20250314APPLICATION.pdf

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RECEIVED
LISA NORDSTROM March 14,2025
Lead Counsel Idaho Public
InordstromCcidahopower.com Utilities Commission
March 14, 2025
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, Idaho 83714
Re: Case No. IPC-E-25-13
Idaho Power Company's Application For Authority to Increase Its Rates for
Electric Service to Recover Costs Associated With the Hells Canyon Complex
Relicensing Project
Dear Commission Secretary:
Attached for electronic filing, please find Idaho Power Company's Application in
the above-entitled matter.
If you have any questions about the attached documents, please do not hesitate
to contact me.
Sincerely,
OCL S. 7
Lisa Nordstrom
LN:sg
Attachments
1221 W. Idaho St(83702)
P.O. Box 70
Boise, ID 83707

MEGAN GOICOECHEA ALLEN (ISB No. 7623)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
mgoicoecheaallenCa�.idahopower.com
Inordstrom(aMdahopower.com
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-25-13
AUTHORITY TO INCREASE ITS RATES )
FOR ELECTRIC SERVICE TO ) APPLICATION
RECOVER COSTS ASSOCIATED WITH )
THE HELLS CANYON COMPLEX )
RELICENSING PROJECT. )
Idaho Power Company ("Idaho Power" or "Company"), in accordance with Idaho
Code §§ 61-502A and 61-524, and Rules of Procedure ("RP") 052, 121 and 125, hereby
respectfully makes application to the Idaho Public Utilities Commission ("Commission")
for an order authorizing an adjustment to customer rates of $29,708,787, effective June
1, 2025, to recover incremental Allowance for Funds Used During Construction
("AFUDC") costs associated with the Hells Canyon Complex ("HCC") relicensing project
contingent upon the outcome of the Power Cost Adjustment ("PCA") update to be filed
APPLICATION - 1

April 15, 2025. That is, the Company proposes to implement the rate increase requested
in this case only if the upcoming PCA update is a rate decrease sufficient to offset the
requested increase resulting in an overall net revenue decrease, or net revenue neutral
outcome for customers.
In support of this Application, Idaho Power asserts as follows:
I. THE HELLS CANYON COMPLEX
1. The HCC consists of three hydroelectric projects (dams, reservoirs, and
powerhouses) on the segment of the Snake River forming the border between Idaho and
Oregon. The three projects, Brownlee, Oxbow, and Hells Canyon, lie approximately 90
miles northwest of Boise. The HCC represents approximately 1,167 megawatts ("MW")
of nameplate generation capacity or approximately 30 percent of the Company's total
generating capacity and is an important source of low cost, clean electric energy for Idaho
Power's customers.
2. Idaho Power is required to obtain a license from the Federal Energy
Regulatory Commission ("FERC") to operate the HCC. The licensing process includes
extensive public review and involves numerous natural resource and environmental
agencies. Idaho Power's previous long-term license was set to expire on July 31, 2005.
In anticipation of that expiration, the Company began its relicensing efforts in 1991 in
preparation for the filing of a new license application, which ultimately occurred in July
2003. Because the Company's relicensing application is still pending, Idaho Power has
been operating under annual licenses issued by FERC since July of 2005 as the
Company and stakeholders work through outstanding issues associated with the pending
license application.
APPLICATION - 2

II. HELLS CANYON COMPLEX RELICENSING EFFORTS
3. The Company's efforts towards relicensing the HCC have spanned nearly
three decades, yet there remain issues that must be resolved in advance of a license
issuance: (1) the Clean Water Act ("CWA") § 401 certification ("§ 401 certification"), (2)
the Endangered Species Act ("ESA") consultation, and (3) a revised supplemental
National Environmental Policy Act ("NEPA") analysis. The § 401 certification from both
Idaho and Oregon is required before FERC can issue its final license, and in April 2019,
the Company and the states of Idaho and Oregon reached a settlement on the § 401
certification. The Offer of Settlement was subsequently filed with FERC and a § 401
certification decision is pending.
4. With respect to the ESA consultation, which was delayed until the § 401
certification process was completed, Idaho Power prepared draft biological assessments
in consultation with the United States Fish and Wildlife Service ("USFWS") and the National
Oceanic and Atmospheric Administration's National Marine Fisheries Service ("NMFS").
The draft biological assessments were filed with FERC in October 2022. FERC is
responsible for finalizing the biological assessments and consulting with USFWS and
NMFS, who will then issue biological opinions. The biological opinions must be issued
before FERC can issue a license.
5. Finally, in June 2022, FERC issued a notice of intent to prepare a
supplemental Environmental Impact Statement ("EIS") in accordance with NEPA. FERC
was targeting a final supplemental EIS in November 2024 but has not yet released the draft
supplemental EIS and cannot issue a license for the HCC until ESA consultation on the
licensing project is complete. Although Idaho Power is unable to predict with certainty the
APPLICATION - 3

