20241231Final_Order_No_36438.pdf

Office of the Secretary
Service Date
December 31,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. IPC-E-24-07
OF IDAHO POWER COMPANY TO )
INCREASE RATES FOR ELECTRIC ) ORDER NO. 36438
SERVICE TO RECOVER COSTS )
ASSOCIATED WITH INCREMENTAL )
CAPITAL INVESTMENTS AND CERTAIN )
ONGOING OPERATIONS AND )
MAINTENANCE EXPENSES )
DECISION SUMMARY
With this Order the Idaho Public Utilities Commission ("Commission") approves Idaho
Power Company's ("Company")Application, modified as follows. The Commission approves an
increase to the Company's annual Idaho jurisdictional revenues of$50,605,147,an overall increase
to adjusted base revenue of 3.73%. The Commission's determination is based on a January through
December 2024 test year using an Average of Monthly Averages("AMA")rate base methodology.
The rate base components were updated with the most recently submitted actuals. The Itron
Enterprise Edition ("IEE") License Expansion 2024, Conference Furniture, and Wood River
Valley ("WRV") distribution line items were removed from the revenue requirement calculation.
Imputed revenue treatment was used for the Destination Trailers. Labor operations and
maintenance ("O&M") expense was updated to the most recent actuals. The revenue offset
adjustment was updated for the most recent actuals, with corresponding billing determinants, and
reflects a class-specific approach as proposed in the Company's rebuttal position. The Company's
proposed rate spread is approved.
PROCEDURAL HISTORY
On May 31, 2024,the Company filed an application("Application")with the Commission
requesting an order approving a revision to the Company's schedules of rates for electric service
in the state of Idaho. The Company requested an increase in annual Idaho jurisdictional revenue
of$99,293,220.
On June 21, 2024, the Commission issued a Notice of Application, Notice of Suspension
of Proposed Effective Date, and Notice of Intervention deadline. Order No. 36238. The
Commission granted intervention to: Idaho Irrigation Pumpers Association, Inc. ("IIPA");
ORDER NO. 36438 1

Industrial Customers of Idaho Power ("ICIP"); Micron Technology, Inc. ("Micron"); Idaho
Conservation League ("ICL"); the city of Boise City ("Boise City"); and The United States
Department of Energy on behalf of the Federal Executive Agencies ("FEA"). Order Nos. 36235;
36237; and 36277. On November 14, 2024, ICL filed a Notice of Withdrawal.
On December 2, 2024, the Commission held a customer hearing in Twin Falls, and on
December 3, 2024, the Commission held a customer hearing in Boise. On December 9 and 10,
2024, the Commission held technical hearings in Boise during which the Commission heard
testimony from all Parties.
APPLICATION
The Company represented that, if approved, the request would result in an overall increase
to adjusted base revenue of 7.31%. Application at 2. The Company represented that it intends to
invest nearly one billion dollars in its system in 2024, and an average of$796 million over the next
five years to meet the growing customer demand and to maintain a safe, reliable electric system.
Id. at 3. The Company represented that with the planned investments, increased labor costs, and
other inflationary pressures, the revenue from current rates is no longer sufficient to maintain a
reasonable rate of return, nor adequate cash flow, to support the Company's financial stability
without the relief requested. Id.
The Company acknowledged that the Commission has recently issued an order on the
Company's last general rate case ("GRC"); however, the Company believed a rate case limited to
only certain matters would provide timely cost recovery, while minimizing the rate increases
customers might otherwise experience with a full GRC.Id. at 4.
The Company proposed an effective date of July 1, 2024, with the understanding that the
Commission would likely suspend the proposed effective date. The Company's Application is
structured around an anticipated effective date of January 1, 2025.Id.
The Company requested relief related to a limited set of revenue requirement categories,
including 2024 incremental plant additions to rate base and incremental ongoing labor costs, as
measured from the revenue requirement approved by the Commission in the Company's 2023
GRC. Id. at 5. The Company did not seek to adjust any other revenue requirement components
such as non-labor Operation and Maintenance ("O&M") expense, net power supply costs, other
revenue, etc.Id.
ORDER NO. 36438 2

