20250806Direct McCoy.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )
APPLICATION OF ROCKY MOUNTAIN )
POWER FOR APPROVAL OF 2026 ) CASE NO. PAC-E-25-14
INTER-JURISDICTIONAL COST )
ALLOCATION PROTOCOL )
ROCKY MOUNTAIN POWER
Direct Testimony of Shelley E. McCoy
August 2025

1 I . INTRODUCTION
2 Q. Please state your name, business address and present
3 position with PacifiCorp d/b/a Rocky Mountain Power
4 ("Company") .
5 A. My name is Shelley E. McCoy, and my business address
6 is 825 NE Multnomah, Suite 2000, Portland OR 97232 . I
7 am currently employed as the Director of Revenue
8 Requirement at the Company.
9 II . QUALIFICATIONS
10 Q. Briefly describe your educational and professional
11 background.
12 A. I earned a Bachelor of Science degree in Accounting
13 from Portland State University. In addition to my
14 formal education, I have attended several utility
15 accounting, ratemaking, and leadership seminars and
16 courses . I have been employed by the Company since
17 November 1996 . My past responsibilities have included
18 general and regulatory accounting, budgeting,
19 forecasting, and reporting. I assumed my current
20 position in November 2022 .
21 Q. What are your responsibilities as director of revenue
22 requirement?
23 A. My primary responsibilities include overseeing the
24 calculation and reporting of the Company' s regulated
25 earnings or revenue requirement, assuring that the
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Rocky Mountain Power

1 inter-jurisdictional cost-allocation methodology is
2 correctly applied, and explaining those calculations
3 to regulators in the jurisdictions in which the
4 Company operates .
5 Q. Have you testified in previous regulatory proceedings?
6 A. Yes . I have provided testimony in multiple dockets
7 before the Idaho, Utah, Wyoming, California, Oregon,
8 and Washington public utility commissions .
9 III . PURPOSE OF TESTIMONY
10 Q. What is the purpose of your testimony in this
11 proceeding?
12 A. My testimony supports the Company' s Application for
13 Approval of the 2026 PacifiCorp Inter-Jurisdictional
14 Allocation Protocol ("2026 Protocol") . Specifically,
15 my testimony provides details on:
16 • Differences between the 2026 Protocol and the 2020
17 PacifiCorp Inter-Jurisdictional Allocation Protocol
18 ("2020 Protocol") ; and
19 • The estimated $2 . 5 million Idaho-allocated revenue
20 requirement impact of implementing the 2026 Protocol
21 as shown in Table 1 below.
22 TABLE 1 - 2026 Protocol Estimated Revenue
23 Requirement Impact
CA OR UT ID WY Total
Total Generation Rev.Req.Impact $ 853,158 $ 14,876,676 $ 24,114,868 $ 3,070,525 $ 5,691,036 $ 48,606,264
SO Allocation Change Rev.Req.Impact $ 2,262,606 $ (548,317) $ (628,634) $ (534,430) $ 185,698 $ 736,924
2026 Protocol Rev.Req.Impact $ 3,115,764 $ 14,328,359 $ 23,486,234 $ 2,536,096 $ 5,876,734 $ 49,343,187
Present Revenues-December 2024 ROO $135,613,126 $ 1,604,698,740 $ 2,266,222,485 $ 346,541,857 $ 692,325,473
Est.Average Rate Impact 2.30% 0.890/0 1.04% 0.73% 0.85%
24 IV. COMPARISON OF THE 2026 PROTOCOL TO THE 2020 PROTOCOL
25 Q. What is the 2020 Protocol?
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Rocky Mountain Power