timing of the issuance of a new license for the HCC, the Company estimates issuance of
the 40- to 50-year license will be delayed until at least late 2026.
III. HELLS CANYON COMPLEX RELICENSING COSTS
6. Idaho Power records the accumulation of all costs associated with the
construction of an asset, including the cost of financing the construction expenditures, or
AFUDC, in FERC Account 107—Construction Work in Progress ("CWIP"). When the plant
is completed and placed in service, the total cost of the plant, including AFUDC, is moved
to FERC Account 101 — Electric Plant-in-Service, placing the asset in rate base. In effect,
during construction, the Company is allowed to earn a return on CWIP by accruing
AFUDC, but typically the cash recovery does not occur until the associated plant is placed
in rate base, which strains the Company's credit quality.
7. With respect to HCC relicensing activities, Idaho Power began incurring
relicensing costs in 1999, accruing those capital costs and AFUDC in CWIP. When FERC
issues a new license, the Company can transfer accrued amounts to Electric Plant-in-
Service.
8. Absent a new license to continue operating HCC, the Company would have
to construct new generation facilities or secure replacement power. Analogous to the
retrofit of a coal-fired plant to comply with new air quality standards, Idaho Power has
invested significant amounts to mitigate externalities associated with the HCC dams such
that FERC will grant the Company a new operating license, appropriately recording those
capital costs to CWIP. To be eligible for recovery in customer rates, capital costs must
be associated with electric plant-in-service that is used and useful in the near term.' As
Order Nos. 32585 at 14-15, 32224 at 11-12.
APPLICATION -4

the Company operates under temporary, annual licenses, the HCC continues to provide
Idaho Power's customers a low-cost, clean source of more than 1,100 MW of generating
capacity. The costs the Company has incurred over the past three decades are directly
correlated to the Company's efforts to license the HCC, both for a temporary, annual
license as well as towards a long-term license.
9. In 2006, Idaho Code § 61-502A was amended to allow for the inclusion of
CWIP in rates if the Commission makes an "explicit finding that the public interest will be
served thereby." As such, in Case No. IPC-E-08-10, with the HCC relicensing costs
increasing and a FERC license still pending, the Company requested recovery of a
portion of the AFUDC associated with the HCC relicensing costs. The Commission
approved Idaho Power's request with Order Nos. 30722 and 32426, authorizing the
annual collection of $6,520,122 in AFUDC associated with the HCC relicensing project
from the Company's Idaho jurisdictional customers, finding that "the Hells Canyon
relicensing project is unlike a typical construction project, and establishes circumstances
that support a finding that including AFUDC in rates will serve the public interest.112 In
Case No. IPC-E-23-11, the annual Idaho-jurisdictional AFUDC collections were revised
to $6,537,444 to reflect the allocation factor and resulting jurisdictionalization of
authorized system-basis HCC relicensing AFUDC collections, which the Commission
approved with Order No. 36042. Attachment 1 to this Application includes the
quantification of the current HCC relicensing AFUDC collections, lines 1 through 3, and
the proposed incremental collections, lines 4 through 6.
2 Order No. 30722, pg. 13.
APPLICATION - 5

10. With collections nearly equivalent to the annual accrued AFUDC amounts
at the time, the cash collections have been providing Idaho Power with at least some cash
(and thus credit) support during the lengthy relicensing project period. As of December
31, 2024, AFUDC amounts collected from customers are $250,941,226 on an Idaho
jurisdictional basis. Because customers are contributing to HCC relicensing costs
currently included in CWIP, Idaho Power's future request for recovery of HCC relicensing
expenditures will be lower, net of those previously collected amounts, or approximately
$245.8 million at year-end 2024, on a system basis.
IV. PROPOSED INCREASE TO RECOVERY OF
HCC RELICENSING AFUDC AMOUNTS
11. More than 15 years have passed since the Company received approval to
include in rates recovery of HCC relicensing AFUDC costs, and Idaho Power is still
operating on annual licenses while awaiting FERC's issuance of a new operating license.
Nevertheless, the Company continues to incur expenditures associated with HCC
relicensing efforts, with AFUDC contributing to the majority of those costs. Since 2022,
Idaho Power has recorded over $30 million annually in AFUDC. Most recently, in 2024,
Idaho Power recorded approximately $37 million in total HCC relicensing expenditures,
of which $34 million were AFUDC-related, meaning the Company has been responsible
for acquiring funds to support relicensing activities and borne the majority of the financing
costs of doing so, with limited cash collection.
12. To better align recovery of HCC relicensing AFUDC costs with the ongoing
cost of financing the relicensing project, Idaho Power is proposing to increase customer
APPLICATION - 6