The Company stated that under its proposal base rates would still reflect the 2023 GRC
settlement amounts for categories considered out of the scope for this case. Id. The Company also
represented that it had excluded any expected 2024 capital projects associated with the Jim Bridger
Power Plant and the North Valmy Generating Station. Id.
The Company did not propose any rate structure changes, and the Company provided the
following table for base revenue impacts of the proposed base rate increase results, to each
customer segment.
Limited Scope Rate Case Request
Cost of Service Percent change—Revenue Spread(Exhibit 4)
Revenue Overall % Residential Small Large Large Irrigation
Change Impact General General Power 2
Service Service '
$99,293,220 7.31 7.25 7.30 6.83 6.50 9.50
Includes lighting schedules,z Includes special contracts.
Id. at 6.
PUBLIC COMMENTS
As of December 5,2024,the Commission received sixty(60)public comments in this case.
The majority of the public comments oppose any increase in rates, with customers presenting
issues including fixed income, inflation, taxes, the state of the economy, and other world issues
that present financial hardships for customers. Many customers also noted that the Company was
just recently granted a rate increase that became effective at the beginning of the year.
PETITIONS FOR INTERVENOR FUNDING
IIPA requests that the Commission grant Intervenor Funding in the amount of$64,281.30
for attorney fees for the work of E. Olsen, paralegal fees, soft costs, and witness fees for L.
Kaufman.
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 §§ 61-301 through 303. 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 through 503.
ORDER NO. 36438 3

In a general rate case,the Company's intrastate revenue requirement,and every component
of it,both rate base and expense,may be at issue. IDAPA 31.01.01.124.01. The Commission may
grant, deny, or modify the revenue requirement requested and may find a revenue requirement
different from that proposed by any party is just, fair, and reasonable. Id.
The Company's retail rates and charges,both recurring and non-recurring, including those
of special contract customers, may be at issue, and every component of every existing and
proposed rate and charge may be at issue.IDAPA 31.01.01.124.02.The Commission may approve,
reject, or modify the rates and charges proposed and may find that rates and charges different from
those proposed by any party are just, fair, and reasonable.Id.
1. Test Year and Rate Base Treatment
For the purposes of this limited incremental rate case, the Company started with year-end
2023 actual plant balances, then estimated January 2024 through December 2024 capital closings.
The Company proposed a test year using actual cost of capital additions closed to plant-in-service
as of January 31, 2024, and forecasted amounts through December 31, 2024. Tr. vol. III, 332-34.
The Company then applied year-end rate base treatment under which 100% of the Company's
proposed actual and projected amounts through the end of December 2024 would be included in
rate base.
The Commission Staff("Staff'), IIPA, ICIP, and Micron disagreed with the Company's
use of the year-end rate base treatment. Staff recommended using an AMA rate base methodology
with actual plant additions that occurred for a test year from August 31, 2023,through August 31,
2024. Tr. vol. V, 937-47.
IIPA objected to the use of a year-end forecasted test year and recommended using a 13-
month average rate base from December 2023 to December 2024,with corresponding adjustments
to the Company's calculation of depreciation expense to replace the Company's annualized
December 2024 monthly depreciation with a forecasted January 2024 to December 2024
depreciation expense. Tr. vol. IV, 668. ICIP also objected to the use of a year-end forecasted test
year and argued that it violated the regulatory principle of used and useful, and that the Company's
concerns regarding regulatory lag were unfounded. Tr. vol. IV, 729-43.
Micron recommended that the Company's test year rate base be calculated using an AMA
approach as the Commission has approved in prior dockets, rather than the Company's year-end
ORDER NO. 36438 4

