20241018Reconsideration_Order_No_36367.pdf

Office of the Secretary
Service Date
October 18,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN ) CASE NO. PAC-E-24-05
POWER'S APPLICATION FOR APPROVAL )
OF $62.4 MILLION ECAM DEFERRAL ) ORDER NO. 36367
On April 1, 2024, PacifiCorp dba Rocky Mountain Power ("Company") applied for
authorization to adjust its rates under the Energy Cost Adjustment Mechanism ("ECAM"). The
Company sought an order approving approximately $62.4 million in ECAM deferred costs and a
10.5 percent increase to Electric Service Schedule No. 94, Energy Cost Adjustment ("Schedule
94"). If the adjustment were approved as filed,the monthly bill of an average residential customer
using 783 kilowatt-hours of electricity would increase by about$7.39. The Company requested its
proposed adjustment be processed by Modified Procedure and become effective on June 1, 2024.
On May 31, 2024, the Commission issued a Final Order that disallowed recovery of costs
incurred to comply with the Washington Climate Commitment Act ("WCCA") and authorized a
revised ECAM deferral amount of$60,093,960. Order No. 36207.
On June 21, 2024, the Company filed a Petition for Reconsideration ("Petition") of Order
No.36207.The Company argued the Commission erred by(1)misinterpreting the 2020 PacifiCorp
Inter-Jurisidictional Protocol ("2020 Protocol") in various ways; (2) impermissibly separating the
costs and benefits of its natural gas-fired generating facility in Chehalis,Washington("Chehalis");
and (3) discriminating against the Company for engaging in interstate commerce. Alternatively,
the Company asserted that the Commission should revise Order No. 36207 to exclude both the
costs and benefits of Chehalis from Idaho customers' rates—effectively removing Chehalis from
service of Idaho customers.
On July 19, 2024, the Commission granted the Company's Petition, setting comment
deadlines, authorizing the parties to submit additional evidence, and posing some initial questions
for the Company to answer. Order No. 36247. The Company responded to the questions the
Commission posed, and then Commission Staff("Staff') filed comments to which the Company
replied with argument and additional evidence.
Having reviewed the record in its entirety and additional arguments lodged by the Parties
on reconsideration, we now issue this Order denying the Company's Petition.
ORDER NO. 36367 1

ORDER NO. 36207
As stated, Order No. 36207 authorized the Company to recover only $60,093,960 of the
approximately$62.4 million in ECAM deferred costs sought in its Application. The only expense
for which the Commission disallowed recovery was costs the Company incurred to comply with
the WCCA. As relevant to this disallowance, Order No. 36207 provides:
We conclude that allowing recovery of costs incurred to comply with the WCCA
from Idaho customers would violate the 2020 Protocol, which governs the
allocation of costs and benefits of Company resources (including Company-owned
generating facilities like the Chehalis facility) across the jurisdictions in which the
Company operates.
We reject the Company's argument that the costs it incurred to comply with the
WCCA are like other taxes imposed on the Company,like the Wyoming Wind Tax.
See Wyo. Stat. Ann. § 39-22-104 (imposing a tax of$1.00 on every MWh of wind
energy generated in state). Rather, we conclude the WCCA is more akin to [a
Renewable Portfolio Standard] as it is designed to reduce the use of fossil fuel
generation to serve load. The 2020 Protocol defines a "Portfolio Standard" as "a
law or regulation that requires [the Company] to acquire . . . [r]esources in a
prescribed manner."2020 Protocol, Section 3.1.2.1. Although the Company owned
the Chehalis generating facility before the WCCA was enacted, it lost the right to
operate it to generate electricity to serve customers outside of Washington State
without purchasing allowances when the legislation became effective. The
Company did not acquire that right again until after it obtained allowances as
prescribed by the Washington State legislature. The costs of resource procurement
standards like this are situs-assigned under the 2020 Protocol. Thus, costs the
Company incurred to comply with the WCCA are appropriately assigned to
customers in Washington State.
Order No. 36207 at 11 (Footnotes omitted.)
Order No. 36207 cited other aspects of the WCCA that support this conclusion.
Specifically, Order No. 36207 noted that the cost of WCCA allowances is determined in an
auction, not by the Washington state legislature as with other taxes. Moreover, despite
acknowledging that isolated WCCA provisions resemble a tax or generation-dispatch costs, the
Commission reasoned that the provision of no-cost allowances to the Company only for customers
served in Washington state distinguished the WCCA from a tax.
Order No. 36207 also examined the link between the WCCA and another Washington state
climate initiative—the Clean Energy Transformation Act ("CETA"). Washington state officials
have indicated in federal court proceedings that no-cost allowances are provided under the WCCA
ORDER NO. 36367 2

