Adjustment
mechanism as set forth in a Settlement Stipulation filed with the Petition. Consistent with a
previous Commission Order, Idaho Power hosted workshops and settlement discussions
addressing a number of issues related to the PCA. The discussions resulted in a settlement
signed by Idaho Power, Commission Staff, Micron Technology, the Industrial Customers of
Idaho Power, the U.S. Department of Energy, and the Idaho Irrigation Pumpers Association.
The primary change proposed by the parties is in the PCA sharing methodology that
allocates non-PURPA power supply expenses between customers and the Company’s
shareholders. The Stipulation calls for a change in the current 90% (customers)/10%
(shareholders) to a 95%/5% sharing arrangement. The parties note in the Stipulation that the
new sharing arrangement is appropriate because of a substantial increase in the magnitude and
volatility of power supply expenses driven by market and fuel price volatility coupled with
increasing loads and development of the Company’s risk management policy.
The Stipulation also addresses the load growth adjustment rate which is a component
of the PCA formula. The LGAR rate in the initial PCA was $16.85/MWh, and the current
LGAR rate from the Company’s last rate case is $31.40. The new LGAR calculation in the
Stipulation results in a new rate of $28.14/MWh.
DECISION MEMORANDUM 2
The Company asks that its Petition be processed by Modified Procedure pursuant
Rules 201 through 204 of the Commission’s Rules of Procedure. Staff recommends that the
Petition of Idaho Power for approval of changes to its PCA methodology be processed by
Modified Procedure with a 21-day comment period.
COMMISSION DECISION
Should the Petition of Idaho Power Company for approval of a Stipulation providing
for changes to its PCA methodology be processed by Modified Procedure?

Weldon B. Stutzman
Deputy Attorney General

bls/M:IPC-E-08-19_ws