approach. Tr. vol. IV, 579. Micron argued that an AMA approach also eliminated the mismatch in
how the Company measured various revenue requirement components in its Application.Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
it fair,just, and reasonable to adopt a calendar year test year ending December 31, 2024, updated
with the most recently submitted actuals, and utilizing an AMA rate base methodology.
In ratemaking, the purpose of a test year is to "develop representative operating data that
will provide a meaningful comparison and guide for developing future revenue requirements, and
allow the parties to work with actual data, while still recognizing projected changes which are
reasonably certain to occur." Order No. 33757 at 4 (internal citations omitted). The Commission
has previously explained that "[i]t simply is not possible to carefully review investment cost
figures and information that are provided close to or at the time of hearing." Order No. 29838 at
6. "Company data should be provided with sufficient time so that Staff and other parties may
incorporate the information in prefiled testimony. This will facilitate the technical hearing process
and eliminate the need to argue over forecasts or pro forma adjustments outside of an established
test year."Order No. 35762. "Not only will data be known and measurable by the time other parties
prefile testimony and for the hearing, it will be more convenient and administratively easier for all
parties." Order No. 29838 at 7.
With respect to the test year, while the Commission does not adopt the August 31, 2024,
cut-off deadline recommended by Staff in this specific case and based upon these specific
circumstances, this is not an invitation for public utilities to present extensive forecasted data in
future proceedings, nor is it an indication of the Commission's willingness to accept forecasted
data in future proceedings. The Commission expects that when any public utility appears before
the Commission in a recovery proceeding, that public utility will present known and measurable
data, for used and useful projects, with sufficient time for all parties to review that data and
formulate any necessary testimony.
With respect to rate base treatment, the Commission finds that an AMA methodology is
appropriate in this case. AMA rate base treatment more accurately matches the Company's
recovery of costs with the revenues and operating expenses throughout the year,making sure those
costs are aligned with real benefits received. As discussed by the Intervenors, among other things,
year-end rate base treatment conflicts with the regulatory principle of costs recovery being
ORDER NO. 36438 5

associated with used and useful projects. While the Commission has approved the use of year-end
rate base treatment in the past, those instances are few and far between, and the limited nature of
this case presents additional problems as various aspects of a full rate case,non-labor O&M,power
cost expense etc., are considered out-of-scope, further misaligning costs and benefits.
The Company's arguments on the impacts of regulatory lag are unpersuasive.As discussed
by the other parties, regulatory lag is an ordinary part of the regulatory compact that may provide
both benefits and detriments. As always, the Commission is open to considering requests for
additional riders, or other cost recovery mechanisms as may be appropriate; however, in this case
year-end rate base treatment is not an appropriate remedy for the Company's concerns.
2. Project Specific Rate Base Adjustments
Staff recommended project specific rate base adjustment relating to: (1) Franklin 60 MW
Battery Energy Storage System ("BESS"); (2) Hemingway 36 MW BESS; (3) Grid
Modernization; (4) IEE License Expansion 2024; (5) Outage Alert Auto Enrollment; (6)
SharePoint 2024 Development; (7) Non-Criteria Based Equipment; (8) Conference Room
Furniture; (9) Destination Trailers; (10) Black MESA BESS; and (11) Hemingway BESS
Interconnection.
In its rebuttal testimony, the Company accepted Staff s adjustments for the IEE License
and Conference Furniture. Tr. vol. III, 365-67. The Company also removed the WRV distribution
line from its proposed revenue requirement calculation. Id. Additionally, the Company requested,
as an alternative to disallowance, imputed revenue treatment for the Destination Trailers. Id. The
Commission finds that treatment reasonable.
a. Franklin 60 MW BESS
Staff argued that the project was not in-service by the August 31, 2024, cut-off deadline
and Staff did not believe the project itself was least-cost, or that the amounts over the soft cap were
prudent. Tr. vol. V, 1025-032. In response, the Company argued that the project was placed in-
service on September 25, 2024, but began its daily cycling on July 8, 2024. Tr. vol. III, 221-34.
The Company also claimed that all costs associated with the project were prudently incurred and
necessary to ensure continued safe, reliable service to customers. Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred.
ORDER NO. 36438 6

b. Hemingway 36 MW BESS
Staff argued that the project itself was not in-service by the August 31, 2024, cut-off
deadline. Tr. vol. V, 1033-032. Staff also believed that 5 years of overbuild was not prudent, and
that 3 years of the overbuild should be disallowed. Tr. vol. V, 1033-035.
In response, the Company argued that the project was placed in service on November 4,
2024, and that daily cycling began on September 20,2024. Tr. vol. III,234-42. The Company also
argued that procurement time for batteries made it necessary to provide 5 years of overbuild, that
there are cost savings for the 5 year overbuild, and that those batteries are being used right now
and rotated to get the longest life expectancy,while also maintaining the system performance over
the 5-year guarantee. Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred. The Commission expects the Company to continue
gathering experience to improve its understanding of battery projects and updating its overbuilding
plans, if any, accordingly.
c. Grid Modernization
Staff argued that the first phase of the Grid Modernization project was not in service prior
to the August 31, 2024, cut-off deadline. Tr. vol. IV, 879-80. Staff also believed that there are
savings due to O&M expense that are not being applied. Id.
In response, the Company claimed that the first phase of the Grid Modernization program
came online on November 6, 2024. Tr. vol. III, 295-97. The Company also claimed that the $3
million in O&M savings is based on the 15-year lifespan, and that those savings are out-of-scope
for this limited rate case. Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred. However, the Commission notes the problem inherent
in the Company's position that the non-labor O&M savings associated with this project are outside
the scope of this limited rate case when considering the Company's position on year-end rate base
treatment.
ORDER NO. 36438 7