to ensure that Washington customers do not bear the costs associated with transitioning to non-
greenhouse gas emitting generation under both the WCCA and CETA. Order No. 36207 reasoned
that the portfolio standards established under CETA and provision of no-cost allowances under
WCCA constituted a state-specific initiative for which Idaho customers should not bear the cost.
The Commission noted that costs for such state-specific policies should be allocated to customers
served in the state creating the policies.
STAFF COMMENTS ON RECONSIDERATION
Staff urged the Commission to reject the Company's request to reconsider the disallowance
of WCCA compliance costs associated with Chehalis. According to Staff,the Commission did not
err by concluding that these costs result from a Portfolio Standard, making them properly situs
assigned to Washington under the 2020 Protocol. Furthermore, Staff argued that, even if the
WCCA is not a Portfolio Standard, the Commission should not authorize recovery of costs to
comply with it because doing so would not be fair, just, and reasonable. Consequently, Staff
recommended that the Commission neither allow the Company to recover WCCA compliance
costs, nor remove the benefits of generation from Chehalis from Idaho rates.
1. The WCCA is a Portfolio Standard.
Staff argued that the Commission properly concluded that the WCCA is a Portfolio
Standard under the 2020 Protocol. In support of this argument, Staff noted that the 2020 Protocol
defines a "Portfolio Standard" as, among other things, "a law or regulation that requires [the
Company] to acquire . . . Resources in a prescribed manner."2020 Protocol Section 3.1.2.1. Staff
characterized the Company's reading of Order No. 36207 as implying that WCCA allowances are
discrete "Resources"under the 2020 Protocol.
However, Staff believed it more reasonable to interpret Order No. 36207 as the
Commission concluding that the WCCA deprived the Company of the right to lawfully operate
Chehalis to generate electricity without obtaining and retiring allowances as required by the
WCCA. That is, Staff interpreted Order No. 36207 as expressing a Commission determination that
the WCCA effectively rendered Chehalis inoperable as an electric generation facility unless the
Company obtained allowances. Consequently, Staff reasoned that the Commission's conclusion
that the WCCA was a Portfolio Standard under the 2020 Protocol was not error.
ORDER NO. 36367 3

2. Including WCCA compliance costs in Idaho rates is not fair,just, and reasonable.
Staff further argued that allowing the Company to recover WCCA compliance costs
violates two principles underpinning the 2020 Protocol. According to Staff, the 2020 Protocol
contemplates the fair allocation of costs between the states the Company serves while minimizing
the rate effects of state-specific policies, like the WCCA. Because allowing recovery of WCCA
compliance cost violates both these principles, Staff contended that allowing such recovery would
not be fair,just, and reasonable. Consequently, Staff asserted that the Commission should disallow
recovery of such costs, even if the WCCA is not a Portfolio Standard under the 2020 Protocol. In
support of this argument, Staff noted that the 2020 Protocol does not limit the Commission's
authority to determine whether rates are fair,just, and reasonable or to consider changes in laws,
regulations, or circumstances on inter jurisdictional allocation policies when evaluating rates.
Although inclusion of certain out-of-state generation taxes in Idaho rates has been deemed
fair,just, and reasonable, Staff distinguished such taxes from WCCA compliance costs. Staff cited
the Wyoming Wind Tax as an example of such a tax included in Idaho rates. The Wyoming Wind
Tax is a flat tax imposed on all wind energy generated in Wyoming, including that consumed in
Wyoming. See Wyo. Stat. Ann. § 39-22-104. The WCCA, however, provides no-cost allowances
for generation serving Washington ratepayers only, essentially exempting Washington residents
from WCCA compliance costs. RCW §§ 70A.65.110, 70A.65.120, 70A.65.130. Consequently,
Staff asserted that the Commission should disallow recovery of WCCA compliance costs under
Section 1 of the 2020 Protocol, even if other provisions of the 2020 Protocol would require
allocation of such costs to Idaho.
Staff also contrasted WCCA compliance costs with the treatment of rates for Public Utility
Regulatory Policies Act ("PURPA") Qualifying Facilities ("QF") under the 2020 Protocol. If the
price of a QF exceeds reasonable energy prices, the 2020 Protocol requires that any amount
exceeding the reasonable energy price be situs assigned to the state authorizing the QF contract.
2020 Protocol Section 4.4.2.1. Staff reasoned that overpriced QF rates are, as a practical matter,
like WCCA compliance costs because the Washington legislature artificially inflated the price of
exported energy generated at Chehalis by requiring the Company to first purchase allowances for
exported generation. Accordingly, Staff argued that the WCCA should receive similar treatment
to QF rates under the 2020 Protocol.
ORDER NO. 36367 4

