20250626Staff Comments.pdf

RECEIVED
June 26, 2025
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11560
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 APPLICATION FOR AN ) CASE NO. IPC-E-25-14
ACCOUNTING ORDER FOR THE )
INCREMENTAL DISTRIBUTION )
UNDERGROUNDING COSTS OF THE NEW ) COMMENTS OF THE
138 KV TRANSMISSION LINE IN THE ) COMMISSION STAFF
WOOD RIVER VALLEY )
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On March 20, 2025, Idaho Power Company("Company") filed an application with the
Commission requesting approval to retain in Construction Work in Progress ("CWIP")the
incremental distribution undergrounding costs incurred for the Blaine County portion of the new
138 kV line in the Wood River Valley until the entire project is completed and placed into
service.
STAFF COMMENTS 1 JUNE 26, 2025

The Company states it began work on the Wood River Valley Reliability Project("WRV
Project") in the fall of 2023. Application at 2. The Company specifies the WRV Project is a
combined distribution and transmission project. Id.
The Company initiated Case No. IPC-E-24-22 in May 2024 ("2024 Case") in which the
Company proposed splitting the surcharge collection for the WRV Project into two phases, first
for the distribution portion, with the transmission portion occurring at a later date. Id. at 2-3.
However, the Commission suspended the 2024 Case on November 1, 2024, at the Company's
request. Order No. 36381. The Company states it is making a separate filing to withdraw and
close the 2024 Case because the Company no longer wishes to pursue the staggered surcharge
collection approach. Application at 3-4.
The Company claims that delaying placing the incremental distribution underground cost
of the WRV Project into utility plant in service and retaining those amounts in CWIP, until the
transmission portion of the project is completed, will eliminate the need for a separate
distribution surcharge, allowing for a single surcharge. Id.
The Company states that implementing a single WRV Project surcharge addresses Staff's
request to consider alternatives to a two-phase approach to surcharge collection that the
Company proposed in the 2024 Case. Id. at 11.
In this Application the Company requests an accounting order allowing the incremental
distribution portion of the WRV Project to remain in the CWIP until the remainder of the
transmission project is completed, which the Company currently estimates to be in 2026. Id. at
11-12. The Company states this proposed process and associated accounting order will provide
for a single surcharge to be implemented without the Company suffering unwarranted financial
harm. Id. at 12. Additionally, the Company states that no surcharge implementation or rate
adjustment is being requested in this filing. Id. at 2.
STAFF ANALYSIS
Single-phase Surcharge vs Two-phase Surcharge
Staff recommends the Commission approve the Company's request to retain the
incremental underground distribution cost in CWIP until both the transmission and distribution
projects are completed and placed into service, as filed.
STAFF COMMENTS 2 JUNE 26, 2025

While the single-phase surcharge method for the WRV Project was originally approved
by Commission Order No. 35452, the Company proposed a two-phase surcharge method in Case
No. IPC-E-24-22 considering the construction schedule of the WRV Project. On January 21,
2025, Staff engaged with the Company to discuss alternatives for implementing the surcharge as
originally proposed in Case No. IPC-E-21-25. Staff believes there were several issues regarding
the two-phase surcharge including the following:
1. Compliance with Commission Order- The Commission approved the single surcharge
for both transmission and distribution line upgrades in Case No. IPC-E-21-25 as noted in
Application at 9. The two-phase surcharge is not aligned with Order No. 35452.
2. Communication with the Blaine County Ratepayers -What was originally communicated
to the Blaine County ratepayers is a single surcharge. The Commission ordered that the
surcharge was acknowledged to the Blaine County customers as its own line-item on
billing statements in Order No. 35452. The two-phase surcharge mechanism could create
confusion and complexity with different collection schedules.
3. Surcharge Rate Based on Costs Not Known and Measurable -Under the proposal in Case
No. IPC-E-24-22, the initial surcharge rate would have been based on two forecasted cost
estimates done in advance of construction: a counter-factual cost estimate for an
underbuilt distribution line and a cost estimate for the overall cost of the project. Under a
single-phase surcharge, recovery and the amount of the surcharge can be based on the
actual cost of the overall project while still requiring a counter-factual cost estimate of an
underbuilt distribution line but using up-to-date cost information at the time of
construction.
4. Timing of Recovery- The justification of the WRV Project was the establishment of a
redundant transmission path in Case No. IPC-E-16-28. Originally, the underground
distribution line was not part of the project and the additional investment to move the
distribution line as an underbuild to the new transmission line would not be necessary
until the new transmission towers were constructed. Under the two-phase surcharge,
customers would be required to pay for a new distribution line before it is needed under
the Commission-approved CPCN.
STAFF COMMENTS 3 JUNE 26, 2025

The Company's proposed method that supports the implementation of the single
surcharge would resolve all of Staff s previously stated issues. Beyond resolving these issues,
the Company's proposed method also avoids the need to provide monthly tracking and annual
reporting on the surcharge collections to ensure that the surcharge is not over collected.
Accounting Treatment
Staff supports the Company's approach to account for the incremental distribution costs
associated with the Blaine County project. These incremental costs should remain in CWIP and
will remain there until the associated transmission line is completed. All additional Allowance
for Funds Used During Construction("AFUDC") accrued while the incremental distribution
costs are in CWIP will be allocated to Blaine County. While Staff expects that AFUDC accrual
will be minor, it is necessary for AFUDC to be allocated to the Blaine County customers in order
to ensure these expenses are not born by the general body of the rate payers.
Cost Filing and Review Process
Upon completion of the transmission line, the Company will file an update reflecting the
final costs for the entire project. Staff will review the updated costs at the time of filing. In
accordance with Commission Order No. 35452, the Company will propose a surcharge to
recover costs over the 20-year depreciable life of the asset. Staff will coordinate with the
Company to ensure customers receive clear and timely notice of the proposed surcharge prior to
its implementation.
Conclusion
Staff concludes that the alternative method is a better approach for the surcharge
collection than the two-phase surcharge and recommends that the Commission approve the
Company's request for the single surcharge, as filed.
STAFF RECOMMENDATION
Staff recommends the Commission approve the Company's requested accounting
treatment.
STAFF COMMENTS 4 JUNE 26, 2025

Respectfully submitted this 26th day of June 2025.
Erika K. Melanson
Deputy Attorney General
Technical Staff. Joe Terry and Seungjae Lee
I:\Utility\UMISC\COMMENTS\IPC-E-25-14 Comments.docx
STAFF COMMENTS 5 JUNE 26, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 26th DAY OF JUNE 2025, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN
CASE NO. IPC-E-25-14, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E. WALKER TIMOTHY TATUM
MEGAN GOICOECHEA ALLEN MATTHEW T. LARKIN
IDAHO POWER COMPANY 1221 WEST IDAHO STREET
1221 WEST IDAHO STREET PO BOX 70
PO BOX 70 BOISE, ID 83707
BOISE, ID 83707-0070 E-MAIL:
E-MAIL: mlarkin(d,idahopower.com
dwalker&idahopower.com ttatum&idahopower.com
mgoicoecheaallen(cidahopower.com
dockets&idahopower.com
PATRICIA JORDAN, ECRETARY
CERTIFICATE OF SERVICE