20130422_4033.pdf

DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: KARL T. KLEIN
DEPUTY ATTORNEY GENERAL
DATE: APRIL 20, 2013
SUBJECT: IDAHO POWER'S PCA APPLICATION, CASE NO. IPC-E-13-10
On April 15, 2013, Idaho Power Company filed its annual Power Cost Adjustment
(PCA) Application. The Company asks for an order: (1) approving an update to the Schedule 55
reflecting a $140.4 million increase in the PCA rates now in effect; (2) approving the Company's
proposed return of 2012 revenue sharing amounts to customers; and (3) implementing one of two
proposed Schedule 55 PCA rates, effective June 1, 2013 through May 31, 2014, which would
allow the Company to collect the $140.4 million over one or two years. The Company requests
that its Application be processed under Modified Procedure. Application at 1, 11.
THE APPLICATION
The Company primarily attributes the proposed rate increase to: (1) the expiration of
nearly $50 million in rate credits; (2) $1.8 million megawatt-hours lower actual hydro generation
as compared to the 2012-2013 forecasted amount; and (3) lower actual market energy prices as
compared to 2012-2013 forecasted prices. The Company says the later two factors reduced
forecasted surplus energy sales by $61.4 million, which would have normally offset power
supply expenses recovered from customers. Id. at 8.
The Company's standard and alternative proposals to recover the $140.4 million are
as follows:
A. Standard, Unmitigated PCA
The Company says its standard, unmitigated PCA calculations result in a $140.4
million increase in the revenue to be recovered from customer rates, for an overall increase of
DECISION MEMORANDUM 1
about 15.34% over current billed revenue. Application at 2. The Company calculated its 2013-
2014 PCA costs based on: (1) projected power costs, (2) "true-ups" of projected power cost
calculations from the prior PCA year, and (3) amounts of revenue that the Commission ordered
the Company to share with customers under Order No. 32424. See Application at 5. The
Company's Application and its attachments describe these calculations in detail. The Company
proposes that its new rates be effective from June 1, 2013 to May 31, 2014. Id. at 2. When the
proposed PCA rate is combined with the sharing rates, the table below shows the approximate,
proposed combined rates for the major customer classes:
Customer Group Current Proposed Percentage
(Schedules) PCA Rate Combined Rate Change Billed to
Billed Revenue
Residential (1) 0.07930/kWh 1.1630/kWh 12.54%
Small General Service .00940/kWh 1.1450/kWh 10.36%
(7)
Large General Service .14920/kWh 1.1820/kWh 16.86%
(9)
Large Power Service (19) .19960/kWh 1.1940/kWh 22.07%
Irrigation (24) .12950/kWh 1.1770/kWh 15.38%
Source: Atcli. 1; Atch. 3, p. 1. See also, Press Release accompanying Application.
The PCA rates for Idaho Power's four special-contract customers would also increase. Under
the Company's proposal, the PCA rate for all the special-contract customers would be
1.23060/kWh. Id. In addition, special contract customers would receive the following monthly
credit during the PCA year: Micron - $180,702; Simplot - $55,194; DOE (INL) - $71,326; and
Hoku— $0.00. Atch. 1, p. 2-3.
A. Alternative, Mitigated PCA
As an alternative to collecting the entire $140.4 million in one year, the Company
proposes to mitigate the immediate rate impact on customers by deferring $52.5 million of the
$140.4 million PCA recovery until the next PCA year (June 1, 2014 - May 31, 2015). Under this
alternative, effective June 1, 2013 to May 31, 2014 the Company would increase revenues by
DECISION MEMORANDUM 2
$87.9 million through rates and charges to all customer classes and special contracts, for an
overall 9.6% increase over current billed revenue. Id. at 2, 9. Under the alternative, mitigated
PCA proposal, the approximate, proposed rates for the major customer classes this PCA year
would be:
Customer Group Current Proposed Percentage
(Schedules) PCA Rate Combined Rate Change Billed to
Billed Revenue
Residential (1) 0.07930/kWh 0.77300/kWh 8.03%
Small General Service .00940/kWh .75430/kWh 6.80%
(7)
Large General Service .14920/kWh .79150/kWh 10.47%
(9)
Large Power Service (19) .19960/kWh .80390/kWh 12.81%
Irrigation (24) .12950/kWh .78650/kWh 9.65%
source: Atdh. ; Atch. 3, p. 3. See also, Press Release accompanying Application.
The PCA rates for Idaho Power's four special-contract customers would also increase. Under
the Company's alternative proposal, the PCA rate for all the special-contract customers would be
.84040/kWh. Id. In addition, as with the standard PCA proposal, special contract customers
would receive a monthly credit during the PCA year as follows: Micron - $180,702; Simplot -
$55,194; DOE (INL) —$71,326; and Hoku— $0.00. Atch. 2, p. 2-3.
PROPOSED SCHEDULING
Commission Rule 127 provides that the Commission will determine whether the Staff
should a conduct a public workshop "[w]hen a public utility files an application to increase any
rate. . . ." IDAPA 31.01.01.127. In this particular case, Staff believes workshops are warranted
given the size of the proposed rate increase. Staff recommends that the Commission schedule
workshops on in Pocatello, Twin Falls, and Boise to respectively occur on April 30, May 1, and
May 8, 2013.
DECISION MEMORANDUM 3
As in past years, the Company has requested that its PCA Application be processed
under Modified Procedure. Staff concurs with the use of Modified Procedure. Given the existing
demands upon Staff, Staff recommends that comments from Staff and any intervenors be due by
May 17, 2013, and that any reply comments from the Company be due by May 21, 2013. Staff
recommends that public comments be allowed through May 27, 2013.
COMMISSION DECISION
Does the Commission wish to schedule workshops as noted above, process the
Application by Modified Procedure, and set comment and reply deadlines as noted above?
Karl Klein
Deputy Attorney General
M:IPC-E-13-10kk
DECISION MEMORANDUM 4