3. Disallowing recovery of WCCA compliance costs does not violate the Dormant
Commerce Clause.
Staff also challenged the Company's assertion that disallowing recovery of WCCA
compliance costs impermissibly discriminates against the Company as an interstate utility in
violation of the Dormant Commerce Clause. In this vein, Staff again noted that Washington state
provides the Company with no-cost allowances to cover electricity generated by Chehalis
distributed to Washington customers. Washington state does this to insulate its residents from the
cost for complying with both the CETA and the WCCA which the Company would pass on.
However, Staff asserted that on its face the disparity between the $42 million of WCCA
compliance costs the Company incurred in 2023 and the $336,219 of CETA compliance costs the
Company incurred the same year suggested that Washington state's choice to offer no-cost
allowances favored its own residents instead of equalizing compliance costs. Accordingly, Staff
argued that any Dormant Commerce Clause violation associated with WCCA compliance costs
occurred when the Company initially incurred the costs.
4. The impact of removing Chehalis from Idaho rates.
Staff also challenged the Company's calculation of the impact to Idaho ratepayers if
Chehalis' generation is removed from Idaho rates. According to the Company,removing Chehalis
from Idaho rates would increase Idaho's Net Power Cost ("NPC") by $23.6 million. However,
Staff took exception with the Company's inclusion of the capacity deficiency penalty from the
Western Resource Adequacy Program("WRAP")to calculate replacement capacity.According to
Staff,the Company would not actually be capacity deficient if Chehalis were removed from Idaho
rates. Rather, Staff argued the Company would be reallocating existing generation to Idaho
ratepayer's detriment. Consequently, Staff reasoned that incurring the capacity deficiency penalty
would be unreasonable. Without including the capacity penalty, the capacity costs of removing
Chehalis drops from $119 million on a system basis to $46 million on an Idaho basis.
Staff also disagreed with the Company's use of the hourly Mid-Columbia("Mid-C")prices
to replace the energy supplied by Chehalis. Instead, Staff proposed using the monthly average cost
per megawatt-hour of gas generation on the Company's system because WRAP replacement costs
are based on a replacement gas plant. Staff asserted that this would reduce the costs of replacing
Chehalis by $99 million on a system basis.
ORDER NO. 36367 5

Alternatively,if the Commission deems the cost of gas generation improper, Staff proposed
using the Company's eastern Balancing Area Authority (`BAA") Locational Marginal Price
("LMP") from the Energy Imbalance Market ("EIM") (or the Energy Day Ahead Market when
that becomes available). Staff believed this rate to be more appropriate than Mid-C market prices,
as the Company would purchase replacement power from the LMP.If LMP prices are used instead
of Mid-C, that would reduce the Company's estimated cost for replacing Chehalis by about $67
million on a system basis. Using LMP prices reduces the replacement energy cost from $190
million to $123 million on a system basis.
Staff also disagreed with the Company's use of rate base and expenses from 2020 when
calculating the cost of removing Chehalis from Idaho rates. Staff noted that the Company has a
general rate case pending before the Commission (Case No. PAC-E-24-04) in which it has
provided updated fuel costs from 2023. Using the updated 2023 fuel costs would increase the cost
of removing Chehalis by about $242,000.'
According to Staff s calculations, the total cost of removing Chehalis from Idaho rates
would be $4.3 million if monthly average gas cost is used or $2.6 million using the LMP price
from the EIM. Staff suggested that removing Chehalis entirely from Idaho rates could cost as little
as $2.6 million further demonstrated that including $2.4 million in WCCA compliance costs in
Idaho rates is not fair,just, and reasonable.
COMPANY REPLY COMMENTS ON RECONSIDERATION
The Company challenged Staffs interpretation of the WCCA as effectively depriving the
Company of the right to lawfully operate Chehalis. According to the Company, the text of the
WCCA and its associated regulations do not support this interpretation. In this vein,the Company
noted that the WCCA is generally enforced with financial penalties—not injunctions that would
stop facilities from generating power. Additionally, the Company argued that interpreting the
WCCA as having deprived it of a property right in Chehalis could have unforeseen consequences
on future proceedings.
Similarly, the Company challenged Staffs assertion that the WCCA is a Portfolio
Standard under the 2020 Protocol. Specifically, the Company stated that the WCCA is not a
1 Staff further noted that the Company omitted capacity costs for three months and miscalculated capacity costs for
another month.
ORDER NO. 36367 6