d. Outage Alert Auto Enrollment
Staff believed the auto-enrollment program is redundant with other systems as auto-
enrollment already takes place through: 1) Enterprise Omni-Channel Notification System; 2)
Automated Dialer Systems; and 3) the Grid Modernization project once implemented. There are
also self-enrollment options through: 1) MyAccount system and 2) Outage Maps Notifications
System. Tr. vol. IV, 882. In response, the Company claimed that its efforts increased the number
of customers receiving outage alerts by 473,000, or 850%. Tr. vol. III, 298-301.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred. The Commission expects the Company to review all
associated programs to ensure any redundancy is minimalized.
e. SharePoint 2024 Development
Staff believes that the Company's current SharePoint 2016 goes end of life in July 2026,
and that the SharePoint 2024 Development Project will take over two years to complete. Tr. vol.
IV, 882-83. In response, the Company argued that the work order associated with the SharePoint
2024 Development project is comprised of costs associated with the labor necessary to build the
new SharePoint sites and its testing, and those sites are used and useful now. Tr. vol. III, 301-304.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred.
f. Non-Criteria Based Equipment
Staff argued that the Company did not provide a cost-benefit analysis for the additional
expense. Tr.vol. IV, 883-84. In response,the Company claimed that it was a necessary and prudent
investment to maintain the CJ Strike parks complex that includes over one hundred (100)
campsites consisting of over sixty (60) acres of turf. Tr. vol. III, 304-306.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the equipment prudently incurred.
g. Black MESA BESS
Staff believed the project itself was not in-service by the August 31,2024,cut-off deadline.
Tr. vol. V, 1023-025. In response, the Company argued that all work orders associated with Black
ORDER NO. 36438 8

Mesa were placed in-service as of June 2024. Tr. vol. III, 215-21. The Company claimed that,
while the project is in-service, the Company is maintaining the position that commissioning has
not technically been accomplished per the contract for contractual reasons. Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred.
h. Hemingway BESS Interconnection
Staff reasoned that the Hemingway BESS project served by this interconnection was not
completed by the August 31, 2024, cut-off deadline. Tr. vol. V, 1022-023. In response, the
Company claimed that backfeed power to support the testing and commissioning of the BESS
components occurred on June 26, 2024. Tr. vol. III, 213-14.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
the cost for the project prudently incurred.
3. Labor O&M Adjustments
Staff recommended that labor costs be updated to the most recent actuals. Tr. vol. IV, 854-
57. Staff also recommended that the Company remove the 2023 annualizing adjustment and the
3% 2025 General Wage Adjustment ("GWA"). IIPA recommended calculating labor expense by
grossing up year to date actuals from January 2024 to July 2024, and without updating for 2025
general wage adjustments or annualizations. Tr. vol. IV, 668-70. Micron recommended both
updating to actual 2024 labor expenses to the extent information is available and removing the
2025 GWA. Tr. vol. IV, 580-81.
In response, the Company agreed to update labor to most recent actuals. Tr. vol. III, 351-
53. However, the Company did not agree with Staff s 2023 annualizing adjustment, arguing that
Staffs adjustment was incorrect. Id. The Company also rejected the recommendation to remove
the 2025 GWA, arguing that it became effective December 21, 2024, and reflects wage levels at
the end of the year. Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
it fair,just, and reasonable to approve the Company's rebuttal position updating labor to the most
recent actuals.
ORDER NO. 36438 9

