20250313Staff Comments.pdf

RECEIVED
MARCH 13,2025
IDAHO PUBLIC
UTILITIES COMMISSION
CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S ANNUAL COMPLIANCE ) CASE NO. IPC-E-25-01
FILING TO UPDATE THE SUBSTATION )
ALLOWANCE AMOUNT UNDER )
SCHEDULE 19,LARGE POWER SERVICE ) COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Chris Burdin, Deputy Attorney General,
submits the following comments.
BACKGROUND
On December 20, 2024, Idaho Power Company ("Company") submitted Tariff Advice
No. IPC-TAE-24-06, an annual compliance filing to update the Substation Allowance amount
contained in Schedule 19, as required by the Commission Order Nos. 32893 and 32914. The
Company proposed an effective date of March 15, 2025.
The Company's proposed per megawatt Substation Allowance reflects an increase from
$71,052 to $99,826, or approximately 29%. Application at 1. The Company represents that the
proposed Substation Allowance reflects updated material costs, labor rates, and the stations
overhead rate. Id.
STAFF COMMENTS 1 MARCH 13, 2025

On January 27, 2025, the Commission issued Order No. 36447, processing the
Company's filing as an Application rather than a tariff advice.
STAFF ANALYSIS
Staff focused on three classifications of costs to justify the proposed Substation
Allowance amount under Schedule 19 including (1) Labor and Vehicle Cost, (2) Material Cost,
and(3) Overhead Cost. The proposed overall allowance has increased 29% from the currently
approved allowance, increasing from $71,052 to $99,826 per Megavolt-amperes ("MVA"). The
increase in the proposed amount is mitigated by a lower general overhead rate that decreased
from 4.7%to 2.64% in this year's filing.
Based on its review, Staff recommends that the Commission approve the proposed
Substation Allowance amount of$99,926 per MVA. Additionally, Staff recommends that the
Commission direct the Company to provide information related to the procurement process for
all materials included in the allowance and the resulting selection of vendors, and also the cost of
material specific to the 44.8 MVA transformer("Transformer") and 4-Unit Metalclad Switchgear
("Metalclad"), which are the two highest-dollar components included in the allowance, in next
year's annual filing.
Labor and Vehicle Cost
Staff verified that the labor and vehicle cost included in the allowance is representative of
the cost Schedule 19 customers would pay for a standard substation upgrade. This year's filing
reflected labor costs that increased from $339,494 to $354,103, a 4.3% increase from the
previous year. The proposed vehicle cost increased from $49,660 to $58,599, an 18% increase
from the previous year. These increases reflect an ongoing trend over the last five years, where
the year-to-year increase in labor and vehicle cost has averaged 6.6% and 17.4%, respectively.
Staff believes the increase in labor cost is comparable to market labor rates for the types
of resources that are involved in constructing substation upgrades. Therefore, Staff believes the
increase in labor cost is reasonable.
According to the Company, the large increase in vehicle cost can be attributed to
increases in licensing, depreciation and maintenance costs. Response to Production Request No.
STAFF COMMENTS 2 MARCH 13, 2025

3. Staff agrees that depreciation has increased as newly purchased vehicles have been added to
Idaho Power's fleet, replacing older vehicles and the larger asset balance is a contributing factor.
Material Cost
The total material cost included in this year's proposed allowance increased by 48.8%
compared to the previous annual filing. This is somewhat mitigated by a decrease in the stores
loading rate. For example, the stores loading rate for the Metalclad decreased from 3.99%
currently to 2.85% in this year's filing. Although the overall material cost increase seems
excessive, it is driven by the increase in the cost of the Transformer and Metalclad, which is
94.4% of the total material cost. By reviewing the actual invoice cost of these components,
verifying that these components are competitively bid, and validating the drivers causing the
increase in their cost, Staff believes that the overall cost of materials included in the allowance
accurately represents the cost Schedule 19 customers will pay. However, Staff recommends that
in next year's filing the Company include details of the procurement process it uses to ensure all
materials included in the allowance are purchased at least cost and specific results of the process
used when purchasing the Transformer and Metalclad.
According to the Company, the demand for the Transformer and Metalclad have
significantly exceeded supply. The price of copper, steel, and non-ferrous metal, such as
aluminum, increased by approximately 18%, 12%, and 10%, respectively, in 2024 as compared
to 2023. Furthermore, manufacturing labor costs continue to rise, while transportation and
shipping costs have also increased. According to the Company, lead times for these types of
equipment have increased from 12 to 14 months to about 3 to 4 years, which validates that the
supply of this type of equipment cannot meet the growing demand,placing significant upward
pressure on the price of these components.
Staff also reviewed some of the components that make up a small percentage of the total
material cost. This includes the cost of the 138 kV/ 13kV Airbreak structure and foundation, the
138 kV Interrupter foundation, and the 13 kV Pad mound local service. Costs of these
components have also increased, ranging from increases of 95.10%to 460.02% from the
previous year. Although the increased cost of these items has little impact on the total increase
of the allowance, Staff believes it merits a more detailed review of the Company's purchasing
practices in next year's filing.
STAFF COMMENTS 3 MARCH 13, 2025

Overhead Cost
Overhead expenses are expenses that cannot be directly assigned to a specific asset or
project. The Company provided the calculation of the Schedule 19 overhead rate for substations
from November 2023 through October 2024. The proposed general overhead rate for the 12
months ending October 31, 2024, is 2.64%, which is a decrease from the current authorized rate
of 4.7%. Staff reviewed the methodology and inputs used to determine the overhead rate and
believes the calculation is accurate.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the proposed Substation Allowance
amount of$99,926 per MVA.
Additionally, Staff recommends that the Commission direct the Company to provide
information related to the procurement process for all materials included in the substation
allowance and the resulting selection of vendors and the cost of material for the Transformer and
Metalclad in next year's annual filing.
Respectfully submitted this 13th day of March 2025.
—M � .. .
Chris Burdin
Deputy Attorney General
Technical Staff: Seungjae Lee
James Chandler
I:\utility\UMISC\COMMENTS\IPC-E-25-01 Comments.docx
STAFF COMMENTS 4 MARCH 13, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 13 DAY OF MARCH 2O25,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-25-01, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN
CONNIE ASCHENBRENNER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: mgoicoecheaallenga idahopower.com
caschenbrennergidahopower.com
docketsgidahopower.com
/l/I_
PATRICI JORDAN, tSICZ ETARY
CERTIFICATE OF SERVICE