1 A. The 2020 Protocol is the multi-jurisdictional
2 allocation methodology that has been adopted by
3 parties of the Multi-State Process and approved by the
4 Idaho Public Utilities Commission ("Commission") for
5 use in allocating costs for ratemaking purposes;
6 however, it is set to expire December 31, 2025 . 1 Due
7 to this approaching expiration date, the Company needs
8 to develop a new allocation methodology to determine
9 fair, just, and reasonable rates in the jurisdictions
10 where it operates . This new proposed allocation
11 methodology will be known as the 2026 Protocol .
12 Q. Please describe the fundamental differences between
13 the 2026 Protocol and the 2020 Protocol .
14 A. The 2026 Protocol supports the transition to the
15 resource portfolios needed to accommodate individual
16 and diverging state energy policies . Notably, the 2026
17 Protocol implements a transition from a cost-
18 allocation methodology applicable to the operation of
19 generation resources as a single portfolio to a cost
20 allocation methodology where state or regional
21 resource portfolios can be used to meet load
22 obligations consistent with state energy policies and
1 In the Matter of Rocky Mountain Power's Petition for
Approval of an Extension of the 2020 Inter-Jurisdictional
Allocation Protocol, Case No . PAC-E-23-13, Order No . 35984
(Nov. 2, 2023) .
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Rocky Mountain Power

1 prevent cross-subsidization among jurisdictions .
2 Company witness Joelle R. Steward more thoroughly
3 discusses the specifics of the 2026 Protocol . 2
4 Q. What is the Company' s proposed effective period for
5 the 2026 Protocol?
6 A. Upon approval by the respective commission in each
7 jurisdiction, the 2026 Protocol will be effective for
8 new regulatory filings made in that jurisdiction
9 beginning January 1, 2026, and will remain in effect
10 until approval of amendments or a new cost allocation
11 protocol .
12 Q. What is the Washington 2026 Protocol?
13 A. As explained in the testimony of Company witness Cindy
14 A. Crane, the Washington 2026 Protocol is a separate
15 allocation methodology intended to address specific,
16 near-term energy policy and requirements in Washington
17 by creating a defined resource portfolio . 3
18 V. ALLOCATION OF GENERATION RESOURCES
19 Q. How are generation resources allocated under the 2026
20 Protocol?
21 A. The 2026 Protocol establishes that generation
22 resources will continue to be dynamically allocated
23 for Idaho, Utah, Wyoming, California, and Oregon ("the
2 See Direct Testimony of Joelle R. Steward at 16-42 (Aug. 6,
2025) .
3 Direct Testimony of Cindy A. Crane at 16-17 (Aug. 6, 2025) .
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Rocky Mountain Power

1 Five States") , excluding the fixed portion allocated
2 to Washington as identified in the Washington 2026
3 Protocol, and with one exception—the Chehalis
4 generation facility. The 2026 Protocol reflects an
5 immediate reassignment of the costs associated with
6 the Chehalis generation facility from being allocated
7 to all Company operating jurisdictions to being situs-
8 assigned to Washington.
9 Q. What differences exist between the methodology for
10 allocating generation costs and benefits under the
11 2020 Protocol and the 2026 Protocol?
12 A. While the situs allocation of the Chehalis generation
13 facility to Washington is the most notable difference,
14 the calculation of the allocation factors for non-
15 emitting, natural gas, and coal resources are also
16 slightly different . I will describe each of these
17 changes separately below:
18 • Non-emitting resources except the Rolling Hills
19 Wind facility ("Rolling Hills") : Costs and benefits
20 of existing non-emitting resources will be
21 dynamically allocated to the Five States for the
22 share excluding the fixed portion allocated to
23 Washington as identified in the Washington 2026
24 Protocol, based on the System Generation 5A
25 ("SG5A") allocation factor as detailed in Appendix
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Rocky Mountain Power