4. Revenue Adjustments
Staff recommended updating the revenue growth offset with 2024 actuals and updating the
billing determinants accordingly. Tr. vol. IV, 896-901. Micron also recommended using actual
2024 kWh sales figures to the extent available. Tr. vol. IV, 581-82. ICIP recommended including
all revenue regardless of being out-of-scope. Tr. vol. IV, 678. ICIP also recommended using
schedule specific incremental kWh and mill rates when calculating partial incremental revenue.
In response, the Company agreed to update for the most recent actuals, January 2024
through September 2024. Tr. vol. III, 353-55. The Company also modified its revenue growth
offset to reflect a class-specific approach. Tr. vol. III, 359-60. However,the Company objected to
the inclusion of any other revenue adjustment that was out-of-scope of this limited case. Tr. vol.
III, 360-61.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
it fair, just, and reasonable to approve a revenue offset adjustment updated for actuals with
corresponding billing determinants and reflecting a class-specific approach.
5. Rate Spread
Staff, Micron, and Boise City agreed with the Company's proposed rate spread. IIPA
recommended an equal percent rate increase to all rate schedules. Tr. vol. IV, 651-53. ICIP
recommended that the percentage difference between the overall rate increase and each individual
rate class's rate increase should be the same percentage difference that was used and approved by
the Commission in the 2023 GRC. Tr. vol. IV, 751. FEA recommended that the revenue spread
incorporate a 190%-0% cap and floor band, and that the Commission order an updated Class Cost
of Service study for use in the next GRC. Tr. vol. IV, 800-03.
In response,the Company did not recommend the pro rata share method proposed by ICIP,
nor the uniform rate increase method proposed by IIPA because they did not recognize the cost
drivers specific and unique to this case and would result in additional inter-class subsidization. Tr.
vol.IV,410-20. The Company noted that FEA's position only results in minor differences between
the Company's original position.Id.
Having considered the arguments and testimony of the parties, the Application, all
submitted material, and considering the specific circumstances of this case, the Commission finds
it fair, just, and reasonable to approve the Company's proposed rate spread. The Commission
ORDER NO. 36438 10

appreciates the work done by all of the intervenors and the various positions and recommendations
presented. However, given the limited nature of this case, and the recency of the Company's last
GRC, the Commission does not find this case to be the appropriate venue for significant
modification to the applicable rate spread.
6. Intervenor Funding
Intervenor funding is available pursuant to Idaho Code § 61-617A and the Idaho Public
Utilities Commission Rules of Procedure 161-165. Idaho Code § 61-617A(1) provides that it is
the "policy of this state to encourage participation at all stages of all proceedings before the
commission so that all affected customers receive full and fair representation in those
proceedings." The Commission may award a cumulative amount of intervenor funding not to
exceed $40,000 for all intervening parties in a single case. Idaho Code § 61-617A(2).
Commission Rule 162 provides the form and content of petitions for intervenor funding.
Each petition must contain: (1) an itemized list of expenses broken down into categories; (2) a
statement of the intervenor's proposed findings or recommendation; (3) a statement showing that
the costs the intervenor wishes to recover are reasonable; (4) a statement explaining why the costs
constitute a significant financial hardship for the intervenor; (5) a statement showing how the
intervenor's proposed recommendations differed materially from the testimony and exhibits of the
Staff; (6) a statement showing how the intervenor's recommendation or position addressed issues
of concern to the general body of the utility users or consumers; and (7) a statement showing the
class of customer on whose behalf the intervenor appeared. IDAPA 31.01.01.162.
IIPA is an Idaho nonprofit corporation representing farm interests in electric utility rate
matters in southern and central Idaho. IIPA relies solely upon dues and contributions voluntarily
paid by members,together with intervenor funding,to support its activities.Based upon our review
of IIPA's petition, the Commission finds that the funding request complies with the procedural
and substantive requirements of the statute and the rules. The Commission finds that IIPA has
materially contributed to the Commission's decision-making; IIPA's participation added a unique
and well-informed perspective to the record; and it is fair,just, and reasonable to award intervenor
funding. The Commission finds it appropriate to award IIPA intervenor funding in the amount of
$40,000. The award shall be chargeable to the irrigation class.Idaho Code § 61-617A(3).
ORDER NO. 36438 11

ORDER
IT IS HEREBY ORDERED that the Company's Application is approved as modified by
this Order.
IT IS FURTHER ORDERED that the Company file tariffs and schedules in conformance
with this Order, to be effective on January 1, 2025, for service rendered on and after that date.
IT IS FURTHER ORDERED that IIPA's petition for intervenor funding is granted in the
amount of$40,000.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. Idaho Code §§ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this 31"day of
December 2024.
ERIC ANDERSON, PRESIDENT
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ORDER NO. 36438 12