20260127Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER LODGE
COMMISSIONER HAMMOND
COMMISSIONER HARDIE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: MATTHEW E. SUESS, COMMISSION STAFF
JEFFREY R. LOLL,DEPUTY ATTORNEY GENERAL
DATE: JANUARY 27, 2026
RE: IDAHO POWER'S ANNUAL COMPLIANCE FILING TO UPDATE THE
SUBSTATION ALLOWANCE AMOUNT UNDER RULE N;
CASE NO. IPC-TAE-25-04.
BACKGROUND
On December 31, 2025, Idaho Power ("Company") filed the Tariff Advice No. 25-04
proposing an update to the Substation Allowance outlined in Rule N, Special Arrangements for
Substation Allowances and Transmission Vested Interest (previously contained in Schedule 19,
Large Power Service). This annual compliance filing is required by Idaho Public Utilities
Commission Order Nos. 32893 and 32914. The Company requested that the updates to the
allowance be approved with an effective date of March 15, 2026.
STAFF ANALYSIS
Staff recommends approval of the Company's proposed allowance amount as filed. The
overall increase of five percent is primarily driven by a four percent direct cost increase and a
general overhead increase of 0.72 percent resulting in an overall allowance increase from$99,826
per Megawatt ("MW") to $104,806 per MW.
The allowance is a credit given to a Rule N customer against the total cost of a substation
upgrade, with the difference being directly charged to that customer for an upgrade needed to
provide them with service.
Staff reviewed the Company's cost adjustment and methodology used to determine the
proposed allowance and believes it conforms with Order Nos. 32893, 32914, 32982, and 34576
DECISION MEMORANDUM - I - JANUARY 27, 2026

from case Nos. IPC-E-13-09 (Glanbia Foods Petition for Allowance to Rule H), IPC-E-14-01
(Schedule 19 Update), and IPC-E-19-40 (Update to Substation Allowance Under Schedule 19),
respectively. Under the current methodology, the Company determines the per MW substation
allowance by dividing the estimated fully loaded costs for constructing a transformer substation
by 44.8 Megavolt Amperes ("MVA"), which is the rating of the transformer commonly used by
the Company for this type of service.'
Staff validated the Company's direct costs for labor,material,and vehicles and found them
to be reasonable. Prior to the adjustment for overhead cost,the substation direct cost increased by
four percent from the previous year. The two biggest contributors to the increase were the 44.8
MVA transformer (approximate cost increase of five percent) and the four-unit Metalclad
switchgear (approximate cost increase of two percent). Project labor costs also went up six
percent.
Staff also verified the Company's inputs and calculation of overheads associated with
substations and believes the proposed overhead rate is reasonable. The Rule N overhead rate
represents costs that cannot be directly assigned to a specific asset or individual project, and are
applied to all vehicles, labor, and direct material costs. The proposed overhead rate for the 12
months ending October 31, 2025, is 3.36 percent, a slight increase from the current rate of 2.64
percent.
STAFF RECOMMENDATION
Staff recommends the Company's proposed update to Rule N be approved as filed with an
effective date of March 15, 2026.
COMMISSION DECISION
Does the Commission wish to approve the Company's proposed update to Rule N with an
effective date of March 15, 2026?
Matthew E. ess
Commission Staff
I:\Utility\UDMEMOS\II'C-TAE-25-04 Decision Memo.docx
1 MVA and MW are equivalent for purposes of determining the cost per MW of the Substation Allowance.
DECISION MEMORANDUM - 2 - JANUARY 27, 2026