I C to the 2026 Protocol .
2 • Natural gas resources except Chehalis and Jim
3 Bridger Units 1 and 2 : Costs and benefits of
4 existing natural gas resources will be dynamically
5 allocated to the Five States and will be based on
6 a System Generation 5B ("SG5B") allocation factor
7 as detailed in Appendix C to the 2026 Protocol .
8 • Rolling Hills : Costs and benefits of Rolling Hills
9 will be dynamically allocated to Idaho, Utah,
10 Wyoming, and California (excluding a larger fixed-
11 share being allocated to Washington) , based on the
12 System Generation 5C ("SG5C") allocation factor as
13 detailed in Appendix C to the 2026 Protocol .
14 • Chehalis : Costs and benefits of the Chehalis
15 generation facility will be situs assigned to the
16 state of Washington.
17 • Jim Bridger Units 1 and 2 : Costs and benefits of
18 the Jim Bridger Units 1 and 2 generating facilities
19 will be allocated based on the SG5A allocation
20 factor.
21 • Coal Resources : Costs and benefits of existing
22 coal-fired resources will be dynamically allocated
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Rocky Mountain Power

I to the Five States based on a SG5B allocation
2 factor.
3 Q. Has the Company quantified the revenue requirement
4 impact that results from the reallocation of
5 generation resources discussed above?
6 A. Yes . Idaho' s revenue requirement increases by
7 approximately $3 . 1 million with the reallocation of
8 generation resources discussed above . A proxy
9 generation resource reallocation revenue requirement
10 calculation for all impacted states, except
11 Washington, is provided in Table 2 below. This revenue
12 requirement impact was calculated based on readily
13 available information and does not contemplate certain
14 state-specific regulatory adjustments (such as Utah' s
15 Sustainable Transportation and Energy Plan buy-down,
16 decommissioning, etc. ) . The Company expects to refine
17 this calculation prior to a deferred accounting
18 request to track the costs and benefits associated
19 with the implementation of the 2026 Protocol .
20 TABLE 2 - Generation Revenue Requirement Impact
CA OR UT ID WY Total
SG5A $ (40,462) $ (800,723) $ (1,381,214) $ (185,002) $ (424,313) $ (2,831,714)
SG56 $ 512,060 $ 10,133,426 $ 17,479,742 $ 2,341,259 $ 5,369,833 $ 35,836,320
SG5C (5,018) - (171,281) (22,942) (52,618) (251,858)
Oregon Incremental Steam $ (703,671) $ (703,671)
Total Non-NPC Impact $ 466,580 $ 8,629,032 $ 15,927,247 $ 2,133,316 $ 4,892,902 $ 32,049,077
NPCImpact* $ 386,578 $ 6,247,644 $ 8,187,622 $ 937,209 $ 798,134 $ 16,557,187
Total Generation Rev.Req.Impact $ 853,158 $ 14,876,676 $ 24,114,868 $ 3,070,525 $ 5,691,036 $ 48,606,264
McCoy, Di 7
Rocky Mountain Power

1 Q. Please describe the process used for developing the
2 proxy calculation.
3 A. Starting with actual accounting data for calendar year
4 2024, 4 the Company identified all components of
5 generation resource revenue requirement that would be
6 impacted by the resource allocation changes discussed
7 previously. This includes generation-specific
8 revenues, non-net power costs, operations and
9 maintenance expense, depreciation and amortization,
10 electric plant placed in-service, accumulated deferred
11 income tax, and other generation-specific rate base
12 items . No changes were made for items such as property
13 taxes and administrative and general expenses which
14 are not resource specific .
15 Q. What data did you use to calculate energy and demand-
16 based allocation factors for the generation resources
17 that are still dynamically allocated?
18 A. Consistent with the accounting data, the Company used
19 2024 weather-normalized load data that was also used
20 in the Company' s December 2024 Results of Operations
21 reports filed with the Commission. The fixed
22 allocation of Washington resources is consistent with
23 percentages filed in the Washington 2026 Protocol .
4 Rate base was calculated using period ending December 31,
2024 .
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Rocky Mountain Power