Portfolio Standard because it does not require the Company to procure a Resource, much less
procure it in a prescribed manner. Rather, the Company viewed the WCCA as discouraging the
construction of new greenhouse gas emitting generation facilities.
The Company further argued that conferring the benefits of Chehalis to Idaho customers
without paying for its full prudent costs is not fair,just,and reasonable.According to the Company,
disallowing the recovery of prudent expenses (like WCCA compliance costs) without removing
the benefits conflicts with the 2020 Protocol and pre-existing fundamental ratemaking principles.
The Company also disputed Staff s analysis of the impact of removing Chehalis from Idaho
rates. First, the Company asserted that removing Chehalis would increase Idaho NPC by $7.9
million. After challenging various aspects of Staffs analysis, the Company asserted that its
calculations should be used to determine the cost of removing Chehalis from Idaho rates.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company's Application and the issues in this
case under Title 61 of the Idaho Code including, Idaho Code §§ 61-501, -502, and -503. The
Commission is empowered to investigate rates, charges,rules,regulations,practices, and contracts
of all public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provisions of law, and to fix the same by order. Idaho Code
§§ 61-501, -502, and-503.
Under Idaho Code§ 61-626,the Commission may abrogate or change one of its orders that
it determines after reconsideration is unjust, unwarranted, or should be changed. This permits the
Commission to correct any errors in the original order before appellate review. See Washington
Water Power Co. v. Kootenai Env'tAll., 99 Idaho 875, 879, 591 P.2d 122, 126 (1979). A petition
for reconsideration must state why the order to be reconsidered, or any issued decided therein, is
unreasonable, unlawful, erroneous, or not in conformity with the law. IDAPA 31.91.01.331.01.
After reviewing the entire record in this case, including the comments, additional materials that
were filed,and arguments provided by the parties on reconsideration,we sustain our prior decision
disallowing recovery of WCCA compliance costs for the reasons set forth below.
1. WCCA compliance costs are properly allocated to Washington State under the
2020 Protocol
The 2020 Protocol is a method of allocating components of the Company's service between
the jurisdictions in which it operates for use in the Company's rate setting proceedings. The 2020
ORDER NO. 36367 7