rates by$29,708,7873 annually to recover incremental HCC relicensing AFUDC amounts,
provided that the anticipated upcoming decrease to rates associated with the Power Cost
Adjustment ("PCA") to be filed on April 15, 2025, is equal to, or greater. If the expected
upcoming PCA decrease is less than the proposed increase associated with AFUDC
collections of $29,708,787, Idaho Power will adjust its request in this case such that the
net of the two proposals would result in a net neutral rate impact to customers. Because
the PCA is a Commission-approved mechanism and the proceedings are processed on
an expedited basis, the Company is filing the request in this case earlier to allow more
time for review.
13. With an AFUDC accrual of $34.5 million in 2024 and annual collections of
$6.5 million, absent an increase to the HCC relicensing AFUDC costs being recovered,
the Company has accrued nearly $28 million in AFUDC alone, significantly contributing
to the total HCC relicensing project costs. Increasing collections of HCC relicensing-
related AFUDC to approximately $30 million will better align the annual AFUDC amounts
collected with the annual AFUDC amounts accrued. As the Commission explained in
Order No. 30722, "...the lengthy duration of the project, and an as yet unknown
completion date, mean that AFUDC is already significant and will continue to accumulate
to alarming levels. . .114 An increase to the amount of AFUDC collections now will reduce
the total project costs ultimately included in rate base, thereby reducing future rate
increases. In addition, while collection of the AFUDC would not contribute to the
Company's net income, the collections would nonetheless improve cash flow, which
3 Based on an increase in collections of HCC relicensing AFUDC amounts of$22,061,745 on a pre-tax
Idaho jurisdictional basis as detailed on line 4 of Attachment 1.
4 Order No. 30722, pg. 14.
APPLICATION - 7

would help maintain the credit strength necessary to access competitive lending markets,
which will benefit the cost of capital and ultimately customer rates. This is critical during
times like now when Idaho Power's capital expenditure forecast is expected to average
over $1 billion per year for the next five years. Finally, the expected decrease to PCA
rates provides an opportunity for the Company to begin collection of amounts due from
customers, without increasing rates, while also reducing the amount of return customers
would pay on what would otherwise be a higher rate base balance.
V. PROPOSED TARIFF SHEETS
14. As explained above, Idaho Power is proposing to increase customer rates
$29,708,787 to recover incremental HCC relicensing AFUDC amounts, provided that the
anticipated upcoming decrease to rates associated with the PCA to be filed on April 15,
2025, is equal to, or greater. Because there is the potential for the Company's request in
this case to be modified pending the request in the PCA proceeding, and in an attempt to
satisfy RP 121.01, coincident with the upcoming PCA case, Idaho Power will supplement
this filing with the proposed tariff sheets specifying the proposed rates for providing retail
electric service to its customers in the state of Idaho.
15. The Company believes that filing individual sets of tariff sheets with this
proceeding as required by RP 121.01 would be administratively complex and would not
aid the Commission and interested parties with their review of these proposed rate
adjustments. Idaho Power believes the filing of the tariff sheets once the anticipated
upcoming decrease in the PCA has been determined and the increase in the incremental
HCC relicensing AFUDC amounts is final, will comply with the spirit of the Commission's
rule. Along with the tariff sheets, in the supplemental filing the Company will also present
APPLICATION - 8