1 Q. What rate of return assumptions were relied upon in
2 the revenue requirement calculation presented above?
3 A. To calculate the return-on-rate base component of
4 revenue requirement, the Company used a five-quarter
5 average 2024 actual capital structure and a
6 9 . 55 percent average return on equity. The actual
7 revenue requirement impact will be dependent on each
8 state' s authorized cost of capital .
9 VI . ALLOCATION OF TRANSMISSION
10 Q. How has the allocation of transmission costs changed
11 under the 2026 Protocol?
12 A. As is done in the 2020 Protocol, the 2026 Protocol
13 continues to allocate transmission costs using the
14 System Generation ("SG") factor calculated based on a
15 classification of costs as 75 percent demand-related
16 and 25 percent energy-related, and based on 12 monthly
17 coincident peaks, using weather-normalized retail peak
18 and energy data, as more thoroughly defined in
19 Appendix C of the 2026 Protocol . The only exception to
20 this methodology applies to new large loads in Section
21 13 . 0 of the 2026 Protocol, which is described by Ms .
22 Steward. 5
5 Direct Testimony of Joelle R. Steward at 40-41 .
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Rocky Mountain Power

1 VII . ALLOCATION OF DISTRIBUTION
2 Q. How does the 2026 Protocol propose to allocate
3 distribution costs?
4 A. As with the 2020 Protocol, the 2026 Protocol
5 establishes that all distribution-related expenses and
6 investments that can be directly allocated will be
7 directly allocated to the states where the related
8 distribution facilities are located. Those costs that
9 cannot be directly assigned will be allocated on the
10 System Net Plant-Distribution ("SNPD") factor, as
11 defined in Appendix C to the 2026 Protocol . 6
12 VIII . ADMINISTRATIVE AND GENERAL COSTS
13 Q. How does the 2026 Protocol propose to allocate
14 administrative and general costs?
15 A. Consistent with the 2020 Protocol, the 2026 Protocol
16 establishes that administrative and general costs,
17 general plant, and intangible plant, both expenses and
18 investments, which can be directly allocated should be
19 directly allocated to the appropriate state, and those
20 costs that must be allocated among states should be
21 allocated consistent with Appendix B to the 2026
22 Protocol . '
6 Exhibit No . 3 at 43 .
7 See Exhibit No . 3 at 20-35 .
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Rocky Mountain Power

1 IX. SYSTEM OVERHEAD COSTS
2 Q. How does the 2026 Protocol propose to allocate system
3 overhead costs?
4 A. The 2026 Protocol establishes that system overhead
5 costs, i . e . costs which support more than a single
6 function such as generation or transmission, should be
7 allocated on a new System Overhead ("SO") allocation
8 factor that is based on one-third weightings of the
9 System Capacity ("SC") , System Energy ("SE") , and
10 System Gross Plant Distribution ("SGPD") allocation
11 factors as those terms are defined in Appendix C to
12 the 2026 Protocol . $
13 Q. How does this differ from the method for allocating
14 system overhead costs under the 2020 Protocol?
15 A. The SO allocation factor used under the 2020 Protocol
16 was based on the ratio of gross plant allocated or
17 situs assigned to each state, excluding any gross
18 plant allocated by the SO allocation factor.
19 Generation and transmission gross plant was allocated
20 using the SG allocation factor, mining plant on the SE
21 allocation factor, and distribution plant was directly
22 allocated to the states where the plant was located.
23 The Company' s new proposal for the SO allocation
24 factor continues to preserve a similar dynamic nature
8 Exhibit No . 3 at 39-44 .
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Rocky Mountain Power

1 that is used in the allocation of administrative and
2 general costs under the SO allocation factor formula
3 approved in the 2020 Protocol .
4 Q. Why is the Company proposing a change to the way the
5 SO allocation factor is calculated?
6 A. As the Company begins to adapt its cost allocation
7 methodology to accommodate diverging resource
8 portfolios, changes in the allocation of generation
9 resources will have an impact on the calculation of
10 the SO allocation factor under the 2020 Protocol . As
11 more resource allocations become fixed, a major
12 component in the 2020 Protocol SO allocation factor
13 also becomes fixed. However, because administrative
14 and general costs are dynamic, it follows that the
15 allocation of these costs should also remain dynamic
16 and not be anchored to fixed shares of allocated
17 generation resource costs .
18 Q. Has the Company quantified the revenue requirement
19 impact of the SO allocation factor change discussed
20 above?
21 A. Yes . Idaho' s revenue requirement would decrease by
22 approximately $0 . 5 million from the changes to the SO
23 allocation factor. An estimate of how the proposed
24 change in the SO allocation factor impacts revenue
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Rocky Mountain Power