Protocol was developed by commission staff members, regulatory agencies, and other interested
groups from states in which the Company operates for use on an interim basis while a long-term
allocation and assignment method was developed. The Commission initially approved the 2020
Protocol in Order No. 34640, and subsequently extended its approval through December 31,2025,
in Order No. 35984.
The 2020 Protocol allocates the costs and benefits of a Company-owned generating facility,
like Chehalis,by first assigning the facility to one of two categories: "State Resources"or"System
Resources." 2020 Protocol, Section 3.1.2. Under the 2020 Protocol, State Resources consist of
only "Demand-Side Management Programs," "Portfolio Standards," and "State-Specific
Initiatives."The 2020 Protocol allocates the costs associated with a Portfolio Standard that exceed
those the Company otherwise would have incurred to the jurisdiction that adopted the Portfolio
Standard. 2020 Protocol, Section 3.1.2.1. Stated differently, the 2020 Protocol requires a state to
bear the additional costs resulting from a Portfolio Standard. However,the 2020 Protocol does not
contain a specific provision expressly allocating the benefits of a Portfolio Standard.
In Order No. 36207, we concluded that the WCCA, at least as applied to electric utilities,
is akin to a Portfolio Standard and, therefore, the cost to comply with it should be allocated to
Washington state. Understanding why this is so,requires an understanding of both the structure of
the WCCA and its peculiar application to electric utilities. The WCCA aims to reduce greenhouse
gas emissions by instituting a"cap and invest program."RCW§ 70A.65.005, .010(58), .060—.080.
The WCCA empowers the Washington Department of Ecology ("WDE") to cap emissions of
certain greenhouse gases by large emitters—called"covered entities."RCW§ 70A.65.080(1). The
Company qualifies as a covered entity because of the greenhouse gas emissions from Chehalis.
Covered entities must obtain and retire allowances for every metric ton of carbon dioxide
gas equivalent they emit under the WCCA. See RCW § 70A.65.010(1) (defining an"Allowance"
as authorization to emit up to one metric ton of carbon dioxide equivalent). Failure to do so can
result in the imposition of"penalty allowances" or monetary sanctions ranging from $10,000 to
$50,000 per day, depending on the violation. See RCW 70A.65.200(2)—(5); Washington
Administrative Code("WAC") 173.446-610(2)—(6). Generally, covered entities obtain allowances
through auctions the WDE conducts.See RCW§ 70A.65.100.The WDE then uses the funds raised
in the auctions on climate change and environmental justice projects offered exclusively in
Washington state. RCW § 70A.65.100(7), .230. However, electric utilities subject to CETA (like
ORDER NO. 36367 8

the Company)receive some allowances for free.RCW§ 70A.65.110-130. Essentially,the WCCA
and WDE regulations provide electric utilities with free allowances to cover the forecasted
emissions associated with servicing customers in Washington State. WAC 173-446-230. The
purpose of these no-cost allowances is to protect customers in Washington from paying the
incremental costs associated with transitioning to non-greenhouse gas emitting generation
resulting from both CETA and the WCCA. See RCW § 70A.65.120(1). The Washington state
legislature chose to provide no-cost allowances for Washington customers only. In sum, the
WCCA requires the Company to obtain and retire allowances to operate Chehalis to generate
electricity. Some of these allowances the Company must pay for while it receives others
specifically those applied to generation to serve customers in Washington state—for free.
The next issue we must address is how the above-described statutory scheme interacts with
the 2020 Protocol. Staff contends that the WCCA constitutes a Portfolio Standard under the 2020
Protocol, the costs of which are properly allocated to Washington state. As stated, the 2020
Protocol allocates the costs of a Portfolio Standard that exceed the costs the Company otherwise
incurred to the jurisdiction that adopted the Portfolio Standard. 2020 Protocol, Section 3.1.2.1. The
2020 Protocol defines a Portfolio Standard as "a law or regulation that requires [the Company] to
acquire: (a) a particular type of Resource, (b) a particular quantity of Resources, (c) Resources in
a prescribed manner, or (d) Resources located in a particular geographic area." 2020 Protocol,
Appendix A at 6 (defining "Portfolio Standard"). Although Chehalis is a "Resource" under the
2020 Protocol, the greenhouse gas allowances the Company had to obtain to operate Chehalis are
not. See 2020 Protocol, Appendix A at 7 (defining the term "Resource" to mean "a Company-
owned generating unit,plan,mine, long-term Wholesale Contract, Short-Term Purchase and Sale,
Non-firm Purchase and Sale, or QF contract."). Consequently, to determine whether the WCCA
constitutes a Portfolio Standard, we must consider its effects on the Company's relationship with
Chehalis.
It is undisputed that the Company owned Chehalis prior to enactment of the WCCA. It is
also undisputed that the WCCA did not deprive the Company of legal title to Chehalis. However,
as described above, the Company could not operate Chehalis without obtaining allowances via
purchase at auction, provision of free allowances, involuntary imposition of penalty allowances,
or some other means. In other words, the WCCA prescribes processes the Company must follow
to operate Chehalis to produce electricity (e.g., obtaining and retiring allowances).
ORDER NO. 36367 9

