20250516Reply Comments.pdf

—�IQAHO Ro
DONOVAN WALKER
Lead Counsel RECEIVED
dwal ker@J da h o power.corn May 16, 2025
IDAHO PUBLIC
UTILITIES COMMISSION
May 16, 2025
VIA ELECTRONIC FILING
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, Idaho 83720-0074
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 Reply
Comments in the above-entitled matter.
If you have any questions about the attached documents, please do not hesitate
to contact me.
Very truly yours,
luz ltJ
Donovan Walker
DW:sg
Attachments

DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker(o-)idahopower.com
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR ) CASE NO. IPC-E-25-13
AUTHORITY TO INCREASE ITS RATES )
FOR ELECTRIC SERVICE TO RECOVER ) IDAHO POWER COMPANY'S
COSTS ASSOCIATED WITH THE HELLS ) REPLY COMMENTS
CANYON COMPLEX RELICENSING )
PROJECT )
Idaho Power Company ("Idaho Power" or "Company") respectfully submits these
Reply Comments in response to Comments filed by the Idaho Public Utilities Commission
("Commission") Staff ("Staff") and the Industrial Customers of Idaho Power ("ICIP") on
May 9, 2025. Idaho Power appreciates Staff's support of an order approving the
Company's request to adjust customer rates $29,708,787 to recover incremental
Allowance for Funds Used During Construction ("AFUDC") costs associated with the Hells
Canyon Complex ("HCC") relicensing project. In these Reply Comments, Idaho Power
IDAHO POWER COMPANY'S REPLY COMMENTS - 1

will respond to ICIP's assertions that the Company did not comply with the Rules of
Procedure ("RP") and that the request is not in the public interest.
L BACKGROUND
1. The HCC consists of three hydroelectric projects (Brownlee, Oxbow, and
Hells Canyon), inclusive of dams, reservoirs, and powerhouses, on the segment of the
Snake River forming the border between Idaho and Oregon. At approximately 30 percent
of the Company's total generating capacity, the HCC provides approximately 1,167
megawatts ("MW") of nameplate generation capacity and is an important source of low
cost, clean electric energy for Idaho Power's customers. Idaho Power is required to obtain
a license from the Federal Energy Regulatory Commission ("FERC") to operate the HCC.
2. Idaho Power's previous long-term license expired on July 31, 2005, and as
a result, the Company began its relicensing efforts in preparation for the filing of a new
license application, which 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. Idaho Power'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. Although the Company is unable to
predict with certainty the timing of the issuance of a new license for the HCC, Idaho Power
estimates issuance of the 40- to 50-year license will be delayed until at least late 2026.
3. 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,
IDAHO POWER COMPANY'S REPLY COMMENTS -2

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. 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.
II. IDAHO POWER'S REPLY
A. The Commission Should Adopt Staff's Recommendation to Approve the
Company's Request to Increase Rates to Offset AFUDC Costs associated
with the HCC Relicensing Project.
4. 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 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 Idaho Power's efforts to license the HCC,
both for a temporary, annual license as well as a long-term license.
5. Idaho Power appreciates Staff's analysis and recommended approval of the
Company's request in this case, which represents a unique opportunity to increase the
recovery of a necessary, known cost while still providing customers with a net price
decrease. Staff evaluated the financial implications of the proposal for both Idaho Power
and its customers, "ensuring consistency with regulatory principles and determining
IDAHO POWER COMPANY'S REPLY COMMENTS - 3

whether the request serves the public interest."' Analyzing AFUDC amounts the
Company is currently accruing as compared to Idaho Power's proposed increase to
AFUDC recovery, Staff acknowledged that "[w]ithout an increase in AFUDC recovery
now, customers could see a significant increase in rates when the Company receives its
new license from FERC."z In their Comments, Staff found Idaho Power's proposal to be
"reasonable, consistent with regulatory principles, and in the public interest, and therefore
recommends its approval."3
B. The Commission Should Reject ICIP's Claims that Idaho Power's Application
Does Not Comply with the Commission's Rules.
6. Idaho Power complied with the notice requirements for this matter.
However, ICIP argues that the Company failed to comply with two separate Rules of
Procedure, RP 122 and RP 125, and therefore believes the application should be denied
or dismissed. RP 122 outlines the rules associated with a Notice of Intent to File a General
Rate Case. Even though this is not a General Rate Case proceeding, ICIP asserts this
rule, although explicitly stating its applicability to general rate cases, "applies only to
general rate increases4 and therefore Idaho Power was required to file a notice of intent
60-days prior to filing its Application in this case. ICIP further supports their claim by citing
RP 122.01 for clarification regarding application of the notice of intent, yet failed to
recognize the language immediately preceding their reference, that indicates that the
examples of cases outside the scope of Rule 122 include,
"but are not limited to [emphasis added] fuel cost adjustments (e.g.,PGA),
power cost adjustment (PCA), commodity or purchased power tracker rate
increases, emergency or other short-notice increases caused by disaster or
' Staff Comments, pg. 3.
2 Staff Comments, pg. 3.
3 Id.
4 ICIP Comments, pg. 4.
IDAHO POWER COMPANY'S REPLY COMMENTS -4