1 requirement for all impacted states, except
2 Washington, is provided in Table 3 below.
3 TABLE 3 - SO Allocation Factor Impact
CA OR UT ID WY Total
s0 Percentage Change 0.33% -0.08% -0.09% -0.08% 0.03%
SO Allocated $2,262,606 $ (548,317) $ (628,634) $ (534,430) $ 185,698 $ 736,924
4 X. SYSTEM ENERGY ALLOCATION FACTOR
5 Q. Does the 2026 Protocol propose any changes to the
6 System Energy ("SE") allocation factor?
7 A. Yes . Fundamentally, the dynamic calculation of the SE
8 allocation factor will remain the same under the 2026
9 Protocol . However, due to the re-allocation of certain
10 generation resources, a change is needed. For example,
11 natural gas resources, except Chehalis and Jim Bridger
12 Units 1 and 2, are no longer allocated to the
13 Washington jurisdiction and therefore the fuel costs
14 associated with these resources should also be
15 excluded from Washington. Accordingly, the Company is
16 proposing new SE allocation factors for items such as
17 net power costs that would follow the resource
18 allocation (i .e . , a SG5A resource would correspond to
19 SE5A of associated energy costs) . The Federal Energy
20 Regulatory Commission account assignments and
21 algebraic derivations for the SE5A allocation factor
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Rocky Mountain Power

1 are provided in Appendix B and Appendix C to the 2026
2 Protocol, respectively. 9
3 XI . ALLOCATION OF TAXES AND FEES
4 Q. How will taxes and fees be allocated among the states?
5 A. State-specific Schedule M and deferred income tax
6 amounts will be allocated using the Company' s tax
7 software system, calculated using the federal tax rate
8 and the Company' s combined state-effective tax rate .
9 The Washington public utility tax is allocated using
10 the SO factor in lieu of Washington income tax.
11 Franchise taxes, revenue related taxes, local business
12 income taxes, commission assessments and fees, and
13 usage related taxes would be allocated on a situs basis
14 or treated as pass through to the local community
15 (e .g. , the Multnomah Business Income Tax) . Wyoming
16 wind tax will be system allocated using the SG5A factor
17 consistent with the proposed allocation of the
18 underlying resource .
19 Property taxes will be allocated based on gross
20 plant using a Gross Plant System ("GPS") factor,
21 defined in Appendix C to the 2026 Protocol . 10 State
22 taxes enacted as a replacement for property taxes,
23 such as the Idaho Kilowatt Hour tax, will be considered
9 Exhibit No . 3 at 20-22; Exhibit No . 3 at 40 .
10 Exhibit No . 3 at 37-38 .
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Rocky Mountain Power

1 the same as property tax and allocated on the GPS
2 factor. Generation and fuel-related taxes or
3 royalties, other than those associated with a carbon
4 or greenhouse gas pricing program will follow the
5 allocation of the underlying resource costs . Other
6 taxes such as payroll taxes are embedded in the cost
7 of expense or capital . Balances associated with the
8 Trojan decommissioning will continue to be allocated
9 using the Trojan decommissioning factor.
10 XII . CONCLUSION
11 Q. What action do you recommend the Commission take with
12 respect to the 2026 Protocol application?
13 A. I recommend that the Commission find that the 2026
14 Protocol is in the public interest and request that
15 the Commission approve the application including all
16 the terms and conditions of the 2026 Protocol in its
17 order in this proceeding.
18 Q. Does this conclude your direct testimony?
19 A. Yes .
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Rocky Mountain Power