The remaining question we must address is whether the WCCA required the Company to
"acquire" Chehalis by obtaining greenhouse gas allowances. The Company contends it does not
because (1)the Company owned Chehalis before the WCCA went into effect; and(2)the WCCA
does not mandate the acquisition of any Resource. We disagree. The Company does not acquire a
Resource within the context of a Portfolio Standard only by obtaining ownership of it. Indeed,
contracts for the purchase and sale of power,which are not tangible property subject to ownership,
are Resources under the 2020 Protocol. Id. Considering this, we conclude that the Company has
not acquired a Resource under the 2020 Protocol if it does not have the right to lawfully employ
the Resource to provide electrical service to customers without complying with the WCCA.
Accordingly, we affirm our conclusion from Order No. 36207 that the Company lost the
right to lawfully operate Chehalis to generate electricity without obtaining allowances when the
WCCA became effective. The Company reacquired this right by obtaining WCCA allowances as
prescribed by the Washington state legislature. Consequently, the costs the Company incurred to
comply with the WCCA that exceed the cost the Company otherwise would have incurred (e.g.,
the cost of purchasing allowances) are appropriately assigned to customers in Washington state.
2. Allowing the recovery of WCCA compliance costs in Idaho rates would not be
fair,just, and reasonable.
The 2020 Protocol was designed to provide an allocation method that would result in the
setting of fair,just, and reasonable rates for the Company's electric service based on a variety of
scenarios.The 2020 Protocol specifically considered the treatment in rates of state-specific policies
and portfolio standards and how those would be allocated between the states. Section 1 of the 2020
Protocol expressly provides that it is not "intended to abrogate any Commission's right or
obligation to: (1) determine fair, just, and reasonable rates based upon applicable laws and the
record established in rate proceedings conducted by the Commission;" or"(2) consider the effect
of changes in laws, regulations, or circumstances on inter jurisdictional allocation policies and
procedures when determining fair,just, and reasonable rates. . . ." 2020 Protocol, Section I at 3.
For the reasons set forth below, even if the 2020 Protocol would otherwise result in the recovery
of WCCA compliance costs through Idaho rates, we decline to authorize such recovery because
doing so would not be fair,just, and reasonable.
The Company contends that allowing Idaho customers the benefit of Chehalis' generation
without paying a share of WCCA compliance costs conflicts with the ratemaking principle of cost
ORDER NO. 36367 10

causation. This principle generally holds the customer responsible for the costs associated with
providing the Company's service. However, even in the 2020 Protocol the principle of cost
causation has not been applied in the rigid manner the Company urges. For example,the treatment
of rates for PURPA QFs under the 2020 Protocol shows that the principle of cost causation does
not compel allocation of single state's artificial inflation of energy prices to all the Company's
customers on a system basis.
Under the 2020 Protocol, costs of a QF power purchase agreement("PPA") executed after
December 31, 2019, which are above the forecasted reasonable energy price are allocated to the
state that approved the PPA (situs assigned to the state where the QF is located). 2020 Protocol
Section 4.4.2.1. If a state happens to have inflated QF rates for whatever reason, customers in the
state where that QF is located pay for the inflated costs of complying with the rates authorized by
the state commission for QFs in that state. This ensures states that do not offer high rates for QFs
are not required to pay for another state's inflated QF rates. QF and WCCA compliance costs are
similar in both formation and effect. Both arise from a single state's unilateral decision, and both
artificially inflate costs to generate or supply electricity. Accordingly, it follows that, like
overpriced QF rates, the amount the WCCA increased the costs the Company otherwise would
have incurred should be allocated to the jurisdiction that caused the increase (i.e., Washington).
Furthermore, allowing the Company to recover WCCA compliance costs from Idaho
customers would conflict with one of our primary functions: preventing rate discrimination.
Although not directly applicable in this case, Idaho Code § 61-315 prohibits public utilities in
Idaho from charging discriminatory rates or maintaining unreasonable rate disparities. Allowing
the Company to recover WCCA compliance costs would, in practical effect, result in the creation
of discriminatory customer classes,consisting of the Company's Idaho customers who would have
to pay for greenhouse gas allowances and the Company's Washington customers who would not.
In sum, requiring Idaho ratepayers to bear the cost of a unilateral Washington policy
decision that is not equally applied to its own residents is not fair,just, and reasonable which is in
direct conflict with Idaho Code § 61-502. Similar discriminatory cost increases authorized by
another state would not be recoverable for Idaho customers under the 2020 Protocol.Accordingly,
even the WCCA were not a Portfolio Standard under the 2020 Protocol, we would not allow
recovery of such costs in Idaho rates because doing so is not just and reasonable. See Idaho Code
§ 61-301 (requiring all rates charged by public utilities to be just and reasonable).
ORDER NO. 36367 11