weather-related or other conditions unexpectedly increasing a utility's
expenses, rate increases designed to recover governmentally-imposed
increases in costs of doing business, such as changes in tax laws or
ordinances, or other increases designed to recover increased expenses
arising on short notice and beyond the utility's control."
The list of cases in RP 122.02 for which a notice of intent is not an exhaustive list.
7. The Company believes the intent of the requirement to file a notice prior to
the filing of a general rate case is due to the nature of the request, which includes a
revenue requirement based on Idaho Power's most recent cost of all of its investments
and expenses. Notifying the Commission and the public of the intent to file a general rate
case provides notice of the likely extensive review of data associated with a utility's
request that is forthcoming. The Company's request in this case is not a general rate case
rather it is a request to increase rates based on the change in a singular expenditure, for
which customers are already paying, and therefore is outside the scope of RP 122, with
no requirement to file a 60-day Notice of Intent to file a General Rate Case for this matter.
8. RP 125 outlines the rules associated with Notices to Customers of
Proposed Changes in Rates. Idaho Power disagrees with ICIP's declaration that the
Company's "notice was misleading and a gross misrepresentation of its impact on
ratepayers."5 In its Application, Idaho Power proposed that, because the request in this
case was subject to the expected proposed decrease in the Power Cost Adjustment
("PCA") proceeding that was unknown at the time, the Company would bring the contents
of both proceedings to the attention of customers via a combined press release and
customer notice once the actual proposed increase was known.
5 ICIP Comments, pg. 5.
IDAHO POWER COMPANY'S REPLY COMMENTS - 5

9. Idaho Power, in fact, included in the customer notice the proposed changes
associated with the PCA, the Fixed Cost Adjustment proceeding, and the request in this
case. The combined notification allowed Idaho Power the opportunity to notify customers
of the proposed net rate change associated with all three proceedings. Idaho Power
believes this approach minimized the opportunity for customer confusion, as opposed to
sending three separate customer notices with three different proposed rate changes —
one of which was unknown at the time of filing. The Company explained its intent to satisfy
RP 125 in its Application and requested additional direction from the Commission if a
different approach to providing customer notice of multiple rate changes, which are all
proposed to take effect on June 1, 2025, was preferred. While the notice summarized the
net impact of all three proceedings, it also individually described the request in each
proceeding, briefly explained Idaho Power's need for the additional revenue, indicated
the request was a proposal and subject to public review, provided the location of materials
for review, and informed customers of the opportunity to provide written comments. The
Company's customer notice included all the requirements outlined in RP 125.01 and was
compliant with the letter of RP 125.
C. Idaho Power's Request to Recover Incremental AFUDC associated with the
HCC Relicensing Project is in the Public Interest.
10. 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
IDAHO POWER COMPANY'S REPLY COMMENTS - 6

approved Idaho Power's requests 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."7 More than 15 years later,
Idaho Power is still operating on annual licenses while awaiting FERC's issuance of a
new operating license and continues to incur expenditures associated with HCC
relicensing efforts, with AFUDC contributing to the majority of those costs, recording over
$30 million annually.
11. 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, reducing the total project costs ultimately included in rate base, thereby
reducing future rate increases. As highlighted by Staff, "because the HCC dams continue
to produce electricity for the benefit of current customers, it is reasonable that current
customers contribute to the costs of relicensing"8 and further increasing AFUDC recovery
at a time when rates will decrease in the PCA allows the Company to provide customers
with rate relief. Staff believes Idaho Power's request is "reasonable, consistent with
regulatory principles, and in the public interest . . . "9
D. The Company's Request to Recover Incremental AFUDC associated with the
HCC Relicensing Project is Necessary to Maintaining its Financial Health.
12. In their Comments, ICIP declares Idaho Power's request is not in the public
interest because the Company has not alleged it is "necessary to maintain its financial
health, cash flow or credit worthiness."10 Yet, Idaho Power explains that while the
6 Order Nos. 30722 and 32426.
Order No. 30722, pg. 13.
8 Staff Comments, pg. 3.
9 Id.
10 ICIP Comments, pg.4.
IDAHO POWER COMPANY'S REPLY COMMENTS - 7

collection of the AFUDC does not contribute to the Company's net income, the collections
nonetheless improve cash flow, which helps maintain credit strength necessary to access
competitive lending markets. Credit strength benefits the cost of capital and ultimately
customer rates which 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.
The Company's request in this case is essential to supporting its credit worthiness,
improving cash flow, and important to the overall financial health of Idaho Power.
III. CONCLUSION
13. Idaho Power appreciates the opportunity to respond to the Comments of
Staff and ICIP filed in this case and for Staff's analysis and evaluation of the financial
implications of the HCC relicensing project AFUDC costs. The Company respectfully
requests the Commission accept Staff's recommendation to approve Idaho Power's (1)
request to adjust customer rates by$29,708,787 to recover AFUDC costs associated with
the HCC relicensing project, and (2) proposed tariff sheets with an effective date of June
1, 2025.
DATED at Boise, Idaho, this 16t" day of May, 2025.
,Z� G!/aP
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 8

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 161" day of May 2025 1 served a true and correct
copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff Hand Delivered
Chris Burdin U.S. Mail
Deputy Attorney General Overnight Mail
Idaho Public Utilities Commission FAX
11331 W. Chinden Blvd., Bldg No. 8 FTP Site
Suite 201-A (83714) X Email chris.burdinCo)puc.idaho.gov
PO Box 83720
Boise, ID 83720-0074
Industrial Customers of Idaho Power Hand Delivered
Peter J. Richardson U.S. Mail
Richardson Adams, PLLC Overnight Mail
515 N. 27t" Street FAX
Boise, Idaho 83702 FTP Site
X Email peter richardsonadams.com
Dr. Don Reading Hand Delivered
280 S. Silverwood Way U.S. Mail
Eagle, Idaho 83716 Overnight Mail
FAX
FTP Site
X Email dread ing(b).mindspring.com
Stacy Gust, Regulatory Administrative
Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 9