a comparison of revenues from the various tariff customers under Idaho Power's existing
rates and charges with the corresponding proposed new revenue levels resulting from
the proposed rates from the two cases. The Company is requesting that the incremental
HCC relicensing AFUDC amounts of $29,708,787 be recovered from customers through
a uniform percentage increase to all base rate components except the service charge.
VI. MODIFIED PROCEDURE
16. Idaho Power stands ready for immediate consideration of this Application.
It believes that a hearing is not necessary to consider the issues presented herein, and
respectfully requests that this Application be processed under Modified Procedure; i.e.,
by written submissions rather than by hearing. RP 201 et seq. If, however, the
Commission determines that a technical hearing is required, the Company stands ready
to support the Application in such hearing.
VII. COMMUNICATIONS AND SERVICE OF PLEADINGS
17. In conformance with RP 125, this Application will be brought to the
attention of Idaho Power's customers by means of a press release to media in the
Company's service area and a customer notice distributed in customers' bills. However,
because the amount of Idaho Power's proposed increase in the case is subject to the
expected proposed decrease in the upcoming PCA proceeding, both of which have a
proposed effective date of June 1, 2025, the actual proposed rate increase is not yet
known. Therefore, the Company intends to bring the contents of both proceedings (this
case and the yet-to-be-filed PCA case)to the attention of customers via a combined press
APPLICATION - 9

release and customer notice once the actual proposed increase is known.5 The combined
notification will provide Idaho Power the opportunity to notify customers of the anticipated
proposed net decrease or net neutral rate change associated with both proceedings.
Accordingly, the combined customer notice will be distributed over the course of the
Company's current billing cycles beginning April 26, 2025, and additionally, to ensure that
all customers are notified in a timely manner and have sufficient time to submit comments,
Idaho Power will send a direct mail postcard to a subset of customers that receive their
bill toward the end of the processing time for the PCA case. Although Idaho Power
believes this approach best satisfies the spirit of RP 125 while minimizing the opportunity
for customer confusion, it requests additional direction if the Commission prefers a
different approach to providing customer notice of multiple rate changes proposed to take
effect on June 1, 2025.
18. Idaho Power will keep its Application open for public inspection by
appointment at its offices throughout the state of Idaho. The Company conveyed its
communication plan with Commission Staff prior to filing and maintains that the combined
notice procedure adequately satisfies the Rules of Practice and Procedure of this
Commission; however, the Company will, in the alternative, bring the Application to the
attention of its affected customers through any other means directed by this Commission.
5 RP 125 (3) provides that the utility must start distributing customer notices when it files its application or
as soon as possible thereafter and RP 125, and (4)the press releases shall be mailed or delivered
simultaneously with filing of the application.
APPLICATION - 10

19. Communications and service of pleadings with reference to this
proceeding should be served on the following:
Megan Goicoechea Allen Matt Larkin
Lisa D. Nordstrom Idaho Power Company
Idaho Power Company 1221 West Idaho Street (83702)
1221 West Idaho Street (83702) P.O. Box 70
P.O. Box 70 Boise, Idaho 83707
Boise, Idaho 83707 mlarkin(aMdahopower.com
mgoicoecheaallen(a�idahopower.com
Inordstrom(aMdahopower.com
dockets idahopower.com
VIII. REQUEST FOR RELIEF
20. Idaho Power continues to cooperate with the USFWS, NMFS, and FERC to
address outstanding issues associated with the pending HCC license application. The
Company, however, is unable to predict the timing of issuance by FERC of any license
and continues to accrue on an annual basis HCC relicensing costs, primarily AFUDC.
Therefore, to reduce future financing costs that will be paid by customers, Idaho Power
respectfully requests that the Commission issue an order authorizing an adjustment to
customer rates of $29,708,787, effective June 1, 2025, to recover incremental AFUDC
costs associated with the HCC relicensing project, contingent upon the outcome of the
PCA to be filed April 15, 2025.
DATED at Boise, Idaho, this 14t"day of March 2025.
LISA D. NORDSTROM
Attorney for Idaho Power Company
APPLICATION - 11

BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-25-13
IDAHO POWER COMPANY
ATTACHMENT 1
HCC Relicensing AFUDC Collections

CWIP-Hells Canyon Relicensing AFUDC
System Idaho Jurisdicational
1 Current Collections $ 6,815,472 $ 6,537,444
2 Net to Gross Tax Multiplier 1.347 1.347
3 Revenue Requirement $ 9,177,851 $ 8,803,453
4 Proposed Incremental Collections $ 23,000,000 $ 22,061,745
5 Net to Gross Tax Multiplier 1.347 1.347
6 Incremental Revenue Requirement $ 30,972,260 $ 29,708,787
7 Total AFUDC Collections (pre-tax gross up) $ 29,815,472 $ 28,599,189
8 Total AFUDC Collections Rev Req $ 40,150,111 $ 38,512,240