3. Disallowing the recovery of WCCA compliance costs in Idaho rates does not
violate the Dormant Commerce Clause.
The Company argues that disallowing recovery of WCCA compliance costs violates the
Dormant Commerce Clause of the United States Constitution. Article I, Section 8, clause 3 of the
United States Constitution grants Congress authority"[t]o regulate commerce ... among the several
states...." The clause also has a negative, or "dormant," aspect, implicitly preempting state
interference with interstate commerce. United Haulers, Assn, v. Oneida Herkimer Solid Waste
Mgmt. Auth., 550 U.S. 330, 338 (2007).
The Dormant Commerce Clause protects markets and market participants. Gen. Motors
Corp. v. Tracy, 519 U.S. 278, 300(1997). Thus,the Dormant Commerce Clause is inapplicable in
the absence of(1)actual or prospective competition between entities in an identifiable market; and
(2) state action expressly discriminating against or unduly burdening interstate commerce. Id.
Additionally, this impact cannot be merely incidental. United States v. Lopez, 514 U.S. 549, 559
(1995).
The Company contends that disallowing recovery of WCCA compliance costs violates the
Dormant Commerce Clause because doing so has the practical effect of discriminating against it
for engaging in interstate operations. This misstates the focus of the Dormant Commerce Clause
analysis. As indicated above, a Dormant Commerce Clause violation arises from state action
discriminating against interstate commerce. Id. Thus, it is critical to differentiate between state
actions that discriminate or burden interstate commerce and those that distribute the effects of
discrimination or burdens imposed by another state.
The Company asserts that, if we do not permit it to pass on to Idaho customers costs that
were already imposed by Washington state, we would be effectively discriminating against
interstate commerce. We disagree. Any decision we make regarding the recovery of WCCA
compliance costs in Idaho rates will not impose a new burden on the Company. Regardless of
whether we allow the Company to pass the costs of greenhouse gas allowances for its Chehalis
emissions to Idaho customers, the Company will remain the entity required to obtain allowances
under the WCCA. The only thing that will change is the identity of the party to the interstate
transaction bearing the ultimate financial burden. However, any decision we make allocating that
cost will not burden interstate commerce anymore than it already is. Additionally, the WCCA
facially discriminates against out-of-state interests by providing no-cost allowances to the
ORDER NO. 36367 12

Company for greenhouse gas emissions generated to serve Washington customers without
providing the same no-cost allowances for emissions associated with serving the retail load of the
Company's other jurisdictions. Allowing the Company to pass the WCCA compliance costs it
incurred to Idaho customers would not eliminate this discrimination against interstate commerce.
It would merely shift the effects of the discrimination from the Company to Idaho customers.
Consequently, the Company's argument that disallowing recovery of WCCA compliance costs
violates the Dormant Commerce Clause fails.
4. Removing the benefits of Chehalis from Idaho rates would not be fair, just, and
reasonable.
The Company argues,in the alternative,that the Commission should remove the generation
benefits of Chehalis from the deferral balance if recovery of the WCCA costs for operating the
facility are disallowed. Based on our conclusion that the WCCA compliance costs the Company
incurred are properly allocated to Washington state, we further conclude that it would not be fair,
just, and reasonable to remove the benefits of Chehalis' generation from Idaho rates due to the
disallowance of those costs.
ORDER
IT IS HEREBY ORDERED that, for the reasons stated above, the Company's Petition for
Reconsideration is DENIED.
THIS IS A FINAL ORDER ON RECONSIDERATION.Any party aggrieved by this Order
may appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code § 61-627.
ORDER NO. 36367 13

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 18th day of
October 2024.
ERIC ANDERSON, PRESIDENT
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R. HAMMOND JR., COMMISSIONER
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EDWARD LODGE, COMNVSIONER
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I:\Legal\ELECTRIC\PAC-E-24-05_ECAM\orders\PACE2405_final2_at.docx
ORDER NO. 36367 14